EXHIBIT 99.1
LOAN AND SECURITY AGREEMENT
by and among
WPS RECEIVABLES CORPORATION,
as Borrower
WESTPOINT ▇▇▇▇▇▇▇ INC.,
as Initial Servicer
and
CONGRESS FINANCIAL CORPORATION (SOUTHERN),
as Agent
THE CIT GROUP/COMMERCIAL SERVICES, INC.,
as Co-Agent
and
THE LENDERS FROM TIME TO TIME PARTIES HERETO,
as Lenders
Dated: March 28, 2003
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS.....................................................................................1
SECTION 2. CREDIT FACILITIES..............................................................................23
2.1 Loans..........................................................................................23
2.2 Making of Loans................................................................................23
2.3 Payments; Settlements. .......................................................................23
2.4 Priority of Application of Payments............................................................26
2.5 Use of Proceeds................................................................................27
SECTION 3. INTEREST AND FEES..............................................................................29
3.1 Interest.......................................................................................29
3.2 Maximum Interest...............................................................................30
3.3 Fees...........................................................................................31
3.4 Changes in Laws and Increased Costs of Loans...................................................31
SECTION 4. CONDITIONS PRECEDENT...........................................................................33
4.1 Conditions Precedent to Initial Loans..........................................................33
4.2 Conditions Precedent to All Loans..............................................................35
SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST......................................................36
5.1 Grant of Security Interest.....................................................................36
5.2 Perfection of Security Interests...............................................................36
SECTION 6. COLLECTION AND ADMINISTRATION..................................................................39
6.1 Borrower Loan Account..........................................................................39
6.2 Statements.....................................................................................39
6.3 Designation of Servicer........................................................................39
6.4 Duties of Servicer.............................................................................40
6.5 Rights of Agent on Servicer Transfer Event.....................................................41
6.6 Responsibilities of Transaction Parties........................................................42
6.7 Servicer Advances..............................................................................42
6.8 Cash Management Arrangements...................................................................43
6.9 Pro Rata Treatment.............................................................................45
6.10 Sharing of Payments, Etc.......................................................................45
6.11 Lender Settlement Procedures..................................................................47
SECTION 7. COLLATERAL REPORTING AND COVENANTS.............................................................49
7.1 Collateral Reporting...........................................................................49
7.2 Accounts Covenants.............................................................................50
7.3 Power of Attorney..............................................................................51
(i)
7.4 Right to Cure..................................................................................52
7.5 Access to Premises; Reviews....................................................................53
SECTION 8. REPRESENTATIONS AND WARRANTIES.................................................................53
8.1 Corporate Existence, Power and Authority.......................................................53
8.2 Name; State of Organization; Chief Executive Office; Collateral Locations......................54
8.3 Financial Statements; No Material Adverse Change...............................................54
8.4 Priority of Liens; Title to Properties.........................................................55
8.5 Tax Returns....................................................................................55
8.6 Litigation.....................................................................................55
8.7 Compliance with Other Agreements and Applicable Laws...........................................55
8.8 Bank Accounts..................................................................................56
8.9 Intellectual Property..........................................................................56
8.10 Subsidiaries; Affiliates; Capitalization; Solvency.............................................56
8.11 Bulk Sales Act.................................................................................56
8.12 Payments to Originator.........................................................................56
8.13 Accuracy and Completeness of Information.......................................................56
8.14 Survival of Warranties; Cumulative.............................................................57
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS.............................................................57
9.1 Maintenance of Existence. ....................................................................57
9.2 Keeping of Books and Records...................................................................57
9.3 Location of Records............................................................................58
9.4 Receivables Purchase Agreement.................................................................58
9.5 Ownership Interest of Borrower.................................................................58
9.6 Security Interest of Agent.....................................................................58
9.7 Payment under Receivables Purchase Agreement...................................................58
9.8 Marking of Records and Data Processing Reports.................................................58
9.9 Compliance with Laws, Regulations, Etc.........................................................59
9.10 Payment of Taxes and Claims....................................................................59
9.12 Sale of Assets, Consolidation, Merger, Dissolution, Etc........................................62
9.13 Encumbrances...................................................................................63
9.14 Indebtedness...................................................................................63
9.15 Loans, Investments, Etc........................................................................64
9.16 Dividends and Redemptions......................................................................65
9.17 Transactions with Affiliates...................................................................65
9.18 Change in Business or Credit and Collection Policy.............................................65
9.19 Change to Other Documents......................................................................66
9.20 End of Fiscal Years; Fiscal Quarters...........................................................66
9.21 Adjusted Tangible Net Worth....................................................................66
9.22 Separate Corporate Existence of Borrower.......................................................66
9.23 Costs and Expenses.............................................................................69
9.24 Further Assurances.............................................................................69
ii
SECTION 10. EVENTS OF DEFAULT AND REMEDIES...............................................................70
10.1 Events of Default............................................................................70
10.2 Remedies.....................................................................................72
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS
AND CONSENTS; GOVERNING LAW ........................................................75
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver........................75
11.2 Waiver of Notices............................................................................77
11.3 Amendments and Waivers. ....................................................................77
11.4 Waiver of Counterclaims......................................................................79
SECTION 12. INDEMNIFICATION..............................................................................79
12.1 Indemnities by Borrower......................................................................79
12.2 Indemnities by Servicer......................................................................81
SECTION 13. THE AGENT....................................................................................82
13.1 Appointment, Powers and Immunities...........................................................82
13.2 Reliance by Agent............................................................................82
13.3 Events of Default............................................................................82
13.4 Congress in its Individual Capacity..........................................................83
13.5 Indemnification..............................................................................83
13.6 Non-Reliance on Agent and Other Lenders......................................................83
13.7 Failure to Act...............................................................................84
13.8 Additional Loans.............................................................................84
13.9 Concerning the Collateral and the Related Financing Agreements...............................84
13.10 Field Audit, Examination Reports and other Information; Disclaimer
by Lenders...................................................................................85
13.11 Collateral Matters...........................................................................85
13.12 Agency for Perfection........................................................................87
13.13 Successor Agent..............................................................................87
SECTION 14. TERM OF AGREEMENT; MISCELLANEOUS.............................................................88
14.1 Term.........................................................................................88
14.2 Interpretative Provisions....................................................................89
14.3 Notices......................................................................................91
14.4 Partial Invalidity...........................................................................92
14.5 Confidentiality..............................................................................92
14.6 Successors...................................................................................93
14.7 Assignments; Participations..................................................................93
14.8 Entire Agreement.............................................................................95
14.9 Counterparts, Etc............................................................................95
(iii)
INDEX TO
EXHIBITS AND SCHEDULES
Exhibit A Form of Assignment and Acceptance Agreement
Exhibit B Form of Interim Receivables Report
Exhibit C Form of Monthly Receivables Report
Exhibit D Form of Compliance Certificate
Schedule 1.37 Concentration Limits
Schedule 8.2 Chief Executive Office, Locations of Records and Returned
Goods, Organizational Identification Numbers
Schedule 8.6 Pending Litigation
Schedule 8.8 Deposit Accounts and Investment Accounts
Schedule 8.10 Subsidiaries and Affiliates
(iv)
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement dated March 28, 2003 is entered into
by and among WPS Receivables Corporation, a Delaware corporation ("Borrower"),
WestPoint ▇▇▇▇▇▇▇ Inc., a Delaware corporation, as initial servicer hereunder
(in such capacity, "Servicer"), the financial institutions from time to time
parties hereto as lenders, whether by execution of this Agreement or an
Assignment and Acceptance (each individually, a "Lender" and collectively,
"Lenders"), Congress Financial Corporation (Southern), a Georgia corporation,
in its capacity as agent for Lenders (in such capacity, "Agent") and The CIT
Group/Commercial Services, Inc., a New York corporation, in its capacity as
co-agent for Lenders (in such capacity, "Co-Agent").
WITNESSETH:
WHEREAS, Borrower has requested that Agent and Lenders enter into
financing arrangements with Borrower pursuant to which Lenders may make loans
and advances to Borrower; and
WHEREAS, each Lender is willing to agree (severally and not jointly)
to make such loans and advances to Borrower on a pro rata basis according to
its Commitment (as defined below) on the terms and conditions set forth herein
and Agent is willing to act as agent for Lenders on the terms and conditions
set forth herein and the other Financing Agreements;
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. DEFINITIONS
For purposes of this Agreement, the following terms shall have the
respective meanings given to them below:
1.1 "Accounts" shall mean, all present and future rights of Borrower
to payment of a monetary obligation, whether or not earned by performance,
which is not evidenced by chattel paper or an instrument, (a) for property that
has been or is to be sold, leased, licensed, assigned, or otherwise disposed
of, (b) for services rendered or to be rendered, (c) for a secondary obligation
incurred or to be incurred, or (d) arising out of the use of a credit or charge
card or information contained on or for use with the card.
1.2 "Adjusted Borrowing Base" shall mean, at any time, the amount
equal to the lesser of: (a) the amount equal to (i) ninety (90%) percent of the
Net Amount of the Eligible Accounts minus (ii) the Reserves or (b) the Maximum
Credit.
1.3 "Adjusted Eurodollar Rate" shall mean, with respect to any
Eurodollar Rate Loan, the rate per annum (rounded upwards, if necessary, to the
next one-sixteenth (1/16) of one (1%)
percent) determined by dividing (a) the Eurodollar Rate for a period of
approximately two (2) months duration, the exact duration to be determined in
accordance with the customary practice in the applicable Eurodollar Rate market
by (b) a percentage equal to: (i) one (1) minus (ii) the Reserve Percentage.
For purposes hereof, "Reserve Percentage" shall mean the reserve percentage,
expressed as a decimal, prescribed by any United States or foreign banking
authority for determining the reserve requirement which is or would be
applicable to deposits of United States dollars in a non-United States or an
international banking office of Reference Bank used to fund a Eurodollar Rate
Loan or any Eurodollar Rate Loan made with the proceeds of such deposit,
whether or not the Reference Bank actually holds or has made any such deposits
or loans. The Adjusted Eurodollar Rate shall be adjusted on and as of the
effective day of any change in the Reserve Percentage.
1.4 "Adjusted Tangible Net Worth" shall mean as to any Person, at any
time, in accordance with GAAP (except as otherwise specifically set forth
below), on a consolidated basis for such Person and its Subsidiaries (if any),
the amount equal to the difference between: (a) the aggregate net book value of
all assets of such Person and its Subsidiaries (excluding the value of patents,
trademarks, tradenames, copyrights, licenses, goodwill, leasehold improvements,
prepaid assets and other intangible assets), calculating the book value of
inventory for this purpose on a first-in-first-out basis, after deducting from
such book values all appropriate reserves in accordance with GAAP (including
all reserves for doubtful receivables, obsolescence, depreciation and
amortization) and (b) the aggregate amount of the Indebtedness and other
liabilities of such Person and its Subsidiaries (including tax and other proper
accruals).
1.5 "Advertising Co-op Reserve" shall mean, at any time, the aggregate
amount of discounts and price load arrangements of Originator with customers
and volume-based rebates to customers as reimbursement for certain expenses
incurred in the advertising of the products of Originator.
1.6 "Affiliate" shall mean, with respect to a specified Person, any
other Person which directly or indirectly, through one or more intermediaries,
controls or is controlled by or is under common control with such Person, and
without limiting the generality of the foregoing, includes (a) any Person which
beneficially owns or holds thirteen (13%) percent or more of any class of
Voting Stock of such Person or other equity interests in such Person, (b) any
Person of which such Person beneficially owns or holds thirteen (13%) percent
or more of any class of Voting Stock or in which such Person beneficially owns
or holds thirteen (13%) percent or more of the equity interests and (c) any
director or executive officer of such Person. For the purposes of this
definition, the term "control" (including with correlative meanings, the terms
"controlled by" and "under common control with"), as used with respect to any
Person, means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of Voting Stock, by agreement or otherwise.
1.7 "Agent" shall mean Congress Financial Corporation (Southern), in
its capacity as agent on behalf of Lenders pursuant to the terms hereof and any
replacement or successor agent hereunder.
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1.8 "Agent Payment Account" shall mean account no. 5000000030318 of
Agent at Wachovia Bank, National Association or such other account of Agent as
Agent may from time to time designate to Borrower or Servicer as the Agent
Payment Account for purposes of this Agreement and the other Financing
Agreements.
1.9 "Assignment and Acceptance" shall mean an Assignment and
Acceptance substantially in the form of Exhibit A attached hereto (with blanks
appropriately completed) delivered to Agent in connection with an assignment of
a Lender's interest hereunder in accordance with the provisions of Section 14.7
hereof.
1.10 "Borrowing Base" shall mean, at any time, the amount equal to the
lesser of: (a) the amount equal to (i) eighty-five (85%) percent of the Net
Amount of Eligible Accounts minus (ii) the Reserves or (b) the Maximum Credit.
1.11 "Business Day" shall mean any day other than a Saturday, Sunday,
or other day on which commercial banks are authorized or required to close
under the laws of the State of New York, the State of Georgia or the State of
North Carolina, and a day on which Agent is open for the transaction of
business, except that if a determination of a Business Day shall relate to any
Eurodollar Rate Loans, the term Business Day shall also exclude any day on
which banks are closed for dealings in dollar deposits in the London interbank
market or other applicable Eurodollar Rate market.
1.12 "Capital Leases" shall mean, as applied to any Person, any lease
of (or any agreement conveying the right to use) any property (whether real,
personal or mixed) by such Person as lessee which in accordance with GAAP, is
required to be reflected as a liability on the balance sheet of such Person.
1.13 "Capital Stock" shall mean, with respect to any Person, any and
all shares, interests, participations or other equivalents (however designated)
of such Person's capital stock or partnership, limited liability company or
other equity interests at any time outstanding, and any and all rights,
warrants or options exchangeable for or convertible into such capital stock or
other interests (but excluding any debt security that is exchangeable for or
convertible into such capital stock).
1.14 "Cash Dominion Period" shall mean any period during which
Collections are being remitted from the Concentration Account to the Agent
Payment Account as provided in Section 6.8 hereof.
1.15 "Cash Equivalents" shall mean, at any time, (a) any evidence of
Indebtedness with a maturity date of ninety (90) days or less issued or
directly and fully guaranteed or insured by the United States of America or any
agency or instrumentality thereof; provided, that, the full faith and credit of
the United States of America is pledged in support thereof; (b) certificates of
deposit or bankers' acceptances with a maturity of ninety (90) days or less of
any financial institution that is a member of the Federal Reserve System having
combined capital and surplus and undivided profits of not less than
$250,000,000; (c) commercial paper (including variable
3
rate demand notes) with a maturity of ninety (90) days or less issued by a
corporation (except an Affiliate of Borrower) organized under the laws of any
State of the United States of America or the District of Columbia and rated at
least A-1 by Standard & Poor's Ratings Service, a division of The ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc. or at least P-1 by ▇▇▇▇▇'▇ Investors Service, Inc.; and (d)
investments in money market funds and mutual funds which invest substantially
all of their assets in securities of the types described in clauses (a) through
(c) above.
1.16 "Change of Control" shall mean (a) with respect to WestPoint, the
acquisition by any person or group of persons (within the meaning of Section 13
or 14 of the Exchange Act), of beneficial ownership (within the meaning of Rule
13d-3 promulgated by the Securities and Exchange Commission under the Exchange
Act) of issued and outstanding shares of the Capital Stock of WestPoint
entitled (without regard to the occurrence of any contingency) to vote for the
election of members of the board of directors of WestPoint and having a then
present right to exercise fifty (50%) percent or more of the voting power for
the election of members of the board of directors of WestPoint attached to all
such outstanding shares of Capital Stock of WestPoint, unless otherwise agreed
in writing by Agent; and (b) with respect to Borrower, the failure of WestPoint
to own (directly or through wholly-owned Subsidiaries of WestPoint) one hundred
(100%) of the issued and outstanding shares of Capital Stock of Borrower on a
fully diluted basis.
1.17 "Code" shall mean the Internal Revenue Code of 1986, as the same
now exists or may from time to time hereafter be amended, modified, recodified
or supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.
1.18 "Collateral" shall have the meaning set forth in Section 5
hereof.
1.19 "Collections" shall mean, with respect to any Receivable, all
funds which are received by Borrower, Originator or Servicer from or on behalf
of the related Obligor in payment of any amounts owed (including, without
limitation, purchase prices, finance charges, interest and all other charges)
in respect of such Receivable, or applied to such amounts owed by such Obligor
(including, without limitation, insurance payments that Borrower, Originator or
Servicer applies in the ordinary course of its business to amounts owed in
respect of such Receivable and net proceeds of sale or other disposition or
returned, repossessed or reclaimed goods or other collateral or property of the
Obligor or any other party directly or indirectly liable for payment of such
Receivable and available to be applied thereon).
1.20 "Commitment" shall mean, at any time, as to each Lender, the
principal amount set forth below such Lender's signature on the signatures
pages hereto designated as the Commitment or on Schedule 1 to the Assignment
and Acceptance Agreement pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 14.7 hereof, as the same
may be adjusted from time to time in accordance with the terms hereof;
sometimes being collectively referred to herein as "Commitments".
4
1.21 "Concentration Account" shall mean account no. 3750235546 of
Borrower maintained at Bank of America, N.A., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇ or such other account as may be approved by Agent after the date hereof.
1.22 "Congress" shall mean Congress Financial Corporation (Southern),
a Georgia corporation, in its individual capacity, and its successors and
assigns.
1.23 "Contract" shall mean a contract between Borrower or Originator
and any Person, or an invoice sent or to be sent by Borrower or Originator,
pursuant to or under which a Receivable shall arise or be created, or which
evidences a Receivable. A "related Contract" or similar reference means rights
to payment, collection and enforcement, and other rights under a Contract to
the extent directly related to a Receivable, but not any other rights under
such Contract.
1.24 "Credit and Collection Policy" shall mean those credit and
collection policies and practices of WestPoint relating to Contracts and
Receivables as in effect on the date of this Agreement, as modified in
accordance with the terms of this Agreement, but subject to compliance with
applicable tariffs or state regulations in effect from time to time, and to the
extent such policies and practices have been disclosed to Agent.
1.25 "Credit Facility" shall mean the Loans provided to or for the
benefit of Borrower pursuant to Section 2.1 hereof.
1.26 "Days Sales Outstanding" shall mean, as of any day, an amount
equal to: (a) ninety-one (91) times (b) the amount equal to (i) the aggregate
outstanding balance of the Receivables as of the most recent month end divided
by (ii) the aggregate amount of sales created during the three (3) months
including and immediately preceding the most recent month ended.
1.27 "Deemed Collections" shall have the meaning set forth in Section
2.7 hereof.
1.28 "Default" shall mean an act, condition or event which with notice
or passage of time or both would constitute an Event of Default.
1.29 "Default Ratio" shall mean, at any time, the ratio (expressed as
a percentage) equal to the average of the Monthly Default Ratios (expressed as
a percentage) for each of the three (3) most recently ended fiscal months. The
term "Monthly Default Ratio" as used in this definition shall mean the ratio
(expressed as a percentage) computed as of the end of a fiscal month by
dividing (a) the aggregate unpaid balance of the then outstanding Receivables
that became Defaulted Receivables during such fiscal month by (b) the aggregate
sales of Originator during the fiscal month that is three (3) months prior to
such fiscal month. In calculating which month is three (3) months prior to such
fiscal month, such fiscal month shall not be counted.
1.30 "Defaulted Receivable" shall mean a Receivable: (a) as to which
any payment, or part thereof, remains unpaid more than the earlier of sixty
(60) days after the original due date for such Receivable or ninety (90) days
after the original invoice date for it; (b) as to which collection proceedings
have commenced; (c) as to which there are proceedings or actions which
5
are threatened or pending against the Obligor with respect to such Receivable
that has or could reasonably be expected to result in a material adverse change
in such Obligor's financial condition (including, without limitation, any
Insolvency Proceeding), except that any Receivables owing by K-Mart Corp. shall
not be deemed a Defaulted Receivable solely because of the pending case of
K-Mart Corp. as of the date hereof under the U.S. Bankruptcy Code; (d) as to
which payments have been extended, or the terms of payment thereof rewritten,
other than as permitted by Section 7.2(b) hereof; (e) which has been, or
consistent with the Credit and Collection Policy should be, written off as
uncollectible; or (f) as to which the Obligor has Receivables unpaid more than
the earlier of sixty (60) days after the original due date for such Accounts or
ninety (90) days after the original invoice date for them which constitute more
than fifty (50%) percent of the total Receivables of such Obligor.
1.31 "Defaulting Lender" shall have the meaning set forth in Section
6.11 hereof.
1.32 "Delinquency Ratio" shall mean, at any time, the ratio (expressed
as a percentage) computed as of the end of the most recently ended fiscal month
by dividing (a) the aggregate unpaid balance of the then outstanding
Receivables that are Delinquent Receivables as of such date by (b) the
aggregate unpaid balance of the Receivables as of such date.
1.33 "Delinquent Receivable" shall mean a Receivable as to which any
payment, or part thereof, remains unpaid more than the earlier of sixty (60)
days after the original due date for such Receivable or ninety (90) days after
the original invoice date for it and is not otherwise a Defaulted Receivable.
1.34 "Deposit Account Control Agreement" shall mean an agreement in
writing, in form and substance satisfactory to Agent in good faith, by and
among Agent, Borrower and any bank at which any deposit account of Borrower is
at any time maintained which provides that such bank will comply with
instructions originated by Agent directing disposition of the funds in the
deposit account without further consent by Borrower and such other terms and
conditions as Agent may in good faith require.
1.35 "Dilution" shall mean the amount of any reduction or cancellation
of the unpaid balance of a Receivable other than as a result of (a) cash
Collections on account of such Receivable or (b) a write-off of such Receivable
as uncollectible in accordance with the Credit and Collection Policy.
1.36 "Dilution Ratio" shall mean, at any time, an amount (expressed as
a percentage) equal to the average of the Monthly Dilution Ratios (expressed as
a percentage) for each of the three (3) most recently ended fiscal months. The
term "Monthly Dilution Ratio" as used in this definition shall mean the amount
(expressed as a percentage) equal to a fraction, the numerator of which is the
total amount of Dilution (other than to the extent reflected in the Advertising
Coop Reserve as then in effect) that occurred during a fiscal month and the
denominator of which is the aggregate amount of the sales of Originator during
the fiscal month occurring three (3) months prior to such fiscal month. In
calculating which month is three (3) months prior to such fiscal month, such
fiscal month shall not be counted.
6
1.37 "Eligible Accounts" shall mean Accounts which are and continue to
be acceptable to Agent based on the criteria set forth below. In general,
Accounts shall be eligible accounts if:
(a) such Accounts arise out of the sale by Originator of goods
or services in the ordinary course of its business and such Accounts have been
sold to Borrower pursuant to the Receivables Purchase Agreement in a "true
sale" transaction free of all security interests, liens, pledges, claims,
charges or other encumbrances;
(b) such Accounts comply with the terms and conditions contained
in Section 7.2(c) of this Agreement;
(c) such Accounts are not Defaulted Receivables or there are no
other facts, events or occurrences which impair the validity, enforceability or
collectability of such Accounts;
(d) such Accounts do not arise from sales on consignment,
guaranteed sale, sale and return, sale on approval, or other terms under which
payment by the Obligor may be conditional or contingent;
(e) the chief executive office of the Obligor with respect to
such Accounts is located in the United States of America or Canada (provided,
that, at any time promptly upon Agent's reasonable request, Borrower shall
execute and deliver, or cause to be executed and delivered, such other
agreements, documents and instruments as may be required by Agent to perfect
the security interests of Agent in those Accounts of an Obligor with its chief
executive office or principal place of business in Canada in accordance with
the applicable laws of the Province of Canada in which such chief executive
office or principal place of business is located and take or cause to be taken
such other and further actions as Agent may request to enable Agent as secured
party with respect thereto to collect such Accounts under the applicable
Federal or Provincial laws of Canada) or, at Agent's option, if the chief
executive office and principal place of business of the Obligor with respect to
such Accounts is located other than in the United States of America or Canada,
then if either: (i) the Obligor has delivered to such Borrower an irrevocable
letter of credit issued or confirmed by a bank satisfactory to Agent and
payable in the United States of America and in U.S. dollars, sufficient to
cover such Account, in form and substance satisfactory to Agent and if required
by Agent, the original of such letter of credit has been delivered to Agent or
Agent's agent and the issuer thereof, and Borrower has complied with the terms
of Section 5.2(e) hereof with respect to the assignment of the proceeds of such
letter of credit to Agent or naming Agent as transferee beneficiary thereunder,
as Agent may specify, or (ii) such Account is subject to credit insurance
payable to Agent issued by an insurer and on terms and in an amount acceptable
to Agent, or (iii) such Account is otherwise acceptable in all respects to
Agent (subject to such lending formula with respect thereto as Agent may
determine);
(f) such Accounts do not consist of progress ▇▇▇▇▇▇▇▇ (such that
the obligation of the Obligor with respect to such Accounts is conditioned upon
the Originator's satisfactory completion of any further performance under the
agreement giving rise thereto), ▇▇▇▇ and hold invoices or retainage invoices;
7
(g) the Obligor with respect to such Accounts has not asserted a
counterclaim, defense or dispute and does not have, and does not engage in
transactions which may give rise to any right of setoff or recoupment against
such Accounts (but the portion of the Accounts of such Obligor in excess of the
amount at any time and from time to time owed by the Originator to such Obligor
or claimed owed by such Obligor that otherwise satisfy the criteria for
Eligible Accounts shall be deemed Eligible Accounts),
(h) such Accounts are subject to the first priority, valid and
perfected security interest of Agent and any goods giving rise thereto are not,
and were not at the time of the sale thereof, subject to any liens except the
liens of Senior Credit Facility Agent and Subordinated Credit Facility Agent
which are released, automatically and without further action, upon the sale or
other transfer of such Accounts or an interest therein by Originator to
Borrower under the terms of the Receivables Purchase Agreement;
(i) neither the Obligor nor any officer or employee of the
Obligor with respect to such Accounts is an officer, employee, agent or other
Affiliate of any Transaction Party;
(j) the Obligors with respect to such Accounts are not any
foreign government, the United States of America, any State, political
subdivision, department, agency or instrumentality thereof, unless, if the
Obligor is the United States of America, any department, agency or
instrumentality thereof, upon Agent's request, the Federal Assignment of Claims
Act of 1940, as amended, has been complied with in a manner satisfactory to
Agent; provided, that, in no event shall Accounts owing by the United States of
America or any department, agency or instrumentality thereof for which the
Federal Assignment of Claims Act of 1940 has not been complied with that are
deemed to be Eligible Accounts be more than the lesser of $3,000,000 or the
amount equal to two (2%) percent of all Eligible Accounts at such time;
(k) such Accounts are not evidenced by or arising under any
instrument or chattel paper;
(l) the aggregate amount of such Accounts owing by an Obligor
(other than the Obligors listed on Schedule 1.37 hereto) do not constitute more
than five (5%) percent of the aggregate amount of all otherwise Eligible
Accounts and such Accounts owing by each of the Obligors listed on Schedule
1.37 hereto do not, in each case, constitute more than the applicable
percentage set forth on such schedule for such Obligors of the aggregate amount
of all otherwise Eligible Accounts (but the portion of the Accounts not in
excess of the applicable percentages that otherwise satisfy the criteria for
Eligible Accounts shall be deemed Eligible Accounts), provided, that, (i)
without limiting any other rights of Agent, upon notice to Borrower, Agent may
from time to time in its determination increase or decrease (but in any event
not below five (5%) percent) the percentages set forth on Schedule 1.37 as to
any Obligor referred to therein and (ii) any such change shall be made in good
faith by Agent based on either: (A) an event, condition or other circumstance
arising after the date hereof, or (B) an event, condition or other circumstance
existing on the date hereof to the extent Agent has no written notice thereof
from Borrower prior to the date hereof;
8
(m) the Obligor is not located in New Jersey, Minnesota, West
Virginia or any other State that may at any time after the date hereof require
the filing of a Notice of Business Activities Report or similar report in order
to permit Borrower or the Originator to seek judicial enforcement in such State
of payment of such Account, unless Borrower and Originator either (i) has
qualified to do business in such State, (ii) has filed an income tax return in
such State for the immediately preceding year or as may otherwise be required
under the applicable laws of such State, (iii) has filed a Notice of Business
Activities Report or equivalent report for the then current year or (iv) such
failure to file and inability to seek judicial enforcement is capable of being
remedied without any material delay or material cost;
(n) such Accounts are owed by Obligors whose total indebtedness
to Borrower and the Originator does not exceed the credit limit with respect to
such Obligor as determined by Borrower or Servicer from time to time in
accordance with the Credit and Collection Policy and such credit limit is
acceptable to Agent (but the portion of the Accounts not in excess of such
credit limit that otherwise satisfy the criteria for Eligible Accounts shall be
deemed Eligible Accounts); and
(o) such Accounts are owed by Obligors deemed creditworthy at
all times by Agent.
The criteria for Eligible Accounts set forth above may only be changed and any
new criteria for Eligible Accounts may only be established by Agent in good
faith based on either: (i) an event, condition or other circumstance arising
after the date hereof, or (ii) an event, condition or other circumstance
existing on the date hereof to the extent Agent has no written notice thereof
from Borrower prior to the date hereof, in either case under clause (i) or (ii)
which adversely affects or could reasonably be expected to adversely affect the
Accounts in the good faith determination of Agent. Any Accounts which are not
Eligible Accounts shall nevertheless be part of the Collateral.
1.38 "Eligible Transferee" shall mean (a) any Lender; (b) the parent
company of any Lender and/or any Affiliate of such Lender which is at least
fifty (50%) percent owned by such Lender or its parent company; (c) any person
(whether a corporation, partnership, trust or otherwise) that is engaged in the
business of making, purchasing, holding or otherwise investing in bank loans
and similar extensions of credit in the ordinary course of its business and is
administered or managed by a Lender or with respect to any Lender that is a
fund which invests in bank loans and similar extensions of credit, any other
fund that invests in bank loans and similar extensions of credit and is managed
by the same investment advisor as such Lender or by an Affiliate of such
investment advisor, and in each case is approved by Agent; and (d) any other
commercial bank, financial institution or "accredited investor" (as defined in
Regulation D under the Securities Act of 1933) approved by Agent, provided,
that, (i) no Transaction Party or any Affiliate of any Transaction Party shall
qualify as an Eligible Transferee, (ii) no person that is a significant
competitor of WestPoint shall qualify as an Eligible Transferee, so long as (A)
no Event of Default shall exist or have occurred and be continuing and (B)
Agent and Lenders have not exercised any of their respective rights and
remedies under this Agreement, the other Financing Agreements, the UCC or other
applicable law in respect of such Event of Default
9
(including, without limitation, the exercise by Agent and Lenders of the right
to accelerate the payment or the maturity of all or any portion of the
Obligations) or sent any notice to Borrower of its or their intention to
exercise any of such rights and remedies, and (iii) no Person to whom any
Indebtedness which is in any way subordinated in right of payment to any other
Indebtedness of any Transaction Party shall qualify as an Eligible Transferee,
except as Agent may otherwise specifically agree. For purposes hereof, the term
"significant competitor" shall mean any corporation or other organization that
derived more than $25,000,000 in total revenues in the immediately preceding
fiscal quarter from the sale of the same types of products as those sold by
WestPoint and is continuing to sell such products.
1.39 "ERISA" shall mean the United States Employee Retirement Income
Security Act of 1974, together with all rules, regulations and interpretations
thereunder or related thereto.
1.40 "ERISA Affiliate" shall mean any person required to be aggregated
with Borrower or any of its Subsidiaries under Sections 414(b), 414(c), 414(m)
or 414(o) of the Code.
1.41 "ERISA Event" shall mean (a) any "reportable event", as defined
in Section 4043(c) of ERISA or the regulations issued thereunder, with respect
to a Plan; (b) the adoption of any amendment to a Plan that would require the
provision of security pursuant to Section 401(a)(29) of the Code or Section 307
of ERISA; (c) the existence with respect to any Plan of an "accumulated funding
deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA),
whether or not waived; (d) the filing pursuant to Section 412 of the Code or
Section 303(d) of ERISA of an application for a waiver of the minimum funding
standard with respect to any Plan; (e) the occurrence of a "prohibited
transaction" with respect to which WestPoint or any of its Subsidiaries is a
"disqualified person" (within the meaning of Section 4975 of the Code) or with
respect to which WestPoint or any of its Subsidiaries could otherwise be
liable; (f) a complete or partial withdrawal by WestPoint or any ERISA
Affiliate from a Multiemployer Plan or a cessation of operations which is
treated as such a withdrawal or notification that a Multiemployer Plan is in
reorganization; (g) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Section 4041 or 4041A of
ERISA, or the commencement of proceedings by the Pension Benefit Guaranty
Corporation to terminate a Plan; (hi an event or condition which might
reasonably be expected to constitute grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, any Plan;
(i) the imposition of any liability under Title IV of ERISA, other than the
Pension Benefit Guaranty Corporation premiums due but not delinquent under
Section 4007 of ERISA, upon WestPoint or any ERISA Affiliate in excess of
$2,500,000 and (j) any other event or condition with respect to a Plan
including any Plan subject to Title IV of ERISA maintained, or contributed to,
by any ERISA Affiliate that could reasonably be expected to result in liability
of WestPoint or any ERISA Affiliate in excess of $2,500,000.
1.42 "Eurodollar Rate" shall mean, with respect to any Eurodollar Rate
Loan, the interest rate per annum equal to the arithmetic average of the rates
of interest per annum (rounded upwards, if necessary, to the next one-sixteenth
(1/16) of one (1%) percent) at which Reference Bank is offered deposits of
United States dollars in the London interbank market on or about 9:00 a.m. (New
York time) two (2) Business Days prior to the first day of each month for a
10
period of approximately two (2) months duration in accordance with the
customary practice in the applicable Eurodollar Rate market.
1.43 "Eurodollar Rate Loans" shall mean any Loans or portion thereof
on which interest is payable based on the Adjusted Eurodollar Rate in
accordance with the terms hereof.
1.44 "Event of Default" shall mean the occurrence or existence of any
event or condition described in Section 10.1 hereof.
1.45 "Excess Availability" shall mean, the amount, as determined by
Agent, calculated at any date, equal to: (a) the Borrowing Base minus (b) the
amount of all then outstanding and unpaid Obligations.
1.46 "Exchange Act" shall mean the Securities Exchange Act of 1934,
together with all rules, regulations and interpretations thereunder or related
thereto.
1.47 "Existing Secured Parties" shall mean, collectively, the
following (and their respective predecessors, successors and assigns): (a) Blue
Ridge Asset Funding Corporation, a Delaware corporation; (b) Wachovia Bank,
National Association in its capacity as Administrator under the Existing
Securitization Facility; and (c) North American Capacity Insurance Company, as
Insurer under the Existing Securitization Facility.
1.48 "Existing Securitization Facility" shall mean the arrangements of
the Transaction Parties pursuant to the First Amended and Restated Asset
Interest Transfer Agreement, dated as of October 31, 2001, among Borrower, as
Transferor, WestPoint, as Initial Servicer, Blue Ridge Asset Funding
Corporation, as Transferee, North American Capacity Insurance Company, as
Insurer, and Wachovia Bank, N.A., as Administrator, as amended.
1.49 "Fee Letter" shall mean the letter agreement, dated of even date
herewith, by and between Borrower and Agent, setting forth certain fees payable
by Borrower to Agent for the benefit of itself and Lenders, as the same now
exists or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced.
1.50 "Financing Agreements" shall mean, collectively, this Agreement
and all notes, guarantees, security agreements, deposit account control
agreements, investment property control agreements, intercreditor agreements
and all other agreements, documents and instruments now or at any time
hereafter executed and/or delivered by any Transaction Party in connection with
this Agreement.
1.51 "GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Board which are applicable to the
circumstances as of the date of determination consistently applied, except
that, for purposes of Section 9.21 hereof, GAAP shall be determined on the
basis of such principles in
11
effect on the date hereof and consistent with those used in the preparation of
the most recent audited financial statements delivered to Agent prior to the
date hereof.
1.52 "Governmental Authority" shall mean any nation or government, any
state, province, or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
1.53 "Indebtedness" shall mean, with respect to any Person, any
liability, whether or not contingent, (a) in respect of borrowed money (whether
or not the recourse of the lender is to the whole of the assets of such Person
or only to a portion thereof) or evidenced by bonds, notes, debentures or
similar instruments; (b) representing the balance deferred and unpaid of the
purchase price of any property or services (except any such balance that
constitutes an account payable to a trade creditor (whether or not an
Affiliate) created, incurred, assumed or guaranteed by such Person in the
ordinary course of business of such Person in connection with obtaining goods,
materials or services that is not overdue by more than ninety (90) days, unless
the trade payable is being contested in good faith); (c) all obligations as
lessee under leases which have been, or should be, in accordance with GAAP
recorded as Capital Leases; (d) any contractual obligation, contingent or
otherwise, of such Person to pay or be liable for the payment of any
indebtedness described in this definition of another Person, including, without
limitation, any such indebtedness, directly or indirectly guaranteed, or any
agreement to purchase, repurchase, or otherwise acquire such indebtedness,
obligation or liability or any security therefor, or to provide funds for the
payment or discharge thereof, or to maintain solvency, assets, level of income,
or other financial condition; (e) all obligations with respect to redeemable
stock and redemption or repurchase obligations under any Capital Stock or other
equity securities issued by such Person; (fi all reimbursement obligations and
other liabilities of such Person with respect to surety bonds (whether bid,
performance or otherwise), letters of credit, banker's acceptances, drafts or
similar documents or instruments issued for such Person's account; (g) all
indebtedness of such Person in respect of indebtedness of another Person for
borrowed money or indebtedness of another Person otherwise described in this
definition which is secured by any consensual lien, security interest,
collateral assignment, conditional sale, mortgage, deed of trust, or other
encumbrance on any asset of such Person, whether or not such obligations,
liabilities or indebtedness are assumed by or are a personal liability of such
Person, all as of such time; (h) all obligations, liabilities and indebtedness
of such Person (marked to market) arising under swap agreements, cap agreements
and collar agreements and other agreements or arrangements designed to protect
such person against fluctuations in interest rates or currency or commodity
values; and (i) all obligations owed by such Person under license agreements
with respect to non-refundable, advance or minimum guarantee royalty payments.
1.54 "Indemnified Amounts" shall have the meaning set forth in Section
12.1 hereof.
1.55 "Insolvency Proceeding" shall mean, as to any Person, any of the
following: (a) any case or proceeding with respect to such Person under the
U.S. Bankruptcy Code or any other Federal or State bankruptcy, insolvency,
reorganization or other law affecting creditors' rights or any other or similar
proceedings seeking any stay, reorganization, arrangement, composition or
12
readjustment of all or substantially all of the obligations and indebtedness of
such Person or (bi any proceeding seeking the appointment of any receiver,
trustee, agent, liquidator, custodian or other insolvency official with similar
powers with respect to such Person or all or substantially all of its assets or
(c) any proceeding for liquidation, dissolution or other winding up of the
business of such Person or (d) any general assignment for the benefit of
creditors or any general marshalling of all or substantially all of the assets
of such Person.
1.56 "Intellectual Property" shall mean all of Borrower's now owned
and hereafter arising or acquired: patents, patent rights, patent applications,
copyrights, works which are the subject matter of copyrights, copyright
registrations, trademarks, trade names, trade styles, trademark and service
▇▇▇▇ applications, and licenses and rights to use any of the foregoing; all
extensions, renewals, reissues, divisions, continuations, and
continuations-in-part of any of the foregoing; all rights to ▇▇▇ for past,
present and future infringement of any of the foregoing; inventions, trade
secrets, formulae, processes, compounds, drawings, designs, blueprints,
surveys, reports, manuals, and operating standards; goodwill (including any
goodwill associated with any trademark or the license of any trademark);
customer and other lists in whatever form maintained; trade secret rights,
copyright rights, rights in works of authorship, domain names and domain name
registration; software and contract rights relating to computer software
programs, in whatever form created or maintained.
1.57 "Intercreditor Agreements" shall mean, collectively (as the same
now exist or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced), (a) the Intercreditor Agreement, dated of even
date herewith, between Agent and Senior Credit Facility Agent, with respect to
the pledge by WestPoint to Senior Credit Facility Agent of the Capital Stock of
Borrower, (b) the Intercreditor Agreement, dated of even date herewith, between
Agent and Subordinated Credit Facility Agent, with respect to the pledge by
WestPoint to Subordinated Credit Facility Agent of the Capital Stock of
Borrower, (c) the Intercreditor Agreement, dated of even date herewith, between
Agent and Senior Credit Facility Agent, with respect to the collateral
assignment by WestPoint to Senior Credit Facility Agent of the WPS ▇▇▇▇▇ Note,
and (di the Intercreditor Agreement, dated of even date herewith, between Agent
and Subordinated Credit Facility Agent, with respect to the collateral
assignment by WestPoint to Subordinated Credit Facility Agent of the WPS ▇▇▇▇▇
Note.
1.58 "Interest Rate" shall mean,
(a) Subject to clause (b) of this definition below:
(i) as to Prime Rate Loans, a rate equal to the Prime Rate
calculated on a per annum basis,
(ii) as to Eurodollar Rate Loans, a rate equal to two and
one-half percent (2 1/2%) per annum in excess of the Adjusted Eurodollar Rate
(based on the Eurodollar Rate as then in effect).
13
(b) Notwithstanding anything to the contrary contained in clause
(a) of this definition, the Interest Rate shall mean the rate of two (2%)
percent per annum in excess of the Prime Rate as to Prime Rate Loans and the
rate of four and one half (4 1/2%) percent per annum in excess of the Adjusted
Eurodollar Rate as to Eurodollar Rate Loans, at Agent's option, (i) either (A)
for the period on and after the Termination Date until such time as all
Obligations are indefeasibly paid and satisfied in full in immediately
available funds, or (B) upon notice by Agent to Borrower at any time after the
date of the occurrence of any Event of Default and for so long as such Event of
Default is continuing and (ii) upon five (5) Business Days' notice, on the
Loans at any time outstanding in excess of the Borrowing Base (or so long as
the Senior Credit Facility Availability is greater than $75,000,000, in excess
of the Adjusted Borrowing Base) or the Maximum Credit (whether or not such
excess(es) arise or are made with or without Agent's or any Lender's knowledge
or consent and whether made before or after an Event of Default).
1.59 "Interim Receivables Report" shall mean the summary report with
respect to the sales and collections with respect to the Receivables and
Related Assets for any week substantially in the form of Exhibit B hereto, as
such form may from time to time be modified by Agent, which is duly completed
(including all schedules thereto) and executed by the chief financial officer,
treasurer or controller of Servicer and delivered to Agent; sometimes being
collectively referred to as "Interim Receivables Reports".
1.60 "Interim Settlement Date" shall mean Friday of each week after
the date hereof, other than the Friday of any week in which there is a Monthly
Settlement Date and if such day is not a Business Day, then the next succeeding
Business Day.
1.61 "Lenders" shall mean the financial institutions who are
signatories hereto as Lenders and other persons made a party to this Agreement
as a Lender in accordance with Section 14.7 hereof, and their respective
successors and assigns; each sometimes being referred to herein individually as
a "Lender".
1.62 "Loans" shall mean the loans now or hereafter made by or on
behalf of any Lender or by Agent for the account of any Lender pursuant to the
Credit Facility (involving advances, repayments and readvances) as set forth in
Section 2.1 hereof.
1.63 "Lock-Box Accounts" shall mean the accounts of Borrower listed as
lock-box accounts on Schedule 8.8 hereto and any other deposit accounts or
other accounts into which Collections are deposited or transferred (other than
the Concentration Account); provided that, each Transaction Party shall cause
the depository bank or other institution at which such accounts are maintained
to be subject to a Deposit Account Control Agreement and with a depository bank
or other institution acceptable to Agent.
1.64 "Material Adverse Effect" shall mean a material adverse effect on
(a) the financial condition, business, performance or operations of Borrower,
or (b) the financial condition, business, performance or operations of
WestPoint and its Subsidiaries, taken as a whole; (c) the legality, validity or
enforceability of this Agreement or any of the other Financing Agreements or
the legality, validity, enforceability or collectability of a material portion
of the Receivables;
14
(d) the legality, validity, enforceability, perfection or priority of the
security interests and liens of Agent upon the Collateral; (e) the Collateral
or its value; (f) the ability of Borrower to repay the Obligations or of any
Transaction Party to perform its obligations under this Agreement or any of the
other Transaction Documents as and when to be performed; or (g) the ability of
Agent or any Lender to enforce the Obligations or realize upon the Collateral
or otherwise with respect to the rights and remedies of Agent and Lenders under
this Agreement or any of the other Financing Agreements.
1.65 "Maturity Date" shall mean the earlier of: (a) the second
anniversary of the date hereof, (b) the maturity of the Indebtedness under the
Senior Credit Facility Agreement (whether as scheduled, upon acceleration or
otherwise) or (c) the maturity of the Indebtedness under the Senior Notes,
provided, that, in the event of any refinancing or replacement, or other
amendments, waivers or restructuring, of the Indebtedness arising under the
Senior Notes that results in a maturity of such Indebtedness (whether the
existing Indebtedness or any refinancing or replacement Indebtedness or
otherwise) being later than as is the case under the Senior Notes as of the
date hereof, Agent may, but shall not be required to, at its option, extend the
date that would otherwise be the Maturity Date pursuant to this clause (c) of
this definition.
1.66 "Maximum Credit" shall mean the amount of $160,000,000.
1.67 "Maximum Interest Rate" shall mean the maximum non-usurious rate
of interest under applicable Federal or State law as in effect from time to
time that may be contracted for, taken, reserved, charged or received in
respect of the indebtedness of Borrower to Agent or any Lender, or to the
extent that at any time such applicable law may thereafter permit a higher
maximum non-usurious rate of interest, then such higher rate.
1.68 "Monthly Receivables Report" shall mean the summary report with
respect to the Borrowing Base for any month substantially in the form of
Exhibit C hereto, as such form may from time to time be modified by Agent,
which is duly completed (including all schedules thereto) and executed by the
chief financial officer, treasurer or controller of Servicer and delivered to
Agent; sometimes being collectively referred to as "Monthly Receivables
Reports".
1.69 "Monthly Settlement Date" shall mean the second (2nd) day after
the due date for the delivery of the Monthly Receivables Reports as set forth
in Section 7.1(a)(ii) hereof, or if such day is not a Business Day, then the
next succeeding Business Day.
1.70 "Multiemployer Plan" shall mean a "multi-employer plan" as
defined in Section 4001(a)(3) of ERISA which is or was at any time during the
current year or the immediately preceding six (6) years contributed to by
WestPoint, any of its Subsidiaries or any ERISA Affiliate.
1.71 "Net Amount of Eligible Accounts" shall mean the gross amount of
the Eligible Accounts (but not including all late payment charges, delinquency
charges, extension or collection fees or similar items) less the amount of the
Advertising Co-op Reserve.
15
1.72 "Obligations" shall mean any and all Loans and all other
obligations, liabilities and indebtedness of every kind, nature and description
owing by any Transaction Party to Agent or any Lender arising under this
Agreement or any of the other Financing Agreements, including principal,
interest, charges, fees, costs and expenses, however evidenced, whether as
principal, surety, endorser, guarantor or otherwise, whether now existing or
hereafter arising, whether arising before, during or after the initial or any
renewal term of this Agreement or after the commencement of any case with
respect to any Transaction Party under the U.S. Bankruptcy Code or any similar
statute (including the payment of interest and other amounts which would accrue
and become due but for the commencement of such case, whether or not such
amounts are allowed or allowable in whole or in part in such case), whether
direct or indirect, absolute or contingent, joint or several, due or not due,
primary or secondary, liquidated or unliquidated, or secured or unsecured.
Without limiting the generality of the foregoing, "Obligations" shall include
all Indemnified Amounts and payments on accounts of Collections received or
deemed to be received.
1.73 "Obligor" shall mean a Person obligated to make payments with
respect to a Receivable, including any guarantor or other secondary obligor
thereof.
1.74 "Originator" shall mean WestPoint ▇▇▇▇▇▇▇ Inc., a Delaware
corporation, in its capacity as seller under the Receivables Purchase
Agreement.
1.75 "Participant" shall mean any financial institution that acquires
and holds a participation in the interest of any Lender in any of the Loans in
conformity with the provisions of Section 14.7 of this Agreement governing
participations.
1.76 "Person" or "person" shall mean any individual, sole
proprietorship, partnership, corporation (including any corporation which
elects subchapter S status under the Code), limited liability company, limited
liability partnership, business trust, unincorporated association, joint stock
corporation, trust, joint venture or other entity or any government or any
agency or instrumentality or political subdivision thereof.
1.77 "Plan" means an employee benefit plan (as defined in Section 3(3)
of ERISA) which WestPoint or any of its Subsidiaries or any ERISA Affiliate
sponsors, maintains, or to which it makes, is making, or is obligated to make
contributions, or in the case of a Multiemployer Plan has made contributions at
any time during the immediately preceding six (6) plan years.
1.78 "Prime Rate" shall mean the rate from time to time publicly
announced by Wachovia Bank, National Association, or its successors, as its
prime rate, whether or not such announced rate is the best rate available at
such bank.
1.79 "Prime Rate Loans" shall mean any Loans or portion thereof on
which interest is payable based on the Prime Rate in accordance with the terms
thereof.
1.80 "Pro Rata Share" shall mean as to any Lender, the fraction
(expressed as a percentage) the numerator of which is such Lender's Commitment
and the denominator of which
16
is the aggregate amount of all of the Commitments of Lenders, as adjusted from
time to time in accordance with the provisions of Section 14.7 hereof;
provided, that, if the Commitments have been terminated, the numerator shall be
the unpaid amount of such Lender's Loans and the denominator shall be the
aggregate amount of all unpaid Loans.
1.81 "Provision for Taxes" shall mean an amount equal to all taxes
imposed on or measured by net income, whether Federal, State, Provincial,
county or local, and whether foreign or domestic, that are paid or payable by
any Person in respect of any period in accordance with GAAP.
1.82 "Receivables" shall mean any right to payment from a Person,
whether constituting an Account, chattel paper, instrument or general
intangible, arising from the sale of goods or services in the ordinary course
of business by Originator, which may be billed or may be an unbilled Receivable
and includes the right to payment of any interest or finance charges and other
amounts with respect thereto but in each case, only to the extent sold or
otherwise transferred to Borrower pursuant to the Receivables Purchase
Agreement.
1.83 "Receivables Purchase Agreement" shall mean the Second Amended
and Restated Receivables Purchase Agreement, dated on or about the date hereof,
between WestPoint, in its capacity as seller and initial servicer thereunder,
and Borrower, in its capacity as purchaser thereunder, as the same now exist or
may hereafter be amended, modified, supplemented, extended, renewed, restated
or replaced.
1.84 "Receivables Reports" shall mean, collectively, the Monthly
Receivables Reports and the Interim Receivables Reports; sometimes being
referred to herein individually as a "Receivables Report".
1.85 "Records" shall mean all of each Transaction Party's present and
future books of account of every kind or nature, purchase and sale agreements,
invoices, ledger cards, bills of lading and other shipping evidence,
statements, correspondence, memoranda, credit files and other data relating to
the Collateral or any Obligor, together with the computer programs, tapes,
disks, diskettes, software and other data and software storage media and
devices, file cabinets or containers in or on which the foregoing are stored
(including any rights of any Transaction Party with respect to the foregoing
maintained with or by any other person).
1.86 "Reference Bank" shall mean Wachovia Bank, National Association,
or such other bank as Agent may from time to time designate.
1.87 "Register" shall have the meaning set forth in Section 14.7
hereof.
1.88 "Related Assets" shall mean: (a) all rights, but not any
obligations, under all related Contracts and Related Security related to any
Receivables; (b) all rights and interests of Borrower under the Receivables
Purchase Agreement in relation to any Receivables, (c) all Records; (d) all
Lock-Box Accounts, the Concentration Account and all cash and investment
property in any of the foregoing or any other deposit account or investment
account containing such investment
17
property (including securities, whether certificated or uncertificated,
securities accounts, security entitlements, commodity contracts or commodity
accounts) purchased with any Collections or other proceeds of any Collateral,
(e) monies, credit balances, deposits and other property of Borrower now or
hereafter held or received by or in transit to Agent, any Lender or its
Affiliates or at any other depository or other institution from or for the
account of Borrower, whether for safekeeping, pledge, custody, transmission,
collection or otherwise; and (f) all Collections in respect of, and other
proceeds of, any Receivables or any other Related Assets.
1.89 "Related Security" shall mean, with respect to any Receivable,
all of the right, title and interest of Borrower or Originator in and to:
(a) all Contracts that relate to such Receivable;
(b) all documents, instruments and chattel paper arising
pursuant to or in connection with such Receivables;
(c) all inventory and goods (including returned, repossessed or
reclaimed inventory or goods), if any, the sale of which gave rise to such
Receivable or otherwise representing or evidencing, Receivables or other
Collateral;
(d) all security deposits and other security interests or liens
and property subject thereto from time to time purporting to secure payment of
such Receivable, whether pursuant to the Contract related to such Receivable or
otherwise and including all rights of stoppage in transit, replevin,
repossession, reclamation and other rights and remedies of an unpaid vendor,
lienor or secured party;
(e) all UCC financing statements covering any collateral
securing payment of such Receivable (but only to the extent of the interest of
Borrower or Agent (as applicable) in the respective Receivable);
(f) all guarantees, letters of credit, banker's acceptances,
letter-of-credit rights, supporting obligations and other agreements or
arrangements of whatever character from time to time supporting or securing
payment of such Receivable whether pursuant to the Contract related to such
Receivable or otherwise;
(g) all insurance policies, and all claims thereunder, related
to such Receivable, in each case to the extent directly related to rights to
payment, collection and enforcement, and other rights with respect to such
Receivable;
(h) all commercial tort claims relating to any Receivable or any
Related Assets, including, without limitation, those from time to time
identified to Agent pursuant to Section 5.2 hereof;
(i) all Records evidencing or otherwise relating to such
Receivable;
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(j) all Collections in respect of, and other proceeds of such
Receivable or any other Related Security; and
(k) all proceeds of any of the foregoing.
1.90 "Required Lenders" shall mean, at any time, those Lenders whose
Pro Rata Shares aggregate sixty-six and two-thirds (66 2/3%) percent or more of
the aggregate of the Commitments of all Lenders, or if the Commitments shall
have been terminated, Lenders to whom at least sixty-six and two-thirds (66
2/3%) percent of the then outstanding Obligations are owing.
1.91 "Reserves" shall mean as of any date of determination, such
amounts as Agent may from time to time establish and revise in good faith
reducing the amount of Loans which would otherwise be available to Borrower
under the lending formula(s) provided for herein: (a) to reflect events,
conditions, contingencies or risks which, as determined by Agent in good faith,
adversely affect, or would have a reasonable likelihood of adversely affecting,
either (i) the Collateral or any other property which is security for the
Obligations or its value or (ii) the assets, business or prospects of any
Transaction Party or (iii) the security interests and other rights of Agent or
any Lender in the Collateral (including the enforceability, perfection and
priority thereof) or (b) to reflect Agent's good faith belief that any
collateral report or financial information furnished by or on behalf of any
Transaction Party to Agent is or may have been incomplete, inaccurate or
misleading in any material respect or (c) in respect of any state of facts
which Agent determines in good faith constitutes a Default or an Event of
Default. Without limiting the generality of the foregoing, Reserves may, at
Agent's option, be established to reflect: (i) dilution with respect to the
Accounts (based on the ratio of the aggregate amount of non-cash reductions in
Accounts for any period to the aggregate dollar amount of the sales of
Originator for such period) exceeds or is reasonably anticipated to exceed five
(5%) percent, other than to the extent reflected in the Advertising Co-op
Reserve, (ii) returns, discounts, claims, credits and allowances of any nature
that are not paid pursuant to the reduction of Accounts, (iiiA sales, excise or
similar taxes included in the amount of any Accounts reported to Agent, (ivA
the amount of any Servicer Advances made in any week and (v) accrued and unpaid
taxes payable by Borrower. Without limiting the generality of the foregoing,
the term "Reserves" as used herein shall include, but not be limited to, the
Servicing Reserve and the Yield Reserve, but the term "Reserve" as used herein
shall not include the Advertising Co-op Reserve. To the extent Agent may
establish new criteria or revise existing criteria for Eligible Accounts so as
to address any circumstances, condition, event or contingency in a manner
satisfactory to Agent, Agent shall not establish a Reserve for the same
purpose. The amount of any Reserve established by Agent shall have a reasonable
relationship to the event, condition or other matter which is the basis for
such reserve as determined by Agent in good faith.
1.92 "Senior Credit Facility Agent" shall mean Bank of America, N.A.
in its capacity as administrative agent under the Senior Credit Facility
Agreement, and any successor or replacement agent and its successors and
assigns.
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1.93 "Senior Credit Facility Agreement" shall mean the Second Amended
and Restated Credit Agreement, dated as of June 9, 1998, by and among West
Point, as borrower, certain subsidiaries of WestPoint, the financial
institutions parties thereto and Bank of America, N.A., as administrative agent
for such financial institutions, as the same now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced.
1.94 "Senior Credit Facility Availability" shall mean, at any time,
the aggregate amount available to WestPoint to be borrowed as revolving loans
under the terms of the Senior Credit Facility Agreement. For purposes hereof,
amounts shall only be deemed available so long as no default or event of
default exists or has occurred and is continuing under the Senior Credit
Facility Agreement or the borrowing of such revolving loans will not with
notice or passage of time or both give rise to such a default or event of
default, unless, Senior Credit Facility Agent and the lenders under the Senior
Credit Facility Agreement have waived such default or event of default in
writing or have otherwise agreed in writing to continue to make revolving loans
to WestPoint and its subsidiaries thereunder notwithstanding the existence or
occurrence of such default or event of default in form and substance
satisfactory to Agent.
1.95 "Senior Notes" shall mean, collectively, the 7-7/8% Senior Notes
due 2005 in the original aggregate principal amount of $525,000,000 issued
pursuant to the Indenture, dated as of June 9, 1998, between WestPoint, as
issuer, and The Bank of New York, as trustee, and the 7-7/8% Senior Notes due
2008 in the original aggregate principal amount of $475,000,000 issued pursuant
to the Indenture, dated as of June 9, 1998, between WestPoint, as issuer, and
The Bank of New York, as trustee, as the same now exist or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced.
1.96 "Servicer" shall mean WestPoint ▇▇▇▇▇▇▇ Inc., a Delaware
corporation, and its successors and assigns, in its capacity as initial
servicer under this Agreement, together with any successor servicer appointed
pursuant to Section 6.3 of this Agreement.
1.97 "Servicer Advances" shall have the meaning set forth in Section
6.7 hereof.
1.98 "Servicer Fee" shall mean, with respect to each month, (a) an
amount equal to one (1%) percent per annum multiplied by the aggregate unpaid
balance of the Receivables as of the close of business on the first day of such
month times 30/360 or (b) on and after Servicer's reasonable request made at
any time when WestPoint shall no longer be Servicer, an amount equal to the
greater of (i) one and one-tenth (1 1/10%) percent per annum multiplied by the
aggregate unpaid balance of the Receivables as of the close of business on the
first day of such month times 30/360 and (ii) $110,000.
1.99 "Servicing Reserve" shall mean the greater of (a) $2,000,000 or
(b) the amount equal (i) to one (1%) percent per annum multiplied by the
fraction the numerator of which is the highest Days Sales Outstanding
calculated for any month in any of the most recent twelve (12) months and the
denominator of which is three hundred sixty (360) then multiplied by the
aggregate unpaid balance of the Receivables as of the last day of the
immediately preceding month, multiplied by (ii) three (3).
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1.100 "Servicer Successor Notice" shall have the meaning set forth in
Section 6.3 hereof.
1.101 "Servicer Transfer Event" shall have the meaning set forth in
Section 6.3 hereof.
1.102 "Solvent" shall mean, at any time with respect to any Person,
that at such time such Person (a) is able to pay its debts as they mature and
has (and has a reasonable basis to believe it will continue to have) sufficient
capital (and not unreasonably small capital) to carry on its business
consistent with its practices as of the date hereof, and (b) the assets and
properties of such Person at a fair valuation (and including as assets for this
purpose at a fair valuation all rights of subrogation, contribution or
indemnification arising pursuant to any guarantees given by such Person) are
greater than the Indebtedness of such Person, and including subordinated and
contingent liabilities computed at the amount which, such person has a
reasonable basis to believe, represents an amount which can reasonably be
expected to become an actual or matured liability (and including as to
contingent liabilities arising pursuant to any guarantee the face amount of
such liability as reduced to reflect the probability of it becoming a matured
liability).
1.103 "Special Agent Advances" shall have the meaning set forth in
Section 13.11 hereof.
1.104 "Subordinated Credit Facility Agent" shall mean Bankers Trust
Company, in its capacity as administrative agent under the Subordinated Credit
Facility Agreement, and any successor or replacement agent and its successors
and assigns.
1.105 "Subordinated Credit Facility Agreement" shall mean the Credit
Agreement, dated as of June 29, 2001, by and among West Point, as borrower,
certain subsidiaries of WestPoint, the financial institutions parties thereto
and Bankers Trust Company, as administrative agent for such financial
institutions, as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
1.106 "Subsidiary" or "subsidiary" shall mean, with respect to any
Person, any corporation, limited liability company, limited liability
partnership or other limited or general partnership, trust, association or
other business entity of which an aggregate of at least a majority of the
outstanding Capital Stock or other interests entitled to vote in the election
of the board of directors of such corporation (irrespective of whether, at the
time, Capital Stock of any other class or classes of such corporation shall
have or might have voting power by reason of the happening of any contingency),
managers, trustees or other controlling persons, or an equivalent controlling
interest therein, of such Person is, at the time, directly or indirectly, owned
by such Person and/or one or more subsidiaries of such Person.
1.107 "Termination Date" shall mean the earliest of:
(a) the Maturity Date;
(b) the date of the commencement of an Insolvency Proceeding
with respect to Borrower or WestPoint; or
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(c) the date on which Agent shall have given notice to Borrower
of the termination of the Commitments in accordance with Section 10.2(b)
hereof.
1.108 "Transaction Documents" shall mean, collectively, the following
(as the same now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced: (a) this Agreement; (b) the other
Financing Agreements, including each Deposit Account Control Agreement, the Fee
Letter, the Intercreditor Agreements and each Receivables Report; (c) the
Receivables Purchase Agreement; and (d) the other documents to be executed and
delivered in connection with any of the foregoing.
1.109 "Transaction Parties" shall mean collectively (a) Borrower and
(b) Servicer; sometimes being referred to herein individually as a "Transaction
Party".
1.110 "UCC" shall mean the Uniform Commercial Code as in effect in the
State of Georgia, and any successor statute, as in effect from time to time
(except that terms used herein which are defined in the Uniform Commercial Code
as in effect in the State of Georgia on the date hereof shall continue to have
the same meaning notwithstanding any replacement or amendment of such statute
except as Agent may otherwise determine).
1.111 "U.S. Bankruptcy Code" shall mean the United States Bankruptcy
Code, being Title 11 of the United States Code as enacted in 1978, as the same
now exists or may from time to time hereafter be amended, modified, recodified
or supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.
1.112 "Voting Stock" shall mean with respect to any Person, (i) one
(1) or more classes of Capital Stock of such Person having general voting
powers to elect at least a majority of the board of directors, managers or
trustees of such Person, irrespective of whether at the time Capital Stock of
any other class or classes have or might have voting power by reason of the
happening of any contingency, and (a) any Capital Stock of such Person
convertible or exchangeable without restriction at the option of the holder
thereof into Capital Stock of such Person described in clause (a) of this
definition.
1.113 "WestPoint" shall mean WestPoint ▇▇▇▇▇▇▇ Inc., a Delaware
corporation, and its successors and assigns.
1.114 "WPS ▇▇▇▇▇ Note" shall mean the Amended and Restated
Non-Negotiable Promissory Note, dated on or about the date hereof, issued by
Borrower payable to the order of WestPoint, under the Receivables Purchase
Agreement, as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
1.115 "Yield Reserve" shall mean the greater of (a) $3,000,000 or (b)
as of any date of determination, the amount equal to one and one-half (1 1/2)
times the Prime Rate multiplied by the fraction, the numerator of which is the
highest Days Sales Outstanding in the immediately preceding twelve (12) month
period and the denominator of which is three hundred sixty (360) then
multiplied by the aggregate unpaid balance of the Receivables as of the last
day of the
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immediately preceding month.
SECTION 2. CREDIT FACILITIES
2.1 Loans. Subject to and upon the terms and conditions contained
herein, prior to the Termination Date, each Lender severally (and not jointly)
agrees to fund its Pro Rata Share of Loans to Borrower from time to time up to
the amount outstanding at any time equal to the Borrowing Base at such time and
such other amounts as may be expressly provided for herein. Except in Agent's
discretion, with the consent of all Lenders, or as otherwise provided herein,
the aggregate principal amount of the Loans outstanding at any time to Borrower
shall not exceed the Borrowing Base or the Adjusted Borrowing Base, as
applicable.
2.2 Making of Loans. Upon the initial date of the satisfaction of the
conditions precedent set forth in Section 4 hereof and subject to the other
terms and conditions contained herein, Lenders, or Agent on behalf of Lenders
as provided herein, shall make the initial Loans in an amount equal to the
Borrowing Base less $5,000,000. After such date, on each Interim Settlement
Date, in each case subject to the terms and conditions contained herein,
Lenders (or Agent on behalf of Lenders as provided herein) shall make Loans to
Borrower in such amounts so that after giving effect to such Loans and the
amount of any payments to be made to Agent and Lenders on such date, the
aggregate amount of the Loans outstanding shall equal the amount of the
Borrowing Base, as calculated by Agent based on the most recent information
with respect thereto received by Agent or as otherwise determined by Agent in
accordance with the terms hereof and after giving effect to the application of
any payment received by Agent on such date, provided, that, at any time and
from time to time during a Cash Dominion Period, Lenders, or Agent on behalf of
Lenders as provided herein, may at their or its option, make such Loans to
Borrower more frequently than on each Interim Settlement Date so long as, in
addition to all other terms and conditions set forth herein, Agent shall have
received an Interim Receivables Report which sets forth the sales and
collections with respect to the Receivables and Related Assets as of the close
of business on the immediately preceding Business Day through and including
such Business Day. Any such payments shall be deemed received by Agent in the
same manner as is described in Section 6.8(d)(i) hereof. All Loans under this
Agreement shall be conclusively presumed to have been made to, and for the
benefit of, Borrower or when deposited to the credit of Borrower or otherwise
disbursed or established in accordance with the instructions of Servicer on
behalf of Borrower or in accordance with the terms and conditions of this
Agreement.
2.3 Payments; Settlements.
(a) At all times other than during a Cash Dominion Period:
(i) Servicer will segregate, set aside and hold in trust,
for the benefit of Agent and Lenders, all or such portion of any Collections
(including Deemed Collections) received (or deemed received) on any day in such
amounts as Agent may from time to time specify to Servicer so that after giving
effect thereto, the aggregate amount of all Collections so segregated,
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set aside and held in trust, are up to the sum of the estimated interest, fees,
expenses and other amounts payable to Agent and Lenders hereunder accrued and
unpaid through such day (or in the event that Agent does not at any time
specify such amounts, then based on Servicer's reasonable, good faith
determination as to such amounts as may be required so that there will be
sufficient funds so segregated, set aside and held in trust to pay such
estimated interest, fees, expenses and other amounts on the next Monthly
Settlement Date or such other date as any of such amounts shall be due and
payable hereunder).
(ii) In addition to amounts provided for in clause (i)
above, Servicer will segregate, set aside and hold in trust, for the benefit of
Agent and Lenders, all or such portion of any Collections (including Deemed
Collections) received (or deemed received) on any day in such amounts as Agent
may from time to time specify to Servicer so that after giving effect thereto
there will be sufficient funds so segregated, set aside and held in trust, in
the determination of Agent, as may be required to make payments to Agent on the
next Interim Settlement Date or Monthly Settlement Date (or such other day as
such amounts may be due and payable hereunder, as the case may be) in respect
of the outstanding Loans as of the close of business on the last Business Day
of the immediately preceding week that exceed the Borrowing Base as of such day
or in the event that Agent does not at any time specify such amounts, then
based on Servicer's reasonable, good faith determination as to such amounts as
may be required so that there will be sufficient funds so segregated, set aside
and held in trust to make such payments as may be required in respect of such
outstanding Loans in excess of the Borrowing Base on the next Interim
Settlement Date or Monthly Settlement Date, as the case may be, or such other
date as any of such amounts shall be due and payable hereunder; provided, that,
Servicer shall not be required to so segregate, set aside and hold in trust all
or such portion of the Collections based on the outstanding Loans in excess of
the Borrowing Base as of the last Business Day of the immediately preceding
week if: (A) it is any week other than a week in which a Monthly Settlement
Date shall occur, (B) the Senior Credit Facility Availability has been greater
than $75,000,000 for each Business Day of the immediately preceding week, (C)
no Default or Event of Default shall exist or have occurred and be continuing,
and (D) the amount of the outstanding Loans as of the close of business on the
last Business Day of the immediately preceding week do not exceed the Adjusted
Borrowing Base.
(iii) On the close of each Business Day, other than during
a Cash Dominion Period and so long as no Default or Event of Default shall
exist or have occurred and be continuing, Collections (including Deemed
Collections) received (or deemed received) on such day in excess of the amounts
required to be segregated, set aside and held in trust as provided above, shall
be applied by Borrower (or Servicer on behalf of Borrower) as follows: first,
to the payment of any expenses of Borrower and to set aside funds for the
payment of expenses that are then accrued; second, to the payment of any then
outstanding and unpaid Servicer Advances; third, to the payment of the purchase
price for Receivables then due from Borrower to Originator under the
Receivables Purchase Agreement; fourth, to the payment of any Indebtedness of
Borrower to Originator then outstanding and unpaid under the WPS ▇▇▇▇▇ Note to
the extent permitted hereunder; and fifth, to the payment of dividends by
Borrower to WestPoint to the extent permitted hereunder.
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(iv) On each Monthly Settlement Date, Servicer, on behalf
of Borrower, shall pay to Agent:
(A) the amount of all interest, fees, costs, expenses
and other charges accrued and payable by Borrower under this Agreement and the
other Financing Agreements during the immediately preceding month; and
(B) the amount of principal of the Loans outstanding
as of the close of business on the Business Day immediately prior to such
Monthly Settlement Date in excess of the amount of the Borrowing Base (as
calculated by Agent) as of the close of business on the last Business Day of
the immediately preceding week (or if Agent has not received an Interim
Receivables Report for such week, then as of the close of business on the last
Business Day of the prior week).
Payments required by this clause (iv) shall be made from amounts set aside
pursuant to clauses (i) and (ii) above, provided, that, to the extent amounts
set aside pursuant to clauses (i) and (ii) above are insufficient to make such
payments, the Servicer shall make a Servicer Advance in accordance with and
subject to Section 6.7 hereof in the amount required so that the full amount of
all such interest, fees, costs, expenses and other charges is paid.
(v) On each Interim Settlement Date, Servicer, on behalf of
Borrower, shall pay to Agent the amount equal to the amount by which the Loans
outstanding as of the close of business on the last Business Day of the
immediately preceding week exceed the amount of the Borrowing Base as of such
Business Day, provided, that, Servicer shall not be required to make such
payment on an Interim Settlement Date if: (A) the Senior Credit Facility
Availability has been greater than $75,000,000 for each Business Day of the
immediately preceding week, (B) no Default or Event of Default shall exist or
have occurred and be continuing, and (C) the amount of the outstanding Loans as
of the close of business on the last Business Day of the immediately preceding
week do not exceed the Adjusted Borrowing Base. Payments required by this
clause (v) shall be made from amounts set aside pursuant to clause (ii) above,
provided, that, to the extent amounts set aside pursuant to clause (ii) above
are insufficient to make such payments, the Servicer shall make a Servicer
Advance in accordance with and subject to Section 6.7 hereof in the amount
required so that the full amount of such payment is made.
(b) At all times during a Cash Dominion Period, all Collections
and other payments received by Agent and Lenders shall be applied as set forth
in Section 2.4 below. All Obligations shall be payable to the Agent Payment
Account or such other place as Agent may designate from time to time. At
Agent's option, all principal, interest, fees, costs, expenses and other
charges provided for in this Agreement or the other Financing Agreements may be
charged directly to the loan account(s) of Borrower maintained by Agent.
Borrower (or Servicer on behalf of Borrower) shall make all payments to Agent
and Lenders on the Obligations free and clear of, and without deduction or
withholding for or on account of, any setoff, counterclaim, defense, duties,
taxes, levies, imposts, fees, deductions, withholding, restrictions or
conditions of any kind. If after receipt of any payment of, or proceeds of
Collateral applied to the payment of, any of the Obligations, Agent or any
Lender is required to surrender or return such payment or proceeds to
25
any Person for any reason, then the Obligations intended to be satisfied by
such payment or proceeds shall be reinstated and continue and this Agreement
shall continue in full force and effect as if such payment or proceeds had not
been received by Agent or such Lender. Borrower shall be liable to pay to
Agent, and do hereby indemnify and hold Agent and Lenders harmless for the
amount of any payments or proceeds surrendered or returned. This Section 2.3
shall remain effective notwithstanding any contrary action which may be taken
by Agent or any Lender in reliance upon such payment or proceeds. This Section
2.3 shall survive the payment of the Obligations and the termination of this
Agreement.
2.4 Priority of Application of Payments.
(a) At all times other than during a Cash Dominion Period, prior
to the Termination Date, on each Monthly Settlement Date, Agent shall apply
payments received or collected from Borrower or for the account of Borrower
(including the Collections) as follows: first, to the Servicer to pay any
Servicer Advances then outstanding, second, to pay any fees, indemnities or
expense reimbursements due to Agent and Lenders accrued and unpaid during the
immediately preceding month; third, to pay interest accrued and unpaid during
the immediately preceding month in respect of any Loans (and including any
Special Agent Advances); fourth, to the Servicer (if the Servicer is not
Borrower or its Affiliate) to pay any Servicer Fee accrued and unpaid during
the immediately preceding month; fifth, to pay or prepay principal in respect
of Special Agent Advances; sixth, to pay principal due in respect of the Loans
(including any Loans outstanding in excess of the Borrowing Base as provided in
Section 2.3 above); seventh, to Servicer (if Servicer is Borrower or its
Affiliate) to pay any Servicer Fee accrued and unpaid during the immediately
preceding month; and eighth, the balance, if any, to Borrower.
(b) At all times during a Cash Dominion Period, prior to the
Termination Date, Agent shall apply payments received or collected from
Borrower or for the account of Borrower (including the Collections) as follows:
first, to the Servicer to pay any Servicer Advances then outstanding, second,
to pay any fees, indemnities or expense reimbursements then due to Agent and
Lenders; third, to pay interest then due in respect of any Loans (and including
any Special Agent Advances); fourth, to pay or prepay principal in respect of
Special Agent Advances; fifth, to pay principal due in respect of the Loans
(including any Loans outstanding in excess of the Borrowing Base or the
Adjusted Borrowing Base, as the case may be, as provided in Section 2.3 above);
sixth, to pay or prepay any other Obligations whether or not then due, in such
order and manner as Agent determines.
(c) At all times whether or not during a Cash Dominion Period,
after the Termination Date, Agent shall apply all payments received or
collected from Borrower or for the account of Borrower (including the
Collections) as follows: first, to the Servicer to pay any Servicer Advances
then outstanding, second, to pay any fees, indemnities or expense
reimbursements then due to Agent and Lenders; third, to pay interest then due
in respect of any Loans (and including any Special Agent Advances); fourth, to
pay or prepay principal in respect of Special Agent Advances; fifth, to pay
principal due in respect of the Loans (including any Loans outstanding in
excess of the Borrowing Base or the Adjusted Borrowing Base, as the case may
be, as provided in Section 2.3 above); sixth, to pay or prepay any other
Obligations whether
26
or not then due, in such order and manner as Agent determines.
(d) Agent and Lenders hereby consent (which consent may be
revoked at any time a Default or Event of Default shall exist or have occurred
and be continuing) to the retention by Servicer of the amounts (if any) set
aside pursuant to Section 2.3 hereof in respect of the Servicer Fee, in which
case no distribution shall be made in respect of Servicer Fee pursuant to
Section 2.3 above or this Section 2.4.
2.5 Use of Proceeds. Borrower shall use the initial proceeds of the
Loans provided by Agent to Borrower hereunder only for: (a) payments to pay the
purchase price to repurchase the interests of the Existing Secured Parties
under the Existing Securitization Facility in any of the Receivables and
Related Assets pursuant to the disbursement direction letter furnished by
Borrower to Agent on or about the date hereof and (b) costs, expenses and fees
in connection with the preparation, negotiation, execution and delivery of this
Agreement and the other Financing Agreements. All other Loans made to or for
the benefit of Borrower pursuant to the provisions hereof shall be used by
Borrower only as follows: first, to the payment of any expenses of Borrower and
to set aside funds for the payment of expenses that are then accrued, second,
at any time during a Cash Dominion Period, to the payment of any then
outstanding and unpaid Servicer Advances; third, to the payment of the purchase
price for Receivables then due from Borrower to Originator under the
Receivables Purchase Agreement; fourth, to the payment of any Indebtedness of
Borrower to Originator then outstanding and unpaid under the WPS ▇▇▇▇▇ Note to
the extent permitted hereunder; and fifth, to the payment of dividends by
Borrower to WestPoint to the extent permitted hereunder and under applicable
law. None of the proceeds will be used, directly or indirectly, for the purpose
of purchasing or carrying any margin security or for the purposes of reducing
or retiring any indebtedness which was originally incurred to purchase or carry
any margin security or for any other purpose which might cause any of the Loans
to be considered a "purpose credit" within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System, as amended.
2.6 Delayed Payment. If on any day, Servicer shall not make any
payment otherwise required to have been made hereunder or under any of the
other Financing Agreements because Collections during the applicable period
were less than the aggregate amounts payable hereunder to Agent and Lenders,
the next available Collections shall be applied to such payments to Agent and
Lenders and no Loans shall be permitted hereunder until such amount payable has
been paid in full.
2.7 Deemed Collections.
(a) If on any day the outstanding amount of any Receivable is:
(i) reduced as a result of any defective, rejected or
returned merchandise or services, any discount, incorrect ▇▇▇▇▇▇▇▇, price
rollbacks, freight charge discrepancies or any other adjustment by any
Transaction Party, Originator or any Affiliate thereof, or as a result of any
tariff or other governmental or regulatory action, or
27
(ii) reduced or canceled as a result of a setoff in respect
of any claim by the Obligor thereof (whether such claim arises out of the same
or a related or an unrelated transaction), or
(iii) reduced on account of the obligation of any
Transaction Party, any Originator or an Affiliate thereof to pay to the related
Obligor any rebate or refund, or
(iv) less than the amount included in calculating the Net
Amount of Eligible Accounts for purposes of any Receivables Report (for any
reason other than such Receivable becoming a Defaulted Receivable or
Collections being applied to the amount that had been owing in respect of such
Account), or
(v) any of the representations or warranties of Borrower
set forth in Sections 7.2(c)(vi), (vii) and (viii) were not true when made with
respect to any Receivable, or any of the representations or warranties of
Borrower set forth in Sections 7.2(c)(vi), (vii) and (viii) are no longer true
with respect to any Receivable, or any Receivable is repurchased by Originator
pursuant to the Receivables Purchase Agreement,
then, on such day, Borrower shall be deemed to have received a Collection of
such Receivable: in the case of clause (i) above, in the amount of such
reduction or cancellation or the difference between the actual unpaid balance
in respect of such Receivable and the amount included in calculation the Net
Amount of Eligible Accounts, as applicable; and in the case of clause (ii)
above, in the amount of the unpaid balance of such Receivable.
(b) Collections deemed received by Borrower under this Section
2.7 are herein referred to as "Deemed Collections"; provided, that, so long as
no Event of Default shall exist or have occurred and be continuing, as to any
Receivable for which there are Deemed Collections, to the extent that the
purchase price payable by Borrower to Originator for Receivables under the
Receivables Purchase Agreement has been reduced in respect of such Deemed
Collections pursuant to Section 3.1(b)(ii) of the Receivables Purchase
Agreement, such Collections shall cease to be deemed to be "Deemed
Collections".
2.8 Treatment of Collections and Deemed Collections. Borrower shall
forthwith deliver to Servicer all Deemed Collections, and Servicer shall hold
or distribute such Deemed Collections in payment of interest, fees and
principal and other accrued amounts owing hereunder to the same extent as if
such Deemed Collections had actually been received on the date of such delivery
to Servicer, provided, that, Borrower shall not be required to so deliver such
Deemed Collections as to any Receivable to Servicer so long as no Event of
Default shall exist or have occurred and be continuing, to the extent that the
purchase price payable by Borrower to Originator for Receivables under the
Receivables Purchase Agreement has been reduced by the amount of such Deemed
Collections pursuant to Section 3.1(b)(ii) of the Receivables Purchase
Agreement. During a Cash Dominion Period, unless the purchase price payable by
Borrower to Originator for the Receivables has been so reduced, Servicer shall
forthwith cause such Deemed Collections to be paid to Agent or its designee or
to such lock-boxes or accounts, as applicable or as Agent shall request. So
long as Borrower shall hold any Collections (including Deemed
28
Collections) required to be paid to Servicer or Agent, it shall segregate such
Collections and hold such Collections in trust and shall clearly ▇▇▇▇ its
records to reflect such trust.
2.9 Commitments. The aggregate amount of each Lender's Pro Rata Share
of the Loans shall not exceed the amount of such Lenders's Commitment, as the
same may from time to time be amended in accordance with the provisions hereof.
SECTION 3. INTEREST AND FEES
3.1 Interest.
(a) Borrower shall pay to Agent, for the benefit of Lenders,
interest on the outstanding principal amount of the Loans at the Interest Rate.
All interest accruing hereunder on and after the Termination Date shall be
payable on demand.
(b) All Loans shall be Eurodollar Rate Loans so long as (i) no
Default or Event of Default shall exist or have occurred and be continuing,
(ii) no party hereto shall have sent any notice of termination of this
Agreement, (iii) Agent and each Lender shall have determined that Adjusted
Eurodollar Rate is available to Agent and such Lender and can be readily
determined as of the date of the Eurodollar Rate Loan. On and after the
occurrence of any of such events, all Eurodollar Rate Loans shall automatically
convert to Prime Rate Loans, except as Agent may otherwise determine. Borrower
shall pay to Agent, for the benefit of Lenders, upon demand by Agent (or Agent
may, at its option, charge any loan account of Borrower) any amounts required
to compensate any Lender or Participant for any loss (including loss of
anticipated profits), cost or expense incurred by such person, as a result of
the conversion of Eurodollar Rate Loans to Prime Rate Loans pursuant to any of
the foregoing. Notwithstanding anything to the contrary contained herein, Agent
and Lenders shall not be required to purchase United States Dollar deposits in
the London interbank market or other applicable Eurodollar Rate market to fund
any Eurodollar Rate Loans, but the provisions hereof shall be deemed to apply
as if Agent and Lenders had purchased such deposits to fund the Eurodollar Rate
Loans.
(c) Interest shall be payable by Borrower to Agent, for the
account of Lenders, monthly in arrears on each Monthly Settlement Date (or
earlier as herein provided) and shall be calculated on the basis of a three
hundred sixty (360) day year and actual days elapsed. Borrower acknowledges and
understands that the calculation of interest on the basis of the actual days
elapsed over the period of a three hundred sixty (360) day year as opposed to a
year of three hundred sixty-five (365) or three hundred sixty-six (366) days
results in a higher effective rate of interest. The Interest Rate on Eurodollar
Rate Loans shall increase or decrease by an amount equal to each increase or
decrease in the Adjusted Eurodollar Rate effective on the first day of the
month after any change in the Adjusted Eurodollar Rate based on the Adjusted
Eurodollar Rate in effect on the last day of the month in which any such change
occurs. The interest rate on non-contingent Obligations (other than Eurodollar
Rate Loans) shall increase or decrease by an amount equal to each increase or
decrease in the Prime Rate effective on the first day of the month after any
change in such Prime Rate is announced based on the Prime Rate in effect on the
last day of the month in which any such change occurs.
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3.2 Maximum Interest.
(a) Notwithstanding anything to the contrary contained in this
Agreement or any of the other Financing Agreements, in no event whatsoever
shall the aggregate of all amounts that are contracted for, charged or received
by Agent or any Lender pursuant to the terms of this Agreement or any of the
other Financing Agreements and that are deemed interest under applicable law
exceed the Maximum Interest Rate (including, to the extent applicable, the
provisions of Section 5197 of the Revised Statutes of the United States of
America as amended, 12 U.S.C. Section 85, as amended). No agreements,
conditions, provisions or stipulations contained in this Agreement or any of
the other Financing Agreements, or any Event of Default, or the exercise by
Agent or any Lender of the right to accelerate the payment or the maturity of
all or any portion of the Obligations, or the exercise of any option whatsoever
contained in this Agreement or any of the other Financing Agreements, or the
prepayment by Borrower of any of the Obligations, or the occurrence of any
event or contingency whatsoever, shall entitle Agent or any Lender to contract
for, charge or receive in any event, interest or any charges, amounts, premiums
or fees deemed interest by applicable law in excess of the Maximum Interest
Rate. In no event shall Borrower be obligated to pay interest or such amounts
as may be deemed interest under applicable law in amounts which exceed the
Maximum Interest Rate. All agreements, conditions or stipulations, if any,
which may in any event or contingency whatsoever operate to bind, obligate or
compel Borrower to pay interest or such amounts which are deemed to constitute
interest in amounts which exceed the Maximum Interest Rate shall be without
binding force or effect, at law or in equity, to the extent of the excess of
interest or such amounts which are deemed to constitute interest over such
Maximum Interest Rate.
(b) In the event any interest is charged or received in excess
of the Maximum Interest Rate ("Excess"), Borrower acknowledges and stipulates
that any such charge or receipt shall be the result of an accident and bona
fide error, and that any Excess received by Agent or any Lender shall be
applied, first, to the payment of the then outstanding and unpaid principal
hereunder; second to the payment of the other Obligations then outstanding and
unpaid; and third, returned to Borrower, it being the intent of the parties
hereto not to enter into a usurious or otherwise illegal relationship. The
right to accelerate the maturity of any of the Obligations does not include the
right to accelerate any interest that has not otherwise accrued on the date of
such acceleration, and Agent and Lenders do not intend to collect any unearned
interest in the event of any such acceleration. Borrower recognizes that, with
fluctuations in the rates of interest set forth in Section 3.1 of this
Agreement and the Maximum Interest Rate, such an unintentional result could
inadvertently occur. All monies paid to Agent or any Lender hereunder or under
any of the other Financing Agreements, whether at maturity or by prepayment,
shall be subject to any rebate of unearned interest as and to the extent
required by applicable law.
(c) By the execution of this Agreement, Borrower agrees that (i)
the credit or return of any Excess shall constitute the acceptance by Borrower
of such Excess, and (ii) Borrower shall not seek or pursue any other remedy,
legal or equitable, against Agent or any Lender, based in whole or in part upon
contracting for, charging or receiving any interest or such amounts which are
deemed to constitute interest in excess of the Maximum Interest Rate. For the
purpose of determining whether or not any Excess has been contracted for,
charged or received by Agent or
30
any Lender, all interest at any time contracted for, charged or received from
Borrower in connection with this Agreement or any of the other Financing
Agreements shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread during the entire term of this Agreement in
accordance with the amounts outstanding from time to time hereunder and the
Maximum Interest Rate from time to time in effect in order to lawfully charge
the maximum amount of interest permitted under applicable laws.
(d) Borrower and Agent and Lenders shall, to the maximum extent
permitted under applicable law, (i) characterize any non-principal payment as
an expense, fee or premium rather than as interest and (ii) exclude voluntary
prepayments and the effects thereof.
(e) The provisions of this Section 3.2 shall be deemed to be
incorporated into each of the other Financing Agreements (whether or not any
provision of this Section is referred to therein). Each of the Financing
Agreements and communications relating to any interest owed by Borrower and all
figures set forth therein shall, for the sole purpose of computing the extent
of the Obligations, be automatically recomputed by Borrower, and by any court
considering the same, to give effect to the adjustments or credits required by
this Section.
3.3 Fees.
(a) Borrower shall pay to Agent, for the account of Lenders,
monthly an unused line fee at a rate equal to one-quarter (1/4%) percent per
annum on the difference between the average monthly balance of Loans
outstanding under the Credit Facility and $160,000,000, which fee shall be
payable on each Monthly Settlement Date (or earlier as herein provided).
(b) Borrower agrees to pay to Agent the other fees and amounts
set forth in the Fee Letter in the amounts and at the times specified therein.
3.4 Changes in Laws and Increased Costs of Loans.
(a) If after the date hereof, either (i) any change in, or in
the interpretation of, any law or regulation is introduced, including, without
limitation, with respect to reserve requirements, applicable to any Lender or
any banking or financial institution from whom any Lender borrows funds or
obtains credit (a "Funding Bank"), or (ii) a Funding Bank or any Lender
complies with any future guideline or request from any central bank or other
Governmental Authority or (iii) a Funding Bank or any Lender determines that
the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any Governmental Authority, central bank or
comparable agency charged with the interpretation or administration thereof has
or would have the effect described below, or a Funding Bank or any Lender
complies 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, and in the case of any event set forth in this clause (iii), such
adoption, change or compliance has or would have the direct or indirect effect
of reducing the rate of return on any Lender's capital as a consequence of its
obligations hereunder to a level below that which such Lender could have
achieved but for such adoption, change or
31
compliance (taking into consideration the Funding Bank's or Lender's policies
with respect to capital adequacy) by an amount deemed by such Lender to be
material, and the result of any of the foregoing events described in clauses
(i), (ii) or (iii) is or results in an increase in the cost to any Lender of
funding or maintaining the Loans or its Commitment, then Borrower shall from
time to time upon demand by Agent pay to Agent additional amounts sufficient to
indemnify Lenders against such increased cost on an after-tax basis (after
taking into account applicable deductions and credits in respect of the amount
indemnified). A certificate as to the amount of such increased cost shall be
submitted to Borrower by Agent and shall be conclusive, absent manifest error.
(b) If prior to the first day of any month, (i) Agent shall have
determined in good faith (which determination shall be conclusive and binding
upon Borrower) that, by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the Eurodollar
Rate, (ii) Agent has received notice from the Required Lenders that the
Eurodollar Rate determined or to be determined for the next month will not
adequately and fairly reflect the cost to such Lenders of making or maintaining
their Eurodollar Rate Loans during such Interest Period, or (iii) Dollar
deposits in the principal amounts of the Eurodollar Rate Loans required to be
made hereunder are not generally available in the London interbank market,
Agent shall give telecopy or telephonic notice thereof to Borrower and Lenders
as soon as practicable thereafter, and will also give prompt written notice to
Borrower when such conditions no longer exist. If such notice is given (A) any
Eurodollar Rate Loans to be made on the next Monthly Settlement Date or
otherwise shall be made as Prime Rate Loans and (B) each outstanding Eurodollar
Rate Loan shall be converted on the last day of the then-current month to Prime
Rate Loans. Until such notice has been withdrawn by Agent, no further
Eurodollar Rate Loans shall be made or continued as such, nor shall any Prime
Rate Loans be converted to Eurodollar Rate Loans. At such time as Agent gives
notice that such conditions no longer exist, the Prime Rate Loans shall be
converted to Eurodollar Rate Loans effective the first day of the month
thereafter.
(c) Notwithstanding any other provision herein, if the adoption
of or any change in any law, treaty, rule or regulation or final,
non-appealable determination of an arbitrator or a court or other Governmental
Authority or in the interpretation or application thereof occurring after the
date hereof shall make it unlawful for Agent or any Lender to make or maintain
Eurodollar Rate Loans as contemplated by this Agreement, (i) Agent or such
Lender shall promptly give written notice of such circumstances to Borrower and
Agent (which notice shall be withdrawn whenever such circumstances no longer
exist), (ii) the commitment of such Lender hereunder to make Eurodollar Rate
Loans, continue Eurodollar Rate Loans as such and convert Prime Rate Loans to
Eurodollar Rate Loans shall forthwith be canceled and, until such time as it
shall no longer be unlawful for such Lender to make or maintain Eurodollar Rate
Loans, such Lender shall then have a commitment only to make a Prime Rate Loan
when a Eurodollar Rate Loan is requested and (iii) such Lender's Loans then
outstanding as Eurodollar Rate Loans, if any, shall be converted automatically
to Prime Rate Loans on the respective last days of the then current month with
respect to such Loans or within such earlier period as required by law. If any
such conversion of a Eurodollar Rate Loan occurs on a day which is not the last
day of the then
32
current month with respect thereto, Borrower shall pay to such Lender such
amounts, if any, as may be required pursuant to Section 3.3(d) below.
(d) Borrower shall indemnify Agent and each Lender and hold
Agent and each Lender harmless from any loss or expense which Agent or such
Lender may sustain or incur as a consequence of the conversion of any
Eurodollar Rate Loans to Prime Rate Loans in accordance with the terms hereof,
other than on a day which is the last day of a month. This covenant shall
survive the termination or non-renewal of this Agreement and the payment of the
Obligations.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions Precedent to Initial Loans. Each of the following is a
condition precedent to Agent and Lenders making the initial Loans hereunder:
(a) Agent shall have received, in form and substance
satisfactory to Agent, all releases, terminations and such other documents as
Agent may request to evidence and effectuate the termination by the Existing
Secured Parties of their respective arrangements with Borrower and the
termination and release by it or them, as the case may be, of any interest in
and to any assets and properties of Borrower or Servicer, duly authorized,
executed and delivered by it or each of them, including, but not limited to,
UCC termination statements for all UCC financing statements previously filed by
it or any of them or their predecessors, as secured party and Borrower, as
debtor, UCC financing statement amendments for all UCC financing statements
filed by Borrower as secured party/buyer, Originator as debtor/seller and any
of the Existing Secured Parties (or their predecessors) as assignee of Borrower
to change the assignee and the written authorization in favor of Agent (or its
designee) to file such UCC termination statements and such UCC financing
statement amendments in each case in form and substance satisfactory to Agent
and notices to the banks at which the Lock-Box Accounts and Concentration
Account are maintained terminating the interest of the Existing Secured Parties
therein as acknowledged and agreed to by such banks;
(b) all requisite corporate action and proceedings in connection
with this Agreement and the other Financing Agreements shall be satisfactory in
form and substance to Agent, and Agent shall have received all information and
copies of all documents, including records of requisite corporate action and
proceedings which Agent may have requested in connection therewith, such
documents where requested by Agent or its counsel to be certified by
appropriate corporate officers or Governmental Authority (and including a copy
of the certificate of incorporation of Borrower and Servicer certified by the
Secretary of State (or equivalent Governmental Authority) which shall set forth
the same complete corporate name of Borrower and Servicer as is set forth
herein and such document as shall set forth the organizational identification
number of Borrower, if one is issued in its jurisdiction of incorporation);
(c) no material adverse change shall have occurred in the
assets, business or prospects of Borrower or Servicer since the date of Agent's
latest field examination (not including for this purpose the field review
referred to in clause (d) below) and no change or event
33
shall have occurred which would impair the ability of Borrower or Servicer to
perform its obligations hereunder or under any of the other Financing
Agreements to which it is a party or of Agent or any Lender to enforce the
Obligations or realize upon the Collateral;
(d) Agent shall have completed a field review of the Records and
such other information with respect to the Collateral as Agent may require to
determine the amount of Loans available to Borrower (including, without
limitation, current perpetual inventory records and/or roll-forwards of
Accounts through the date of closing in a manner satisfactory to Agent,
together with such supporting documentation as may be necessary or appropriate,
and other documents and information that will enable Agent to accurately
identify and verify the Collateral), the results of which each case shall be
satisfactory to Agent, not more than three (3) Business Days prior to the date
hereof;
(e) Agent shall have received, in form and substance
satisfactory to Agent, all consents, waivers, acknowledgments and other
agreements from third persons which Agent may deem necessary or desirable in
order to permit, protect and perfect its security interests in and liens upon
the Collateral or to effectuate the provisions or purposes of this Agreement
and the other Financing Agreements, including, without limitation, consents
from the Senior Credit Facility Agent and the lenders under the Senior Credit
Facility Agreement and from the Subordinated Credit Facility Agent and the
lenders under the Subordinated Credit Facility Agreement;
(f) the Excess Availability as determined by Agent, as of the
date hereof, shall be not less than $5,000,000 after giving effect to the
initial Loans made or to be made in connection with the initial transactions
hereunder;
(g) Agent shall have received, in form and substance
satisfactory to Agent, Deposit Account Control Agreements by and among Agent,
Borrower, and each bank where there is a Lock-Box Account and the Concentration
Account, in each case, duly authorized, executed and delivered by such bank and
Borrower;
(h) Agent shall have received evidence, in form and substance
satisfactory to Agent, that Agent has a valid perfected first priority security
interest in all of the Collateral;
(i) Agent shall have received and reviewed lien and judgement
search results for the jurisdiction of incorporation or organization of each
Transaction Party and Originator and the jurisdiction of the chief executive
office of each Transaction Party and Originator, which search results shall be
in form and substance satisfactory to Agent;
(j) Agent shall have received evidence of insurance and loss
payee endorsements required hereunder and under the other Financing Agreements,
in form and substance satisfactory to Agent, and certificates of insurance
policies and/or endorsements naming Agent as loss payee;
(k) Agent shall have received the Receivables Purchase Agreement
and the WPS ▇▇▇▇▇ Note in form and substance satisfactory to Agent, duly
executed by the parties thereto;
34
(l) Agent shall have received the Intercreditor Agreements, in
form and substance satisfactory to Agent, duly authorized, executed and
delivered by the parties thereto, Borrower and WestPoint;
(m) Agent shall have received, in form and substance
satisfactory to Agent, such opinion letters of counsel to Borrower with respect
to the Transaction Documents and such other matters as Agent may request,
including a favorable opinion of special counsel to the Transaction Parties and
the Originator, as to (i) the existence of a "true sale" of the Receivables
from the Originator to Borrower under the Receivables Purchase Agreement and
(ii) the inapplicability of the doctrine of substantive consolidation to
Borrower and WestPoint in connection with any bankruptcy proceeding involving
WestPoint;
(n) Agent shall have received, in form and substance
satisfactory to Agent, written confirmation from WestPoint that the independent
certified public accountants to WestPoint have represented to it that Borrower
will be treated as a qualifying special purpose entity pursuant to FASB 140 in
the audited financial statements of WestPoint and such other related matters as
Agent may reasonably request; and
(o) the other Financing Agreements and all instruments and
documents hereunder and thereunder shall have been duly executed and delivered
to Agent, in form and substance satisfactory to Agent.
4.2 Conditions Precedent to All Loans. Each of the following is an
additional condition precedent to the Loans to Borrower, including the initial
Loans and any future Loans:
(a) all representations and warranties contained herein and in
the other Financing Agreements shall be true and correct in all material
respects with the same effect as though such representations and warranties had
been made on and as of the date of the making of each such Loan and after
giving effect thereto, except to the extent that such representations and
warranties expressly relate solely to an earlier date (in which case such
representations and warranties shall have been true and accurate on and as of
such earlier date);
(b) no law, regulation, order, judgment or decree of any
Governmental Authority shall exist, and no action, suit, investigation,
litigation or proceeding shall be pending or threatened in any court or before
any arbitrator or Governmental Authority, which (i) purports to enjoin,
prohibit, restrain or otherwise affect the consummation of the transactions
contemplated pursuant to the terms hereof or the other Financing Agreements or
(ii) has or has a reasonable likelihood of having a Material Adverse Effect;
and
(c) no Default or Event of Default shall exist or have occurred
and be continuing on and as of the date of the making of such Loan and after
giving effect thereto.
35
SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST
36
5.1 Grant of Security Interest. To secure payment and performance
of all Obligations of Borrower, Borrower hereby grants to Agent, for itself and
the benefit of Lenders, a continuing security interest in, a lien upon, and a
right of set off against, and hereby assigns to Agent, for itself and the
benefit of Lenders, as security, all of the following personal property of
Borrower, whether now owned or hereafter acquired or existing, and wherever
located (together with all other collateral security for the Obligations of
Borrower at any time granted to or held or acquired by Agent or any Lender,
collectively, the "Collateral"):
(a) all of the Receivables and Related Assets;
(b) the Receivables Purchase Agreement and the other
Transaction Documents;
(c) all products and proceeds of the foregoing, in any
form, including insurance proceeds and all claims against third parties for
loss or damage to or destruction of or other involuntary conversion of any kind
or nature of any or all of the other Collateral.
5.2 Perfection of Security Interests.
(a) Borrower irrevocably and unconditionally authorizes
Agent (or its agent) to file at any time and from time to time such financing
statements with respect to the Collateral naming Agent or its designee as the
secured party and Borrower as debtor, as Agent may require, and including any
other information with respect to Borrower or otherwise required by part 5 of
Article 9 of the Uniform Commercial Code of such jurisdiction as Agent may
determine, together with any amendment and continuations with respect thereto,
which authorization shall apply to all financing statements filed on, prior to
or after the date hereof. Borrower hereby ratifies and approves all financing
statements naming Agent or its designee as secured party and Borrower, as
debtor with respect to the Collateral (and any amendments with respect to such
financing statements) filed by or on behalf of Agent prior to the date hereof
and ratifies and confirms the authorization of Agent to file such financing
statements (and amendments, if any). Borrower hereby authorizes Agent to adopt
on behalf of Borrower any symbol required for authenticating any electronic
filing. In the event that the description of the collateral in any financing
statement naming Agent or its designee as the secured party and Borrower as
debtor includes assets and properties of Borrower that do not at any time
constitute Collateral, whether hereunder, under any of the other Financing
Agreements or otherwise, the filing of such financing statement shall
nonetheless be deemed authorized by such Borrower to the extent of the
Collateral included in such description and it shall not render the financing
statement ineffective as to any of the Collateral or otherwise affect the
financing statement as it applies to any of the Collateral. In no event shall
Borrower at any time file, or permit or cause to be filed, any correction
statement or termination statement with respect to any financing statement (or
amendment or continuation with respect thereto) naming Agent or its designee as
secured party and Borrower as debtor.
(b) Borrower (or Servicer on behalf of Borrower) does
not have any chattel paper (whether tangible or electronic) or instruments as
of the date hereof. In the event that an Originator or Borrower shall be
entitled to or shall receive any chattel paper or instrument after the date
hereof, Borrower or Servicer shall promptly notify Agent thereof in writing.
Promptly
37
upon the receipt thereof by or on behalf of Borrower (including by the
Originator, Servicer or any other agent or representative), Borrower shall
deliver, or cause to be delivered to Agent, all tangible chattel paper and
instruments that such Borrower has or may at any time acquire, accompanied by
such instruments of transfer or assignment duly executed in blank as Agent may
from time to time specify, in each case except as Agent may otherwise agree. At
Agent's option, Borrower shall, or Agent may at any time on behalf of Borrower,
cause the original of any such instrument or chattel paper to be conspicuously
marked in a form and manner acceptable to Agent with the following legend
referring to chattel paper or instruments as applicable: "This [chattel
paper][instrument] is subject to the security interest of Congress Financial
Corporation (Southern), as Agent, and any sale, transfer, assignment or
encumbrance of this [chattel paper][instrument] violates the rights of such
secured party."
(c) No Transaction Party has any deposit accounts as of
the date hereof, except as set forth in Schedule 8.8 hereto. Borrower shall
not, directly or indirectly, after the date hereof open, establish or maintain
any deposit account unless each of the following conditions is satisfied: (i)
Agent shall have received not less than five (5) Business Days prior written
notice of the intention of Borrower to open or establish such account which
notice shall specify in reasonable detail and specificity acceptable to Agent
the name of the account, the owner of the account, the name and address of the
bank at which such account is to be opened or established, the individual at
such bank with whom Borrower is dealing and the purpose of the account, (ii)
the bank where such account is opened or maintained shall be acceptable to
Agent, and (iii) on or before the opening of such deposit account, Borrower
shall as Agent may specify either (A) deliver to Agent a Deposit Account
Control Agreement with respect to such deposit account duly authorized,
executed and delivered by Borrower and the bank at which such deposit account
is opened and maintained or (B) arrange for Agent to become the customer of the
bank with respect to the deposit account on terms and conditions acceptable to
Agent. The terms of Section 5.2(c)(iii) above shall not apply to deposit
accounts specifically and exclusively used for payroll, payroll taxes and other
employee wage and benefit payments to or for the benefit of Borrower's salaried
employees.
(d) Borrower does not own or hold, directly or
indirectly, beneficially or as record owner or both, any investment property,
as of the date hereof, or have any investment account, securities account,
commodity account or other similar account with any bank or other financial
institution or other securities intermediary or commodity intermediary as of
the date hereof, in each case except as set forth in Schedule 8.8 hereto.
Borrower shall not, directly or indirectly, after the date hereof, open,
establish or maintain any investment account, securities account, commodity
account or any other similar account (other than a deposit account) with any
securities intermediary or commodity intermediary.
(e) Borrower is not the beneficiary or otherwise
entitled to any right to payment under any letter of credit, banker's
acceptance or similar instrument as of the date hereof. In the event that
Borrower shall be entitled to or shall receive any right to payment under any
letter of credit, banker's acceptance or any similar instrument, whether as
beneficiary thereof or otherwise after the date hereof, Borrower shall promptly
notify Agent thereof in writing. Borrower shall immediately, as Agent may
specify, either (i) deliver, or cause to be delivered to Agent, with
38
respect to any such letter of credit, banker's acceptance or similar
instrument, the written agreement of the issuer and any other nominated person
obligated to make any payment in respect thereof (including any confirming or
negotiating bank), in form and substance satisfactory to Agent, consenting to
the assignment of the proceeds of the letter of credit to Agent by Borrower and
agreeing to make all payments thereon directly to Agent or as Agent may
otherwise direct or (ii) cause Agent to become, at Borrower's expense, the
transferee beneficiary of the letter of credit, banker's acceptance or similar
instrument (as the case may be).
(f) Borrower does not have any commercial tort claims as
of the date hereof. In the event that Borrower shall at any time after the date
hereof have any commercial tort claims, Borrower shall promptly notify Agent
thereof in writing, which notice shall (i) set forth in reasonable detail the
basis for and nature of such commercial tort claim and (ii) include the express
grant by Borrower to Agent of a security interest in such commercial tort claim
(and the proceeds thereof). In the event that such notice does not include such
grant of a security interest, the sending thereof by Borrower to Agent shall be
deemed to constitute such grant to Agent. Upon the sending of such notice, any
commercial tort claim described therein shall constitute part of the Collateral
and shall be deemed included therein. Without limiting the authorization of
Agent provided in Section 5.2(a) hereof or otherwise arising by the execution
by Borrower of this Agreement or any of the other Financing Agreements, Agent
is hereby irrevocably authorized from time to time and at any time to file such
financing statements naming Agent or its designee as secured party and Borrower
as debtor, or any amendments to any financing statements, covering any such
commercial tort claim as Collateral. In addition, Borrower shall promptly upon
Agent's request, execute and deliver, or cause to be executed and delivered, to
Agent such other agreements, documents and instruments as Agent may require in
connection with such commercial tort claim.
(g) Borrower does not have any goods, documents of title
or other Collateral in the custody, control or possession of a third party as
of the date hereof, other than Servicer, and Servicer holds all such goods in
trust for the benefit of Borrower at the locations specified in Schedule 8.2
hereto. In the event that any goods, documents of title or other Collateral are
at any time after the date hereof in the custody, control or possession of any
other person, Borrower shall promptly notify Agent thereof in writing. Promptly
upon Agent's request, Borrower shall deliver to Agent a Collateral Access
Agreement duly authorized, executed and delivered by such person and Borrower.
(h) Each Transaction Party shall take any other actions
reasonably requested by Agent from time to time to cause the attachment,
perfection and first priority of, and the ability of Agent to enforce, the
security interest of Agent in any and all of the Collateral, including, without
limitation, (i) executing, delivering and, where appropriate, filing financing
statements and amendments relating thereto under the UCC or other applicable
law, to the extent, if any, that such Transaction Party's signature thereon is
required therefor, (ii) complying with any provision of any statute, regulation
or treaty of the United States as to any Collateral if compliance with such
provision is a condition to attachment, perfection or priority of, or ability
of Agent to enforce, the security interest of Agent in such Collateral, (iii)
obtaining the consents and approvals of any Governmental Authority or third
party, including, without limitation, any
39
consent of any licensor, lessor or other person obligated on Collateral, and
taking all actions required by any earlier versions of the UCC or by other law,
as applicable in any relevant jurisdiction.
SECTION 6. COLLECTION AND ADMINISTRATION
6.1 Borrower Loan Account. Agent shall maintain one or more loan
account(s) on its books in which shall be recorded (a) all Loans and other
Obligations and the Collateral, (b) all payments made by or on behalf of
Borrower and (c) all other appropriate debits and credits as provided in this
Agreement, including fees, charges, costs, expenses and interest. All entries
in the loan account(s) shall be made in accordance with Agent's customary
practices as in effect from time to time.
6.2 Statements. Agent shall render to Borrower each month a
statement setting forth the balance in the Borrower's loan account(s)
maintained by Agent for Borrower pursuant to the provisions of this Agreement,
including principal, interest, fees, costs and expenses. Each such statement
shall be subject to subsequent adjustment by Agent but shall, absent manifest
errors or omissions, be considered correct and deemed accepted by Borrower and
conclusively binding upon Borrower as an account stated except to the extent
that Agent receives a written notice from Borrower of any specific exceptions
of Borrower thereto within thirty (30) days after the date such statement has
been received by Borrower. Until such time as Agent shall have rendered to
Borrower a written statement as provided above, the balance in Borrower's loan
account(s) shall be presumptive evidence of the amounts due and owing to Agent
and Lenders by Borrower.
6.3 Designation of Servicer.
(a) The servicing, administering and collection of the
Receivables shall be conducted by the Person designated as Servicer hereunder
from time to time in accordance with this Section 6.3. Until Agent gives to
WestPoint a Servicer Successor Notice (or automatically and without notice to
WestPoint upon the commencement of any Insolvency Proceeding with respect to
WestPoint, except as Agent may otherwise specifically agree in writing),
WestPoint is hereby designated as, and hereby agrees to perform the duties and
obligations of, Servicer pursuant to the terms hereof.
(b) On and after a Default or an Event of Default and
for so long as the same is continuing, Agent may by written notice to WestPoint
(a "Servicer Successor Notice"), or automatically and without notice to
WestPoint upon the commencement of any Insolvency Proceeding with respect to
WestPoint (except as Agent may otherwise specifically agree in writing),
designate a new Servicer (a "Servicer Transfer Event"), which may be The CIT
Group/Commercial Services, Inc. or such other person as Agent may select for
such purpose. Upon WestPoint's receipt of a Servicer Successor Notice or
automatically and without notice to WestPoint upon the commencement of any
Insolvency Proceeding with respect to WestPoint (except as Agent may otherwise
specifically agree in writing), WestPoint agrees that it will terminate its
activities as Servicer hereunder in a manner that Agent determines will
facilitate the
40
transition of the performance of such activities to the new Servicer, and Agent
(or its designee) shall assume each and all of WestPoint's obligations to
service and administer the Receivables, on the terms and subject to the
conditions herein set forth or as may otherwise be agreed in writing between
Agent and such new Servicer, and WestPoint shall use its best efforts to assist
Agent (or its designee) in assuming such obligations. Without limiting the
foregoing, each of WestPoint and Borrower agrees, at its expense, to use its
best efforts to provide the new Servicer with access (including, to the extent
necessary licenses, sub-licenses and/or assignments of contracts), whether or
not at the offices and properties of WestPoint, to all computer software
(including its servicing software, NMC, and its claims software, CHICOR),
necessary or useful in collecting or billing Receivables, solely for use in
collecting and billing Receivables.
(c) Servicer may, without the prior consent of Agent,
subcontract with any other Person for servicing, administering or collecting an
immaterial amount of the Receivables, provided that Servicer shall remain
liable for the performance of the duties and obligations of Servicer pursuant
to the terms hereof and such subservicing arrangement may be terminated at
Agent's request at any time after a Servicer Successor Notice has been given or
upon the commencement of any Insolvency Proceeding with respect to Servicer
(except as Agent may otherwise specifically agree in writing).
6.4 Duties of Servicer.
(a) Subject to the terms and conditions contained
herein, each of Borrower and Agent hereby appoints the Servicer, as from time
to time designated pursuant to Section 6.3, as its agent to enforce its rights
and interests in and under the Receivables and the Related Assets (but subject
in all respects to the rights of Agent with respect thereto). Servicer shall
take or cause to be taken all such actions as may be necessary or advisable to
collect each Receivable from time to time, all in accordance with applicable
laws, rules and regulations, with reasonable care and diligence, and in
accordance with the Credit and Collection Policy or as may otherwise be agreed
in writing between Agent and Servicer and in any event at any time that a
Default or an Event of Default exists or has occurred and is continuing, as
Agent may from time to time specify.
(b) Servicer shall segregate and set aside for the
account of Agent and Borrower their respective allocable shares of the
Collections of Receivables in accordance with Section 2.3 of this Agreement.
Servicer shall segregate and deposit, or cause to be deposited, into the
Concentration Account, all of the Collections in accordance with Section 6.8
hereof. Servicer shall notify Agent of any deposit accounts at any time
established by Servicer for its own use or for its use as Servicer promptly
upon the establishment thereof, other than deposit accounts established by
Servicer for its own use similar to those listed in Part I.B.2 of Schedule 8.8
hereto.
(c) To the extent permitted under and in accordance with
Section 7.2(b) hereof, WestPoint, while it is Servicer, may, in accordance with
the Credit and Collection Policy, (i) extend the maturity or adjust the unpaid
balance of any Defaulted Receivable as WestPoint may reasonably determine to be
appropriate to maximize Collections thereof, and (ii) adjust the
41
unpaid balance of any Receivable to reflect the reductions or cancellations
described in Section 2.7 hereof.
(d) Borrower shall deliver to Servicer, and Servicer
shall hold in trust for Borrower and Agent in accordance with their respective
interests, all documents, instruments and records (including, without
limitation, computer tapes or disks) that evidence or relate to Receivables or
any of the Related Assets, including the Records, until such time as Agent may
direct otherwise.
(e) Servicer's authorization under this Agreement shall
terminate upon written notice by Agent to Servicer at any time on or after the
occurrence of an Event of Default and for so long as the same is continuing or
the Termination Date or without such notice as of the date that Servicer is
subject to any Insolvency Proceeding.
(f) Borrower hereby grants to Servicer an irrevocable
power of attorney, with full power of substitution, coupled with an interest,
to take in the name of Borrower all steps which are necessary or advisable to
endorse, negotiate or otherwise realize on any writing or other right of any
kind held or transmitted by Borrower or transmitted or received by Agent
(whether or not from Borrower) in connection with any Receivable, but such
power of attorney shall be deemed automatically revoked and terminated without
any further action by the parties hereto at any time that Servicer is subject
to any Insolvency Proceeding or upon an Event of Default, except as Agent may
otherwise agree in writing.
(g) Any payment by an Obligor in respect of any
indebtedness owed by it to Originator or Borrower shall, except as otherwise
specified by such Obligor or otherwise required by contract or law, be applied
as a Collection of any Receivable of such Obligor (starting with the oldest
such Receivable) to the extent of any amounts then due and payable thereunder
before being applied to any other receivable or other obligation of such
Obligor.
6.5 Rights of Agent on Servicer Transfer Event.
(a) In addition to the rights of Agent at any time on or
after an Event of Default, at any time a Servicer Transfer Event has occurred
and is continuing, (i) Agent may notify the Obligors of Receivables, or any of
them, of the security interest and lien of Agent in such Receivables and
Related Assets and (ii) Agent is hereby authorized to give notice to any or all
of the depository banks at which the Lock-Box Accounts and Concentration
Account are maintained to transfer the funds in such accounts only in
accordance with the instructions of Agent and that Agent has exclusive dominion
and control over the lock-boxes, related Lock-Box Accounts and Concentration
Account. Borrower and Servicer hereby transfer to Agent, effective at such time
as Agent shall give such notice, the exclusive dominion and control over such
lock-boxes, Lock-Box Accounts and Concentration Account, and shall take any
further action that Agent may reasonably request to effect such transfer.
(b) At any time following the designation of a Servicer
other than WestPoint pursuant to Section 6.3 hereof or, at Agent's option, at
any time that WestPoint is subject to any Insolvency Proceeding or there is any
other Event of Default: (i) Agent may direct the Obligors
42
of Receivables, or any of them, to pay all amounts payable under any Receivable
directly to Agent or its designee; (ii) any Transaction Party shall, at Agent's
request and at such Transaction Party's expense, give notice of Agent's
security interests in the Receivables to each Obligor of Receivables and direct
that payments be made directly to Agent or its designee; (iii) each Transaction
Party shall, at Agent's request, (A) assemble all of the documents, instruments
and other records (including, without limitation, computer programs, tapes and
disks) which evidence the Receivables and the Related Assets or which are
otherwise necessary or desirable to collect such Receivables, and make the same
available to the successor Servicer at a place and in a manner selected by
Agent and (B) segregate all cash, checks and other instruments received by it
from time to time constituting Collections in a manner acceptable to Agent and
promptly upon receipt, remit all such cash, checks and instruments, duly
endorsed or with duly executed instruments of transfer, to the successor
Servicer, and (iv) without limiting the generality of the rights granted to
Agent pursuant to Section 7.3 hereof, each Transaction Party hereby authorizes
Agent, and grants to Agent an irrevocable power of attorney, to take any and
all steps in such Transaction Party's name and on behalf of such Transaction
Party and Agent which are necessary or desirable, in the determination of
Agent, to collect all amounts due under any and all Receivables, including,
without limitation, endorsing any Transaction Party's name on checks and other
instruments representing Collections and enforcing such Receivables and the
related Contracts. On and after a Event of Default or at any time that
WestPoint is subject to an Insolvency Proceeding, at Agent's option, Agent
shall have the exclusive right to deal with the Receivables and Related Assets,
in such manner as Agent may determine and in accordance with its rights as a
secured party with respect thereto under the terms of this Agreement, the other
Financing Agreements and applicable law and upon the exercise of such rights by
Agent all rights of Servicer to act with respect to the Receivables and Related
Assets shall cease, except as Agent may otherwise agree in writing. At any time
following the designation of a Servicer other than WestPoint pursuant to
Section 6.3 hereof, Agent may enter into such agreements with such successor
Servicer as Agent may determine and in the event of any inconsistency between
the terms hereof and such agreements, such agreements shall govern.
6.6 Responsibilities of Transaction Parties.
(a) Each Transaction Party shall remain responsible for
performing all of its obligations (if any) under the Contracts related to the
Receivables and under the related agreements to the same extent as if Agent did
not have the security interest or liens granted to it hereunder or under any of
the other Financing Agreements, and the exercise by Agent or its designee of
its rights hereunder shall not relieve any Transaction Party from such
obligations.
(b) Agent and Lenders shall not have any obligation or
liability with respect to any Receivables or Related Assets, nor shall any of
them be obligated to perform any of the obligations of any Transaction Party or
Originator or any Affiliate thereof.
6.7 Servicer Advances. If, on any day that any payment of
interest, fees or any other amounts payable hereunder to Agent or any Lender is
required to be made, Borrower does not have sufficient available funds to make
any such payment (including from Collections set aside pursuant to Section 2.3
hereof), Servicer shall make an advance in an amount up to the amount of
43
such deficiency (any such advance, a "Servicer Advance"), provided, that, in
the event that WestPoint is not the Servicer, any such successor Servicer shall
only have such obligations to make any Servicer Advances as Agent and such
successor Servicer may agree. Notwithstanding the preceding sentence, Servicer
shall not be required to make a Servicer Advance (a) if the Servicer determines
(such determination to be conclusive and binding) in good faith that such
Servicer Advance will not ultimately be recoverable from future collections on,
or the liquidation of, the Receivables or from proceeds of Loans; provided,
that, Servicer shall provide Agent with an officer's certificate describing the
Servicer's reasons (in reasonable detail) for making such determination), or
(b) in respect of any Receivable that becomes a Defaulted Receivable. The
Servicer will deposit any Servicer Advances into the Concentration Account on
or prior to 12:00 p.m. (Atlanta, Georgia time) on the date necessary to make
any payment required to be made under Section 2.3 hereof. All Servicer Advances
shall be made by wire transfer in immediately available funds. Servicer may
recover any Servicer Advance that it has made from Collections in accordance
with Section 2.4 hereof.
6.8 Cash Management Arrangements.
(a) Borrower has established and shall maintain the
Lock-Box Accounts and the Concentration Account in the name of Borrower. The
names and addresses of all of the banks at which the Lock-Box Accounts and the
Concentration Account are maintained, together with the account numbers of such
accounts are as set forth on Schedule 8.8 hereto. Each Lock-Box Account and the
Concentration Account is and shall at all times be subject to a Deposit Account
Control Agreement that has been duly authorized, executed and delivered by the
bank at which such accounts are maintained, Borrower and Agent and is in full
force and effect. No Transaction Party shall enter into any agreement with any
person other than Agent authorizing the bank at which any Lock-Box Account or
the Concentration Account are maintained to comply with instructions from such
other person as to the disposition of funds in or from the Lock-Box Accounts or
the Concentration Account or with respect to any other dealings with any
Lock-Box Account or the Concentration Account or that such other person shall
be deemed the customer of the bank. Each Transaction Party has and maintains
accounting, administrative and operating procedures that permit identification
of the Collections. Payments made to such Lock-Box Accounts or the
Concentration Account or other funds received and collected by Agent or any
Lender, whether in respect of the Receivables or other Collateral or otherwise
shall be treated as payments to Agent and Lenders in respect of the Obligations
and therefore shall constitute the property of Agent and Lenders prior to the
commencement of Cash Dominion Period to the extent set forth in Section 2.3
hereof and on and after the commencement of a Cash Dominion Period to the
extent of the then outstanding Obligations.
(b) Each Transaction Party shall promptly deposit all
payments in respect of Receivables or other Collateral received by it into the
Concentration Account and has instructed and shall instruct (or shall cause
Originator to instruct) all Obligors to pay all Collections directly to a
lock-box related to a Lock-Box Account or directly to a Lock-Box Account.
Borrower shall cause (i) all proceeds remitted to any lock-box related to such
Lock-Box Account to be deposited directly by the applicable bank into the
related Lock-Box Account, (ii) all such funds deposited into the Lock-Box
Accounts on any Business Day to be transferred daily to the Concentration
44
Account by no later than the next Business Day (except to the extent that
during a Cash Dominion Period Agent may elect to have funds deposited into the
Lock-Box Accounts transferred directly to the Agent Payment Account) and (iii)
each such lock-box and Lock-Box Account and Concentration Account to be
maintained in its name and subject at all times to a Deposit Account Control
Agreement that is in full force and effect.
(c) Pursuant to the terms of the Deposit Account Control
Agreement with respect to the Concentration Account, funds in the Concentration
Account may be transferred pursuant to the instructions of Servicer to the
Originator in payment of the purchase price for the Receivables in accordance
with the Receivables Purchase Agreement or to the Originator as otherwise
permitted herein until such time as Agent shall exercise its right to notify
the depository bank at which the Concentration Account is maintained to remit
the funds to Agent Payment Account as a result of the occurrence of the events
set forth in this Section 6.8(c) below. Without limiting any other rights or
remedies of Agent or Lenders, Agent may, at its option, instruct the depository
bank at which the Concentration Account is maintained to transfer all available
funds received or deposited into the Concentration Account to the Agent Payment
Account at any time on or after either: (i) a Default or an Event of Default
shall exist or have occurred and be continuing, or (ii) the later of August 31,
2004 or the date ninety (90) days prior to the earlier of the scheduled
maturity of the Indebtedness under the Senior Credit Facility Agreement, the
Subordinated Credit Facility Agreement or the Senior Notes (or in the event of
the refinancing or replacement of the Senior Notes, the scheduled maturity of
the Indebtedness arising under such refinancing or replacement) or (iii) the
aggregate amount of the Loans outstanding at any time exceed the Adjusted
Borrowing Base as of the last day of any two (2) consecutive weeks (or such
other day of such two (2) consecutive weeks for which Agent shall have received
an Interim Receivables Report or other information so as to be able to
calculate the Adjusted Borrowing Base), or (iv) Servicer shall fail to
segregate, set aside and hold funds in trust for the benefit of Agent and
Lenders as required under Section 2.3 hereof, or (v) the Senior Credit Facility
Availability shall at any time be less than $75,000,000. Upon the occurrence of
any of such events and for so long as any of the same may be continuing, Agent
may, at its option, elect not to instruct the depository bank to transfer all
available funds to the Agent Payment Account, but may, at Agent's option,
require that Servicer obtain the approval of Agent each Business Day (or at
such other time or times as Agent may specify to Servicer) prior to any
transfer of funds from the Concentration Account as to whether any of such
funds may be transferred from the Concentration Account and the amount of the
funds that may be so transferred. In the event that at any time after Agent has
instructed such depository banks to transfer such funds to the Agent Payment
Account, each of the conditions set forth in clauses (iii) or (v) above do not
exist or have not occurred and are not continuing for a period of thirty (30)
consecutive days, Agent shall instruct such depository banks to transfer the
funds on deposit in such accounts in accordance with the instructions of
Servicer until such time as Agent is entitled to notify and shall notify the
depository bank otherwise as provided above.
(d) (i) For purposes of calculating the amount of the
Loans available to Borrower, such payments will be applied (conditional upon
final collection) to the Obligations on the Business Day of receipt by Agent of
immediately available funds in the Agent Payment Account provided such payments
and notice thereof are received in accordance with Agent's usual and
45
customary practices as in effect from time to time and within sufficient time
to credit Borrower's loan account on such day based on the notice thereof given
to Agent by the depository bank where such funds are received, and if not, then
on the next Business Day. (ii) For the purposes of calculating interest on the
Obligations, at all times during a Cash Dominion Period, such payments or other
funds received at any time on any Business Day will be deemed applied
(conditional upon final collection) to the Obligations one (1) Business Day
following the date of receipt of immediately available funds by Agent in the
Agent Payment Account provided such payments or other funds and notice thereof
are received in accordance with Agent's usual and customary practices as in
effect from time to time and within sufficient time to credit Borrower's loan
account on such day based on the notice thereof given to Agent by the depository
bank where such funds are received, and if not, then on the next Business Day.
(iii) At all times other than during a Cash Dominion Period or at all times that
there are no Loans outstanding, Agent shall be entitled to an administrative fee
in an amount equal to the Interest Rate (on a per annum basis) using an Interest
Period of one (1) month multiplied by the amount of the funds received in the
Lock-Box Accounts for such day as calculated by Agent in accordance with its
customary practice. The economic benefit of the timing in the application of
payments (and the administrative fee provided for above, if applicable) shall be
for the sole benefit of Agent.
(e) Each Transaction Party shall, acting as trustee for
Agent, receive, as the property of Agent, any monies, checks, notes, drafts or
any other payment relating to and/or proceeds of Accounts or other Collateral
which come into their possession or under their control and promptly upon
receipt thereof, shall deposit or cause the same to be deposited in the
Concentration Account, or remit the same or cause the same to be remitted, in
kind, to Agent. In no event shall the same be commingled with any Transaction
Party's own funds. Each Transaction Party agrees to reimburse Agent on demand
for any amounts owed or paid to any bank at which a Lock-Box Account, the
Concentration Account or any other deposit account is established or any other
bank or person involved in the transfer of funds to or from the Lock-Box
Accounts, the Concentration Account or the Agent Payment Account arising out of
Agent's payments to or indemnification of such bank or person. The obligations
of Borrower to reimburse Agent for such amounts pursuant to this Section 6.8
shall survive the termination of this Agreement.
6.9 Pro Rata Treatment. Except to the extent otherwise provided
in this Agreement: (a) the making and conversion of Loans shall be made among
the Lenders based on their respective Pro Rata Shares as to the Loans and (b)
each payment on account of any Obligations to or for the account of one or more
of Lenders in respect of any Obligations due on a particular day shall be
allocated among the Lenders entitled to such payments based on their respective
Pro Rata Shares and shall be distributed accordingly.
6.10 Sharing of Payments, Etc.
(a) Borrower agrees that, in addition to (and without
limitation of) any right of setoff, banker's lien or counterclaim Agent or any
Lender may otherwise have, each Lender shall be entitled, at its option (but
subject, as among Agent and Lenders, to the provisions of Section 12.3(b)
hereof), to offset balances held by it for the account of Borrower at any of
its
46
offices, in dollars or in any other currency, against any principal of or
interest on any Loans owed to such Lender or any other amount payable to such
Lender hereunder, that is not paid when due (regardless of whether such
balances are then due to Borrower), in which case it shall promptly notify
Borrower and Agent thereof; provided, that, such Lender's failure to give such
notice shall not affect the validity thereof.
(b) If any Lender (including Agent) shall obtain from
Borrower payment of any principal of or interest on any Loan owing to it or
payment of any other amount under this Agreement or any of the other Financing
Agreements through the exercise of any right of setoff, banker's lien or
counterclaim or similar right or otherwise (other than from Agent as provided
herein), and, as a result of such payment, such Lender shall have received more
than its Pro Rata Share of the principal of the Loans or more than its share of
such other amounts then due hereunder or thereunder by Borrower to such Lender
than the percentage thereof received by any other Lender, it shall promptly pay
to Agent, for the benefit of Lenders, the amount of such excess and
simultaneously purchase from such other Lenders a participation in the Loans or
such other amounts, respectively, owing to such other Lenders (or such interest
due thereon, as the case may be) in such amounts, and make such other
adjustments from time to time as shall be equitable, to the end that all
Lenders shall share the benefit of such excess payment (net of any expenses
that may be incurred by such Lender in obtaining or preserving such excess
payment) in accordance with their respective Pro Rata Shares or as otherwise
agreed by Lenders. To such end all Lenders shall make appropriate adjustments
among themselves (by the resale of participation sold or otherwise) if such
payment is rescinded or must otherwise be restored.
(c) Borrower agrees that any Lender purchasing a
participation (or direct interest) as provided in this Section may exercise, in
a manner consistent with this Section, all rights of setoff, banker's lien,
counterclaim or similar rights with respect to such participation as fully as
if such Lender were a direct holder of Loans or other amounts (as the case may
be) owing to such Lender in the amount of such participation.
(d) Nothing contained herein shall require any Lender to
exercise any right of setoff, banker's lien, counterclaims or similar rights or
shall affect the right of any Lender to exercise, and retain the benefits of
exercising, any such right with respect to any other Indebtedness or obligation
of Borrower. If, under any applicable bankruptcy, insolvency or other similar
law, any Lender receives a secured claim in lieu of a setoff to which this
Section applies, such Lender shall, to the extent practicable, assign such
rights to Agent for the benefit of Lenders and, in any event, exercise its
rights in respect of such secured claim in a manner consistent with the rights
of Lenders entitled under this Section to share in the benefits of any recovery
on such secured claim.
(e) In the event that at any time after the date hereof
a Lender shall also be acting as Servicer pursuant to the terms hereof, nothing
contained herein shall be construed to require such Lender to share with any
other Lender any fees received by such Lender in its capacity as Servicer
hereunder from any Transaction Party. In addition, nothing contained herein
shall be construed to require that a Lender who has purchased any accounts
receivable owing by
47
WestPoint to a third party share any payments received by such Lender in
respect of such accounts receivable with any other Lender pursuant to the terms
of this Section 6.10.
6.11 Lender Settlement Procedures.
(a) In order to administer the Credit Facility in an
efficient manner and to minimize the transfer of funds between Agent and
Lenders, Agent may, at its option, subject to the terms of this Section, make
available, on behalf of Lenders, the full amount of the Loans requested or
charged to Borrower's loan account(s) or otherwise to be advanced by Lenders
pursuant to the terms hereof, without requirement of prior notice to Lenders of
the proposed Loans.
(b) With respect to all Loans made by Agent on behalf of
Lenders as provided in this Section, the amount of each Lender's Pro Rata Share
of the outstanding Loans shall be computed weekly, and shall be adjusted upward
or downward on the basis of the amount of the outstanding Loans as of 5:00 p.m.
Atlanta, Georgia time on the Business Day immediately preceding the date of
each settlement computation; provided, that, Agent retains the absolute right
at any time or from time to time to make the above described adjustments at
intervals more frequent than weekly, but in no event more than twice in any
week. Agent shall deliver to each of the Lenders after the end of each week, or
at such lesser period or periods as Agent shall determine, a summary statement
of the amount of outstanding Loans for such period (such week or lesser period
or periods being hereinafter referred to as a "Settlement Period"). If the
summary statement is sent by Agent and received by a Lender prior to 12:00 p.m.
Atlanta, Georgia time, then such Lender shall make the settlement transfer
described in this Section by no later than 3:00 p.m. Atlanta, Georgia time on
the same Business Day and if received by a Lender after 12:00 p.m. Atlanta,
Georgia time, then such Lender shall make the settlement transfer by not later
than 3:00 p.m. Atlanta, Georgia time on the next Business Day following the
date of receipt. If, as of the end of any Settlement Period, the amount of a
Lender's Pro Rata Share of the outstanding Loans is more than such Lender's Pro
Rata Share of the outstanding Loans as of the end of the previous Settlement
Period, then such Lender shall forthwith (but in no event later than the time
set forth in the preceding sentence) transfer to Agent by wire transfer in
immediately available funds the amount of the increase. Alternatively, if the
amount of a Lender's Pro Rata Share of the outstanding Loans in any Settlement
Period is less than the amount of such Lender's Pro Rata Share of the
outstanding Loans for the previous Settlement Period, Agent shall forthwith
transfer to such Lender by wire transfer in immediately available funds the
amount of the decrease. The obligation of each of the Lenders to transfer such
funds and effect such settlement shall be irrevocable and unconditional and
without recourse to or warranty by Agent. Agent and each Lender agrees to ▇▇▇▇
its books and records at the end of each Settlement Period to show at all times
the dollar amount of its Pro Rata Share of the outstanding Loans. Each Lender
shall only be entitled to receive interest on its Pro Rata Share of the Loans
to the extent such Loans have been funded by such Lender. Because the Agent on
behalf of Lenders may be advancing and/or may be repaid Loans prior to the time
when Lenders will actually advance and/or be repaid such Loans, interest with
respect to Loans shall be allocated by Agent in accordance with the amount of
Loans actually advanced by and repaid to each Lender and the Agent and shall
accrue from and including the date such Loans are so
48
advanced to but excluding the date such Loans are either repaid by Borrower or
actually settled with the applicable Lender as described in this Section.
(c) To the extent that Agent has made any such amounts
available and the settlement described above shall not yet have occurred, upon
repayment of any Loans by Borrower, Agent may apply such amounts repaid
directly to any amounts made available by Agent pursuant to this Section. In
lieu of weekly or more frequent settlements, Agent may, at its option, at any
time require each Lender to provide Agent with immediately available funds
representing its Pro Rata Share of each Loan, prior to Agent's disbursement of
such Loan to Borrower. In such event, all Loans under this Agreement shall be
made by the Lenders simultaneously and proportionately to their Pro Rata
Shares. No Lender shall be responsible for any default by any other Lender in
the other Lender's obligation to make a Loan requested hereunder nor shall the
Commitment of any Lender be increased or decreased as a result of the default
by any other Lender in the other Lender's obligation to make a Loan hereunder.
(d) If Agent is not funding a particular Loan to
Borrower pursuant to this Section on any day, Agent may assume that each Lender
will make available to Agent such Lender's Pro Rata Share of the Loan requested
or otherwise made on such day and Agent may, in its discretion, but shall not
be obligated to, cause a corresponding amount to be made available to or for
the benefit of Borrower on such day. If Agent makes such corresponding amount
available to Borrower and such corresponding amount is not in fact made
available to Agent by such Lender, Agent shall be entitled to recover such
corresponding amount on demand from such Lender together with interest thereon
for each day from the date such payment was due until the date such amount is
paid to Agent at the Federal Funds Rate for each day during such period (as
published by the Federal Reserve Bank of New York or at Agent's option based on
the arithmetic mean determined by Agent of the rates for the last transaction
in overnight Federal funds arranged prior to 9:00 a.m. (New York City time) on
that day by each of the three leading brokers of Federal funds transactions in
New York City selected by Agent) and if such amounts are not paid within three
(3) days of Agent's demand, at the highest Interest Rate provided for in
Section 3.1 hereof applicable to Prime Rate Loans. During the period in which
such Lender has not paid such corresponding amount to Agent, notwithstanding
anything to the contrary contained in this Agreement or any of the other
Financing Agreements, the amount so advanced by Agent to or for the benefit of
Borrower shall, for all purposes hereof, be a Loan made by Agent for its own
account. Upon any such failure by a Lender to pay Agent, Agent shall promptly
thereafter notify Borrower of such failure and Borrower shall pay such
corresponding amount to Agent for its own account within five (5) Business Days
of Borrower's receipt of such notice. A Lender who fails to pay Agent its Pro
Rata Share of any Loans made available by the Agent on such Lender's behalf, or
any Lender who fails to pay any other amount owing by it to Agent, is a
"Defaulting Lender". Agent shall not be obligated to transfer to a Defaulting
Lender any payments received by Agent for the Defaulting Lender's benefit, nor
shall a Defaulting Lender be entitled to the sharing of any payments hereunder
(including any principal, interest or fees). Amounts payable to a Defaulting
Lender shall instead be paid to or retained by Agent. Agent may hold and, in
its discretion, relend to Borrower the amount of all such payments received or
retained by it for the account of such Defaulting Lender. For purposes of
voting or consenting to matters with respect to this Agreement and the other
Financing Agreements and
49
determining Pro Rata Shares, such Defaulting Lender shall be deemed not to be a
"Lender" and such Lender's Commitment shall be deemed to be zero (0). This
Section shall remain effective with respect to a Defaulting Lender until such
default is cured. The operation of this Section shall not be construed to
increase or otherwise affect the Commitment of any Lender, or relieve or excuse
the performance by any Transaction Party of their duties and obligations
hereunder.
(e) Nothing in this Section or elsewhere in this
Agreement or the other Financing Agreements shall be deemed to require Agent to
advance funds on behalf of any Lender or to relieve any Lender from its
obligation to fulfill its Commitment hereunder or to prejudice any rights that
Borrower may have against any Lender as a result of any default by any Lender
hereunder in fulfilling its Commitment.
6.12 Obligations Several; Independent Nature of Lenders' Rights.
The obligation of each Lender hereunder is several, and no Lender shall be
responsible for the obligation or commitment of any other Lender hereunder.
Nothing contained in this Agreement or any of the other Financing Agreements
and no action taken by the Lenders pursuant hereto or thereto shall be deemed
to constitute the Lenders to be a partnership, an association, a joint venture
or any other kind of entity. The amounts payable at any time hereunder to each
Lender shall be a separate and independent debt, and subject to Section 13.3
hereof, each Lender shall be entitled to protect and enforce its rights arising
out of this Agreement and it shall not be necessary for any other Lender to be
joined as an additional party in any proceeding for such purpose.
SECTION 7. COLLATERAL REPORTING AND COVENANTS
7.1 Collateral Reporting.
(a) Servicer shall provide Agent with the following
documents in a form reasonably satisfactory to Agent:
(i) as soon as possible after the last day of
each week (but in any event by the close of business in Atlanta, Georgia on the
first Tuesday after the end of each week or if such day is not a Business Day,
then the immediately following Business Day), or more frequently as Agent may
request at any time that a Default or Event of Default shall exist or have
occurred and be continuing, (A) an Interim Receivables Report for such week and
(B) a report setting forth the Senior Credit Facility Availability and the
components thereof for each Business Day of such week, duly completed and
executed by the chief financial officer, treasurer or controller of Servicer;
(ii) as soon as possible after the end of each
fiscal month (but in any event by the close of business in Atlanta, Georgia on
the tenth (10th) day after the end of each such fiscal month or if such day is
not a Business Day, then the immediately following Business Day), or more
frequently as Agent may request at any time a Default or Event of Default shall
exist or have occurred and be continuing, a Monthly Receivables Report setting
forth the calculation of the Borrowing Base as of the last Business Day of the
immediately preceding period, duly completed and executed by the chief
financial officer, treasurer or controller of Servicer, together with all
schedules required pursuant to the terms of the Monthly Receivables Report duly
50
completed (including a schedule of all Accounts created, collections received
and credit memos issued for each day of the immediately preceding period) and
an aging of accounts receivable in form acceptable to Agent;
(iii) upon Agent's request, (A) copies of
customer statements, purchase orders, sales invoices, credit memos, remittance
advices and reports, and copies of deposit slips and bank statements, and (B)
copies of shipping and delivery documents;
(b) Nothing contained in any Receivables Report shall be
deemed to limit, impair or otherwise affect the rights of Agent contained
herein and in the event of any conflict or inconsistency between the
calculation of the Borrowing Base or any component thereof as set forth in any
Receivables Report and as determined by Agent in good faith, the determination
of Agent shall govern and be conclusive and binding upon each Transaction
Party. Without limiting the foregoing, each Transaction Party shall furnish to
Agent any information which Agent may reasonably request regarding the
determination and calculation of any of the amounts set forth in any
Receivables Report. Upon the request of Agent, each such Receivables Report
shall be accompanied by an electronic file in a form reasonably satisfactory to
Agent.
(c) If any Transaction Party's records or reports with
respect to any Collateral are prepared or maintained by an accounting service,
contractor, shipper or other agent, such Transaction Party hereby irrevocably
authorizes such service, contractor, shipper or agent to deliver such records,
reports and related documents to Agent and to follow Agent's instructions with
respect to further services at any time that an Event of Default exists or has
occurred and is continuing.
7.2 Accounts Covenants.
(a) Each Transaction Party will, at its expense, timely
and fully perform and comply with all provisions, covenants and other promises
required to be observed by it under the Contracts and all other agreements
related to the Receivables and the Related Assets, the breach of which
provisions, covenants or promises could reasonably be expected to have a
Material Adverse Effect. With respect to each Receivable and all related
Contracts, each of Borrower, Servicer and Originator has complied and shall
comply in all material respects with the Credit and Collection Policy.
(b) In the next Receivables Report to be delivered under
the terms hereof following the occurrence thereof, or at such earlier times as
Agent may hereafter specify to Servicer from time to time, Servicer shall
notify Agent promptly of: (i) the assertion of any material claims, offsets,
defenses or counterclaims by any Obligor, or any material disputes with any
Obligor, or any settlement, adjustment or compromise thereof, (ii) all material
adverse information known to Servicer relating to the financial condition of
any Obligor and (iii) any event or circumstance which, to the best of
Servicer's knowledge, would cause Agent to consider any then existing Accounts
as no longer constituting Eligible Accounts. No credit, discount,
51
allowance or extension or agreement for any of the foregoing shall be granted
to any Obligor without Agent's consent, except in the ordinary course of
business consistent with the Credit and Collection Policy and so long as any of
the foregoing are set forth in the Receivables Report for the period in which
the same was granted. So long as no Event of Default or Servicer Transfer Event
exists or has occurred and is continuing, Servicer may, in accordance with the
Credit and Collection Policy, extend the maturity or adjust the unpaid balance
of any Defaulted Receivable as it may reasonably determine to be appropriate to
maximize Collections thereof and adjust the unpaid balance of any Receivable to
reflect the reductions or cancellations described in Section 2.7 hereof.
(c) With respect to each Account: (i) the amounts shown
on any invoice delivered to Agent or schedule thereof delivered to Agent shall
be true and complete, (ii) no payments shall be made thereon except payments
made to the Lock-Box Accounts, the Concentration Account or as Agent may
otherwise direct; provided, that, from time to time, an Obligor may, other than
in the ordinary course of the business of the Transaction Parties, make a
payment to another deposit account of Servicer so long as in any such event (A)
the aggregate amount of all such payments in any month shall not exceed
$750,000, (B) Servicer shall, and shall cause Originator to, contact such
Obligor to direct such Obligor to make all future payments to the Lock-Box
Accounts, the Concentration Account or as Agent may otherwise direct and (C)
any such payments shall be promptly deposited in the Concentration Account (but
in any event within one (1) Business Day), (iii) no credit, discount, allowance
or extension or agreement for any of the foregoing shall be granted to any
Obligor except as reported to Agent in accordance with this Agreement and
except for credits, discounts, allowances or extensions made or given in the
ordinary course of Borrower's business in accordance with the Credit and
Collection Policy, (iv) there shall be no setoffs, deductions, contras,
defenses, counterclaims or disputes existing or asserted with respect thereto
except as reported to Agent in accordance with the terms of this Agreement, (v)
none of the transactions giving rise thereto will violate any applicable
foreign, Federal, State or local laws or regulations, all documentation
relating thereto will be legally sufficient under such laws and regulations and
all such documentation will be legally enforceable in accordance with its
terms, (vi) such Account, together with the Related Assets, is owned by
Borrower free and clear of any security interest, lien, encumbrance, pledge,
assignment or similar right or claim, (vii) Agent shall have a valid and
perfected first priority security interest in such Account and the Related
Assets, and (viii) no currently effective financing statement or other
instrument similar in effect covering such Account, any interest therein, or
the Related Assets with respect thereto is on file in any recording office,
except in favor of Borrower in connection with the transfer of such Account
from Originator to Borrower and except in favor of Agent.
(d) Agent shall have the right at any time or times, in
Agent's name or in the name of a nominee of Agent, to verify the validity,
amount or any other matter relating to any Receivables or other Collateral, by
mail, telephone, facsimile transmission or otherwise.
7.3 Power of Attorney. Each Transaction Party hereby irrevocably
designates and appoints Agent (and all persons designated by Agent) such
Transaction Party's as true and lawful attorney-in-fact, and authorizes Agent,
in, or Agent's name, to: (a) at any time an Event of Default or a Servicer
Transfer Event exists or has occurred and is continuing (i) demand payment
52
on Receivables or other Collateral, (ii) enforce payment of Receivables by
legal proceedings or otherwise, (iii) exercise all of Borrower's rights and
remedies to collect any Receivable or other Collateral, (iv) sell or assign any
Receivable upon such terms, for such amount and at such time or times as the
Agent deems advisable, (v) settle, adjust, compromise, extend or renew an
Account, (vi) discharge and release any Receivable, (vii) prepare, file and
sign such Transaction Party's name on any proof of claim in bankruptcy or other
similar document against an Obligor in respect of any Receivables or other
Collateral, (viii) notify the post office authorities to change the address for
delivery of remittances from Obligors in respect of Receivables or other
proceeds of Collateral to an address designated by Agent, and open and dispose
of all mail addressed to such Transaction Party and handle and store all mail
relating to the Collateral; and (ix) do all acts and things which are
necessary, in Agent's determination, to fulfill each Transaction Party's
obligations under this Agreement and the other Transaction Documents, (b) at
any time during a Cash Dominion Period or that Agent may otherwise have the
right to instruct the depository bank at which the Concentration Account is
maintained to transfer funds to the Agent Payment Account or at any time that a
Servicer Transfer Event exists or has occurred and is continuing, to (i) take
control in any manner of any item of payment in respect of Receivables or
constituting Collateral or otherwise received in or for deposit in the Lock-Box
Accounts, Concentration Account or otherwise received by Agent or any Lender,
(ii) have access to any lockbox or postal box into which remittances from
Obligors in respect of Receivables or other proceeds of Collateral are sent or
received, (iii) endorse such Transaction Party's name upon any items of payment
in respect of Receivables or constituting Collateral or otherwise received by
Agent and any Lender and deposit the same in Agent's account for application to
the Obligations, (iv) endorse such Transaction Party's name upon any chattel
paper, document, instrument, invoice, or similar document or agreement relating
to any Receivable or any goods pertaining thereto or any other Collateral,
including any warehouse or other receipts, or bills of lading and other
negotiable or non-negotiable documents, and (c) at any such time, to sign such
Transaction Party's name on any verification of Receivables and notices thereof
to Obligors in respect thereof. Each Transaction Party hereby releases Agent
and Lenders and their respective officers, employees and designees from any
liabilities arising from any act or acts under this power of attorney and in
furtherance thereof, whether of omission or commission, except as a result of
Agent's or any Lender's own gross negligence or wilful misconduct as determined
pursuant to a final non-appealable order of a court of competent jurisdiction.
7.4 Right to Cure. Agent may, at its option, upon notice to
Borrower, (a) cure any default by any Transaction Party under any material
agreement with a third party that adversely affects the Collateral in any
material respect, its value or adversely affects in any material respect the
ability of Agent or Servicer to collect, sell or otherwise dispose of the
Collateral or the rights and remedies of Agent or any Lender therein or the
ability of any Transaction Party to perform its obligations hereunder or under
any of the other Financing Agreements, (b) pay or bond on appeal any judgment
entered against Borrower, (c) discharge taxes, liens, security interests or
other encumbrances at any time levied on or existing with respect to the
Collateral and (d) pay any amount, incur any expense or perform any act which,
in Agent's good faith judgment, is necessary or appropriate to preserve,
protect, insure or maintain the Collateral and the rights of Agent and Lenders
with respect thereto. Agent may add any amounts so expended to the Obligations
and charge Borrower's account therefor, such amounts to be repayable by
Borrower
53
on demand. Agent and Lenders shall be under no obligation to effect such cure,
payment or bonding and shall not, by doing so, be deemed to have assumed any
obligation or liability of any Transaction Party. Any payment made or other
action taken by Agent or any Lender under this Section shall be without
prejudice to any right to assert an Event of Default hereunder and to proceed
accordingly.
7.5 Access to Premises; Reviews. From time to time as requested
by Agent, each Transaction Party will, at the cost and expense of Borrower,
upon reasonable prior notice from Agent to such Transaction Party, or at any
time and without notice to such Transaction Party if an Event of Default exists
or has occurred and is continuing, permit Agent or its designee to (a) have
complete access to such Transaction Party's premises during normal business
hours for the purposes of inspecting, verifying and auditing the Collateral and
all of such Transaction Party's books and records, including the Records, and
discussing matters relating to the Receivables and the Related Assets or such
Transaction Party's financial condition or performance hereunder or under any
other Transaction Document or performance under any Contract, in each case,
with any of the officers or employees of such Transaction Party having
knowledge of such matters, provided that, without limiting the rights of Agent
to conduct such inspections, verifications and audits as provided above, in no
event shall more than four (4) of such inspections, verifications and audits in
any twelve (12) month period be at the cost and expense of Borrower, so long as
no Default or Event of Default shall exist or have occurred and be continuing
(and any such inspections, verifications and audits conducted when an Event of
Default exists or has occurred and is continuing shall not be considered for
purposes of such limitation), (b) meet with the independent auditors for such
Transaction Party to review with such auditors the books and records of such
Transaction Party with respect to the Receivables and Related Assets (including
the Records) and (c) without limiting the provisions of clauses (a) or (b)
above from time to time at the expense of Borrower, permit certified public
accountants or other third party auditors acceptable to Agent to conduct a
review of such Transaction Party's books and records with respect to the
Receivables and Related Assets (including the Records). Each Transaction Party
shall promptly furnish to Agent such copies of such books and records or
extracts therefrom as Agent may in good faith request, and Agent or any Lender
or Agent's designee may use during normal business hours such Transaction
Party's personnel, equipment, supplies and premises as may be reasonably
necessary for any of the foregoing and if an Event of Default exists or has
occurred and is continuing for the collection of Receivables and realization of
other Collateral.
SECTION 8. REPRESENTATIONS AND WARRANTIES
Each Transaction Party hereby represents and warrants as to itself to
Agent and Lenders the following (which shall survive the execution and delivery
of this Agreement), the truth and accuracy of which are a continuing condition
of the making of Loans by Agent and Lenders to Borrower:
8.1 Corporate Existence, Power and Authority. Each Transaction
Party is a corporation duly organized and in good standing under the laws of
its state of incorporation and is duly
54
qualified as a foreign corporation and in good standing in all states or other
jurisdictions where the nature and extent of the business transacted by it or
the ownership of assets makes such qualification necessary, where the failure
to so qualify would have a Material Adverse Effect. The execution, delivery and
performance of this Agreement, the other Financing Agreements and the
transactions contemplated hereunder and thereunder (a) are all within each
Transaction Party's corporate powers, (b) have been duly authorized, (c) are
not in contravention of law or the terms of such Transaction Party's
certificate of incorporation, by-laws, or other organizational documentation,
or any indenture, agreement or undertaking to which such Transaction Party is a
party or by which such Transaction Party or its property are bound and (d) will
not result in the creation or imposition of, or require or give rise to any
obligation to grant, any lien, security interest, charge or other encumbrance
upon any property of such Transaction Party. This Agreement and the other
Financing Agreements constitute legal, valid and binding obligations of each
Transaction Party enforceable in accordance with their respective terms.
8.2 Name; State of Organization; Chief Executive Office;
Collateral Locations.
(a) The exact legal name of each Transaction Party is as
set forth on the signature page of this Agreement. Each Transaction Party has
not, during the five years immediately prior to the date of this Agreement,
been known by or used any other corporate or fictitious name or been a party to
any merger or consolidation, or acquired all or substantially all of the assets
of any Person, or acquired any of its property or assets out of the ordinary
course of business, except as set forth in Schedule 8.2 hereto.
(b) Each Transaction Party is a corporation and
organized in the jurisdiction set forth in the initial paragraph of this
Agreement. Schedule 8.2 hereto accurately sets forth the organizational
identification number and the federal employer identification number of each
Transaction Party.
(c) The chief executive office and mailing address of
each Transaction Party and the Records concerning Receivables and Related
Assets are located only at the address identified as such in Schedule 8.2
hereto and the only other locations of Collateral, if any, are the addresses
set forth in Schedule 8.2 hereto, subject to the right of each Transaction
Party to establish new locations in accordance with Section 9.3 below. Schedule
8.2 hereto correctly identifies any of such locations which are not owned by
Borrower and sets forth the owners and/or operators thereof.
8.3 Financial Statements; No Material Adverse Change. All
financial statements relating to WestPoint and its subsidiaries which have been
or may hereafter be delivered by a Transaction Party to Agent or any Lender
have been prepared in accordance with GAAP (except as to any interim financial
statements, to the extent such statements are subject to normal year-end
adjustments and do not include any notes) and fairly present in all material
respects the financial condition and the results of operation of WestPoint and
its Subsidiaries as at the dates and for the periods set forth therein. Except
as disclosed in any interim financial statements furnished by WestPoint and its
subsidiaries to Agent or any Lender prior to the date of this
55
Agreement or as otherwise disclosed by a Transaction Party to Agent prior to
the date of this Agreement, there has been no material adverse change in the
assets, liabilities, properties and condition, financial or otherwise, of any
Transaction Party since the date of the most recent audited financial
statements furnished by or on behalf of such Transaction Party to Agent prior
to the date of this Agreement.
8.4 Priority of Liens; Title to Properties. The security
interests and liens granted to Agent under this Agreement and the other
Financing Agreements constitute valid and perfected first priority liens and
security interests in and upon the Collateral. Borrower has good, valid and
merchantable title to all of its other properties and assets subject to no
liens, mortgages, pledges, security interests, encumbrances or charges of any
kind, except those granted to Agent.
8.5 Tax Returns. Each Transaction Party has filed, or caused to
be filed, in a timely manner all tax returns, reports and declarations which
are required to be filed by it. All information in such tax returns, reports
and declarations is complete and accurate in all material respects. Each
Transaction Party has paid or caused to be paid all taxes due and payable or
claimed due and payable in any assessment received by it, except taxes the
validity of which are being contested in good faith by appropriate proceedings
diligently pursued and available to such Transaction Party and with respect to
which adequate reserves have been set aside on its books. Adequate provision
has been made for the payment of all accrued and unpaid Federal, State, county,
local, foreign and other taxes whether or not yet due and payable and whether
or not disputed.
8.6 Litigation. Except as set forth in Schedule 8.6 hereto, there
is no present investigation by any Governmental Authority pending, or to the
best of any Transaction Party's knowledge threatened, against or affecting any
Transaction Party, its assets or business and there is no action, suit,
proceeding or claim by any Person pending, or to the best of any Transaction
Party's knowledge threatened, against any Transaction Party or its assets or
goodwill, or against or affecting any transactions contemplated by this
Agreement, which if adversely determined against such Transaction Party would
have a Material Adverse Effect.
8.7 Compliance with Other Agreements and Applicable Laws.
(a) No Transaction Party is in default in any respect
under, or in violation in any respect of the terms of, any material agreement,
contract, instrument, lease or other commitment to which it is a party or by
which it or any of its assets are bound. Each Transaction Party is in
compliance with the requirements of all applicable laws, rules, regulations and
orders of any Governmental Authority relating to their respective businesses
where the failure to so comply would reasonably be expected to have a Material
Adverse Effect.
(b) Each Transaction Party has obtained all material
permits, licenses, approvals, consents, certificates, orders or authorizations
of any Governmental Authority required for the lawful conduct of its business
(the "Permits"). All of the Permits are valid and subsisting and in full force
and effect. There are no actions, claims or proceedings pending or to the best
of each
56
Transaction Party's knowledge, threatened that seek the revocation,
cancellation, suspension or modification of any of the Permits.
8.8 Bank Accounts. All of the deposit accounts, investment
accounts or other accounts in the name of or used by Borrower maintained at any
bank or other financial institution are set forth on Schedule 8.8 hereto,
subject to the right of Borrower to establish new accounts in accordance with
Section 5.2 hereof.
8.9 Intellectual Property. Borrower owns or licenses or otherwise
has the right to use all Intellectual Property necessary for the operation of
its business as presently conducted or proposed to be conducted. As of the date
hereof, Borrower does not have any Intellectual Property registered, or subject
to pending applications, in the United States Patent and Trademark Office or
any similar office or agency in the United States, any State thereof, any
political subdivision thereof or in any other country.
8.10 Subsidiaries; Affiliates; Capitalization; Solvency.
(a) Borrower does not have any direct or indirect
Subsidiaries or Affiliates and is not engaged in any joint venture or
partnership, except as set forth on Schedule 8.10 hereto.
(b) The issued and outstanding shares of Capital Stock
of Borrower are directly and beneficially owned and held by WestPoint and in
each case all of such shares have been duly authorized and are fully paid and
non-assessable, free and clear of all claims, liens, pledges and encumbrances
of any kind, except for the pledges and security interests in favor of Senior
Credit Facility Agent and Subordinated Credit Facility Agreement, which pledges
and security interests are subject to the terms of the Intercreditor
Agreements. There are no beneficial interests (as such term is defined in FASB
140) in Borrower other than those in favor of WestPoint, Agent and Lenders.
(c) Borrower is Solvent and will continue to be Solvent
after the creation of the Obligations, the security interests of Agent, the
transfer of Receivables by Originator to Borrower and the other transactions
contemplated hereunder.
8.11 Bulk Sales Act. No transaction contemplated hereby requires
compliance with any bulk sales act or similar law.
8.12 Payments to Originator. With respect to each Receivable
transferred to Borrower by Originator pursuant to the Receivables Purchase
Agreement, Borrower has given reasonably equivalent value and fair
consideration to Originator in consideration for the Receivables originated by
it and the Related Assets with respect thereto and such transfer was not made
for or on account of antecedent debt. No transfer by Originator of any
Receivable is or may be voided under any section of the U.S. Bankruptcy Code.
8.13 Accuracy and Completeness of Information. All information
furnished by or on behalf of any Transaction Party in writing to Agent or any
Lender in connection with this
57
Agreement or any of the other Financing Agreements or any transaction
contemplated hereby or thereby is true and correct in all material respects on
the date as of which such information is dated or certified and does not omit
any material fact necessary in order to make such information not misleading.
No event or circumstance has occurred which has had or could reasonably be
expected to have a Material Adverse Effect, which has not been fully and
accurately disclosed to Agent in writing prior to the date hereof.
8.14 Survival of Warranties; Cumulative. All representations and
warranties contained in this Agreement or any of the other Financing Agreements
shall survive the execution and delivery of this Agreement and shall be deemed
to have been made again to Agent and Lenders on the date of each additional
borrowing or other credit accommodation hereunder and shall be conclusively
presumed to have been relied on by Agent and Lenders regardless of any
investigation made or information possessed by Agent or any Lender. The
representations and warranties set forth herein shall be cumulative and in
addition to any other representations or warranties which any Transaction Party
shall now or hereafter give, or cause to be given, to Agent or any Lender.
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
9.1 Maintenance of Existence.
(a) Each Transaction Party shall at all times preserve,
renew and keep in full force and effect its corporate existence and rights and
franchises with respect thereto and maintain in full force and effect all
licenses, trademarks, tradenames, approvals, authorizations, leases, contracts
and Permits necessary to carry on the business as presently or proposed to be
conducted where the failure to do so could reasonably be expected to have
Material Adverse Effect.
(b) No Transaction Party shall change its name unless
each of the following conditions is satisfied: (i) Agent shall have received
not less than five (5) Business Days' prior written notice from such
Transaction Party of such proposed change in its corporate name, which notice
shall accurately set forth the new name; and (ii) Agent shall have received a
copy of the amendment to the Certificate of Incorporation of such Transaction
Party providing for the name change certified by the Secretary of State of the
jurisdiction of incorporation or organization of such Transaction Party as soon
as it is available.
9.2 Keeping of Books and Records. Servicer will maintain and
implement administrative and operating procedures (including, without
limitation, an ability to recreate records evidencing Receivables in the event
of the destruction of the originals thereof pursuant to a system reasonably
acceptable to Agent and that is successfully tested periodically or otherwise
at such time or times as Agent may reasonably request), and keep and maintain,
all documents, books, records and other information reasonably necessary or
advisable for the collection of all Receivables (including, without limitation,
records adequate to permit the daily identification of outstanding unpaid
amounts owing by Obligors and related debit and credit details of the
Receivables).
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9.3 Location of Records. Each Transaction Party will keep its
principal place of business and chief executive office and the offices where it
keeps its Records at the addresses set forth on Schedule 8.2 hereto identified
as their respective chief executive offices or at such other locations as such
Transaction Party may establish after the date hereof within the continental
United States provided such Transaction Party (a) gives Agent written notice of
the opening of any such new location on or about the date of its opening (but
in any event no later than five (5) Business Days' thereafter so long as no
Default or Event of Default exists or has occurred and is continuing and no
later than on the date of its opening if a Default or Event of Default exists
or has occurred and is continuing) and (b) executes and delivers, or causes to
be executed and delivered, to Agent such agreements, documents, and instruments
as Agent may deem reasonably necessary or desirable to protect its interests in
the Collateral at such location promptly upon Agent's request.
9.4 Receivables Purchase Agreement. Borrower will (a) perform and
comply with all of its covenants and agreements set forth in the Receivables
Purchase Agreement, (b) enforce the rights and remedies accorded to Borrower
under the Receivables Purchase Agreement, and (c) enforce the performance by
the Originator of its obligations under the Receivables Purchase Agreement.
9.5 Ownership Interest of Borrower. Borrower shall take all
necessary action to vest legal and equitable title to the Receivables and the
Related Assets purchased under the Receivables Purchase Agreement irrevocably
in Borrower, free and clear of any security interest, lien, claim, charge,
pledge or other encumbrance other than security interests and liens of Agent
(including, without limitation, the filing of all financing statements or other
similar instruments or documents necessary under the UCC of all appropriate
jurisdictions (or any comparable law) to perfect Borrower's interest in such
Receivables and Related Assets and such other action to perfect, protect or
more fully evidence the interests of Borrower and Agent as assignee of Borrower
or otherwise, in each case as Agent may reasonably request).
9.6 Security Interest of Agent. Borrower shall take all necessary
action to establish and maintain, in favor of Agent, a valid and perfected
first priority security interest in all Receivables and Related Assets to the
full extent contemplated herein, free and clear of any security interests,
liens, claims, charges, pledges or other encumbrances other than the security
interests and liens in favor of Agent.
9.7 Payment under Receivables Purchase Agreement. With respect to
each Receivable purchased by Borrower from the Originator, such sale shall be
effected under, and in strict compliance with the terms of the Receivables
Purchase Agreement, including, without limitation, the terms relating to the
amount and timing of payments to be made to Originator in respect of the
purchase price for such Receivable.
9.8 Marking of Records and Data Processing Reports. Each
Transaction Party shall ▇▇▇▇ its computer systems and other electronic Records
which store information relating to and which evidence Receivables and related
Contracts with a legend, acceptable to Agent, evidencing that the Receivables
and Related Assets have been sold by WestPoint to Borrower and that such
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Receivables and Related Assets are subject to the security interest and lien of
Agent. Each Transaction Party shall on or before April 15, 2003 (and shall
deliver to Agent on or before such date a certificate of an authorized officer
certifying compliance with this Section 9.8) place on its computer systems and
electronic records which store information relating to and which evidence the
Receivables, and take all steps reasonably necessary to ensure that there shall
remain on such computer systems and electronic records the following legend (or
the substantive equivalent thereof): THE RECEIVABLES DESCRIBED HEREIN HAVE BEEN
SOLD TO WPS RECEIVABLES CORPORATION PURSUANT TO A SECOND AMENDED AND RESTATED
RECEIVABLES PURCHASE AGREEMENT, DATED AS OF MARCH 28, 2003, AS AMENDED OR
SUPPLEMENTED FROM TIME TO TIME, BETWEEN WESTPOINT ▇▇▇▇▇▇▇ INC. AND WPS
RECEIVABLES CORPORATION, AND A SECURITY INTEREST IN THE RECEIVABLES DESCRIBED
HEREIN AND IN SUCH RECEIVABLES PURCHASE AGREEMENT HAS BEEN GRANTED AND ASSIGNED
TO CONGRESS FINANCIAL CORPORATION (SOUTHERN), AS AGENT ON BEHALF OF ITSELF AND
CERTAIN LENDERS PURSUANT TO THE LOAN AND SECURITY AGREEMENT, DATED AS OF MARCH
28, 2003, AMONG WPS RECEIVABLES CORPORATION, AS BORROWER, WESTPOINT ▇▇▇▇▇▇▇
INC., AS INITIAL SERVICER, CONGRESS FINANCIAL CORPORATION (SOUTHERN), AS AGENT,
AND THE PARTIES THERETO AS LENDERS, AS AMENDED OR SUPPLEMENTED FROM TIME TO
TIME. In the event that any such records are printed and distributed or shown
to any person other than a Transaction Party or Agent, and other than customers
in the ordinary course of the business of a Transaction Party consistent with
current practices as of the date hereof, such legend shall be included with
such printed records.
9.9 Compliance with Laws, Regulations, Etc. Each Transaction
Party shall, at all times, comply in all material respects with all laws,
rules, regulations, licenses, approvals, orders and other Permits applicable to
it and duly observe all requirements of any foreign, Federal, State or local
Governmental Authority, where the failure to so comply, individually or in the
aggregate could reasonably be expected to have a Material Adverse Effect.
9.10 Payment of Taxes and Claims. Each Transaction Party shall,
and shall cause any Subsidiary to, duly pay and discharge all taxes,
assessments, contributions and governmental charges upon or against it or its
properties or assets, except for taxes the validity of which are being
contested in good faith by appropriate proceedings diligently pursued and
available to Borrower or such Subsidiary, as the case may be, and with respect
to which adequate reserves have been set aside on its books. Each Transaction
Party shall be liable for any tax or penalties imposed on Agent or any Lender
as a result of the financing arrangements provided for herein and Borrower
agrees to indemnify and hold Agent harmless with respect to the foregoing, and
to repay to Agent, for the benefit of Lenders, on demand the amount thereof,
and until paid by such Transaction Party such amount shall be added and deemed
part of the Loans, provided, that, nothing contained herein shall be construed
to require any Transaction Party to pay any income or franchise taxes
attributable to the income of Lenders from any amounts charged or paid
hereunder to Lenders. The foregoing indemnity shall survive the payment of the
Obligations and the termination of this Agreement.
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9.11 Reporting Requirements of Transaction Parties.
(a) Each Transaction Party shall, and shall cause any
Subsidiary to, keep proper books and records in which true and complete entries
shall be made of all dealings or transactions of or in relation to the
Collateral and the business of WestPoint and its Subsidiaries in accordance
with GAAP. Each Transaction Party shall promptly furnish to Agent and Lenders
all such financial and other information as Agent shall reasonably request
relating to the Collateral and the assets, business and operations of such
Transaction Party, and each Transaction Party shall notify its auditors and
accountants that Agent is authorized to obtain such information directly from
them. Without limiting the foregoing, each Transaction Party shall furnish or
cause to be furnished to Agent, the following:
(i) within twenty (20) days after the end of
each fiscal month, other than a fiscal month that is also the end of a fiscal
quarter or the end of a fiscal year, and within thirty (30) days after the end
of each fiscal month that is also the end of a fiscal quarter, other than a
fiscal quarter that is also the end of a fiscal year, and within forty-five
(45) days after the end of each fiscal month that is also the end of a fiscal
year, as applicable,
(A) monthly unaudited consolidated
financial statements of WestPoint and its Subsidiaries (including balance
sheets, statements of income and loss and statements of cash flow, and on a
quarterly basis, statements of shareholders' equity), all in reasonable detail,
fairly presenting in all material respects the financial position and the
results of the operations of WestPoint and its Subsidiaries as of the end of
and through such fiscal month, certified to be correct by the chief financial
officer, treasurer or controller of WestPoint, subject to normal year-end
adjustments and no footnotes; and
(B) monthly unaudited consolidated
financial statements of Borrower and its Subsidiaries (including balance sheets
and statements of income and loss), all in reasonable detail, fairly presenting
in all material respects the financial position and the results of the
operations of Borrower and its Subsidiaries as of the end of and through such
fiscal month, certified to be correct by the president, chief financial
officer, treasurer or controller of Borrower, subject to normal year-end
adjustments and no footnotes and accompanied by a compliance certificate
substantially in the form of Exhibit D hereto, along with a schedule in a form
satisfactory to Agent of the calculations used in determining, as of the end of
such month, whether Borrower is in compliance with the covenant set forth in
Section 9.21 of this Agreement for such month;
(ii) within ninety-five (95) days after the end
of each fiscal year (or within one hundred twenty (120) days after the end of
each fiscal year in the event that WestPoint is entitled to an extension of
time under federal securities laws to file its annual report on Form 10-K for
such fiscal year),
(A) audited consolidated financial
statements of WestPoint and its Subsidiaries (including balance sheets,
statements of income and loss, statements of cash flow, and statements of
shareholders' equity), and the accompanying notes thereto, all in reasonable
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detail, fairly presenting in all material respects the financial position and
the results of the operations of WestPoint and its Subsidiaries as of the end
of and for such fiscal year, together with the unqualified opinion of
independent certified public accountants with respect to the audited
consolidated financial statements, which accountants shall be an independent
accounting firm selected by WestPoint and acceptable to Agent, that such
audited consolidated financial statements have been prepared in accordance with
GAAP, and present fairly in all material respects the results of operations and
financial condition of WestPoint and its Subsidiaries as of the end of and for
the fiscal year then ended; and
(B) unaudited consolidated financial
statements of Borrower and its Subsidiaries (including balance sheets and
statements of income and loss), all in reasonable detail, fairly presenting in
all material respects the financial position and the results of the operations
of Borrower and its Subsidiaries as of the end of and for such fiscal year,
certified to be correct by the president, chief financial officer, treasurer or
controller of Borrower, subject to no footnotes; and
(iii) within twenty-five (25) days after the end
of each fiscal year, in form and substance satisfactory to Agent, projected
consolidated financial statements of WestPoint and its Subsidiaries (including
in each case forecasted balance sheets, statements of income and loss and
statements of cash flow), all in reasonable detail, for the then current fiscal
year of WestPoint prepared on a monthly basis, together with a statement of all
assumptions related thereto (which shall be fair and reasonable as of the date
of preparation in view of current and reasonably foreseeable business
conditions) and monthly projections of Senior Credit Facility Availability for
the subsequent fiscal year, together with a statement of all assumptions
related thereto (which shall be fair and reasonable as of the date of
preparation in view of current and reasonably foreseeable business conditions),
which projected financial statements and projections of availability shall be
based on the reasonable, good faith opinion of Borrower and WestPoint for the
periods set forth therein (it being understood that actual results may differ
from those set forth in such projections).
(b) Each Transaction Party shall notify Agent
immediately if at any time the Senior Credit Facility Availability is less than
$75,000,000 or if there is any default or event of default under the Senior
Credit Facility Agreement or any related agreements, the Subordinated Credit
Facility Agreement or any related agreements or the Senior Notes or any related
agreements (or any agreements relating to Indebtedness refinancing or replacing
the Senior Notes). Each Transaction Party shall promptly notify Agent in
writing of the details of (i) any loss, damage, investigation, action, suit,
proceeding or claim relating to Collateral or that if adversely determined
could reasonably be expected to have a Material Adverse Effect, (ii) any order,
judgment or decree entered against Borrower or any of its properties or assets,
(iii) any order, judgment or decree entered against Servicer or any of its
properties or assets that could reasonably be expected to have a Material
Adverse Effect, (iv) any ERISA Event, and (v) the occurrence of any Default or
Event of Default.
(c) Each Transaction Party shall promptly after the
sending or filing thereof furnish or cause to be furnished to Agent copies of
all reports which WestPoint sends to its stockholders
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generally and copies of all reports and registration statements which WestPoint
files with the Securities and Exchange Commission, any national securities
exchange or the National Association of Securities Dealers, Inc.
(d) Each Transaction Party shall furnish or cause to be
furnished to Agent such budgets, forecasts, projections and other information
respecting the Collateral and the business of such Transaction Party as Agent
may, from time to time, reasonably request, including, without limitation,
periodic updates with respect to the projections described in Section
9.11(a)(iii) hereof. Agent is hereby authorized to deliver a copy of any
financial statement or any other information relating to the business of
Borrower to any court or other Governmental Authority, or to any Lender or
Participant or prospective Lender or Participant, or any Affiliate of any
Lender or Participant. Borrower hereby irrevocably authorizes and directs all
accountants or auditors to deliver to Agent, at the expense of Servicer, copies
of the financial statements of WestPoint and any reports or management letters
prepared by such accountants or auditors on behalf of any Transaction Party and
to disclose to Agent and Lenders such information as they may have regarding
the business of any Transaction Party. Any documents, schedules, invoices or
other papers delivered to Agent or any Lender may be destroyed or otherwise
disposed of by Agent or such Lender one (1) year after the same are delivered
to Agent or such Lender, except as otherwise designated by Servicer to Agent or
such Lender in writing.
9.12 Sale of Assets, Consolidation, Merger, Dissolution, Etc.
(a) WestPoint shall not merge into or with or
consolidate with any other Person or permit any other Person to merge into or
with or consolidate with it or sell, issue, assign, lease, license, transfer,
abandon or otherwise dispose of any Capital Stock to any other Person or any of
its assets to any other Person, or agree to do any of the foregoing, except in
each case, as and to the extent permitted under the Senior Credit Facility
Agreement as in effect on the date hereof and without regard to any waiver of
any provision thereof after the date hereof (or as Agent may otherwise agree in
good faith) and upon not less than thirty (30) days' prior written notice to
Agent (and subject to the execution and delivery of such agreements or other
materials, including lien searches, as a result of such transaction, as Agent
may reasonably request) or wind up, liquidate or dissolve.
(b) Borrower shall not merge into or with or consolidate
with any other Person or permit any other Person to merge into or with or
consolidate with it or sell, issue, assign, lease, license, transfer, abandon
or otherwise dispose of any Capital Stock to any other Person or any of its
assets to any other Person, wind up, liquidate or dissolve or agree to do any
of the foregoing, except that (i) Borrower may issue and sale shares of Capital
Stock to WestPoint on terms and conditions acceptable to Agent and (ii)
Borrower may sell to Originator rejected or returned merchandise from time to
time in the ordinary course of business in accordance with Section 3.1(b)(ii)
of the Receivables Purchase Agreement which rejected or returned merchandise
may be paid for by Originator pursuant to the reduction in the purchase price
payable by Borrower to Originator for Receivables as set forth therein and
merchandise so sold by Borrower to Originator shall be free of the security
interest of Agent therein.
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9.13 Encumbrances. Borrower shall not create, incur, assume or
suffer to exist any security interest, mortgage, pledge, lien, charge or other
encumbrance of any nature whatsoever on any of its assets or properties,
including the Collateral, or file or permit the filing of, or permit to remain
in effect, any financing statement or other similar notice of any security
interest or lien with respect to any such assets or properties, except for the
security interests and liens of Agent for itself and the benefit of Lenders.
Servicer shall not have or assert any interest in the Receivables or Related
Assets.
9.14 Indebtedness. Borrower shall not incur, create, assume,
become or be liable in any manner with respect to, or permit to exist, any
Indebtedness or any other obligations or liabilities, or guarantee, assume,
endorse, or otherwise become responsible for (directly or indirectly), the
Indebtedness or any other obligations or liabilities of any other Person,
except:
(a) the Obligations;
(b) the unsecured Indebtedness of Borrower evidenced by
the WPS ▇▇▇▇▇ Note; provided, that:
(i) as of the last day of the fiscal month
immediately prior to the date hereof, the aggregate principal amount of such
Indebtedness was approximately$55,085,316.62;
(ii) such Indebtedness of Borrower is and at all
times shall be subject and subordinate in right of payment to the right of
Agent and Lenders to receive the indefeasible payment and satisfaction in full
of all of the Obligations on the terms and conditions set forth in the WPS
▇▇▇▇▇ Note as in effect on the date hereof and as may otherwise be acceptable
to Agent;
(iii) Borrower shall not, directly or indirectly,
make any payments in respect of such Indebtedness, except, that, Borrower may
make payments of principal or interest in accordance with the terms of the WPS
▇▇▇▇▇ Note, provided, that, as to any such payment, each of the following
conditions is satisfied as determined by Agent: (A) as of the close of business
on the Business Day immediately prior to any such payment, funds shall have
been segregated, set aside and held in trust by Servicer from Collections in
such amounts as may be required under Section 2.3 hereof, and at any time and
from time to time, upon Agent's request, only if Agent shall have received
evidence that such funds have been so segregated, set aside and held in trust,
(B) no such payments shall be made unless and until all then outstanding
Servicer Advances have been paid in full, all funds for the payment of any
expenses (including taxes)of Borrower have been set aside or such payments
otherwise made in full, and the amount of the purchase price for any
Receivables and Related Assets payable from Borrower to Originator under the
Receivables Purchase Agreement has been paid in full, and (C) as of the date of
any such payment and after giving effect thereto, no Default or Event of
Default shall exist or have occurred and be continuing,
(iv) Borrower shall not directly or indirectly,
(A) amend, modify, alter or change any terms of such Indebtedness or the WPS
▇▇▇▇▇ Note, except, that, Borrower may, after prior written notice to Agent,
amend, modify, alter or change the terms thereof so as to extend the
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maturity thereof or defer the timing of any payments in respect thereof, or to
forgive or cancel any portion of such Indebtedness other than pursuant to
payments thereof, or to contribute such Indebtedness as an equity capital
contribution, or to reduce the interest rate or any fees in connection
therewith, or (B) redeem, retire, defease, purchase or otherwise acquire such
Indebtedness, or set aside or otherwise deposit or invest any sums for such
purpose, and
(v) Borrower shall furnish to Agent all notices
or demands in connection with such Indebtedness either received by Borrower or
on its behalf promptly after the receipt thereof, or sent by Borrower or on its
behalf concurrently with the sending thereof, as the case may be;
(c) unsecured Indebtedness of Borrower to Originator
incurred in accordance with the Receivables Purchase Agreement;
(d) unsecured Indebtedness of Borrower to Servicer in
respect of Servicer Advances arising in accordance with the terms hereof;
(e) obligations arising pursuant to accrued and unpaid
federal and state taxes payable by Borrower in the ordinary course of its
business as currently conducted which are not overdue and for which adequate
reserves have been set aside;
(f) the unsecured contingent obligations or liabilities
of Borrower under the Existing Securitization Facility that expressly survive
the termination thereof to the extent such obligations or liabilities continue
as set forth in the Termination Agreement, dated of even date herewith, between
among Borrower, as Transferor, WestPoint, as Initial Servicer, Blue Ridge Asset
Funding Corporation, as Transferee, North American Capacity Insurance Company,
as Insurer, and Wachovia Bank, N.A., as Administrator;
(g) the unsecured contingent obligations or liabilities
of Borrower to the depository banks at which the deposit accounts are
maintained that are subject to the Deposit Account Control Agreements arising
under such agreements; and
(h) current accounts payable arising in the ordinary
course of business and not overdue, in an aggregate amount at any time
outstanding not to exceed $10,000.
9.15 Loans, Investments, Etc. Borrower shall not, directly or
indirectly, make any loans or advance money or property to any person, or
invest in (by capital contribution, dividend or otherwise) or purchase or
repurchase the Capital Stock or Indebtedness or all or a substantial part of
the assets or property of any person, or form or acquire any Subsidiaries, or
agree to do any of the foregoing, except:
(a) the endorsement of instruments for collection or
deposit in the ordinary course of business; and
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(b) investments in cash or Cash Equivalents, provided,
that, the terms and conditions of Section 5.2 hereof shall have been satisfied
with respect to the deposit account, investment account or other account in
which such cash or Cash Equivalents are held.
9.16 Dividends and Redemptions. Borrower shall not, directly or
indirectly, declare or pay any dividends on account of any shares of class of
any Capital Stock of Borrower now or hereafter outstanding, or set aside or
otherwise deposit or invest any sums for such purpose, or redeem, retire,
defease, purchase or otherwise acquire any shares of any class of Capital Stock
(or set aside or otherwise deposit or invest any sums for such purpose) for any
consideration or apply or set apart any sum, or make any other distribution (by
reduction of capital or otherwise) in respect of any such shares or agree to do
any of the foregoing, except that the foregoing shall not prohibit Borrower
from declaring and paying dividends or making distributions to its shareholders
if each of the following conditions is satisfied: (a) as of the date of any
such payment and after giving effect thereto, there shall have been no
Indebtedness evidenced by the WPS ▇▇▇▇▇ Note or Servicer Advances for each of
the immediately preceding five (5) consecutive Business Days, (b) as of the
close of business on the Business Day immediately prior to any such payment,
funds shall have been segregated, set aside and held in trust by Servicer from
Collections in such amounts as may be required under Section 2.3 hereof, and at
any time and from time to time, upon Agent's request, only if Agent shall have
received evidence that such funds have been so segregated, set aside and held
in trust, (c) as of the date of any such payment and after giving effect
thereto, no Servicer Advances shall have been outstanding for each of the
immediately preceding five (5) consecutive Business Days, all funds for the
payment of any expenses (including taxes) of Borrower have been set aside or
such payments otherwise made in full, and the amount of the purchase price for
any Receivables and Related Assets payable from Borrower to Originator under
the Receivables Purchase Agreement has been paid in full, and (d) as of the
date of any such payment and after giving effect thereto, no Default of Event
of Default shall exist or have occurred and be continuing.
9.17 Transactions with Affiliates. Borrower shall not, directly or
indirectly:
(a) purchase, acquire or lease any property from, or
sell, transfer or lease any property to, any officer, director or other
Affiliate of Borrower, except in the ordinary course of and pursuant to the
reasonable requirements of Borrower's business (as the case may be) and upon
fair and reasonable terms no less favorable to Borrower than Borrower would
obtain in a comparable arm's length transaction with an unaffiliated person; or
(b) make any payments (whether by dividend, loan or
otherwise) of management, consulting or other fees for management or similar
services, or of any Indebtedness owing to any officer, employee, shareholder,
director or any other Affiliate of Borrower, except reasonable compensation to
officers, employees and directors for services rendered to Borrower in the
ordinary course of business and payments in respect of the Indebtedness of the
WPS ▇▇▇▇▇ Note otherwise permitted hereunder and dividends otherwise permitted
hereunder.
9.18 Change in Business or Credit and Collection Policy. No
Transaction Party will make or permit to be made any change in the character of
its business or in the Credit and
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Collection Policy that would, in either case, impair the collectability of any
significant portion of the Receivables or otherwise materially adversely affect
the interests or remedies of Agent or any Lender under this Agreement or any
other Transaction Document, unless with respect to any material change in
accounting policies relating to Receivables, such change is made in accordance
with GAAP.
9.19 Change to Other Documents. Borrower shall not enter into any
amendment, waiver or modification of, or supplement to, the Receivables
Purchase Agreement or any agreements related thereto or its certificate of
incorporation or by-laws.
9.20 End of Fiscal Years; Fiscal Quarters. Borrower shall, for
financial reporting purposes, cause its, and each of its Subsidiaries' (a)
fiscal years to end on or about December 31 of each year and (b) fiscal
quarters to end on or about March 31, June 30, September 30 and December 31 of
each year.
9.21 Adjusted Tangible Net Worth. Borrower shall, as of the end of
each fiscal month, have Adjusted Tangible Net Worth of not less than
$50,000,000.
9.22 Separate Corporate Existence of Borrower. Each Transaction
Party hereby acknowledges that Agent and Lenders are entering into the
transactions contemplated hereby in reliance upon Borrower's identity as a
legal entity separate from WestPoint and its other Affiliates. Therefore, each
Transaction Party shall take all steps specifically required by this Agreement
or otherwise or reasonably required by the Agent to continue Borrower's
identity as a separate legal entity and to make it apparent to third Persons
that Borrower is an entity with assets and liabilities distinct from those of
WestPoint and Affiliates, and is not a division of WestPoint or any other
Person. Without limiting the foregoing, each Transaction Party will take such
actions as shall be required in order that:
(a) Borrower will be a limited purpose corporation whose
primary activities are restricted in its certificate of incorporation to
purchasing or otherwise acquiring from the Originator, owning, holding,
granting security interests, or selling interests, in Receivables and Related
Assets, entering into agreements for the selling or transferring and servicing
of the Receivables, and conducting such other activities as it deems necessary
or appropriate to carry out its primary activities;
(b) not less than one member of Borrower's Board of
Directors (the "Independent Director") shall be an individual who is not at
such time, and shall not have been at any time during the preceding three years
(and is not an associate, as defined below, of), (i) a director, officer,
employee or affiliate of WestPoint or any of its Subsidiaries or Affiliates, or
of any major creditor (as hereinafter defined) thereof, or (ii) the direct,
indirect or beneficial owner at the time of such individual's appointment as an
Independent Director or at any time thereafter while serving as an Independent
Director, of common stock of WestPoint, or (iii) a relative of any person
described in the foregoing clauses (i) or (ii). For purposes of this paragraph
(b), (A) the term "major creditor" shall mean a financial institution to which
WestPoint or any of its subsidiaries or affiliates has outstanding Indebtedness
for borrowed money in a sum sufficiently
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large as would reasonably be expected to influence the judgment of the
Independent Director adversely to the interest of Borrower when its interests
are adverse to those of WestPoint or any of its subsidiaries or affiliates, (B)
the term "affiliate of a person" means a person that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is under
common control with, the person specified, and (C) the term "associate," when
used to indicate a relationship with any person, means (1) a corporation or
organization of which such person is an officer, director or partner or is,
directly or indirectly, the beneficial owner of ten (10%) percent or more of
any class of equity securities, (2) any trust or other estate in which such
person serves as trustee or in a similar capacity, and (3) any spouse, parent,
sibling, child, niece, nephew or cousin of such person or any spouse of any of
the foregoing;
(c) the certificate of incorporation of Borrower shall
provide that (i) at least one member of Borrower's Board of Directors shall be
an Independent Director, (ii) Borrower shall not, without the affirmative vote
of one hundred (100%) percent of the members of its Board of Directors,
institute proceedings to be adjudicated bankrupt or insolvent, or consent to
the institution of an bankruptcy or insolvency proceedings against it, or file
a petition seeking or consent to reorganization or relief under any applicable
federal or state law relating to bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution or liquidation or similar law of any
jurisdiction whether now or hereinafter in effect, or consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator (or
similar official) of Borrower or a substantial part of its property, or make
any assignment for the benefit of creditors, or admit in writing its inability
to pay its debts generally as they become due, or take corporate action in
furtherance of any such action, and (iii) the provisions described in clause
(ii) of this subsection (c), cannot be amended without the prior written
consent of the Independent Director;
(d) the Independent Director shall not at any time serve
as a trustee in bankruptcy for Borrower or any Affiliate thereof;
(e) any employee, consultant or agent of Borrower will
be compensated from Borrower's funds for services provided to Borrower and
Borrower will not engage any agents other than its attorneys, auditors and
other professionals, and a servicer and any other agent contemplated by the
Transaction Documents for the Receivables, which servicer will be fully
compensated for its services by payment of the Servicer Fee, and certain
organizational expenses in connection with the formation of Borrower;
(f) Borrower will contract with Servicer to perform for
Borrower all operations required on a daily basis to service the Receivables
and Borrower will pay Servicer the Servicer Fee pursuant hereto. Borrower will
not incur any material indirect or overhead expenses for items shared with
WestPoint (or any other Affiliate thereof) which are not reflected in the
Servicer Fee. To the extent, if any, that Borrower (or any other Affiliate
thereof) share items of expenses not reflected in the Servicer Fee, for legal,
auditing and other professional services and directors' fees, such expenses
will be allocated to the extent practical on the basis of actual use or the
value of services rendered, and otherwise on a basis reasonably related to the
actual use or the value of services rendered, it being understood that
WestPoint shall pay all expenses relating to
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the preparation, negotiation, execution and delivery of the Transaction
Documents, including, without limitation, legal, rating agency and other fees;
(g) Borrower's operating expenses will not be paid by
any other Transaction Party or other Affiliate of Borrower;
(h) Borrower will have and use its own stationery;
(i) the books of account, financial reports and
corporate records of Borrower will be maintained separately from those of
WestPoint and each other Affiliate of Borrower;
(j) any financial statements of any Transaction Party or
Affiliate thereof which are consolidated to include Borrower will contain
detailed notes clearly stating that (i) all of Borrower's assets are owned by
Borrower, and (ii) Borrower is a separate corporate entity with its own
separate creditors that will be entitled to be satisfied out of Borrower's
assets prior to any value in Borrower becoming available to Borrower's equity
holders; and the accounting records and the published financial statements of
WestPoint or any of its Affiliates and any other public financial reports of
WestPoint or any of its Affiliates will clearly show (which, solely in the case
of published financial statements, may be by footnote) that, for accounting
purposes, the Receivables and Related Assets have been sold by Originator to
Borrower;
(k) Borrower's assets will be maintained in a manner
that facilitates their identification and segregation from those of WestPoint
and its other Affiliates;
(l) each Affiliate of Borrower will strictly observe
corporate formalities in its dealings with Borrower, and, except as permitted
pursuant to this Agreement with respect to Collections, funds or other assets
of Borrower that are to be held in trust for the benefit of Borrower or Agent,
will not be commingled with those of any of its Affiliates;
(m) no Affiliate of Borrower will maintain joint bank
accounts with Borrower or other depository accounts with Borrower to which any
such Affiliate (other than in its capacity as the Servicer hereunder or under
the Receivables Purchase Agreement) has independent access;
(n) no Affiliate of Borrower shall, directly or
indirectly, name Borrower or enter into any agreement to name Borrower as a
direct or contingent beneficiary or loss payee on any insurance policy covering
the property of any Affiliate of Borrower;
(o) each Affiliate of Borrower will maintain arm's
length relationships with Borrower, and each Affiliate of Borrower that renders
or otherwise furnishes services or merchandise to Borrower will be compensated
by Borrower at market rates for such services or merchandise;
(p) no Affiliate of Borrower will be, nor will it hold
itself out to be, responsible for the debts of Borrower or the decisions or
actions in respect of the daily business and affairs of Borrower. WestPoint and
Borrower will immediately correct any known misrepresentation with
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respect to the foregoing and they will not operate or purport to operate as an
integrated single economic unit with respect to each other or in their dealing
with any other entity;
(q) Borrower will keep correct and complete books and
records of account and minutes of the meetings and other proceedings of its
stockholder and board of directors, as applicable, and the resolutions,
agreements and other instruments of Borrower will be continuously maintained as
official records by Borrower; and
(r) Borrower, on the one hand, and Originator, on the
other hand, will conduct its business solely in its own corporate name and in
such a separate manner so as not to mislead others with whom they are dealing;
provided that, subject to Section 6.4, Servicer may service the Receivables in
its own name.
9.23 Costs and Expenses. Each Transaction Party shall pay to Agent
on demand all costs, expenses, filing fees and taxes paid or payable in
connection with the preparation, negotiation, execution, delivery, recording,
administration, collection, liquidation, enforcement and defense of the
Obligations, Agent's rights in the Collateral, this Agreement, the other
Financing Agreements and all other documents related hereto or thereto,
including any amendments, supplements or consents which may hereafter be
contemplated (whether or not executed) or entered into in respect hereof and
thereof, including: (a) all costs and expenses of filing or recording
(including Uniform Commercial Code financing statement filing taxes and fees,
documentary taxes, intangibles taxes and mortgage recording taxes and fees, if
applicable); (b) costs and expenses and fees for insurance premiums, appraisal
fees and search fees, costs and expenses of remitting loan proceeds, collecting
checks and other items of payment, and establishing and maintaining the
Lock-Box Accounts and the Concentration Account, together with Agent's
customary charges and fees with respect thereto; (c) costs and expenses of
preserving and protecting the Collateral; (d) costs and expenses paid or
incurred in connection with obtaining payment of the Obligations, enforcing the
security interests and liens of Agent, selling or otherwise realizing upon the
Collateral, and otherwise enforcing the provisions of this Agreement and the
other Financing Agreements or defending any claims made or threatened against
Agent or any Lender arising out of the transactions contemplated hereby and
thereby (including preparations for and consultations concerning any such
matters); (e) all out-of-pocket expenses and costs heretofore and from time to
time hereafter incurred by Agent in connection with the administration of the
arrangements hereunder and during the course of periodic field examinations of
the Collateral and the operations of each Transaction Party, plus a per diem
charge at the then standard rate for Agent's field examiners in the field and
office (which rate as of the date hereof is of $750 per person per day); and
(f) the reasonable fees and disbursements of counsel (including legal
assistants) to Agent in connection with any of the foregoing.
9.24 Further Assurances. At the request of Agent at any time and
from time to time, each Transaction Party shall, at its expense, duly execute
and deliver, or cause to be duly executed and delivered, such further
agreements, documents and instruments, and do or cause to be done such further
acts as may be necessary or proper to evidence, perfect, maintain and enforce
the security interests and the priority thereof in the Collateral and to
otherwise effectuate the provisions or purposes of this Agreement or any of the
other Financing Agreements. Agent may at any time
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and from time to time request a certificate from an officer of a Transaction
Party representing that all conditions precedent to the making of Loans
contained herein are satisfied. In the event of such request by Agent, Agent
and Lenders may, at Agent's option, cease to make any further Loans until Agent
has received such certificate.
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
10.1 Events of Default. The occurrence or existence of any one or
more of the following events are referred to herein individually as an "Event
of Default", and collectively as "Events of Default":
(a) (i) Servicer or Borrower shall fail to make any
payment or deposit to be made by it hereunder when due in respect of the
Obligations, (ii) any Transaction Party fails to perform any of the covenants
contained in Sections 9.3, 9.4, 9.6, 9.7, 9.9, 9.10 and 9.23 of this Agreement
and such failure shall continue for ten (10) Business Days or (iii) any
Transaction Party fails to perform any of the terms, covenants, conditions or
provisions contained in this Agreement or any of the other Transaction
Documents other than those described in Sections 10.1(a)(i) and 10.1(a)(ii)
above or in Section 10.1(s) below;
(b) any representation, warranty or statement of fact
made by any Transaction Party (or any of its officers) to Agent in this
Agreement, the other Financing Agreements or any other written agreement,
schedule, confirmatory assignment or otherwise shall when made or deemed made
be false or misleading in any material respect;
(c) (i) any judgment for the payment of money is
rendered against WestPoint in excess of $10,000,000 in any one case or in the
aggregate (to the extent not covered by insurance where the insurer has assumed
responsibility for the defense of the action resulting in such judgment and the
insurer has not notified any Transaction Party or otherwise taken any action to
indicate that it does not intend to or will not pay such judgment) and shall
remain undischarged or unvacated for a period in excess of thirty (30) days or
execution shall at any time not be effectively stayed, or any judgment other
than for the payment of money, or injunction, attachment, garnishment or
execution is rendered against WestPoint that would have, or would have a
reasonable likelihood of having, a Material Adverse Effect or in any event that
relates to any of the transactions contemplated by any of the Transaction
Documents or (ii) any judgment for the payment of money is rendered against
Borrower or any judgment other than for the payment of money, or injunction,
attachment, garnishment or execution is rendered against Borrower;
(d) any Transaction Party dissolves or suspends or
discontinues doing business;
(e) any Transaction Party makes an assignment for the
benefit of creditors, makes or sends notice of a bulk transfer or calls a
meeting of its creditors or principal creditors in connection with a moratorium
or adjustment of the Indebtedness due to them;
(f) a case or proceeding under the bankruptcy laws of
the United States of America
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now or hereafter in effect or under any insolvency, reorganization,
receivership, readjustment of debt, dissolution or liquidation law or statute
of any jurisdiction now or hereafter in effect (whether at law or in equity) is
filed against Originator or any Transaction Party or all or any part of its
properties and such petition or application is not dismissed within thirty (30)
days after the date of its filing or Originator or any Transaction Party shall
file any answer admitting or not contesting such petition or application or
indicates its consent to, acquiescence in or approval of, any such action or
proceeding or the relief requested is granted sooner;
(g) a case or proceeding under the bankruptcy laws of
the United States of America now or hereafter in effect or under any
insolvency, reorganization, receivership, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction now or hereafter in effect
(whether at a law or equity) is filed by Originator or any Transaction Party or
for all or any part of its property;
(h) any default in respect of any Indebtedness of
WestPoint in any case in an amount in excess of $10,000,000 (including, without
limitation, any default or event of default under or in respect of the Senior
Credit Facility Agreement, the Subordinated Credit Facility Agreement and the
Senior Notes or any Indebtedness to refinance or replace the Indebtedness
arising under the Senior Notes), which default continues for more than the
applicable cure period, if any, with respect thereto and/or is not waived in
writing by the other parties thereto;
(i) any default by Borrower in respect of any
Indebtedness of Borrower, which default continues for more than the applicable
cure period, if any, with respect thereto and/or is not waived in writing by
the other parties thereto;
(j) the Senior Credit Facility Availability shall be
less than $30,000,000 at any time that the amount of the then outstanding Loans
are greater than the amount of the Borrowing Base (based on the most recent
calculation thereof);
(k) any material provision hereof or of any of the other
Financing Agreements shall for any reason cease to be valid, binding and
enforceable with respect to any party hereto or thereto (other than Agent) in
accordance with its terms, or any such party shall challenge the enforceability
hereof or thereof, or shall assert in writing, or take any action or fail to
take any action based on the assertion that any provision hereof or of any of
the other Financing Agreements has ceased to be or is otherwise not valid,
binding or enforceable in accordance with its terms, or any security interest
provided for herein or in any of the other Financing Agreements shall cease to
be a valid and perfected first priority security interest in any of the
Collateral purported to be subject thereto (except as otherwise permitted
herein or therein);
(l) an ERISA Event shall occur which results in or could
reasonably be expected to result in liability of Borrower in an aggregate
amount in excess of $2,500,000;
(m) any Change of Control;
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(n) the indictment by any Governmental Authority, or as
Agent may reasonably and in good faith determine, the threatened indictment by
any Governmental Authority of any Transaction Party of which such Transaction
Party or Agent receives notice, in either case, as to which there is a
reasonable possibility of an adverse determination, in the good faith
determination of Agent, under any criminal statute, or commencement or
threatened commencement of criminal or civil proceedings against any
Transaction Party, pursuant to which statute or proceedings the penalties or
remedies sought or available include forfeiture of any of the Collateral;
(o) the Dilution Ratio as of the end of any fiscal month
exceeds three and three-quarters (3 3/4%) percent;
(p) the Default Ratio as of the end of any fiscal month
exceeds one (1%) percent;
(q) the Delinquency Ratio as of the end of any fiscal
month exceeds one and one-quarter (1 1/4%) percent;
(r) any event, condition or circumstance shall exist or
have occurred and be continuing after the date hereof that has a Material
Adverse Effect;
(s) (i) WestPoint fails to perform any of the covenants
contained in Section 6.1 of the Receivables Purchase Agreement and such failure
shall continue for ten (10) Business Days or (ii) any Transaction Party fails
to perform any of the terms, covenants, conditions or provisions contained in
the Receivables Purchase Agreement or there shall otherwise be an event of
default under the Receivables Purchase Agreement other than as described in
clause (i); or
(t) there shall be an event of default under any of the
other Transaction Documents.
10.2 Remedies.
(a) At any time an Event of Default exists or has
occurred and is continuing, Agent and Lenders shall have all rights and
remedies provided in this Agreement, the other Financing Agreements, the UCC
and other applicable law, all of which rights and remedies may be exercised
without notice to or consent by any Transaction Party, except as such notice or
consent is expressly provided for hereunder or required by applicable law. All
rights, remedies and powers granted to Agent and Lenders hereunder, under any
of the other Financing Agreements, the UCC or other applicable law, are
cumulative, not exclusive and enforceable, in Agent's discretion,
alternatively, successively, or concurrently on any one or more occasions, and
shall include, without limitation, the right to apply to a court of equity for
an injunction to restrain a breach or threatened breach by any Transaction
Party of this Agreement or any of the other Transaction Documents. Subject to
Section 13 hereof, Agent may, and at the direction of the Required Lenders
shall, at any time or times, proceed directly against Borrower to collect the
Obligations without prior recourse to the Collateral.
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(b) Without limiting the foregoing, at any time an Event
of Default exists or has occurred and is continuing, Agent may, in its
discretion, and upon the direction of the Required Lenders, shall (i)
accelerate the payment of all Obligations and demand immediate payment thereof
to Agent for itself and the ratable benefit of Lenders (provided, that, upon
the occurrence of any Event of Default described in Sections 10.1(f) and
10.1(g), all Obligations shall automatically become immediately due and
payable), and (ii) terminate the Commitments and this Agreement.
(c) Without limiting the foregoing, at any time an Event
of Default exists or has occurred and is continuing, Agent may, in its
discretion, (i) with or without judicial process or the aid or assistance of
others, enter upon any premises on or in which any of the Collateral may be
located and take possession of the Collateral, (ii) require any Transaction
Party, at its expense, to assemble and make available to Agent any part or all
of the Collateral at any place and time designated by Agent, (iii) collect,
foreclose, receive, appropriate, setoff and realize upon any and all
Collateral, (iv) remove any or all of the Collateral from any premises on or in
which the same may be located for the purpose of effecting the sale,
foreclosure or other disposition thereof or for any other purpose, (v) sell,
lease, transfer, assign, deliver or otherwise dispose of any and all Collateral
(including entering into contracts with respect thereto, public or private
sales at any exchange, broker's board, at any office of Agent or elsewhere) at
such prices or terms as Agent may deem reasonable, for cash, upon credit or for
future delivery, with the Agent having the right to purchase the whole or any
part of the Collateral at any such public sale, all of the foregoing being free
from any right or equity of redemption of Borrower, which right or equity of
redemption is hereby expressly waived and released by Borrower. If any of the
Collateral is sold or leased by Agent upon credit terms or for future delivery,
the Obligations shall not be reduced as a result thereof until payment therefor
is finally collected by Agent. If notice of disposition of Collateral is
required by law, ten (10) days prior notice by Agent to Borrower designating
the time and place of any public sale or the time after which any private sale
or other intended disposition of Collateral is to be made, shall be deemed to
be reasonable notice thereof and Borrower waives any other notice. In the event
Agent institutes an action to recover any Collateral or seeks recovery of any
Collateral by way of prejudgment remedy, Borrower waives the posting of any
bond which might otherwise be required.
(d) At any time or times that an Event of Default exists
or has occurred and is continuing, Agent may, in its discretion, enforce the
rights of Borrower against any Obligor (including any secondary Obligor) in
respect of any of the Accounts or other Receivables. Without limiting the
generality of the foregoing, Agent may, in its discretion, and upon the
direction of the Required Lenders, Agent shall, at such time or times (i)
notify any or all Obligors that the Receivables have been assigned to Agent and
that Agent has a security interest therein and Agent may direct any or all
Obligors to make payment of Receivables and Related Assets directly to Agent,
(ii) extend the time of payment of, compromise, settle or adjust for cash,
credit, return of merchandise or otherwise, and upon any terms or conditions,
any and all Receivables or other obligations included in the Collateral and
thereby discharge or release the Obligor in respect thereof without affecting
any of the Obligations, (iii) demand, collect or enforce payment of any
Receivables or such other obligations, but without any duty to do so, and Agent
and Lenders shall not be liable for any failure to collect or enforce the
payment thereof nor for the
74
negligence of its agents or attorneys with respect thereto and (iv) take
whatever other action Agent may deem necessary or desirable for the protection
of its interests and the interests of Lenders. At any time that an Event of
Default exists or has occurred and is continuing, at Agent's request, all
invoices and statements sent to any Obligor shall state that the Receivables
and Related Assets have been assigned to Agent and are payable directly and
only to Agent and Borrower or Servicer shall deliver to Agent such originals of
documents evidencing the sale and delivery of goods or the performance of
services giving rise to any Receivables as Agent may require. In the event any
Obligor returns Inventory when an Event of Default exists or has occurred and
is continuing, Borrower and Servicer shall, upon Agent's request, hold the
returned Inventory in trust for Agent, segregate all returned Inventory from
all of its other property, dispose of the returned Inventory solely according
to Agent's instructions, and not issue any credits, discounts or allowances
with respect thereto without Agent's prior written consent.
(e) To the extent that applicable law imposes duties on
Agent or any Lender to exercise remedies in a commercially reasonable manner
(which duties cannot be waived under such law), each Transaction Party
acknowledges and agrees that it is not commercially unreasonable for Agent or
any Lender (i) to fail to incur expenses reasonably deemed significant by Agent
or any Lender to prepare Collateral for disposition or otherwise to complete
raw material or work in process into finished goods or other finished products
for disposition, (ii) to fail to obtain third party consents for access to
Collateral to be disposed of, or to obtain or, if not required by other law, to
fail to obtain consents of any Governmental Authority or other third party for
the collection or disposition of Collateral to be collected or disposed of,
(iii) to fail to exercise collection remedies against Obligor or other persons
obligated on Collateral or to remove liens or encumbrances on or any adverse
claims against Collateral, (iv) to exercise collection remedies against
Obligors obligated on Collateral directly or through the use of collection
agencies and other collection specialists, (v) to advertise dispositions of
Collateral through publications or media of general circulation, whether or not
the Collateral is of a specialized nature, (vi) to contact other persons,
whether or not in the same business as any Transaction Party for expressions of
interest in acquiring all or any portion of the Collateral, (vii) to hire one
or more professional auctioneers to assist in the disposition of Collateral,
whether or not the collateral is of a specialized nature, (viii) to dispose of
Collateral by utilizing Internet sites that provide for the auction of assets
of the types included in the Collateral or that have the reasonable capability
of doing so, or that match buyers and sellers of assets, (ix) to dispose of
assets in wholesale rather than retail markets, (x) to disclaim disposition
warranties, (xi) to purchase insurance or credit enhancements to insure Agent
or Lenders against risks of loss, collection or disposition of Collateral or to
provide to Agent or Lenders a guaranteed return from the collection or
disposition of Collateral, or (xii) to the extent deemed appropriate by Agent,
to obtain the services of other brokers, investment bankers, consultants and
other professionals to assist Agent in the collection or disposition of any of
the Collateral. Borrower acknowledges that the purpose of this Section is to
provide non-exhaustive indications of what actions or omissions by Agent or any
Lender would not be commercially unreasonable in the exercise by Agent or any
Lender of remedies against the Collateral and that other actions or omissions
by Agent or any Lender shall not be deemed commercially unreasonable solely on
account of not being indicated in this Section. Without limitation of the
foregoing, nothing contained in this Section shall be construed to grant any
rights to any Transaction Party or to
75
impose any duties on Agent or Lenders that would not have been granted or
imposed by this Agreement or by applicable law in the absence of this Section.
(f) For the purpose of enabling Agent to exercise the
rights and remedies hereunder, each Transaction Party hereby grants to Agent,
to the extent assignable, an irrevocable, non-exclusive license (exercisable at
any time an Event of Default shall exist or have occurred and for so long as
the same is continuing) without payment of royalty or other compensation to the
respective Transaction Party, to use, assign, license or sublicense any of the
trademarks, service-marks, trade names, business names, trade styles, designs,
logos and other source of business identifiers and other Intellectual Property
and general intangibles now owned or hereafter acquired by any Transaction
Party, wherever the same maybe located, including in such license reasonable
access to all media in which any of the licensed items may be recorded or
stored and to all computer programs used for the compilation or printout
thereof.
(g) Agent may apply the cash proceeds of Collateral
actually received by Agent from any sale, lease, foreclosure or other
disposition of the Collateral to payment of the Obligations, in whole or in
part and in such order as Agent may elect, whether or not then due, after all
Servicer Advances are paid. Borrower shall remain liable to Agent and Lenders
for the payment of any deficiency with interest at the highest rate provided
for herein and all costs and expenses of collection or enforcement, including
attorneys' fees and expenses.
(h) Without limiting the foregoing, upon the occurrence
of a Default or an Event of Default, (i) Agent and Lenders may, at Agent's
option, and upon the occurrence of an Event of Default, at the direction of the
Required Lenders, Agent and Lenders shall, without notice, (A) cease making
Loans or reduce the lending formulas or amounts of Loans available to Borrower
and/or (B) terminate the Commitments and any provision of this Agreement
providing for any future Loans to be made by Agent and Lenders to Borrower, and
(ii) Agent may, at its option, establish such Reserves as Agent determines
without limitation or restriction, notwithstanding anything to the contrary
provided herein.
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW
11.1 Governing Law; Choice of Forum; Service of Process; Jury
Trial Waiver.
(a) The validity, interpretation and enforcement of this
Agreement and the other Financing Agreements and any dispute arising out of the
relationship between the parties hereto, whether in contract, tort, equity or
otherwise, shall be governed by the internal laws of the State of Georgia but
excluding any principles of conflicts of law or other rule of law that would
cause the application of the law of any jurisdiction other than the laws of the
State of Georgia.
(b) Each Transaction Party, Agent and Lenders
irrevocably consent and submit to the non-exclusive jurisdiction of the
Superior Court of ▇▇▇▇▇▇ County, Georgia and the United States District Court
for the Northern District of Georgia, whichever Agent may elect, and waive
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any objection based on venue or forum non conveniens with respect to any action
instituted therein arising under this Agreement or any of the other Financing
Agreements or in any way connected with or related or incidental to the
dealings of the parties hereto in respect of this Agreement or any of the other
Financing Agreements or the transactions related hereto or thereto, in each
case whether now existing or hereafter arising, and whether in contract, tort,
equity or otherwise, and agree that any dispute with respect to any such
matters shall be heard only in the courts described above (except that Agent
and Lenders shall have the right to bring any action or proceeding against any
Transaction Party or its or their property in the courts of any other
jurisdiction which Agent deems necessary or appropriate in order to realize on
the Collateral or to otherwise enforce its rights against any Transaction Party
or its or their property).
(c) Each Transaction Party hereby waives personal
service of any and all process upon it and consents that all such service of
process may be made by certified mail (return receipt requested) directed to
its address set forth herein and service so made shall be deemed to be
completed five (5) days after the same shall have been so deposited in the U.S.
mails, or, at Agent's option, by service upon such Transaction Party in any
other manner provided under the rules of any such courts. Within thirty (30)
days after such service, such Transaction Party shall appear in answer to such
process, failing which such Transaction Party shall be deemed in default and
judgment may be entered by Agent against such Transaction Party for the amount
of the claim and other relief requested.
(d) TRANSACTION PARTIES, AGENT AND LENDERS EACH HEREBY
WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION (i) ARISING UNDER THIS AGREEMENT OR ANY OF THE OTHER TRANSACTION
DOCUMENTS OR (ii) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER
TRANSACTION DOCUMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH
CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT,
EQUITY OR OTHERWISE. TRANSACTION PARTIES, AGENT AND LENDERS EACH HEREBY AGREES
AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT A TRANSACTION PARTY, AGENT OR
ANY LENDER MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(e) Agent and Lenders shall not have any liability to
any Transaction Party (whether in tort, contract, equity or otherwise) for
losses suffered by such Transaction Party in connection with, arising out of,
or in any way related to the transactions or relationships contemplated by this
Agreement, or any act, omission or event occurring in connection herewith,
unless it is determined by a final and non-appealable judgment or court order
binding on Agent and such Lender, that the losses were the result of acts or
omissions constituting gross negligence or willful misconduct. In any such
litigation, Agent and Lenders shall be entitled to the benefit of the
rebuttable presumption that it acted in good faith and with the exercise of
ordinary care in the
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performance by it of the terms of this Agreement. Each Transaction Party: (i)
certifies that neither Agent, any Lender nor any representative, agent or
attorney acting for or on behalf of Agent or any Lender has represented,
expressly or otherwise, that Agent and Lenders would not, in the event of
litigation, seek to enforce any of the waivers provided for in this Agreement
or any of the other Financing Agreements and (ii) acknowledges that in entering
into this Agreement and the other Financing Agreements, Agent and Lenders are
relying upon, among other things, the waivers and certifications set forth in
this Section 11.1 and elsewhere herein and therein.
11.2 Waiver of Notices. Borrower hereby expressly waives demand,
presentment, protest and notice of protest and notice of dishonor with respect
to any and all instruments and chattel paper, included in or evidencing any of
the Obligations or the Collateral, and any and all other demands and notices of
any kind or nature whatsoever with respect to the Obligations, the Collateral
and this Agreement, except such as are expressly provided for herein. No notice
to or demand on Borrower which Agent or any Lender may elect to give shall
entitle Borrower to any other or further notice or demand in the same, similar
or other circumstances. Without limiting the generality of the foregoing,
Borrower waives (i) notice prior to Agent or any Lender taking possession or
control of any of the Collateral or any bond or security which might be
required by any court prior to allowing Agent or any Lender to exercise any of
the remedies of Agent or such Lender, including the issuance of an immediate
writ of possession and (ii) the benefit of all valuation, appraisement and
exemption laws.
11.3 Amendments and Waivers.
(a) Neither this Agreement nor any other Financing
Agreement nor any terms hereof or thereof may be amended, waived, discharged or
terminated unless such amendment, waiver, discharge or termination is in
writing signed by Agent and the Required Lenders or at Agent's option, by Agent
with the authorization of the Required Lenders, and as to amendments to any of
the Financing Agreements (other than with respect to any provision of Section
13 hereof), by Borrower; except, that, no such amendment, waiver, discharge or
termination shall:
(i) reduce the interest rate or any fees or
extend the time of payment of principal, interest or any fees or reduce the
principal amount of any Loan, in each case without the consent of each Lender
directly affected thereby,
(ii) increase the Commitment of any Lender over
the amount thereof then in effect or provided hereunder, in each case without
the consent of the Lender directly affected thereby,
(iii) release any Collateral (except as expressly
required hereunder or under any of the other Financing Agreements or applicable
law and except as permitted under Section 13.11(b) hereof), without the consent
of Agent and all of Lenders,
(iv) reduce any percentage specified in the
definition of Required Lenders, without the consent of Agent and all of
Lenders,
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(v) consent to the assignment or transfer by
Borrower of any of its rights and obligations under this Agreement, without the
consent of Agent and all of Lenders,
(vi) amend, modify or waive any terms of this
Section 11.3 hereof, without the consent of Agent and all of Lenders, or
(vii) increase the advance rates constituting
part of the Borrowing Base or the Adjusted Borrowing Base, without the consent
of Agent and all of Lenders.
(b) Agent and Lenders shall not, by any act, delay,
omission or otherwise be deemed to have expressly or impliedly waived any of
its or their rights, powers and/or remedies unless such waiver shall be in
writing and signed as provided herein. Any such waiver shall be enforceable
only to the extent specifically set forth therein. A waiver by Agent or any
Lender of any right, power and/or remedy on any one occasion shall not be
construed as a bar to or waiver of any such right, power and/or remedy which
Agent or any Lender would otherwise have on any future occasion, whether
similar in kind or otherwise.
(c) Notwithstanding anything to the contrary contained
in Section 11.3(a) above, in connection with any amendment, waiver, discharge
or termination, in the event that any Lender whose consent thereto is required
shall fail to consent or fail to consent in a timely manner (such Lender being
referred to herein as a "Non-Consenting Lender"), but the consent of any other
Lenders to such amendment, waiver, discharge or termination that is required
are obtained, if any, then Congress shall have the right, but not the
obligation, at any time thereafter, and upon the exercise by Congress of such
right, such Non-Consenting Lender shall have the obligation, to sell, assign
and transfer to Congress or such Eligible Transferee as Congress may specify,
the Commitment of such Non-Consenting Lender and all rights and interests of
such Non-Consenting Lender pursuant thereto. Congress shall provide the
Non-Consenting Lender with prior written notice of its intent to exercise its
right under this Section, which notice shall specify on date on which such
purchase and sale shall occur. Such purchase and sale shall be pursuant to the
terms of an Assignment and Acceptance (whether or not executed by the
Non-Consenting Lender), except that on the date of such purchase and sale,
Congress, or such Eligible Transferee specified by Congress, shall pay to the
Non-Consenting Lender the amount equal to: (i) the principal balance of the
Loans held by the Non-Consenting Lender outstanding as of the close of business
on the business day immediately preceding the effective date of such purchase
and sale, plus (ii) amounts accrued and unpaid in respect of interest and fees
payable to the Non-Consenting Lender to the effective date of the purchase (but
in no event shall the Non-Consenting Lender be deemed entitled to any early
termination fee), minus (iii) the amount of the closing fee received by the
Non-Consenting Lender pursuant to the terms hereof or of any of the other
Financing Agreements multiplied by the fraction, the numerator of which is the
number of months remaining in the then current term of the Credit Facility and
the denominator of which is the number of months in the then current term
thereof. Such purchase and sale shall be effective on the date of the payment
of such amount to the Non-Consenting Lender and the Commitment of the
Non-Consenting Lender shall terminate on such date.
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(d) The consent of Agent shall be required for any
amendment, waiver or consent affecting the rights or duties of Agent hereunder
or under any of the other Financing Agreements, in addition to the consent of
the Lenders otherwise required by this Section, and the exercise by Agent of
any of its rights hereunder with respect to Reserves or Eligible Accounts
(including, without limitation, eligibility criteria with respect thereto)
shall not be deemed an amendment to the advance rates provided for in this
Section 11.3.
11.4 Waiver of Counterclaims. Each Transaction Party waives all
rights to interpose any claims, deductions, setoffs or counterclaims of any
nature (other then compulsory counterclaims) in any action or proceeding with
respect to this Agreement, the Obligations, the Collateral or any matter
arising therefrom or relating hereto or thereto.
SECTION 12. INDEMNIFICATION.
12.1 Indemnities by Borrower.
(a) Without limiting any other rights which any such
Person may have hereunder or under applicable law, Borrower hereby agrees to
indemnify Agent and each Lender, each of their respective Affiliates, and all
successors, transferees, participants and assigns and all officers, directors,
shareholders, controlling persons, employees and agents of any of the foregoing
(each an "Indemnified Party"), forthwith on demand, from and against any and
all damages, losses, claims, liabilities, judgments and related costs and
expenses, including reasonable attorneys' fees and disbursements (all of the
foregoing being collectively referred to as "Indemnified Amounts") awarded
against or incurred by any of them arising out of or relating to the
Transaction Documents or the ownership or funding of the Loans or in respect of
any Receivable or any Contract. Notwithstanding the foregoing, in no event
shall any Indemnified Party be awarded any Indemnified Amounts to the extent
determined by a court of competent jurisdiction pursuant to a final,
non-appealable order to have resulted from gross negligence or willful
misconduct on the part of such Indemnified Party or constituting recourse
(except as otherwise specifically provided in this Agreement) to Borrower for
non-payment of the Receivables due to the credit problems of the Obligors
thereof. Without limiting the foregoing, Borrower shall indemnify each
Indemnified Party for Indemnified Amounts arising out of or relating to:
(i) the transfer by any Transaction Party of
any interest in any Receivable other than the transfer of Receivables and
related property by Originator to Borrower pursuant to the Receivables Purchase
Agreement and the grant of a security interest to Agent pursuant to the terms
hereof;
(ii) any representation or warranty made by any
Transaction Party (or any of its officers) under or in connection with this
Agreement or any other Transaction Document or any other information or report
delivered by or on behalf of any Transaction Party pursuant hereto or thereto,
which shall have been false, incorrect or misleading in any material respect
when made or deemed made or delivered, as the case may be;
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(iii) the failure by any Transaction Party to
comply with any applicable law, rule or regulation with respect to any
Receivable or the related Contract, or the nonconformity of any Receivable or
the related Contract with any such applicable law, rule or regulation;
(iv) the failure of Agent to have a security
interest in the Receivables and Related Assets, free and clear of any other
security interest, lien, pledge, charge or other encumbrance, other than any
other security interest, lien, pledge, charge or other encumbrance arising
solely as a result of an act of Agent or any Lender and other than solely as a
result of the failure of Agent to file a financing statement;
(v) the failure to file, or any delay in
filing, financing statements or other similar instruments or documents under
the UCC of any applicable jurisdiction or other applicable laws with respect to
any Receivables, other than if such failure or delay is caused solely as a
result of any act or omission of Agent;
(vi) any dispute, claim, offset or defense
(other than discharge in bankruptcy) of the Obligor to the payment of any
Receivable (including, without limitation, a defense based on such Receivables
or the related Contract not being a legal, valid and binding obligation of such
Obligor enforceable against it in accordance with its terms), or any other
claim resulting from the sale of the merchandise or services related to such
Receivable or the furnishing or failure to furnish such merchandise or
services;
(vii) any matter described in Section 2.7(a)
hereof;
(viii) any failure of any Transaction Party, as
Servicer or otherwise, to perform its duties or obligations in accordance with
the terms thereof;
(ix) any products liability claim arising out of
or in connection with merchandise or services that are the subject of any
Receivable;
(x) any claim of breach by any Transaction
Party of any related Contract with respect to any Receivable;
(xi) any tax or governmental fee or charge (but
not including taxes upon or measured by net income), all interest and penalties
thereon or with respect thereto, and all out-of-pocket costs and expenses,
including the reasonable fees and expenses of counsel in defending against the
same, which may arise by reason of the security interest in the Receivables and
Related Assets; and
(xii) amounts in respect of dilution with respect
to the Receivables.
(b) If any Indemnified Party shall have notice of any
attempt to impose or collect any tax or governmental fee or charge for which
indemnification will be sought from any Transaction Party under Section
12.1(a)(xi), such Indemnified Party shall give prompt and timely notice of such
attempt to Borrower and Borrower shall have the right, at its expense, to
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participate in any proceedings resisting or objecting to the imposition or
collection of any such tax, governmental fee or charge. Indemnification
hereunder shall be in an amount necessary to make the Indemnified Party whole
after taking into account any tax consequences to the Indemnified Party of the
payment of any of the aforesaid taxes (including any deduction) and the receipt
of the indemnity provided hereunder or of any refund of any such tax previously
indemnified hereunder, including the effect of such tax, deduction or refund on
the amount of tax measured by net income or profits which is or was payable by
the Indemnified Party.
(c) If for any reason the indemnification provided above
in this Section 12.1 is unavailable to an Indemnified Party or is insufficient
to hold an Indemnified Party harmless, then Borrower shall contribute to the
amount paid or payable by such Indemnified Party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to reflect not
only the relative benefits received by such Indemnified Party on the one hand
and Borrower on the other hand but also the relative fault of such Indemnified
Party as well as any other relevant equitable considerations.
12.2 Indemnities by Servicer.
(a) Without limiting any other rights which any
Indemnified Party may have hereunder or under applicable law, except as
Servicer and Agent may hereafter otherwise agree in writing, the Servicer
hereby agrees to indemnify each of the Indemnified Parties forthwith on demand,
from and against any and all Indemnified Amounts awarded against or incurred by
any of them arising out of or relating to the Servicer performance of, or
failure to perform, any of its obligations under or in connection with any
Transaction Document, or any representation or warranty made by Servicer (or
any of its officers) under or in connection with any Transaction Document or
any other information or report delivered by or on behalf of Servicer, which
shall have been false, incorrect or misleading in any material respect when
made or deemed made or delivered, as the case may be, or the failure of the
Servicer to comply with any applicable law, rule or regulation with respect to
any Receivable or the related Contract. Notwithstanding the foregoing, in no
event shall any Indemnified Party be awarded any Indemnified Amounts (i) to the
extent determined by a court of competent jurisdiction pursuant to a final,
non-appealable order to have resulted from gross negligence or willful
misconduct on the part of such Indemnified Party or (ii) constituting recourse
(except as otherwise specifically provided in this Agreement) to Servicer for
non-payment of the Receivables due to the credit problems of the Obligors
thereof.
(b) If for any reason the indemnification provided above
in this Section 12.2 (and subject to the exceptions set forth therein) is
unavailable to an Indemnified Party or is insufficient to hold an Indemnified
Party harmless, then the Servicer shall contribute to the amount paid or
payable by such Indemnified Party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect not only the relative
benefits received by such Indemnified Party on the one hand and the Servicer on
the other hand but also the relative fault of such Indemnified Party as well as
any other relevant equitable considerations.
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SECTION 13. THE AGENT
13.1 Appointment, Powers and Immunities. Each Lender irrevocably
designates, appoints and authorizes Congress to act as Agent hereunder and
under the other Financing Agreements with such powers as are specifically
delegated to Agent by the terms of this Agreement and of the other Financing
Agreements, together with such other powers as are reasonably incidental
thereto. Agent (a) shall have no duties or responsibilities except those
expressly set forth in this Agreement and in the other Financing Agreements,
and shall not by reason of this Agreement or any other Financing Agreement be a
trustee or fiduciary for any Lender; (b) shall not be responsible to Lenders
for any recitals, statements, representations or warranties contained in this
Agreement or in any of the other Financing Agreements, or in any certificate or
other document referred to or provided for in, or received by any of them
under, this Agreement or any other Financing Agreement, or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Financing Agreement or any other document referred to or
provided for herein or therein or for any failure by any Transaction Party or
any other Person to perform any of its obligations hereunder or thereunder; and
(c) shall not be responsible to Lenders for any action taken or omitted to be
taken by it hereunder or under any other Financing Agreement or under any other
document or instrument referred to or provided for herein or therein or in
connection herewith or therewith, except for its own gross negligence or
willful misconduct as determined by a final non-appealable judgment of a court
of competent jurisdiction. Agent may employ agents and attorneys-in-fact and
shall not be responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it in good faith. Agent may deem and treat the
payee of any note as the holder thereof for all purposes hereof unless and
until the assignment thereof pursuant to an agreement (if and to the extent
permitted herein) in form and substance satisfactory to Agent shall have been
delivered to and acknowledged by Agent.
13.2 Reliance by Agent. Agent shall be entitled to rely upon any
certification, notice or other communication (including any thereof by
telephone, telecopy, telex, telegram or cable) believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the proper Person or
Persons, and upon advice and statements of legal counsel, independent
accountants and other experts selected by Agent. As to any matters not
expressly provided for by this Agreement or any other Financing Agreement,
Agent shall in all cases be fully protected in acting, or in refraining from
acting, hereunder or thereunder in accordance with instructions given by the
Required Lenders or all of Lenders as is required in such circumstance, and
such instructions of such Agents and any action taken or failure to act
pursuant thereto shall be binding on all Lenders.
13.3 Events of Default.
(a) Agent shall not be deemed to have knowledge or
notice of the occurrence of a Default or an Event of Default or other failure
of a condition precedent to the Loans hereunder, unless and until Agent has
received written notice from a Lender, or a Borrower specifying such Event of
Default or any unfulfilled condition precedent, and stating that such notice is
a "Notice of Default or Failure of Condition". In the event that Agent receives
such a Notice of Default or
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Failure of Condition, Agent shall give prompt notice thereof to the Lenders.
Agent shall (subject to Section 13.7) take such action with respect to any such
Event of Default or failure of condition precedent as shall be 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 or by reason of such Event of
Default or failure of condition precedent, as it shall deem advisable in the
best interest of Lenders. Without limiting the foregoing, and notwithstanding
the existence or occurrence and continuance of an Event of Default or any other
failure to satisfy any of the conditions precedent set forth in Section 4 of
this Agreement to the contrary, Agent may, but shall have no obligation to,
continue to make Loans for the ratable account and risk of Lenders from time to
time if Agent believes making such Loans is in the best interests of Lenders.
(b) Except with the prior written consent of Agent, no
Lender may assert or exercise any enforcement right or remedy in respect of the
Loans or other Obligations, as against any Transaction Party or any of the
Collateral or other property of any Transaction Party.
13.4 Congress in its Individual Capacity. With respect to its
Commitment and the Loans made or caused to be made by it (and any successor
acting as Agent), so long as Congress shall be a Lender hereunder, it shall
have the same rights and powers hereunder as any other Lender and may exercise
the same as though it were not acting as Agent, and the term "Lender" or
"Lenders" shall, unless the context otherwise indicates, include Congress in
its individual capacity as Lender hereunder. Congress (and any successor acting
as Agent) and its Affiliates may (without having to account therefor to any
Lender) lend money to, make investments in and generally engage in any kind of
business with Borrower (and any of its Subsidiaries or Affiliates) as if it
were not acting as Agent, and Congress and its Affiliates may accept fees and
other consideration from Borrower or WestPoint and any of its Subsidiaries and
Affiliates for services in connection with this Agreement or otherwise without
having to account for the same to Lenders.
13.5 Indemnification. Lenders agree to indemnify Agent (to the
extent not reimbursed by Borrower hereunder and without limiting any
obligations of Borrower hereunder) ratably, in accordance with their Pro Rata
Shares, for any and all claims of any kind and nature whatsoever that may be
imposed on, incurred by or asserted against Agent (including by any Lender)
arising out of or by reason of any investigation in or in any way relating to
or arising out of this Agreement or any other Financing Agreement or any other
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby (including the costs and expenses that Agent is
obligated to pay hereunder) or the enforcement of any of the terms hereof or
thereof or of any such other documents, provided, that, no Lender shall be
liable for any of the foregoing to the extent it arises from the gross
negligence or willful misconduct of the party to be indemnified as determined
by a final non-appealable judgment of a court of competent jurisdiction. The
foregoing indemnity shall survive the payment of the Obligations and the
termination or non-renewal of this Agreement.
13.6 Non-Reliance on Agent and Other Lenders. Each Lender agrees
that it has, independently and without reliance on Agent or other Lender, and
based on such documents and
84
information as it has deemed appropriate, made its own credit analysis of each
Transaction Party and has made its own decision to enter into this Agreement
and that it will, independently and without reliance upon Agent or any other
Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement or any of the other Financing
Agreements. Agent shall not be required to keep itself informed as to the
performance or observance by each Transaction Party of any term or provision of
this Agreement or any of the other Financing Agreements or any other document
referred to or provided for herein or therein or to inspect the properties or
books of each Transaction Party. Agent will use reasonable efforts to provide
Lenders with any information received by Agent from a Transaction Party which
is required to be provided to Lenders or which is deemed to be requested by
Lenders hereunder and with a copy of any Notice of Default or Failure of
Condition received by Agent from Borrower or any Lender; provided, that, Agent
shall not be liable to any Lender for any failure to do so, except to the
extent that such failure is attributable to Agent's own gross negligence or
willful misconduct as determined by a final non-appealable judgment of a court
of competent jurisdiction. Except for notices, reports and other documents
expressly required to be furnished to Lenders by Agent hereunder, Agent shall
not have any duty or responsibility to provide any Lender with any other credit
or other information concerning the affairs, financial condition or business of
any Transaction Party that may come into the possession of Agent.
13.7 Failure to Act. Except for action expressly required of Agent
hereunder and under the other Financing Agreements, Agent shall in all cases be
fully justified in failing or refusing to act hereunder and thereunder unless
it shall receive further assurances to its satisfaction from Lenders of their
indemnification obligations under Section 13.5 hereof against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such action.
13.8 Additional Loans. Agent shall not make any Loans on behalf of
Lenders intentionally and with actual knowledge that such Loans would cause the
aggregate amount of the total outstanding Loans to Borrower to exceed the
Adjusted Borrowing Base, without the prior consent of all Lenders, except,
that, Agent may make such additional Loans on behalf of Lenders, intentionally
and with actual knowledge that such Loans will cause the total outstanding
Loans to Borrower to exceed the Adjusted Borrowing Base, as Agent may deem
necessary or advisable in its discretion, provided, that: (a) the total
principal amount of the additional Loans to Borrower which Agent may make or
provide after obtaining such actual knowledge that the aggregate principal
amount of the Loans equal or exceed the Adjusted Borrowing Base, plus the
Special Agent Advances pursuant to Section 13.11(a)(ii) then outstanding, shall
not exceed the aggregate amount equal to ten (10%) percent of the Maximum
Credit and shall not cause the total principal amount of the Loans to exceed
the Maximum Credit and (b) no such additional Loans shall be outstanding more
than ninety (90) days after the date such additional Loan is made or issued (as
the case may be), except as the Required Lenders may otherwise agree. Each
Lender shall be obligated to fund the amount of its Pro Rata Share of any such
additional Loans.
13.9 Concerning the Collateral and the Related Financing
Agreements. Each Lender authorizes and directs Agent to enter into this
Agreement and the other Financing Agreements.
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Each Lender agrees that any action taken by Agent or Required Lenders in
accordance with the terms of this Agreement or the other Financing Agreements
and the exercise by Agent or Required Lenders of their respective powers set
forth therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of the Lenders.
13.10 Field Audit, Examination Reports and other Information;
Disclaimer by Lenders. By signing this Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such
Lender, promptly after it becomes available, a copy of each field audit or
examination report and each Receivables Report received by Agent (each field
audit or examination report and Receivables Report being referred to herein as
a "Report" and collectively, "Reports");
(b) expressly agrees and acknowledges that Agent (A)
does not make any representation or warranty as to the accuracy of any Report,
or (B) shall not be liable for any information contained in any Report;
(c) expressly agrees and acknowledges that the Reports
are not comprehensive audits or examinations, that Agent or any other party
performing any audit or examination will inspect only specific information
regarding any Transaction Party and will rely significantly upon the books and
records of each Transaction Party, as well as on representations of personnel
of each Transaction Party; and
(d) agrees to keep all Reports confidential and strictly
for its internal use in accordance with the terms of Section 14.5 hereof, and
not to distribute or use any Report in any other manner.
13.11 Collateral Matters.
(a) Agent may, at its option, from time to time, at any
time on or after an Event of Default and for so long as the same is continuing
or upon any other failure of a condition precedent to the Loans hereunder, make
such disbursements and advances ("Special Agent Advances") which Agent, in its
sole discretion, deems necessary or desirable either (i) to preserve or protect
the Collateral or any portion thereof or (ii) to enhance the likelihood or
maximize the amount of repayment by Borrower of the Loans and other
Obligations, provided, that, the aggregate principal amount of the Special
Agent Advances pursuant to this clause (ii), plus the then outstanding
principal amount of the additional Loans which Agent may make or provide as set
forth in Section 13.8 hereof, shall not exceed the aggregate amount equal to
ten (10%) percent of the Maximum Credit or (iii) to pay any other amount
chargeable to Borrower pursuant to the terms of this Agreement or any of the
other Financing Agreements consisting of costs, fees and expenses. Special
Agent Advances shall be repayable on demand and be secured by the Collateral.
Special Agent Advances shall not constitute Loans but shall otherwise
constitute Obligations hereunder. Interest on Special Agent Advances shall be
payable at the Interest Rate then applicable to Prime Rate Loans and shall be
payable on demand. Agent shall notify each Lender and Borrower in writing of
each such Special Agent Advance, which notice shall include
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a description of the purpose of such Special Agent Advance. Without limitation
of its obligations pursuant to Section 6.10, each Lender agrees that it shall
make available to Agent, upon Agent's demand, in immediately available funds,
the amount equal to such Lender's Pro Rata Share of each such Special Agent
Advance. If such funds are not made available to Agent by such Lender, then
such Lender shall be deemed a Defaulting Lender and Agent shall be entitled to
recover such funds, on demand from such Lender together with interest thereon
for each day from the date such payment was due until the date such amount is
paid to Agent at the Federal Funds Rate for each day during such period (as
published by the Federal Reserve Bank of New York or at Agent's option based on
the arithmetic mean determined by Agent of the rates for the last transaction
in overnight Federal funds arranged prior to 9:00 a.m. (New York City time) on
that day by each of the three leading brokers of Federal funds transactions in
New York City selected by Agent) and if such amounts are not paid within three
(3) days of Agent's demand, at the highest Interest Rate provided for in
Section 3.1 hereof applicable to Prime Rate Loans.
(b) Lenders hereby irrevocably authorize Agent, at its
option and in its discretion to release any security interest in, mortgage or
lien upon, any of the Collateral (i) upon termination of the Commitments and
payment and satisfaction of all of the Obligations and delivery of cash
collateral to the extent required under Section 14.1 below, or (ii)
constituting property being sold or disposed of if Borrower certifies to Agent
that the sale or disposition is made in compliance with Section 9.12 hereof
(and Agent may rely conclusively on any such certificate, without further
inquiry), or (iii) constituting property in which Borrower did not own an
interest at the time the security interest, mortgage or lien was granted or at
any time thereafter, or (iv) having a value in the aggregate in any twelve (12)
month period of less than $5,000,000 or (v) if required or permitted under the
terms of any of the other Financing Agreements, including any intercreditor
agreement, or (vi) if approved, authorized or ratified in writing by all of
Lenders. Except as provided above, Agent will not release any security interest
in, mortgage or lien upon, any of the Collateral without the prior written
authorization of all of Lenders. Upon request by Agent at any time, Lenders
will promptly confirm in writing Agent's authority to release particular types
or items of Collateral pursuant to this Section.
(c) Without any manner limiting Agent's authority to act
without any specific or further authorization or consent by the Required
Lenders, each Lender agrees to confirm in writing, upon request by Agent, the
authority to release Collateral conferred upon Agent under this Section. Agent
shall (and is hereby irrevocably authorized by Lenders to) execute such
documents as may be necessary to evidence the release of the security interest,
mortgage or liens granted to Agent upon any Collateral to the extent set forth
above; provided, that, (i) Agent shall not be required to execute any such
document on terms which, in Agent's opinion, would expose Agent to liability or
create any obligations or entail any consequence other than the release of such
security interest, mortgage or liens without recourse or warranty and (ii) such
release shall not in any manner discharge, affect or impair the Obligations or
any security interest, mortgage or lien upon (or obligations of any Transaction
Party in respect of) the Collateral retained by such Transaction Party.
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(d) Agent shall have no obligation whatsoever to any
Lender or any other Person to investigate, confirm or assure that the
Collateral exists or is owned by Borrower or is cared for, protected or insured
or has been encumbered, or that any particular items of Collateral meet the
eligibility criteria applicable in respect of the Loans hereunder, or whether
any particular reserves are appropriate, or that the liens and security
interests granted to Agent pursuant hereto or any of the Financing Agreements
or otherwise have been properly or sufficiently or lawfully created, perfected,
protected or enforced or are entitled to any particular priority, or to
exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to Agent in this Agreement or in
any of the other Financing Agreements, it being understood and agreed that in
respect of the Collateral, or any act, omission or event related thereto, Agent
may act in any manner it may deem appropriate, in its discretion, given Agent's
own interest in the Collateral as a Lender and that Agent shall have no duty or
liability whatsoever to any other Lender.
13.12 Agency for Perfection. Each Lender hereby appoints Agent and
each other Lender as agent and bailee for the purpose of perfecting the
security interests in and liens upon the Collateral of Agent in assets which,
in accordance with Article 9 of the UCC can be perfected only by possession (or
where the security interest of a secured party with possession has priority
over the security interest of another secured party) and Agent and each Lender
hereby acknowledges that it holds possession of any such Collateral for the
benefit of Agent as secured party. Should any Lender obtain possession of any
such Collateral, such Lender shall notify Agent thereof, and, promptly upon
Agent's request therefor shall deliver such Collateral to Agent or in
accordance with Agent's instructions.
13.13 Successor Agent. Agent may resign as Agent upon thirty (30)
days' notice to Lenders and Borrower. If Agent resigns under this Agreement,
the Required Lenders shall appoint from among the Lenders a successor agent for
Lenders. If no successor agent is appointed prior to the effective date of the
resignation of Agent, Agent may appoint, after consulting with Lenders and, so
long as no Default or Event of Default shall exist or have occurred and be
continuing, Borrower, a successor agent from among Lenders. Upon the acceptance
by the Lender so selected of its appointment as successor agent hereunder, such
successor agent shall succeed to all of the rights, powers and duties of the
retiring Agent and the term "Agent" as used herein and in the other Financing
Agreements shall mean such successor agent and the retiring Agent's
appointment, powers and duties as Agent shall be terminated. After any retiring
Agent's resignation hereunder as Agent, the provisions of this Section 12 shall
inure to its benefit as to any actions taken or omitted by it while it was
Agent under this Agreement. If no successor agent has accepted appointment as
Agent by the date which is thirty (30) days after the date of a retiring
Agent's notice of resignation, the retiring Agent's resignation shall
nonetheless thereupon become effective and Lenders shall perform all of the
duties of Agent hereunder until such time, if any, as the Required Lenders
appoint a successor agent as provided for above.
13.14 Co-Agent. The Lender identified on the facing page or
signature pages of this Agreement as a "co-agent" shall have no right, power,
obligation, liability, responsibility or duty under this Agreement or any of
the other Financing Agreements other than those applicable to all
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Lenders as such. Without limiting the foregoing, the Lender so identified shall
not have or be deemed to have any fiduciary relationship with any Lender. Each
Lender acknowledges that it has not relied, and will not rely, on the Lender so
identified in deciding to enter into this Agreement or in taking or not taking
action hereunder.
SECTION 14. TERM OF AGREEMENT; MISCELLANEOUS
14.1 Term.
(a) This Agreement and the other Financing Agreements
shall become effective as of the date set forth on the first page hereof and
shall continue until the Maturity Date, unless sooner terminated pursuant to
the terms hereof. In addition, Agent may, at its option, and shall, at the
direction of Required Lenders, terminate this Agreement at any time on or after
an Event of Default. Upon the Maturity Date or any other Termination Date,
Borrower shall pay to Agent all outstanding and unpaid Obligations and shall
furnish cash collateral to Agent (or, at Agent's option, a letter of credit
issued for the account of Borrower and at Borrower's expense, in form and
substance satisfactory to Agent, by an issuer acceptable to Agent and payable
to Agent as beneficiary) in such amounts as Agent determines are reasonably
necessary to secure Agent and Lenders from loss, cost, damage or expense,
including attorneys' fees and expenses, in connection with any contingent
Obligations, including issued and outstanding checks or other payments
provisionally credited to the Obligations and/or as to which Agent or any
Lender has not yet received final and indefeasible payment or any other
continuing obligations of Agent or any Lender pursuant to any Deposit Account
Control Agreement. Such payments in respect of the Obligations and cash
collateral shall be remitted by wire transfer in Federal funds to the Agent
Payment Account or such other bank account of Agent, as Agent may, in its
discretion, designate in writing to Borrower for such purpose. Interest shall
be due until and including the next Business Day, if the amounts so paid by
Borrower to the Agent Payment Account or other bank account designated by Agent
are received in such bank account later than 12:00 noon, Atlanta, Georgia time.
(b) No termination of the Commitments, this Agreement or
the other Financing Agreements shall relieve or discharge any Transaction Party
of its respective duties, obligations and covenants under this Agreement or the
other Financing Agreements until all Obligations have been fully and finally
discharged and paid, and Agent's continuing security interest in the Collateral
and the rights and remedies of Agent and Lenders hereunder, under the other
Financing Agreements and applicable law, shall remain in effect until all such
Obligations have been fully and finally discharged and paid in cash or other
immediately available funds. Accordingly, each Transaction Party waives any
rights it may have under the UCC to demand the filing of termination statements
with respect to the Collateral and Agent shall not be required to send such
termination statements to any Transaction Party, or to file them with any
filing office,
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unless and until this Agreement shall have been terminated in accordance with
its terms and all Obligations paid and satisfied in full in immediately
available funds.
(c) If for any reason this Agreement is terminated prior
to the Maturity Date in accordance with its terms, in view of the
impracticality and extreme difficulty of ascertaining actual damages and by
mutual agreement of the parties as to a reasonable calculation of Agent's and
each Lender's lost profits as a result thereof, Borrower agrees to pay to Agent
for itself and the benefit of Lenders, upon the effective date of such
termination, an early termination fee in the amount equal to
Amount Period
------ ------
(i) Two (2%) percent of From the date hereof to and including the
Maximum Credit first anniversary of the date hereof
(ii) One (1%) percent of From and after the first anniversary of the
Maximum Credit date hereof to but not including the second
anniversary of the date hereof
Such early termination fee shall be presumed to be the amount of damages
sustained by Agent and Lenders as a result of such early termination and
Borrower agrees that it is reasonable under the circumstances currently
existing. In addition, Agent and Lenders shall be entitled to such early
termination fee upon the occurrence of any Event of Default described in
Sections 10.1(f) and 10.1(g) hereof, even if Agent and Lenders do not exercise
the right to terminate this Agreement, but elect, at their option, to provide
financing to Borrower or permit the use of cash collateral under the U.S.
Bankruptcy Code. The early termination fee provided for in this Section 14.1
shall be deemed included in the Obligations.
(d) Notwithstanding anything to contrary contained in
Section 14.1(c) above, in the event of the termination of this Agreement by
Borrower after the first anniversary of the date hereof but prior to the end of
the then current term or renewal term of this Agreement and the full and final
repayment of all of the Obligations and the receipt by Agent of cash collateral
all as provided in Section 14.1(a) (or letter of credit, at Agent's option, as
provided therein) with the proceeds of initial loans and advances to Borrower
pursuant to a credit facility provided by Wachovia Bank, National Association
or its Affiliates to Borrower to replace the financing arrangements provided
for herein, Borrower shall not be required to pay the early termination fee
provided for above.
14.2 Interpretative Provisions.
(a) All terms used herein which are defined in Article
1, Article 8 or Article 9 of the UCC shall have the meanings given therein
unless otherwise defined in this Agreement.
(b) All references to the plural herein shall also mean
the singular and to the singular shall also mean the plural unless the context
otherwise requires.
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(c) All references to Borrower, Servicer, WestPoint,
Agent and Lenders pursuant to the definitions set forth in the recitals hereto,
or to any other person herein, shall include their respective successors and
assigns.
(d) The words "hereof", "herein", "hereunder", "this
Agreement" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not any particular provision of this Agreement
and as this Agreement now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
(e) The word "including" when used in this Agreement
shall mean "including, without limitation".
(f) An Event of Default shall exist or continue or be
continuing until such Event of Default is waived in accordance with Section
11.3 or is cured in a manner satisfactory to Agent, if such Event of Default is
capable of being cured as determined by Agent.
(g) All references to the term "good faith" used herein
when applicable to Agent or any Lender shall mean, notwithstanding anything to
the contrary contained herein or in the UCC, honesty in fact in the conduct or
transaction concerned. Each Transaction Party shall have the burden of proving
any lack of good faith on the part of Agent or any Lender alleged by a
Transaction Party at any time.
(h) Any accounting term used in this Agreement shall
have, unless otherwise specifically provided herein, the meaning customarily
given in accordance with GAAP, and all financial computations hereunder shall
be computed unless otherwise specifically provided herein, in accordance with
GAAP as consistently applied and using the same method for inventory valuation
as used in the preparation of the financial statements of Borrower most
recently received by Agent prior to the date hereof.
(i) In the computation of periods of time from a
specified date to a later specified date, the word "from" means "from and
including", the words "to" and "until" each mean "to but excluding" and the
word "through" means "to and including".
(j) Unless otherwise expressly provided herein, (i)
references herein to any agreement, document or instrument shall be deemed to
include all subsequent amendments, modifications, supplements, extensions,
renewals, restatements or replacements with respect thereto, but only to the
extent the same are not prohibited by the terms hereof or of any other
Financing Agreement, and (ii) references to any statute or regulation are to be
construed as including all statutory and regulatory provisions consolidating,
amending, replacing, recodifying, supplementing or interpreting the statute or
regulation.
(k) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
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(l) This Agreement and other Financing Agreements may
use several different limitations, tests or measurements to regulate the same
or similar matters. All such limitations, tests and measurements are cumulative
and shall each be performed in accordance with their terms.
(m) This Agreement and the other Financing Agreements
are the result of negotiations among and have been reviewed by counsel to Agent
and the other parties, and are the products of all parties. Accordingly, this
Agreement and the other Financing Agreements shall not be construed against
Agent or Lenders merely because of Agent's or any Lender's involvement in their
preparation.
14.3 Notices. All notices, requests and demands hereunder shall be
in writing and deemed to have been given or made: if delivered in person,
immediately upon delivery; if by telex, telegram or facsimile transmission,
immediately upon sending and upon confirmation of receipt; if by nationally
recognized overnight courier service with instructions to deliver the next
Business Day, one (1) Business Day after sending; and if by certified mail,
return receipt requested, five (5) days after mailing. All notices, requests
and demands upon the parties are to be given to the following addresses (or to
such other address as any party may designate by notice in accordance with this
Section):
If to Borrower: WPS Receivables Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Mr. J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
with copies to: WPS Receivables Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
Citigroup Center, Suite 2900
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
If to Agent: Congress Financial Corporation (Southern), as Agent
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
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Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
14.4 Partial Invalidity. If any provision of this Agreement is
held to be invalid or unenforceable, such invalidity or unenforceability shall
not invalidate this Agreement as a whole, but this Agreement shall be construed
as though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
14.5 Confidentiality.
(a) Agent and each Lender shall use all reasonable
efforts to keep confidential, in accordance with its customary procedures for
handling confidential information and safe and sound lending practices, any
non-public information supplied to it by Borrower pursuant to this Agreement,
provided, that, nothing contained herein shall limit the disclosure of any such
information: (i) to the extent required by statute, rule, regulation, subpoena
or court order, (ii) to bank examiners and other regulators, auditors and/or
accountants, in connection with any litigation to which Agent or such Lender is
a party, (iii) to any Lender or Participant (or prospective Lender or
Participant) or to any Affiliate of any Lender so long as such Lender or
Participant (or prospective Lender or Participant) or Affiliate shall have been
instructed to treat such information as confidential in accordance with this
Section 14.5, or (iv) to counsel for Agent or any Lender or Participant (or
prospective Lender or Participant).
(b) In the event that Agent or any Lender receives a
request or demand to disclose any confidential information pursuant to any
subpoena or court order, Agent or such Lender, as the case may be, agrees (i)
to the extent permitted by applicable law or if permitted by applicable law, to
the extent Agent or such Lender determines in good faith that it will not
create any risk of liability to Agent or such Lender, Agent or such Lender will
promptly notify Borrower of such request so that Borrower may seek a protective
order or other appropriate relief or remedy and (ii) if disclosure of such
information is required, disclose such information and, subject to
reimbursement by Borrower of Agent's or such Lender's expenses, cooperate with
Borrower in the reasonable efforts to obtain an order or other reliable
assurance that confidential treatment will be accorded to such portion of the
disclosed information which Borrower so designates, to the extent permitted by
applicable law or if permitted by applicable law, to the extent Agent or such
Lender determines in good faith that it will not create any risk of liability
to Agent or such Lender.
(c) In no event shall this Section 14.5 or any other
provision of this Agreement, any of the other Financing Agreements or
applicable law be deemed: (i) to apply to or restrict disclosure of information
that has been or is made public by any Transaction Party or any Affiliate of
any Transaction Party or any third party or otherwise becomes generally
available to the public other than as a result of a disclosure in violation
hereof, (ii) to apply to or restrict disclosure of information that was or
becomes available to Agent or any Lender (or any Affiliate of any Lender) on a
non-confidential basis from a person other than Borrower unless Agent or
93
the Lender receiving such information has actual knowledge (including advice of
counsel as required) that such person has obtained such information in
violation of law or in violation of the terms of a valid and binding written
agreement to hold such information confidential, (iii) to require Agent or any
Lender to return any materials furnished by any Transaction Party or Affiliate
of a Transaction Party to Agent or a Lender or prevent Agent or a Lender from
responding to routine informational requests in accordance with the Code of
Ethics for the Exchange of Credit Information promulgated by The ▇▇▇▇▇▇ ▇▇▇▇▇▇
Associates or other applicable industry standards relating to the exchange of
credit information. The obligations of Agent and Lenders under this Section
14.5 shall supersede and replace the obligations of Agent and Lenders under any
confidentiality letter signed prior to the date hereof.
14.6 Successors. This Agreement, the other Financing Agreements
and any other document referred to herein or therein shall be binding upon and
inure to the benefit of and be enforceable by Agent, Lenders, Borrower, and
their respective successors and assigns, except that Borrower may not assign
its rights under this Agreement, the other Financing Agreements and any other
document referred to herein or therein without the prior written consent of
Agent and Lenders. Any such purported assignment without such express prior
written consent shall be void. No Lender may assign its rights and obligations
under this Agreement without the prior written consent of Agent, except as
provided in Section 14.7 below. The terms and provisions of this Agreement and
the other Financing Agreements are for the purpose of defining the relative
rights and obligations of Borrower, Agent and Lenders with respect to the
transactions contemplated hereby and there shall be no third party
beneficiaries of any of the terms and provisions of this Agreement or any of
the other Financing Agreements.
14.7 Assignments; Participations.
(a) Each Lender may, with the prior written consent of
Agent (which consent shall not be unreasonably withheld), assign all or, if
less than all, a portion equal to at least $10,000,000 in the aggregate for the
assigning Lender, of such rights and obligations under this Agreement to one or
more Eligible Transferees (but not including for this purpose any assignments
in the form of a participation), each of which assignees shall become a party
to this Agreement as a Lender by execution of an Assignment and Acceptance;
provided, that, such transfer or assignment will not be effective until: (i) it
is recorded by Agent on the Register and (ii) Agent shall have received for its
sole account payment of a processing fee from the assigning Lender or the
assignee in the amount of $5,000.
(b) Congress shall not reduce its Commitment to less
than $30,000,000, except, that, Congress shall have the right to assign its
rights and delegate its obligations as a Lender under the Financing Agreements
below such minimum amount (i) to any present and future subsidiaries or
affiliates of Congress or (ii) upon the merger, consolidation, sale, transfer
or other disposition of all or any substantial portion of its business, loan
portfolio or other assets or (iii) at any time after the occurrence and
continuance of a Default or an Event of Default or (iv) with the consent of
Servicer, which consent shall not be unreasonably withheld, delayed or
conditioned.
94
(c) Agent shall maintain a register of the names and
addresses of Lenders, their Commitments and the principal amount of their Loans
(the "Register"). Agent shall also maintain a copy of each Assignment and
Acceptance delivered to and accepted by it and shall modify the Register to
give effect to each Assignment and Acceptance. The entries in the Register
shall be conclusive and binding for all purposes, absent manifest error, and
Borrower, Servicer, Agent and Lenders may treat each Person whose name is
recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by Borrower and any
Lender at any reasonable time and from time to time upon reasonable prior
notice.
(d) Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in each Assignment and
Acceptance, (i) the assignee thereunder shall be a party hereto and to the
other Financing Agreements and, to the extent that rights and obligations
hereunder have been assigned to it pursuant to such Assignment and Acceptance,
have the rights and obligations of a Lender hereunder and thereunder and (ii)
the assigning Lender shall, to the extent that rights and obligations hereunder
have been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights and be released from its obligations under this Agreement.
(e) By execution and delivery of an Assignment and
Acceptance, the assignor and assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than as provided in
such Assignment and Acceptance, the assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
any of the other Financing Agreements or the execution, legality,
enforceability, genuineness, sufficiency or value of this Agreement or any of
the other Financing Agreements furnished pursuant hereto, (ii) the assigning
Lender makes no representation or warranty and assumes no responsibility with
respect to the financial condition of Borrower, WestPoint or any of its
Subsidiaries or the performance or observance by any Transaction Party of any
of the Obligations; (iii) such assignee confirms that it has received a copy of
this Agreement and the other Financing Agreements, together with such other
documents and information it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance, (iv) such
assignee will, independently and without reliance upon the assigning Lender,
Agent and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under this Agreement and the other Financing Agreements, (v) such
assignee appoints and authorizes Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement and the other Financing
Agreements as are delegated to Agent by the terms hereof and thereof, together
with such powers as are reasonably incidental thereto, and (vi) such assignee
agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement and the other Financing
Agreements are required to be performed by it as a Lender. Agent and Lenders
may furnish any information concerning Borrower, WestPoint or any of its
Subsidiaries in the possession of Agent or any Lender from time to time to
assignees and Participants.
95
(f) Each Lender may sell participations to one or more
banks or other entities, other than a significant competitor (as such term is
defined in this Agreement) of WestPoint, in or to all or a portion of its
rights and obligations under this Agreement and the other Financing Agreements
(including, without limitation, all or a portion of its Commitments and the
Loans owing to it without the consent of Agent or the other Lenders); provided,
that, (i) such Lender's obligations under this Agreement (including, without
limitation, its Commitment hereunder) and the other Financing Agreements shall
remain unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, and Borrower, the other
Lenders and Agent shall continue to deal solely and directly with such Lender
in connection with such Lender's rights and obligations under this Agreement
and the other Financing Agreements, (iii) the Participant shall not have any
rights under this Agreement or any of the other Financing Agreements (the
Participant's rights against such Lender in respect of such participation to be
those set forth in the agreement executed by such Lender in favor of the
Participant relating thereto) and all amounts payable by Borrower hereunder
shall be determined as if such Lender had not sold such participation.
(g) Nothing in this Agreement shall prevent or prohibit
any Lender from pledging its Loans hereunder to a Federal Reserve Bank or, with
the prior written consent of Agent, to any other Person, in support of
borrowings made by such Lenders from such Federal Reserve Bank or such other
Person.
(h) Each Transaction Party shall assist Agent or any
Lender permitted to sell assignments or participations under this Section 14.7
in whatever manner reasonably necessary in order to enable or effect any such
assignment or participation, including (but not limited to) the execution and
delivery of any and all agreements, notes and other documents and instruments
as shall be requested and the delivery of informational materials, appraisals
or other documents for, and the participation of relevant management in
meetings and conference calls with, potential Lenders or Participants. Each
Transaction Party shall certify the correctness, completeness and accuracy, in
all material respects, of all descriptions of such Transaction Party and its
affairs provided, prepared or reviewed by such Transaction Party that are
contained in any selling materials and all other information provided by it and
included in such materials.
14.8 Entire Agreement. This Agreement, the other Financing
Agreements, any supplements hereto or thereto, and any instruments or documents
delivered or to be delivered in connection herewith or therewith represents the
entire agreement and understanding concerning the subject matter hereof and
thereof between the parties hereto, and supersede all other prior agreements,
understandings, negotiations and discussions, representations, warranties,
commitments, proposals, offers and contracts concerning the subject matter
hereof, whether oral or written. In the event of any inconsistency between the
terms of this Agreement and any schedule or exhibit hereto, the terms of this
Agreement shall govern.
14.9 Counterparts, Etc. This Agreement or any of the other
Financing Agreements may be executed in any number of counterparts, each of
which shall be an original, but all of which taken together shall constitute
one and the same agreement. Delivery of an executed counterpart of this
Agreement or any of the other Financing Agreements by telefacsimile shall have
the same
96
force and effect as the delivery of an original executed counterpart of this
Agreement or any of such other Financing Agreements. Any party delivering an
executed counterpart of any such agreement by telefacsimile shall also deliver
an original executed counterpart, but the failure to do so shall not affect the
validity, enforceability or binding effect of such agreement.
IN WITNESS WHEREOF, the parties have caused these presents to be duly
executed as of the day and year first above written.
BORROWER
WPS RECEIVABLES CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------------
Title: President
----------------------------------------
WESTPOINT ▇▇▇▇▇▇▇ INC.,
as initial Servicer
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------------
Title: /s/ Senior Vice President & Controller
----------------------------------------
[SIGNATURES CONTINUE ON NEXT PAGE]
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
AGENTS
CONGRESS FINANCIAL CORPORATION
(SOUTHERN), as Agent
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Title: /s/ First Vice President
--------------------------------
THE CIT GROUP/COMMERCIAL
SERVICES, INC., as Co-Agent
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Title: /s/ Vice President
--------------------------------
LENDERS
CONGRESS FINANCIAL CORPORATION
(SOUTHERN), as Lender
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Title: /s/ First Vice President
--------------------------------
Commitment:$130,000,000
THE CIT GROUP/COMMERCIAL
SERVICES, INC., as Lender
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Title: /s/ Vice President
--------------------------------
Commitment: $30,000,000