Exhibit 4(d)(18)
EXECUTION COPY
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$40,000,000
LOAN AND SECURITY AGREEMENT
Dated as of August 28, 1998
Between
TEXFI INDUSTRIES, INC.
(the Borrower)
and
THE FINANCIAL INSTITUTIONS PARTY
HERETO FROM TIME TO TIME
(the Lenders)
and
BANKBOSTON, N.A.
(the Agent)
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TABLE OF CONTENTS(1)
Page
ARTICLE 1 - DEFINITIONS
SECTION 1.1. Definitions...................................................1
SECTION 1.2. General......................................................30
SECTION 1.3 Exhibits and Schedules........................................31
ARTICLE 2 - REVOLVING CREDIT FACILITY
SECTION 2.1. Revolving Credit Loans.......................................32
SECTION 2.2. Manner of Borrowing Revolving Credit Loans...................32
SECTION 2.3. Repayment of Revolving Credit Loans..........................34
SECTION 2.4. Revolving Credit Note........................................34
SECTION 2.5. Extension of Revolving Credit Facility.......................34
ARTICLE 3 - LETTER OF CREDIT FACILITY
SECTION 3.1. Agreement to Issue...........................................35
SECTION 3.2. Amounts......................................................35
SECTION 3.3. Conditions...................................................35
SECTION 3.4. Issuance of Letters of Credit................................36
SECTION 3.5. Duties of BankBoston.........................................36
SECTION 3.6. Payment of Reimbursement Obligations.........................36
SECTION 3.7. Participations...............................................37
SECTION 3.8. Indemnification, Exoneration.................................38
SECTION 3.9. Supporting Letter of Credit; Cash Collateral.................40
ARTICLE 4 - GENERAL LOAN PROVISIONS
SECTION 4.1. Interest.....................................................41
SECTION 4.2. Certain Fees.................................................42
SECTION 4.3. Manner of Payment............................................43
SECTION 4.4. General......................................................43
SECTION 4.5. Loan Accounts; Statements of Account.........................43
SECTION 4.6. Termination of Agreement.....................................44
SECTION 4.7. Making of Loans..............................................44
SECTION 4.8. Settlement Among Lenders.....................................46
SECTION 4.9. Prepayments; Application of Proceeds.........................47
SECTION 4.10. Optional Prepayments........................................48
SECTION 4.11. Prepayment Fee..............................................48
SECTION 4.12. Payments Not at End of Interest Period; Failure to Borrow...48
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(1) This Table of Contents is included for reference purposes only and does
not constitute part of the Loan and Security Agreement.
SECTION 4.13. Assumptions Concerning Funding of Eurodollar Rate Revolving
Credit Loans................................................49
SECTION 4.14. Notice of Conversion or Continuation........................49
SECTION 4.15. Conversion or Continuation..................................50
SECTION 4.16. Duration of Interest Periods; Maximum Number of Eurodollar
Rate Revolving Credit Loans; Minimum Increments.............50
SECTION 4.17. Changed Circumstances.......................................50
ARTICLE 5 - CONDITIONS PRECEDENT
SECTION 5.1. Conditions Precedent to Revolving Credit Loans...............52
SECTION 5.2. All Loans; Letters of Credit.................................55
ARTICLE 6 - REPRESENTATIONS AND WARRANTIES OF BORROWER
SECTION 6.1. Representations and Warranties...............................56
SECTION 6.2. Survival of Representations and Warranties, Etc..............66
ARTICLE 7 - SECURITY INTEREST
SECTION 7.1. Security Interest............................................67
SECTION 7.2. Continued Priority of Security Interest......................67
ARTICLE 8 - COLLATERAL COVENANTS
SECTION 8.1. Collection of Receivables....................................69
SECTION 8.2. Verification and Notification................................69
SECTION 8.3. Disputes, Returns and Adjustments............................70
SECTION 8.4. Invoices.....................................................70
SECTION 8.5. Delivery of Instruments......................................71
SECTION 8.6. Sales of Inventory...........................................71
SECTION 8.7. Ownership and Defense of Title...............................71
SECTION 8.8. Insurance....................................................71
SECTION 8.9. Location of Offices and Collateral...........................72
SECTION 8.10. Records Relating to Collateral..............................72
SECTION 8.11. Inspection..................................................72
SECTION 8.12. Information and Reports.....................................73
SECTION 8.13. Power of Attorney...........................................74
SECTION 8.14. Additional Real Estate and Leases...........................74
SECTION 8.15. Assignment of Claims Act....................................75
ARTICLE 9 - AFFIRMATIVE COVENANTS
SECTION 9.1. Preservation of Corporate Existence and Similar Matters......76
SECTION 9.2. Compliance with Applicable Law...............................76
SECTION 9.3. Maintenance of Property......................................76
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SECTION 9.4. Conduct of Business..........................................76
SECTION 9.5. Insurance....................................................76
SECTION 9.6. Payment of Taxes and Claims..................................77
SECTION 9.7. Accounting Methods and Financial Records.....................77
SECTION 9.8. Use of Proceeds..............................................77
SECTION 9.9. Hazardous Waste and Substances; Environmental Requirements...78
SECTION 9.10. Exchange Offer..............................................78
SECTION 9.11. Year 2000 Compliance........................................79
ARTICLE 10 - INFORMATION
SECTION 10.1. Financial Statements........................................80
SECTION 10.2. Accountants' Certificate....................................80
SECTION 10.3. Officer's Certificate.......................................81
SECTION 10.4. Copies of Other Reports.....................................81
SECTION 10.5. Notice of Litigation and Other Matters......................82
SECTION 10.6. ERISA.......................................................82
SECTION 10.7. Revisions or Updates to Schedules...........................83
SECTION 10.8. Subordinated Debt Certificate...............................83
ARTICLE 11 - NEGATIVE COVENANTS
SECTION 11.1. Financial Ratios............................................84
SECTION 11.2. Debt........................................................85
SECTION 11.3. Guaranties..................................................85
SECTION 11.4. Investments.................................................86
SECTION 11.5.Restricted Payments and Purchases, Etc.......................86
SECTION 11.6. Merger, Consolidation and Sale of Assets...................86
SECTION 11.7. Transactions with Affiliates................................86
SECTION 11.8. Liens.......................................................86
SECTION 11.9. Capitalized Lease Obligations...............................86
SECTION 11.10. Operating Leases...........................................86
SECTION 11.11. Real Estate Leases.........................................86
SECTION 11.12. Plans......................................................86
SECTION 11.13. Sales and Leasebacks.......................................87
ARTICLE 12 - DEFAULT
SECTION 12.1. Events of Default...........................................88
SECTION 12.2. Remedies....................................................90
SECTION 12.3. Application of Proceeds.....................................92
SECTION 12.4. Power of Attorney...........................................93
SECTION 12.5. Miscellaneous Provisions Concerning Remedies................94
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ARTICLE 13 - ASSIGNMENTS
SECTION 13.1. Successors and Assigns; Participations......................96
SECTION 13.2. Representation of Lenders...................................98
ARTICLE 14 - AGENT
SECTION 14.1. Appointment of Agent........................................99
SECTION 14.2. Delegation of Duties........................................99
SECTION 14.3. Exculpatory Provisions......................................99
SECTION 14.4. Reliance by Agent...........................................99
SECTION 14.5. Notice of Default..........................................100
SECTION 14.6. Non-Reliance on Agent and Other Lenders....................100
SECTION 14.7. Indemnification............................................100
SECTION 14.8. Agent in Its Individual Capacity...........................101
SECTION 14.9. Successor Agent............................................101
SECTION 14.10. Notices from Agent to Lenders.............................101
ARTICLE 15 - MISCELLANEOUS
SECTION 15.1. Notices....................................................102
SECTION 15.2. Expenses...................................................103
SECTION 15.3. Stamp and Other Taxes......................................104
SECTION 15.4. Setoff.....................................................104
SECTION 15.5. Litigation.................................................104
SECTION 15.6. Waiver of Rights...........................................105
SECTION 15.7. Consent to Advertising and Publicity.......................106
SECTION 15.8. Reversal of Payments.......................................106
SECTION 15.9. Injunctive Relief..........................................106
SECTION 15.10. Accounting Matters........................................106
SECTION 15.11. Amendments................................................106
SECTION 15.12. Assignment................................................108
SECTION 15.13. Performance of Borrower's Duties..........................108
SECTION 15.14. Indemnification...........................................108
SECTION 15.15. All Powers Coupled with Interest..........................109
SECTION 15.16. Survival..................................................109
SECTION 15.17. Titles and Captions.......................................109
SECTION 15.18. Severability of Provisions................................109
SECTION 15.19. Governing Law.............................................109
SECTION 15.20. Counterparts..............................................110
SECTION 15.21. Reproduction of Documents.................................110
SECTION 15.22. Term of Agreement.........................................110
SECTION 15.23. Increased Capital.........................................110
SECTION 15.24. Pro-Rata Participation....................................110
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ANNEX A COMMITMENTS
EXHIBIT A FORM OF REVOLVING CREDIT NOTE
EXHIBIT B FORM OF BORROWING BASE CERTIFICATE
EXHIBIT C FORM OF ASSIGNMENT AND ACCEPTANCE
EXHIBIT D FORM OF SETTLEMENT REPORT
Schedule 1.1A Permitted Investments
Schedule 1.1B Permitted Liens
Schedule 6.1(a) Organization
Schedule 6.1(b) Capitalization
Schedule 6.1(d) Subsidiaries; Ownership of Stock
Schedule 6.1(f) Compliance with Laws
Schedule 6.1(h) Governmental Approvals
Schedule 6.1(i) Title to Properties
Schedule 6.1(j) Liens
Schedule 6.1(k) Debt and Guaranties
Schedule 6.1(l) Litigation
Schedule 6.1(m) Tax Matters
Schedule 6.1(p) Material Adverse Change
Schedule 6.1(q) ERISA
Schedule 6.1(u) Location of Offices and Receivables
Schedule 6.1(v) Location of Inventory
Schedule 6.1(w) Equipment
Schedule 6.1(x) Real Estate
Schedule 6.1(y) Corporate and Fictitious Names
Schedule 6.1(bb) Employee Relations
Schedule 6.1(cc) Proprietary Rights
Schedule 6.1(dd) Trade Names
Schedule 6.1(ee) Bank Accounts
Schedule 9.8 Use of Proceeds
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LOAN AND SECURITY AGREEMENT
Dated as of August 28, 1998
TEXFI INDUSTRIES, INC., a Delaware corporation (the "Borrower"), the
financial institutions party to this Agreement from time to time (the "Lenders")
and BANKBOSTON, N.A., a national banking association, as agent for the Lenders
(the "Agent"), agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1. Definitions. For the purposes of this Agreement:
"8 3/4% Debentures" means the Senior Subordinated Debentures, 8.75%, due
August 1, 1999, issued pursuant to that certain Indenture dated as of September
8, 1993, between the Borrower and Norwest Bank Minnesota, National Association,
as successor trustee, as amended by the First Supplemental Indenture dated as of
March 10, 1995, and the Second Supplemental Indenture dated as of March 15,
1996.
"Account Debtor" means a Person who is obligated on a Receivable.
"Acquire" or "Acquisition", as applied to any Business Unit or Investment,
means the acquiring or acquisition of such Business Unit or Investment by
purchase, exchange, issuance of stock or other securities, or by merger,
reorganization or any other method.
"Affiliate" means, with respect to a Person, (a) any partner, officer,
shareholder (if holding more than ten percent (10%) of the outstanding shares of
capital stock of such Person), director, employee or managing agent of such
Person, (b) any spouse, parents, siblings, children or grandchildren of such
Person, and (c) any other Person (other than a Subsidiary) that, (i) directly or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, such given Person, (ii) directly or indirectly
beneficially owns or holds ten percent (10%) or more of any class of voting
stock or partnership or other voting interest of such Person or any Subsidiary
of such Person, or (iii) ten percent (10%) or more of the voting stock or
partnership or other voting interest of which is directly or indirectly
beneficially owned or held by such Person or a Subsidiary of such Person. The
term "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 ownership of voting securities or partnership or other voting
interest, by contract or otherwise.
"Agency Account" means an account of the Borrower maintained by it with a
Clearing Bank pursuant to an Agency Account Agreement.
"Agency Account Agreement" means an agreement among the Borrower, the
Agent and a Clearing Bank, in form and substance satisfactory to the Agent,
concerning the collection of payments which represent the proceeds of
Receivables or of any other Collateral.
"Agent" means BankBoston, N.A., a national banking association, and any
successor agent appointed pursuant to SECTION 14.9 hereof.
"Agent's Office" means the office of the Agent specified in or determined
in accordance with the provisions of SECTION 15.1.
"Agreement" means and includes this Agreement, including all Schedules,
Exhibits and other attachments hereto, and all amendments, modifications and
supplements hereto and thereto.
"Agreement Date" means the date as of which this Agreement is dated.
"Alternate Base Rate" means a floating rate of interest equal to the
higher of (a) the Base Rate, and (b) the Federal Funds Effective Rate PLUS 1/2
of 1% per annum (rounded up if necessary, to the next higher 1/8th of 1%).
"Applicable Law" means all applicable provisions of constitutions,
statutes, rules, regulations and orders of all governmental bodies and of all
orders and decrees of all courts and arbitrators, including, without limitation,
Environmental Laws.
"Applicable Margin" means (a) as to Base Rate Revolving Credit Loans, 1%
and (b) as to Eurodollar Rate Revolving Credit Loans, 3%, in each case subject
to a permanent reduction of 1/2 of 1% commencing on the first Business Day
following the first anniversary date of the Effective Date, PROVIDED that no
Default or Event of Default with respect to the financial covenants set forth in
Article 11 has occurred during such year, and (c) at any time when the election
provided for in SECTION 4.1(C) has been made, as to all Loans, the Default
Margin.
"Asset Disposition" means the disposition of any asset of the Borrower or
any of its Subsidiaries, other than sales of Inventory in the ordinary course of
business.
"Assignment and Acceptance" means an assignment and acceptance in the form
attached hereto as EXHIBIT C assigning all or a portion of a Lender's interests,
rights and obligations under this Agreement pursuant to SECTION 13.1.
"Assignment of Factoring Proceeds" means each assignment, in form and
substance satisfactory to the Agent executed and delivered by the Borrower in
favor of the Agent and agreed to by the Factors with respect to payments due
from such Factors under Factoring Agreements.
"Availability" means at any time (a) the Borrowing Base at such time MINUS
(b) the sum of the aggregate principal amount of Revolving Credit Loans
outstanding at such time.
"BBC" means Back Bay Capital LLC, a limited liability company organized
under the laws of Delaware.
"BankBoston" means BankBoston, N.A., a national banking association, in
its individual capacity and not as the Agent hereunder.
"Base Rate" means on any day the interest rate per annum equal to the rate
of interest publicly announced from time to time by BankBoston at its head
office at 000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx as its "base" rate as in
effect at such time.
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"Base Rate Revolving Credit Loan" means a Revolving Credit Loan bearing
interest at a rate determined with reference to the Alternate Base Rate.
"Benefit Plan" means an "employee pension benefit plan" as defined in
Section 3(3) of ERISA (other than a Multiemployer Plan) in respect of which the
Borrower or, solely with respect to any employee benefit plan subject to Title
IV of ERISA, any Related Company is, or within the immediately preceding six
years was, an "employer" as defined in Section 3(5) of ERISA, including such
plans as may be established after the Agreement Date.
"Borrower" means Texfi Industries, Inc., a Delaware corporation.
"Borrowing" means the aggregate Revolving Credit Loans made by the Lenders
on the same day, bearing interest at the same rate, and if Eurodollar Rate
Revolving Credit Loans, for the same Interest Period.
"Borrowing Base" means at any time an amount equal to the lesser of:
(a) the Revolving Credit Facility MINUS the sum of
(i) the Letter of Credit Reserve, PLUS
(ii) such other reserves as the Agent in its reasonable credit
judgment may establish from time to time, and
(b) an amount equal to
(i) 90% (or such lesser percentage as the Agent may in its
reasonable credit judgment determine from time to time) of the face value
of Eligible Factored Receivables due and owing at such time, PLUS
(ii) 85% (or such lesser percentage as the Agent may in its
reasonable credit judgment determine from time to time) of the face value
of Eligible Insured House Receivables due and owing at such time, PLUS
(iii) 65% (or such lesser percentage as the Agent may in its
reasonable credit judgment determine from time to time) of the face value
of Eligible Uninsured House Receivables due and owing at such time, PLUS
(iv) THE LESSER OF
(A) $12,000,000, AND
(B) the sum of (i) 55% (or such lesser percentage as the Agent
may in its reasonable credit judgment determine from time to time)
of the lesser of cost determined on a FIFO (or first-in-first-out)
accounting basis and fair market value of Eligible Raw Materials
Inventory, (ii) 55% (or such lesser percentage as the Agent may in
its reasonable credit judgment determine from time to time) of the
face amount of documentary letters of credit issued under this
Agreement for the purchase of
3
imported finished greige goods, (iii) 50% (or such lesser percentage
as the Agent may in its reasonable credit judgment determine from
time to time) of the lesser of cost determined on a FIFO (or
first-in-first-out) accounting basis and fair market value of
Eligible Finished Inventory, and (iv) 35% (or such lesser percentage
as the Agent may in its reasonable credit judgment determine from
time to time) of the lesser of cost determined on a FIFO (or
first-in-first-out) accounting basis and fair market value of
Eligible Work in Process Inventory, MINUS
(v) the sum of
(A) the Letter of Credit Reserve, PLUS
(B) such other reserves as the Agent in its reasonable credit
judgment may establish from time to time.
"Borrowing Base Certificate" means a certificate in the form attached
hereto as EXHIBIT B or in such other form as may be acceptable to the Agent.
"Business Day" means any day other than a Saturday, Sunday or other day on
which banks in Atlanta, Georgia are authorized to close and, when used with
respect to Eurodollar Rate Revolving Credit Loans, means any such day on which
dealings are also carried on in the applicable interbank Eurodollar market.
"Business Unit" means the assets constituting the business or a division
or operating unit thereof of any Person.
"CIT Ledger Debt" means all amounts owing, whether now or in the future,
by the Borrower to CIT on account of the Borrower's purchases of goods or
services from any Person for whom CIT acts as factor.
"Capital Expenditures" means, with respect to any Person, all expenditures
made and liabilities incurred for the acquisition of assets (other than assets
which constitute a Business Unit) which are not, in accordance with GAAP,
treated as expense items for such Person in the year made or incurred or as a
prepaid expense applicable to a future year or years.
"Capitalized Lease" means a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
"Capitalized Lease Obligation" means Indebtedness represented by
obligations under a Capitalized Lease, and the amount of such Indebtedness shall
be the capitalized amount of such obligations determined in accordance with
GAAP.
"Cash Collateral" means collateral consisting of cash or Cash Equivalents
on which the Agent, for the benefit of itself as Agent and the Lenders, has a
first priority Lien.
"Cash Equivalents" means
4
(a) marketable direct obligations issued or unconditionally guaranteed by
the United States Government or issued by any agency thereof and backed by the
full faith and credit of the United States, in each case maturing within one
year from the date of acquisition thereof;
(b) commercial paper maturing no more than one year from the date issued
and, at the time of acquisition thereof, having a rating of at least A-1 from
Standard & Poor's Ratings Service or at least P-1 from Xxxxx'x Investors
Service, Inc.;
(c) certificates of deposit or bankers' acceptances issued in Dollar
denominations and maturing within one year from the date of issuance thereof
issued by any commercial bank organized under the laws of the United States of
America or any state thereof or the District of Columbia having combined capital
and surplus of not less than $250,000,000 and, unless issued by the Agent or a
Lender, not subject to set-off or offset rights in favor of such bank arising
from any banking relationship with such bank; and
(d) repurchase agreements in form and substance and for amounts
satisfactory to the Agent.
"Clearing Bank" means BankBoston and any other banking institution with
which an Agency Account has been established pursuant to an Agency Account
Agreement.
"Collateral" means and includes all of the Borrower's right, title and
interest in and to each of the following, wherever located and whether now or
hereafter existing or now owned or hereafter acquired or arising:
(a) (i) all rights to the payment of money or other forms of consideration
of any kind (whether classified under the UCC as accounts, contract rights,
chattel paper, general intangibles or otherwise) including, but not limited to,
accounts receivable, letters of credit and the right to receive payment
thereunder, chattel paper, tax refunds, insurance proceeds, any rights under
contracts not yet earned by performance and not evidenced by an instrument or
chattel paper, notes, drafts, instruments, documents, acceptances and all other
debts, obligations and liabilities in whatever form from any Person, (ii) all
guaranties, security and Liens securing payment thereof, (iii) all goods,
whether now owned or hereafter acquired, and whether sold, delivered,
undelivered, in transit or returned, which may be represented by, or the sale or
lease of which may have given rise to, any such right to payment or other debt,
obligation or liability, and (iv) all proceeds of any of the foregoing (the
foregoing, collectively, "Receivables"),
(b) (i) all inventory, (ii) all goods intended for sale or lease or for
display or demonstration, (iii) all work in process, (iv) all raw materials and
other materials and supplies of every nature and description used or which might
be used in connection with the manufacture, packing, shipping, advertising,
selling, leasing or furnishing of goods or services or otherwise used or
consumed in the conduct of business, and (v) all documents evidencing and
general intangibles relating to any of the foregoing (the foregoing,
collectively, "Inventory"),
(c) (i) all machinery, apparatus, equipment, motor vehicles, tractors,
trailers, rolling stock, fittings, fixtures and other tangible personal property
(other than Inventory) of every kind and description, (ii) all tangible personal
property (other than Inventory) and fixtures used in the
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Borrower's business operations or owned by the Borrower or in which the Borrower
has an interest, and (iii) all parts, accessories and special tools and all
increases and accessions thereto and substitutions and replacements therefor
(the foregoing, collectively, "Equipment"),
(d) all general intangibles, choses in action and causes of action and all
other intangible personal property of every kind and nature (other than
Receivables), including, without limitation, Proprietary Rights, corporate or
other business records, inventions, designs, blueprints, plans, specifications,
trade secrets, goodwill, computer software, customer lists, registrations,
licenses, franchises, tax refund claims, reversions or any rights thereto and
any other amounts payable to such Person from any Benefit Plan, Multiemployer
Plan or other employee benefit plan, rights and claims against carriers and
shippers, rights to indemnification, business interruption insurance and
proceeds thereof, property, casualty or any similar type of insurance and any
proceeds thereof, the beneficiary's interest in proceeds of insurance covering
the lives of key employees and any letter of credit, guarantee, claims, security
interest or other security for the payment by an Account Debtor of any of the
Receivables (the foregoing, collectively, "General Intangibles"),
(e) any demand, time, savings, passbook, money market or like depository
account, and all certificates of deposit, maintained with a bank, savings and
loan association, credit union or like organization, other than an account
evidenced by a certificate of deposit that is an instrument under the UCC (the
foregoing, collectively, "Deposit Accounts"),
(f) all certificated and uncertificated securities, all security
entitlements, all securities accounts, all commodity contracts and all commodity
accounts (the foregoing, collectively, "Investment Property"),
(g) (i) any investment account maintained by or on behalf of the Borrower
with the Agent or any Lender or any Affiliate of the Agent or any Lender, (ii)
any agreement governing such account, (iii) all cash, money, notes, securities,
instruments, goods, accounts, documents, chattel paper, general intangibles and
other property now or hereafter held by the Agent or any Lender or any Affiliate
of the Agent or any Lender on behalf of the Borrower in connection with such
investment account or deposited by the Borrower or on the Borrower's behalf to
such investment account or otherwise credited thereto for the Borrower's
benefit, or distributable to the Borrower from such investment account, together
with all contracts for the sale or purchase of the foregoing, (iv) all of the
Borrower's right, title and interest with respect to the deposit, investment,
allocation, disposition, distribution or withdrawal of the foregoing, (v) all of
the Borrower's right, title and interest with respect to the making of
amendments, modifications or additions of or to the terms and conditions under
which the investment account or investments maintained therein is to be
maintained by the Borrower, any Lender or any Affiliate of the Agent or any
Lender on the Borrower's behalf, and (vi) all of the Borrower's books, records
and receipts pertaining to or confirming any of the foregoing (the foregoing,
collectively, "Investment Accounts"),
(h) all cash or other property deposited with the Agent or any Lender or
any Affiliate of the Agent or any Lender or which the Agent, for its benefit and
for the benefit of the Lenders, or any Lender or such Affiliate is entitled to
retain or otherwise possess as collateral pursuant to the provisions of this
Agreement or any of the Loan Documents or any agreement relating to any Letter
of Credit, including, without limitation, amounts on deposit in the Cash
Collateral Account,
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(i) all goods and other property, whether or not delivered,
(i) the sale or lease of which gives or purports to give rise to any
Receivable, including, but not limited to, all merchandise returned or
rejected by or repossessed from customers, or
(ii) securing any Receivable,
including, without limitation, all rights as an unpaid vendor or lienor
(including, without limitation, stoppage in transit, replevin and reclamation)
with respect to such goods and other property,
(j) all mortgages, deeds to secure debt and deeds of trust on real or
personal property, guaranties, leases, security agreements, and other agreements
and property which secure or relate to any Receivable or other Collateral, or
are acquired for the purpose of securing and enforcing any item thereof,
(k) all documents of title, including bills of lading and warehouse
receipts, policies and certificates of insurance, securities, chattel paper and
other documents and instruments evidencing or pertaining to any and all items of
Collateral,
(l) all files, correspondence, computer programs, tapes, discs and related
data processing software which contain information identifying or pertaining to
any of the Receivables or any Account Debtor, or showing the amounts thereof or
payments thereon or otherwise necessary or helpful in the realization thereon or
the collection thereof,
(m) all cash deposited with the Agent or any Lender or any Affiliate of
the Agent or any Lender or which the Agent, for the benefit of the Lenders, or
any Lender or such Affiliate is entitled to retain or otherwise possess as
collateral pursuant to the provisions of this Agreement or any of the Security
Documents or any agreement relating to any Letters of Credit,
(n) any and all products and proceeds of the foregoing (including, but not
limited to, any claim to any item referred to in this definition, and any claim
against any third party for loss of, damage to or destruction of any or all of,
the Collateral or for proceeds payable under, or unearned premiums with respect
to, policies of insurance) in whatever form, including, but not limited to,
cash, negotiable instruments and other instruments for the payment of money,
chattel paper, security agreements and other documents.
"Commitment" means, as to each Lender, the amount set forth opposite such
Lender's name on ANNEX A hereto, representing such Lender's obligation, upon and
subject to the terms and conditions of this Agreement (including the applicable
provisions of SECTION 13.1), to make Revolving Credit Loans and to purchase
participations in Letters of Credit or, from and after the date hereof, in the
Register (as defined in SECTION 13.1) representing such Lender's obligation to
make Revolving Credit Loans and to purchase participations in Letters of Credit.
"Commitment Percentage" means, as to any Lender, the result (expressed as
a percentage) obtained by dividing such Lender's Commitment by the aggregate
Commitments.
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"Consolidated Subsidiaries" means, as to the Borrower, the Subsidiaries of
the Borrower whose accounts are at the time in question, in accordance with GAAP
and pursuant to the written consent of the Required Lenders, which consent may
be withheld in their absolute discretion conditioned upon, INTER ALIA, the
execution and delivery of guaranties, security agreements, mortgages and other
documents required by the Required Lenders in their absolute discretion,
consolidated with those of the Borrower.
"Contaminant" means any waste, pollutant, hazardous substance, toxic
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, or any constituent of any such substance or waste.
"Contract Rights" means any rights under contracts not yet earned by
performance and not evidenced by an instrument or chattel paper.
"Controlled Disbursement Account" means one or more accounts maintained by
and in the name of the Borrower with a Disbursing Bank for the purposes of
disbursing Revolving Credit Loan proceeds and amounts deposited thereto.
"Copyrights" means and includes, in each case whether now existing or
hereafter arising, all of the Borrower's right, title and interest in and to
(a) all copyrights, rights and interests in copyrights, works protectable
by copyright, copyright registrations and copyright applications;
(b) all renewals of any of the foregoing;
(c) all income, royalties, damages and payments now or hereafter due
and/or payable under any of the foregoing, including, without limitation,
damages or payments for past or future infringements of any of the foregoing;
(d) the right to xxx for past, present and future infringements of any of
the foregoing; and
(e) all rights corresponding to any of the foregoing throughout the world.
"Credit Risk" means the risk of loss resulting solely and exclusively from
an Account Debtor's failure to pay an Eligible Receivable at maturity because of
its financial inability.
"Current Assets" means, with respect to any Person, the aggregate amount
of assets of such Person which should properly be classified as current assets
in accordance with GAAP, after deducting adequate reserves in each case where a
reserve is appropriate in accordance with GAAP.
"Current Liabilities" means, with respect to any Person, the aggregate
amount of all Liabilities of such Person which should properly be classified as
current liabilities in accordance with GAAP.
"Debt" means,
(a) Indebtedness for money borrowed,
8
(b) Indebtedness, whether or not in any such case the same was for money
borrowed,
(i) represented by notes payable, and drafts accepted, that
represent extensions of credit,
(ii) constituting obligations evidenced by bonds, debentures, notes
or similar instruments, or
(iii) upon which interest charges are customarily paid or that was
issued or assumed as full or partial payment for property (other than
trade credit that is incurred in the ordinary course of business),
(c) Indebtedness that constitutes a Capitalized Lease Obligation, and
(d) Indebtedness that is such by virtue of CLAUSE (C) of the definition
thereof, but only to the extent that the obligations Guaranteed are obligations
that would constitute Debt.
"Default" means any of the events specified in SECTION 12.1 which with the
passage of time or giving of notice or both would constitute an Event of
Default.
"Default Margin" means 2.0%.
"Deposit Accounts" has the meaning specified in the definition
"Collateral."
"Disbursing Bank" means any commercial bank with which a Controlled
Disbursement Account is maintained after the Effective Date.
"Dollar" and "$" means freely transferable United States dollars.
"EBITDA" has the meaning specified in SECTION 11.1.
"ERISA" means the Employee Retirement Income Security Act of 1974, as in
effect from time to time.
"ERISA Event" means (a) a "Reportable Event" as defined in Section 3032(c)
of ERISA, but excluding any such event as to which the provision for 30 days'
notice to the PBGC is waived under applicable regulations, (b) the filing of a
notice of intent to terminate a Benefit Plan subject to Title IV of ERISA under
a distress termination under Section 4041(c) of ERISA or the treatment of an
amendment to such a Benefit Plan as a termination under Section 4041(c) of
ERISA, (c) the institution of proceedings by the PBGC to terminate a Benefit
Plan subject to Title IV of ERISA or the appointment of a trustee to administer
any such Benefit Plan or an event or condition that might reasonably be expected
to constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Benefit Plan subject to Section
4042, (d) the imposition of any liability under Title IV of ERISA other than for
PBGC premiums due but not yet payable, (e) the filing of an application for a
minimum funding waiver under Section 412 of the Code, (f) a withdrawal by the
Borrower or any Related Company from a Benefit Plan subject to Section 4063 of
ERISA during a plan year in which it was a "substantial employer" as defined in
Section 4001(a)(2) of ERISA, (g) a Benefit Plan intending to qualify under
Section 401(g) of the
9
Code losing such qualified status, (h) the failure to make a material required
contribution to a Benefit Plan, (i) the Borrower or any Related Company being in
"default" (as defined in Section 4219(c)(5) of ERISA) with respect to payments
to a Multiemployer Plan because of its complete or partial withdrawal (as
described in Section 4203 or 4205 of ERISA) from such Multiemployer Plan, or (j)
the occurrence of a non-exempt prohibited transaction within the meaning of
Section 4975 of the Code or Section 406 of ERISA with respect to any Benefit
Plan.
"Effective Date" means the later of:
(a) the Agreement Date, and
(b) the first date on which all of the conditions set forth in ARTICLE 5
shall have been fulfilled.
"Effective Interest Rate" means each rate of interest per annum on the
Revolving Credit Loans in effect from time to time pursuant to the provisions of
SECTIONS 4.1(A) and (B).
"Eligible Assignee" means (i) a commercial bank organized under the laws
of the United States, or any State thereof, having total assets in excess of
$1,000,000,000; (ii) any commercial finance or asset-based lending affiliate of
any such commercial bank; and (iii) any Lender listed on the signature page of
this Agreement; PROVIDED in each case that the representation contained in
SECTION 13.2 hereof shall be applicable with respect to such institution or
Lender.
"Eligible Factored Receivable" means any Receivable created by the
Borrower and sold and assigned to a Factor under its respective Factoring
Agreement and for which such Factor retains the Credit Risk under its respective
Factoring Agreement, LESS all discounts, returns, credits or allowances at any
time issued, owing or outstanding, LESS the amount by which the aggregate amount
of all such Receivables 60 days or more past due exceeds 10% of all such
Receivables, LESS all such Receivables that, to the Borrower's knowledge, remain
unpaid after 180 days after the invoice date therefor, LESS all reserves, LESS
any commissions due the Factors under their respective Factoring Agreements and
LESS any commissions due any credit insurer under any policy of credit insurance
(including the policy of American Credit Indemnity Company); and PROVIDED that
an Assignment of Factoring Proceeds exists with respect to such Receivables,
between the Borrower, the respective Factor and the Agent on behalf of the
Lenders.
"Eligible Insured House Receivable" means any House Receivable that has
been fully insured pursuant to a credit insurance policy issued by an insurer
and in form and substance satisfactory to the Agent and which credit insurance
policy has been endorsed or assigned to the Agent, and which is not an Eligible
Factored Receivable.
"Eligible Inventory" means, items of Inventory of the Borrower held for
sale or used in the Borrower's manufacturing process in the ordinary course of
business which meet all of the following requirements:
(a) such Inventory is owned by the Borrower, is stored at a location
listed on SCHEDULE 6.1(V), is subject to the Security Interest, which is
perfected as to such Inventory, and is subject to no other Lien whatsoever other
than a Xxxxxxxxx Xxxx,
00
(b) such Inventory consists of raw materials, greige goods and finished
goods and not work-in-process (except that work-in-process in the form of greige
goods in the dying and finishing stages is included),
(c) such Inventory is in good condition and meets all standards imposed by
any governmental agency, or department or division thereof, having regulatory
authority over such goods, their use or sale,
(d) such Inventory is currently either usable or salable, at prices
approximating at least cost, in the normal course of the Borrower's business and
is not slow moving or stale,
(e) such Inventory is not obsolete or returned or repossessed or used
goods taken in trade,
(f) such Inventory is located within the United States at one of the
locations set forth in the most recent Schedule of Inventory,
(g) such Inventory is in the possession and control of the Borrower and
not any third party or if the Inventory is held by a third party bailee and a
negotiable instrument has not been issued with respect to it (i) a financing
statement which names the third party bailee as the debtor/bailee, names the
Borrower as the secured party/xxxxxx, names the Agent as assignee of the secured
party/xxxxxx and contains a description of such Inventory acceptable to the
Agent and otherwise in compliance with the requirements of Section 9-304(3) of
the UCC has been filed in the appropriate filing office and (ii) such other
steps as the Agent may reasonably require in order to establish and preserve the
priority of the Security Interest against secured creditors of the third party
bailee or the Borrower shall have been taken,
(h) if such Inventory is located in a warehouse or other facility leased
by the Borrower, the lessor has delivered to the Agent, on behalf of the
Lenders, a waiver and consent in form and substance satisfactory to the Agent,
and
(i) such Inventory is not determined by the Agent, on behalf of the
Lenders, in its reasonable credit judgment to be ineligible for any other
reason.
"Eligible Raw Materials Inventory" means Eligible Inventory consisting of
raw materials and greige goods, other than griege goods in the dying and
finishing stages.
"Eligible Finished Inventory" means Eligible Inventory consisting of
finished goods.
"Eligible Work in Process Inventory" means Eligible Inventory consisting
of greige goods in the dying and finishing stages.
"Eligible Receivable" means a Receivable of the Borrower that consists of
the unpaid portion of the obligation stated on the invoice issued to an Account
Debtor with respect to Inventory sold and shipped to or services performed for
such Account Debtor in the ordinary course of business, net of any credits or
rebates owed by the Borrower to the Account Debtor and that meets all of the
following requirements:
11
(a) such Receivable is owned by the Borrower and represents a complete
bona fide transaction which requires no further act under any circumstances on
the part of the Borrower to make such Receivable payable by the Account Debtor,
(b) the due date for such Receivable shall not be more than 70 days (or,
as to not more than 15% of total Eligible Receivables, 90 days) from the date of
the shipment of the goods the sale of which gave rise to such Receivable (or the
date of performance of services for Receivables arising from the performance of
services),
(c) no more than 120 days have elapsed from the date of the original
invoice nor more than 60 days from the due date of the original invoice,
(d) the goods the sale of which gave rise to such Receivable were shipped
or delivered to the Account Debtor on an absolute sale basis and not on a
consignment sale basis, a guaranteed sale basis, a sale or return basis, or on
the basis of any other similar understanding and no material part of such goods
has been returned or rejected,
(e) such Receivable is not evidenced by chattel paper or an instrument of
any kind unless such chattel paper or instrument has been collaterally assigned
to the Agent, for the benefit of itself as agent and the Lenders, pursuant to an
assignment in form and substance satisfactory to the Agent and is in the
possession of the Agent,
(f) the Account Debtor with respect to such Receivable is not insolvent or
the subject of any bankruptcy or insolvency proceedings of any kind or of any
other proceeding or action, threatened or pending, which might, in the Agent's
sole judgment, have a Materially Adverse Effect on such Account Debtor, and is
not, in the reasonable discretion of the Agent, deemed ineligible for credit or
other reasons,
(g) such Receivable is not owing by an Account Debtor having 50% or more
in face value of its then-existing accounts owing to the Borrower past due more
than 60 days from the due date of the original invoice,
(h) such Receivable is not owing by an Account Debtor whose then-existing
accounts owing to the Borrower exceed in face amount 15% of the Borrower's total
Eligible Receivables,
(i) if such Receivable arises from the performance of services, such
services have been fully rendered and do not relate to any warranty claim or
obligation,
(j) if the Account Debtor with respect thereto is located outside of the
United States of America (including Puerto Rico) or Canada, the goods which gave
rise to such Receivable were shipped after receipt by the Borrower from the
Account Debtor of an irrevocable letter of credit that has been confirmed by a
financial institution acceptable to the Agent in form and substance acceptable
to the Agent, payable in the full face amount of the face value of the
Receivable in Dollars at a place of payment located in the United States and
has, if requested by the Agent, been duly assigned to the Agent,
(k) such Receivable is a valid, legally enforceable obligation of the
Account Debtor with respect thereto and is not subject to any present or
contingent (and no facts exist which are the basis
12
for any future) offset, deduction or counterclaim, dispute or other defense on
the part of such Account Debtor, PROVIDED that any Receivable so subject to any
offset, etc., if otherwise an Eligible Receivable shall remain so to the extent
of the excess of such Receivable over the amount of any such offset, etc.,
(l) such Receivable is subject to the Security Interest, which is
perfected as to such Receivable, and is subject to no other Lien whatsoever
other than a Permitted Lien,
(m) such Receivable is evidenced by an invoice or other documentation in
form acceptable to the Agent,
(n) the Receivable is not subject to the Assignment of Claims Act of 1940,
as amended from time to time, or any Applicable Law now or hereafter existing
similar in effect thereto, or to any other prohibition (under Applicable Law, by
contract or otherwise) against its assignment or requiring notice of or consent
to such assignment, unless all such required notices have been given, all such
required consents have been received and all other procedures have been complied
with such that such Receivable shall have been duly and validly assigned to the
Agent, for the benefit of the Lenders,
(o) the goods giving rise to such Receivable were not, at the time of the
sale thereof, subject to any Lien, except the Security Interest and Permitted
Liens,
(p) the Borrower is not in breach of any express or implied representation
or warranty with respect to the goods the sale of which gave rise to such
Receivable nor in breach of any representation or warranty, covenant or other
agreement contained in the Loan Documents with respect to such Receivable,
(q) such Receivable does not arise out of any transaction with any
Subsidiary, Affiliate, creditor, tenant, lessor or supplier of the Borrower,
(r) the Borrower is not the beneficiary of any letter of credit that has
not been duly assigned to the Agent, nor has any bond or other undertaking by a
guarantor or surety been obtained, supporting such Receivable and the Account
Debtor's obligations in respect thereof,
(s) such Receivable does not arise out of finance or similar charges by
the Borrower or other fees for the time value of money,
(t) such Receivable does not arise out of a charge back in connection with
any Factoring Agreements,
(u) the Account Debtor with respect to such Receivable is not located in
New Jersey or any other state denying creditors access to its courts in the
absence of qualification to transact business in such state or the filing of a
Notice of Business Activities Report or other similar filing, unless the
Borrower has either qualified as a foreign corporation authorized to transact
business in such state or has filed a Notice of Business Activities Report or
similar filing with the applicable state agency for the then current year, and
13
(v) neither the Account Debtor with respect to such Receivable, nor such
Receivable, is determined by the Agent in its reasonable credit judgment to be
ineligible for any other reason.
"Eligible Uninsured House Receivable" means any House Receivable that has
not been fully insured in form and substance satisfactory to the Agent or which
credit insurance policy has not been endorsed or assigned to the Agent.
"Environmental Laws" means all federal, state, local and foreign laws now
or hereafter in effect relating to pollution or protection of the environment,
including laws relating to emissions, discharges, Releases or threatened
Releases of pollutants, Contaminants, chemicals, or industrial, toxic or
hazardous substances or wastes into the environment (including, without
limitation, ambient air, surface water, ground water, or land), or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, removal, transport, or handling of pollutants, Contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes, and any and
all regulations, notices or demand letters issued, entered, promulgated or
approved thereunder; such laws and regulations include but are not limited to
the Resource Conservation and Recovery Act, 42 U.S.C. ss. 6901 ET SEQ., as
amended; the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. ss. 9601 ET SEQ., as amended; the Toxic Substances Control Act,
15 U.S.C. ss. 2601 ET SEQ., as amended; the Clean Air Act, 46 U.S.C. ss. 7401 ET
SEQ., as amended; and state and federal lien and environmental cleanup programs.
"Environmental Lien" means a Lien in favor of any governmental entity for
(a) any liability under Environmental Laws or (b) damages arising from, or costs
incurred by such governmental entity in response to, a Release or threatened
Release of Contaminant into the environment.
"Equipment" has the meaning specified in the definition "Collateral."
"Eurodollar Rate" means, with respect to any Eurodollar Rate Revolving
Credit Loan for the Interest Period applicable thereto a rate per annum
determined pursuant to the following formula, rounded upwards, if necessary, to
the next higher 1/16 of 1%:
Eurodollar Rate = Interbank Offered Rate
---------------------------------
1 - Eurodollar Reserve Percentage
The Eurodollar Rate shall be adjusted automatically as of the effective date of
any change in the Eurodollar Reserve Percentage.
"Eurodollar Rate Revolving Credit Loan" means a Revolving Credit Loan
bearing interest at a rate determined with reference to the Eurodollar Rate.
"Eurodollar Reserve Percentage" applicable to any Interest Period means
the rate (expressed as a decimal) applicable to the Lenders during such Interest
Period under regulations issued from time to time by the Board of Governors of
the Federal Reserve System for determining the maximum reserve requirement
(including, without limitation, any basic, supplemental, emergency or marginal
reserve requirement) of the Lenders with respect to "Eurocurrency Liabilities"
as that term is defined under such regulations. Without limiting the effect of
the foregoing, the Eurodollar Reserve Percentage shall include any other
reserves required to be maintained by the Lenders by reason of any regulatory
change with respect to (i) any category of liabilities that includes deposits by
reference to
14
which the "Interbank Offered Rate" is to be determined as provided in the
definition of "Interbank Offered Rate" below or (ii) any category of extensions
of credit or other assets that includes Eurodollar Rate Revolving Credit Loans.
"Event of Default" means any of the events specified in SECTION 12.1,
PROVIDED that any requirement for notice or lapse of time or any other condition
has been satisfied.
"Exchange Offer" has the meaning specified in SECTION 9.10(A).
"Extendible Debentures" means the Subordinated Extendible Debentures, 11%,
due April 1, 2000, issued pursuant to that certain Indenture dated as of April
12, 1990, between the Borrower, State Street Bank and Trust Company as trustee,
and First Union National Bank as paying agent.
"Factoring Agreement" means each of (a) that certain Factoring Agreement
dated November 6, 1986 between CIT and the Borrower, as amended by amendments
dated November 1, 1987, September 15, 1989, March 31, 1992, August 1, 1992, May
3, 1993, September 1, 1993, Xxxxx 0, 0000 xxx xxxxxxxxx, (x) that certain
Factoring and Security Agreement dated January 14, 1988 between FFC and the
Borrower, as amended by Amendment dated Xxxxx 0, 0000, (x) that certain Amended
and Restated Factoring Agreement dated April 15, 1993 between NCC and the
Borrower, and (d) that certain Factoring Agreement dated July 28, 1994 between
RFC and the Borrower, as amended by Amendment dated March 14, 1996 and
otherwise.
"Factors" means each of (a) The CIT Group/Commercial Services, Inc.
("CIT"), (b) First Factors Corporation ("FFC"), (c) NationsBanc Commercial
Corporation ("NCC"), and (d) Republic Factors Corp. ("RFC"), in its capacity as
a factor under its Factoring Agreement with the Borrower and any other factor
approved by the Agent which has executed and delivered to the Agent documents,
which, among other requirements, are sufficient to waive such factor's right of
set-off with respect to ledger debt and to assign the proceeds of all factored
Receivables to the Agent for the benefit of the Lenders.
"Federal Funds Effective Rate" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to the weighted
average of the rates on overnight federal funds transactions with members of the
Federal Reserve system arranged by federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by BankBoston from three federal funds brokers of
recognized standing selected by BankBoston.
"Financial Officer" means the Chief Financial Officer, or Treasurer of the
Borrower.
"Financing Statements" means any and all Uniform Commercial Code financing
statements, in form and substance satisfactory to the Agent, executed and
delivered by the Borrower to the Agent, naming the Agent, for the benefit of the
Lenders, as secured party and the Borrower as debtor, in connection with this
Agreement.
"Fiscal Month" means each succeeding period of four or five consecutive
weeks, beginning on the first day of each Fiscal Year, occurring in the pattern
five weeks, four weeks, four weeks, except that in each 53-week Fiscal Year, the
final Fiscal Month of such Fiscal Year consists of five weeks.
15
"Fiscal Quarter" means each succeeding period of three consecutive Fiscal
Months beginning on the first day of each Fiscal Year.
"Fiscal Year" means the fifty-two or fifty-three week period beginning on
the Saturday after the Friday closest to October 31 in one calendar year and
ending on the Friday closest to October 31 in the following calendar year and
when followed or preceded by a designated calendar year means such period ending
on the Friday closest to October 31 of such designated year.
"GAAP" means generally accepted accounting principles consistently applied
and maintained throughout the period indicated and, when used with reference to
the Borrower or any Subsidiary, consistent with the prior financial practice of
the Borrower, as reflected on the financial statements referred to in SECTION
6.1(O); PROVIDED, HOWEVER, that, in the event that changes shall be mandated by
the Financial Accounting Standards Board or any similar accounting authority of
comparable standing, or shall be recommended by the Borrower's independent
public accountants, such changes shall be included in GAAP as applicable to the
Borrower only from and after such date as the Borrower, the Required Lenders and
the Agent shall have amended this Agreement to the extent necessary to reflect
any such changes in the financial covenants set forth in ARTICLE 11.
"General Intangibles" has the meaning specified in the definition
"Collateral."
"Governmental Approvals" means all authorizations, consents, approvals,
licenses and exemptions of, registrations and filings with, and reports to, all
governmental bodies, whether federal, state, local or foreign national or
provincial and all agencies thereof.
"Guaranty", "Guaranteed" or to "Guarantee" as applied to any obligation of
another Person shall mean and include
(a) a guaranty (other than by endorsement of negotiable instruments for
collection in the ordinary course of business), directly or indirectly, in any
manner, of any part or all of such obligation of such other Person, and
(b) an agreement, direct or indirect, contingent or otherwise, and whether
or not constituting a guaranty, the practical effect of which is to assure the
payment or performance (or payment of damages in the event of nonperformance) of
any part or all of such obligation of such other Person whether by
(i) the purchase of securities or obligations,
(ii) the purchase, sale or lease (as lessee or lessor) of property
or the purchase or sale of services primarily for the purpose of enabling
the obligor with respect to such obligation to make any payment or
performance (or payment of damages in the event of nonperformance) of or
on account of any part or all of such obligation, or to assure the owner
of such obligation against loss,
(iii) the supplying of funds to or in any other manner investing in
the obligor with respect to such obligation,
(iv) repayment of amounts drawn down by beneficiaries of letters of
credit, or
16
(v) the supplying of funds to or investing in a Person on account of
all or any part of such Person's obligation under a Guaranty of any
obligation or indemnifying or holding harmless, in any way, such Person
against any part or all of such obligation.
"House Receivable" means any Eligible Receivable which is not an Eligible
Factored Receivable.
"Indebtedness" of any Person means, without duplication, all Liabilities
of such Person, and to the extent not otherwise included in Liabilities, the
following:
(a) all obligations for Debt or for the deferred purchase price of
property or services or in respect of drafts accepted or similar instruments or
reimbursement obligations under letters of credit,
(b) all obligations (including, during the noncancellable term of any
lease in the nature of a title retention agreement, all future payment
obligations under such lease discounted to their present value in accordance
with GAAP) secured by any Lien to which any property or asset owned or held by
such Person is subject, whether or not the obligation secured thereby shall have
been assumed by such Person,
(c) all obligations of other Persons which such Person has Guaranteed,
including, but not limited to, all obligations of such Person consisting of
recourse liability with respect to accounts receivable sold or otherwise
disposed of by such Person,
(d) all obligations of such Person in respect of Interest Rate Protection
Agreements, and
(e) in the case of the Borrower (without duplication) all obligations
under the Revolving Credit Loans.
"Interbank Offered Rate" applicable to any Eurodollar Rate Revolving
Credit Loan for any Interest Period means the rate of interest determined by
BankBoston to be the prevailing rate per annum at which deposits in U.S. dollars
are offered to BankBoston by first-class banks in the interbank Eurodollar
market in which it regularly participates on or about 10:00 a.m. (Boston,
Massachusetts time) two Business Days before the first day of such Interest
Period in an amount approximately equal to the principal amount of the
Eurodollar Rate Revolving Credit Loan to which such interest Period is to apply
for a period of time approximately equal to such Interest Period.
"Intercreditor Agreement" means that certain Intercreditor Agreement dated
on or about the Effective Date, between BBC and the Agent, in form and substance
satisfactory to the Agent.
"Interest Payment Date" means (a) as to Base Rate Revolving Credit Loans,
the first day of each calendar month commencing on September 1, 1998 and
continuing thereafter until the Secured Obligations have been irrevocably paid
in full and (b) as to Eurodollar Rate Revolving Credit Loans, the earlier of (i)
the last day of each applicable Interest Period or (ii) quarterly.
"Interest Period" means with respect to each Eurodollar Rate Revolving
Credit Loan, the period commencing on the date of the making or continuation of
or conversion to such Eurodollar Rate Revolving Credit Loan and ending one, two,
three or six months thereafter, as the Borrower may elect in the applicable
Notice of Borrowing or Notice of Conversion or Continuation; PROVIDED, that:
17
(i) any Interest Period that would otherwise end on a day that is
not a Business Day shall, subject to the provisions of CLAUSE (III) below,
be extended to the next succeeding Business Day unless such Business Day
falls in the next calendar month, in which case such Interest Period shall
end on the immediately preceding Business Day;
(ii) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall, subject to CLAUSE (III) below, end on the last Business Day
of a calendar month; and
(iii) any Interest Period that would otherwise end after the
Termination Date shall end on the Termination Date.
"Interest Rate Protection Agreement" shall mean an interest rate swap, cap
or collar agreement or similar arrangement between any Person and a financial
institution providing for the transfer or mitigation of interest risks either
generally or under specific contingencies.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time.
"Inventory" has the meaning specified in the definition "Collateral."
"Investment" means, with respect to any Person:
(a) the acquisition or ownership by such Person of any share of capital
stock, evidence of Indebtedness or other security issued by any other Person,
(b) any loan, advance or extension of credit to, or contribution to the
capital of, any other Person, excluding advances to employees in the ordinary
course of business for business expenses,
(c) any Guaranty of the obligations of any other Person,
(d) any other investment (other than the Acquisition of a Business Unit)
in any other Person, and
(e) any commitment or option to make any of the investments listed in
CLAUSES (A) through (D) above if, in the case of an option, the consideration
therefor exceeds $100.
"IRS" means the Internal Revenue Service.
"Junior Secured Obligations" means the CIT Ledger Debt and all other
indebtedness, liabilities, obligations, covenants and duties of the Borrower to
BankBoston or any Affiliate of BankBoston in connection with lease obligations
of the Borrower.
"Lender" means at any time any financial institution party to this
agreement at such time, including any such Person becoming a party hereto
pursuant to the provisions of ARTICLE 13, and its successors and assigns, and
"Lenders" means at any time all of the financial institutions party to this
18
Agreement at such time, including any such Persons becoming parties hereto
pursuant to the provisions of ARTICLE 13, and their successors and assigns.
"Letter of Credit" means any Letter of Credit issued by BankBoston for the
account of the Borrower pursuant to ARTICLE 3.
"Letter of Credit Amount" means, with respect to any Letter of Credit, the
aggregate maximum amount at any time available for drawing under such Letter of
Credit.
"Letter of Credit Facility" means a subfacility of the Revolving Credit
Facility providing for the issuance of Letters of Credit up to an aggregate
amount of Letter of Credit Obligations at any one time outstanding not to exceed
the amount of $3,000,000.
"Letter of Credit Obligations" means, at any time, the sum of (a) the
Reimbursement Obligations of the Borrower at such time, PLUS (b) the aggregate
Letter of Credit Amount of Letters of Credit outstanding at such time, PLUS (c)
the aggregate Letter of Credit Amount of Letters of Credit the issuance of which
has been authorized by the Agent and BankBoston pursuant to SECTION 3.4(B) but
that have not yet been issued, in each case as determined by the Agent.
"Letter of Credit Reserve" means, at any time, the aggregate Letter of
Credit Obligations at such time, other than Letter of Credit Obligations that
are fully secured by Cash Collateral.
"Liabilities" of any Person means all items (except for items of capital
stock, additional paid-in capital or retained earnings, or of general
contingency or deferred tax reserves) which in accordance with GAAP would be
included in determining total liabilities as shown on the liability side of a
balance sheet of such Person as at the date as of which Liabilities are to be
determined.
"Lien" as applied to the property of any Person means:
(a) any mortgage, deed to secure debt, deed of trust, lien, pledge,
charge, lease constituting a Capitalized Lease Obligation, conditional sale or
other title retention agreement, or other security interest, security title or
encumbrance of any kind in respect of any property of such Person, or upon the
income or profits therefrom,
(b) any arrangement, express or implied, under which any property of such
Person is transferred, sequestered or otherwise identified for the purpose of
subjecting the same to the payment of Indebtedness or performance of any other
obligation in priority to the payment of the general, unsecured creditors of
such Person,
(c) any Indebtedness which is unpaid more than 30 days after the same
shall have become due and payable and which if unpaid might by law (including,
but not limited to, bankruptcy and insolvency laws), or otherwise, be given any
priority whatsoever over the claims of general unsecured creditors of such
Person, and
(d) the filing of, or any agreement to give, any financing statement under
the Uniform Commercial Code or its equivalent in any jurisdiction, excluding
informational financing statements relating to property leased by the Borrower.
19
"Loan" means each Lender's advance made as part of any Revolving Credit
Loan as well as all such loans collectively, as the context requires.
"Loan Account" and "Loan Accounts" shall have the meanings ascribed
thereto in SECTION 4.5.
"Loan Documents" means collectively this Agreement, the Notes, the
Security Documents and each other instrument, agreement or document executed by
the Borrower or any Affiliate or Subsidiary of the Borrower in connection with
this Agreement whether prior to, on or after the Effective Date and each other
instrument, agreement or document referred to herein or contemplated hereby.
"Loan Year" means each period of 12 consecutive months commencing on the
Effective Date and on each anniversary thereof.
"Lockbox" means each U.S. Post Office Box specified in a Lockbox
Agreement.
"Lockbox Agreement" means each agreement between the Borrower and a
Clearing Bank concerning the establishment of a Lockbox for the collection of
Receivables.
"Long-Term Liabilities" means, with respect to any Person, the aggregate
amount of all Liabilities of such Person other than Current Liabilities.
"Materially Adverse Effect" means, with respect to any Person, a
materially adverse effect upon such Person's business, assets, liabilities,
condition (financial or otherwise), results of operations or business prospects,
and in addition (i) with respect to the Borrower, means a materially adverse
effect upon the Borrower's ability to perform its obligations hereunder or under
any other Loan Document to which it is a party or upon the enforceability of
such obligations against the Borrower.
"Mortgages" means and includes any and all of the mortgages, deeds of
trust, deeds to secure debt, assignments and other instruments executed and
delivered by the Borrower to or for the benefit of the Agent by which the Agent,
on behalf of the Lenders, acquires a Lien on the Borrower's Real Estate or a
collateral assignment of the Borrower's interest under leases of Real Estate,
and all amendments, modifications and supplements thereto.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA to which the Borrower or a Related Company is required to
contribute or has contributed within the immediately preceding six (6) years.
"Net Amount" means, with respect to any Investments made by any Person,
the gross amount of all such Investments MINUS the aggregate amount of all cash
received and the fair value, at the time of receipt by such Person, of all
property received as payments of principal or premiums, returns of capital,
liquidating dividends or distributions, proceeds of sale or other dispositions
with respect to such Investments.
"Net Income" means, as applied to any Person, the net income (or net loss)
of such Person for the period in question after giving effect to deduction of or
provision for all operating expenses, all
20
taxes and reserves (including reserves for deferred taxes) and all other proper
deductions, all determined in accordance with GAAP, provided that there shall be
excluded:
(a) the net income (or net loss) of any Person accrued prior to the date
it becomes a Subsidiary of, or is merged into or consolidated with, the Person
whose Net Income is being determined or a Subsidiary of such Person,
(b) the net income (or net loss) of any Person in which the Person whose
Net Income is being determined or any Subsidiary of such Person has an ownership
interest, except, in the case of net income, to the extent that any such income
has actually been received by such Person or such Subsidiary in the form of cash
dividends or similar distributions,
(c) any restoration of any contingency reserve, except to the extent that
provision for such reserve was made out of income during such period,
(d) any net gains or losses on the sale or other disposition, not in the
ordinary course of business, of Investments, Business Units and other capital
assets, provided that there shall also be excluded any related charges for taxes
thereon,
(e) any net gain arising from the collection of the proceeds of any
insurance policy,
(f) any write-up of any asset, and
(g) any other extraordinary item.
"Net Outstandings" of any Lender means, at any time, the sum of (a) all
amounts paid by such Lender (other than pursuant to SECTION 14.7) to the Agent
in respect of Loans under the Revolving Credit Facility or otherwise under this
Agreement, MINUS (b) all amounts received by the Agent and paid by the Agent to
such Lender for application, pursuant to this Agreement, to reduction of the
outstanding principal balance of the Loans of such Lender outstanding under the
Revolving Credit Facility.
"Net Proceeds" means proceeds received by the Borrower or any of its
Subsidiaries in cash from any Asset Disposition (including, without limitation,
payments under notes or other debt securities received in connection with any
Asset Disposition), net of: (a) the transaction costs of such sale, lease,
transfer or other disposition; (b) any tax liability arising from such
transaction; and (c) amounts applied to repayment of Indebtedness (other than
the Secured Obligations) secured by a Lien on the asset or property disposed.
"Net Worth" means, with respect to any Person, such Person's total
shareholder's equity (including capital stock, additional paid-in capital and
retained earnings, after deducting treasury stock) which would appear as such on
a balance sheet of such Person prepared in accordance with GAAP PROVIDED THAT,
in the case of the Borrower any accrued and unpaid management fees to Mentmore
Holdings Corp. deducted in computing such shareholder's equity shall be added
back and non-cash gains or losses recorded or realized after August 1, 1998 in
respect of the disposal of intangible assets shall be excluded from such
computations.
"New Debentures" has the meaning specified in SECTION 9.10(A).
21
"Non-Ratable Loan" means a Base Rate Revolving Credit Loan made by
BankBoston in accordance with the provisions of SECTION 4.8(B).
"Note" means any of the Revolving Credit Notes and "Notes" means more than
one such Note.
"Notice of Borrowing" has the meaning specified in SECTION 2.2(A).
"Notice of Conversion or Continuation" has the meaning specified in
SECTION 4.14.
"Operating Lease" means any lease (other than a lease constituting a
Capitalized Lease Obligation) of real or personal property.
"PBGC" means the Pension Benefit Guaranty Corporation and any successor
agency.
"Patent Assignment" means the Assignment for Security-Patents, dated on or
about the Effective Date, made by the Borrower to the Agent, for the benefit of
the Lenders, as the same may be amended, modified or supplemented from time to
time.
"Patents" means and includes, in each case whether now existing or
hereafter arising, all of the Borrower's right, title and interest in and to
(a) any and all patents and patent applications,
(b) inventions and improvements described and claimed therein,
(c) reissues, divisions, continuations, renewals, extensions and
continuations-in-part thereof,
(d) income, royalties, damages, claims and payments now or hereafter due
and/or payable under and with respect thereto, including, without limitation,
damages and payments for past and future infringements thereof,
(e) rights to xxx for past, present and future infringements thereof, and
(f) all rights corresponding to any of the foregoing throughout the world.
"Payables Factor" means the aggregate amount of accounts payable of the
Borrower more than 30 days past due at the time of determination.
"Permitted Investments" means Investments of the Borrower in:
(a) negotiable certificates of deposit and time deposits issued by
BankBoston or by any United States bank or trust company having capital, surplus
and undivided profits in excess of $100,000,000,
(b) any direct obligation of the United States of America or any Agency or
instrumentality thereof which has a remaining maturity at the time of purchase
of not more than one year and repurchase agreements relating to the same,
22
(c) sales of inventory on credit in the ordinary course of business,
(d) shares of capital stock, evidence of Indebtedness or other security
acquired by the Borrower in consideration for or as evidence of past-due or
restructured Receivables in an aggregate face amount of such Receivables at any
time not to exceed $1,000,000,
(e) Guaranties permitted pursuant to SECTION 11.3,
(f) those items described on SCHEDULE 1.1A - PERMITTED INVESTMENTS, and
(g) other Investments not in excess of $500,000 in the aggregate at any
time outstanding.
"Permitted Liens" means:
(a) Liens securing taxes, assessments and other governmental charges or
levies (excluding any Lien imposed pursuant to any of the provisions of ERISA)
or the claims of materialmen, mechanics, carriers, warehousemen or landlords for
labor, materials, supplies or rentals incurred in the ordinary course of
business, but (i) in all cases only if payment shall not at the time be required
to be made in accordance with SECTION 10.6, and (ii) in the case of warehousemen
or landlords, only if such liens are junior to the Security Interest in any of
the Collateral,
(b) Liens consisting of deposits or pledges made in the ordinary course of
business in connection with, or to secure payment of, obligations under workers'
compensation, unemployment insurance or similar legislation or under payment or
performance bonds,
(c) Liens constituting encumbrances in the nature of zoning restrictions,
easements, and rights or restrictions of record on the use of real property,
which do not materially detract from the value of such property or impair the
use thereof in the business of the Borrower,
(d) Purchase Money Liens,
(e) Liens shown on SCHEDULE 1.1B - PERMITTED LIENS,
(f) Liens of Factors under the terms and conditions of the Factoring
Agreement,
(g) Liens in favor of Term Lender, arising under the Term Loan and
Security Agreement,
(h) Liens in favor of the holders of the New Debentures, to the extent
expressly permitted by the provisions of this Agreement, and
(i) Liens of the Agent, for the benefit of the Lenders, arising under this
Agreement and the other Loan Documents.
"Permitted Purchase Money Debt" means Purchase Money Debt of the Borrower
incurred after the Agreement Date
(a) which is secured by a Purchase Money Lien,
23
(b) the aggregate principal amount of which does not exceed an amount
equal to 100% of the lesser of,
(i) the cost (including the principal amount of such Debt, whether
or not assumed) of the property (other than Inventory) subject to such
Lien, and
(ii) the fair value of such property (other than Inventory) at the
time of its acquisition, and
(c) which, when aggregated with the principal amount of all other such
Debt and Capitalized Lease Obligations of the Borrower at the time outstanding,
does not exceed $2,000,000.
For the purposes of this definition, the principal amount of any Purchase Money
Debt consisting of Capitalized Leases shall be computed as a Capitalized Lease
Obligation.
"Person" means an individual, corporation, limited liability company,
partnership, association, trust or unincorporated organization, or a government
or any agency or political subdivision thereof.
"Projections" means the forecasted (a) balance sheets, (b) income
statements and (c) cash flow statements of the Borrower for the Borrower's 1998
fiscal year, prepared on a monthly basis, together with appropriate supporting
details and a statement of underlying assumptions and reflecting, among other
things, projected Availability.
"Proprietary Rights" means all of the Borrower's now owned and hereafter
arising or acquired: Patents, Copyrights, Trademarks, including, without
limitation, those Proprietary Rights set forth on SCHEDULE 6.1(CC) hereto, and
all other rights under any of the foregoing, all extensions, renewals, reissues,
divisions, continuations, and continuations-in-part of any of the foregoing, and
all rights to xxx for past, present and future infringement of any of the
foregoing.
"Purchase Money Debt" means
(a) Debt created to secure the payment of all or any part of the purchase
price of any property (other than Inventory),
(b) any Debt incurred at the time of or within 30 days prior to or after
the acquisition of any property (other than Inventory) for the purpose of
financing all or any part of the purchase price thereof, and
(c) any renewals, extensions or refinancings thereof, but not any
increases in the principal amounts thereof outstanding at the time of any such
renewal, extension or refinancing.
"Purchase Money Lien" means any Lien securing Purchase Money Debt, but
only if such Lien shall at all times be confined solely to the property (other
than Inventory) the purchase price of which was financed through the incurrence
of the Purchase Money Debt secured by such Lien.
"Real Estate" means all of the Borrower's now or hereafter owned or leased
estates in real property, including, without limitation, all fees, leaseholds
and future interests, together with all of the Borrower's now or hereafter owned
or leased interests in the improvements and emblements
24
thereon, the fixtures attached thereto and the easements appurtenant thereto,
including, without limitation the real property described on SCHEDULE 6.1(X).
"Redemption" has the meaning specified in SECTION 9.10(B).
"Receivables" has the meaning specified in the definition "Collateral."
"Register" has the meaning specified in SECTION 13.1(D).
"Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System (or any successor), as the same may be amended or supplemented
from time to time.
"Reimbursement Agreement" means, with respect to a Letter of Credit, such
form of application therefor and form of reimbursement agreement therefor
(whether in a single document or several documents) as BankBoston may employ in
the ordinary course of business for its own account, with such modifications
thereto as may be agreed upon by BankBoston and the Borrower, provided that such
application and agreement and any modifications thereto are not inconsistent
with the terms of this Agreement.
"Reimbursement Obligations" means the reimbursement or repayment
obligations of the Borrower to BankBoston pursuant to SECTION 3.6 or pursuant to
a Reimbursement Agreement with respect to amounts that have been drawn under
Letters of Credit.
"Related Company" means any (i) corporation which is a member of the same
controlled group of corporations (within the meaning of Section 414(b) of the
Internal Revenue Code) as the Borrower; (ii) partnership or other trade or
business (whether or not incorporated) under common control (within the meaning
of Section 414(c) of the Internal Revenue Code) with the Borrower; or (iii)
member of the same affiliated service group (within the meaning of Section
414(m) of the Internal Revenue Code) as the Borrower, any corporation described
in CLAUSE (I) above or any partnership, trade or business described in CLAUSE
(II) above.
"Release" means release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration into the indoor
or outdoor environment or into or out of any property, including the movement of
Contaminants through or in the air, soil, surface water or groundwater.
"Remedial Action" means actions required to (i) clean up, remove, treat or
in any other way address Contaminants in the indoor or outdoor environment; (ii)
prevent the Release or threat of Release or minimize the further Release of
Contaminants so they do not migrate or endanger or threaten to endanger public
health or welfare or the indoor or outdoor environment; or (iii) perform
pre-remedial studies and investigations and post-remedial monitoring and care.
"Required Lenders" means, at any time, any combination of Lenders whose
Commitment Percentages at such time aggregate in excess of 51%.
"Restricted Payment" means (a) any dividend, distribution or payment on or
with respect to (i) any shares of a Person's capital stock (other than dividends
payable solely in shares of its capital stock) or (ii) any partnership interest
in a Person, excluding, however, any such dividend, distribution
25
or payment to the Borrower by any Subsidiary of the Borrower, (b) any redemption
or prepayment or other retirement, prior to the stated maturity thereof or prior
to the due date of any regularly scheduled installment or amortization payment
with respect thereto, of any Debt (other than the Loans) or of any Indebtedness
that is junior and subordinate to the Secured Obligations, and (c) the payment
of any management, consulting or similar fee by any Person to any Affiliate of
such Person.
"Restricted Purchase" means any payment on account of the purchase,
redemption or other acquisition or retirement by a Person of any (a) shares of
such Person's capital stock (except shares acquired on the conversion thereof
into other shares of capital stock of such Person) or (b) a partnership interest
in such Person, if such Person is a partnership.
"Revolving Credit Facility" means the principal amount of $40,000,000 or
such lesser or greater amount as shall be agreed upon from time to time in
writing by the Agent, the Lenders and the Borrower.
"Revolving Credit Loans" means loans made to the Borrower pursuant to
SECTION 2.1, including any Non-Ratable Loans.
"Revolving Credit Note" means each Revolving Credit Note made by the
Borrower payable to the order of a Lender evidencing the obligation of the
Borrower to pay the aggregate unpaid principal amount of the Revolving Credit
Loans made to it by such Lender (and any promissory note or notes that may be
issued from time to time in substitution, renewal, extension, replacement or
exchange therefor whether payable to such Lender or to a different Lender in
connection with a Person becoming a Lender after the Effective Date or
otherwise) substantially in the form of EXHIBIT A hereto, with all blanks
properly completed, either as originally executed or as the same may from time
to time be supplemented, modified, amended, renewed, extended or refinanced.
"Rival Note" means the promissory note dated December 15, 1997, in the
original principal amount of $4,500,000 made payable to the Borrower by
Clarendon Holdings, LLC, an Affiliate of Mentmore Holdings Corp., in payment of
the purchase price of the Borrower's membership interest in Rival Sport LLC, a
Delaware limited liability company, which note is repayable as to principal in a
single payment on the tenth anniversary of the date of issuance thereof (subject
to required prepayments from specified funds) and as to interest, at the rate of
5% per annum, only when principal is repaid.
"Schedule of Inventory" means a schedule delivered by the Borrower to the
Agent pursuant to the provisions of SECTION 8.12(B).
"Schedule of Receivables" means a schedule delivered by the Borrower to
the Agent pursuant to the provisions of SECTION 8.12(A).
"Secured Obligations" means, in each case whether now in existence or
hereafter arising,
(a) the principal of, and interest and premium, if any, on, the Loans,
(b) the Reimbursement Obligations and all other obligations of the
Borrower to the Agent or any Lender arising in connection with the issuance of
Letters of Credit, and
26
(c) all indebtedness, liabilities, obligations, covenants and duties of
the Borrower to the Agent or to the Lenders of every kind, nature and
description arising under or in respect of this Agreement, the Notes or any of
the other Loan Documents, whether direct or indirect, absolute or contingent,
due or not due, contractual or tortious, liquidated or unliquidated, and whether
or not evidenced by any note, and whether or not for the payment of money,
including without limitation, fees required to be paid pursuant to ARTICLE 4 and
expenses required to be paid or reimbursed pursuant to SECTION 15.2.
"Security Documents" means each of the following:
(a) the Financing Statements,
(b) the Mortgages,
(c) the Patent Assignment,
(d) the Trademark Assignment,
(e) Assignments of Factoring Proceeds, and
(f) each other writing executed and delivered by the Borrower or any other
Person securing the Secured Obligations.
"Security Interest" means the Liens of the Agent, for the benefit of the
Lenders, on and in the Collateral effected hereby or by any of the Security
Documents or pursuant to the terms hereof or thereof.
"Settlement Date" means each Business Day after the Effective Date
selected by the Agent in its sole discretion as of which a Settlement Report is
delivered by the Agent and on which settlement is to be made among the Lenders
in accordance with the provisions of SECTION 4.8, PROVIDED, that a Settlement
Date shall occur at least every five Business Days.
"Settlement Report" means each report, substantially in the form attached
hereto as EXHIBIT D, prepared by the Agent and delivered to each Lender and
setting forth, among other things, as of the Settlement Date indicated thereon
and as of the next preceding Settlement Date, the aggregate principal balance of
all Revolving Credit Loans outstanding, each Lender's Commitment Percentage
thereof, each Lender's Net Outstandings and all Non-Ratable Loans made, and all
payments of principal, interest and fees received by the Agent from the Borrower
during the period beginning on such next preceding Settlement Date and ending on
such Settlement Date.
"Subordinated Debt" means the Debt of the Borrower under the 8 3/4%
Debentures and the Extendible Debentures and other Debt of the Borrower that is
subordinated to the Secured Obligations on terms and conditions satisfactory to
the Agent and the Required Lenders.
"Subsidiary"
(a) when used to determine the relationship of a Person to another Person,
means a Person of which an aggregate of 50% or more of the stock of any class or
classes or 50% or more of other
27
ownership interests is owned of record or beneficially by such other Person, or
by one or more Subsidiaries of such other Person, or by such other Person and
one or more Subsidiaries of such Person,
(i) if the holders of such stock, or other ownership interests, (A)
are ordinarily, in the absence of contingencies, entitled to vote for the
election of a majority of the directors (or other individuals performing
similar functions) of such Person, even though the right so to vote has
been suspended by the happening of such a contingency, or (B) are
entitled, as such holders, to vote for the election of a majority of the
directors (or individuals performing similar functions) of such Person,
whether or not the right so to vote exists by reason of the happening of a
contingency, or
(ii) in the case of such other ownership interests, if such
ownership interests constitute a majority voting interest,
(b) when used without other designation of ownership, means a Subsidiary
of the Borrower.
"Term Lender" means collectively, the financial institutions party to the
Term Loan and Security Agreement from time to time.
"Term Loan and Security Agreement" means that certain Term Loan and
Security Agreement dated on or about the Effective Date, between the Borrower
and the Term Lender as amended, modified or supplemented from time to time.
"Term Loan" means term loans up to $13,000,000 in aggregate principal
amount made to the Borrower pursuant to the Term Loan and Security Agreement.
"Termination Date" means August 31, 2000, such earlier date as all Secured
Obligations shall have been irrevocably paid in full and the Revolving Credit
Facility shall have been terminated, or such later date as to which the same may
be extended pursuant to the provisions of SECTION 2.5.
"Trademark Assignment" means the Assignment for Security - Trademarks,
dated on or about the Effective Date, by the Borrower to the Agent for the
benefit of the Lender, as the same may be amended, modified or supplemented from
time to time.
"Trademarks" means and includes in each case whether now existing or
hereafter arising, all of the Borrower's right, title and interest in and to
(a) trademarks (including service marks), trade names and trade styles and
the registrations and applications for registration thereof and the goodwill of
the business symbolized by the trademarks,
(b) licenses of the foregoing, whether as licensee or licensor,
(c) renewals thereof,
28
(d) income, royalties, damages and payments now or hereafter due and/or
payable with respect thereto, including, without limitation, damages, claims and
payments for past and future infringements thereof,
(e) rights to xxx for past, present and future infringements thereof,
including the right to settle suits involving claims and demands for royalties
owing, and
(f) all rights corresponding to any of the foregoing throughout the world.
"Unfunded Vested Accrued Benefits" means with respect to any Benefit Plan
at any time, the amount (if any) by which
(a) the present value of all vested nonforfeitable benefits under such
Benefit Plan exceeds
(b) the fair market value of all Benefit Plan assets allocable to such
benefits,
all determined as of the then most recent valuation date for such Benefit Plan.
"Uniform Commercial Code" means the Uniform Commercial Code as in effect
from time to time in the State of Georgia.
"Waiver Agreement" means that certain Third Supplemental Indenture dated
as of the Effective Date, between the Borrower and the trustee of the 8 3/4%
Debentures, in form and substance satisfactory to the Agent.
"Wholly Owned Subsidiary" when used to determine the relationship of a
Subsidiary to a Person means a Subsidiary all of the issued and outstanding
shares (other than directors' qualifying shares) of the capital stock of which
shall at the time be owned by such Person or one or more of such Person's Wholly
Owned Subsidiaries or by such Person and one or more of such Person's Wholly
Owned Subsidiaries.
SECTION 1.2. General.
(a) All terms of an accounting nature not specifically defined herein
shall have the meaning ascribed thereto by GAAP.
(b) The terms accounts, chattel paper, contract rights, documents,
equipment, instruments, general intangibles, inventory and proceeds, as and when
used in this Agreement or the Security Documents, shall have the meanings given
those terms in the Uniform Commercial Code.
(c) Unless otherwise specified, a reference in this Agreement to a
particular section or subsection is a reference to that section or subsection of
this Agreement, and the words "hereof," "herein," "hereunder" and words of
similar import, when used in this Agreement, refer to this Agreement as a whole
and not to any particular provision, section or subsection of this Agreement.
(d) Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and plural, and
pronouns stated in the masculine, feminine
29
or neuter gender shall include the masculine, the feminine and the neuter. Words
denoting individuals include corporations and vice versa.
(e) References to any legislation or statute or code, or to any provisions
of any legislation or statute or code, shall include any modification or
reenactment of, or any legislative, statutory or code provision substituted for,
such legislation, statute or code or provision thereof.
(f) References to any document or agreement (including this Agreement)
shall include references to such document or agreement as amended, novated,
supplemented, modified or replaced from time to time, so long as and to the
extent that such amendment, novation, supplement, modification or replacement is
either not prohibited by the terms of this Agreement or is consented to by the
Required Lenders and the Agent.
(g) Except where specifically restricted in a Loan Document, references to
any Person include its successor or permitted substitutes and assigns permitted
or not prohibited under such Loan Document.
(h) References to the time of day are to the time of day in the city in
which the Agent's Office is located.
(i) The terms "payment", "prepayment", "distribution" and similar terms
used in the definitions of "Restricted Distribution" and "Restricted Payment"
and in SECTION 11.5, shall include payment by means of the transfer of funds or
of property and, in the event of a transfer of property, the payment shall be
deemed to be in an amount equal to the greater of the fair market value and the
book value of the property at the time of the transfer.
(j) Titles of Articles and Sections in this Agreement are for convenience
only, do not constitute part of this Agreement and neither limit nor amplify the
provisions of this Agreement, and all references in this Agreement to Articles,
Sections, subsections, paragraphs, clauses, subclauses, Schedules or Exhibits
shall refer to the corresponding Article, Section, subsection, paragraph, clause
or subclause of, or Schedule or Exhibit attached to, this Agreement, unless
specific reference is made to the articles, sections or other subdivisions or
divisions of, or to schedules or exhibits to, another document or instrument.
(k) Whenever from the context it appears appropriate, the term "Loan",
including such terms as used as part of a defined term including the term
"Loan", shall mean and include a Loan made by all Lenders to the Borrower as
well as a Lender's Proportionate Share of any Loan.
(l) Unless otherwise specified herein, any Lien created or purported to be
created hereby or by or pursuant to any Loan Document in favor of the Agent and
each payment made to the Agent, is and shall be deemed to have been created in
favor of the Agent, for its benefit as Agent and for the ratable benefit of the
Lenders, or made to and received by the Agent for the ratable benefit of the
Lenders.
(m) Whenever the phrase "to the knowledge of the Borrower" or words of
similar import relating to the knowledge of the Borrower are used herein, such
phrase shall mean and refer to (i) the actual knowledge of the chief executive
officer, chief operating officer or chief financial officer or (ii) the
knowledge that such officers would have obtained if they had engaged in good
faith in the
30
diligent performance of their duties, including the making of such reasonable
specific inquiries as may be necessary of the appropriate persons in a good
faith attempt to ascertain the accuracy of the matter to which such phrase
relates.
SECTION 1.3. Exhibits and Schedules. All Exhibits and Schedules attached
hereto are by reference made a part hereof.
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ARTICLE 2
REVOLVING CREDIT FACILITY
SECTION 2.1. Revolving Credit Loans. Upon the terms and subject to the
conditions of, and in reliance upon the representations and warranties made
under, this Agreement, each Lender agrees, severally, but not jointly, to make
Revolving Credit Loans to the Borrower from time to time from the Effective Date
to but not including the Termination Date, as requested or deemed requested by
the Borrower in accordance with the terms of SECTION 2.2, in amounts equal to
such Lender's Commitment Percentage of each Borrowing requested or deemed
requested hereunder up to an aggregate amount at any one time outstanding equal
to such Lender's Commitment Percentage of the Borrowing Base; PROVIDED, HOWEVER,
that the aggregate principal amount of all outstanding Revolving Credit Loans
(after giving effect to the Loans requested) shall not exceed the Borrowing
Base. It is expressly understood and agreed that the Lenders may and at present
intend to use the Borrowing Base as a maximum ceiling on Revolving Credit Loans
made to the Borrower; PROVIDED, HOWEVER, that it is agreed that should the
aggregate outstanding amount of such Loans exceed the ceiling so determined or
any other limitation set forth in this Agreement, such Loans shall nevertheless
constitute Secured Obligations and, as such, shall be entitled to all benefits
thereof and security therefor. The principal amount of any Loan made under the
Revolving Credit Facility which is repaid may be reborrowed by the Borrower,
subject to the terms and conditions of this Agreement, in accordance with the
terms of this SECTION 2.1. The Agent's and each Lender's books and records
reflecting the date and the amount of each Loan made under the Revolving Credit
Facility and each repayment of principal thereof shall constitute PRIMA FACIE
evidence of the accuracy of the information contained therein, subject to the
provisions of SECTION 4.8.
SECTION 2.2. Manner of Borrowing Revolving Credit Loans. Borrowings under
the Revolving Credit Facility shall be made as follows:
(a) Requests for Borrowing.
(i) Base Rate Revolving Credit Loans. Unless the Borrower shall
previously have requested a Eurodollar Rate Revolving Credit Loan and
authorized the application of the proceeds thereof to any purpose
described in CLAUSES (A) through (E) below and the Lenders shall have
disbursed such Eurodollar Rate Revolving Credit Loan for such purpose, a
request for a Borrowing of Base Rate Revolving Credit Loans under the
Revolving Credit Facility shall be made, or shall be deemed to be made, in
the following manner:
(A) the Borrower may request a Base Rate Revolving Credit Loan
by notifying the Agent, before 12:30 p.m. on the proposed borrowing
date, of its intention to borrow ("Notice of Borrowing"), specifying
the amount of the proposed borrowing and the proposed borrowing
date,
(B) whenever a check or other item is presented to a
Disbursing Bank for payment against a Controlled Disbursement
Account in an amount greater than the then available balance in such
account, such Disbursing Bank shall, and is hereby irrevocably
authorized by the Borrower to, give the Agent notice thereof, which
notice shall be deemed to be a request for a Borrowing of Base Rate
Revolving Credit Loans
32
on the date of such notice in an amount equal to the excess of such
check or other item over such available balance, and such request
shall be irrevocable,
(C) unless payment is otherwise made by the Borrower, the
becoming due of any amount required to be paid under this Agreement
or any of the Notes as interest shall be deemed to be a request for
a Borrowing of Base Rate Revolving Credit Loans on the due date in
the amount required to pay such interest, and such request shall be
irrevocable,
(D) unless payment is otherwise made by a Borrower, a becoming
due of any other Secured Obligation shall be deemed to be a request
for a Borrowing of Base Rate Revolving Credit Loans on the due date
in the amount then so due, and such request shall be irrevocable,
and
(E) the receipt by the Agent of notification from BankBoston
to the effect that a drawing has been made under a Letter of Credit
and that the Borrower has failed to reimburse BankBoston therefor in
accordance with the terms of the Letter of Credit, the Reimbursement
Agreement and ARTICLE 3, shall be deemed to be a request for a
Borrowing of Base Rate Revolving Credit Loans on the date such
notification is received in the amount of such drawing which is so
unreimbursed;
PROVIDED that if any notice referred to in CLAUSE (A) above is received
after 12:30 p.m. on the proposed borrowing date, the proposed borrowing
will be postponed automatically to the next Business Day.
(ii) Eurodollar Rate Revolving Credit Loans. The Borrower may
request a Borrowing of Eurodollar Rate Revolving Credit Loans by notifying
the Agent (which notice shall be irrevocable) not later than 11:30 a.m. on
the date three Business Days before the day on which the requested
Eurodollar Rate Revolving Credit Loans are to be made, specifying the
effective date and amount of such Eurodollar Rate Revolving Credit Loans
requested and the duration of the applicable Interest Period.
(iii) Notification of Lenders. Unless the Agent has elected periodic
settlements pursuant to SECTION 4.8, the Agent shall promptly notify the
Lenders of any Notice of Borrowing given or deemed given pursuant to this
SECTION 2.2(A) by 12:00 noon on the proposed borrowing date (in the case
of Base Rate Revolving Credit Loans) or by 3:00 p.m. three Business Days
before the proposed borrowing date (in the case of Eurodollar Rate
Revolving Credit Loans). Not later than 1:30 p.m. on the proposed
borrowing date, each Lender will make available to the Agent, for the
account of the Borrower, at the Agent's Office in funds immediately
available to the Agent, such Lender's Base Rate Revolving Credit Loan or
Eurodollar Rate Revolving Credit Loan, as the case may be, in an amount
equal to such Lender's Commitment Percentage of the Borrowing to be made
on such date.
(b) Disbursement of Loans. The Borrower hereby irrevocably authorizes the
Agent to disburse the proceeds of each Borrowing requested, or deemed to be
requested, pursuant to this SECTION 2.2(B) as follows:
33
(i) the proceeds of each Borrowing requested under SECTIONS
2.2(A)(I)(A) or (B) or 2.2(A)(II) shall be disbursed by the Agent in
Dollars in immediately available funds by wire transfer to a Controlled
Disbursement Account or, in the absence of a Controlled Disbursement
Account, by wire transfer to such other account as may be agreed upon by
the Borrower and the Agent from time to time,
(ii) the proceeds of each borrowing deemed requested under SECTION
2.2(A)(I)(C) or (D) shall be disbursed by the Agent by way of direct
payment of the relevant interest or Secured Obligation, and
(iii) the proceeds of each borrowing deemed requested under SECTION
2.2(A)(I)(E) shall be disbursed by the Agent directly to BankBoston on
behalf of the Borrower.
SECTION 2.3. Repayment of Revolving Credit Loans. The Revolving Credit
Loans will be repaid as follows:
(a) Whether or not any Default or Event of Default has occurred, the
outstanding principal amount of all the Revolving Credit Loans is due and
payable, and shall be repaid by the Borrower in full, not later than the
Termination Date;
(b) If at any time the aggregate outstanding unpaid principal amount of
the Revolving Credit Loans exceeds the Borrowing Base in effect at such time,
the Borrower shall repay the Revolving Credit Loans in an amount sufficient to
reduce the aggregate unpaid principal amount of such Revolving Credit Loans by
an amount equal to such excess, together with accrued and unpaid interest on the
amount so repaid to the date of repayment; and
(c) The Borrower hereby instructs the Agent to repay the Revolving Credit
Loans outstanding on any day in an amount equal to the amount received by the
Agent on such day pursuant to SECTION 8.1(B).
Subject to the provisions of SECTION 4.9(C), repayments pursuant to SECTION
2.3(B) or (C) shall be applied first to the Base Rate Revolving Credit Loans,
and then to Eurodollar Rate Revolving Credit Loans.
SECTION 2.4. Revolving Credit Note. Each Lender's Revolving Credit Loans
and the obligation of the Borrower to repay such Loans shall also be evidenced
by a Revolving Credit Note payable to the order of such Lender. Each Revolving
Credit Note shall be dated the Effective Date (or later "effective date" under
any Assignment and Acceptance) and be duly and validly executed and delivered by
the Borrower.
SECTION 2.5. Extension of Revolving Credit Facility. Upon the request of
the Borrower, the Lenders may, in their sole discretion, effective as of any
anniversary of the Effective Date, agree to extend the Revolving Credit Facility
for a period of one year. Each such extension shall be effected by the delivery
to the Borrower of a written notice to that effect by the Lenders, not less than
30 days prior to such anniversary date.
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ARTICLE 3
LETTER OF CREDIT FACILITY
SECTION 3.1. Agreement to Issue. Upon the terms and subject to the
conditions of, and in reliance upon the representations and warranties made
under, this Agreement, BankBoston agrees to issue for the account of the
Borrower one or more Letters of Credit in accordance with this ARTICLE 3, from
time to time during the period commencing on the Effective Date and ending on
the Termination Date.
SECTION 3.2. Amounts. BankBoston shall not have any obligation to issue
any Letter of Credit at any time:
(a) if, after giving effect to the issuance of the requested Letter of
Credit, (i) the aggregate Letter of Credit Obligations of the Borrower would
exceed the Letter of Credit Facility then in effect or (ii) the aggregate
principal amount of the Revolving Credit Loans outstanding would exceed the
Borrowing Base (after reduction for the Letter of Credit Reserve in respect of
such Letter of Credit) or (iii) if no Revolving Credit Loans are outstanding,
the aggregate Letter of Credit Obligations would exceed the Borrowing Base; or
(b) which has a term longer than one calendar year or an expiration date
after the last Business Day that is more than 30 days prior to the Termination
Date.
SECTION 3.3. Conditions. The obligation of BankBoston to issue any Letter
of Credit is subject to the satisfaction of (a) the conditions precedent
contained in ARTICLE 5 and (b) the following additional conditions precedent in
a manner satisfactory to the Agent and BankBoston:
(i) the Borrower shall have delivered to BankBoston and the Agent at
such times and in such manner as BankBoston or the Agent may prescribe an
application in form and substance satisfactory to BankBoston and the Agent
for the issuance of the Letter of Credit, a Reimbursement Agreement and
such other documents as may be required pursuant to the terms thereof, and
the form and terms of the proposed Letter of Credit shall be satisfactory
to BankBoston and the Agent; and
(ii) as of the date of issuance, no order of any court, arbitrator
or governmental authority having jurisdiction or authority over BankBoston
shall purport by its terms to enjoin or restrain banks generally from
issuing letters of credit of the type and in the amount of the proposed
Letter of Credit, and no law, rule or regulation applicable to banks
generally and no request or directive (whether or not having the force of
law) from any governmental authority with jurisdiction over banks
generally shall prohibit, or request that BankBoston refrain from, the
issuance of letters of credit generally or the issuance of such Letter of
Credit.
SECTION 3.4. Issuance of Letters of Credit
(a) Request for Issuance. The Borrower shall give BankBoston and the Agent
written notice of the Borrower's request for the issuance of a Letter of Credit
no later than six Business Days prior to the proposed date of issuance of the
Letter of Credit. Such notice shall be irrevocable and shall specify the
original face amount of the Letter of Credit requested, the effective date
(which date shall be a Business Day) of issuance of such requested Letter of
Credit, whether such Letter of Credit may be drawn in a single or in multiple
draws, the date on which such requested Letter of Credit is to
35
expire (which date shall be a Business Day earlier than the 30th day prior to
the Termination Date), the purpose for which such Letter of Credit is to be
issued and the beneficiary of the requested Letter of Credit. The Borrower shall
attach to such notice the form of the Letter of Credit that the Borrower
requests to be issued.
(b) Responsibilities of the Agent; Issuance. The Agent shall determine, as
of the Business Day immediately preceding the requested effective date of
issuance of the Letter of Credit set forth in the notice from the Borrower
pursuant to SECTION 3.4(A), the amount of the unused Letter of Credit Facility
and the Borrowing Base. If (i) the form of the Letter of Credit delivered by the
Borrower to the Agent is acceptable to BankBoston and the Agent in their sole,
reasonable discretion, (ii) the undrawn face amount of the requested Letter of
Credit is less than or equal to the lesser of (A) the unused Letter of Credit
Facility and (B) the unused Borrowing Base and (iii) the Agent has received a
certificate from the Borrower stating that the applicable conditions set forth
in ARTICLE 5 have been satisfied, then BankBoston will cause the Letter of
Credit to be issued.
(c) Notice of Issuance. Promptly after the issuance of any Letter of
Credit, BankBoston shall give the Agent written or facsimile notice, or
telephonic notice confirmed promptly thereafter in writing, of the issuance of
such Letter of Credit, and the Agent shall give each Lender written or facsimile
notice, or telephonic notice confirmed promptly thereafter in writing, of the
issuance of such Letter of Credit.
(d) No Extension or Amendment. No Letter of Credit shall be extended or
amended unless the requirements of this SECTION 3.4 are met as though a new
Letter of Credit were being requested and issued.
SECTION 3.5. Duties of BankBoston. Any action taken or omitted to be taken
by BankBoston under or in connection with any Letter of Credit, if taken or
omitted in the absence of gross negligence or willful misconduct, shall not
result in any liability of BankBoston to any Lender or relieve any Lender of its
obligations hereunder to BankBoston. In determining whether to pay under any
Letter of Credit, BankBoston shall have no obligation to any Lender other than
to confirm that any documents required to be delivered under such Letter of
Credit in connection with such drawing have been presented and appear on their
face to comply with the requirements of such Letter of Credit.
SECTION 3.6. Payment of Reimbursement Obligations.
(a) Payment to Issuer. Notwithstanding any provisions to the contrary in
any Reimbursement Agreement, the Borrower agrees to reimburse BankBoston for any
drawings (whether partial or full) under each Letter of Credit issued by
BankBoston and agrees to pay to BankBoston the amount of all other Reimbursement
Obligations and other amounts payable to BankBoston under or in connection with
such Letter of Credit immediately when due, irrespective of any claim, set-off,
defense or other right which the Borrower may have at any time against
BankBoston or any other Person.
(b) Recovery or Avoidance of Payments. In the event any payment by or on
behalf of the Borrower with respect to any Letter of Credit (or any
Reimbursement Obligation relating thereto) received by BankBoston, or by the
Agent and distributed by the Agent to the Lenders on account of their respective
participations therein, is thereafter set aside, avoided or recovered from
BankBoston
36
or the Agent in connection with any receivership, liquidation or bankruptcy
proceeding, the Lenders shall, upon demand by the Agent, pay to the Agent, for
the account of the Agent or BankBoston, their respective Commitment Percentages
of such amount set aside, avoided or recovered together with interest at the
rate required to be paid by the Agent upon the amount required to be repaid by
it.
SECTION 3.7. Participations.
(a) Purchase of Participations. Immediately upon issuance by BankBoston of
a Letter of Credit, each Lender shall be deemed to have irrevocably and
unconditionally purchased and received without recourse or warranty, an
undivided interest and participation in such Letter of Credit, equal to such
Lender's Commitment Percentage of the face amount thereof (including, without
limitation, all obligations of the Borrower with respect thereto, other than
amounts owing to BankBoston under SECTION 4.5(B), and any security therefor or
guaranty pertaining thereto).
(b) Sharing of Letter of Credit Payments. In the event that BankBoston
makes a payment under any Letter of Credit and BankBoston shall not have been
repaid such amount pursuant to SECTION 3.6, then BankBoston shall be deemed to
have made a Non-Ratable Loan in the amount of such payment, and notwithstanding
the occurrence or continuance of a Default or Event of Default at the time of
such payment, such Non-Ratable Loan shall be subject to the provisions of
SECTION 4.8(B) and the absolute obligations of the Lenders to pay for their
respective participation interests therein.
(c) Sharing of Reimbursement Obligation Payments. Whenever BankBoston
receives a payment from or on behalf of the Borrower on account of a
Reimbursement Obligation as to which the Agent has previously received for the
account of BankBoston payment from a Lender pursuant to this SECTION 3.7,
BankBoston shall promptly pay to the Agent, for the benefit of such Lender, such
Lender's Commitment Percentage of the amount of such payment from the Borrower
in Dollars. Each such payment shall be made by BankBoston on the Business Day on
which BankBoston receives immediately available funds from the Agent pursuant to
the immediately preceding sentence, if received prior to 11:00 a.m. on such
Business Day, and otherwise on the next succeeding Business Day.
(d) Documentation. Upon the request of any Lender, the Agent shall furnish
to such Lender copies of any Letter of Credit, Reimbursement Agreement or
application for any Letter of Credit and such other documentation as may
reasonably be requested by such Lender.
(e) Obligations Irrevocable. The obligations of each Lender to make
payments to the Agent with respect to any Letter of Credit and their
participations therein pursuant to the provisions of SECTION 4.7(C) hereof or
otherwise and the obligations of the Borrower to make payments to BankBoston or
to the Agent, for the account of Lenders, shall be irrevocable, shall not be
subject to any qualification or exception whatsoever and shall be made in
accordance with the terms and conditions of this Agreement (assuming, in the
case of the obligations of the Lenders to make such payments, that the Letter of
Credit has been issued in accordance with SECTION 3.4), including, without
limitation, any of the following circumstances:
(i) Any lack of validity or enforceability of this Agreement or any
of the other Loan Documents;
37
(ii) The existence of any claim, set-off, defense or other right
which the Borrower may have at any time against a beneficiary named in a
Letter of Credit or any transferee of any Letter of Credit (or any Person
for whom any such transferee may be acting), any Lender, BankBoston or any
other Person, whether in connection with this Agreement, any Letter of
Credit, the transactions contemplated herein or any unrelated transactions
(including any underlying transactions between the Borrower or any other
Person and the beneficiary named in any Letter of Credit);
(iii) Any draft, certificate or any other document presented under
the Letter of Credit upon which payment has been made in good faith and
according to its terms proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) The surrender or impairment of any Collateral or any other
security for the Secured Obligations or the performance or observance of
any of the terms of any of the Loan Documents;
(v) The occurrence of any Default or Event of Default; or
(vi) BankBoston's or the Agent's failure to deliver the notice
provided for in SECTION 3.4(C).
SECTION 3.8. Indemnification, Exoneration.
(a) Indemnification. In addition to amounts payable as elsewhere provided
in this ARTICLE 3, the Borrower agrees to protect, indemnify, pay and save the
Lenders and the Agent harmless from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
attorneys' fees) which any Lender or the Agent may incur or be subject to as a
consequence, directly or indirectly, of
(i) the issuance of any Letter of Credit, other than as a result of
its gross negligence or willful misconduct, as determined by a court of
competent jurisdiction, or
(ii) the failure of BankBoston to honor a drawing under any Letter
of Credit as a result of any act or omission, whether rightful or
wrongful, of any present or future DE JURE or DE FACTO governmental
authority (all such acts or omissions being hereinafter referred to
collectively as "Government Acts").
(b) Assumption of Risk by the Borrower. As among the Borrower, the Lenders
and the Agent, the Borrower assumes all risks of the acts and omissions of, or
misuse of any of the Letters of Credit by, the respective beneficiaries of such
Letters of Credit. In furtherance and not in limitation of the foregoing,
subject to the provisions of the applications for the issuance of Letters of
Credit, the Lenders and the Agent shall not be responsible for:
(i) the form, validity, sufficiency, accuracy, genuineness or legal
effect of any document submitted by any Person in connection with the
application for and issuance of and presentation of drafts with respect to
any of the Letters of Credit, even if it should prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged;
38
(ii) the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign any Letter of Credit or the
rights or benefits thereunder or proceeds thereof, in whole or in part,
which may prove to be invalid or ineffective for any reason;
(iii) the failure of the beneficiary of any Letter of Credit to
comply duly with conditions required in order to draw upon such Letter of
Credit;
(iv) errors, omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or otherwise,
whether or not they be in cipher;
(v) errors in interpretation of technical terms;
(vi) any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under any Letter of Credit or
of the proceeds thereof;
(vii) the misapplication by the beneficiary of any Letter of Credit
of the proceeds of any drawing under such Letter of Credit; or
(viii) any consequences arising from causes beyond the control of
the Lenders or the Agent, including, without limitation, any Government
Acts.
None of the foregoing shall affect, impair or prevent the vesting of any of the
Agent's rights or powers under this SECTION 3.8.
(c) Exoneration. In furtherance and extension, and not in limitation, of
the specific provisions set forth above, any action taken or omitted by the
Agent, BankBoston or any Lender under or in connection with any of the Letters
of Credit or any related certificates, if taken or omitted in good faith, shall
not result in any liability of any Lender or the Agent to the Borrower or
relieve the Borrower of any of its obligations hereunder to any such Person.
SECTION 3.9. Supporting Letter of Credit; Cash Collateral. If,
notwithstanding the provisions of SECTION 3.2(B), any Letter of Credit is
outstanding on the Termination Date, then on or prior to such Termination Date,
or in any case upon the occurrence of an Event of Default, the Borrower shall,
promptly on demand by the Agent, deposit with the Agent, for the ratable benefit
of the Lenders, with respect to each Letter of Credit then outstanding, as the
Agent shall specify, either (a) a standby letter of credit (a "Supporting Letter
of Credit") in form and substance satisfactory to the Agent, issued by an issuer
satisfactory to the Agent in its reasonable judgment in an amount equal to the
greatest amount for which such Letter of Credit may be drawn, under which
Supporting Letter of Credit the Agent is entitled to draw amounts necessary to
reimburse the Agent and the Lenders for payments made by the Agent and the
Lenders under such Letter of Credit or under any reimbursement or guaranty
agreement with respect thereto, or (b) Cash Collateral in an amount necessary to
reimburse the Agent and the Lenders for payments made by the Agent and the
Lenders under such Letter of Credit or under any reimbursement or guaranty
agreement with respect thereto. Such Supporting Letter of Credit or Cash
Collateral shall be held by the Agent for the benefit of the Lenders, as
security for, and to provide for the payment of, the Reimbursement Obligations.
In addition, the Agent may at any time after the Termination Date apply any or
all of such Cash
39
Collateral to the payment of any or all of the Secured Obligations then due and
payable. At the Borrower's request, but subject to the Agent's reasonable
approval, the Agent shall invest any Cash Collateral consisting of cash or any
proceeds of Cash Collateral consisting of cash in Cash Equivalents, and any
commissions, expenses and penalties incurred by the Agent in connection with any
investment and redemption of such Cash Collateral shall be Secured Obligations
hereunder secured by the Collateral, shall bear interest at the rates provided
herein for the Loans and shall be charged to the Borrower's Loan Accounts, or,
at the Agent's option, shall be paid out of the proceeds of any earnings
received by the Agent from the investment of such Cash Collateral as provided
herein or out of such cash itself. The Agent makes no representation or warranty
as to, and shall not be responsible for, the rate of return, if any, earned on
any Cash Collateral. Any earnings on Cash Collateral shall be held as additional
Cash Collateral on the terms set forth in this SECTION 3.9.
40
ARTICLE 4
GENERAL LOAN PROVISIONS
SECTION 4.1. Interest.
(a) Subject to the provisions of SECTION 4.1(C), the Borrower will pay
interest on the unpaid principal amount of each Base Rate Revolving Credit Loan,
for each day from the day such Loan is made until such Loan is paid (whether at
maturity, by reason of acceleration, or otherwise) or is converted to a Loan
bearing interest on a different basis, at a rate per annum equal to the sum of
(i) the Applicable Margin and (ii) the Alternate Base Rate, payable monthly in
arrears as it accrues on each Interest Payment Date.
(b) Subject to the provisions of SECTION 4.1(C), the Borrower will pay
interest on the unpaid principal amount of each Eurodollar Rate Revolving Credit
Loan for the applicable Interest Period at a rate per annum equal to the sum of
(i) the Applicable Margin and (ii) the Eurodollar Rate, payable in arrears as it
accrues on each Interest Payment Date.
(c) If the Borrower shall fail to pay when due (whether at maturity, by
reason of acceleration or otherwise) all or any portion of the principal amount
of any Loan or if there shall occur any Event of Default, then, at the election
of the Required Lenders, the Secured Obligations shall no longer bear interest
in accordance with the terms of SECTION 4.1(A), (B) OR (D), but shall bear
interest for each day from the date of such failure to pay or other Event of
Default, until such failure to pay or other Event of Default shall have been
cured or waived at a rate per annum equal to the sum of (i) the Default Margin
and (ii) the rate otherwise applicable to such Loan, payable on demand. The
interest rate provided for in the preceding sentence shall, to the extent
permitted by Applicable Law, apply to and accrue on the amount of any judgment
entered with respect to any Secured Obligation and shall continue to accrue at
such rate during any proceeding described in SECTION 12.1(G) or (H).
(d) The Borrower will, to the extent permitted by Applicable Law, pay
interest on the unpaid principal amount of any Secured Obligation that is due
and payable other than the Loans in accordance with SECTIONS 4.1(A) or (C), as
applicable, as if such Secured Obligation were a Base Rate Revolving Credit
Loan.
(e) The interest rates provided for in SECTIONS 4.1(A), (B), (C) and (D)
shall be computed on the basis of a year of 360 days and the actual number of
days elapsed. Each interest rate determined with reference to the Alternate Base
Rate shall be adjusted automatically as of the opening of business on the
effective date of each change in the Alternate Base Rate.
(f) It is not intended by the Lenders, and nothing contained in this
Agreement or the Notes shall be deemed, to establish or require the payment of a
rate of interest in excess of the maximum rate permitted by Applicable Law (the
"Maximum Rate"). If, in any month, the Effective Interest Rate, absent such
limitation, would have exceeded the Maximum Rate, then the Effective Interest
Rate for that month shall be the Maximum Rate, and, if in future months, the
Effective Interest Rate would otherwise be less than the Maximum Rate, then the
Effective Interest Rate shall remain at the Maximum Rate until such time as the
amount of interest paid hereunder equals the amount of interest which would have
been paid if the same had not been limited by the Maximum Rate. In the event
that, upon payment in full of the Secured Obligations, the total amount of
interest paid or accrued
41
under the terms of this Agreement is less than the total amount of interest
which would have been paid or accrued if the Effective Interest Rate had at all
times been in effect, then the Borrower shall, to the extent permitted by
Applicable Law, pay to the Lenders an amount equal to the excess, if any, of (i)
the lesser of (A) the amount of interest which would have been charged if the
Maximum Rate had, at all times, been in effect and (B) the amount of interest
which would have accrued had the Effective Interest Rate, at all times, been in
effect and (ii) the amount of interest actually paid or accrued under this
Agreement. In the event the Lenders receive, collect or apply as interest any
sum in excess of the Maximum Rate, such excess amount shall be applied to the
reduction of the principal balance of the Secured Obligations, and if no such
principal is then outstanding, such excess or part thereof remaining, shall be
paid to the Borrower.
SECTION 4.2. Certain Fees.
(a) Closing Fee. In consideration of the Lenders' structuring and
implementing the credit facilities hereunder, the Borrower shall pay to the
Agent, for the ratable account of the Lenders, a closing fee, in an amount equal
to $200,000, $100,000 of which shall be due and payable on the Effective Date
and $100,000 shall be due and payable in full on the first to occur of (i)
February 1, 1999, (ii) the occurrence of an Event of Default or (iii) the
termination of this Agreement.
(b) Agent Fee. For administration and other services performed by the
Agent in connection with its continuing administration of this Agreement, the
Borrower shall pay to the Agent, for its own account, and not for the account of
the Lenders, an annual fee of $50,000, payable quarterly in advance beginning on
the Effective Date and continuing for so long as any Secured Obligation shall
remain outstanding or the Revolving Credit Facility shall not have been
terminated.
(c) Commitment Fee. In connection with and as consideration for the
holding available for the use of the Borrower hereunder the full amount of the
Revolving Credit Facility, the Borrower will pay a fee to the Agent, for the
ratable benefit of the Lenders, for each day from the Effective Date until the
Termination Date, in an amount equal to 0.375% per annum of the unused portion
of the Revolving Credit Facility for such day. Such fee shall be payable
quarterly in arrears on the first day of each January, April, July and October
beginning October 1, 1998, and on the date of any permanent reduction in the
Revolving Credit Facility.
(d) Letter of Credit Fees.
(i) The Borrower agrees to pay to the Agent, for the ratable benefit
of the Lenders, Letter of Credit fees at a rate per annum equal to the
Applicable Margin applicable to Eurodollar Rate Revolving Credit Loans on
each Letter of Credit from time to time outstanding during the term of
this Agreement. Such fees shall be payable to the Agent for the ratable
benefit of the Lenders in accordance with their respective Commitment
Percentages in advance on the date of issuance of each Letter of Credit,
shall be calculated according to the anticipated average daily Letter of
Credit Amount based on the stated term of each Letter of Credit and shall
be calculated based on a year of 360 days and the actual number of days
elapsed.
42
(ii) The Borrower agrees to pay to Agent, for the account of
BankBoston, the standard fees and charges of BankBoston for issuing,
administering, amending, renewing, paying and cancelling letters of
credit, as and when assessed.
(e) The fees provided for in this SECTION 4.2 are charges for services and
not interest or charges for the use of money and shall be fully earned when due
and payable and shall not be subject to refund or rebate.
SECTION 4.3. Manner of Payment.
(a) Except as otherwise expressly provided in SECTION 8.1(B), each payment
(including prepayments) by the Borrower on account of the principal of or
interest on the Loans or of any other amounts payable to the Lenders under this
Agreement or any Note shall be made not later than 12:00 noon on the date
specified for payment under this Agreement to the Agent, for the account of the
Lenders, at the Agent's Office, in Dollars, in immediately available funds and
shall be made without any setoff, counterclaim or deduction whatsoever. Any
payment received after such time but before 2:00 p.m. on such day shall be
deemed a payment on such date for the purposes of SECTION 12.1, but for all
other purposes shall be deemed to have been made on the next succeeding Business
Day.
(b) The Borrower hereby irrevocably authorizes each Lender and each
Affiliate of such Lender and each participant herein to charge any account of
the Borrower maintained with such Lender or such Affiliate or participant with
such amounts as may be necessary from time to time to pay any Secured
Obligations (whether or not owed to such Lender, Affiliate or participant) which
are not paid when due.
SECTION 4.4. If any payment under this Agreement or any Note shall be
specified to be made on a day which is not a Business Day, it shall be made on
the next succeeding day which is a Business Day and such extension of time shall
in such case be included in computing interest, if any, in connection with such
payment.
SECTION 4.5. Loan Accounts; Statements of Account.
(a) Each Lender shall open and maintain on its books a loan account in the
Borrower's name (each, a "Loan Account" and collectively, the "Loan Accounts").
Each such Loan Account shall show as debits thereto each Loan made under this
Agreement by such Lender to the Borrower and as credits thereto all payments
received by such Lender and applied to principal of such Loans, so that the
balance of the Loan Account at all times reflects the principal amount due such
Lender from the Borrower.
(b) The Agent shall maintain on its books a control account for the
Borrower in which shall be recorded (i) the amount of each disbursement made
hereunder, (ii) the amount of any principal or interest due or to become due
from the Borrower hereunder, and (iii) the amount of any sum received by the
Agent hereunder from the Borrower and each Lender's share therein.
(c) The entries made in the accounts pursuant to SUBSECTIONS (A) and (B)
shall be PRIMA FACIE evidence, in the absence of manifest error, of the
existence and amounts of the obligations of the Borrower therein recorded and in
case of discrepancy between such accounts, in the absence of manifest error, the
accounts maintained pursuant to SUBSECTION (B) shall be controlling.
43
(d) The Agent will account separately to the Borrower monthly with a
statement of Loans, charges and payments made to and by the Borrower pursuant to
this Agreement, and such accounts rendered by the Agent shall be deemed final,
binding and conclusive, save for manifest error, unless the Agent is notified by
the Borrower in writing to the contrary within 30 days of the date the account
to the Borrower was so rendered. Such notice by the Borrower shall be deemed an
objection to only those items specifically objected to therein. Failure of the
Agent to render such account shall in no way affect the rights of the Agent or
of the Lenders hereunder.
SECTION 4.6. Termination of Agreement. Subject to the provisions of
SECTION 4.10, the Borrower shall have the right, at any time, to terminate this
Agreement upon not less than 30 Business Days' prior written notice of its
intention to terminate this Agreement, which notice shall specify the effective
date of such termination. Upon receipt of such notice, the Agent shall promptly
notify each Lender thereof. On the date specified in such notice, such
termination shall be effected, PROVIDED, that the Borrower shall, on or prior to
such date, pay to the Agent, for the account of the Lenders and its Affiliates
(which are the holders thereof), in same day funds, an amount equal to all
Secured Obligations and Junior Secured Obligations then outstanding, including,
without limitation, all (i) accrued interest thereon, (ii) all accrued fees
provided for hereunder, and (iii) any amounts payable to the Lender pursuant to
SECTIONS 4.11, 4.12, 15.2, 15.3 and 15.14, and, in addition thereto, shall
deliver to the Agent, in respect of each outstanding Letter of Credit, either
the Supporting Letter of Credit or the Cash Collateral as provided in SECTION
3.9. Following a notice of termination as provided for in this SECTION 4.6 and
upon payment in full of the amounts specified in this SECTION 4.6, this
Agreement shall be terminated and the Agent, the Lenders and the Borrower shall
have no further obligations to any other party hereto except for the obligations
to the Agent and the Lenders pursuant to SECTION 15.14 hereof.
SECTION 4.7. Making of Loans.
(a) Nature of Obligations of Lenders to Make Loans. The obligations of the
Lenders under this Agreement to make the Loans are several and are not joint or
joint and several.
(b) Assumption by Agent. Subject to the provisions of SECTION 4.8 and
notwithstanding the occurrence or continuance of a Default or Event of Default
or other failure of any condition to the making of Loans hereunder subsequent to
the Loans to be made on the Effective Date, unless the Agent shall have received
notice from a Lender in accordance with the provisions of SECTION 4.7(C) prior
to a proposed borrowing date that such Lender will not make available to the
Agent such Lender's Revolving Credit Loan as part of the Borrowing to be made on
such date, the Agent may assume that such Lender will make such Loan available
to the Agent in accordance with SECTION 2.2(A), and the Agent may, in reliance
upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent such Lender shall not make such Loan
available to the Agent, such Lender and the Borrower severally agree to repay to
the Agent forthwith on demand such corresponding amount, together with interest
thereon for each day from the date such amount is made available to the Borrower
until the date such amount is repaid to the Agent at the Effective Interest Rate
or, if lower, subject to SECTION 4.1(F), the Maximum Rate. If such Lender shall
repay to the Agent such corresponding amount, the amount so repaid shall
constitute such Lender's Revolving Credit Loan made on such date for purposes of
this Agreement. The failure of any Lender to make its Commitment Percentage of
any Loan available shall not (without regard to whether a Borrower shall have
returned the amount thereof to the Agent in accordance with this SECTION 4.7)
44
relieve it or any other Lender of its obligation, if any, hereunder to make its
Loan available as part of such Borrowing, but no Lender shall be responsible for
the failure of any other Lender to make its Loan available such Borrowing.
(c) Delegation of Authority to Agent. Without limiting the generality of
SECTION 14.1, each Lender expressly authorizes the Agent to determine on behalf
of such Lender (i) any reduction or increase of advance rates applicable to the
Borrowing Base, so long as such advance rates do not at any time exceed the
rates set forth in the Borrowing Base definition, (ii) the creation or
elimination of any reserves (other than the Letter of Credit Reserve) against
the Revolving Credit Facility and the Borrowing Base and (iii) whether or not
Inventory or Receivables shall be deemed to constitute Eligible Inventory,
Eligible Raw Materials Inventory, Eligible Finished Inventory, Eligible Work in
Process Inventory, Eligible Factored Receivables, Eligible Receivables, Eligible
Insured House Receivables or Eligible Uninsured House Receivables. Such
authorization may be withdrawn by the Required Lenders by giving the Agent
written notice of such withdrawal signed by the Required Lenders; PROVIDED,
HOWEVER, that unless otherwise agreed by the Agent such withdrawal of
authorization shall not become effective until the 30th Business Day after
receipt of such notice by the Agent. Thereafter, the Required Lenders shall
jointly instruct the Agent in writing regarding such matters with such frequency
as the Required Lenders shall jointly determine. Unless and until the Agent
shall have received written notice from (i) the Required Lenders or (ii) any
Lender having at least a 50% Commitment Percentage, as to the existence of a
Default, an Event of Default or some other circumstance which would relieve the
Lenders of their respective obligations to make Loans hereunder, which notice
shall be in writing and shall be signed by the Required Lenders or such Lender,
as the case may be, and shall expressly state that the Required Lenders or such
Lender, as the case may be, does not intend to make available to the Agent such
Lenders' ratable share of Loans made after the effective date of such notice,
the Agent shall be entitled to continue to make the assumptions described in
SECTION 4.7(B). After receipt of the notice described in the preceding sentence,
which shall become effective on the third Business Day after receipt of such
notice by the Agent unless otherwise agreed by the Agent, the Agent shall be
entitled to make the assumptions described in SECTION 4.7(B) as to any Loans as
to which it has not received a written notice to the contrary prior to 11:00
a.m. on the Business Day next preceding the day on which the Loan is to be made.
The Agent shall not be required to make any Loan as to which it shall have
received notice by a Lender of such Lender's intention not to make its ratable
portion of such Loan available to the Agent. Any withdrawal of authorization
under this SECTION 4.7(C) shall not affect the validity of any Loans made prior
to the effectiveness thereof.
SECTION 4.8. Settlement Among Lenders.
(a) Revolving Credit Loans. It is agreed that each Lender's Net
Outstandings are intended by the Lenders to be equal at all times to such
Lender's Commitment Percentage of the aggregate principal amount of all
Revolving Credit Loans outstanding. Notwithstanding such agreement, the several
and not joint obligation of each Lender to make Revolving Credit Loans in
accordance with the terms of this Agreement ratably in accordance with such
Lender's Commitment Percentage and each Lender's right to receive its ratable
share of principal payments on Revolving Credit Loans in accordance with its
Commitment Percentage, the Lenders agree that in order to facilitate the
administration of this Agreement and the Loan Documents that settlement among
them may take place on a periodic basis in accordance with the provisions of
this SECTION 4.8.
45
(b) Settlement Procedures as to Revolving Credit Loans. Settlement among
the Lenders as to Revolving Credit Loans may occur periodically on Settlement
Dates determined from time to time by the Agent, which may occur before or after
the occurrence or during the continuance of a Default or Event of Default and
whether or not all of the conditions set forth in SECTION 5.2 have been met. On
each Settlement Date payments shall be made by or to BankBoston and the other
Lenders (through the Agent) in accordance with the Settlement Report delivered
by the Agent in respect of such Settlement Date so that as of each Settlement
Date, and after giving effect to the transactions to take place on such
Settlement Date, each Lender's Net Outstandings shall equal such Lender's
Commitment Percentage of the Revolving Credit Loans outstanding. Between
Settlement Dates, the Agent shall request and BankBoston may (but shall not be
obligated to) advance to the Borrower out of BankBoston's own funds, the entire
principal amount of any Revolving Credit Loan requested or deemed requested
pursuant to SECTION 2.2(A) (any such Revolving Credit Loan being referred to as
a "Non-Ratable Loan"). The making of each Non-Ratable Loan by BankBoston shall
be deemed to be a purchase by BankBoston of a 100% participation in each other
Lender's Commitment Percentage of the amount of such Non-Ratable Loan. All
payments of principal, interest and any other amount with respect to such
Non-Ratable Loan shall be payable to and received by the Agent for the account
of BankBoston. Upon demand by BankBoston, with notice thereof to the Agent, each
other Lender shall pay to BankBoston, as the repurchase of such participation,
an amount equal to 100% of such Lender's Commitment Percentage of the principal
amount of such Non-Ratable Loan. Any payments received by the Agent between
Settlement Dates which in accordance with the terms of this Agreement are to be
applied to the reduction of the outstanding principal balance of Revolving
Credit Loans, shall be paid over to and retained by BankBoston for such
application, and such payment to and retention by BankBoston shall be deemed, to
the extent of each other Lender's Commitment Percentage of such payment, to be a
purchase by each such other Lender of a participation in the Revolving Credit
Loans (including the repurchase of participations in Non-Ratable Loans) held by
BankBoston. Upon demand by another Lender, with notice thereof to the Agent,
BankBoston shall pay to the Agent, for the account of such other Lender, as a
repurchase of such participation, an amount equal to such other Lender's
Commitment Percentage of any such amounts (after application thereof to the
repurchase of any participations of BankBoston in such other Lender's Commitment
Percentage of any Non-Ratable Loans) paid only to BankBoston by the Agent.
(c) Settlement of Other Secured Obligations. All other amounts received by
the Agent on account of, or applied by the Agent to the payment of, any Secured
Obligation owed to the Lenders (including, without limitation, fees payable to
the Lenders pursuant to SECTIONS 4.2(A), (C) and (D) and proceeds from the sale
of, or other realization upon, all or any part of the Collateral following an
Event of Default) that are received by the Agent on or prior to 1:00 p.m. on a
Business Day will be paid by the Agent to each Lender on the same Business Day,
and any such amounts that are received by the Agent after 1:00 p.m. will be paid
by the Agent to each Lender on the following Business Day. Unless otherwise
stated herein, the Agent shall distribute fees payable to the Lenders pursuant
to SECTIONS 4.2(A), (C) and (D) ratably to the Lenders based on each Lender's
Commitment Percentage and shall distribute proceeds from the sale of, or other
realization upon, all or any part of the Collateral following an Event of
Default ratably to the Lenders based on the amount of the Secured Obligations
then owing to each Lender.
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SECTION 4.9. Prepayments; Application of Proceeds.
(a) [RESERVED]
(b) Prepayments from Equity Offerings. In the event that at any time after
the Effective Date, the Borrower issues capital stock or other securities or
receives an additional capital contribution in respect of existing capital stock
or other securities, (other than in connection with the issuance or sale of
shares to employees of the Borrower pursuant to any stock ownership or profit
sharing plan) not later than the third Business Day following the date of
receipt of the cash proceeds from such issuance, the Borrower shall apply such
proceeds, net of underwriting discounts and commissions and other reasonable
costs associated therewith, in prepayment of the Loans as provided in SECTION
4.9(C).
(c) Application of Proceeds of Payments. All payments and prepayments of
Secured Obligations pursuant to this Agreement shall be applied as follows: (i)
first, to BankBoston to pay principal and accrued interest on any portion of any
Non-Ratable Loan which BankBoston may have advanced on behalf of any Lender and
for which BankBoston has not been reimbursed by such Lender or the Borrower;
(ii) second, to the Agent to pay the amount of expenses that have not been
reimbursed to the Agent by the Borrower or the Lenders, together with interest
accrued thereon; (iii) third, to the Agent to pay any indemnified amount that
has not been paid to the Agent by the Borrower or the Lenders, together with
interest accrued thereon; (iv) fourth, to the Agent to pay any fees due and
payable to the Agent under this Agreement; (v) fifth, to the Lenders for any
indemnified amount that they have paid to the Agent and for any expenses that
they have reimbursed to the Agent; and (vi) sixth, to the Lenders in payment of
the unpaid principal and accrued interest in respect of the Loans and any other
Secured Obligations then outstanding and held by any Lender to be shared among
Lenders on a ratable basis, or on such other basis as may be agreed upon in
writing by all of the Lenders (which agreement or agreements may be entered into
without notice to or the consent or approval of the Borrower). The allocations
set forth in this SECTION 4.9 are solely to determine the rights and priorities
of the Agent and the Lenders as among themselves and may be changed by the Agent
and the Lenders without notice or the consent of approval of the Borrower or any
other Person. Whenever allocation is made pursuant to this SECTION 4.9 to the
holder of Secured Obligations in which another Lender acquires a participation,
the monies received by such holder shall be shared as between such holder and
such participants on a ratable basis.
SECTION 4.10. Reduction of Revolving Credit Facility . The Borrower shall
have the right, at any time and from time to time, upon at least three Business
Days' prior irrevocable written notice to Agent, to terminate or reduce
permanently all or a portion of the unused Revolving Credit Facility; PROVIDED,
HOWEVER, that any such partial reduction shall be made in increments of $500,000
or an integral multiple thereof and shall not reduce the Revolving Credit
Facility below the amount of the aggregate Letter of Credit Obligations. As of
the date of termination or reduction set forth in such notice and upon payment
of any fee payable pursuant to SECTION 4.11, the Revolving Credit Facility shall
be permanently reduced to the amount stated in the Borrower's notice for all
purposes herein (and each Lender's Commitment shall also be reduced by such
Lender's Commitment Percentage of the amount of such reduction). The amount of
the Revolving Credit Facility shall be automatically reduced to zero on the
Termination Date. The Revolving Credit Facility or any portion thereof
terminated or reduced pursuant to this SECTION 4.10 may not be reinstated.
47
SECTION 4.11. Prepayment Fee. If the Borrower prepays the Loans and
effects a permanent reduction of the Revolving Credit Facility prior to the
Termination Date, for any reason, the Borrower shall pay to the Agent for the
ratable benefit of the Lenders on such date of reduction, as liquidated damages
and compensation for the costs of making funds available to the Borrower under
this Agreement, and not as a penalty, an amount equal to 2% of the principal
amount of such permanent reduction of the Revolving Credit Facility during the
first year after the Effective Date and 1% of the principal amount of such
permanent reduction of the Revolving Credit Facility during the second year
after the Effective Date.
SECTION 4.12. Payments Not at End of Interest Period; Failure to Borrow.
If for any reason any payment of principal with respect to any o Borrow
Eurodollar Rate Revolving Credit Loan is made on any day prior to the last day
of the Interest Period applicable to such Eurodollar Rate Revolving Credit Loan
or, after having given a Notice of Borrowing with respect to any Eurodollar Rate
Revolving Credit Loan or a Notice of Conversion or Continuation with respect to
any Loan to be continued as or converted into a Eurodollar Rate Revolving Credit
Loan, such Loan is not made or is not continued as or converted into a
Eurodollar Rate Revolving Credit Loan due to the Borrower's failure to borrow or
to fulfill the applicable conditions set forth in ARTICLE 4, the Borrower shall
pay to each Lender, in addition to any amounts that may be due under Section
4.11, an amount (if a positive number) computed pursuant to the following
formula:
L = (R - T) x P x D
----------------
360
L = amount payable
R = interest rate applicable to the Eurodollar Rate Revolving
Credit Loan unborrowed or prepaid
T = effective interest rate per annum at which any readily
marketable bonds or other obligations of the United States,
selected at the Agent's sole discretion, maturing on or near
the last day of the then applicable or requested Interest
Period for such Loan and in approximately the same amount as
such Loan, can be purchased by such Lender on the day of such
payment of principal or failure to borrow
P = the amount of principal paid or the amount of the requested
Loan
D = the number of days remaining in the Interest Period as of the
date of such payment or the number of days in the requested
Interest Period
The Borrower shall pay such amount upon presentation by the Agent of a statement
setting forth the amount and the Agent's calculation thereof pursuant hereto,
which statement shall be deemed true and correct absent manifest error.
SECTION 4.13. Assumptions Concerning Funding of Eurodollar Rate Revolving
Credit Loans. Calculation of all amounts payable to the Lenders under this
ARTICLE 4 shall be made as though each Lender had actually funded or committed
to fund its Eurodollar Rate Revolving Credit Loans through the purchase of an
underlying deposit in an amount equal to the amount of such ratable share and
having a maturity comparable to the relevant Interest Period for such Eurodollar
Rate
48
Revolving Credit Loan; PROVIDED, HOWEVER, each Lender may fund its Eurodollar
Rate Revolving Credit Loans in any manner it deems fit and the foregoing
assumption shall be utilized only for the calculation of amounts payable under
this ARTICLE 4.
SECTION 4.14. Notice of Conversion or Continuation. Whenever the Borrower
desires, subject to the provisions of Section 4.7, to convert an outstanding
Base Rate Revolving Credit Loan into a Eurodollar Rate Revolving Credit Loan or
to continue all or a portion of an outstanding Eurodollar Rate Revolving Credit
Loan for a subsequent Interest Period, the Borrower shall notify the Agent in
writing (which notice shall be irrevocable) by telecopy not later than 11:30
a.m. on the date two Business Days before the day on which such proposed
conversion or continuation is to be effective (and such effective date of any
continuation shall be the last day of the Interest Period for such Eurodollar
Rate Revolving Credit Loan). Each such notice (a "Notice of Conversion or
Continuation") shall (i) identify the Loan to be converted or continued, the
aggregate outstanding principal balance thereof and, if a Eurodollar Rate
Revolving Credit Loan, the last day of the Interest Period applicable to such
Loan, (ii) specify the effective date of such conversion or continuation, (iii)
specify the principal amount of such Loan to be converted or continued, and (iv)
the Interest Period to be applicable to the Eurodollar Rate Revolving Credit
Loan as converted or continued, and shall be immediately followed by a written
confirmation thereof by the Borrower in a form acceptable to the Agent, PROVIDED
that if such written confirmation differs in any respect from the action taken
by the Lenders, the records of the Agent shall control absent manifest error.
SECTION 4.15. Conversion or Continuation. Provided that no Event of
Default shall have occurred and be continuing (but subject to the provisions of
SECTION 4.14), the Borrower may request that all or any part of any outstanding
Base Rate Revolving Credit Loan be converted into a Eurodollar Rate Revolving
Credit Loan or Loans or (b) Eurodollar Rate Revolving Credit Loan be continued
as a Eurodollar Rate Revolving Credit Loan or Loans, in the same aggregate
principal amount, on any Business Day (which, in the case of continuation of a
Eurodollar Rate Revolving Credit Loan, shall be the last day of the Interest
Period applicable thereto), upon notice (which notice shall be irrevocable)
given in accordance with SECTION 4.14.
SECTION 4.16. Duration of Interest Periods; Maximum Number of Eurodollar
Rate Revolving Credit Loans; Minimum Increments.
(a) Subject to the provisions of the definition "Interest Period", the
duration of each Interest Period shall be as specified in the applicable Notice
of Borrowing or Notice of Conversion or Continuation. The Borrower may elect a
subsequent Interest Period to be applicable to any Eurodollar Rate Revolving
Credit Loan by giving a Notice of Conversion or Continuation with respect to
such Loan in accordance with SECTION 4.14.
(b) If the Agent does not receive a notice of election in accordance with
SECTION 4.14 with respect to the continuation of a Eurodollar Rate Revolving
Credit Loan within the applicable time limits specified in said SECTION 4.14, or
if, when such notice must be given, an Event of Default exists or Eurodollar
Rate Revolving Credit Loans are not available, the Borrower shall be deemed to
have elected to convert such Eurodollar Rate Revolving Credit Loan in whole into
a Base Rate Revolving Credit Loan on the last day of the Interest Period
therefor.
49
(c) Notwithstanding the foregoing, the Borrower may not select an Interest
Period that would end, but for the provisions of the definition "Interest
Period," after the Termination Date.
(d) In no event shall there be more than 10 Eurodollar Rate Revolving
Credit Loans outstanding hereunder at any time. For the purpose of this
SUBSECTION (D), each Eurodollar Rate Revolving Credit Loan having a distinct
Interest Period shall be deemed to be a separate Loan hereunder.
(e) Each Eurodollar Rate Revolving Credit Loan shall be in a minimum
amount of $500,000.
SECTION 4.17. Changed Circumstances.
(a) If the introduction of or any change in or in the interpretation of
(in each case, after the date hereof) any law or regulation makes it unlawful,
or any Governmental Authority asserts, after the date hereof, that it is
unlawful, for any Lender to perform its obligations hereunder to make Eurodollar
Rate Revolving Credit Loans or to fund or maintain Eurodollar Rate Revolving
Credit Loans hereunder, such Lender shall notify the Agent of such event and the
Agent shall notify the Borrower of such event, and the right of the Borrower to
select Eurodollar Rate Revolving Credit Loans for any subsequent Interest Period
or in connection with any subsequent conversion of any Loan shall be suspended
until the Agent shall notify the Borrower that the circumstances causing such
suspension no longer exist, and the Borrower shall forthwith prepay in full all
Eurodollar Rate Revolving Credit Loans then outstanding and shall pay all
interest accrued thereon through the date of such prepayment or conversion,
unless the Borrower, within three Business Days after such notice from the
Agent, requests the conversion of all Eurodollar Rate Revolving Credit Loans
then outstanding into Base Rate Revolving Credit Loans; PROVIDED, that if the
date of such repayment or proposed conversion is not the last day of the
Interest Period applicable to such Eurodollar Rate Revolving Credit Loans, the
Borrower shall also pay any amount due pursuant to SECTION 4.12.
(b) If the Agent shall, at least one Business Day before the date of any
requested Revolving Credit Loan or the effective date of any conversion or
continuation of an existing Loan to be made or continued as or converted into a
Eurodollar Rate Revolving Credit Loan (each such requested Revolving Credit Loan
made and Loan to be converted or continued, a "Pending Loan"), notify the
Borrower that the Eurodollar Rate will not adequately reflect the cost to the
Lenders of making or funding such Pending Loan as a Eurodollar Rate Revolving
Credit Loan or that the Interbank Offered Rate is not determinable from any
interest rate reporting service of recognized standing, then the right of the
Borrower to select the Eurodollar Rate Revolving Credit Loan for such Pending
Loan, any subsequent Revolving Credit Loan or in connection with any subsequent
conversion or continuation of any Loan shall be suspended until the Agent shall
notify the Borrower that the circumstances causing such suspension no longer
exist, and each Loan comprising each Pending Loan and each such subsequent Loan
requested to be made, continued or converted shall be made or continued as or
converted into a Base Rate Revolving Credit Loan.
50
ARTICLE 5
CONDITIONS PRECEDENT
SECTION 5.1. Conditions Precedent to Revolving Credit Loans.
Notwithstanding any other provision of this Agreement, the s effectiveness of
this Agreement and the obligations of the Lenders to make Loans hereunder is
subject to the satisfaction of each of the following conditions, prior to or
contemporaneously with the making of the first such Loans hereunder:
(a) Fees. The Borrower shall have paid all of the fees payable on the
Effective Date referred to herein and all additional fees due in accordance with
the terms of this Agreement.
(b) Security Interests. The Agent shall have received satisfactory
evidence that the Agent (for the benefit of Lenders) has a valid and perfected
first priority security interest as of such date in all of the Collateral,
subject only to Permitted Liens.
(c) Closing Documents. The Agent shall have received each of the following
documents, all of which shall be satisfactory in form and substance to the Agent
and its special counsel and to the Lenders:
(i) certified copies of the articles or certificate of incorporation
and bylaws of the Borrower as in effect on the Effective Date,
(ii) certified copies of all corporate action, including shareholder
approval, if necessary, taken by the Borrower to authorize the execution,
delivery and performance of this Agreement, the other Loan Documents, and
the borrowings under this Agreement,
(iii) certificates of incumbency and specimen signatures with
respect to each of the officers of the Borrower authorized to execute and
deliver this Agreement and the Loan Documents on behalf of the Borrower or
other Person executing any document, certificate or instrument to be
delivered in connection with this Agreement or the Loan Documents and, in
the case of the Borrower, to request borrowings under this Agreement,
(iv) a certificate evidencing the good standing of the Borrower in
the jurisdiction of its incorporation and in each other jurisdiction in
which it is required to be qualified as a foreign corporation to transact
its business as presently conducted,
(v) copies of all financial statements referred to in SECTION 6.1(O)
and meeting the requirements thereof,
(vi) a signed opinion of Winston & Xxxxxx, counsel for the Borrower,
and of such local counsel for the Borrower as may be required, opining as
to such matters in connection with the transactions contemplated by this
Agreement as the Agent or its special counsel may reasonably request,
(vii) the Financing Statements duly executed and delivered by the
Borrower and acknowledgment copies evidencing the filing of such Financing
Statements in each jurisdiction where such filing may be necessary or
appropriate to perfect the Security Interest,
51
(viii) a certification from the principal officers of the Borrower
as to such factual matters as shall be reasonably requested by the Agent,
(ix) certificates or binders of insurance relating to each of the
policies of insurance covering any of the Collateral together with loss
payable clauses which comply with the terms of SECTION 8.8,
(x) a certificate of the President or a Financial Officer of the
Borrower stating that, to the best of his knowledge and based on an
examination sufficient to enable him to make an informed statement,
(A) all of the representations and warranties made or deemed
to be made under this Agreement are true and correct as of the
Effective Date, after giving effect to the Revolving Credit Loans to
be made at such time and the application of the proceeds thereof,
and
(B) no Default or Event of Default exists,
(xi) a Borrowing Base Certificate, a Schedule of Inventory and a
Schedule of Receivables, prepared as of the Effective Date,
(xii) evidence satisfactory to Agent of consummation of the
transaction under the Term Loan and Security Agreement,
(xiii) the Intercreditor Agreement, duly executed and delivered by
the Term Lender,
(xiv) the Assignment of Factoring Proceeds, duly executed and
delivered by the Borrower and each Factor,
(xv) the Waiver Agreements, duly executed and delivered by the
requisite holders of the 8 3/4% Debentures,
(xvi) Mortgages affecting Real Estate located in Jefferson, Georgia
and Haw River, Fayetteville and Rocky Mount, North Carolina, duly executed
and delivered by the Borrower, in form for recording in the appropriate
jurisdiction,
(xvii) fully paid mortgagee title insurance policies or, at the
option of the Agent, an unconditional commitment for the issuance thereof
with all requirements and conditions to the issuance of the final policy
deleted or marked satisfied, issued by a title insurance company
satisfactory to the Agent, each in an amount agreed to by the Agent and
the Borrower, insuring that such Mortgage creates a valid first Lien on,
and security title to, all Real Estate described therein, and with no
exceptions which the Agent shall not have approved in writing,
(xviii) such materials and information concerning the Real Estate as
the Agent may reasonably request, including owner's affidavits,
(xix) landlord's waiver and consent agreements duly executed on
behalf of each landlord of Real Estate and any other real property on
which any Collateral is located,
52
(xx) Agency Account Agreements, each duly executed by the Borrower
and the Clearing Bank party thereto,
(xxi) a letter, conforming to the requirements of SECTION 9.8, from
the Borrower to the Agent requesting the initial Revolving Credit Loans to
be made on the Effective Date and specifying the method of disbursement,
(xxii) a certificate or other evidence confirming the agreement
between CIT and the Borrower relating to the reduction of the CIT Ledger
Debt,
(xxiii) the Patent Assignment and Trademark Assignment, each duly
executed and delivered by the Borrower,
(xxiv) copies of each of the other Loan Documents duly executed by
the parties thereto, together with evidence satisfactory to the Agent of
the due authorization and binding effect of each such Loan Document on
such party, and
(xxv) such other documents and instruments as the Agent or any
Lender may reasonably request.
(d) Notes. Each Lender shall have received a Revolving Credit Note duly
executed and delivered by the Borrower, complying with the terms of SECTIONS
2.4.
(e) Other Security Documents. The Agent shall have received each other
Security Document, duly executed and delivered by the Borrower.
(f) Availability. The Agent shall be provided with evidence satisfactory
to it, confirmed by a certificate of a Financial Officer of the Borrower, that
as of the Effective Date the minimum excess Borrowing Availability, excluding
check-float, is not less than $4,000,000.
(g) No Injunctions, Etc. No action, proceeding, investigation, regulation
or legislation shall have been instituted, threatened or proposed before any
court, governmental agency or legislative body to enjoin, restrain, or prohibit,
or to obtain damages in respect of, or which is related to or arises out of this
Agreement or the consummation of the transactions contemplated hereby or which,
in the Lenders' reasonable discretion, would make it inadvisable to consummate
the transactions contemplated by this Agreement.
(h) Material Adverse Change. As of the Effective Date, there shall not
have occurred any change which is materially adverse, in the Lenders' sole
discretion, to the assets, liabilities, businesses, operations, condition
(financial or otherwise) or prospects of the Borrower from those presented by
the audited financial statements of the Borrower described in SECTION 6.1(O),
except to the extent disclosed by the Borrower to the Lender prior to the
Effective Date with respect to losses incurred since the date of such financial
statements.
SECTION 5.2. All Loans; Letters of Credit. At the time of making of each
Loan, including the initial Revolving Credit Loan and all subsequent Loans, and
the issuance of each Letter of Credit:
53
(a) all of the representations and warranties made or deemed to be made
under this Agreement (other than a representation or warranty made as of a
specified date) shall be true and correct at such time both with and without
giving effect to the Loans to be made at such time and the application of the
proceeds thereof, and
(b) the corporate actions of the Borrower referred to in SECTION
5.1(C)(II) shall remain in full force and effect and the incumbency of officers
shall be as stated in the certificates of incumbency delivered pursuant to
SECTION 5.1(C)(III) or as subsequently modified and reflected in a certificate
of incumbency delivered to the Agent.
Each request or deemed request for any borrowing hereunder shall be deemed to be
a certification by the Borrower to the Agent and the Lenders as to the matters
set forth in SECTION 5.2(A) and (B) and the Agent may, without waiving either
condition, consider the conditions specified in SECTIONS 5.2(A) and (b)
fulfilled and a representation by the Borrower to such effect made, if no
written notice to the contrary is received by the Agent prior to the making of
the Loan then to be made.
54
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BORROWER
SECTION 6.1. Representations and Warranties. The Borrower represents and
warrants to the Agent and to the Lenders as follows:
(a) Organization; Power; Qualification. The Borrower and each of its
Subsidiaries is a corporation, duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, having the power
and authority to own its properties and to carry on its business as now being
and hereafter proposed to be conducted and is duly qualified and authorized to
do business in each jurisdiction in which the character of its properties or the
nature of its business requires such qualification or authorization. The
jurisdictions in which each of the Borrower and each of its Subsidiaries is
qualified to do business as a foreign corporation are listed on SCHEDULE 6.1(A).
(b) Capitalization; Shareholder Agreements. The outstanding capital stock
of the Borrower has been duly and validly issued and is fully paid and
nonassessable, and the number and owners of such shares of capital stock of the
Borrower are set forth on SCHEDULE 6.1(B). The issuance and sale of the
Borrower's capital stock have been registered or qualified under applicable
federal and state securities laws or are exempt therefrom. Except as set forth
on SCHEDULE 6.1(B), there are no shareholders agreements, options, subscription
agreements or other agreements or understandings to which the Borrower is a
party in effect with respect to the capital stock of the Borrower, including,
without limitation, agreements providing for special voting requirements or
arrangements for approval of corporate actions or other matters relating to
corporate governance or restrictions on share transfer or providing for the
issuance of any securities convertible into shares of the capital stock of the
Borrower, any warrants or other rights to acquire any shares or securities
convertible into such shares, or any agreement that obligates the Borrower,
either by its terms or at the election of any other Person, to repurchase such
shares under any circumstances.
(c) Subordinated Debt. The Borrower has the corporate power and authority
to incur the Subordinated Debt. The issuance and sale of the Subordinated Debt
have been registered or qualified under applicable federal and state securities
laws or are exempt therefrom. The Subordinated Debt is the legal, valid and
binding obligation of the Borrower enforceable against the Borrower in
accordance with its terms (including those pertaining to subordination). The
Borrower has delivered to the Agent a complete and correct copy of all documents
evidencing or relating to the Subordinated Debt, and each of the representations
and warranties given by the Borrower therein was true and correct in all
material respects when made. The subordination provisions of the Subordinated
Debt will be enforceable against the respective holders thereof by the holder of
any Note which has not effectively waived the benefits thereof. All of the
Secured Obligations constitute senior Debt entitled to the benefits of
subordination created by the Subordinated Debt, after giving effect to the
Waiver Agreements.
(d) Subsidiaries. SCHEDULE 6.1(D) correctly sets forth the name of each
Subsidiary of the Borrower, its jurisdiction of incorporation, the name of its
immediate parent or parents, and the percentage of its issued and outstanding
securities owned by the Borrower or any other Subsidiary of the Borrower and
indicating whether such Subsidiary is a Consolidated Subsidiary. Except as set
forth on SCHEDULE 6.1(D),
55
(i) no Subsidiary of the Borrower has issued any securities
convertible into shares of such Subsidiary's capital stock or any options,
warrants or other rights to acquire any shares or securities convertible
into such shares,
(ii) the outstanding stock and securities of each Subsidiary of the
Borrower are owned by the Borrower or a Wholly Owned Subsidiary of the
Borrower, or by the Borrower and one or more of its Wholly Owned
Subsidiaries, free and clear of all Liens, warrants, options and rights of
others of any kind whatsoever, and
(iii) the Borrower has no Subsidiaries.
The outstanding capital stock of each Subsidiary of the Borrower has been duly
and validly issued and is fully paid and nonassessable by the issuer, and the
number and owners of the shares of such capital stock are set forth on SCHEDULE
6.1(D).
(e) Authorization of Agreement, Notes, Loan Documents and Borrowing. The
Borrower has the right and power, and has taken all necessary action to
authorize it, to execute, deliver and perform this Agreement and each of the
Loan Documents in accordance with their respective terms. This Agreement and
each of the Loan Documents have been duly executed and delivered by the duly
authorized officers of the Borrower and each is, or each when executed and
delivered in accordance with this Agreement will be, a legal, valid and binding
obligation of the Borrower, enforceable in accordance with its terms.
(f) Compliance of Agreement, Notes, Loan Documents and Borrowing with
Laws, Etc. Except as set forth on SCHEDULE 6.1(F), the execution, delivery and
performance of this Agreement and each of the Loan Documents in accordance with
their respective terms and the borrowings hereunder do not and will not, by the
passage of time, the giving of notice or otherwise,
(i) require any Governmental Approval or violate any Applicable Law
relating to the Borrower or any of its Subsidiaries,
(ii) conflict with, result in a breach of or constitute a default
under the articles or certificate of incorporation or by-laws of the
Borrower or any of its Subsidiaries,
(iii) conflict with, result in a breach of or constitute a default
under any material provisions of any indenture, agreement or other
instrument to which the Borrower or any of its Subsidiaries is a party or
by which the Borrower, any of its Subsidiaries or any of the Borrower's or
such Subsidiaries' property may be bound or any Governmental Approval
relating to the Borrower or any of its Subsidiaries, or
(i) result in or require the creation or imposition of any Lien upon
or with respect to any property now owned or hereafter acquired by the
Borrower other than the Security Interest.
(g) Business. The Borrower is engaged principally in the business of
manufacturing synthetics and synthetic blend fabrics.
56
(h) Compliance with Law; Governmental Approvals.
(i) Except as set forth in SCHEDULE 6.1(H), the Borrower and each of
its Subsidiaries
(A) has all Governmental Approvals, including permits relating
to federal, state and local Environmental Laws, ordinances and
regulations, required by any Applicable Law for it to conduct its
business, each of which is in full force and effect, is final and
not subject to review on appeal and is not the subject of any
pending or, to the knowledge of the Borrower, threatened attack by
direct or collateral proceeding, and
(B) is in compliance with each Governmental Approval
applicable to it and in compliance with all other Applicable Laws
relating to it, including, without being limited to, all
Environmental Laws and all occupational health and safety laws
applicable to the Borrower, any of its Subsidiaries or their
respective properties,
except for instances of noncompliance which would not, singly or in the
aggregate, cause a Default or Event of Default or have a Materially
Adverse Effect on the Borrower or any of its Subsidiaries and in respect
of which reserves in respect of the Borrower's or such Subsidiary's
reasonably anticipated liability have been established on the books of the
Borrower or such Subsidiary, as applicable.
(ii) Without limiting the generality of the above, except with
respect to matters which could not reasonably be expected to have, singly
or in the aggregate, a Materially Adverse Effect on the Borrower or any of
its Subsidiaries:
(A) the operations of the Borrower and each of its
Subsidiaries comply in all material respects with all applicable
environmental, health and safety requirements of Applicable Law;
(B) the Borrower and each of its Subsidiaries has obtained all
environmental, health and safety permits necessary for its
operation, and all such permits are in good standing and the
Borrower and each of its Subsidiaries is in compliance in all
material respects with all terms and conditions of such permits;
(C) neither the Borrower nor any of its Subsidiaries nor any
of their respective present or past property or operations are
subject to any order from or agreement with any public authority or
private party respecting (x) any environmental, health or safety
requirements of Applicable Law, (y) any Remedial Action, or (z) any
liabilities and costs arising from the Release or threatened Release
of a Contaminant into the environment;
(D) none of the operations of the Borrower or of any of its
Subsidiaries is subject to any judicial or administrative proceeding
alleging a violation of any environmental, health or safety
requirement of Applicable Law;
57
(E) none of the present or past operations of the Borrower or
any of its Subsidiaries is the subject of any investigation by any
public authority evaluating whether any Remedial Action is needed to
respond to a Release or threatened Release of a Contaminant into the
environment;
(F) neither the Borrower nor any of its Subsidiaries has filed
any notice under any requirement of Applicable Law indicating past
or present treatment, storage or disposal of a hazardous waste, as
that term is defined under 40 CFR Part 261 or any state equivalent;
(G) neither the Borrower nor any of its Subsidiaries has filed
any notice under any requirement of Applicable Law reporting a
Release of a Contaminant into the environment;
(H) except in compliance in all material respects with
applicable Environmental Laws, during the course of the Borrower's
or any of its Subsidiaries' ownership of or operations on the Real
Estate, there has been no (1) generation, treatment, recycling,
storage or disposal of hazardous waste, as that term is defined
under 40 CFR Part 261 or any state equivalent, (2) use of
underground storage tanks or surface impoundments, (3) use of
asbestos-containing materials, or (4) use of polychlorinated
biphenyls (PCBs) used in hydraulic oils, electrical transformers or
other equipment;
(I) neither the Borrower nor any of its Subsidiaries has
entered into any negotiations or agreements with any Person
(including, without limitation, any prior owner of any of the Real
Estate or other property of the Borrower or any of its Subsidiaries)
relating to any Remedial Action or environment-related claim;
(J) neither the Borrower nor any of its Subsidiaries has
received any notice or claim to the effect that it is or may be
liable to any Person as a result of the Release or threatened
Release of a Contaminant into the environment;
(K) neither the Borrower nor any of its Subsidiaries has any
material contingent liability in connection with any Release or
threatened Release of any Contaminant into the environment;
(L) no Environmental Lien has attached to any of the Real
Estate or other property of the Borrower or of any of its
Subsidiaries;
(M) the presence and condition of all asbestos-containing
material which is on or part of the Real Estate (excluding any raw
materials used in the manufacture of products or products
themselves) do not violate in any material respect any currently
applicable requirement of Applicable Law; and
(N) neither the Borrower nor any of its Subsidiaries
manufactures, distributes or sells, and has never manufactured,
distributed or sold, products which contain asbestos-containing
material.
58
(iii) The Borrower has notified the Lenders and the Agent of the
receipt by the Borrower or by any of its Subsidiaries of any notice of a
material violation of any Environmental Laws and occupational health and
safety laws applicable to the Borrower, any of its Subsidiaries or any of
their respective properties.
(i) Title to Properties. Except as set forth in SCHEDULE 6.1(I), the
Borrower and each of its Subsidiaries has valid and legal title to or leasehold
interest in all personal property, Real Estate owned and other assets used in
its business.
(j) Liens. Except as set forth in SCHEDULE 6.1(J), none of the properties
and assets of the Borrower or any Subsidiary of the Borrower is subject to any
Lien, except Permitted Liens. Other than the Financing Statements, no financing
statement under the Uniform Commercial Code of any State or other instrument
evidencing a Lien which names the Borrower or any Subsidiary of the Borrower as
debtor has been filed (and has not been terminated) in any State or other
jurisdiction, and neither the Borrower nor any Subsidiary of the Borrower has
signed any such financing statement or other instrument or any security
agreement authorizing any secured party thereunder to file any such financing
statement or instrument, except to perfect those Liens listed on SCHEDULE
6.1(J).
(k) Debt and Guaranties. SCHEDULE 6.1(K) is a complete and correct listing
of all (i) Debt, and (ii) Guaranties of each of the Borrower and each of its
Subsidiaries, in each case as amended, restated or refinanced from time to time
to the extent that, (i) the principal amount of such Debt and Guaranties shall
not be increased, (ii) the revised terms and conditions of such Debt and
Guaranties shall not be less favorable to the Borrower than those existing on
the Effective Date, (iii) the Liens securing such Debt and Guaranties shall not
be extended to any additional property of the Borrower, and (iv) in each case,
such revised terms and conditions shall be consistent with the terms and
conditions of this Agreement. Each of the Borrower and its Subsidiaries has
performed and is in compliance with all of the terms of such Indebtedness and
Guaranties and all instruments and agreements relating thereto, and no default
or event of default, or event or condition which with notice or lapse of time,
or both, would constitute such a default or event of default, exists with
respect to any such Indebtedness or Guaranty.
(l) Litigation. Except as set forth on SCHEDULE 6.1(L), there are no
actions, suits or proceedings pending (nor, to the knowledge of the Borrower,
are there any actions, suits or proceedings threatened, or any reasonable basis
therefor) against or in any other way relating to or affecting the Borrower or
such Subsidiaries or any of the Acquired Assets or any of the Borrower's or any
of its Subsidiaries' other properties in any court or before any arbitrator of
any kind or before or by any governmental body, except actions, suits or
proceedings of the character normally incident to the kind of business conducted
by the Borrower or any of its Subsidiaries which, if adversely determined, would
not singly or in the aggregate have a Materially Adverse Effect on the Borrower
or such Subsidiary, and there are no strikes or walkouts in process or pending
relating to any labor contracts to which the Borrower or any of its Subsidiaries
is a party, relating to any labor contracts being negotiated, or otherwise.
(m) Tax Returns and Payments. Except as set forth on SCHEDULE 6.1(M), all
United States federal, state and local as well as foreign national, provincial
and local and other tax returns of the Borrower and each of its Subsidiaries
required by Applicable Law to be filed have been duly filed, and all United
States federal, state and local and foreign national, provincial and local and
other taxes,
59
assessments and other governmental charges or levies upon the Borrower and each
of its Subsidiaries and the Borrower's and any of its Subsidiaries' property,
income, profits and assets which are due and payable have been paid, except any
such nonpayment which is at the time permitted under SECTION 9.6. The charges,
accruals and reserves on the books of the Borrower and each of its Subsidiaries
in respect of United States federal, state and local and foreign national,
provincial and local taxes for all fiscal years and portions thereof since the
organization of the Borrower are in the judgment of the Borrower adequate, and
the Borrower knows of no reason to anticipate any additional assessments for any
of such years which, singly or in the aggregate, might have a Materially Adverse
Effect on the Borrower.
(n) Burdensome Provisions. Neither the Borrower nor any of its
Subsidiaries is a party to any indenture, agreement, lease or other instrument,
or subject to any charter or corporate restriction, Governmental Approval or
Applicable Law, compliance with the terms of which could reasonably be expected
to have a Materially Adverse Effect on the Borrower or any of its Subsidiaries.
(o) Financial Statements.
(i) The Borrower has furnished to the Agent and the Lenders (A)
copies of the Borrower's unaudited consolidated balance sheet as at April
30, 1998, and the related statements of income for the 12-month period
then ended, which financial statements are complete and correct and
present fairly and in all material respects in accordance with GAAP (but
for omission of notes and subject to year-end audit adjustments)
consistently applied the financial position of the Borrower's as at April
30, 1998, and the results of operations of the Borrower for the 12-month
period then ended and (B) copies of the Borrower's audited balance sheet
as at October 31, 1997 as restated on the Borrower's Form 10-KA filed with
the Securities Exchange Commission on June 22, 1998, and the related
statements of income, shareholder's equity and cash flows for the Fiscal
Year then ended, which financial statements are complete and correct and
present fairly and in all material respects in accordance with GAAP
consistently applied the financial position of the Borrower as at October
31, 1997 as restated on the Borrower's Form 10-KA filed with the
Securities Exchange Commission on June 22, 1998 and the results of
operations of the Borrower for the Fiscal Year then ended.
(ii) The Borrower has furnished to the Agent and the Lenders copies
of the Projections. The Projections have been be prepared by the Borrower
in good faith in light of the past operations of the business of the
Borrower and its Subsidiaries.
(iii) Except as disclosed or reflected in the financial statements
described in CLAUSE (I) above and except as disclosed prior to the
Effective Date with respect to losses incurred since the date of such
financial statements, the Borrower does not have any material liabilities,
contingent or otherwise, and there were no material unrealized or
anticipated losses of the Borrower.
(p) Material Adverse Change. Since the date of the last financial
statements of the Borrower delivered to the Agent pursuant to SECTION 6.1(O)(I),
after giving effect to the transactions contemplated hereby, except as disclosed
by the Borrower prior to the Effective Date with respect to losses incurred
since the date of such financial statements,
60
(i) no material adverse change has occurred in the business, assets,
liabilities, financial condition, results of operations or business
prospects of the Borrower, and
(ii) no event has occurred or failed to occur which has had, or may
have, singly or in the aggregate, a Materially Adverse Effect on the
Borrower.
(q) ERISA. Neither the Borrower nor any Related Company maintains or
contributes to any Benefit Plan other than those listed on SCHEDULE 6.1(Q).
Except as set forth on SCHEDULE 6.1(Q), each Benefit Plan is in substantial
compliance with ERISA and the Code, including but not limited to those
provisions thereof relating to reporting and disclosure, and neither the
Borrowers nor any Related Company has received any notice asserting that a
Benefit Plan is not in compliance with ERISA. No material liability to the PBGC
or to Multiemployer Plan has been, or is expected to be, incurred by the
Borrowers or any Related Company. Except as set forth on SCHEDULE 6.1(Q), each
Benefit Plan intended to qualify under Section 401(a) of the Code so qualifies
and any related trust is exempt from federal income tax under Section 501(a) of
the Code. A favorable determination letter from the IRS has been issued or
applied for with respect to each such plan and trust and nothing that has
occurred since the date of such determination letter that would adversely affect
such qualification or tax-exempt status. No Benefit Plan subject to the minimum
funding standards of the Code has failed to meet such standards. Neither the
Borrowers nor any Related Company has transferred any pension plan liability in
a transaction that could be subject to Sections 4069 or 4212(c) of ERISA. Except
as set forth on SCHEDULE 6.1(Q), neither the Borrowers nor any Related Company
has any liability, actual or contingent, with respect to any Benefit Plan in
accordance with its terms, and there are no pending or, to the Borrower's
knowledge, threatened claims against a Benefit Plan. No non-exempt prohibited
transaction within the meaning of Section 4975 of the Code or Section 406 of
ERISA has occurred with respect to a Benefit Plan. Except under plans listed on
SCHEDULE 6.1(P), no employee or former employee of the Borrowers or any Related
Company is or may become entitled to any benefit under a Benefit Plan that is a
"welfare plan" within the meaning of Section 3(1) of ERISA following such
employee's termination of employment. Except as set forth on SCHEDULE 6.1(P),
each such welfare plan that is a group health plan has been operated in
compliance with the provisions of Section 4980B of the Code and Sections 601-609
of ERISA and any applicable provisions of state law that are similar.
(r) Absence of Defaults. After giving effect to (i) the termination of the
Amended and Restated Loan and Security Agreement dated as of December 19, 1997,
to which the Borrower was a party and (ii) the Waiver Agreements, neither the
Borrower nor any of its Subsidiaries is in default under its articles or
certificate of incorporation or by-laws and no event has occurred, which has not
been remedied, cured or waived,
(i) which constitutes a Default or an Event of Default, or
(ii) which constitutes, or which with the passage of time or giving
of notice, or both, would constitute, a default or event of default by the
Borrower or any of its Subsidiaries under any material agreement (other
than this Agreement) or judgment, decree or order to which the Borrower or
any of its Subsidiaries is a party or by which the Borrower, any of its
Subsidiaries or any of the Borrower's or any of its Subsidiaries'
properties may be bound or which would require the Borrower or any of its
Subsidiaries to make any payment under any thereof prior to the scheduled
maturity date therefor, except, in the case only of any such
61
agreement, for alleged defaults which are being contested in good faith by
appropriate proceedings and with respect to which reserves in respect of
the Borrower's or such Subsidiary's reasonably anticipated liability have
been established on the books of the Borrower or such Subsidiary.
(s) Accuracy and Completeness of Information.
(i) All written information, reports and other papers and data
produced by or on behalf of the Borrower and furnished to the Agent or any
Lender were, at the time the same were so furnished, complete and correct
in all material respects, to the extent necessary to give the recipient a
true and accurate knowledge of the subject matter. No fact is known to the
Borrower which has had, or may in the future have (so far as the Borrower
can foresee), a Materially Adverse Effect upon the Borrower or any of its
Subsidiaries which has not been set forth in the financial statements or
disclosure delivered prior to the Effective Date, in each case referred to
in SECTION 6.1(O), or in such written information, reports or other papers
or data or otherwise disclosed in writing to the Agent and the Lenders
prior to the Agreement Date. No document furnished or written statement
made to the Agent or any Lender by the Borrower in connection with the
negotiation, preparation or execution of this Agreement or any of the Loan
Documents contains or will contain any untrue statement of a fact material
to the creditworthiness of the Borrower or omits or will omit to state a
material fact necessary in order to make the statements contained therein
not misleading.
(ii) The Borrower has no reason to believe that any document
furnished or written statement made to the Agent or any Lender by any
Person other than the Borrower in connection with the negotiation,
preparation or execution of this Agreement or any of the Loan Documents
contained any incorrect statement of a material fact or omitted to state a
material fact necessary in order to make the statements made, in light of
the circumstances under which they were made, not misleading.
(t) Solvency. In each case after giving effect to the Indebtedness
represented by the Loans outstanding and to be incurred and the transactions
contemplated by this Agreement, the Borrower and each of its Subsidiaries is
solvent, having assets of a fair salable value which exceeds the amount required
to pay its debts as they become absolute and matured (including contingent,
subordinated, unmatured and unliquidated liabilities), and the Borrower and each
of its Subsidiaries is able to and anticipates that it will be able to meet its
debts as they mature and has adequate capital to conduct the business in which
it is or proposes to be engaged.
(u) Receivables.
(i) Status.
(A) Each Receivable reflected in the computations included in
any Borrowing Base Certificate meets the criteria enumerated in
CLAUSES (A) through (T) of the definition of Eligible Receivables,
except as disclosed in such Borrowing Base Certificate or as
disclosed in a timely manner in a subsequent Borrowing Base
Certificate or otherwise in writing to the Agent.
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(B) The Borrower has no knowledge of any fact or circumstance
not disclosed to the Agent in a Borrowing Base Certificate or
otherwise in writing which would impair the validity or
collectibility of any Receivable of $500,000 or more or of
Receivables which (regardless of the individual amount thereof)
aggregate $1,000,000 or more.
(ii) Chief Executive Office. The chief executive office of the
Borrower and the books and records relating to the Receivables are located
at the address or addresses set forth on SCHEDULE 6.1(U); the Borrower has
not maintained its chief executive office or books and records relating to
any Receivables at any other address at any time during the five years
immediately preceding the Agreement Date except as disclosed on SCHEDULE
6.1(U).
(v) Inventory.
(i) Schedule of Inventory. All Inventory included in any Schedule of
Inventory or Borrowing Base Certificate delivered to the Agent pursuant to
SECTION 8.12 meets the criteria enumerated in CLAUSES (A) through (H) of
the definition of Eligible Inventory, except as disclosed in such Schedule
of Inventory or Borrowing Base Certificate or in a subsequent Schedule of
Inventory or Borrowing Base Certificate, or as otherwise specifically
disclosed in writing to the Agent.
(ii) Condition. All Inventory is in good condition, meets all
standards imposed by any governmental agency, or department or division
thereof, having regulatory authority over such goods, their use or sale,
and is currently either usable or salable in the normal course of the
Borrower's business, except to the extent reserved against in the
financial statements referred to in SECTION 6.1(O) or delivered pursuant
to ARTICLE 10 or as disclosed on a Schedule of Inventory delivered to the
Agent pursuant to SECTION 8.12(B).
(iii) Location. All Inventory is located on the premises set forth
on SCHEDULE 7.1(V) or is Inventory in transit to one of such locations,
except as otherwise disclosed in writing to the Agent and the Borrower has
not, in the last year, located such Inventory at premises other than those
set forth on SCHEDULE 6.1(V).
(w) Equipment. All Equipment is in good order and repair in all material
respects and is located on the premises set forth on SCHEDULE 6.1(W) and has
been so located at all times during the last year.
(x) Real Property. The Borrower owns no Real Estate and leases no Real
Estate other than that described on SCHEDULE 6.1(X) and other than Real Estate
acquired or leased after the Effective Date for which the Borrower has complied
with the requirements of SECTION 8.14.
(y) Corporate and Fictitious Names. Except as otherwise disclosed on
SCHEDULE 6.1(Y), during the five-year period preceding the Agreement Date,
neither the Borrower nor any predecessor thereof has been known as or used any
corporate or fictitious name other than the corporate name of the Borrower on
the Effective Date.
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(z) Federal Reserve Regulations. Neither the Borrower nor any of its
Subsidiaries is engaged and none will engage, principally or as one of its
important activities, in the business of extending credit for the purpose of
"purchasing" or "carrying" any "margin stock" (as each of the quoted terms is
defined or used in Regulations G and U of the Board of Governors of the Federal
Reserve System). No part of the proceeds of any of the Loans will be used for so
purchasing or carrying margin stock or, in any event, for any purpose which
violates, or which would be inconsistent with, the provisions of Regulation G,
T, U or X of such Board of Governors. If requested by the Agent or any Lender,
the Borrower will furnish to the Agent and the Lenders a statement or statements
in conformity with the requirements of said Regulation G, T, U or X to the
foregoing effect.
(aa) Investment Company Act. The Borrower is not an "investment company"
or a company "controlled" by an "investment company" (as each of the quoted
terms is defined or used in the Investment Company Act of 1940, as amended).
(bb) Employee Relations. The Borrower and each of its Subsidiaries has a
stable work force in place and is not, except as set forth on SCHEDULE 6.1(BB),
party to any collective bargaining agreement nor has any labor union been
recognized as the representative of the Borrower's or any of its Subsidiaries'
employees, and the Borrower knows of no pending, threatened or contemplated
strikes, work stoppage or other labor disputes involving the Borrower's or any
of its Subsidiaries' employees.
(cc) Proprietary Rights. SCHEDULE 6.1(CC) sets forth a correct and
complete list of all of the Proprietary Rights. None of the Proprietary Rights
is subject to any licensing agreement or similar arrangement except as set forth
on SCHEDULE 6.1(CC) or as entered into in the sale or distribution of the
Borrower's Inventory in the ordinary course of business. To the best of the
Borrower's knowledge, none of the Proprietary Rights infringes on or conflicts
with any other Person's property, and no other Person's property infringes on or
conflicts with the Proprietary Rights. The Proprietary Rights described on
SCHEDULE 6.1(CC) constitute all of the property of such type necessary to the
current and anticipated future conduct of the Borrower's business.
(dd) Trade Names. All trade names or styles under which the Borrower sells
Inventory or Equipment or creates Receivables, or to which instruments in
payment of Receivables are made payable, are listed on SCHEDULE 6.1(DD).
(ee) Bank Accounts. SCHEDULE 6.1(EE) is a complete and correct list of
all checking accounts, deposit accounts, lockboxes and other bank accounts
maintained by the Borrower.
(ff) Year 2000 Compliance. The Borrower has (i) initiated a review and
assessment of all areas within its and each of its Subsidiaries' business and
operations (including those affected by suppliers, vendors and customers) that
could be adversely affected by the "Year 2000 Problem" (that is, the risk that
computer applications used by the Borrower or any of its Subsidiaries (or
suppliers, vendors and customers) may be unable to recognize and perform
properly date-sensitive functions involving certain dates prior to and any date
after December 31, 1999), (ii) developed a plan and timeline for addressing the
Year 2000 Problem on a timely basis, including, without limitation, compliance
with the requirements of SECTION 9.11, and (iii) to date, implemented that plan
in accordance with that timetable. Based on the foregoing, the Borrower believes
that all computer applications (including those of its
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suppliers, vendors and customers) that are material to its or any of its
Subsidiaries' business and operations are reasonably expected on a timely basis
to be able to perform properly date-sensitive functions for all dates before and
after January 1, 2000 (that is, be "Year 2000 Compliant").
SECTION 6.2. Survival of Representations and Warranties, Etc. All
representations and warranties set forth in this ARTICLE 6 and all statements
contained in any certificate, financial statement, or other instrument,
delivered by or on behalf of the Borrower pursuant to or in connection with this
Agreement or any of the Loan Documents (including, but not limited to, any such
representation, warranty or statement made in or in connection with any
amendment thereto) shall constitute representations and warranties made under
this Agreement. All representations and warranties made under this Agreement
shall be made or deemed to be made at and as of the Agreement Date, at and as of
the Effective Date and at and as of the date of each Loan, except that
representations and warranties which, by their terms are applicable only to one
such date shall be deemed to be made only at and as of such date. All
representations and warranties made or deemed to be made under this Agreement
shall survive and not be waived by the execution and delivery of this Agreement,
any investigation made by or on behalf of the Lender or any borrowing hereunder.
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ARTICLE 7
SECURITY INTEREST
SECTION 7.1. Security Interest.
(a) To secure the payment, observance and performance of the Secured
Obligations and the Junior Secured Obligations, the Borrower hereby mortgages,
pledges and assigns all of the Collateral to the Agent, for the benefit of
itself as Agent and the Lenders and the Affiliates which are the holders of the
Junior Secured Obligations, and grants to the Agent, for the benefit of itself
as Agent and the Lenders and the Affiliates of the Lenders a continuing security
interest in, and a continuing Lien upon, all of the Collateral.
(b) As additional security for all of the Secured Obligations and the
Junior Secured Obligations, the Borrower grants to the Agent, for the benefit of
itself as Agent and the Lenders and Affiliates which are the holders of the
Junior Secured Obligations, a security interest in, and assigns to the Agent,
for the benefit of itself as Agent and the Lenders and such Affiliates, all of
the Borrower's right, title and interest in and to, any deposits or other sums
at any time credited by or due from each Lender and each such Affiliate to the
Borrower, or credited by or due from any participant of any Lender to the
Borrower, with the same rights therein as if the deposits or other sums were
credited by or due from such Lender. The Borrower hereby authorizes each Lender
and each such Affiliate and each participant to pay or deliver to the Agent, for
the account of the Lenders, without any necessity on the Agent's or any Lender's
part to resort to other security or sources of reimbursement for the Secured
Obligations and Junior Secured Obligations, at any time during the continuation
of any Event of Default or in the event that the Agent, on behalf of the
Lenders, should make demand for payment hereunder and without further notice to
the Borrower (such notice being expressly waived), any of the aforesaid deposits
(general or special, time or demand, provisional or final) or other sums for
application to any Secured Obligation and Junior Secured Obligations,
irrespective of whether any demand has been made or whether such Secured
Obligation and Junior Secured Obligations is mature, and the rights given the
Agent, the Lenders, their Affiliates and participants hereunder are cumulative
with such Person's other rights and remedies, including other rights of set-off.
The Agent will promptly notify the Borrower of its receipt of any such funds for
application to the Secured Obligations or the Junior Secured Obligations, but
failure to do so will not affect the validity or enforceability thereof. The
Agent may give notice of the above grant of a security interest in and
assignment of the aforesaid deposits and other sums, and authorization, to, and
make any suitable arrangements with, any Lender, any such Affiliate of any
Lender or participant for effectuation thereof, and the Borrower hereby
irrevocably appoints the Agent as its attorney to collect any and all such
deposits or other sums to the extent any such payment is not made to the Agent
or any Lender by such Lender, Affiliate or participant.
SECTION 7.2. Continued Priority of Security Interest.
(a) The Security Interest granted by the Borrower shall at all times be
valid, perfected and enforceable against the Borrower and all third parties in
accordance with the terms of this Agreement, as security for the Secured
Obligations and Junior Secured Obligations, and the Collateral shall not at any
time be subject to any Liens that are prior to, on a parity with or junior to
the Security Interest, other than Permitted Liens.
66
(b) The Borrower shall, at its sole cost and expense, take all action that
may be necessary or desirable, or that the Agent may reasonably request, so as
at all times to maintain the validity, perfection, enforceability and rank of
the Security Interest in the Collateral in conformity with the requirements of
SECTION 7.2(A), or to enable the Agent and the Lenders to exercise or enforce
their rights hereunder, including, but not limited to:
(i) paying all taxes, assessments and other claims lawfully levied
or assessed on any of the Collateral, except to the extent that such
taxes, assessments and other claims constitute Permitted Liens,
(ii) obtaining, after the Agreement Date, landlords' and mortgagees'
releases, subordinations or waivers, and using all reasonable efforts to
obtain mechanics' releases, subordinations or waivers,
(iii) delivering to the Agent, for the benefit of the Lenders,
endorsed or accompanied by such instruments of assignment as the Agent may
specify, and stamping or marking, in such manner as the Agent may specify,
any and all chattel paper, instruments, letters and advices of guaranty
and documents evidencing or forming a part of the Collateral, and
(iv) executing and delivering financing statements, pledges,
designations, hypothecations, notices and assignments in each case in form
and substance satisfactory to the Agent relating to the creation,
validity, perfection, maintenance or continuation of the Security Interest
under the Uniform Commercial Code or other Applicable Law.
(c) The Agent is hereby authorized to file one or more financing or
continuation statements or amendments thereto without the signature of or in the
name of the Borrower for any purpose described in SECTION 7.2(B). The Agent will
give the Borrower notice of the filing of any such statements or amendments,
which notice shall specify the locations where such statements or amendments
were filed. A carbon, photographic, xerographic or other reproduction of this
Agreement or of any of the Security Documents or of any financing statement
filed in connection with this Agreement is sufficient as a financing statement.
(d) The Borrower shall xxxx its books and records as directed by the Agent
and as may be necessary or appropriate to evidence, protect and perfect the
Security Interest and shall cause its financial statements to reflect the
Security Interest.
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ARTICLE 8
COLLATERAL COVENANTS
Until the Revolving Credit Facility has been terminated and all the
Secured Obligations and Junior Secured Obligations have been paid in full,
unless the Required Lenders shall otherwise consent in the manner provided in
SECTION 15.11:
SECTION 8.1. Collection of Receivables.
(a) The Borrower will cause (i) all monies, checks, notes, drafts and
other payments relating to or constituting proceeds of trade accounts receivable
(other than Receivables sold and assigned to the Factors under the Factoring
Agreements), and all other Collateral to be forwarded to a Lockbox maintained
with BankBoston for deposit in the related Agency Account in accordance with the
procedures set out in the corresponding Agency Account Agreement or Lockbox
Agreement. All payments by Factors of proceeds of Factored Receivables shall be
made directly to the Agent for application to repayment of the Secured
Obligations as provided in SUBSECTION (B) below. In particular, the Borrower
will advise each Account Debtor that makes payment to the Borrower by wire
transfer, automated clearinghouse ("ACH") transfer or similar means to make
payment directly to an Agency Account, and
(b) The Borrower and the Agent shall cause all collected balances in each
Agency Account to be transmitted daily by wire transfer, ACH transfer,
depository transfer check or other means in accordance with the procedures set
forth in the corresponding Agency Account Agreement, to the Agent at the Agent's
Office:
(i) for application, on account of the Secured Obligations and
Junior Secured Obligations, as provided in SECTIONS 2.3(C), 12.2, and
12.3, such credits to be entered as of the Business Day they are received
if they are received prior to 1:30 p.m. and to be conditioned upon final
payment in cash or solvent credits of the items giving rise to them, and
(ii) with respect to the balance, so long as no Default or Event of
Default has occurred and is continuing, for transfer by wire transfer, ACH
transfer or depository transfer check to a Controlled Disbursement
Account.
(c) Any monies, checks, notes, drafts or other payments referred to in
SUBSECTION (A) of this SECTION 8.1 which, notwithstanding the terms of such
subsection, are received by or on behalf of the Borrower will be held in trust
for the Agent and will be delivered to the Agent or a Clearing Bank, as promptly
as possible, in the exact form received, together with any necessary
endorsements for application by the Agent directly to the Secured Obligations
or, if applicable, for deposit in the Agency Account maintained with a Clearing
Bank and processing in accordance with the terms of the corresponding Agency
Account Agreement.
SECTION 8.2. Verification and Notifications. The Agent shall have the
right at any time and from time to time,
(a) in the name of the Agent, the Lenders or in the name of the Borrower,
to verify the validity, amount or any other matter relating to any Receivables
by mail, telephone, telegraph or otherwise,
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(b) during normal business hours, to review, examine and make extracts
from all records and files related to any of the Receivables, and
(c) if an Event of Default has occurred, to notify the Account Debtors or
obligors under any Receivables of the assignment of such Receivables to the
Agent, for the benefit of the Lenders, and to direct such Account Debtor or
obligors to make payment of all amounts due or to become due thereunder directly
to the Agent, for the account of the Lenders, and, upon such notification and at
the expense of the Borrower, to enforce collection of any such Receivables and
to adjust, settle or compromise the amount or payment thereof, in the same
manner and to the same extent as the Borrower might have done.
SECTION 8.3. Disputes, Returns and Adjustments.
(a) In the event any amounts due and owing under any Receivable for an
amount in excess of $500,000 are in dispute between the Account Debtor and the
Borrower, the Borrower shall provide the Agent with prompt written notice
thereof.
(b) The Borrower shall notify the Agent promptly of all returns and
credits in excess of $500,000 in respect of any Receivable, which notice shall
specify the Receivable affected.
(c) The Borrower may, in the ordinary course of business unless a Default
or an Event of Default has occurred and is continuing, grant any extension of
time for payment of any Receivable or compromise, compound or settle the same
for less than the full amount thereof, or release wholly or partly any Person
liable for the payment thereof, or allow any credit or discount whatsoever
therein; provided that (i) no such action results in the reduction of more than
$500,000 in the amount payable with respect to any Receivable or of more than
$1,000,000 with respect to all Receivables in any fiscal year of the Borrower
(in each case, excluding the allowance of credits or discounts generally
available to Account Debtors in the ordinary course of the Borrower's business),
and (ii) the Agent is promptly notified of the amount of such adjustments and
the Receivable(s) affected thereby.
SECTION 8.4. Invoices.
(a) The Borrower will not use any invoices other than invoices in the form
delivered to the Agent prior to the Agreement Date without giving the Agent 30
days' prior notice of the intended use of a different form of invoice together
with a copy of such different form.
(b) Upon the request of the Agent, the Borrower shall deliver to the
Agent, at the Borrower's expense, copies of customers' invoices or the
equivalent, original shipping and delivery receipts or other proof of delivery,
customers' statements, customer address lists, the original copy of all
documents, including, without limitation, repayment histories and present status
reports, relating to Receivables and such other documents and information
relating to the Receivables as the Agent shall specify.
SECTION 8.5. Delivery of Instruments. In the event any Receivable is at
any time evidenced by a promissory note, trade acceptance or any other
instrument for the payment of money, the Borrower will immediately thereafter
deliver such instrument to the Agent, appropriately endorsed to the Agent, for
the benefit of the Lenders.
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SECTION 8.6. Sales of Inventory. All sales of Inventory will be made in
compliance with all requirements of Applicable Law.
SECTION 8.7. Ownership and Defense of Title.
(a) Except for Permitted Liens, the Borrower shall at all times be the
sole owner or lessee of each and every item of Collateral and shall not create
any lien on, or sell, lease, exchange, assign, transfer, pledge, hypothecate,
grant a security interest or security title in or otherwise dispose of, any of
the Collateral or any interest therein, except for sales of Inventory in the
ordinary course of business, for cash or on open account or on terms of payment
ordinarily extended to its customers, and except for dispositions that are
otherwise expressly permitted under this Agreement. The inclusion of "proceeds"
of the Collateral under the Security Interest shall not be deemed a consent by
the Agent or the Lenders to any other sale or other disposition of any part or
all of the Collateral.
(b) The Borrower shall defend its title or leasehold interest in and to,
and the Security Interest in, the Collateral against the claims and demands of
all Persons.
SECTION 8.8. Insurance.
(a) The Borrower shall at all times maintain insurance on the Inventory
and Equipment against loss or damage by fire, theft (excluding theft by
employees), burglary, pilferage, loss in transit and such other hazards as the
Agent shall reasonably specify, in amounts not to exceed those obtainable at
commercially reasonable rates and under policies issued by insurers acceptable
to the Agent in the exercise of its reasonable judgment. All premiums on such
insurance shall be paid by the Borrower and copies of the policies delivered to
the Agent. The Borrower will not use or permit the Inventory or Equipment to be
used in violation of Applicable Law or in any manner which might render
inapplicable any insurance coverage.
(b) All insurance policies required under SECTION 8.8(A) shall name the
Agent, for the benefit of the Lenders, as an additional insured and shall
contain loss payable clauses in the form submitted to the Borrower by the Agent,
or otherwise in form and substance satisfactory to the Required Lenders, naming
the Agent, for the benefit of the Lenders, as loss payee, as its interests may
appear, and providing that
(i) all proceeds thereunder shall be payable to the Agent, for the
benefit of the Lenders,
(ii) no such insurance shall be affected by any act or neglect of
the insurer or owner of the property described in such policy, and
(iii) such policy and loss payable clauses may be cancelled, amended
or terminated only upon at least ten (10) days' prior written notice given
to the Agent.
(c) Any proceeds of insurance referred to in this SECTION 8.8 which are
paid to the Agent, for the account of the Lenders, shall be, at the option of
the Required Lenders in their sole discretion, either (i) applied to replace the
damaged or destroyed property, or (ii) applied to the payment or prepayment of
the Secured Obligations, PROVIDED that in the event that the proceeds from any
single casualty do not exceed $100,000, then, upon the Borrower's written
request to the Agent, provided
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that no Default or Event of Default shall have occurred and be continuing, such
proceeds shall be disbursed by the Agent to the Borrower pursuant to such
procedures as the Agent shall reasonably establish for application to the
replacement of the damaged or destroyed property.
SECTION 8.9. Location of Offices and Collateral.
(a) The Borrower will not change the location of its chief executive
office or the place where it keeps its books and records relating to the
Collateral or change its name, its identity or corporate structure without
giving the Agent 60 days' prior written notice thereof.
(b) All Inventory, other than Inventory in transit to any such location,
will at all times be kept by the Borrower at the locations set forth in SCHEDULE
6.1(V), and shall not, without the prior written consent of the Agent, be
removed therefrom except pursuant to sales of Inventory permitted under SECTION
8.7(A).
(c) If any Inventory is in the possession or control of any of the
Borrower's agents or processors, the Borrower shall notify such agents or
processors of the Security Interest (and shall promptly provide copies of any
such notice to the Agent and the Lenders) and, upon the occurrence of an Event
of Default, shall instruct them (and cause them to acknowledge such instruction)
to hold all such Inventory for the account of the account of the Lenders,
subject to the instructions of the Agent.
SECTION 8.10. Records Relating to Collateral.
(a) The Borrower will at all times
(i) keep complete and accurate records of Inventory on a basis
consistent with past practices of the Borrower so as to permit comparison
of Inventory records relating to different time periods, itemizing and
describing the kind, type and quantity of Inventory and the Borrower's
cost thereof and a current price list for such Inventory, and
(ii) keep complete and accurate records of all other Collateral.
(b) The Borrower will prepare a physical listing of all Inventory and
Equipment, wherever located, at least annually.
SECTION 8.11. Inspections. The Agent and each Lender (by any of their
officers, employees or agents) shall have the right, to the extent that the
exercise of such right shall be within the control of the Borrower, at any time
or times to
(a) visit the properties of the Borrower and its Subsidiaries, inspect the
Collateral and the other assets of the Borrower and its Subsidiaries and inspect
and make extracts from the books and records of the Borrower and its
Subsidiaries, including but not limited to management letters prepared by
independent accountants, all during customary business hours at such premises;
(b) discuss the Borrower's and its Subsidiaries' business, assets,
liabilities, financial condition, results of operations and business prospects,
insofar as the same are reasonably related to the rights of the Agent or the
Lenders hereunder or under any of the Loan Documents, with the Borrower's and
its Subsidiaries' (i) principal officers, (ii) independent accountants, and
(iii) any other
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Person (except that any such discussion with any third parties shall be
conducted only in accordance with the Agent's or such Lender's standard
operating procedures relating to the maintenance of the confidentiality of
confidential information of borrowers); and
(c) verify the amount, quantity, value and condition of, or any other
matter relating to, any of the Collateral (other than Receivables) and in this
connection to review, audit and make extracts from all records and files related
to any of the Collateral.
The Borrower will deliver to the Agent, for the benefit of the Lenders, any
instrument necessary for it to obtain records from any service bureau
maintaining records on behalf of the Borrower. The Lenders will make reasonable
efforts to coordinate their visits to the Borrower's premises through the Agent
so as to minimize any inconvenience to the Borrower occasioned by such visits.
SECTION 8.12. Information and Reports.
(a) Schedules of Receivables. The Borrower shall deliver to the Agent on
or before the Effective Date and not later than the 20th day of each Fiscal
Month thereafter:
(i) a Schedule of Receivables sold to the Factors pursuant to the
Factoring Agreements, which shall be as of the last Business Day of the
immediately preceding month shall be reconciled to a Borrowing Base
Certificate as of such last Business Day, and shall set forth a detailed
aged trial balance of all such Receivables, specifying the names and
balance due for each Account Debtor obligated on a Receivable so listed
AND
(ii) a Schedule of Receivables that have not been sold to Factors
pursuant to the Factoring Agreements, which shall be as of the last
Business Day of the preceding Fiscal Month, shall be reconciled to a
Borrowing Base Certificate as of such day and shall set forth a detailed
aged trial balance of all such Receivables, specifying the names,
addresses and balance due for each Account Debtor obligated on a
Receivable so listed.
(b) Schedule of Inventory. The Borrower shall deliver to the Agent on or
before the Effective Date and not later than the last Business Day of each
Fiscal Month thereafter a Schedule of Inventory as of the last Business Day of
the immediately preceding Fiscal Month of the Borrower, itemizing and describing
the kind, type and quantity of Inventory, the Borrower's cost thereof and the
location thereof.
(c) Borrowing Base Certificate. The Borrower shall deliver to the Agent
not later than Wednesday of each week after the Effective Date, a Borrowing Base
Certificate prepared as of the close of business on the previous Friday, and not
later than the last Business Day of each Fiscal Month a Borrowing Base
Certificate as of the last Business Day of the preceding Fiscal Month.
(d) Notice of Diminution of Value. The Borrower shall give prompt notice
to the Agent of any matter or event which has resulted in, or may result in, the
diminution in excess of $500,000 in the value of any of its Collateral, except
for any such diminution in the value of any Receivables or Inventory in the
ordinary course of business which has been appropriately reserved against, as
reflected in financial statements previously delivered to the Agent and the
Lenders pursuant to ARTICLE 10.
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(e) Additional Information. The Agent may in its discretion from time to
time request that the Borrower deliver the schedules, certificates described in
SECTIONS 8.12(A), (B) and (C) more or less often and on different schedules than
specified in such Sections and the Borrower will comply with such requests. The
Borrower will also furnish to the Agent and each Lender such other information
with respect to the Collateral as the Agent or any Lender may from time to time
reasonably request.
SECTION 8.13. Power of Attorney. The Borrower hereby appoints the Agent as
its attorney, with power
(a) to endorse the name of the Borrower on any checks, notes, acceptances,
money orders, drafts or other forms of payment or security that may come into
the Agent's or any Lender's possession, and
(b) to sign the name of the Borrower on any invoice or xxxx of lading
relating to any Receivable, Inventory or other Collateral, on any drafts against
customers related to letters of credit, on schedules and assignments of
Receivables furnished to the Agent or any Lender by the Borrower, on notices of
assignment, financing statements and other public records relating to the
perfection or priority of the Security Interest, verifications of account and
notices to or from customers.
SECTION 8.14. Additional Real Estate and Leases.
(a) Promptly upon the Borrower's acquisition of any interest (including a
leasehold interest) in any Real Estate, the Borrower shall deliver to the Agent,
for the benefit of itself as Agent and the Lenders, an executed Mortgage in form
and substance satisfactory to the Agent, conveying to the Agent, for the benefit
of itself and the Lenders, a first priority Lien on such Real Estate, subject
only to such prior Liens as the Agent shall consent to in writing. If requested
by the Agent, the Borrower shall also deliver to the Agent at the Borrower's
expense a mortgagee title insurance policy in favor of the Agent and the Lenders
insuring such Mortgage to create and convey such Lien, subject only to such
exceptions as are consented to by the Agent and shall deliver to the Agent, at
the Agent's request, such other items with respect to such Real Estate, all in
form and substance satisfactory to the Agent, as the Agent shall reasonably
request.
(b) Promptly upon the Borrower's entry into any lease of Real Estate
(other than a lease conveying an interest in Real Estate, which shall be subject
to the provisions of SUBSECTION (A) above), the Borrower shall collaterally
assign to the Agent, for the benefit of itself and the Lenders, the Borrower's
interest in such lease, in form and substance satisfactory to the Agent. The
Borrower shall also deliver to the Agent an executed landlord's waiver and
consent with respect to such lease in form and substance satisfactory to the
Agent.
SECTION 8.15. Assignment of Claims Act. Upon the request of the Agent, the
Borrower shall execute any documents or instruments and shall take such steps or
actions reasonably required by the Agent so that all monies due or to become due
under any contract with the United States of America, the District of Columbia
or any state, county, municipality or other domestic or foreign governmental
entity, or any department, agency or instrumentality thereof, will be assigned
to the Agent, for the benefit of itself and the Lenders, and notice given
thereof in accordance with the requirements of the Assignment of Claims Act of
1940, as amended, or any other laws, rules or regulations relating to the
assignment of any such contract and monies due to or to become due.
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ARTICLE 9
AFFIRMATIVE COVENANTS
Until the Revolving Credit Facility has been terminated and all the
Secured Obligations and the Junior Secured Obligations have been paid in full,
unless the Required Lenders shall otherwise consent in the manner provided for
in SECTION 15.11, the Borrower will, and will cause each of its Subsidiaries to:
SECTION 9.1. Preservation of Corporate Existence and Similar Matters.
Preserve and maintain its corporate existence, rights, franchises, rs licenses
and privileges in the jurisdiction of its incorporation and qualify and remain
qualified as a foreign corporation and authorized to do business in each
jurisdiction in which the character of its properties or the nature of its
business requires such qualification or authorization.
SECTION 9.2. Compliance with Applicable Law. Comply with all Applicable
Law relating to the Borrower or such Subsidiary except to the extent being
contested in good faith by appropriate proceedings and for which reserves in
respect of the Borrower's or such Subsidiary's reasonably anticipated liability
have been appropriately established.
SECTION 9.3. Maintenance of Property. In addition to, and not in
derogation of, the requirements of SECTION 8.7 and of the Security Documents,
(a) protect and preserve all properties material to its business,
including copyrights, patents, trade names and trademarks, and maintain in good
repair, working order and condition in all material respects, with reasonable
allowance for wear and tear, all tangible properties, and
(b) from time to time make or cause to be made all needed and appropriate
repairs, renewals, replacements and additions to such properties necessary for
the conduct of its business, so that the business carried on in connection
therewith may be properly and advantageously conducted at all times.
SECTION 9.4. Conduct of Business. At all times carry on its business in an
efficient manner and engage only the business described in SECTION 6.1(G).
SECTION 9.5. Insurance. Maintain, in addition to the coverage required by
SECTION 8.8 and the Security Documents, insurance with responsible insurance
companies against such risks and in such amounts as is customarily maintained by
similar businesses or as may be required by Applicable Law, and from time to
time deliver to the Agent or any Lender upon its request a detailed list of the
insurance then in effect, stating the names of the insurance companies, the
amounts and rates of the insurance, the dates of the expiration thereof and the
properties and risks covered thereby.
SECTION 9.6. Payment of Taxes and Claims. Pay or discharge when due
(a) all taxes, assessments and governmental charges or levies imposed upon
it or upon its income or profits or upon any properties belonging to it, except
that real property AD VALOREM taxes shall be deemed to have been so paid or
discharged if the same are paid before they become delinquent, and
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(b) all lawful claims of materialmen, mechanics, carriers, warehousemen
and landlords for labor, materials, supplies and rentals which, if unpaid, might
become a Lien on any properties of the Borrower;
except that this SECTION 9.6 shall not require the payment or discharge of any
such tax, assessment, charge, levy or claim which is being contested in good
faith by appropriate proceedings and for which reserves in respect of reasonably
anticipated liability have been appropriately established.
SECTION 9.7. Accounting Methods and Financial Records. Maintain a system
of accounting, and keep such books, records and accounts (which shall be true
and complete), as may be required or as may be necessary to permit the
preparation of financial statements in accordance with GAAP.
SECTION 9.8. Use of Proceeds.
The Borrower shall:
(a) Use the proceeds of
(i) the initial Revolving Credit Loan to pay amounts indicated on
SCHEDULE 9.8 to the Persons indicated thereon, and
(ii) all subsequent Revolving Credit Loans only for (A) the
principal of and interest, if any, due and payable pursuant to the Term
Loan and Security Agreement and (B) working capital and general business
purposes, and
(iii) subject to the conditions set forth in SECTION 9.10(B), to
redeem up to $8,000,000 of the 8 3/4% Debentures and the ExtendiblE
Debentures, and,
(b) not use any part of such proceeds to purchase or, to carry or reduce
or retire or refinance any credit incurred to purchase or carry, any margin
stock (within the meaning of Regulation G or U of the Board of Governors of the
Federal Reserve System) or, in any event, for any purpose which would involve a
violation of such Regulation G or U or of Regulation T or X of such Board of
Governors, or for any purpose prohibited by law or by the terms and conditions
of this Agreement.
SECTION 9.9. Hazardous Waste and Substances; Environmental Requirements.
(a) In addition to, and not in derogation of, the requirements of SECTION
9.2 and of the Security Documents, comply with all Environmental Laws and all
Applicable Laws relating to occupational health and safety (except for instances
of noncompliance that are being contested in good faith by appropriate
proceedings if reserves in respect of the Borrower's or such Subsidiary's
reasonably anticipated liability therefor have been appropriately established),
promptly notify the Agent of its receipt of any notice of a violation of any
such Environmental Laws or other such Applicable Laws and indemnify and hold the
Agent and the Lenders harmless from all loss, cost, damage, liability, claim and
expense incurred by or imposed upon the Agent or any Lender on account of the
Borrower's failure to perform its obligations under this SECTION 9.9.
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(b) Whenever the Borrower gives notice to the Agent pursuant to this
SECTION 9.9 or otherwise with respect to a matter that reasonably could be
expected to result in liability to the Borrower or any Subsidiary in excess of
$100,000 in the aggregate, the Borrower shall, at the Agent's request and the
Borrower's expense (i) cause an independent environmental engineer acceptable to
the Agent to conduct an assessment, including tests where necessary, of the site
where the noncompliance or alleged noncompliance with Environmental Laws has
occurred and prepare and deliver to the Agent a report setting forth the results
of such assessment, a proposed plan to bring the Borrower (or such Subsidiary)
into compliance with such Environmental Laws (if such assessment indicates
noncompliance) and an estimate of the costs thereof, and (ii) provide to the
Agent a supplemental report of such engineer whenever the scope of the
noncompliance, or the response thereto or the estimated costs thereof, shall
materially adversely change.
SECTION 9.10. Exchange Offer. (a) On or before April 30, 1999, consummate
an exchange offer (the "Exchange Offer") with the holders of not less than $27.1
million in principal amount of the 8 3/4% Debentures whereby the exchanged or
amended debentures (thE "New Debentures") shall be issued on substantially the
same terms and conditions of the 8 3/4% Debentures, EXCEPT that the New
Debentures (i) may provide foR interest up to 15% per annum of which 8.75% may
be on a current pay basis and the balance on a payment-in-kind ("PIK") basis;
(ii) shall provide for a maturity of August 1, 2002; (iii) may provide for the
issuance of warrants convertible into preferred stock of the Borrower to the
holders of the New Debentures; (iv) if secured, shall provide for a deeply
subordinated lien position of such holders junior to all Liens securing the
Secured Obligations and the Debt under the Term Loan and Security Agreement and
any future working capital or short term senior loans; (v) shall not include
provisions that are inconsistent with this Agreement and the Term Loan and
Security Agreement; (vi) shall provide for the suspension of all payments,
including principal and interest, due under the New Debentures, upon the
occurrence of any Event of Default; and (vii) shall provide for a standstill
period, satisfactory to the Agent and the Lenders, upon a Default or Event of
Default; and
(b) The Borrower may redeem the 8 3/4% Debentures and the ExtendiblE
Debentures held by the holders who do not accept or are not tendered the
Exchange Offer (the "Redemption"), PROVIDED that (i) no Default or Event of
Default exists immediately prior to or would result from such Redemption; (ii)
such Redemption shall not exceed $8,000,000 in aggregate principal amount of 8
3/4% Debentures and the Extendible Debentures; and (iii) on a PRO FORMA basis,
after the completion of such Redemption, the Availability shall not be less than
$4,000,000 plus the Payables Factor.
SECTION 9.11. Year 2000 Compliance. The Borrower will promptly notify the
Agent in the event the Borrower discovers or determines that any computer
application (including those of its suppliers, vendors and customers) that is
material to its or any of its Subsidiaries' business and operations will not be
Year 2000 Compliant (A) as to its accounting systems, by December 1, 1998, (B)
as to its process control systems, by March 1, 1999, and (C) as to its
manufacturing support and all other systems and all other systems, by May 1,
1999.
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ARTICLE 10
INFORMATION
Until the Revolving Credit Facility has been terminated and all the
Secured Obligations and Junior Secured Obligations have been paid in full,
unless the Required Lenders shall otherwise consent in the manner set forth in
SECTION 15.11, the Borrower will furnish to the Agent and to each Lender at its
offices then designated for notices pursuant to SECTION 15.1, the statements,
reports, certificates, and other information provided for in this ARTICLE 10.
All written information, reports, statements and other papers and data furnished
to the Agent or any Lender by or at the request of the Borrower, whether
pursuant to this ARTICLE 10 or any other provision of this Agreement or of any
other Loan Document, shall be, at the time the same is so furnished, complete
and correct in all material respects to the extent necessary to give the Agent
and the Lenders true and accurate knowledge of the subject matter.
Specifically, the Borrower will so furnish:
SECTION 10.1. Financial Statements.
(a) Audited Year-End Statements. As soon as available, but in any event
within 90 days after the end of each Fiscal Year, copies of the consolidating
and consolidated balance sheets of the Borrower and its Consolidated
Subsidiaries as at the end of such fiscal year and the related statements of
income, shareholders' equity and cash flows for such fiscal year, in each case
setting forth in comparative form the figures for the previous fiscal year of
the Borrower, reported on, as to such consolidated statements, without
qualification, by Ernst & Young LLC or other independent certified public
accountants of nationally recognized standing; and
(b) Monthly Financial Statements. As soon as available after the end of
each month, but in any event within 30 days after the end of each Fiscal Month,
copies of the unaudited consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as at the end of such Fiscal Month and the related
unaudited consolidated statements of income and cash flows for the Borrower and
its Consolidated Subsidiaries for such Fiscal Month and for the portion of the
Fiscal Year through such Fiscal Month, certified by a Financial Officer of the
Borrower as presenting fairly the financial condition and results of operations
of the Borrower (subject to normal year-end audit adjustments) for the
applicable period(s);
all such financial statements to be complete and correct in all material
respects and prepared in accordance with GAAP (except, with respect to interim
financial statements, for the omission of notes and for the effect of normal
year-end audit adjustments) applied consistently throughout the periods
reflected therein; and
(c) Annual Budget. Not later than the 30th day of each Fiscal Year, an
operating budget for such fiscal year, prepared on a monthly basis and including
balance sheets, yearly statements, cash flows, projected Loans and Availability.
SECTION 10.2. Accountants' Certificate. Together with the financial
statements referred to in SECTION 10.1(A), a certificate of such accountants
addressed to the Agent
(a) stating that in making the examination necessary for the certification
of such financial statements, nothing has come to their attention to lead them
to believe that any Default or Event of
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Default exists and, in particular, they have no knowledge of any Default or
Event of Default or, if such is not the case, specifying such Default or Event
of Default and its nature, and
(b) having attached the calculations, prepared by the Borrower and
reviewed by such accountants, required to establish whether or not the Borrower
is in compliance with the covenants contained in SECTIONS 11.1, 11.2, 11.09 AND
11.10, as at the date of such financial statements.
SECTION 10.3. Officer's Certificate. At the time that the Borrower
furnishes the financial statements pursuant to SECTION 10.1(B) for any Fiscal
Month that is the last Fiscal Month of a Fiscal Quarter, a certificate of its
President or a Financial Officer
(a) setting forth as at the end of such Fiscal Quarter or Fiscal Year, as
the case may be, the calculations required to establish whether or not the
Borrower was in compliance with the requirements of SECTIONS 11.1, 11.2, 11.09
AND 11.10, as at the end of each respective period,
(b) stating that the information on the schedules to this Agreement is
complete and accurate as of the date of such certificate or, if such is not the
case, attaching to such certificate updated schedules in accordance with the
provisions of SECTION 10.8, and
(c) stating that, based on a reasonably diligent examination, no Default
or Event of Default exists, or, if such is not the case, specifying such Default
or Event of Default and its nature, when it occurred, whether it is continuing
and the steps being taken by the Borrower with respect to such Default or Event
of Default.
SECTION 10.4. Copies of Other Reports.
(a) Promptly upon receipt thereof, copies of all reports, if any,
submitted to the Borrower or its Board of Directors by its independent public
accountants, including, without limitation, any management report.
(b) As soon as practicable, copies of all financial statements and reports
that the Borrower shall send to its shareholders generally and of all
registration statements and all regular or periodic reports which the Borrower
shall file with the Securities and Exchange Commission or any successor
commission.
(c) From time to time and as soon as reasonably practicable following each
request, such forecasts, data, certificates, reports, statements, opinions of
counsel, documents or further information regarding the business, assets,
liabilities, financial condition, results of operations or business prospects of
the Borrower or any of its Subsidiaries as the Agent or any Lender may
reasonably request and that the Borrower has or (except in the case of legal
opinions relating to the perfection or priority of the Security Interest)
without unreasonable expense can obtain; PROVIDED, HOWEVER, that the Lenders
shall, to the extent reasonably practicable, coordinate examinations of the
Borrower's records by their respective internal examiners. The rights of the
Agent and the Lenders under this SECTION 10.4 are in addition to and not in
derogation of their rights under any other provision of this Agreement or of any
other Loan Document.
(d) If requested by the Agent or any Lender, the Borrower will furnish to
the Agent and the Lenders statements in conformity with the requirements of
Federal Reserve Form G-3 or U-1
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referred to in Regulation G and U, respectively, of the Board of Governors of
the Federal Reserve System.
SECTION 10.5. Notice of Litigation and Other Matters. Prompt notice of:
(a) the commencement, to the extent the Borrower is aware of the same, of
all proceedings and investigations by or before any governmental or
nongovernmental body and all actions and proceedings in any court or before any
arbitrator against or in any other way relating to or affecting the Borrower,
any of its Subsidiaries or any of the Borrower's or any of its Subsidiaries'
properties, assets or businesses, which might, singly or in the aggregate,
result in the occurrence of a Default or an Event of Default, or have a
Materially Adverse Effect on the Borrower or any of its Subsidiaries,
(b) any amendment of the articles of incorporation or by-laws of the
Borrower or any of its Subsidiaries,
(c) any change in the business, assets, liabilities, financial condition,
results of operations or business prospects of the Borrower or any of its
Subsidiaries which has had or may have, singly or in the aggregate, a Materially
Adverse Effect on the Borrower or any of its Subsidiaries and any change in the
executive officers of the Borrower, and
(d) any Default or Event of Default or any event which constitutes or
which with the passage of time or giving of notice or both would constitute a
default or event of default by the Borrower or any of its Subsidiaries under any
material agreement (other than this Agreement) to which the Borrower or any of
its Subsidiaries is a party or by which the Borrower, any of its Subsidiaries or
any of the Borrower's or any of its Subsidiaries' properties may be bound.
SECTION 10.6. ERISA. As soon as possible and in any event within 30 days
after the Borrower knows, or has reason to know, that:
(a) any ERISA Event with respect to a Benefit Plan has occurred or will
occur, or
(b) the aggregate present value of the Unfunded Vested Accrued Benefits
under all Benefit Plans is equal to an amount in excess of $0, or
(c) the Borrower or any Subsidiary is in default (as defined in Section
4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan required
by reason of the Borrower's or such Subsidiary's complete or partial withdrawal
(as described in Section 4203 or 4205 of ERISA) from such Multiemployer Plan, a
certificate of the President or a Financial Officer of the Borrower setting
forth the details of such event and the action which is proposed to be taken
with respect thereto, together with any notice or filing which may be required
by the PBGC or other agency of the United States government with respect to such
event.
SECTION 10.7. Revisions or Updates to Schedules. Should any of the
information or disclosures provided on any of the Schedules originally attached
hereto become outdated or incorrect in any material respect, as part of the
officer's certificate required pursuant to SECTION 10.3(B), such revisions or
updates to such Schedule(s) as may be necessary or appropriate to update or
correct such Schedule(s), PROVIDED that no such revisions or updates to any
Schedule(s) shall be deemed to have amended, modified or superseded such
Schedule(s) as attached hereto immediately prior to the
79
submission of such revised or updated Schedule(s), or to have cured any breach
of warranty or representation resulting from the inaccuracy or incompleteness of
any such Schedule(s), unless and until the Required Lenders in their sole and
absolute discretion, shall have accepted in writing such revisions or updates to
such Schedule(s).
SECTION 10.8. Subordinated Debt Certificate. Not less than five Business
Days prior to any scheduled payment of any principal of, or interest or other
amounts on, the Subordinated Debt, and as a condition precedent to making such
payment, a certificate of its President or a Financial Officer stating:
(a) that no Default or Event of Default is in existence as of the date of
the certificate or will be in existence as of the date of such payment, both
with and without giving effect to the making of such payment, and
(b) the amount of principal and interest to be paid.
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ARTICLE 11
NEGATIVE COVENANTS
Until the Revolving Credit Facility has been terminated and all the
Secured Obligations and Junior Secured Obligations have been paid in full,
unless the Required Lenders shall otherwise consent in the manner set forth in
SECTION 15.11, the Borrower will not directly or indirectly and, in the case of
SECTIONS 11.2 through 11.14, will not permit its Subsidiaries to:
SECTION 11.1. Financial Ratios. Permit:
(a) Debt Service Coverage Ratio. Permit the ratio of Adjusted Operating
Cash Flow to Total Debt Service for (i) the period of the Fiscal Quarter ending
on October 31, 1998 to be less than 1.20 to 1, (ii) the period of two
consecutive Fiscal Quarters ending on January 31, 1999 to be less than 1.25 to
1, (iii) the period of three consecutive Fiscal Quarters ending on April 30,
1999 to be less than 1.30 to 1, and (iv) the period of any four consecutive
Fiscal Quarters ending on or after July 31, 1999 to be less than 1.30 to 1.
WHERE:
"ADJUSTED OPERATING CASH FLOW" for any test period described above means
EBIT for such period, MINUS the sum of (i) cash income taxes paid by the
Borrower and its Consolidated Subsidiaries during such period (net of cash
refunds of income taxes received by them during such period) and (ii) the amount
of Capital Expenditures not financed with Debt (other than Loan proceeds) of the
Borrower and its Consolidated Subsidiaries during such period after deducting
all capitalized interest related thereto, PLUS the sum of (x) depreciation
expense, (y) amortization expense, and (z) accrued but unpaid management fees
owed by the Borrower to Mentmore Holdings Corp., to the extent deducted in
computing EBIT, in each case of the Borrower and its Consolidated Subsidiaries
for such period.
"EBIT" for any test period described above means consolidated Net Income
of the Borrower and its Consolidated Subsidiaries for such period, PLUS the sum
of (i) federal and state income tax expense and (ii) Total Interest Expense,
(minus any amount in respect of federal or state income tax refunds or interest
income) to the extent deducted in computing consolidated Net Income.
"TOTAL DEBT SERVICE" for any test period described above means the sum of
(i) repayments of principal of Debt to the Term Lenders scheduled to be made
during such period and (ii) Total Interest Expense, MINUS, to the extent
included in Total Interest Expense for such period, any amortization of bond
discount on the 8 3/4% Debentures or the Extendible Debentures or the NEW
Debentures and any interest not payable in cash.
AND
"TOTAL INTEREST EXPENSE" for any test period described above, means
consolidated total cash interest expense of the Borrower and its Consolidated
Subsidiaries, determined in accordance with GAAP, BUT including all capitalized
interest in connection with Capital Expenditures.
(b) Minimum Capital Funds. Permit the Capital Funds of the Borrower at any
time:
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(i) during the period from the Effective Date through October 31,
1998 to be less than $12,300,000;
(ii) during the period from November 1, 1998 through July 31, 1999
to be less than $11,000,000;
(iii) during the period from August 1, 1999 through January 31, 2000
to be less than $11,400,00;
(iv) during the period from February 1, 2000 through April 30, 2000
to be less than $11,700,000; and
(v) during the period from May 1, 2000 through August 31, 2000 to be
less than $12,000,000;
WHERE:
"CAPITAL FUNDS" means at the time of determination the consolidated Net
Worth of the Borrower and its Consolidated Subsidiaries, plus outstanding
Subordinated Debt.
SECTION 11.2. Debt. Create, assume, or otherwise become or remain
obligated in respect of, or permit or suffer to exist or to be created, assumed
or incurred or to be outstanding any Debt, except that this SECTION 11.2 shall
not apply to:
(a) Debt of the Borrower represented by the Loans and the Notes,
(b) other Debt reflected on SCHEDULE 6.1(K), excluding any such Debt that
is to be paid in full on the Effective Date,
(c) Permitted Purchase Money Debt,
(d) the Debt to the Term Lender under the Term Loan and Security
Agreement;
(e) the Debt under the 8 3/4% Debentures, the Extendible Debentures anD
the New Debentures; and
(f) the Debt under the letter agreement between the Borrower and CIT dated
on or about the date of this Agreement relating to the repayment of the CIT
Ledger Debt.
SECTION 11.3. Guaranties. Become or remain liable with respect to any
Guaranty of any obligation of any other Person.
SECTION 11.4. Investments. Acquire, after the Agreement Date, any Business
Unit or Investment or, aster such date, maintain any Investment other than
Permitted Investments and the Rival Note.
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SECTION 11.5. Restricted Payments and Purchases, Etc. Declare or make any
Restricted Payment or Restricted Purchase, EXCEPT that this Section 11.5 shall
not apply to (a) provided that no Default or Event of Default exists immediately
prior to or after giving effect to any such payment (i) Redemptions in
accordance with SECTION 9.10(B), and (ii) payments made by the Borrower to
Mentmore Holdings Corp., after completion of the Exchange Offer and Redemption,
in an amount not greater than $112,500 per month, and (b) reimbursement AT ANY
TIME of actual reasonable out of pocket expenses incurred by Mentmore Holdings
Corp. to third parties (excluding compensation to employees) in connection with
the performance of its management services to the Borrower; provided that during
the continuance of a Default or Event of Default such reimbursements shall not
exceed in the aggregate $20,000 per month.
SECTION 11.6. Merger, Consolidation and Sale of Assets. Merge or
consolidate with any other Person or sell, lease or transfer or otherwise
dispose of all or a substantial portion of its assets to any Person other than
sales of Inventory in the ordinary course of business and the sale and
assignment of Receivables to the Factors pursuant to the terms of their
respective Factoring Agreement.
SECTION 11.7. Transactions with Affiliates. Effect any transaction with
any Affiliate on a basis less favorable to the Borrower than would be the case
if such transaction had been effected with a Person not an Affiliate , EXCEPT
that this SECTION 11.7 shall not apply to the Borrower's payments to Mentmore
Holdings Corp. permitted pursuant to SECTION 11.5 or to the Borrower's
enforcement or lack of enforcement of the terms of the Rival Note.
SECTION 11.8. Liens. Create, assume or permit or suffer to exist or to be
created or assumed any Lien on any of the Collateral or its other assets, other
than Permitted Liens.
SECTION 11.9. Capitalized Lease Obligations. Without the consent of the
Required Lenders, which consent shall not be unreasonably withheld, incur or
permit to exist any Capitalized Lease Obligations if such Capitalized Lease
Obligation when added to existing Capitalized Lease Obligations and Permitted
Purchase Money Debt of the Borrower would exceed $2,000,000 in the aggregate.
SECTION 11.10. Operating Leases. Without the consent of the Required
Lenders, enter into any Operating Lease if the aggregate annual rental payable
under all Operating Leases of the Borrower would exceed $6,000,000 in the
aggregate at any time after the Effective Date.
SECTION 11.11. [RESERVED]
SECTION 11.12. Plans. Permit any condition to exist in connection with any
Plan which might constitute grounds for the PBGC to institute proceedings to
have such Plan terminated or a trustee appointed to administer such Plan, and
any other condition, event or transaction with respect to any Plan which could
result in the incurrence by the Borrower of any material liability, fine or
penalty.
SECTION 11.13. Sales and Lease backs. Enter into any arrangement with any
Person providing for the Borrower's leasing from such Person any real or
personal property which has been or is to be sold or transferred, directly or
indirectly, by the Borrower to such Person.
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ARTICLE 12
DEFAULT
SECTION 12.1. Events of Defaults. Each of the following shall constitute
an Event of Default, whatever the reason for such event and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment or order of any court or any order, rule or regulation of any
governmental or nongovernmental body:
(a) Default in Payment. The Borrower shall default in any payment of
principal of or interest on any Loan, any or any Note when and as due (whether
at maturity, by reason of acceleration or otherwise).
(b) Other Payment Default. The Borrower shall default in the payment, as
and when due, of principal of or interest on, any other Secured Obligation, and
such default shall continue for a period of 10 days after written notice thereof
has been given to the Borrower by the Agent.
(c) Misrepresentation. Any representation or warranty made or deemed to be
made by the Borrower under this Agreement or any Loan Document, or any amendment
hereto or thereto, shall at any time prove to have been incorrect or misleading
in any material respect when made.
(d) Default in Performance. The Borrower shall default in the performance
or observance of any term, covenant, condition or agreement to be performed by
the Borrower, contained in
(i) ARTICLES 7, 8, 10 or 11, or SECTIONS 9.1 (insofar as it requires
the preservation of the corporate existence of the Borrower), 9.8, or
9.10(A) and the Agent shall have delivered to the Borrower written notice
of such default, or
(ii) this Agreement (other than as specifically provided for
otherwise in this SECTION 12.1) and such default shall continue for a
period of ten days after written notice thereof has been given to the
Borrower by the Agent.
(e) Indebtedness Cross-Default.
(i) The Borrower or any Subsidiary shall fail to pay when due and
payable the principal of or interest on any Debt (other than the Loans) in
an amount in excess of $1,000,000, PROVIDED that the Borrower's failure to
make a payment of the principal of or interest on the Subordinated
Indebtedness on account of the operation of the subordination provisions
thereof shall not be an Event of Default, or
(ii) the maturity of any such Indebtedness shall have (A) been
accelerated in accordance with the provisions of any indenture, contract
or instrument providing for the creation of or concerning such
Indebtedness, or (B) been required to be prepaid prior to the stated
maturity thereof, or
(iii) any event shall have occurred and be continuing which would
permit any holder or holders of such Indebtedness, any trustee or agent
acting on behalf of such holder or holders or any other Person so to
accelerate such maturity, and the Borrower shall have failed to cure such
default prior to the expiration of any applicable cure or grace period.
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(f) Other Cross-Defaults. The Borrower or any of its Subsidiaries shall
default in the payment when due, or in the performance or observance, of any
obligation or condition of any agreement, contract or lease (other than this
Agreement, the Security Documents or any such agreement, contract or lease
relating to Debt) if the existence of any such defaults, singly or in the
aggregate, could in the reasonable judgment of the Agent have a Materially
Adverse Effect on the Borrower or any of its Subsidiaries.
(g) Voluntary Bankruptcy Proceeding. The Borrower or any of its
Subsidiaries shall
(i) commence a voluntary case under the federal bankruptcy laws (as
now or hereafter in effect),
(ii) file a petition seeking to take advantage of any other laws,
domestic or foreign, relating to bankruptcy, insolvency, reorganization,
winding up or composition for adjustment of debts,
(iii) consent to or fail to contest in a timely and appropriate
manner any petition filed against it in an involuntary case under such
bankruptcy laws or other laws,
(iv) apply for or consent to, or fail to contest in a timely and
appropriate manner, the appointment of, or the taking of possession by, a
receiver, custodian, trustee, or liquidator of itself or of a substantial
part of its property, domestic or foreign,
(v) admit in writing its inability to pay its debts as they become
due,
(vi) make a general assignment for the benefit of creditors, or
(vii) take any corporate action for the purpose of authorizing any
of the foregoing.
(h) Involuntary Bankruptcy Proceeding. A case or other proceeding shall be
commenced against the Borrower or any of its Subsidiaries in any court of
competent jurisdiction seeking
(i) relief under the federal bankruptcy laws (as now or hereafter in
effect) or under any other laws, domestic or foreign, relating to
bankruptcy, insolvency, reorganization, winding up or adjustment of debts,
(ii) the appointment of a trustee, receiver, custodian, liquidator
or the like of the Borrower, any of its Subsidiaries or of all or any
substantial part of the assets, domestic or foreign, of the Borrower or
any of its Subsidiaries,
and such case or proceeding shall continue undismissed or unstayed for a period
of 60 consecutive calendar days, or an order granting the relief requested in
such case or proceeding against the Borrower or any of its Subsidiaries
(including, but not limited to, an order for relief under such federal
bankruptcy laws) shall be entered.
(i) Failure of Agreements. The Borrower shall challenge the validity and
binding effect of any provision of any Loan Document after delivery thereof
hereunder or shall state in writing its intention to make such a challenge, or
any Security Document, after delivery thereof hereunder, shall
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for any reason (except to the extent permitted by the terms thereof) cease to
create a valid and perfected first priority Lien (except for Permitted Liens)
on, or security interest in, any of the Collateral purported to be covered
thereby.
(j) Judgment. A final, unappealable judgment or order for the payment of
money in an amount that exceeds the uncontested insurance available therefor by
$100,000 or more shall be entered against the Borrower by any court and such
judgment or order shall continue undischarged or unstayed for 10 days.
(k) Attachment. A warrant or writ of attachment or execution or similar
process which exceeds $100,000 in value shall be issued against any property of
the Borrower and such warrant or process shall continue undischarged or unstayed
for 10 days.
(l) Loan Documents. Any event of default under any other Loan Document
shall occur or the Borrower shall default in the performance or observance of
any term, covenant, condition or agreement contained in, or the payment of any
other sum covenanted to be paid by the Borrower under, any other Loan Document;
PROVIDED, HOWEVER that no event of default under any other Loan Document shall
be deemed to have occurred until any notice required under such Loan Document
has been given and any grace period granted under such Loan Document has
expired.
(m) ERISA. Any ERISA Event shall occur with respect to any Benefit Plan.
(n) Change in Control. There shall have occurred under any indenture or
other instrument evidencing any Debt in excess of $1,000,000 any "change in
control" (as defined in such indenture or other evidence of Debt) obligating the
Borrower to repurchase, redeem or repay, or to offer to repurchase, redeem or
repay, or conferring on the holders of such Debt the right to require the
Borrower to repurchase, redeem or repay, all or any part of the Debt provided
for therein.
SECTION 12.2. Remedies.
(a) Automatic Acceleration and Termination of Facilities. Upon the
occurrence of an Event of Default specified in SECTION 12.1(G) or (H), (i) the
principal of and the interest on the Loans, the Loans and any Note at the time
outstanding, and all other amounts owed to the Agent or the Lenders under this
Agreement or any of the other Loan Documents and all other Secured Obligations
and Junior Secured Obligations, shall thereupon become due and payable without
presentment, demand, protest, or other notice of any kind, all of which are
expressly waived, anything in this Agreement or any of the Loan Documents to the
contrary notwithstanding, and (ii) the Revolving Credit Facility and the right
of the Borrower to request borrowings under this Agreement shall immediately
terminate.
(b) Other Remedies. If any Event of Default shall have occurred, and
during the continuance of any Event of Default, the Agent may, and at the
direction of the Required Lenders in their sole and absolute discretion shall,
do any of the following:
(i) declare the principal of and interest on the Loans and any Note
at the time outstanding, and all other amounts owed to the Agent or the
Lenders under this Agreement or any of the other Loan Documents and all
other Secured Obligations and Junior Secured Obligations, to be forthwith
due and payable, whereupon the same shall immediately become
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due and payable without presentment, demand, protest or other notice of
any kind, all of which are expressly waived, anything in this Agreement or
the Loan Documents to the contrary notwithstanding;
(ii) terminate the Revolving Credit Facility and any other right of
the Borrower to request borrowings hereunder;
(iii) notify, or request the Borrower to notify, in writing or
otherwise, any Account Debtor or obligor with respect to any one or more
of the Receivables to make payment to the Agent, for the benefit of the
Lenders, or any agent or designee of the Agent, at such address as may be
specified by the Agent and if, notwithstanding the giving of any notice,
any Account Debtor or other such obligor shall make payments to the
Borrower, the Borrower shall hold all such payments it receives in trust
for the Agent, for the account of the Lenders, without commingling the
same with other funds or property of, or held by, the Borrower, and shall
deliver the same to the Agent or any such agent or designee of the Agent
immediately upon receipt by the Borrower in the identical form received,
together with any necessary endorsements;
(iv) settle or adjust disputes and claims directly with Account
Debtors and other obligors on Receivables for amounts and on terms which
the Agent considers advisable and in all such cases only the net amounts
received by the Agent, for the account of the Lenders, in payment of such
amounts, after deductions of costs and attorneys' fees, shall constitute
Collateral and the Borrower shall have no further right to make any such
settlements or adjustments or to accept any returns of merchandise;
(v) enter upon any premises in which Inventory or Equipment may be
located and, without resistance or interference by the Borrower, take
physical possession of any or all thereof and maintain such possession on
such premises or move the same or any part thereof to such other place or
places as the Agent shall choose, without being liable to the Borrower on
account of any loss, damage or depreciation that may occur as a result
thereof, so long as the Agent shall act reasonably and in good faith;
(vi) require the Borrower to and the Borrower shall, without charge
to the Agent or any Lender, assemble the Inventory and Equipment and
maintain or deliver it into the possession of the Agent or any agent or
representative of the Agent at such place or places as the Agent may
designate and as are reasonably convenient to both the Agent and the
Borrower;
(vii) at the expense of the Borrower, cause any of the Inventory and
Equipment to be placed in a public or field warehouse, and the Agent shall
not be liable to the Borrower on account of any loss, damage or
depreciation that may occur as a result thereof, so long as the Agent
shall act reasonably and in good faith;
(viii) without notice, demand or other process, and without payment
of any rent or any other charge, enter any of the Borrower's premises and,
without breach of the peace, until the Agent, on behalf of the Lenders,
completes the enforcement of its rights in the Collateral, take possession
of such premises or place custodians in exclusive control thereof, remain
on
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such premises and use the same and any of the Borrower's Equipment, for
the purpose of (A) completing any work in process, preparing any Inventory
for disposition and disposing thereof, and (B) collecting any Receivable,
and the Agent for the benefit of the Lenders is hereby granted a license
or sublicense and all other rights as may be necessary, appropriate or
desirable to use the Proprietary Rights in connection with the foregoing,
and the rights of the Borrower under all licenses, sublicenses and
franchise agreements shall inure to the Agent for the benefit of the
Lenders (PROVIDED, HOWEVER, that any use of any federally registered
trademarks as to any goods shall be subject to the control as to the
quality of such goods of the owner of such trademarks and the goodwill of
the business symbolized thereby);
(ix) exercise any and all of its rights under any and all of the
Security Documents;
(x) apply any Collateral consisting of cash to the payment of the
Secured Obligations and Junior Secured Obligations in any order in which
the Agent, on behalf of the Lenders, may elect or use such cash in
connection with the exercise of any of its other rights hereunder or under
any of the Security Documents;
(xi) establish or cause to be established one or more Lockboxes or
other arrangement for the deposit of proceeds of Receivables, and, in such
case, the Borrower shall cause to be forwarded to the Agent at the Agent's
Office, on a daily basis, copies of all checks and other items of payment
and deposit slips related thereto deposited in such Lockboxes, together
with collection reports in form and substance satisfactory to the Agent;
and
(xii) exercise all of the rights and remedies of a secured party
under the Uniform Commercial Code and under any other Applicable Law,
including, without limitation, the right, without notice except as
specified below and with or without taking possession thereof, to sell the
Collateral or any part thereof in one or more parcels at public or private
sale, at any location chosen by the Agent, for cash, on credit or for
future delivery, and at such price or prices and upon such other terms as
the Agent may deem commercially reasonable. The Borrower agrees that, to
the extent notice of sale shall be required by law, at least ten (10)
days' notice to the Borrower 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, but notice given in any other reasonable manner
or at any other reasonable time shall constitute reasonable notification.
The Agent shall not be obligated to make any sale of Collateral regardless
of notice of sale having been given. The 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.
SECTION 12.3. Application of Proceeds. All proceeds from each sale of, or
other realization upon, all or any part of the Collateral following an Event of
Default shall be applied or paid over as follows:
(a) First: to the payment of all costs and expenses incurred in connection
with such sale or other realization, including reasonable attorneys' fees,
(b) Second: to the payment of the Secured Obligations (with the Borrower
remaining liable for any deficiency) as the Agent may elect,
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(c) Third: to BBC for application in accordance with the Intercreditor
Agreement (with the Borrower remaining liable for any deficiency);
(d) Fourth: to the payment of the Junior Secured Obligations (with the
Borrower remaining liable for any deficiency) ratably in accordance with the
amounts of such Junior Secured Obligations held by each Person, for application
to such Junior Secured Obligations as each such Person may elect, and
(e) Fifth: the balance (if any) of such proceeds shall be paid to the
Borrower, subject to any duty imposed by law, or otherwise to whomsoever shall
be entitled thereto.
THE BORROWER SHALL REMAIN LIABLE AND WILL PAY, ON DEMAND, ANY DEFICIENCY
REMAINING IN RESPECT OF THE SECURED OBLIGATIONS, TOGETHER WITH INTEREST THEREON
AT A RATE PER ANNUM EQUAL TO THE HIGHEST RATE THEN PAYABLE HEREUNDER ON SUCH
SECURED OBLIGATIONS, WHICH INTEREST SHALL CONSTITUTE PART OF THE SECURED
OBLIGATIONS.
SECTION 12.4. Power of Attorney. In addition to the authorizations granted
to the Agent under SECTION 8.13 or under any other provision of this Agreement
or of any other Loan Document, during the continuance of an Event of Default,
the Borrower hereby irrevocably designates, makes, constitutes and appoints the
Agent (and all Persons designated by the Agent from time to time) as the
Borrower's true and lawful attorney, and agent in fact, and the Agent, or any
agent of the Agent, may, without notice to the Borrower, and at such time or
times as the Agent or any such agent in its sole discretion may determine, in
the name of the Borrower, the Agent or the Lenders,
(c) demand payment of the Receivables,
(d) enforce payment of the Receivables by legal proceedings or otherwise,
(e) exercise all of the Borrower's rights and remedies with respect to the
collection of Receivables,
(f) settle, adjust, compromise, extend or renew any or all of the
Receivables,
(g) settle, adjust or compromise any legal proceedings brought to collect
the Receivables,
(h) discharge and release the Receivables or any of them,
(i) prepare, file and sign the name of the Borrower on any proof of claim
in bankruptcy or any similar document against any Account Debtor,
(j) prepare, file and sign the name of the Borrower on any notice of Lien,
assignment or satisfaction of Lien, or similar document in connection with any
of the Collateral,
(k) endorse the name of the Borrower upon any chattel paper, document,
instrument, notice, freight xxxx, xxxx of lading or similar document or
agreement relating to the Receivables, the Inventory or any other Collateral,
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(l) use the stationery of the Borrower and sign the name of the Borrower
to verifications of the Receivables and on any notice to the Account Debtors,
(m) open the Borrower's mail,
(n) notify the post office authorities to change the address for delivery
of the Borrower's mail to an address designated by the Agent, and
(o) use the information recorded on or contained in any data processing
equipment and computer hardware and software relating to the Receivables,
Inventory or other Collateral to which the Borrower has access.
SECTION 12.5. Miscellaneous Provisions Concerning Remedies.
(a) Rights Cumulative. The rights and remedies of the Agent and the
Lenders under this Agreement, the Notes and each of the Loan Documents shall be
cumulative and not exclusive of any rights or remedies which it or they would
otherwise have. In exercising such rights and remedies the Agent and the Lenders
may be selective and no failure or delay by the Agent or any Lender in
exercising any right shall operate as a waiver of it, nor shall any single or
partial exercise of any power or right preclude its other or further exercise or
the exercise of any other power or right.
(b) Waiver of Marshalling. The Borrower hereby waives any right to require
any marshalling of assets and any similar right.
(c) Limitation of Liability. Nothing contained in this ARTICLE 12 or
elsewhere in this Agreement or in any of the Loan Documents shall be construed
as requiring or obligating the Agent, any Lender or any agent or designee of the
Agent or any Lender to make any demand, or to make any inquiry as to the nature
or sufficiency of any payment received by it, or to present or file any claim or
notice or take any action, with respect to any Receivable or any other
Collateral or the monies due or to become due thereunder or in connection
therewith, or to take any steps necessary to preserve any rights against prior
parties, and the Agent, the Lenders and their agents or designees shall have no
liability to the Borrower for actions taken pursuant to this ARTICLE 12, any
other provision of this Agreement or any of the Loan Documents so long as the
Agent or such Lender shall act in good faith and in a commercially reasonable
manner.
(d) Appointment of Receiver. In any action under this ARTICLE 12, the
Agent shall be entitled during the continuance of an Event of Default, to the
fullest extent permitted by Applicable Law, to the appointment of a receiver,
without notice of any kind whatsoever, to take possession of all or any portion
of the Collateral and to exercise such power as the court shall confer upon such
receiver.
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ARTICLE 13
ASSIGNMENTS
SECTION 13.1. Successors and Assigns; Participations.
(a) This Agreement shall be binding upon and inure to the benefit of the
Borrower, the Lenders, the Agent, all future holders of the Notes, and their
respective successors and assigns, except that the Borrower may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of each Lender.
(b) Each Lender may with the consent of the Agent and, so long as no
Default or Event of Default has occurred and is continuing, the Borrower, such
consent not to be unreasonably withheld or delayed, assign to one or more
Eligible Assignees all or a portion of its interests, rights and obligations
under this Agreement (including, without limitation, all or a portion of the
Loans at the time owing to it and the Notes held by it); PROVIDED, HOWEVER, that
(i) each such assignment shall be of a constant, and not a varying, percentage
of all the assigning Lender's rights and obligations under this Agreement, (ii)
the amount of the Commitment of the assigning Lender that is subject to each
such assignment (determined as of the date the Assignment and Acceptance with
respect to such assignment is delivered to the Agent) shall in no event be less
than $2,500,000, (iii) in the case of a partial assignment, the amount of the
Commitment that is retained by the assigning Lender (determined as of the date
the Assignment and Acceptance with respect to such assignment is delivered to
the Agent) shall in no event be less than $2,500,000, (iv) the parties to each
such assignment shall execute and deliver to the Agent, for its acceptance and
recording in the Register an Assignment and Acceptance, together with any Note
or Notes subject to such assignment and such assignee's pro rata share of the
Agent's syndication expenses, (v) such assignment shall not, without the consent
of the Borrower, require the Borrower to file a registration statement with the
Securities and Exchange Commission or apply to or qualify the Loans or the Notes
under the "blue sky" laws of any state, and (vi) the representation contained in
SECTION 13.2 hereof shall be true with respect to any such proposed assignee.
Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in each Assignment and Acceptance, which effective date
shall be at least five Business Days after the execution thereof, (A) the
assignee thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender
hereunder, and (B) the Lender assignor thereunder shall, to the extent provided
in such assignment, be released from its obligations under this Agreement.
(c) By executing and delivering an Assignment and Acceptance, the Lender
assignor thereunder and the assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than the representation
and warranty that it is the legal and beneficial owner of the interest being
assigned thereby free and clear of any adverse claim, such Lender assignor makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other instrument or document
furnished pursuant hereto; (ii) such Lender assignor makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Borrower or the performance or observance by the Borrower of any of its
obligations under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) such assignee confirms that it has received a copy of
this Agreement, together with copies of the financial statements referred to in
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SECTION 6.1(O) and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee will, independently and without
reliance upon the Agent, such Lender assignor or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (v) such assignee confirms that it is an Eligible Assignee; (vi)
such assignee appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement and the other Loan
Documents as are delegated to the Agent by the terms hereof and thereof,
together with such powers as are reasonably incidental thereto; and (vii) such
assignee agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender.
(d) The Agent shall maintain a copy of each Assignment and Acceptance
delivered to it and a register for the recordation of the names and addresses of
the Lenders and the Commitment and Commitment Percentage of, and principal
amount of the Loans and owing to, each Lender from time to time (the
"Register"). The entries in the Register shall be conclusive, in the absence of
manifest error, and the Borrower, the Agent and the Lenders may treat each
person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Eligible Assignee together with any Note or Notes
subject to such assignment, the Agent shall, if such Assignment and Acceptance
has been completed and is in the form of EXHIBIT C, (i) accept such Assignment
and Acceptance, (ii) record the information contained therein in the Register,
(iii) give prompt notice thereof to the Lenders and the Borrower, and (iv)
promptly deliver a copy of such Acceptance and Assignment to the Borrower.
Within five Business Days after receipt of notice, the Borrower shall execute
and deliver to the Agent in exchange for the surrendered Note or Notes a new
Note or Notes to the order of such Eligible Assignee in amounts equal to the
Commitment assumed by such Eligible Assignee pursuant to such Assignment and
Acceptance and a new Note or Notes to the order of the assigning Lender in an
amount equal to the Commitment retained by it hereunder. Such new Note or Notes
shall be in an aggregate principal amount equal to the aggregate principal
amount of such surrendered Note or Notes, shall be dated the effective date of
such Assignment and Acceptance and shall otherwise be in substantially the form
of the assigned Notes. Each surrendered Note or Notes shall be cancelled and
returned to the Borrower.
(f) Each Lender may sell participations to one or more banks or other
entities in all or a portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitment hereunder and
the Loans owing to it and the Notes held by it); PROVIDED, HOWEVER, that (i)
each such participation shall be in an amount not less than $2,500,000, (ii)
such Lender's obligations under this Agreement (including, without limitation,
its Commitment hereunder) shall remain unchanged, (iii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, (iv) such Lender shall remain the holder of the Notes held by it
for all purposes of this Agreement, (v) the Borrower, the Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement;
PROVIDED, that such Lender may agree with any participant that such Lender will
not, without such participant's consent, agree to or approve any waivers or
amendments which
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would reduce the principal of or the interest rate on any Loans, extend the term
or increase the amount of the commitments of such participant, reduce the amount
of any fees to which such participant is entitled, extend any scheduled payment
date for principal or release Collateral securing the Loans (other than
Collateral disposed of pursuant to SECTION 8.7 hereof or otherwise in accordance
with the terms of this Agreement or the Security Documents), and (vi) any such
disposition shall not, without the consent of the Borrower, require any Borrower
to file a registration statement with the Securities and Exchange Commission to
apply to qualify the Loans or the Notes under the "blue sky" laws of any state.
The Lender selling a participation to any bank or other entity that is not an
Affiliate of such Lender shall give prompt notice thereof to the Borrower.
(g) Any Lender may, in connection with any assignment, proposed
assignment, participation or proposed participation pursuant to this Section
13.1, disclose to the assignee, participant, proposed assignee or proposed
participant, any information relating to the Borrower furnished to such Lender
by or on behalf of the Borrower, PROVIDED that, prior to any such disclosure,
each such assignee, proposed assignee, participant or proposed participant shall
agree with the Borrower or such Lender (which in the case of an agreement with
only such Lender, the Borrower shall be recognized as a third party beneficiary
thereof) to preserve the confidentiality of any confidential information
relating to the Borrower received from such Lender.
SECTION 13.2. Representation of Lenders. Each Lender hereby represents
that it will make each Loan hereunder as a commercial loan for its own account
in the ordinary course of its business; PROVIDED, HOWEVER, that subject to
SECTION 13.1 hereof, the disposition of the Notes or other evidence of the
Secured Obligations held by any Lender shall at all times be within its
exclusive control.
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ARTICLE 14
AGENT
SECTION 14.1. Appointment of Agent. Each of the Lenders hereby irrevocably
designates and appoints BankBoston, N.A. as the Agent of such Lender under this
Agreement and the other Loan Documents, and each Lender irrevocably authorizes
the Agent, as the Agent for such Lender, to take such action on its behalf under
the provisions of this Agreement and the other Loan Documents and to exercise
such powers and perform such duties as are expressly delegated to the Agent by
the terms of this Agreement and such other Loan Documents, together with such
other powers as are reasonably incidental thereto. Notwithstanding any provision
to the contrary elsewhere in this Agreement or the other Loan Documents, the
Agent shall not have any duties or responsibilities, except those expressly set
forth herein and therein, or any fiduciary relationship with any Lender, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or the other Loan Documents or
otherwise exist against the Agent.
SECTION 14.2. Delegation of Duties. The Agent may execute any of its
duties under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
SECTION 14.3. Exculpatory Provisions. Neither the Agent nor any of its
trustees, officers, directors, employees, agents, attorneys-in-fact or
Affiliates shall be (i) liable to any Lender (or any Lender's participants) for
any action lawfully taken or omitted to be taken by it or such Person under or
in connection with this Agreement or the other Loan Documents (except for its or
such Person's own gross negligence or willful misconduct), or (ii) responsible
in any manner to any Lender (or any Lender's participants) for any recitals,
statements, representations or warranties made by the Borrower or any officer
thereof contained in this Agreement or the other Loan Documents or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in connection with, this Agreement or the
other Loan Documents or for the existence, value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or the other Loan
Documents or any Collateral or Lien or other interest therein or for any failure
of the Borrower to perform its obligations hereunder or thereunder. The Agent
shall not be under any obligation to any Lender to ascertain or to inquire as to
the observance or performance of any of the agreements contained in, or
conditions of, this Agreement, or to inspect the properties, books or records of
the Borrower.
SECTION 14.4. Reliance by Agent. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any Note, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or
teletype message, statement, order or other document or conversation believed by
it to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the Borrower), independent accountants and other
experts selected by the Agent. The Agent may deem and treat the payee of any
Note as the owner thereof for all purposes unless such Note shall have been
transferred in accordance with SECTION 13.1. The Agent shall be fully justified
in failing or refusing to take any action under this Agreement and the other
Loan Documents unless it shall first receive such advice or concurrence of the
Required Lenders as it
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deems appropriate and shall be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement
and the Notes in accordance with a request of the Required Lenders, and such
request and any action taken or failure to act pursuant thereto shall be binding
upon all the Lenders and all future holders of the Notes.
SECTION 14.5. Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent has received notice from a Lender or the Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event that the Agent
receives such a notice, the Agent shall promptly give notice thereof to the
Lenders. The Agent shall take such action with respect to such Default or Event
of Default as shall be reasonably directed by the Required Lenders; PROVIDED
that unless and until the Agent shall have received such directions, the Agent
may (but shall not be obligated to) continue making Revolving Credit Loans to
the Borrower on behalf of the Lenders in reliance on the provisions of SECTION
4.7 and take such other action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interests of the Lenders.
SECTION 14.6. Non-Reliance on Agent and Other Lenders. Each Lender
expressly acknowledges that neither the Agent nor any of its officers,
directors, counsel, employees, agents, attorneys-in-fact or Affiliates has made
any representations or warranties to it and that no act by the Agent hereafter
taken, including any review of the affairs of the Borrower, shall be deemed to
constitute any representation or warranty by the Agent to any Lender. Each
Lender represents to the Agent that it has, independently and without reliance
upon the Agent or any other Lender, and based on such documents and information
as it has deemed appropriate, made its own appraisal of and investigation into
the business, operations, property, financial (and other) condition and
creditworthiness of the Borrower and made its own decision to make its Loans
hereunder and enter into this Agreement. Each Lender also represents that it
will, independently and without reliance upon the Agent or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial (and other) condition and
creditworthiness of the Borrower. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the Agent
hereunder or under the other Loan Documents, the Agent shall not have any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, financial (and other) condition
or creditworthiness of the Borrower which may come into the possession of the
Agent or any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates.
SECTION 14.7. Indemnification. The Lenders agree to indemnify the Agent in
its capacity as such (to the extent not reimbursed by the Borrower and without
limiting the obligation of the Borrower to do so), ratably according to their
respective Commitment Percentages, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the Notes)
be imposed on, incurred by or asserted against the Agent in any way relating to
or arising out of this Agreement or the other Loan
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Documents, or any documents contemplated by or referred to herein or therein or
the transactions contemplated hereby or thereby or any action taken or omitted
by the Agent under or in connection with any of the foregoing; PROVIDED that no
Lender shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting solely from the Agent's gross negligence or
willful misconduct or resulting solely from transactions or occurrences that
occur at a time after such Lender has assigned all of its interests, rights and
obligations under this Agreement pursuant to SECTION 13.1 or, in the case of a
Lender to which an assignment is made hereunder pursuant to SECTION 13.1, at a
time before such assignment. The agreements in this subsection shall survive the
payment of the Notes, the Secured Obligations and all other amounts payable
hereunder and the termination of this Agreement.
SECTION 14.8. Agent in Its Individual Capacity. The institution at the
time acting as the Agent and its Affiliates may make loans to, accept deposits
from and generally engage in any kind of business with the Borrower and the
Guarantor and their respective Subsidiaries as if it were not the Agent
hereunder. With respect to its Commitment, the Loans made or renewed by it and
any Note issued to it and any Letter of Credit issued by it, such institution
shall have and may exercise the same rights and powers under this Agreement and
the other Loan Documents and shall be subject to the same obligations and
liabilities as and to the extent set forth herein and in the other Loan
Documents for any other Lender. The terms "Lenders" and "Required Lenders" or
any other term shall, unless the context clearly otherwise indicates, include
such institution in its individual capacity as a Lender or one of the Required
Lenders.
SECTION 14.9. Successor Agent. The Agent may resign as Agent upon 10 days'
notice to the Lenders. If the Agent shall resign as Agent under this Agreement,
then the Required Lenders shall appoint from among the Lenders a successor agent
for the Lenders which successor agent shall be approved by the Borrower (which
approval shall not be unreasonably withheld), whereupon such successor agent
shall succeed to the rights, powers and duties of the Agent, and the term
"Agent" shall mean such successor agent effective upon its appointment, and the
former Agent's rights, powers and duties as Agent shall be terminated, without
any other or further act or deed on the part of such former Agent or any of the
parties to this Agreement or any holders of the Notes. After any retiring
Agent's resignation hereunder as Agent, the provisions of SECTION 14.7 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement.
SECTION 14.10. Notices from Agent to Lenders. The Agent shall promptly,
upon receipt thereof, forward to each Lender copies of any written notices,
reports or other information supplied to it by the Borrower (but which the
Borrower is not required to supply directly to the Lenders).
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ARTICLE 15
MISCELLANEOUS
SECTION 15.1. Notices.
(a) Method of Communication. Except as specifically provided in this
Agreement or in any of the Loan Documents, all notices and the communications
hereunder and thereunder shall be in writing or by telephone, subsequently
confirmed in writing. Notices in writing shall be delivered personally or sent
by certified or registered mail, postage pre-paid, or by overnight courier,
telex or facsimile transmission and shall be deemed received in the case of
personal delivery, when delivered, in the case of mailing, when receipted for,
in the case of overnight delivery, on the next Business Day after delivery to
the courier, and in the case of telex and facsimile transmission, upon
transmittal, PROVIDED that in the case of notices to the Agent, notice shall be
deemed to have been given only when such notice is actually received by the
Agent. A telephonic notice to the Agent, as understood by the Agent, will be
deemed to be the controlling and proper notice in the event of a discrepancy
with or failure to receive a confirming written notice.
(b) Addresses for Notices. Notices to any party shall be sent to it at the
following addresses, or any other address of which all the other parties are
notified in writing by such first party:
If to the Borrower: Texfi Industries, Inc.
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxxx Xxxxxxxxx
Facsimile No.(000) 000-0000
with a copy to: Winston & Xxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxx Xxxxxxxxx, Esq.
Facsimile No.(000) 000-0000
If to the Agent: BankBoston, N.A.
000 Xxxxxxxxx Xxxxxx Xxxxx, X.X.
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
If to a Lender: At the address of such Lender set forth on
the signature pages hereof.
(c) Agent's Office. The Agent hereby designates its office located at 000
Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, or any subsequent office which
shall have been specified for such purpose by written notice to the Borrower, as
the office to which payments due are to be made and at which Loans will be
disbursed.
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SECTION 15.2. Expenses. The Borrower agrees to pay or reimburse on demand
all costs and expenses incurred by the Agent or any Lender, including, without
limitation, the reasonable fees and disbursements of counsel, in connection with
(a) the negotiation, preparation, execution, delivery, administration,
enforcement and termination of this Agreement and each of the other Loan
Documents, whenever the same shall be executed and delivered, including, without
limitation
(i) the out-of-pocket costs and expenses incurred in connection with
the administration and interpretation of this Agreement and the other Loan
Documents;
(ii) the costs and expenses of appraisals of the Collateral;
(iii) the costs and expenses of lien and title searches and title
insurance;
(iv) the costs and expenses of environmental reports with respect to
the Real Estate;
(v) taxes, fees and other charges for recording the Mortgages,
filing the Financing Statements and continuations and the costs and
expenses of taking other actions to perfect, protect, and continue the
Security Interests;
PROVIDED, HOWEVER, that the Borrower shall not be required to pay the expenses
of any Person which becomes a Lender more than 90 days after the Effective Date
incurred in connection with such Person's so becoming a Lender;
(b) the preparation, execution and delivery of any waiver, amendment,
supplement or consent by the Agent and the Lenders relating to this Agreement or
any of the Loan Documents;
(c) sums paid or incurred to pay any amount or take any action required of
the Borrower under the Loan Documents that the Borrower fails to pay or take;
(d) costs of inspections and verifications of the Collateral, including,
without limitation, standard per diem fees charged by the Agent or the Lenders,
travel, lodging, and meals for inspections of the Collateral and the Borrower's
operations and books and records by the Agent's and/or the Lenders' agents up to
two times per year and whenever an Event of Default exists;
(e) costs and expenses of forwarding loan proceeds, collecting checks and
other items of payment, and establishing and maintaining each Controlled
Disbursement Account, Agency Account and Lockbox;
(f) costs and expenses of preserving and protecting the Collateral;
(g) consulting, after the occurrence of a Default, with one or more
Persons, including appraisers, accountants and lawyers, concerning the value of
any Collateral for the Secured Obligations or related to the nature, scope or
value of any right or remedy of the Agent or any Lender hereunder or under any
of the Loan Documents, including any review of factual matters in connection
therewith, which expenses shall include the fees and disbursements of such
Persons; and
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(h) costs and expenses paid or incurred to obtain payment of the Secured
Obligations, enforce the Security Interests, sell or otherwise realize upon the
Collateral, and otherwise enforce the provisions of the Loan Documents, or to
prosecute or defend any claim in any way arising out of, related to or connected
with, this Agreement or any of the Loan Documents, which expenses shall include
the reasonable fees and disbursements of counsel and of experts and other
consultants retained by the Agent or any Lender.
The foregoing shall not be construed to limit any other provisions of the Loan
Documents regarding costs and expenses to be paid by the Borrower. The Borrower
hereby authorizes the Agent and the Lenders to debit the Borrower's Loan
Accounts (by increasing the principal amount of the Revolving Credit Loan) in
the amount of any such costs and expenses owed by the Borrower when due.
SECTION 15.3. Stamp and Other Taxes. The Borrower will pay any and all
stamp, registration, recordation and similar taxes, fees or charges and shall
indemnify the Agent and the Lenders against any and all liabilities with respect
to or resulting from any delay in the payment or omission to pay any such taxes,
fees or charges, which may be payable or determined to be payable in connection
with the execution, delivery, performance or enforcement of this Agreement and
any of the Loan Documents or the perfection of any rights or security interest
thereunder, including, without limitation, the Security Interest.
SECTION 15.4. Setoff. In addition to any rights now or hereafter granted
under Applicable Law and not by way of limitation of any such rights, during the
continuance of any Event of Default, each Lender, any participant with such
Lender in the Loans and each Affiliate of each Lender are hereby authorized by
the Borrower at any time or from time to time, without notice to the Borrower or
to any other Person, any such notice being hereby expressly waived, to set off
and to appropriate and to apply any and all deposits (general or special,
including, but not limited to, indebtedness evidenced by certificates of
deposit, whether matured or unmatured) and any other indebtedness at any time
held or owing by any Lender or any Affiliate of any Lender or any participant to
or for the credit or the account of the Borrower against and on account of the
Secured Obligations irrespective or whether or not
(a) the Agent or such Lender shall have made any demand under this
Agreement or any of the Loan Documents, or
(b) the Agent or such Lender shall have declared any or all of the Secured
Obligations to be due and payable as permitted by SECTION 12.2 and although such
Secured Obligations shall be contingent or unmatured.
SECTION 15.5. LITIGATION. THE BORROWER, THE AGENT AND EACH LENDER HEREBY
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY WAIVE TRIAL BY JURY IN ANY ACTION OR
PROCEEDING OF ANY KIND OR NATURE IN ANY COURT IN WHICH AN ACTION MAY BE
COMMENCED BY OR AGAINST THE BORROWER, THE AGENT OR SUCH LENDER ARISING OUT OF
THIS AGREEMENT, THE COLLATERAL OR ANY ASSIGNMENT THEREOF OR BY REASON OF ANY
OTHER CAUSE OR DISPUTE WHATSOEVER BETWEEN THE BORROWER AND THE AGENT OR ANY
LENDER OF ANY KIND OR NATURE. THE BORROWER, THE AGENT AND THE LENDERS HEREBY
AGREE THAT THE FEDERAL COURT OF THE NORTHERN DISTRICT OF GEORGIA OR, AT THE
99
OPTION OF THE AGENT OR ANY LENDER, ANY COURT IN WHICH THE AGENT OR SUCH LENDER
SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER
JURISDICTION OVER THE MATTER IN CONTROVERSY, SHALL HAVE NONEXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE BORROWER
AND THE AGENT OR SUCH LENDER, PERTAINING DIRECTLY OR INDIRECTLY TO THIS
AGREEMENT OR THE LOAN DOCUMENTS OR TO ANY MATTER ARISING THEREFROM. THE BORROWER
EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR
PROCEEDING COMMENCED IN SUCH COURTS, HEREBY WAIVING PERSONAL SERVICE OF THE
SUMMONS AND COMPLAINT, OR OTHER PROCESS OR PAPERS ISSUED THEREIN AND AGREEING
THAT SERVICE OF SUCH SUMMONS AND COMPLAINT OR OTHER PROCESS OR PAPERS MAY BE
MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO THE BORROWER AT THE ADDRESS OF
THE BORROWER SET FORTH IN SECTION 15.1. SHOULD THE BORROWER FAIL TO APPEAR OR
ANSWER ANY SUMMONS, COMPLAINT, PROCESS OR PAPERS SO SERVED WITHIN THIRTY (30)
DAYS AFTER THE MAILING THEREOF, IT SHALL BE DEEMED IN DEFAULT AND AN ORDER
AND/OR JUDGMENT MAY BE ENTERED AGAINST IT AS DEMANDED OR PRAYED FOR IN SUCH
SUMMONS, COMPLAINT, PROCESS OR PAPERS. THE NONEXCLUSIVE CHOICE OF FORUM SET
FORTH IN THIS SECTION SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT OF ANY
JUDGMENT OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT
TO ENFORCE SAME IN ANY APPROPRIATE JURISDICTION.
SECTION 15.6. WAIVER OF RIGHTS. THE BORROWER HEREBY KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY WAIVES ALL RIGHTS WHICH THE BORROWER HAS UNDER
CHAPTER 14 OF TITLE 44 OF THE OFFICIAL CODE OF GEORGIA OR UNDER ANY SIMILAR
PROVISION OF APPLICABLE LAW TO NOTICE AND TO A JUDICIAL HEARING PRIOR TO THE
ISSUANCE OF A WRIT OF POSSESSION ENTITLING THE AGENT OR ANY LENDER, OR THE
SUCCESSORS AND ASSIGNS OF THE AGENT OR SUCH LENDER TO POSSESSION OF THE
COLLATERAL UPON EVENT OF DEFAULT. WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING AND WITHOUT LIMITING ANY OTHER RIGHT WHICH THE AGENT OR THE LENDERS
MAY HAVE, THE BORROWER CONSENTS THAT IF LENDER FILES A PETITION FOR AN IMMEDIATE
WRIT OF POSSESSION IN COMPLIANCE WITH SECTIONS 00-00-000 AND 00-00-000 OF THE
OFFICIAL CODE OF GEORGIA OR UNDER ANY SIMILAR PROVISION OF APPLICABLE LAW, AND
THIS WAIVER OR A COPY HEREOF IS ALLEGED IN SUCH PETITION AND ATTACHED THERETO,
THE COURT BEFORE WHICH SUCH PETITION IS FILED MAY DISPENSE WITH ALL RIGHTS AND
PROCEDURES HEREIN WAIVED AND MAY ISSUE FORTHWITH AN IMMEDIATE WRIT OF POSSESSION
IN ACCORDANCE WITH CHAPTER 14 OF TITLE 44 OF THE OFFICIAL CODE OF GEORGIA OR IN
ACCORDANCE WITH ANY SIMILAR PROVISION OF APPLICABLE LAW, WITHOUT THE NECESSITY
OF AN ACCOMPANYING BOND AS OTHERWISE REQUIRED BY SECTION 00-00-000 OF THE
OFFICIAL CODE OF GEORGIA OR BY ANY SIMILAR PROVISION UNDER APPLICABLE LAW. THE
BORROWER HEREBY ACKNOWLEDGES THAT IT HAS READ AND FULLY UNDERSTANDS THE TERMS OF
THIS WAIVER AND THE EFFECT HEREOF.
SECTION 15.7. Consent to Advertising and Publicity. With the prior written
consent of the Borrower, which consent shall not be unreasonably withheld, the
Agent, on behalf of the Lenders,
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may issue and disseminate to the public information describing the credit
accommodation entered into pursuant to this Agreement, including the name and
address of the Borrower, the amount, interest rate, maturity, collateral for and
a general description of the credit facilities provided hereunder and of the
Borrower's business.
SECTION 15.8. Reversal of Payments. The Agent and each Lender shall have
the continuing and exclusive right to apply, reverse and re-apply any and all
payments to any portion of the Secured Obligations in a manner consistent with
the terms of this Agreement. To the extent the Borrower makes a payment or
payments to the Agent, for the account of the Lenders, or any Lender receives
any payment or proceeds of the Collateral for the Borrower's benefit, which
payment(s) or proceeds or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any bankruptcy law, state
or federal law, common law or equitable cause, then, to the extent of such
payment or proceeds received, the Secured Obligations or part thereof intended
to be satisfied shall be revived and continued in full force and effect, as if
such payment or proceeds had not been received by the Agent or such Lender.
SECTION 15.9. Injunctive Relief. The Borrower recognizes that, in the
event the Borrower fails to perform, observe or discharge any of its obligations
or liabilities under this Agreement, any remedy at law may prove to be
inadequate relief to the Agent and the Lenders; therefore, the Borrower agrees
that if any Event of Default shall have occurred and be continuing, the Agent
and the Lenders, if the Agent or any Lender so requests, shall be entitled to
temporary and permanent injunctive relief without the necessity of proving
actual damages.
SECTION 15.10. Accounting Matters. All financial and accounting
calculations, measurements and computations made for any purpose relating to
this Agreement, including, without limitation, all computations utilized by the
Borrower to determine whether it is in compliance with any covenant contained
herein, shall, unless this Agreement otherwise provides or unless Required
Lenders shall otherwise consent in writing, be performed in accordance with
GAAP.
SECTION 15.11. Amendments.
(a) Except as set forth in SUBSECTION (B) below, any term, covenant,
agreement or condition of this Agreement or any of the other Loan Documents may
be amended or waived, and any departure therefrom may be consented to by the
Required Lenders, if, but only if, such amendment, waiver or consent is in
writing signed by the Required Lenders and, in the case of an amendment (other
than an amendment described in SECTION 15.11(D)), by the Borrower, PROVIDED that
no such amendment, unless consented to by the Agent, shall alter or affect the
rights or responsibilities of the Agent, and in any such event, the failure to
observe, perform or discharge any such term, covenant, agreement or condition
(whether such amendment is executed or such waiver or consent is given before or
after such failure) shall not be construed as a breach of such term, covenant,
agreement or condition or as a Default or an Event of Default. Unless otherwise
specified in such waiver or consent, a waiver or consent given hereunder shall
be effective only in the specific instance and for the specific purpose for
which given. In the event that any such waiver or amendment is requested by the
Borrower, the Agent and the Lenders may require and charge a fee in connection
therewith and consideration thereof in such amount as shall be determined by the
Agent and the Required Lenders in their discretion.
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(b) Without the prior unanimous written consent of the Lenders,
(i) no amendment, consent or waiver shall (A) affect the amount or
extend the time of the obligation of any Lender to make Loans or (B)
extend the originally scheduled time or times of payment of the principal
of any Loan or Loan or (C) alter the time or times of payment of interest
on any Loan or Loan or of any fees payable for the account of the Lenders
or (D) alter the amount of the principal of any Loan or Loan or the rate
of interest thereon or (E) alter the amount of any commitment fee or other
fee payable hereunder for the account of the Lenders or (F) permit any
subordination of the principal of or interest on any Loan or Loan or (G)
permit the subordination of the Security Interests in any Collateral,
(ii) no Collateral having an aggregate value greater than $500,000
shall be released by the Agent in any 12-month period other than as
specifically permitted in this Agreement or the Security Documents nor
shall any Collateral be released at a time when the Agent is entitled to
exercise remedies hereunder upon default, nor shall the Borrower or the
Guarantor be released from its liability for the Secured Obligations,
(iii) except to the extent expressly provided in SECTION 4.7, the
definition "Borrowing Base" shall not be amended,
(iv) none of the provisions of this SECTION 15.11, the definitions
"Lenders" or "Required Lenders", or the provisions of ARTICLE 12 shall be
amended, and
(v) neither the Agent nor any Lender shall consent to any amendment
to or waiver of the amortization, deferral or subordination provisions of
the Subordinated Debt or any other instrument or agreement evidencing or
relating to obligations of the Borrower that are expressly subordinate to
any of the Secured Obligations if such amendment or waiver would be
adverse to the Lenders in their capacities as Lenders hereunder;
PROVIDED, HOWEVER, that anything herein to the contrary notwithstanding, the
Required Lenders shall have the right to waive any Default or Event of Default
and the consequences hereunder of such Default or Event of Default provided only
that such Default or Event of Default does not arise under SECTION 12.1(G) OR
(h) or out of a breach of or failure to perform or observe any term, covenant or
condition of this Agreement or any other Loan Document (other than the
provisions of ARTICLE 12 of this Agreement) the amendment of which requires the
unanimous consent of the Lenders. The Required Lenders shall have the right,
with respect to any Default or Event of Default that may be waived by them, to
enter into an agreement with the Borrower or the Guarantor providing for the
forbearance from the exercise of any remedies provided hereunder or under the
other Loan Documents without thereby waiving any such Default or Event of
Default.
(c) The making of Loans hereunder by the Lenders during the existence of a
Default or Event of Default shall not be deemed to constitute a waiver of such
Default or Event of Default.
(d) Notwithstanding any provision of this Agreement or the other Loan
Documents to the contrary, no consent, written or otherwise, of the Borrower
shall be necessary or required in connection with any amendment to ARTICLE 14 or
SECTION 4.8, and any amendment to such provisions
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may be effected solely by and among the Agent and the Lenders, PROVIDED that no
such amendment shall impose any obligation on the Borrower.
SECTION 15.12. Assignment. All the provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that the Borrower may not assign or transfer any
of its rights under this Agreement.
SECTION 15.13. Performance of Borrower's Duties.
(a) The Borrower's obligations under this Agreement and each of the Loan
Documents shall be performed by the Borrower at its sole cost and expense.
(b) If the Borrower shall fail to do any act or thing which it has
covenanted to do under this Agreement or any of the Loan Documents, the Agent,
on behalf of the Lenders, may (but shall not be obligated to) do the same or
cause it to be done either in the name of the Agent or the Lenders or in the
name and on behalf of the Borrower, and the Borrower hereby irrevocably
authorizes the Agent so to act.
SECTION 15.14. Indemnification. The Borrower agrees to reimburse the Agent
and the Lenders for all costs and expenses, including reasonable counsel fees
and disbursements, incurred, and to indemnify and hold the Agent and the Lenders
harmless from and against all losses suffered by, the Agent or any Lender in
connection with
(a) the exercise by the Agent or any Lender of any right or remedy granted
to it under this Agreement or any of the Loan Documents,
(b) any claim, and the prosecution or defense thereof, arising out of or
in any way connected with this Agreement or any of the Loan Documents, and
(c) the collection or enforcement of the Secured Obligations or any of
them, other than such costs, expenses and liabilities arising out of the Agent's
or any Lender's gross negligence or willful misconduct.
SECTION 15.15. All Powers Coupled with Interest. All powers of attorney
and other authorizations granted to the Agent and the Lenders and any Persons
designated by the Agent or the Lenders pursuant to any provisions of this
Agreement or any of the Loan Documents shall be deemed coupled with an interest
and shall be irrevocable so long as any of the Secured Obligations remain unpaid
or unsatisfied.
SECTION 15.16. Survival. Notwithstanding any termination of this
Agreement,
(a) until all Secured Obligations have been irrevocably paid in full or
otherwise satisfied, the Agent, for the benefit of the Lenders, shall retain its
Security Interest and shall retain all rights under this Agreement and each of
the Security Documents with respect to such Collateral as fully as though this
Agreement had not been terminated,
(b) the indemnities to which the Agent and the Lenders are entitled under
the provisions of this ARTICLE 15 and any other provision of this Agreement and
the Loan Documents shall continue
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in full force and effect and shall protect the Agent and the Lenders against
events arising after such termination as well as before, and
(c) in connection with the termination of this Agreement and the release
and termination of the Security Interests, the Agent, on behalf of itself as
agent and the Lenders, may require such assurances and indemnities as it shall
reasonably deem necessary or appropriate to protect the Agent and the Lenders
against loss on account of such release and termination, including, without
limitation, with respect to credits previously applied to the Secured
Obligations that may subsequently be reversed or revoked.
SECTION 15.17. Titles and Captions. Titles and captions of Articles,
Sections and subsections in this Agreement are for convenience only, and neither
limit nor amplify the provisions of this Agreement.
SECTION 15.18. Severability of Provisions. Any provision of this Agreement
or any Loan Document which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective only to the extent of such
prohibition or unenforceability without invalidating the remainder of such
provision or the remaining provisions hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.
SECTION 15.19. Governing Law. This Agreement, the Notes and the Security
Documents (except to the extent otherwise expressly set forth therein) shall be
deemed to have been made in the State of Georgia and the validity, construction,
interpretation and enforcement hereof and thereof and the rights of the parties
hereto and thereto shall be determined under, governed by and construed in
accordance with the internal laws of the State of Georgia, without regard to
principles of conflicts of law, except that the waiver contained in the first
sentence of SECTION 15.5 shall be construed in accordance with and governed by
the internal laws of the jurisdiction in which any such action or proceeding is
commenced.
SECTION 15.20. Counterparts. This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and shall be binding
upon all parties, their successors and assigns, and all of which taken together
shall constitute one and the same agreement.
SECTION 15.21. Reproduction of Documents. This Agreement, each of the Loan
Documents and all documents relating thereto, including, without limitation, (a)
consents, waivers and modifications that may hereafter be executed, (b)
documents received by the Agent or any Lender, and (c) financial statements,
certificates and other information previously or hereafter furnished to the
Agent or any Lender, may be reproduced by the Agent or such Lender by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and such Person may destroy any original document so produced.
Each party hereto stipulates that, to the extent permitted by Applicable Law,
any such reproduction shall be as admissible in evidence as the original itself
in any judicial or administrative proceeding (whether or not the original shall
be in existence and whether or not such reproduction was made by the Agent or
such Lender in the regular course of business), and any enlargement, facsimile
or further reproduction of such reproduction shall likewise be admissible in
evidence.
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SECTION 15.22. Term of Agreement. This Agreement shall remain in effect
from the Agreement Date through the Termination Date and thereafter until all
Secured Obligations shall have been irrevocably paid and satisfied in full. No
termination of this Agreement shall affect the rights and obligations of the
parties hereto arising prior to such termination.
SECTION 15.23. Increased Capital. If any Lender shall have determined that
the adoption of any applicable law, rule, regulation, guideline, directive or
request (whether or not having force of law) regarding capital requirements for
banks or bank holding companies, or any change therein or in the interpretation
or administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by such Lender with any of the foregoing imposes or increases a
requirement by such Lender to allocate capital resources to such Lender's
Commitment to make Loans hereunder which has or would have the effect of
reducing the return on such Lender's capital to a level below that which such
Lender could have achieved (taking into consideration such Lender's then
existing policies with respect to capital adequacy and assuming full utilization
of such Lender's capital) but for such adoption, change or compliance by any
amount deemed by such Lender to be material: (i) such Lender shall promptly
after its determination of such occurrence give notice thereof to the Borrower;
and (ii) the Borrower shall pay to such Lender as an additional fee from time to
time on demand such amount as such Lender certifies to be the amount that will
compensate it for such reduction. A certificate of such Lender claiming
compensation under this SECTION 15.23 shall be conclusive in the absence of
manifest error. Such certificate shall set forth the nature of the occurrence
giving rise to such compensation, the additional amount or amounts to be paid to
it hereunder and the method by which such amounts were determined. In
determining such amount, such Lender may use any reasonable averaging and
attribution methods.
SECTION 15.24. Pro-Rata Participation.
(a) Each Lender agrees that if, as a result of the exercise of a right of
setoff, banker's lien or counterclaim or other similar right or the receipt of a
secured claim it receives any payment in respect of the Secured Obligations, it
shall promptly notify the Agent thereof (and the Agent shall promptly notify the
other Lenders). If, as a result of such payment, such Lender receives a greater
percentage of the Secured Obligations owed to it under this Agreement than the
percentage received by any other Lender, such Lender shall purchase a
participation (which it shall be deemed to have purchased simultaneously upon
the receipt of such payment) in the Secured Obligations then held by such other
Lenders so that all such recoveries of principal and interest with respect to
all Secured Obligations owed to each Lender shall be pro rata on the basis of
its respective amount of the Secured Obligations owed to all Lenders, PROVIDED
that if all or part of such proportionately greater payment received by such
purchasing Lender is thereafter recovered by or on behalf of the Borrower from
such Lender, such purchase shall be rescinded and the purchase price paid for
such participation shall be returned to such Lender to the extent of such
recovery, but without interest.
(b) Each Lender which receives such a secured claim shall, to the extent
practicable, exercise its rights in respect of such secured claim in a manner
consistent with the rights of the Lenders entitled under this SECTION 15.24 to
share in the benefits of any recovery on such secured claim.
(c) The Borrower expressly consents to the foregoing arrangements and
agrees that any holder of a participation in any Secured Obligation so purchased
or otherwise acquired of which the
105
Borrower has received notice may exercise any and all rights of banker's lien,
set-off or counterclaim with respect to any and all monies owing by the Borrower
to such holder as fully as if such holder were a holder of such Secured
Obligation in the amount of the participation held by such holder.
106
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers in several counterparts all as of the
day and year first written above.
BORROWER:
TEXFI INDUSTRIES, INC.
[Corporate Seal]
Attest: By: /s/ Xxxxxx X. Xxxxxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxxxxx
By: Xxxxxxx X. Xxxxxxx Title: CFO
---------------------------
Name: Xxxxxxx X. Xxxxxxx
Secretary
AGENT:
BANKBOSTON, N.A.
By: /s/ Xxxxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxxxx X. Xxxxxx
Title: Managing Director
107
LENDERS:
BANKBOSTON, N.A.
By: /s/ Xxxxxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxxxxx X. Xxxxxx
Title: Managing Director
Address: 000 Xxxxxxxxx Xxxxxx Xxxxx, X.X.
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: ____________________
Facsimile No.: (000) 000-0000
THE CIT GROUP/COMMERCIAL SERVICES, INC.
By: /s/ Xxxxxx Xxxxx
---------------------------------
Name: Xxxxxx Xxxxx
Title: VP
Address: Two First Union Center
X.X. Xxx 00000
Xxxxxxxxx, XX 00000-0000
Attn: Xxxx Xxxx
Facsimile No.: (000) 000-0000
108
ANNEX A
COMMITMENTS
BankBoston, N.A. $20,000,000
The CIT Group/Commercial Services, Inc. $20,000,000
EXHIBIT A
FORM OF
REVOLVING CREDIT NOTE
U.S. $______________ Atlanta, Georgia
August ___, 1998
FOR VALUE RECEIVED, TEXFI INDUSTRIES, INC., a Delaware corporation
(the "Borrower"), hereby unconditionally promises to pay to the order of THE
__________________________. (the "Lender") on the Termination Date (as defined
in the Loan Agreement), as the same may be extended, the principal sum of
________________________________________ DOLLARS ($_________), or, if less, the
aggregate unpaid principal amount of all Revolving Credit Loans made by the
Lender to the Borrower pursuant to the Loan Agreement.
The Borrower also unconditionally promises to pay interest on the
unpaid principal amount of each Revolving Credit Loan made by the Lender from
the date of such Loan until paid (whether at maturity, by reason of acceleration
or otherwise) at such interest rates, and payable at such times, as are
specified in the Loan Agreement.
All payments made under this Revolving Credit Note shall be made in
lawful money of the United States of America, in federal or other immediately
available funds, to __________________, as agent (the "Agent") for the account
of the Lender at the Agent's office at _____________________________________, or
at such other place within the United States as shall be designated from time to
time by the Agent.
Nothing contained in this Revolving Credit Note shall be deemed to
establish or require the payment of a rate of interest in excess of the maximum
rate permitted by any Applicable Law. In the event that any rate of interest
required to be paid hereunder exceeds the maximum rate permitted by Applicable
Law, the provisions of the Loan Agreement relating to the payment of interest
under such circumstances shall control.
For the purposes of this Revolving Credit Note, "Loan Agreement"
means the Loan and Security Agreement dated as of August ___, 1998, between the
Borrower, the Lender, each of the other financial institutions initially a
signatory thereto, together with their assignees pursuant to Article 13 thereof,
and the Agent, as the same may be amended, modified, supplemented or restated
from time to time. Reference is made to the Loan Agreement for the definitions
of other terms used in this Revolving Credit Note.
Presentment for payment, demand, protest and notice of demand,
notice of dishonor and notice of nonpayment and all other notices are hereby
waived by the Borrower to the fullest extent permitted by Applicable Law. No
failure to exercise, and no delay in
exercising any rights hereunder on the part of the holder hereof shall operate
as a waiver of such rights.
The Borrower hereby agrees to pay on demand all costs and expenses
incurred in collecting the Borrower's Secured Obligations hereunder or in
enforcing or attempting to enforce any of the Lender's rights hereunder,
including, but not limited to, reasonable attorneys' fees and expenses if
collected by or through an attorney, whether or not suit is filed.
This Revolving Credit Note is one of the Revolving Credit Notes
under, and is subject to the provisions and entitled to the benefits of, the
Loan Agreement and the other Loan Documents which, among other things, provide
for the making of Revolving Credit Loans by the Lender to the Borrower from time
to time in an aggregate amount not to exceed at any time outstanding the Dollar
amount first above mentioned and contain provisions with respect to acceleration
of the maturity hereof and prepayments of the principal of this Revolving Credit
Note prior to maturity, all upon the terms and conditions specified therein.
THE PROVISIONS OF SECTION 15.5 OF THE LOAN AGREEMENT ARE HEREBY
EXPRESSLY INCORPORATED BY REFERENCE HEREIN.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
A1-2
THIS REVOLVING CREDIT NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF GEORGIA.
IN WITNESS WHEREOF, the undersigned have executed this Revolving
Credit Note as of the date and year first above written.
TEXFI INDUSTRIES, INC.
(CORPORATE SEAL)
By:_____________________________
Name:
Title:
Attest:
By:___________________________
Name:
Title:
A1-3
EXHIBIT B
FORM OF
BORROWING BASE CERTIFICATE
Reference is made to the Amended and Restated Loan and Security
Agreement dated as of December ___, 1997 (as amended to the date hereof, the
"Loan Agreement"), between Texfi Industries Inc., a Delaware corporation (the
"Borrower"), the financial institutions party to this Agreement from time to
time (the "Lenders") and BankBoston, N.A., a national banking association, as
agent for the Lenders (together with its successor agents, the "Agent"). Terms
defined in the Loan Agreement, unless otherwise defined herein are used herein
as therein defined.
This Certificate is furnished to the Agent by the Borrower in
accordance with its obligations under Section 6.1(c)(xi) or Section 9.12(c) of
the Loan Agreement. The Borrower certifies that (a) the computation of the
Borrowing Base attached hereto complies with all the applicable provisions of
the Loan Agreement, and (b) the data has been prepared from the books of account
and records of the Borrower in accordance with GAAP and present fairly and
accurately the status of the Borrower's accounts as at _____________ ___, 19__.
Date:_______________ TEXFI INDUSTRIES, INC.
By:________________________________
Name:
Title:
EXHIBIT C
FORM OF
ASSIGNMENT AND ACCEPTANCE
Dated ___________ __, 199__
Reference is made to the Loan and Security Agreement dated as of
August __, 1998 (the "Loan Agreement") between TEXFI INDUSTRIES, INC., a
Delaware corporation (the "Borrower"), the "Lenders" named in the Loan Agreement
and BANKBOSTON, N.A., as agent for the Lenders (the "Agent"). Terms defined in
the Loan Agreement are used herein with the same meanings.
________________________ (the "Assignor") and ______________________
(the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, an interest in and to
such of the Assignor's rights and obligations as a Lender under the Loan
Agreement as of the Effective Date (as hereinafter defined) as represent a
_____% interest in and to all of the outstanding rights and obligations of the
Lenders thereunder as of the Effective Date (including, without limitation, such
percentage interest in the Loans owing to the Lenders outstanding on the
Effective Date, together with such percentage interest in all unpaid interest
and such percentage interest in the Notes and in the Letter of Credit
Obligations). The Assignee shall have no interest in any interest that is
payable with respect to a period prior to the Effective Date.
2. The Assignor (i) represents that as of the date hereof, its
Commitment under the Loan Agreement is $___________, the outstanding balance of
its Revolving Credit (unreduced by any assignments thereof which have not yet
become effective); (ii) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Loan Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Loan
Agreement or any other instrument or document furnished pursuant thereto; (iii)
makes no representation or warranty and assumes no responsibility with respect
to the financial condition of the Borrower or the performance or observance by
the Borrower of any of its obligations under the Loan Agreement or any other
instrument or document furnished pursuant thereto; and (iv) attaches the Notes
referred to in paragraph 1 above and requests that the Agent exchange such Notes
for new Notes as set forth on Annex A hereto.
3. The Assignee (i) confirms that it has received a copy of the Loan
Agreement, together with copies of the financial statements referred to in
Section 6.1(o) thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance; (ii) agrees that it will, independently and without
reliance upon the Agent, the Assignor or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Loan
Agreement; (iii) confirms that it is an
Eligible Assignee; (iv) appoints and authorizes the Agent to take such action as
agent on its behalf and to exercise such powers under the Loan Agreement and the
other Loan Documents as are delegated to the Agent by the terms thereof,
together with such powers as are reasonably incidental thereto; (v) agrees that
it will perform in accordance with their terms all the obligations which by the
terms of the Loan Agreement are required to be performed by it as a Lender; and
(vi) specifies as its address for notices the office set forth beneath its name
on the signature pages hereof.
4. The effective date of this Assignment and Acceptance shall be
[____________ __, 199__] [the date of acceptance thereof by the Agent] (the
"Effective Date"). Following the execution of this Assignment and Acceptance, it
will be delivered to the Agent for acceptance and recording by the Agent.
5. Upon such acceptance and recording, as of the Effective Date, (i)
the Assignee shall be a party to the Loan Agreement and, to the extent provided
in this Assignment and Acceptance, shall have the rights and obligations of a
Lender thereunder and (ii) the Assignor shall, to the extent provided in this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Loan Agreement.
6. Upon such acceptance and recording, from and after the Effective
Date, the Agent shall make all payments under the Loan Agreement and the Notes
in respect of the interest assigned hereby (including, without limitation, all
payments of principal, interest and fees with respect thereto) to the Assignee.
The Assignor and Assignee shall make all appropriate adjustments in payments
under the Loan Agreement and the Notes for periods prior to the Effective Date
directly between themselves.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
2
7. This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of Georgia.
[ASSIGNOR]
By:______________________________
Name:________________________
Title:_________________________
[ASSIGNEE]
By:_____________________________
Name:_______________________
Title:_________________________
Address for notices:
------------------------------
------------------------------
------------------------------
Accepted this _____ day
of ____________, 199__
BANKBOSTON, N.A., as Agent
By:___________________________
Name:_____________________
Title:______________________
3
EXHIBIT D
FORM OF
SETTLEMENT REPORT
Pursuant to SECTION 4.8 of the Loan and Security Agreement dated as of
August ___, 1998 (the "Loan Agreement"; terms defined in the Loan Agreement and
not otherwise defined herein being used herein as therein defined), among Texfi
Industries, Inc., a Delaware corporation (the "Borrower"), the financial
institutions party thereto from time to time (the "Lenders") and BankBoston,
N.A. as agent for the Lenders (together with its successor agents the "Agent"),
the Agent hereby delivers this Report to the Lenders for the ______________ ___,
[199__/200_] Settlement Date.
1. Principal amount of Revolving Credit
Loans outstanding as of Settlement
Date (before settlement)
(a) BankBoston $_________________________
(b) The CIT Group/ $_________________________
Commercial Services, Inc.
(c) Total $_________________________
2. Principal amount of Revolving
Credit Loans outstanding as of
next preceding Settlement Date
(after settlement on such date)
(a) BankBoston $_________________________
(b) The CIT Group/ $_________________________
Commercial Services, Inc.
(c) Total $_________________________
3. Commitment Amount
of each Lender (line 1(b) x
Commitment Percentage)
(a) BankBoston $_________________________
(b) The CIT Group/ $_________________________
Commercial Services, Inc.
4. Excess (shortfall) of each
Lender's Commitment Percentage
Amount over its outstandings
(a) BankBoston (line
3(a) minus line 1(a)) $_________________________
(b) The CIT Group/
Commercial Services, Inc.
(line 3(b) minus line 1(b)) $_________________________
5 Each Lender for which an excess (a positive dollar amount) is shown in
item 4 shall pay an amount equal to such excess to the Agent, for payment
by the Agent to each Lender for which a shortfall (a negative dollar
amount) is shown in item 4 to the extent of such shortfall.
BANKBOSTON, as Agent
By:__________________________
Name:______________________
Title:_______________________
2
LOAN AND SECURITY AGREEMENT
Texfi Industries, Inc.
The Financial Institutions Party
Hereto From Time to Time
And
BankBoston, N.A.
SCHEDULE 1.1A PERMITTED INVESTMENTS
$100,000 Certificate of Deposit at NationsBank, N.A. dated October 20, 1997
with a twelve-month term
$4,524,285 Note Receivable from Clarendon Holdings, LLC dated as of December 15,
1997 repayable as to principal in a single payment on the tenth anniversary of
the date of issuance thereof (subject to required prepayments from specified
funds) and as to interest, at the rate of 5% per annum, only when principal is
repaid.
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Texfi Industries, Inc.
The Financial Institutions Party
Hereto From Time to Time
And
BankBoston, N.A.
SCHEDULE 1.1B PERMITTED LIENS
Lien for taxes in the amount of $37,266.37 filed by the City of New York which
lien is being contested in good faith by the Borrower, as more fully disclosed
on Schedule 6.1(m).
Lien for taxes in the amount of $49,474.80 filed by the City of New York which
lien is being contested in good faith by the Borrower as more fully disclosed on
Schedule 6.1(m).
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Texfi Industries, Inc.
The Financial Institutions Party
Hereto From Time to Time
And
BankBoston, N.A.
SCHEDULE 6.1 (A) ORGANIZATION
Jurisdiction of organization of the Borrower:
Delaware
Jurisdiction where the Borrower is qualified to do business:
California
Georgia
New York
North Carolina
South Carolina
Texas
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Texfi Industries, Inc.
The Financial Institutions Party
Hereto From Time to Time
And
BankBoston, N.A.
SCHEDULE 6.1 (B) CAPITALIZATION
Outstanding capital stock of the Borrower:
Texfi Industries, Inc. Common Stock, $1.00 par value
Shares of Borrower capital stock authorized:
20,000,000
Shares of Borrower capital stock issued as of Agreement Date:
8,859,098
Shares and shareholders of > 5% of total Shares of Borrower capital stock:
1,444,000 Mentmore Holdings Corp.
1,025,000 Polysindo Hong Kong
592,000 Trust Company of the West
443,000 Dimensional Fund
Borrower Shareholder Agreements as of Agreement Date:
1987 Nonqualified Stock Option Plan, as adopted by the Borrower's Board of
Directors on December 16, 1987 and approved by Borrower's Shareholders at
an annual meeting of Borrower's Shareholders on March 8, 1988, as amended
Share Purchase Rights Plan, as adopted by the Borrower's Board of
Directors, dated July 22, 1988
Rights Agreement between the Borrower and First Union National Bank, as
Rights Agent, dated July 28, 1988, as amended
Directors' Deferred Stock Compensation Plan, as adopted by the Borrower's
Board of Directors on July 14, 1989, as amended
1990 Executive Stock Purchase Plan, dated January 9, 1990, as amended
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Texfi Industries, Inc.
The Financial Institutions Party
Hereto From Time to Time
And
BankBoston, N.A.
SCHEDULE 6.1 (B) CAPITALIZATION (CONTINUED)
Stock and Option Purchase Agreement between the Borrower and Xxxxxxxxxx
Corporation dated May 14, 1994, as amended
Option Purchase Agreement dated June 17, 1998 between the Borrower and
Mentmore Holdings Corporation
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Texfi Industries, Inc.
The Financial Institutions Party
Hereto From Time to Time
And
BankBoston, N.A.
SCHEDULE 6.1 (D) SUBSIDIARIES: OWNERSHIP OF STOCK
Borrower is the parent company of a wholly owned subsidiary, Casualwear
Express, Inc. for which the Jurisdiction of organization is North Carolina.
Casualwear Express, Inc. is an inactive corporation that has not been
officially dissolved.
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Texfi Industries, Inc.
The Financial Institutions Party
Hereto From Time to Time
And
BankBoston, N.A.
SCHEDULE 6.1(F) COMPLIANCE WITH LAWS
None
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Texfi Industries, Inc.
The Financial Institutions Party
Hereto From Time to Time
And
BankBoston, N.A.
SCHEDULE 6.1(H) GOVERNMENTAL APPROVALS
Small quantities of certain organic solvents are present in the groundwater at a
New Bern, North Carolina site previously owned by the Borrower. The Borrower
engaged the engineering firm of Xxxxxxx X. Main, Inc. to conduct an assessment
of the contamination and to propose a plan of remediation. Xxxxxxx X. Main, Inc.
completed a Remedial Act Plan which was approved by the Division of
Environmental Management, North Carolina Department of Environment, Health and
Natural Resources ("NCDEHNR"). The Borrower obtained a permit to treat recovered
groundwater and discharge it into an infiltration gallery at the New Bern site.
The engineering firm of Four Seasons Industrial Services, Inc. was engaged to
complete the engineering, design and installation of the groundwater remediation
system. The Borrower engaged Aquaterra Engineering to implement the Corrective
Action Plan. The corrective activities which have continued for several years
are conducted pursuant to a Special Order by Consent entered into between the
Borrower and NCDEHNR. The improved portion of this New Bern site has been sold
to the Borrower's former tenant there, but the Borrower continues to be
responsible for the groundwater remediation project. An escrow fund was
established by the Borrower for the payment of expenses associated with said
groundwater remediation project. The Borrower believes that no further
remediation should be required and has requested that NCDEHNR remove the site
and consider the Corrective Action Plan complete. NCDEHNR denied this request
and the Borrower is in the process of appealing this ruling.
The unimproved portion of the New Bern site retained by the Borrower includes an
area that was used in earlier years by the Borrower as a refuse and solid waste
disposal site. The Borrower engaged the engineering firm of Delta Environmental
Consultants, Inc. to conduct a preliminary assessment of the site in order to
determine whether it is causing or has the potential to cause environmental
damage. The preliminary report indicated the possibility that some remedial
activity may be required. The existence of the site was reported to the State of
North Carolina. The Borrower has conducted no further assessment of the site and
no Governmental Authority has made a request for remedial activity.
The Borrower acknowledges that to the extent that any liability of the Borrower
with respect to the matters referred to herein has not been finally determined
as of the Agreement Date, the Lenders reserve all rights, benefits, and
protections under the Amended and Restated Loan and Security
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Texfi Industries, Inc.
The Financial Institutions Party
Hereto From Time to Time
And
BankBoston, N.A.
SCHEDULE 6.1(H) GOVERNMENTAL APPROVALS (CONTINUED)
Agreement with respect to such liability including all protection afforded if
such liability causes a Material Adverse Effect.
Reference is hereby made to the information contained in the following reports,
copies of which have been provided to the Agent:
(1) Updated Phase I Environmental Site Assessment dated August 25,
1998 for Texfi Industries, Inc., 00 Xxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxx;
(2) Phase I Environmental Site Assessment dated August 25, 1998 for
Texfi Industries, Inc., 000 Xxxxxx Xxxxx, Xxxxxxxxxxxx, Xxxxx
Xxxxxxxx;
(3) Updated Phase I Environmental Site Assessment dated August 25, 1998
for Texfi Industries, Inc., 000 Xxxxx Xxxxxx, Xxx Xxxxx, Xxxxx
Xxxxxxxx; and
(4) Phase I Environmental Site Assessment dated August 25, 1998 for
Texfi Industries, Inc., 000 Xxxxxxx Xxxx, Xxxxx Xxxxx, Xxxxx
Xxxxxxxx.
(5) Phase II Environmental Site Assessments dated August 27, 1998 for
Texfi Industries, Inc. Facilities in Rocky Mount and Fayetteville,
North Carolina.
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Texfi Industries, Inc.
The Financial Institutions Party
Hereto From Time to Time
And
BankBoston, N.A.
SCHEDULE 6.1(I) TITLE TO PROPERTIES
None
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Texfi Industries, Inc.
The Financial Institutions Party
Hereto From Time to Time
And
BankBoston, N.A.
SCHEDULE 6.1(J) LIENS
Amounts outstanding under the Master Loan and Security Agreement between BOT
Financial Corporation and the Borrower dated June 1, 1993
Amounts outstanding under the Master Loan and Security Agreement between
KeyCorp. Leasing Ltd. and the Borrower dated June 1, 1993
Obligations of the Borrower with respect to letter of credit #37559, dated
October 12, 1993, with NationsBank, N.A. as lender and Liberty Mutual Insurance
Company as beneficiary, as amended
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Texfi Industries, Inc.
The Financial Institutions Party
Hereto From Time to Time
And
BankBoston, N.A.
SCHEDULE 6.1(K) DEBTS AND GUARANTIES
Senior Subordinated Debentures, 8.75%, due August 1, 1999, First Union
National Bank as trustee
First Supplemental Indenture to the Senior Subordinated Debentures, 8.75%, due
August 1, 1999, dated March 10, 1995 between Borrower and First Union National
Bank as trustee
Second Supplemental Indenture to the Senior Subordinated Debentures, 8.75%, due
August 1, 1999, dated March 15, 1996 between Borrower and First Union National
Bank as trustee
Subordinated Extendible Debentures, 11%, due April 1, 0000, Xxxxx Xxxxxx Bank
and Trust Company as trustee, First Union National Bank as paying agent
Master Loan and Security Agreement between BOT Financial Corporation and the
Borrower dated June 1, 1993
Master Loan and Security Agreement between KeyCorp. Leasing Ltd. and the
Borrower dated June 1, 1993
$50,000 obligations of the Borrower with respect to letter of credit #37559,
dated October 12, 1993, with NationsBank, N.A. as lender and Liberty Mutual
Insurance Company as beneficiary, as amended
Employment Agreement between the Borrower and Xxxxxx Xxxxxxxxx dated January
1, 1997
Employment Agreement between the Borrower and Xxxxxx X. Xxxxxx, Xx. dated
April 1, 1997
Term Loan and Security Agreement dated as of August 28, 1998, between Borrower
and Back Bay Capital LLC
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Texfi Industries, Inc.
The Financial Institutions Party
Hereto From Time to Time
And
BankBoston, N.A.
SCHEDULE 6.1(L) LITIGATION
Action filed in 1993 by Xxxxxx Xxxxxxx, President of Fabri-Com, Inc. for
payments allegedly due him under an alleged sales commission agreement.
Fabric-Com has asserted three causes of action against Texfi Industries, Inc.
and is demanding damages of $30 million dollars. Xxxxxxx was a commissioned
sales agent who was never an employee of Texfi Elastex or its predecessor
Xxxxxxx Elastics. Xxxxxxx was paid all commissions due through his dismissal in
1993 and is trying to assert that he is due additional fees under an agreement
which never existed. An answer to the complaint was served. Discovery is
complete. Fabri-Com has dismissed its one cause of action against defendant
Dynarex. The case is pending in the Supreme Court of the State of New York, New
York County.
Action commenced by Worldtex, Inc. and Elastex, Inc., as plaintiffs, against the
Borrower, as defendant, in the Supreme Courtt of the State of New York, County
of New York, under Index Number 981602807, alleging obligations of the Borrower
to pay the plaintiffs the aggregate amount of approximately $285,000 in
connection with post-closing adjustments and related matters arising out of an
agreement with its Narrow Fabrics Division in October 1997. The Borrower
answered the complaint in this matter. Discussions related to possible
settlement are pending.
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Texfi Industries, Inc.
The Financial Institutions Party
Hereto From Time to Time
And
BankBoston, N.A.
SCHEDULE 6.1(M) TAX MATTERS
The Borrower has signed an extension of time limitations relating to an audit by
the City of New York on tax returns for the fiscal years ending October 31, 1991
through October 31, 1994.
The Borrower filed amended New York City income tax returns in the fall of 1997
paying the taxes and interest due in respect of tax warrants previously recorded
by New York City, and described in Schedule 1.1B, but declining to pay penalties
sought by such warrants. Such amended returns are being reviewed by the New York
City tax authorities.
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Texfi Industries, Inc.
The Financial Institutions Party
Hereto From Time to Time
And
BankBoston, N.A.
SCHEDULE 6.1(P) MATERIAL ADVERSE CHANGE
None
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Texfi Industries, Inc.
The Financial Institutions Party
Hereto From Time to Time
And
BankBoston, N.A.
SCHEDULE 6.1(Q) ERISA
Texfi Industries, Inc. and Affiliated Companies Cafeteria Plan dated December
16, 1987
Texfi Industries, Inc. 401(k) Retirement and Savings Plan dated April 1, 1993
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Texfi Industries, Inc.
The Financial Institutions Party
Hereto From Time to Time
And
BankBoston, N.A.
SCHEDULE 6.1(U) LOCATION OF CORPORATE OFFICES
0000 Xxxxxxxx Xxxxxx
Xxxxx 000 (beginning November 4, 1994)
Suite 318 (April 1, 1990 through November 3, 1994)
Xxxxxxx, Xxxxx Xxxxxxxx 00000
or
0000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx
00000
LOCATION OF RECEIVABLES
000 Xxxxxxx Xxxx
Xxxxx Xxxxx, Xxxxx Xxxxxxxx
00000
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Texfi Industries, Inc.
The Financial Institutions Party
Hereto From Time to Time
And
BankBoston, N.A.
SCHEDULE 6.1(V) LOCATION OF INVENTORY
000 Xxxxxxx Xxxx
Xxxxx Xxxxx, Xxxxx Xxxxxxxx
00000
000 Xxxxxxx Xxxxx
Xxxxxxxxxxxx, Xxxxx Xxxxxxxx
00000
00 Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx
00000
000 Xxxxx Xxxxxx
Xxx Xxxxx, Xxxxx Xxxxxxxx
00000
XX Colors
Xxxxxxx Xxxx
Xxxxx Xxxxx, Xxxxx Xxxxxxxx
00000
Mid-Atlantic Warehouse & Storage
0000 Xxxxxxx Xxxx Xxxxx
Xxxxx Xxxxx, Xxxxx Xxxxxxxx
00000
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Texfi Industries, Inc.
The Financial Institutions Party
Hereto From Time to Time
And
BankBoston, N.A.
SCHEDULE 6.1(W) EQUIPMENT
000 Xxxxxxx Xxxx
Xxxxx Xxxxx, Xxxxx Xxxxxxxx
00000
000 Xxxxxxx Xxxxx
Xxxxxxxxxxxx, Xxxxx Xxxxxxxx
00000
00 Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx
00000
000 Xxxxx Xxxxxx
Xxx Xxxxx, Xxxxx Xxxxxxxx
00000
NONPRODUCTIVE EQUIPMENT
0000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx
00000
0000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx
00000
000 Xxxx 0xx Xxxxxx
Xxxxx X000
Xxx Xxxxxxx, Xxxxxxxxxx
00000-0000
00 Xxxxxxxx Xxxxx
Xxxx Xxxxx, Xxxxx Xxxxxxxx
00000
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Texfi Industries, Inc.
The Financial Institutions Party
Hereto From Time to Time
And
BankBoston, N.A.
SCHEDULE 6.1(X) REAL ESTATE
OWNED PROPERTIES
000 Xxxxxxx Xxxx
Xxxxx Xxxxx, Xxxxx Xxxxxxxx
00000
000 Xxxxxxx Xxxxx
Xxxxxxxxxxxx, Xxxxx Xxxxxxxx
00000
00 Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx
00000
000 Xxxxx Xxxxxx
Xxx Xxxxx, Xxxxx Xxxxxxxx
00000
000 Xxxxx Xxxx
Xxxxxx, Xxxxx Xxxxxxxx
00000
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Texfi Industries, Inc.
The Financial Institutions Party
Hereto From Time to Time
And
BankBoston, N.A.
SCHEDULE 6.1(X) REAL ESTATE
LEASED PROPERTIES
0000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx
00000
0000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx
00000
000 Xxxx 0xx Xxxxxx
Xxxxx X000
Xxx Xxxxxxx, Xxxxxxxxxx
00000-0000
00 Xxxxxxxx Xxxxx
Xxxx Xxxxx, Xxxxx Xxxxxxxx
00000
WAREHOUSE LOCATIONS
Mid-Atlantic Warehouse & Storage
0000 Xxxxxxx Xxxx Xxxxx
Xxxxx Xxxxx, Xxxxx Xxxxxxxx
00000
XX Colors
Xxxxxxx Xxxx
Xxxxx Xxxxx, Xxxxx Xxxxxxxx
00000
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Texfi Industries, Inc.
The Financial Institutions Party
Hereto From Time to Time
And
BankBoston, N.A.
SCHEDULE 6.1(Y) CORPORATE NAMES
Texfi Industries, Inc.
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Texfi Industries, Inc.
The Financial Institutions Party
Hereto From Time to Time
And
BankBoston, N.A.
SCHEDULE 6.1(BB) EMPLOYEE RELATIONS
None
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Texfi Industries, Inc.
The Financial Institutions Party
Hereto From Time to Time
And
BankBoston, N.A.
SCHEDULE 6.1(CC) PROPRIETARY RIGHTS
Trademarks:
"TEXFI" RN 1288 (North Carolina)
logo RN 999,993
Pending Trademarks:
"Texxus" 75-247592
Patents:
4,936,119 Venturi device for fluid-jet dyeing apparatus
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Texfi Industries, Inc.
The Financial Institutions Party
Hereto From Time to Time
And
BankBoston, N.A.
SCHEDULE 6.1(DD) TRADENAMES
Texfi
Texfi Blends
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Texfi Industries, Inc.
The Financial Institutions Party
Hereto From Time to Time
And
BankBoston, N.A.
SCHEDULE 6.1(EE) BANK ACCOUNTS
NATIONSBANK:
TEXAS ABA # 0000-0000-0
0020009973 New Bern Remediation
WACHOVIA:
0000000000 Rocky Mount Payroll
4020047620 Narrow Fabrics Payroll
XXXXXX NATIONAL:
42463812 New York Xxxxx Cash
BANKBOSTON:
ABA #000000000
533-24548 Corporate Funding
800-60846 Corporate Disbursing
800-60854 Division Disbursing
41445 Lockbox
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Texfi Industries, Inc.
The Financial Institutions Party
Hereto From Time to Time
And
BankBoston, N.A.
SCHEDULE 9.8 USE OF PROCEEDS
(1) To refinance the existing revolving credit agreement as evidenced by the
Amended and Restated Loan and Security Agreement dated December 19, 1997
between the Borrower, the Agent and the financial institutions party
thereto, as Lenders; and
(2) For costs and expenses incurred in connection with the closing of this
Agreement and the Term Loan and Security Agreement dated August 28, 1998,
between Borrower and Back Bay Capital LLC.
