HAMPSHIRE GROUP, LIMITED
Note Purchase Agreement
DATED AS OF MAY 15, 1998
$15,000,000 7.05% SENIOR SECURED NOTES DUE JANUARY 2, 2008
TABLE OF CONTENTS
PAGE
1. AUTHORIZATION OF NOTES 1
2. SALE AND PURCHASE OF NOTES 2
3. CLOSING 2
4. CONDITIONS TO CLOSING 2
4.1 Representations and Warranties 2
4.2 Performance; No Default 2
4.3 Compliance Certificates 3
4.4 Opinions of Counsel 3
4.5 Purchase Permitted By Applicable Law, etc 3
4.6 Sale of Other Notes 4
4.7 Payment of Special Counsel Fees 4
4.8 Private Placement Number 4
4.9 Changes in Structure 4
4.10 Evidence of Key-Person Life Insurance 4
4.11 Security Agreement 4
4.12 Financing Statements 5
4.13 UCC Searches 5
4.14 Insurance 5
4.15 Credit Agreement 5
4.16 Intercreditor Agreement 6
4.17 Proceedings and Documents 6
5. REPRESENTATIONS AND WARRANTIES OF THE OBLIGORS 6
5.1 Organization; Power and Authority 6
5.2 Authorization, etc 6
5.3 Disclosure 7
5.4 Organization and Ownership of Shares of
Material Subsidiaries; Affiliates 8
5.5 Financial Statements 8
5.6 Compliance with Laws, Other Instruments, etc 9
5.7 Governmental Authorizations, etc 9
5.8 Litigation; Observance of Agreements, Statutes and Orders 9
5.9 Taxes 10
5.10 Title to Property; Leases 10
5.11 Licenses, Permits, etc 10
5.12 Pension Plans 11
5.13 Private Offering by the Company 12
5.14 Use of Proceeds; Margin Regulations 12
5.15 Existing Debt; Future Liens 12
5.16 Foreign Assets Control Regulations, etc 13
5.17 Status under Certain Statutes 13
5.18 Environmental Matters 13
TABLE OF CONTENTS (cont.)
PAGE
5.19 Obligors Interdependent 14
5.20 Other Representations and Warranties 14
6. REPRESENTATIONS OF THE PURCHASER 14
6.1 Purchase for Investment 14
6.2 Source of Funds 14
7. INFORMATION AS TO COMPANY 16
7.1 Financial and Business Information 16
7.2 Officer's Certificate 19
7.3 Inspection 19
8. PREPAYMENT OF THE NOTES 20
8.1 Required Prepayments 20
8.2 Optional Prepayments of Notes with Make-Whole Amount 20
8.3 Allocation of Note Partial Prepayments 20
8.4 Change in Control 20
8.5 Maturity; Surrender, etc. 22
8.6 Purchase of Notes 23
8.7 Make-Whole Amount 23
9. INTEREST ON THE NOTES
10.AFFIRMATIVE COVENANTS 24
10.1 Compliance with Law 25
10.2 Insurance 25
10.3 Maintenance of Properties 27
10.4 Payment of Taxes and Claims 27
10.5 Corporate Existence, etc 28
10.6 Pan Passu Obligations 28
10.7 Guaranties of Subsidiaries 28
10.8 Year 2000 29
10A.AFFIRMATIVE COVENANTS 29
10A.1 Compliance with Law 30
10A.2 Insurance 30
10A.3 Maintenance of Properties 30
10A.4 Payment of Taxes and Claims 30
11. NEGATIVE COVENANTS 31
11.1 Transactions with Affiliates 31
11.2 Merger, Consolidation, etc 31
11.3 Consolidated Tangible Net Worth 32
TABLE OF CONTENTS (cont.)
PAGE
11.4 Average Current Ratio 33
11.5 Fixed Charge Coverage 33
11.6 Funded Debt to Capitalization 33
11.7 Current Debt 33
11.8 Restricted Subsidiary Debt 33
11.9 Sale of Assets, etc 34
11.10 Restricted Payments and Restricted Investments 36
11.11 Liens 37
11.12 Line of Business 41
12. EVENTS OF XXXXXXX 00
00. REMEDIES ON DEFAULT, ETC 44
13.1 Acceleration 44
13.2 Other Remedies 45
13.3 Rescission 46
13.4 No Waivers or Election of Remedies, Expenses, etc 46
14. REGISTRATION EXCHANGE; SUBSTITUTION OF NOTES 46
14.1 Registration of Notes 46
14.2 Transfer and Exchange of Notes 46
14.3 Replacement of Notes 47
15. PAYMENTS ON NOTES 47
15.1 Place of Payment 47
15.2 Home Office Payment 48
16. EXPENSES, ETC 48
16.1 Transaction Expenses 48
16.2 Survival 48
17.SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT 49
18.AMENDMENT AND WAIVER 49
18.1 Requirements 49
18.2 Solicitation of Holders of Notes 49
18.3 Binding Effect, etc 50
18.4 Notes held by Obligor, etc 50
19.NOTICES 51
20.REPRODUCTION OF DOCUMENTS 51
TABLE OF CONTENTS (cont.)
PAGE
21.CONFIDENTIAL INFORMATION 52
22.SUBSTITUTION OF PURCHASER 53
23.GUARANTEE 53
23.1 Guaranteed Obligations 53
23.2 Performance under this Agreement and the Other Agreement 54
23.3 Waivers 54
23.4 Certain Waivers of Subrogation, Reimbursement and Indemnity 55
23.5 Release 56
23.6 Marshaling 56
23.7 Liability 57
23.8 Character of Obligation 57
23.9 Election to Perform Obligations 58
23.10 No Election 59
23.11 Severability 59
23.12 Other Enforcement Rights 59
23.13 Delay or Omission; No Waiver 59
23.14 Restoration of rights and Remedies 60
23.15 Cumulative Remedies 60
23.16 Survival 60
23.17 Miscellaneous 60
24.MISCELLANEOUS 61
24.1 Successors and Assigns 61
24.2 Payments Due on Non-Business Days 61
24.3 Severability 61
24.4 Construction 61
24.5 Counterparts 61
24.6 Governing Law 62
SECTION 25. COLLATERAL AGENT 62
25.1 Appointment 62
25.2 Distribution 63
25.3 Indemnification 64
25.4 Trustee 64
0.XXXXXXXX INTEREST Exhibit 4.11 -(CSA)-1
2.OBLIGATIONS DEFINED Exhibit 4.11 -(CSA)-2
3.WARRANTIES AND COVENANTS Exhibit 4.11 -(CSA)-2
0.XXXXXX OF DEFAULT Exhibit 4.11 -(CSA)-5
TABLE OF CONTENTS (cont.)
5. RIGHTS AND REMEDIES Exhibit 4.11-(CSA)-5
6. MISCELLANEOUS Exhibit 4.11 -(CSA)-5
1. THE PLEDGE Exhibit 4.11 -(CPA)-1
1. SECURITY INTEREST Exhibit 4.1 1-(GSA)-1
2. OBLIGATIONS DEFINED Exhibit 4.11 -(GSA)-2
3. WARRANTIES AND COVENANTS Exhibit 4.11 -(GSA)-2
4. EVENTS OF DEFAULT Exhibit 4.11 -(GSA)-5
5. RIGHTS AND REMEDIES Exhibit 4.11 -(GSA)-5
6. MISCELLANEOUS Exhibit 4.11 -(GSA)-5
1. THE PLEDGE Exhibit 4.11 -(GPA)-1
TABLE OF CONTENTS (cont.)
SCHEDULES:
SCHEDULE A -- Information Relating to Purchasers
SCHEDULE B -- Defined Terms
SCHEDULE C -- Payment Instructions at Closing
SCHEDULE 5.1 -- Foreign Qualification
SCHEDULE 5.3 -- Disclosure Materials
SCHEDULE 5.4 -- Ownership of the Company; Affiliates
SCHEDULE 5.5 -- Financial Statements
SCHEDULE 5.8 -- Certain Litigation
SCHEDULE 5.9 -- Taxes
SCHEDULE 5.11 -- Patents, Etc.
SCHEDULE 5.12(a) -- Compliance of Pension Plans
SCHEDULE 5.12(f) -- Certain Pension Plans
SCHEDULE 5.14 -- Use of Proceeds
SCHEDULE 5.15 -- Existing Indebtedness; Liens
TABLE OF CONTENTS (cont.)
EXHIBITS:
EXHIBIT 1 -- Form of 7.05% Senior Secured Note due January 2, 2008
EXHIBIT 4.4(a) -- Form of Opinion of Special Counsel for the Company
EXHIBIT 4.4(b) -- Form of Opinion of Special Counsel for the Purchasers
EXHIBIT 4.1 1-(CSA) -- Form of Security Agreement for Company
EXHIBIT 4.11 -(GSA) -- Form of Security Agreement for Guarantor
EXHIBIT 4.11 -(CPA) -- Form of Pledge Agreement for Company
EXHIBIT 4.11 -(GPA) -- Form of Pledge Agreement for Guarantor
EXHIBIT 4.16 -- Form of Intercreditor Agreement
EXHIBIT 10.7 -- Form of Guarantee Joinder Agreement
HAMPSHIRE GROUP, LIMITED
000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
$15,000,000 7.05% Senior Secured Notes Due January 2, 2008
Dated as of May 15,1998
[Separately addressed to each of the Purchasers identified on Schedule A]
Ladies and Gentlemen:
HAMPSHIRE GROUP, LIMITED, a Delaware corporation (together with its permitted
successors, the "Company"), HAMPSHIRE DESIGNERS, INC., a corporation organized
under the laws of Delaware (together with its permitted successors, "HDI") and
each of HAMPSHIRE INVESTMENTS, LIMITED, a corporation organized under the laws
of Delaware (together with its permitted successors, "HIL"), SEGUE (AMERICA)
LIMITED, a corporation organized under the laws of Delaware (together with its
permitted successors, "Segue"), GLAMOURETTE FASHION XXXXX, INC., a corporation
organized under the laws of Delaware (together with its permitted successors,
"Glamourette"), and SAN FRANCISCO KNITWORKS, INC., a corporation organized under
the laws of Delaware (together with its permitted successors, "SF Knitworks")
(the foregoing Persons other than the Company together with each other Person
becoming a Guarantor hereunder pursuant to Section 10.7 being referred to herein
individually as a "Guarantor" and collectively as the "Guarantors"; the Company
and the Guarantors (other than HIL) being referred to herein individually as an
"Obligor" and collectively as the "Obligors"), hereby agree, jointly and
severally, with you as follows:
1. AUTHORIZATION OF NOTES.
The Company will authorize the issue and sale of $15,000,000 aggregate principal
amount of its 7.05% Senior Secured Notes due January 2, 2008 (the "Notes"). The
term "Notes" as used in this Agreement shall include each Note delivered
pursuant to this Agreement and the Other Agreement (as hereinafter defined) and
any such notes issued in substitution therefor pursuant to Section 14 of this
Agreement or the Other Agreement. The Notes shall be substantially in the form
set out in Exhibit 1, with such changes therefrom, if any, as may be approved by
you and the Company. Certain capitalized terms used in this Agreement are
defined in Schedule B; references to a "Schedule" or an "Exhibit" are, unless
otherwise specified, to a Schedule or an Exhibit attached to this Agreement.
2. SALE AND PURCHASE OF NOTES.
Subject to the terms and conditions of this Agreement, the Company will issue
and sell to you and you will purchase from the Company, at the Closing provided
for in Section 3, Notes in the principal amount specified below your name in
Schedule A at the purchase price of 100% of the principal amount thereof.
Contemporaneously with entering into this Agreement, the Company is entering
into another separate Note Purchase Agreement (the "Other Agreement") identical
with this Agreement with the other purchaser named in Schedule A (the "Other
Purchaser"), providing for the sale at such Closing to the Other Purchaser of
Notes in the principal amount specified below its name in Schedule A. Your
obligation hereunder and the obligations of the Other Purchaser under the Other
Agreement are several and not joint obligations and you shall have no obligation
under the Other Agreement and no liability to any Person for the performance or
non-performance by the Other Purchaser thereunder.
3. CLOSING.
The sale and purchase of the Notes to be purchased by you and the Other
Purchaser shall occur at the offices of Willkie, Xxxx & Xxxxxxxxx, at 10:00
a.m., local time, at a closing (the "Closing") on June 4,1998 or on such other
Business Day thereafter as may be agreed upon by the Company and you and the
Other Purchaser. At the Closing the Company will deliver to you the Notes to be
purchased by you in the form of a single Note (or such greater number of Notes
in denominations of at least $500,000 as you may request), dated the date of the
Closing and registered in your name (or in the name of your nominee), against
delivery by you to the Company or its order of immediately available funds in
the amount of the purchase price therefor by wire transfer of immediately
available funds for the account of the Company as indicated on Schedule C. If at
the Closing the Company shall fail to tender such Notes to you as provided above
in this Section 3, or any of the conditions specified in Section 4 shall not
have been fulfilled to your satisfaction, you shall, at your election, be
relieved of all further obligations under this Agreement, without thereby
waiving any rights you may have by reason of such failure or such
nonfulfillment.
4. CONDITIONS TO CLOSING.
Your obligation to purchase and pay for the Notes to be sold to you at the
Closing is subject to the fulfillment to your satisfaction, prior to or at the
Closing, of the following conditions:
4.1 Representations and Warranties.
The representations and warranties of the Obligors and HIL in the Financing
Documents shall be correct when made and at the time of the Closing.
4.2 Performance; No Default.
Each Obligor and HIL shall have performed and complied with all agreements and
conditions contained in the Financing Documents required to be performed or
complied with by it prior to or at the Closing and, after giving effect to the
issue and sale of the Notes (and the application of the proceeds thereof as
contemplated by Schedule 5.14) no Default or Event of Default shall have
occurred and be continuing. Neither any Obligor nor HIL shall have entered into
any transaction since February 18, 1998 that would have been prohibited by
Section 11.1 had such Section applied since such date.
4.3 Compliance Certificates.
(a) Obligor's Officer's Certificates. Each Obligor and HIL shall have
delivered to you an Officer's Certificate, dated the date of the Closing,
certifying that the conditions specified in Section 4.1, Section 4.2 and
Section 4.9 have been fulfilled.
(b) Obligor Secretary's Certificates. Each Obligor and HIL shall have
delivered to you a certificate of its Secretary or one of its Assistant
Secretaries, dated the date of the Closing, certifying as to the
resolutions attached thereto and other proceedings relating to the
authorization, execution and delivery of the Financing Documents to which
it is a party.
4.4 Opinions of Counsel.
You shall have received opinions in form and substance satisfactory to you,
dated the date of the Closing,
(a) from Willkie, Xxxx & Xxxxxxxxx, counsel for the Company, substantially
in the form set out in Exhibit 4.4(a) and covering such matters incident to
the transactions contemplated hereby as you or your counsel may reasonably
request (and the Company hereby instructs its counsel to deliver such
opinion to you), and
(b) from Xxxx & Xxxxxx, your special counsel in connection with the
transactions contemplated hereby, substantially in the form set out in
Exhibit 4.4(b) and covering such other matters incident to the transactions
contemplated hereby as you may reasonably request.
The Company hereby instructs its counsel named in clause (a) above to deliver
such opinion to you.
4.5 Purchase Permitted By Applicable Law, etc.
On the date of the Closing, your purchase of Notes shall (a) be permitted by the
laws and regulations of each jurisdiction to which you are subject, without
recourse to provisions (such as section 1405(a)(8) of the New York Insurance
Law) permitting limited investments by insurance companies without restriction
as to the character of the particular investment, (b) not violate any applicable
law or regulation (including, without limitation, Regulation U, T or X of the
Board of Governors of the Federal Reserve System) and (c) not subject you to any
tax, penalty or liability under or pursuant to any applicable law or regulation,
which law or regulation was not in effect on the date of your execution and
delivery of this Agreement. If requested by you, you shall have received an
Officer's Certificate certifying as to such matters of fact as you may
reasonably specify to enable you to determine whether such purchase is so
permitted.
4.6 Sale of Other Notes.
Contemporaneously with the Closing the Company shall sell to the Other Purchaser
and the Other Purchaser shall purchase the Notes to be purchased by them at the
Closing as specified in Schedule A.
4.7 Payment of Special Counsel Fees.
Without limiting the provisions of Section 16.1, the Company shall have paid on
or before the Closing the fees, charges and disbursements of your special
counsel referred to in Section 4.4 to the extent reflected in a statement of
such counsel rendered to the Company at least one Business Day prior to the date
of the Closing.
4.8 Private Placement Number.
A Private Placement Number issued by Standard & Poor's CUSIP Service Bureau (in
cooperation with the Securities Valuation Office of the National Association of
Insurance Commissioners) shall have been obtained for the Notes.
4.9 Changes in Structure.
The Obligors and HIL shall not have changed their jurisdiction of incorporation
or organization or been a party to any merger or consolidation and shall not
have succeeded to all or any substantial part of the liabilities of any other
entity, at any time following the date of the most recent financial statements
referred to in Schedule 5.5.
4.10 Evidence of Key-Person Life Insurance.
The Company shall have delivered to you a copy of the Key-Person Policy and
collateral assignments thereof, which Policy and assignments shall be reasonably
satisfactory to you and the Other Purchaser. The Company shall have delivered to
you evidence that all premiums in respect of the Key-Person Policy have been
paid.
4.11 Security Agreement.
(a) Security Agreements. A Security Agreement (as may be amended, restated
or otherwise modified from time to time, the "Company's Security
Agreement"), substantially in the form of Exhibit 4.11 (CSA), shall have
been duly authorized, executed and delivered by the Company, shall be in
full force and effect, and you shall have received an original executed
counterpart thereof. A Security Agreement (as may be amended, restated or
otherwise modified from time to time, a "Guarantor's Security Agreement"),
substantially in the form of Exhibit 4.11 -(GSA), shall have been duly
authorized, executed and delivered by each of the Guarantors (other than
HIL), shall be in full force and effect, and you shall have received an
original executed counterpart thereof.
(b) Pledge Agreements. A Pledge Agreement (as may be amended, restated or
otherwise modified from time to time, the "Company's Pledge Agreement"),
substantially in the form of Exhibit 4.11 (CPA), shall have been duly
authorized, executed and delivered by the Company, shall be in full force
and effect, and you shall have received an original executed counterpart
thereof. All stock certificates and stock powers required to be delivered
to the Collateral Agent under the Pledge Agreement in respect of each of
the Subsidiaries owned by the Company shall have been so delivered. A
Pledge Agreement (as may be amended, restated or otherwise modified from
time to time, a "Guarantor's Pledge Agreement"), substantially in the form
of Exhibit 4.11 -(GPA), shall have been duly authorized, executed and
delivered by each of the Guarantors (other than HIL), shall be in full
force and effect, and you shall have received an original executed
counterpart thereof. All stock certificates and stock powers required to be
delivered to the Collateral Agent under each such Guarantor's Pledge
Agreement in respect of each of the Subsidiaries owned by such Guarantor
shall have been so delivered.
4.12 Financing Statements.
Each financing statement required to be filed, registered or recorded in
connection with the transactions contemplated by this Agreement and the other
Financing Documents shall have been properly filed, registered or recorded in
each office in each jurisdiction required in order to create in favor of the
Collateral Agent, for the ratable benefit of you and the Other Purchaser, a
valid and/or perfected first priority Lien (subject only to the Liens permitted
under the lntercreditor Agreement) in and to the Collateral and the Pledged
Stock Collateral; the Collateral Agent and you shall have received such evidence
satisfactory to the Collateral Agent that all such filings, registrations and
recordations have been made; and all necessary filing, recording and other
similar fees, and all taxes and other charges related to such filings,
registrations and recordations (including such other taxes and charges requested
by you), shall have been paid in full.
4.13 UCC Searches
Uniform Commercial Code financing statement, judgment lien and Federal income
tax lien searches in such central and local recording offices as you shall have
identified to the Company shall have been delivered to you or your special
counsel and shall be satisfactory to you in your sole discretion.
4.14 Insurance.
Certificates of insurance evidencing the insurance policies and endorsements
required to be delivered pursuant to Section 3D of the Security Agreements shall
have been delivered to you and the Other Purchaser.
4.15 Credit Agreement.
You shall have received a copy of the Credit Agreement and such other documents
related thereto as you may reasonably request, the Credit Agreement and such
other documents shall be in form and substance reasonably satisfactory to you.
4.16 Intercreditor Agreement
An lntercreditor Agreement (as may be amended, restated or otherwise modified
from time to time, the "Intercreditor Agreement"), substantially in the form of
Exhibit 4.16, shall have been duly authorized, executed and delivered by the
lenders and agent under the Credit Agreement, the Other Purchaser, each of the
Guarantors and the Company, shall be in full force and effect, and you shall
have received an original executed counterpart thereof.
4.17 Proceedings and Documents.
All corporate and other proceedings in connection with the transactions
contemplated by the Financing Documents and all documents and instruments
incident to such transactions shall be satisfactory to you and your special
counsel, and you and your special counsel shall have received all such
counterpart originals or certified or other copies of such documents as you or
they may reasonably request.
5. REPRESENTATIONS AND WARRANTIES OF THE OBLIGORS.
Each Obligor and HIL, jointly and severally, represents and warrants to you, as
of the date of the Closing, that:
5.1 Organization; Power and Authority.
Each Obligor and HIL is a corporation, duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation, and each is
duly qualified as a foreign corporation and is in good standing (to the extent
such concept is recognized) in each jurisdiction in which such qualification is
required by law, other than those jurisdictions as to which the failure to be so
qualified or in good standing could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Each Obligor and HIL
has the corporate power and authority to own or hold under lease the properties
it purports to own or hold under lease, to transact the business it transacts
and proposes to transact, to execute and deliver the Financing Documents to
which it is a party and to perform the provisions hereof and thereof.
5.2 Authorization, etc.
(a) The Company. The Financing Documents to which the Company is a party
have been duly authorized by all necessary corporate action on the part of
the Company, and this Agreement constitutes, and each of such other
Financing Documents, upon execution and delivery thereof, will constitute,
a legal, valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except as such enforceability may
be limited by (i) applicable bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and (ii) general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or et law).
(b) The Guarantors. Each Financing Document has been duly authorized by all
necessary corporate action on the part of each Guarantor that is a party
thereto, and each such Financing Document constitutes a legal, valid and
binding obligation of each such Guarantor, enforceable against each such
Guarantor in accordance with its terms, except as such enforceability may
be limited by (i) applicable bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and (ii) general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(c) Solvency of Guarantors. None of the Guarantors intends to incur any
obligations hereunder or otherwise make any transfers in connection
herewith, with actual intent to hinder, delay or defraud either present or
future creditors. Before, and after giving effect to, the consummation of
the transactions contemplated hereby, without limitation, the issuance of
the Notes and the delivery of the Guarantees:
(i) the assets of each Guarantor at a fair valuation thereof on a
going concern basis will not be less than the amount that will be
required to pay the probable liability with respect to its debts
(including, without limitation, contingent, subordinated, unmatured
and unliquidated liabilities on existing debts, as such liabilities
may become absolute and matured), in each case both prior to and after
giving effect to the transactions contemplated by this Agreement,
(ii) no Guarantor is currently engaged in or about to engage in a
business or transaction for which the property remaining in its
respective hands is an unreasonably small capital and
(iii) each Guarantor will be able to pay its respective debts as they
mature.
5.3 Disclosure.
The financial statements referred to in Schedule 5.5 do not, nor does any
Financing Document or any written statement furnished by or on behalf of any
Obligor and HIL to you in connection with the negotiation or the closing of the
sale of the Notes, contain any untrue statement of a material fact or omit a
material fact necessary to make the statements contained therein not misleading
when viewed in the aggregate. There is no fact that the Company has not
disclosed to you in writing that has had or, so far as the Company can now
reasonably foresee, could reasonably be expected to have a Material Adverse
Effect. Except as expressly described in Schedule 5.3, or in one of the
documents, certificates or other writings identified therein, or in the
financial statements listed in Schedule 5.5, since December 31,1997, there has
been no change in the financial condition, operations, business, properties or
prospects of the Obligors except changes that individually or in the aggregate
could not reasonably be expected to have a Material Adverse Effect. There is no
fact known to a Senior Financial Officer of the Company that could reasonably be
expected to have a Material Adverse Effect that has not been set forth herein,
in the other Financing Documents or in any other written statement delivered to
you by or on behalf of any Obligor or HIL specifically for use in connection
with the transactions contemplated hereby. In connection with the foregoing, the
Company hereby discloses to you and you acknowledge such disclosure that the
Company incurred losses of approximately $1,150,000 in its fiscal quarter ended
March 31, 1998.
5.4 Organization and Ownership of Shares of Material Subsidiaries; Affiliates.
(a) Schedule 5.4 contains (except as noted therein) complete and correct
lists (i) of the Company's Subsidiaries, showing, as to each Subsidiary,
the correct name thereof, whether such Subsidiary is a Restricted
Subsidiary or an Unrestricted Subsidiary, the jurisdiction of its
organization and the percentage of shares of each class of its capital
stock or similar equity interests outstanding owned by the Company and each
other Subsidiary, (ii) of the Company's Affiliates, other than Subsidiaries
and other than Persons that are Affiliates solely as a consequence of being
controlled by one or more Acceptable Control Persons (which Affiliates are
unrelated to the business of the Company and its Subsidiaries), and (iii)
of the Company's directors and senior officers. All of the Company's
Restricted Subsidiaries (other than Keynote) are Guarantors.
(b) All of the outstanding shares of capital stock of each Subsidiary shown
in Schedule 5.4 as being owned by the Company and its Subsidiaries have
been validly issued, are fully paid and nonassessable and are owned by the
Company or another Subsidiary free and clear of any Lien (except as
otherwise disclosed in Schedule 5.4).
(c) Each Subsidiary identified in Schedule 5.4 is a corporation or other
legal entity duly organized, validly existing and in good standing (to the
extent such concept is recognized) under the laws of its jurisdiction of
organization, and is duly qualified as a foreign corporation or other legal
entity and is in good standing (to the extent such concept is recognized)
in each jurisdiction in which such qualification is required by law, other
than those jurisdictions as to which the failure to be so qualified or in
good standing could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Each such Subsidiary has the
corporate or other power and authority to own or hold under lease the
properties it purports to own or hold under lease and to transact the
business it transacts and proposes to transact.
(d) No Subsidiary is a party to, or otherwise subject to any legal
restriction or any agreement (other than this Agreement, the other
Financing Documents, the agreements listed on Schedule 5.4 and customary
limitations imposed by corporate law statutes) restricting the ability of
such Subsidiary to pay dividends out of profits or make any other similar
distributions of profits to the Company or any of its Subsidiaries that
owns outstanding shares of capital stock or similar equity interests of
such Subsidiary.
5.5 Financial Statements.
The Company has delivered to you and the Other Purchaser copies of the financial
statements of the Company and its Subsidiaries listed on Schedule 5.5. All of
said financial statements (including in each case the related schedules and
notes) fairly present, in all material respects, the consolidated financial
position of the Company and its Subsidiaries as of the respective dates
specified in such Schedule and the consolidated results of their operations and
cash flows for the respective periods so specified and have been prepared in
accordance with GAAP consistently applied throughout the periods involved except
as set forth in the notes thereto (subject, in the case of any interim financial
statements, to normal year-end adjustments).
5.6 Compliance with Laws, Other Instruments, etc.
The execution, delivery and performance by the Company of the Notes and by the
Obligors and HIL of the other Financing Documents will not
(a) contravene, result in any breach of, or constitute a default under, or
result in the creation of any Lien in respect of any property of any
Obligor or HIL under, any indenture, mortgage, deed of trust, loan,
purchase or credit agreement, lease, corporate charter, bylaws or other
constitutive document, or any other material agreement or instrument to
which such Obligor or HIL is bound or by which such Obligor or HIL or any
of their respective properties may be bound or affected,
(b) conflict with or result in a breach of any of the terms, conditions or
provisions of any order, judgment, decree, or ruling of any court,
arbitrator or Governmental Authority applicable to any Obligor or HIL, or
(c) violate any provision of any statute or other rule or regulation of any
Governmental Authority applicable to any Obligor or HIL.
5.7 Governmental Authorizations, etc.
No consent, approval or authorization of, or registration, filing or declaration
with, any Governmental Authority is required in connection with the execution,
delivery or performance of the Notes by the Company or the other Financing
Documents by the Obligors or HIL (other than the filing of financing and/or
continuation statements as contemplated by the Financing Documents).
5.8 Litigation; Observance of Agreements, Statutes and Orders.
(a) Except as disclosed in Schedule 5.8, there are no actions, suits or
proceedings pending or, to the knowledge of the Obligors, threatened
against or affecting any Obligor or any property of any Obligor in any
court or before any arbitrator of any kind or before or by any Governmental
Authority that, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect.
(b) No Obligor is in default under any term of any agreement or instrument
to which it is a party or by which it is bound, or any order, judgment,
decree or ruling of any court, arbitrator or Governmental Authority or is
in violation of any applicable law, ordinance, rule or regulation
(including, without limitation, Environmental Laws) of any Governmental
Authority, which default or violation, individually or in the aggregate,
would reasonably be expected to have a Material Adverse Effect.
5.9 Taxes.
The Obligors have filed all tax returns that are required to have been filed in
any jurisdiction, and have paid all taxes shown to be due and payable on such
returns and all other taxes and assessments levied upon them or their
properties, assets, income or franchises, to the extent such taxes and
assessments have become due and payable and before they have become delinquent,
except for any taxes and assessments (a) the amount of which is not individually
or in the aggregate Material or (b) the amount, applicability or validity of
which is currently being contested in good faith by appropriate proceedings and
with respect to which such Obligor has established adequate reserves in
accordance with GAAP. The Obligors know of no basis for any other tax or
assessment that could reasonably be expected to have a Material Adverse Effect.
The charges, accruals and reserves on the books of the Company and its
Subsidiaries in respect of Federal, state or other taxes for all fiscal periods
are adequate. Other than with respect to a currently on-going Internal Revenue
Service audit of one or more of the Obligors (which audit has not been
completed), there are no other continuing or open audits with respect to any
Obligor.
HIL has filed all Federal income tax returns that are required to have been
filed and has paid all such taxes shown to be due and payable on such returns,
to the extent such taxes have become due and payable and before they have become
delinquent, except for any taxes the amount of which is not individually or in
the aggregate Material or the amount, applicability or validity of which is
currently being contested in good faith by appropriate proceedings and with
respect to which HIL has established adequate reserves in accordance with GAAP.
HIL knows of no basis for any other Federal income tax that could reasonably be
expected to have a Material Adverse Effect. The charges, accruals and reserves
on the books of HIL in respect of Federal income taxes for all fiscal periods
are adequate.
5.10 Title to Property; Leases.
The Obligors have good and sufficient title to their respective properties that
individually or in the aggregate are Material, including all such properties
reflected in the most recent audited balance sheet referred to in Section 5.5 or
purported to have been acquired by any Obligor after said date (except as sold
or otherwise disposed of in the ordinary course of business), in each case free
and clear of Liens prohibited by this Agreement. All leases that individually or
in the aggregate are Material are valid and subsisting and are in full force and
effect in all material respects.
5.11 Licenses, Permits, etc.
Except as disclosed in Schedule 5.11,
(a) the Obligors possess all licenses, permits, franchises, authorizations,
patents, copyrights, service marks, trademarks and trade names, or rights
thereto, that individually or in the aggregate are Material, without known
conflict with the rights of others;
(b) to the best knowledge of the Obligors, no product or practice of any
Obligor infringes in any material respect any license, permit, franchise,
authorization, patent, copyright, service xxxx, trademark, trade name or
other right owned by any other Person, which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect;
and
(c) to the best knowledge of the Obligors, there is no material violation
by any Person of any right of any Obligor with respect to any patent,
copyright, service xxxx, trademark, trade name or other right owned or used
by such Person which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
5.12 Pension Plans. Except as disclosed in Schedule 5.12,
(a) the Company and each ERISA Affiliate have operated and administered
each Plan (other than any Multiemployer Plan) in compliance with all
applicable laws except for such instances of noncompliance as have not
resulted in and could not reasonably be expected to result in a Material
Adverse Effect. Neither the Company nor any ERISA Affiliate has incurred
any liability in the nature of a penalty, excise tax or fine pursuant to
Title I of ERISA, any liability under Title IV of ERISA or any liability
under sections 4971 through 4980E of the Code, and no event, transaction or
condition has occurred or exists that could reasonably be expected to
result in the incurrence of any such liability by the Company or any ERISA
Affiliate, or in the imposition of any Lien on any of the rights,
properties or assets of the Company or any ERISA Affiliate, in either case
pursuant to Title I or IV of ERISA or pursuant to sections 4971 through
4980E of the Code or pursuant to section 401 (a)(29) or 412 of the Code,
other than such liabilities or Liens as would not, individually or in the
aggregate, result in a Material Adverse Effect;
(b) the present value of the aggregate benefit liabilities under all of the
Plans subject to Title IV of ERISA (other than Multiemployer Plans),
determined as of the end of each such Plan's most recently ended plan year
on the basis of the actuarial assumptions specified for funding purposes in
such Plan's most recent actuarial valuation report, did not exceed the
aggregate current value of the assets of all such Plans by an amount that
is Material. The term "benefit liabilities" has the meaning specified in
section 4001 of ERISA and the terms "current value" and "present value"
have the meaning specified in section 3 of ERISA;
(c) the Company and its ERISA Affiliates have not incurred withdrawal
liabilities (and are not subject to contingent withdrawal liabilities)
under section 4201 or 4204 of ERISA in respect of Multiemployer Plans that
individually or in the aggregate are Material;
(d) the unfunded expected postretirement benefit obligation (determined as
of the last day of the Company's most recently ended fiscal year in
accordance with Financial Accounting Standards Board Statement No. 106,
without regard to liabilities attributable to continuation coverage
mandated by section 4980B of the Code) of the Company and its Subsidiaries
is not Material;
(e) the execution and delivery of this Agreement and the issuance and sale
of the Notes hereunder will not involve any transaction that is subject to
the prohibitions of section 406(a) of ERISA or in connection with which a
tax could be imposed pursuant to section 4975(c)(1)(A)-(D) of the Code. The
representation by the Obligors in the first sentence of this Section
5.12(e) is made in reliance upon and subject to the accuracy of your
representation in Section 6.2 as to the sources of the funds used to pay
the purchase price of the Notes to be purchased by you;
(f) the Multiemployer Plans in respect of which any Obligor or any ERISA
Affiliate makes contributions or has any liability or obligation are set
forth on Schedule 5.12(f). The Plans constituting "defined benefit plans"
(as defined in section (3)(35) of ERISA) are set forth on Schedule 5.12(f).
5.13 Private Offering by the Company.
Neither the Obligors nor HIL nor anyone acting on their behalf has offered the
Notes or any similar securities for sale to, or solicited any offer to buy any
of the same from, or otherwise approached or negotiated in respect thereof with,
any Person other than you, the Other Purchaser and not more than 1 other
Institutional Investor, which has been offered the Notes at a private sale for
investment. Neither any of the Obligors nor HIL nor anyone acting on their
behalf has taken, or will take, any action that would subject the issuance or
sale of the Notes to the registration requirements of section 5 of the
Securities Act.
5.14 Use of Proceeds; Margin Regulations.
The Company will apply the proceeds of the sale of the Notes as set forth in
Schedule 5.14. No part of the proceeds from the sale of the Notes hereunder will
be used, directly or indirectly, for the purpose of buying or carrying any
margin stock within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System (12 CFR 207), or for the purpose of buying or carrying or
trading in any securities under such circumstances as to involve the Company in
a violation of Regulation X of said Board (12 CFR 224) or to involve any broker
or dealer in a violation of Regulation T of said Board (12 CFR 220). Margin
stock does not constitute more than 20% of the value of the consolidated assets
of the Obligors and HIL, and the Obligors and HIL do not have any present
intention that margin stock will constitute more than 20% of the value of such
assets. As used in this Section, the terms "margin stock" and "purpose of buying
or carrying" shall have the meanings assigned to them in said Regulation U.
5.15 Existing Debt; Future Liens.
(a) Except as described therein, Schedule 5.15 sets forth a complete and
correct list of all outstanding Debt of the Obligors as of December 31,
1997, since which date there has been no Material change in the amounts,
interest rates, sinking funds, installment payments or maturities of the
Debt of the Obligors except as described in Schedule 5.15. No Obligor is in
default, and no waiver of default is currently in effect, in the payment of
any principal or interest on any Debt of any Obligor, and no event or
condition exists with respect to any such Debt of any Obligor that would
permit (or that with notice or the lapse of time, or both, would permit)
one or more Persons to cause such Debt to become due and payable before its
stated maturity or before its regularly scheduled dates of payment.
(b) Except as disclosed in Schedule 5.15, no Obligor has agreed or
consented to cause or permit in the future (upon the happening of a
contingency or otherwise) any of its property, whether now owned or
hereafter acquired, to be subject to a Lien not permitted by Section 11.11.
5.16 Foreign Assets Control Regulations, etc.
Neither the sale of the Notes by the Company hereunder nor its use of the
proceeds thereof will violate the Trading with the Enemy Act, as amended, or any
of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.
5.17 Status under Certain Statutes.
Neither any Obligor nor HIL is subject to regulation under the Investment
Company Act of 1940, as amended, the Public Utility Holding Company Act of 1935,
as amended, the Transportation Acts (49 U.S.C.), as amended (which would require
any approval or registration of the issuing of Notes or the granting of the
Collateral), or the Federal Power Act, as amended.
5.18 Environmental Matters.
No Obligor has knowledge of any claim or has received any written notice of any
claim, and no proceeding has been instituted against any Obligor raising any
claim against any Obligor or any of its real properties now or formerly owned,
leased or operated by any of them or other assets, alleging any damage to the
environment or violation of any Environmental Laws, except, in each case, such
as would not reasonably be expected to result in a Material Adverse Effect.
Except as otherwise disclosed to you in writing,
(a) no Obligor has knowledge of any facts which would give rise to any
claim, public or private, against any Obligor of the violation of
Environmental Laws or damage to the environment emanating from, occurring
on or in any way related to real properties now or formerly owned, leased
or operated by any of them or to other assets or their use, except, in each
case, such as would not reasonably be expected to result in a Material
Adverse Effect;
(b) no Obligor has stored any Hazardous Materials on real properties now or
formerly owned, leased or operated by any of them in a manner contrary to
any Environmental Laws and has not disposed of any Hazardous Materials in a
manner contrary to any Environmental Laws in each case in any manner that
could reasonably be expected to result in a Material Adverse Effect; and
(c) all buildings on all real properties now owned, leased or operated by
any Obligor are in compliance with applicable Environmental Laws, except
where failure to comply would not reasonably be expected to result in a
Material Adverse Effect.
5.19 Obligors Interdependent.
The Company and the Guarantors are directly dependent upon each other for and in
connection with their borrowing activities. Each Guarantor will receive direct
and indirect economic, financial and other benefits from the indebtedness
incurred hereunder and under the Notes by the Company, and under the Guarantee
of each Guarantor, and the incurrence of such indebtedness is in the best
interests of the Company and each Guarantor. The Company and the Guarantors have
explicitly induced you and the Other Purchaser to purchase the Notes based on
and in reliance on the consolidated financial condition of the Company and the
Guarantors.
5.20 Other Representations and Warranties.
The representations and warranties of the Company set forth in the other
Financing
Documents are true and correct as of the date of Closing
6. REPRESENTATIONS OF THE PURCHASER.
6.1 Purchase for Investment.
You represent that you are purchasing the Notes for your own account or for one
or more separate accounts maintained by you or for the account of one or more
pension or trust funds (or commingled pension trust funds) or for the account of
one or more "accredited investors" within the meaning of Regulation D under the
Securities Act for whom you are acting as investment manager, agent or
investment adviser, and not with a view to the distribution thereof, provided
that the disposition of your or their property shall at all times be within your
or their control. You understand that the Notes have not been registered under
the Securities Act and may be resold only if registered pursuant to the
provisions of the Securities Act or if an exemption from registration is
available, except under circumstances where neither such registration nor such
an exemption is required by law, and that the Company is not required to
register the Notes.
6.2 Source of Funds.
You represent that at least one of the following statements is an accurate
representation as to each source of funds (a "Source") to be used by you to pay
the purchase price of the Notes to be purchased by you hereunder:
(a) the Source is an "insurance company general account" as defined in
Department of Labor Prohibited Transaction Exemption ("PTE") 95-60 (60 FR
35925, July 12,1995) and in respect thereof you represent that there is no
"employee benefit plan" (as defined in section 3(3) of ERISA and section
4975(e)(1) of the Code, treating as a single plan all plans maintained by
the same employer or employee organization or affiliate thereof) with
respect to which the amount of the general account reserves and liabilities
of all contracts held by or on behalf of such plan exceed 10% of the total
reserves and liabilities of such general account (exclusive of separate
account liabilities) plus surplus, as set forth in the NAIC Annual
Statement filed with your state of domicile; or
(b) if you are an insurance company, the Source does not include assets
allocated to any separate account maintained by you in which any employee
benefit plan (or its related trust) has any interest, other than a separate
account that is maintained solely in connection with your fixed contractual
obligations under which the amounts payable, or credited, to such plan and
to any participant or beneficiary of such plan (including any annuitant)
are not affected in any manner by the investment performance of the
separate account; or
(c) the Source is either (i) an insurance company pooled separate account,
within the meaning of PTE 90-1 (issued January 29, 1990), or (ii) a bank
collective investment fund, within the meaning of the PTE 91-38 (issued
July 12, 1991) and, except as you have disclosed to the Company in writing
pursuant to this paragraph (c), no employee benefit plan or group of plans
maintained by the same employer, affiliate of such employer or employee
organization beneficially owns more than 10% of all assets allocated to
such pooled separate account or collective investment fund; or
(d) (i) the Source constitutes assets of an "investment fund" (within the
meaning of Part V of the QPAM Exemption) managed by a "qualified
professional asset manager" or "QPAM" (within the meaning of Part V of the
QPAM Exemption), (ii) no employee benefit plan's assets that are included
in such investment fund, when combined with the assets of all other
employee benefit plans established or maintained by the same employer or by
an affiliate (within the meaning of Section V(c)(1) of the QPAM Exemption)
of such employer or by the same employee organization and managed by such
QPAM, exceed 20% of the total client assets managed by such QPAM, (iii) the
conditions of Part 1(c) and (g) of the QPAM Exemption are satisfied, (iv)
neither the QPAM nor a person controlling or controlled by the QPAM
(applying the definition of "control" in Section V(e) of the QPAM
Exemption) owns a 5% or more interest in any Obligor or HIL and (v) the
identity of such QPAM and the names of all employee benefit plans whose
assets are included in such investment fund have been disclosed to the
Company in writing pursuant to this paragraph (d); or
(e) the Source is a governmental plan; or
(f) the Source is one or more employee benefit plans, or a separate account
or trust fund comprised of one or more employee benefit plans, each of
which has been identified to the Company in writing pursuant to this
paragraph (f); or
(g) the Source does not include assets of any employee benefit plan, other
than a plan exempt from the coverage of ERISA.
As used in this Section 6.2, the terms "employee benefit plan", "governmental
plan", "party in interest" and "separate account" shall have the respective
meanings assigned to such terms in section 3 of ERISA.
7. INFORMATION AS TO COMPANY.
7.1 Financial and Business Information.
The Company shall deliver to each holder of Notes:
(a) Quarterly Statements --within 60 days after the end of each quarterly
fiscal period in each fiscal year of the Company (other than the last
quarterly fiscal period of each such fiscal year), duplicate copies of
(i) consolidated balance sheets of (x) the Company and its
Subsidiaries, and (y) the Company and the Restricted Subsidiaries, as
at the end of such quarter, and
(ii) consolidated statements of operations, stockholders' equity and
cash flows for (x) the Company and its Subsidiaries, and (y) the
Company and the Restricted Subsidiaries, for such quarter and (in the
case of the second and third quarters) for the portion of the fiscal
year ending with such quarter, setting forth in each case in
comparative form the figures for the corresponding periods in the
previous fiscal year of the Company, all in reasonable detail,
prepared in accordance with GAAP applicable to quarterly financial
statements generally, and certified by a Senior Financial Officer of
the Company as fairly presenting, in all material respects, the
financial position of the companies being reported on and their
results of operations and cash flows, subject to changes resulting
from year-end adjustments, provided that delivery within the time
period specified above of copies of the Company's Quarterly Report on
Form 10-Q prepared in compliance with the requirements therefor and
filed with the Securities and Exchange Commission shall be deemed to
satisfy the requirements of Section 7.1 (a)(i)(x) and Section 7.1
(a)(ii)(x);
(b) Annual Statements -- within 120 days after the end of each fiscal year
of the Company, duplicate copies of
(i) a consolidated balance sheet of (x) the Company and its
Subsidiaries, and (y) the Company and the Restricted Subsidiaries, as
at the end of such year, and
(ii) consolidated statements of operations, stockholders' equity and
cash flows of (x) the Company and its Subsidiaries, and (y) the
Company and the Restricted Subsidiaries, for such year, setting forth
in each case in comparative form the figures for the previous fiscal
year, all in reasonable detail, prepared in accordance with GAAP, and
accompanied
(A) in the case of the consolidated balance sheet referred to in
Section 7.1 (b)(i)(x) above and the consolidated statements of
operations, stockholders' equity and cash flows referred to in
Section 7.1 (b)(ii)(x) above, by an opinion thereon of
independent certified public accountants of recognized national
standing, which opinion shall state that such financial
statements present fairly, in all material respects, the
financial position of the companies being reported upon and the
results of their operations and cash flows and have been prepared
in conformity with GAAP, and that the examination of such
accountants in connection with such financial statements has been
made in accordance with generally accepted auditing standards,
and that such audit provides a reasonable basis for such opinion
in the circumstances,
(B) in the case of the consolidated balance sheet referred to in
Section 7.1 (b)(i)(y) above and the consolidated statements of
operations, stockholders' equity and cash flows referred to in
Section 7.1 (b)(ii)(y) above, a certificate of a Senior Financial
Officer, which certificate shall state that such financial
statements present fairly, in all material respects, the
financial position of the companies being reported upon and the
results of their operations and cash flows and have been prepared
in conformity with GAAP, and
(C) by a certificate of such accountants stating that they have
reviewed this Agreement and stating further whether, in making
their audit, they have become aware of any condition or event
that then constitutes a Default or an Event of Default, and, if
they are aware that any such condition or event then exists,
specifying the nature and period of the existence thereof (it
being understood that such accountants shall not be liable,
directly or indirectly, for any failure to obtain knowledge of
any Default or Event of Default unless such accountants should
have obtained knowledge thereof in making an audit in accordance
with generally accepted auditing standards or did not make such
an audit), provided that the delivery within the time period
specified above of the Company's Annual Report on Form 10-K for
such fiscal year (together with the Company's annual report to
shareholders, if any, prepared pursuant to Rule 1 4a-3 under the
Exchange Act) prepared in accordance with the requirements
therefor and filed with the Securities and Exchange Commission,
together with the accountant's certificate described in clause
(B) above, shall be deemed to satisfy the requirements of Section
7.1 (b)(i)(x) and Section 7.1 (b)(ii)(x);
(c) SEC and Other Reports -- promptly upon their becoming available, one
copy of (i) each financial statement, report, notice or proxy statement
sent by the Company or any Subsidiary to public securities holders
generally, and (ii) each regular or periodic report, each registration
statement (without exhibits except as expressly requested by such holder),
and each prospectus and all amendments thereto filed by the Company or any
Subsidiary with the Securities and Exchange Commission and of all press
releases and other statements made available generally by the Company or
any Subsidiary to the public concerning developments that are Material;
(d) Notice of Default or Event of Default -- promptly, and in any event
within 5 days after a Responsible Officer becoming aware of the existence
of any Default or Event of Default or that any Person has given any notice
or taken any action with respect to a claimed default hereunder or that any
Person has given any notice or taken any action with respect to a claimed
default of the type referred to in Section 12(f), a written notice
specifying the nature and period of existence thereof and what action the
Company is taking or proposes to take with respect thereto;
(e) ERISA Matters -- promptly, and in any event within 5 days after a
Responsible Officer becoming aware of any of the following, a written
notice setting forth the nature thereof and the action, if any, that the
Company or an ERISA Affiliate proposes to take with respect thereto:
(i) with respect to any Plan, any reportable event, as defined in
section 4043 of ERISA and the regulations thereunder, for which notice
thereof has not been waived pursuant to such regulations as in effect
on the date hereof; or
(ii) the taking by the PBGC of steps to institute, or the threatening
by the PBGC of the institution of, proceedings under section 4042 of
ERISA for the termination of, or the appointment of a trustee to
administer, any Plan, or the receipt by the Company or any ERISA
Affiliate of a notice from a Multiemployer Plan that such action has
been taken by the PBGC with respect to such Multiemployer Plan; or
(iii) any event, transaction or condition that could result in the
incurrence of any liability by the Company or any ERISA Affiliate
pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans, or in the
imposition of any Lien on any of the rights, properties or assets of
the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA
or such penalty or excise tax provisions, if such liability or Lien,
taken together with any other such liabilities or Liens then existing,
could reasonably be expected to have a Material Adverse Effect;
(f) Notices from Governmental Authority -- promptly, and in any event
within 10 days of receipt thereof by a Responsible Officer, copies of any
notice to the Company or any Subsidiary from any Federal or state
Governmental Authority relating to any order, ruling, statute or other law
or regulation that could reasonably be expected to have a Material Adverse
Effect; and
(g) Requested Information -- with reasonable promptness, such other data
and information relating to the business, operations, affairs, financial
condition, assets or properties of the Company or any of its Subsidiaries
or relating to the ability of the Company to perform its obligations under
this Agreement, the Other Agreement, the Notes and the other Financing
Documents as from time to time may be reasonably requested by any such
holder of Notes.
7.2 Officer's Certificate.
Each set of financial statements delivered to a holder of Notes pursuant to
Section 7.1(a) or Section 7.1(b) hereof shall be accompanied by a certificate of
a Senior Financial Officer of the Company setting forth: a Covenant Compliance
-- the information (including detailed calculations) required in order to
establish whether the Company was in compliance with the requirements of Section
11.2 through Section 11.11, inclusive, during the quarterly or annual period
covered by the statements then being furnished (including with respect to each
such Section, where applicable, the calculations of the maximum or minimum
amount, ratio or percentage, as the case may be, permissible under the terms of
such Sections, and the calculation of the amount, ratio or percentage then in
existence); and
(b) Event of Default -- a statement that such officer has reviewed the
relevant terms hereof and has made, or caused to be made, under his or her
supervision, a review of the transactions and conditions of the Obligors
and HIL from the beginning of the quarterly or annual period covered by the
statements then being furnished to the date of the certificate and that
such review shall not have disclosed the existence during such period of
any condition or event that constitutes a Default or an Event of Default
or, if any such condition or event existed or exists, specifying the nature
and period of existence thereof and what action the Obligors or HIL shall
have taken or propose to take with respect thereto.
7.3 Inspection.
The Company shall permit the representatives of each holder of Notes that is an
Institutional Investor:
(a) No Default -- if no Default or Event of Default then exists, at the
expense of such holder and upon reasonable prior notice to the Company, to
visit any one or more of the principal executive offices of the Company, to
discuss the affairs, finances and accounts of the Company and the
Subsidiaries with the Company's officers, and (with the consent of the
Company, which consent will not be unreasonably withheld) its independent
public accountants, and (with the consent of the Company, which consent
will not be unreasonably withheld) to visit the other offices and
properties of the Company and each Subsidiary, all at such reasonable times
and as often as may be reasonably requested in writing; and
(b) Default -- if a Default or Event of Default then exists, at the expense
of the Company, to visit and inspect upon reasonable prior notice to the
Company any of the offices or properties of the Company or any Subsidiary,
to examine all their respective books of account, records, reports and
other papers, to make copies and extracts therefrom, and to discuss their
respective affairs, finances and accounts with their respective officers
and independent public accountants (and by this provision the Company
authorizes said accountants to discuss the affairs, finances and accounts
of the Company and its Subsidiaries), all at such reasonable times and as
often as may be reasonably requested.
8. PREPAYMENT OF THE NOTES.
8.1 Required Prepayments.
On January 2, 2002 and on each January 2 thereafter to and including January 2,
2007, the Company will prepay $2,142,857.15 principal amount (or such lesser
principal amount as shall then be outstanding) of the Notes at par and without
payment of the Make-Whole Amount or any premium, provided that upon any partial
prepayment of the Notes pursuant to Section 8.4, the principal amount of each
required prepayment of the Notes becoming due under this Section 8.1 on and
after the date of such prepayment shall be reduced in the same proportion as the
aggregate unpaid principal amount of the Notes is reduced as a result of such
prepayment. On January 2, 2008, all of the Notes then outstanding shall mature
and become due and payable.
8.2 Optional Prepayments of Notes with Make-Whole Amount.
The Company may, at its option, upon notice as provided below, prepay at any
time all, but not less than all, of the Notes then outstanding at 100% of the
principal amount thereof and accrued interest thereon to the date of prepayment,
plus the Make-Whole Amount determined in respect of such date of prepayment. The
Company will give each holder of Notes to be prepaid under this Section 8.2
written notice of such optional prepayment not less than 30 days and not more
than 60 days prior to the date fixed for such prepayment (which shall be a
Business Day). Each such notice shall specify such date, the aggregate principal
amount of the Notes held by such holder and to be prepaid on such date, and the
interest to be paid on the prepayment date with respect to such principal amount
being prepaid, and shall be accompanied by a certificate of a Senior Financial
Officer of the Company as to the estimated Make-Whole Amount due in connection
with such prepayment (calculated as if the date of such notice were the date of
the prepayment), setting forth the details of such computation. Two Business
Days prior to such prepayment, the Company shall deliver to each holder of Notes
a certificate of a Senior Financial Officer of the Company specifying the
calculation of the Make-Whole Amount in respect of such Notes as of the
specified prepayment date.
8.3 Allocation of Note Partial Prepayment.
Except as provided in Section 8.4 with respect to payments pursuant to that
Section accepted by any holder of Notes, in the case of any partial prepayment
of Notes, as required under Section 8.1, the principal amount of the Notes to be
prepaid shall be allocated among all of the Notes at the time outstanding in
proportion, as nearly as practicable, to the respective unpaid principal amounts
thereof not theretofore called for prepayment.
8.4 Change in Control.
(a) Notice of Change In Control or Control Event. The Company will, within
three Business Days after any Responsible Officer has knowledge of the
occurrence of any Change in Control or Control Event, give written notice
of such Change in Control or Control Event to each holder of Notes (by
telecopy transmission and, simultaneously with the sending of such
telecopied notice, by sending a copy of such notice to each such holder via
an overnight courier of national reputation) unless notice in respect of
such Change in Control (or the Change in Control contemplated by such
Control Event) shall have been given previously pursuant to clause (b) of
this Section 8.4. If a Change in Control has occurred, such notices shall
contain and constitute an offer to prepay Notes as described in clause (c)
of this Section 8.4 and shall be accompanied by the certificate described
in clause (g) of this Section 8.4. In the case of any such notice
containing and constituting such an offer to prepay Notes, if the Company
shall not have received a written response to such first notice from each
holder of Notes within 10 days after the transmission of such telecopy
thereof, then the Company will immediately send a second such written
notice via an overnight courier of national reputation to each holder of
Notes who shall have not previously responded to the Company.
(b) Condition to Action. Neither the Company nor any other Obligor nor HIL
will take any action that consummates or finalizes a Change in Control
unless (i) at least 30 days prior to such action the Company shall have
given to each holder of Notes written notice containing and constituting an
offer to prepay Notes as described in clause (c) of this Section 8.4,
accompanied by the certificate described in clause (g) of this Section 8.4,
and (ii) contemporaneously with such action, the Company prepays all Notes
required to be prepaid in accordance with this Section 8.4.
(c) Offer to Prepay Notes. The offer to prepay Notes contemplated by
clauses (a) and (b) of this Section 8.4 shall be a written offer to prepay,
in accordance with and subject to this Section 8.4, all, but not less than
all, the Notes held by each holder (in this case only, "holder" in respect
of any Note registered in the name of a nominee for a disclosed beneficial
owner shall mean such beneficial owner) on a date specified in such offer
(the "Proposed Prepayment Date"). If such Proposed Prepayment Date is in
connection with an offer contemplated by clause (a) of this Section 8.4,
such date shall be not less than 30 days and not more than 60 days after
the date of the first notice that constitutes an offer to prepay the Notes
referred to in clause (a) of this Section 8.4 (if the Proposed Prepayment
Date shall not be specified in such first notice, the Proposed Prepayment
Date shall be the 30th day after the date of such notice).
(d) Acceptance, Rejection. A holder of Notes may accept the offer to prepay
made pursuant to this Section 8.4 by causing a notice of such acceptance to
be delivered to the Company at least 10 days prior to the Proposed
Prepayment Date. A failure by a holder of Notes to respond (by such time)
to an offer to prepay made pursuant to this Section 8.4 shall be deemed to
constitute an acceptance of such offer by such holder.
(e) Prepayment. Prepayment of the Notes to be prepaid pursuant to this
Section 8.4 solely because of the satisfaction of clause (a) or clause (b)
of the definition of "Change in Control" in Schedule B shall be at 100% of
the principal amount of such Notes, together with interest on such Notes
accrued to the date of prepayment and Make-Whole Amount determined with
respect to such principal amount. Prepayment of the Notes to be prepaid
pursuant to this Section 8.4 solely because of the satisfaction of clause
(c) of the definition of "Change in Control" in Schedule B shall be at 100%
of the principal amount of such Notes, at par and without payment of any
Make-Whole Amount or any premium, together with interest on such Notes
accrued to the date of prepayment. Each such prepayment shall be made on
the Proposed Prepayment Date except as provided in clause (f) of this
Section 8.4.
(f) Deferral Pending Change in Control. The obligation of the Company to
prepay Notes pursuant to the offers required by clause (b) and accepted in
accordance with clause (d) of this Section 8.4 is subject to the occurrence
of the Change in Control in respect of which such offers and acceptances
shall have been made. In the event that such Change in Control does not
occur on the Proposed Prepayment Date in respect thereof, the prepayment
shall be deferred until and shall be made on the date on which such Change
in Control occurs. The Company shall keep each holder of Notes reasonably
and timely informed of (i) any such deferral of the date of prepayment,
(ii) the date on which such Change in Control and the prepayment are
expected to occur, and (iii) any determination by the Company that efforts
to effect such Change in Control have ceased or been abandoned (in which
case the offers and acceptances made pursuant to this Section 8.4 in
respect of such Change in Control shall be deemed rescinded). In the event
that such Change in Control is deferred for 60 or more days after the
Proposed Prepayment Date, the offers and acceptances made pursuant to this
Section 8.4 in respect of such Change in Control shall be deemed rescinded.
If any such offers and acceptances are deemed rescinded pursuant to this
clause (f), then all requirements of this Section 8.4 (including, without
limitation, the requirement to give notice and make offers pursuant to
clauses (a) and (b)) with respect to any Change in Control (including,
without limitation, with respect to such deferred Change in Control)
occurring after such rescission shall be reinstated.
(g) Officer's Certificate. Each offer to prepay the Notes pursuant to this
Section 8.4 shall be accompanied by a certificate, executed by a Senior
Financial Officer of the Company and dated the date of such offer,
specifying: (i) the Proposed Prepayment Date; (ii) that such offer is made
pursuant to this Section 8.4; (iii) the principal amount of each Note
offered to be prepaid; (iv) the interest that would be due on each Note
offered to be prepaid, accrued to the Proposed Prepayment Date; (vi) the
calculation of the estimated Make-Whole Amount (if any) due in respect
thereof (calculated as if the date of such notice were the date of the
prepayment) and setting forth the details of such computation; (v) that the
conditions of this Section 8.4 have been fulfilled; and (vi) in reasonable
detail, the nature and date or proposed date of the Change in Control. In
addition to the foregoing requirement, 2 Business Days prior to any such
prepayment (other than a prepayment of the Notes solely pursuant to the
satisfaction of clause (c) of the definition of "Change in Control" in
Schedule B), the Company shall deliver to each holder of a Note to be
prepaid under this Section 8.4 a certificate of a Senior Financial Officer
of the Company specifying the calculation of the Make-Whole Amount in
respect of such Notes as of the specified prepayment date and setting forth
the details of such computation.
8.5 Maturity; Surrender, etc.
In the case of each prepayment of Notes pursuant to this Section 8, the
principal amount of each such Note to be prepaid shall mature and become due and
payable on the date fixed for such prepayment, together with interest on such
principal amount accrued to such date and the applicable Make-Whole Amount, if
any. From and after such date, unless the Company shall fail to pay such
principal amount when so due and payable, together with the interest and Make
Whole Amount, if any, as aforesaid, interest on such principal amount shall
cease to accrue. Any Note paid or prepaid in full shall be surrendered to the
Company and canceled and shall not be reissued, and no Note shall be issued in
lieu of any prepaid principal amount of any Note.
8.6 Purchase of Notes.
The Company will not and will not permit any Subsidiary to purchase, redeem,
prepay or otherwise acquire, directly or indirectly, any of the outstanding
Notes except upon the payment or prepayment of the Notes in accordance with the
terms of this Agreement and the Notes. The Company will promptly cancel all
Notes acquired by it or any Subsidiary pursuant to any payment, prepayment or
purchase of Notes pursuant to any provision of this Agreement and no Notes may
be issued in substitution or exchange for any such Notes.
8.7 Make-Whole Amount.
The term "Make-Whole Amount" means, with respect to any Note, an amount equal to
the excess, if any, of the Discounted Value with respect to the Called Principal
of such Note over the amount of such Called Principal, provided that the
Make-Whole Amount may in no event be less than zero. For the purposes of
determining the Make-Whole Amount, the following terms have the following
meanings: "Called Principal" means, with respect to any Note, the principal of
such Note that is to be prepaid pursuant to Section 8.2 or Section 8.4 or has
become or is declared to be immediately due and payable pursuant to Section
13.1, as the context requires.
"Discounted Value" means, with respect to the Called Principal of any Note, the
amount obtained by discounting all Remaining Scheduled Payments with respect to
such Called Principal from their respective scheduled due dates to the
Settlement Date with respect to such Called Principal, in accordance with
accepted financial practice and at a discount factor (applied on the same
periodic basis as that on which interest on the Notes is payable) equal to the
Reinvestment Yield with respect to such Called Principal.
"Reinvestment Yield" means, with respect to the Called Principal of any Note,
the sum of (a) 0.50% per annum plus (b) the yield to maturity implied by (I) the
yields reported, as of 10:00 a.m. (New York City time) on the second Business
Day preceding the Settlement Date with respect to such Called Principal, on the
display designated as "Page 678" on the Dow Xxxxx Market Service (or such other
display as may replace Page 678 on Dow Xxxxx Market Service) for actively traded
U.S. Treasury securities having a maturity equal to the Remaining Average Life
of such Called Principal as of such Settlement Date, or (ii) if such yields are
not reported as of such time or the yields reported as of such time are not
ascertainable (including by interpolation), the Treasury Constant Maturity
Series Yields reported, for the latest day for which such yields have been so
reported as of the second Business Day preceding the Settlement Date with
respect to such Called Principal, in Federal Reserve Statistical Release H.1 5
(519) (or any comparable successor publication) for actively traded U.S.
Treasury securities having a constant maturity equal to the Remaining Average
Life of such Called Principal as of such Settlement Date. Such implied yield
will be determined, if necessary, by (1) converting U.S. Treasury xxxx
quotations to bond-equivalent yields in accordance with accepted financial
practice and (2) interpolating linearly between (A) the actively traded U.S.
Treasury security with the maturity closest to and greater than the Remaining
Average Life and (B) the actively traded U.S. Treasury security with the
maturity closest to and less than the Remaining Average Life.
"Remaining Average Life" means, with respect to any Called Principal, the number
of years (calculated to the nearest one-twelfth year) obtained by dividing (a)
such Called Principal into (b) the sum of the products obtained by multiplying
(i) the principal component of each Remaining Scheduled Payment with respect to
such Called Principal by (ii) the number of years (calculated to the nearest
one-twelfth year) that will elapse between the Settlement Date with respect to
such Called Principal and the scheduled due date of such Remaining Scheduled
Payment.
"Remaining Scheduled Payments" means, with respect to the Called Principal of
any Note, all payments of such Called Principal and interest thereon that would
be due after the Settlement Date with respect to such Called Principal if no
payment of such Called Principal were made prior to its scheduled due date,
provided that if such Settlement Date is not a date on which interest payments
are due to be made under the terms of the Notes, then the amount of the next
succeeding scheduled interest payment will be reduced by the amount of interest
accrued to such Settlement Date and required to be paid on such Settlement Date
pursuant to Section 8.2, 8.4 or 13.1.
"Settlement Date" means, with respect to the Called Principal of any Note, the
date on which such Called Principal is to be prepaid pursuant to Section 8.2 or
Section 8.4 or has become or is declared to be immediately due and payable
pursuant to Section 13.1, as the context requires.
9. INTEREST ON THE NOTES.
Interest (computed on the basis of a 360-day year of twelve 30-day months) shall
accrue on the unpaid principal balance of the Notes at 7.05% per annum from the
date of each Note, and shall be payable to the holders thereof semi-annually, on
January 2 and July 2 in each year, commencing with the later of July 2,1998 and
the payment date next succeeding the date of such Note, until the principal
thereof shall have become due and payable, and, to the extent permitted by law
in respect of any Note, on any overdue payment of principal, any overdue payment
of interest and any overdue payment of Make-Whole Amount with respect thereto,
payable, on demand, at a rate per annum equal to the Default Rate.
10. AFFIRMATIVE COVENANTS.
For so long as any of the Notes are outstanding, each Obligor covenants as set
forth below:
10.1 Compliance with Law.
The Company will and will cause each of its Restricted Subsidiaries to comply
with all laws, ordinances or governmental rules or regulations to which each of
them is subject, including, without limitation, Environmental Laws, and will
obtain and maintain in effect all licenses, certificates, permits, franchises
and other governmental authorizations necessary to the ownership of their
respective properties or to the conduct of their respective businesses, in each
case to the extent necessary to ensure that non-compliance with such laws,
ordinances or governmental rules or regulations or failure to obtain or maintain
in effect such licenses, certificates, permits, franchises and other
governmental authorizations would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, provided that nothing
in this Section 10.1 shall affect or reduce the obligations of the Company under
section 3R of the Security Agreements with respect to the Collateral.
10.2 Insurance.
The Company will and will cause each of its Restricted Subsidiaries to,
maintain, with financially sound and reputable insurers, insurance with respect
to their respective properties and businesses against such casualties and
contingencies, of such types, on such terms and in such amounts (including
deductibles) as is customary in the case of entities of established reputations
engaged in the same or a similar business and similarly situated, provided that
nothing in this Section 10.2 shall affect or reduce the obligations of the
Company under section 3D of the Security Agreements with respect to the
Collateral.
The Company will obtain and maintain in full force and effect for so long as any
Notes are outstanding a key-person life insurance policy (the "Key-Person
Policy") in an amount not less than $5,000,000 on the life of Xx. Xxxxxx
Xxxxxxx. The insurer and the form of the Key-Person Policy shall be reasonably
satisfactory to the Required Holders. The Company shall pay all premiums in
respect of the Key-Person Policy and shall deliver a copy of the Key-Person
Policy and all endorsements and riders thereto to the Collateral Agent. Except
as may be provided for in the lntercreditor Agreement, the Collateral Agent
shall have the sole right
(a) to collect from the insurer under the Key-Person Policy the proceeds of
such policy upon the death of Xx. Xxxxxxx,
(b) to surrender said policy and receive the surrender value thereof,
(c) to collect and receive all distributions, shares of surplus, dividends,
deposits or other similar payments in respect of the Key-Person Policy,
provided that for so long as the Company shall not be in default hereunder,
under any of the other Financing Documents or under the Credit Agreement,
such distributions, shares, dividends, deposits and payments shall be paid
to, or retained by, the Company, as the case may be,
(d) to exercise any options under the Key-Person Policy,
(e) to designate and change the beneficiary in respect of the Key-Person
Policy and
(f) to elect any optional mode of settlement permitted by the Key-Person
Policy.
The Company shall execute a form of life insurance policy assignment acceptable
to the insurer under the Key-Person Policy pursuant to which the Key-Person
Policy shall be assigned to the Collateral Agent on behalf of the holders of
Notes; if requested by the Collateral Agent, the Company shall cause the sole
named beneficiary of the Key-Person Policy to be the Collateral Agent. Any such
assignment notwithstanding, the Company shall continue to be obligated to
perform its undertakings in this Section 10.2. In order to induce you to accept
the Company's undertaking in respect of obtaining and maintaining a Key-Person
Policy, the Company hereby represents and warrants to you that it is not aware
of any reason why a Key-Person Policy in respect of him would not be issued.
If, at the time of receipt of proceeds in respect of the Key-Person Policy, an
Actionable Event of Default shall exist under, and as defined in, the
Intercreditor Agreement and enforcement and/or foreclosure actions are being or
will be undertaken in respect of the Collateral, the proceeds of the Key-Person
Policy shall be paid and distributed by the Collateral Agent as provided for in
Section 3 of the lntercreditor Agreement.
If, at the time of receipt of proceeds in respect of the Key-Person Policy, the
lntercreditor Agreement shall no longer be in effect and an Event of Default
shall exist hereunder and enforcement and/or foreclosure actions are being or
will be undertaken in respect of the Collateral, the proceeds of the Key-Person
Policy shall be applied by the Collateral Agent to the obligations hereunder and
under the other Financing Documents.
If, at the time of receipt of proceeds in respect of the Key-Person Policy,
there shall be in existence no Actionable Event of Default (as defined above) or
Event of Default in respect of which enforcement and/or foreclosure actions are
being or Will be undertaken with respect to the Collateral, the proceeds of the
Key-Person Policy shall be paid by the Collateral Agent (or, if for any reason
whatsoever, received by the Company or any other Obligor, by the Company or such
Obligor) to the banks under the Credit Agreement and the holders of Notes as
follows:
(1) in the case of each bank under the Credit Agreement, the portion of
such proceeds equal to the ratio that the aggregate principal amount
outstanding at such time under the Credit Agreement and owing to such bank
bears to the total of the aggregate principal amount outstanding at such
time and owing to all banks under the Credit Agreement plus the aggregate
principal amount of all Notes then outstanding, or
(2) in the case of each holder of Notes that shall have exercised its
rights under Section 8.4 in respect of the death of Xx. Xxxxxxx prior to
the receipt of such proceeds or after the receipt of such proceeds if such
exercise after such receipt is in accordance with the requirements set
forth in Section 8.4, the lesser of (i) the amount otherwise payable to
such holder under Section 8.4 and (ii) the portion of such proceeds equal
to the ratio that the aggregate principal amount outstanding at such time
of the Notes of such holder bears to the total of the aggregate principal
amount outstanding at such time and owing to all banks under the Credit
Agreement plus the aggregate principal amount of all Notes then
outstanding.
To the extent that any holder of Notes shall have exercised its rights under
Section 8.4 in respect of the death of Xx. Xxxxxxx and the proceeds distributed
to such holder under clause (2) above are sufficient to fully pay all
obligations of the Company in respect thereof, nothing contained in this Section
10.2 shall limit or restrict the obligations of the Company to make all payments
in respect thereof required by Section 8.4. The collateral Agent may make all
payments to the banks provided for above to the agent for the banks under the
Credit Agreement. the Company shall cooperate with the collateral Agent in
connection with any payments under this Section 10.3. To the extent that
proceeds from the Key-Person Policy shall not have been paid to the banks and/or
any one or more holders of Notes and are not subject to distribution under
Section 3 of the Intercreditor Agreement, they shall be paid by the Collateral
Agent to the Company free and clear of any Lien created by any Financing
Document.
10.3 Maintenance of Properties.
The Company will and will cause each of its Restricted Subsidiaries to maintain
and keep, or cause to be maintained and kept, their respective properties in
good repair, working order and condition (other than ordinary wear and tear), so
that the business carried on in connection therewith may be properly conducted
at all times, provided that his Section shall not prevent the Company or any
Subsidiary from discontinuing the operation and the maintenance of any of its
properties if such discontinuance is desirable in the conduct of its business
and the Company has concluded that such discontinuance would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.
Anything continued in this Section 10.3 to the contrary notwithstanding, nothing
in this Section 10.3 shall affect or reduce the obligations of the Company under
Section 3E of the Security Agreements with respect to the Collaterals.
10.4 Payment of Taxes and Claims.
The Company will and will cause each of its Restricted Subsidiaries to file all
tax returns required to be filed in any jurisdiction and to pay and discharge
all taxes shown to be due and payable on such returns and all other taxes,
assessments, governmental charges, or levies imposed on them or any of their
properties, assets, income or franchises, to the extent such taxes and
assessments have become due and payable and before they have become delinquent
and all claims for which sums have become due and payable that have or might
become a Lien on properties or assets of the Company or any Restricted
Subsidiary (including, without limitation, mechanic's liens or other similar
construction liens), provided that neither the Company nor any Restricted
Subsidiary need pay any such tax or assessment or claims if (a) the amount,
applicability or validity thereof is contested by the Company or such Restricted
Subsidiary on a timely basis in good faith and in appropriate proceedings, and
the Company or such Restricted Subsidiary has established adequate reserves
therefor in accordance with GAAP on the books of the Company or such Restricted
Subsidiary or (b) the nonpayment of all such taxes and assessments and claims in
the aggregate would not reasonably be expected to have a Material Adverse
Effect.
10.5 Corporate Existence, etc.
The Company will at all times preserve and keep in full force and effect its
corporate existence. Subject to Section 11.2 and Section 11.9, each Guarantor
will at all times preserve and keep in full force and effect its respective
corporate existence.
10.6 Pari Passu Obligations.
The Company covenants that its obligations under the Notes and the other
Financing Documents do and will rank at least pari passu in right of payment
with all its other present and future secured and unsubordinated Debt. Each
Guarantor covenants that its obligations under the Guarantee do and will rank at
least pari passu in right of payment with all its other present and future
secured and unsubordinated Debt.
10.7 Guaranties of Subsidiaries.
(a) Additional Subsidiaries as Guarantors. If the Company or any Restricted
Subsidiary creates or otherwise acquires any Subsidiary at any time after
the date of Closing (or if the book investment of the Obligors and HIL in
Keynote reaches or exceeds $100,000), the Company shall promptly (and in
any event within 30 days) cause such Subsidiary to become a Guarantor
hereunder and under the Other Agreement by delivering to each holder of
Notes an instrument referring to this Agreement and the Other Agreement
wherein such Subsidiary agrees to be bound by all of the terms and
conditions applicable to a "Guarantor" under this Agreement and the Other
Agreement as of the date thereof, which instrument shall be substantially
in the form of Exhibit 10.7. In connection with the delivery of such
instrument, the Company shall also deliver the following to each of the
holders of Notes:
(i) a certificate of the secretary or assistant secretary of such
Subsidiary certifying the names and true signatures of the officers of
such Subsidiary authorized to execute such instrument and the proper
adoption of a resolution of the board of directors or stockholders of
such Subsidiary approving the execution, delivery and performance of
such instrument; and
(ii) a certificate executed by a Senior Financial Officer of the
Company, dated as of the date of such instrument, stating that (x)
except as to such exceptions as shall be set forth in writing therein,
the representations and warranties contained in Section 5 are true and
correct on and as of the date of such instrument to the extent such
representations and warranties are applicable to such Subsidiary as a
"Guarantor" or "Obligor" hereunder and (y) no Default or Event of
Default exists as of the date of such instrument, and shall pledge to
the Collateral Agent on behalf of the holders of Notes all of the
stock of such Subsidiary, which stock shall also be made subject to
the terms and provisions of the appropriate Pledge Agreement and the
lntercreditor Agreement, and shall cause such Subsidiary to execute
and deliver to the Collateral Agent on behalf of the holders of Notes
a Guarantor's Security Agreement and a Guarantor's Pledge Agreement
and to make all necessary filings and registrations in respect
thereof.
(b) Release of Guarantees of Subsidiaries. If, with respect to any
Subsidiary that is a Guarantor, all of the Company's and any Restricted
Subsidiary's capital stock or other equity ownership interests in such
Guarantor is Transferred in accordance with the requirements of Section
11.9, then the Company may elect to cause the withdrawal of the Guarantee
of such Guarantor hereunder and under the Other Agreement. Such election
shall be exercised by a Senior Financial Officer of the Company informing,
in writing, each holder of Notes of such election, certifying in such
writing that the requirements of this Section 10.7 have been satisfied,
that no Default or Event of Default exists and that the investment grade
rating of the Notes has been confirmed by any nationally recognized credit
rating agency or the Securities Valuation Office of the National
Association of Insurance Commissioners after giving effect to such
withdrawal. Thereafter, the Guarantee of such Guarantor shall be null and
void and without effect and such Guarantor shall no longer be, or be deemed
to be, a party to this Agreement or any of the Other Agreement or to any
other Financing Document to which it is a party, provided that, if the
aforesaid requirements under this Section 10.7(b) shall not have been
satisfied or any of the aforesaid certifications are not true, then the
Guarantee of such Guarantor shall continue in full force and effect and
such Guarantor shall continue to be a party hereto and to the Other
Agreement and such other Financing Documents notwithstanding the delivery
of such writing by the Company to each of the holders of Notes until all of
such requirements shall have been satisfied.
10.8 Year 2000.
Any reprogramming required to permit the proper functioning, in and following
the year 2000, of (a) the Company's and the Subsidiaries' computer systems and
(b) equipment containing embedded microchips (including systems and equipment
supplied by others or with which the Company's and the Subsidiaries' systems
interface) and the testing of all such systems and equipment, as so
reprogrammed, will be completed in a timely manner and as soon as practicable.
The cost to the Company and the Subsidiaries of such reprogramming and testing
and of the reasonably foreseeable consequences of year 2000 to the Company and
the Subsidiaries (including, without limitation, reprogramming errors and the
failure of others' systems or equipment) will not result in an Event of Default
or otherwise reasonably be expected to have a Material Adverse Effect. Except as
such of the reprogramming referred to in the preceding sentence as may be
necessary, the computer and management information systems of the Company and
the Subsidiaries are and, with ordinary course upgrading and maintenance, will
continue for the term of this Agreement to be, sufficient to permit the Company
and the Subsidiaries to conduct their business without the reasonable likelihood
of a Material Adverse Effect as a result thereof.
10A. AFFIRMATIVE COVENANTS.
For so long as any of the Notes are outstanding, HIL covenants as set forth
below:
10A.1 Compliance with Law.
HIL will use its best efforts to, and will cause each of its subsidiaries to use
their respective best efforts to, comply with all laws, ordinances or
governmental rules or regulations to which each of them is subject, including,
without limitation, Environmental Laws, and will use their respective best
efforts to obtain and maintain in effect all licenses, certificates, permits,
franchises and other governmental authorizations necessary to the ownership of
their respective properties or to the conduct of their respective businesses, in
each case to the extent necessary to ensure that non-compliance with such laws,
ordinances or governmental rules or regulations or failure to obtain or maintain
in effect such licenses, certificates, permits, franchises and other
governmental authorizations would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
10A.2 Insurance.
NIL will use its best efforts to, and will cause each of its subsidiaries to use
their respective best efforts to, maintain, with financially sound and reputable
insurers, insurance with respect to their respective properties and businesses
against such casualties and contingencies, of such types, on such terms and in
such amounts (including deductibles) as is customary in the case of entities of
established reputations engaged in the same or a similar business and similarly
situated.
10A.3 Maintenance of Properties.
HIL will use its best efforts to, and will cause each of its subsidiaries to use
their respective best efforts to, maintain and keep, or cause to be maintained
and kept, their respective properties in good repair, working order and
-condition (other than ordinary wear and tear), so that the business carried on
in connection therewith may be properly conducted at all times.
10A.4 Payment of Taxes and Claims.
HIL will use its best efforts to, and will cause each of Its subsidiaries to use
their respective best efforts to, file all tax returns required to be filed in
any jurisdiction and to pay and discharge all taxes shown to be due and payable
on such returns and all other taxes, assessments, governmental charges, or
levies imposed on them or any of their properties, assets, income or franchises,
to the extent such taxes and assessments have become due and payable and before
they have become delinquent and all claims for which sums have become due and
payable that have or might become a lien on properties or assets of NIL or any
of Its subsidiaries, provided that neither HIL nor such subsidiary need pay any
such tax or assessment or claims if (a) the amount, applicability or validity
thereof is contested by HIL or such subsidiary on a timely basis in good faith
and in appropriate proceedings, and NIL or such subsidiary has established
adequate reserves therefor in accordance with GMP on the books of HIL or such
subsidiary or (b) the nonpayment of all such taxes and assessments and claims in
the aggregate would not reasonably be expected to have a Material Adverse
Effect.
11. NEGATIVE COVENANTS.
For so long as any of the Notes are outstanding, each Obligor covenants as set
forth below:
11.1 Transactions With Affiliates.
The Company will not and will not permit any Restricted Subsidiary to enter into
directly or indirectly any Material transaction or Material group of related
transactions (including, without limitation, the purchase, lease, sale or
exchange of properties of any kind or the rendering of any service) with any
Affiliate (other than the Company or a Restricted Subsidiary), except in the
ordinary course and pursuant to the reasonable requirements of the Company's or
such Restricted Subsidiary's business and upon fair and reasonable terms no less
favorable to the Company or such Restricted Subsidiary than would be obtainable
in a comparable arm's-length transaction with a Person not an Affiliate and
except that the Company may make loans and provide equity capital to HIL from
time to time pursuant to the reasonable requirements of HIL's and the Company's
businesses and upon such terms as the Board of Directors have determined, in
good faith, are appropriate and in the best interests of HIL and the Company.
11.2 Merger, Consolidation, etc.
(a) The Company will not and will not permit any of its Restricted
Subsidiaries to consolidate, amalgamate or merge with or into any other
Person or convey, transfer or lease all or substantially all of its assets
in a single transaction or series of transactions to any Person (except
that (x) any Restricted Subsidiary may consolidate or merge with or into,
or convey, transfer or lease all or substantially all of its assets in a
single transaction or series of transaction to, the Company or any
Wholly-Owned Restricted Subsidiary and (y) any Restricted Subsidiary may
convey, transfer or lease all or substantially all of its assets if
permitted pursuant to Section 11.9(a)(iv) or (v)), provided that the
foregoing restrictions do not apply to the consolidation or merger of the
Company with or into, or the conveyance, transfer or lease of all or
substantially all of the assets of the Company in a single transaction or
series of transactions to, any person so long as:
(i) The successor formed by such consolidation or the survivor or such
merger or the Person that acquires by conveyance, transfer or lease
all or substantially all of the assets of the Company as an entirety,
as the case may be (as used in this Section 11.2(a), the "Successor
Company"), shall be a solvent corporation organized and existing under
the laws of the United States of America or any State thereof
(including, without limitation, the District of Columbia);
(ii) if the Company is not the successor Company, such Successor
Company shall have executed and delivered to each holder of any Noes
its assumption of the due and punctual performance and observance of
each covenant and condition of this Agreement, the Other Agreement,
the Notes and the other Financing Documents to which the Company is
subject and shall have caused to be delivered to each holder of any
Notes an opinion of independent counsel reasonably satisfactory to the
Required Holders to the effect that all agreements or instruments
effecting such assumption are enforceable in accordance with their
terms and comply with the terms hereof and that all actions, filings
and registrations have been undertaken and effected in order to
continue the perfection and priority of the Liens and security
interests of the Collateral Agent on behalf of the holders of Notes in
and to the Collateral and the Pledged Stock Collateral;
(iii) each Guarantor shall have confirmed to each holder of Notes, in
writing, its Guarantee and its other obligations hereunder, under the
Other Agreement and under the other Financing Documents to which it is
a party and shall have caused to be delivered to each holder of any
Notes an opinion of nationally recognized independent counsel, or
other independent counsel reasonably satisfactory to the Required
Holders, to the effect that such confirmation is effective, such
Guarantee continues in full force and effect and that all actions,
filings and registrations have been undertaken and effected in order
to continue the perfection and priority of the Liens and security
interests granted by such Guarantor, if any, to the Collateral Agent
on behalf of the holders of Notes in and to the Collateral and the
Pledged Stock Collateral;
(iv) immediately after giving effect to such transaction, no Default
or Event of Default would exist; and
(v) immediately after giving effect to such transaction, the
investment grade rating of the Notes shall have been confirmed by any
nationally recognized credit rating agency or the Securities Valuation
Office of the National Association of Insurance Commissioners.
(b) Except as expressly provided in Section 10.7(b), no such conveyance,
transfer or lease of all or substantially all of the assets of any
Guarantor under this Section 11.2 shall have the effect of releasing such
Guarantor from its liability under this Agreement, the Other Agreement, the
Notes and the other Financing Documents to which it is a party.
11.3 Consolidated Tangible Net Worth.
The Company will not at any time permit Consolidated Tangible Net Worth,
determined as of the end of the fiscal quarter of the Company then most recently
ended, to be less than the sum of
(a) $34,000,000, plus
(b) the sum of the Fiscal Year Net Worth Increase Amounts for all fiscal
years of the Company the last day of which occurred during the period
beginning January 1, 1998 and ending at such time.
As used in Section 11.3, "Fiscal Year Net Worth Increase Amount" means, for any
fiscal year of the Company, the greater of
(i) 50% of Consolidated Net Income for such fiscal year and
(ii) $0.
11.4 Average Current Ratio.
The Company will not at any time permit the Average Current Ratio, determined at
such time, to be less than 1.75 to 1.0.
11.5 Fixed Charge Coverage.
The Company will not at any time permit the ratio of
(a) Consolidated Income Available for Fixed Charges for the period of 4
consecutive fiscal quarters of the Company then most recently ended to
(b) Consolidated Fixed Charges for such period to be less than 2.5 to 1.0.
11.6 Funded Debt to Capitalization.
The Company will not at any time permit the ratio of
(a) Consolidated Funded Debt at such time to
(b) Consolidated Total Capitalization at such time to exceed .45 to 1.0.
11.7 Current Debt.
The Company will not and will not permit any Restricted Subsidiary to have
outstanding or in any other manner be liable in respect of any Current Debt of
the type described in clause (a) of the definition of "Debt" (excluding, in any
case, from such Debt the Current Maturities of Funded Debt) unless during the
period of 12 consecutive calendar months then most recently ended there shall
have been a period of at least 45 consecutive days during which no Consolidated
Current Debt of the type described in clause (a) of the definition of "Debt"
(excluding, in any case, from such Debt the Current Maturities of Funded Debt)
shall have been outstanding on each day of such period.
11.8 Restricted Subsidiary Debt.
The Company will not permit any Restricted Subsidiary to have outstanding or in
any other manner be liable in respect of any Debt other than Permitted
Restricted Subsidiary Debt.
11.9 Sale of Assets, etc.
(a) Subject to the penultimate paragraph of this clause (a), the Company
will not and will not permit any of its Restricted Subsidiaries to make any
Transfer, provided that the foregoing restriction does not apply to a
Transfer if:
(i) the property that is the subject of such Transfer constitutes (A)
inventory, (B) equipment, fixtures, supplies or materials no longer
required in the operation of the business of the Company and the
Restricted Subsidiaries or that is obsolete or (C) checks, drafts,
money orders or other instruments with respect to accounts receivable
that are to be collected in the ordinary course of business, and, in
each case, such Transfer is in the ordinary course of business;
(ii) such Transfer is (A) from a Restricted Subsidiary to the Company
or a Wholly-Owned Restricted Subsidiary or (B) from the Company to a
Wholly-Owned Restricted Subsidiary;
(iii) such Transfer is subject to Section 11.2 and satisfies the
requirements thereof; or
(iv) such Transfer is not a Transfer described in clause (i) through
clause (iii) above, and all of the following conditions shall have
been satisfied with respect to such Transfer (each such Transfer is
referred to as a "Basket Transfer"):
(A) in the good faith opinion of the Board of Directors of the
Company, the Transfer is in exchange for consideration with a
Fair Market Value at least equal to the greater of book value or
the Fair Market Value of the property exchanged, is in the best
interests of the Company and the Restricted Subsidiaries, and is
not detrimental to the interests of the holders of Notes,
(B) immediately after giving effect to such transaction no
Default or Event of Default would exist, and
(C) immediately after giving effect to such Transfer,
(I) the book value of all property that was the subject of
any Basket Transfer occurring during the period beginning
with the date that is 12 calendar months preceding the first
day of the month in which such Basket Transfer occurred and
ending on the date of such Basket Transfer does not exceed
10% of Consolidated Tangible Net Assets determined as of the
end of the then most recently fiscal year of the Company
ended prior to such period, and
(II) the Operating Income Contribution Percentage of all
property that was the subject of any Basket Transfer
occurring during the period beginning with the date that is
12 calendar months preceding the first day of the month in
which such Basket Transfer occurred and ending on the date
of such Basket Transfer does not exceed 10%.
For purposes of determining the book value of any property that is the subject
of a Transfer, such book value shall be the book value of such property, as
determined in accordance with GAAP, at the time of the consummation of such
Transfer, provided that, in the case of a Transfer of any capital stock or other
equity interests of a Subsidiary, as provided in Section 11.9(b), the book value
thereof shall be deemed to be an amount equal to
(X) the difference (determined after eliminating all intercompany
transactions, assets and liabilities in accordance with GAAP) of
(1) the book value of the total assets of such Subsidiary less
(2) the liabilities of such Subsidiary times
(Y) a percentage that is equal to the percentage of total equity interests
of such Subsidiary attributable to the capital stock or other equity
interest being so Transferred.
(b) Transfers of Restricted Subsidiary Stock. The Company will not and
will not permit any Restricted Subsidiary to Transfer any shares of
the stock (or any warrants, rights or options to purchase stock or
other securities exchangeable for or convertible into stock) of a
Restricted Subsidiary (such stock, warrants, rights, options and other
securities herein called "Restricted Subsidiary Stock"), nor will any
Restricted Subsidiary issue, sell or otherwise dispose of any shares
of its own Restricted Subsidiary Stock, provided that the foregoing
restrictions do not apply to:
(i) the issuance by a Restricted Subsidiary of shares of its own
Restricted Subsidiary Stock to the Company or a Wholly-Owned
Restricted Subsidiary;
(ii) Transfers by the Company or a Restricted Subsidiary of
shares of Restricted Subsidiary Stock to the Company or to a
Wholly-Owned Restricted Subsidiary;
(iii) the issuance by a Restricted Subsidiary of directors'
qualifying shares or the issuance of Glamourette of its Exempt
Preferred Stock to its officers, directors and employees; and
(iv) the Transfer of all of the Restricted Subsidiary Stock of a
Restricted Subsidiary owned by the Company and the other
Restricted Subsidiaries if:
(A) such Transfer satisfies the requirements of Section
11.9(a)(iv) hereof;
(B) in connection with such Transfer the entire Investment
(whether represented by stock, Debt, claims or otherwise but
excluding any reserves or escrows for customary purposes
established in connection with such Transfer) of the Company
and the other Restricted Subsidiaries in such Restricted
Subsidiary is Transferred to a Person other than the Company
or a Restricted Subsidiary not being simultaneously disposed
of;
(C) the Restricted Subsidiary being disposed of has no
continuing Investment in any other Restricted Subsidiary not
being simultaneously disposed of or in the Company; and
(D) immediately after the consummation of such Transfer, and
after giving effect thereto, no Default or Event of Default
would exist.
11.10 Restricted Payments and Restricted Investments.
(a) The Company will not, and will not permit any Restricted Subsidiary to,
declare or make any Restricted Payment or make any Restricted Investment
unless:
(i) immediately after, and after giving effect to, such Restricted
Payment or such Restricted Investment, the aggregate amount of (y) all
Restricted Payments declared or made after December 31, 1997 and (z)
all Restricted Investments at such time would not exceed the sum of
(A) Eight Million Dollars ($8,000,000), plus
(B) 50% (or 100% in the case of a deficit) of Full Consolidated
Net Income for the period commencing on and including January 1,
1998 and ending on and including the date such Restricted Payment
is declared or made or such Restricted Investment is made, plus
(C) the aggregate amount of net cash proceeds received by the
Company from the sale of capital stock of the Company after
December 31,1997; and
(ii) at the time of such declaration and immediately before,
and after giving effect to, such Restricted Payment or such
Restricted Investment, no Default or Event of Default exists
or would exist.
(b) Notwithstanding the limitations set forth in clause (a) hereof, the
Company may make one or more Investments in any one or more Unrestricted
Subsidiaries after December 31, 1997, in an aggregate amount in respect of
all Unrestricted Subsidiaries not in excess of $10,000,000, so long as
immediately before, and after giving effect to, such Investment, no Default
or Event of Default exists or would exist. For the avoidance of doubt, any
such Investment in any Unrestricted Subsidiary permitted by this clause (b)
shall constitute a "Restricted Investment" for purposes of this Agreement
and the Other Agreement and the amount of which shall be included in
determining compliance with clause (a) upon the declaration or making of
any Restricted Payment or the making of any other Restricted Investment
(other than an Investment in any Unrestricted Subsidiary permitted by this
clause (b)).
(c) Notwithstanding the limitations set forth in clause (a) above,
Glamourette may pay cash dividends on its Exempt Preferred Stock
outstanding from time to time and may redeem, retire, purchase or otherwise
acquire shares of its Exempt Preferred Stock from time to time. For the
avoidance of doubt, such payments and transactions relating to Exempt
Preferred Stock shall not constitute "Restricted Payments" for purposes of
this Agreement and the amounts thereof shall not be included in determining
compliance with clause (a) above for any purpose. The permissions granted
under this clause (c) are subject to the limitation that no more than 1,000
shares of Exempt Preferred Stock shall be issued and outstanding at any one
time, the issuance of Exempt Preferred Stock is solely to employees,
managers or directors of Glamourette, the maximum annual cash dividend
payable in respect of such Exempt Preferred Stock is $62 per share and the
redemption, retirement, purchase or other acquisition of Exempt Preferred
Stock by Glamourette is in connection with the resignation or termination
of employment, death or retirement of any such employee, manager or
director and is at a price which is fair and reasonable in the reasonable
opinion of the Company.
11.11 Liens.
(a) Negative Pledge. Subject to Section 11.11(d) hereof as to the
Collateral and the Pledged Stock Collateral, the Company will not, and will
not permit any Restricted Subsidiary to, cause or permit to exist, or agree
or consent to cause or permit to exist in the future (upon the happening of
a contingency or otherwise), on any of their property, whether now owned or
hereafter acquired, any Lien except:
(i) (A) Liens for taxes, assessments or other governmental charges the
payment of which is not at the time required by Section 10.4, and
(B) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen, inventory suppliers and
other similar Liens, in each case, incurred in the ordinary
course of business for sums not yet due or the payment of which
is not at the time required by Section 10.4;
(ii) Liens (A) arising from judicial attachments and judgments, (B)
securing appeal bonds or supersedeas bonds, and (C) arising in
connection with court proceedings (including, without limitation,
surety bonds and letters of credit or any other instrument serving a
similar purpose), provided that (1) the execution or other enforcement
of such Liens is effectively stayed, (2) the claims secured thereby
are being actively contested in good faith and by appropriate
proceedings, (3) adequate book reserves shall have been established
and maintained and shall exist with respect thereto, in accordance
with GAAP, and (4) the aggregate amount so secured shall not at any
time exceed $500,000
(iii) Liens incurred or deposits made in the ordinary course of
business (i) in connection with workers' compensation, unemployment
insurance and other types of social security or retirement benefits or
to obtain letters of credit in connection therewith, or (ii) to secure
(or to obtain letters of credit that secure) the performance of
tenders, statutory obligations, surety bonds, appeal bonds, bids,
leases (other than Capital Leases), performance bonds, purchase,
construction or sales contracts, leases and other similar obligations,
in each case not incurred or made in connection with the borrowing of
money, the obtaining of advances or credit or the payment of the
deferred purchase price of property, and which Liens do not, in the
aggregate, materially impair the use of the property subject thereto
in the operation of the business of the Company and the Restricted
Subsidiaries or the value of such property for the purposes of such
business;
(iv) leases or subleases granted to others, easements, rights-of-way,
restrictions, zoning restrictions, governmental restrictions in
respect of any property or property right or franchise of the Company
or any Restricted Subsidiary and other similar charges or
encumbrances, in each case incidental to, and not interfering with,
the ordinary conduct of the business of the Company or any Restricted
Subsidiary, taken as a whole, provided that such charges and
encumbrances do not, in the aggregate, materially detract from the
value of such property;
(v) Liens created to secure all or any part of the purchase price, or
to secure Debt incurred or assumed to pay all or any part of the
purchase price or cost of construction, of property (or any
improvement thereon) acquired or constructed by the Company or any
Restricted Subsidiary, provided that all of the following conditions
are satisfied:
(A) any such Lien shall extend solely to the item or items of
such property (or improvements thereon) or proceeds thereof so
acquired or constructed and, if required by the terms of the
instrument originally creating such Lien, other property (or
improvements thereon) which is an improvement to or is acquired
for specific use in connection with such acquired or constructed
property (or improvements thereon) or which is real property
being improved by such acquired or constructed property (or
improvements thereon),
(B) the principal amount of the Debt secured by any such Lien
shall at no time exceed an amount equal to the cost to the
Company or such Restricted Subsidiary of the properties (or
improvements thereon) so acquired or constructed,
(C) after giving effect to the incurrence or assumption of such
Debt secured by such Lien, no Default or Event of Default shall
exist, and
(D) any such Lien shall be created contemporaneously with, or
within 365 days after, the acquisition or construction of such
property;
(vi) Liens existing on property of a Person immediately prior to its
being consolidated with or merged into the Company or any Restricted
Subsidiary or its becoming a Restricted Subsidiary, or any Lien
existing on any property acquired by the Company or any Restricted
Subsidiary at the time such property is so acquired (whether or not
the Debt secured thereby shall have been assumed), provided that
(A) no such Lien shall have been created or assumed as part of
such consolidation or merger or such Person's becoming a
Restricted Subsidiary or such acquisition of property,
(B) each such Lien shall extend solely to the item or items of
property so acquired and proceeds thereof and, if required by the
terms of the instrument originally creating such Lien, other
property which is an improvement to or is acquired for specific
use in connection with such acquired property,
(C) after giving effect to such consolidation, merger or
acquisition, no Default or Event of Default shall exist, and
(D) the principal amount of the Debt secured by any such Lien
shall at no time exceed an amount equal to the lesser of book
value or Fair Market Value (as determined in good faith by the
Board of Directors of the Company) of such property (or
improvements thereon) at the time of such consolidation, merger,
becoming a Subsidiary or acquisition;
(vii) Liens securing obligations under the Credit Agreement and
related agreements (provided that the Notes are secured ratably by the
related collateral securing such obligations as contemplated by the
Intercreditor Agreement), Liens securing Permitted Restricted
Subsidiary Debt described in clause (d) of the definition thereof and
Liens securing Permitted Restricted Subsidiary Debt described in
clause (e) of the definition thereof to the extent, but only to the
extent, that such Liens encumber inventory and secure unpaid letter of
credit reimbursement obligations referred to in such clause;
(viii) Liens in existence on the Closing Date securing other Debt of
the Company and the Restricted Subsidiaries, provided that such Liens
are described on Schedule 11.11;
(ix) Liens on property or assets of the Company or any Restricted
Subsidiary securing Debt of the Company owing to any Wholly-Owned
Restricted Subsidiary or securing Debt of any Restricted Subsidiary
owing to the Company or any other Wholly-Owned Restricted Subsidiary;
(x) Liens renewing, extending or replacing Liens permitted by clauses
(v), (vi), (vii) or (viii), provided that all of the following
conditions are satisfied:
(A) no such new Lien shall extend to any property of the Company
and the Restricted Subsidiaries other than property already
encumbered by an existing Lien being so renewed, extended or
replaced, and
(B) the principal amount of the underlying obligation secured by
such existing Lien outstanding at the time of such renewal,
extension or replacement shall not be increased in connection
with such renewal, extension or replacement and the average life
thereof shall not be reduced;
(xi) Liens (other than Liens permitted under clause (i) through clause
(x) above) securing any Debt of the Company, which Debt, as of the
date of the creation of such Lien, together with the aggregate
principal amount of Debt outstanding at such time secured by Liens
permitted by clause (v), clause (vi), clause (vii), clause (viii) and
clause (x) of this Section 11.11, does not exceed the applicable
percentage of Consolidated Tangible Net Worth determined with respect
to such time as set forth in the table immediately below: the
Applicable Percentage of Consolidated Tangible Net If such time is:
Worth is: On or prior to December 31, 1999 20% After December 31, 1999
and on or prior to December 31, 2000 19% After December 31, 2000 and
on or prior to December 31, 2001 18% After December 31, 2001 and on or
prior to December 31, 2002 17% After December 31, 2002 and on or prior
to December 31, 2003 16% After December 31, 2003 15%and provided that
immediately after giving effect to the incurrence or assumption of
such Debt no Default or Event of Default shall exist.
(b) Equal and Ratable Lien; Equitable Lien. In case any property shall be
subjected to a Lien in violation of this Section 11.11, the Company will
forthwith make or cause to be made, to the fullest extent permitted by
applicable law, provision whereby the Notes and the Guarantee, as the case
may be, will be secured equally and ratably with all other obligations
secured thereby pursuant to such agreements and instruments as shall be
approved by the Required Holders, and the Company will cause to be
delivered to each holder of a Note an opinion, satisfactory in form and
substance to the Required Holders, of independent counsel to the effect
that such agreements and instruments are enforceable in accordance with
their terms, and in any such case the Notes shall have the benefit, to the
fullest extent that, and with such priority as, the holders of Notes may be
entitled thereto under applicable law, of an equitable Lien on such
property securing the Notes. A violation of this Section 11.11 will
constitute an Event of Default, whether or not any such provision is made
pursuant to this Section 11.11(b).
(c) Financing Statements. The Company will not, and will not permit any
Restricted Subsidiary to, sign or file a financing statement under the
Uniform Commercial Code of any jurisdiction that names the Company or such
Restricted Subsidiary as debtor, or sign any security agreement authorizing
any secured party thereunder to file any such financing statement, except,
in any such case, a financing statement filed or to be filed to perfect or
protect a security interest that the Company or such Restricted Subsidiary
is entitled to create, assume or incur, or permit to exist, under the
foregoing provisions of this Section 11.11 or to evidence for informational
purposes a lessor's interest in property leased to the Company or any such
Restricted Subsidiary or to evidence any Transfer of an asset for which
such filing is appropriate.
(d) Collateral Anything contained to the contrary in this Section 11.11
notwithstanding, the Company will not, and will not permit any Restricted
Subsidiary to, directly or indirectly create, incur, assume or permit to
exist (upon the happening of a contingency or otherwise) any Lien on or
with respect to any property that at such time constitutes Collateral or
Pledged Stock Collateral, whether now owned or held or hereafter acquired,
or any income or profits therefrom or assign or otherwise convey any right
to receive such income or profits, provided that the foregoing restriction
and limitation shall not apply to:
(i) Liens created with respect to the Collateral and/or the Pledged
Stock Collateral pursuant to the Financing Documents;
(ii) Liens securing obligations under the Credit Agreement and related
agreements; and
(iii) Liens that would be permitted to exist under Section 11 .11
(a)(i) or Section 11.11 (a)(ii) hereof
11.12 Line of Business.
The Company will not and will not permit any Restricted Subsidiary to engage in
any business if, as a result, the general nature of the business in which the
Company and the Restricted Subsidiaries, taken as a whole, would then be engaged
would be substantially changed from the general nature of the business in which
the Company and the Restricted Subsidiaries, taken as a whole, are engaged on
the date of the Closing.
12. EVENTS OF DEFAULT.
An "Event of Default" shall exist if any of the following conditions or events
shall occur and be continuing:
(a) the Company defaults in the payment of any principal or Make-Whole
Amount, if any, on any Note when the same becomes due and payable, whether
at maturity or at a date fixed for prepayment or by declaration or
otherwise; of
(b) the Company defaults in the payment of any interest on any Note for
more than 5 days after the same becomes due and payable; or
(c) any Obligor defaults in the performance of or compliance with any term
contained in any of Section 11.2 through Section 11.11, inclusive, or
Section 7.1(d); or
(d) any Obligor defaults in the performance of or compliance with any term
contained herein, in the Other Agreement or in any other Financing Document
(other than those referred to in paragraphs (a), (b), (c) or (k) of this
Section 12) and such default is not remedied within 30 days after the
earlier of (i) a Responsible Officer obtaining actual knowledge of such
default and (ii) the Company receiving written notice of such default from
any holder of a Note (any such written notice to be identified as a "notice
of default" and to refer specifically to this paragraph (d) of Section 12),
unless such default is capable of being cured but shall have not been cured
(notwithstanding diligent efforts with respect thereto) within such period,
in which case such period shall be extended for an additional 60 days, upon
receipt by the Required Holders of a written request from the Company in
respect thereof, provided that all cure efforts in respect thereof have
been and are being diligently pursued; failure to cure any such default by
the end of such extended period shall, in any case, be an Event of Default
under this clause (d); or
(e) (i) any representation or warranty made in writing by or on behalf of
any Obligor or by any officer of any Obligor in this Agreement, the Other
Agreement, in any other Financing Document or in any writing furnished in
connection with the transactions contemplated hereby or thereby (including,
without limitation, in any instrument delivered pursuant to Section 10.7)
proves to have been false or incorrect in any material respect on the date
as of which made or (ii) any representation or warranty made in writing by
or on behalf of HIL or by any officer of HIL in this Agreement or the Other
Agreement or in any writing furnished in connection with the transactions
contemplated hereby or thereby proves to have been false or incorrect in
any material respect on the date as of which made; or
(f) (i) any Obligor is in default (as principal or as guarantor or other
surety) in the payment of any principal of or premium or make-whole amount
or interest on any Debt (other than Debt under this Agreement, the Other
Agreement and the Notes) beyond any period of grace provided with respect
thereto, that individually or together with such other Debt as to which any
such failure exists has an aggregate outstanding principal amount of at
least $500,000, or (ii) any Obligor is in default in the performance of or
compliance with any term of any evidence of any Debt (other than
indebtedness under this Agreement, the Other Agreement and the Notes), that
individually or together with such other Debt as to which any such failure
exists has an aggregate outstanding principal amount of at least $500,000,
or of compliance with any mortgage, indenture or other agreement relating
thereto or any other condition exists, and as a consequence of such default
or condition such Debt has become, or has been declared (or one or more
Persons are entitled to declare such Debt to be), due and payable before
its stated maturity or before its regularly scheduled dates of payment; or
(g) any Obligor (i) is generally not paying, or admits in writing its
inability to pay, its debts as they become due, (ii) files, or consents by
answer or otherwise to the filing against it of, a petition for relief or
reorganization or arrangement or any other petition in bankruptcy, for
liquidation or to take advantage of any bankruptcy, insolvency,
reorganization, moratorium or other similar law of any jurisdiction, (iii)
makes an assignment for the benefit of its creditors, (iv) consents to the
appointment of a custodian, receiver, trustee or other officer with similar
powers with respect to it or with respect to any substantial part of its
property, (v) is adjudicated as insolvent or to be liquidated, or (vi)
takes corporate action for the purpose of any of the foregoing; or
(h) a court or governmental authority of competent jurisdiction enters an
order appointing, without consent by any Obligor, a custodian, receiver,
trustee or other officer with similar powers with respect to such Obligor
or with respect to any substantial part of the property of such Obligor, or
constituting an order for relief or approving a petition for relief or
reorganization or any other petition in bankruptcy or for liquidation or to
take advantage of any bankruptcy or insolvency law of any jurisdiction, or
ordering the dissolution, winding-up or liquidation of such Obligor, or any
such petition shall be filed against such Obligor and such petition shall
not be dismissed within 60 days; or
(i) a final judgment or judgments for the payment of money aggregating in
excess of $500,000 are rendered against any one or more of the Obligors and
which judgments are not, within 30 days after entry thereof, bonded,
discharged or stayed pending appeal, or are not discharged within 30 days
after the expiration of such stay; or
(j) if (i) any Plan shall fail to satisfy the minimum funding standards of
ERISA or section 412 of the Code for any plan year or part thereof or a
waiver of such standards or extension of any amortization period is sought
or granted under section 412 of the Code,
(ii) a notice of intent to terminate any Plan shall have been or is
reasonably expected to be filed with the PBGC or the PBGC shall have
instituted proceedings under section 4042 of ERISA to terminate or
appoint a trustee to administer any Plan or the PBGC shall have
notified the Company or any ERISA Affiliate that a Plan may become a
subject of any such proceedings,
(iii) the aggregate "amount of unfunded benefit liabilities" (within
the meaning of section 4001 (a)(1 8) of ERISA) under all Plans subject
to Title IV of ERISA, determined in accordance with Title IV of ERISA,
shall exceed $1,000,000,
(iv) the Company or any ERISA Affiliate shall have incurred or is
reasonably expected to incur any liability in the nature of a penalty,
excise tax or fine pursuant to Title I of ERISA, any liability under
Title IV of ERISA or any liability under section 4971 through section
4980E of the Code,
(v) the Company or any ERISA Affiliate withdraws from any
Multiemployer Plan, or
(vi) the Company or any Restricted Subsidiary establishes or amends
any employee welfare benefit plan that provides post-employment
welfare benefits in a manner that, on and after the date of Closing,
would in the aggregate increase the liability of the Company or such
Restricted Subsidiary thereunder by more than $500,000; and any such
event or events described in clauses (i) through (vi) above, either
individually or together with any other such event or events, could
reasonably be expected to have a Material Adverse Effect; as used in
this Section 12(j), the terms "employee benefit plan" and "employee
welfare benefit plan" shall have the respective meanings assigned to
such terms in section 3 of ERISA; or
(k) the Guarantee in respect of any Guarantor or any provision thereof
shall cease to be in full force or effect except as otherwise provided
herein, or any Guarantor or any Person acting by or on behalf of such
Guarantor shall deny or disaffirm such Guarantor's obligations under such
Guarantee, or any Guarantor shall default in the due performance or
observance of any term, covenant or agreement on its part to be performed
pursuant to Section 23; or
(l) any Financing Document creating or granting a security interest or Lien
in and to the Collateral and/or the Pledged Stock Collateral in favor of
the Collateral Agent shall cease to be in full force and effect, except as
otherwise permitted or provided for under the terms of the Financing
Documents, or the Company shall deny or disaffirm the validity of any such
security interest or Lien; or
(m) The Chase Manhattan Bank or any other agent under the Credit Agreement
shall commence any enforcement proceedings or actions in respect of the
Collateral and/or the Pledged Stock Collateral except to the extent
permitted under the lntercreditor Agreement.
13. REMEDIES ON DEFAULT, ETC.
13.1 Acceleration.
(a) If an Event of Default with respect to the Company described in
paragraph (g) or paragraph (h) of Section 12 (other than an Event of
Default described in clause (i) of paragraph (g) or described in clause
(vi) of paragraph (g) by virtue of the fact that such clause encompasses
clause (i) of paragraph (g)) has occurred, all the Notes then outstanding
shall automatically become immediately due and payable.
(b) If any other Event of Default has occurred and is continuing, any
holder or holders of 33 and 1/3% or more in principal amount of the Notes
at the time outstanding may at any time at its or their option, by notice
or notices to the Company, declare all the Notes then outstanding to be
immediately due and payable.
(c) If any Event of Default described in paragraph (a) or (b) of Section 12
has occurred and is continuing, any holder or holders of Notes at the time
outstanding affected by such Event of Default may at any time, at its or
their option, by notice or notices to the Company, declare all the Notes
held by it or them to be immediately due and payable.
Upon any Notes becoming due and payable under this Section 13.1, whether
automatically or by declaration, such Notes will forthwith mature and the entire
unpaid principal amount of such Notes, plus (x) all accrued and unpaid interest
thereon and (y) the Make-Whole Amount determined in respect of such principal
amount (to the full extent permitted by applicable law), shall all be
immediately due and payable, in each and every case without presentment, demand,
protest or further notice, all of which are hereby waived. The Company
acknowledges, and the parties hereto agree, that each holder of a Note has the
right to maintain its investment in such Note free from repayment by the Company
(except as herein specifically provided for) and that the provision for payment
of a Make-Whole Amount by the Company in the event that such Note is prepaid or
is accelerated as a result of an Event of Default, is intended to provide
compensation for the deprivation of such right under such circumstances.
13.2 Other Remedies.
If any Default or Event of Default has occurred and is continuing, and
irrespective of whether any Notes have become or have been declared immediately
due and payable under Section 13.1, the holder of any Note at the time
outstanding may proceed to protect and enforce the rights of such holder by an
action at law, suit in equity or other appropriate proceeding, whether for the
specific performance of any agreement contained herein or in any Note, or for an
injunction against a violation of any of the terms hereof or thereof, or in aid
of the exercise of any power granted hereby or thereby or by law or otherwise.
The holders of Notes shall have all of the rights and remedies in favor of, or
for the benefit of, such holders under the Security Agreements, the Pledge
Agreements and the other Financing Documents in respect of the Collateral and/or
the Pledged Stock Collateral, it being expressly understood that no such right
or remedy is intended to be exclusive of any other right or remedy; but each and
every right and remedy shall be cumulative and shall be in addition to every
other right and remedy given herein, in any other Financing Document or now or
hereafter existing at law or in equity or by statute or otherwise, and may be
exercised, or caused to be exercised, from time to time as is provided in the
Security Agreements, the Pledge Agreements and such other Financing Documents.
13.3 Rescission.
At any time after any Notes have been declared due and payable pursuant to
clause (b) or clause (c) of Section 13.1, the holders of 66 and 2/3% or more in
principal amount of the Notes then outstanding, by written notice to the
Company, may rescind and annul any such declaration and its consequences if (a)
the Company has paid all overdue interest on the Notes, all principal due and
payable on any Notes other than by reason of such declaration, and all interest
on such overdue principal, if any, and any Make-Whole Amount that is due and
payable in respect of the Notes other than by reason of such declaration and any
interest thereon and (to the extent permitted by applicable law) any overdue
interest in respect of the Notes, at the applicable Default Rate, (b) all Events
of Default and Defaults, other than non-payment of amounts that have become due
solely by reason of such declaration, have been cured or have been waived
pursuant to Section 18, and (c) no judgment or decree has been entered for the
payment of any monies due pursuant hereto or to the Notes. No rescission and
annulment under this Section 13.3 will extend to or affect any subsequent Event
of Default or Default or impair any right consequent thereon.
13.4 No Waivers or Election of Remedies, Expenses, etc.
No course of dealing and no delay on the part of any holder of any Note in
exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice such holder's rights, powers or remedies. No right, power or
remedy conferred by this Agreement or by any Note upon any holder thereof shall
be exclusive of any other right, power or remedy referred to herein or therein
or now or hereafter available at law, in equity, by statute or otherwise.
Without limiting the obligations of the Company under Section 16, the Company
will pay to the holder of each Note on demand such further amount as shall be
sufficient to cover all costs and expenses of such holder incurred in any
enforcement or collection under this Section 13, including, without limitation,
reasonable attorneys' fees, expenses and disbursements.
14. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
14.1 Registration of Notes.
The Company shall keep at its principal executive office a register for the
registration and registration of transfers of Notes. The name and address of
each holder of one or more Notes, each transfer thereof and the name and address
of each transferee of one or more Notes shall be registered in such register.
Prior to due presentment for registration of transfer, the Person in whose name
any Note shall be registered shall be deemed and treated as the owner and holder
thereof for all purposes hereof, and the Company shall not be affected by any
notice or knowledge to the contrary. The Company shall give to any holder of a
Note that is an Institutional Investor promptly upon request therefor, a
complete and correct copy of the names and addresses of all registered holders
of Notes.
14.2 Transfer and Exchange of Notes.
Upon surrender of any Note at the principal executive office of the Company for
registration of transfer or exchange (and in the case of a surrender for
registration of transfer, duly endorsed or accompanied by a written instrument
of transfer duly executed by the registered holder of such Note or his attorney
duly authorized in writing and accompanied by the address for notices of each
transferee of such Note or part thereof), the Company shall execute and deliver,
at the Company's expense (except as provided below), one or more new Notes (as
requested by the holder thereof) in exchange therefor, in an aggregate principal
amount equal to the unpaid principal amount of the surrendered Note. Each such
new Note shall be payable to such Person as such holder may request and shall be
substantially in the form of Exhibit 1. Each such new Note shall be dated and
bear interest from the date to which interest shall have been paid on the
surrendered Note or dated the date of the surrendered Note if no interest shall
have been paid thereon. The Company may require payment of a sum sufficient to
cover any stamp tax or governmental charge imposed in respect of any such
transfer of Notes. Notes shall not be transferred in denominations of less than
$500,000, provided that if necessary to enable the registration of transfer by a
holder of its entire holding of Notes, one Note may be in a denomination of less
than $500,000. Any transferee, by its acceptance of a Note registered in its
name (or the name of its nominee), shall be deemed to have made the
representation set forth in Section 6.2.
14.3 Replacement of Notes.
Upon receipt by the Company of evidence reasonably satisfactory to it of the
ownership of and the loss, theft, destruction or mutilation of any Note (which
evidence shall be, in the case of an Institutional Investor, notice from such
Institutional Investor of such ownership and such loss, theft, destruction or
mutilation), and
(a) in the case of loss, theft or destruction, of indemnity reasonably
satisfactory to it (provided that if the holder of such Note is, or is a
nominee for, you or the Other Purchaser or another holder of a Note with a
minimum net worth of at least $100,000,000, such Person's own unsecured
agreement of indemnity shall be deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation thereof, the
Company at its own expense shall execute and deliver, in lieu thereof, a
new Note, dated and bearing interest from the date to which interest shall
have been paid on such lost, stolen, destroyed or mutilated Note or dated
the date of such lost, stolen, destroyed or mutilated Note if no interest
shall have been paid thereon.
15. PAYMENTS ON NOTES.
15.1 Place of Payment.
Subject to Section 15.2, payments of principal, Make-Whole Amount, if any, and
interest becoming due and payable on the Notes shall be made in Anderson, South
Carolina at the principal office of the Company in such jurisdiction. The
Company may at any time, by notice to each holder of a Note, change the place of
payment of the Notes so long as such place of payment shall be either a
principal office of the Company in the United States of America or a principal
office of a bank or trust company in the United States of America.
15.2 Home Office Payment.
So long as you or your nominee shall be the holder of any Note, and
notwithstanding anything contained in Section 15.1 or in such Note to the
contrary, the Company will pay all sums becoming due on such Note for principal,
Make-Whole Amount, if any, and interest by the method and at the address
specified for such purpose below your name in Schedule A, or by such other
method or at such other address as you shall have from time to time specified to
the Company in writing for such purpose, without the presentation or surrender
of such Note or the making of any notation thereon, except that upon written
request of the Company made concurrently with or reasonably promptly after
payment or prepayment in full of any Note, you shall surrender such Note for
cancellation, reasonably promptly after any such request, to the Company at its
principal executive office or at the place of payment most recently designated
by the Company pursuant to Section 15.1. Prior to any sale or other disposition
of any Note held by you or your nominee you will, at your election, either
endorse thereon the amount of principal paid thereon and the last date to which
interest has been paid thereon or surrender such Note to the Company in exchange
for a new Note or Notes pursuant to Section 14.2. The Company will afford the
benefits of this Section 15.2 to any Institutional Investor that is the direct
or indirect transferee of any Note purchased by you under this Agreement and
that has made the same agreement relating to such Note as you have made in this
Section 15.2.
16. EXPENSES, ETC.
16.1 Transaction Expenses.
Whether or not the transactions contemplated hereby are consummated, the
Obligors will pay all costs and expenses (including reasonable attorneys' fees
of a special counsel and, if reasonably required, local or other counsel and the
$1,500 registration fee payable to the Securities Valuation Office of the
National Association of Insurance Commissioners in connection with the
registration of this transaction with such Office) incurred by you and the Other
Purchaser or any holder of a Note in connection with such transactions and in
connection with any amendments, waivers or consents under or in respect of this
Agreement or the Notes (whether or not such amendment, waiver or consent becomes
effective), including, without limitation: (a) the costs and expenses incurred
in enforcing or defending (or determining whether or how to enforce or defend)
any rights under this Agreement or the Notes or in responding to any subpoena or
other legal process or informal investigative demand issued in connection with
this Agreement or the Notes, or by reason of being a holder of any Note, and (b)
the costs and expenses, including financial advisors' fees, incurred in
connection with the insolvency or bankruptcy of the Company or any Subsidiary or
in connection with any work-out or restructuring of the transactions
contemplated hereby and by the Notes. The Obligors will pay, and will save you
and each other holder of a Note harmless from, all claims in respect of any
fees, costs or expenses if any, of brokers and finders (other than those
retained by you).
16.2 Survival.
The obligations of the Obligors under this Section 16 will survive the payment
or transfer of any Note, the enforcement, amendment or waiver of any provision
of this Agreement or any other Financing Document and the termination of this
Agreement or any other Financing Document.
17. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein shall survive the execution
and delivery of this Agreement and the Notes, the purchase or transfer by you of
any Note or portion thereof or interest therein and the payment of any Note, and
may be relied upon by any subsequent holder of a Note, regardless of any
investigation made at any time by or on behalf of you or any other holder of a
Note. All statements contained in any certificate or other instrument delivered
by or on behalf of the Obligors or HIL pursuant to this Agreement shall be
deemed representations and warranties of the Obligors or HIL, as the case may
be, under this Agreement. Subject to the preceding sentence, this Agreement and
the Notes embody the entire agreement and understanding between you and the
Obligors and HIL and supersede all prior agreements and understandings relating
to the subject matter hereof.
18. AMENDMENT AND WAIVER.
18.1 Requirements.
This Agreement, the Notes and the other Financing Documents may be amended, and
the observance of any term hereof or of the Notes may be waived (either
retroactively or prospectively), with (and only with) the written consent of the
Company and the Required Holders, except that
(a) no amendment or waiver of any of the provisions of any of Sections 1,
2, 3, 4, 5, 6,15.2 and 22, or any defined term (as it is used therein),
will be effective as to you unless consented to by you in writing, and
(b) no amendment or waiver may, without the written consent of the holder
of each Note at the time outstanding affected thereby, (i) subject to the
provisions of Section 13 relating to acceleration or rescission, change the
amount or time of any prepayment or payment of principal of, or reduce the
rate or change the time of payment or method of computation of interest or
of the Make-Whole Amount on, the Notes, (ii) change the percentage of the
principal amount of the Notes the holders of which are required to consent
to any such amendment or waiver hereunder or under any of the Financing
Documents, (iii) release any of the Collateral and/or the Pledged Stock
Collateral except as expressly provided for in the Security Agreements, the
Pledge Agreements or lntercreditor Agreement, (iv) change the Collateral
Agent or (v) amend any of Sections 8,12,13,18, 21 and 23.
18.2 Solicitation of Holders of Notes.
(a) Solicitation. The Company will provide each holder of the Notes
(irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is
required, to enable such holder to make an informed and considered decision
with respect to any proposed amendment, waiver or consent in respect of any
of the provisions hereof or of the Notes. The Company will deliver executed
or true and correct copies of each amendment, waiver or consent effected
pursuant to the provisions of this Section 18 to each holder of outstanding
Notes promptly following the date on which it is executed and delivered by,
or receives the consent or approval of, the requisite holders of Notes.
(b) Payment. The Company will not directly or indirectly pay or cause to be
paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, or grant any security, to any holder of Notes
as consideration for or as an inducement to the entering into by any holder
of Notes of any waiver or amendment of any of the terms and provisions
hereof unless such remuneration is concurrently paid, or security is
concurrently granted, on the same terms, ratably to each holder of Notes
then outstanding even if such holder did not consent to such waiver or
amendment.
18.3 Binding Effect, etc.
Any amendment or waiver consented to as provided in this Section 18 applies
equally to all holders of Notes and is binding upon them and upon each future
holder of any Note and upon the Obligors and HIL without regard to whether such
Note has been marked to indicate such amendment or waiver. No such amendment or
waiver will extend to or affect any obligation, covenant, agreement, Default or
Event of Default not expressly amended or waived or impair any right consequent
thereon. No course of dealing between the Company and the holder of any Note nor
any delay in exercising any rights hereunder or under any Note shall operate as
a waiver of any rights of any holder of such Note. As used herein, the term
"this Agreement" and references thereto shall mean this Agreement as it may from
time to time be amended or supplemented.
18.4 Notes held by Obligor, etc.
Solely for the purpose of determining whether the holders of the requisite
percentage of the aggregate principal amount of Notes then outstanding approved
or consented to any amendment, waiver or consent to be given under this
Agreement or the Notes, or have directed the taking of any action provided
herein or in the Notes to be taken upon the direction of the holders of a
specified percentage of the aggregate principal amount of Notes then
outstanding, Notes directly or indirectly owned by any Obligor, HIL or any of
their Affiliates shall be deemed not to be outstanding. Without limiting the
foregoing and in addition thereto, if any Affiliate shall purchase, redeem,
prepay or otherwise acquire, directly or indirectly, any outstanding Notes, such
Notes shall not be counted as outstanding in connection with any determination
of any percentage of holders of Notes hereunder or under the Other Agreement
necessary to approve any action to be taken hereunder or under any other
Financing Document (including, without limitation, the determination of Required
Holders) and any such Affiliate shall have no right to vote such Notes in
connection with any such action, provided that, in connection with any proposal
to reduce the principal amount of such Notes, change the date or amount of any
scheduled principal payment of such Notes, change the final maturity date of
such Notes, reduce the rate of interest of such Notes or change the dates or
reduce the amounts of scheduled interest payments in respect of such Notes, the
written consent of all holders of Notes shall be required.
19. NOTICES.
All notices and communications provided for hereunder shall be in writing and
sent (a) by telecopy if the sender on the same day sends a confirming copy of
such notice by a recognized overnight delivery service (charges prepaid), or (b)
by registered or certified mail with return receipt requested (postage prepaid),
or (c) by a recognized overnight delivery service (with charges prepaid). Any
such notice must be sent:
(i) if to you or your nominee, to you or it at the address specified for
such communications in Schedule A, or at such other address as you or it
shall have specified to the Company in writing,
(ii) if to any other holder of any Note, to such holder at such address as
such other holder shall have specified to the Company in writing,
(iii) if to the Company, to the Company at its address set forth at the
beginning hereof to the attention of the Chief Financial Officer,
telecopier: 000-000-0000 or at such other address as the Company shall have
specified to the holder of each Note in writing, or
(iv) if to any Guarantor, to such Guarantor in care of the Company at its
address set forth at the beginning hereof to the attention of the Chief
Financial Officer, telecopier: 000-000-0000, or at such other address as
such Guarantor shall have specified to the holder of each Note in writing.
Notices under this Section 19 will be deemed given only when actually received.
20. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by you at the Closing (except the Notes
themselves), and (c) financial statements, certificates and other information
previously or hereafter furnished to you, may be reproduced by you by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and you may destroy any original document so reproduced. The
Obligors and HIL agree and stipulate that, to the extent permitted by applicable
law, any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding (whether or not the original
is in existence and whether or not such reproduction was made by you in the
regular course of business) and any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence. This
Section 20 shall not prohibit the Obligors, HIL or any other holder of Notes
from contesting any such reproduction to the same extent that it could contest
the original, or from introducing evidence to demonstrate the inaccuracy of any
such reproduction.
21. CONFIDENTIAL INFORMATION.
For the purposes of this Section 21, "Confidential Information" means
information delivered to you by or on behalf of any Obligor and any Subsidiary
of any Obligor in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary in nature and that was clearly
marked or labeled or otherwise adequately identified when received by you as
being confidential information of the Obligors and their Subsidiaries, provided
that such term does not include information that
(a) was publicly known or otherwise known to you prior to the time of such
disclosure,
(b) subsequently becomes publicly known through no act or omission by you
or any Person acting on your behalf,
(c) otherwise becomes known to you other than through disclosure by any
Obligor or any Subsidiary of an Obligor, or
(d) constitutes financial statements delivered to you under Section 7.1
that are otherwise publicly available.
You will maintain the confidentiality of such Confidential Information in
accordance with procedures adopted by you in good faith to protect confidential
information of third parties delivered to you, provided that you may deliver or
disclose Confidential Information to:
(i) your directors, officers, trustees, employees, agents, attorneys,
auditors and affiliates (to the extent such disclosure reasonably
relates to the administration of the investment represented by your
Notes),
(ii) your financial advisors and other professional advisors who agree
to hold confidential the Confidential Information substantially in
accordance with the terms of this Section 21,
(iii) any other holder of any Note,
(iv) any Institutional Investor to which you sell or offer to sell
such Note or any part thereof or any participation therein (if such
Person has agreed in writing prior to its receipt of such Confidential
Information to be bound by the provisions of this Section 21),
(v) any Person from which you offer to purchase any security of the
Company (if such Person has agreed in writing prior to its receipt of
such Confidential Information to be bound by the provisions of this
Section 21),
(vi) any federal or state regulatory authority having jurisdiction
over you,
(vii) the National Association of Insurance Commissioners or any
similar organization, or any nationally recognized rating agency that
requires access to information about your investment portfolio or
(viii) any other Person to which such delivery or disclosure may be
necessary or appropriate
(A) to effect compliance with any law, rule, regulation or order
applicable to you,
(B) in response to any subpoena or other legal process,
(C) in connection with any litigation to which you are a party,
or
(D) if an Event of Default has occurred and is continuing, to the
extent you may reasonably determine such delivery and disclosure
to be necessary or appropriate in the enforcement or for the
protection of the rights and remedies under your Notes and this
Agreement.
Each holder of a Note, by its acceptance of a Note, will be deemed to have
agreed to be bound by and to be entitled to the benefits of this Section 21 as
though it were a party to this Agreement. On reasonable request by any Obligor
in connection with the delivery to any holder of a Note of information required
to be delivered to such holder under this Agreement or requested by such holder
(other than a holder that is a party to this Agreement or its nominee), such
holder will enter into an agreement with the Obligors embodying the provisions
of this Section 21.
22. SUBSTITUTION OF PURCHASER.
You shall have the right to substitute any one of your Affiliates as the
purchaser of the Notes that you have agreed to purchase hereunder, by written
notice to the Company, which notice shall be signed by both you and such
Affiliate, shall contain such Affiliate's agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in Section 6. Upon receipt
of such notice, wherever the word "you" is used in this Agreement (other than in
this Section 22), such word shall be deemed to refer to such Affiliate in lieu
of you. In the event that such Affiliate is so substituted as a purchaser
hereunder and such Affiliate thereafter transfers to you all of the Notes then
held by such Affiliate, upon receipt by the Company of notice of such transfer,
wherever the word "you" is used in this Agreement (other than in this Section
22), such word shall no longer be deemed to refer to such Affiliate, but shall
refer to you, and you shall have all the rights of an original holder of the
Notes under this Agreement.
23. GUARANTEE.
23.1 Guaranteed Obligations.
Each of the Guarantors hereby irrevocably, unconditionally, absolutely, jointly
and severally guarantees to each holder of Notes, as and for each such
Guarantor's own debt, until final and indefeasible payment of the Guaranteed
Obligations (as defined below) has been made:
(a) the due and punctual payment by the Company of the principal of, and
interest (including default interest and post-petition interest), and the
Make-Whole Amount (if any) on, the Notes at any time outstanding and the
due and punctual payment of all other amounts payable, and all other
indebtedness owing, by the Company to the holders of the Notes under this
Agreement, the Other Agreement, the Notes and the other Financing Documents
(all such obligations so guarantied are herein collectively referred to as
the "Guaranteed Obligations"), in each case when and as the same shall
become due and payable, whether at maturity, pursuant to mandatory or
optional prepayment, by acceleration or otherwise, all in accordance with
the terms and provisions hereof and thereof; it being the intent of each of
the Guarantors that the guarantee set forth in this Section 23 (the
"Guarantee") shall be a guarantee of payment and not a guarantee of
collection; and
(b) the punctual and faithful performance, keeping, observance, and
fulfillment by the Company of all duties, agreements, covenants and
obligations of the Company contained in this Agreement, the Other
Agreement, the Notes and the other Financing Documents, including, without
limitation, each undertaking by the Company herein or therein to cause a
Subsidiary to perform or discharge a particular undertaking or covenant.
23.2 Performance under this Agreement and the Other Agreement.
In the event the Company fails to make, on or before the due date thereof, any
payment of the Guaranteed Obligations, or if the Company shall fail to perform,
keep, observe, or fulfill any other obligation referred to in clause (a) or
clause (b) of Section 23.1 in the manner provided in this Agreement or the other
Financing Documents, after in each case giving effect to any applicable grace
periods or cure provisions or waivers or amendments, the Guarantors shall cause
forthwith to be paid the moneys, or to be performed, kept, observed, or
fulfilled each of such obligations, in respect of which such failure has
occurred in accordance with the terms and provisions of this Agreement and the
other Financing Documents.
23.3 Waivers.
To the fullest extent permitted by law, each Guarantor does hereby waive:
(a) notice of acceptance of the Guarantee;
(b) notice of any purchase of the Notes under this Agreement or the Other
Agreement, or the creation, existence or acquisition of any of the
Guaranteed Obligations, subject to such Guarantor's right to make inquiry
of each holder of Notes to ascertain the amount of the Guaranteed
Obligations at any reasonable time;
(c) notice of the amount of the Guaranteed Obligations, subject to such
Guarantor's right to make inquiry of each holder of Notes to ascertain the
amount of the Guaranteed Obligations at any reasonable time
(d) notice of adverse change in the financial condition of the Company, any
other Guarantor or any Subsidiary or any other fact that might increase or
expand such Guarantor's risk hereunder;
(e) notice of presentment for payment, demand, protest, and notice thereof
as to the Notes or any other instrument;
(f) notice of any Default or Event of Default (except if such notice or
demand is specifically otherwise required to be given to such Guarantor
pursuant to the terms of this Agreement or any other Financing Document);
(g) all other notices and demands to which such Guarantor might otherwise
be entitled (except if such notice or demand is specifically otherwise
required to be given to such Guarantor pursuant to the terms of this
Agreement or any other Financing Document);
(h) the defense of the "single action" rule or any similar right or
protection, and the right by statute or otherwise to require any holder of
Notes to institute suit against the Company or any other Guarantor or to
exhaust its rights and remedies against the Company or any other Guarantor,
such Guarantor being bound to the payment of each and all Guaranteed
Obligations, whether now existing or hereafter accruing, as fully as if
such Guaranteed Obligations were directly owing to the holders of Notes by
such Guarantor;
(i) any defense of the Company under this Agreement or the other Financing
Documents other than the full and timely performance thereof;
(j) any defense relating to the validity or enforceability (or absence or
failure thereof) of any term of this Agreement or any other Financing
Document;
(k) any defense arising by reason of any disability or other defense (other
than the defense that the Guaranteed Obligations shall have been fully and
finally performed and indefeasible paid) of the Company or by reason of the
cessation from any cause whatsoever of the liability of the Company in
respect thereof, and any other defense that such Guarantor may otherwise
have against the Company or any holder of Notes;
(l) any stay (except in connection with a pending appeal), valuation,
appraisal, redemption or extension law now or at any time hereafter in
force which, but for this waiver, might be applicable to any sale of
property of such Guarantor made under any judgment, order or decree based
on this Agreement, and such Guarantor covenants that it will not at any
time insist upon or plead, or in any manner claim or take the benefit or
advantage of such law; and
(m) any other defense which a Guarantor may have to the full and complete
performance of its obligations hereunder.
23.4 Certain Waivers of Subrogation, Reimbursement and Indemnity.
Until all of the Guaranteed Obligations shall have been fully and finally paid,
no Guarantor shall have any right of subrogation, reimbursement or indemnity
whatsoever and no right of recourse to or with respect to any assets or property
of the Company. Nothing shall discharge or satisfy the liability of any of the
Guarantors hereunder except the full and final performance and indefeasible
payment of the Guaranteed Obligations.
23.5 Releases.
Each of the Guarantors consents and agrees that, without notice to or by such
Guarantor and without, to the fullest extent permitted by applicable law,
impairing, releasing, abating, deferring, suspending, reducing, terminating or
otherwise affecting the obligations of such Guarantor hereunder, each holder of
Notes, in the manner provided herein, by action or inaction, may:
(a) compromise or settle, renew or extend the period of duration or the
time for the payment, or discharge the performance of, or may refuse to, or
otherwise not, enforce, or may, by action or inaction, release all or any
one or more parties to, any one or more of this Agreement or the other
Financing Documents;
(b) assign, sell or transfer, or otherwise dispose of, any one or more of
the Notes;
(c) grant waivers, extensions, consents and other indulgences to the
Company or any other Guarantor in respect of any one or more of this
Agreement or the other Financing Documents;
(d) amend, modify or supplement in any manner and at any time (or from time
to time) any one or more of this Agreement or the other Financing
Documents;
(e) release or substitute any one or more of the endorsers or guarantors of
the Guaranteed Obligations whether parties hereto or not;
(f) sell, exchange, release or surrender any property at any time pledged
or granted as security in respect of the Guaranteed Obligations (including,
without limitation, the Collateral and/or Pledged Stock Collateral),
whether so pledged or granted by the Company, such Guarantor or another
guarantor of the Company's obligations under this Agreement or the other
Financing Documents;
(g) exchange, enforce, waive, or release, by action or inaction, any
security for the Guaranteed Obligations or any other guarantee of any of
the Notes; and
(h) any other act or event which could have the effect of releasing a
Guarantor from the full and complete performance of its obligations
hereunder.
23.6 Marshaling.
Each Guarantor consents and agrees, to the fullest extent permitted by
applicable law, that:
(a) each holder of Notes shall be under no obligation to marshal any assets
in favor of such Guarantor or against or in payment of any or all of the
Guaranteed Obligations; and
(b) to the extent the Company or another Guarantor makes a payment or
payments to any holder of Notes, which payment or payments or any part
thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside, or required, for any of the foregoing reasons or
for any other reason, to be repaid or paid over to a custodian, trustee,
receiver, or any other party under any bankruptcy law, common law, or
equitable cause, then to the extent of such payment or repayment, the
obligation or part thereof intended to be satisfied thereby shall be
revived and continued in full force and effect as if said payment or
payments had not been made and such Guarantor shall be primarily liable for
such obligation.
23.7 Liability.
Each Guarantor agrees that the liability of such Guarantor in respect of this
Section 23 shall be immediate and shall not be contingent upon the exercise or
enforcement by any holder of Notes of whatever remedies such holder may have
against the Company or any other Guarantor or the enforcement of any Lien or
realization upon any security such holder may at any time possess (including any
realization in respect of the Collateral and/or Pledged Stock Collateral).
23.8 Character of Obligation.
The Guarantee set forth in this Section 23 is a primary and original obligation
of each Guarantor and is an absolute, unconditional, continuing and irrevocable
guarantee of payment and performance (and not of collectibility) and shall
remain in full force and effect until the full, final and indefeasible payment
of the Guaranteed Obligations without respect to future changes in conditions.
The obligations of the Guarantors under this Section 23 are joint and several.
The obligations of each Guarantor under this Guarantee and the rights of the
holders of Notes to enforce such obligations by any proceedings, whether by
action at law, suit in equity or otherwise, shall not be subject to any
reduction, limitation, impairment or termination, whether by reason of any claim
of any character whatsoever or otherwise, including, without limitation, claims
of waiver, release, surrender, alteration or compromise, and shall not be
subject to any defense (other than the defense that the Guaranteed Obligations
shall have been fully and finally performed and indefeasible paid), set-off,
counterclaim, recoupment or termination whatsoever.
Without limiting the generality of the foregoing and to the fullest extent
permitted by applicable law, the obligations of each Guarantor hereunder shall
not be discharged or impaired or otherwise affected by:
(a) any default, failure or delay, willful or otherwise, in the performance
by the Company of any obligations of any kind or character whatsoever of
the Company (including, without limitation, the obligations and
undertakings of the Company hereunder or under any other Financing
Document);
(b) any creditors' rights, bankruptcy, receivership or other insolvency
proceeding of the Company or any other Person or in respect of the property
of the Company or any other Person or any merger, consolidation,
reorganization, dissolution, liquidation or winding up of the Company or
any other Person;
(c) impossibility or illegality of performance on the part of the Company
of its obligations hereunder or under any other Financing Document;
(d) the validity or enforceability of this Agreement or any other Financing
Document;
(e) in respect of the Company or any other Person, any change of
circumstances, whether or not foreseen or foreseeable, whether or not
imputable to the Company or any other Person, or other impossibility of
performance through fire, explosion, accident, labor disturbance, floods,
droughts, embargoes, wars (whether or not declared), civil commotion, acts
of God or the public enemy, delays or failure of suppliers or carriers,
inability to obtain materials, action of any federal or state regulatory
body or agency, change of law or any other causes affecting performance, or
any other force majeure, whether or not beyond the control of the Company
or any other Person and whether or not of the kind hereinbefore specified;
(f) any attachment, claim, demand, charge, lien, order, process,
encumbrance or any other happening or event or reason, similar or
dissimilar to the foregoing, or any withholding or diminution at the
source, by reason of any taxes, assessments, expenses, indebtedness,
obligations or liabilities of any character, foreseen or unforeseen, and
whether or not valid, incurred by or against any Person, or any claims,
demands, charges or Liens of any nature, foreseen or unforeseen, incurred
by any Person, or against any sums payable hereunder or under any other
Financing Document, so that such sums would be rendered inadequate or would
be unavailable to make the payments herein provided;
(g) any order, judgment, decree, law, ruling or regulation (whether or not
valid) of any court of any nation or of any political subdivision thereof
or any body, agency, department, official or administrative or regulatory
agency of any thereof or any other action, happening, event or reason
whatsoever which shall delay, interfere with, hinder or prevent, or in any
way adversely affect, the performance by any party of its respective
obligations under any instruments; or
(h) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, any Guarantor in respect of the
obligations of such Guarantor under this Guarantee.
23.9 Election to Perform Obligations.
Any election by any Guarantor to pay or otherwise perform any of the obligations
of the Company under this Agreement or the other Financing Documents, whether
pursuant to this Section 23 or otherwise, shall not release the Company or any
other Guarantor from such obligations or any of such Person's other obligations
under this Agreement and the other Financing Documents.
23.10 No Election.
Each holder of Notes shall have the right to seek recourse against each of the
Guarantors to the fullest extent provided for in this Section 23 and elsewhere
as provided in this Agreement and the other Financing Documents, and against the
Company, to the full extent provided for in this Agreement and the other
Financing Documents. No election to proceed in one form of action or proceeding,
or against any party, or on any obligation, shall constitute a waiver of the
right of such holder of Notes to proceed in any other form of action or
proceeding or against other parties unless such holder of Notes has expressly
waived such right in writing. Specifically, but without limiting the generality
of the foregoing, no action or proceeding by any holder of Notes against the
Company or any Guarantor under any document or instrument evidencing obligations
of the Company or such Guarantor to such holder of Notes shall serve to diminish
the liability of any Guarantor under this Agreement (including, without
limitation, this Section 23) except to the extent that such holder of Notes
finally and unconditionally shall have realized payment by such action or
proceeding, notwithstanding the effect of any such action or proceeding upon
such Guarantor's right of subrogation against the Company.
23.11 Severability.
Subject to Section 13 hereof, each of the rights and remedies granted under this
Section 23 to the holder of Notes in respect of the Notes held by such holder
may be exercised by such holder without notice by such holder to, or the consent
of or any other action by, any other holder of Notes.
23.12 Other Enforcement Rights.
Each holder of Notes may proceed to protect and enforce the Guarantee under this
Section 23 by suit or suits or proceedings in equity, at law or in bankruptcy,
and whether for the specific performance of any covenant or agreement contained
in this Section 23 or in execution or aid of any power herein granted or for the
recovery of judgment for or in respect of the Guaranteed Obligations or for the
enforcement of any other proper, legal or equitable remedy available under
applicable law.
23.13 Delay or Omission; No Waiver.
No course of dealing on the part of any holder of Notes and no delay or failure
on the part of such holder to exercise any right under this Agreement (including
this Section 23) or the other Financing Documents shall impair such right or
operate as a waiver of such right or otherwise prejudice such holder's rights,
powers and remedies hereunder. Every right and remedy given in or by this
Section 23 or by law to any holder of Notes may be exercised from time to time
as often as may be deemed expedient by such Person.
23.14 Restoration of Rights and Remedies.
If any holder of Notes shall have instituted any proceeding to enforce any right
or remedy in this Section 23, under this Agreement or any other Financing
Document and such proceeding shall have been discontinued or abandoned for any
reason, or shall have been determined adversely to such holder, then and in
every such case each such holder, the Company and each of the Guarantors shall,
except as may be limited or affected by any determination in such proceeding, be
restored severally and respectively to its respective former positions hereunder
and thereunder, and thereafter the rights and remedies of such holder shall
continue as though no such proceeding had been instituted.
23.15 Cumulative Remedies.
No remedy under this Agreement (including, without limitation, this Section 23)
or the other Financing Documents is intended to be exclusive of any other
remedy, but each and every remedy shall be cumulative and in addition to any and
every other remedy given pursuant to this Agreement (including, without
limitation, this Section 23) and the other Financing Documents.
23.16 Survival.
So long as the Guaranteed Obligations shall not have been fully and finally
performed and indefeasibly paid, the obligations of each Guarantor under this
Section 23 shall survive the transfer and payment of any Note and the payment in
full of all the Notes.
23.17 Miscellaneous.
If an Event of Default exists, then the holders of Notes (as provided in Section
13) shall have the right to declare all of the Guaranteed Obligations to be, and
such Guaranteed Obligations shall thereupon become, forthwith due and payable,
without any presentment, demand, protest or other notice of any kind, all of
which have been expressly waived by the Company and the Guarantors, and
notwithstanding any stay, injunction or other prohibition preventing such
declaration (or such Guaranteed Obligations from becoming automatically due and
payable) as against the Company. In any such event, the holders of Notes shall
have immediate recourse to each of the Guarantors to the fullest extent set
forth herein.
Notwithstanding any other provision of this Section 23, the Guaranteed
Obligations of each Guarantor under this Section 23 shall be limited to the
extent, if any, required so that its obligations under this Section 23 shall not
be subject to avoidance under Section 548 of the Bankruptcy Code or to being set
aside or annulled under any applicable state law relating to fraud on creditors.
In determining the limitations, if any, on the amount of any Guarantor's
obligations under this Section 23 pursuant to the preceding sentence, any rights
of subrogation or contribution which such Guarantor may have under this Section
23 or applicable law shall be taken into account.
Notwithstanding any provision in this Agreement or the Other Agreement to the
contrary, each Obligor agrees that any indebtedness of an Obligor owing to the
Company or another Obligor shall be subordinated in right of payment to the
Guaranteed Obligations of such Guarantor under this Section 23 owing to the
holders of Notes.
24. MISCELLANEOUS.
24.1 Successors and Assigns.
All covenants and other agreements contained in this Agreement by or on behalf
of any of the parties hereto bind and inure to the benefit of their respective
successors and assigns (including, without limitation, any subsequent holder of
a Note) whether so expressed or not.
24.2 Payments Due on Non-Business Days.
Anything in this Agreement or the Notes to the contrary notwithstanding, any
payment of principal of or Make-Whole Amount or interest on any Note that is due
on a date other than a Business Day shall be made on the next succeeding
Business Day without including the additional days elapsed in the computation of
the interest payable on such next succeeding Business Day.
24.3 Severability.
Any provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.
24.4 Construction.
(a) Each covenant contained herein shall be construed (absent express
provision to the contrary) as being independent of each other covenant
contained herein, so that compliance with any one covenant shall not
(absent such an express contrary provision) be deemed to excuse compliance
with any other covenant. Where any provision herein refers to action to be
taken by any Person, or which such Person is prohibited from taking, such
provision shall be applicable whether such action is taken directly or
indirectly by such Person.
(b) This Agreement and the wording contained herein have been arrived at by
mutual negotiation of the parties hereto, and no provision hereof shall be
interpreted or construed against one party in favor of the other party by
reason of draftsmanship.
24.5 Counterparts.
This Agreement may be executed in any number of counterparts, each of which
shall be an original but all of which together shall constitute one instrument.
Each counterpart may consist of a number of copies hereof, each signed by less
than all, but together signed by all, of the parties hereto.
24.6 Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE
RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF NEW YORK
EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE
THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.
25. COLLATERAL AGENT
25.1 Appointment.
(a) Appointment. You hereby join the Other Purchaser in appointing Phoenix
Home Life Mutual Insurance Company as the Collateral Agent (the "Collateral
Agent") under each of the Security Agreements and the Pledge Agreements.
The Collateral Agent, by executing and delivering a copy of the Note
Purchase Agreement accepts such appointment. Upon 30 days prior written
notice to the holders of Notes, the Collateral Agent may resign from its
position and responsibilities hereunder and under the Security Agreements
and Pledge Agreements. Upon any such notice of resignation, the Required
Holders shall appoint a successor Collateral Agent or an institutional
trustee under Section 25.4. If a successor collateral Agent or
institutional trustee under Section 25.4 shall not have been appointed
within said 30 day period, the resigning collateral Agent's resignation
shall be postponed until the Required Holders shall have appointed a
successor Collateral Agent or institutional trustee under Section 25.4. the
resigning Collateral Agent shall, upon receipt of written instructions from
the Required Holders, promptly deliver all collateral and Pledged Stock
Collateral then in its possession to such successor Collateral Agent or
such institutional trustee and shall execute and deliver any and all such
further instruments and documents and take such further actions as may be
reasonably required by the Required Holders to effect such transfer and
shall thereafter be discharged from all of its obligations hereunder and
under the other Financing Documents. The collateral Agent shall not be
obligated to take any action hereunder, under the Security Agreements,
under the Pledge Agreements, under the Intercreditor Agreement or under the
other Financing Documents unless directed in writing by the Required
Holders and the Collateral Agent may require that a satisfactory indemnity
bond be furnished for the reimbursement o fall expenses which it incurs and
to protect it against all liability by reason of any action so taken,
except liability which is adjudicated to have resulted from its gross
negligence or willful misconduct. The Collateral Agent shall not be
obligated to follow any such written instructions or to take any such
action to the extent that such instructions or actions are, in the good
faith judgment of the Collateral Agent, in conflict with any provision of
law, this Agreement or the other Financing Documents. The Collateral Agent
may execute any of the rights or powers and perform any duty hereunder
either directly or through agents or attorney-in-fact. The collateral Agent
shall not be responsible for the negligence or misconduct of any Agent or
attorney-in-fact selected by it without gross negligence or willful
misconduct. The Collateral Agent shall have no duties or responsibilities
except those expressly set forth in the Financial Documents to which it is
a party. The duties of the Collateral Agent shall be mechanical and
administrative in nature and the Collateral Agent shall not have, by reason
of this Agreement or any other Financing Agreement to which it is a party,
a fiduciary relationship in respect of any holder of Notes. The Collateral
Agent shall not be responsible to any holder of Notes for the execution,
effectiveness, genuineness, validity, enforceability, collectibility or
sufficiency of this Agreement, any other Financing document or any document
or instrument related hereto (individually, a "Related Document" and,
collectively, the "Related Documents"). Neither the Collateral Agent nor
any of its officers, directors, employees, agents, investigators,
consultants, attorneys-in-fact or affiliates shall be liable to any holder
of Notes for any action taken or omitted hereunder or under any Related
Document or in connection herewith or hereunder unless, but only to the
extent, caused by its or their gross negligence or willful misconduct. If
the Collateral Agent shall reject instructions from the holders of Notes
with respect to any act or action (including the failure to take an action)
in connection with this Agreement or any Related Document, the Collateral
Agent shall be entitled to refrain from such act or taking such action
unless and until the Collateral Agent shall have received instructions from
the Required Holders and the other conditions set forth in this paragraph
in respect thereof have been satisfied. Without limiting the generality of
the foregoing, the Collateral Agent:
(a) may consult with legal counsel, independent public accountants,
appraisers, and other experts and shall not be liable for any action
taken or omitted to be taken in good faith in accordance with the
advice of such counsel, accountants, appraisers, or experts and
(b) shall incur no liability under or in respect of this Agreement
(i) by acting or relying upon any recital, statement,
communication, certificate, representation or warranty of any
Obligor, HIL or any holder of Notes made in connection herewith
or with any Related Document,
(ii) by relying upon any written information supplied by any
predecessor Collateral Agent, or
(iii) by acting or relying upon any notice, instruction, consent,
certificate or other instrument, writing or communication (which
may be by telegram, cable, telex, telecopier or telephone) in
good faith believed by it to be genuine and to have been signed,
sent or made by the proper party or parties.
The agency hereby created shall in no way impair or affect any of the rights and
powers of, or impose any duties or obligations upon, the Collateral Agent, in
its individual capacity as a holder of Notes hereunder, if such Collateral Agent
shall at any time be a holder of Notes hereunder.
25.2 Distribution. All cash proceeds received by the Collateral Agent in respect
of the Collateral and the Pledged Stock Collateral, whether by foreclosure or
otherwise, shall, to the extent payable to the holders of Notes in accordance
with the terms hereof and of the lntercreditor Agreement, be reasonably promptly
distributed to the holders of Notes ratably in accordance with the terms and
provisions of the Security Agreements, the Pledge Agreements and/or
lntercreditor Agreement, as the case may be.
25.3 Indemnification. Each holder of Notes agrees to protect, indemnify and hold
harmless any Collateral Agent from and against all suits, penalties, claims,
demands, judgments, taxes, liabilities, obligations, costs and expenses of any
kind or nature whatsoever (including, without limitation, reasonable counsel
fees and disbursements) which may at any time be imposed on, incurred by, or
asserted against, such Collateral Agent in connection with, or arising out of,
its duties and actions as a Collateral Agent hereunder; provided, however, that
no holders of Notes shall be liable (a) for any of the foregoing arising
directly from such Collateral Agent's gross negligence or willful misconduct or
(b) in excess of its ratable portion of the aggregate amounts owed under this
Section 25.3 to such Collateral Agent (such ratable portion to be determined in
accordance with such holder's share of the total principal amount of the Notes
outstanding at the time of the determination of such holder's obligations under
this Section 25.3). If any indemnity furnished to the Collateral Agent for any
purpose hereunder shall, in the opinion of such Collateral Agent, be
insufficient or become impaired, such Collateral Agent may request additional
indemnity and cease, or not commence, to do the acts indemnified against until
such additional indemnity is furnished. The agreements in this Section 25.3
shall survive the payment of the Notes and all other amounts payable hereunder.
25.4 Trustee. The Required Holders may direct, at any time, the Collateral Agent
to deliver all Collateral and Pledged Stock Collateral then in its possession to
an institutional trustee selected by such Required Holders, and the Collateral
Agent shall, upon receipt of such direction, promptly deliver all of such
Collateral and Pledged Stock Collateral to such institutional trustee and shall
thereafter be discharged from all of its obligations hereunder and under the
other Financing Documents to which it is a party. The Obligors shall execute and
deliver any and all such further instruments and documents and take such further
actions as may be reasonably required to put into effect a trust indenture
whereby the Collateral and Pledged Stock Collateral is to be held in trust by
the aforesaid institutional trustee on behalf of the holders of Notes. All costs
and expenses incurred in connection with the appointment of such institutional
trustee (including, without limitation, the fees of any institutional trustee
and all attorneys' fees and disbursements of such institutional trustee) and all
other annual fees, renewal fees or other similar fees of such institutional
trustee shall be for the account of the Obligors and shall be payable upon
demand. In any such case, all references herein and in the other Financing
Documents to "Collateral Agent" shall be deemed to be a reference to such
institutional trustee.
If you are in agreement with the foregoing, please sign the form of agreement on
the accompanying counterpart of this Agreement and return it to the Company,
whereupon the foregoing shall become a binding agreement between you and the
Obligors and HIL.
Very truly yours,
HAMPSHIRE GROUP, LIMITED
By: /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
HAMPSHIRE DESIGNERS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
HAMPSHIRE INVESTMENTS, LIMITED
By: /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
SEGUE (AMERICA) LIMITED
By: /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
GLAMOURETTE FASHION XXXXX, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
SAN FRANCISCO KNITWORKS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
The foregoing is hereby agreed to as of the date thereof.
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
/s/ Xxxx X. Xxxxx
Title: Vice President
The foregoing is hereby agreed to as of the date thereof.
THE OHIO NATIONAL LIFE INSURANCE COMPANY
/s/ Xxxxxxx X. Xxxxxxxx
Title: Vice President, Fixed Income Securities
SCHEDULE A-1
Purchaser Name PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
Name in Which Note is Registered Phoenix Home Life Mutual Insurance Company
Note Registration Number;
Principal Amount R-1; $10,000,000
Payment on Account of Note
Method Federal Funds Wire Transfer
Account Information Chase Manhattan Bank, N.A
New York, NY
ABA No.: 021 000 021
For the Account of: Income Processing
Account No.: 900 9000 200
For further credit to:
Phoenix Home Life Acct. #G05143
Re: See "Accompanying Information" below
Accompanying Information Name of company: Hampshire Group, Limited
Description of
Security: 7.05% Senior Secured Note due
January 2, 2008
PPN: 408859 A* 7
Due Date and Application (as among
principal, Make-Whole Amount and
interest) of the payment being made:
Address for Notices
Related to Payments Phoenix Home Life Mutual Insurance Company
c/o Phoenix Investment Partners, Ltd.
00 Xxxxxxxx Xxxxxx
X.X. Xxx 000000
Xxxxxxxx, XX 00000-0000
Attention: Private Placements Division
Telecopier Number: (000) 000-0000
Address for all other Notices Phoenix Home Life Mutual Insurance Company
c/o Phoenix Investment Partners, Ltd.
00 Xxxxxxxx Xxxxxx
X.X. Xxx 000000
Xxxxxxxx, XX 00000-0000
Attention: Private Placements Division
Telecopier Number: (000) 000-0000
Other Instructions PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
By
Name:
Title:
Instructions re Delivery of Notes Law Department of Purchaser
Tax Identification Number 00-0000000
SCHEDULE A-2
Purchaser Name THE OHIO NATIONAL LIFE INSURANCE COMPANY
Name in Which Note is Registered The Ohio National Life Insurance Company
Note Registration Number;
Principal Amount R-2; $5,000,000
Payment on Account of Note
Method Federal Funds Wire Transfer
Account Information Star Bank, N.A.
0xx & Xxxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
ABA #: 042-000013
For credit to: The Ohio National Life
Insurance Company
Account No.: 000-000-0
Re:See "Accompanying Information" below
Accompanying Information Name of Company: Hampshire Group, Limited
Description of
Security:7.05% Senior Secured Note due
January 2, 2008
PPN: 408859 A* 7
Due Date and Application (as among
principal, Make-Whole Amount and
interest) of the payment being made:
Address for Notices
Related to Payments The Ohio National Life Insurance Company
Xxxx Xxxxxx Xxx 000
Xxxxxxxxxx, XX 00000
Attn: Investment Department
Telecopier No.: 000-000-0000
Address for all other Notices The Ohio National Life Insurance Company
Xxxx Xxxxxx Xxx 000
Xxxxxxxxxx, XX 00000
Attn: Investment Department
Telecopier No.: 000-000-0000
Other Instructions THE OHIO NATIONAL LIFE INSURANCE COMPANY
By
Name:
Title:
Instructions re Delivery of Note Xx. Xxx Xxxxxx
Ohio National Financial Services
Xxx Xxxxxxxxx Xxx
Xxxxxxxxxx, XX 00000
Tax Identification Number 00-0000000
SCHEDULE B
DEFINED TERMS
As used herein, the following terms have the respective meanings set forth below
or set forth in the Section hereof following such term:
Acceptable Control Persons - means and includes (i) any Kuttner Family Member,
(ii) any trust established by any Kuttner Family Member, at least a majority of
the beneficial interests in which are reserved to one or more Kuttner Family
Members, (iii) any Subsidiary of a Kuttner Family Member, (iv) any charitable
foundation or trust to which a Kuttner Family Member may transfer Voting Stock
of the Company, at least one of the directors or trustees of which is a Kuttner
Family Member, and (v) any banks, trust companies, brokerage firms, nominees,
securities intermediaries and clearing corporations that hold Voting Stock of
the Company for the benefit of any of the foregoing, but only to the extent of
the Voting Stock so held.
Affiliate - means, at any time, and with respect to any Person,
(a) any other Person that at such time directly or indirectly through one
or more intermediaries Controls, or is Controlled by, or is under common
Control with, such first Person, and
(b) any Person beneficially owning or holding, directly or indirectly, 5%
or more of any class of voting or equity interests of the Company or any
Subsidiary or any corporation, company, partnership or other entity of
which the Company and its Subsidiaries beneficially own or hold, in the
aggregate, directly or indirectly, 5% or more of any class of voting or
equity interests.
As used in this definition, "Control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise. Unless the context otherwise clearly requires, any
reference to an "Affiliate" is a reference to an Affiliate of the Company.
Agreement, this - is defined in Section 18.3.
Average Current Ratio -- means, at any time, the quotient that results from (a)
adding to g ether the Current Ratios for each fiscal quarter in respect of the
then most recently ended four consecutive fiscal quarters of the Company (the
Current Ratio for each such fiscal quarter being determined as of the last
Business Day of each such fiscal quarter) and dividing such sum by (b) 4.
Bankruptcy Code -- means the Bankruptcy Reform Act of 1978, as heretofore and
hereafter amended, and codified as 11 U.S.C. Sec. 101 et seq.
Basket Transfer -- is defined in Section 11 .9(a)(iv).
Board of Directors -- means, the board of directors of the Company or any
committee thereof which, in the instance, shall have the lawful power to
exercise the power and authority of such board of directors.
Business Day -- means any day other than a Saturday, Sunday or other day on
which commercial banks in Hartford, Connecticut, New York, New York or Anderson,
South Carolina are authorized or required to close under the laws of the State
of Connecticut or the State of South Carolina (other than a general banking
moratorium or holiday for a period exceeding 4 consecutive days).
Capital Lease -- means, at any time, a lease with respect to which the lessee is
required to recognize the acquisition of an asset and the incurrence of a
liability at such time in accordance with GAAP.
Capital Lease Obligation -- means, with respect to the Company or any Restricted
Subsidiary and a Capital Lease, the amount of the obligation of such Person as
the lessee under such Capital Lease which would, in accordance with GAAP, appear
as a liability on a balance sheet of such Person.
Change in Control -- means any of the following events or circumstances:
(a) any Person or Persons acting in concert or constituting a group (as
such term is used in Rule 1 3d-5 under the Exchange Act) (other than
Acceptable Control Persons), together with Affiliates thereof, shall in the
aggregate, directly or indirectly, control or own (beneficially or
otherwise) more than 49% (by number of shares) of the issued and
outstanding Voting Stock of the Company;
(b) Xxxxxx Xxxxxxx shall cease to hold the position of or perform the
duties of President or Chief Executive Officer of the Company (other than
by reason of death or his physical or mental disability or incapacity as
described in clause (c) below); and
(c) Xxxxxx Xxxxxxx shall cease to hold the position of President or Chief
Executive Officer of the Company by reason of his death or shall fail to
fully perform and discharge his duties as President and Chief Executive
Officer of the Company for any period of not less than six consecutive
months by reason of his physical or mental disability or incapacity.
The disability or incapacity of Xx. Xxxxxxx to fully perform and discharge his
duties as President and Chief Executive Officer of the Company shall be
determined by the Board of Directors in good faith and upon consultation with
one or more medical physicians, provided that Xx. Xxxxxxx'x inability to be
physically present and active in his office at the Company's headquarters for at
least 30 full Business Days of the aforesaid six consecutive month period shall
be deemed to be a determination and confirmation of his disability or incapacity
to fully perform and discharge his duties as President and Chief Executive
Officer for purposes of this definition.
Closing -- is defined in Section 3.
Code -- means the Internal Revenue Code of 1986, as amended from time to time,
and the rules and regulations promulgated thereunder from time to time.
Collateral-- has the collective meaning ascribed to such term in the Security
Agreements.
Collateral Agent-- Section 25.1.
Company -- is defined in the introductory sentence of this Agreement.
Company's Pledge Agreement--Section 4.11.
Company's Security Agreement -- Section 4.11.
Confidential Information -- is defined in Section 21.
Consolidated Current Assets -- means, at any time, the total current assets of
the Company and the Restricted Subsidiaries determined at such time on a
consolidated basis in accordance with GMP.
Consolidated Current Debt -- means, at any time, the aggregate amount of all
Current Debt of the Company and the Restricted Subsidiaries determined on a
consolidated basis in accordance with GAAP.
Consolidated Current Liabilities -- means, at any time, the total current
liabilities of the Company and the Restricted Subsidiaries determined at such
time on a consolidated basis in accordance with GAAP.
Consolidated Debt -- means, at any time, the aggregate amount of all Debt of the
Company and the Restricted Subsidiaries determined on a consolidated basis in
accordance with GAAP.
Consolidated Fixed Charges -- means, for any period, the sum of
(a) Consolidated Interest Expense for such period, plus
(b) the amount payable in respect of such period with respect to Operating
Rentals payable by the Company and the Restricted Subsidiaries determined
on a consolidated basis in accordance with GAAP.
Consolidated Funded Debt -- means, at any time, the aggregate amount of all
Funded Debt of the Company and the Restricted Subsidiaries determined on a
consolidated basis in accordance with GAAP.
Consolidated Interest Expense -- means, for any period, the aggregate amount of
interest accrued or capitalized on, or with respect to, Consolidated Debt for
such period, determined in accordance with GAAP.
Consolidated Income Available for Fixed Charges -- means, for any period, the
sum of
(a) Consolidated Operating Net Income, plus
(b) the aggregate amount of
(i) income taxes and
(ii) Consolidated Fixed Charges,
(to the extent, and only to the extent, that such aggregate amount was
reflected in the computation of Consolidated Operating Net Income for such
period), in each case accrued for such period by the Company and the
Restricted Subsidiaries, determined on a consolidated basis in accordance
with GAAP.
Consolidated Liabilities -- means, at any time, the aggregate amount of all
liabilities of the Company and the Restricted Subsidiaries determined on a
consolidated basis in accordance with GAAP.
Consolidated Net Income -- means, with respect to any period, the net income (or
loss) of the Company and the Restricted Subsidiaries for such period, as
determined on a consolidated basis in accordance with GAAP.
Consolidated Net Worth -- means, at any time, shareholders' equity of the
Company and the Restricted Subsidiaries determined on a consolidated basis in
accordance with GAAP.
Consolidated Operating Net Income -- means, for any period, Consolidated Net
Income for such period, but excluding to the extent included in the computation
thereof:
(a) net earnings (or net loss) of any Restricted Subsidiary accrued prior
to the date it became a Restricted Subsidiary;
(b) any gain or loss (net of tax effects applicable thereto) resulting from
the sale, conversion or other disposition of capital assets other than in
the ordinary course of business;
(c) any extraordinary, unusual or nonrecurring gains or losses;
(d) any gain arising from any reappraisal or write-up of assets;
(e) any gain or loss (net of tax effects applicable thereto) during such
period resulting from the receipt of any proceeds of any insurance policy;
(f) any earnings of any Person acquired by the Company or any Restricted
Subsidiary through purchase, merger or consolidation or otherwise, or
earnings of any Person substantially all of whose assets have been acquired
by the Company or any Restricted Subsidiary, for any period prior to the
date of acquisition; and
(g) net earnings (or net non-cash loss) of any Person (other than a
Restricted Subsidiary) in which the Company or any Restricted Subsidiary
shall have an ownership interest unless, in the case of such net earnings,
such net earnings shall have actually been received by the Company or such
Restricted Subsidiary in the form of cash distributions.
Consolidated Tangible Net Assets -- means, at any time:
(a) Consolidated Total Assets (net of all depreciation and amortization in
respect thereof), minus
(b) the sum of (i) all Intangible Assets (net of all depreciation and
amortization in respect thereof) to the extent included in clause (a)
above, plus (ii) any write-ups in valuation of the Consolidated Total
Assets, plus (iii) all Restricted Investments to the extent included in
clause (a) above, in each case determined at such time in accordance with
GAAP.
Consolidated Tangible Net Worth -- means, at any time, the difference of
(a) Consolidated Total Assets (net of all depreciation and amortization in
respect thereof) minus
(b) the sum of (i) all Intangible Assets (net of all depreciation and
amortization in respect thereof) to the extent included in clause (a)
above, plus (ii) Consolidated Liabilities, plus (iii) all Restricted
Investments to the extent included in clause (a) above, plus (iv) any
write-up's in valuation of the Consolidated Total Assets, determined in
each case at such time in accordance with GAAP.
Consolidated Total Assets -- means, at any time, the total assets of the Company
and the Restricted Subsidiaries determined on a consolidated basis at such time
in accordance with GAAP.
Consolidated Total Capitalization -- means, at anytime, the sum of Consolidated
Funded Debt at such time plus Consolidated Tangible Net Worth at such time.
Control Event means:
(a) the execution by the Company or any Subsidiary or Affiliate of any
agreement or letter of intent with respect to any proposed transaction or
event or series of transactions or events that, individually or in the
aggregate, may reasonably be expected to result in a Change in Control;
(b) the execution of any written agreement that, when fully performed by
the parties thereto, would result in a Change in Control; or
(c) the making of any written offer by any "person" (as such term is used
in section 13(d) and section 1 4(d)(2) of the Exchange Act as in effect on
the date of the Closing) or related persons constituting a "group" (as such
term is used in Rule 1 3d-5 under the Exchange Act as in effect on the date
of the Closing) to the holders of the Voting Stock of the Company, which
offer, if accepted by the requisite number of holders, would result in a
Change in Control.
Credit Agreement-- means that certain Credit Agreement and Guaranty, dated as of
May 28,1998, among the Company, the Guarantors, The Chase Manhattan Bank,
Republic National Bank of New York, NationsBank, N.A., as Banks and The Chase
Manhattan Bank, as Agent, together with any related documents thereto, in each
case as such agreement may be amended (including any amendment and restatement
thereof), supplemented or otherwise modified from time to time, including
without limitation any agreement extending the maturity of, refinancing,
replacing or otherwise restructuring all or any portion of the Debt under such
agreement or any successor or replacement agreement and whether by the same or
any other agent, lender or group of lenders, provided that lenders in connection
with any such refinancing, replacing or otherwise restructuring and the agent in
respect thereof shall have become a party to the lntercreditor Agreement.
Current Debt -- means, with respect to any Person, at any time, all Debt of such
Person other than Funded Debt. With respect to the Company and the Restricted
Subsidiaries, Debt of Restricted Subsidiaries described in clause (e) of the
definition of "Permitted Restricted Subsidiary Debt" shall be, without regard to
the limitations as to amount contained in such definition, deemed to be Current
Debt.
Current Maturities of Funded Debt -- means, at any time and with respect to any
item of Funded Debt, the portion of such Funded Debt outstanding at such time
which by the terms of such Funded Debt or the terms of any instrument or
agreement relating thereto is due on demand or within one year from such time
(whether by sinking fund, other required prepayment or final payment at
maturity) and is not directly or indirectly renewable, extendible or refundable
at the option of the obligor under an agreement or firm commitment in effect at
such time to a date one year or more from such time.
Current Ratio -- means, at any time, the quotient resulting from (a)
Consolidated Current Assets determined at such time divided by (b) Consolidated
Current Liabilities determined at such time (excluding from such Consolidated
Current Liabilities Current Debt other than Debt described in cause (a) of the
definition of "Debt" with respect to the Company and the Restricted
Subsidiaries).
Debt -- means, with respect to the Company or any Subsidiary, without
duplication,
(a) its liabilities for borrowed money and its redemption obligations in
respect of mandatorily redeemable preferred stock;
(b) its liabilities for the deferred purchase price of property acquired by
such Person (including, without limitation, all liabilities created or
arising under any conditional sale or other title retention agreement with
respect to any such property but excluding accounts payable arising in the
ordinary course of business);
(c) its Capital Lease Obligations;
(d) all liabilities for borrowed money secured by any Lien with respect to
any property owned by such Person (whether or not it has assumed or
otherwise become liable for such liabilities);
(e) any reimbursement obligation in respect of any letter of credit issued
for the account of such Person (to the extent not prepaid);
(f) Swaps of such Person; and
(g) any Guaranty of such Person with respect to liabilities of a type
described in any of clauses (a) through (f) hereof.
For purposes of the foregoing, (i) the amount of any Debt described in clause
(g) shall be equal to the lesser of the amount of the primary obligation in
respect of which such Guaranty is issued and the maximum liability amount under
the terms of such Guaranty.
Default -- means an event or condition the occurrence or existence of which
would, with the lapse of time or the giving of notice or both, become an Event
of Default.
Default Rate -- means the lesser of
(a) the maximum rate of interest allowed by applicable law, and
(b) the greater of (i) 9.05% per annum and (ii) 2% per annum over the rate
of interest publicly announced from time to time by Xxxxxx Guaranty Trust
Company of New York (or its successors) in New York, New York as its "base"
or "prime" rate.
Environmental Laws -- means any and all applicable Federal, state, local,
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.
ERISA -- means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the rules and regulations promulgated thereunder from
time to time in effect.
ERISA Affiliate -- means any trade or business (whether or not incorporated)
that is treated as a single employer together with the Company under section 414
of the Code.
Event of Default -- is defined in Section 12.
Exchange Act -- means the Securities Exchange Act of 1934, as amended from time
to time.
Exempt Preferred Stock -- means not more than 1,000 shares of Preferred Stock,
$200 stated value, of Glamourette, with an annual dividend rate not in excess of
$62 per share.
Fair Market Value -- means, at any time and with respect to any property, the
sale value of such property that would be realized in an arm's-length sale at
such time between an informed and willing buyer and an informed and willing
seller (neither being under a compulsion to buy or sell).
Financing Documents -- means the Note Purchase Agreements, the Notes, the
lntercreditor Agreement, the Security Agreements, the Pledge Agreements and the
documents, instruments and certificates executed and delivered in connection
with each, as each may be amended from time to time.
Fiscal Year Net Worth Increase Amount -- Section 11.3.
Full Consolidated Net Income -- means, with respect to any period, the net
income (or loss) of the Company and the Subsidiaries for such period, as
determined on a consolidated basis in accordance with GAAP.
Funded Debt -- means, with respect to the Company or any Restricted Subsidiary,
all Debt of such Person which by its terms or by the terms of any instrument or
agreement relating thereto matures, or which is otherwise payable or unpaid, one
year or more from, or is directly or indirectly renewable or extendible at the
option of such Person to a date one year or more (including, without limitation,
an option of such Person under a revolving credit or similar agreement
obligating the lender or lenders to extend credit over a period of one year or
more) from, the date of the creation thereof, but excludes any Current
Maturities of Funded Debt. For purposes of this definition, any minority
interest that would be shown on a consolidated balance sheet of the Company and
the Restricted Subsidiaries prepared in accordance with GAAP at such time shall
be deemed to be Funded Debt.
GAAP -- means generally accepted accounting principles as in effect from time to
time in the United States of America.
Glamourette -- is defined in the introductory sentence of this Agreement.
Governmental Authority -- means
(a) the government of
(i) the United States of America or any state or other political
subdivision thereof, or
(ii) any jurisdiction in which the Company or any Subsidiary conducts
all or any part of its business, or that asserts jurisdiction over any
properties of any such Person, or
(b) any entity exercising executive, legislative, judicial, regulatory or
administrative functions of, or pertaining to, any such government.
Guarantee -- is defined in Section 23.1.
Guaranteed Obligations -- is defined in Section 23.1.
Guarantor -- is defined in the introductory sentence of this Agreement, and
shall include each such other Person that shall have become a party to this
Agreement as provided for in Section 10.7.
Guarantor's Pledge Agreement -- Section 4.11.
Guarantor's Security Agreement -- Section 4.11.
Guaranty -- means, with respect to any Person (for the purposes of this
definition, the "guarantor"), any obligation (except the endorsement in the
ordinary course of business of negotiable instruments for deposit or collection)
of such Person guaranteeing or in effect guaranteeing any indebtedness, dividend
or other obligation of any other Person (the "primary obligor") in any manner,
whether directly or indirectly, including, without limitation, obligations
incurred through an agreement, contingent or otherwise, by the guarantor:
(a) to purchase such indebtedness or obligation or any property
constituting security therefor;
(b) to advance or supply funds
(i) for the purchase or payment of such indebtedness, dividend or
obligation, or
(ii) to maintain working capital or other balance sheet condition or
any income statement condition of the primary obligor or otherwise to
advance or make available funds for the purchase or payment of such
indebtedness, dividend or obligation;
(c) to lease property or to purchase securities or other property or
services primarily for the purpose of assuring the owner of such
indebtedness or obligation of the ability of the primary obligor to make
payment of the indebtedness or obligation; or
(d) otherwise to assure the owner of the indebtedness or obligation of the
primary obligor against loss in respect thereof.
For purposes of computing the amount of any guaranty in connection with any
computation of indebtedness or other liability, it shall be assumed that the
indebtedness or other liabilities that are the subject of such Guaranty are
direct obligations of the issuer of such Guaranty.
Hazardous Material -- means any and all pollutants, toxic or hazardous wastes or
any other substances that might pose a hazard to health or safety, the removal
of which may be required or the generation, manufacture, refining, production,
processing, treatment, storage, handling, transportation, transfer, use,
disposal, release, discharge, spillage, seepage, or filtration of which is or
shall be restricted, prohibited or penalized by any applicable law (including,
without limitation, asbestos, urea formaldehyde foam insulation and
polychlorinated biphenyls).
HDI -- is defined in the introductory sentence of this Agreement.
HIL -- is defined in the introductory sentence of this Agreement.
HIL Note -- means the $5,000,000 unsecured promissory note of HIL, dated May
28,1998, in favor of the Company.
Holder -- means, with respect to any Note, the Person in whose name such Note is
registered in the register maintained by the Company pursuant to Section 14.1.
Institutional Investor -- means (a) any original purchaser of a Note, (b) any
holder of a Note holding more than 10% of the aggregate principal amount of the
Notes then outstanding and (c) any bank, trust company, savings and loan
association or other financial institution, any fund, any foundation, any
pension plan, any investment company, any insurance company, any broker or
dealer, or any other similar financial institution or entity, regardless of
legal form.
Intangible Assets -- means, with respect to any Person, all deferred assets and
other intangible assets (including, without limitation, all patents, copyrights,
trademarks, trade names, franchises, goodwill, organizational expense and
experimental expense, but excluding any deferred tax assets) of such Person, as
determined by GAAP.
Intercreditor Agreement -- Section 4.16.
Investment -- means any investment, made in cash or by delivery of property by
the Company or any Restricted Subsidiary (a) in any Person, whether by
acquisition of stock, partnership interest, indebtedness or other obligation or
security, or by loan, Guaranty, advance, capital contribution or otherwise or
(b) in any property.
Keynote -- means Keynote Services, Limited, a Hong Kong corporation and a
Subsidiary of the Company.
Key-Person Policy -- Section 10.2.
Kuttner Family Member -- means and includes (i) Xxxxxx Xxxxxxx, (ii) Xxxxxxxx
Xxxxxxx, (iii) any descendant of Xxxxxx Xxxxxxx or Xxxxxxxx Xxxxxxx, whether by
birth or adoption, (iv) any spouse or former spouse of any of the foregoing, (v)
any conservator or custodian for the person or property of any Person described
in clauses (i) through (iv) inclusive, and (v) the estate of any Person
described in clauses (i) through (iv) inclusive.
Lien -- means, with respect to the Company or any Subsidiary, any mortgage,
lien, pledge, charge, security interest or other encumbrance, or any interest or
title of any vendor, lessor, lender or other secured party to or of such Person
under any conditional sale or other title retention agreement or Capital Lease,
upon or with respect to any property or asset of such Person. The term "Lien"
shall not include any so-called "negative pledge" provisions in agreements
covering the incurrence of Debt.
Make-Whole Amount -- is defined in Section 8.7.
Material -- means material in relation to the business, operations, affairs,
financial condition, assets, properties, or prospects of the Company or any
Restricted Subsidiary.
Material Adverse Effect -- means a material adverse effect on (a) the business,
operations, affairs, financial condition, assets or properties of the Company
and its Restricted Subsidiaries, taken as a whole, or (b) the ability of any of
the Obligors to perform its obligations under this Agreement, the Other
Agreement, the Notes or the other Financing Documents, or (c) the validity or
enforceability of this Agreement, the Other Agreement, the Notes or the other
Financing Documents. For the avoidance of doubt, no matter affecting the
business, operations, affairs, financial condition, assets or properties of any
Unrestricted Subsidiary shall be deemed to have a material adverse effect on the
business, operations, affairs, financial condition, assets or properties of the
Company and its Restricted Subsidiaries, taken as a whole.
Moody's -- means Xxxxx'x Investors Service, Inc.
Multiemployer Plan -- means any Plan that is a "multiemployer plan" (as such
term is defined in section 4001 (a)(3) of ERISA).
Notes -- is defined in Section 1.
Obligor -- is defined in the introductory sentence of this Agreement.
Officer's Certificate -- means a certificate of a Senior Financial Officer or of
any other officer of an Obligor or HIL whose responsibilities extend to the
subject matter of such certificate
Operating Income Contribution Percentage -- means, in respect of any property of
the Company or any Restricted Subsidiary that is the subject of a Basket
Transfer or proposed Basket Transfer, the percentage of Consolidated Operating
Net Income contributed by such property during the period of 12 consecutive
fiscal months of the Company most recently ended prior to the Transfer or
proposed Transfer of such property.
Operating Lease -- means, with respect to any Person, any lease other than a
Capital Lease.
Operating Rentals -- means all fixed payments that the lessee is required to
make by the terms of any Operating Lease, but shall not include amounts required
to be paid in respect of maintenance, repairs, utilities, income taxes, property
taxes, insurance, assessments or other similar charges or additional rentals (in
excess of fixed minimums) based upon a percentage of gross receipts.
Other Agreement -- is defined in Section 2.
Other Purchaser -- is defined in Section 2.
PBGC -- means the Pension Benefit Guaranty Corporation referred to and defined
in ERISA or any successor thereto.
Permitted Restricted Subsidiary Debt -- means
(a) Debt obligations of each Restricted Subsidiary in respect of the
Guarantee;
(b) Debt obligations of each Restricted Subsidiary in respect of the
Company's obligations under the Credit Agreement;
(c) obligations of each Restricted Subsidiary in respect of Debt owed to
the Company or a Wholly-Owned Restricted Subsidiary;
(d) Debt obligations of HDI in respect of a mortgage loan in favor of
Merchants National Bank in an outstanding principal amount not in excess of
$1,000,000, provided that any refinancing of such mortgage loan that
(i) does not increase the principal amount outstanding thereunder at
the time of such refinancing,
(ii) does not result in the increase of any scheduled payment amounts
of principal and/or interest,
(iii) does not result in the shortening of the maturity of such loan,
(iv) does not cause or create any Default or Event of Default and
(v) is not effected during the existence of any Default or Event of
Default (whether or not it shall have caused the same) shall be deemed
to be included within this clause (d); and
(e) Debt obligations of any Restricted Subsidiary in respect of
(i) one or more unsecured lines of credit incurred in the ordinary
course of business in an aggregate maximum principal amount not in
excess of $2,500,000 and/or
(ii) one or more letter of credit facilities having a maximum stated
liability of not more than $6,000,000, provided that (1) not more than
$500,000 in aggregate principal amount of unpaid letter of credit
reimbursement obligations (or loans or advances in respect thereof
under said letter of credit facility or facilities or under said line
or lines of credit) remain outstanding and (2) such outstanding
obligations (or loans or advances in respect thereof) have not
remained unpaid for more than 10 days.
Person -- means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization, or a government or
agency or political subdivision thereof.
Plan -- means an "employee benefit plan" (as defined in section 3(3) of ERISA)
that is or, within the preceding five years, has been established or maintained,
or to which contributions are or, within the preceding five years, have been
made or required to be made, by the Company or any ERISA Affiliate or with
respect to which the Company or any ERISA Affiliate may have any liability.
Pledge Agreement -- means the Company's Pledge Agreement and each Guarantor's
Pledge Agreement.
Pledged Stock Collateral-- has the collective meaning ascribed to such term in
the Pledge Agreements.
Preferred Stock -- means any class of capital stock of a Person that is
preferred over any other class of capital stock of such Person as to the payment
of dividends or other equity distributions or the payment of any amount upon
liquidation or dissolution of such Person.
Property or properties -- means, unless otherwise specifically limited, real or
personal property of any kind, tangible or intangible, xxxxxx or inchoate.
Proposed Prepayment Date -- is defined in Section 8.4(c).
PTE -- is defined in Section 6.2.
QPAM Exemption -- means Prohibited Transaction Class Exemption 84-14 issued by
the United States Department of Labor.
Related Document -- Section 25.1.
Required Holders -- means, at any time, the holders of at least 66 and 2/3% in
principal amount of the Notes at the time outstanding (exclusive of Notes then
owned by the Company or any Affiliate thereof).
Responsible Officer-- means any Senior Financial Officer of the Company and any
other officer of the Company with responsibility for the administration of the
relevant portion of this Agreement.
Restricted Investment -- means, at any time, all Investments except the
following:
(a) Investments in property to be used in the ordinary course of business
of the Company and the Restricted Subsidiaries;
(b) Investments in current assets arising from the sale of goods and
services in the ordinary course of business of the Company and the
Restricted Subsidiaries;
(c) Investments in one or more Restricted Subsidiaries or any corporation
that concurrently with such Investment becomes a Restricted Subsidiary;
(d) Investments in direct obligations of the United States of America, or
any agency or instrumentality thereof, or obligations guaranteed by the
United States of America, provided that such obligations mature within one
(1) year from the date of acquisition thereof;
(e) Investments in (i) certificates of deposit issued by an Acceptable
Bank, provided that such obligations mature within one (1) year from the
date of acquisition thereof, (ii) demand deposit accounts in an Acceptable
Bank and (iii) time or saving deposit accounts in an Acceptable Bank,
provided that moneys in such deposit accounts are withdrawable with not
more than 30 days prior notice; and
(f) Investments in commercial paper rated "A-i" (or higher) by Standard &
Poor's or "P-i" (or higher) by Moody's (or any future comparable ratings
issued by Standard & Poor's or Moody's), provided that such obligations
mature within two hundred seventy (270) days from the date of creation
thereof.
Investments shall be valued at cost less any net return of capital through the
sale or liquidation thereof or other return of capital thereon.
As used in this definition:
Acceptable Bank -- means, at any time, any commercial bank:
(a) that at such time has capital, surplus and undivided profits
aggregating at least Two Hundred Fifty Million Dollars ($250,000,000); and
(b) whose long-term unsecured debt obligations (or the long-term unsecured
debt obligations of the bank holding company owning all of the capital
stock of such bank) shall at such time be rated "A" or higher by Standard &
Poor's or "A2" or higher by Moody's (or any future comparable ratings
issued by Standard & Poor's or Moody's).
Restricted Payment -- means:
(a) any dividend or other distribution, direct or indirect, on account of
any shares of capital stock of the Company or any Restricted Subsidiary
(other than on account of capital stock of a Restricted Subsidiary owned
legally and beneficially by the Company or a Wholly-Owned Restricted
Subsidiary) now or hereafter outstanding, whether in cash or other
property, except a dividend or other distribution payable solely in shares
of common stock of such Person;
(b) any redemption, retirement, purchase or other acquisition, direct or
indirect, of any shares of capital stock of the Company or any Restricted
Subsidiary (other than on account of capital stock of a Restricted
Subsidiary owned legally and beneficially by the Company or a Wholly-Owned
Restricted Subsidiary) now or hereafter outstanding, or of any warrants,
rights or options to acquire any shares of such stock, provided that any
such redemption, retirement, purchase or other such acquisition that
involves only the exchange of securities to be issued by the Company or any
Restricted Subsidiary for other outstanding securities of such Person
(which exchanged and outstanding securities shall be of equivalent value)
shall not be deemed to be a "Restricted Payment;" and
(c) any repayment, defeasance, redemption, retirement, repurchase or other
acquisition, direct or indirect, of any installment of Subordinated Debt
prior to the regularly scheduled payment or maturity date of such
installment, provided that any refinancing of Subordinated Debt that
(i) is funded with the proceeds of equity issued by the obligor in
respect of such Subordinated Debt to Persons other than the Company or
a Subsidiary; or
(ii) funded with the proceeds of new Subordinated Debt that
(1) does not increase the principal amount outstanding thereunder
at the time of such refinancing,
(2) does not result in the increase of any scheduled payment
amounts of principal and/or interest,
(3) does not result in the shortening of the maturity of such
Subordinated Debt,
(4) does not cause or create any Default or Event of Default and
(5) is not effected during the existence of any Default or Event
of Default (whether or not it shall have caused the same)
shall not be deemed to be a "Restricted Payment."
Restricted Subsidiary -- means all Subsidiaries other than the Unrestricted
Subsidiaries.
Restricted Subsidiary Stock -- Section 11.9(b).
Securities Act -- means the Securities Act of 1933, as amended from time to
time.
Security Agreement -- means the Company's Security Agreement and each
Guarantor's Security Agreement.
Senior Debt -- any unsecured Debt of any one or more of the Obligors that is not
in any manner subordinated in right of payment to the Notes or to any other Debt
of such Persons.
Senior Financial Officer-- means, with respect to the Company, the chief
financial officer, principal accounting officer, treasurer or comptroller of the
Company, or any other officer of the Company with responsibility for the
administration of the relevant portion of this Agreement and, with respect to
any Guarantor, any officer of such Guarantor.
Segue -- is defined in the introductory sentence of this Agreement.
SF Knitworks -- is defined in the introductory sentence of this Agreement.
Source -- is defined in Section 6.2.
Standard & Poor's -- means Standard & Poor's Ratings Group, a division of
XxXxxx-Xxxx, Inc.
Subordinated Debt -- means any Debt of the Company or any Guarantor that is in
any respect subordinate or junior in right of payment or otherwise to the Debt
evidenced by the Notes or to the Guarantee.
Subsidiary -- means, as to any Person, any corporation, association, limited
liability company or other similar business entity in which such Person or one
or more of its Subsidiaries or such Person and one or more of its Subsidiaries
owns sufficient equity or voting interests to enable it or them (as a group)
ordinarily, in the absence of contingencies, to elect a majority of the
directors (or Persons performing similar functions) of such entity, and any
partnership or joint venture if more than a 50% interest in the profits or
capital thereof is owned by such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries (unless such partnership can and
does ordinarily take major business actions without the prior approval of such
Person or one or more of its Subsidiaries). Unless the context otherwise clearly
requires, any reference to a "Subsidiary" is a reference to a Subsidiary of the
Company or another Obligor.
Swaps -- means, with respect to any Person, payment obligations with respect to
interest rate swaps, currency swaps and similar obligations obligating such
Person to make payments, whether periodically or upon the happening of a
contingency. For the purposes of this Agreement, the amount of the obligation
under any Swap shall be the amount determined in respect thereof as of the end
of the then most recently ended fiscal quarter of such Person, based on the
assumption that such Swap had terminated at the end of such fiscal quarter, and
in making such determination, if any agreement relating to such Swap provides
for the netting of amounts payable by and to such Person thereunder or if any
such agreement provides for the simultaneous payment of amounts by and to such
Person, then in each such case, the amount of such obligation shall be the net
amount so determined. For purposes of this Agreement, any such interest rate
swap, currency swap or other similar obligation which was entered into and is
being used by such Person in the ordinary course of its business to hedge an
existing or future risk or exposure of such Person in respect of its liabilities
or assets shall not be deemed a "Swap."
Successor Company -- Section 11.2.
Transfer -- means, with respect to the Company or any Restricted Subsidiary, any
transaction in which such Person sells, conveys, transfers or leases (as lessor)
any of its assets. The verb "Transfer" has the meaning correlative to the
meaning of the noun. Transfer shall not include a transaction or part of a
transaction because the Company or a Restricted Subsidiary uses assets
constituting cash or money to consummate such transaction or part thereof and to
thereby purchase, acquire, receive or lease assets in consideration of the
payment of such cash or money.
Unrestricted Subsidiary -- means (a) HIL so long as it is a Subsidiary of the
Company and (b) any Subsidiary directly owned by HIL or indirectly owned by HIL
and/or any Subsidiary of HIL so long as, in any such case, such Subsidiary
continues to be a Subsidiary of HIL. It is the intention of this definition to
include as Unrestricted Subsidiaries only Subsidiaries of HIL that are owned
directly or indirectly by HIL and other Subsidiaries of HIL and Persons other
than Obligors. If any percentage of the capital equity of an Unrestricted
Subsidiary is owned, directly or indirectly, by any Obligor (other than by or
through HIL), then such Unrestricted Subsidiary shall be deemed to be a
Restricted Subsidiary for purposes of this Agreement
Voting Stock -- means capital stock or other equity interests or capital of any
class or classes of a corporation, partnership, association or other business
entity, the holders of which are ordinarily, in the absence of contingencies,
entitled to elect the directors (or Persons performing similar functions) of
such entity.
Wholly-Owned Restricted Subsidiary -- means, at any time, any Restricted
Subsidiary 100% of all of the equity interests and voting interests of which
(other than directors' qualifying shares and, in the case of Subsidiaries
organized under the laws of a jurisdiction other than a State of the United
States of America, any shares required by applicable law to be owned by
nationals of such jurisdiction (not in excess of 5% of the total equity thereof)
are owned by any one or more of the Company and the other Wholly-Owned
Restricted Subsidiaries at such time.
Wholly-Owned Subsidiary -- means, at any time, any Subsidiary 100% of all of the
equity interests and voting interests of which are owned by any one or more of
the Company and the other Wholly-Owned Subsidiaries at such time.
EXHIBIT 4.11 -(CSA)
FORM OF COMPANY'S SECURITY AGREEMENT
SECURITY AGREEMENT
This Agreement made as of May 15, 1998 between HAMPSHIRE GROUP, LIMITED, a
Delaware corporation (the "Debtor"), and PHOENIX HOME LIFE MUTUAL INSURANCE
COMPANY, a New York Mutual Insurance Company, having an office at Xxx Xxxxxxxx
Xxx, Xxxxxxxx, Xxxxxxxxxxx 00000, as collateral agent for itself and for The
Ohio National Life Insurance Company (the "Collateral Agent;" Phoenix Home Life
Mutual Insurance Company and The Ohio National Life Insurance Company are
referred to herein as the "Lenders;" and the Collateral Agent is sometimes
referred to herein as the "Secured Party").
WHEREAS, The Lenders have extended loans to Debtor pursuant to those certain
separate Note Purchase Agreements each dated as of May 15,1998 among Debtor,
Hampshire Designers, Inc., Glamourette Fashion Xxxxx, Inc., San Francisco
Knitworks, Inc. and Segue (America), Limited and each of the Lenders, (together
with the other documents and agreements executed in connection therewith,
collectively, the "Note Purchase Agreement;" Hampshire Designers, Inc.,
Hampshire Investments, Limited, Glamourette Fashion Xxxxx, Inc., San Francisco
Knitworks, Inc., and Segue (America), Limited are referred to herein,
collectively, as the "Guarantors"). The loans arising under the Note Purchase
Agreement are evidenced by the notes issued by the Debtor to the Lenders
thereunder and outstanding from time to time (collectively, the "Notes"). Debtor
desires to secure the performance of its obligations to pay, duly and
punctually, the principal of and interest on the Notes and to perform, duly and
punctually, all other obligations and indebtedness owing to the Secured Party
and the Lenders, including those arising under the Notes, the Note Purchase
Agreement, this Security Agreement and otherwise.
WHEREAS, capitalized terms used herein and not defined herein shall have the
meanings ascribed to them in the Note Purchase Agreement.
NOW, THEREFORE, for and in consideration of the sum of Ten ($10.00) Dollars and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Debtor and Secured Party, intending to be legally
bound, hereby agree as follows:
1. SECURITY INTEREST
To secure the Obligations (as hereafter defined), Debtor hereby grants to
Secured Party a continuing security interest in and to all of the following
described property and interest in such property (the "Collateral"), now owned
or hereafter acquired by Debtor:
A. All now owned and hereafter acquired right, title and interest of Debtor
in, to and in respect of all: accounts, interests in goods represented by
accounts, returned, reclaimed or repossessed goods with respect thereto and
rights as an unpaid vendor; contract rights, chattel paper relating to
goods sold; documents; instruments; letters of credit, bankers' acceptances
or guaranties securing any of the foregoing (the "Accounts");
B. All right, title and interest of Debtor in, to and in respect of the
following:
All inventory imported into the United States or purchased pursuant to
letters of credit of whatever kind, nature or description, including all
raw materials, work-in-process, finished goods, and materials to be used or
consumed in Debtor's business; and all names or marks affixed to or to be
affixed thereto for purposes of selling same by the seller, manufacturer,
lessor or licenser thereof ("Inventory");
All warehouse receipts, bills of lading, shipping documents and other
instruments or documents relating to such Inventory; and
C. All present and future books and records, including, without limitation,
all computer programs, printed output and computer readable data in the
possession or control of the Debtor, any computer service bureau or other
third party, all computer disks, hard drives and other computer related
hardware and software, relating to Accounts and Inventory; and
D. All cash and non-cash proceeds of the foregoing in whatever form and
wherever located, including, without limitation, all insurance proceeds and
all claims against third parties for loss or destruction of or damage to
any of the foregoing.
Except as defined herein, all terms used above shall have the meaning provided
in the New York Uniform Commercial Code.
2. OBLIGATIONS DEFINED
The term "Obligations" shall mean all payment and other obligations of the
Debtor under, or in respect of, this Agreement, the Note Purchase Agreement, the
Notes and the other Financing Documents to which the Debtor is a party.
3. WARRANTIES AND COVENANTS
Debtor warrants and agrees that:
A. Debtor will pay and perform all of the Obligations according to their
terms.
B. All of the Collateral is and will at all times be owned by Debtor free
and clear of all tax liens and other liens and security interests, except
the liens and security interests permitted in the Note Purchase Agreement
or by Secured Party in writing.
C. The Collateral shall be kept at the principal place of business of
Debtor set forth below or at the locations set forth in Schedule A hereto
and none of the Collateral will be removed from such locations without the
prior written consent of Secured Party except for Debtor's sales to its
customers in the ordinary course of Debtor's business.
D. Debtor will insure the Collateral at all times against all hazards,
including but not limited to fire, theft and risks covered by extended
coverage insurance, and such policies shall be payable to Secured Party as
its interest may appear. Said policies of insurance shall be satisfactory
to Secured Party as to form, amount and insurer. Debtor shall furnish
certificates, policies or endorsements to Secured Party as proof of such
insurance, and, if Debtor fails to do so, Secured Party is authorized but
not required to obtain such insurance at Debtor's expense. All policies
shall provide for at least thirty (30) days' prior written notice to
Secured Party of cancellation or non-renewal. Secured Party may act as
attorney-in-fact for Debtor in making, adjusting and settling any claims
under any such insurance policies. Subject to the lntercreditor Agreement,
Debtor hereby assigns to Secured Party all of its right, title and interest
to any insurance policies insuring the Collateral, including all rights to
receive the proceeds of insurance, and directs all insurers to pay all such
proceeds directly to Secured Party and authorizes Secured Party to endorse
Debtor's name on any instrument of such payment.
E. Debtor will keep the Collateral in good condition and repair, reasonable
wear and tear excepted, and will immediately notify Secured Party of any
destruction of or any damage to any of the Collateral.
F. Debtor will not sell, transfer or otherwise dispose of any of the
Collateral except (i) Inventory to buyers in the ordinary course of
business and (ii) as otherwise permitted under the Note Purchase Agreement.
G. Intentionally Omitted.
H. Debtor will advise Secured Party in writing of any changes in any of the
Debtor's places of business or the opening of any new place of business
five (5) business days prior to the occurrence thereof.
I. Debtor will pay when due all taxes (unless such taxes are being
contested in good faith and adequate reserves have been provided and all
other conditions required by Section 10.4 of the Note Purchase Agreement
have been satisfied), license fees and assessments relating to the
Collateral.
J. Debtor will be liable to Secured Party for any expenditures by Secured
Party in connection with the preparation, execution, delivery,
administration and enforcement of this Security Agreement and for the
maintenance and preservation of the Collateral, including but not limited
to taxes, appraisal fees, certificate of title charges, recording and
filing fees (including Uniform Commercial Code financing statement fees and
search fees), the fees and disbursements of Secured Party's in-house and
outside counsel, levies, insurance and repairs, and for the repossession,
holding, preparation for sale, and the sale of the Collateral (including
attorneys' and accountants' fees and expenses), as well as all damages for
breach of warranty, misrepresentation, or breach of covenant by Debtor, and
all such liabilities shall be included in the definition of Obligations
herein, shall be secured by the security interest granted herein, and shall
be payable upon demand.
K. Debtor will execute financing statements pursuant to the Uniform
Commercial Code, as enacted in the states where such financing statements
are required, or are deemed by Secured Party as desirable, and any other
documents required by Secured Party, to perfect or maintain the security
interest granted herein or to effect the purposes of this Agreement. Debtor
hereby authorizes Secured Party to execute and file any financing
statements covering the Collateral without Debtor's signature or if Secured
Party so elects signed in Debtor's name by Secured Party and Secured Party
is hereby appointed attorney-in-fact to do so.
L. Debtor will at all times during normal business hours allow Secured
Party or its agents to examine and inspect the Collateral, as well as
Debtor's books and records relating thereto, and to make extracts and
copies of them.
M. Debtor will report, in form satisfactory to Secured Party, such
information as Secured Party may reasonably request regarding the
Collateral; such reports shall be for such periods shall reflect Debtor's
records as at such time and shall be rendered with such frequency as
Secured Party may reasonably designate. All information heretofore or
hereafter furnished by Debtor to Secured Party is or will be true and
correct in all material respects as of the date with respect to which such
information is or will be furnished.
N. Debtor shall not become a party to any restructuring of its form of
business or participate in any consolidation, merger, liquidation or
dissolution without Secured Party's prior written consent, except as
permitted in the Note Purchase Agreement.
O. Debtor will notify Secured Party of any intended change of Debtor's
name, or the use of any trade name or style, and will notify Secured Party
when such change or use becomes effective Debtor represents that it uses
only the trade name and styles listed on schedule B annexed hereto.
P. Debtor has the right and power and is duly authorized to enter into and
perform its Obligations hereunder, and Debtor's execution, performance and
delivery of this Agreement does not and will not conflict with the
provisions of any statute, regulation, ordinance or rule of law, or with
the provisions of any agreement, contract or other document which may now
or hereafter be binding on Debtor.
Q. There are no actions or proceedings which are pending or threatened
against Debtor which might result in any material and adverse change in its
financial condition or materially affect the Collateral pledged hereunder.
R. Debtor is not in violation of any applicable federal, state, municipal
or county statute, regulation or ordinance which may materially and
adversely affect its business, property, assets, operations or conditions,
financial or otherwise and Debtor has obtained and shall maintain in effect
all federal state and local licenses and permits necessary to conduct its
business, including, but not limited to any environmental matters relating
to the remediation of contaminated property and/or the removal of hazardous
materials or otherwise, except where the failure to maintain the same would
not materially and adversely affect its business, property, assets,
operations or conditions, financial or otherwise.
S. Debtor hereby irrevocably appoints Secured Party as Debtor's true and
lawful attorney-in-fact, with full power and authority and in the place and
stead of Debtor and in the name of Debtor or otherwise, from time to time
while an Event of Default under, and as defined in, the Note Purchase
Agreement shall have occurred and be continuing in Secured Party's
discretion, to take any action and to execute any instrument which Secured
Party may deem necessary or desirable to accomplish the purposes of this
Security Agreement, including, without limitation, to receive, endorse and
collect all instruments made payable to Debtor representing any
distribution in respect of the Collateral or any part thereof and to give
full discharge far the same; to ask, demand, collect, xxx for, recover,
compromise, receive and give acquittance and receipt for monies due and to
become due under or in connection with the Collateral; to obtain and adjust
insurance covering the Collateral; to receive, endorse and collect any
drafts or other instruments and documents in connection therewith; and to
file any claims or take any action or institute any proceedings which
Secured Party may deem to be necessary or desirable for the collection
thereof, provided, however, that Secured Party may act as such
attorney-in-fact at any time with respect to signing and recording
financing statements under the Uniform Commercial Code.
4. EVENTS OF DEFAULT
All Obligations shall become due and payable upon the occurrence of any Event of
Default under, and as defined in, the Note Purchase Agreement in accordance with
the terms and provisions thereof.
5. RIGHTS AND REMEDIES
Upon the occurrence and continuance of any Event of Default, Secured Party shall
have all rights and remedies provided by law, including but not limited to those
of a secured party under the Uniform Commercial Code of New York, in addition to
the rights and remedies provided herein or in the Note Purchase Agreement.
Secured Party may require Debtor to assemble the Collateral and make it
available to Secured Party at a place to be designated by Secured Party which is
reasonably convenient to Debtor and Secured Party. If notice of disposition of
Collateral is required by law, five (5) days prior notice by Secured Party to
Debtor designating the time and place of any public sale or the time after which
any private sale or other intended disposition of Collateral is to be made shall
be deemed to be reasonable notice thereof and Debtor waives any other notice. In
the event Secured Party institutes an action to recover any Collateral or seeks
recovery of any Collateral by way of prejudgment remedy in an action against
Debtor, Debtor waives the posting of any bond which might otherwise be required.
All Secured Party's rights and remedies shall be cumulative and none are
exclusive. Whether or not default has occurred, all payments made by or on
behalf of Debtor and all credits due Debtor under this Agreement and under any
other agreement between Debtor and Secured Party may be applied to the
Obligations in whatever order and amounts Secured Party chooses.
6. MISCELLANEOUS
A. Any failure or delay by Secured Party to require strict performance by
Debtor of any of the provisions, warranties, terms and conditions contained
herein or in any other agreement, document or instrument shall not affect
Secured Party's right to demand strict compliance and performance
therewith, and any waiver of any default shall not waive or affect any
other default, whether prior or subsequent thereto, and whether of the same
or of a different type. None of the warranties, conditions, provisions and
terms contained herein or in any other agreement, document or instrument
shall be deemed to leave been waived by any act or knowledge of Secured
Party, its agents, officers or employees, but only by an instrument in
writing, signed by an officer of Secured Party, directed to Debtor and
specifying such waiver.
B. Any notice under this Agreement shall be in writing, and deemed to have
been given or made: if by hand, immediately upon delivery; if by
telecopier, immediately upon receipt; if by overnight courier, one (1) day
after dispatch; and if by first class or certified mail three (3) days
after the mailing. All such notices shall be addressed to the parties at
their respective addresses set forth below.
C. In the event that any provision hereof shall be deemed to be invalid by
any court, such invalidity shall not affect the remainder of this
Agreement.
D. This Agreement shall be binding upon and for the benefit of the parties
hereto and their respective successors and assigns.
E. Wherever the context requires, the singular form of any word shall
include the plural, and the neuter form of any word shall include the
masculine and feminine forms, and vice verse.
F. Debtor hereby irrevocably submits and consents to the jurisdiction of
any New York State or United States Federal court sitting in New York City
over any action or proceeding arising out of or relating to this Agreement,
and the Debtor hereby irrevocably agrees that all claims in respect of such
action or proceeding may be heard and determined in such New York State or
Federal court. The Debtor irrevocably consents to the service of any and
all process in any such action or proceeding by the mailing of copies of
such process to the Debtor at its address specified in the Note Purchase
Agreement. The Debtor agrees that a final non-appealable judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
law. The Debtor further waives any objection to venue in such State and any
objection to an action or proceeding in such State on the basis of forum
non conveniens. The Debtor agrees that any action or proceeding brought
against the Secured Party or any holder of Notes shall be brought only in
New York State or United States Federal Court sitting in New York City.
Nothing contained in this paragraph shall affect the right of the Secured
Party or any holder of Notes to serve legal process in any other manner
permitted by law or affect the right of the Secured Party or any holder of
Notes to bring any action or proceeding against Debtor or its property in
the courts of any other jurisdiction
To the extent that the Debtor has or hereafter may acquire any immunity
from jurisdiction of any court or from any legal process (whether from
service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property,
the Debtor hereby irrevocably waives such immunity in respect of its
obligations under this Agreement.
G. This Agreement together with the Note Purchase Agreement and the other
agreements executed in connection therewith, constitutes the entire
agreement among the parties with respect to the subject matter hereof, and
supersedes all prior written or oral understandings with respect thereto.
This Agreement may be amended only by mutual agreement of the parties
evidenced in writing and signed by the party to be charged therewith.
H. This Agreement is subject to the terms and provisions of the
Intercreditor Agreement (as such term is defined in the Note Purchase
Agreement).
IN WITNESS WHEREOF, the undersigned have executed and delivered this Agreement
on the date written above.
HAMPSHIRE GROUP, LIMITED
By: /s/ Xxxxxxx X. Xxxxxxx
Address: 000 Xxxxxxxx Xxxx., Xxxxxxxx, XX 00000
Telephone No. (000) 000-0000
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY, as Collateral Agent
By: /s/ Xxxx X. Xxxxx
Address:
Street
c/o Phoenix Investment Partners, Ltd.
56 Prospect
X.X. Xxx 000000
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Telephone No: 000-000-0000
SCHEDULE A
Locations of Collateral
Hampshire Group, Limited County:
000 Xxxxxxxx Xxxxxxxxx Xxxxxxxx
Xxxxxxxx, XX 00000
Natalie Knitting Xxxxx County:
Rose Industrial Park #15 Xxxxxx
Chilhowie, VA 24319
Designers Knitting Xxxxx County:
000 Xxx Xxxxx Xxxx Xxxxxxxx
Xxxxxxxx, XX 00000
Winona Knitting Xxxxx County:
000 Xxxx Xxxxxx Xx. Xxxxxx
Xxxxxx, XX 00000
Winona Knitting Xxxxx County:
000 Xxxx Xxxxxx Xxxxxxx
XxXxxxxxxx, XX 00000
Hampshire Hosiery - Plant No. 2 County
000 Xxxxx Xxxxxx Xxxxxxxx
Xxxxxx Xxxx, XX 00000
Hampshire Hosiery - Plant No. 0 Xxxxxx
XX Xxx. 00X Xxxxxxxx
Xxxxxx Xxxx, XX 00000
Hampshire Brands County:
0000 Xxxxxx Xxxxx Xxxxxx
Xxxxxx, XX 00000
SCHEDULE B
Tradestyle and Brand Names
Tradestvles:
Designers Knitting Xxxxx
Hampshire Brands
Winona Knitting Xxxxx
Hampshire Brands
Hampshire Hosiery
Natalie Knitting Xxxxx
Brand Names/Licenses:
Designers Originals
Designers Originals Studio
Moving Bleu
Plant & Co.
American Portrait
Landscape
San Francisco Knitworks
SFK
EXHIBIT 4.11 -(CPA)
FORM OF COMPANY'S PLEDGE AGREEMENT
PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of May 15, 1998, made by HAMPSHIRE GROUP, LIMITED, a
Delaware corporation, whose address is 000 Xxxxxxxx Xxxxxxxxx, Xxxxxxxx, Xxxxx
Xxxxxxxx 00000 (the "Pledgor"), in favor of PHOENIX HOME LIFE MUTUAL INSURANCE
COMPANY, a New York mutual insurance company, having an office at Xxx Xxxxxxxx
Xxx, Xxxxxxxx, Xxxxxxxxxxx 00000, as collateral agent for itself and for The
Ohio National Life Insurance Company (the "Collateral Agent;" Phoenix Home Life
Mutual Insurance Company and The Ohio National Life Insurance Company are
referred to herein as the "Lenders").
The Lenders have extended loans to Pledgor pursuant to those certain separate
Note Purchase Agreements each dated as of May 15, 1998 among Pledgor, Hampshire
Designers, Inc., Hampshire Investments, Limited, Glamourette Fashion Xxxxx,
Inc., San Francisco Knitworks, Inc., and Segue (America), Limited and each of
the Lenders, (together with the other documents and agreements executed in
connection therewith, collectively, the "Note Purchase Agreement;" Hampshire
Designers, Inc., Hampshire Investments, Limited, Glamourette Fashion Xxxxx,
Inc., San Francisco Knitworks, Inc., Limited and Segue (America), Limited are
referred to herein, collectively, as the "Guarantors"). The Pledgor is the owner
and holder of the shares of stock of those certain Guarantors as more
particularly described in the Schedule attached hereto and of the $5,000,000
promissory note described in such Schedule (the "Pledged Securities").
It is a condition to the making of the loans by the Lenders that the Pledgor
shall have made the pledge contemplated by this Agreement. In consideration of
the premises, the Pledgor hereby agrees as follows:
1. THE PLEDGE
A. Pledge.
The Pledgor hereby pledges to the Collateral Agent and grants to the
Collateral Agent a security interest in the following (the "Pledged
Collateral"):
(a) the Pledged Securities and the certificates and instruments
representing the Pledged Securities, and all interest, dividends,
cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for
any or all of the Pledged Securities; and
(b) all additional shares of stock of the issuers of the Pledged
Securities, and the certificates representing such additional shares,
and all interest, dividends, cash, instruments and other property from
time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of the Pledged Securities.
B. Security for Obligations.
This Agreement secures the payment of all obligations (the "Obligations")
of the Pledgor, as provided for in the Note Purchase Agreement, in the
Notes, in this Agreement and in the other Financing Documents (as such term
is defined in the Note Purchase Agreement) to which the Pledgor is a party.
C. Delivery of Pledged Collateral.
All certificates or instruments representing or evidencing the Pledged
Collateral shall be delivered to and held by the Collateral Agent on behalf
of the Lenders pursuant hereto and shall be in suitable form for transfer
by delivery, or shall be accompanied by duly executed instruments of
transfer or assignment in blank, all in form and substance satisfactory to
the Collateral Agent. The Collateral Agent shall have the right, at any
time in its discretion and without notice to the Pledgor, to transfer to or
to register in the name of the Collateral Agent or any of its nominees any
or all of the Pledged Collateral, subject only to the revocable rights
specified in Section 5A(a). In addition, the Collateral Agent shall have
the right at any time to exchange certificates or instruments representing
or evidencing Pledged Collateral for certificates or instruments of smaller
or larger denominations.
D. Continuing Agreement.
This Agreement shall create a continuing security interest in the Pledged
Collateral and shall remain in full force and effect until payment in full
of the Obligations, provided, that, on the second anniversary of the date
of Closing (as defined in the Note Purchase Agreement), the Pledged
Securities constituting the shares of stock of Hampshire Investments,
Limited (as described on the Schedule attached hereto), that certain
promissory note in the original principal amount of $5,000,000 made by
Hampshire Investments, Limited to the Pledgor (as described on the schedule
attached hereto) and all other Pledged Collateral hereunder shall be
released from being pledged hereunder and being subject to any lien or
security interest created hereby and this Agreement shall be terminated, if
but only if, at such time (a) no Default or Event of Default shall have
occurred and be continuing and (b) the Credit Agreement provides for a
similar release of the pledge provided therein in respect of such shares
and promissory note and such release shall have been effected previously or
simultaneously with the release provided for in this clause.
2. REPRESENTATIONS AND WARRANTIES
The Pledgor represents and warrants as follows:
A. Ownership and Liens.
The Pledgor is the legal and beneficial owner of the Pledged Collateral
free and clear of any Lien, except for the security interest created by
this Agreement and except as provided for in the Credit Agreement (as such
term is defined in the Note Purchase Agreement) and the pledge agreements
executed in connection therewith (collectively, as amended from time to
time, the "Bank Pledge Agreement").
B. Perfection.
The pledge of the Pledged Securities pursuant to this Agreement and the
delivery thereof to Collateral Agent creates a valid and perfected first
priority security interest in the Pledged Collateral, securing the payment
of the Obligations, subject only to the pari passu security interest of the
Bank Pledge Agreement.
C. No Authorization Required.
No authorization, approval or other action by, and no notice to or filing
with, any governmental authority or regulatory body is required either (a)
for the pledge by the Pledgor of the Pledged Collateral pursuant to this
Agreement or for the execution, delivery or performance of this Agreement
by the Pledgor or (b) for the exercise by the Collateral Agent of the
voting or other rights provided for in this Agreement (except as may be
required in connection with such disposition by laws affecting the offering
and sale of securities generally and except for the filing of financing
and/or continuation statements).
3. COVENANTS
A. Further Assurances.
The Pledgor agrees that at any time and from time to time, at the expense
of the Pledgor, the Pledgor will promptly execute and deliver all further
instruments and documents, and take all further action that the Collateral
Agent may request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable the Collateral Agent
to exercise and enforce its rights and remedies hereunder with respect to
any Pledged Collateral.
B. Transfers and Other Liens; Additional Shares.
The Pledgor agrees that it will not (i) hereafter sell or otherwise dispose
of, or grant any option with respect to, any of the Pledged Collateral, or
(ii) create or permit to exist any lien or security interest upon or with
respect to any of the Pledged Collateral, except for (1) the security
interest under this Agreement and under the Bank Pledge Agreement and (2)
as otherwise permitted under the Note Purchase Agreement.
4. THE COLLATERAL AGENT
A. Collateral Agent Appointed Attorney-in-Fact.
The Pledgor hereby irrevocably appoints the Collateral Agent as the
Pledgor's attorney-in-fact, with full authority in the place and stead of
the Pledgor and in the name of the Pledgor or otherwise, from time to time,
following the occurrence and during the continuance of an Event of Default
(as defined in the Note Purchase Agreement), in the Collateral Agent's
discretion to take any action and to execute any instrument which the
Collateral Agent may deem necessary or advisable to accomplish the purposes
of this Agreement, including, without limitation, to receive, endorse and
collect all instruments made payable to the Pledgor representing any
dividend, interest payment or other distribution in respect of the Pledged
Collateral or any part thereof and to give full discharge for the same,
provided, however, that the Collateral Agent may act as such
attorney-in-fact at any time with respect to signing and recording
financing statements under the Uniform Commercial Code.
B. Collateral Agent May Perform.
If the Pledgor fails to perform any agreement contained herein, the
Collateral Agent may itself perform, or cause performance of such
agreement, and the expenses of the Collateral Agent incurred in connection
therewith shall be payable by the Pledgor under Section 6B.
C. Reasonable Care.
The Collateral Agent shall be deemed to have exercised reasonable care in
the custody and preservation of the Pledged Collateral in its possession if
the Pledged Collateral is accorded treatment substantially equal to that
which it accords its own property, it being understood that the Collateral
Agent shall not have responsibility for (a) ascertaining or taking action
with respect to calls, conversations, exchanges, maturities, tenders or
other matters relative to any Pledged Collateral, whether or not the
Collateral Agent has or is deemed to have knowledge of such matters, or (b)
taking any necessary steps to preserve rights against any other parties
with respect to any Pledged Collateral.
5. DEFAULT
A. Voting Rights; Dividends; Etc.
(a) So long as no Event of Default (as defined in the Note Purchase
Agreement) shall have occurred and be continuing:
(i) The Pledgor shall be entitled to exercise any and all voting
and other consensual rights pertaining to the Pledged Collateral
or any part thereof for any purpose not inconsistent with the
terms of this Agreement, provided, however, that the Pledgor
shall provide (within five (5) days after the date of such
meeting) the Collateral Agent with a copy of any minutes of a
meeting of shareholders evidencing the exercise of any and all
voting and other consensual rights by Pledgor.
(ii) The Collateral Agent shall execute and deliver (or cause to
be executed and delivered) to the Pledgor all such proxies and
other instruments as the Pledgor may reasonably request for the
purpose of enabling the Pledgor to exercise the voting and other
rights which it is entitled to exercise pursuant to paragraph (i)
above.
(b) Upon the occurrence and during the continuance of an Event of
Default (as defined in the Note Purchase Agreement):
(i) All rights of the Pledgor to exercise the voting and other
consensual rights which it would otherwise be entitled to
exercise pursuant to Section 5A(a)(i) shall cease, and all such
rights shall thereupon become vested in the Collateral Agent who
shall thereupon have the sole right to exercise such voting and
other consensual rights and to receive and hold the Pledged
Collateral.
(ii) All dividends and interest payments, which are received by
the Pledgor, shall be received in trust for the benefit of the
Collateral Agent, shall be segregated from other funds of the
Pledgor and shall be forthwith paid over to the Collateral Agent
as Pledged Collateral in the same form as so received (with any
necessary indorsement).
B. Remedies upon Default.
If an Event of Default has occurred and is continuing:
(a) The Collateral Agent may exercise in respect of the Pledged Collateral,
in addition to other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party on default
under the Uniform Commercial Code (the "UCC") in effect in the State of New
York at that time, and the Collateral Agent may also, without notice except
as specified below, sell the Pledged Collateral or any part thereof in one
or more parcels at public or private sale, at any exchange, broker's board
or at any of the Collateral Agent's offices or elsewhere, for cash, on
credit or for future delivery, and at such price or prices and upon such
other terms as the Collateral Agent may deem commercially reasonable. The
Pledgor agrees that, to the extent notice of sale shall be required by law,
at least ten (10) days' notice to the Pledgor of the time and place of any
public sale or the time after which any private sale is to be made shall
constitute reasonable notification. The Collateral Agent shall not be
obligated to make any sale of Pledged Collateral regardless of notice of
sale having been given. The Collateral Agent may adjourn any public or
private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned.
(b) Any cash held by the Collateral Agent as Pledged Collateral and all
cash proceeds received by the Collateral Agent in respect of any sale or
collection from or other realization upon all or any part of the Pledged
Collateral may, in the discretion of the Collateral Agent, be held by the
Collateral Agent as collateral for, and/or then or at any time thereafter
applied (after payment of any amounts payable to the Collateral Agent
pursuant to Section 6B) in whole or in part by the Collateral Agent
against, all or any part of the Obligations in such order as the Collateral
Agent shall elect. Any surplus of such cash or cash proceeds held by the
Collateral Agent and remaining after payment in full of all the Obligations
shall be paid over to the Pledgor or to whomever may be lawfully entitled
to receive such surplus.
6. MISCELLANEOUS
A. Amendments, Etc.
No amendment or waiver of any provision of this Agreement nor consent to
any departure by the Pledgor therefrom, shall in any event be effective
unless the same shall be in writing and signed by the Collateral Agent, and
then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
B. Expenses.
The Pledgor will upon demand pay to the Collateral Agent the amount of any
and all reasonable expenses, including the reasonable fees and expenses of
its counsel and of any experts and agents, which the Collateral Agent may
incur in connection with (a) the administration of this Agreement, (b) the
custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Pledged Collateral, (c) the exercise or
enforcement of any of the rights of the Collateral Agent hereunder or (d)
the failure by the Pledgor to perform or observe any of the provisions
hereof.
C. Notices.
Unless the party to be notified otherwise notifies the other party in
writing, notices shall be given by ordinary mail or telecopier, addressed
to such party at its address on the signature page hereof.
D. Transfer of Loan Documents.
This Agreement shall (a) be binding upon the Pledgor, its successors and
assigns, and (b) inure, together with the rights and remedies of the
Collateral Agent hereunder, to the benefit of the Collateral Agent on
behalf of the Lenders and their respective successors, transferees and
assigns.
E. Governing Law; Terms.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
F Intercreditor Agreement.
This Agreement is subject to the terms and provisions of the lntercreditor
Agreement (as such term is defined in the Note Purchase Agreement).
IN WITNESS WHEREOF, the Pledgor has caused this Agreement to be duly executed
and delivered by all of its members as of the date first above written.
HAMPSHIRE GROUP, LIMITED
By: /s/ Xxxxxxx X. Xxxxxxx
Title: Vice President
Address for Notices to Pledgor:
000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
PHOENIX HOME MUTUAL LIFE INSURANCE COMPANY,
as Collateral Agent
By: /s/ Xxxx X. Xxxxx
Title: Vice President
Address for Notices to the Collateral Agent:
c/o Phoenix Investment Partners, Ltd.
00 Xxxxxxxx Xxxxxx
P.O. Box 150480
Hartford, Connecticut 06115-0480
SCHEDULE TO PLEDGE AGREEMENT OF
HAMPSHIRE GROUP, LIMITED
Description of Collateral
COMPANY CERTIFICATE NO. NUMBER OF SHARES
Hampshire Designers, Inc. #100 1,000
Hampshire Investments, Limited #2 200
#3 50
#4 125
#5 125
$5,000,000 unsecured promissory note of HIL, dated May 28,1998, in favor of the
Company.
This Schedule shall be deemed automatically and immediately amended and replaced
upon each addition to or substitution or replacement of any of the Pledged
Securities.
EXHIBIT 4.11 -(GSA)
FORM OF GUARANTOR'S SECURITY AGREEMENT
SECURITY AGREEMENT
This Agreement made as of May 15,1998 between ___________, a _______________
corporation (the "Debtor") and PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY, a New
York mutual insurance company, having an office at Xxx Xxxxxxxx Xxx, Xxxxxxxx,
Xxxxxxxxxxx 00000, as collateral agent for itself and for The Ohio National Life
Insurance Company (the "Collateral Agent;" Phoenix Home Life Mutual Insurance
Company and The Ohio National Life Insurance Company are referred to herein as
the "Lenders;" and the Collateral Agent is sometimes referred to herein as the
"Secured Party").
WHEREAS, The Lenders have extended loans to Hampshire Group, Limited, a Delaware
corporation (the "Company") pursuant to those certain separate Note Purchase
Agreements each dated as of May 15,1998 among Debtor, the Company, Hampshire
Designers, Inc., Hampshire Investments, Limited, Glamourette Fashion Xxxxx,
Inc., San Francisco Knitworks, Inc., and Segue (America), Limited and each of
the Lenders, (together with the other documents and agreements executed in
connection therewith, the "Note Purchase Agreement;" Hampshire Designers, Inc.,
Hampshire Investments, Limited, Glamourette Fashion Xxxxx, Inc., San Francisco
Knitworks, Inc., and Segue (America), Limited are referred to herein,
collectively, as the "Other Guarantors"). The Debtor has guaranteed the
borrowings of the Company pursuant to the Note Purchase Agreement. The
indebtedness of Debtor arising under the Note Purchase Agreement is guaranteed
by the Debtor, as provided for in the Note Purchase Agreement (the "Guarantee").
Debtor desires to secure the performance of its obligations to pay, duly and
punctually, its obligations in respect of the Guarantee and to perform, duly and
punctually, all other obligations and indebtedness owing to the Secured Party
and the Lenders, including those arising under the Notes, the Note Purchase
Agreement, this Security Agreement and otherwise.
WHEREAS, capitalized terms used herein and not defined herein shall have the
meanings ascribed to them in the Note Purchase Agreement.
NOW, THEREFORE, for and in consideration of the sum of Ten ($10.00) Dollars and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Debtor and Secured Party, intending to be legally
bound, hereby agree as follows:
1. SECURITY INTEREST
To secure the Obligations (as hereafter defined), Debtor hereby grants to
Secured Party a continuing security interest in and to all of the following
described property and interest in such property (the "Collateral"), now owned
or hereafter acquired by Debtor:
A. All now owned and hereafter acquired right, title and interest of Debtor
in, to and in respect of all: accounts, interests in goods represented by
accounts, returned, reclaimed or repossessed goods with respect thereto and
rights as an unpaid vendor; contract rights, chattel paper relating to
goods sold; documents; instruments; letters of credit, bankers' acceptances
or guaranties securing any of the foregoing (the "Accounts");
B. All right, title and interest of Debtor in, to and in respect of the
following:
All inventory imported into the United States or purchased pursuant to
letters of credit of whatever kind, nature or description, including all
raw materials, work-in-process, finished goods, and materials to be used or
consumed in Debtor's business; and all names or marks affixed to or to be
affixed thereto for purposes of selling same by the seller, manufacturer,
lessor or licenser thereof ("Inventory");
All warehouse receipts, bills of lading, shipping documents and other
instruments or documents relating to such Inventory; and
C. All present and future books and records, including, without limitation,
all computer programs, printed output and computer readable data in the
possession or control of the Debtor, any computer service bureau or other
third party, all computer disks, hard drives and other computer related
hardware and software, relating to Accounts and Inventory; and
D. All cash and non-cash proceeds of the foregoing in whatever form and
wherever located, including, without limitation, all insurance proceeds and
all claims against third parties for loss or destruction of or damage to
any of the foregoing.
Except as defined herein, all terms used above shall have the meaning
provided in the New York Uniform Commercial Code.
2. OBLIGATIONS DEFINED
The term "Obligations" shall mean all payment and other obligations of the
Debtor under, or in respect of, this Agreement, the Note Purchase Agreement, the
Guarantee and the other Financing Documents to which the Debtor is a party.
3. WARRANTIES AND COVENANTS
Debtor warrants and agrees that:
A. Debtor will pay and perform all of the Obligations according to their
terms.
B. All of the Collateral is and will at all times be owned by Debtor free
and clear of all tax liens and other liens and security interests, except
the liens and security interests permitted in the Note Purchase Agreement
or by Secured Party in writing.
C. The Collateral shall be kept at the principal place of business of
Debtor set forth below or at the locations set forth in Schedule A hereto
and none of the Collateral will be removed from such locations without the
prior written consent of Secured Party except for Debtor's sales to its
customers in the ordinary course of Debtor's business.
D. Debtor will insure the Collateral at all times against all hazards,
including but not limited to fire, theft and risks covered by extended
coverage insurance, and such policies shall be payable to Secured Party as
its interest may appear. Said policies of insurance shall be satisfactory
to Secured Party as to form, amount and insurer. Debtor shall furnish
certificates, policies or endorsements to Secured Party as proof of such
insurance, and, if Debtor fails to do so, Secured Party is authorized but
not required to obtain such insurance at Debtor's expense. All policies
shall provide for at least thirty (30) days' prior written notice to
Secured Party of cancellation or non-renewal. Secured Party may act as
attorney-in-fact for Debtor in making, adjusting and settling any claims
under any such insurance policies. Subject to the lntercreditor Agreement,
Debtor hereby assigns to Secured Party all of its right, title and interest
to any insurance policies insuring the Collateral, including all rights to
receive the proceeds of insurance, and directs all insurers to pay all such
proceeds directly to Secured Party and authorizes Secured Party to endorse
Debtor's name on any instrument of such payment.
E. Debtor will keep the Collateral in good condition and repair, reasonable
wear and tear excepted, and will immediately notify Secured Party of any
destruction of or any damage to any of the Collateral.
F. Debtor will not sell, transfer or otherwise dispose of any of the
Collateral except Inventory to buyers in the ordinary course of business
and except as otherwise permitted under the Note Purchase Agreement.
G. Intentionally omitted.
H. Debtor will advise Secured Party in writing of any changes in any of the
Debtor's places of business or the opening of any new place of business
five (5) business days prior to the occurrence thereof.
I. Debtor will pay when due all taxes (unless such taxes are being
contested in good faith and adequate reserves have been provided and all
other conditions required by Section 10.4 of the Note Purchase Agreement
have been satisfied), license fees and assessments relating to the
Collateral
J. Debtor will be liable to Secured Party for any expenditures by Secured
Party in connection with the preparation, execution, delivery,
administration and enforcement of this Security Agreement and for the
maintenance and preservation of the Collateral, including but not limited
to taxes, appraisal fees, certificate of title charges, recording and
filing fees (including Uniform Commercial Code financing statement fees and
search fees), the fees and disbursements of Secured Party's in-house and
outside counsel, levies, insurance and repairs, and for the repossession,
holding, preparation for sale, and the sale of the Collateral (including
attorneys' and accountants' fees and expenses), as well as all damages for
breach of warranty, misrepresentation, or breach of covenant by Debtor, and
all such liabilities shall be included in the definition of Obligations
herein, shall be secured by the security interest granted herein, and shall
be payable upon demand.
K. Debtor will execute financing statements pursuant to the Uniform
Commercial Code, as enacted in the states where such financing statements
are required, or are deemed by Secured Party as desirable, and any other
documents required by Secured Party, to perfect or maintain the security
interest granted herein or to effect the purposes of this Agreement. Debtor
hereby authorizes Secured Party to execute and file any financing
statements covering the Collateral without Debtor's signature or if Secured
Party so elects signed in Debtor's name by Secured Party and Secured Party
is hereby appointed attorney-in-fact to do so.
L. Debtor will at all times during normal business hours allow Secured
Party or its agents to examine and inspect the Collateral, as well as
Debtor's books and records relating thereto, and to make extracts and
copies of them.
M. Debtor will report, in form satisfactory to Secured Party, such
information as Secured Party may reasonably request regarding the
Collateral; such reports shall be for such periods shall reflect Debtor's
records as at such time and shall be rendered with such frequency as
Secured Party may reasonably designate. All information heretofore or
hereafter furnished by Debtor to Secured Party is or will be true and
correct in all material respects as of the date with respect to which such
information is or will be furnished.
N. Debtor shall not become a party to any restructuring of its form of
business or participate in any consolidation, merger, liquidation or
dissolution without Secured Party's prior written consent, except as
permitted in the Note Purchase Agreement.
O. Debtor will notify Secured Party of any intended change of Debtor's
name, or the use of any trade name or style, and will notify Secured Party
when such change or use becomes effective Debtor represents that it uses
only the trade names and styles listed on Schedule B annexed hereto.
P. Debtor has the right and power and is duly authorized to enter into and
perform its Obligations hereunder, and Debtor's execution, performance and
delivery of this Agreement does not and will not conflict with the
provisions of any statute, regulation, ordinance or rule of law, or with
the provisions of any agreement, contract or other document which may now
or hereafter be binding on Debtor.
Q. There are no actions or proceedings which are pending or threatened
against Debtor which might result in any material and adverse change in its
financial condition or materially affect the Collateral pledged hereunder.
R. Debtor is not in violation of any applicable federal, state, municipal
or county statute, regulation or ordinance which may materially and
adversely affect its business, property, assets, operations or conditions,
financial or otherwise and Debtor has obtained and shall maintain in effect
all federal state and local licenses and permits necessary to conduct its
business, including, but not limited to any environmental matters relating
to the remediation of contaminated property and/or the removal of hazardous
materials or otherwise, except where the failure to maintain the same would
not materially and adversely affect its business, property, assets,
operations or conditions, financial or otherwise.
S. Debtor hereby irrevocably appoints Secured Party as Debtor's true and
lawful attorney-in-fact, with full power and authority and in the place and
stead of Debtor and in the name of Debtor or otherwise, from time to time
while an Event of Default under, and as defined in, the Note Purchase
Agreement shall have occurred and be continuing in Secured Party's
discretion, to take any action and to execute any instrument which Secured
Party may deem necessary or desirable to accomplish the purposes of this
Security Agreement, including, without limitation, to receive, endorse and
collect all instruments made payable to Debtor representing any
distribution in respect of the Collateral or any part thereof and to give
full discharge far the same; to ask, demand, collect, xxx for, recover,
compromise, receive and give acquittance and receipt for monies due and to
become due under or in connection with the Collateral; to obtain and adjust
insurance covering the Collateral; to receive, endorse and collect any
drafts or other instruments and documents in connection therewith; and to
file any claims or take any action or institute any proceedings which
Secured Party may deem to be necessary or desirable for the collection
thereof, provided, however, that Secured Party may act as such
attorney-in-fact at any time with respect to signing and recording
financing statements under the Uniform Commercial Code.
4. EVENTS OF DEFAULT
All Obligations shall become due and payable upon the occurrence of any Event of
Default under, and as defined in, the Note Purchase Agreement in accordance with
the terms and provisions thereof.
5. RIGHTS AND REMEDIES
Upon the occurrence and continuance of any Event of Default, Secured Party shall
have all rights and remedies provided by law, including but not limited to those
of a secured party under the Uniform Commercial Code of New York, in addition to
the rights and remedies provided herein or in the Note Purchase Agreement.
Secured Party may require Debtor to assemble the Collateral and make it
available to Secured Party at a place to be designated by Secured Party which is
reasonably convenient to Debtor and Secured Party. If notice of disposition of
Collateral is required by law, five (5) days prior notice by Secured Party to
Debtor designating the time and place of any public sale or the time after which
any private sale or other intended disposition of Collateral is to be made shall
be deemed to be reasonable notice thereof and Debtor waives any other notice. In
the event Secured Party institutes an action to recover any Collateral or seeks
recovery of any Collateral by way of prejudgment remedy in an action against
Debtor, Debtor waives the posting of any bond which might otherwise be required.
All Secured Party's rights and remedies shall be cumulative and none are
exclusive. Whether or not default has occurred, all payments made by or on
behalf of Debtor and all credits due Debtor under this Agreement and under any
other agreement between Debtor and Secured Party may be applied to the
Obligations in whatever order and amounts Secured Party chooses.
6. MISCELLANEOUS
A. Any failure or delay by Secured Party to require strict performance by
Debtor of any of the provisions, warranties, terms and conditions contained
herein or in any other agreement, document or instrument shall not affect
Secured Party's right to demand strict compliance and performance
therewith, and any waiver of any default shall not waive or affect any
other default, whether prior or subsequent thereto, and whether of the same
or of a different type. None of the warranties, conditions, provisions and
terms contained herein or in any other agreement, document or instrument
shall be deemed to leave been waived by any act or knowledge of Secured
Party, its agents, officers or employees, but only by an instrument in
writing, signed by an officer of Secured Party, directed to Debtor and
specifying such waiver.
B. Any notice under this Agreement shall be in writing, and deemed to have
been given or made: if by hand, immediately upon delivery; if by
telecopier, immediately upon receipt; if by overnight courier, one (1) day
after dispatch; and if by first class or certified mail three (3) days
after the mailing. All such notices shall be addressed 10 the parties at
their respective addresses set forth below.
C. In the event that any provision hereof shall be deemed to be invalid by
any court, such invalidity shall not affect the remainder of this
Agreement.
D. This Agreement shall be binding upon and for the benefit of the parties
hereto and their respective successors and assigns.
E. Wherever the context requires, the singular form of any word shall
include the plural, and the neuter form of any word shall include the
masculine and feminine forms, and vice verse.
F. Debtor hereby irrevocably submits and consents to the jurisdiction of
any New York State or United States Federal court sitting in New York City
over any action or proceeding arising out of or relating to this Agreement,
and the Debtor hereby irrevocably agrees that all claims in respect of such
action or proceeding may be heard and determined in such New York State or
Federal court. The Debtor irrevocably consents to the service of any and
all process in any such action or proceeding by the mailing of copies of
such process to the Debtor at its address specified in the Note Purchase
Agreement. The Debtor agrees that a final non-appealable judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
law. The Debtor further waives any objection to venue in such State and any
objection to an action or proceeding in such State on the basis of forum
non conveniens. The Debtor agrees that any action or proceeding brought
against the Secured Party or any holder of Notes shall be brought only in
New York State or United States Federal Court sitting in New York City.
Nothing contained in this paragraph shall affect the right of the Secured
Party or any holder of Notes to serve legal process in any other manner
permitted by law or affect the right of the Secured Party or any holder of
Notes to bring any action or proceeding against Debtor or its property in
the courts of any other jurisdiction.
To the extent that the Debtor has or hereafter may acquire any immunity
from jurisdiction of any court or from any legal process (whether from
service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property,
the Debtor hereby irrevocably waives such immunity in respect of its
obligations under this Agreement.
G. This Agreement together with the Note Purchase Agreement and the other
agreements executed in connection therewith, constitutes the entire
agreement among the parties with respect to the subject matter hereof, and
supersedes all prior written or oral understandings with respect thereto.
This Agreement may be amended only by mutual agreement of the parties
evidenced in writing and signed by the party to be charged therewith.
H. This Agreement is subject to the terms and provisions of the
lntercreditor Agreement (as such term is defined in the Note Purchase
Agreement).
IN WITNESS WHEREOF, the undersigned have executed and delivered this Agreement
on the date written above.
By: /s/ Xxxxxxx X. Xxxxxxx
Its: Vice President
Address: 000 Xxxxxxxx Xxxx., Xxxxxxxx, XX 00000
Telephone No. (000) 000-0000
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY, as Collateral Agent
By: /s/ Xxxx X. Xxxxx
Its: c/o Phoenix Investments Partners, Ltd.
00 Xxxxxxxx Xxxxxx
X.X. Xxx 000000
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Telephone No: 000-000-0000
SCHEDULE A
Locations of Collateral
For Hampshire Designers, Inc.:
Hampshire Designers, Inc. County:
000 Xxxxxxxx Xxxxxxxxx Xxxxxxxx
Xxxxxxxx, XX 00000
Hampshire Designers, Inc. County:
000 Xxxx 00xx Xxxxxx Xxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Natalie Knitting Xxxxx County:
Xxxxx Industrial Park #15 Xxxxxx
Chilhowie, VA 24319
Designers Knitting Xxxxx County:
000 Xxx Xxxxx Xxxx Xxxxxxxx
Xxxxxxxx, XX 00000
Winona Knitting Xxxxx County:
000 Xxxx Xxxxxx Xx. Xxxxxx
Xxxxxx, XX 00000
Winona Knitting Xxxxx County:
000 Xxxx Xxxxxx Xxxxxxx
XxXxxxxxxx, XX 00000
Hampshire Hosiery - Plant No. 2 County:
000 Xxxxx Xxxxxx Xxxxxxxx
Xxxxxx Xxxx, XX 00000
Hampshire Hosiery - Plant No. 1 County:
XX Xxx. 0 0X Xxxxxxxx
Xxxxxx Xxxx, XX 00000
Hampshire Brands County:
0000 Xxxxxx Xxxxx Xxxxxx
Xxxxxx, XX 00000
For Glamourette Fashions Xxxxx, Inc:
Glamourette Fashion Xxxxx - Plant Xx. 0
000 XX 00.0
Xxxxxxxxxxxx, XX 00000
Glamourette Fashion Xxxxx - Plant Xx. 0
Xxxx Xx. 0 XX 000.0
Xxxxxxxxxxxx, XX 00000
For Segue (America) Limited
Segue (America) Limited
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Segue (America) Limited County:
c/o Xxxxxxx Xxxx, Inc. Los
0000 Xxxxxx Xxxxxx Xxxxxxx
Xxxxxxxx, XX 00000
Segue (America) Limited County:
000 Xxxxxxxx Xxxxxxxxx Xxxxxxxx
Xxxxxxxx, XX 00000
For San Francisco Knitworks, Inc:
San Francisco Knitworks County:
000 Xxxxxxx Xxxxxx Xxx Xxxxxxxxx
Xxx Xxxxxxxxx, XX 00000
SCHEDULE B
Tradestyle and Brand Names
For Hampshire Designers, Inc.:
Tradestvles:
Designers Knitting Xxxxx
Hampshire Brands
Winona Knitting Xxxxx
Hampshire Brands
Hampshire Hosiery
Natalie Knitting Xxxxx
Brand Names/Licenses:
Designers Originals Sport
Hampshire Studio
Luxalon
Xxxxxxxx Xxxxx
Xxxxxxx
Xxx Xxxxxxxxx
Xxxxxx Xxxxx
Xxxx Xxxx Xxxxxxxxxx
Xxxxxxx Xxxxxx (pending)
Xxxxxxx Xxxxxxx (pending)
Berwick (pending)
Lake Harmony Rowing Club (pending)
Silk Impressions (pending)
Step Ahead (pending)
Healthy Feet (pending)
Flash Legs (pending)
EXHIBIT 4.11 -(GPA)
FORM OF GUARANTOR'S PLEDGE AGREEMENT
PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of May 15, 1998, made by HAMPSHIRE DESIGNERS, INC., a
Delaware corporation, whose address is 000 Xxxxxxxx Xxxxxxxxx, Xxxxxxxx, Xxxxx
Xxxxxxxx 00000 (the "Pledgor"), in favor of PHOENIX HOME LIFE MUTUAL INSURANCE
COMPANY, a New York mutual insurance company, having an office at Xxx Xxxxxxxx
Xxx, Xxxxxxxx, Xxxxxxxxxxx 00000, as collateral agent for itself and for The
Ohio National Life Insurance Company (the "Collateral Agent;" Phoenix Home Life
Mutual Insurance Company and The Ohio National Life Insurance Company are
referred to herein as the "Lenders").
The Lenders have extended loans to Hampshire Group, Limited, a Delaware
corporation (the "Company") pursuant to those certain separate Note Purchase
Agreements each dated as of May 15, 1998 among Pledgor, the Company, Hampshire
Investments, Limited, Glamourette Fashion Xxxxx, Inc., San Francisco Knitworks,
Inc., and Segue (America), Limited and each of the Lenders, (together with the
other documents and agreements executed in connection therewith, the "Note
Purchase Agreement;" Hampshire Investments, Limited, Glamourette Fashion Xxxxx,
Inc., San Francisco Knitworks, Inc., and Segue (America), Limited are referred
to herein, collectively, as the "Other Guarantors"). The Pledgor has guaranteed
the borrowings of the Company pursuant to the Note Purchase Agreement. The
Pledgor is the owner and holder of the shares of stock of those certain Other
Guarantors as more particularly described in the Schedule attached hereto (the
"Pledged Securities").
It is a condition to the making of the loans by the Lenders that the Pledgor
shall have made the pledge contemplated by this Agreement. In consideration of
the premises, the Pledgor hereby agrees as follows:
1. THE PLEDGE
A. Pledge.
The Pledgor hereby pledges to the Collateral Agent and grants to the
Collateral Agent a security interest in the following (the "Pledged
Collateral"):
(a) the Pledged Securities and the certificates and instruments
representing the Pledged Securities, and all interest, dividends,
cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for
any or all of the Pledged Securities; and
(b) all additional shares of stock of the issuers of the Pledged
Securities, and the certificates representing such additional shares,
and all interest, dividends, cash, instruments and other property from
time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of the Pledged Securities.
B. Security for Obligations.
This Agreement secures the payment of all obligations (the "Obligations")
of the Pledgor, as provided for in the Note Purchase Agreement and in this
Agreement.
C. Delivery of Pledged Collateral.
All certificates or instruments representing or evidencing the Pledged
Collateral shall be delivered to and held by the Collateral Agent on behalf
of the Lenders pursuant hereto and shall be in suitable form for transfer
by delivery, or shall be accompanied by duly executed instruments of
transfer or assignment in blank, all in form and substance satisfactory to
the Collateral Agent. The Collateral Agent shall have the right, at any
time in its discretion and without notice to the Pledgor, to transfer to or
to register in the name of the Collateral Agent or any of its nominees any
or all of the Pledged Collateral, subject only to the revocable rights
specified in Section 5A(a). In addition, the Collateral Agent shall have
the right at any time to exchange certificates or instruments representing
or evidencing Pledged Collateral for certificates or instruments of smaller
or larger denominations.
D. Continuing Agreement.
This Agreement shall create a continuing security interest in the Pledged
Collateral and shall remain in full force and effect until payment in full
of the Obligations.
2. REPRESENTATIONS AND WARRANTIES
The Pledgor represents and warrants as follows:
A. Ownership and Liens.
The Pledgor is the legal and beneficial owner of the Pledged Collateral
free and clear of any Lien, except for the security interest created by
this Agreement and except as provided for in the Credit Agreement (as such
term is defined in the Note Purchase Agreement) and the pledge agreements
executed in connection therewith (collectively, as amended from time to
time, the "Bank Pledge Agreement").
B. Perfection.
The pledge of the Pledged Securities pursuant to this Agreement and the
delivery thereof to Collateral Agent creates a valid and perfected first
priority security interest in the Pledged Collateral, securing the payment
of the Obligations, subject only to the pari passu security interest of the
Bank Pledge Agreement.
C. No Authorization Required.
No authorization, approval or other action by, and no notice to or filing
with, any governmental authority or regulatory body is required either (a)
for the pledge by the Pledgor of the Pledged Collateral pursuant to this
Agreement or for the execution, delivery or performance of this Agreement
by the Pledgor or (b) for the exercise by the Collateral Agent of the
voting or other rights provided for in this Agreement (except as may be
required in connection with such disposition by laws affecting the offering
and sale of securities generally and except for the filing of financing
and/or continuation statements).
3. COVENANTS
A. Further Assurances.
The Pledgor agrees that at any time and from time to time, at the expense
of the Pledgor, the Pledgor will promptly execute and deliver all further
instruments and documents, and take all further action that the Collateral
Agent may request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable the Collateral Agent
to exercise and enforce its rights and remedies hereunder with respect to
any Pledged Collateral.
B. Transfers and Other Liens; Additional Shares.
The Pledgor agrees that it will not (i) hereafter sell or otherwise dispose
of, or grant any option with respect to, any of the Pledged Collateral, or
(ii) create or permit to exist any lien or security interest upon or with
respect to any of the Pledged Collateral, except (1) for the security
interest under this Agreement and under the Bank Pledge Agreement and (2)
as otherwise permitted under the Note Purchase Agreement.
4. THE COLLATERAL AGENT
A. Collateral Agent Appointed Attorney-in-Fact.
The Pledgor hereby irrevocably appoints the Collateral Agent as the
Pledgor's attorney-in-fact, with full authority in the place and stead of
the Pledgor and in the name of the Pledgor or otherwise, from time to time,
following the occurrence and during the continuance of an Event of Default
(as defined in the Note Purchase Agreement), in the Collateral Agent's
discretion to take any action and to execute any instrument which the
Collateral Agent may deem necessary or advisable to accomplish the purposes
of this Agreement, including, without limitation, to receive, endorse and
collect all instruments made payable to the Pledgor representing any
dividend, interest payment or other distribution in respect of the Pledged
Collateral or any part thereof and to give full discharge for the same,
provided, however, that the Collateral Agent may act as such
attorney-in-fact at any time with respect to signing and recording
financing statements under the Uniform Commercial Code.
B. Collateral Agent May Perform.
If the Pledgor fails to perform any agreement contained herein, the
Collateral Agent may itself perform, or cause performance of such
agreement, and the expenses of the Collateral Agent incurred in connection
therewith shall be payable by the Pledgor under Section 6B.
C. Reasonable Care.
The Collateral Agent shall be deemed to have exercised reasonable care in
the custody and preservation of the Pledged Collateral in its possession if
the Pledged Collateral is accorded treatment substantially equal to that
which it accords its own property, it being understood that the Collateral
Agent shall not have responsibility for (a) ascertaining or taking action
with respect to calls, conversations, exchanges, maturities, tenders or
other matters relative to any Pledged Collateral, whether or not the
Collateral Agent has or is deemed to have knowledge of such matters, or (b)
taking any necessary steps to preserve rights against any other parties
with respect to any Pledged Collateral.
5. DEFAULT
A. Voting Rights; Dividends; Etc.
(a) So long as no Event of Default (as defined in the Note Purchase
Agreement) shall have occurred and be continuing:
(i) The Pledgor shall be entitled to exercise any and all voting
and other consensual rights pertaining to the Pledged Collateral
or any part thereof for any purpose not inconsistent with the
terms of this Agreement, provided, however, that the Pledgor
shall provide (within five (5) days after the date of such
meeting) the Collateral Agent with a copy of any minutes of a
meeting of shareholders evidencing the exercise of any and all
voting and other consensual rights by Pledgor.
(ii) The Collateral Agent shall execute and deliver (or cause to
be executed and delivered) to the Pledgor all such proxies and
other instruments as the Pledgor may reasonably request for the
purpose of enabling the Pledgor to exercise the voting and other
rights which it is entitled to exercise pursuant to paragraph (i)
above.
(b) Upon the occurrence and during the continuance of an Event of
Default (as defined in the Note Purchase Agreement):
(i) All rights of the Pledgor to exercise the voting and other
consensual rights which it would otherwise be entitled to
exercise pursuant to Section 5A(a)(i) shall cease, and all such
rights shall thereupon become vested in the Collateral Agent who
shall thereupon have the sole right to exercise such voting and
other consensual rights and to receive and hold the Pledged
Collateral.
(ii) All dividends and interest payments, which are received by
the Pledgor, shall be received in trust for the benefit of the
Collateral Agent, shall be segregated from other funds of the
Pledgor and shall be forthwith paid over to the Collateral Agent
as Pledged Collateral in the same form as so received (with any
necessary indorsement).
B. Remedies upon Default.
If an Event of Default has occurred and is continuing:
(a) The Collateral Agent may exercise in respect of the Pledged Collateral,
in addition to other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party on default
under the Uniform Commercial Code (the "UCC") in effect in the State of New
York at that time, and the Collateral Agent may also, without notice except
as specified below, sell the Pledged Collateral or any part thereof in one
or more parcels at public or private sale, at any exchange, broker's board
or at any of the Collateral Agent's offices or elsewhere, for cash, on
credit or for future delivery, and at such price or prices and upon such
other terms as the Collateral Agent may deem commercially reasonable. The
Pledgor agrees that, to the extent notice of sale shall be required by law,
at least ten (10) days' notice to the Pledgor of the time and place of any
public sale or the time after which any private sale is to be made shall
constitute reasonable notification. The Collateral Agent shall not be
obligated to make any sale of Pledged Collateral regardless of notice of
sale having been given. The Collateral Agent may adjourn any public or
private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned.
(b) Any cash held by the Collateral Agent as Pledged Collateral and all
cash proceeds received by the Collateral Agent in respect of any sale or
collection from or other realization upon all or any part of the Pledged
Collateral may, in the discretion of the Collateral Agent, be held by the
Collateral Agent as collateral for, and/or then or at any time thereafter
applied (after payment of any amounts payable to the Collateral Agent
pursuant to Section 6.2) in whole or in part by the Collateral Agent
against, all or any part of the Obligations in such order as the Collateral
Agent shall elect. Any surplus of such cash or cash proceeds held by the
Collateral Agent and remaining after payment in full of all the Obligations
shall be paid over to the Pledgor or to whomever may be lawfully entitled
to receive such surplus.
6. MISCELLANEOUS
A. Amendments, Etc.
No amendment or waiver of any provision of this Agreement nor consent to
any departure by the Pledgor therefrom, shall in any event be effective
unless the same shall be in writing and signed by the Collateral Agent, and
then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
B. Expenses.
The Pledgor will upon demand pay to the Collateral Agent the amount of any
and all reasonable expenses, including the reasonable fees and expenses of
its counsel and of any experts and agents, which the Collateral Agent may
incur in connection with (a) the administration of this Agreement, (b) the
custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Pledged Collateral, (c) the exercise or
enforcement of any of the rights of the Collateral Agent hereunder or (d)
the failure by the Pledgor to perform or observe any of the provisions
hereof.
C. Notices.
Unless the party to be notified otherwise notifies the other party in
writing, notices shall be given by ordinary mail or telecopier, addressed
to such party at its address on the signature page hereof.
D. Transfer of Loan Documents.
This Agreement shall (a) be binding upon the Pledgor, its successors and
assigns, and (b) inure, together with the rights and remedies of the
Collateral Agent hereunder, to the benefit of the Collateral Agent on
behalf of the Lenders and their respective successors, transferees and
assigns.
E. Governing Law; Terms.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
F. lntercreditor Agreement.
This Agreement is subject to the terms and provisions of the lntercreditor
Agreement (as such term is defined in the Note Purchase Agreement).
IN WITNESS WHEREOF, the Pledgor has caused this Agreement to be duly executed
and delivered by all of its members as of the date first above written.
HAMPSHIRE DESIGNERS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
Title: Vice President
Address for Notices to Pledgor:
000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY, as Collateral Agent
Investment
c/o Phoenix Partners, Ltd.
00 Xxxxxxxx Xxxxxx
P.O. Box 150480
Hartford, Connecticut 06115-0480
By: /s/ Xxxx X. Xxxxx
Its: Vice President
Address:
SCHEDULE TO PLEDGE AGREEMENT OF
Description of Collateral
COMPANY CERTIFICATE NO. NUMBER OF SHARES
Glamourette Fashion Xxxxx, Inc. #100 1,000
Segue (America) Limited #100 400
San Francisco Knitworks, Inc. #100 1,000
This Schedule shall be deemed automatically and immediately amended and replaced
upon each addition to or substitution or replacement of any of the Pledged
Securities.
EXHIBIT 4.16
FORM OF INTERCREDITOR AGREEMENT
INTERCREDITOR AGREEMENT
THIS INTERCREDITOR AGREEMENT is made as of the 15th day of May, 1998 by and
among EACH OF THE PERSONS LISTED ON SCHEDULE 1 ATTACHED HERETO.
RECITALS
WHEREAS, the capitalized terms used herein have the respective meanings set
forth in Schedule 2 attached hereto;
WHEREAS, HGL has entered into the Note Purchase Agreements with each of the
original Noteholders, pursuant to which HGL has issued and sold the Notes;
WHEREAS, HGL has also entered into the Credit Agreement with the Bank Agent and
the Banks, as lenders, pursuant to which the Banks have agreed to extend loans
and other financial accommodations to HGL;
WHEREAS, HGL has pledged to the Bank Agent on behalf of the Banks, and has
granted a security interest and lien to the Bank Agent on behalf of the Banks in
and to, all of its now existing and hereafter acquired HGL Subsidiary Pledged
Stock and certain other collateral as security for its obligations under the
Credit Agreement and under the HGL Bank Security Documents;
WHEREAS, HGL has pledged to the Noteholder Agent on behalf of the Noteholders,
and has granted a security interest and lien to the Noteholder Agent on behalf
of the Noteholders in and to, all of its now existing and hereafter acquired HGL
Subsidiary Pledged Stock and certain other collateral as security for its
obligations under the Note Purchase Agreements, the HGL Note Security Documents
and the Notes;
WHEREAS, HDI has pledged to the Bank Agent on behalf of the Banks, and has
granted a security interest and lien to the Bank Agent on behalf of the Banks in
and to, all of its now existing and hereafter acquired HDI Subsidiary Pledged
Stock and certain other collateral as security for its obligations under the HDI
Bank Guaranty and the HDI Bank Security Documents;
WHEREAS, HDI has pledged to the Noteholder Agent on behalf of the Noteholders,
and has granted a security interest and lien to the Noteholder Agent on behalf
of the Noteholders in and to, all of its now existing and hereafter acquired HDI
Subsidiary Pledged Stock and certain other collateral as security for its
obligations under the HDI Note Guaranty and the HDI Note Security Documents;
WHEREAS, Segue has pledged to the Bank Agent on behalf of the Banks, and has
granted a security interest and lien to the Bank Agent on behalf of the Banks in
and to, all of its now existing and hereafter acquired Segue Subsidiary Pledged
Stock and certain other collateral as security for its obligations under the
Segue Bank Guaranty and the Segue Bank Security Documents;
WHEREAS, Segue has pledged to the Noteholder Agent on behalf of the Noteholders,
and has granted a security interest and lien to the Noteholder Agent on behalf
of the Noteholders in and to, all of its now existing and hereafter acquired
Segue Subsidiary Pledged Stock and certain other collateral as security for its
obligations under the Segue Note Guaranty and the Segue Note Security Documents;
WHEREAS, Glamourette has granted a security interest and lien to the Bank Agent
on behalf of the Banks in and to certain collateral as security for its
obligations under the Glamourette Bank Guaranty and the Glamourette Bank
Security Documents;
WHEREAS, Glamourette has granted a security interest and lien to the Noteholder
Agent on behalf of the Noteholders in and to certain collateral as security for
its obligations under the Glamourette Note Guaranty and the Glamourette Note
Security Documents;
WHEREAS, SF Knitworks has granted a security interest and lien to the Bank Agent
on behalf of the Banks in and to certain collateral as security for its
obligations under the SF Knitworks Bank Guaranty and the SF Knitworks Bank
Security Documents;
WHEREAS, SF Knitworks has granted a security interest and lien to the Noteholder
Agent on behalf of the Noteholders in and to certain collateral as security for
its obligations under the SF Knitworks Note Guaranty and the SF Knitworks Note
Security Documents;
WHEREAS, the Bank Agent, the Banks, the Noteholder Agent and the Noteholders
desire to set forth their respective rights and remedies in and to the
Collateral and various other related matters;
NOW THEREFORE, in consideration of the sum of TEN DOLLARS ($10.00) now paid by
each party hereto to the other parties hereto (the receipt and sufficiency of
which is hereby acknowledged by each party hereto), and for other good and
valuable consideration, the parties hereto agree as follows:
1. HAMPSHIRE DEBT AND LIEN PRIORITIES.
1.1 All Bank Debt and Noteholder Debt to Rank Equally. Subject to the terms
of this Agreement, all Bank Debt and Noteholder Debt shall be of equal
priority and none shall have priority of payment over or be subordinate to
the other.
1.2 Lien Priorities to Rank Equally. Notwithstanding the date, manner or
order of perfection of the security interests and liens granted to the Bank
Agent on behalf of the Banks in and to the Bank Collateral or the date,
manner or order of perfection of the security interests and liens granted
to the Noteholder Agent on behalf of the Noteholders in and to the
Noteholder Collateral, and notwithstanding any provisions of the applicable
Uniform Commercial Code or any other applicable law or judicial decision or
whether either of the Bank Agent or the Noteholder Agent holds possession
of all or any part of the Collateral, as among the Bank Agent, the
Noteholder Agent, the Banks and the Noteholders, the Bank Agent on behalf
of the Banks and the Noteholder Agent on behalf of the Noteholders shall
each have security interests and liens of equal priority and without
preference or distinction in and to the Collateral. The shared priority
provided for in this Section 1.2 and any sharing of proceeds in respect
thereof provided for in Section 3.1 hereof is expressly conditioned upon
the nonavoidability and perfection of the security interest and liens to
which it applies and, if a security interest or lien in favor of the Bank
Agent or the Noteholder Agent, as the case may be, is not perfected or is
avoidable or has been discharged, terminated or released for any reason,
then the priority arrangements provided for in this Section 1.2 and the
allocation of proceeds under Section 3.1 hereof shall be ineffective as to
the particular Collateral which is the subject of the unperfected or
avoidable or discharged, terminated or released security interest or lien.
Anything contained in this Section 2.1 to the contrary notwithstanding, the
assignment of the Key-Person Policy to the Noteholder Agent is and shall be
for the benefit of all holders of Hampshire Debt, as hereinafter described.
1.3 Attachment and Perfection. For the avoidance of doubt, the Bank Agent,
the Banks, the Noteholder Agent and the Noteholders agree that their
respective rights set forth herein shall exist and be enforceable
independent of the time or order of attachment or perfection of the
respective security interests, chattel mortgage liens or other liens, or
the time or order of filing of financing statements, chattel mortgages or
other recordations and registrations, or the time or sequence in which any
Bank Document or Note Document is executed or delivered, the time or
sequence in which any Bank Debt or Noteholder Debt becomes due (whether at
its stated maturity, by acceleration or otherwise) or is incurred, or the
time or sequence of commencement or completion of any proceedings to
enforce or collect any Bank Debt or Noteholder Debt, to enforce or realize
on any Bank Collateral or Noteholder Collateral or the time or sequence in
which any order or judgment in respect thereof is made or entered or any
execution is obtained or registered or any other proceeding is commenced or
completed or any other factor of legal relevance, whether similar or
dissimilar to any of the foregoing, other than this Agreement, establishing
the priority or ranking or relative rights of enforcement among the Bank
Agent, the Noteholder Agent, the Banks and the Noteholders.
1.4 No Contest of Liens or Ranking in Respect of Collateral. Each of the
Bank Agent, the Noteholder Agent, the Banks and the Noteholders agrees that
it will not dispute or contest (a) the validity, enforceability or
perfection of any security interest or lien in and to the Collateral
securing any Bank Debt or Noteholder Debt, or (b) the pari passu ranking of
Bank Debt, Noteholder Debt and the security interests and liens in and to
the Collateral as provided in this Section 1. Nothing in this clause 1.4
shall reduce the scope of the last sentence of Section 1.2 hereof.
1.5 Amount of Hampshire Debt Discharged; Application to Hampshire Debt. Any
proceeds realized from the enforcement or realization upon the Collateral
or otherwise under this Agreement shall constitute a discharge of Bank Debt
or the Noteholder Debt only to the extent of the amount of such proceeds
actually received by the holder thereof in accordance with this Agreement.
Any moneys received by a Bank or Noteholder as aforesaid shall be applied
or reapplied from time to time to the Bank Debt or Noteholder Debt held by
such Person as the relevant Bank Documents or Noteholder Documents, as the
case may be, require.
2. ENFORCEMENT.
2.1 Enforcement of Security Interests and Liens in Collateral.
(a) Enforcement Actions. The Bank Agent, the Noteholder Agent, the
Banks and the Noteholders agree that the security interests and liens
in and to the Collateral provided for in the Bank Documents and the
Note Documents, as the case may be, shall not be enforced as against
any or all of the Collateral except at the direction of the
Super-Majority Debt Holders upon the existence of one or more
Actionable Events of Default and in compliance with the provisions
hereof. Such direction shall state whether one Agent shall act in
commencing any enforcement or foreclosure of the security interests or
liens in and to the Collateral, or any portion thereof, or whether
both Agents shall act, as herein after set forth, provided that an
Agent shall not be obligated to act hereunder unless instructed by the
appropriate majority of the holders of Hampshire Debt that may so
instruct it. If only one Agent is instructed to act by the
Super-Majority Debt Holders, such agent, prior to commencing any
enforcement or foreclosure of the security interests or liens in and
to the Collateral, or any portion thereof, shall notify, in writing,
the other Agent of the nature and scope of the enforcement or
foreclosure action to be taken; such notification shall be delivered
not less than 15 days prior to the taking of such action.
(b) Proceeds from Enforcement Actions. In the event one Agent or both
of the Agents, pursuant to clause (a) above, commence to enforce or
foreclose their respective security interests or liens in and to the
Collateral, or any portion thereof, any net proceeds from such action
shall be shared among the Agents, the Banks and the Noteholders as
provided in Section 3.1 hereof.
(c) Joint Enforcement; Separate Enforcement. In the event that both
Agents, pursuant to clause (a) above, shall have been directed to act
in connection with the enforcement or foreclosure of their respective
security interests or liens in and to the Collateral, or any portion
thereof, such Agents (and the holders of Hampshire Debt represented by
such Agents) shall cooperate with each other in connection with the
exercise of their enforcement and foreclosure rights in respect of
such Collateral so that such Collateral may be sold free and clear of
any security interests and liens in favor of such Agents or such
holders; in connection therewith, any instructions to be given to the
Agents shall be approved by the Super-Majority Debt Holders.
(d) Coordination of Collateral Agents. If both Agents, pursuant to
clause (a) above , shall have been directed to act in the enforcement
or foreclosure of their respective rights in and to the Collateral,
the Majority Banks, Majority Noteholders and the Agents, acting
together, may agree to substitute the Bank Agent for the Noteholder
Agent or the Noteholder Agent for the Bank Agent, as the case may be,
for the sole purpose of creating a single collateral agent under the
Bank Documents and Note Documents to facilitate the enforcement and
foreclosure of the rights of the Agents under such documents and in
respect of the Collateral. If only one Agent, pursuant to clause (a)
above, shall have been directed to act in the enforcement or
foreclosure of its rights in and to the Collateral, the acting Agent
and the holders of Hampshire Debt represented thereby shall indemnify
and hold harmless the nonacting Agent and the holders of Hampshire
Debt represented thereby from and against any and all liabilities,
obligations, claims, losses, damages, penalties, actions, judgments,
suits, costs, expenses and disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or asserted against
such nonacting Agent and/or such holders of Hampshire Debt and that in
any way relate to or arise out of the enforcement action or
foreclosure undertaken by such acting Agent. If only one Agent,
pursuant to clause (a) above, shall have been directed to act in the
enforcement or foreclosure of its rights in and to the Collateral, the
nonacting Agent shall, to the extent that its liens and security
interests are superior of record to those of the acting Agent,
promptly subordinate its security interests and liens in and to the
Collateral then subject to the enforcement action or foreclosure of
such acting Agent for purposes of enabling the acting Agent to pass
title to such Collateral pursuant to such enforcement action or
foreclosure free and clear of such liens and security interests.
2.2 Possession of Collateral. If any Agent shall be in possession of any
Collateral and such Agent has not been directed pursuant to Section 2.1(a)
hereof, to be the acting Agent in respect of the exercise of any right of
enforcement or foreclosure in respect thereof, such Agent shall deliver
such Collateral to the acting Agent and the acting Agent shall hold such
Collateral subject to the provisions of Section 5 hereof.
2.3 Noncollateral Enforcement Rights Permitted. Except as provided in
Sections 2.1, 2.5 and 2.6 hereof, no Agent or holder of Hampshire Debt
shall exercise any right of enforcement or foreclosure in respect of any
Collateral or appoint a receiver or trustee in respect thereof or exercise
or take any other remedy or proceedings in or out of court in respect
thereof, provided that, other than as provided in said Sections, nothing in
this Section 2 shall limit or restrict, or be construed as limiting or
restricting, (a) the ability of any Agent to take any action provided for
in the Bank Documents or the Noteholder Documents, as the case may be, to
preserve or protect all or any of the Collateral, (b) the ability of any
holder of Hampshire Debt from exercising any of its other rights and
remedies under the Bank Documents or the Noteholder Documents, as the case
may be (including, without limitation, amending or modifying any of such
Documents, waiving any obligations or responsibilities of any Hampshire
Entity under any of such Documents, increasing the amount of indebtedness
under any of such Documents or accelerating the maturity of any
indebtedness under any of such Documents).
2.4 No Marshaling. Each of the Bank Agent, Noteholder Agent, Banks and
Noteholders hereby waives any right to require the other party to marshal
any of the Collateral or any other collateral or security or otherwise
compel any other party to seek recourse against or satisfaction of any
Hampshire Debt owed to it from one source before seeking recourse or
satisfaction from another source.
2.5 Insurance. Subject to the shared priority and respective rights of the
Bank Agent, the Banks, the Noteholder Agent and the Noteholders provided
for herein, each of the Bank Agent and the Noteholder Agent shall be
entitled to be designated secured parties and to obtain loss payee
endorsements and additional insured status with respect to any policies of
insurance now or hereafter obtained by any Hampshire Entity insuring
against casualty or other loss to any property constituting Collateral.
Each of the Bank Agent and the Noteholder Agent agrees to coordinate their
respective activities with respect to filing claims, settling disputes,
making adjustments and taking any and all other action with regard to such
insurance. For the avoidance of doubt, the provisions of this Agreement
shall govern the respective rights of the Bank Agent, the Noteholder Agent,
the Banks and the Noteholders to insurance proceeds despite any
inconsistent provisions or any inconsistent designation of rights or
priorities among secured creditors in any insurance policy or endorsement
thereof.
Subject to Section 2.1 and the shared priority and respective rights of the Bank
Agent, the Banks, the Noteholder Agent and the Noteholders provided for herein,
the Noteholder Agent shall be entitled to receive a collateral assignment of the
Key-Person Policy (acknowledged by the insurer in respect thereof) and shall
have the right (a) to collect from the insurer under the Key-Person Policy the
proceeds of such policy upon the death of Xx. Xxxxxxx, (b) to surrender said
policy and receive the surrender value thereof, (c) to collect and receive all
distributions, shares of surplus, dividends, deposits or other similar payments
in respect of the Key-Person Policy, and (d) to elect any optional mode of
settlement permitted by the Key-Person Policy. If, at the time of receipt of
proceeds in respect of the Key-Person Policy, an Actionable Event of Default
shall exist and enforcement and/or foreclosure actions are being or will be
undertaken in respect of the Collateral, the proceeds of the Key-Person Policy
shall be paid and distributed by the Noteholder Agent as provided for in Section
3 hereof. If, at the time of receipt of proceeds in respect of the Key-Person
Policy, there shall be in existence no Actionable Event of Default in respect of
which enforcement and/or foreclosure actions are being or will be undertaken
with respect to the Collateral, the proceeds of the Key-Person Policy shall be
paid by the Noteholder Agent (or, if for any reason whatsoever, received by the
Company or any other Obligor, by the Company or such Obligor) to the Bank Agent
on behalf of the Banks and the holders of Notes as follows:
(1) in the case of each Bank, the portion of such proceeds equal to the ratio
that the aggregate principal amount outstanding at such time under the Credit
Agreement and owing to such bank bears to the total of the aggregate principal
amount outstanding at such time and owing to all Banks plus the aggregate
principal amount of all Notes then outstanding, or
(2) in the case of each holder of Notes that shall have exercised its rights
under Section 8.4 of the Note Purchase Agreements in respect of the death of Xx.
Xxxxxxx prior to the receipt of such proceeds or after the receipt of such
proceeds if such exercise after such receipt is in accordance with the
requirements set forth in Section 8.4 of the Note Purchase Agreements, the
lesser of (i) the amount otherwise payable to such holder under Section 8.4 of
the Note Purchase Agreements and (ii) the portion of such proceeds equal to the
ratio that the aggregate principal amount outstanding at such time of the Notes
of such holder bears to the total of the aggregate principal amount outstanding
at such time and owing to all Banks under the Credit Agreement plus the
aggregate principal amount of all Notes then outstanding.
The Company shall cooperate with the Noteholder Agent in connection with any
payments owing to the Banks and/or the holders of Notes under this Section 2.5.
To the extent that proceeds from the Key-Person Policy shall not have been paid
to the Banks and/or any one or more Noteholders and Section 3 would not
otherwise apply, they shall be paid by the Noteholder Agent to the Company free
and clear of any liens or security interests created by any Document.
2.6 Offsets. Neither the Bank Agent, the Noteholder Agent, any Bank nor any
Noteholder having any right of offset in respect of, or banker's lien in
and to, any moneys, instruments or deposit accounts of HGL, HDI,
Glamourette, Segue, SF Knitworks or any other Hampshire Entity shall
exercise any such right or such lien except in connection with the exercise
of rights and remedies under this Section 2, and the allocation and
distribution of net proceeds in respect thereof shall be as provided for in
Section 3.1(a) hereof.
2.7 Books and Records. If the Agents shall jointly act in the exercise of
their enforcement and foreclosure rights in respect of the Collateral, or
any portion thereof, they shall jointly take possession of the books and
records of the Hampshire Entities. To the extent either of the Agents takes
possession of the books and records of any Hampshire Entity, such Agent
will notify the other Agent thereof and provide the other Agent with
reasonable access to inspect and copy and use such books and records for
purposes of preserving, collecting and/or disposing of accounts and other
Collateral.
2.8 Foreclosure Sales. To the extent that any acting Agent shall hold a
public or private foreclosure sale in respect of all or any of the
Collateral, such acting Agent shall give written notice thereof to the
other nonacting Agent not less than 10 Business Days prior to such sale.
The holders of Hampshire Debt agree that each of them may attend and bid at
any such public sale but may not pay for any such bid that is successful by
applying all or any of the indebtedness then owing to such Person from any
Hampshire Entity in whole or partial satisfaction of such successful bid
other than the amount of cash proceeds that such Person would be entitled
to receive from such sale as provided for hereunder and under the Bank
Documents or the Noteholder Documents, as the case may be.
3. APPLICATION AND ALLOCATION OF PROCEEDS.
3.1 Application and Allocation of Net Proceeds.
(a) Allocation and Distribution of Net Proceeds. Cash proceeds in
respect of (i) the enforcement or other realization of any security
interest or lien in and to any of the Collateral, (ii) the exercise of
the other rights and remedies of either of the Agents under the Bank
Documents or the Noteholder Documents in respect of the Collateral
(including, without limitation, the receipt of any proceeds in respect
of the collection of any accounts), (iii) the effecting by any holder
of Hampshire Debt of any offset in respect of, or realizing by any
such holder upon any banker's lien in and to, any moneys, instruments
or deposit accounts of any Hampshire Entity, in each case, net of all
Recovery Costs in respect thereof (collectively, the "Net Proceeds")
shall be allocated, subject to Section 1.2 hereof, among the holders
of Hampshire Debt in respect thereof as follows:
(1) first, to all accrued and unpaid interest in respect of
Hampshire Debt; to the extent that Net Proceeds allocated to this
paragraph (1) are insufficient to pay all such accrued and unpaid
interest, such Net Proceeds shall be shared ratably among the
holders of Hampshire Debt in accordance with the ratio that the
aggregate amount of such accrued and unpaid interest owing to
each such holder bears to the total amount of such accrued and
unpaid interest;
(2) second, to the outstanding principal of all Hampshire Debt
until all such outstanding principal has been fully repaid (and
for purposes of this paragraph (2) only, outstanding banker's
acceptances and issued but undrawn and unexpired letters of
credit shall be deemed to be outstanding principal, provided that
any payments of proceeds in respect of any such banker's
acceptance or any such letter of credit shall not be paid to the
holder of Hampshire Debt that shall have created such banker's
acceptance or shall have issued such letter of credit but rather
shall be held in trust by the Agent for such holder until such
time as such holder shall have certified to both Agents, in
writing, the amount and time of the payment it has actually made
in respect of any such banker's acceptance or letter of credit;
upon receipt of such certification, the amount held in trust by
such Agent corresponding to such banker's acceptance or letter of
credit (which would have been paid directly to such holder if
such banker's acceptance or such letter of credit, as the case
may be, had been paid at the time of the original distribution of
Net Proceeds under this Paragraph (2)) shall be paid to such
holder; if any such letter of credit shall have expired or
otherwise become void without having been drawn upon, the portion
of the amount held in trust in respect thereof shall be released
by such Agent and distributed at such time to the holders of
Hampshire Debt as provided in paragraphs (1) through (5) of this
Section 3.1(a); to the extent that Net Proceeds allocated to this
paragraph (2) are insufficient to pay all outstanding principal
of all Hampshire Debt, such Net Proceeds shall be shared ratably
among the holders of Hampshire Debt in accordance with the ratio
that the aggregate outstanding principal balance of Hampshire
Debt held by each such holder bears to the total outstanding
principal balance of all Hampshire Debt;
(3) third, to all prepayment premiums due and owing in respect of
any Hampshire Debt (prepayment premiums shall include any
Make-Whole Amounts) and to all commitment fees, utilization fees,
letter of credit issuance fees, banker's acceptance fees or other
similar fees owing in respect of any Hampshire Debt or the Bank
Documents or Noteholder Documents relating thereto; to the extent
that Net Proceeds allocated to this paragraph (3) are
insufficient to pay all prepayment premiums, such Net Proceeds
shall be shared ratably among the holders of Hampshire Debt in
accordance with the ratio that the aggregate amount of such
prepayment premiums, commitment fees, utilization fees, letter of
credit issuance fees, banker's acceptance fees and other similar
fees owing to each such holder bears to the total amount of such
prepayment premiums, commitment fees, utilization fees, letter of
credit issuance fees, banker's acceptance fees and other similar
fees;
(4) fourth, to all Hedging Transaction Breakage Costs; to the
extent that Net Proceeds allocated to this paragraph (4) are
insufficient to pay all Hedging Transaction Breakage Costs, such
Net Proceeds shall be shared ratably among the holders of
Hampshire Debt in accordance with the ratio that the aggregate
amount of such Hedging Transaction Breakage Costs owing to each
such holder bears to the total amount of such Hedging Transaction
Breakage Costs; and
(5) fifth, to all other amounts (including, without limitation,
any costs, fees, expenses and indemnities) owing by any Hampshire
Entity to holders of Hampshire Debt to the extent not included in
paragraphs (1) through (4), inclusive, above (collectively, the
"Remainder Obligations"); to the extent that Net Proceeds
allocated to this paragraph (5) are insufficient to pay all
Remainder Obligations, such Net Proceeds shall be shared ratably
among the holders of Hampshire Debt in accordance with the ratio
that the aggregate amount of such Remainder Obligations owing to
each such holder bears to the total amount of such Remainder
Obligations.
(b) Realization of Cash. To the extent that the proceeds of Collateral are
not cash or cash equivalents, the Agents, Banks and Noteholders agree to
cooperate with each other in establishing a fair and reasonable value for
such proceeds and determining how such proceeds should be distributed and
allocated under this Section 3 or otherwise turned into cash.
(c) Certain Banker's Acceptances and Letters of Credit. Anything contained
in Section 3.1(a) hereof notwithstanding, if any holder of Hampshire Debt,
pursuant to the Bank Documents or Noteholder Documents, as the case may be,
created banker's acceptances and/or issued letters of credit for the
benefit or account of any Hampshire Entity after such holder shall have
actual knowledge of the existence of any Actionable Event of Default or any
default under the Bank Documents or Noteholder Documents (other than in
connection with rolling over or reissuing a letter of credit that was
outstanding prior to the existence of such Actionable Event of Default or
other default), any amounts that may become due and payable thereunder and
any acceptance fees in connection therewith shall be treated for purposes
of Section 3.1(a) hereof as Remainder Obligations.
(d) Acceleration. Each holder of Hampshire Debt, as a condition to
receiving any distributions under Section 3.1(a) hereof, shall have
accelerated all payments in respect thereof or otherwise made demand, or
caused demand to be made, for the same. If Net Proceeds are held by an
Agent on behalf of holders of Hampshire Debt represented by it pursuant to
Section 3.1 (a)(2) hereof, any delayed distributions of such Net Proceeds
shall be made as if such delayed distribution took place at the time of the
original distribution of such Net Proceeds and without taking into
consideration any further or additional exercise of enforcement or
foreclosure rights being pursued by any Agent at the time of such delayed
distribution.
3.2 Turnover of Proceeds. To the extent that any holder of Hampshire Debt
obtains proceeds in respect of any of the Collateral or pursuant to the
exercise of any of its rights of offset or any of its banker's liens other
than as provided for in Section 3.1 hereof, it shall take such actions as
may be necessary (including, without limitation, turning over such proceeds
to an Agent) in order to comply with the requirements of this Agreement in
respect of such proceeds (including, without limitation, the allocation,
distribution and sharing provisions of Section 3.1 hereof). Nothing in this
Section 3.2 shall prohibit or prevent any Hampshire Entity from making any
payment to an Agent or a holder of Hampshire Debt that is a scheduled
payment under the Bank Documents or the Noteholder Documents, as the case
may be, or, if unscheduled and if proceeds of Collateral have been used to
fund such payment, has not occurred during the existence of any default or
event of default under the Bank Documents or the Noteholder Documents or
pursuant to any exercise of a right or remedy in respect of the Collateral.
Any turnover of proceeds to an Agent effected under this Section 3.2 shall
be distributed by such Agent to the holders of Hampshire Debt so as to give
effect to how such proceeds would have been so distributed under Section
3.1 hereof if originally distributed pursuant to such Section.
4. LOANS AND OTHER BANKING ACTIVITIES; ADDITIONAL COLLATERAL
4.1 Loans and Other Banking Activities. Nothing contained in this Agreement
shall be construed to restrict or limit the ability of any Bank to make
loans and extend other credit (including, without limitation, banker's
acceptances and the issuance of letters of credit) to or for the benefit of
any Hampshire Entity under the Credit Agreement or otherwise, to enter into
Hedging Transactions with any Hampshire Entity, to provide deposit accounts
for any Hampshire Entity and to provide such other customary banking
services for any Hampshire Entity as such Bank and such Hampshire Entity
deem appropriate. Nothing contained in this Agreement shall be construed to
restrict or limit the ability of any Noteholder to make loans and extend
other credit to or for the benefit of any Hampshire Entity under the Note
Purchase Agreements or otherwise or to offer to provide to any Hampshire
Entity insurance and/or investment products or services.
4.2 Additional Collateral. Neither the Agents nor any holder of Hampshire
Debt shall accept any additional property as security with respect to such
Hampshire Debt unless such additional property is simultaneously made a
part of the Collateral and made subject to this Agreement for the equal and
ratable benefit of all holders of Hampshire Debt.
4.3 Additional Guarantees. Neither the Agents nor any holder of Hampshire
Debt shall accept any additional guarantees in respect of Hampshire Debt
unless the entity issuing such guarantee becomes a "Hampshire Entity" and
any collateral pledged with respect thereto is made subject to this
Agreement and made part of the Collateral.
5. CONTROL OF SUBSIDIARY PLEDGED STOCK AND OTHER COLLATERAL
5.1 Subsidiary Pledged Stock. To the extent that the Bank Agent, as secured
party on behalf of the Banks, shall hold any Subsidiary Pledged Stock in
its possession, the Bank Agent acknowledges and agrees that, for purposes
of establishing control over such Subsidiary Pledged Stock for the benefit
of the Noteholder Agent and the Noteholders, the Bank Agent, subject to the
terms hereof and its rights hereunder, is acting as the agent of the
Noteholder Agent in holding such Subsidiary Pledged Stock and that, as such
agent, its sole duty shall be to deliver such Subsidiary Pledged Stock to
the Noteholder Agent as required under Section 2.2 and in accordance with
this Section 5.1; except in connection with the exercise of any enforcement
or foreclosure rights by the Bank Agent, as provided for herein, the Bank
Agent shall not deliver such Subsidiary Pledged Stock to any other Person
without the prior written consent of the Noteholder Agent. To the extent
that the Noteholder Agent, as a secured party on behalf of the Noteholders,
shall hold any Subsidiary Pledged Stock in its possession, the Noteholder
Agent acknowledges and agrees that, for purposes of establishing control
over the Subsidiary Pledged Stock for the benefit of the Bank Agent and the
Banks, the Noteholder Agent, subject to the terms hereof and its rights
hereunder, is acting as the agent of the Bank Agent in holding such
Subsidiary Pledged Stock and that, as such agent, its sole duty shall be to
deliver such Subsidiary Pledged Stock to the Bank Agent as required under
Section 2.2 and in accordance with this Section 5.1; except in connection
with the exercise of any enforcement or foreclosure rights by the
Noteholder Agent, as provided for herein, the Noteholder Agent shall not
deliver such Subsidiary Pledged Stock to any other Person without the prior
written consent of the Bank Agent. Both Agents agree to obtain and maintain
appropriate executed and undated stock powers in respect of all Subsidiary
Pledged Stock.
5.2 Other Collateral. To the extent that the Bank Agent, as secured party
on behalf of the Banks, shall hold any goods, instruments, money,
negotiable documents or chattel paper as Collateral in its possession, the
Bank Agent acknowledges and agrees that, for purposes of establishing
perfection of the security interest or lien of the Noteholder Agent
therein, the Bank Agent, subject to the terms hereof and its rights
hereunder, is acting as the agent of the Noteholder Agent and as a bailee
under notification and, as such agent, its sole duty shall be to deliver
such Collateral to the Noteholder Agent as required under Section 2.2 and
in accordance with this Section 5.2; except in connection with the exercise
of any enforcement or foreclosure rights by the Bank Agent, as provided for
herein, the Bank Agent shall not deliver such Collateral to any other
Person without the prior written consent of the Noteholder Agent. To the
extent that the Noteholder Agent, as secured party on behalf of the
Noteholders, shall hold any goods, instruments, money, negotiable documents
or chattel paper as Collateral in its possession, the Noteholder Agent
acknowledges and agrees that, for purposes of establishing perfection of
the security interest or lien of the Bank Agent therein, the Noteholder
Agent, subject to the terms hereof and its rights hereunder, is acting as
the agent of the Bank Agent and as a bailee under notification and, as such
agent, its sole duty shall be to deliver such Collateral to the Bank Agent
as required by Section 2.2 and in accordance with this Section 5.2; except
in connection with the exercise of any enforcement or foreclosure rights by
the Noteholder Agent, as provided for herein, the Noteholder Agent shall
not deliver such Collateral to any other Person without the prior written
consent of the Bank Agent.
5.3 HIL Collateral To the extent that HIL Collateral is to be released
pursuant to the Documents, the Bank Agent and the Noteholder Agent shall
effect such release, as provided for in the Documents to which they are
parties.
6. PROVISION OF INFORMATION.
6.1 Information Regarding Bank Documents or Noteholder Documents. Upon
request, each holder of Hampshire Debt shall furnish any other holder of
Hampshire Debt with full information and particulars relating to the Bank
Documents or Noteholder Documents, as the case may be, of such holder,
including, if so requested, photocopies of the same.
6.2 Notice of Certain Events. Each holder of Hampshire Debt, promptly and
in any event within three Business Days of:
(a) obtaining knowledge of the occurrence of a default or event of
default under its respective Bank Documents or Noteholder Documents,
or
(b) receipt of any proceeds of Collateral by such holder other than as
expressly provided for herein, shall use its best efforts to give
written notice thereof, in accordance with Section 7.2 hereof, to the
other holders of Hampshire Debt, setting forth in such notice the
details thereof, including with respect to clause (b) above, the
amount of proceeds received; provided that the failure of any holder
of Hampshire Debt to provide such notice shall not adversely affect
such holder's rights and benefits under this Agreement.
7. MISCELLANEOUS.
7.1 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
7.2 Notices. All notices and communications provided for hereunder shall be
in writing and sent (a) by facsimile transmission (or electronic mail) if
the sender on the same day sends a confirming copy of such notice by a
recognized overnight delivery service (with charges prepaid), (b) by first
class United States mail (with charges prepaid) or (c) by a recognized
overnight delivery service (with charges prepaid). Any such notice shall be
addressed as set forth on Schedule 1 attached hereto or at such other
address as the Bank Agent, the Noteholder Agent, the Banks or the
Noteholders shall have specified to the other parties by notice duly given
in accordance with this Section 7.2. Notices under this Section 7.2 will be
deemed given only when actually received.
7.3 Amendments. This Agreement may not be amended or modified, and no
provision of this Agreement may be waived, except by an agreement in
writing signed by each of the holders of Hampshire Debt. The agreements and
priorities set forth in this Agreement shall remain in full force and
effect regardless of whether any holder of Hampshire Debt or any Agent
rescinds, amends, terminates or reforms, by liquidation or otherwise, any
one or more of the Bank Documents or Noteholder Documents, as the case may
be.
7.4 Transfer of Obligations. Each holder of Hampshire Debt agrees that it
shall not transfer or assign its interest in any of such Hampshire Debt or
any instrument evidencing such Hampshire Debt unless the transferee agrees
in writing that it shall be bound by this Agreement.
7.5 Primary Obligor. Anything contained herein to the contrary
notwithstanding, the Banks and the Noteholders agree that credit shall be
extended and loans made only to HGL and not any other Hampshire Entity,
provided that such other Hampshire Entities may provide guarantees in
support of such credit extension and such loans.
7.6 Benefits of Agreement Restricted. Nothing herein expressed or implied
is intended or shall be construed to give anyone other than the Agents and
holders of Hampshire Debt and their successors and assigns any legal or
equitable right, remedy or claim under or in respect hereof or any
covenant, condition or provision contained herein; and all such covenants,
conditions and provisions are and shall be held to be for the sole and
exclusive benefit of the Agents and holders of Hampshire Debt and their
successors and assigns. Subject to the preceding sentence, this Agreement
shall inure to the benefit of and be binding upon the parties hereto and
their respective successors and assigns. For the avoidance of doubt,
nothing contained in this Agreement is or is intended to be for the benefit
of HGL, HDI, Glamourette, Segue, SF Knitworks or any other Hampshire Entity
and nothing contained herein shall limit or in any way modify any of the
obligations of such Persons to the holders of Hampshire Debt.
7.7 Relations Among Holders of Hampshire Debt. This Agreement is entered
into solely for the purposes set forth herein, and no holder of Hampshire
Debt nor any Agent assumes any responsibility to any other party hereto to
advise such Person of information known to such Person regarding the
financial condition of any Hampshire Entity or of any other circumstance
bearing upon the risk of nonpayment of any Hampshire Debt. Except as
provided in and as limited by Section 5, neither Agent and no holder of
Hampshire Debt shall be deemed to the agent of the other party.
7.8 Severability. Should any part of this Agreement for any reason be
declared invalid or unenforceable, such decision shall not affect the
validity or enforceability of any remaining portion, which remaining
portion shall remain in force and effect as if this Agreement had been
executed with the invalid or unenforceable portion hereof eliminated.
7.9 Duplicate Originals; Execution in Counterpart. This Agreement may be
executed in any number of counterparts, each of which shall be an original
but all of which together shall constitute one instrument. Each counterpart
may consist of a number of copies hereof, each signed by less than all, but
together signed by all, of the parties hereto.
7.10 Term of the Agreement. This Agreement shall remain in force and effect
until there is no longer any Hampshire Debt outstanding, all such Hampshire
Debt (including, without limitation, all interest, prepayment premiums,
fees, costs and expenses in respect thereof) having been fully, finally and
indefeasibility paid.
7.11 Entire Agreement. This Agreement, including the Annex and the
Schedules hereto, constitutes the entire agreement between the parties
hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
THE CHASE MANHATTAN BANK, for itself and as
Bank Agent
By: /s/ Xxxx Xxxxxxxxx
Name: Xxxx Xxxxxxxxx
Title: Vice President
REPUBLIC NATIONAL BANK OF NEW YORK
By: /s/ Xxxxxx Commander
Name: Xxxxxx Commander
Title: Vice President
NATIONSBANK N.A.
By: /s/ Xxxx Xxxxxxxx
Name: Xxxx Xxxxxxxx
Title: Vice President
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY, for itself and as Noteholder Agent
By: /s/ Xxxx X. Xxxxx
Name: Xxxx X. Xxxxx
Title: Vice President
OHIO NATIONAL LIFE INSURANCE COMPANY
By: /s/ Xxxxxxx X. Xxxxxxxx
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President
The undersigned Hampshire Entities hereby acknowledge and agree to the foregoing
Intercreditor Agreement. Nothing herein shall be deemed to amend, modify or
supersede or otherwise alter the terms of the Bank Documents and/or the
Noteholder Documents as to such Hampshire Entities and, in the event of any
inconsistency or conflict between the terms of such Documents and this
lntercreditor Agreement, such Documents shall govern as between each of such
Hampshire Entities and the relevant Agent and/or holders of Hampshire Debt. The
undersigned Hampshire Entities agree that each Agent holding Collateral may
serve as bailee for the other Agent and each Agent is authorized to turn such
Collateral over to such other Agent as provided for in this lntercreditor
Agreement. The undersigned Hampshire Entities further agree that this
lntercreditor Agreement is solely for the benefit of the Agents and the holders
of Hampshire Debt and shall not give any of such Hampshire Entities any rights
or benefits thereunder:
HAMPSHIRE GROUP, LIMITED
By: /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
HAMPSHIRE DESIGNERS, INC.
By: Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
SEGUE (AMERICA) LIMITED
By: Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
GLAMOURETTE FASHION XXXXX, INC.
By: Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
SAN FRANCISCO KNITWORKS, INC.
By: Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
SCHEDULE I
Noteholders. Noteholder Agent and Addresses
Phoenix Home Life Mutual Insurance Company
c/o Phoenix Duff & Xxxxxx Corporation
00 Xxxxxxxx Xxxxxx
X.X. Xxx 000000
Xxxxxxxx, XX 00000-0000
Attention: Private Placements Division
Telecopier Number: (000) 000-0000
The Ohio National Life Insurance Company
Xxxx Xxxxxx Xxx 000
Xxxxxxxxxx, XX 00000
Attn: Investment Department
Telecopier Number: (000) 000-0000
Banks. Bank Agent and Addresses
The Chase Manhattan Bank
Republic National Bank of New York
NationsBank N.A.
SCHEDULE II
Defined Terms
As used in this Agreement, the following terms have the respective meanings set
forth below or set forth in the Section of this Agreement following such term:
"Actionable Event of Default" shall mean any event of default under, and as
defined in, (with respect to the Banks) the Bank Documents and (with respect to
the Noteholders) the Noteholder Documents, in either case, after all required
notices have been given and grace periods and cure periods have elapsed or run
with respect thereto and after the Bank Debt or Noteholder Debt, as the case may
be, has been declared or otherwise has become immediately due and payable prior
to its scheduled maturity.
"Agents" shall mean the Bank Agent and the Noteholder Agent.
"Agreement, this" means this lntercreditor Agreement as it may from time to time
be amended or modified.
"Bank Agent" means The Chase Manhattan Bank and any successor facility agent
under, and as provided for in, the Credit Agreement.
"Bank Collateral" means all of the collateral provided for in the Bank
Documents.
"Bank Debt" means, without duplication, at any time all indebtedness and other
payment obligations of HGL, HIL, HDI, Glamourette, Segue, SF Knitworks and/or
any other Hampshire Entity owing to the Banks and/or Bank Agent at such time
under or in respect of the Bank Documents (including, without limitation, all
outstanding loans under the Credit Agreement).
"Bank Documents" means all of the HGL Bank Security Documents, HDI Bank Security
Documents, Glamourette Bank Security Documents, Segue Bank Security Documents,
SF Knitworks Bank Security Document, the Credit Agreement and any other security
document or guarantee executed in favor of the Bank Agent and/or the Banks by a
Hampshire Entity.
"Banks" means each of the banks that are parties to the Credit Agreement and all
assignees (if any) of any such bank's interest therein.
"Business Day" means any day, other than a Saturday, Sunday or any other day on
which commercial banks are generally not open for business in Hartford,
Connecticut, Anderson, South Carolina or New York, New York.
"Collateral" means the Bank Collateral and the Noteholder Collateral.
"Credit Agreement" means that certain Credit Agreement and Guaranty, dated as of
May 28, 1998, among the Company, the Guarantors, The Chase Manhattan Bank,
Republic National Bank of New York, NationsBank, N.A., as Banks and The Chase
Manhattan Bank, as Agent, together with any related documents thereto, in each
case as such agreement may be amended (including any amendment and restatement
thereof), supplemented or otherwise modified from time to time, including
without limitation any agreement extending the maturity of, refinancing,
replacing or otherwise restructuring all or any portion of the Debt under such
agreement or any successor or replacement agreement and whether by the same or
any other agent, lender or group of lenders, provided that lenders in connection
with any such refinancing, replacing or otherwise restructuring and the agent in
respect thereof shall have become a party to this Agreement.
"Documents" means the Bank Documents and the Noteholder Documents.
"Dollars or $" means lawful money of the United States from time to time.
"Glamourette" means Glamourette Fashion Xxxxx, Inc., a Delaware corporation.
"Glamourette Bank Guaranty" means that certain guaranty and the obligations in
respect thereof of Glamourette, as set forth in the Credit Agreement.
"Glamourette Bank Security Documents" means each of the documents set forth on
Schedule 3 hereto, as amended or modified from time to time.
"Glamourette Note Guaranty" means that certain guaranty and the obligations in
respect thereof of Glamourette, as set forth in the Note Purchase Agreements.
"Glamourette Note Security Documents" means each of the documents set forth on
Schedule 4 hereto, as amended or modified from time to time.
"Hampshire Debt" means all Bank Debt and Noteholder Debt.
"Hampshire Entity" means HGL, HDI, Glamourette, Segue and any other, directly or
indirectly owned, Subsidiary of any such Person that shall have issued a
guarantee of indebtedness of HGL owing to the Banks and/or the Noteholders.
"HDI" means Hampshire Designers, Inc., a Delaware corporation.
"HDI Bank Guaranty" means that certain guaranty and the obligations in respect
thereof of HDI, as set forth in the Credit Agreement.
"HDI Bank Security Documents" means each of the documents set forth on Schedule
5 hereto, as amended or modified from time to time.
"HDI Note Guaranty" means that certain guaranty and the obligations in respect
thereof of HDI, as set forth in the Note Purchase Agreements.
"HDI Note Security Documents" means each of the documents set forth on Schedule
6 hereto, as amended or modified from time to time.
"HDI Subsidiary Pledged Stock" means, at any time, the capital stock of the
Subsidiaries of HGL that has been pledged to the Bank Agent on behalf of the
Banks and the Noteholder Agent on behalf of the Noteholders.
"Hedging Transactions" means transactions entered into by HGL, HDI, Glamourette,
Segue or any other Hampshire Entity with any holder of Hampshire Debt which are
designed to protect a Hampshire Entity against fluctuations in interest rates
and/or foreign exchange, including, without limitation, interest rate "swap,"
"cap" or "collar" agreements or similar arrangements between such Person and
such holder providing for the transfer or mitigation of interest and/or foreign
exchange risks either generally or under specific contingencies.
Hedging Transactions Breakage Costs" means the damages payable by any Hampshire
Entity to any holder of Hampshire Debt, as a counterparty to any Hedging
Transaction, arising from any early termination of such Hedging Transaction,
which damages shall be determined in accordance with the contractual terms to
which such Hedging Transaction is subject. "Hedging Transactions Breakage Costs"
shall include only liquidated contractual damages after giving effect to
reasonable mitigation efforts (consistent with the terms of any such Hedging
Transaction) undertaken by such holder of Hampshire Debt. If such holder shall
have failed to undertake such reasonable mitigation efforts, the "Hedging
Transactions Breakage Costs" shall be reduced by the amount such damages would
have been mitigated if such holder had reasonably undertaken such mitigation
(consistent with the terms of any such Hedging Transaction).
"HGL" means Hampshire Group, Limited, a Delaware corporation.
"HGL Bank Security Documents" means each of the collateral documents set forth
on Schedule 7 hereto, as amended or modified from time to time.
"UHOL Note Security Documents" means each of the collateral documents set forth
on Schedule 8 hereto, as amended or modified from time to time.
"HGL Subsidiary Pledged Stock" means, at anytime, the capital stock of the
Subsidiaries of HGL that has been pledged to the Bank Agent on behalf of the
Banks and the Noteholder Agent on behalf of the Noteholders.
"HIL" means Hampshire Investment, Limited, a Delaware corporation.
"HlL Collateral" means the pledged stock securities described on Schedule 9
hereto and the pledged promissory note described on Schedule 10 hereto.
"Key-Person Policy" means a key-person life insurance policy in an amount not
less than $5,000,000 on the life of Xx. Xxxxxx Xxxxxxx.
"Majority Banks" shall mean, at any time, Banks holding in the aggregate not
less than 51% of the principal amount of the Bank Debt outstanding at such time.
"Majority Noteholders" shall mean, at anytime, Noteholders holding in the
aggregate not less than 51% of the principal amount of the Noteholder Debt
outstanding at such time.
"Make-Whole Amount" has the meaning ascribed thereto in the Note Purchase
Agreements.
"Net Proceeds" shall have the meaning set forth in Section 3.1(a) hereof.
"Noteholder Collateral" means all of the collateral provided for in the
Noteholder Documents.
"Note Purchase Agreements" means each of those separate Note Purchase Agreements
dated as of May 15, 1998, between HGL and each of the original Noteholders, as
amended or modified from time to time.
"Noteholder Agent" means Phoenix Home Life Mutual Insurance Company and any
successor collateral agent under, and as provided for in, the Note Purchase
Agreements.
"Noteholder Debt" means, without duplication, at any time all indebtedness and
other payment obligations of HGL, HIL, HDI, Glamourette, Segue, SF Knitworks
and/or any other Hampshire Entity owing to the Noteholders and/or Noteholder
Agent at such time under or in respect of the Noteholder Documents (including,
without limitation, the Notes).
"Noteholder Documents" means all of the HGL Note Security Documents, HDI Note
Security Documents, Glamourette Note Security Documents, Segue Note Security
Documents, the SF Knitworks Note Security Documents, the Note Purchase
Agreements, the Notes and any other security document or guarantee executed in
favor of the Noteholder Agent and/or the Noteholders by a Hampshire Entity.
"Noteholders" means Phoenix Home Life Mutual Life Insurance Company and Ohio
National Life Insurance Company, and all assignees (if any) of any such Person's
interest as holder in respect of any of the Notes.
"Notes" means the 7.05% Senior Secured Notes due January 2, 2008 of HGL issued
in an original aggregate principal amount of $15,000,000.
"Person" means an individual, partnership, joint venture, corporation, limited
liability corporation or other incorporated entity, company, undertaking, trust,
unincorporated organization, or a government or agency or political subdivision
thereof.
"Recovery Costs" means (a) all costs, charges, expenses and advances properly
incurred by, and reasonable compensation of, any Agent in connection with its
execution of its collateral agency duties and other related activities
(including, without limitation, all such costs, charges and expenses incurred in
connection with the realization upon the Collateral then being realized upon)
and (b) all liens on the Collateral so sold or realized upon (except those
subject to which such sale or realization shall have been made) ranking in
priority to the security interests or liens of the Agents granted pursuant to
the Bank Documents or Noteholder Documents, as the case may be.
"Remainder Obligations" has the meaning set forth in Section 3.1(a).
"SF Knitworks" means San Francisco Knitworks, Inc., a Delaware corporation.
"SF Knitworks Bank Guaranty" means that certain guaranty and the obligations in
respect thereof of SF Knitworks, as set forth in the Credit Agreement.
"SF Knitworks Bank Security Documents" means each of the documents set forth on
Schedule 11 hereto, as amended or modified from time to time.
"SF Knitworks Note Guaranty" means that certain guaranty and the obligations in
respect thereof of SF Knitworks, as set forth in the Note Purchase Agreements.
"SF Knitworks Note Security Documents" means each of the documents set forth on
Schedule 12 hereto, as amended or modified from time to time.
"Segue" means Segue (America) Limited, a Delaware corporation.
"Segue Bank Guaranty" means that certain guaranty and the obligations in respect
thereof of Segue, as set forth in the Credit Agreement.
"Segue Bank Security Documents" means each of the documents set forth on
Schedule 13 hereto, as amended or modified from time to time.
"Segue Note Guaranty" means that certain guaranty and the obligations in respect
thereof of Segue, as set forth in the Note Purchase Agreements.
"Segue Note Security Documents" means each of the documents set forth on
Schedule 14 hereto, as amended or modified from time to time.
"Subsidiary" means, with respect to any Person, any corporation, association,
limited liability company or other similar business entity in which such Person
owns sufficient equity or voting interests to enable it ordinarily, in the
absence of contingencies, to elect a majority of the directors (or Persons
performing similar functions) of such entity.
"Subsidiary Pledged Stock" means HGL Subsidiary Pledged Stock, HDI Subsidiary
Pledged Stock, Glamourette Subsidiary Pledged Stock, Segue Subsidiary Pledged
Stock and the capital stock of any other Hampshire Entity that shall have been
pledged pursuant to the Bank Documents or the Noteholder Documents.
"Super-Majority Debt Holders" shall mean, at any time, holders of Hampshire Debt
the outstanding principal amount of which is not less than 66 2/3% of the
aggregate amount of all Hampshire Debt then outstanding, provided that among
such holders there shall be at least one Noteholder and one Bank. For purposes
of this definition, any outstanding banker's acceptances and issued but undrawn
and unexpired letters of credit shall be deemed to be outstanding principal in
respect of Hampshire Debt but that any unutilized commitment under the Credit
Agreement shall not be deemed to be outstanding principal in respect of
Hampshire Debt.
SCHEDULE 3
Glamourette Bank Security Documents
Security Agreement dated as of May 28,1998 between Glamourette and the Bank
Agent.
SCHEDULE 4
Glamourette Note Security Documents
Security Agreement dated as of May 15, 1998 between Glamourette and the
Noteholder Agent.
SCHEDULE 5
HDI Bank Security Documents
Security Agreement dated as of May 28,1998 between HDI and the Bank Agent.
Pledge Agreement dated as of May 28,1998 between HDI and
the Bank Agent.
SCHEDULE 6
HDI Note Security Documents
Security Agreement dated as of May 15, 1998 between HDI and the Noteholder
Agent. Pledge Agreement dated as of May 15,1998 between HDI and the Noteholder
Agent.
SCHEDULE 7
HGL Bank Security Documents
Security Agreement dated as of May 28,1998 between HGL and the Bank Agent.
Pledge Agreement dated as of May 28,1998 between HGL and the Bank Agent
SCHEDULE 8
HGL Note Security Documents
Security Agreement dated as of May 15,1998 between HGL and the Noteholder Agent.
Pledge Agreement dated as of May 15,1998 between HGL and the Noteholder Agent.
SCHEDULE 0
XXX Xxxxxxx Xxxxx
Xxxxxxxxx Investments, Limited #2 200
#3 50
#4 125
#5 125
SCHEDULE 10
HIL Pledged Promissory Note
$5,000,000 unsecured promissory note of HIL, dated May 28,1998, in favor of the
Company.
SCHEDULE 11
SF Knitworks Bank Security Documents
Security Agreement dated as of May 28,1998 between SF Knitworks and the Bank
Agent.
SCHEDULE 12
SF Knitworks Note Security Documents
Security Agreement dated as of May 15,1998 between SF Knitworks and the
Noteholder Agent.
SCHEDULE 13
Segue Bank Security Documents
Security Agreement dated as of May 28,1998 between Segue and the Bank Agent.
SCHEDULE 14
Segue Note Security Documents
Security Agreement dated as of May 15, 1998 between Segue and the Noteholder
Agent.
EXHIBIT 10.7
GUARANTEE JOINDER AGREEMENT
Date:
Reference is made to
(a) the separate Note Purchase Agreements, each dated as of May 15, 1997
(as amended from time to time, collectively, the "Note Purchase Agreements"),
among Hampshire Group, Limited, a Delaware corporation (the "Company"),
Hampshire Designers, Inc., a Delaware corporation ("HDI"), Hampshire
Investments, Limited, a Delaware corporation ("HIL"), Segue (America) Limited, a
Delaware corporation ("Segue"), Glamourette Fashion Xxxxx, Inc., a Delaware
corporation ("Glamourette)," San Francisco Knitworks, Inc., a Delaware
corporation (together with its permitted successors, "SF Knitworks);" SF
Knitworks together with HDI, HIL, Segue and Glamourette are referred to herein
individually as an "Original Guarantor" and collectively as the "Original
Guarantors") and each of the purchasers listed on Annex 1 attached thereto (the
"Purchasers"), pursuant to which the Company sold, and the Purchasers bought,
the Company's 7.05% Senior Secured Notes due January 2, 2008, in the original
aggregate principal amount of $15,000,000 (as amended, restated or otherwise
modified from time to time, collectively, the "Notes"); and
(b) the joinder agreements identified on Annex 1 hereto, pursuant to which
the persons identified on said Annex 1, prior to the execution and delivery of
this Joinder Agreement, joined and were made joint and several Guarantors under
the Note Purchase Agreements (such persons and the Original Guarantors (other
than any such persons that may have been released under Section 10.7(b) of the
Note Purchase Agreement) are herein referred to, collectively, as the
"Guarantors").
Capitalized terms used herein and not otherwise defined herein have the
meanings specified in the Note Purchase Agreements.
1. JOINDER OF ADDITIONAL DOMESTIC SUBSIDIARY GUARANTOR.
In accordance with the terms of Section 10.7 of the Note Purchase
Agreements, ________ a ________ corporation (the "Additional Subsidiary
Guarantor"), by the execution and delivery of this Joinder Agreement, does
hereby agree to become, and does hereby become, a "Guarantor" under and as
defined in the Note Purchase Agreements. Without limiting the foregoing or any
of the terms and provisions of the Note Purchase Agreements, the Additional
Subsidiary Guarantor, by the execution and delivery of this Joinder Agreement,
does hereby agree to become, and does hereby become, jointly and severally
liable with the Guarantors for (a) the Guaranteed Obligations and (b) for the
due and punctual performance and observance of all the covenants in the Notes
and the Note Purchase Agreements to be performed or observed by the Company, all
as more particularly provided for in Section 23 of the Note Purchase Agreements.
As provided in Section 10.7 of the Note Purchase Agreements, the Note
Purchase Agreements are hereby, without any further action, amended to add the
Additional Subsidiary Guarantor as a "Guarantor" and signatory to the Note
Purchase Agreements.
2. REPRESENTATIONS AND WARRANTIES OF THE ADDITIONAL SUBSIDIARY GUARANTOR.
The Additional Subsidiary Guarantor hereby makes and restates, as of the
date hereof and only as to itself in its capacity as a Guarantor under the Note
Purchase Agreements, each of the representations and warranties set forth in
Section 5 to the Note Purchase Agreements that are applicable to a Guarantor
(whether as a Obligor or Subsidiary), subject only to the exceptions in respect
thereof set forth on Annex 2 hereto.
3. MISCELLANEOUS.
3.1 Effective Date.
This Joinder Agreement shall become effective on the date on which all of
the conditions set forth in Section 10.7(a) with respect to such Additional
Subsidiary Obligor are satisfied, -provided that, unless the Required Holders
shall have otherwise informed the Company, the effective date of this Joinder
Agreement shall be the date first stated above.
3.2 Expenses.
Without limiting the generality of Section 16 of the Note Purchase
Agreements, the Additional Subsidiary Guarantor agrees that it will pay, on the
date this Joinder Agreement becomes effective, the statement for the reasonable
fees and the disbursements of a single special counsel of the holders of Notes
presented on or about such date.
3.3 Section Headings, etc.
The titles of the Sections appear as a matter of convenience only, do not
constitute a part hereof and shall not affect the construction hereof. The words
"herein," "hereof," "hereunder" and "hereto" refer to this Joinder Agreement as
a whole and not to any particular Section or other subdivision.
3.4 Governing Law.
This Joinder Agreement shall be construed and enforced in accordance with,
and the rights of the parties shall be governed by, the law of the State of New
York excluding choice-of-law principles of the law of such State that would
require the application of the laws of a jurisdiction other than such State.
3.5 Successors and Assigns.
This Joinder Agreement shall inure to the benefit of and be binding upon
the successors and assigns of the Additional Subsidiary Guarantor.
IN WITNESS WHEREOF, the Additional Subsidiary Guarantor has caused this
Joinder Agreement to be executed on its behalf by a duly authorized officer or
agent thereof as of the date first above written.
Very truly yours,
By: /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
