EXHIBIT (b)(3)
TERM LOAN AGREEMENT
BETWEEN
HOOKER FURNITURE CORPORATION
AND
SUNTRUST BANK
CLOSING DATE: September __, 2000
TABLE OF CONTENTS
1. DEFINITIONS, TERMS AND REFERENCES 1
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1.1. Certain Definitions. 1
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1.2. Use of Defined Terms. 5
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1.3. Accounting Terms. 5
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1.4. Terminology. 5
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1.5. Exhibits. 5
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2. THE FINANCING. 6
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2.1. Term Loan. 6
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2.2. Payments and Computations. 6
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2.3. Capital Adequacy. 6
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2.4. Unavailability of LIBOR Rate. 7
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2.5. Usury Savings Provisions. 7
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3. GENERAL REPRESENTATIONS AND WARRANTIES. 7
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3.1. Corporate Existence and Qualification. 7
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3.2. Corporate Authority; Validity and Binding Effect. 7
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3.3. Incumbency and Authority of Signing Officers. 8
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3.4. No Material Litigation. 8
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3.5. Taxes. 8
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3.6. Corporate Organization. 8
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3.7. Insolvency. 8
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3.8. Title. 8
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3.9. Margin Stock. 8
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3.10. No Violations. 8
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3.11. Financial Statements. 9
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3.12. Pollution and Environmental Control. 9
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3.13. Possession of Permits. 9
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3.14. Subsidiaries. 9
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3.15. Federal Taxpayer Identification Number. 9
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3.16. Employee Benefit Plans. 9
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3.17. Claims. 9
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3.18. Labor Controversies. 9
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4. AFFIRMATIVE COVENANTS. 9
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4.1. Records. 9
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4.2. Right to Inspect. 10
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4.3. Quarterly Financial Statements. 10
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4.4. Annual Financial Statements. 10
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4.5. Payment of Taxes. 10
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4.6. Maintenance of Insurance. 10
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4.7. Maintenance of Property and Management. 10
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4.8. Certificate of Compliance and No Default. 11
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4.9. Change of Principal Place of Business. 11
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4.10. Preservation of Corporate Existence. 11
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4.11. Compliance With Laws. 11
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4.12. Subordinations. 11
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4.13. Certain Required Notices. 11
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5. NEGATIVE COVENANTS. 11
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5.1. Encumbrances. 11
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5.2. Debt. 12
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5.3. Contingent Liabilities. 12
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5.4. Dividends. 12
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5.5. Redemption. 12
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5.6. Mergers. 12
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5.7. Affiliate Transactions. 12
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5.8. Subsidiaries. 12
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5.9. Fiscal Year. 12
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5.10. Federal Taxpayer Identification Number. 13
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5.11. Employee Benefit Plans. 13
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6. FINANCIAL COVENANTS. 13
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7. EVENTS OF DEFAULT. 13
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7.1. Obligations. 13
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7.2. Misrepresentations. 13
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7.3. Certain Covenants. 13
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7.4. Other Covenants. 13
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7.5. Other Debts. 13
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7.6. Voluntary Bankruptcy. 13
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7.7. Involuntary Bankruptcy. 14
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7.8. Judgments. 14
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7.9. Bankruptcy of Affiliate. 14
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7.10. Material Adverse Effect. 14
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7.11. Change of Control, Etc. 14
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7.12. Deemed Insure. 14
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8. REMEDIES. 14
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8.1. Acceleration of the Obligations. 14
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8.2. Other Remedies. 15
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8.3. Set Off. 15
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9. MISCELLANEOUS. 15
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9.1. Waiver. 15
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9.2. Governing Law. 15
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9.3. Survival. 15
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9.4. No Assignment by Borrower. 15
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9.5. Counterparts. 15
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9.6. Reimbursement. 15
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9.7. Successors and Assigns. 16
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9.8. Severability. 16
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9.9. Notices. 16
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9.10. Entire Agreement; Amendments. 16
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9.11. Time of Essence. 16
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9.12. Interpretation. 16
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9.13. Lender Not a Joint Venturer. 16
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9.14. Jurisdiction. 16
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9.15. Acceptance. 17
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9.16. Payment on Non-Business Days. 17
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9.17. Cure of Defaults by Lender. 17
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9.18. Recitals. 17
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9.19. Attorney-in-Fact. 17
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9.20. Sole Benefit. 17
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9.21. Indemnification. 17
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9.22. JURY TRIAL WAIVER. 18
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9.23. COORDINATION. 18
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9.24. CONFIDENTIALITY. 18
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10. CONDITIONS PRECEDENT. 18
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10.1. Secretary's Certificate. 18
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10.2. Good Standing Certificates. 18
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10.3. Loan Documents. 19
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10.4. Opinion of Counsel. 19
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10.5. No Default. 19
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10.6. Approval of ESOP Loan. 19
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10.7. Other. 19
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EXHIBITS
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EXHIBIT A Borrower Information
EXHIBIT B Note
EXHIBIT C Certificate of No Default
EXHIBIT D Secretary's Certificate
EXHIBIT E ESOP Documentation
EXHIBIT F Opinion of Counsel
EXHIBIT G Negative Pledge
Supplement A Financial Covenants
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LOAN AGREEMENT
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THIS AGREEMENT, made, entered into and effective as of September ___,
2000, by and between HOOKER FURNITURE CORPORATION, a Virginia Corporation
("Borrower"); and SUNTRUST BANK, a Georgia Banking Company ("Lender");
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W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Borrower has applied to Lender for financing the proceeds of
which will be used solely to make a loan to the Borrower's Employee Stock
Ownership Plan to enable it to purchase shares of the Company's stock, as more
particularly described hereinbelow; and
WHEREAS, Lender is willing to extend financing to Borrower in
accordance with the terms hereof upon the execution of this Agreement by
Borrower, compliance by Borrower with all of the terms and provisions of this
Agreement and fulfillment of all conditions precedent to Lender's obligations
herein contained;
NOW, THEREFORE, to induce Lender to extend the financing provided for
herein, and for other good and valuable consideration, the sufficiency and
receipt of all of which are acknowledged by Borrower, Lender and Borrower agree
as follows:
1. DEFINITIONS, TERMS AND REFERENCES
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1.1 Certain Definitions. In addition to such other terms as
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elsewhere defined herein, as used in this Agreement, in any Exhibits and in any
Supplements, the following terms shall have the following meanings:
"Affiliate" shall mean, with respect to any Person, any Person
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Controlling, Controlled by or under common Control with such Person. For
purposes hereof, each Subsidiary shall at all times be considered an "Affiliate"
of Borrower.
"Agreement" shall mean this Loan Agreement, as it may be amended or
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supplemented from time to time.
"Applicable Rate" shall mean the interest rate per annum payable on the
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Obligations, as is defined and more particularly described in Section 2.1.
"Bankruptcy Code" shall mean Title 11 of the United States Code, as it
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may be amended from time to time.
"Borrowed Debt" shall mean all short and long term Debt for borrowed
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money, regardless of the lender, plus Capital Leases.
"Borrower" shall have the meaning given to such term in the preamble to
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this Agreement. Each of the covenants, agreements, representations and
warranties made in this Agreement and under the Loan Documents shall also apply
to each Subsidiary.
"Business Day" shall mean a day on which Lender is open for the conduct
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of banking business at its office in Richmond, Virginia, where payments are to
be made under this Agreement and, if applicable Business Day relates to any
determination of the LIBOR Rate, on which dealings are carried on in the London
interbank market.
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"Capital Lease" shall mean any lease of property that, in accordance
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with GAAP, should be capitalized on the balance sheet of a Person.
"Closing Date" shall mean the date of this Agreement.
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"Consolidated Subsidiaries" shall mean those Subsidiaries of Borrower
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(if any) existing from time to time which, for purposes of GAAP, are required to
be consolidated for financial reporting purposes.
"Control", "Controlled" or "Controlling" shall mean, with respect to
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any Person, the power to direct the management and policies of such Person,
directly, indirectly, whether through the ownership of voting securities or
otherwise; provided, however, that, in any event, any Person which owns directly
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or indirectly ten percent (10%) or more of the securities having ordinary voting
power for the election of directors or other governing body of a corporation
shall be deemed to "Control" such corporation for purposes of this Agreement.
"Debt" shall mean, with respect to any Person, without duplication, (i)
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all obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services, (iv) all obligations of such Person as lessee under Capital Leases,
(v) all obligations of such Person to purchase securities or other property
which arise out of or in connection with the sale of the same or substantially
similar securities or property, (vi) all obligations of such Person to reimburse
any bank or other person in respect of amounts paid under a letter of credit or
similar instrument, (vii) all obligations of others secured by a Lien on any
asset of such Person, whether or not such obligation is assumed by such Person
(limited, in the case of any such obligation not assumed by such Person, to the
value of such asset), (viii) all obligations of others endorsed or guaranteed by
such Person, (ix) all accrued pension fund and other employee benefit plan
obligations and liabilities, and (x) all derivative, interest rate protection or
similar hedging agreements.
"Default Condition" shall mean the occurrence of any event which, after
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satisfaction of any requirement for the giving of notice or the lapse of time,
or both, would become an Event of Default.
"Default Rate" shall mean that interest rate per annum equal to two
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percent (2%) per annum in excess of the otherwise Applicable Rate payable on any
Obligation.
"Employee Benefit Plan" shall mean any employee welfare benefit plan as
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that term is defined in Section 3(1) of ERISA, any employee pension benefit
plan, as that term is defined in Section 3(2) of ERISA or any other plan which
is subject to the provisions of Title IV of ERISA or which is for the benefit of
any employees of Borrower and any employees of any Subsidiary or any other
entity which is a member of a controlled group or under common control with
Borrower, as such terms are defined in Section 4001(a)(14) of ERISA.
"Environmental Laws" shall mean all federal, state and local laws,
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rules, regulations, ordinances, programs, permits, guidances, orders and consent
decrees relating to health, safety and environmental matters, whether now or
hereafter existing, including, but not limited to state and federal superlien
and environmental cleanup laws and U.S. Department of Transportation regulations
and any other state or local law or regulation relating to pollution,
reclamation, or protection of the environment, including laws relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, or hazardous or toxic materials or wastes into air, water, or
land, or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants, contaminants
or hazardous or toxic materials or wastes.
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"Equity" shall mean total assets minus total liabilities, each as
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calculated in accordance with GAAP.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
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as may be amended from time to time.
"ESOP" shall mean the Borrower's Employee Stock Ownership Plan.
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"ESOP Loan" shall mean the Loan of $22,500,000 made by the Borrower to
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the ESOP with the proceeds of the Note.
"ESOP Note" shall mean the promissory note in the original principal
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amount of Twenty-two Million Five Hundred Thousand and no/100 Dollars
($22,500,000) dated as of the date of this Agreement, made by the ESOP and
payable to the Borrower.
"ESOP Stock" shall mean all of the Borrower's stock acquired by the
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ESOP with the proceeds of the ESOP Note.
"Event of Default" shall mean any of the events or conditions described
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in Article 7, provided that any requirement for the giving of notice or the
lapse of time, or both, has been satisfied.
"Executive Office" shall mean the address of Borrower designated as
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such on Exhibit "A".
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"Fiscal Year", in respect of a Person, shall mean the fiscal year of
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such Person employed by such Person as of the Closing Date, and designated as
such on Exhibit "A" as to Borrower. The term "Fiscal Quarter" shall correspond
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accordingly thereto.
"GAAP" shall mean generally accepted accounting principles consistently
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applied for the period or periods in question.
"Interest Payment Date" means the first day of December, 2000 and the
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first day of each December, March, June and September thereafter, and the day on
which the Term Loan is paid in full.
"Lender" shall have the meaning given to such term in the preamble to
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this Agreement.
"LIBOR Rate" shall mean the one month LIBOR established by the British
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Bankers Association as of 11:00 a.m. (London Time) on the first Business Day of
each month as published by a on-line information service, such as Bloomberg
Financial Markets News Services or any comparable reporting service selected by
the Lender. The LIBOR Rate shall be adjusted on the first Business Day of the
month. Adjustments to the LIBOR Rate shall be effective as of the first calendar
day of each month.
"Lien" shall mean any deed to secure debt, deed of trust, mortgage or
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similar instrument, and any lien, security interest, preferential arrangement
which has the practical effect of constituting a security interest, security
title, pledge, charge, encumbrance or servitude of any kind, whether by
consensual agreement or by operation of statute or other law, and whether
voluntary or involuntary, including, without limitation, any conditional sale or
other title retention agreement or lease in the nature thereof.
"Loan Documents" shall mean this Agreement, the Negative Pledge, the
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Note, any Master Agreement and any and all other documents, instruments,
certificates and agreements executed and/or delivered by Borrower in connection
herewith, or any one, more, or all of the foregoing, as the context shall
require.
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"Master Agreement" shall mean any interest rate swap transaction,
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interest rate cap transaction, interest rate floor transaction, interest rate
collar transaction or other similar transaction pursuant to an International
Swap Dealers Association, Inc. Master Agreement which may hereafter be executed
by and between the Borrower and the Lender, together with all amendments and
schedules thereto and confirmations thereof from time to time.
"Material Adverse Effect" shall mean with respect to any event, act,
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condition or occurrence of whatever nature (including any adverse determination
in any litigation, arbitration or governmental investigation or proceeding),
whether singly or in conjunction with any other event or events, act or acts,
condition or conditions, occurrence or occurrences, whether or not related, a
material adverse change in, or a material adverse effect upon any of (a) the
financial condition, operations, business, properties or prospects of the
Borrower, as determined by the Lender in the exercise of its reasonable business
judgment, and its Consolidated Subsidiaries taken as a whole, (b) the rights and
remedies of the Lender under any of the Loan Documents or the ability of the
Borrower to perform its obligations under any of the Loan Documents or (c) the
legality, validity or enforceability of any of the Loan Documents.
"Negative Pledge" shall mean the Negative Pledge and Agreement dated of
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even date herewith, as amended or supplemented from time to time whereby the
Borrower agrees not to create or suffer to exist any Lien except Permitted Liens
on any real or personal property or assets of either the Borrower or any
Subsidiary. The Negative Pledge shall be substantially in the form of Exhibit G.
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"Note" shall mean the promissory note, dated of even date herewith, as
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amended or supplemented from time to time, in the principal amount of Twenty-Two
Million Five Hundred Thousand and No/100 Dollars ($22,500,000) evidencing the
obligation to repay the Term Loan together with interest, together with any
renewals, modifications or extensions thereof, in whole or in part. The Note
shall be substantially in the form of Exhibit "B".
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"Obligations" shall mean any Debt of Borrower to Lender arising
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hereunder or as a result hereof, whether evidenced by the Note, or otherwise,
and any and all extensions or renewals thereof in whole or in part; any Debt of
Borrower to Lender under any later or future advances or loans made by Lender to
Borrower, and any and all extensions or renewals thereof in whole or in part and
any and all existing or future Debt of Borrower to Lender and any and all
extensions or renewals thereof in whole or in part.
"Permitted Encumbrances" shall mean (i) Liens for taxes not yet due and
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payable or being actively contested as permitted by this Agreement; (ii)
carriers', warehousemen's mechanics, materialmen's, repairmen's or other like
Liens arising in the ordinary course of business, payment for which is not yet
due or which are being actively contested in good faith and by appropriate,
lawful proceedings, and for which adequate reserves have been established as
required by GAAP; (iii) pledges or deposits in connection with worker's
compensation, unemployment insurance and other social security legislation; (iv)
deposits to secure the performance of utilities, leases, statutory obligations
and surety and appeal bonds and other obligations of a like nature arising by
statute or under customary terms regarding depository relationships on deposits
held by financial institutions with whom Borrower has a banker-customer
relationship; (v) typical restrictions imposed by licenses and leases of
software (including location and transfer restrictions); (vi) Purchase Money
Liens not to exceed $1,000,000 in the aggregate outstanding at any one time; and
(vii) encumbrances in the nature of zoning restrictions, easements and rights or
restrictions of record on the use of the real estate of Borrower, which do not
materially detract from the value of such real estate or impair the use thereof
in the business of the Borrower.
"Person" shall mean any individual, partnership, corporation, limited
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liability company, joint venture, joint stock company, trust, governmental unit
or other entity.
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"Prime Rate" refers to that interest rate so denominated and set by
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Lender from time to time as an interest rate basis for borrowings. The Prime
Rate is but one of several interest rate bases used by Lender. Lender extends
credit at interest rates above and below the Prime Rate.
"Purchase Money Lien" shall mean any Lien granted by Borrower or any
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Subsidiary from time to time to vendors or financiers of equipment to secure the
payment of the purchase price thereof so long as (i) such Liens extend only to
the specific equipment so purchased, (ii) secure only such deferred payment
obligation and related interest, fees and charges and no other Debt, and (iii)
are promptly released upon the payment in full of such purchase price and
related interest, fees and charges.
"Subordinated Debt" shall mean any Debt of Borrower or any Subsidiary
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to any Person which, by written agreement in form and substance satisfactory to
Lender, has been subordinated in right of payment and claim, to the rights and
claims of Lender in respect of the Obligations, on terms and conditions
satisfactory to Lender.
"Subsidiary" shall mean any corporation, partnership, business
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association or other entity (including any Subsidiary of any of the foregoing)
of which Borrower owns, directly or indirectly, fifty percent (50%) or more of
the capital stock or equity interest having ordinary power for the election of
directors or others performing similar functions.
"Term Loan" shall mean the loan in the principal amount of Twenty-Two
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Million Five Hundred Thousand and No/100 Dollars ($22,500,000) to be made to the
Borrower by the Lender pursuant to the provisions of this Agreement.
1.2. Use of Defined Terms. All terms defined in this Agreement
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and the Exhibits shall have the same defined meanings when used in any other
Loan Documents, unless the context shall require otherwise.
1.3. Accounting Terms. All accounting terms not specifically
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defined herein shall have the meanings generally attributed to such terms under
GAAP.
1.4. Terminology. All personal pronouns used in this
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Agreement, whether used in the masculine, feminine or neuter gender, shall
include all other genders; the singular shall include the plural, and the plural
shall include the singular. Titles of Articles and Sections in this Agreement
are for convenience only, and neither limit nor amplify the provisions of this
Agreement, and all references in this Agreement to Articles, Sections,
Subsections, paragraphs, clauses, subclauses, Exhibits or Supplements shall
refer to the corresponding Article, Section, Subsection, paragraph, clause,
subclause of, or Exhibit or Supplement attached to, this Agreement, unless
specific reference is made to the articles, sections or other subdivisions of,
or Exhibit or Supplement to, another document or instrument. Wherever in this
Agreement reference is made to any instrument, agreement or other document,
including, without limitation, any of the Loan Documents, such reference shall
be understood to mean and include any and all amendments thereto or
modifications, restatements, renewals or extensions thereof. Wherever in this
Agreement reference is made to any statute, such reference shall be understood
to mean and include any and all amendments thereof and all regulations
promulgated pursuant thereto. Whenever any matter set forth herein or in any
Loan Document is to be consented to or satisfactory to Lender, or is to be
determined, calculated or approved by Lender, then, unless otherwise expressly
set forth herein or in any such Loan Document, such consent, satisfaction,
determination, calculation or approval shall be in Lender's sole discretion,
exercised in good faith and, where required by law, in a commercially reasonable
manner, and shall be conclusive absent manifest error.
1.5. Exhibits. All Exhibits attached hereto are by reference
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made a part hereof.
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2. THE FINANCING.
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2.1. Term Loan.
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(a) Subject to the terms and conditions of this Agreement,
the Lender agrees to make a Term Loan to the Borrower on the Closing Date in the
principal amount of Twenty-Two Million Five Hundred Thousand and No/100 Dollars
($22,500,000).
(b) The entire proceeds of the Term Loan shall be used by
the Borrower solely to make a loan in like amount to the ESOP and will be
evidenced by the ESOP Note, the proceeds of which will be used by the ESOP
solely to acquire ESOP Stock.
(c) The unpaid principal balance of the Term Loan shall
bear interest at a per annum rate equal to the sum of the LIBOR Rate for each
month plus three-eighths of one percent (.375%) per annum. Payments of interest
on the Note evidencing the Term Loan shall be made in arrears on each Interest
Payment Date beginning on the Interest Payment Date next succeeding the date of
disbursement of the Term Loan.
(d) The obligation of the Borrower to repay the Term Loan
shall be evidenced by the Note. The principal balance of the Term Loan shall be
payable in forty (40) equal consecutive quarterly installments of principal and
interest on the first day of each September, December, March and June,
commencing on December 1, 2000, in the amount of $ __________ each, based upon
an assumed interest rate of ____ % per annum and a ten (10) year principal
amortization, provided that, the last such installment shall be in an amount
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sufficient to repay in full the entire unpaid principal balance of the Term Loan
and all accrued but unpaid interest thereon. All payments will be applied first
to accrued interest, then to principal.
(e) The Borrower shall have the right at any time to prepay
the Term Loan in whole or, from time to time in part, in each case without
penalty, provided that (i) each prepayment shall be in a minimum principal
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amount of $5,000, and (ii) prepayments will be applied to the installments due
on the Note in the inverse order of their maturity; provided further, however,
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the Borrower shall be responsible for any costs, expenses or charges resulting
from the termination of any Master Agreement.
2.2. Payments and Computations. All payments due under this
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Agreement (including any payment or prepayment of principal, interest, fees and
other charges) or with respect to the Obligations shall be made without offset
or deduction in lawful money of the United States of America, in immediately
available funds, to the Lender at its office at 000 X. Xxxx Xxxxxx, Xxxxxxxx,
Xxxxxxxx 00000, or at such other place as the Lender may designate, and shall be
applied first to any accrued fees or expenses, next to accrued late charges,
next to accrued interest and then to principal, or in such other fashion as the
Lender may select. If any payment of principal, interest or fees is due on a day
which is not a Business Day, then the due date will be extended to the next
succeeding full Business Day and interest and fees will be payable with respect
to the extension. Upon the occurrence of an Event of Default and during the
continuation of such Event of Default, interest shall accrue on the Term Loan at
the Default Rate. The rate at which interest accrues on the unpaid principal
balance of the Term Loan shall be changed as of the effective date of any change
in the LIBOR Rate. Interest and fees shall be computed on the basis of a year of
360 days and actual days elapsed. The Lender may, but shall not be obligated to,
debit the amount of any payment due under this Agreement to any deposit account
of the Borrower maintained with the Lender.
2.3. Capital Adequacy. If the adoption of any applicable
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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, or compliance by the Lender with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency,
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in each case after the date hereof, has or would have the effect of reducing the
rate of return on the Lender's capital as a consequence of its obligations
hereunder to a level below that which the Lender could have achieved but for
such adoption, change or compliance (taking into consideration the Lender's
policies with respect to capital adequacy) by an amount deemed by the Lender to
be material, then from time to time, 30 days after written demand by the Lender,
the Borrower shall pay to the Lender such additional amount or amounts as will
compensate the Lender for such reduction. A certificate of the Lender claiming
compensation under this ss. 2.3 and setting forth in reasonable detail the
additional amount or amounts to be paid to it hereunder and the basis therefor
shall be prepared in good faith by the Lender and shall be conclusive in the
absence of manifest error. In determining any such amount, the Lender may use
any reasonable averaging and attribution methods.
2.4. Unavailability of LIBOR Rate. If, after the date
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hereof, the Lender determines that the LIBOR Rate cannot be determined, the
Lender and the Borrower shall negotiate in good faith to establish an alternate
index as a basis for setting interest rates hereunder, which shall approximate
the LIBOR Rate as closely as possible. Until such alternate index is agreed
upon, interest shall accrue at the greater of (a) the LIBOR Rate most recently
determined under this Agreement plus three-eighths of one percent (.375%) from
time to time in effect thereafter and (b) the Prime Rate less two percent (2.0%)
for a period not to exceed 30 days, during which time the parties shall agree
upon an alternate index.
2.5. Usury Savings Provisions. Lender and Borrower hereby
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further agree that the only charge imposed by Lender upon Borrower for the use
of money in connection herewith is and shall be the interest expressed in the
Note at the rate set forth in each of the Note, and that all other charges
imposed by Lender upon Borrower in connection herewith, are and shall be deemed
to be charges made to compensate Lender for underwriting and administrative
services and costs, and other services and costs performed and incurred, and to
be performed and incurred, by Lender in connection with the Term Loan, and shall
under no circumstances be deemed to be charges for the use of money. In no
contingency or event whatsoever shall the aggregate of all amounts deemed
interest hereunder or under the Note and charged or collected pursuant to the
terms of this Agreement or pursuant to the Note exceed the highest rate
permissible under any law which a court of competent jurisdiction shall, in a
final determination, deem applicable hereto. In the event that such a court
determines that Lender has charged or received interest hereunder in excess of
the highest applicable rate, the rate in effect hereunder shall automatically be
reduced to the maximum rate permitted by applicable law and Lender shall
promptly refund to Borrower any interest received by Lender in excess of the
maximum lawful rate or, if so requested by Borrower, shall apply such excess to
the principal balance of the Obligations. It is the intent hereof that Borrower
not pay or contract to pay, and that Lender not receive or contract to receive,
directly or indirectly in any manner whatsoever, interest in excess of that
which may be paid by Borrower under applicable law.
3. GENERAL REPRESENTATIONS AND WARRANTIES. In order to induce
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Lender to enter into this Agreement, Borrower hereby represents and warrants to
Lender as set forth below:
3.1. Corporate Existence and Qualification. Borrower is a
-------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of its incorporation, as designated on Exhibit "A", with its
-----------
principal place of business, chief executive office and office where it keeps
all of its books and records being located at the Executive Office and is duly
qualified as a foreign corporation in good standing in each other state in which
the failure to be so qualified would have a Material Adverse Effect. Borrower
has as its corporate name, as registered with the secretary of state of the
state of its incorporation, the words first inscribed hereinabove as its name,
and, except as may be described on Exhibit "A", has not done business under any
-----------
other name for at least the past seven (7) years.
3.2. Corporate Authority; Validity and Binding Effect.
------------------------------------------------
Borrower has the power to make, deliver and perform under the Loan Documents,
and to borrow hereunder, and has taken all necessary and appropriate corporate
action to authorize the execution, delivery and performance of the Loan
7
Documents. This Agreement and each of the other Loan Documents is, or when
executed and delivered in accordance with this Agreement will be, a legal, valid
and binding obligation of Borrower, enforceable in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors' rights generally, and
general principles of equity.
3.3. Incumbency and Authority of Signing Officers. The
--------------------------------------------
undersigned officers of Borrower hold the offices specified hereinbelow and, in
such capacities, are duly authorized and empowered to execute, attest and
deliver this Agreement and the remainder of the Loan Documents for and on behalf
of Borrower, and to bind Borrower accordingly thereby.
3.4. No Material Litigation. Except as may be set forth on
----------------------
Exhibit "A", there are no legal proceedings pending (or, so far as Borrower or
-----------
its officers know, threatened), before any court or administrative agency which,
if adversely determined, could reasonably be expected to have a Material Adverse
Effect.
3.5. Taxes. Borrower has filed or caused to be filed all tax
-----
returns required to be filed by it and has paid all taxes shown to be due and
payable by it on said returns or on any assessments made against
it.
3.6. Corporate Organization. The articles of incorporation of and
----------------------
bylaws of Borrower are in full force and effect under the law of the state of
its incorporation and all amendments to said articles of incorporation and
bylaws have been duly and properly made under and in accordance with all
applicable laws.
3.7. Insolvency. After giving effect to the execution and delivery
----------
of the Loan Documents and the making of disbursements under the Note, Borrower
will not be "insolvent", within the meaning of such term as defined in ss.
101(32) of the Bankruptcy Code; or be unable to pay its debts generally as such
debts become due; or have an unreasonably small capital.
3.8. Title. Borrower has good and marketable title to all of its
-----
properties subject to no material Lien of any kind except as otherwise disclosed
in writing to Lender on Exhibit A, except for the Permitted Encumbrances.
3.9. Margin Stock. Borrower is not engaged principally, or as
------------
one of its important activities, in the business of purchasing or carrying any
"margin stock", as that term is defined in Section 221.2(h) of Regulation U of
the Board of Governors of the Federal Reserve System, and no part of the
proceeds of any borrowing made pursuant hereto will be used to purchase or carry
any such margin stock or to extend credit to others for the purpose of
purchasing or carrying any such margin stock, or be used for any purpose which
violates, or which is inconsistent with, the provisions of Regulation X of said
Board of Governors. In connection herewith, if requested by Lender, Borrower
will furnish to Lender a statement in conformity with the requirements of
Federal Reserve Form U-1 referred to in said Regulation U to the foregoing
effect.
3.10. No Violations. The execution, delivery and performance by
-------------
Borrower of this Agreement and the Note have been duly authorized by all
necessary corporate action and do not and will not require any consent or
approval of the shareholders of Borrower, violate any provision of any law,
rule, regulation (including, without limitation, Regulation X of the Board of
Governors of the Federal Reserve System), order, writ, judgment, injunction,
decree, determination or award presently in effect having applicability to
Borrower or of the charter or bylaws of Borrower, or result in a breach of or
constitute a default under any indenture or loan or credit agreement or any
other agreement, lease or instrument to which Borrower is a party or by which it
or its properties may be bound or affected; and Borrower is not in default
8
under any such law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award or any such indenture, agreement, lease or instrument.
3.11. Financial Statements. The audited financial statements of
--------------------
Borrower and its Consolidated Subsidiaries (if any) for its most recent Fiscal
Year together with the unaudited financial statements of Borrower and its
Consolidated Subsidiaries (if any) for that portion ended with its most recent
Fiscal Quarter of its current Fiscal Year, for which statements have been
prepared, copies of which heretofore have been furnished to Lender, fairly
present, in all material respects, the financial condition of Borrower and its
Consolidated Subsidiaries (if any), the results of its operations and the
transactions in its equity accounts as of the dates and for the periods referred
to therein, and have been prepared in accordance with GAAP. There are no
material liabilities, direct or indirect, fixed or contingent, of Borrower or
any such Consolidated Subsidiaries as of the date of such financial statements
which are not reflected therein or in the notes thereto. No event has occurred
which could reasonably be anticipated to have a Material Adverse Effect since
the date of the balance sheet contained in the audited financial statements
described hereinabove.
3.12. Pollution and Environmental Control. Except as disclosed on
-----------------------------------
Exhibit A, Borrower and each Subsidiary have obtained all permits, licenses and
---------
other authorizations which are required under all Environmental Laws where the
failure to so obtain could have a Material Adverse Effect, and is in material
compliance with, all Environmental Laws.
3.13. Possession of Permits. Borrower and each Subsidiary possess
---------------------
all franchises, certificates, licenses, permits and other authorizations from
governmental political subdivisions or regulatory authorities, and all patents,
trademarks, service marks, trade names, copyrights, licenses and other rights,
free from burdensome restrictions, that are necessary for the ownership,
maintenance and operation of any of its properties and assets, and Borrower is
not in violation of any thereof which violation could reasonably be expected to
have a Material Adverse Effect.
3.14. Subsidiaries. As of the Closing Date, Borrower has no
------------
Subsidiaries except as described on Exhibit "A".
-----------
3.15. Federal Taxpayer Identification Number. Borrower's federal
--------------------------------------
taxpayer identification number is as indicated on Exhibit "A".
-----------
3.16. Employee Benefit Plans. As of the Closing Date, Borrower has
----------------------
no Employee Benefit Plans except as described on Exhibit "A".
-----------
3.17. Claims. Except as disclosed on Exhibit A, no product sold,
------ ---------
leased, licensed or delivered by Borrower is subject to any guaranty, warranty,
right of return or other indemnity beyond Borrower's standard written warranty.
3.18. Labor Controversies. Except as disclosed on Exhibit A, there
------------------- ---------
are no labor controversies pending or, to the best knowledge of the Borrower
threatened against it, which, if adversely determined, could have a Material
Adverse Effect.
4. AFFIRMATIVE COVENANTS. Borrower covenants to Lender that from and
---------------------
after the date hereof, and so long as any amount remain unpaid on account of
either the Note or any of the other Loan Documents or this Agreement remains
effective (whichever is the last to occur), Borrower will comply (and cause each
Subsidiary to comply) with the affirmative covenants set forth below:
4.1. Records. All material records of Borrower will be kept at its
-------
Executive Office and will not be removed from such address without the prior
written consent of Lender.
9
4.2. Right to Inspect. Lender (or any Person or Persons
----------------
designated by it) shall, in its sole discretion, have the right to call during
normal business hours at any place of business of Borrower at any reasonable
time and without prior notice, and, without hindrance or delay, inspect, audit,
check and make extracts from Borrower's books, records, journals, orders,
receipts and any correspondence and other data relating to the Borrower's
business or to any other transactions between the parties hereto.
4.3. Quarterly Financial Statements. Borrower shall, within forty
------------------------------
five (45) days after the end of each Fiscal Quarter, furnish to Lender unaudited
financial statements of Borrower, including balance sheets, income statements
and statements of cash flow, for the Fiscal Quarter ended, and for the Fiscal
Year to date, on a consolidated basis certified as presenting fairly and in all
material respects such information, by a duly authorized officer of Borrower.
Accompanying such financial statements shall be a copy of the Borrower's Form
10-Q filed with the Securities Exchange Commission.
4.4. Annual Financial Statements. Borrower shall within ninety
---------------------------
(90) days after the end of each Fiscal Year, furnish to Lender the annual audit
and report of shareholders of Borrower, certified without material qualification
by independent certified public accountants selected by Borrower and reasonably
acceptable to Lender, and prepared in accordance with GAAP, together with
relevant financial statements of Borrower for the Fiscal Year then ended, on a
consolidated basis, if applicable. Borrower shall cause said accountants to
furnish Lender with a statement that in making their examination of such
financial statements, they obtained no knowledge of any Event of Default or
Default Condition which pertains to accounting matters relating to this
Agreement or the Note, or, in lieu thereof, a statement specifying the nature
and period of existence of any such Event of Default or Default Condition
disclosed by their examination. The Borrower shall furnish to the Lender
promptly upon receipt thereof, copies of any reports submitted to the Borrower
by its independent certified public accountants in connection with examination
of the financial statements of the Borrower made by such accountants as well as
any filings made with or communications received from the Securities Exchange
Commission, including but not limited to Form 10-K.
4.5. Payment of Taxes. Borrower shall pay and discharge all taxes,
-----------------
assessments and governmental charges upon it, its income and its properties
prior to the date on which penalties attach thereto, unless and to the extent
only that (x) such taxes, assessments and governmental charges are being
contested in good faith and by appropriate proceedings by Borrower, (y) Borrower
maintains reasonable reserves on its books therefor and (z) the non-payment of
such taxes does not result in a Lien upon any of the Borrower's property other
than a Permitted Encumbrance.
4.6. Maintenance of Insurance. Borrower shall maintain insurance
------------------------
with responsible insurance companies on such of its properties, in such
reasonable amounts and against such risks as is customarily maintained by
similar businesses operating in the same vicinity, but in any event to include
business interruption, freight, loss, damage, flood, windstorm, fire, theft,
extended coverage and product liability insurance in amounts reasonably
satisfactory to Lender, which such insurance shall not be cancelable by
Borrower, unless with the prior written consent of Lender, or by Borrower's
insurer, unless with at least thirty (30) days (or such lesser or greater number
of days as Lender may agree or accept) advance written notice to Lender thereof.
Borrower shall file with Lender upon its request a detailed list of such
insurance then in effect stating the names of the insurance companies, the
amounts and rate of insurance, the date of expiration thereof, the properties
and risks covered thereby and the insured with respect thereto, a copy of each
such insurance policy.
4.7. Maintenance of Property and Management. Borrower shall
--------------------------------------
maintain its property in good working condition less ordinary wear and tear.
10
4.8. Certificate of Compliance and No Default. Borrower shall, on
----------------------------------------
a quarterly basis not later than forty five (45) days after the close of each of
its first three Fiscal Quarters and not later than ninety (90) days after the
close of its Fiscal Year, certify to Lender, in a statement executed by a duly
authorized officer of Borrower in the form of Exhibit "C" attached hereto, that
-----------
no Event of Default and no Default Condition exists or has occurred, or, if an
Event of Default or Default Condition exists or has occurred, specifying the
nature and period of existence thereof. Such certificate shall also set forth,
in reasonable detail, compliance with all financial covenants set forth in
Supplement A for the immediately preceding Fiscal Quarter on a rolling four
quarter basis.
4.9. Change of Principal Place of Business. Borrower hereby
-------------------------------------
understands and agrees that if, at any time hereafter, Borrower elects to move
its Executive Office, or if Borrower elects to change its name, identity or its
structure to other than a corporate structure, Borrower will notify Lender in
writing at least thirty (30) days prior thereto.
4.10. Preservation of Corporate Existence. Borrower shall preserve
-----------------------------------
and maintain its corporate existence, rights, franchises and privileges in the
jurisdiction of its incorporation. The Borrower shall qualify and remain
qualified as a foreign corporation in each jurisdiction in which such
qualification is necessary or desirable in view of its business and operations
or the ownership of its properties and where the failure to be so qualified
could have a Material Adverse Effect.
4.11. Compliance With Laws. Borrower and each of its Subsidiaries
--------------------
shall comply with the requirements of all applicable laws, rules, regulations
and orders of any governmental authority, noncompliance with which could have a
Material Adverse Effect. Without limiting the foregoing, each of Borrower and
its Subsidiaries shall obtain and maintain all permits, licenses and other
authorizations which are required under, and otherwise comply with, all federal,
state, and local laws and regulations, except where the failure to so obtain,
maintain or comply would not be expected to have a Material Adverse Effect.
4.12. Subordinations. Borrower shall provide Lender with a
--------------
subordination agreement, in form satisfactory to Lender, executed by any Person
who is an officer or director of Borrower to whom Borrower is or hereafter
becomes indebted for money borrowed in excess of $100,000, subordinating in
right of payment and claim all of such indebtedness and any future advances
thereon to the claims of Lender on the Note and the other Obligations so long as
any amount remains unpaid on the Note or any of the Obligations. Such
subordination agreement shall provide, among other things, that no principal or
interest on any such indebtedness shall be repaid unless and until there is no
outstanding balance due and payable on the Note or on any other Obligations of
Borrower to Lender.
4.13. Certain Required Notices. The Borrower shall furnish to the
------------------------
Lender, promptly after the commencement or obtaining knowledge thereof (i)
notice of all actions, suits and proceedings before any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, affecting the Borrower, which, when taken with all other similar
claims, if determined adversely to the Borrower could have a Material Adverse
Effect, (ii) notice of any pending or, to the knowledge of the Borrower,
threatened claim arising under any Environmental Law at, on, in, or under
affecting any of the properties of the Borrower, which, if determined adversely
to the Borrower could have a Material Adverse Effect, or (iii) the existence and
nature of any Default Condition or Event of Default.
5. NEGATIVE COVENANTS. Borrower covenants to Lender that from and after
------------------
the date hereof and so long as any amount remains unpaid on account of either
the Note or any of the other Loan Documents or this Agreement remains effective
(whichever is the last to occur), Borrower will not do (and will not permit any
Subsidiary to do), without the prior written consent of Lender, any of the
things or acts set forth below:
5.1. Encumbrances. Create, assume, or suffer to exist any Lien on
------------
its property, except for Permitted Encumbrances.
------
11
5.2. Debt. Incur, assume, or suffer to exist any Debt, except for:
---- ----------
(i) Debt to Lender or any Affiliate of Lender; (ii) Debt to Persons other than
Lender existing on the date of this Agreement, including existing Borrowed Debt
as listed on Schedule A; (iii) Subordinated Debt; (iv) trade payables and
----------
contractual obligations including import letters of credit to suppliers and
customers incurred in the ordinary course of business; (v) accrued pension fund
and other employee benefit plan obligations and liabilities (provided, however,
that such Debt does not result in the existence of any Event of Default or
Default Condition under any other provision of this Agreement); (vi) deferred
taxes; (vii) Debt resulting from endorsements of negotiable instruments received
in the ordinary course of its business, including import letters of credit;
(viii) Debt secured by Purchase Money Liens not to exceed $1,000,000 in the
aggregate at any one time outstanding; (ix) Debt arising in connection with
derivative, interest rate protection and similar hedging arrangements relating
to the Obligations or entered into in the ordinary course of business in order
to manage existing or anticipated interest rate, equity value, exchange rate or
commodity price risks and not for speculative purposes with the Borrower's
liability for risk exposure not to exceed $1,000,000 in the aggregate at any one
time; and (x) Debt not otherwise permitted by clause (i) through (ix) above in
an aggregate principal amount not to exceed $1,000,000 at any one time
outstanding.
5.3. Contingent Liabilities. Guarantee, endorse, become surety
----------------------
with respect to or otherwise become directly or contingently liable for or in
connection with the obligations of any other Person, except for endorsements of
----------
negotiable instruments for collection in the ordinary course of business.
5.4. Dividends. Declare and pay dividends except when no Default
---------
Condition or Event of Default shall have occurred and be continuing or would
result therefrom.
5.5. Redemption. Purchase, redeem or otherwise acquire for value
----------
any of its shares of any class of capital stock, except: (i) with the proceeds
------
of the ESOP Loan; (ii) when no Default Condition or Event of Default shall have
occurred and be continuing or would result therefrom, or (iii) pursuant to the
Hooker Furniture Corporation Employee Stock Ownership Plan amended and restated
effective as of January 1, 2000, as such Plan may be amended, supplemented or
modified from time to time, the Trust Agreement for Hooker Furniture Corporation
Employee Stock Ownership Plan effective as of August 1, 2000, as such Agreement
may be amended, supplemented or modified from time to time, or applicable laws
or regulations relating to the ESOP.
5.6 Mergers. Dissolve, liquidate, merge, lease, transfer or
-------
otherwise terminate its corporate status or enter into any merger,
reorganization or consolidation or dispose of any material portion of its assets
or make any substantial change in the basic type of business conducted by
Borrower and its Subsidiaries, as of the Closing Date.
5.7. Affiliate Transactions. Enter into, or be a party to, or
----------------------
permit any Subsidiary to enter into or be a party to, any transaction with any
Affiliate, except in the ordinary course of and pursuant to the reasonable
requirements of Borrower's or such Subsidiary's business and upon fair and
reasonable terms which are no less favorable to Borrower than would obtain in a
comparable arm's length transaction with a Person not an Affiliate.
5.8. Subsidiaries. Divest itself of any material assets by
------------
transferring them to any Subsidiary which is not a wholly-owned Subsidiary.
5.9. Fiscal Year. Change its Fiscal Year, or permit any Subsidiary
-----------
to have a fiscal year different from the Fiscal Year of Borrower.
12
5.10. Federal Taxpayer Identification Number. Change its federal
--------------------------------------
taxpayer identification number without prior written notice to Lender.
5.11. Employee Benefit Plans. Permit an Employee Benefit Plan to
----------------------
become materially underfunded.
6. FINANCIAL COVENANTS. Borrower covenants to Lender that, from and
-------------------
after the date hereof and so long as any amount remains unpaid on account of
either the Note or any of the other Loan Documents or this Agreement remains
effective (whichever is the last to occur), it will comply with the financial
covenants set forth on Supplement "A"
--------------
attached hereto, which is incorporated by reference herein.
7. EVENTS OF DEFAULT. The occurrence and continuation of any events or
-----------------
conditions set forth below shall constitute an Event of Default hereunder,
provided that any requirement for the giving of notice or the lapse of time, or
both, has been satisfied:
7.1. Obligations. Borrower shall fail to make any payments of (i)
-----------
principal and interest on the Term Loan within five (5) days of the date due; or
(ii) any amounts due under any of the other Obligations within five days after
written notice thereof has been given to Borrower by Lender.
7.2. Misrepresentations. Borrower or any Subsidiary shall make any
------------------
representations or warranties in any of the Loan Documents or in any certificate
or statement furnished at any time hereunder or in connection with any of the
Loan Documents which proves to have been untrue or misleading in any material
respect when made or furnished.
7.3. Certain Covenants. Borrower shall default in the observance
-----------------
or performance of any covenant or agreement contained in Sections 4.3, 4.4, 4.5,
4.9, 4.12, or in Articles 5 or 6 or Supplement "A".
--------------
7.4. Other Covenants. Borrower or any Subsidiary shall default in
---------------
the observance or performance of any covenant or agreement contained herein or
in any of the other Loan Documents (other than a covenant or agreement or a
default in the performance or observance of which is dealt with specifically
elsewhere in this Article 7) unless (i) with respect to this Agreement, such
------
default is cured to Lender's satisfaction within thirty (30) days after the
sooner to occur of receipt of notice of such default from Lender or the date on
which such default first becomes known to Borrower and (ii) with respect to any
other Loan Document, such default is cured within any applicable grace, cure or
notice and cure period contained therein (or, if no such period is contained
therein, such default is cured in accordance with clause (i) above).
7.5. Other Debts. Borrower shall default in connection with any
-----------
agreement for Debt with any creditor other than Lender which entitles said
creditor to accelerate the maturity thereof, where the aggregate principal
amount of such Debt is in excess of $1,000,000.
7.6. Voluntary Bankruptcy. Borrower or any Subsidiary shall file a
--------------------
voluntary petition in bankruptcy or a voluntary petition or answer seeking
liquidation, reorganization, arrangement, readjustment of its debts, or for any
other relief under the Bankruptcy code, or under any other act or law pertaining
to insolvency or debtor relief, whether state, Federal, or foreign, now or
hereafter existing; Borrower or any Subsidiary shall enter into any agreement
indicating its consent to, approval of, or acquiescence in, any such petition or
proceeding; Borrower or any Subsidiary shall apply for or permit the appointment
by consent or acquiescence of a receiver, custodian or trustee of Borrower or
any Subsidiary for all or a substantial part of its property; Borrower or any
Subsidiary shall make an assignment for the benefit of creditors; or Borrower or
any Subsidiary shall be unable or shall fail to pay its debts generally as
13
such debts become due, or Borrower or any Subsidiary shall admit, in writing,
its inability or failure to pay its debts generally as such debts become due.
7.7. Involuntary Bankruptcy. There shall have been filed against
----------------------
Borrower or any Subsidiary an involuntary petition in bankruptcy or seeking
liquidation, reorganization, arrangement, readjustment of its debts or for any
other relief under the Bankruptcy Code, or under any other act or law pertaining
to insolvency or debtor relief, whether state, federal or foreign, now or
hereafter existing; Borrower or any Subsidiary shall suffer or permit the
involuntary appointment of a receiver, custodian or trustee of Borrower or any
Subsidiary or for all or a substantial part of its property; or Borrower or any
Subsidiary shall suffer or permit the issuance of a warrant of attachment,
execution or similar process against all or any substantial part of the property
of Borrower or any Subsidiary and in each such case, any such proceeding shall
continue undismissed and unstayed for a period of 60 consecutive days.
7.8. Judgements. A final judgment or order for the payment of
----------
money is rendered against Borrower or any Subsidiary in the amount of $100,000
or more (exclusive of amounts covered by insurance) and either (x) enforcement
proceedings shall have been commenced by any creditor upon such judgment or
order, or (y) a stay of enforcement of such judgment or order, by reason of
pending appeal or otherwise, shall not be in effect for any period of thirty
(30) consecutive days.
7.9. Bankruptcy of Affiliate. Any motion, complaint or other
-----------------------
pleading is filed in any bankruptcy case of any Affiliate of the Borrower and
such motion, complaint or pleading seeks the consolidation of Borrower's assets
and liabilities with the assets and liabilities of such Person and any such
proceeding shall continue undismissed and unstayed for a period of 60
consecutive days.
7.10. Material Adverse Effect. There shall be any event, act,
-----------------------
condition or occurrence having a Material Adverse Effect.
7.11. Change of Control, Etc. Any of the following shall occur: (i)
-----------------------
any Person or group of Persons, other than the ESOP, acting in concert as a
partnership or other group shall, as a result of a tender or exchange offer,
open market purchases, privately negotiated purchases or otherwise, have become,
after the date hereof, the "beneficial owner" (within the meaning of such term
under Rule 13d-3 under the Securities Exchange Act) of securities of the
Borrower representing 15% or more of the combined voting power of the then
outstanding securities of Borrower ordinarily (and apart from rights) accruing
under special circumstances) having the right to vote in the election of
directors; or (ii) the Board of Directors of the Borrower shall cease to consist
of a majority of the individuals who constituted the Board of Directors
immediately following the consummation of the Closing or who shall become a
member thereof subsequent to the date hereof after having been nominated, or
otherwise approved in writing, by at least a majority of individuals who
constitute the Board of Directors of the Borrower immediately following the
consummation of the Closing.
7.12. Deemed Insecure. Lender, at any time and in good faith, shall
---------------
deem itself insecure (and for the purposes of this Agreement, Lender shall be
entitled to deem itself insecure when some event occurs, fails to occur of is
threatened or some objective condition exists or is threatened which
significantly impairs the prospects that any of the Obligations will be paid
when due, or which significantly affects the financial or business condition of
Borrower).
8. REMEDIES. Upon the occurrence and during the continuation of any
--------
Event of Default, Lender shall have all of the rights and remedies set forth
below, and it may exercise any one, more, or all of such remedies, in its sole
discretion, without thereby waiving any of the others.
8.1. Acceleration of the Obligations. Lender, at its option, may
-------------------------------
declare all of the Obligations (including but not limited to that portion
thereof evidenced by the Note) to be immediately due and payable, whereupon the
same shall become immediately due and payable without presentment, demand,
14
protest, notice of nonpayment or any other notice required by law relative
thereto, all of which are hereby expressly waived by Borrower, anything
contained herein to the contrary notwithstanding. If any note of Borrower to
Lender constituting Obligations, including, without limitation, the Note, shall
be a demand instrument, however, the recitation of the right of Lender to
declare any and all Obligations to be immediately due and payable, whether such
recitation is contained in such note or in this Agreement, as well as the
recitation of the above events permitting Lender to declare all Obligations due
and payable, shall not constitute an election by Lender to waive its right to
demand payment under a demand at any time and in any event, as Lender in its
discretion may deem appropriate. Thereafter, Lender, at its option, may, but
shall not be obligated to, accept less than the entire amount of Obligations
due, if tendered, provided, however, that unless then agreed to in writing by
Lender, no such acceptance shall or shall be deemed to constitute a waiver of
any Event of Default.
8.2. Other Remedies. Unless and except to the extent expressly
--------------
provided for to the contrary herein, the rights of Lender specified herein shall
be in addition to, and not in limitation of, Lender's rights under any statute
or rule of law or equity, or under any other provision of any of the Loan
Documents, or under the provisions of any other document, instrument or other
writing executed by Borrower or any third party in favor of Lender, all of which
may be exercised successively or concurrently.
8.3. Set Off. Lender may set off against the Obligations any funds
-------
owed by Lender to Borrower.
9. MISCELLANEOUS.
--------------
9.1. Waiver. Each and every right granted to Lender under this
-------
Agreement, or any of the other Loan Documents, or any other document delivered
hereunder or in connection herewith or allowed it by law or in equity, shall be
cumulative and may be exercised from time to time. No failure on the part of
Lender to exercise, and no delay in exercising, any right shall operate as a
waiver thereof, nor shall any single or partial exercise by Lender of any right
preclude any other or future exercise thereof or the exercise of any other
right. No waiver by Lender of any Default Condition or Event of Default shall
constitute a waiver of any subsequent Default Condition or Event of Default.
9.2. Governing Law. THIS AGREEMENT, THE NOTE AND THE OTHER LOAN
--------------
DOCUMENTS, AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND
THEREUNDER, SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAWS OF THE COMMONWEALTH OF VIRGINIA.
9.3. Survival. All representations, warranties and covenants made
---------
herein and in the Loan Documents shall survive the execution and delivery hereof
and thereof. The terms and provisions of this Agreement shall continue in full
force and effect, notwithstanding the payment of the Note, until all amounts
owed under the other Loan Documents have been paid in full.
9.4. No Assignment by Borrower. No assignment hereof or of any
--------------------------
Loan Document shall be made by Borrower without the prior written consent of
Lender. Lender may assign or participate all or any part of its rights, title
and interest herein and in the Loan Documents at any time hereafter with (and
subject to) the prior written consent of the Borrower, which shall not be
unreasonably withheld or delayed.
9.5. Counterparts. This Agreement may be executed in two or more
-------------
counterparts, each of which when fully executed shall be an original, and all of
said counterparts taken together shall be deemed to constitute one and the same
agreement.
9.6. Reimbursement. Borrower shall pay to Lender on demand all
--------------
reasonable out-of-pocket costs and expenses that Lender pays or actually incurs
in connection with the negotiation,
15
preparation, consummation, enforcement and termination of this Agreement and the
other Loan Documents, including, without limitation: (a) reasonable attorneys'
fees and paralegals' fees and disbursements of outside counsel; (b) reasonable
costs and expenses (including outside attorneys' and paralegals' fees and
disbursements) for any amendment, supplement, waiver, consent or subsequent
closing in connection with the Loan Documents and the transactions contemplated
thereby; (c) sums paid or incurred to pay for any amount or to take any action
required of Borrower under the Loan Documents that Borrower fails to pay or
take; and (d) after an Event of Default, costs and expenses (including
reasonable attorneys' and paralegals' fees and disbursements) paid or incurred
to obtain payment of the Obligations, and otherwise enforce the provisions of
the Loan Documents or to defend any claim made or threatened against Lender
arising out of the transactions contemplated hereby (including, without
limitation, preparations for and consultations concerning any such matters). The
foregoing shall not be construed to limit any other provisions of the Loan
Documents regarding costs and expenses to be paid to Borrower. Borrower will pay
all expenses incurred by it in this transaction. In the event Borrower becomes a
debtor under the Bankruptcy Code, Lender's claim in such case shall include
interest on the Obligations and all fees, costs and charges provided for herein
(including, without limitation, reasonable attorneys' fees actually incurred),
all to the extent allowed by the Bankruptcy Code.
9.7. Successors and Assigns. This Agreement and Loan Documents
----------------------
shall be binding upon and inure to the benefit of the successors and permitted
assigns of the parties hereto and thereto.
9.8. Severability. If any provision this Agreement or of any of
-------------
the Loan Documents or the application thereof to any party thereto or
circumstances shall be invalid or unenforceable to any extent, the remainder of
such Loan Documents and the application of such provisions to any other party
thereto or circumstance shall not be affected thereby and shall be enforced to
the greatest extent permitted by law.
9.9. Notices. All notices, requests and demands to or upon the
--------
respective parties hereto shall be deemed to have been given or made when
personally delivered or deposited in the mail, registered or certified mail,
postage prepaid, addressed to the Borrower at its Executive Office Attn: Chief
Financial Officer and to the Lender at P. O. Xxx 0000, Xxxxxxxxxxxx, Xxxxxxxx
00000, Attention: Xxxxx X. Xxxx, Senior Vice President (or to such other address
as may be designated hereafter in writing by the respective parties hereto)
except in cases where it is expressly provided herein or by applicable law that
such notice, demand or request is not effective until received by the party to
whom it is addressed.
9.10. Entire Agreement; Amendments. This Agreement, together with
-----------------------------
the remaining Loan Documents, constitute the entire agreement between the
parties hereto with respect to the subject matter hereof. Neither this Agreement
nor any Loan Document may be changed, waived, discharged, modified or terminated
orally, but only by an instrument in writing signed by the party against whom
enforcement is sought.
9.11. Time of Essence. Time is of the essence in this Agreement and
---------------
the other Loan Documents.
9.12. Interpretation. No provision of this Agreement or any Loan
---------------
Document shall be construed against or interpreted to the disadvantage of any
party hereto by any court or other governmental or judicial authority by reason
of such party having or being deemed to have structured or dictated such
provision.
9.13. Lender Not a Joint Venturer. Neither this Agreement nor any
----------------------------
Loan Document shall in any respect be interpreted, deemed or construed as making
Lender a partner or joint venturer with Borrower or as creating any similar
relationship or entity, and Borrower agrees that it will not make any contrary
assertion, contention, claim or counterclaim in any action, suit or other legal
proceeding involving Lender and Borrower.
16
9.14. Jurisdiction. BORROWER AGREES THAT ANY LEGAL ACTION OR
------------
PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY LOAN DOCUMENT MAY BE BROUGHT IN
THE CIRCUIT COURT OF THE CITY OF MARTINSVILLE, VIRGINIA OR THE UNITED STATES
DISTRICT COURT FOR THE WESTERN DISTRICT OF VIRGINIA, ALL AS LENDER MAY ELECT. BY
EXECUTION OF THIS AGREEMENT, BORROWER HEREBY SUBMITS TO EACH SUCH JURISDICTION,
HEREBY EXPRESSLY WAIVING WHATEVER RIGHTS MAY CORRESPOND TO IT BY REASON OF ITS
PRESENT OR FUTURE DOMICILE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF LENDER TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST BORROWER IN ANY OTHER
JURISDICTION OR TO SERVE PROCESS IN ANY MANNER PERMITTED OR REQUIRED BY LAW.
9.15. Acceptance. This Agreement, together with the other Loan
----------
Documents, shall not become effective unless and until delivered to Lender at
its principal office in the Commonwealth of Virginia and accepted in writing by
Lender at such office as evidenced by its execution hereof (notice of which
delivery and acceptance are hereby waived by Borrower).
9.16. Payment on Non-Business Days. Whenever any payment to be made
----------------------------
hereunder or under the Note shall be stated to be due on a Saturday, Sunday or a
public holiday under the laws of the Commonwealth of Virginia, such payment may
be made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of payment of interest hereunder or
under the Notes.
9.17. Cure of Defaults by Lender. If Borrower defaults in the
--------------------------
performance of any duty or obligation to Lender hereunder or under any Loan
Document, Lender may, at its option, but without obligation, cure such default
and any costs, fees and expenses incurred by Lender in connection therewith
including, without limitation, for the purchase of insurance, the payment of
taxes and the removal or settlement of liens and claims, shall be reimbursed
pursuant to Section 9.6.
9.18. Recitals. All recitals contained herein are hereby
--------
incorporated by reference into this Agreement and made part thereof.
9.19. Attorney-in-Fact. Borrower hereby designates, appoints and
----------------
empowers Lender irrevocably as its attorney-in-fact, at Borrower's cost and
expense, to do in the name of Borrower any and all actions which Lender may deem
necessary or advisable to carry out the terms of this Agreement or any other
Loan Document upon the failure, refusal or inability of Borrower to do so and
Borrower hereby agrees to indemnify and hold Lender harmless from any costs,
damages, expenses or liabilities arising against or incurred by Lender in
connection therewith.
9.20. Sole Benefit. The rights and benefits set forth in this
------------
Agreement and the other Loan Documents are for the sole and exclusive benefit of
the parties hereto and thereto and may be relied upon only by them.
9.21. Indemnification. Borrower will hold Lender, its respective
---------------
directors, officers, employees, agents, Affiliates, successors and assigns
harmless from and indemnify Lender, its respective directors, officers,
employees, agents, Affiliates, successors and assigns against, all loss,
damages, costs and expenses (including, without limitation, reasonable
attorney's fees, costs and expenses) actually incurred by any of the foregoing,
whether direct, indirect or consequential, as a result of or arising from or
relating to any "Proceedings" (as defined below) by any Person, whether
threatened or initiated, asserting a claim for any legal or equitable remedy
against any Person under any statute, case or regulation, including, without
limitation, any federal or state securities laws or under any common law or
equitable case or otherwise,
17
arising from or in connection with this Agreement, and any other of the
transactions contemplated by this Agreement, except to the extent such losses,
damages, costs or expenses are due to the willful misconduct or gross negligence
of Lender. As used herein, "Proceedings" shall mean actions, suits or
-----------
proceedings before any court, governmental or regulatory authority and shall
include, particularly, but without limitation, any actions concerning
Environmental Laws. At the request of Lender, Borrower will indemnify any Person
to whom Lender transfers or sells all or any portion of its interest in the
Obligations or participations therein pursuant to the provisions of Section 9.4
hereof. Lender shall not be responsible or liable to any Person for
consequential damages which may be alleged as a result of this Agreement or any
of the transactions contemplated hereby. The obligations of Borrower under this
Section 9.21 shall survive the termination of this Agreement and payment of the
Obligations.
9.22. JURY TRIAL WAIVER. EACH OF BORROWER AND LENDER HEREBY WAIVES,
-----------------
TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE RIGHT TO TRIAL BY JURY IN ANY
ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED
TO ANY OF THE LOAN DOCUMENTS, OBLIGATIONS OR THE COLLATERAL.
9.23. COORDINATION. If there is a conflict in any of the
------------
provisions, rights or remedies of any of the Loan Documents and this Agreement,
the terms of such Loan Document is to be construed to be in addition to and not
in place of any provision, right or remedy contained in this Agreement.
9.24. CONFIDENTIALITY. Lender hereby acknowledges that certain of
---------------
the information to be furnished to it pursuant to this Agreement may be received
prior to the time it shall have been made public. Lender hereby agrees that it
will keep all information so furnished to it pursuant hereto confidential in
accordance with its normal banking procedures and, except in accordance with
such procedures, will make no disclosure to any other Person of such information
until the same shall have become public, except (i) in connection with matters
involving this Agreement and with Lender's Obligations under law or regulation,
(ii) pursuant to subpoenas or similar process, (iii) to governmental authorities
or examiners, (iv) to independent auditors or counsel, (v) to any parent or
corporate Affiliate of Lender, or (vi) to any (a) assignee or proposed assignee
hereunder, provided that Borrower has consented to such disclosure, or (b)
--------
participant or proposed participant in each case so long as such assignee or
proposed assignee or participant or proposed participant (x) is not in the same
general type of business as Borrower on the date of such disclosure and (y)
agrees in writing to accept such information subject to the restrictions
provided in this Section 9.24.
10. CONDITIONS PRECEDENT. Unless waived in writing by Lender at or prior
--------------------
to the execution and delivery of this Agreement, the conditions set forth below
shall constitute express conditions precedent to any obligation of Lender
hereunder.
10.1. Secretary's Certificate. Receipt by Lender of a certificate
-----------------------
from the Secretary (or Assistant Secretary) of Borrower, certifying to Lender
that appropriate resolutions have been entered into by the Board of Directors of
Borrower incident hereto and that the officers of Borrower whose signatures
appear hereinbelow, on the other Loan Documents, and on any and all other
documents, instruments and agreements executed in connection herewith, are duly
authorized by the Board of Directors of Borrower for and on behalf of Borrower
to execute and deliver this Agreement, the other Loan Documents and such other
documents, instruments and agreements, and to bind Borrower accordingly thereby,
all in form and substance substantially similar to those board resolutions set
forth and described on Exhibit "D".
-----------
10.2. Good Standing Certificates. Receipt by Lender of a
--------------------------
certificate of good standing with respect to Borrower and each Subsidiary from
the secretary of state of the state of incorporation of Borrower, dated within
30 days of the date hereof.
18
10.3. Loan Documents. Receipt by Lender of all the other Loan
--------------
Documents, duly executed in form and substance acceptable to Lender.
10.4. Opinion of Counsel. Receipt by Lender of an opinion of
------------------
counsel from independent legal counsel to Borrower in substantially the form of
Exhibit "F".
-----------
10.5. No Default. No Default Condition or Event of Default shall
----------
exist and Borrower shall in all respects be in compliance with all of the terms
of the Loan Documents, as evidenced by its delivery of a certificate of no
default to such effect, to be substantially in the form of Exhibit "C" attached
-----------
hereto.
10.6. Approval of ESOP Loan. Receipt by Lender of the form of the
---------------------
ESOP Note and all solicitation materials relating to the use of the proceeds of
the ESOP Loan copies of which are attached hereto as Exhibit E to purchase the
---------
ESOP Stock.
10.7. Master Agreement The Borrower shall have entered into a
----------------
Master Agreement with a financial institution reasonably acceptable to the
Lender upon terms acceptable to the Lender providing for a forward fixed rate
swap for the entire ten (10) year period of the Term Loan.
10.8. Other. Receipt by Lender of such other documents,
-----
certificates, instruments and agreements as shall be required hereunder or
provided for herein or as Lender or Lender's counsel may require in connection
herewith.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their duly authorized officers as of the ___ day of September, 2000.
"LENDER"
SUNTRUST BANK
By: __________________________(SEAL)
Xxxxx X. Xxxx
Senior Vice President
19
"BORROWER"
HOOKER FURNITURE CORPORATION
By: ___________________________ (SEAL)
Xxxx X. Xxxx, Xx.
President
and By: __________________________ (SEAL)
Xxxxx X. Xxxxx
Senior Vice President
Finance & Administration
20
EXHIBIT A
BORROWER INFORMATION
Borrower's Legal Name and State of Incorporation: Hooker Furniture
Corporation, Virginia
Address of Executive Office: 000 Xxxx Xxxxxxxxxxxx Xxxxxxxxx, Xxxxxxxxxxxx,
Xxxxxxxx 00000
Jurisdiction in which Executive Office is Located: Martinsville, Virginia
Fiscal Year: November 30
Other Names Used by Borrower: None
Litigation: None
Existing Liens other than Permitted Encumbrances: None
Subsidiaries: Triwood, Inc.
Taxpayer Identification Number: 00-0000000
Employee Benefit Plans: 401(K), ESOP
Claims: None
Labor Controversies: None
Business Locations: Martinsville, Virginia
Roanoke, Virginia
Kernersville, North Carolina
Pleasant Garden, North Carolina
Maiden, North Carolina
Borrowed Debt: $9,800,000 in initial aggregate principal amount of The
Catawba County Industrial Facilities and Pollution Control
Financing Authority Industrial Development Revenue Bonds
(Hooker Furniture Corporation Project) Series 1996 issued
pursuant to the Trust Indenture dated as of October 1,
1996 between The Catawba County Industrial Facilities and
Pollution Control Financing Authority and Norwest Bank
Minnesota, N.A., as Trustee, as amended pursuant to the
First Amendment to Trust Indenture dated November 2, 1998
and as such Trust Indenture may be further amended,
supplemented or modified from time to time, and related
obligations of the Borrower pursuant to the Loan Agreement
dated as of October 1, 1996 between The Catawba County
Industrial Facilities and Pollution Control Financing
Authority and the Borrower, as such Loan Agreement may be
amended, supplemented or modified from time to time, and
the Reimbursement Agreement dated as of October 1, 1996
between the Borrower and NationsBank, N.A., as such
Reimbursement Agreement may be amended, supplemented or
modified from time to time, provided that the principal
amount of such bonds does not hereafter exceed $7,000,000
outstanding at any one time.
1
$15,000,000 revolving credit facility pursuant to Loan
Agreement dated December 18, 1992 between Hooker Furniture
Corporation and NationsBank of Virginia, N.A., ,as amended
and as such agreement may be amended, supplemented or
modified from time to time, and any extensions or renewals
thereof, provided that the principal amount of such loan
does not exceed $15,000,000 outstanding at any one time.
Pollution and The Borrower formerly owned a 50% interest in a joint
Environmental venture that produced particleboard for furniture
Control: manufacturing. The Borrower currently owns 100% of such
venture. During 1998, the joint venture was cited by the
U.S. Environmental Protection Agency ("EPA") for a
violation of certain regulations under the Clean Air Act
Amendments of 1990. No final action has been taken by EPA
in this matter, including the assessment of fines against
the joint venture. The Borrower's former joint venturer is
obligated to indemnify the Borrower for 50% of any such
fines.
Based upon performance tests conducted in November 1998,
the EPA issued the Borrower a Notice of Violation in March
1999 for the failure of two boilers at the Borrower's
Martinsville facility to meet particulate emission
limitations under the Clean Air Act. The Borrower made
adjustments to one non-compliant boiler and conducted a
second performance test in February 1999. The results of
that second performance test indicated that the boiler was
in compliance with its particulate limitations. The
Borrower has forwarded those results to EPA. The Borrower
has analyzed the operations of the second non-compliant
boiler and has formulated a plan to bring that boiler into
compliance with its particulate emission limitations. No
final action has been taken by EPA in this matter,
including the assessment of fines against the Borrower.
2
EXHIBIT B
City of Richmond September __, 2000
State of Virginia
TERM NOTE
FOR VALUE RECEIVED, the undersigned (the Borrower) promises to pay to
the order of SunTrust Bank without offset or deduction at its office in
Martinsville, Virginia, or at such other place as the holder of this Note shall
designate in writing the principal sum of Twenty-Two Million Five Hundred
Thousand and No/100 dollars ($22,500,000) in lawful money of the United States
and in immediately available funds in forty (40) consecutive quarterly
installments of ________ Dollars ($________) each including interest on the
unpaid principal balance at the LIBOR Rate plus three eighths of one percent
(.375%) per annum until paid, commencing on September 1, 2000, continuing on the
first day of each December, March, June and September thereafter and ending on
December 1, 2010; provided, however, that the last such installment shall be in
the amount necessary to repay in full the unpaid principal balance of this Note
and all accrued but unpaid interest thereon. All payments will be applied first
to accrued interest, then in reduction of principal.
Upon occurrence and during the continuation of an Event of Default, the
unpaid balance of this Note shall bear interest at the Default Rate.
If any installment of this Note becomes due and payable on a day other
than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day, and interest shall be payable thereon at the rate
herein specified during such extension.
This Note is the Term Note referred to in, and is entitled to the
benefits of, the Term Loan Agreement, dated as of the date hereof between the
Borrower and the Lender (the "Loan Agreement"). Terms used herein which are
defined in the Loan Agreement shall have their defined meanings when used
herein. The Loan Agreement, among other things, contains provisions for
acceleration of the maturity of this Note upon the happening of certain stated
Events of Default and also the prepayments on account of principal hereof prior
to the maturity of this Note upon the terms and conditions specified in the Loan
Agreement.
Borrower agrees, in the event that this Note or any portion hereof is
collected by law or referred to an attorney at law for collection or for the
protection of Lender's rights and remedies, to pay all reasonable costs of
collection, including, without limitation, reasonable attorney's fees.
Borrower hereby waives presentment, demand, protest, notice of demand,
protest and nonpayment and any other notice required by law relative hereto,
except to the extent as otherwise may be provided for in the Loan Agreement.
This Note shall be governed by the laws of the Commonwealth of
Virginia, provided that, as to the maximum rate of interest which may be charged
or collected, if the laws applicable to the Bank permit it to charge or collect
a higher rate than the laws of the Commonwealth of Virginia, then such law
applicable to the Bank shall apply to the Lender under this Note.
HOOKER FURNITURE CORPORATION
By:_______________________________ (SEAL)
Xxxx X. Xxxx, Xx.
President
and By:_______________________________ (SEAL)
Xxxxx X. Xxxxx
Senior Vice President
Finance & Administration
2
EXHIBIT "C"
-----------
CERTIFICATE OF NO DEFAULT
-------------------------
The undersigned, being the Senior Vice President Finance &
Administration of Hooker Furniture Corporation ("Borrower"), and, in such
capacity, being familiar with the matters set forth herein and duly authorized
and empowered to issue this Certificate for and on behalf of Borrower, does
hereby certify to SunTrust Bank ("Lender"), in connection with and pursuant to
that certain Term Loan Agreement, dated as of August __, 2000, between Borrower
and Lender (herein, as it may be amended to date, called the "Loan Agreement";
--------------
capitalized terms used herein, without definition, having the meaning given to
such terms in the Loan Agreement) that, as of the date of this Certificate,
there exists no Event of Default or Default Condition.
Without limiting the generality of the foregoing, Borrower is in
compliance with all financial covenants referenced in Section 6 of the Loan
Agreement and specified in Supplement A thereto, as demonstrated by the
------------
computations set forth on Schedule "A" attached to this certificate by the
-----------
Borrower.
WITNESS my hand as of ____________, _______.
---------------------------------
Xxxxx X. Xxxxx
Senior Vice President Finance & Administration
EXHIBIT "D"
-----------
SECRETARY'S CERTIFICATE
-----------------------
I hereby certify that I am the duly elected, qualified and serving
Secretary of Hooker Furniture Corporation (the "Corporation"); that the
Corporation is a corporation organized and existing under the laws of the
Commonwealth of Virginia, having its registered office and registered agent in
such state; that the following copy is a true and correct copy of resolutions
duly adopted at a meeting of the Board of Directors of the Corporation, held on
or prior to the date of this Certificate, at which a quorum was present and
acting throughout; that said meeting was duly authorized by the By-Laws of the
Corporation; that the actions taken at such meeting and reflected in said
resolutions are authorized by the By-Laws of the Corporation; that said
resolutions are now in full force and effect and have not been modified or
amended; that on the date hereof the office of Chairman of the Board, President
and Senior Vice President Finance & Administration of the Corporation are held
by the Persons named as such below and the office of Secretary of the
Corporation is held by the Person named as such below; and that the following
are the genuine signatures of said officers:
Chairman of the Board ____________________
President ____________________
Senior Vice President Finance & Administration ____________________
Secretary ____________________
"RESOLVED that this corporation enter into a certain term loan
agreement with SunTrust Bank ("Lender"), providing for the extension of a term
loan by the Lender in favor of this corporation in the principal amount of
Twenty-two Million, Five Hundred Thousand and no/100 Dollars ($22,500,000.00),
upon the terms and for the purposes set forth in the term loan agreement coupled
with a negative pledge against all now owned or hereinafter and/or personal
property of this corporation except as permitted by the term loan agreement;
"RESOLVED FURTHER, that either the Chairman of the Board,
President or Senior Vice President Finance & Administration of this corporation
be and he is hereby authorized to execute and deliver said term loan agreement
and all other agreements, and to consent and agree to any and all terms to each
and every one thereof. Any two such officers shall execute any notes which said
Lender may require.
"RESOLVED, FURTHER, that the execution and delivery of any
writings or the taking of any other actions in connection with the foregoing by
either the President or the Chief Financial Officer or any officer of this
corporation be and the same is hereby ratified as the act and deed of this
corporation;
"RESOLVED, FURTHER, that the Secretary of this corporation be
and he is hereby authorized to affix the seal of this corporation to any
writings executed by the President in connection with the foregoing, and to
attest the same, but such attestation is not required to evidence the same as
the act and deed of this corporation."
So certified to as of August __, 2000.
(CORPORATE SEAL) ________________________________
_____________________, Secretary
I, ___________________, President of Hooker Furniture
Corporation, do certify that __________________ is the duly elected and
qualified Secretary of said corporation as of the date hereof, and the keeper of
the records and minutes of the meetings of the Board of Directors of said
corporation.
___________________________________
________________________, President
2
EXHIBIT F
OPINION OF COUNSEL
[Letterhead of Firm]
[Date]
SunTrust Bank
X.X. Xxx 0000
Xxxxxxxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
We have acted as counsel to Hooker Furniture Corporation, a corporation
(the "Borrower"), in connection with that certain $22,500,000 loan (the "Loan")
from SunTrust Bank, X.X. Xxx 0000, Xxxxxxxxxxxx, Xxxxxxxx 00000 (the "Lender")
to the Borrower being consummated on the same date as this letter. For purposes
of the opinions contained in this letter, we have examined and reviewed the
following documents:
(a) Borrower's Note (the "Note"), dated _________________, in the
principal amount of $22,500,000, executed by the Borrower and payable to the
order of the Lender; and
(b) Term Loan Agreement (the "Loan Agreement"), dated the same date
as the Note, executed by the Borrower.
For purposes of this letter, the Note and Loan Agreement are
collectively referred to as the "Loan Documents".
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of the documents pursuant to which the Borrower has been
organized or formed and other related documents, such as corporate resolutions,
if applicable, as well as of the documents and agreements covered by our
opinions below, and have made such other examinations as we have deemed
appropriate with respect to the subject matter of this letter. As to any facts
relevant to our opinions which we did not independently establish, we have
relied upon information furnished to us by or on behalf of the Borrower, and in
such examination we have assumed the genuineness of all signatures not witnessed
by us and the conformity to originals of all documentation submitted to us as
certified or photostatic copies thereof.
Whenever any opinion herein with respect to the existence or absence of
facts is qualified by the phrase "to the best of our knowledge," such phrase
indicates only that during the course of our representation of the Borrower, no
information has come to our attention which would give us actual knowledge of
the existence or absence of such facts. Except to the extent expressly stated
herein, we have not undertaken any independent investigation to determine the
existence or absence of any such facts, and no inference as to our knowledge of
the existence of such facts should be drawn from the fact of our representation
of the Borrower.
-1-
Based upon and subject to the foregoing and to the qualifications,
limitations, exceptions and assumptions, if any, set forth below, we are of the
opinion that:
1. Borrower is a corporation duly formed, validly existing and in
good standing under the laws of the Commonwealth of Virginia.
2. Borrower has all requisite authority to borrow the proceeds of
the Loan and to execute and perform Borrower's obligations under the Loan
Documents.
3. The Loan Documents have each been duly authorized and properly
executed and delivered by Borrower and each of the Loan Documents is a legal,
valid and binding obligation and agreement of Borrower, enforceable in
accordance with its terms.
4. To the best of our knowledge, no material legal or
administrative proceedings are pending or threatened against or affecting
Borrower.
5. To the best of our knowledge, no further approval of or consent
from any governmental authority, or any other person or entity, is required in
connection with the execution of any of the Loan Documents.
6. The Loan Documents do not violate, conflict with, result in the
breach of, or constitute a default under any applicable constitutional,
legislative, judicial and administrative provisions, statutes, regulations,
decisions, rulings and other laws or, to the best of our knowledge, any contract
to which Borrower is a party, or, to the best of our knowledge, result in the
creation or imposition of any lien, charge or encumbrance upon any assets of
Borrower, pursuant to the terms of any contract to which Borrower is a party.
The opinions expressed in this opinion are subject to the following
qualifications:
(a) Any opinions herein as to the enforceability of the Loan
Documents are subject to the qualification that enforcement of the Loan
Documents is limited by the following: (i) principles of equity which may limit
the availability of certain equitable remedies; and (ii) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium and other laws applicable to
creditors' rights or the collection of debtors' obligations generally.
(b) Any opinions herein as to the enforceability of the Loan
Documents are further subject to the qualification that the enforceability of
certain of the remedial, waiver and other provisions of the Loan Documents is
further limited by applicable constitutional, legislative, judicial and
administrative provisions, statutes, regulations, decisions, rulings and other
laws in addition to those described in subparagraph (a) above; however, such
additional laws do not, in our opinion, substantially interfere with the
practical realization of the benefits expressed in the Loan Documents except for
the economic consequences of any procedural delay which may result from such
laws.
2
(c) We have assumed that the Lender has the power and authority to
execute, deliver and perform the Loan Documents.
(d) We have no obligation to update our opinions for events
occurring after the date of this letter.
(e) We are attorneys licensed to practice only in the Commonwealth
of Virginia and our opinions are limited to matters involving the laws of the
Commonwealth of Virginia and the United States of America.
Very truly yours,
3
EXHIBIT G
NEGATIVE PLEDGE AND AGREEMENT
This Negative Pledge and Agreement (this "Agreement") is made and
delivered as of the ___ day of August 2000 by and between Hooker Furniture
Corporation (the "Borrower") and SunTrust Bank (the "Lender") and provides as
follows:
RECITALS
1. The Borrower and the Lender have entered into a Term Loan Agreement
dated as of the date hereof (the "Loan Agreement") whereby the Lender has agreed
to make a Term Loan to the Borrower in the principal amount of $22,500,000 upon
the terms and conditions provided in the Loan Agreement.
2. The Lender has required as a condition of making the Term Loan that
the Borrower agree not to create or suffer to exist any Lien on any of now owned
or hereinafter acquired real and personal property of either the Borrower or any
Subsidiary (collectively, the "Property"), except Permitted Encumbrances.
3. Except as otherwise defined in this Agreement, the capitalized terms
used in this Agreement shall have the same meaning as the defined terms used in
the Loan Agreement.
NOW, THEREFORE, in consideration of the premises and covenants herein
contained, Lender and Borrower hereby agree as follows:
1. Borrower hereby agrees that until such time as the outstanding
principal amount of the Note and all Obligations are paid in full, neither the
Borrower nor any Subsidiary shall (i) except for Permitted Encumbrances, create,
assume, grant or suffer to exist, any Lien of any kind, voluntarily or
involuntarily upon any Property, or (ii) sell, assign, convey, transfer or
otherwise dispose of any Property in violation of any covenant set forth in the
Loan Agreement.
2. Any violation of the covenants of Borrower set forth above shall
constitute a default under this Agreement. Borrower acknowledges and agrees that
a default under this Agreement shall constitute a default under the Note and an
Event of Default under the Loan Agreement.
3. Borrower acknowledges that any damages which Lender may sustain as a
result of violation of this Agreement may be difficult to measure and ascertain
and further agrees that any violation of this Agreement shall be subject to
injunctive relief in addition to any other remedies available to Lender (i) at
law or in equity or (ii) under the terms of the Note and the Loan Agreement.
4. Borrower shall be liable to pay, upon demand, all reasonable costs
and expenses, including reasonable attorneys' fees and expenses, incurred by
Lender in enforcing or in taking any action necessary to preserve and protect
its rights under this Agreement.
5. This Agreement and the rights thereto are expressly governed by and
are to be construed in accordance with the laws of the Commonwealth of Virginia.
6. All rights and remedies of the parties under this Agreement shall
inure to any assignee or successor of Lender and shall bind any successors and
assigns of Borrower.
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WITNESS the following duly authorized signatures.
HOOKER FURNITURE CORPORATION
By:_________________________________
Xxxxx X. Xxxxx
Senior Vice President
Finance & Administration
STATE OF VIRGINIA )
), to wit
CITY/COUNTY OF ___________ )
The foregoing instrument was acknowledged before me this ____ day of
August, 2000, in my jurisdiction aforesaid by Xxxxx X. Xxxxx, the Senior Vice
President Finance & Administration of Hooker Furniture Corporation on behalf of
the Corporation.
------------------------------------
Notary Public
My Commission Expires: ________________________________
2
SUPPLEMENT A
FINANCIAL COVENANTS
Until the final payment of all of the Borrower's Obligations, the Borrower
agrees to observe and maintain the following financial covenants, calculated in
accordance with GAAP unless otherwise provided herein.
1. Maintain a Minimum Debt Service Coverage of 2.25 times at each fiscal
quarter end through November 30, 2002; 1.75 times at each fiscal quarter
end thereafter through November 30, 2005; and 2.25 times at each fiscal
quarter end thereafter, based on a rolling four quarter basis. The Debt
Service Coverage Ratio is defined as follows:
Net Income + Depreciation + Amortization + Interest + ESOP
Contribution - Dividends Divided by Interest + Current Maturities of
----------
Long Term Debt + ESOP Contribution
2. Maintain a Maximum Balance Sheet Leverage of 50% at each fiscal quarter end
through November 30,2001;45% at each fiscal quarter end through November
30, 2003;40% at each fiscal quarter end through November 30, 2005 and 30%
for each fiscal quarter end thereafter. The Balance Sheet Leverage is
defined as follows:
Borrowed Debt Divided by Borrowed Debt + Equity (in each case, as
------------------------
defined in the definition section of this Loan Agreement)
Compliance with the foregoing Covenants will be tested quarterly, with
calculations included in the Borrower's Quarterly Certificate of No Default.
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