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EXHIBIT 10.1
FINANCING AGREEMENT
Dated as of September 25, 1997
by and among
NORTON XxXXXXXXXX, INC.,
NORTON XxXXXXXXXX OF XXXXXX, INC.,
MISS XXXXX, INC.,
THE FINANCIAL INSTITUTIONS FROM TIME TO TIME PARTY HERETO,
NATIONSBANC COMMERCIAL CORPORATION,
as Collateral Agent
and
THE CIT GROUP/COMMERCIAL SERVICES, INC.,
as Administrative Agent.
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(i)
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS; CERTAIN TERMS...........................................................1
SECTION 1.01. Definitions...................................................................1
SECTION 1.02. Accounting and Other Terms....................................................22
SECTION 1.03. Time References...............................................................22
ARTICLE II THE LOANS.......................................................................22
SECTION 2.01. Commitments...................................................................22
SECTION 2.02. Loans.........................................................................23
SECTION 2.03. Making the Loans..............................................................23
SECTION 2.04. Notes; Repayment of Loans.....................................................24
SECTION 2.05. Funding and Settlement Procedures.............................................24
SECTION 2.06. Interest......................................................................26
SECTION 2.07. Reduction of Commitment; Prepayment of Loans..................................28
SECTION 2.08. Fees..........................................................................31
SECTION 2.09. Eurodollar Rate Not Determinable; Illegality or Impropriety...................31
SECTION 2.10. Indemnity.....................................................................32
SECTION 2.11. Continuation and Conversion of Loans..........................................33
SECTION 2.12. Taxes.........................................................................34
SECTION 2.13. Joint and Several Liability of the Borrowers..................................36
ARTICLE III LETTERS OF CREDIT...............................................................37
SECTION 3.01. Letter of Credit Guaranty.....................................................37
SECTION 3.02. Participations................................................................41
SECTION 3.03. Letters of Credit.............................................................42
ARTICLE IV FEES, PAYMENTS AND OTHER COMPENSATION............................................44
SECTION 4.01. Audit and Collateral Monitoring Fees..........................................44
SECTION 4.02. Payments; Computations and Statements.........................................44
SECTION 4.03. Sharing of Payments, Etc......................................................45
SECTION 4.04. Apportionment of Payments.....................................................46
SECTION 4.05. Increased Costs and Reduced Return............................................46
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ARTICLE V CONDITIONS OF EFFECTIVENESS, LETTER OF CREDIT
ISSUANCE AND LENDING..........................................................................48
SECTION 5.01. Conditions Precedent to Effectiveness.........................................48
SECTION 5.02. Conditions Precedent to Loans and Letters of Credit...........................52
ARTICLE VI REPRESENTATIONS AND WARRANTIES...................................................53
SECTION 6.01. Representations and Warranties................................................53
ARTICLE VII COVENANTS OF THE BORROWER......................................................60
SECTION 7.01. Affirmative Covenants.........................................................60
SECTION 7.02. Negative Covenants............................................................68
ARTICLE VIII MANAGEMENT, COLLECTION AND STATUS OF ACCOUNTS
RECEIVABLE AND OTHER COLLATERAL...............................................................78
SECTION 8.01. Management of Collateral......................................................78
SECTION 8.02. Accounts Receivable Documentation.............................................80
SECTION 8.03. Status of Accounts Receivable and Other Collateral............................80
SECTION 8.04. Collateral Custodian..........................................................81
ARTICLE IX THE AGENTS.....................................................................82
SECTION 9.01. Authorization and Action......................................................82
SECTION 9.02. Borrower's Default............................................................82
SECTION 9.03. Agents' Reliance, Etc.........................................................83
SECTION 9.04. CIT and NationsBanc...........................................................83
SECTION 9.05. Lender Credit Decision........................................................84
SECTION 9.06. Indemnification...............................................................84
SECTION 9.07. Successor Agents..............................................................84
SECTION 9.08. Collateral Matters............................................................85
ARTICLE X EVENTS OF DEFAULT..............................................................86
SECTION 10.01. Events of Default............................................................86
SECTION 10.02. Deposit for Letters of Credit................................................89
ARTICLE XI GUARANTY.......................................................................89
SECTION 11.01. Guaranty.....................................................................89
SECTION 11.02. Obligations Unconditional....................................................89
SECTION 11.03. Waivers......................................................................90
SECTION 11.04. Subrogation..................................................................90
SECTION 11.05. No Waiver; Remedies..........................................................91
SECTION 11.06. Stay of Acceleration.........................................................91
ARTICLE XII MISCELLANEOUS..................................................................91
SECTION 12.01. Termination..................................................................91
SECTION 12.02. Notices, Etc.................................................................92
SECTION 12.03. Amendments, Etc..............................................................94
SECTION 12.04. No Waiver; Remedies, Etc.....................................................94
SECTION 12.05. Expenses; Taxes; Attorneys' Fees.............................................94
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SECTION 12.06. Right of Set-off.............................................................96
SECTION 12.07. Severability.................................................................96
SECTION 12.08. Assignments and Participations...............................................96
SECTION 12.09. Counterparts.................................................................98
SECTION 12.10 Headings.....................................................................98
SECTION 12.11. Governing Law................................................................98
SECTION 12.12. WAIVER OF JURY TRIAL, ETC....................................................98
SECTION 12.13. Consent by the Agents, Lenders...............................................99
SECTION 12.14. No Party Deemed Drafter......................................................99
SECTION 12.15. Reinstatement; Certain Payments..............................................99
SECTION 12.16. Indemnification..............................................................100
SECTION 12.17. Binding Effect...............................................................100
SECTION 12.18. Releases of Collateral.......................................................101
SECTION 12.19. Confidentiality..............................................................101
(iii)
SCHEDULE 1.01A Lenders and Lenders' Commitments
SCHEDULE 1.01B Fiscal Year, Fiscal Month, Fiscal Quarter
SCHEDULE 1.01C Prior Season Inventory
SCHEDULE 3.03(c) Existing Letters of Credit
SCHEDULE 5.01(d)(v) Additional Pledged Stock
SCHEDULE 5.01(d)(xxi) Contractors
SCHEDULE 6.01(e) Inventory Locations
SCHEDULE 6.01(f) Subsidiaries
SCHEDULE 6.01(g) Litigation
SCHEDULE 6.01(j) ERISA
SCHEDULE 6.01(k) Taxes, Etc.
SCHEDULE 6.01(s) Operating Lease Obligations
SCHEDULE 6.01(y) Tradenames
SCHEDULE 6.01(aa) Material Contracts
SCHEDULE 7.02(a)(ii) Liens
SCHEDULE 7.02(b)(ii) Indebtedness
SCHEDULE 7.02(c)(iii) Guaranties
SCHEDULE 7.02(f)(ii) Investments
SCHEDULE 7.02(g) Capitalized Lease Obligations
SCHEDULE 7.02(k)(ii) Promissory Notes
SCHEDULE 7.02(m) Transactions with Affiliates
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EXHIBIT A Form of Revolving Credit Note
EXHIBIT B Form of Term Note
EXHIBIT C-1 Form of Subsidiary Guaranty
EXHIBIT C-2 Form of Borrower Guaranty
EXHIBIT D-1 Form of Borrower Security Agreement
EXHIBIT D-2 Form of Guarantor Security Agreement
EXHIBIT E-1 Form of Borrower Pledge Agreement
EXHIBIT E-2 Form of Parent Pledge Agreement
EXHIBIT F Form of Letter of Credit Application
EXHIBIT G Form of New York Counsel Opinion
EXHIBIT H Form of Local Counsel Opinion
EXHIBIT I Form of Assignment and Acceptance
EXHIBIT J Form of Notice of Borrowing
EXHIBIT K-1 Form of Monthly Borrowing Base Certificate
EXHIBIT K-2 Form of Weekly Borrowing Base Certificate
EXHIBIT L Form of Release Certificate
EXHIBIT M-1 Form of Subordinated Intercompany Term Note
EXHIBIT M-2 Form of Subordinated Intercompany Revolving Credit Note
(Squire)
EXHIBIT M-3 Form of Subordinated Intercompany Revolving Credit Note
(Miss Xxxxx)
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FINANCING AGREEMENT
FINANCING AGREEMENT, dated as of September 25, 1997, by and
among Norton XxXxxxxxxx, Inc., a Delaware corporation (the "Company"), Norton
XxXxxxxxxx of Xxxxxx, Inc., a New York corporation ("Squire"), Miss Xxxxx, Inc.,
a Delaware corporation formerly known as ME Acquisition Corp. ("Miss Xxxxx" and
together with Squire, each a "Borrower" and collectively the "Borrowers"), the
financial institutions from time to time party hereto (each a "Lender" and
collectively the "Lenders"), NationsBanc Commercial Corporation, as collateral
agent for the Lenders (in such capacity, the "Collateral Agent") and The CIT
Group/Commercial Services, Inc., as administrative agent for the Lenders (in
such capacity, the "Administrative Agent" and together with the Collateral
Agent, each an "Agent" and collectively the "Agents").
RECITALS
The Company and the Borrowers have asked the Lenders to extend
credit to the Borrowers consisting of (a) a term loan to Squire in the principal
amount of $15,000,000 and (b) a revolving credit facility to the Borrowers in an
aggregate principal amount not in excess of $125,000,000 at any time
outstanding, a portion of which may be utilized for letters of credit. The
proceeds of the term loan and the loans under the revolving credit facility
shall be used to refinance existing indebtedness of the Borrowers, to finance
the Acquisition (as hereinafter defined) and for general working capital
purposes of the Borrowers. The letters of credit will be used to finance the
purchase by the Borrowers of inventory and for other general working capital
purposes. The Lenders are severally, and not jointly, willing to extend such
credit to the Borrowers subject to the terms and conditions hereinafter set
forth. Accordingly, the Company, the Borrowers, the Lenders and the Agents
hereby agree as follows:
ARTICLE I
DEFINITIONS; CERTAIN TERMS
SECTION 1.01. Definitions. As used in this Agreement, the
following terms shall have the respective meanings indicated below, such
meanings to be applicable equally to both the singular and plural forms of such
terms:
"Account Debtor" means each debtor, customer or obligor in any
way obligated on or in connection with any Account Receivable.
"Accounts Receivable" means any and all rights of a Borrower
to payment for goods sold, including accounts, contract rights, general
intangibles and any and all such rights evidenced by chattel paper, instruments
or documents, whether due or to become due and whether or not earned by
performance, and whether now or hereafter acquired or arising in the future and
any proceeds arising therefrom or relating thereto.
"Acquisition" means the purchase by Miss Xxxxx of the Assets
from the Seller pursuant to the Acquisition Documents.
"Acquisition Agreement" means the Agreement of Purchase and
Sale dated as of the 29th day of August, 1997, as amended through the date
hereof, by and among the Seller, Terbem Limited, a British Virgin Islands
corporation, Bobst Investment Corp., a British Virgin Islands corporation, TCRI
Offshore Partners C.V., a Netherlands Antilles corporation, TCR International
Partners L.P., a Delaware limited partnership, Triumph Capital, X.X. XX, a
Delaware limited partnership, Xxxxxx Xxxxxxx, Xxxxxx Xxxxxxxx, Xxxxxx Xxxxxxxxx,
Xxxxxxxxx Xxxxxxx, Miss Xxxxx and the Company.
"Acquisition Documents" means the Acquisition Agreement and
all other documents entered into or delivered in connection with the Acquisition
Agreement or the Acquisition.
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"Action" has the meaning specified therefor in Section 12.13.
"Administrative Agent" has the meaning specified therefor in
the preamble hereto.
"Affiliate" means, as to any Person, any other Person that
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person. For purposes of
this definition, "control" of a Person means the power, directly or indirectly,
either to (i) vote 5% or more of the Capital Stock having ordinary voting power
for the election of directors of such Person or (ii) direct or cause the
direction of the management and policies of such Person whether by contract or
otherwise.
"Agents" has the meaning specified therefor in the preamble
hereto.
"Agent Advances" has the meaning specified therefor in Section
9.08.
"A Letter of Credit Obligations" means Letter of Credit
Obligations attributable to Letters of Credit issued for the account of Squire.
"A Revolving Credit Loan" means a Revolving Credit Loan made
by a Lender or the Administrative Agent to Squire.
"Assets" has the meaning specified therefor in the Acquisition
Agreement.
"Assignment and Acceptance" means an assignment and acceptance
entered into by an assigning Lender and an assignee and accepted by the
Administrative Agent, in accordance with Section 12.08 hereof and substantially
in the form of Exhibit I hereto.
"Assignment Agreement" means the Intercreditor Agreement and
Assignment of Factoring Proceeds dated September 25, 1997 among the Factor, the
Collateral Agent, the Administrative Agent, Squire and Miss Xxxxx, as the same
may be amended or otherwise modified from time to time.
"Availability" shall mean, at any time (i) with respect to the
Borrowers on a combined basis, the difference between (A) the lesser of (x) the
aggregate Borrowing Base Before Overadvance Amount of the Borrowers and (y) the
Total Revolving Credit Commitment and (B) the sum of (x) the aggregate
outstanding principal amount of all Revolving Credit Loans and (y) all Letter of
Credit Obligations, and (ii) with respect to any Borrower on an individual
basis, the lesser of (A) the difference between (x) the Borrowing Base Before
Overadvance Amount of such Borrower and (y) the sum of (1) the aggregate
principal amount of all Revolving Credit Loans of such Borrower and (2) the
aggregate Letter of Credit Obligations of such Borrower and (B) the difference
between (x) the Total Revolving Credit Commitment and (y) the sum of (1) the
aggregate outstanding principal amount of all Revolving Credit Loans and (2) the
aggregate Letter of Credit Obligations.
"Base Documentary L/C Fee" has the meaning specified therefor
in Section 3.03(b).
"Base Rate" means, for any day, the Prime Rate for such day.
"Base Rate Loan" means a Loan bearing interest at a rate
calculated based upon the Base Rate.
"Board" means the Board of Governors of the Federal Reserve
System of the United States.
"Borrower" and "Borrowers" each has the meaning specified
therefor in the preamble hereto.
"Borrowing Base" means with respect to a Borrower as of any
date the sum of (i) the Borrowing Base Before Overadvance Amount of such
Borrower and (ii) the Overadvance Amount allocated to such Borrower.
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"Borrowing Base Before Overadvance Amount" means with respect
to a Borrower as of any date the difference between (i) the sum of (A) 85% of
the Net Amount of Eligible Accounts Receivable of such Borrower and (B) 60% of
the value, determined at the lower of cost or market value in accordance with
GAAP, of such Borrower's Eligible Inventory and (ii) such reserves as the
Collateral Agent may deem appropriate in the exercise of its reasonable business
judgment based upon the lending practices of the Collateral Agent, consistent
with the practices customary in the commercial finance industry generally.
"Borrowing Base Certificate" means the certification of the
Borrowing Base in compliance with Section 7.01(a)(v) hereof, substantially in
the form of Exhibits K-1 and K-2 hereto, as applicable, setting forth the
calculation of the Borrowing Base and Availability for each Borrower on an
individual and combined basis.
"B Letter of Credit Obligations" means the Letter of Credit
Obligations attributable to Letters of Credit issued for the account of Miss
Xxxxx.
"B Revolving Credit Loan" means a Revolving Credit Loan made
by a Lender or the Administrative Agent to Miss Xxxxx.
"Business Day" means any day other than a Saturday, Sunday or
other day on which commercial banks in Xxx Xxxx Xxxx xxx Xxxxxxxxx, Xxxxx
Xxxxxxxx are required or authorized to close, provided, that with respect to the
borrowing, payment, conversion to or continuation of, or determination of
interest rate on, Eurodollar Loans, Business Day shall mean any Business Day on
which dealings in Dollars may be carried on in the interbank eurodollar markets
in New York City, Charlotte and London.
"Capital Guideline" means any law, rule, regulation, policy,
guideline or directive (whether or not having the force of law and whether or
not the failure to comply therewith would be unlawful) (i) regarding capital
adequacy, capital ratios, capital requirements, the calculation of a bank's
capital or similar matters, or (ii) affecting the amount of capital required to
be obtained or maintained by the Lenders, any Person controlling any Lender, or
the L/C Issuer or the manner in which the Lenders, any Person controlling any
Lender or the L/C Issuer allocate capital to any of their contingent liabilities
(including letters of credit), advances, acceptances, commitments, assets or
liabilities.
"Capital Stock" means any and all shares, interests,
participations, warrants, options or other equivalents (however designated) of
capital stock of a corporation or any and all equivalent ownership interests in
a Person (other than a corporation).
"Capitalized Lease" means any lease which is required under
GAAP to be capitalized on the balance sheet of the lessee.
"Capitalized Lease Obligations" means obligations for the
payment of rent for any real or personal property under leases or agreements to
lease that, in accordance with GAAP, have been or should be capitalized on the
books of the lessee and, for purposes hereof, the amount of any such obligation
shall be the capitalized amount thereof determined in accordance with such
principles.
"Change of Control" means (i) any person or group of persons
(within the meaning of Section 13 or 14 of the Securities Exchange Act of 1934,
as amended) shall have acquired beneficial ownership (within the meaning of Rule
13d-3 promulgated by the Securities and Exchange Commission under said Act) of
40% or more of the voting power of the then outstanding common stock of the
Company, (ii) during any period of 12 consecutive calendar months, individuals
who were directors of the Company on the first day of such period shall cease to
constitute a majority of the board of directors of the Company, provided that a
director who has resigned or is replaced during such time shall not be included
in any determination of whether a Change of Control has occurred pursuant to
this clause (ii) to the extent such director is replaced by a successor director
elected by a majority of those directors who were directors at the commencement
of such period, (iii) the Company shall cease to directly own and control, of
record and beneficially, 100% of the then outstanding Capital Stock of each
Borrower free and clear of all Liens other than, in the case of the Capital
Stock of Miss Xxxxx, the Lien of the Seller, (iv) either Xxxxxxx Xxxxxxxxx or
Xxxxx Xxxxxxxxx shall cease to
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manage and be involved in the day-to-day operations of the Company and Squire
and a successor, reasonably acceptable to the Agents, is not appointed within
180 days of the cessation of such management and involvement or (v) prior to the
earlier of September 27, 1999 and the date on which the Term Loan is repaid in
full, Xxxxxx Xxxxxxxx or Xxxxxx Xxxxxxx shall cease to manage and be involved in
the day-to-day operations of Miss Xxxxx and a successor, reasonably acceptable
to the Agents, is not appointed within 180 days of the cessation of such
management and involvement.
"CIT" means The CIT Group/Commercial Services, Inc., a New
York corporation.
"Collateral" means all of the property (tangible and
intangible) purported to be subject to the Lien purported to be created by any
mortgage, deed of trust, security agreement, pledge agreement, assignment or
other security document heretofore or hereafter executed by any Person as
security for all or any part of the Obligations.
"Collateral Agent" has the meaning specified therefor in the
preamble hereto.
"Commitment" means, with respect to each Lender, such Lender's
Revolving Credit Commitment and Term Loan Commitment.
"Company" has the meaning specified therefor in the preamble
hereto.
"Consolidated Current Assets" means, at a particular date, all
cash, cash equivalents, accounts and inventory of a Person and its Consolidated
Subsidiaries and all other items which would, in conformity with GAAP, be
included under current assets on a balance sheet of such Person and its
Consolidated Subsidiaries on a consolidated basis as at such date; provided,
however, for the purposes hereof (i) Accounts Receivable of the Borrowers shall
not be considered sold pursuant to the Factoring Agreements and will be included
in Consolidated Current Assets, (ii) the Inventory of Miss Xxxxx shall be
determined without giving effect to any purchase accounting reserves, and (iii)
prior to October 31, 1998, all barter credits arising from the going out of
business sales of Norty's Inc. shall be included as a current asset; provided,
further, that such amounts shall not include (A) any amounts for any
Indebtedness owing by an Affiliate to such Person or any of its Consolidated
Subsidiaries, unless such Indebtedness arose in connection with the sale of
goods or rendition of services in the ordinary course of business and would
otherwise constitute current assets in conformity with GAAP, (B) any shares of
stock issued by an Affiliate of such Person or any of its Consolidated
Subsidiaries or (C) the cash surrender value of any life insurance policy.
"Consolidated Current Liabilities" means, at a particular
date, all amounts which would, in conformity with GAAP, be included under
current liabilities on a balance sheet of a Person and its Consolidated
Subsidiaries on a consolidated basis, as at such date, but in any event
including, without limitation, the amounts of (i) all Indebtedness of such
Person or any of its Consolidated Subsidiaries payable on demand, or, at the
option of the Person to whom such Indebtedness is owed, not more than twelve
(12) months after such date, (ii) any payments in respect of any Indebtedness of
such Person or any of its Consolidated Subsidiaries (whether installment, serial
maturity, sinking fund payment or otherwise) required to be made not more than
twelve (12) months after such date, (iii) all accruals for federal or other
taxes measured by income payable within a twelve (12) month period and (iv) the
Revolving Credit Loans.
"Consolidated EBIT" means, for any Person and its Consolidated
Subsidiaries, for any period, the net income (or net loss) of such Person and
its Consolidated Subsidiaries for such period, plus (i) the sum, without
duplication, of (A) gross interest expense for such period minus gross interest
income for such period, (B) income tax expense, and (C) extraordinary or unusual
non-cash losses (provided such extraordinary or unusual losses do not at any
time result in a cash outlay by such Person), less (ii) extraordinary gains,
each determined on a consolidated basis in accordance with GAAP for such Person
and its Consolidated Subsidiaries.
"Consolidated EBITDA" means for any Person and its
Consolidated Subsidiaries, for any period, the net income (or net loss) of such
Person and its Consolidated Subsidiaries for such period, plus (i) the sum,
without duplication, of (A) gross interest expense for such period minus gross
interest income for
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such period, (B) income tax expense, (C) depreciation expense, (D) amortization
expense net of negative goodwill amortization, and (E) extraordinary or unusual
non-cash losses (provided such extraordinary or unusual losses do not at any
time result in a cash outlay by such Person), less (ii) extraordinary gains,
each determined on a consolidated basis in accordance with GAAP for such Person
and its Consolidated Subsidiaries.
"Consolidated Fixed Charges" means, for any Person and its
Consolidated Subsidiaries for any period, the sum of, without duplication (i)
Consolidated Net Interest Expense for such period, (ii) all principal of
Indebtedness for borrowed money of such Person or any of its Consolidated
Subsidiaries having a scheduled due date during such period (not including
mandatory prepayments pursuant to Section 2.07 hereof), (iii) cash dividends or
distributions paid by such Person or any of its Consolidated Subsidiaries (other
than dividends and distributions paid to the Company) during such period, (iv)
the total income tax liability actually payable by such Person or any of its
Consolidated Subsidiaries in respect of such period, (v) cash expenditures for
the repurchase of the Company's Capital Stock made during such period, and (vi)
cash capital expenditures of such Person and its Consolidated Subsidiaries made
during such period.
"Consolidated Net Interest Expense" means, for any Person and
its Consolidated Subsidiaries for any period, gross interest expense of such
Person and its Consolidated Subsidiaries for such period determined in
conformity with GAAP less the following for such Person and its Consolidated
Subsidiaries determined in conformity with GAAP (i) the sum of (a) interest
income for such period and (b) gains for such period on Hedging Agreements (to
the extent not included in interest income above and to the extent not deducted
in the calculation of such gross interest expense), plus the following for such
Person and its Consolidated Subsidiaries determined in conformity with GAAP (ii)
the sum of (a) losses for such period on Hedging Agreements (to the extent not
included in such gross interest expense) and (b) the expending of upfront costs
or fees for such period associated with Hedging Agreements (to the extent not
included in gross interest expense).
"Consolidated Subsidiary" of a Person at any time shall mean
those Subsidiaries of such Person whose accounts are or should in accordance
with GAAP be consolidated with those of such Person.
"Consolidated Tangible Net Worth" means, with respect to a
Person and its Consolidated Subsidiaries, the excess of (i) the aggregate net
book value of the assets (other than goodwill, unamortized non-compete
agreements, organization costs, capitalized financing costs and other intangible
assets classified as such in accordance with GAAP and, prior to October 31,
1998, including the barter credits arising from the going out of business sales
of Norty's Inc.) of such Person and its Consolidated Subsidiaries on a
consolidated basis after adjustments in accordance with GAAP (including, without
limitation, reserves for doubtful receivables, obsolescence, depreciation and
amortization and any valuation allowance against tax assets and excluding the
amount of any write-up or revaluation of any asset and the effect of any
purchase accounting reserves applicable to the Inventory of Miss Xxxxx) over
(ii) the Consolidated Total Liabilities of such Person and its Consolidated
Subsidiaries on a consolidated basis, in each case computed and consolidated in
accordance with GAAP.
"Consolidated Total Liabilities" means, for a Person and its
Consolidated Subsidiaries, at any date, without duplication, all obligations
which in conformity with GAAP would be included in determining total liabilities
as shown on the liabilities side of a balance sheet of such Person and its
Consolidated Subsidiaries.
"Default" means an event which, with the giving of notice or
the lapse of time or both, would constitute an Event of Default.
"Documents" means the Acquisition Documents and the Loan
Documents.
"Dollar", "Dollars" and the symbol "$" means lawful money of
the United States of America.
"Early Termination Fee" means a fee equal to (i) the sum of
(A) the aggregate unpaid
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principal amount of the Loans and (B) the Letter of Credit Obligations, in each
case outstanding at the time of the termination of the Total Revolving Credit
Commitment, multiplied by (ii) (A) prior to the time that all principal of and
interest on the Term Loans has been paid in full, (x) 3%, if the Total Revolving
Credit Commitment is terminated on or before September 25, 1998, (y) 1.5%, if
the Total Revolving Credit Commitment is terminated after September 25, 1998 and
before September 27, 1999, and (z) .75%, if the Total Revolving Credit
Commitment is terminated after September 27, 1999 and before September 25, 2000
or (B) after the time that all principal of and interest on the Term Loans has
been paid in full, (x) 3%, if the Total Revolving Credit Commitment is
terminated on or before September 25, 1998 and (y) .75%, if the Total Revolving
Credit Commitment is terminated after September 25, 1998 and before September
27, 1999.
"Earn Out Payment" has the meaning specified therefor in the
Acquisition Agreement.
"Effective Date" has the meaning specified therefor in Article
V hereof.
"Eligible Accounts Receivable" means, with respect to any
Borrower, the Accounts Receivable of such Borrower which are and at all times
continue to be, reasonably acceptable to the Collateral Agent in all respects.
Criteria for eligibility may be established and revised from time to time solely
by the Collateral Agent in the exercise of its reasonable business judgment
based upon the lending practices of the Collateral Agent consistent with those
criteria customary in the commercial finance industry generally. Notwithstanding
the foregoing, Accounts Receivable of a Borrower shall be deemed to be
acceptable and eligible if such Accounts Receivable are generated in the
ordinary course of business of such Borrower and are purchased and credit
approved and continue to be credit approved, in each case by Factor, under the
relevant Factoring Agreement and are and continue to be subject to the
Assignment Agreement. In addition, Accounts Receivable that are purchased and
not credit approved (including as the result of a withdrawal of credit approval)
by Factor under the relevant Factoring Agreement may, in the reasonable business
judgment of the Collateral Agent, be deemed to be eligible if: (i) delivery of
the merchandise has been completed; (ii) no return, rejection or repossession
has occurred; (iii) the merchandise has been accepted by the Account Debtor
without dispute, setoff, defense or counterclaim; (iv) such Account Receivable
is (A) owned by a Borrower free and clear of any Lien, other than in favor of
the Collateral Agent or the Factor under the relevant Factoring Agreement or (B)
if purchased by the Factor, subject to the Assignment Agreement, and in each
such case otherwise continues to be in full conformity with any and all
representations and warranties made by such Borrower to the Agents and the
Lenders with respect thereto in the Loan Documents; (v) such Account Receivable
is unconditionally payable in Dollars within 90 days from the invoice date,
other than Accounts Receivable of Miss Xxxxx existing on the Effective Date for
which Modecraft Fashion is the Account Debtor, and is not evidenced by a
promissory note, chattel paper or any other instrument or document; (vi) no more
than 60 days have elapsed from the invoice due date and no more than 90 days
have elapsed from the invoice date; (vii) the Account Debtor with respect
thereto is not an Affiliate of any Borrower or any Guarantor; (viii) such
Account Receivable does not constitute an obligation of the United States or any
other Governmental Authority; (ix) the Account Debtor (or the applicable office
of the Account Debtor) with respect thereto is located in the continental United
States, unless the Account Receivable is supported by a letter of credit or
other similar obligation satisfactory to the Collateral Agent; (x) the Account
Debtor with respect thereto is not also a supplier to or creditor of a Borrower
or Guarantor, unless such supplier or creditor has executed a no-offset letter
satisfactory to the Collateral Agent; (xi) not more than 50% of the aggregate
amount of all Accounts Receivable of the Account Debtor with respect to such
Account Receivable have remained unpaid 60 days past the invoice due date or 90
days past the invoice date; (xii) the Account Debtor is not the subject of a
"Bankruptcy Proceeding"; for purposes hereof an Account Debtor is subject to a
"Bankruptcy Proceeding" if such Account Debtor has filed a petition for
bankruptcy or any other relief under the United States Bankruptcy Code or any
other law relating to bankruptcy, insolvency, reorganization or relief of
debtors, made an assignment for the benefit of creditors, had filed against it
any petition or other application for relief under the United States Bankruptcy
Code or any such other law, has failed, suspended business operations, become
insolvent, called a meeting of its creditors for the purpose of obtaining any
financial concession or accommodation, or had or suffered to be appointed a
receiver or a trustee for all or a significant portion of its assets or affairs;
and (xiii) the Collateral Agent is, and continues to be, reasonably satisfied
with the credit standing of the Account Debtor in relation to the amount of
credit extended.
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"Eligible Amount of Prior Season Inventory" means, with
respect to each shipping season, the Prior Season Inventory of Miss Xxxxx during
such shipping season or seasons valued at the lower of cost or market value in
accordance with GAAP in an amount equal to the sum of (i) 75% of the Prior
Season Inventory for the corresponding shipping season or seasons of the
immediately preceding year not subject to a confirmed purchased order, (ii) 50%
of the Prior Season Inventory from the immediately preceding year (not covered
by clause (i) above) not subject to a confirmed purchase order, and (iii) 100%
of all other Prior Season Inventory (not covered by clauses (i) or (ii) above)
subject to a confirmed purchase order. By way of illustration see Schedule 1.01C
attached hereto.
"Eligible Inventory" means, with respect to any Borrower, all
finished goods and uncut piece goods Inventory of such Borrower which meets all
of the following specifications: (i) the Inventory is owned by such Borrower
free and clear of any existing Lien, other than that of the Collateral Agent and
the Lenders under the Loan Documents, it is not held on consignment and may be
lawfully sold and it continues to be in full conformity with any representations
and warranties made in this Agreement by such Borrower to the Agents and the
Lenders with respect thereto; (ii) such Borrower has the right to assignment
thereof and the power to grant Liens thereon and security interests therein;
(iii) the Inventory arose or was acquired in the ordinary course of the business
of such Borrower and does not represent damaged goods; (iv) no Account
Receivable or, except as permitted by clause (vi)(B) below, document of title
has been created or issued with respect to such Inventory; (v) the Inventory is
readily marketable for sale by such Borrower; (vi) the Inventory is (A) located
in one of the locations in the United States listed on Part B of Schedule
6.01(e) hereto which is designated with an asterisk or such other locations in
the continental United States which is approved in writing by the Collateral
Agent, which approval will not be unreasonably withheld or delayed or (B) "in
transit" Inventory shipped or to be shipped as finished goods or uncut piece
goods Inventory under a Letter of Credit issued by the L/C Issuer pursuant to
this Agreement to a location in the United States described in the clause (vi)
(A) above; (vii) the Inventory does not represent raw materials (other than
uncut piece goods), trim, work in process, supplies or samples; (viii) if the
Inventory is sold under a licensed trademark, the Collateral Agent shall have
entered into a licensor waiver letter, in form and substance satisfactory to the
Collateral Agent, with the licensor with respect to the rights of the Collateral
Agent to use the trademark to sell or otherwise dispose of such Inventory; (ix)
the Inventory is not Prior Season Inventory, other than, in the case of Miss
Xxxxx, Prior Season Inventory in an amount of up to the Eligible Amount of Prior
Season Inventory; and (x) the Inventory is and at all times shall continue to be
reasonably acceptable to the Collateral Agent in all respects in the exercise of
its reasonable business judgment based upon the lending practices of the
Collateral Agent, consistent with the criteria customary in the commercial
finance industry generally.
"Employee Plan" means an employee benefit plan (other than a
Multiemployer Plan) covered by Title IV of ERISA and maintained (or was
maintained at any time during the six (6) calendar years preceding the date of
any borrowing hereunder) for employees of a Borrower or any of their ERISA
Affiliates.
"Environmental Actions" refers to any complaint, summons,
citation, notice, directive, order, claim, litigation, investigation, judicial
or administrative proceeding, judgment, letter or other written communication
from any governmental agency, department, bureau, office or other authority, or
any third party involving violations of Environmental Laws or Releases of
Hazardous Materials (i) from any assets, properties or businesses of any Loan
Party or any predecessor in interest; or (ii) from or onto any adjoining
properties or businesses; or (iii) from or onto any facilities which received
Hazardous Materials generated by any Loan Party or any predecessor in interest.
"Environmental Law" means the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. Section 9601, et seq.), the
Hazardous Materials Transportation Act (49 U.S.C. Section 1801, et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. Section 6901, et seq.), the
Federal Water Pollution Control Act (33 U.S.C. Section 1251 et seq.), the Clean
Air Act (42 U.S.C. Section 7401 et seq.), the Toxic Substances Control Act (15
U.S.C. Section 2601 et seq.) and the Occupational Safety and Health Act (29
U.S.C. Section 651 et seq.), as such laws may be amended or supplemented from
time to time, and any other present or future federal, state, local or foreign
statute, ordinance, rule, regulation, order, judgment, decree, permit, license
or other binding determination of any Governmental Authority imposing liability
or establishing standards of conduct for protection of the environment.
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"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and, unless the context otherwise requires,
the rules and regulations promulgated thereunder from time to time.
"ERISA Affiliate" means, with respect to any Person, any trade
or business (whether or not incorporated) which is a member of a group of which
such Person is a member and which would be deemed to be a "controlled group"
within the meaning of Sections 414(b), (c), (m) and (o) of the Internal Revenue
Code.
"Eurodollar Base Rate" means, with respect to each day during
each Interest Period pertaining to a Eurodollar Loan, the rate of interest
published in The Wall Street Journal, Eastern Edition, two Business Days prior
to such Interest Period as the "London Interbank Offered Rate" applicable to
one, three or six months, as selected by a Borrower. In the event that The Wall
Street Journal, Eastern Edition is not published or such rate does not appear in
The Wall Street Journal, Eastern Edition, the Eurodollar Base Rate shall be the
rate determined by the Administrative Agent to be the rate at which deposits in
Dollars are offered by NationsBank, N.A. to first class banks in the interbank
eurodollar market where the eurodollar and foreign currency and exchange
operations in respect of its eurodollar loans are then being conducted at
approximately 11:00 A.M., New York City time, two Business Days prior to the
beginning of such Interest Period, in an amount approximately equal to the
principal amount of the Eurodollar Loan to which such Interest Period is to
apply and for a period of time comparable to such Interest Period.
"Eurodollar Loan" means a Loan bearing interest based on the
Eurodollar Rate.
"Eurodollar Rate" means with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, a rate per annum determined for
such day in accordance with the following formula (rounded upward to the nearest
1/100 of 1%):
Eurodollar Base Rate
1.00 - Reserve Requirements
"Evergreen Letters of Credit" shall have the meaning specified
therefor in Section 3.01(b).
"Event of Default" means any of the events set forth in
Section 10.01 hereof.
"Excess Cash Flow" means, for any fiscal period of the Company
(i) net income (or net loss) of the Company and its Consolidated Subsidiaries
for such period, plus (ii) all non-cash charges of the Company and its
Consolidated Subsidiaries deducted in arriving at such net income (or net loss)
for such period, less (iii) all non-cash credits of the Company and its
Consolidated Subsidiaries included in arriving at such net income (or net loss)
for such period, less (iv) all scheduled and mandatory cash principal payments
on the Loans and optional cash principal payments on the Loans made during such
period (but, in the case of the Revolving Credit Loans, only to the extent that
the Total Revolving Credit Commitment is permanently reduced by the amount of
such payments) during such period, less (v) the cash portion of capital
expenditures made by the Company and its Consolidated Subsidiaries during such
period to the extent permitted to be made under this Agreement, less (vi) cash
expenditures made by the Company for the repurchase of its Capital Stock to the
extent permitted to be made under this Agreement, less (vii) cash expenditures
made by Miss Xxxxx during such period to satisfy the Earn Out Payment.
"Existing Letters of Credit" has the meaning assigned to such
term in Section 3.03(c) hereof.
"Factor" means NationsBanc in its capacity as factor under
each Factoring Agreement and shall include CIT as a participant in each
Factoring Agreement.
"Factoring Agreements" means (i) the Amended and Restated
Factoring Agreement dated as of September 25, 1997 between the Factor and
Squire, and (ii) the Factoring Agreement dated as of September 25, 1997 between
the Factor and Miss Xxxxx.
"Fall Shipping Season" means, with respect to Miss Xxxxx, the
shipping season beginning on July 1 and ending on November 30 of each Fiscal
Year.
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"Federal Funds Rate" means, for any period, a fluctuating
interest rate per annum equal for each day during such period of 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 on the
next succeeding 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 the
Administrative Agent from three Federal funds brokers of recognized standing
selected by it.
"Fee Letter" means the letter agreement, dated as of the date
hereof, among the Company, the Borrowers and the Agents obligating the Borrowers
to jointly and severally pay certain fees to the Agents for their account in
connection with this Agreement, as such letter agreement may be modified,
supplemented or amended from time to time.
"Final Maturity Date" means the date this Agreement is
terminated pursuant to Section 12.01 hereof.
"Financial Statements" means (i) the audited financial
statements of the Seller for its fiscal year ended January 31, 1997 and (ii) the
unaudited consolidated financial statements of the Company and its Consolidated
Subsidiaries for the nine month period ended August 2, 1997.
"Fiscal Month" means the fiscal months of the Company and its
Consolidated Subsidiaries as set forth on Part B of Schedule 1.01B hereto.
"Fiscal Quarter" means the fiscal quarters of the Company and
its Consolidated Subsidiaries as set forth on Part C of Schedule 1.01B hereto.
"Fiscal Year" means the fiscal year of the Company and its
Consolidated Subsidiaries as set forth on Part A of Schedule 1.01B hereto.
"GAAP" means generally accepted accounting principles in
effect from time to time in the United States, applied on a consistent basis,
provided that for the purposes of Section 7.02(p) and the definitions used
therein, "GAAP" shall mean generally accepted accounting principles in effect on
the date hereof and consistent with those used in the preparation of the
Financial Statements.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof and any department, commission,
board, bureau, instrumentality, agency or other entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Guaranties" means (i) the guaranty made by the Company
contained in Article XI hereof and (ii) each guaranty, substantially in the form
of Exhibits C-1 and C-2 hereto, made by a Guarantor (other than the Company) in
favor of the Collateral Agent for the benefit of the Lenders guaranteeing the
Obligations, as the same may be amended, modified or supplemented from time to
time.
"Guarantors" means the Company, Squire, Miss Xxxxx, Norty's,
Inc. and all Persons which hereafter guarantee, pursuant to Section 7.01(b)
hereof or otherwise, all or any part of the Obligations.
"Hazardous Materials" shall include (i) any element, compound,
or chemical that is defined, listed or otherwise classified as a contaminant,
pollutant, toxic pollutant, toxic or hazardous substances, extremely hazardous
substance or chemical, hazardous waste, special waste, or solid waste under
Environmental Laws; (ii) petroleum and its refined products; (iii)
polychlorinated biphenyls; (iv) any substance exhibiting a hazardous waste
characteristic including but not limited to corrosivity, ignitability, toxicity
or reactivity as well as any radioactive or explosive materials; and (v) any raw
materials, building components, including but not limited to asbestos-containing
materials and manufactured products containing Hazardous Materials.
"Hedging Agreement" means any interest rate swap, collar, cap,
floor or a forward rate agreement or other agreement regarding the hedging of
interest rate risk exposure executed in connection with hedging the interest
rate exposure of the Borrowers, and any confirming letter executed pursuant to
such agreement, all as amended or supplemented from time to time.
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"Holiday Shipping Season" means, with respect to Miss Xxxxx,
the shipping season beginning on October 1 and ending December 31 of each Fiscal
Year.
"Indebtedness" means as to any Person, without duplication,
(i) indebtedness for borrowed money; (ii) indebtedness for the deferred purchase
price of property or services (other than current trade payables incurred in the
ordinary course of business and payable in accordance with customary practices);
(iii) indebtedness evidenced by bonds, debentures, notes or other similar
instruments (other than performance, surety and appeal or other similar bonds
arising in the ordinary course of business); (iv) obligations and liabilities
secured by a Lien upon property owned by such Person, whether or not owing by
such Person and even though such Person has not assumed or become liable for the
payment thereof; (v) obligations and liabilities directly or indirectly
guaranteed by such Person; (vi) obligations or liabilities created or arising
under any conditional sales contract or other title retention agreement with
respect to property used and/or acquired by such Person, even though the rights
and remedies of the lessor, seller and/or lender thereunder are limited to
repossession of such property; (vii) Capitalized Lease Obligations; (viii) all
liabilities in respect of letters of credit, acceptances and similar obligations
created for the account of such Person, and (ix) net liabilities of such Person
under: (A) Hedging Agreements and (B) foreign currency exchange agreements, each
calculated on a basis reasonably satisfactory to the Agents and in accordance
with accepted practice.
"Indemnitees" has the meaning specified therefor in Section
12.16.
"Interest Period" means (i) with respect to any portion of the
Term Loan that is a Eurodollar Loan, the period commencing on the borrowing date
or the date of any continuation of or conversion into such Eurodollar Loan, as
the case may be, and ending three or six months thereafter and (ii) with respect
to a Revolving Credit Loan that is a Eurodollar Loan, the period commencing on
the borrowing date or the date of any continuation or conversion into such
Eurodollar Loan, as the case may be, and ending one or three months thereafter,
in each case as selected by the relevant Borrower in the applicable notice given
to the Administrative Agent pursuant to Sections 2.03 or 2.11 hereof; provided
that (i) each Interest Period shall begin on the first Business Day of a month
and end on the first Business Day of a month, (ii) no Interest Period for any
Eurodollar Loan shall end after the Final Maturity Date in the case of the
Revolving Credit Loans or October 2, 2000 in the case of the Term Loan, (iii)
with respect to Revolving Credit Loans, no more than five (5) Interest Periods
in the aggregate for the Borrowers may exist at any one time and only the Loans
of a single Borrower may be included in a single Interest Period and (iv) with
respect to the Term Loan, no more than one (1) Interest Period may exist at any
one time.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended from time to time.
"Inventory" means all goods and merchandise of a Borrower
including, but not limited to, all raw materials, work in process, piece goods,
trim, finished goods, materials and supplies of every nature used or usable in
connection with the manufacture, shipping, storing, advertising or sale of such
goods and merchandise, whether now owned or hereafter acquired and all such
property the sale or other disposition of which would give rise to Accounts
Receivable.
"L/C Issuer" means NationsBank, N.A. and, in the case of
certain Existing Letters of Credit, The Chase Manhattan Bank, or such other bank
as the Agents may select in their sole and absolute discretion.
"L/C Subfacility" means that portion of the Total Revolving
Credit Commitment equal to $70,000,000, or such other amount as shall be agreed
to in writing by the Agents, the Lenders and the Borrowers.
"Ledger Debt" means indebtedness owing by a Borrower to the
Factor by reason of such Borrower's purchases from other entities factored by
the Factor, provided that the Factor shall include CIT, as a participant of the
Factor in each Factoring Agreement .
"Lender" has the meaning specified therefor in the preamble
hereto.
"Letter of Credit" has the meaning specified therefor in
Section 3.01(a) hereof.
"Letter of Credit Application" has the meaning specified
therefor in Section 3.01(a) hereof.
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"Letter of Credit Guaranty" means one or more guaranties by
NationsBanc or, in the case of certain Existing Letters of Credit, CIT in favor
of the L/C Issuer guaranteeing the Borrowers' obligations to the L/C Issuer
under a reimbursement agreement, Letter of Credit Application or other like
document in respect of any Letters of Credit.
"Letter of Credit Obligations" means, at any time and without
duplication, the sum of (i) the outstanding Reimbursement Obligations at such
time, plus (ii) the aggregate maximum amount available for drawing under the
Letters of Credit outstanding at such time, plus (iii) all amounts for which
NationsBanc or CIT may be liable to the L/C Issuer pursuant to the Letter of
Credit Guaranty in connection with any steamship guaranty, airway release,
indemnity or delivery order issued by the L/C Issuer at the request of or for
the benefit of a Borrower, in each case as calculated by the L/C Issuer.
"Lien" shall mean any mortgage, deed of trust, pledge, lien,
security interest, charge or other encumbrance or security arrangement of any
nature whatsoever, including but not limited to any conditional sale or title
retention arrangement, and any assignment, deposit arrangement or lease intended
as, or having the effect of, security.
"Loan" means any Revolving Credit Loan or Term Loan made by a
Lender or the Administrative Agent to a Borrower pursuant to Article II hereof.
"Loan Account" means a separate account for each Borrower
maintained at the Payment Office of the Administrative Agent in the name of a
Borrower in which such Borrower will be charged with all Loans made to, and all
other Obligations incurred by, such Borrower or such other accounts as the
Administrative Agent shall designate from time to time.
"Loan Documents" means this Agreement, the Notes, the
Guaranties, the Security Agreements, the Pledge Agreements, the Assignment
Agreement, the Fee Letter, the Subordination Agreement, the Letter of Credit
Applications and all other instruments, agreements and other documents executed
and delivered pursuant hereto or thereto.
"Loan Parties" means each of the Company, the Borrowers and
the other Guarantors.
"Material Adverse Effect" means a material adverse effect upon
(i) the business, properties, operations, or condition (financial or otherwise)
of any Borrower or of the Loan Parties taken as a whole but excluding an event
or condition that has a material adverse effect solely upon general economic
conditions or the apparel industry generally and not upon the business,
operation or condition (financial or otherwise) of any Borrower or of the Loan
Parties taken as a whole, (ii) the ability of any Borrower or of the Loan
Parties taken as a whole to perform its or their obligations hereunder or under
any other Loan Document to which any of such Persons is a party, (iii) the Lien
arising under the Loan Documents on any Collateral or (iv) the rights, powers
and remedies of the Agents and the Lenders under this Agreement or any other
Loan Document or the legality, validity or enforceability of this Agreement or
any other Loan Document.
"Material Contract" means, with respect to any Person, each
contract to which such Person is a party involving aggregate consideration
payable to or by such Person of $500,000 or more (other than contracts that by
their terms may be terminated by any party thereto in the ordinary course of its
business upon less than 60 days' notice) or otherwise material to the business,
condition (financial or otherwise), operations, performance, properties or
prospects of such Person.
"Miss Xxxxx" has the meaning specified therefor in the
preamble hereto.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA for which a Borrower or any ERISA Affiliate has
contributed to, or has been obligated to contribute to, at any time during the
six (6) years preceding the date hereof.
"NationsBanc" means NationsBanc Commercial Corporation, a
Georgia corporation.
"Net Amount of Eligible Accounts Receivable" means the
aggregate unpaid invoice amount of
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Eligible Accounts Receivable less, without duplication (i) in the case of
Accounts Receivable not purchased by the Factor under a Factoring Agreement,
sales, excise or similar taxes, returns, discounts, chargebacks, claims, advance
payments, credits and allowances of any nature at any time issued, owing,
granted, outstanding, available or claimed, and (ii) in the case of Accounts
Receivable purchased by a Factor under a Factoring Agreement and sums due under
a Factoring Agreement, deductions for factoring charges, discounts, estimated
anticipation, chargebacks based upon disputes and returns, chargebacks of
department risk accounts purchased with recourse, and all other charges, offsets
and reserves under a Factoring Agreement.
"Net Proceeds" means (a) with respect to the sale or other
disposition of any asset by the Company or any of its Subsidiaries (including in
connection with any sale-leaseback), the excess, if any, of (i) the aggregate
amount received in cash (including any cash received by way of deferred payment
pursuant to a note receivable, other non-cash consideration or otherwise, but
only as and when such cash is so received) in connection with such sale or other
disposition, over (ii) the sum of (A) the principal amount of any Indebtedness
which is secured by any such asset (other than Indebtedness assumed by the
purchaser of such asset) or which is required to be, and is, repaid in
connection with the sale or other disposition thereof (other than Indebtedness
hereunder), (B) the reasonable out-of-pocket expenses and fees incurred by the
Company or its Subsidiaries in connection with such sale or other disposition
(but only to the extent that such out-of-pocket expenses and fees, if paid to an
Affiliate of the Company (other than legal fees and expenses), are approved by
the Agents in their sole discretion exercised reasonably), and provided that all
such expenses and fees are set forth on a certificate provided to the Agents,
and (C) federal and state taxes incurred in connection with such sale or other
disposition, whether payable at such time or thereafter and (b) with respect to
the sale or other disposition of any Capital Stock or debt security by the
Company or any of its Subsidiaries, the excess of (i) the aggregate amount
received in cash (including any cash received by way of deferred payment
pursuant to a note receivable, other non-cash consideration or otherwise, but
only as and when such cash is so received) in connection with such sale or other
disposition, over (ii) the sum of (A) the reasonable fees, commissions,
discounts and other out-of-pocket expenses incurred by the Company or its
Subsidiaries in connection with such sale or other disposition (but only to the
extent such fees, commissions and expenses, if paid to an Affiliate of the
Company (other than legal fees and expenses), are approved by the Agents in
their sole discretion exercised reasonably and provided that all such fees,
commissions and expenses are set forth on a certificate provided to the Agents)
and (B) federal and state taxes incurred in connection with such sale or other
disposition, whether payable at such time or thereafter.
"Notes" means the Revolving Credit Notes and the Term Notes.
"Notice of Borrowing" has the meaning specified therefor in
Section 2.03 hereof.
"Obligations" means (i) the obligations of each Borrower to
pay, as and when due and payable (by scheduled maturity or otherwise), all
amounts from time to time owing by it in respect of any Loan Document to which
it is a party, whether for principal, interest (including, without limitation,
all interest that accrues after the commencement of any case, proceeding or
other action relating to bankruptcy, insolvency or reorganization of any
Borrower, whether or not a claim for post-filing interest is allowed in such
proceeding), Letter of Credit Obligations, fees, commissions, expense
reimbursements, indemnifications or otherwise and all Ledger Debt, and (ii) the
obligations of each Borrower to perform or observe all of its other obligations
from time to time existing under any Loan Document to which it is a party.
"Operating Lease Obligations" means all obligations for the
payment of rent for any real or personal property under leases or agreements to
lease, other than Capitalized Lease Obligations.
"Other Taxes" shall have the meaning specified therefor in
Section 2.12 hereto.
"Overadvance Amount" means (i) for the Borrowers on a combined
basis, an amount (A) up to $10,000,000 on the last day of any Fiscal Month, (B)
up to $20,000,000 at any time (other than the last day of such Fiscal Month)
during the August, September and October Fiscal Months and (C) up to $15,000,000
at any time (other than the last day of such Fiscal Month) during any other
Fiscal Month, which amount shall be allocated between the Borrowers by the
Administrative Agent pursuant to the terms of Section 2.01(b) hereof and (ii)
for each Borrower on an individual basis, the portion of the relevant amount set
forth in clause (i) above allocated by the Administrative Agent to such Borrower
pursuant to Section 2.01(b) hereof.
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"Payment Office" means the Administrative Agent's offices
located at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, XX 00000, or such other
offices as the Administrative Agent may designate and, when used in connection
with any payments made to the Administrative Agent, shall mean an account in the
name of the Administrative Agent designated to the Borrowers and the Lenders
from time to time into which the Borrowers and the Lenders shall make all
payments to the Administrative Agent under this Agreement.
"Permitted Disposition" has the meaning specified therefor in
Section 12.18.
"Permitted Investments" means (i) 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 or marketable direct obligations issued or unconditionally
guaranteed by any State or agency thereof and backed by the full faith and
credit of such State, in each case maturing within one year from the date of
acquisition thereof; (ii) commercial paper, maturing not more than 270 days
after the date of issue rated P-1 by Xxxxx'x Investors Service, Inc. or A-1 by
Standard & Poor's Ratings Group, (iii) overnight bank deposits, certificates of
deposit and bankers' acceptances in each case maturing not more than 270 days
after the date of issue, issued by any Lender or issued by commercial banking
institutions, and money market or time or demand deposit accounts maintained at
any Lender or commercial banking institutions each commercial banking
institutions (other than any Lender) of which is a member of the Federal Reserve
System and has a combined capital and surplus and undivided profits of not less
than $500,000,000, and (iv) repurchase agreements having maturities of not more
than 90 days from the date of acquisition which are entered into with the
commercial banking institutions described in clause (iii) above and which are
secured by readily marketable direct obligations of the Government of the United
States of America or any agency thereof.
"Permitted Liens" shall have the meaning specified therefor in
Section 7.02(a) hereto.
"Person" means an individual, corporation, limited liability
company, partnership, association, joint-stock company, trust, unincorporated
organization, joint venture or Governmental Authority.
"Pledge Agreements" means the Pledge and Security Agreements
made by each of the Company and the Borrowers in favor of the Collateral Agent,
each in the form of Exhibits E-1 or E-2 hereto, as applicable, as the same may
be amended or otherwise modified from time to time.
"Post-Default Rate" means a rate of interest per annum equal
to the rate of interest otherwise in effect plus 2% or, if no other rate of
interest is in effect, the Base Rate plus 2.5%.
"Prime Rate" means the rate of interest publicly announced by
NationsBank, N.A. in Charlotte, North Carolina from time to time as its prime
rate. The prime rate is determined from time to time by NationsBank, N.A. as a
means of pricing some loans to its borrowers and neither is tied to any external
rate of interest or index, nor necessarily reflects the lowest rate of interest
actually charged by NationsBank, N.A. to any particular class or category of
customers. Each change in the Prime Rate shall be effective on the first day of
the month following the date such change is announced.
"Prior Season Inventory" means, during any shipping season of
Miss Xxxxx, finished goods Inventory that is manufactured to be shipped in the
shipping seasons of Miss Xxxxx prior to the current shipping season of Miss
Xxxxx.
"Pro Rata Share" means, with respect to any Lender, a fraction
(expressed as a percentage), the numerator of which shall be the amount of such
Lender's Commitment and the denominator of which shall be the Total Commitment,
provided that, if the Commitments have been reduced to zero, the numerator shall
be the aggregate unpaid principal amount of such Lender's Loans and interest in
Letter of Credit Obligations and the denominator shall be the aggregate unpaid
principal amount of all of the Loans and Letter of Credit Obligations.
"Reimbursement Obligations" means the aggregate joint and
several obligations of the Borrowers to reimburse NationsBanc, CIT and the
Lenders for amounts payable by NationsBanc, CIT or the Lenders under a Letter of
Credit Guaranty in respect of any drawing made under any Letter of Credit,
together with interest thereon as provided in Section 2.06.
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"Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, seeping,
migrating, dumping, or disposing of any Hazardous Material (including the
abandonment or discarding of barrels, containers, and other closed receptacles
containing any Hazardous Material) into the indoor or outdoor environment,
including ambient air, soil, surface or ground water.
"Release Certificate" has the meaning specified therefor in
Section 12.18.
"Remedial Action" shall mean all actions taken to (i) monitor,
assess, evaluate, investigate, clean up, remove, treat, remediate or contain or
in any way address Hazardous Materials in the indoor or outdoor environment,
(ii) prevent, mitigate or minimize any Release or threatened Release so that the
Release or threatened Release does not migrate or endanger or threaten to
endanger public health or welfare or the environment or (iii) perform
pre-remedial investigations and studies, and post remedial operation and
maintenance activities or any other actions authorized by 42 USC Section 9601.
"Reportable Event" means an event described in Section 4043 of
ERISA (other than an event not subject to the provision for 30-day notice to the
Pension Benefit Guaranty Corporation under the regulations promulgated under
such Section).
"Required Lenders" means, at any time, Lenders whose Pro Rata
Shares aggregate at least 60%.
"Reserve Requirements" means, for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the rates (expressed as
a decimal fraction) of reserve requirements in effect on such day (including,
without limitation, basic, supplemental, marginal and emergency reserves under
any regulations of the Board or other Governmental Authority having jurisdiction
with respect thereto) dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board) maintained by a member bank of the Federal Reserve
System. Eurodollar Loans shall be deemed to constitute Eurocurrency Liabilities
and to be subject to such reserve requirements without benefit of or credit for
proration, exceptions or offsets which may be available from time to time to any
Lender or the Affiliate of any Lender under Regulation D.
"Revolving Credit Commitment" means, with respect to each
Lender the revolving credit commitment of such Lender as set forth in Schedule
1.01A hereto, as the same may be adjusted from time to time pursuant to the
terms of this Agreement.
"Revolving Credit Loan" means a Loan made by a Lender or the
Administrative Agent to a Borrower pursuant to Section 2.01(a)(i) hereof.
"Revolving Credit Note" means a joint and several promissory
note of the Borrowers, substantially in the form of Exhibit A hereto, made
payable to the order of a Lender and evidencing the Indebtedness resulting from
the making by such Lender of Revolving Credit Loans and delivered to the
Administrative Agent pursuant to Article V hereof, as such promissory note may
be modified or extended from time to time, and any promissory note or notes
issued in exchange or replacement therefor.
"Security Agreements" means the Security Agreements made by
each of the Loan Parties in favor of the Collateral Agent, each in the form of
Exhibits D-1 or D-2 hereto, as applicable, as the same may be amended or
otherwise modified from time to time.
"Security Documents" means collectively, each Security
Agreement and each Pledge Agreement executed and delivered by a Loan Party, and
all Uniform Commercial Code financing statements required by this Agreement and
the Security Agreements to be filed with respect to the security interests in
personal property and fixtures created pursuant to such agreements, and all
other documents and agreements executed and delivered by the Loan Parties in
connection with any of the foregoing documents.
"Seller" means Miss Xxxxx, Inc., a Delaware corporation, prior
to the effective time of the Acquisition, which entity will change its name to
Old ME Corp. immediately after the effective time of the Acquisition.
"Settlement Period" has the meaning specified therefor in
Section 2.05(b)(i).
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"Solvent" means, with respect to any Person on a particular
date, that on such date (a) the fair value of the property of such Person is not
less than the total amount of its liabilities (including, without limitation,
liabilities on all claims, whether or not reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured) of such Person, (b) the present fair
salable value of the assets of such Person is not less than the amount that will
be required to pay the probable liability of such Person on its existing debts
as they become absolute and matured, (c) such Person is able to realize upon its
assets and pay its debts and other liabilities, contingent obligations and other
commitments as they mature in the normal course of business, (d) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and liabilities
mature, and (e) such Person is not engaged in business or a transaction, and is
not about to engage in business or a transaction, for which such Person's
property would constitute unreasonably small capital.
"Spring Shipping Season" means, with respect to Miss Xxxxx,
the shipping season beginning on January 1 and ending on May 31 of each Fiscal
Year.
"Squire" has the meaning specified therefor in the preamble
hereto.
"Subordinate Pledge and Security Agreement" means the
subordinate pledge and security agreement dated as of the date hereof between
the Company and the Seller, as the same may be amended or otherwise modified
from time to time.
"Subordination Agreement" means the subordination agreement
dated as of the date hereof between the Collateral Agent and the Seller, as the
same may be amended or otherwise modified from time to time.
"Subsidiary" means, as to any Person, any corporation of which
more than 50% of the outstanding Capital Stock having (in the absence of
contingencies) ordinary voting power to elect directors (or Persons performing
similar functions) of such corporation is, at the time of determination, owned
directly, or indirectly through one or more intermediaries, by such Person.
"Syndication Date" shall mean the earlier of (i) the date
which is 60 days after the date of the initial Loan and (ii) the date on which
the Administrative Agent determines in its sole discretion (and notifies the
Borrowers and the Lenders) that the primary syndication (and the resulting
addition of institutions as Lenders pursuant to Section 12.08) has been
completed.
"Taxes" shall have the meaning given to that term in Section
2.12.
"Term Loan" means a Loan made by a Lender to Squire pursuant
to Section 2.01(a)(ii) hereof.
"Term Loan Commitment" means, with respect to each Lender, the
term commitment of such Lender as set forth in Schedule 1.01A hereto, as the
same may be adjusted from time to time pursuant to the terms of this Agreement.
"Term Note" means a promissory note of Squire, substantially
in the form of Exhibit B hereto, made payable to the order of a Lender and
evidencing the Indebtedness resulting from the making by such Lender of such
Lender's Term Loan and delivered to the Administrative Agent pursuant to Article
V hereof, as such promissory note may be modified or extended from time to time,
and any promissory note or notes issued in exchange or replacement therefor.
"Termination Agreement" means the termination agreement, in
form and substance reasonably satisfactory to the Agents, dated as of the
effective date of the Acquisition between The Chase Manhattan Bank and the
Seller confirming the payment in full of all of the obligations of the Seller
owing to The Chase Manhattan Bank and the termination or release of all Liens
existing in favor of The Chase Manhattan Bank in and to the Assets.
"Termination Anniversary Date" means October 2, 2000 and
thereafter October 2 of each succeeding calendar year.
"Termination Event" means (i) a Reportable Event with respect
to any Employee Plan, (ii) any event
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that causes a Borrower or any of its ERISA Affiliates to incur liability under
Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of
ERISA or Section 4971 or 4975 of the Internal Revenue Code, (iii) the filing of
a notice of intent to terminate an Employee Plan under Section 4041(c) of ERISA,
(iv) the institution of proceedings by the Pension Benefit Guaranty Corporation
to terminate an Employee Plan, or (v) any other event or condition that would
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Employee Plan.
"Title Company" shall have the meaning specified therefor in
Section 7.01(m).
"Total Commitment" means the sum of the amounts of the
Lenders' Commitments.
"Total Revolving Credit Commitment" means the sum of the
Lenders' Revolving Credit Commitments.
"Total Term Loan Commitment" means the sum of the Lenders'
Term Loan Commitments.
"Transition Shipping Season" means, with respect to Miss
Xxxxx, the shipping season beginning on April 1 and ending on June 30 of each
Fiscal Year.
"WARN" has the meaning specified therefor in Section 6.01(j).
"Working Capital" means as to any Person at a particular date,
the excess, if any, of Consolidated Current Assets of such Person and its
Consolidated Subsidiaries over Consolidated Current Liabilities of such Person
and its Consolidated Subsidiaries at such date.
SECTION 1.02. Accounting and Other Terms. Unless otherwise
expressly provided herein, each accounting term used herein shall have the
meaning given it under GAAP applied on a basis consistent with those used in
preparing the Financial Statements. All terms used in this Agreement which are
defined in Article 9 of the Uniform Commercial Code in effect in the State of
New York on the date hereof and which are not otherwise defined herein shall
have the same meanings herein as set forth therein.
SECTION 1.03. Time References. Unless otherwise indicated
herein, all references to time of day refer to Eastern standard time or Eastern
daylight saving time, as in effect in New York City on such day. For purposes of
the computation of a period of time from a specified date to a later specified
date, the word "from" means "from and including" and the words "to" and "until"
each means "to but excluding", provided, however, that with respect to a
computation of fees or interest payable to the Agents, the Lenders or the L/C
Issuer, such period shall in any event consist of at least one full day.
ARTICLE II
THE LOANS
SECTION 2.01. Commitments. (a) Subject to the terms and
conditions and relying upon the representations and warranties set forth herein,
each Lender severally agrees to make the following Loans to the Borrowers:
(i) Revolving Credit Loans, which may be
either A Revolving Credit Loans to Squire or B Revolving Credit Loans to Miss
Xxxxx, at any time and from time to time from the Effective Date to the Final
Maturity Date, or until the earlier reduction of its Revolving Credit Commitment
to zero in accordance with the terms hereof, in an aggregate principal amount of
Revolving Credit Loans at any time outstanding not to exceed the amount of such
Lender's Revolving Credit Commitment; and
(ii) a Term Loan to Squire on the Effective
Date in a principal amount not to exceed such Lender's Term Loan Commitment.
(b) Notwithstanding the foregoing, (i) the aggregate
principal amount of Revolving Credit Loans outstanding at any time to the
Borrowers on a combined basis shall not exceed the lowest of (A) the
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difference between (1) the Total Revolving Credit Commitment and (2) the
aggregate Letter of Credit Obligations, (B) the difference between (1) the then
current Borrowing Base of the Borrowers on a combined basis and (2) the
aggregate Letter of Credit Obligations, and (C) $70,000,000, (ii) the aggregate
principal amount of A Revolving Credit Loans outstanding at any time to Squire
shall not exceed the difference between (A) the then current Borrowing Base of
Squire on an individual basis and (B) the aggregate A Letter of Credit
Obligations, and (iii) the aggregate principal amount of B Revolving Credit
Loans outstanding at any time to Miss Xxxxx shall not exceed the difference
between (A) the then current Borrowing Base of Miss Xxxxx on an individual basis
and (B) the aggregate B Letter of Credit Obligations, provided that (x) the
Lenders agree to include the Overadvance Amount as part of the Borrowing Base,
(y) no Borrower shall be permitted to obtain a Revolving Credit Loan that
results in such Borrower having an Overadvance Amount if and to the extent that,
at such time, the other Borrower has positive Availability, and (z) except as
provided in clause (y) above, the Overadvance Amount shall be allocated between
the Borrowers by the Administrative Agent in the exercise of its reasonable
business judgment based upon such factors as the Administrative Agent may deem
appropriate.
(c) Within the foregoing limits, the Borrowers may
borrow, repay and reborrow Revolving Credit Loans, on or after the Effective
Date and prior to the Final Maturity Date, subject to the terms, provisions and
limitations set forth herein. Any principal amount of a Term Loan which is
repaid or prepaid may not be reborrowed.
SECTION 2.02. Loans. Except as otherwise provided in Section
2.05, Loans shall be made ratably by the Lenders in accordance with their
respective Revolving Credit Commitments and Term Loan Commitments, as the case
may be. The Term Loan shall be made on the Effective Date by the Lenders against
delivery hereunder of the Term Notes, and the initial Revolving Credit Loans
shall be made on or after the Effective Date against delivery hereunder of the
Revolving Credit Notes.
SECTION 2.03. Making the Loans. A Borrower shall give the
Administrative Agent prior telephone notice (which notice, if requested by the
Administrative Agent, must be promptly confirmed in writing in substantially the
form of Exhibit J hereto (a "Notice of Borrowing")) (i) not later than 11:00
a.m. (New York City time) on the date of the proposed borrowing, in the case of
a borrowing consisting of Base Rate Loans, or (ii) not later than 12:00 noon
(New York City time) three Business Days prior to such proposed borrowing in the
case of a borrowing consisting of Eurodollar Loans, provided that Eurodollar
Loans will only be made on the first Business Day of a month. Such Notice of
Borrowing shall be irrevocable and shall specify the Borrower that is requesting
such Loan, the principal amount of the proposed borrowing (which, in the case of
a Eurodollar Loan that is a Revolving Credit Loan, must be in a minimum amount
of $5,000,000 and, in the case of a Eurodollar Loan that is a Term Loan, must be
in a minimum amount of $10,000,000 and, in each case, in multiples of $1,000,000
in excess thereof), whether such Loan is requested to be a Base Rate Loan or a
Eurodollar Loan and, in the case of a Eurodollar Loan, the Initial Interest
Period for such Eurodollar Loan, the use of the proceeds of such proposed Loan,
and the proposed borrowing date, which must be a Business Day and, in the case
of a Eurodollar Loan, the first Business Day of a month, and such Borrower shall
be bound to make a borrowing in accordance therewith. At no time shall the
principal amount of Revolving Credit Loans that are Eurodollar Loans exceed
$40,000,000 in the aggregate for the Borrowers and at no time shall the
principal amount of the Term Loan that is a Eurodollar Loan exceed $12,000,000.
Notwithstanding anything to the contrary contained herein, prior to the
Syndication Date, all Loans shall be incurred and maintained as Base Rate Loans.
The Administrative Agent may act without liability upon the basis of written,
telecopy or telephone notice believed by the Administrative Agent in good faith
to be from a Borrower (or from any officer thereof designated in writing to the
Administrative Agent), and each Borrower hereby waives the right to dispute the
Administrative Agent's record of the terms of any such telephonic Notice of
Borrowing.
SECTION 2.04. Notes; Repayment of Loans. (a) The Term Loan
made by a Lender shall be evidenced by a Term Note, each duly executed by
Squire, dated the Effective Date and delivered to and made payable to the order
of such Lender in a principal amount equal to such Lender's Term Loan
Commitment. All Revolving Credit Loans made by a Lender shall be evidenced by a
single Revolving Credit Note, duly executed by the Borrowers, dated the
Effective Date, and delivered to and made jointly and severally payable to the
order of such Lender in a principal amount equal to its Revolving Credit
Commitment on such date.
(b) The outstanding principal balance of each
Revolving Credit Loan shall be due and
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payable on the Final Maturity Date. The Term Loans shall be payable as to
principal in thirty-five (35) equal installments of $250,000 on the first day of
each month following the Effective Date, beginning on November 1, 1997 and a
final installment of $6,250,000 on October 2, 2000; provided, however that the
last such installment shall be in the amount necessary to repay in full the
principal amount of the Term Loans outstanding on October 2, 2000.
SECTION 2.05. Funding and Settlement Procedures.
(a) (i) Except as otherwise provided in this
subsection 2.05(a), all Loans under this Agreement shall be made by the Lenders
simultaneously and proportionately according to their Pro Rata Shares of the
Total Term Loan Commitment or the Total Revolving Credit Commitment, as the case
may be, it being understood that no Lender shall be responsible for any default
by any other Lender in such other Lender's obligation to make a Loan requested
hereunder nor shall the relevant Commitment of any Lender to make the Loan
requested be increased or decreased as a result of the default by any other
Lender in such other Lender's obligation to make a Loan requested hereunder.
(ii) Notwithstanding any other provision of
this Agreement, in order to reduce the number of fund transfers among the
Borrowers, the Lenders and the Agents, the Borrowers, the Lenders and the Agents
agree that the Administrative Agent may, but shall not be obligated to, and the
Borrowers and the Lenders hereby irrevocably authorize the Administrative Agent
to, fund, on behalf of the Lenders, Revolving Credit Loans pursuant to Sections
2.02 and 2.03, subject to the procedures for settlement set forth in subsection
2.05(b); provided, however, that (A) the Administrative Agent shall in no event
fund such Revolving Credit Loan if the Administrative Agent shall have received
written notice from the Required Lenders on the Business Day prior to the date
of the proposed Revolving Credit Loan that one or more of the conditions
precedent contained in Section 5.02 hereof will not be satisfied on the date of
the proposed Revolving Credit Loan and (B) the Administrative Agent shall not
otherwise be required to determine that, or take notice whether, the conditions
precedent in Section 5.02 have been satisfied. If the Administrative Agent
elects not to fund a requested Revolving Credit Loan on behalf of the Lenders,
promptly after receipt of a Notice of Borrowing, the Administrative Agent shall
so notify each Lender. If the Administrative Agent notifies the Lenders that it
will not fund a requested Revolving Credit Loan on behalf of the Lenders, each
Lender shall make its Pro Rata Share of the Loan available to the Administrative
Agent, in immediately available funds, at the Payment Office no later than 2:00
p.m. (New York City time) on the date of the proposed Loan. The Administrative
Agent will make the proceeds of such Loans available to the appropriate Borrower
on the day of the proposed Loan by causing an amount, in immediately available
funds, equal to the proceeds of all such Loans received by the Administrative
Agent at the Payment Office or the amount funded by the Administrative Agent on
behalf of the Lenders to be deposited in an account designated by the
appropriate Borrower.
(iii) If the Administrative Agent has
notified the Lenders that the Administrative Agent will not fund a particular
Loan pursuant to subsection 2.05(a)(ii) on behalf of the Lenders, the
Administrative Agent may assume that such Lender has made such amount available
to the Administrative Agent on such day and the Administrative Agent, in its
sole and absolute discretion, may, but shall not be obligated to, cause a
corresponding amount to be made available to the appropriate Borrower on such
day. If, in such case, the Administrative Agent makes such corresponding amount
available to the appropriate Borrower and such corresponding amount is not in
fact made available to the Administrative Agent by such Lender, such Lender and
each of the Borrowers, severally agree to repay to the Administrative Agent
forthwith on demand such corresponding amount together with interest thereon for
each day from the date such amount is made available to such Borrower until the
date such amount is repaid to the Administrative Agent, at (A) in the case of
such Borrower, a rate per annum equal to the higher of the Federal Funds Rate
and the interest rate applicable thereto pursuant to Section 2.06 and (B) in the
case of such Lender, at the Federal Funds Rate for three Business Days and
thereafter at the Prime Rate. If such Lender shall repay to the Administrative
Agent such corresponding amount, such amount so repaid shall constitute such
Lender's Pro Rata Share of such Revolving Credit Loan.
(iv) Nothing in this Section 2.05(a) shall
be deemed to relieve any Lender from its obligation to fulfill its Revolving
Credit Commitment hereunder or to prejudice any rights that the Administrative
Agent or a Borrower may have against any Lender as a result of any default by
such Lender hereunder.
(b) (i) With respect to all periods for which the
Administrative Agent, on behalf of the Lenders, has funded Revolving Credit
Loans pursuant to subsection 2.05(a), on the first Business Day after the
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last day of each week, or such shorter period as the Administrative Agent may
from time to time select (any such week or shorter period being herein called a
"Settlement Period"), the Administrative Agent shall notify each Lender of the
average daily unpaid principal amount of the Revolving Credit Loans outstanding
during such Settlement Period. In the event that such amount is greater than the
average daily unpaid principal amount of the Revolving Credit Loans outstanding
during the Settlement Period immediately preceding such Settlement Period (or,
if there has been no preceding Settlement Period, the amount of the Revolving
Credit Loans made on the date of such Lender's initial funding), each Lender
shall promptly make available to the Administrative Agent such Lender's Pro Rata
Share of the difference in immediately available funds. In the event that such
amount is less than such average daily unpaid principal amount, the
Administrative Agent shall promptly pay over to each other Lender such Lender's
Pro Rata Share of the difference in immediately available funds. In addition, if
the Administrative Agent shall so request at any time when a Default or an Event
of Default shall have occurred and be continuing, or any other event shall have
occurred as a result of which the Administrative Agent shall determine that it
is desirable to present claims against the Borrowers for repayment, each Lender
shall promptly remit to the Administrative Agent or, as the case may be, the
Administrative Agent shall promptly remit to each Lender, sufficient funds to
adjust the interests of the Lenders in the then outstanding Revolving Credit
Loans to such an extent that, after giving effect to such adjustment, each
Lender's interest in the then outstanding Revolving Credit Loans will be equal
to its Pro Rata Share thereof. The obligations of the Administrative Agent and
each Lender under this subsection 2.05(b) shall be absolute and unconditional.
Each Lender shall only be entitled to receive interest on its Pro Rata Share of
the Revolving Credit Loans which have been funded by such Lender.
(ii) In the event that any Lender fails to
make any payment required to be made by it pursuant to subsection 2.05(b)(i),
the Administrative Agent shall be entitled to recover such corresponding amount
on demand from such Lender together with interest thereon, for each day from the
date such payment was due until the date such amount is paid to the
Administrative Agent, at the Federal Funds Rate for three Business Days and
thereafter at the Prime Rate. During the period in which such Lender has not
paid such corresponding amount to the Administrative Agent, notwithstanding
anything to the contrary contained in this Agreement or any other Loan Document,
the amount so advanced by the Administrative Agent to any Borrower shall, for
all purposes hereof, be a Loan made by the Administrative Agent for its own
account. Upon any such failure by a Lender to pay the Administrative Agent, the
Administrative Agent shall promptly thereafter notify the Borrowers of such
failure and the Borrowers shall immediately pay such corresponding amount to the
Administrative Agent for its own account.
SECTION 2.06. Interest.
(a) Revolving Credit Loans. Each Revolving Credit
Loan which is a Eurodollar Loan shall bear interest on the principal amount
thereof from time to time outstanding from the date of such Loan until such
principal amount becomes due, at a rate per annum equal to the Eurodollar Rate
for the Interest Period in effect for such Loan plus (i) 2.75% prior to the
payment in full of the Term Loan and (ii) 2.50% after the payment in full of the
Term Loan. Interest shall accrue from and include the first date of an Interest
Period, but exclude the last day of such Interest Period. Each Revolving Credit
Loan which is a Base Rate Loan shall bear interest on the principal amount
thereof from time to time outstanding from the date of such Loan, until such
principal amount becomes due, at a rate per annum equal to (A) the Base Rate
less .25% prior to the payment in full of the Term Loan and (B) the Base Rate
less .50% after the payment in full of the Term Loan.
(b) Term Loan. The portion of the Term Loan that is a
Eurodollar Loan shall bear interest on the principal amount thereof from time to
time outstanding from the date of such Term Loan until such principal amount
becomes due at a rate per annum equal to the Eurodollar Rate for the Interest
Period in effect for such Loan plus (i) 3.25% on and before September 27, 1999
and (ii) 3.75% thereafter. Interest shall accrue from and include the first date
of an Interest Period, but exclude the last day of such Interest Period. The
portion of the Term Loan which is a Base Rate Loan shall bear interest on the
principal amount thereof from time to time outstanding from the date of such
Loan until such principal amount becomes due, at a rate per annum equal to the
Base Rate plus (i) .25% on and before September 27, 1999 and (ii) .75%
thereafter.
(c) Default Interest. Upon the occurrence and during
the continuance of an Event of Default, all outstanding principal of the Loans
and all outstanding Reimbursement Obligations and (to the extent permitted by
law) interest which is not paid when due, may, at the option of the
Administrative Agent or the Required
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Lenders, bear interest until such amount is paid in full at a fluctuating
interest rate per annum equal at all times to the Post-Default Rate.
(d) Interest Payment. Interest on each Eurodollar
Loan shall be payable, in arrears, on the last day of each Interest Period of
such Eurodollar Loan and, in the case of any Eurodollar Loan of six month
duration, the day that interest would have been payable if such Eurodollar Loan
had an Interest Period of three months. Interest on each Base Rate Loan shall be
payable monthly, in arrears, on the first day of each month, commencing on the
first day of the month following the month in which such Loan is made, and at
maturity (whether upon demand, by acceleration or otherwise). Interest at the
Post-Default Rate shall be payable on demand. The Borrowers hereby authorize the
Administrative Agent to, and the Administrative Agent may, from time to time,
charge the Loan Account pursuant to Section 4.02 hereof with the amount of any
interest payment due hereunder.
(e) General. All interest shall be computed on the
basis of a year of 360 days for the actual number of days, including the first
day but excluding the last day, elapsed.
SECTION 2.07. Reduction of Commitment; Prepayment of Loans.
(a) The Total Term Loan Commitment shall
automatically terminate in full at 5:00 p.m. on the Effective Date. The
Borrowers may at any time or from time to time and without penalty or premium
reduce the Total Revolving Credit Commitment to an amount (which may be zero)
not less than the sum of the unpaid principal amount of all Revolving Credit
Loans then outstanding plus the principal amount of all Revolving Credit Loans
not yet made as to which notice has been given by a Borrower under Section 2.03
hereof plus the Letter of Credit Obligations at such time plus the stated amount
of all Letters of Credit not yet issued as to which a request has been made and
not withdrawn. Any reduction shall be in an amount which is an integral multiple
of $5,000,000. Reduction of the Total Revolving Credit Commitment shall be made
by providing not less than two Business Days' written notice (which notice shall
be irrevocable) to such effect to the Administrative Agent (which notice the
Administrative Agent shall promptly transmit to each Lender). Reductions of the
Total Revolving Credit Commitment are irrevocable and may not be reinstated.
Each such reduction shall reduce the Revolving Credit Commitment of each Lender
proportionately in accordance with its Pro Rata Share.
(b) Subject to the terms and conditions contained in
this Section 2.07, Section 2.10 hereof and elsewhere in this Agreement, the
Borrowers shall have the right to prepay, in whole or in part, the Revolving
Credit Loans and the Term Loans, provided that, subject to the terms of Section
2.08(a) hereof, the Borrowers shall be obligated to pay the Early Termination
Fee with respect to any Loans prepaid in connection with a termination of the
Total Revolving Credit Commitment prior to September 25, 2000.
(c) If at any time (i) the Borrowing Base of the
Borrowers calculated on a combined basis is less than the sum of the outstanding
principal on all Revolving Credit Loans outstanding plus the outstanding amount
of all Letter of Credit Obligations, (ii) the Borrowing Base of Squire on an
individual basis is less than the sum of the outstanding principal on all A
Revolving Credit Loans plus the outstanding amount of all A Letter of Credit
Obligations or (iii) the Borrowing Base of Miss Xxxxx on an individual basis is
less than the sum of the outstanding principal on all B Revolving Credit Loans
plus the outstanding amount of all B Letter of Credit Obligations, Squire or
Miss Xxxxx, as appropriate, will (A) immediately give notice of such occurrence
to the Administrative Agent and (B) prepay the appropriate Revolving Credit
Loans in an amount which will reduce the sum of the outstanding principal on all
such Revolving Credit Loans, the A Revolving Credit Loans or the B Revolving
Credit Loans, as the case may be, to an amount less than or equal to the then
current Borrowing Base of the Borrowers on a combined basis or the Borrowing
Base of Squire or Miss Xxxxx on an individual basis, as the case may be. If at
any time after the applicable Borrowers have complied with the first sentence of
this Section 2.07(c), the aggregate Letter of Credit Obligations is greater than
the then current Borrowing Base of the Borrowers on a combined basis, the A
Letter of Credit Obligations is greater than current Borrowing Base of Squire on
an individual basis or the B Letter of Credit Obligations is greater than the
current Borrowing Base of Miss Xxxxx on an individual basis, Squire or Miss
Xxxxx, as appropriate, shall provide cash collateral to the Collateral Agent in
the amount of such excess, which cash collateral shall be deposited in an
interest bearing account maintained by the Collateral Agent and, provided that
no Event of Default shall have occurred and be continuing, returned to Squire or
Miss Xxxxx, as appropriate, at such time as (x) the aggregate Letter of Credit
Obligations plus the aggregate principal amount of all outstanding Revolving
Credit Loans no longer exceeds the then current Borrowing Base of the Borrowers
on a combined basis, (y) the aggregate A Letter of Credit Obligations
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plus the aggregate principal amount of all outstanding A Revolving Credit Loans
no longer exceeds the then current Borrowing Base of Squire on an individual
basis or (z) the aggregate B Letter of Credit Obligations plus the aggregate
principal amount of all outstanding B Revolving Credit Loans no longer exceeds
the then current Borrowing Base of Miss Xxxxx on an individual basis, as the
case may be.
(d) Within ten (10) Business Days of delivery to the
Administrative Agent of audited annual financial statements pursuant to Section
7.01(a)(ii) hereof or, if such financial statements are not delivered to the
Administrative Agent on the date such statements are required to be delivered
pursuant to such Section 7.01(a)(ii), ten (10) Business Days after the date such
statements are required to be delivered to the Administrative Agent pursuant to
Section 7.01(a)(ii), Squire shall pay to the Administrative Agent an amount
equal to the Excess Cash Flow for the Fiscal Year covered by such financial
statements. Each prepayment pursuant to this paragraph (d) shall be applied to
principal installments of the Term Loan in the inverse order of maturity.
(e) Squire shall immediately prepay the outstanding
principal amount of the Term Loan in full in the event the Total Revolving
Credit Commitment is terminated for any reason.
(f) The Borrowers shall immediately prepay the Loans
and provide cash collateral to the Collateral Agent in the amount of all Letter
of Credit Obligations (which cash collateral shall be deposited in an interest
bearing account maintained by the Collateral Agent) if, without its consent,
NationsBanc has been replaced as the Factor by a Borrower.
(g) Promptly following, and in any event within two
Business Days after, the receipt by the Company or any of its Subsidiaries of
any Net Proceeds from the issuance, sale, assignment, transfer or other
disposition by the Company or any of its Subsidiaries of any Capital Stock, debt
securities or assets of the Company or any of its Subsidiaries, Squire shall
make a prepayment of the Term Loan in an amount equal to the amount of such Net
Proceeds, provided that Squire shall not be required to prepay the Term Loan in
the case of (i) the issuance of Capital Stock of the Company pursuant to the
Company's 1994 Stock Option Plan or pursuant to other plans or arrangements with
respect to options or warrants issued to the employees, consultants and
directors of the Company or any Borrower to the extent such issuance results in
cash Net Proceeds of less than $100,000 to the Company and the Borrowers in the
aggregate in any Fiscal Year, (ii) the issuance of Capital Stock of the Company
to make the Earn Out Payment, (iii) intercompany indebtedness between the Loan
Parties permitted by Sections 7.02(b) and 7.02(f) hereof, (iv) sales of
Inventory (A) by the Borrowers and their Subsidiaries in the ordinary course of
business and (B) by Norty's in going out of business sales, (v) sales of
Accounts Receivable by the Borrowers pursuant to the Factoring Agreements, (vi)
the disposition of obsolete or worn-out property in the ordinary course of
business, (vii) sales of the Capital Stock or assets of Norty's, and (viii)
sales or dispositions of assets other than Inventory, provided that the
aggregate Net Proceeds of such sales or dispositions do not exceed $100,000 in
the aggregate in any Fiscal Year. The aggregate amount of Net Proceeds shall be
applied first to the principal installments of the Term Loan in the inverse
order of maturity and, if any Net Proceeds remain after such application,
second, to the Revolving Credit Loans.
(h) Subject to paragraph (b) of Section 2.10 of this
Agreement, the Administrative Agent shall on each Business Day apply all funds
received from the Factor pursuant to the Assignment Agreement or representing
other proceeds of Accounts Receivable or Inventory, to the payment, in whole or
in part, of the outstanding Revolving Credit Loans and, if any proceeds remain
after such application, to the principal installments of the Term Loan in the
inverse order of maturity.
(i) Immediately upon the receipt by any Loan Party of
any insurance proceeds, the Borrowers shall prepay the Revolving Credit Loans in
an amount equal to the insurance proceeds received by such Loan Party, provided
that (i) except with respect to the proceeds from key-man life insurance and
except during the continuance of an Event of Default, proceeds from insurance
covering damage to property not in excess of $500,000 for any one occurrence
shall not be required to be so prepaid on such date to the extent such insurance
proceeds are used to replace or restore the properties or assets in respect of
which such proceeds were paid if the Borrowers deliver a certificate to the
Administrative Agent on or prior to such date stating that such proceeds shall
be used to replace or restore any such properties or assets within a period
specified in such certificate not to exceed 60 days after the date of receipt of
such proceeds (which certificate shall set forth estimates of the proceeds to be
so expended) and (ii) if all or any portion of such proceeds not so applied to
the repayment of the Revolving Credit Loans are not so used within the period
specified in the relevant certificate furnished pursuant to clause (i) above,
such remaining portion shall be
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prepaid on the last day of such specified period. Such insurance proceeds shall
be applied to the outstanding Revolving Credit Loans and, if any proceeds remain
after such application, to the principal installments of the Term Loan in the
inverse order of maturity.
(j) Notwithstanding anything to the contrary
contained in this Agreement, the Borrowers shall repay the Revolving Credit
Loans in an amount sufficient to cause the Overadvance Amount calculated on a
combined basis to equal zero on the last day of each of two consecutive Fiscal
Months in each period of twelve consecutive months.
(k) The Borrowers shall repay the Revolving Credit
Loans in the amount of any payments received as (i) principal of the
non-negotiable limited recourse promissory notes listed on Schedule 7.02(k)(ii)
hereof and (ii) principal of or interest on loans or advances made pursuant to
Section 7.02(f)(xii) hereof and dividends or distributions made by Norty's to
Squire pursuant to Section 7.02(i)(iv) hereof, in each case on the Business Day
following the receipt of such payments.
(l) Any prepayment made pursuant to this Section 2.07
shall be accompanied by accrued interest on the principal amount being prepaid
to the date of prepayment.
(m) Except as otherwise expressly provided in this
Section 2.07, payments with respect to any paragraph of this Section 2.07 are in
addition to payments made or required to be made under any other paragraph of
this Section 2.07. Prepayments of the Revolving Credit Loans pursuant to this
Section 2.07 shall be applied to the A Revolving Credit Loan or the B Revolving
Credit Loan by the Administrative Agent, first, based upon the Borrower making
such prepayment and, second, based upon such factors as the Administrative Agent
deem appropriate in the exercise of its reasonable business judgment (which
factors may include the minimization or reduction of the payments required by
Section 2.10(a) hereof).
SECTION 2.08. Fees.
(a) Early Termination Fee. If the Total Revolving
Credit Commitment is terminated prior to September 25, 2000 the Borrowers shall
pay to the Administrative Agent for the Pro Rata Share of the Lenders, on the
date of such termination, the Early Termination Fee, provided, that the Early
Termination Fee shall not be payable if (i) the Loans are prepaid from the
proceeds generated by the public sale or the private sale, pursuant to Rule 144A
of the Securities Act of 1933 of Capital Stock, of debt securities or
convertible debt securities of the Company or any of its Subsidiaries, (ii) the
Total Revolving Credit Commitment is terminated as a result of an Event of
Default and the Loans are not repaid from the proceeds generated from a third
party refinancing, other than a refinancing described in clause (i) above, or
(iii) only the Term Loan is prepaid, in whole or in part.
(b) Other Fees. The Borrowers shall jointly and
severally pay to the Agents the fees set forth in the Fee Letter at the times
set forth in the Fee Letter. All fees required to be paid to the Agents pursuant
to the Fee Letter shall be paid to the Administrative Agent, for the account of
the Agents. All fees required to be paid to the Lenders pursuant to this
Agreement shall be paid to the Administrative Agent for the Pro Rata Share of
the Lenders. All fees under this Agreement and the Fee Letter are non-refundable
under all circumstances.
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SECTION 2.09. Eurodollar Rate Not Determinable; Illegality or
Impropriety.
(a) In the event, and on each occasion, that on or
before the day on which the Eurodollar Rate is to be determined for a borrowing
that is to include Eurodollar Loans, the Administrative Agent has determined in
good faith that, or has been advised by the Required Lenders that, (i) the
Eurodollar Rate cannot be determined for any reason, (ii) the Eurodollar Rate
will not adequately and fairly reflect the cost of maintaining Eurodollar Loans
or (iii) Dollar deposits in the principal amount of the applicable Eurodollar
Loans are not available in the interbank eurodollar market where the eurodollar
and foreign currency and exchange operations in respect of the Lenders'
Eurodollar Loans are then being conducted, the Administrative Agent shall, as
soon as practicable thereafter, give written notice of such determination to the
Borrowers and the other Lenders. In the event of any such determination, any
request by the Borrowers for a Eurodollar Loan pursuant to Section 2.03 shall,
until, in the case of such a determination by the Required Lenders, the
Administrative Agent has been advised by the Required Lenders and the
Administrative Agent has so advised such Borrower that, or in the case of a
determination by the Administrative Agent, the Administrative Agent has advised
such Borrower and the other Lenders that, the circumstances giving rise to such
notice no longer exist, be deemed to be a request for a Base Rate Loan. Each
determination by the Administrative Agent and/or the Required Lenders hereunder
shall be conclusive and binding absent manifest error.
(b) In the event that it shall be unlawful for any
Lender to make, maintain or fund any Eurodollar Loan as contemplated by this
Agreement, then such Lender shall forthwith give notice thereof to the
Administrative Agent and the Borrowers describing such illegality in reasonable
detail. Effective immediately upon the giving of such notice, the obligation of
such Lender to make Eurodollar Loans shall be suspended for the duration of such
illegality and, if and when such illegality ceases to exist, such suspension
shall cease, and such Lender shall notify the Administrative Agent and the
Borrowers. If any such change shall make it unlawful for any Lender to maintain
any outstanding Eurodollar Loan as a Eurodollar Loan, such Lender shall, upon
the happening of such event, notify the Administrative Agent and the Borrowers,
and the Borrowers shall immediately, or if permitted by applicable law, rule,
regulation, order, decree, interpretation, request or directive, at the end of
the then current Interest Period for such Eurodollar Loan, convert each such
Eurodollar Loan into a Base Rate Loan.
SECTION 2.10. Indemnity.
(a) The Borrowers hereby jointly and severally
indemnify each Lender against any loss or expense that such Lender actually
sustains or incurs (including, without limitation, any loss or expense incurred
by reason of the liquidation or reemployment of deposits or other funds acquired
by such Lender to fund or maintain any Eurodollar Loan and including loss of
anticipated profits) as a consequence of (i) any failure by the Borrowers to
fulfill on the date of any borrowing hereunder the applicable conditions set
forth in Article V, (ii) any failure by the Borrowers to borrow any Eurodollar
Loan hereunder, to convert any Base Rate Loan into a Eurodollar Loan or to
continue a Eurodollar Loan as such after notice of such borrowing, conversion or
continuation has been given pursuant to Section 2.03 or Section 2.11 hereof,
(iii) any payment, prepayment (mandatory or optional) or conversion of a
Eurodollar Loan required by any provision of this Agreement or otherwise made on
a date other than the last day of the Interest Period applicable thereto, (iv)
any default in payment or prepayment of the principal amount of any Eurodollar
Loan or any part thereof or interest accrued thereon, as and when due and
payable (at the due date thereof, by notice of prepayment or otherwise), or (v)
the occurrence of any Event of Default, including, in each such case, any loss
(including, without limitation, loss of anticipated profits) or reasonable
expense sustained or incurred in liquidating or employing deposits from third
parties acquired to effect or maintain such Loan or any part thereof as a
Eurodollar Loan. Such loss or reasonable expense shall include but not be
limited to an amount equal to the excess, if any, as reasonably determined by
such Lender, of (i) its cost of obtaining the funds for the Loan being paid or
prepaid or converted or continued or not borrowed or converted or continued
(based on the Eurodollar Rate applicable thereto) for the period from the date
of such payment, prepayment, conversion, continuation or failure to borrow,
convert or continue on the last day of the Interest Period for such Loan (or, in
the case of a failure to borrow, convert or continue, the last day of the
Interest Period for such Loan that would have commenced on the date of such
failure to borrow, convert or continue) over (ii) the amount of interest (as
reasonably determined by such Lender) that would be realized by such Lender in
re-employing the funds so paid, prepaid, converted or continued or not borrowed,
converted or continued for such Interest Period. A certificate of any Lender
setting forth in reasonable detail any amount or amounts that such Lender is
entitled to receive pursuant to this Section 2.10 and the basis for the
determination of such amount or amounts shall be delivered to the Borrowers and
shall be conclusive and binding absent manifest error.
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(b) Notwithstanding paragraph (a) of this Section
2.10, the Administrative Agent will use reasonable efforts to minimize or reduce
any such loss or expense resulting from the mandatory prepayments required by
Section 2.07 (other than paragraphs (e) and (f) thereof) of this Agreement by
(i) applying all payments and prepayments to Loans bearing interest at the Base
Rate prior to any application of payments to Loans bearing interest at the
Eurodollar Rate and (ii) in the case of Revolving Credit Loans, after all Base
Rate Loans have been paid in full, calculating any such loss or expense based
upon the net decrease in Eurodollar Loans on a day after giving effect to all
prepayments and all Loans made on such day.
SECTION 2.11. Continuation and Conversion of Loans.
(a) Subject to Section 2.09 hereof, the Borrowers
shall have the right, at any time, on three (3) Business Days' prior irrevocable
written or telecopy notice to the Administrative Agent, to continue any
Eurodollar Loan, or any portion thereof, into a subsequent Interest Period or,
after the Syndication Date, to convert any Base Rate Loan or portion thereof
into a Eurodollar Loan, or on one (1) Business Day's prior irrevocable written
or telecopy notice to the Administrative Agent, to convert any Eurodollar Loan
or portion thereof into a Base Rate Loan, subject to the following:
(i) no Eurodollar Loan may be continued as
such and no Base Rate Loan may be converted into a Eurodollar Loan,
when any Event of Default or Default shall have occurred and be
continuing at such time;
(ii) in the case of a continuation of a
Eurodollar Loan as such or a conversion of a Base Rate Loan into a
Eurodollar Loan, the aggregate principal amount of such Eurodollar Loan
shall not be less than $5,000,000 in the case of a Revolving Credit
Loan and $10,000,000 in the case of the Term Loan and, in each case, in
multiples of $1,000,000 if in excess thereof;
(iii) in the case of a conversion from a
Eurodollar Loan to a Base Rate Loan, accrued interest on the Loan (or
portion thereof) being converted shall be paid by the applicable
Borrower at the time of conversion;
(iv) a Base Rate Loan may be converted into
a Eurodollar Loan only on the first Business Day of a month;
(v) any portion of a Loan maturing or
required to be repaid in less than one month may not be converted into
or continued as a Eurodollar Loan; and
(vi) if any conversion of a Eurodollar Loan
shall be effected on a day other than the last day of an Interest
Period, the Borrowers shall jointly and severally reimburse each Lender
on demand for any loss incurred or to be incurred by it in the
reemployment of the funds released by such conversion as provided in
Section 2.10 hereof.
In the event that a Borrower shall not give notice to continue any Eurodollar
Loan into a subsequent Interest Period, such Loan shall automatically become a
Base Rate Loan at the expiration of the then current Interest Period.
SECTION 2.12. Taxes. (a) All payments made by the Borrowers
hereunder, under the Notes or under any other Loan Document shall be made
without set-off, counterclaim, deduction or other defense. All such payments
shall be made free and clear of and without deduction for any present or future
income, franchise, sales, use, excise, stamp or other taxes, levies, imposts,
deductions, charges, fees, withholdings, restrictions or conditions of any
nature now or hereafter imposed, levied, collected, withheld or assessed by any
jurisdiction (whether pursuant to United States Federal, state, local or foreign
law) or by any political subdivision or taxing authority thereof or therein, and
all interest, penalties or similar liabilities, excluding taxes on the net
income of, and branch profit taxes of, any Lender, the Agents or the L/C Issuer
imposed by the jurisdiction in which such Lender, the Agents or the L/C Issuer
is organized or any political subdivision thereof or taxing authority thereof or
any jurisdiction in which such Person's principal office or relevant lending
office is located or any political subdivision thereof or taxing authority
thereof (such nonexcluded taxes being hereinafter collectively referred to as
"Taxes"). If the Borrowers shall be required by law to deduct or to withhold any
Taxes from or in respect of any amount payable hereunder, (i) the amount so
payable shall be increased to
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the extent necessary so that after making all required deductions and
withholdings (including Taxes on amounts payable to the Lenders or the L/C
Issuer pursuant to this sentence) the Lenders or the L/C Issuer receive an
amount equal to the sum they would have received had no such deductions or
withholdings been made, (ii) the Borrowers shall make such deductions or
withholdings, and (iii) the Borrowers shall pay the full amount deducted or
withheld to the relevant taxation authority in accordance with applicable law.
Whenever any Taxes are payable by the Borrowers, as promptly as possible
thereafter, the Borrowers shall send the Lenders, the L/C Issuer and the Agents
an official receipt (or, if an official receipt is not available, such other
documentation as shall be satisfactory to the Lenders, L/C Issuer or the Agents,
as the case may be) showing payment. In addition, the Borrowers agree to pay any
present or future taxes, charges or similar levies which arise from any payment
made hereunder or from the execution, delivery, performance, recordation or
filing of, or otherwise with respect to, this Agreement, the Notes, the Letters
of Credit or any other Loan Document other than the foregoing excluded taxes
(hereinafter referred to as "Other Taxes").
(b) The Borrowers will jointly and severally
indemnify the Lenders and the L/C Issuer for the amount of Taxes or Other Taxes
(including, without limitation, any Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this Section 2.12) paid by any Lender or
the L/C Issuer and any liability (including penalties, interest and expenses for
nonpayment, late payment or otherwise) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted. This indemnification shall be paid within 30 days from the date on
which such Lender or such L/C Issuer makes written demand which demand shall
identify the nature and amount of Taxes or Other Taxes for which indemnification
is being sought and the basis of the claim.
(c) Each Lender that is organized in a jurisdiction
other than the United States, a State thereof or the District of Columbia hereby
agrees that:
(i) it shall, no later than the Effective
Date (or, in the case of a Lender which becomes a party hereto pursuant
to Section 12.08 hereof after the Effective Date, the date upon which
such Lender becomes a party hereto) deliver to the Borrowers and the
Administrative Agent:
(A) two accurate, complete and
signed originals of U.S. Internal Revenue Service Form 4224 or
successor form, or
(B) two accurate, complete and
signed originals of U.S. Internal Revenue Service Form 1001 or
successor form,
in each case indicating that such Lender is on the date of delivery
thereof entitled to receive payments of principal, interest and fees
for the account of its lending office under this Agreement free from
withholding of United States Federal income tax;
(ii) if at any time such Lender changes its
lending office or offices or selects an additional lending office it
shall, at the same time or reasonably promptly thereafter, deliver to
the Borrowers through the Administrative Agent in replacement for, or
in addition to, the forms previously delivered by it hereunder:
(A) if such changed or additional
lending office is located in the United States, two accurate,
complete and signed originals of such Form 4224 or successor
form, or
(B) two accurate, complete and
signed originals of such Form 1001 or successor form,
in each case indicating that such Lender is on the date of delivery
thereof entitled to receive payments of principal, interest and fees
for the account of such changed or additional lending office under this
Agreement free from withholding of United States Federal income tax;
and
(iii) it shall, promptly upon the Borrowers'
reasonable request to that effect, deliver to the Borrowers such other
forms or similar documentation as may be required from time to time by
any applicable law, treaty, rule or regulation in order to establish
such Lender's tax status for withholding
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purposes.
(d) If either of the Borrowers fails to perform its
obligations under this Section 2.12, the Borrowers shall jointly and severally
indemnify the Lenders and the L/C Issuer for any taxes, interest or penalties
that may become payable as a result of any such failure.
SECTION 2.13. Joint and Several Liability of the Borrowers.
(a) Notwithstanding anything in this Agreement or any
other Loan Document to the contrary (including, without limitation, the
designation of Revolving Credit Loans as A Revolving Credit Loans or B Revolving
Credit Loans and the designation of Letter of Credit Obligations as A Letter of
Credit Obligations or B Letter of Credit Obligations), each of the Borrowers
hereby accepts joint and several liability hereunder and under the other Loan
Documents in consideration of the financial accommodations to be provided by the
Agents and the Lenders under this Agreement and the other Loan Documents, for
the mutual benefit, directly and indirectly, of each of the Borrowers and in
consideration of the undertakings of the other Borrower to accept joint and
several liability for the Obligations. Each of the Borrowers, jointly and
severally, hereby irrevocably and unconditionally accepts, not merely as a
surety but also as a co-debtor, joint and several liability with the other
Borrower, with respect to the payment and performance of all of the Obligations
(including, without limitation, any Obligations arising under this Section
2.13), it being the intention of the parties hereto that all the Obligations
shall be the joint and several obligations of each of the Borrowers without
preferences or distinction among them. If and to the extent that any of the
Borrowers shall fail to make any payment with respect to any of the Obligations
as and when due or to perform any of the Obligations in accordance with the
terms thereof, then in each such event the other Borrower will make such payment
with respect to, or perform, such Obligation. Subject to the terms and
conditions hereof, the Obligations of each of the Borrowers under the provisions
of this Section 2.13 constitute the absolute and unconditional, full recourse
Obligations of each of the Borrowers enforceable against each such Person to the
full extent of its properties and assets, irrespective of the validity,
regularity or enforceability of this Agreement, the other Loan Documents or any
other circumstances whatsoever.
(b) The provisions of this Section 2.13 are made for
the benefit of the Agents, the Lenders and their successors and assigns, and may
be enforced by them from time to time against any or all of the Borrowers as
often as occasion therefor may arise and without requirement on the part of the
Agents, the Lenders or such successors or assigns first to xxxxxxxx any of its
or their claims or to exercise any of its or their rights against any of the
other Borrowers or to exhaust any remedies available to it or them against any
of the other Borrowers or to resort to any other source or means of obtaining
payment of any of the Obligations hereunder or to elect any other remedy. The
provisions of this Section 2.13 shall remain in effect until all of the
Obligations shall have been paid in full or otherwise fully satisfied.
(c) Each of the Borrowers hereby agrees that it will
not enforce any of its rights of contribution or subrogation against the other
Borrowers with respect to any liability incurred by it hereunder or under any of
the other Loan Documents, any payments made by it to the Agents or the Lenders
with respect to any of the Obligations or any Collateral until such time as all
of the Obligations have been paid in full in cash. Any claim which any Borrower
may have against any other Borrower with respect to any payments to the Agents
or the Lenders hereunder or under any other Loan Documents are hereby expressly
made subordinate and junior in right of payment, without limitation as to any
increases in the Obligations arising hereunder or thereunder, to the prior
payment in full in cash of the Obligations and, in the event of any insolvency,
bankruptcy, receivership, liquidation, reorganization or other similar
proceeding under the laws of any jurisdiction relating to any Borrower, its
debts or its assets, whether voluntary or involuntary, all such Obligations
shall be paid in full in cash before any payment or distribution of any
character, whether in cash, securities or other property, shall be made to any
other Borrower therefor.
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ARTICLE III
LETTERS OF CREDIT
SECTION 3.01. Letter of Credit Guaranty.
(a) In order to assist the Borrowers in establishing
or opening documentary and standby letters of credit, which shall not have
expiration dates that exceed 270 days in the case of documentary letters of
credit and 365 days in the case of standby letters of credit (or such longer
periods as may be approved by the Agents from the date of issuance (the "Letters
of Credit"), with the L/C Issuer, the Borrowers have requested NationsBanc to
join in the applications for such Letters of Credit, and/or guarantee payment or
performance of such Letters of Credit and any drafts thereunder through the
issuance of a Letter of Credit Guaranty, thereby lending NationsBanc's credit to
that of the Borrowers, and NationsBanc hereby agrees to do so. These
arrangements shall be coordinated by NationsBanc subject to the terms and
conditions set forth below. NationsBanc shall not be required to be the issuer
of any Letter of Credit. A Borrower will be the account party for each
application for a Letter of Credit, which shall be substantially in the form of
Exhibit F hereto or on a computer transmission system approved by NationsBanc
and the L/C Issuer or such other written form or written transmission system as
may from time to time be approved by the L/C Issuer and NationsBanc, and shall
be duly completed in a manner reasonably acceptable to NationsBanc, together
with such other certificates, agreements, documents and other papers and
information as the L/C Issuer or NationsBanc may reasonably request (the "Letter
of Credit Application"). In the event of any conflict between the terms of the
Letter of Credit Application and this Agreement, for purposes of this Agreement,
the terms of this Agreement shall control.
(b) The aggregate Letter of Credit Obligations shall
not exceed the lowest of (i) the difference between (A) the Total Revolving
Credit Commitment and (B) the aggregate principal amount of Revolving Credit
Loans then outstanding, (ii) the difference between (A) the aggregate Borrowing
Base for the Borrowers on a combined basis and (B) the aggregate principal
amount of the Revolving Credit Loans then outstanding and (iii) the L/C
Subfacility. In addition (x) the A Letter of Credit Obligations shall not exceed
the difference between (1) the then current Borrowing Base of Squire on an
individual basis and (2) the aggregate principal amount of A Revolving Credit
Loans and (y) the B Letter of Credit Obligations shall not exceed the difference
between (1) the then current Borrowing Base of Miss Xxxxx on an individual basis
and (2) the aggregate principal amount of B Revolving Credit Loans, provided
that (AA) no Borrower shall be permitted to obtain a Letter of Credit that
results in such Borrower having an Overadvance Amount if and to the extent that,
at such time, the other Borrower has positive availability, (BB) except as
provided in clause (AA) above, the Overadvance Amount shall be allocated between
the Borrowers by the Administrative Agent, as described in Section 2.01(b)
hereof, and (CC) nothing contained herein shall prohibit a Borrower with
positive Availability at any time from opening a Letter of Credit for the
account of another Borrower that does not have positive Availability at such
time. Not more than $6 million of such Letter of Credit Obligations shall be
Letter of Credit Obligations with respect to standby Letters of Credit. In
addition, the terms and conditions of all Letters of Credit and all changes or
modifications thereof by the Borrowers and/or the L/C Issuer shall in all
respects be subject to the prior approval of NationsBanc (or, in the case of
Existing Letters of Credit issued by The Chase Manhattan Bank, CIT) in the
reasonable exercise of its sole and absolute discretion; provided, however, that
(i) the expiry date of all Letters of Credit shall be no later than forty-five
days prior to the Final Maturity Date unless, on or prior to forty-five days
prior to the Final Maturity Date, either such Letters of Credit shall be cash
collateralized in an amount equal to 105% of the face amount of such Letters of
Credit or the Borrowers shall provide the Agents and the Lenders with an
indemnification, in form and substance reasonably satisfactory to the Collateral
Agent, from a commercial bank or other financial institution acceptable to the
Collateral Agent for any Letter of Credit Obligations with respect to such
Letters of Credit and (ii) the Letters of Credit and all documentation in
connection therewith shall be in form and substance reasonably satisfactory to
NationsBanc and the L/C Issuer. At the request of a Borrower, NationsBanc may,
in its sole discretion, assist such Borrower in establishing or opening standby
Letters of Credit that have expiry dates that will automatically be extended for
an additional period or periods unless the L/C Issuer notifies the beneficiary
that the then existing expiry date will not be extended ("Evergreen Letters of
Credit"), provided that (x) NationsBanc shall have no obligation to assist any
Borrower in establishing or opening any Evergreen Letter of Credit, (y)
NationsBanc may at any time, in its sole discretion, instruct the L/C Issuer to
notify the beneficiary of an Evergreen Letter of Credit that the expiry date of
such Letter of Credit will not be automatically extended, if an Event of Default
or Default has occurred and is continuing, and (z) all Evergreen Letters of
Credit shall be subject to all of the terms and conditions contained in this
Agreement applicable to Letters of Credit.
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(c) The Administrative Agent shall have the right,
without notice to the Borrowers, to charge the relevant Loan Account with the
amount of any and all indebtedness, liabilities and obligations of any kind
(including indemnification for breakage costs, capital adequacy and reserve
requirement charges) incurred by the Agents, NationsBanc, CIT or the Lenders
under the Letter of Credit Guaranty or incurred by an L/C Issuer with respect to
a Letter of Credit at the earlier of (i) payment by NationsBanc, CIT or the
Lenders under the Letter of Credit Guaranty or (ii) the occurrence of an Event
of Default. Any amount charged to a Loan Account shall be deemed a Revolving
Credit Loan hereunder made by the Lenders to the relevant Borrower, funded by
the Administrative Agent on behalf of the Lenders and subject to Section 2.05 of
this Agreement. Any charges, fees, commissions, costs and expenses charged to
NationsBanc or CIT for a Borrower's account by the L/C Issuer in connection with
or arising out of Letters of Credit or transactions relating thereto will be
charged to the relevant Loan Account in full when charged to or paid by
NationsBanc or CIT and, when charged, shall be conclusive on such Borrower
absent manifest error. Each of the Lenders and the Borrowers agrees that the
Administrative Agent shall have the right to make such charges regardless of
whether any Event of Default or Default shall have occurred and be continuing or
whether any of the conditions precedent in Section 5.02 have been satisfied.
(d) The Borrowers unconditionally and jointly and
severally indemnify each Agent, NationsBanc, CIT and each Lender and hold each
Agent, NationsBanc, CIT and each Lender harmless from any and all loss, claim or
liability incurred by any Agent, NationsBanc, CIT or any Lender arising from any
transactions or occurrences relating to Letters of Credit, any drafts or
acceptances thereunder, the Collateral relating thereto, and all Obligations in
respect thereof, including any such loss or claim due to any action taken by the
L/C Issuer, other than for any such loss, claim or liability arising out of the
gross negligence or willful misconduct of the Agents, NationsBanc, CIT or any
Lender as determined by a final judgment of a court of competent jurisdiction.
The Borrowers further agree to jointly and severally hold the Agents,
NationsBanc, CIT and each Lender harmless from any errors or omission,
negligence or misconduct by the L/C Issuer. The Borrowers' unconditional, joint
and several obligations to the Agents, NationsBanc, CIT and each Lender with
respect to the Letters of Credit hereunder shall not be modified or diminished
for any reason or in any manner whatsoever, other than as a result of the
Agents', NationsBanc's, CIT's or such Lender's gross negligence or willful
misconduct as determined by a final judgment of a court of competent
jurisdiction. The Borrowers agree that any charges incurred by NationsBanc, CIT
or the L/C Issuer for a Borrower's account hereunder may be charged to the
relevant Loan Account.
(e) None of the Agents, NationsBanc, CIT, the Lenders
and the L/C Issuer shall be responsible for the existence, character, quality,
quantity, condition, packing, value or delivery of the goods purporting to be
represented by any documents; any difference or variation in the character,
quality, quantity, condition, packing, value or delivery of the goods from that
expressed in the documents; the validity, sufficiency or genuineness of any
documents or of any endorsements thereof even if such documents should in fact
prove to be in any or all respects invalid, insufficient, fraudulent or forged;
the time, place, manner or order in which shipment is made; partial or
incomplete shipments, or failure or omission to ship any or all of the goods
referred to in the Letters of Credit or documents; any deviation from
instructions, delay, default, or fraud by the shipper and/or anyone else in
connection with the Collateral or the shipping thereof; or any breach of
contract between the shipper or vendors and the Borrowers. Furthermore, without
limiting any of the foregoing, none of the Agents, NationsBanc, CIT and the
Lenders shall be responsible for any act or omission with respect to or in
connection with any goods covered by any Letter of Credit except in the case of
the Agents', NationsBanc's, CIT's or the Lenders' gross negligence or willful
misconduct as determined by a final judgment of a court of competent
jurisdiction.
(f) The Borrowers jointly and severally agree that
any action taken by any Agent, NationsBanc, CIT or any Lender, if taken in good
faith, or any action taken by the L/C Issuer, under or in connection with the
Letters of Credit, the drafts or acceptances, the guarantees or the Collateral,
shall be binding on the Borrowers and shall not put the Agents, NationsBanc, CIT
or the Lenders in any resulting liability to the Borrowers except in the case of
the Agents', NationsBanc's, CIT's or the Lenders' gross negligence or willful
misconduct as determined by a final judgment of a court of competent
jurisdiction. In furtherance of the foregoing, NationsBanc and CIT shall have
the full right and authority to clear and resolve any questions of
non-compliance of documents; to give any instructions as to acceptance or
rejection of any documents or goods; to execute any and all steamship or airways
guaranties (and applications therefore), indemnities or delivery orders; to
grant any extensions of the maturity of, time of payment for, or time of
presentation of, any drafts, acceptances or documents; and to agree to any
amendments, renewals, extensions, modifications, changes or cancellations of any
of the terms or conditions of any of the applications, Letters of Credit,
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drafts or acceptances, all in NationsBanc's or CIT's sole name, and the L/C
Issuer shall be entitled to comply with and honor any and all such documents or
instruments executed by or received solely from NationsBanc or CIT, all without
any notice to or any consent from the Borrowers. NationsBanc and CIT, as
applicable, shall use reasonable efforts to consult with the Borrowers before
taking any action pursuant to this Section 3.01(f).
(g) Without NationsBanc's or CIT's, as applicable,
express consent, the Borrowers jointly and severally agree: (i) not to execute
any and all applications for steamship or airway guaranties, indemnities or
delivery orders; to grant any extensions of the maturity of, time of payment
for, or time of presentation of, any drafts, acceptances or documents; or to
agree to any amendments, renewals, extensions, modifications, changes or
cancellations of any of the terms or conditions of any of the Letter of Credit
Applications, Letters of Credit, drafts or acceptances; and (ii) after the
occurrence of an Event of Default which is not cured within any applicable grace
period, if any, or waived, not to (A) clear and resolve any questions of
non-compliance of documents, or (B) give any instructions as to acceptances or
rejection of any documents or goods.
(h) The Borrowers jointly and severally agree that
any necessary and material import, export or other license or certificate for
the import or handling of Inventory will have been promptly procured; all
foreign and domestic material governmental laws and regulations in regard to the
shipment and importation of Inventory or the financing thereof will have been
promptly and fully complied with, in each case, where the failure to obtain such
certificate or license or the failure to comply with such laws would have a
Material Adverse Effect; and any certificates in that regard that NationsBanc or
CIT, as applicable, may at any time reasonably request will be promptly
furnished. In this connection, the Borrowers warrant and represent that all
shipments made under any Letters of Credit are in accordance with the laws and
regulations of the countries in which the shipments originate and terminate, and
are not prohibited by any such laws and regulations except where the failure to
be in compliance with such laws and regulations would not have a Material
Adverse Effect. As between the Borrowers, on the one hand, and the Agents,
NationsBanc, CIT, the Lenders and the L/C Issuer, on the other hand, the
Borrowers jointly and severally assume all risk, liability and responsibility
for, and agree to pay and discharge, all present and future local, state,
federal or foreign taxes, duties, or levies in respect of the shipment and
importation of Inventory. As between the Borrowers, on the one hand, and the
Agents, NationsBanc, CIT, the Lenders and the L/C Issuer, on the other hand, any
embargo, restriction, laws, customs or regulations of any country, state, city,
or other political subdivision, where such Inventory is or may be located, or
wherein payments are to be made, or wherein drafts may be drawn, negotiated,
accepted, or paid, shall be solely the Borrowers' joint and several risk,
liability and responsibility.
(i) Upon any payments made to the L/C Issuer under
the Letter of Credit Guaranty, NationsBanc, CIT, the Agents or the Lenders, as
the case may be, shall, without prejudice to its rights under this Agreement
(including that such unreimbursed amounts shall constitute Loans hereunder),
acquire by subrogation, any rights, remedies, duties or obligations granted or
undertaken by the Borrowers in favor of the L/C Issuer in any application for
Letters of Credit, any standing agreement relating to Letters of Credit or
otherwise, all of which shall be deemed to have been granted to NationsBanc,
CIT, the Agents and the Lenders and apply in all respects to NationsBanc, CIT,
the Agents and the Lenders and shall be in addition to any rights, remedies,
duties or obligations contained herein.
SECTION 3.02. Participations.
(a) Purchase of Participations. Immediately upon
issuance by the L/C Issuer of any Letter of Credit pursuant to this Agreement
(and, for each Existing Letter of Credit, on the Effective Date), each Lender
(other than, in the case of Letters of Credit issued after the Effective Date,
NationsBanc and, in the case of the Existing Letters of Credit, NationsBanc or
CIT, as appropriate) shall be deemed to have irrevocably and unconditionally
purchased and received from NationsBanc (or, in the case of Existing Letters of
Credit issued by The Chase Manhattan Bank, CIT), without recourse or warranty,
an undivided interest and participation, to the extent of such Lender's Pro Rata
Share, in all obligations of NationsBanc (and, in the case of the Existing
Letters of Credit issued by The Chase Manhattan Bank, CIT) in such Letter of
Credit (including, without limitation, all Reimbursement Obligations of the
Borrowers with respect thereto pursuant to the Letter of Credit Guaranty or
otherwise).
(b) Sharing of Payments. In the event that
NationsBanc (or, in the case of Existing Letters of Credit issued by The Chase
Manhattan Bank, CIT) makes any payment in respect of the Letter of Credit
Guaranty and the Borrowers shall not have repaid such amount to the
Administrative Agent for the account of
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NationsBanc (or, in the case of Existing Letters of Credit issued by The Chase
Manhattan Bank, CIT), the Administrative Agent shall charge the relevant Loan
Account in the amount of the Reimbursement Obligation, in accordance with
Sections 3.01(c) and 4.02.
(c) Obligations Irrevocable. The obligations of a
Lender to make payments to the Administrative Agent for the account of the
Agents, NationsBanc, CIT or the L/C Issuer with respect to a Letter of Credit
shall be irrevocable, without any qualification or exception whatsoever and
shall be made in accordance with the terms and conditions of this Agreement
under all circumstances, 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;
(ii) the existence of any claim, setoff,
defense or other right which a Borrower may have at any time against a
beneficiary named in such Letter of Credit or any transferee of such
Letter of Credit (or any Person for whom any such transferee may be
acting), the Agents, L/C Issuer, any Lender, or any other Person,
whether in connection with this Agreement, such Letter of Credit, the
transactions contemplated herein or any unrelated transactions
(including any underlying transactions between any Borrower or any
other party and the beneficiary named in such Letter of Credit);
(iii) any draft, certificate or any other
document presented under such Letter of Credit 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
security for the performance or observance of any of the terms of any
of the Loan Documents;
(v) any failure by NationsBanc, CIT or the
Administrative Agent to provide any notices required pursuant to this
Agreement relating to such Letter of Credit;
(vi) any payment by the L/C Issuer under any
of the Letters of Credit against presentation of a draft or certificate
which does not comply with the terms of such Letter of Credit; or
(vii) the occurrence of any Default or Event
of Default.
SECTION 3.03. Letters of Credit.
(a) Request for Issuance. A Borrower may from time to
time, upon notice not later than 12:00 noon, New York City time, at least three
Business Days in advance, request NationsBanc to assist such Borrower in
establishing or opening a Letter of Credit by delivering to NationsBanc, with a
copy to the Administrative Agent and the L/C Issuer, a Letter of Credit
Application, together with any necessary related documents. NationsBanc shall
not provide support, pursuant to the Letter of Credit Guaranty, if NationsBanc
and the Administrative Agent shall have received written notice from the
Required Lenders on the Business Day immediately preceding the proposed issuance
date for such Letter of Credit that one or more of the conditions precedent in
Section 5.02 will not have been satisfied on such date, and neither NationsBanc
nor the Administrative Agent shall otherwise be required to determine that, or
take notice whether, the conditions precedent set forth in Section 5.02 have
been satisfied.
(b) Letters of Credit Fees. (i) The Borrowers shall
jointly and severally pay to the Administrative Agent for the account of the
Lenders in accordance with such Lender's Pro Rata Share a nonrefundable fee for
each documentary Letter of Credit issued hereunder and for each amendment to a
documentary Letter of Credit that increases the stated amount of such Letter of
Credit or extends the expiration date of such Letter of Credit, such fee to be
equal to (A) for each documentary Letter of Credit with an expiration date of
less than or equal to 90 days from its issuance date and for any amendment to an
existing documentary Letter of Credit that increases the stated amount of such
documentary Letter of Credit, such fee shall be equal to .3125% of the initial
stated amount of such documentary Letter of Credit or the increase in the stated
amount of such existing documentary Letter of Credit, as the case may be (the
"Base Documentary L/C Fee"), (B) for each documentary Letter of Credit with an
expiration date of greater than
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90 days from its issuance date, such fee shall be equal to the Base Documentary
L/C Fee plus .1042% of the stated amount of such documentary Letter of Credit
for each thirty day period or part thereof for which the expiration date of such
documentary Letter of Credit exceeds 90 days, and (C) for any amendment to an
existing documentary Letter of Credit that extends the expiration date of such
documentary Letter of Credit, such fee shall be equal to .1042% of the stated
amount of such documentary Letter of Credit for each 30 day period or part
thereof for which such amendment extends the expiration date beyond 90 days from
the issuance date of such documentary Letter of Credit. This fee shall be
payable in advance on or prior to the issuance of each such documentary Letter
of Credit. In addition, the Borrowers shall jointly and severally pay to the
Administrative Agent for the account of the Lenders, in accordance with the
Lenders' Pro Rata Shares (x) for each standby Letter of Credit issued hereunder,
a nonrefundable fee equal to 1.25% per annum of the stated amount of such
standby Letter of Credit, payable annually in advance commencing on the date
such standby Letter of Credit is issued and on each anniversary of such issuance
date and (y) for any amendment to an existing standby Letter of Credit that
increases the stated amount of such standby Letter of Credit, a nonrefundable
fee equal to 1.25% per annum of the increase in the stated amount of such
standby Letter of Credit for the period from the date of such increase to the
next anniversary of the date such standby Letter of Credit was issued, payable
on the date of such increase.
(ii) L/C Issuer Charges. The Borrowers shall
pay to NationsBanc (or, in the case of Existing Letters of Credit issued by The
Chase Manhattan Bank, CIT) the standard charges assessed by the L/C Issuer in
connection with the issuance, administration, amendment, payment or cancellation
of Letters of Credit and the Letter of Credit Guaranty.
(iii) Charges to Loan Account. The Borrowers
hereby authorize the Administrative Agent to, and the Administrative Agent may,
from time to time, charge the relevant Loan Account pursuant to Sections 3.01(c)
and 4.02 of this Agreement with the amount of any Letter of Credit fees or
charges due under this Section 3.03.
(c) Existing Letters of Credit; Letter of Credit
Indemnity. Schedule 3.03(c) hereto contains a description of all letters of
credit issued pursuant to the Factoring Agreement of Squire and all letters of
credit issued by The Chase Manhattan Bank for the account of Miss Xxxxx, in each
case which are outstanding on the Effective Date. Each such letter of credit,
including any extension or renewal thereof (each, as amended from time to time
in accordance with the terms thereof and hereof, an "Existing Letter of Credit")
shall constitute a "Letter of Credit" issued for the account of Squire or Miss
Xxxxx, as the case may be for all purposes of this Agreement, including, without
limitation, calculations of Availability, the Overadvance Amount, the Borrowing
Base and Letter of Credit fees, issued on the Effective Date.
ARTICLE IV
FEES, PAYMENTS AND OTHER COMPENSATION
SECTION 4.01. Audit and Collateral Monitoring Fees. The
Borrowers acknowledge that the Agents may upon reasonable notice to the Company
conduct audits and/or field examinations of the Borrowers and the Guarantors at
any time and from time to time during normal business hours in a manner so as to
not unduly disrupt the business of the Borrowers and the Guarantors, provided
that (i) such notice shall not be required if an Event of Default has occurred
and is continuing and (ii) in the absence of a continuing Event of Default, the
Agents may conduct no more than four audits and/or field examinations of the
Borrowers and Guarantors in any year. The Borrowers jointly and severally agree
to pay $600 per day per examiner plus the examiner's out-of-pocket costs and
reasonable expenses incurred in connection with all such visits, inspections,
audits and examinations.
SECTION 4.02. Payments; Computations and Statements. (a) The
Borrowers will make each payment under the Notes not later than 12:00 noon (New
York City time) on the day when due, in lawful money of the United States of
America and in immediately available funds, to the Administrative Agent at the
Payment Office. All payments received by the Administrative Agent after 12:00
noon (New York City time) on any Business Day will be credited to the relevant
Loan Account on the next succeeding Business Day. All payments shall be made by
the Borrowers without defense, set-off or counterclaim to the Administrative
Agent and the Lenders. Except as provided in Section 2.05, after receipt, the
Administrative Agent will promptly thereafter cause to be distributed like funds
relating to the payment of principal ratably to the Lenders and like funds
relating to the payment of any other amount payable to
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any Lender to such Lender in each case to be applied in accordance with the
terms of this Agreement, provided that the Administrative Agent will cause to be
distributed all interest and fees received from or for the account of each
Borrower not less than once each month and in any event promptly after receipt
thereof. The Lenders and the Borrowers hereby authorize the Administrative Agent
to, and the Administrative Agent may, from time to time, charge the Loan Account
of a Borrower with any amount due and payable by such Borrower under any Loan
Document to which such Borrower is a party. Each of the Lenders and the
Borrowers agree that the Administrative Agent shall have the right to make such
charges whether or not any Event of Default or Default shall have occurred and
be continuing or whether any of the conditions precedent in Section 5.02 have
been satisfied. Any amount charged to the Loan Account of a Borrower shall be
deemed a Revolving Credit Loan hereunder made by the Lenders to such Borrower,
funded by the Administrative Agent on behalf of the Lenders and subject to
Section 2.05 of this Agreement. The Lenders and the Borrowers confirm that any
charges which the Administrative Agent may so make to the Loan Account of a
Borrower as herein provided will be made as an accommodation to such Borrower
and solely at the Administrative Agent's discretion. It is expressly understood
and agreed by the Borrowers that the Administrative Agent and the Lenders shall
have no responsibility to inquire into the correctness of the apportionment,
allocation or disposition of Loans or Letters of Credit made to the Borrowers or
any fees, costs or expenses for which the Borrowers are jointly and severally
obligated under this Agreement. Whenever any payment to be made under any such
Loan Document shall be stated to be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day and such extension of
time shall in such case be included in the computation of interest or fees, as
the case may be. All computations of fees shall be made by the Administrative
Agent on the basis of a year of 360 days for the actual number of days
(including the first day but excluding the last day) occurring in the period for
which such fees are payable. Each determination by the Administrative Agent of
an interest rate or fees hereunder shall be conclusive and binding for all
purposes in the absence of manifest error.
(b) The Administrative Agent shall provide each
Borrower, promptly after the end of each calendar month, a summary statement (in
the form from time to time used by the Administrative Agent) of the opening and
closing daily balances in the Loan Account of such Borrower during such month,
the amounts and dates on all Loans made to such Borrower during such month, the
amounts and dates of all payments on account of the Loans to such Borrower
during such month and the Loans to which such payments were applied, the amount
of interest accrued on the Loans to such Borrower during such month, any Letters
of Credit issued by the L/C Issuer for the account of such Borrower during such
month, specifying the face amount thereof, the amount of charges to such Loan
Account and/or Loans made to such Borrower during such month to reimburse the
Lenders for drawings made under Letters of Credit, and the amount and nature of
any charges to such Loan Account made during such month on account of fees,
commissions, expenses and other Obligations. All entries on any such statement
shall, 30 days after the same is sent, be presumed to be correct and shall
constitute presumptive evidence of the information contained in such statement
and shall be final and conclusive absent manifest error.
SECTION 4.03. Sharing of Payments, Etc. Except as provided in
Section 2.05 hereof, if any Lender shall obtain any payment (whether voluntary,
involuntary, through the exercise of any right of set-off, or otherwise) on
account of any Obligation in excess of its ratable share of payments on account
of similar obligations obtained by all the Lenders, such Lender shall forthwith
purchase from the other Lenders such participations in such similar obligations
held by them as shall be necessary to cause such purchasing Lender to share the
excess payment ratably with each of them; provided, however, that if all or any
portion of such excess payment is thereafter recovered from such purchasing
Lender, such purchase from each Lender shall be rescinded and such Lender shall
repay to the purchasing Lender the purchase price to the extent of such recovery
together with an amount equal to such Lender's ratable share (according to the
proportion of (i) the amount of such Lender's required repayment to (ii) the
total amount so recovered from the purchasing Lender of any interest or other
amount paid by the purchasing Lender in respect of the total amount so
recovered). The Borrowers agree that any Lender so purchasing a participation
from another Lender pursuant to this Section 4.03 may, to the fullest extent
permitted by law, exercise all its rights (including the Lender's right of
set-off) with respect to such participation as fully as if such Lender were the
direct creditor of the Borrowers in the amount of such participation.
SECTION 4.04. Apportionment of Payments. (a) Subject to
Sections 2.05 and 12.01 hereof, all payments of principal and interest in
respect of outstanding Loans, all payments in respect of the Reimbursement
Obligations, all payments of fees (other than the fees set forth in the Fee
Letter, fees with respect to Letters of Credit provided for in Section
3.03(b)(ii) and the audit and collateral monitoring fee provided for in Section
4.01) and all other
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payments in respect of any other Obligations, shall be allocated by the
Administrative Agent among such of the Lenders as are entitled thereto, in
proportion to their respective Pro Rata Shares or otherwise as provided herein
or, in respect of payments not made on account of Loans or Letter of Credit
Obligations, as designated by the Person making payment when the payment is
made.
(b) After the occurrence and during the continuance
of an Event of Default, the Administrative Agent may, and upon the direction of
the Required Lenders shall, apply all payments in respect of any Obligations and
all proceeds of the Collateral, subject to the provisions of this Agreement (i)
first, to pay the Obligations in respect of any fees, expense reimbursements or
indemnities then due to any Agent or the L/C Issuer; (ii) second, to pay the
Obligations in respect of any fees and indemnities then due to the Lenders;
(iii) third, ratably to pay interest due in respect of the Loans and
Reimbursement Obligations; (iv) fourth, ratably to pay or prepay principal of
the Loans and Letter of Credit Obligations (or, to the extent such Obligations
are contingent, to prepay or provide cash collateral in respect of such
Obligations); and (v) fifth, to the ratable payment of all other Obligations
then due and payable.
SECTION 4.05. Increased Costs and Reduced Return.
(a) If any Lender or the L/C Issuer shall have
determined that the adoption or implementation of, or any change in, any law,
rule, treaty or regulation, or any policy, guideline or directive of, or any
change in the interpretation or administration thereof by, any court, central
bank or other administrative or Governmental Authority, or compliance by the L/C
Issuer or any Lender or any Person controlling any such Lender or the L/C Issuer
with any directive of or guideline from any central bank or other Governmental
Authority or the introduction of or change in any accounting principles
applicable to the L/C Issuer or any Lender or any Person controlling any such
Lender or the L/C Issuer (in each case, whether or not having the force of law),
shall (i) change the basis of taxation of payments to the L/C Issuer or any
Lender or any Person controlling any such Lender or the L/C Issuer of any
amounts payable hereunder (except for taxes on the overall net income of the L/C
Issuer or any Lender or any Person controlling any such Lender or the L/C
Issuer), (ii) impose, modify or deem applicable any reserve, special deposit or
similar requirement against any Loan, Letter of Credit or against assets of or
held by, or deposits with or for the account of, or credit extended by, the L/C
Issuer or any Lender, or any Person controlling any such Lender or the L/C
Issuer or (iii) impose on the L/C Issuer or any Lender or any Person controlling
any such Lender or the L/C Issuer any other condition regarding this Agreement
or any Loan or Letter of Credit, and the result of any event referred to in
clauses (i), (ii) or (iii) above shall be to increase the cost to the L/C Issuer
or any Lender of making any Loan, issuing, guaranteeing or participating in any
Letter of Credit, or agreeing to make any Loan or issue, guaranty or participate
in any Letter of Credit, or to reduce any amount received or receivable by the
L/C Issuer or any Lender hereunder, then, upon demand by the L/C Issuer or such
Lender, the Borrowers shall pay to the L/C Issuer or such Lender such additional
amounts as will compensate the L/C Issuer or such Lender for such increased
costs or reductions in amount.
(b) If any Lender or the L/C Issuer shall have
determined that any Capital Guideline or adoption or implementation of, or any
change in, any Capital Guideline by the Governmental Authority charged with the
interpretation or administration thereof, or compliance by the L/C Issuer, any
Lender or any Person controlling such L/C Issuer or any Lender with any Capital
Guideline or with any request or directive of any such Governmental Authority
with respect to any Capital Guideline, or the implementation of, or any change
in, any applicable accounting principles (in each case, whether or not having
the force of law), either (i) affects or would affect the amount of capital
required or expected to be maintained by the L/C Issuer, any Lender or any
Person controlling such L/C Issuer or any Lender, and the L/C Issuer or any
Lender determines that the amount of such capital is increased as a direct or
indirect consequence of any Loans made or maintained, Letters of Credit issued
or any guaranty or participation with respect thereto, or the L/C Issuer's, any
Lender's or any such other controlling Person's other obligations hereunder, or
(ii) has or would have the effect of reducing the rate of return on the L/C
Issuer's, any Lender's, any such other controlling Person's capital to a level
below that which such L/C Issuer, such Lender or such controlling Person could
have achieved but for such circumstances as a consequence of any Loans made or
maintained, Letters of Credit issued, or any guaranty or participation with
respect thereto or any agreement to make Loans, to issue Letters of Credit or
such L/C Issuer's, such Lender's, such other controlling Person's other
obligations hereunder (in each case, taking into consideration such L/C
Issuer's, such Lender's or such other controlling Person's policies with respect
to capital adequacy), then, upon demand by the L/C Issuer or any Lender, the
Borrowers shall pay to the L/C Issuer or such Lender from time to time such
additional amounts as will compensate the L/C Issuer or such Lender for such
cost of
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maintaining such increased capital or such reduction in the rate of return on
such L/C Issuer's, such Lender's or such other controlling Person's capital.
(c) All amounts payable under this Section 4.05 shall
bear interest from the date that is ten days after the date of demand by the L/C
Issuer or a Lender until payment in full to the L/C Issuer or such Lender at the
Base Rate. A certificate of the L/C Issuer or any Lender claiming compensation
under this Section 4.05 specifying the event herein above described and the
nature of such event shall be submitted by the L/C Issuer or such Lender to a
Borrower, setting forth the additional amount due and an explanation of the
calculation thereof, the L/C Issuer's or such Lender's reasons for invoking the
provisions of this Section 4.05, and shall be final and conclusive absent
manifest error.
ARTICLE V
CONDITIONS OF EFFECTIVENESS, LETTER OF CREDIT
ISSUANCE AND LENDING
SECTION 5.01. Conditions Precedent to Effectiveness. This
Agreement shall become effective as of the Business Day (the "Effective Date")
when each of the following conditions precedent shall have been satisfied:
(a) Payment of Fees, Etc. The Borrowers shall have
paid on or before the date of this Agreement, all fees, costs, expenses and
taxes then payable by the Borrowers pursuant to Sections 2.08(b) and 12.05
hereof.
(b) Representations and Warranties; No Event of
Default. The representations and warranties contained in Section 6.01 of this
Agreement and in each other Loan Document and certificate or other writing
delivered to the Agents, the Lenders or the L/C Issuer pursuant hereto on or
prior to the Effective Date shall be correct on and as of the Effective Date as
though made on and as of such date (other than those which expressly speak only
as of a different date); and no Default or Event of Default shall have occurred
and be continuing on the Effective Date or would result from this Agreement
becoming effective in accordance with its terms.
(c) Legality. The making of the initial Loans or the
issuance of the initial Letter of Credit shall not contravene any law, rule or
regulation applicable to the Lenders or the L/C Issuer.
(d) Delivery of Documents. The Agents shall have
received on or before the Effective Date the following, each in form and
substance reasonably satisfactory to the Agents and, unless indicated otherwise,
dated the Effective Date:
(i) a Term Note payable to the order of each
Lender, duly executed by Squire;
(ii) a Revolving Credit Note payable to the
order of each Lender, duly executed by each Borrower;
(iii) a Guaranty, duly executed by each
Borrower and Norty's Inc.;
(iv) a Security Agreement, duly executed by
each Borrower and Guarantor;
(v) a Pledge Agreement, duly executed by the
Company and each Borrower; together with the original stock
certificates representing all of the common stock of the Subsidiaries
of the Company, all inter-company promissory notes of the Borrowers,
the non-negotiable limited recourse promissory notes of shareholders of
the Company listed on Schedule 7.02(k)(ii) hereof and in the case of
Miss Xxxxx original stock certificates representing certain shares of
common stock of the companies listed in Schedule 5.01(d)(v) hereto, in
each case accompanied by undated stock powers executed in blank or
other instruments of transfer;
(vi) appropriate financing statements on
Form UCC-1, duly executed by each Borrower and Guarantor duly filed (in
the case of all Loan Parties other than Miss Xxxxx) and for filing (in
the
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case of Miss Xxxxx) in such office or offices as may be necessary or,
in the reasonable opinion of the Agents, desirable to perfect the
security interests purported to be created by the Security Agreements;
(vii) certified copies of requests for
copies of information on Form UCC-11, listing all effective financing
statements which name as debtor any Borrower or Guarantor or the Seller
and which are filed in the offices referred to in paragraph (vi) above,
together with copies of such financing statements, none of which,
except as otherwise agreed to in writing by the Agents, shall cover any
of the Collateral;
(viii) a copy of the resolutions adopted by
the Board of Directors of each Borrower and Guarantor, certified as of
the Effective Date by authorized officers thereof, authorizing (A) the
borrowings hereunder and the transactions contemplated by the Loan
Documents and the Factoring Agreements to which such Borrower or
Guarantor is or will be a party, and (B) the execution, delivery and
performance by each Borrower and Guarantor of each Loan Document and
Factoring Agreement and the execution and delivery of the other
documents to be delivered by each Borrower and Guarantor in connection
herewith;
(ix) a certificate of an authorized officer
of each Borrower and Guarantor, certifying the names and true
signatures of the officers of such Borrower or Guarantor authorized to
sign each Loan Document and Factoring Agreement to which such Borrower
or Guarantor is or will be a party and the other documents to be
executed and delivered by such Borrower or Guarantor in connection
herewith, together with evidence of the incumbency of such authorized
officers;
(x) a certificate dated as of a recent date
of the appropriate official(s) of the states of incorporation and each
state of foreign qualification of each Borrower and Guarantor,
certifying as to the subsistence in good standing of, and the payment
of taxes by, such Borrower or Guarantor in such states and listing all
charter documents of such Borrower and Guarantor on file with such
official(s);
(xi) a copy of the charter of each Borrower
and Guarantor certified by the appropriate official(s) of the state of
organization of such Borrower or Guarantor and as of the Effective Date
by an authorized officer of the Borrower or Guarantor;
(xii) a copy of the by-laws of each Borrower
and Guarantor, certified as of the Effective Date by an authorized
officer of such Borrower or Guarantor;
(xiii) an opinion of Xxxxxx & Xxxxxx, New
York counsel to the Borrowers and Guarantors, substantially in the form
of Exhibit G hereto, and as to such other matters as the Agents may
reasonably request;
(xiv) an opinion of Jamieson, Moore, Xxxxxx
& Xxxxxx, New Jersey counsel to the Borrowers and the Guarantors,
substantially in the form of Exhibit H hereto, and as to such other
matters as the Agents may reasonably request;
(xv) a certificate of the chief executive
officer or the chief financial officer of the Company and each
Borrower, certifying as to the matters set forth in subsection (b) of
this Section 5.01;
(xvi) a copy of the Financial Statements and
the pro forma and projected financial statements described in Section
6.01(h) hereof together with a certificate of the chief executive
officer or chief financial officer of the Company and each Borrower
setting forth (i) all existing Indebtedness not reflected on the
Financial Statements, including guarantees, pending or, to the best of
the Company's and each Borrower's knowledge, threatened litigation and
other contingent liabilities of the Borrowers and Guarantors (in the
case of such contingent liabilities, only if required to be reported in
a Financial Statement by GAAP), and (ii) all dividends declared or paid
since the date of such financial statements and all inter-company
payments made or obligations incurred to Affiliates outside the
ordinary course of the Borrowers' businesses since the date of such
Financial Statements;
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(xvii) a breakdown of Inventory by Borrower
and by location in the form specified in Section 7.01(a)(v)(A) hereof
certified by the chief financial officer of each Borrower;
(xviii) the Assignment Agreement duly
executed by the Borrowers and the Factor, and a copy, certified by the
chief executive officer or the chief financial officer of each
Borrower, of each executed Factoring Agreement and related documents;
(xix) copies of the insurance policies and
certificates of insurance evidencing such insurance on the property of
the Borrowers and the Guarantors as is required by Section 7.01(h)
hereof naming the Collateral Agent as additional insured and loss
payee, using a long form loss payee endorsement, for all insurance
maintained by the Borrowers and the Guarantors;
(xx) a certificate of an authorized officer
of each Borrower and Guarantor certifying the names and true signatures
of those officers of each Borrower and Guarantor that are authorized to
provide Notices of Borrowings, Letter of Credit Applications and all
other notices under this Agreement and the Loan Documents;
(xxi) (A) a landlord waiver or appropriate
language in the assignment of lease for the premises of Miss Xxxxx
located at 000 Xxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxxxx and (B) processor no
offset letters for each of the Borrowers' contractors listed on
Schedule 5.01(d)(xxi) hereto, in the case of clauses (A) and (B), in
form and substance reasonably satisfactory to the Agents;
(xxii) a Borrowing Base Certificate
calculated on a consolidated basis and on an individual basis for each
Borrower current as of September 29, 1997;
(xxiii) a copy of (A) each Acquisition
Document, including any Update Notice (as defined in the Acquisition
Agreement), certified as a true and correct copy thereof by the chief
executive officer of the Company, and if there is no Update Notice, a
certificate of the chief executive officer of the Company to that
effect, (B) each financial statement delivered to Miss Xxxxx pursuant
to Section 10.09 of the Acquisition Agreement, (C) the Current Balance
Sheet (as defined in the Acquisition Agreement), and (D) the assignment
of lease regarding the property located at 000 Xxxxx Xxxxxx, Xxxxxxxxx,
XX 00000;
(xxiv) a copy of the most recent annual
report (Form 5500 Series) for each Employee Plan, including Schedule B
attached thereto;
(xxv) the Termination Agreement duly
executed by The Chase Manhattan Bank and the Seller, together with UCC
termination statements and other documentation evidencing the
termination by The Chase Manhattan Bank of its Liens in and to the
properties and assets of the Seller;
(xxvi) the Subordination Agreement, duly
executed by the Collateral Agent and the Seller;
(xxvii) the Subordinate Pledge Agreement,
duly executed by the Company and the Seller; and
(xxviii) such other agreements, instruments,
approvals, opinions and other documents as the Agents may reasonably
request.
(e) Proceedings; Receipt of Documents. All
proceedings in connection with the transactions contemplated by this Agreement,
and all documents incidental thereto, shall be satisfactory to the Agents and
their special counsel, and the Agents and such special counsel shall have
received all such information and such counterpart originals or certified or
other copies of such documents as the Agents or such special counsel may
reasonably request.
(f) Material Adverse Effect. The Lenders shall have
determined, in their sole judgment, that no Material Adverse Effect shall have
occurred (i) after August 2, 1997 with respect to the Company and Squire and
(ii) after January 31, 1997 with respect to the Assets and with respect to Miss
Xxxxx.
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(g) Consummation of the Acquisition. All terms and
provisions of the Acquisition Documents shall be in form and substance
reasonably satisfactory to the Agents and shall not be amended without the
consent of the Agents. The Agents shall be reasonably satisfied with the nature
of and the amount and type of assets and liabilities being acquired and/or
assumed in the Acquisition. The Acquisition, including all of the terms and
conditions thereof, shall have been duly authorized by the board of directors
and (if required by applicable law) the shareholders of the parties to the
Acquisition Agreement and all Acquisition Documents shall have been duly
executed and delivered by the parties thereto and shall be in full force and
effect in all respects as if made on and as of the Effective Date. The
representations and warranties set forth in the Acquisition Documents shall be
true and correct in all material respects as if made on and as of the Effective
Date. Each of the conditions precedent to the obligations of each of the parties
to the Acquisition Documents to consummate the Acquisition as set forth in the
Acquisition Documents shall have been satisfied or waived with the consent of
the Agents and the Acquisition shall have been consummated in accordance with
all applicable law and the Acquisition Documents. The consideration paid in the
Acquisition, excluding the Earn-Out Payment, shall not exceed $24,000,000 plus
the amount contemplated by Sections 9.08 and 10.10 of the Acquisition Agreement.
(h) Name Change. The Agents shall have received
evidence satisfactory to them that ME Acquisition Corp. has changed its name to
Miss Xxxxx, Inc. and that Seller has changed its name to Old ME Corp.
(i) Overadvance Amount. The Overadvance Amount,
calculated on a combined basis for the Borrowers as of September 29, 1997 after
giving effect to the Loans and Letters of Credit necessary to effect the
Acquisition, as set forth in the combined Borrowing Base Certificate delivered
to the Agents pursuant to Section 5.01(d)(xxii) hereof, shall not exceed
$15,000,000.
SECTION 5.02. Conditions Precedent to Loans and Letters of
Credit. As a condition precedent to the Administrative Agent or any Lender
making any Loan (including the initial Loans on the Effective Date), or the
Agents assisting the Borrowers in establishing, or opening any Letter of Credit
(including the initial Letters of Credit on the Effective Date), each of the
following conditions precedent shall be fulfilled in a manner satisfactory to
the Administrative Agent;
(a) Payment of Fees, Etc. The Borrowers shall have
paid all fees, costs, expenses and taxes then payable by the Borrowers pursuant
to Sections 2.08 and 12.05 hereof.
(b) Representations and Warranties; No Event of
Default. The following statements shall be true, and the submission by a
Borrower to the Administrative Agent of a Notice of Borrowing with respect to a
Loan and a Borrower's acceptance of the proceeds of such Loan, or the submission
by a Borrower of a Letter of Credit Application with respect to a Letter of
Credit and the issuance of such Letter of Credit shall be deemed to be a
representation and warranty by such Borrower on the date of such Loan and the
date of the issuance of such Letter of Credit that (i) the representations and
warranties contained in Section 6.01 of this Agreement and in each other Loan
Document and certificate or other writing delivered to the Lenders pursuant
hereto on or prior to the date of such Loan or Letter of Credit are correct on
and as of such date as though made on and as of such date (other than those
representations and warranties which expressly speak only as of a different
date); and (ii) no Event of Default or Default has occurred and is continuing or
would result from the making of the Loan to be made on such date or the issuance
of the Letter of Credit to be issued on such date.
(c) Legality. The making of such Loan or the issuance
of such Letter of Credit shall not contravene any law, rule or regulation
applicable to the Agents, the Lenders or the L/C Issuer, as the case may be.
(d) Notices. Except in the case of a borrowing of a
Loan pursuant to Sections 3.01(c), the Administrative Agent shall have received
(i) a Notice of Borrowing pursuant to Section 2.03 hereof no later than 12:00
noon (New York City time) (A) on the date of the proposed borrowing with respect
to a Base Rate Loan and (B) three Business Days prior to the date of the
proposed borrowing in the case of a Eurodollar Loan and (ii) a Letter of Credit
Application pursuant to Section 3.03 hereof not later than 12:00 noon (New York
City time) three Business Days prior to the proposed date of issuance of a
Letter of Credit.
(e) Delivery of Documents. The Administrative Agent
shall have received such other reasonably available information, approvals and
documents, each in form and substance reasonably satisfactory to the
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Administrative Agent, as the Administrative Agent may reasonably request.
(f) Proceedings. All proceedings in connection with
the making of such Loan or the issuance of such Letter of Credit and the other
transactions contemplated by this Agreement, and all documents incidental
thereto, shall be reasonably satisfactory to the Administrative Agent and its
special counsel.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION 6.01. Representations and Warranties. The Company and
each Borrower represents and warrants as follows:
(a) Organization, Good Standing, Etc. Each Loan Party
(i) is a corporation duly organized, validly existing and in good standing under
the laws of the state of its organization, (ii) has all requisite corporate
power and authority to conduct its business as now conducted and as presently
contemplated and to make the borrowings hereunder (in the case of the Borrowers)
and to consummate the transactions contemplated by the Documents to which it is
a party, and (iii) is duly qualified to do business and is in good standing in
each jurisdiction in which the character of the properties owned or leased by it
or in which the transaction of its business makes such qualification necessary,
except in the case of clause (iii) where the failure to qualify and be in good
standing would not have a Material Adverse Effect.
(b) Authorization, Etc. The execution, delivery and
performance by each Loan Party of each Document to which it is a party, (i) have
been duly authorized by all necessary corporate action, (ii) do not contravene
the charter, by-laws or any applicable law or any contractual restriction
binding on or otherwise affecting it or any of its properties, (iii) do not
result in or require the creation of any Lien, (other than pursuant to any such
Loan Document) upon or with respect to any of its properties, and (iv) do not
result in any suspension, revocation, impairment, forfeiture or nonrenewal of
any permit, license, authorization or approval applicable to its operations or
any of its properties.
(c) Governmental Approvals. No authorization or
approval or other action by, and no notice to or filing with, any Governmental
Authority or other regulatory body is required in connection with the due
execution, delivery and performance by each Loan Party of any Document to which
it is or will be a party other than those pursuant to the Xxxx-Xxxxx Xxxxxx
Antitrust Improvement Act of 1976 and as otherwise contemplated by the
Acquisition Documents, each of which will have been received or been made, as
applicable, by the Effective Date and shall be in full force and effect.
(d) Enforceability of Loan Documents. This Agreement
is, and each other Document to which each Loan Party is or will be a party, when
delivered hereunder, will be, a legal, valid and binding obligation of such Loan
Party, enforceable against such Loan Party in accordance with its terms except
to the extent the enforceability thereof may be limited by any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws from time to
time in effect affecting generally, the enforcement of creditors' rights and
remedies and by general principles of equity.
(e) Inventory Locations; Places of Business; Chief
Executive Office. There is no location at which any Borrower has any Inventory
(except for Inventory in transit) other than (i) those locations listed on Part
A of Schedule 6.01(e) hereto and (ii) any other locations in the continental
United States permitted pursuant to the terms of Section 7.01(n) hereof. Part B
of Schedule 6.01(e) hereto contains a true, correct and complete list, as of the
Effective Date, of the legal names and addresses of each warehouse at which
Inventory of any Borrower is stored. None of the receipts received by a Borrower
from any warehouse states that the goods covered thereby are to be delivered to
bearer or to the order of a named Person or to a named Person and such named
Person's assigns. Part C of Schedule 6.01(e) sets forth a complete and accurate
list as of the date hereof of (A) each place of business of each Loan Party and
(B) the chief executive office of each Loan Party. Part D of Schedule 6.01(e)
sets forth a complete and accurate description and list as of the date hereof of
the location, by state and street address, of all real property owned and leased
by the Company and its Subsidiaries.
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(f) Subsidiaries. Schedule 6.01(f) hereto is a
complete and correct description of the name, jurisdiction of incorporation and
ownership of the outstanding Capital Stock of each Subsidiary of the Company in
existence on the date hereof. All shares of such stock owned by the Company or
one or more of its Subsidiaries, as indicated in such Schedule, are owned free
and clear of all Liens other than (i) Liens created by the Loan Documents and
(ii) in the case of the Capital Stock of Miss Xxxxx, Permitted Liens.
(g) Litigation. Except (i) as set forth on Schedule
6.01(g) hereto and (ii) for all pending or, to the best of the Loan Parties'
knowledge, threatened actions, suits or proceedings affecting the Company or any
of its Subsidiaries before any court or other Governmental Authority or any
arbitrator seeking money damages in an aggregate amount for all such actions,
suits or proceedings of not more than $500,000 in excess of any applicable
insurance or bond coverage and, in the case of clause (ii), which actions, suits
or proceedings were not pending or, to the best of the Loan Parties' knowledge
threatened on the Effective Date, there is no pending or, to the best of the
Loan Parties' knowledge, threatened action, suit or proceeding affecting the
Company or any of its Subsidiaries before any court or other Governmental
Authority or any arbitrator. There is no pending or, to the best of the Loan
Parties' knowledge, threatened action, suit or proceeding affecting the Company
or any of its Subsidiaries before any court or other Governmental Authority or
any arbitrator which may have a Material Adverse Effect.
(h) Financial Condition. (i) The Financial
Statements, copies of which have been delivered to the Lenders, fairly present
in all material respects the financial condition of the Company and its
Subsidiaries and the Seller, as the case may be, as at the respective dates
thereof and the results of operations of the Company and its Subsidiaries and
the Seller, as the case may be, for the fiscal periods ended on such respective
dates, all in accordance with GAAP, and since (A) August 2, 1997 with respect to
the Company and Squire and (B) since January 31, 1997 with respect to the Assets
and with respect to Miss Xxxxx, there has been no Material Adverse Effect.
(ii) The pro forma consolidated and
consolidating balance sheets of the Company as at August 30, 1997 after giving
effect to the Acquisition and related financings, certified by the chief
financial officer of the Company, copies of which have been furnished to the
Lenders, were believed at the time furnished to be reasonable, have been
prepared on a reasonable basis and in good faith by the Company, and have been
based on assumptions believed by the Company to be reasonable at the time made
and upon the best information then reasonably available to the Company.
(iii) The Company has heretofore furnished
to the Agents and the Lenders projected balance sheets, income statements and
statements of cash flow prepared on a monthly basis for the period from
September 1997 to October 1998 and prepared on an annual basis for the Fiscal
Years ending in 1998, 1999, 2000, 2001 and 2002 and such projections were
believed at the time furnished to be reasonable, have been prepared on a
reasonable basis and in good faith by the Company, and have been based on
assumptions believed by the Company to be reasonable at the time made and upon
the best information then reasonably available to the Company.
(i) Compliance with Law, Etc. Neither the Company nor
any other Loan Party is in violation of its charter or by-laws, any material law
or any term of any agreement or instrument binding on or otherwise affecting it
or any of its properties, except, in the case of any violation of any agreement
or instrument, where such violation would not have a Material Adverse Effect.
(j) ERISA. Schedule 6.01(j) hereto sets forth each
Employee Plan and Multiemployer Plan. Except as set forth on Schedule 6.01(j)
hereto, (i) each Employee Plan is in substantial compliance with the applicable
provisions of ERISA and the Internal Revenue Code, (ii) no Termination Event has
occurred nor is reasonably expected to occur with respect to any Employee Plan,
(iii) the most recent annual report (Form 5500 Series) with respect to each
Employee Plan, including Schedule B (Actuarial Information) thereto, copies of
which have been filed with the Internal Revenue Service and delivered to the
Agents, is complete and correct in all material respects and fairly presents the
funding status of such Employee Plan, and since the date of such report there
has been no material adverse change in such funding status, (iv) no Employee
Plan had an accumulated or waived funding deficiency or permitted decreases or
has applied for an extension of any amortization period within the meaning of
Section 412 of the Internal Revenue Code at any time during the previous 60
months, and (v) no Lien imposed under the Internal Revenue Code or ERISA exists
or is likely to arise on account of any Employee Plan within the meaning of
Section 412 of the Internal Revenue Code at any time during the previous 60
months, except as described in clauses (ii) and (iii) of paragraph 6.01(k)
hereof. Except as set forth on Schedule 6.01(j) hereto, neither the
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Company nor any other Loan Party nor any of their respective ERISA Affiliates
have incurred any withdrawal liability under ERISA with respect to any
Multiemployer Plan, and neither the Company nor any other Loan Party is aware of
any facts indicating that the Company or any other Loan Party or any of their
respective ERISA Affiliates may in the future incur any such withdrawal
liability. Except as required by Section 4980B of the Internal Revenue Code, and
except as set forth on Schedule 6.01(j) hereto, neither the Company nor any
other Loan Party nor any of their respective ERISA Affiliates maintains an
employee welfare benefit plan (as defined in Section 3(1) of ERISA) which
provides health or welfare benefits (through the purchase of insurance or
otherwise) for any retired or former employee of the Company or any other Loan
Party or any of their respective ERISA Affiliates or coverage after a
participant's termination of employment. Neither the Company nor any other Loan
Party nor any of their respective ERISA Affiliates has incurred any liability or
obligation under the Worker Adjustment and Retraining Notification Act ("WARN")
or similar state law, which remains unpaid or unsatisfied.
(k) Taxes, Etc. All Federal, state and local tax
returns and other reports required by applicable law to be filed by the Company
and each Loan Party have been filed, and, except as set forth on Schedule
6.01(k) hereto, all taxes, assessments and other governmental charges imposed
upon the Company or any other Loan Party or any property of the Company or such
other Loan Party and which have become due and payable on or prior to the date
hereof have been paid, except (i) to the extent contested in good faith by
proper proceedings which stay the imposition of any penalty, fine or Lien
resulting from the non-payment thereof and with respect to which adequate
reserves have been set aside for the payment thereof, and (ii) for taxes,
assessments or other charges in an amount of not more than $200,000 in the
aggregate and the Liens, if any, securing such amounts.
(l) Regulation U. Neither the Company nor any other
Loan Party is or will be engaged in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of Regulation
U issued by the Board of Governors of the Federal Reserve System), and no
proceeds of any Loan will be used to purchase or carry any margin stock or to
extend credit to others for the purpose of purchasing or carrying any margin
stock.
(m) Nature of Business. Neither the Company nor any
other Loan Party is engaged in any business other than the women's apparel
business, excluding manufacturing but not excluding contracting for manufacture
or the manufacture of samples.
(n) Adverse Agreements, Etc. Neither the Company nor
any other Loan Party nor any of their respective Subsidiaries is a party to any
agreement or instrument, or subject to any charter or other corporate
restriction or any judgment, order, regulation, ruling or other requirement of a
court or other Governmental Authority or regulatory body, which has or, to the
best knowledge of the Company and the other Loan Parties, in the future is
reasonably likely to result in, a Material Adverse Effect.
(o) Holding Company and Investment Company Acts.
Neither the Company nor any other Loan Party is (i)a "holding company" or a
"subsidiary company" of a "holding company" or an "affiliate" of a "holding
company", as such terms are defined in the Public Utility Holding Company Act of
1935, as amended, or (ii) an "investment company" or an "affiliated person" or
"promoter" of, or "principal underwriter" of or for, an "investment company", as
such terms are defined in the Investment Company Act of 1940, as amended.
(p) Permits, Etc. Each Loan Party has all permits,
licenses, authorizations and approvals required for them lawfully to own and
operate their business except where the failure to have such would not have a
Material Adverse Effect.
(q) Title to Properties. Each Loan Party has good and
marketable title to all of their properties and assets, free and clear of all
Liens, and other types of preferential arrangements except for Permitted Liens.
(r) Full Disclosure. No Loan Document or schedule or
exhibit thereto and no certificate, report, statement or other document or
information furnished in writing by or on behalf of the Loan Parties to the
Lenders in connection herewith or with the consummation of the transactions
contemplated hereby, contains any material misstatement of fact or omits to
state a material fact or any fact necessary to make the statements contained
herein or therein not misleading in any material respect. There is no fact
reasonably likely to result in a Material
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Adverse Effect which has not been set forth in a footnote included in the
Financial Statements or a Schedule hereto.
(s) Operating Lease Obligations. As of the date
hereof, the Company and the other Loan Parties do not have any obligations as
lessee for the payment of rent for any real or personal property other than the
Operating Lease Obligations set forth in Schedule 6.01(s) hereto.
(t) Environmental Matters. (i) The operations of the
Loan Parties are in compliance with all Environmental Laws except where the
failure to be in compliance would not have a Material Adverse Effect; (ii) there
has been no Release at any of the properties owned or operated by any Loan Party
or a predecessor in interest, or at any disposal or treatment facility which
received Hazardous Materials generated by any Loan Party or any predecessor in
interest except, in each case, where the Release would not have a Material
Adverse Effect; (iii) no Environmental Actions have been asserted against any
Loan Party or any predecessor in interest nor does any Loan Party have knowledge
or notice of any threatened or pending Environmental Action against any Loan
Party or any predecessor in interest which will have a Material Adverse Effect;
and (iv) no Environmental Actions have been asserted against any facilities that
may have received Hazardous Materials generated by any Loan Party or any
predecessor in interest which will result in a Material Adverse Effect.
(u) Schedules. All of the information which is
required to be scheduled to this Agreement on the date hereof is set forth on
the Schedules attached hereto, is correct and accurate in all material respects
and does not omit to state any information material thereto.
(v) Insurance. The Loan Parties keep their properties
adequately insured and maintain (i) insurance to such extent and against such
risks, including fire, as is customary with companies in the same or similar
businesses, (ii) workmen's compensation insurance in the amount required by
applicable law, (iii) public liability insurance, which shall include product
liability insurance, in the amount customary with companies in the same or
similar business against claims for personal injury or death on properties
owned, occupied or controlled by them, and (iv) such other insurance as may be
required by law.
(w) Use of Proceeds. The proceeds of the Loans shall
be used to refinance existing Indebtedness of the Company and its Subsidiaries,
to finance the Acquisition, for general working capital purposes and to make
intercompany loans and advances permitted by Sections 7.02(b) and 7.02(f)
hereof. The Letters of Credit will be used to finance the purchase by the
Borrowers of Inventory and for other general working capital purposes.
(x) Security Interests. The Security Documents create
in favor of the Collateral Agent, for the benefit of the Lenders, a legal, valid
and (upon the filing of UCC-1 financing statements described in Section
5.01(d)(vi), the recording of the Assignment For Security (Trademarks) referred
to in the Security Agreements in the United States Patent and Trademark Office,
the recording of the Assignment For Security (Copyrights) referred to the
Security Agreements in the United States Registrar of Copyrights, and the
delivery to the Collateral Agent of the Pledged Collateral (as defined in the
Pledge Agreements)) perfected first priority (except as permitted by Section
7.02(a) hereof) security interest in the Collateral.
(y) Tradenames. Schedule 6.01(y) hereto sets forth a
complete and accurate list as of the Effective Date of all tradenames used by
the Company and its Subsidiaries.
(z) Solvency. After giving effect to the transactions
contemplated or required to occur by the terms of this Agreement and the
Acquisition Documents, each Loan Party is, individually and together with its
Subsidiaries, Solvent.
(aa) Material Contracts. Set forth on Schedule
6.01(aa) hereto is a complete and accurate list as of the Effective Date of all
Material Contracts of the Company and its Subsidiaries, showing the parties
thereto and amendments and modifications thereto. As of the date hereof, each
such Material Contract (i) is in full force and effect and is binding upon and
enforceable against each Loan Party that is a party thereto and, to the best of
such Loan Party's knowledge, all other parties thereto in accordance with its
terms, (ii) has not been otherwise amended or modified, and (iii) there exists
no default under any Material Contract by any Loan Party thereto or, to the Loan
Parties' knowledge, any other party thereto which default gives the
non-defaulting party the right to terminate such Material Contract.
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(bb) Representations and Warranties in Documents. All
representations and warranties set forth in the Documents are true and correct
in all material respects at the time as of which such representations were made
and on the Effective Date.
(cc) The Acquisition. The Acquisition has been
effected in accordance with the terms of the Acquisition Documents and all
applicable law. At the time of consummation thereof, all consents and approvals
of, and filings and registrations with, and all other actions in respect of, all
Governmental Authorities required in order to consummate the Acquisition shall
have been obtained, given, filed or taken and shall be in full force and effect.
At the time of consummation of the Acquisition, there does not exist any
judgment, order or injunction prohibiting or imposing any material adverse
condition upon the consummation of the Acquisition. All actions taken by the
Company or any of its Subsidiaries pursuant to or in furtherance of the
Acquisition have been taken in compliance in all material respects with the
respective Documents and all applicable law.
(dd) Acquisition Documents. (i) The Loan Parties are
not in default on any of their obligations under any Acquisition Document, and,
to the best knowledge of the Loan Parties, neither Seller nor any other party to
any Acquisition Document is in default thereunder, (ii) all representations and
warranties made by the Loan Parties in the Acquisition Documents and in the
certificates delivered in connection therewith are true and correct in all
material respects as of the date hereof and, to the best knowledge of the Loan
Parties, all material representations and warranties made in the Acquisition
Documents by or on behalf of Seller, or any other party thereto other than the
Loan Parties, is true and correct in all material respects as of the date
hereof, (iii) all written information (other than pro forma information and
projections as to which Section 6.01(h)(ii) and (iii) above shall be
applicable), with respect to the Loan Parties, the Acquisition, and, to the best
knowledge of the Loan Parties, the business and Assets acquired in connection
with the Acquisition, furnished to the Agents by the Loan Parties or on behalf
of the Loan Parties, were, at the time the same were so furnished, complete and
correct in all material respects, or have been subsequently supplemented by
other written information, to the extent necessary to give the Agents and the
Lenders a true and accurate knowledge of the subject matter of each of them in
relation to the Loan Parties, the Acquisition, and the business and Assets
acquired in the Acquisition, in all material respects, (iv) no representation,
warranty or statement made by the Loan Parties or, to their best knowledge,
Seller or any other party thereto other than the Loan Parties, at the time they
were made in any Acquisition Document, or any agreement, certificate, statement
or document required to be delivered pursuant to any Acquisition Document
contains any untrue statement of material fact or omits to state a material fact
necessary in order to make the statements contained in such Acquisition Document
not misleading in light of the circumstances in which they were made, and (v) in
connection with the Acquisition, Miss Xxxxx is acquiring the Assets, including,
without limitation, the accounts receivable and inventory of the Seller and, on
the date hereof, after giving effect to the transactions contemplated by this
Agreement, by the Acquisition Agreement and by the other Acquisition Documents
and Loan Documents, Miss Xxxxx will have good title to such Assets, including
without limitation, the account receivables and inventory of the Seller free and
clear of all Liens other than the Liens created by the Loan Documents and other
than Permitted Liens.
ARTICLE VII
COVENANTS OF THE BORROWER
SECTION 7.01. Affirmative Covenants. So long as any principal
of or interest on the Loans or the Reimbursement Obligations or any other Letter
of Credit Obligations (whether or not due) shall remain unpaid or any Lender
shall have any Commitment hereunder, the Company and the Borrowers will unless
the Required Lenders shall otherwise consent in writing:
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(a) Reporting Requirements. Furnish to the Lenders
(except in the case of clause (v)(C) below, which shall be furnished to the
Agents):
(i) as soon as available and in any event
within 50 days after the end of each Fiscal Quarter of the Company,
consolidated and consolidating balance sheets, consolidated and
consolidating statements of income and consolidated statements of
retained earnings and cash flow of the Company and its Consolidated
Subsidiaries and statements of retained earnings and cash flows
prepared on a stand alone basis for the Company and its Subsidiaries,
in each case as at the end of such Fiscal Quarter; and for the period
commencing at the end of the immediately preceding Fiscal Year and
ending with the end of such Fiscal Quarter, setting forth in each case
in comparative form the figures for the corresponding date or period of
the immediately preceding Fiscal Year (except in the case of Miss Xxxxx
until the 1999 Fiscal Year), all in reasonable detail and certified by
the chief financial officer of the Company as fairly presenting, in all
material respects, the financial position of the Company and its
Consolidated Subsidiaries as of the end of such Fiscal Quarter and the
results of operations and changes in financial position of the Company
and its Consolidated Subsidiaries for such Fiscal Quarter, in
accordance with GAAP applied in a manner consistent with that of the
most recent audited financial statements furnished to the Lender,
subject to year end adjustments and the absence of footnotes;
(ii) as soon as available, and in any event
within 105 days after the end of each Fiscal Year of the Company,
consolidated and consolidating balance sheets, consolidated and
consolidating statements of income and consolidated statements of
retained earnings and cash flow of the Company and its Consolidated
Subsidiaries and statements of retained earnings and cash flows
prepared on a stand alone basis for the Company and its Subsidiaries,
in each case as at the end of such Fiscal Year, setting forth in
comparative form the corresponding figures for the immediately
preceding Fiscal Year, all in reasonable detail and prepared in
accordance with GAAP, and with respect to the consolidated financial
statements accompanied by a report and an unqualified opinion, prepared
in accordance with generally accepted auditing standards, of Ernst &
Young LLP or other independent certified public accountants of
recognized standing selected by the Company and reasonably satisfactory
to the Agents, together with a written statement of such accountants
(1) to the effect that, in making the examination necessary for their
certification of such financial statements, they have not obtained any
knowledge of the existence of an Event of Default or a Default under
Sections 7.02(f)(vi), 7.02(h), 7.02(i)(ii), 7.02(p) or 7.02(q) hereof
and (2) if such accountants shall have obtained any knowledge of the
existence of an Event of Default or such Default, describing the nature
thereof;
(iii) as soon as available and in any event
within 30 days of the end of each Fiscal Month, an internally prepared
consolidated balance sheets and consolidated statements of income for
such Fiscal Month of the Company and its Consolidated Subsidiaries and
balance sheets and statements of income prepared on a stand alone basis
for the Company and its Subsidiaries for such Fiscal Month, in each
case for the period from the beginning of such Fiscal Year to the end
of such Fiscal Month all in reasonable detail and certified by the
chief financial officer of the Company as fairly presenting, in all
material respects, the financial position of the Company and its
Consolidated Subsidiaries as of the end of such Fiscal Month and the
results of operations of the Company and its Consolidated Subsidiaries
for such Fiscal Month, in accordance with GAAP applied in a manner
consistent with that of the most recent audited financial statements
furnished to the Lenders, subject to quarterly and year end adjustments
and the absence of footnotes;
(iv) simultaneously with the delivery of the
financial statements required by clauses (i), (ii) and (iii) of this
Section 7.01(a), a certificate of the chief financial officer of the
Company, stating (a) that such officer has reviewed the provisions of
this Agreement and the other Loan Documents and has made or caused to
be made under such officer's supervision a review of the condition and
operations of the Company and its Subsidiaries during the period
covered by such financial statements with a view to determining whether
the Company and its Subsidiaries were in compliance with all of the
provisions of such Loan Documents at the times such compliance is
required by the Loan Documents, and that such review has not disclosed,
and such officer has no knowledge of, the existence during such period
of an Event of Default or Default or, if an Event of Default or such
Default existed, describing the nature and period of existence
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thereof and the action which the Company and its Subsidiaries propose
to take or took with respect thereto and (b) a schedule showing the
calculations specified in Section 7.02(p) of this Agreement if such
financial covenants are applicable for such period;
(v) (A) within 30 days after the end of each
Fiscal Month, a schedule, in form and substance reasonably satisfactory
to the Collateral Agent, current as of the close of business on the
last day of such Fiscal Month, certified by the chief financial officer
of each Borrower, containing a breakdown of each Borrower's Inventory
by amount and valued at cost (which shall include dollar valuation by
location) and warehouse and production facility location and shall
include a breakdown of all Prior Season Inventory, appropriately
completed with information reasonably satisfactory to the Collateral
Agent, incorporating all appropriate month-end adjustments and current
as of the close of business on the last day of such Fiscal Month
immediately prior to such date, and (B) within 30 days after the end of
each Fiscal Month, a Borrowing Base Certificate, in the form of Exhibit
K-1 hereto, current as of the close of business on the last day of such
Fiscal Month setting forth the calculation of the Borrowing Base
(utilizing the Accounts Receivable at the end of such Fiscal Month and
the Inventory set forth in the report delivered pursuant to clause (A)
above at such time including in-transit Inventory) and Availability for
each Borrower on an individual and combined basis, and (C) within 3
Business Days after the end of each week, a Borrowing Base Certificate,
in the form of Exhibit K-2 hereto, current as of the close of business
on the Saturday of the immediately preceding week setting forth the
calculation of the Borrowing Base and Availability for each Borrower on
an individual and combined basis, and in the case of the Borrowing Base
Certificates described in clauses (B) and (C) above, supported by
schedules showing the derivation thereof and containing such detail and
such other information as the Collateral Agent may reasonably request
from time to time provided that (1) the Borrowing Base and the
Availability set forth in the Borrowing Base Certificate shall be
effective from and including the date such Borrowing Base Certificate
is duly received by the Collateral Agent to but not including the date
on which a subsequent Borrowing Base Certificate is duly received by
the Collateral Agent, unless the Collateral Agent disputes the
eligibility of any asset for inclusion in the calculation of the
Borrowing Base or the valuation thereof by notice of such dispute to
the appropriate Borrower and (2) in the event of any dispute about the
eligibility of any asset for inclusion in the calculation of the
Borrowing Base or the valuation thereof, the Collateral Agent's good
faith judgment shall control;
(vi) prior to the end of each Fiscal Year,
financial projections (including projected income statements, balance
sheets and schedules of cash receipts and cash disbursements, all
projected on a monthly basis for the succeeding Fiscal Year and on an
annual basis for each Fiscal Year thereafter until the Termination
Anniversary Date and in each case prepared on a consolidated and stand
alone basis), in form and substance reasonably satisfactory to the
Agents; all such financial projections shall be reasonable, shall be
prepared on a reasonable basis and in good faith, and shall be based on
assumptions believed by the Company to be reasonable at the time made
and from the best information then available to the Company;
(vii) promptly upon their becoming
available, a copy of (A) all consultants' reports, investment bankers'
reports, accountants' management letters, business plans and similar
documents, (B) all reports, financial statements or other information
delivered by the Company or any other Loan Party to its shareholders
generally, (C) all reports, proxy statements, financial statements and
other information generally distributed by the Company or any other
Loan Party to its creditors or the financial community in general, and
(D) any audit or other reports submitted to the Company or any other
Loan Party by independent accountants in connection with any annual,
interim or special audit;
(viii) promptly after submission to any
Government Authority all documents and information furnished to such
Government Authority in connection with any investigation of any Loan
Party other than routine inquiries by such Governmental Authority and,
except as requested by the Agents, other than in connection with tax
audits by Governmental Authorities;
(ix) as soon as possible, and in any event
within five days after the occurrence of an Event of Default, Default
or a Material Adverse Effect, the written statement of the chief
executive officer or the chief financial officer of each Borrower,
setting forth the details of such Event of Default,
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Default or Material Adverse Effect and the action which the Company and
its Subsidiaries propose to take with respect thereto;
(x) (A) as soon as possible and in any event
(1) within 30 days after the Borrowers, the Guarantors or any of their
respective ERISA Affiliates knows or has reason to know that any
Termination Event described in clause (i) of the definition of
Termination Event with respect to any Employee Plan has occurred, (2)
within 10 Business Days after the Borrowers, the Guarantors or any of
their respective ERISA Affiliates knows or has reason to know that any
other Termination Event with respect to any Employee Plan has occurred,
or (3) within 10 Business Days after any of the Borrowers, any of the
Guarantors or any of their respective ERISA Affiliates knows or has
reason to know that an accumulated funding deficiency has been incurred
or an application has been made to the Secretary of the Treasury for a
waiver or modification of the minimum funding standard (including
installment payments) or an extension of any amortization period under
Section 412 of the Internal Revenue Code with respect to an Employee
Plan, a statement of the chief financial officer of the Company setting
forth the details of such occurrence and the action, if any, which the
Borrowers, the Guarantors or any of their respective ERISA Affiliates
proposes to take with respect thereto, (B) promptly and in any event
within two Business Days after receipt thereof by the Borrowers, the
Guarantors or any of their respective ERISA Affiliates from the Pension
Benefit Guaranty Corporation, copies of the notice received by the
Borrowers, the Guarantors or any of their respective ERISA Affiliates
of the Pension Benefit Guaranty Corporation's intention to terminate
any Plan or to have a trustee appointed to administer any Plan, (C)
promptly and in any event within 30 days after the filing thereof with
the Internal Revenue Service, copies of each Schedule B (Actuarial
Information) to the annual report (Form 5500 Series) with respect to
each Employee Plan and Multiemployer Plan, (D) promptly and in any
event within 10 Business Days after receipt thereof by the Borrowers,
the Guarantors or any of their respective ERISA Affiliates from a
sponsor of a Multiemployer Plan or from the Pension Benefit Guaranty
Corporation, a copy of the notice received by the Borrowers, the
Guarantors or any of their respective ERISA Affiliates concerning the
imposition or amount of withdrawal liability under Section 4202 of
ERISA or indicating that such Multiemployer Plan may enter
reorganization status under Section 4241 of ERISA, and (E) promptly and
in any event within 10 Business Days after any of the Borrowers, any of
the Guarantors or any of their respective ERISA Affiliates sends notice
of a plant closing or mass layoff (as defined in WARN) to employees,
copies of each such notice sent by the Borrowers, the Guarantors or any
of their respective ERISA Affiliates;
(xi) as soon as available and in any event
within 5 days after receipt or delivery thereof, copies of any notices
that any Loan Party receives or sends in connection with the
Acquisition Documents including, without limitation, each EBITDA
Notice, Dispute Notice, Determination and Final Earn-Out Notice (each
as defined in the Acquisition Agreement);
(xii) promptly after the commencement
thereof but in any event not later than five days after service of
process with respect thereto on, or the obtaining of knowledge thereof
by, the Company or any other Loan Party, notice of each action, suit or
proceeding before any court or other Governmental Authority or other
regulatory body or any arbitrator which would have a Material Adverse
Effect;
(xiii) at the time of the first delivery of
the audited financial statements pursuant to sub-clause (ii) of this
Section 7.01(a), consolidated and consolidating balance sheets of the
Company and its Consolidated Subsidiaries as of the effective date of
the Acquisition, all in reasonable detail and prepared in accordance
with GAAP (other than the absence of footnotes and adjustments but
including a narrative description of any adjustments) and based upon
the audited consolidated balance sheet of the Company and its
Consolidated Subsidiaries as of November 1, 1997, as adjusted by Ernst
& Young LLP pursuant to the procedures set forth in the letter dated
September 25, 1997 from Ernst & Young LLP to the Company; and
(xiv) promptly upon request, such other
information concerning the condition or operations, financial or
otherwise, of the Company or any other Loan Party that the Agents from
time to time may reasonably request.
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(b) Guaranties, Etc. Cause each of their respective
Subsidiaries not existing on the Effective Date to execute and deliver to the
Collateral Agent promptly, and in any event within 15 days after the formation
or acquisition thereof (i) a guaranty, substantially in the form of Exhibit C-1
hereto, guaranteeing the Obligations, and (ii) a security agreement,
substantially in the form of Exhibit D-2 hereto, securing such guaranty, and, in
connection with each such delivery, cause to be delivered to the Collateral
Agent, in form and substance reasonably satisfactory to the Collateral Agent, a
written opinion of counsel as to such matters relating thereto as the Collateral
Agent may reasonably request, together with such other agreements, instruments,
approvals or other documents as the Collateral Agent may reasonably request. In
addition, within 15 days after the formation or acquisition of any Subsidiary
not existing on the Effective Date, the parent of such Subsidiary shall pledge
all of the Capital Stock of such Subsidiary to the Collateral Agent pursuant to
the terms of the Pledge Agreement to which such parent is a party.
(c) Compliance with Laws, Etc. Comply, and cause each
of their respective Subsidiaries to comply, with all applicable material laws,
rules, regulations and orders (including, without limitation, ERISA and
Environmental Laws), such compliance to include, without limitation, (i) paying
before the same become delinquent all taxes, assessments and governmental
charges or levies imposed upon it or upon its income or profits or upon any of
its properties, and (ii) paying all lawful claims arising under such laws which
if unpaid might become a Lien upon any of its properties, except (A) to the
extent contested in good faith by proper proceedings which stay the imposition
of any penalty, fine or Lien resulting from the non-payment thereof and with
respect to which adequate reserves have been set aside for the payment thereof
and (B) taxes, assessments or other claims in an amount of not more than
$200,000 in the aggregate and the Liens, if any, securing such amounts.
(d) Preservation of Existence, Etc. Except for
Norty's, Inc., maintain and preserve, and cause each of their Subsidiaries to
maintain and preserve, its existence, rights and privileges, and become or
remain duly qualified and in good standing in each jurisdiction in which the
character of the properties owned or leased by them or in which the transaction
of their business makes such qualification necessary, except where the failure
to preserve its rights and privileges and to qualify and be in good standing
would not have a Material Adverse Effect.
(e) Keeping of Records and Books of Account. Keep,
and cause each of their Subsidiaries to keep, adequate records and books of
account, with complete entries made in accordance with GAAP.
(f) Inspection Rights. Permit, and cause each of
their Subsidiaries to permit, the Agents, or any agents or representatives
thereof at any time and from time to time upon reasonable notice to the Company,
during normal business hours to examine and make copies of and abstracts from
their records and books of account, to visit and inspect their properties, to
conduct audits, physical counts, valuations or examinations and to discuss their
affairs, finances and accounts with any of the directors, officers, managerial
employees, independent accountants or other representatives thereof, provided
that (i) the foregoing shall be in a manner so as to not unduly disrupt the
business of the Borrowers and (ii) such notice shall not be required if an Event
of Default has occurred and is continuing.
(g) Maintenance of Properties, Etc. Except in respect
of Norty's Inc., maintain and preserve, and cause each of their Subsidiaries to
maintain and preserve, all of their properties which are necessary or useful in
the proper conduct of their business in good working order and condition,
ordinary wear and tear and damage due to casualty excepted. Except where the
failure to comply would not have a Material Adverse Effect, comply, and cause
each of their Subsidiaries to comply, at all times with the provisions of all
leases to which each of them is a party as lessee or under which each of them
occupies property, so as to prevent any loss or forfeiture thereof or
thereunder.
(h) Maintenance of Insurance. Maintain for the
Company and its Subsidiaries, with responsible and reputable insurance companies
or associations insurance (including, without limitation, comprehensive general
liability and property and casualty insurance) with respect to their properties
and business, in such amounts and covering such risks, as is required by any
Governmental Authority or other regulatory body having jurisdiction with respect
thereto and as is carried generally in accordance with sound business practice
by companies in similar businesses similarly situated.
(i) Environmental. Cause each Loan Party to (i) keep
any property either owned or operated by it free of any Liens arising under any
Environmental Laws; (ii) comply with Environmental Laws except where the failure
to comply would not have a Material Adverse Effect and provide to the Agents
documentation of such
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compliance which the Agents reasonably request; (iii) promptly notify the Agents
of any Release of a Hazardous Material in excess of any reportable quantity and
take any Remedial Actions required by Governmental Authorities to xxxxx said
Release; and (iv) promptly provide the Agents with written notice within ten
(10) days of the receipt of any Environmental Action or notice that an
Environmental Action will be filed against either of the Borrowers.
(j) Further Assurances. Shall, and shall cause each
Subsidiary to, do, execute, acknowledge and deliver, at the sole cost and
expense of the Borrowers all such further acts, deeds, conveyances, mortgages,
assignments, estoppel certificates, financing statements, notices of assignment,
transfers and assurances as the Agents may reasonably require from time to time
in order to (i) carry out more effectively the purposes of this Agreement and
the other Loan Documents, (ii) subject to valid and perfected first priority
Liens, all the Collateral, (iii) perfect and maintain the validity,
effectiveness and priority of any of the Loan Documents and the Liens intended
to be created thereby, and (iv) better assure, convey, grant, assign, transfer
and confirm unto the Agents, the Lenders and the L/C Issuer the rights now or
hereafter intended to be granted to the Agents, the Lenders and the L/C Issuer
under this Agreement, any Loan Document or any other instrument under which the
Borrowers, the Guarantors or any of their respective Subsidiaries may be or may
hereafter become bound for carrying out the intention or facilitating the
performance of the terms of the Agreement.
(k) Key Man Life Insurance. Furnish to the Agents
within sixty (60) days of the Effective Date a copy of key man life insurance
policies on the lives of Xxxxxxx Xxxxxxxxx in the amount of $1,500,000, Xxxxx
Xxxxxxxxx in the amount of $3,000,000 and Xxxxxx Xxxxxxxx in the amount of
$1,500,000, in each case from a responsible and reputable life insurance
company, together with a collateral assignment of each such life insurance
policy to the Collateral Agent for the benefit of the Lenders, duly executed by
each of the Borrowers, and acknowledged by the home office of the insurance
company. Maintain at all times such key man or other life insurance policies on
the lives of Xxxxxxx Xxxxxxxxx, Xxxxx Xxxxxxxxx and Xxxxxx Xxxxxxxx or their
successors for so long as such individuals or their successors are employed by
the Company or any Borrower from a responsible and reputable life insurance
company each in an amount of not less than $1,500,000, $3,000,000 and
$1,500,000, respectively, together with an assignment of such life insurance
policies to the Collateral Agent for the benefit of the Lenders.
(l) Landlords Waivers; No-offset Letters. Use their
best efforts to furnish to the Collateral Agent within sixty (60) days of the
Effective Date or the first date on which a Borrower maintains Inventory on
leased premises, the location of a contractor, processor or supplier or a
warehouse (i) landlord waivers in form and substance reasonably satisfactory to
the Collateral Agent from each of the Borrowers' landlords and from each of the
landlord's of the premises of the Borrower's contractors set forth on Schedule
5.01(d)(xxi) (other than the landlord for the premises of Miss Xxxxx located at
000 Xxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxxxx), (xx) no-offset letters in form and
substance reasonably satisfactory to the Collateral Agent from each of the
Borrowers' contractors, processors and suppliers that may from time to time have
possession of the Inventory with a value in excess of $1 million (other than
those set forth on Schedule 5.01(d)(xxi) hereto), and (iii) warehouse letters in
form and substance reasonably satisfactory to the Collateral Agent from the
owner of each of the warehouses that may from time to time have possession of
Inventory.
(m) Real Estate. If at any time any Loan Party or any
of its Subsidiaries acquires any fee interest in real property, such Loan Party
shall promptly execute, deliver and record, or cause such Subsidiary to execute,
deliver and record, a first priority mortgage and/or deed of trust in favor of
the Collateral Agent covering such real property interest, in form and substance
reasonably satisfactory to the Collateral Agent, and provide the Collateral
Agent with a title insurance policy covering such real property interest in an
amount reasonably acceptable to the Collateral Agent, a current ALTA survey
thereof, a surveyor's certificate, a satisfactory legal description of such
property and an opinion from special counsel to such Loan Party, each in form
and substance reasonably satisfactory to the Collateral Agent and as to such
matters as the Collateral Agent may reasonably request together with a report of
title on forms of and issued by a title company reasonably satisfactory to the
Collateral Agent ("Title Company"), subject to such exceptions as are reasonably
satisfactory to the Collateral Agent, and, to the extent necessary under
applicable law, Uniform Commercial Code financing statements covering fixtures,
in each case appropriately completed and duly executed, for filing in the
appropriate county land office and evidence that such Loan Party shall have paid
to the Title Company all expenses of the Title Company in connection with the
issuance of such reports and in addition shall have paid to the Title Company an
amount equal to the recording and stamp taxes (including mortgage recording
taxes), if any, payable in connection with recording such mortgages in the
appropriate county land offices, each in form and substance reasonably
satisfactory to the Collateral Agent.
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(n) Change in Collateral; Collateral Records. Give
the Collateral Agent not less than thirty days' prior written notice of any
change in the location of any Collateral, other than to locations, that as of
the date hereof are known to the Collateral Agent and at which the Collateral
Agent has filed financing statements and otherwise fully perfected its Liens
thereon, except for (i) in-transit Inventory and (ii) new locations of Inventory
in the possession of third-party contractors, processors or suppliers where the
value of such Inventory does not exceed $100,000 for all such locations,
provided that, in the case of clause (ii), the Borrower owning such Inventory
(A) provides the Collateral Agent with prompt written notice of such new
location, not more than 5 Business Days after the first date on which Inventory
is located at such new location, and (B) takes all action reasonably requested
by the Collateral Agent to grant to the Collateral Agent a perfected first
priority Lien on such Inventory. The Borrowers shall also advise the Collateral
Agent promptly, in reasonable detail, of any material adverse change relating to
the value of or the Lien granted on the Collateral. The Borrowers agree to
execute and deliver to the Collateral Agent for the benefit of the Lenders from
time to time, solely for the Collateral Agent's convenience in maintaining a
record of Collateral, such written statements and schedules as the Collateral
Agent may reasonably require, designating, identifying or describing the
Collateral. The Borrowers' failure, however, to promptly give the Collateral
Agent such statements or schedules shall not effect, diminish or modify or
otherwise limit the Collateral Agent's security interest in the Collateral.
(o) Borrowing Base. Maintain (i) all Revolving Credit
Loans and Letter of Credit Obligations of each Borrower in compliance with the
then current Borrowing Base of each such Borrower on an individual basis and
(ii) all Revolving Credit Loans and Letter of Credit Obligations in compliance
with the then current Borrowing Base on a combined basis.
(p) Intellectual Property Appraisals. Furnish to the
Lenders within sixty (60) days of the Effective Date, appraisals, at the sole
cost and expense of the Borrowers, reasonably satisfactory to the Agents, of all
trademarks of the Borrowers, such appraisals to be performed by Xxxxx Xxxxxx
Corporation on an "orderly liquidation value" basis.
SECTION 7.02. Negative Covenants. So long as any principal of
or interest on the Loans or any Letter of Credit Obligations (whether or not
due) shall remain unpaid or any Lender shall have any Commitment hereunder, the
Company and the Borrowers will not without the prior written consent of the
Required Lenders:
(a) Liens, Etc. Create or suffer to exist, or permit
any of their Subsidiaries to create or suffer to exist, any Lien upon or with
respect to any of their properties, rights or other assets, whether now owned or
hereafter acquired, or assign or otherwise transfer, or permit any of its
Subsidiaries to assign or otherwise transfer, any right to receive income, other
than the following ("Permitted Liens"):
(i) Liens created pursuant to the Loan
Documents;
(ii) Liens existing on the date hereof, as
set forth in Schedule 7.02(a)(ii) hereto, and the renewal and
replacement of such Liens, provided that any such renewal or
replacement Lien shall be limited to the property or assets covered by
the Lien renewed or replaced and the Indebtedness secured by any such
renewal or replacement Lien shall be in an amount not greater than the
amount of Indebtedness secured by the Lien renewed or replaced;
(iii) Liens for taxes, assessments or
governmental charges or levies to the extent that the payment thereof
shall not be required by Section 7.01(c) hereof;
(iv) Liens created by operation of law or
leases (other than Liens created under Environmental Laws), such as
landlords' liens, materialmen's liens, mechanics' liens and other
similar Liens, arising in the ordinary course of business and securing
claims the payment of which shall not be required by Section 7.01(c)
hereof;
(v) deposits, pledges or Liens (other than
Liens arising under ERISA or the Internal Revenue Code) securing (A)
obligations incurred in respect of workers' compensation, unemployment
insurance or other forms of governmental insurance or benefits, (B) the
performance of bids, tenders, leases, contracts (other than for the
payment of money) and statutory obligations, or (C) obligations on
surety or appeal bonds, but only to the extent such deposits, pledges
or Liens are incurred or otherwise arise in the
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ordinary course of business and secure obligations which are not past
due;
(vi) easements, rights-of-way, zoning and
similar restrictions and other similar charges and encumbrances on the
use of real property and minor irregularities in the title thereto
which do not (A) secure obligations for the payment of money, or (B)
materially impair the value of such property or materially impair the
use thereof by the Borrowers, the Guarantors or any of their
Subsidiaries in the normal conduct of such Person's business;
(vii) Liens created under the Factoring
Agreements;
(viii) purchase money liens on or purchase
money security interests in equipment acquired or held in the ordinary
course of business of the Borrowers, the Guarantors and their
Subsidiaries securing Indebtedness not exceeding in any Fiscal Year of
the Company the aggregate principal amount of $500,000 for the
Borrowers, the Guarantors and their Subsidiaries;
(ix) Liens securing Capitalized Leases
permitted by Section 7.02(g); and
(x) Liens in favor of the Seller on the
Capital Stock of Miss Xxxxx securing the Earn Out Payment.
(b) Indebtedness. Create, incur or suffer to exist,
or permit any of their Subsidiaries to create, incur or suffer to exist, any
Indebtedness, other than:
(i) Indebtedness created hereunder or under
the Notes or any Letter of Credit;
(ii) Indebtedness existing on the date
hereof, as set forth in Schedule 7.02(b)(ii) hereto, and any extensions
of maturity, refinancing or modification of the terms thereof, provided
that such extension, refinancing or modification (A) is pursuant to
terms that are not less favorable to the Borrowers or the Guarantors
than the terms of the Indebtedness being extended, refinanced or
modified, (B) after giving effect to the extension, refinancing or
modification, such Indebtedness is not greater than the amount of the
Indebtedness outstanding immediately prior to such extension,
refinancing or modification, and (C) the extension, refinancing or
modification does not change the Persons liable for such Indebtedness;
(iii) intercompany Indebtedness permitted by
Section 7.02(f)(iii) owing to any Borrower by the other Borrower,
provided that (A) the repayment of such Indebtedness shall be
subordinated to the payment of the Obligations, pursuant to the terms
of and evidenced by one or more promissory notes, substantially in the
form of Exhibits X-0, X-0 xx X-0 hereto, as applicable, and (B) such
notes shall be pledged to the Collateral Agent for the benefit of the
Lenders;
(iv) Indebtedness permitted by subsection
(c) of this Section 7.02;
(v) Indebtedness secured by Liens permitted
by clause (viii) of subsection (a) of this Section 7.02;
(vi) Indebtedness under the Hedging
Agreements;
(vii) Indebtedness under Capitalized Leases
permitted by Section 7.02(g);
(viii) to the extent that it constitutes
Indebtedness, the obligation of Miss Xxxxx with respect to the Earn Out
Payment; and
(ix) intercompany Indebtedness of the
Company and Norty's Inc. permitted by Sections 7.02(f)(viii), (ix) and
(xii) hereof.
(c) Guaranties, Etc. Assume, guarantee, indorse or
otherwise become directly or contingently liable (including, without limitation,
liable by way of agreement, contingent or otherwise, to purchase, to
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provide funds for payment, to supply funds to or otherwise invest in the debtor
or otherwise to assure the creditor against loss), in connection with any
Indebtedness of any other Person, other than:
(i) guaranties in favor of the Agents and
the Lenders under the Loan Documents;
(ii) guaranties by indorsement of negotiable
instruments for deposit or collection in the ordinary course of
business;
(iii) guaranties existing on the date
hereof, as set forth in Schedule 7.02(c)(iii) hereto, but not any
renewal or other modification thereof provided that, if the
Indebtedness guaranteed by such guaranty is renewed, modified or
extended pursuant to the terms of this Agreement, such guaranty may be
renewed or modified on terms no less favorable to the Borrowers or the
Guarantors than the guaranty being renewed or modified;
(iv) advances incurred in the ordinary
course of a Borrower's business, in an aggregate amount not to exceed
(A) $2,000,000 at any time outstanding to domestic contractors,
processors or agents and (B) $7,500,000 at any time outstanding between
April 1 and October 31 of any year and $4,000,000 at any time
outstanding between November 1 and March 31 of any year to Style
International, Inc., provided that the amounts set forth in sub-clause
(B) above may include (but not be increased by) an amount of up to
$500,000 at any one time outstanding to foreign contractors, processors
or agents other than Style International, Inc.;
(v) guaranties by the Company of Miss
Erika's obligations under the Acquisition Agreement; and
(vi) guaranties in favor of contractors,
processors or agents of the Borrowers incurred in the ordinary course
of a Borrower's business, in an aggregate amount not to exceed
$1,000,000 at any time outstanding.
(d) Merger, Consolidation, Sale of Assets, Etc.
(i) Merge or consolidate with any Person, or
permit any of their Subsidiaries to merge or consolidate with, any Person;
provided, however, that any Loan Party (other than the Borrowers) including any
Subsidiary of a Loan Party formed or acquired after the Effective Date, may be
merged into a Guarantor (other than the Borrowers) or another such Subsidiary,
or may consolidate with another such Subsidiary, so long as (A) the Company
gives the Administrative Agent at least 60 days' prior written notice of such
merger or consolidation and (B) no Default or Event of Default shall have
occurred and be continuing either before or after giving effect to such
transactions.
(ii) Sell, assign, lease or otherwise
transfer or dispose of, or permit any of its Subsidiaries to sell, assign, lease
or otherwise transfer or dispose of, whether in one transaction or in a series
of related transactions, any of its properties, rights or other assets whether
now owned or hereafter acquired to any Person, provided that (A) the Borrowers
and their Subsidiaries may sell Inventory in the ordinary course of business,
(B) the Company and its Subsidiaries may dispose of obsolete or worn-out
property in the ordinary course of business, (C) the Loan Parties may sell or
otherwise dispose of assets, other than Inventory, for fair market value,
provided that the aggregate Net Proceeds of such dispositions do not exceed
$100,000 in any Fiscal Year, (D) the Borrowers may sell Accounts Receivable to
the Factor pursuant to the Factoring Agreements, (E) Squire may sell, assign or
otherwise transfer the Capital Stock of Norty's, Inc. and Norty's, Inc. may
sell, assign or otherwise transfer any or all of its properties, rights and
assets, and (F) the Company and its Subsidiaries may enter into licensing
agreements as a licensor.
(e) Nature of Business. Engage in, or permit any of
their Subsidiaries to engage in, any business other than the women's apparel
business, excluding manufacturing but not excluding contracting for manufacture
or the manufacture of samples.
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(f) Investments, Etc. Make, or permit any of its
Subsidiaries to make, any loan or advance to any Person or purchase, hold or
otherwise acquire, or permit any of its Subsidiaries to purchase, hold or
otherwise acquire, any Capital Stock, other securities, properties, assets or
obligations of, or any interest in, any Person, other than:
(i) Permitted Investments;
(ii) investments in Subsidiaries existing on
the date hereof, and other investments and loans existing on the date
hereof, in each case existing on the date hereof as set forth in
Schedule 7.02(f)(ii) hereto;
(iii) loans or advances made by any Borrower
to the other Borrower, provided that (A) the repayment of all such
loans and advances is subordinated to the payment of the Obligations
pursuant to the terms of and evidenced by one or more promissory notes
substantially in the form of Exhibits X-0, X-0 xx X-0 hereto, as
applicable, and (B) such notes shall be pledged to the Collateral Agent
for the benefit of the Lenders;
(iv) loans or advances to employees in the
ordinary course in an aggregate amount not to exceed $100,000 at any
time outstanding;
(v) loans, advances and guaranties permitted
by Sections 7.02(c)(iv) and (vi);
(vi) investments in the Capital Stock of the
Company permitted by Section 7.02(i)(ii);
(vii) the Acquisition;
(viii) loans or advances by any Borrower to
the Company in the ordinary course of business for the purpose of the
payment of taxes due and owing by the Company and to purchase Capital
Stock of the Company permitted by Section 7.02(i)(ii);
(ix) loans or advances made by Squire to
Norty's, Inc. in an aggregate amount at any time outstanding not to
exceed the sum of (A) the amount, if any, loaned, advanced, paid as a
dividend or otherwise distributed to Squire by Norty's after the
Effective Date and (B) $700,000;
(x) acquisitions by any Loan Party of
Capital Stock or assets provided that each of the following conditions
has been satisfied and the chief executive officer of the Company shall
provide the Lenders with a certificate stating that each of the
following conditions has been satisfied together with any additional
information that the Agents may reasonably request (A) the Term Loan
has been repaid in full, (B) both before and after giving effect to
such acquisition, no Default or Event of Default shall have occurred
and be continuing, (C) the consideration paid by the Loan Party making
such acquisition shall be limited to the Capital Stock of the Company,
(D) the entity or assets acquired in such acquisition shall be in a
line of business permitted by Section 7.02(e) hereof, (E) the entity or
assets acquired shall not require financing in addition to that
provided by this Agreement, (F) the independent directors of the
Company's board of directors shall approve such acquisition, (G) the
Company shall obtain and deliver to the Lenders a fairness opinion with
respect to the acquisition from an independent investment banking firm
reasonably acceptable to the Agents, and (H) in the case of the
acquisition of stock, the new subsidiary shall comply with the
provisions of Section 7.01(b) hereof and, in the case of the
acquisition of stock or assets, the Loan Parties shall take all action
reasonably requested by the Collateral Agent to grant to the Collateral
Agent a perfected first priority Lien on all Capital Stock and assets
acquired;
(xi) purchases of inventory and supplies by
any Borrower in the ordinary course of business;
(xii) loans or advances by Norty's to
Squire; and
(xiii) other loans, advances or investments
in an aggregate amount not to
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exceed $100,000.
(g) Lease Obligations. Create, incur or suffer to
exist, or permit any of their Subsidiaries to create, incur or suffer to exist,
any obligations as lessee (i) for the payment of rent for any real or personal
property in connection with any sale and leaseback transaction, or (ii) for the
payment of rent for any real or personal property under leases or agreements to
lease other than (A) obligations under Capitalized Leases (other than the
existing Capitalized Leases set forth on Schedule 7.02(g) hereto) which would
not cause the aggregate amount of all obligations under Capitalized Leases
entered into after the Effective Date owing by the Loan Parties in any Fiscal
Year to exceed the amounts set forth in subsection (h) of this Section 7.02, and
(B) Operating Lease Obligations which would not cause the aggregate amount of
all Operating Lease Obligations owing by the Loan Parties in any Fiscal Year to
exceed $5,000,000 or such greater amount as shall be approved by the Required
Lenders.
(h) Capital Expenditures. Make or be committed to
make, or permit any of its Subsidiaries to make or be committed to make, any
expenditure (by purchase or Capitalized Lease) for fixed or capital assets other
than expenditures (including obligations under Capitalized Leases) which would
not cause the aggregate amount of all such expenditures to exceed $2,500,000 for
the Fiscal Year ended October 31, 1998 and $2,000,000 for each Fiscal Year
thereafter.
(i) Dividends, Prepayments, Etc. Declare or pay any
dividends, purchase or otherwise acquire for value any of its Capital Stock now
or hereafter outstanding, return any capital to its stockholders as such, or
make any other payment or distribution of assets to its stockholders as such, or
purchase or otherwise acquire for value any stock of any Loan Party, or make any
payment or prepayment of principal of, premium, if any, or interest on, or
redeem, defease or otherwise retire, any Indebtedness of any Loan Party (other
than Indebtedness under the Loan Documents) before its scheduled due date, or
permit any of its Subsidiaries to do any of the foregoing; provided, however,
that so long as no Default or Event of Default shall have occurred and be
continuing, or would result therefrom, (i) Miss Xxxxx may make the Earn-Out
Payment, (ii) the Company may repurchase shares of its Capital Stock during its
Fiscal Year ended October 31, 1998, provided, that the aggregate consideration
paid for such purchases does not exceed $1,000,000 in the aggregate for such
Fiscal Year less all amounts paid by the Company for similar repurchases of its
Capital Stock during the Fiscal Quarter of the Company ending November 1,1997,
(iii) the Borrowers may pay dividends to the Company in amounts necessary to (A)
make the repurchase of its shares of Capital Stock to the extent permitted by
clause (ii) above and (B) to pay taxes due and owing by the Company, (iv) any
Subsidiaries of the Borrowers may pay dividends to the Borrowers, and (v) the
Company may pay dividends in the form of Capital Stock.
(j) Sale of Notes, Etc. Except pursuant to the
Factoring Agreements and, in the absence of a continuing Event of Default, in
the ordinary course of business, sell, discount or otherwise dispose of notes,
Accounts Receivable or other obligations owing to a Loan Party or permit any of
their Subsidiaries to do so.
(k) Compromise of Receivable; Other Obligations.
(i) Compromise or adjust any of the Accounts
Receivable (or extend the time for payment thereof) or grant any discounts,
allowance or credits thereon or permit any of their Subsidiaries to do so, in
each case other than (i) as permitted by the Factoring Agreements and (ii) in
the absence of a continuing Event of Default, in the ordinary course of
business.
(ii) Forgive or compromise any principal of
or interest on, or amend, modify or waive, if the effect of such amendment,
modification or waiver is to forgive or compromise any principal of or interest
on, the non-negotiable limited recourse promissory notes described on Schedule
7.02(k)(ii) hereto or release any security for such notes (except, in connection
with a sale of such notes, as provided in such notes or the pledge agreements
related thereto as such notes and pledge agreements existed on the Effective
Date).
(l) Federal Reserve Regulations. Permit any Loan or
the proceeds of any Loan under this Agreement to be used for any purpose which
violates or is inconsistent with the provisions of Regulations G, T, U or X of
the Board of Governors of the Federal Reserve System.
(m) Transactions with Affiliates. Enter into or be a
party to, or permit any Subsidiary
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to enter into or be a party to any transaction with any Affiliate of the Company
except as otherwise expressly permitted in this Agreement or except in the
ordinary course of business in a manner and to an extent necessary or desirable
for the prudent operation of its business for fair consideration and on terms no
less favorable to the Company or such Subsidiary as are available from
unaffiliated third parties except for the employment, compensation or consulting
arrangements described in Schedule 7.02(m) hereto and any renewals, extensions
or modifications thereof on fair and reasonable terms necessary or desirable for
the prudent operation of its business.
(n) Environmental. The Loan Parties shall not allow
the use, handling, generation, storage, treatment, release or disposal of
Hazardous Materials at any property owned or leased by the Loan Parties except
in compliance with Environmental Laws so long as such use, handling, generation,
storage, treatment, release or disposal of Hazardous Materials does not result
in a Material Adverse Effect.
(o) Factoring Agreements. Cause any voluntary
termination by a Loan Party of any Factoring Agreement.
(p) Financial Covenants.
(i) Tangible Net Worth. Permit Consolidated
Tangible Net Worth of the Company and its Consolidated Subsidiaries at
the end of each Fiscal Quarter to be less than the amount set forth
below opposite each such Fiscal Quarter end:
Fiscal Minimum Tangible
Quarter End Net Worth
----------- ---------
November 1, 1997 $37,000,000
January 31, 1998 $36,000,000
May 2, 1998 $39,500,000
August 1, 1998 $40,500,000
October 31, 1998 $43,500,000
provided that, upon receipt of the financial projections required to be
delivered to the Lenders pursuant to Section 7.01(a)(vi) hereof for
each Fiscal Year, the Company and the Agents shall negotiate in good
faith to determine the Consolidated Tangible Net Worth for the Company
and its Consolidated Subsidiaries as of the end of each Fiscal Quarter
covered by such financial projections and, in the event that the
Company and the Required Lenders are unable to agree upon the amounts
of such Consolidated Tangible Net Worth on or before the date that is
30 days after the date that the Lenders have received such financial
projections, the Consolidated Tangible Net Worth at the end of each
Fiscal Quarter of the Fiscal Year covered by such financial projections
shall not be less than the amount set forth for the last Fiscal Quarter
end set forth above.
(ii) Leverage Ratio. Permit the ratio of
Consolidated Total Liabilities to Consolidated Tangible Net Worth of
the Company and its Consolidated Subsidiaries as of the end of each
Fiscal Quarter to be greater than the amount set forth below opposite
each such Fiscal Quarter end:
Fiscal Maximum
Quarter End Leverage Ratio
----------- --------------
November 1, 1997 1.8:1.0
January 31, 1998 1.5:1.0
May 2, 1998 1.7:1.0
August 1, 1998 1.45:1.0
October 31, 1998 1.25:1.0
provided that, upon receipt of the financial projections required to be
delivered to the Lenders pursuant to Section 7.01(a)(vi) hereof for
each Fiscal Year, the Company and the Agents shall negotiate in good
faith to
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determine the ratio of Consolidated Total Liabilities to Consolidated
Tangible Net Worth of the Company and its Consolidated Subsidiaries as
of the end of each Fiscal Quarter covered by such financial projections
and, in the event that the Company and the Required Lenders are unable
to agree upon such ratio on or before the date that is 30 days after
the date that the Lenders have received such projections, such ratio as
of the end of each Fiscal Quarter of the Fiscal Year covered by such
financial projections shall not be greater than the ratio set forth for
the last Fiscal Quarter end set forth above.
(iii) Working Capital. Permit Working
Capital at the end of each Fiscal Quarter to be less than the amount
set forth below opposite each such Fiscal Quarter:
Fiscal Minimum
Quarter End Working Capital
----------- ---------------
November 1, 1997 $38,000,000
January 31, 1998 $37,500,000
May 2, 1998 $40,500,000
August 1, 1998 $41,500,000
October 31, 1998 $44,000,000
provided that, upon receipt of the financial projections required to be
delivered to the Lenders pursuant to Section 7.01(a)(vi) hereof for
each Fiscal Year, the Company and the Agents shall negotiate in good
faith to determine the minimum Working Capital as of the end of each
Fiscal Quarter covered by such financial projections and, in the event
that the Company and the Required Lenders are unable to agree upon the
amounts of such Working Capital on or before the date that is 30 days
after the date that the Lenders have received such projections, the
Working Capital at the end of each Fiscal Quarter of the Fiscal Year
covered by such financial projections shall not be less than the amount
set forth for the last Fiscal Quarter end set forth above.
(iv) Fixed Charge Coverage Ratio. Permit the
ratio of Consolidated EBITDA of the Company and its Consolidated
Subsidiaries to Consolidated Fixed Charges of the Company and its
Consolidated Subsidiaries for each Fiscal Quarter to be less than the
amount set forth below opposite each such Fiscal Quarter:
Fiscal Minimum Fixed
Quarter End Charge Coverage Ratio
----------- ---------------------
November 1, 1997 2:1.0
January 31, 1998 (0.25):1.0
May 2, 1998 1.6:1.0
August 1, 1998 0.8:1.0
October 31, 1998 1.4:1.0
provided that, upon receipt of the financial projections required to be
delivered to the Lenders pursuant to Section 7.01(a)(vi) hereof for
each Fiscal Year, the Company and the Agents shall negotiate in good
faith to determine the ratio of Consolidated EBITDA of the Company and
its Consolidated Subsidiaries to Consolidated Fixed Charges of the
Company and its Consolidated Subsidiaries as of the end of each Fiscal
Quarter covered by such financial projections and, in the event that
the Company and the Required Lenders are unable to agree upon the
amounts of such ratio on or before the date that is 30 days after the
date that the Lenders have received such projections, such ratio for
each Fiscal Quarter of the Fiscal Year covered by such financial
projections shall not be less than the ratio set forth for the last
Fiscal Quarter end set forth above.
(v) Cash Flow Ratio. Permit the ratio of
Consolidated EBIT of the Company and its Consolidated Subsidiaries to
Consolidated Net Interest Expense of the Company and its Consolidated
Subsidiaries at the end of each Fiscal Quarter be less than the amount
set forth below opposite each such Fiscal
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Quarter:
Fiscal Minimum
Quarter End Cash Flow Ratio
----------- ---------------
November 1, 1997 3.5:1.0
January 31, 1998 (0.55):1.0
May 2, 1998 5.2:1.0
August 1, 1998 2.4:1.0
October 31, 1998 4:1.0
provided that, upon receipt of the financial projections required to be
delivered to the Lenders pursuant to Section 7.01(a)(vi) hereof for
each Fiscal Year, the Company and the Agents shall negotiate in good
faith to determine the ratio of Consolidated EBIT of the Company and
its Consolidated Subsidiaries to Consolidated Net Interest Expense of
the Company and its Consolidated Subsidiaries as of the end of each
Fiscal Quarter covered by such financial projections and, in the event
that the Company and the Required Lenders are unable to agree upon such
ratio on or before the date that is 30 days after the date that the
Lenders have received such projections, such ratio at the end of each
Fiscal Quarter of the Fiscal Year covered by such financial projections
shall not be less than the ratio set forth for the last Fiscal Quarter
set forth above.
(q) Restructuring Charges. Permit Squire to incur a
restructuring charge in an aggregate amount in excess of $5,000,000 during the
third and fourth fiscal quarters of the Fiscal Year ending November 1, 1997.
(r) Fiscal Periods. Change the Fiscal Months, Fiscal
Years and Fiscal Quarters as set forth on Schedule 1.01B, except as otherwise
agreed to in writing by the Agents.
ARTICLE VIII
MANAGEMENT, COLLECTION AND STATUS OF
ACCOUNTS RECEIVABLE AND OTHER COLLATERAL
SECTION 8.01. Management of Collateral. (a) After the
occurrence and during the continuance of an Event of Default and subject to the
prior rights of the Factor under the Factoring Agreements and the Assignment
Agreement , the Collateral Agent may for the benefit of the Lenders, send a
notice of assignment and/or notice of the Collateral Agent's security interest
to any and all Account Debtors or any third party holding or otherwise concerned
with any of the Collateral, and thereafter the Collateral Agent on behalf of the
Lenders shall have the sole right to collect the Accounts Receivable and/or take
possession of the Collateral and the books and records relating thereto. The
Company and the Borrowers shall not and shall not permit their Subsidiaries,
without prior written consent of the Collateral Agent, to grant any extension of
time of payment of any Account Receivable, compromise or settle any Account
Receivable for less than the full amount thereof, release, in whole or in part,
any Person or property liable for the payment thereof, or allow any credit or
discount whatsoever thereon, except (i) prior to the occurrence and during the
continuance of an Event of Default, in the ordinary course of business or (ii)
as permitted by the Factoring Agreements.
(b) (i) Subject to the prior rights of the Factor
under the Factoring Agreements and the Assignment Agreement, the Company and the
Borrowers hereby appoint the Collateral Agent or its designee on behalf of the
Collateral Agent as the Company's and the Borrowers' attorney-in-fact with power
after the occurrence and during the continuance of an Event of Default to
endorse the Company's or Borrower's name upon any notes, acceptances, checks,
drafts, money orders or other evidences of payment or Collateral that may come
into its possession, to sign the Company's or a Borrower's name on any invoice
or xxxx of lading relating to any of the Accounts Receivable, drafts against
Account Debtors, assignments and verifications of Accounts Receivable and
notices to Account Debtors, to send verification of Accounts Receivable, to
notify the Postal Service authorities to change the address for delivery of mail
addressed to the Company and the Borrowers to such address as the Administrative
Agent may designate and to do all other acts and things necessary to carry out
this Agreement. All acts of said attorney or
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designee are hereby ratified and approved, and said attorney or designate shall
not be liable for any acts of omission or commission (other than acts or
omissions constituting gross negligence or willful misconduct as determined by a
final judgment of a court of competent jurisdiction), nor for any error of
judgment or mistake of fact or law; this power being coupled with an interest is
irrevocable until all of the Loans and any other Obligations under the Loan
Documents are paid in full and all of the Commitments are terminated.
(ii) Subject to the prior rights of the Factor under
the Factoring Agreements and the Assignment Agreement, the Collateral Agent,
without notice to or consent of the Company, any Borrower or any Guarantor upon
the occurrence and during the continuance of an Event of Default (A) may xxx
upon or otherwise collect, extend the time of payment of, or compromise or
settle for cash, credit or otherwise upon any terms, any of the Accounts
Receivable or any securities, instruments or insurance applicable thereto and/or
release the Account Debtor thereon; (B) is authorized and empowered to accept
the return of the goods represented by any of the Accounts Receivable, and (C)
shall have the right to receive, endorse, assign and/or deliver in its name or
the name of the Company, any Borrower or any Guarantor any and all checks,
drafts, and other instruments for the payment of money relating to the Accounts
Receivable. The Company and each Borrower and Guarantor hereby waive notice of
presentment, protest and non-payment of any instrument so endorsed, all in a
commercially reasonable manner and without discharging or in any way affecting
liability hereunder.
(c) Nothing herein contained shall be construed to
constitute the Company, any Borrower or any Guarantor as agent of the Agents or
the Lenders for any purpose whatsoever, and the Agents and the Lenders shall not
be responsible or liable for any shortage, discrepancy, damage, loss or
destruction of any part of the Collateral wherever the same may be located and
regardless of the cause thereof (other than from acts or omissions of the Agents
or the Lenders constituting gross negligence or willful misconduct as determined
by a final judgment of a court of competent jurisdiction). The Agents and the
Lenders shall not, under any circumstances or in any event whatsoever, have any
liability for any error or omission or delay of any kind occurring in the
settlement, collection or payment of any of the Accounts Receivable or any
instrument received in payment thereof or for any damage resulting therefrom
(other than acts or omissions of the Agents or the Lenders constituting gross
negligence or willful misconduct as determined by a final judgment of a court of
competent jurisdiction). The Agents and the Lenders, by anything herein or in
any assignment or otherwise, do not assume any of the Company's, Borrowers' or
any Guarantor's obligations under any contract or agreement assigned to the
Agents and the Agents or the Lenders shall not be responsible in any way for the
performance by the Company or such Borrower of any of the terms and conditions
thereof.
(d) If any of the Accounts Receivable includes a
charge for any tax payable to any Governmental Authority, subject to the prior
rights of the Factor under the Factoring Agreement and the Assignment Agreement,
the Collateral Agent is hereby authorized (but in no event obligated) in its
discretion to pay the amount thereof to the proper taxing authority for the
Company's, any Borrower's or any Guarantor's account and to charge the Company
or such Borrower or Guarantor therefor. The Company or such Borrower or
Guarantor shall notify the Collateral Agent if any Accounts Receivable include
any taxes due to any such authority and, in the absence of such notice and, the
Collateral Agent shall have the right to retain the full proceeds of such
Accounts Receivable and shall not be liable for any taxes that may be due from
the Company or such Borrower or Guarantor by reason of the sale and delivery
creating such Accounts Receivable.
SECTION 8.02. Accounts Receivable Documentation. Subject to
the prior rights of the Factor under the Factoring Agreements and the Assignment
Agreement, the Company and each Borrower will at such intervals as the
Collateral Agent may reasonably require, execute and deliver confirmatory
written assignments of the Accounts Receivable to the Collateral Agent and
furnish such further schedules and/or information as the Collateral Agent may
reasonably require relating to the Accounts Receivable, including, without
limitation, sales invoices or the equivalent, credit memos issued, remittance
advises, reports and copies of deposit slips and copies of original shipping or
delivery receipts for all merchandise sold. In addition, the Company and each
Borrower shall notify the Collateral Agent of any material non-compliance in
respect of the representations, warranties and covenants contained in Section
8.03 below. The items to be provided under this Section 8.02 are to be in form
reasonably satisfactory to the Collateral Agent and are to be executed and
delivered to the Collateral Agent from time to time solely for its convenience
in maintaining records of the Collateral. The Company or any Borrower's failure
to give any of such items to the Collateral Agent shall not affect, terminate,
modify or otherwise limit the Collateral Agent's Lien in the Collateral.
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Subject to the provisions of the Factoring Agreements, the Company and each
Borrower shall not re-date any invoice or sale or make sales on extended dating
beyond that customary in the Company's or such Borrower's industry, and shall
not re-xxxx any Accounts Receivable without promptly disclosing the same to the
Factor and the Collateral Agent and providing the Factor and the Collateral
Agent with copy of such re-billing, identifying the same as such. If the Company
or any Borrower becomes aware of anything materially detrimental to the credit
of any of the Company's or any of the Borrowers' customers' which is not
otherwise publicly known with respect to non-credit approved Accounts
Receivable, the Company or such Borrower will promptly advise the Collateral
Agent thereof.
SECTION 8.03. Status of Accounts Receivable and Other
Collateral. With respect to Collateral of the Borrowers and the Guarantors at
the time the Collateral becomes subject to the Collateral Agent's security
interests, the Borrowers and the Guarantors covenant, represent and warrant: (a)
the Borrower or such Guarantor shall be the sole owner of the Collateral owned
by it, free and clear of all Liens except the Lien of the Factor, the Lien in
the favor of the Collateral Agent for the benefit of the Lenders and Permitted
Liens, fully authorized to sell, transfer, pledge and/or grant a security
interest in each and every item of said Collateral; (b) to the knowledge of the
Borrowers and the Guarantors, at the time created, each Account Receivable shall
be a good and valid account representing an undisputed bona fide indebtedness
incurred or an amount indisputably owed by the Account Debtor therein named, for
a fixed sum as set forth in the invoice relating thereto with respect to an
absolute sale and delivery upon the specified terms of goods sold by a Borrower
or Guarantor or work, labor and/or services theretofore rendered by a Borrower
or Guarantor; (c) to the best knowledge of the Borrowers and the Guarantors and
except as otherwise disclosed to the Factor and the Collateral Agent, no Account
Receivable is subject to any defense, offset, counterclaim, discount or
allowance except as may be stated in the invoice relating thereto or discounts
and allowances as may be customary in the Borrowers' or the Guarantors'
business, and, each of such Accounts Receivable will be paid when due; (d) none
of the transactions underlying or giving rise to any Accounts Receivable shall
violate any applicable material state or federal laws or regulations; (e) except
as disclosed to the Factor and the Collateral Agent, no agreement under which
any deduction or offset of any kind, other than normal trade discounts and
allowances, may be granted or shall have been made by the Borrowers or the
Guarantors at or before the time such Accounts Receivable is created; (f) all
documents and agreements relating to Accounts Receivable shall be true and
correct in all material respects and in all respects what they purport to be;
(g) to the best knowledge of the Borrowers and the Guarantors, all signatures
and endorsements that appear on all documents and agreements relating to
Accounts Receivable shall be genuine and all signatories and endorsers shall
have full capacity to contract; (h) the Borrowers and the Guarantors shall
maintain books and records pertaining to said Collateral in such detail, form
and scope as required by Section 7.01(l) hereof; (i) the Borrowers and the
Guarantors will promptly notify the Factor and the Collateral Agent if any of
their accounts arise out of contracts with the United States or any department,
agency, or instrumentality thereof and, subject to the prior rights of the
Factor under the Factoring Agreements and the Assignment Agreement, will execute
any instruments and take any steps required by the Collateral Agent in order
that all monies due or to become due under any such contract shall be assigned
to the Collateral Agent and notice thereof given to the United States Government
under the Federal Assignment of Claims Act; (j) the Borrowers and the Guarantors
will, immediately upon learning thereof, report to the Collateral Agent any
material loss or destruction of, or substantial damage to, any of the
Collateral, and any other material matters affecting the value, enforceability
or collectibility of any of the Collateral; (k) if any amount payable under or
in connection with any Account Receivable is evidenced by a promissory note or
other instrument, as such term is defined in the Uniform Commercial Code,
subject to the prior rights of the Factor under the Factoring Agreements and the
Assignment Agreement, such promissory note or instrument shall be immediately
pledged, endorsed, assigned and delivered to the Collateral Agent as additional
Collateral; (l) the Borrowers and the Guarantors shall not redate any invoice or
sale or make sales on extended dating beyond that which is customary in the
ordinary course of their business and in the industry; (m) the Borrowers and the
Guarantors shall conduct a physical count of their Inventory not less than once
each year and, upon the occurrence and during the continuance of an Event of
Default, at such other intervals as the Collateral Agent may reasonably request
and, if requested by the Collateral Agent, the Borrowers and the Guarantors
shall promptly supply the Collateral Agent with a copy of each such count (in
such form as is available) accompanied by a report of the value (based on the
lower of cost (on a FIFO basis) or market value) of such Inventory; and (n) the
Borrowers and the Guarantors are not and shall not be entitled to pledge the
Collateral Agents' or the Lenders' credit on any purchases for or any purpose
whatsoever.
SECTION 8.04. Collateral Custodian. Upon the occurrence and
during the continuance of an Event of Default, the Collateral Agent may at any
time and from time to time employ and maintain in the premises of the Company
and the Borrowers a custodian selected by the Collateral Agent who shall have
full authority to do all acts
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necessary to protect the Collateral Agent's interests in accordance with
applicable law and the provisions of the Loan Documents. The Company and the
Borrowers hereby agree to cooperate with any such custodian and to do whatever
the Collateral Agent may reasonably request to preserve the Collateral. All
reasonable costs and expenses incurred by the Collateral Agent, by reason of the
employment of the custodian, shall be charged to the Loan Account.
ARTICLE IX
THE AGENTS
SECTION 9.01. Authorization and Action. Each Lender (and each
subsequent holder of any Note by its acceptance thereof) hereby irrevocably
appoints and authorizes CIT, in its capacity as the Administrative Agent, and
NationsBanc, in its capacity as Collateral Agent, to perform the duties of each
such Agent as set forth in this Agreement including: (i) to receive on behalf of
each Lender any payment of principal of or interest on the Notes outstanding
hereunder and all other amounts accrued hereunder paid to the Administrative
Agent, and, subject to Section 2.05 of this Agreement and the other provisions
of this Agreement, to distribute promptly to each Lender its Pro Rata Share of
all payments so received, (ii) to distribute to each Lender copies of all
material notices and agreements received by the Agents and not required to be
delivered to each Lender pursuant to the terms of this Agreement, provided that
the Agents shall not have any liability to the Lenders for the Agents'
inadvertent failure to distribute any such notice or agreements to the Lenders,
and (iii) subject to Section 12.03 of this Agreement, to take such action as the
Agents deem appropriate on its behalf to administer the Loans, Letters of Credit
and the Loan Documents and to exercise such other powers delegated to the Agents
by the terms hereof or the Loan Documents (including, without limitation, the
power to give or to refuse to give notices, waivers, consents, approvals and
instructions and the power to make or to refuse to make determinations and
calculations), together with such powers as are reasonably incidental thereto to
carry out the purposes hereof and thereof. As to any matters not expressly
provided for by this Agreement and the other Loan Documents (including, without
limitation, enforcement or collection of the Notes), the Agents shall not be
required to exercise any discretion or take any action, but shall be required to
act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Required Lenders, and such
instructions of the Required Lenders shall be binding upon all Lenders and all
holders of Notes; provided, however, that the L/C Issuer shall not be required
to refuse to honor a drawing under any Letter of Credit and the Agents shall not
be required to take any action which, in the reasonable opinion of the Agents,
exposes the Agents to liability or which is contrary to this Agreement or any
Loan Document or applicable law.
SECTION 9.02. Borrower's Default. In the event that (i) any
Borrower fails to pay when due the principal of or interest on any Note or any
Reimbursement Obligation or any other amount payable hereunder, or (ii) the
Administrative Agent receives written notice of the occurrence of an Event of
Default, the Administrative Agent shall promptly give written notice thereof to
the Lenders, and shall take such action with respect to such Event of Default as
it shall be directed to take by the Required Lenders; provided, however, that,
unless and until the Administrative Agent shall have received such directions
and except as otherwise expressly provided in this Agreement, the Administrative
Agent may take such action or refrain from taking such action hereunder or under
the other Loan Documents with respect to an Event of Default or Default, as it
shall deem advisable in the best interest of the Lenders.
SECTION 9.03. Agents' Reliance, Etc. The Agents or any of
their directors, officers, agents or employees shall not be liable for any
action taken or omitted to be taken by them under or in connection with this
Agreement or the other Loan Documents, except for their own gross negligence or
willful misconduct as determined by a final judgment of a court of competent
jurisdiction. Without limiting the generality of the foregoing, the Agents (i)
may treat the payee of any Note as the holder thereof until the Administrative
Agent receive written notice of the assignment or transfer thereof, pursuant to
Section 12.08 hereof, signed by such payee and in form satisfactory to the
Administrative Agent; (ii) may consult with legal counsel (including, without
limitation, counsel to the Agents or counsel to the Borrowers), independent
public accountants, and other experts selected by it and shall not be liable for
any action taken or omitted to be taken in good faith by it in accordance with
the advice of such counsel, accountants or experts; (iii) makes no warranty or
representation to any Lender and shall not be responsible to any Lender for any
statements, certificates, warranties or representations made in or in connection
with this Agreement or the other Loan Documents; (iv) shall not have any duty to
ascertain or to inquire as to the performance or observance of any of the terms,
covenants or conditions of this Agreement or the other Loan Documents on the
part of any Person or to inspect
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the Collateral or other property (including, without limitation, the books and
records) of any Person; (v) shall not be responsible to any Lender for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement or the other Loan Documents or any other instrument or
document furnished pursuant hereto or thereto; (vi) shall not be deemed to have
made any representation or warranty regarding the existence, value or
collectibility of the Collateral, the existence, priority or perfection of the
Collateral Agent's Lien thereon, or the Borrowing Base or any certificate
prepared by a Borrower in connection therewith, nor shall the Agents be
responsible or liable to the Lenders for any failure to monitor or maintain the
Borrowing Base or any portion of the Collateral; and (vii) shall incur no
liability under or in respect of this Agreement or the other Loan Documents by
acting upon any notice, consent, certificate or other instrument or writing
(which may be by telegram, telecopy, cable or telex) believed by it to be
genuine and signed or sent by the proper party or parties.
SECTION 9.04. CIT and NationsBanc. With respect to the Loans
made by it and the Notes issued to it and the Letters of Credit, each of CIT and
NationsBanc and each of their Affiliates shall have the same rights and powers
under this Agreement as any other Lender and may exercise the same as though it
were not an Agent; and the term "Lender" or "any Lenders" shall, unless
otherwise expressly indicated, include CIT and NationsBanc each in its
individual capacity. CIT and NationsBanc and each of their respective Affiliates
may accept deposits from, lend money to, act as trustee or paying agent under
indentures of, and generally engage in any kind of business with, any Borrower
or any Guarantor, any of their Affiliates, or any Person who may do business
with or own securities of any Borrower or Guarantor, or any of their Affiliates,
all as if CIT and NationsBanc were not Agents and without any duty to account
therefor to any Lenders. The Lenders acknowledge and agree that NationsBanc, as
Factor under the Factoring Agreements, CIT as a participant of Factor in the
Factoring Agreements, and the L/C Issuer, which may be an Affiliate of the
Collateral Agent, may take actions which are not in the interests of, or may
have an adverse effect on, the Lenders, or may omit to take actions which would
be in the interests of, or would have a favorable effect on, the Lenders, and
the Lenders will not assert any claim against the Collateral Agent based on
actions or omissions by NationsBanc, as Factor under the Factoring Agreements or
the Administrative Agent, as a participant of Factor, or the L/C Issuer and will
not assert any such actions or omissions as a defense or offset to the Lenders'
obligations hereunder.
SECTION 9.05. Lender Credit Decision. Each Lender acknowledges
that it has, independently and without reliance upon the Agents or any other
Lender, made its own credit analysis and decision to enter into this Agreement.
Each Lender also acknowledges that it will, independently and without reliance
upon the Agents 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 and the other Loan
Documents.
SECTION 9.06. Indemnification. Each Lender agrees to indemnify
and hold harmless each Agent (to the extent not reimbursed by any Borrower or
any Guarantor), ratably according to the Pro Rata Shares of each Lender, from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against any
Agent in any way relating to or arising out of this Agreement or the other Loan
Documents or any action taken or omitted by any Agent under this Agreement or
the other Loan Documents; provided, however, that no Lender shall be liable to
any Agent for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements for which
there has been a final judicial determination that such resulted from such
Agent's gross negligence or willful misconduct. Without limiting the foregoing,
each Lender agrees to reimburse the Agents promptly upon demand for its ratable
share of any out-of-pocket expenses (including reasonable counsel fees,
disbursements and other charges) incurred by the Agents in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiation, legal proceedings or otherwise) of, or
legal advice in respect of rights or responsibilities under, this Agreement or
the other Loan Documents, to the extent that the Agents are not reimbursed in
full for such expenses by the Borrowers. The obligations of each Lender under
this Section 9.06 shall survive the termination of this Agreement and the other
Loan Documents and the payment of all other obligations of the Agents and the
Lenders under this Agreement and the other Loan Documents.
SECTION 9.07. Successor Agents. Any Agent may resign at any
time by giving written notice thereof to the Lenders and the Company. Upon any
such resignation, the Required Lenders shall have the right to appoint a
successor Agent, reasonably acceptable to the Company, with such rights and
obligations hereunder as those previously held by the retiring Agent, provided,
the successor Agent may be appointed by the Required Lenders without any
consultation with or consent of the Company or any other Loan Party if an Event
of Default or Default has
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occurred and is continuing. If no successor Agent shall have been so appointed
by the Required Lenders, been accepted by the Company, and shall have accepted
such appointment, within 30 days after the retiring Agent's giving of notice of
resignation, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent, which shall be a Lender or a commercial bank or other financial
institution organized under the laws of the United States of America or any
State thereof and having a combined capital and surplus of at least
$500,000,000. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations under
this Agreement and the other Loan Documents. After any retiring Agent's
resignation hereunder as an Agent, the provisions of this Article IX shall inure
to its benefit as to any actions taken or omitted to be taken by it while it was
an Agent under this Agreement and the other Loan Documents.
SECTION 9.08. Collateral Matters.
(a) The Administrative Agent may from time to time,
make such disbursements and advances ("Agent Advances") which the Administrative
Agent, in its sole discretion, deems necessary or desirable to preserve or
protect the Collateral or any portion thereof, to enhance the likelihood or
maximize the amount of repayment by any Borrower, any Guarantor or other Person
of the Loans, Reimbursement Obligations or Letters of Credit and other
Obligations or to pay any other amount chargeable to any Borrower or Guarantor
pursuant to the terms of this Agreement, including, without limitation, costs,
fees and expenses as described in Section 12.05. The Agent Advances shall be
repayable on demand and be secured by the Collateral. The Agent Advances shall
not constitute Loans but shall otherwise constitute Obligations hereunder.
Without limitation to its obligations pursuant to Section 9.06, each Lender
agrees that it shall make available to the Administrative Agent, upon the
Administrative Agent's demand, in Dollars in immediately available funds, the
amount equal to such Lender's Pro Rata Share of each such Agent Advance. If such
funds are not made available to the Administrative Agent by such Lender the
Administrative Agent shall be entitled to recover such funds, on demand from
such Lender together with interest thereon, for each day from the date such
payment was due until the date such amount is paid to the Administrative Agent,
at the Federal Funds Rate for three Business Days and thereafter at the Base
Rate.
(b) The Agents shall have no obligation whatsoever to
any Lenders to assure that the Collateral exists or is owned by any Borrower or
any Guarantor or is cared for, protected or insured or has been encumbered or
that the Liens granted to the Collateral Agent herein or pursuant hereto have
been properly or sufficiently or lawfully created, perfected, protected or
enforced or are entitled to any particular priority, or to exercise at all or in
any particular manner or under any duty of care, disclosure or fidelity, or to
continue exercising, any of the rights, authorities and powers granted or
available to the Agents in this Section 9.08 or in any of the Loan Documents, it
being understood and agreed that in respect of the Collateral, or any act,
omission or event related thereto, the Collateral Agent may act in any manner it
may deem appropriate, in its sole discretion, given the Collateral Agent's own
interest in the Collateral as one of the Lenders and that the Collateral Agent
shall have no duty or liability whatsoever to any other Lender other than for
acts or omissions constituting gross negligence or willful misconduct as
determined by a final judgment of a court of competent jurisdiction.
(c) The Lenders hereby irrevocably authorize the
Collateral Agent, at its option and in its discretion, to release any Lien
granted to or held by the Collateral Agent upon any Collateral upon termination
of the Revolving Credit Commitments and payment and satisfaction of all Loans
and Letter of Credit Obligations, (whether or not due) and all other Obligations
which have matured and which the Collateral Agent has been notified in writing
are then due and payable; or constituting property being sold or disposed of if
a Loan Party certifies to the Collateral Agent that the sale or disposition is
made in compliance with Section 7.02(d)(ii) hereof (and the Collateral Agent may
rely conclusively on any such certificate, without further inquiry); or
constituting property in which the Loan Parties owned no interest at the time
the Lien was granted or at any time thereafter; or (except as otherwise provided
in Section 12.03 of this Agreement) if approved, authorized or ratified in
writing by the Required Lenders. Without in any manner limiting the Collateral
Agent's authority to act without any specific or further authorization or
consent by the Required Lenders, upon request by the Collateral Agent at any
time, the Lenders shall confirm in writing the Collateral Agent's authority to
release particular types or items of Collateral pursuant to this Section
9.08(c).
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ARTICLE X
EVENTS OF DEFAULT
SECTION 10.01. Events of Default. If any of the following Events of
Default shall occur and be continuing:
(a) Any Loan Party shall fail to pay any principal of
or interest on any Loan, any Agent Advance, any Reimbursement Obligation, or any
fee or other amount when due (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise);
(b) Any representation or warranty made by any Loan
Party or any officer of such Loan Party under or in connection with any Loan
Document shall have been incorrect in any material respect when made;
(c) Any Loan Party shall fail to perform or observe
any covenant contained in (i) paragraphs (b), (c) (d), (f), (h), (k), (n), (o)
or (p) of Section 7.01, Section 7.02 or Article VIII of this Agreement, (ii)
paragraphs (b), (d), (e), (f)(i), (g), (h) or (j) of Section 5 of the Security
Agreements, or (iii) Section 4(a) or paragraphs (e), (f), (g) or (h) of Section
6 of the Pledge Agreements;
(d) Any Loan Party shall default in the performance
or observance of (i) the covenants contained in Section 7.01(a) of this
Agreement (other than subparagraphs (v), (ix), (xii) and (xiii) thereof) and
such default shall continue unremedied for a period of 10 days, (ii) the
covenants contained in subparagraphs (v), (ix), (xii) and (xiii) of Section
7.01(a) of this Agreement and such default shall continue unremedied for a
period of 3 days, or (iii) any other covenant contained in Section 7.01 of this
Agreement (to the extent not otherwise provided for in paragraphs (a), (b) or
(c) of this Section 10.01) and such default shall continue unremedied for a
period of 20 days;
(e) Any Loan Party shall fail to perform or observe
any other term, covenant or agreement contained in any Loan Document to be
performed or observed by such Loan Party (to the extent not otherwise provided
for in paragraphs (a), (b), (c) or (d) of this Section 10.01) and such failure,
if capable of being remedied, shall remain unremedied for 20 days;
(f) Any Loan Party shall fail to pay any principal or
interest on any of its Indebtedness (excluding Indebtedness evidenced by the
Notes) in excess of $200,000, or any interest or premium thereon, when due
(whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise) and such failure shall continue after the applicable grace period, if
any, specified in the agreement or instrument relating to such Indebtedness, or
any other default under any agreement or instrument relating to any such
Indebtedness, or any other event, shall occur and shall continue after the
applicable grace period, if any, specified in such agreement or instrument, if
the effect of such default or event is to accelerate, or to permit the
acceleration of, the maturity of such Indebtedness; or any such Indebtedness in
excess of such amount shall be declared to be due and payable, or required to be
prepaid (other than by a regularly scheduled required prepayment), prior to the
stated maturity thereof;
(g) Any Loan Party (i) shall institute any proceeding
or voluntary case seeking to adjudicate it a bankrupt or insolvent, or seeking
dissolution, liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief or composition of it or its debts under any law relating to
bankruptcy, insolvency, reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee,
custodian or other similar official for such Loan Party or for any substantial
part of its property, (ii) shall be generally not paying its debts as such debts
become due, or shall admit in writing its inability to pay its debts generally,
(iii) shall make a general assignment for the benefit of creditors, or (iv)
shall take any action to authorize or effect any of the actions set forth above
in this subsection (g);
(h) Any proceeding shall be instituted against any
Loan Party seeking to adjudicate it a bankrupt or insolvent, or seeking
dissolution, liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief of debtors, or seeking the entry of an order for relief or
the appointment of a receiver, trustee, custodian or other similar official for
such Loan Party or for any substantial part of its property, and either such
proceeding shall remain undismissed or unstayed for a period of 45 days or any
of the actions sought in such
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proceeding (including, without limitation, the entry of an order for relief
against it or the appointment of a receiver, trustee, custodian or other similar
official for it or for any substantial part of its property) shall occur;
(i) Any material provision of any Loan Document shall
at any time for any reason be declared by a court of competent jurisdiction to
be null and void, or the validity or enforceability thereof shall be contested
by any Loan Party, or a proceeding shall be commenced by any Loan Party or any
Governmental Authority or other regulatory body having jurisdiction over such
Loan Party, seeking to establish the invalidity or unenforceability thereof, or
any Loan Party shall deny in writing that such Loan Party has any liability or
obligation purported to be created under any Loan Document;
(j) Any Security Agreement, Pledge Agreement, any
mortgage or any other security document, after delivery thereof pursuant hereto,
shall for any reason not as a result of any act or omission of the Collateral
Agent fail or cease to create a valid and perfected and, except to the extent
permitted by the terms hereof or thereof, first priority Lien on or security
interest in any Collateral purported to be covered thereby;
(k) One or more judgments or orders (other than a
judgment or award described in subsections (g) or (h) of this Section 10.01) for
the payment of money exceeding any applicable insurance or bond coverage by more
than $200,000 in the aggregate for the Loan Parties shall be rendered against
any Loan Party and either (i) enforcement proceedings shall have been commenced
by any creditor upon any such judgment or order, or (ii) there shall be any
period of 30 consecutive days during which a stay of enforcement of any such
judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect;
(l) Any Loan Party or any of its ERISA Affiliates
shall have made a complete or partial withdrawal from a Multiemployer Plan, and,
as a result of such complete or partial withdrawal, such Loan Party or such
ERISA Affiliate incurs a withdrawal liability in an annual amount exceeding
$200,000; or a Multiemployer Plan enters reorganization status under Section
4241 of ERISA, and, as a result thereof, such Loan Party's or such ERISA
Affiliate's annual contribution requirement with respect to such Multiemployer
Plan increases in an annual amount exceeding $200,000;
(m) Any Termination Event with respect to any
Employee Plan shall have occurred, and, 30 days after notice thereof shall have
been given to any Loan Party by the Administrative Agent, (i) such Termination
Event (if correctable) shall not have been corrected, and (ii) the then current
value of such Employee Plan's vested benefits exceeds the then current value of
assets allocable to such benefits in such Employee Plan by more than $200,000
(or, in the case of a Termination Event involving liability under Section 409,
502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or
Section 4971 or 4975 of the Internal Revenue Code, the liability is in excess of
such amount);
(n) A breach, default, event of default shall occur
under any Factoring Agreement, if such breach, default or event of default has
resulted in the Factor terminating such Factoring Agreement;
(o) A Change of Control shall have occurred;
then, and in any such event, the Administrative Agent may, and upon the
direction of the Required Lenders shall, by notice to the Company, (i) declare
the Total Commitment to be reduced to zero, whereupon the Total Commitment shall
forthwith be reduced to zero, (ii) declare all Loans and all Reimbursement
Obligations, all interest thereon and all other amounts payable under this
Agreement to be forthwith due and payable, whereupon the Loans, all
Reimbursement Obligations, all such interest and all such amounts shall become
and be forthwith due and payable, without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived by each
Loan Party; provided, however, that upon the occurrence of any Event of Default
described in subsections (g) or (h) of this Section 10.01, the Loans, all
Reimbursement Obligations, all such interest and all such amounts shall become
and be forthwith due and payable, without presentment, demand, protest or
further notice of any kind, all of which are expressly waived by each Loan
Party, and (iii) exercise any and all of its other rights under applicable law,
hereunder and under the other Loan Documents.
SECTION 10.02. Deposit for Letters of Credit. Upon demand by
the Administrative Agent after the occurrence and during the continuation of any
Event of Default, the Borrowers shall deposit with the Collateral Agent
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with respect to each Letter of Credit then outstanding cash or equivalents,
acceptable to the Collateral Agent, and readily convertible into cash in an
amount equal to the greatest amount for which such Letter of Credit may be
drawn. Such deposits shall be held by the Collateral Agent in an interest
bearing account maintained by the Collateral Agent as security for, and to
provide for the payment of, the Letter of Credit Obligations.
ARTICLE XI
GUARANTY
SECTION 11.01. Guaranty. The Company hereby (i) irrevocably,
absolutely and unconditionally guarantees the prompt payment, as and when due
and payable (whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise), of all the Obligations, including, without limitation, all
amounts now or hereafter owing in respect of the Loan Documents, whether for
principal, interest (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to a Borrower whether or
not a claim for post-filing interest is allowed in such proceeding), fees,
expenses, indemnifications or otherwise, and (ii) agrees to pay any and all
expenses (including reasonable counsel fees and expenses) incurred by the
Agents, the Lenders, the L/C Issuer, NationsBanc or CIT in enforcing its rights
under this Article XI.
SECTION 11.02. Obligations Unconditional.
(i) The Company hereby guarantees that the
Obligations will be paid strictly in accordance with the terms of the Loan
Documents, regardless of any law, regulation or order now or hereafter in effect
in any jurisdiction affecting any of such terms or the rights of the Agents, the
Lenders, the L/C Issuer, NationsBanc or CIT with respect thereto. The Company
agrees that its guarantee constitutes a guaranty of payment when due and not of
collection, and waives any right to require that any resort be had by the
Agents, the Lenders, the L/C Issuer, NationsBanc or CIT to any Collateral. The
obligations of the Company under this Article XI are independent of the
obligations of the Borrowers under this Agreement and the other Loan Documents
and a separate action or actions may be brought and prosecuted against the
Company to enforce this Article XI irrespective of whether any action is brought
against the Borrowers or whether the Borrowers are joined in any such action.
The liability of the Company hereunder shall be absolute and unconditional,
irrespective of: (i) any lack of validity or enforceability of any Loan Document
or any agreement or instrument relating thereto; (ii) any extension or change in
the time, manner or place of payment of, or in any other term in respect of, all
or any of the Obligations (including, without limitation, any extension for
longer than the original period), or any other amendment or waiver of or consent
to any departure from any provision of any Loan Document (including the creation
or existence of any Obligations in excess of the amounts permitted by any
lending formulas contained in this Agreement; (iii) any exchange or release of,
or non-perfection of any Lien on, any Collateral, or any release or amendment or
waiver of or consent to any departure from any other guaranty, for all or any of
the Obligations; (iv) the existence of any claim, set off, defense or other
right that the Company may have against any Person, including the Agents or the
Lenders; (v) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, any Borrower or any other Guarantor in respect
of the Obligations of the Company in respect hereof.
(ii) This Guaranty (i) is a continuing
guaranty and shall remain in full force and effect until such date on which all
of the Obligations and all other expenses to be paid by the Company pursuant
hereto shall have been satisfied in full after the Total Commitment shall have
been terminated, (ii) shall continue to be effective or shall be reinstated, as
the case may be, if at any time any payment of any of the Obligations is
rescinded or must otherwise be returned by the Agents, the Lenders, the L/C
Issuer or NationsBanc upon the insolvency, bankruptcy or reorganization of any
Borrower or any Guarantor or otherwise, all as though such payment had not been
made, and (iii) shall be binding upon the Company, its successors and assigns.
SECTION 11.03. Waivers. The Company hereby waives, to the
extent permitted by applicable law, (i) promptness and diligence, (ii) notice of
acceptance and notice of the incurrence of any Obligation, (iii) notice of any
action taken by the Agents, the Lenders, the L/C Issuer, NationsBanc or any
Borrower or any other agreement or instrument relating thereto, (iv) all other
notices, demands and protests, and all other formalities of every kind in
connection with the enforcement of the Obligations or of the obligations of the
Company hereunder, the omission of or delay in which, but for the provisions of
this Section 11.03, might constitute grounds for relieving the Company of its
obligations hereunder, (v) any right to compel or direct the Agents or the
Lenders to seek payment or recovery of any
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amounts owed under this Article IX from any one particular fund or source, (vi)
any requirement that the Agents, the Lenders, the L/C Issuer or NationsBanc
protect, secure, perfect or insure any Lien or any property subject thereto or
exhaust any right or take any action against any Person or any Collateral, and
(vii) any other defenses available to the Borrowers or the Company. All such
waivers by the Company shall be effective only to the extent permitted by
applicable law.
SECTION 11.04. Subrogation. Until such time as the Obligations
have been satisfied in full and all Commitments have been terminated, the
Company hereby irrevocably agrees that it will not exercise any and all rights
which it has or may have at any time or from time to time (whether arising
directly or indirectly by operation of law or contract) to assert any claim
against any Borrower or any other Guarantor on account of any payments made
under this Agreement, including, without limitation, all existing and future
rights of subrogation, reimbursement, exoneration, contribution and/or
indemnity. If any amount shall be paid to the Company on account of such rights
at any time when all of such Obligations and all other Obligations shall not
have been paid in full, such amount shall be held in trust for the benefit of
the Agents or the Lenders, shall be segregated from the other funds of the
Company and shall forthwith be paid over to the Agents to be applied in whole or
in part by the Agents against the Obligations, whether matured or unmatured, in
accordance with the terms of this Agreement.
SECTION 11.05. No Waiver; Remedies. No failure on the part of
the Agents, the Lenders, the L/C Issuer or NationsBanc to exercise, and no delay
in exercising, any right hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise of any right hereunder preclude any other or
further exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedy provided by law.
SECTION 11.06. Stay of Acceleration. If acceleration of the
time for payment of any amount payable by any Borrower in respect of the
Obligations is stayed upon the insolvency, bankruptcy or reorganization of such
Borrower, all such amounts otherwise subject to acceleration under the terms of
this Agreement shall nonetheless be payable by the Company hereunder forthwith
on demand by the Agents, Lenders, the L/C Issuer or NationsBanc.
ARTICLE XII
MISCELLANEOUS
SECTION 12.01. Termination. (a) Except as otherwise permitted
herein, the Borrowers may terminate the Total Commitment and this Agreement only
by giving the Administrative Agent not less than sixty (60) days prior written
notice of termination, provided that if any Loan Party intends to conduct a
public sale or private sale pursuant to Rule 144A of the Securities Act of 1933
of securities as described in clause (i) of Section 2.08(a) hereof and gives the
Agents prompt notice after such Loan Party determines to conduct such sale, such
sixty (60) day notice requirement shall be reduced to fifteen (15) days.
Notwithstanding the foregoing, the Administrative Agent may terminate the Total
Commitment and this Agreement immediately by notice to the Company upon the
occurrence and during the continuance of an Event of Default, provided, however,
that if the Event of Default is an event listed in Sections 10.01(g) or (h) of
this Agreement, the Agents and the Lenders may regard the Total Commitment and
the Agreement as terminated and notice to that effect is not required. The Total
Commitment and this Agreement, unless terminated as herein provided on a
Termination Anniversary Date, shall automatically continue to the next
Termination Anniversary Date. All Obligations shall become due and payable as of
the date of any termination under this Section 12.01 and, pending a final
accounting, the Administrative Agent may withhold any balances in the Loan
Account (unless supplied with an indemnity satisfactory to the Agents) to cover
all of the Obligations, whether absolute or contingent. All of the Collateral
Agent's and the Lenders' rights and Liens and security interests shall continue
after any termination until all Obligations for the payment of money have been
paid in cash and satisfied in full and all Letters of Credit have been canceled
and returned to the L/C Issuer or cash collateralized to the reasonable
satisfaction of the Agents. After such payment and satisfaction, the Collateral
Agent and the Lenders will, upon the reasonable request of the Borrowers,
execute all documents necessary to release, without recourse, representation and
warranty and at the expense of the Borrowers, its Liens granted pursuant to the
terms of this Agreement and the other Loan Documents.
(b) Any Lender may elect not to renew its Commitment
by giving the Agents and the Borrowers written notice of its intention to not
renew its Commitment not less than 60 days prior to a Termination Anniversary
Date. If such Lender does not assign its rights, interests and obligations under
this Agreement pursuant to Section 12.08 hereof, then the Commitment of such
Lender shall be terminated as of such Termination Anniversary Date. The
Borrowers hereby, jointly and severally, agree to pay to the Administrative
Agent on such Termination Anniversary
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Date, for the account of such non-renewing Lender, the principal amount of, and
all accrued interest on, such Lender's Pro Rata Share of all funded Loans and
Reimbursement Obligations, together with any amounts payable to such Lender
pursuant to Section 12.16 and any fees or other amounts owing to such Lender
under this Agreement and such Lender's Note. If an Agent makes any Loan or Agent
Advance or assists a Borrower in opening or establishing any Letter of Credit,
during the period between a Lender giving notice of its intention to not renew
its Commitment and such Termination Anniversary Date, the obligations of such
non-renewing Lender pursuant to Sections 2.05, 3.01, 3.02, 4.02 and 9.08 of this
Agreement shall be irrevocable, absolute and unconditional with respect to such
Loan, Agent Advance or Letter of Credit. Notwithstanding such termination and
repayment, the non-renewing Lender shall remain obligated to the Administrative
Agent and NationsBanc or CIT, as the case may be, under Sections 3.02 and
3.03(b) for its Pro Rata Share (calculated immediately prior to the Termination
Anniversary Date on which such termination became effective) of the aggregate
maximum amount available for drawing under all outstanding Letters of Credit on
such Termination Anniversary Date (the "Retained Obligations") until all
Retained Obligations have been paid in full and the Letters of Credit giving
rise to such Retained Obligations have been canceled and returned to the L/C
Issuer. After the effective date of any such termination and repayment pursuant
to this Section 12.01(b), for purposes of Sections 3.02 and 3.03(b) of this
Agreement such non-renewing Lender's Pro Rata Share shall be a fraction
(expressed as a percentage) the numerator of which shall be the Retained
Obligations and the denominator of which shall be the aggregate amount of all
unpaid Loans, Agent Advances and Letter of Credit Obligations.
SECTION 12.02. Notices, Etc. All notices and other
communications provided for hereunder shall be in writing and shall be mailed,
sent by overnight courier, telecopied, or delivered, if to any Lender, at its
address specified under its signature on the signature pages hereof; if to any
Borrower or the Company, at the following address:
Norton XxXxxxxxxx, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxxx, President
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Cost, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
if to the Administrative Agent, to it at the following address:
The CIT Group/Commercial Services, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Vice President
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
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if to the Collateral Agent, to it at the following address:
NationsBanc Commercial Corporation
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxxxx, Senior Vice President
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
in each case with a copy to:
Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
or, as to each party, at such other address as shall be designated by such party
in a written notice to the other party complying as to delivery with the terms
of this Section 12.02. All such notices and other communications shall be
effective (i) if mailed (by certified mail, postage prepaid and return receipt
requested), upon receipt or three Business Days after mailing whichever occurs
first, (ii) if telecopied, when transmitted and a confirmation is received,
provided the same is on a Business Day and, if not, on the next Business Day,
(iii) if sent by overnight courier, upon receipt or two Business Days after
delivered to such overnight courier, whichever occurs first, or (iv) if
delivered, upon delivery, provided the same is on a Business Day and, if not, on
the next Business Day, except that notices to the Agents or the L/C Issuer
pursuant to Articles II and III hereof shall not be effective until received by
the Agents or the L/C Issuer, as the case may be.
SECTION 12.03. Amendments, Etc. No amendment or waiver of any
provision of this Agreement or the other Loan Documents, and no consent to any
departure by any Loan Party therefrom, shall in any event be effective unless
the same shall be in writing and signed by such Loan Party and the Required
Lenders, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; provided, however, that
no amendment, waiver or consent shall (i) increase the Commitment of any Lender,
reduce the principal of, or interest on, the Loans or the Reimbursement
Obligations payable to any Lender, reduce the amount of any fee payable for the
account of any Lender, or postpone or extend any date fixed for any payment of
principal of, or interest or fees on, the Loans or Letter of Credit Obligations
payable to any Lender, in each case without the written consent of any Lender
affected thereby, (ii) increase the Total Commitment without the written consent
of each Lender, (iii) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Notes, or amend the definition of
"Required Lenders", release all or a substantial portion of the Collateral
(except as otherwise provided in this Agreement and the other Loan Documents) or
the Guarantors (other than inactive Guarantors), amend, modify or waive Section
12.01 or this Section 12.03 of this Agreement, or amend the definition of
"Eligible Inventory", "Eligible Accounts Receivable" "Net Amount of Eligible
Accounts Receivable", "Overadvance Amount", "Borrowing Base", "Eligible Amount
of Prior Season Inventory" or "Borrowing Base Before Overadvance Amount" if the
effect of such amendment is to increase the aggregate Availability of the
Borrowers (after adding the Overadvance Amount) on a combined basis, in each
case without the written consent of each Lender. Notwithstanding the foregoing,
no amendment, waiver or consent shall, unless in writing and signed by the
Agents, affect the rights or duties of the Agents or NationsBanc with respect to
the Letter of Credit Guaranty (but not in its capacity as a Lender) under this
Agreement or the other Loan Documents.
SECTION 12.04. No Waiver; Remedies, Etc. No failure on the
part of any Lender or any Agent to exercise, and no delay in exercising, any
right hereunder or under any other Loan Document shall operate as a waiver
thereof; nor shall any single or partial exercise of any right under any Loan
Document preclude any other or further exercise thereof or the exercise of any
other right. The rights and remedies of the Lenders and the Agents provided
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herein and in the other Loan Documents are cumulative and are in addition to,
and not exclusive of, any rights or remedies provided by law. The rights of the
Lenders and the Agents under any Loan Document against any party thereto are not
conditional or contingent on any attempt by the Lenders and the Agents to
exercise any of their rights under any other Loan Document against such party or
against any other Person.
SECTION 12.05. Expenses; Taxes; Attorneys' Fees. The Borrowers
agree to jointly and severally pay or cause to be paid, on demand, and to save
the Agents (and, in the case of clauses (a) and (d) through (m) below, the
Lenders) harmless against liability for the payment of, all reasonable
out-of-pocket expenses, regardless of whether the transactions contemplated
hereby are consummated, including but not limited to reasonable fees and
expenses of counsel for the Agents (and, in the case of clauses (a) and (d)
through (m) below, the Lenders), accounting, due diligence, filing fees,
periodic field audits, investigation, monitoring of assets, syndication,
miscellaneous disbursements, examination, travel, lodging and meals, incurred by
the Agents (and, in the case of clauses (a) and (d) through (m) below, the
Lenders) from time to time arising from or relating to: (a) the negotiation,
preparation, execution, delivery, performance and administration of this
Agreement and the other Loan Documents, provided that the Borrowers shall not be
obligated to reimburse the Lenders under this clause (a) for out-of-pocket
expenses in excess of $40,000 for all Lenders (excluding the expenses of the
Agents), (b) any amendments, waivers or consents to this Agreement or the other
Loan Documents requested or signed by any Loan Party whether or not such
documents become effective or are given, (c) the preservation and protection of
any of the Agents' and the Lenders' rights under this Agreement or the other
Loan Documents, (d) the defense of any claim or action asserted or brought
against the Agents or the Lenders by any Person that arises from or relates to
this Agreement, any other Loan Document, the Agents' or the Lenders' claims
against the Borrowers or the other Loan Parties, or any and all matters in
connection therewith, (e) the commencement or defense of, or intervention in,
any court proceeding arising from or related to this Agreement or any other Loan
Document, (f) the filing of any petition, complaint, answer, motion or other
pleading by the Agents or the Lenders, or the taking of any action in respect of
the Collateral or other security, in connection with this Agreement or any other
Loan Document, (g) the protection, collection, lease, sale, taking possession of
or liquidation of, any Collateral or other security in connection with this
Agreement or any other Loan Document, (h) any attempt to enforce any Lien on any
Collateral or other security in connection with this Agreement or any other Loan
Document, (i) any attempt to collect from the Borrowers or any other Loan Party
amounts owed hereunder or under any other Loan Document, (j) the receipt of any
advice with respect to any of the foregoing, (k) all liabilities and costs
arising from or in connection with the past, present or future operations of the
Loan Parties involving any damage to real or personal property or natural
resources or harm or injury alleged to have resulted from any Release of
Hazardous Materials on, upon or into such property, (l) any costs or liabilities
incurred in connection with the investigation, removal, cleanup and/or
remediation of any Hazardous Materials present or arising out of the operations
of any facility of the Loan Parties, or (m) any liabilities or costs incurred in
connection with any Lien arising under any Environmental Law. Without limitation
of the foregoing or any other provision of any Loan Document: (x) the Borrowers
jointly and severally agree to pay all stamp, document, transfer, recording or
filing taxes or fees (including, without limitation, mortgage recording taxes)
and similar impositions now or hereafter determined by the Agents or any of the
Lenders to be payable in connection with this Agreement or any other Loan
Document, and the Borrowers jointly and severally agree to save the Agents and
the Lenders harmless from and against any and all present or future claims,
liabilities or losses with respect to or resulting from any omission to pay or
delay in paying any such taxes, fees or impositions, and (y) if the Borrowers or
any Loan Party fail to perform any covenant or agreement contained herein or in
any other Loan Document, any Agent may itself perform or cause performance of
such covenant or agreement, and the expenses of the Agents incurred in
connection therewith shall be reimbursed on demand by the Borrowers.
SECTION 12.06. Right of Set-off. Upon the occurrence and
during the continuance of any Event of Default, each Lender may, and is hereby
authorized to, at any time and from time to time, without notice to any Borrower
or Guarantor (any such notice being expressly waived by the Borrowers and
Guarantors) and to the fullest extent permitted by law, set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by such Lender to or for
the credit or the account of any Borrower or Guarantor against any and all joint
and several obligations of the Borrowers now or hereafter existing under any
Loan Document, irrespective of whether or not such Lender shall have made any
demand hereunder or thereunder and although such obligations may be contingent
or unmatured. Such set-off shall be subject to the provisions of Section 4.03.
Such Lender agrees to notify the Borrowers promptly after any such set-off and
application made by such Lender provided that the failure to give such notice
shall not affect the validity of such set-off and application. The rights of the
Agents under this Section 12.06 are in addition to the other rights and remedies
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(including, without limitation, other rights of set-off) which such Lender may
have.
SECTION 12.07. Severability. Any provision of this Agreement,
or of any other Loan Document to which any Borrower or any Guarantor is a party,
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining portions hereof or thereof
or affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 12.08. Assignments and Participations.
(a) Each Lender may, with the written consent of the
Agents, assign to one or more other lenders or other entities all or a portion
of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitment, the Loans made by it, the Notes
held by it and its Pro Rata Share of Letter of Credit Obligations); provided,
however, that (i) such assignment is in an amount which is at least $10,000,000
or a multiple of $1,000,000 in excess thereof (or the remainder of such Lender's
Commitment), (ii) each such assignment shall be of a constant, and not a
varying, percentage of all of the assigning Lender's rights and obligations
under this Agreement, (iii) no such assignment shall be made, other than by
NationsBanc or CIT, prior to the Syndication Date, and (iv) the parties to each
such assignment shall execute and deliver to the Administrative Agent, for its
acceptance, an Assignment and Acceptance, together with any Note subject to such
assignment and such parties (other than the Borrowers or the Company) shall
deliver to the Administrative Agent a processing and recordation fee of $5,000.
Upon such execution, delivery and acceptance, from and after the effective date
specified in each Assignment and Acceptance, which effective date shall be at
least three Business Days after the delivery thereof to the Administrative Agent
(or such shorter period as shall be agreed to by the Administrative Agent and
the parties to such assignment), (A) the assignee thereunder shall become a
"Lender" hereunder and, in addition to the rights and obligations hereunder held
by it immediately prior to such effective date, have the rights and obligations
hereunder that have been assigned to it pursuant to such Assignment and
Acceptance and (B) the assigning Lender thereunder shall, to the extent that
rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto). Any such assignment shall not adversely affect the Borrowers' rights
under this Agreement except that the assigning Lender shall not be responsible
for the obligations assigned.
(b) By executing and delivering an Assignment and
Acceptance, the assigning Lender thereunder and the assignee thereunder confirm
to and agree with each other and the other parties hereto that: (i) other than
as provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement of any other instrument or document
furnished pursuant hereto, and (ii) such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to the
value, perfection or priority of the Collateral or the financial condition of
any Borrower or any Guarantor or any of their Subsidiaries or the performance or
observance by such Borrower or such Guarantor or any of their Subsidiaries of
any of their obligations under this Agreement, any other Loan Document or any
other instrument or document furnished pursuant hereto.
(c) The Administrative Agent shall maintain at its
address referred to in Section 12.02 hereof a copy of each Assignment and
Acceptance delivered to and accepted by it. Such copies shall be available for
inspection by any Borrower or any Guarantor or any Lender at any reasonable time
and from time to time upon reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance
executed by an assigning Lender and an assignee Lender, together with the Notes
subject to such assignment and the processing and recordation fee, if the
Administrative Agent consents, which consent will not be unreasonably withheld,
to the proposed Assignment, the Administrative Agent shall, if such Assignment
and Acceptance has been completed and is in substantially the form of Exhibit I
hereto, (i) accept such Assignment and Acceptance, and (ii) give prompt notice
thereof to the Borrower. Within three Business Days after its receipt of such
notice, any Borrower or any Guarantor, at its own expense, shall execute and
deliver to the Administrative Agent in exchange for the surrendered Note a new
Note to the order of such assignee Lender in an aggregate principal amount equal
to the Loans and Revolving Credit Commitment assumed by it pursuant to such
Assignment and Acceptance, and if the assigning Lender has retained any
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Loans and Revolving Credit Commitment hereunder, a new Note to the order of the
assigning Lender in an aggregate principal amount equal to the Loans and
Revolving Credit 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 date of the
Administrative Agent's acceptance of such Assignment and Acceptance and shall
otherwise be in substantially the form of Exhibit A and/or Exhibit B hereto.
(e) Each Lender shall not sell participations in or
to all or a portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitment, the Loans
made by it and the Notes held by it and the Letter of Credit Obligations).
(f) Nothing contained in this Section 12.08 shall
prohibit any Lender from pledging its Loans hereunder to a Federal Reserve Bank
in support of borrowings made by such Lender from such Federal Reserve Bank.
SECTION 12.09. Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which shall be deemed to be an original, but all of which
taken together shall constitute one and the same agreement.
SECTION 12.10 Headings. Section headings herein are included
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
SECTION 12.11. Governing Law. This Agreement, the Notes and
the other Loan Documents shall be governed by, and construed in accordance with,
the law of the State of New York applicable to contracts made and to be
performed in the State of New York without regard to conflicts of law
principles. Any legal action or proceeding with respect to this Agreement or any
other Loan Document may be brought in the courts of the State of New York or of
the United States for the Southern District of New York, and, by execution and
delivery of this Agreement, the Company and each Borrower hereby irrevocably
accept in respect of its property, generally and unconditionally, the
jurisdiction of the aforesaid courts. The Company and each Borrower further
irrevocably consent to the service of process out of any of the aforementioned
courts and in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to each Borrower or the Company
at its address for notices contained in Section 12.02, such service to become
effective ten (10) days after such mailing. Each Borrower and the Company hereby
irrevocably appoint the Secretary of State of the State of New York as its agent
for service of process in respect of any such action or proceeding. Nothing
herein shall affect the right of the Agents to service of process in any other
manner permitted by law or to commence legal proceedings or otherwise proceed
against the Borrowers and/or the Company in any other jurisdiction. The Company
and each Borrower hereby expressly and irrevocably waive, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the laying
of venue of any such litigation brought in any such court referred to above and
any claim that any such litigation has been brought in an inconvenient forum. To
the extent that the Company or any Borrower has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution or otherwise) with respect to itself or its property, such Person
hereby irrevocably waives such immunity in respect of its obligations under this
Agreement and the other Loan Documents.
SECTION 12.12. WAIVER OF JURY TRIAL, ETC. THE COMPANY AND EACH
BORROWER, THE LENDERS AND THE AGENTS HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY
IN ANY ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS
AGREEMENT, THE NOTES OR OTHER LOAN DOCUMENTS, OR UNDER ANY AMENDMENT, WAIVER,
CONSENT, INSTRUMENT, DOCUMENT OR OTHER AGREEMENT DELIVERED OR WHICH IN THE
FUTURE MAY BE DELIVERED IN CONNECTION THEREWITH, OR ARISING FROM ANY BANKING
RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREE THAT ANY SUCH
ACTION, PROCEEDINGS OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE
A JURY. THE COMPANY AND EACH BORROWER CERTIFY THAT NO OFFICER, REPRESENTATIVE,
AGENT OR ATTORNEY OF THE AGENT OR ANY LENDER HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT THE AGENT OR ANY LENDER WOULD NOT, IN THE EVENT OF ANY ACTION,
PROCEEDING OR COUNTERCLAIM, SEEK TO ENFORCE THE FOREGOING WAIVERS. THE COMPANY
AND EACH BORROWER HEREBY ACKNOWLEDGE THAT THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE AGENTS AND THE LENDERS ENTERING INTO THIS AGREEMENT.
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SECTION 12.13. Consent by the Agents, Lenders. Except as
otherwise expressly set forth herein to the contrary, if the consent, approval,
satisfaction, determination, judgment, acceptance or similar action (an
"Action") of the Agents or the Lenders shall be permitted or required pursuant
to any provision hereof or any provision of any other agreement to which the
Company or any Borrower is a party and to which the Agents or the Lenders has
succeeded thereto, such Action shall be required to be in writing and may be
withheld or denied by any Agent or any Lender, as the case may be, with or
without any reason, and without being subject to question or challenge on the
grounds that such Action was not taken in good faith.
SECTION 12.14. No Party Deemed Drafter. The Company, each of
the Borrowers, the Lenders and the Agents agree that no party hereto shall be
deemed to be the drafter of this Agreement, and each of the Borrowers, the
Company, the Lenders and the Agents further agree that, in the event this
Agreement is ever construed by a court of law, such court shall not construe
this Agreement or any provision of this Agreement against any party hereto as
the drafter of this Agreement.
SECTION 12.15. Reinstatement; Certain Payments. If claim is
ever made upon the Agents or the Lenders for repayment or recovery of any amount
or amounts received by the Agents or the Lenders in payment or on account of any
of the Obligations under this Agreement, the Agents or the Lenders shall give
prompt notice of such claim to each other Lender and the L/C Issuer, the Company
and the Borrowers, and if the Agents or the Lenders repays all or part of said
amount by reason of (i) any judgment, decree or order of any court or
administrative body having jurisdiction over the Agents or the Lenders or any of
their property, or (ii) any good faith settlement or compromise of any such
claim effected by the Agents or the Lenders with any such claimant, then and in
such event the Company and each Borrower agrees that (A) any such judgment,
decree, order, settlement or compromise shall be binding upon the Company and
the Borrowers notwithstanding the cancellation of any Note or other instrument
evidencing the Obligations under this Agreement or the other Loan Documents or
the termination of this Agreement or the other Loan Documents, and (B) it shall
be and remain liable to the Agents and the Lenders hereunder for the amount so
repaid or recovered to the same extent as if such amount had never originally
been received by the Agents or the Lenders.
SECTION 12.16. Indemnification. In addition to all of the
Company's or any Borrowers' other Obligations under this Agreement, each of the
Company and the Borrowers agree to, jointly and severally, defend, protect,
indemnify and hold harmless the Agents, the L/C Issuer, each Lender, and all of
the respective officers, directors, employees, attorneys, consultants and agents
of the Agents, the L/C Issuer and each Lender (collectively called the
"Indemnitees") from and against any and all losses, damages, liabilities,
obligations, penalties, fees, costs and expenses (including, without limitation,
attorneys' fees, costs and expenses) incurred by such Indemnitees, whether prior
to or from and after the Effective Date, whether direct, indirect or
consequential, as a result of or arising from or relating to or in connection
with any of the following: (i) the negotiation, preparation, execution or
performance or enforcement of this Agreement, any Loan Document or of any other
document executed in connection with the transactions contemplated by this
Agreement, (ii) the Lender's furnishing of funds to the Borrowers issuing
Letters of Credit for the account of the Borrowers under this Agreement,
including, without limitation, the management of any such Loans or the
Reimbursement Obligations, (iii) any matter relating to the Acquisition, the
transactions, contemplated by the Acquisition Discounts, financing transactions
contemplated by this Agreement or by any document executed in connection with
the transactions contemplated by this Agreement or the Acquisition Documents, or
(iv) any claim, litigation, investigation or proceeding relating to any of the
foregoing, whether or not any Indemnitee is a party thereto (collectively, the
"Indemnified Matters"); provided, however, that the Company and the Borrowers
shall have no obligation to any Indemnitee hereunder for any Indemnified Matter
caused by or resulting from the gross negligence or willful misconduct of such
Indemnitee, as determined by a final judgment of a court of competent
jurisdiction. Such indemnification for all of the foregoing losses, damages,
fees, costs and expenses of the Indemnitees are chargeable against the Loan
Account. To the extent that the undertaking to indemnify, pay and hold harmless
set forth in this Section 12.16 may be unenforceable because it is violative of
any law or public policy, the Company and the Borrowers shall contribute the
maximum portion which they are permitted to pay and satisfy under applicable
law, to the payment and satisfaction of all Indemnified Matters incurred by the
Indemnitees. The Indemnity shall survive the repayment of the Obligations and
the discharge of the Liens granted under the Loan Documents.
SECTION 12.17. Binding Effect. This Agreement shall become
effective when it shall have been executed by the Company, the Borrowers, the
Agents and the Lenders and when the conditions precedent set forth in Section
5.01 hereof have been satisfied or waived by the Agents, and thereafter shall be
binding upon and inure to the
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benefit of the Company, each Borrower, the Agents and each Lender, and their
respective successors and assigns, except that the Company and the Borrowers
shall not have the right to assign their rights hereunder or any interest herein
without the prior written consent of all the Lenders, and the assignment by any
Lender shall be governed by Section 12.08 hereof.
SECTION 12.18. Releases of Collateral.
(a) Upon the request of any Loan Party made in
connection with any sale, transfer or other disposition of Collateral permitted
pursuant to clauses (B), (C) or (E) of Section 7.02(d)(ii) of this Agreement (a
"Permitted Disposition"), provided that, in the case of clause (E) of Section
7.02(d)(ii), the Net Proceeds of any such Permitted Disposition are paid to the
Administrative Agent pursuant to Section 2.07(k) of this Agreement, the
Collateral Agent shall, at the expense of the Loan Parties, promptly release,
without recourse, representation and warranty, its Lien on any such Collateral.
Notwithstanding anything to the contrary, the Collateral Agent shall not have
any obligation to release its Lien on any such Collateral if the Collateral
Agent determines, in its sole discretion exercised reasonably, that the
conditions of this subsection (b) of Section 12.18 have not been satisfied.
(b) The Loan Parties may exercise their rights under
this Section 12.18 at any time during the term of this Financing Agreement in
connection with a Permitted Disposition by delivering to the Collateral Agent,
not less than five Business Days prior to the date of the proposed Permitted
Disposition and release, a certificate substantially in the form of Exhibit L
hereto (the "Release Certificate") of the chief executive officer of the Company
which shall refer to this Section 12.18, identify the assets proposed to be sold
or disposed of and any documents that the Loan Parties are requesting the
Collateral Agent to sign in connection with any such proposed release, and be
accompanied by a counterpart of any such documents executed and acknowledged by
all parties thereto (if any) other than the Collateral Agent (and in form for
execution by the Collateral Agent) certifying, as of the date of the Release
Certificate, that (i) both immediately before and immediately after giving
effect to such requested release, no Default or Event of Default shall have
occurred and be continuing, (ii) the sale, transfer or disposition is made in
compliance with Section 7.02(d)(ii) hereof, and (iii) if the Net Proceeds of
such Permitted Disposition has been made or, as a condition to the requested
release, will be made to the Administrative Agent, provided that in the event
that the Release Certificate states that the Borrowers are required to make a
payment of such Net Proceeds, (A) such Release Certificate shall contain a
calculation of the amount of such payment and (B) prior to or simultaneously
with the release requested by the Loan Parties and the delivery by the
Collateral Agent of any documents relating thereto, the Administrative Agent
shall have received such payment within two Business Days after receipt by the
applicable Borrower.
SECTION 12.19. Confidentiality. Upon delivering to any Lender
or Agent or permitting any Lender or Agent to inspect, any written information
pursuant to this Agreement or the other Loan Documents, each Lender and or Agent
shall treat such information as confidential to the extent such information is
conspicuously marked confidential. Each Lender and Agent agrees to hold such
information in confidence from the date of disclosure thereof. Subject to the
other provisions of this Section 12.19, any Lender or Agent may disclose
confidential information to its officers, directors, employees, attorneys,
accountants or other professionals engaged by any Lender or Agent only after
determining that such third party has been instructed to hold such information
in confidence to the same extent as if it were a Lender. Notwithstanding the
foregoing, the provisions of this Section 12.19 shall not apply to information
within any one of the following categories or any combination thereof: (i)
information the substance of which, at the time of disclosure by any Lender or
Agent, has been disclosed to or is known to any creditor (other than information
as to which such creditor is then under an obligation of nondisclosure), or any
other Person other than (A) a director, officer, employee or agent of any Loan
Party or a professional engaged by a Loan Party or (B) a Person who is then
under an obligation of nondisclosure (otherwise than as a consequence of a
wrongful act of any Lender or Agent), (ii) information which any Lender or Agent
had in its possession prior to receipt thereof from the disclosing party, or
(iii) information received by any Lender or Agent from a third party having no
obligations of nondisclosure with respect thereto. Nothing contained in this
Section 12.19 shall prevent any disclosure: (i) believed in good faith by any
Lender or Agent to be required by any law or guideline or interpretation or
application thereof by any Governmental Authority, arbitrator or grand jury
charged with the interpretation or administration thereof or compliance with any
request or directive of any Governmental Authority, arbitrator or grand jury
(whether or not having the force of law), (ii) determined by counsel for any
Lender or Agent to be necessary or advisable in connection with enforcement or
preservation of rights under or in connection with this Agreement or any other
Loan Document or (iii) of any information which has been made public by a Person
other than any Lender or Agent. Any Lender or Agent shall have
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the right to disclose any confidential information described in this Section
12.19 to the L/C Issuer and to an assignee or prospective assignee or to a
participant or prospective participant in the Obligations hereunder, provided
that the assigning or selling Lender or Agent shall have obtained from such
assignee or prospective assignee or participant or prospective participant an
agreement to hold such information in confidence to the same extent as if it
were a Lender.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
NORTON XxXXXXXXXX, INC.
By: /s/ Xxxxx Xxxxxxxxx
------------------------
Title: President
NORTON XxXXXXXXXX OF XXXXXX, INC.
By: /s/ Xxxxx Xxxxxxxxx
--------------------------
Title: President
MISS XXXXX, INC.
By: /s/ Xxxxx Xxxxxxxxx
-------------------------
Title: Vice Chairman
AGENTS AND LENDERS
THE CIT GROUP/COMMERCIAL SERVICES,
INC., as Administrative Agent and Lender
By: /s/ Xxxxxxx X. Xxxxx
-------------------------
Title: Vice President
NATIONSBANC COMMERCIAL
CORPORATION, as Collateral Agent and
Lender
By: /s/ Xxxxxxx X. Xxxx
-------------------------------
Title: President
LENDERS
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EXHIBIT A
FORM OF REVOLVING CREDIT NOTE
$__________ Dated: ____________, 000__
Xxx Xxxx, Xxx Xxxx
FOR VALUE RECEIVED, each of Norton XxXxxxxxxx of Xxxxxx, Inc., a New
York corporation and Miss Xxxxx, Inc., a Delaware corporation formally known as
ME Acquisition Corp. (collectively, the "Borrowers"), HEREBY JOINTLY AND
SEVERALLY PROMISE TO PAY to the order of____________________ (the "Lender") (i)
the principal amount of ____________ ($____________ ), or if less, the aggregate
unpaid principal amount of all Revolving Credit Loans (as defined in the
Financing Agreement hereinafter referred to) made by the Lender to the
Borrowers, payable on the Final Maturity Date (as defined in the Financing
Agreement) and (ii) interest on the unpaid principal amount of all Revolving
Credit Loans, from the date hereof until all such principal amounts are paid in
full, at such interest rates, and payable at such times, as are specified in the
Financing Agreement.
Notwithstanding any other provision of this Revolving Credit Note,
interest paid or becoming due hereunder shall in no event exceed the maximum
rate permitted by applicable law. Both principal and interest are payable in
lawful money of the United States of America in immediately available funds to
The CIT Group/Commercial Services, Inc., as administrative agent (the
"Administrative Agent"), at its office located at 0000 Xxxxxx xx xxx Xxxxxxxx,
Xxx Xxxx, Xxx Xxxx 00000 or such other office as the Administrative Agent may
designate.
This Revolving Credit Note is the Revolving Credit Note referred to in,
and is entitled to the benefits of, the Financing Agreement dated as of
___________ ___, 1997 (as amended or otherwise modified from time to time, the
"Financing Agreement"), by and among Norton XxXxxxxxxx, Inc., the Borrowers, the
financial institutions from time to time party to the Financing Agreement,
NationsBanc Commercial Corporation, as Collateral Agent, and the Administrative
Agent. The Financing Agreement, among other things, contains provisions for
certain stated events of default and also for prepayments on account of
principal hereof prior to the maturity hereof upon the terms and conditions
specified therein. The Borrowers hereby waive presentment for payment, demand,
protest and notice of dishonor of this Revolving Credit Note.
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This Revolving Credit Note shall be governed by, and construed and
interpreted in accordance with, the internal laws of the State of New York
applicable to contracts made and to be performed therein without consideration
as to choice of law.
NORTON XxXXXXXXXX OF XXXXXX, INC.
By: ____________________________
Name:
Title:
MISS XXXXX, INC., formerly known as
ME ACQUISITION CORP.
By: ____________________________
Name:
Title:
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EXHIBIT B
FORM OF TERM NOTE
$__________ Dated: ______________, 0000
Xxx Xxxx, Xxx Xxxx
FOR VALUE RECEIVED, Norton XxXxxxxxxx of Xxxxxx, Inc., a New York
corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order
of_______________ (the "Lender") (i) the principal amount of____________________
($ ________ ), or if less, the aggregate unpaid principal amount of the Term
Loan (as defined in the Financing Agreement hereinafter referred to) made by the
Lender to the Borrower, payable in such installments and at such times as are
specified in the Financing Agreement, and (ii) interest on the unpaid principal
amount hereof from the date hereof until all such principal amount is paid in
full, at such interest rates, and payable at such times, as are specified in the
Financing Agreement.
Notwithstanding any other provision of the Term Note, interest paid or
becoming due hereunder shall in no event exceed the maximum rate permitted by
applicable law. Both principal and interest are payable in lawful money of the
United States of America in immediately available funds to The CIT
Group/Commercial Services, Inc., as administrative agent (the "Administrative
Agent"), at its office located at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx
Xxxx 00000 or such other office as the Administrative Agent may designate.
The Term Loan made by the Lender to the Borrower pursuant to the
Financing Agreement, and all payments made on account of principal hereof, shall
be recorded by the Lender and, prior to any transfer hereof, indorsed on the
schedule attached hereto which is a part of this Term Note.
This Term Note is the Term Note referred to in, and is entitled to the
benefits of, the Financing Agreement dated as of_______, 1997 (as amended or
otherwise modified from time to time, the "Financing Agreement"), by and among
Norton XxXxxxxxxx, Inc., the Borrower, Miss Xxxxx, Inc., formerly known as ME
Acquisition Corp., the financial institutions from time to time party to the
Financing Agreement, NationsBanc Commercial Corporation, as Collateral Agent,
and the Administrative Agent. The Financing Agreement, among other things,
contains provisions for the acceleration of the maturity of the unpaid principal
amount of this Term Note upon the happening of certain stated events of default
and also for prepayments on account of principal hereof prior to the maturity
hereof upon the terms and conditions specified therein. The Borrower hereby
waives presentment for payment, demand, protest and notice of dishonor of this
Term Note.
This Term Note shall be governed by, and construed and interpreted in
accordance with, the internal laws of the State of New York applicable to
contracts made and to be performed therein without consideration as to choice of
law.
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NORTON XxXXXXXXXX OF XXXXXX, INC.
By: __________________________________
Name:
Title:
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XXXXXX XxXXXXXXXX OF XXXXXX, INC.
TERM LOAN AND REPAYMENT OF PRINCIPAL
AMOUNT PRINCIPAL PRINCIPAL NOTATION
OF TERM LOAN PAID OR PREPAID BALANCE MADE BY
------------ --------------- ------- -------
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EXHIBIT C-1
FORM OF SUBSIDIARY GUARANTY
GUARANTY, dated as of ______________, _____, made by _______________, a
________ corporation (the "Guarantor"), in favor of each of the Lenders (as
hereinafter defined) and NATIONSBANC COMMERCIAL CORPORATION, as collateral agent
for the Lenders (the "Collateral Agent") pursuant to the Financing Agreement
referred to below.
WITNESSETH:
WHEREAS, Norton XxXxxxxxxx, Inc., a Delaware corporation and a
guarantor (the "Company"), Norton XxXxxxxxxx of Xxxxxx, Inc., a New York
corporation, and Miss Xxxxx, Inc., a Delaware corporation formerly known as ME
Acquisition Corp. (each a "Borrower" and collectively the "Borrowers"), the
financial institutions from time to time party to the Financing Agreement (the
"Lenders"), The CIT Group/Commercial Services, Inc., as administrative agent,
(the "Administrative Agent"), and the Collateral Agent are parties to a
Financing Agreement, dated as of September __, 1997 (such Agreement, as amended,
restated or otherwise modified from time to time, being hereinafter referred to
as the "Financing Agreement");
WHEREAS, [the Company] [a Borrower] directly owns all of the issued and
outstanding shares of capital stock of the Guarantor; and
WHEREAS, pursuant to Section 7.01(b) of the Financing Agreement, the
Guarantor is required to execute and deliver to the Collateral Agent a guaranty
guaranteeing all Loans and Reimbursement Obligations (each as defined in the
Financing Agreement) and all other obligations under the Financing Agreement;
NOW, THEREFORE, in consideration of the premises and the agreements
herein and in order to induce the Lenders to make and maintain the Loans and to
assist the Borrowers in obtaining letters of credit, in each case pursuant to
the Financing Agreement, the Guarantor hereby agrees with the Lenders and the
Collateral Agent as follows:
SECTION 1. Definitions. Reference is hereby made to the Financing
Agreement for a statement of the terms thereof. All terms used in this Guaranty
which are defined therein and not otherwise defined herein shall have the same
meanings herein as set forth therein.
SECTION 2. Guaranty. The Guarantor hereby (i) irrevocably, absolutely
and unconditionally guarantees the prompt payment by the Borrowers, as and when
due and payable (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise), of all amounts now or hereafter owing in
respect of the Notes, the Financing Agreement and the other Loan Documents,
including, without limitation, all Letter of Credit Obligations and all Ledger
Debt, whether for principal, interest (including interest accruing on or after
the filing of any
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petition in bankruptcy or for reorganization relating to a Borrower whether or
not a claim for post-filing interest is allowed in such proceeding), fees,
commissions, expenses, indemnifications or otherwise (the "Obligations"), and
(ii) agrees to pay any and all expenses (including counsel fees and expenses)
incurred by the Collateral Agent and the Lenders in enforcing their rights under
this Guaranty.
SECTION 3. Guarantor's Obligations Unconditional.
(a) The Guarantor hereby guarantees that the Obligations will be paid
strictly in accordance with the terms of the Loan Documents, regardless of any
law, regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of the Collateral Agent or the Lenders
with respect thereto. The Guarantor agrees that its guarantee constitutes a
guaranty of payment when due and not of collection and waives any right to
require that any resort be made by the Collateral Agent or the Lenders to any
Collateral. The obligations of the Guarantor under this Guaranty are independent
of the obligations under the Financing Agreement and the other Loan Documents,
and a separate action or actions may be brought and prosecuted against the
Guarantor to enforce this Guaranty, irrespective of whether any action is
brought against any Borrower or whether any Borrower is joined in any such
action. The liability of the Guarantor hereunder shall be absolute and
unconditional irrespective of: (i) any lack of validity or enforceability of any
Loan Document or any agreement or instrument relating thereto; (ii) any change
in the time, manner or place of payment of, or in any other term in respect of,
all or any of the Obligations, or any other amendment or waiver of or consent to
any departure from any provision of any Loan Document other than this Guaranty
(including the creation or existence of any Obligations in excess of the amount
permitted by any lending formulas contained in the Loan Documents or the amount
evidenced by the Loan Documents); (iii) any exchange or release of, or
non-perfection of any Lien on or security interest in, any Collateral, or any
release or amendment or waiver of or consent to any departure from any other
guaranty, for all or any of the Obligations; (iv) the existence of any claim,
set-off, defense or other right that the Guarantor may have against any Person,
including, without limitation, the Collateral Agent or the Lenders, or (v) any
other circumstance which might otherwise constitute a defense available to, or a
discharge of, any Borrower or any other guarantor in respect of the Obligations
or the Guarantor in respect hereof.
(b) This Guaranty (i) is a continuing guaranty and shall remain in full
force and effect until such date on which all of the Obligations and all other
expenses to be paid by the Guarantor pursuant hereto shall have been satisfied
in full after the Total Commitment shall have been terminated and all Letters of
Credit are canceled or cash collateralized, and (ii) shall continue to be
effective or shall be reinstated, as the case may be, if at any time any payment
of any of the Obligations is rescinded or must otherwise be returned by the
Collateral Agent upon the insolvency, bankruptcy or reorganization of any
Borrower or otherwise, all as though such payment had not been made.
SECTION 4. Waivers. The Guarantor hereby waives, to the extent
permitted by applicable law, (i) promptness and diligence; (ii) notice of
acceptance and notice of the incurrence of any Obligation by the Borrowers;
(iii) notice of any actions taken by the Collateral Agent, the Borrowers or any
Lender under any Loan Document or any other agreement or instrument relating
thereto; (iv) all other notices, demands and protests, and all other formalities
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of every kind in connection with the enforcement of the Obligations or of the
obligations of the Guarantor hereunder, the omission of or delay in which, but
for the provisions of this Section 4, might constitute grounds for relieving the
Guarantor of its obligations hereunder; (v) any right to compel or direct the
Collateral Agent or the Lenders to seek payment or recovery of any amounts owed
under this Guaranty from any one particular fund or source; (vi) any requirement
that the Collateral Agent protect, secure, perfect or insure any security
interest or Lien or any property subject thereto or exhaust any right or take
any action against any Borrower or any other Person or any Collateral; and (vii)
any other defense available to the Guarantor.
SECTION 5. Subrogation. Until the Obligations have been satisfied in
full, the Guarantor hereby waives and irrevocably agrees it will not exercise
any and all rights which it has or may have at any time or from time to time
(whether arising directly or indirectly by operation of law or contract) to
assert any claim against any Borrower on account of any payments made under this
Guaranty or otherwise, including, without limitation, any and all existing and
future rights of subrogation, reimbursement, exoneration, contribution and/or
indemnity. If any amount shall be paid to the Guarantor on account of such
subrogation rights at any time when all of the Obligations and all such other
expenses shall not have been paid in full, such amount shall be held in trust
for the benefit of the Collateral Agent and the Lenders, shall be segregated
from the other funds of the Guarantor and shall forthwith be paid over to the
Collateral Agent to be applied in whole or in part by the Collateral Agent
against the Obligations, whether matured or unmatured, and all such other
expenses in accordance with the terms of the Financing Agreement.
SECTION 6. Representations and Warranties. The Guarantor hereby
represents and warrants as follows:
(a) The Guarantor (i) is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation as
set forth on the first page hereof; and (ii) has all requisite corporate power
and authority to execute, deliver and perform this Guaranty and each other Loan
Document to which the Guarantor is a party.
(b) The execution, delivery and performance by the Guarantor of this
Guaranty and each other Loan Document to which the Guarantor is a party (i) have
been duly authorized by all necessary corporate action, (ii) do not contravene
its charter or by-laws or any applicable law, (iii) do not violate any
contractual restriction binding on or otherwise affecting the Guarantor, and
(iv) do not result in or require the creation of any Lien, security interest or
other charge or encumbrance upon or with respect to any of its properties other
than pursuant to any such Loan Document.
(c) No authorization, approval or other action by, and no notice to or
filing with, any Governmental Authority or other regulatory body is required in
connection with the due execution, delivery and performance by the Guarantor of
this Guaranty or any of the other Loan Documents to which the Guarantor is a
party.
(d) Each of this Guaranty and the other Loan Documents to which the
Guarantor is a party is a legal, valid and binding obligation of the Guarantor,
enforceable against the Guarantor in accordance with its terms, except as may be
limited by applicable bankruptcy,
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87
insolvency, reorganization, moratorium or other similar laws and general equity
principles affecting the enforcement of creditors' rights generally.
(e) There is no pending or, to the best knowledge of the Guarantor,
threatened action, suit or proceeding against the Guarantor or to which any of
the properties of the Guarantor is subject, before any court or other
Governmental Authority or any arbitrator (i) which challenges the validity or
enforceability of this Guaranty or any of the other Loan Documents to which the
Guarantor is a party, or (ii) in which there is a reasonable possibility of an
adverse decision which would materially adversely affect the business,
operations or financial condition of the Guarantor.
(f) The Guarantor now has and will continue to have independent means
of obtaining information concerning the affairs, financial condition and
business of the Borrowers, and has no need of, or right to obtain from the
Collateral Agent or any Lender, any credit or other information concerning the
affairs, financial condition or business of the Borrowers that may come under
the control of the Collateral Agent or any Lender.
SECTION 7. Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default, the Collateral Agent, the Administrative
Agent and the Lenders may, and are hereby authorized to, at any time and from
time to time, without notice to the Guarantor (any such notice being expressly
waived by the Guarantor) and to the fullest extent permitted by law, set-off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by the
Collateral Agent, the Administrative Agent or any Lender to or for the credit of
the account of the Guarantor against any and all obligations of the Guarantor
now or hereafter existing under this Guaranty, irrespective of whether or not
the Collateral Agent, the Administrative Agent or any Lender shall have made any
demand under this Guaranty and although such obligations may be contingent or
unmatured. The Collateral Agent, the Administrative Agent and the Lenders agree
to notify the Guarantor promptly after any such set-off and application made by
the Collateral Agent, the Administrative Agent or such Lender, provided that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of the Collateral Agent, the Administrative Agent and
the Lenders under this Section 7 are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which the Collateral
Agent, the Administrative Agent and the Lenders may have.
SECTION 8. Notices, Etc. All notices and other communications provided
for hereunder shall be in writing and shall be mailed (by certified mail,
postage prepaid and return receipt requested), telecopied or delivered, if to
the Guarantor, to it at its address at ________ ; if to the Collateral Agent, to
it at its address set forth in the Financing Agreement; or, as to any such
Person, at such other address as shall be designated by such Person in a written
notice to such other Persons complying as to delivery with the terms of this
Section 8. All such notices and other communications shall be effective (i) if
sent by registered mail, return receipt requested, when received or three
Business Days after mailing, whichever first occurs, (ii) if telecopied, when
transmitted and a confirmation is received, provided the same is on a Business
Day and, if not, on the next Business Day, or (iii) if delivered, upon delivery,
provided the same is on a Business Day and, if not, on the next Business Day.
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SECTION 9. Consent to Jurisdiction; Waiver of Immunities.
(a) The Guarantor hereby irrevocably submits to the jurisdiction of any
New York State or federal court sitting in New York City in any action or
proceeding arising out of or relating to this Guaranty, and the Guarantor hereby
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such New York State or federal court. The Guarantor
hereby irrevocably appoints ____________ (the "Process Agent"), with an office
on the date hereof at ________________________, as its agent to receive on
behalf of the Guarantor and its property service of copies of the summons and
complaint and any other process which may be served in any such action or
proceeding. Such service may be made by mailing (by certified or registered
mail, postage prepaid and return receipt requested) or delivering a copy of such
process to the Guarantor in care of the Process Agent at the Process Agent's
above address, and the Guarantor hereby irrevocably authorizes and directs the
Process Agent to accept such service on its behalf. As an alternative method of
service, the Guarantor also irrevocably consents to the service of any and all
process in any such action or proceeding by the mailing of copies of such
process to the Guarantor at its address specified in Section 8 hereof. The
Guarantor agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.
(b) Nothing in this Section 9 shall affect the right of the Collateral
Agent to serve legal process in any other manner permitted by law or affect the
right of the Collateral Agent to bring any action or proceeding against the
Guarantor or its property in the courts of any other jurisdictions.
(c) The Guarantor hereby expressly and irrevocably waives, to the
fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of venue of any such litigation brought in any such court
referred to above and any claim that any such litigation has been brought in an
inconvenient forum. To the extent that the Guarantor has or hereafter may
acquire any immunity from jurisdiction of any court or from any legal process
(whether through service or notice, attachment prior to judgment, attachment in
aid of execution or otherwise) with respect to itself or its property, the
Guarantor hereby irrevocably waives such immunity in respect of its obligations
under this Guaranty and the other Loan Documents.
SECTION 10. WAIVER OF JURY TRIAL. EACH OF THE GUARANTOR AND, BY
ACCEPTANCE HEREOF, THE COLLATERAL AGENT AND THE LENDERS WAIVES ANY RIGHT TO A
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS
UNDER THIS GUARANTY, THE LOAN DOCUMENTS OR UNDER ANY AMENDMENT, WAIVER, CONSENT,
INSTRUMENT, DOCUMENT OR OTHER AGREEMENT DELIVERED OR WHICH IN THE FUTURE MAY BE
DELIVERED IN CONNECTION THEREWITH, OR ARISING FROM ANY RELATIONSHIP EXISTING IN
CONNECTION WITH THIS GUARANTY, AND AGREES THAT ANY SUCH ACTION, PROCEEDING OR
COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
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SECTION 11. Miscellaneous.
(a) The Guarantor will make each payment hereunder in lawful money of
the United States of America and in immediately available funds to the
Collateral Agent, for the benefit of the Lenders, at such address specified by
the Collateral Agent from time to time by notice to the Guarantor.
(b) No amendment of any provision of this Guaranty shall be effective
unless it is in writing and signed by the Guarantor and the Collateral Agent,
and no waiver of any provision of this Guaranty, and no consent to any departure
by the Guarantor therefrom, shall be effective unless it is in writing and
signed by the Collateral Agent, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
(c) No failure on the part of the Collateral Agent, acting on behalf of
the Lenders, to exercise, and no delay in exercising, any right hereunder or
under any other Loan Document shall operate as a waiver thereof, nor shall any
single or partial exercise of any right preclude any other or further exercise
thereof or the exercise of any other right. The rights and remedies of the
Collateral Agent and the Lenders provided herein and in the other Loan Documents
are cumulative and are in addition to, and not exclusive of, any rights or
remedies provided by law. The rights of the Collateral Agent and the Lenders
under any Loan Document against any party thereto are not conditional or
contingent on any attempt by the Collateral Agent and the Lenders to exercise
any of their rights under any other Loan Document against such party or against
any other Person.
(d) Any provision of this Guaranty which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
portions hereof or thereof or affecting the validity or enforceability of such
provision in any other jurisdiction.
(e) This Guaranty shall (i) be binding on the Guarantor and its
successors and assigns, and (ii) inure, together with all rights and remedies of
the Collateral Agent and the Lenders hereunder, to the benefit of the Collateral
Agent and the Lenders and their respective successors, transferees and assigns.
Without limiting the generality of clause (ii) of the immediately preceding
sentence, to the extent permitted by Section 12.09 of the Financing Agreement,
any Lender may assign or otherwise transfer any Note held by it, and assign or
otherwise transfer its rights under any other Loan Document, to any other
Person, and such other Person shall thereupon become vested with all of the
benefits in respect thereof granted to the Lenders herein or otherwise. None of
the rights or obligations of the Guarantor hereunder may be assigned or
otherwise transferred without the prior written consent of the Collateral Agent.
(f) This Guaranty shall be governed by and construed in accordance with
the law of the State of New York applicable to contracts made and to be
performed therein without regard to conflict of law principles.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be
executed by an officer thereunto duly authorized, as of the date first above
written.
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90
[NAME OF GUARANTOR]
By: ________________________________
Name:
Title:
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91
EXHIBIT C-2
FORM OF BORROWER GUARANTY
GUARANTY, dated as of _____, ___, made by _______________,
a ________ corporation (the "Guarantor"), in favor of each of the Lenders (as
hereinafter defined) and NATIONSBANC COMMERCIAL CORPORATION, as collateral agent
for the Lenders (the "Collateral Agent") pursuant to the Financing Agreement
referred to below.
W I T N E S S E T H:
WHEREAS, Norton XxXxxxxxxx, Inc., a Delaware corporation (the
"Company"), the Guarantor, [Norton XxXxxxxxxx of Xxxxxx, Inc., a New York
corporation] [Miss Xxxxx, Inc., a Delaware corporation formerly known as ME
Acquisition Corp.] (the "Borrower"), the financial institutions from time to
time party to the Financing Agreement (the "Lenders"), The CIT Group/Commercial
Services, Inc., as administrative agent, (the "Administrative Agent"), and the
Collateral Agent are parties to a Financing Agreement, dated as of September __,
1997 (such Agreement, as amended, restated or otherwise modified from time to
time, being hereinafter referred to as the "Financing Agreement");
WHEREAS, the Company directly owns all of the issued and outstanding
shares of capital stock of the Guarantor; and
WHEREAS, pursuant to Section 5.01(d)(iii) of the Financing Agreement,
the Guarantor is required to execute and deliver to the Collateral Agent a
guaranty guaranteeing all Loans and Reimbursement Obligations (each as defined
in the Financing Agreement) of the Borrower and all other obligations of the
Borrower under the Financing Agreement;
NOW, THEREFORE, in consideration of the premises and the agreements
herein and in order to induce the Lenders to make and maintain the Loans and to
assist the Borrower in obtaining letters of credit, in each case pursuant to the
Financing Agreement, the Guarantor hereby agrees with the Lenders and the
Collateral Agent as follows:
SECTION 1. Definitions. Reference is hereby made to the Financing
Agreement for a statement of the terms thereof. All terms used in this Guaranty
which are defined therein and not otherwise defined herein shall have the same
meanings herein as set forth therein.
SECTION 2. Guaranty. The Guarantor hereby (i) irrevocably, absolutely
and unconditionally guarantees the prompt payment by the Borrower, as and when
due and payable (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise), of all amounts now or hereafter owing by the
Borrower in respect of the Notes, the Financing Agreement and the other Loan
Documents, including, without limitation, all Letter of Credit Obligations and
all Ledger Debt of the Borrower, whether for principal, interest (including
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interest accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to the Borrower whether or not a claim for post-filing
interest is allowed in such proceeding), fees, commissions, expenses,
indemnifications or otherwise (the "Obligations"), and (ii) agrees to pay any
and all expenses (including counsel fees and expenses) incurred by the
Collateral Agent and the Lenders in enforcing their rights under this Guaranty.
SECTION 3. Guarantor's Obligations Unconditional.
(a) The Guarantor hereby guarantees that the Obligations will be paid
strictly in accordance with the terms of the Loan Documents, regardless of any
law, regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of the Collateral Agent or the Lenders
with respect thereto. The Guarantor agrees that its guarantee constitutes a
guaranty of payment when due and not of collection and waives any right to
require that any resort be made by the Collateral Agent or the Lenders to any
Collateral. The obligations of the Guarantor under this Guaranty are independent
of the obligations under the Financing Agreement and the other Loan Documents,
and a separate action or actions may be brought and prosecuted against the
Guarantor to enforce this Guaranty, irrespective of whether any action is
brought against the Borrower or whether the Borrower is joined in any such
action. The liability of the Guarantor hereunder shall be absolute and
unconditional irrespective of: (i) any lack of validity or enforceability of any
Loan Document or any agreement or instrument relating thereto; (ii) any change
in the time, manner or place of payment of, or in any other term in respect of,
all or any of the Obligations, or any other amendment or waiver of or consent to
any departure from any provision of any Loan Document other than this Guaranty
(including the creation or existence of any Obligations in excess of the amount
permitted by any lending formulas contained in the Loan Documents or the amount
evidenced by the Loan Documents); (iii) any exchange or release of, or
non-perfection of any Lien on or security interest in, any Collateral, or any
release or amendment or waiver of or consent to any departure from any other
guaranty, for all or any of the Obligations; (iv) the existence of any claim,
set-off, defense or other right that the Guarantor may have against any Person,
including, without limitation, the Collateral Agent or the Lenders, or (v) any
other circumstance which might otherwise constitute a defense available to, or a
discharge of, the Borrower or any other guarantor in respect of the Obligations
or the Guarantor in respect hereof.
(b) This Guaranty (i) is a continuing guaranty and shall remain in full
force and effect until such date on which all of the Obligations and all other
expenses to be paid by the Guarantor pursuant hereto shall have been satisfied
in full after the Total Commitment shall have been terminated and all Letters of
Credit are canceled or cash collateralized, and (ii) shall continue to be
effective or shall be reinstated, as the case may be, if at any time any payment
of any of the Obligations is rescinded or must otherwise be returned by the
Collateral Agent upon the insolvency, bankruptcy or reorganization of the
Borrower or otherwise, all as though such payment had not been made.
SECTION 4. Waivers. The Guarantor hereby waives, to the extent
permitted by applicable law, (i) promptness and diligence; (ii) notice of
acceptance and notice of the incurrence of any Obligation by the Borrower; (iii)
notice of any actions taken by the Collateral Agent, the Borrower or any Lender
under any Loan Document or any other agreement or instrument relating thereto;
(iv) all other notices, demands and protests, and all other formalities
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of every kind in connection with the enforcement of the Obligations or of the
obligations of the Guarantor hereunder, the omission of or delay in which, but
for the provisions of this Section 4, might constitute grounds for relieving the
Guarantor of its obligations hereunder; (v) any right to compel or direct the
Collateral Agent or the Lenders to seek payment or recovery of any amounts owed
under this Guaranty from any one particular fund or source; (vi) any requirement
that the Collateral Agent protect, secure, perfect or insure any security
interest or Lien or any property subject thereto or exhaust any right or take
any action against the Borrower or any other Person or any Collateral; and (vii)
any other defense available to the Guarantor.
SECTION 5. Subrogation. Until the Obligations have been satisfied in
full, the Guarantor hereby waives and irrevocably agrees it will not exercise
any and all rights which it has or may have at any time or from time to time
(whether arising directly or indirectly by operation of law or contract) to
assert any claim against the Borrower on account of any payments made under this
Guaranty or otherwise, including, without limitation, any and all existing and
future rights of subrogation, reimbursement, exoneration, contribution and/or
indemnity. If any amount shall be paid to the Guarantor on account of such
subrogation rights at any time when all of the Obligations and all such other
expenses shall not have been paid in full, such amount shall be held in trust
for the benefit of the Collateral Agent and the Lenders, shall be segregated
from the other funds of the Guarantor and shall forthwith be paid over to the
Collateral Agent to be applied in whole or in part by the Collateral Agent
against the Obligations, whether matured or unmatured, and all such other
expenses in accordance with the terms of the Financing Agreement.
SECTION 6. Representations and Warranties. The Guarantor hereby
represents and warrants as follows:
(a) The Guarantor (i) is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation as
set forth on the first page hereof; and (ii) has all requisite corporate power
and authority to execute, deliver and perform this Guaranty and each other Loan
Document to which the Guarantor is a party.
(b) The execution, delivery and performance by the Guarantor of this
Guaranty and each other Loan Document to which the Guarantor is a party (i) have
been duly authorized by all necessary corporate action, (ii) do not contravene
its charter or by-laws or any applicable law, (iii) do not violate any
contractual restriction binding on or otherwise affecting the Guarantor, and
(iv) do not result in or require the creation of any Lien, security interest or
other charge or encumbrance upon or with respect to any of its properties other
than pursuant to any such Loan Document.
(c) No authorization, approval or other action by, and no notice to or
filing with, any Governmental Authority or other regulatory body is required in
connection with the due execution, delivery and performance by the Guarantor of
this Guaranty or any of the other Loan Documents to which the Guarantor is a
party.
(d) Each of this Guaranty and the other Loan Documents to which the
Guarantor is a party is a legal, valid and binding obligation of the Guarantor,
enforceable against the Guarantor in accordance with its terms, except as may be
limited by applicable bankruptcy,
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insolvency, reorganization, moratorium or other similar laws and general equity
principles affecting the enforcement of creditors' rights generally.
(e) There is no pending or, to the best knowledge of the Guarantor,
threatened action, suit or proceeding against the Guarantor or to which any of
the properties of the Guarantor is subject, before any court or other
Governmental Authority or any arbitrator (i) which challenges the validity or
enforceability of this Guaranty or any of the other Loan Documents to which the
Guarantor is a party, or (ii) in which there is a reasonable possibility of an
adverse decision which would materially adversely affect the business,
operations or financial condition of the Guarantor.
(f) The Guarantor now has and will continue to have independent means
of obtaining information concerning the affairs, financial condition and
business of the Borrower, and has no need of, or right to obtain from the
Collateral Agent or any Lender, any credit or other information concerning the
affairs, financial condition or business of the Borrower that may come under the
control of the Collateral Agent or any Lender.
SECTION 7. Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default, the Collateral Agent, the Administrative
Agent and the Lenders may, and are hereby authorized to, at any time and from
time to time, without notice to the Guarantor (any such notice being expressly
waived by the Guarantor) and to the fullest extent permitted by law, set-off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by the
Collateral Agent, the Administrative Agent or any Lender to or for the credit of
the account of the Guarantor against any and all obligations of the Guarantor
now or hereafter existing under this Guaranty, irrespective of whether or not
the Collateral Agent, the Administrative Agent or any Lender shall have made any
demand under this Guaranty and although such obligations may be contingent or
unmatured. The Collateral Agent, the Administrative Agent and the Lenders agree
to notify the Guarantor promptly after any such set-off and application made by
the Collateral Agent, the Administrative Agent or such Lender, provided that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of the Collateral Agent, the Administrative Agent and
the Lenders under this Section 7 are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which the Collateral
Agent, the Administrative Agent and the Lenders may have.
SECTION 8. Notices, Etc. All notices and other communications provided
for hereunder shall be in writing and shall be mailed (by certified mail,
postage prepaid and return receipt requested), telecopied or delivered, if to
the Guarantor, to it at its address at ________ ; if to the Collateral Agent, to
it at its address set forth in the Financing Agreement; or, as to any such
Person, at such other address as shall be designated by such Person in a written
notice to such other Persons complying as to delivery with the terms of this
Section 8. All such notices and other communications shall be effective (i) if
sent by registered mail, return receipt requested, when received or three
Business Days after mailing, whichever first occurs, (ii) if telecopied, when
transmitted and a confirmation is received, provided the same is on a Business
Day and, if not, on the next Business Day, or (iii) if delivered, upon delivery,
provided the same is on a Business Day and, if not, on the next Business Day.
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SECTION 9. Consent to Jurisdiction; Waiver of Immunities.
(a) The Guarantor hereby irrevocably submits to the jurisdiction of any
New York State or federal court sitting in New York City in any action or
proceeding arising out of or relating to this Guaranty, and the Guarantor hereby
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such New York State or federal court. The Guarantor
hereby irrevocably appoints ____________ (the "Process Agent"), with an office
on the date hereof at _________________________, as its agent to receive on
behalf of the Guarantor and its property service of copies of the summons and
complaint and any other process which may be served in any such action or
proceeding. Such service may be made by mailing (by certified or registered
mail, postage prepaid and return receipt requested) or delivering a copy of such
process to the Guarantor in care of the Process Agent at the Process Agent's
above address, and the Guarantor hereby irrevocably authorizes and directs the
Process Agent to accept such service on its behalf. As an alternative method of
service, the Guarantor also irrevocably consents to the service of any and all
process in any such action or proceeding by the mailing of copies of such
process to the Guarantor at its address specified in Section 8 hereof. The
Guarantor agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.
(b) Nothing in this Section 9 shall affect the right of the Collateral
Agent to serve legal process in any other manner permitted by law or affect the
right of the Collateral Agent to bring any action or proceeding against the
Guarantor or its property in the courts of any other jurisdictions.
(c) The Guarantor hereby expressly and irrevocably waives, to the
fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of venue of any such litigation brought in any such court
referred to above and any claim that any such litigation has been brought in an
inconvenient forum. To the extent that the Guarantor has or hereafter may
acquire any immunity from jurisdiction of any court or from any legal process
(whether through service or notice, attachment prior to judgment, attachment in
aid of execution or otherwise) with respect to itself or its property, the
Guarantor hereby irrevocably waives such immunity in respect of its obligations
under this Guaranty and the other Loan Documents.
SECTION 10. WAIVER OF JURY TRIAL. EACH OF THE GUARANTOR AND, BY
ACCEPTANCE HEREOF, THE COLLATERAL AGENT AND THE LENDERS WAIVES ANY RIGHT TO A
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS
UNDER THIS GUARANTY, THE LOAN DOCUMENTS OR UNDER ANY AMENDMENT, WAIVER, CONSENT,
INSTRUMENT, DOCUMENT OR OTHER AGREEMENT DELIVERED OR WHICH IN THE FUTURE MAY BE
DELIVERED IN CONNECTION THEREWITH, OR ARISING FROM ANY RELATIONSHIP EXISTING IN
CONNECTION WITH THIS GUARANTY, AND AGREES THAT ANY SUCH ACTION, PROCEEDING OR
COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
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SECTION 11. Miscellaneous.
(a) The Guarantor will make each payment hereunder in lawful money of
the United States of America and in immediately available funds to the
Collateral Agent, for the benefit of the Lenders, at such address specified by
the Collateral Agent from time to time by notice to the Guarantor.
(b) No amendment of any provision of this Guaranty shall be effective
unless it is in writing and signed by the Guarantor and the Collateral Agent,
and no waiver of any provision of this Guaranty, and no consent to any departure
by the Guarantor therefrom, shall be effective unless it is in writing and
signed by the Collateral Agent, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
(c) No failure on the part of the Collateral Agent, acting on behalf of
the Lenders, to exercise, and no delay in exercising, any right hereunder or
under any other Loan Document shall operate as a waiver thereof, nor shall any
single or partial exercise of any right preclude any other or further exercise
thereof or the exercise of any other right. The rights and remedies of the
Collateral Agent and the Lenders provided herein and in the other Loan Documents
are cumulative and are in addition to, and not exclusive of, any rights or
remedies provided by law. The rights of the Collateral Agent and the Lenders
under any Loan Document against any party thereto are not conditional or
contingent on any attempt by the Collateral Agent and the Lenders to exercise
any of their rights under any other Loan Document against such party or against
any other Person.
(d) Any provision of this Guaranty which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
portions hereof or thereof or affecting the validity or enforceability of such
provision in any other jurisdiction.
(e) This Guaranty shall (i) be binding on the Guarantor and its
successors and assigns, and (ii) inure, together with all rights and remedies of
the Collateral Agent and the Lenders hereunder, to the benefit of the Collateral
Agent and the Lenders and their respective successors, transferees and assigns.
Without limiting the generality of clause (ii) of the immediately preceding
sentence, to the extent permitted by Section 12.09 of the Financing Agreement,
any Lender may assign or otherwise transfer any Note held by it, and assign or
otherwise transfer its rights under any other Loan Document, to any other
Person, and such other Person shall thereupon become vested with all of the
benefits in respect thereof granted to the Lenders herein or otherwise. None of
the rights or obligations of the Guarantor hereunder may be assigned or
otherwise transferred without the prior written consent of the Collateral Agent.
(f) This Guaranty shall be governed by and construed in accordance with
the law of the State of New York applicable to contracts made and to be
performed therein without regard to conflict of law principles.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be
executed by an officer thereunto duly authorized, as of the date first above
written.
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97
[NAME OF GUARANTOR]
By:
----------------------------------
Name:
Title:
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98
EXHIBIT D-1
FORM OF BORROWER SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of September __, 1997, made by
____________________________, a _________ corporation (the "Grantor"), in favor
of NATIONSBANC COMMERCIAL CORPORATION, as collateral agent for the Lenders
parties to the Financing Agreement referred to below (in such capacity, the
"Collateral Agent").
W I T N E S S E T H:
WHEREAS, Norton XxXxxxxxxx, Inc., a Delaware corporation (the
"Company"), the Grantor, [Norton XxXxxxxxxx of Xxxxxx, Inc., a New York
corporation ("Squire")] [Miss Xxxxx, Inc., a Delaware corporation formerly known
as ME Acquisition Corp. ("MISS XXXXX")] (together with the Grantor, each a
"Borrower" and collectively the "Borrowers"), The CIT Group/Commercial Services,
Inc., as administrative agent (the "Administrative Agent"), the Collateral Agent
and the financial institutions from time to time party thereto (the "Lenders")
are parties to a Financing Agreement, dated as of September __, 1997 (such
Agreement, as amended, restated or otherwise modified from time to time, being
hereinafter referred to as the "Financing Agreement");
WHEREAS, pursuant to the Financing Agreement, the Lenders have agreed
to make (i) a term loan to [Grantor] [Squire] in the aggregate principal amount
not to exceed $15,000,000 (the "Term Loan") and (ii) revolving credit loans to
the Borrowers in an aggregate principal amount at any one time outstanding not
to exceed $125,000,000 (the "Revolving Credit Loans" and together with the Term
Loan, each a "Loan" and collectively the "Loans"), which may include letters of
credit (the "Letters of Credit") issued with the assistance of the Collateral
Agent and the Lenders for the account of the Borrowers;
WHEREAS, it is a condition precedent to the Lenders making any Loan or
assisting the Grantor in obtaining the issuance of any Letter of Credit pursuant
to the Financing Agreement that the Grantor shall have executed and delivered to
the Collateral Agent a security agreement providing for the grant to the
Collateral Agent for the benefit of the Lenders of a security interest in all
personal property of the Grantor;
NOW, THEREFORE, in consideration of the premises and the agreements
herein and in order to induce the Lenders to make and maintain the Loans and to
assist the Grantor in obtaining the issuance of Letters of Credit pursuant to
the Financing Agreement, the Grantor hereby agrees with the Collateral Agent as
follows:
SECTION 1. Definitions. Reference is hereby made to the Financing
Agreement for a statement of the terms thereof. All terms used in this Agreement
which are defined in the Financing Agreement or in Article 9 of the Uniform
Commercial Code (the "Code") currently in effect in the State of New York and
which are not otherwise defined herein shall have the same
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meanings herein as set forth therein.
SECTION 2. Grant of Security Interest. As collateral security for all
of the Obligations (as defined in Section 3 hereof), the Grantor hereby pledges
and collaterally assigns to the Collateral Agent, and grants to the Collateral
Agent for the benefit of the Lenders a continuing security interest in, all
personal property and fixtures of the Grantor, wherever located and whether now
or hereafter existing and whether now owned or hereafter acquired, of every kind
and description, tangible or intangible (the "Collateral"), including, without
limitation, all of the Grantor's right, title and interest in and to the
following:
(a) all equipment of any kind including, without limitation, all
furniture, fixtures and machinery, wherever located and whether now or hereafter
existing and whether now owned or hereafter acquired, together with all
substitutes, replacements, accessions and additions thereto, and all tools,
parts, accessories and attachments used in connection therewith (hereinafter
collectively referred to as the "Equipment");
(b) all inventory of any kind wherever located and whether now or
hereafter existing and whether now owned or hereafter acquired, (including,
without limitation, all types of inventory, merchandise, goods, property and
other assets that are held by the Grantor for sale, lease or other disposition
or to be furnished under a contract for services, whether such inventory,
merchandise, goods, property and other assets are raw, in process, finished,
trim or piece goods, and materials used or consumed in the business of the
Grantor, and goods returned to or repossessed by the Grantor and goods in which
the Grantor has an interest in mass or in joint or other interest or right of
any kind, including consigned goods and goods being processed), and all
accessions thereto and products thereof and all packing and shipping materials
(any and all such inventory, accessions and products being hereinafter referred
to as the "Inventory");
(c) (i) all present and future accounts, contract rights, chattel
paper, documents, instruments, general intangibles and other obligations of any
kind arising out of or in connection with the sale, lease or other disposition
of goods or the rendering of services or otherwise; (ii) all of the Grantor's
right, title and interest, and all of the Grantor's rights, remedies, security
and Liens, in, to and in respect of any credit insurance, accounts (including,
without limitation, rights of stoppage in transit, replevin, repossession,
reclamation and other rights and remedies of an unpaid vendor, lienor or secured
party), guaranties or other contracts of suretyship with respect to accounts,
and deposits or other security for the obligation of any Account Debtor; (iii)
all rights relating to the sale or other transfer of property to, or the
construction, renovation, processing or other improvement of property by or for
the Grantor; (iv) all rights now or hereafter existing in and to all letters of
credit, security agreements, leases and other contracts now or hereafter
existing and securing or otherwise relating to such accounts, contract rights,
chattel paper, instruments, documents, general intangibles or other rights or
obligations (including, without limitation, the contracts described in SCHEDULE
I hereto); (v) all goods relating to, or which by sale have resulted in,
accounts, including, without limitation, all goods described in invoices or
other documents or instruments with respect to, or otherwise representing or
evidencing, any accounts, and all returned, reclaimed or repossessed goods; and
(vi) all credit balances and other amounts due and owing to the Grantor under
the [amended and restated] factoring agreement between NationsBanc Commercial
Corporation and the Grantor dated as of September __, 1997, as amended, restated
or otherwise modified from time to time
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(the "Factoring Agreement") and all agreements which replace or supersede the
Factoring Agreement (any and all such accounts, contract rights, chattel paper,
instruments, documents, general intangibles and obligations being hereinafter
referred to collectively as the "Receivables", and any and all such credit
insurance, guaranties, letters of credit, security agreements, leases and other
contracts being hereinafter referred to collectively as the "Related
Contracts");
(d) (i) all trademarks, service marks, trade names, business names,
trade styles, designs, logos and other source or business identifiers and all
general intangibles of like nature, now or hereafter owned, adopted, acquired or
used by the Grantor (including, without limitation, all trademarks, service
marks, trade names, business names, trade styles, designs, logos and other
source or business identifiers described in SCHEDULE II or VI hereto), all
applications, registrations and recordings thereof (including, without
limitation, applications, registrations and recordings in the United States
Patent and Trademark Office or in any similar office or agency of the United
States, any state thereof or any other country or any political subdivision
thereof), and all reissues, extensions or renewals thereof, together with all
goodwill of the business symbolized by such marks and all customer lists,
formulae and other records of the Grantor relating to the distribution of
products and services in connection with which any of such marks are used, and
all income, royalties, damages and payments now or hereafter due and/or payable
under and with respect thereto, including, without limitation, payments under
all licenses entered into in connection therewith and damages and payments for
past and future infringements or dilution's thereof and the right to xxx for
past, present and future infringements and dilutions thereof (hereinafter
referred to collectively as the "Trademarks"), and (ii) all licenses, contracts
or other agreements, whether written or oral, naming the Grantor as licensor or
licensee and providing for the grant of any right to use any Trademark,
including, without limitation, all Trademark Licenses described in SCHEDULE II
hereto, together with any goodwill connected with and symbolized by any such
trademark licenses or agreements and the right to prepare for sale and sell any
and all Inventory now or hereafter owned by the Grantor and now or hereafter
covered by such licenses (hereinafter referred to collectively as the "Trademark
Licenses");
(e) (i) all letters patent, design patents and utility patents, and all
inventions, trade secrets, proprietary information and technology, know-how,
formulae and other general intangibles of like nature, now existing or hereafter
acquired (including, without limitation, all letters patent, design patents and
utility patents described in SCHEDULE III hereto), all applications,
registrations and recordings thereof (including, without limitation,
applications, registrations and recordings in the United States Patent and
Trademark Office or in any similar office or agency of the United States or any
other country or any political subdivision thereof), and all reissues,
divisions, continuations, continuations in part and extensions or renewals
thereof (hereinafter referred to collectively as the "Patents"), and (ii) all
licenses, contracts or other agreements, whether written or oral, naming the
Grantor as licensee or licensor and providing for the grant of any right to
manufacture, use or sell any invention covered by any patent (hereinafter
referred to collectively as the "Patent Licenses") (including, without
limitation, all Patent Licenses set forth in SCHEDULE III hereto);
(f) (i) all copyrights, including, without limitation, all original
works of authorship fixed in any tangible medium of expression, acquired or used
by the Grantor
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(including, without limitation, all copyrights described in SCHEDULE IV hereto),
all applications, registrations and recordings thereof (including, without
limitation, applications, registrations and recordings in the United States
Copyright Office or in any similar office or agency of the United States or any
other country or any political subdivision thereof), and all reissues,
divisions, continuations, continuations in part and extensions or renewals
thereof (hereinafter referred to collectively as the "Copyrights"), and (ii) all
licenses, contracts or other agreements, whether written or oral, naming the
Grantor as licensee or licensor and providing for the grant of any right to use
or sell any works covered by any copyright (hereinafter referred to collectively
as the "Copyright Licenses" and together with the Trademark Licenses and the
Patent Licenses, the "Licenses") (including, without limitation, all Copyright
Licenses set forth in SCHEDULE IV hereto);
(g) (i) all moneys, securities and other property and the proceeds
thereof, now or hereafter held or received by, or in transit to, the Collateral
Agent, the Administrative Agent or any Lender from or for the Grantor, whether
for safekeeping, pledge, custody, transmission, collection or otherwise, and all
of the Grantor's sums and credits with, and all of the Grantor's claims against
the Collateral Agent, the Administrative Agent or any Lender at any time
existing; (ii) all rights, interests, choses in action, causes of actions,
claims and all other intangible property of every kind and nature, in each
instance whether now owned or hereafter acquired by the Grantor, including,
without limitation, all corporate and other business records, all loans,
royalties, and all other forms of obligations receivable whatsoever (other than
Receivables); (iii) all computer programs, software, printouts and other
computer materials, customer lists, credit files, correspondence, advertising
materials and other source or business identifiers; (iv) all customer and
supplier contracts, sale orders, rights under license and franchise agreements,
and other contracts and contract rights [, including without limitation, all
rights of Grantor in the Acquisition Agreement and all related agreements]; (v)
all interests in partnerships, limited liability companies and joint ventures,
including all moneys due from time to time in respect thereof; (vi) all federal,
state and local tax refunds and federal, state and local tax refund claims and
all judgments in favor of Grantor and all of Grantor's rights with respect
thereto; (vii) all right, title and interest under leases, subleases, licenses
and concessions and other agreements relating to personal property, including
all moneys due from time to time in respect thereof; (viii) all payments due or
made to the Grantor in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of any property by any Person or
Governmental Authority; (ix) all lock-box and all deposit accounts (general or
special) or other accounts with any bank or other financial institution,
including, without limitation, all depository or other accounts maintained by
the Grantor at the Administrative Agent, the Collateral Agent or any Lender and
all funds on deposit therein; (x) all credits with and other claims against
third parties (including carriers and shippers) (other than Receivables); (xi)
all rights to indemnification; (xii) all reversionary interests in pension and
profit sharing plans and reversionary, beneficial and residual interests in
trusts; (xiii) all proceeds of insurance of which the Grantor is the
beneficiary; (xiv) all letters of credit, guaranties, liens, security interests
and other security held by or granted to the Grantor; (xv) all instruments,
files, records, ledger sheets and documents covering or relating to any of the
Collateral; and (xvi) all general intangibles, whether or not similar to the
foregoing, in each instance, however and wherever arising;
(h) the books and records of the Grantor relating to any of the
foregoing
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Collateral, including, without limitation, all customer contracts, sale orders,
minute books, ledgers, records, computer programs, software, printouts and other
computer materials, customer lists, credit files, correspondence and advertising
materials, in each case indicating, summarizing or evidencing any of the
Collateral; and
(i) all cash and non-cash proceeds of any and all of the foregoing
Collateral (including, without limitation, (i) damages and payments for past or
future infringements of the Trademarks, the Patents or the Copyrights and (ii)
the right to xxx for past, present and future infringements of the Trademarks,
the Patents or the Copyrights) and, to the extent not otherwise included, all
payments under insurance (whether or not the Collateral Agent is the loss payee
thereof) and any indemnity, warranty or guaranty payable by reason of loss or
damage to or otherwise with respect to any of the foregoing Collateral;
in each case howsoever the Grantor's interest therein may arise or appear
(whether by ownership, security interest, claim or otherwise); provided that,
nothing hereunder constitutes or shall be deemed to constitute the grant of a
security interest in favor of the Collateral Agent in the Grantor's interest in
any Related Contract or other contract right, any License or other license
agreement, any lease or any other general intangible (other than any of the
foregoing constituting an account or a general intangible for money due or to
become due to which Section 9-318(4) of the Code applies) (each such contract
right, license agreement, lease and other general intangible, other than those
described in the preceding parenthesis, being hereinafter referred to as
"Excluded Property"), if the granting of a security interest therein by the
Grantor to the Collateral Agent is prohibited by the terms and provisions of the
written agreement, document or instrument creating or evidencing such Excluded
Property, and either (i) such agreement, document or instrument was entered into
prior to the date of this Agreement, or (ii) such agreement, document or
instrument is entered into after the date of this Agreement and the Grantor
delivers to the Collateral Agent a copy of such agreement, document or
instrument, provided, however, that (1) if and when the prohibition which
prevents the granting by the Grantor to the Collateral Agent of a security
interest in any Excluded Property is removed or otherwise terminated, the
Collateral Agent will be deemed to have, and at all times to have had, a
security interest in such Excluded Property, and (2) the Grantor shall use its
reasonable efforts to exclude from any written agreement, document or instrument
entered into on or after the date of this Agreement creating or evidencing any
contract right, license, lease or general intangible, any prohibition against
the granting by the Grantor to the Collateral Agent of a security interest
therein to the extent that such exclusion or such efforts would not result in
such agreement, document or instrument containing terms which are less favorable
to the Grantor than would be the case but for such exclusion or such efforts or
would result in a decision by the Persons proposed to be parties to such
agreement, document or instrument not to enter into such agreement, document or
instrument. Notwithstanding anything set forth herein to the contrary, the
Collateral Agent will be deemed to have, and at all times to have had, a
security interest in the proceeds of such Excluded Property.
SECTION 3. Security for Obligations. The security interest created
hereby in the Collateral constitutes continuing collateral security for all of
the following obligations, whether now existing or hereafter incurred (the
"Obligations"):
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(a) the prompt payment by the Grantor, as and when due and payable, of
all amounts from time to time owing by it in respect of the Financing Agreement,
the Notes, its Guaranty and the other Loan Documents, including, without
limitation, principal of and interest on the Loans (including, without
limitation, all interest that accrues after the commencement of any case,
proceeding or other action relating to the bankruptcy, insolvency or
reorganization of the Grantor, whether or not a claim for post-filing interest
is allowed in such proceeding), all Letter of Credit Obligations and Ledger Debt
and all interest thereon, all fees, commissions, expense reimbursements,
indemnifications and all other amounts due or to become due under any Loan
Document; and
(b) the due performance and observance by the Grantor of all of its
other obligations from time to time existing in respect of the Financing
Agreement, the Notes, its Guaranty and all other Loan Documents.
SECTION 4. Representations and Warranties. The Grantor represents and
warrants as follows:
(a) There is no pending or, to the knowledge of the Grantor, threatened
action, suit, proceeding or claim before any court or other Governmental
Authority or any arbitrator, or any order, judgment or award by any court or
other Governmental Authority or arbitrator, that may adversely affect the grant
by the Grantor, or the perfection, of the security interest purported to be
created hereby in the Collateral, or the exercise by the Collateral Agent of any
of its rights or remedies hereunder.
(b) All taxes, assessments and other governmental charges imposed upon
the Grantor or any property of the Grantor (including, without limitation, all
federal income and social security taxes on employees' wages) and which have
become due and payable on or prior to the date hereof have been paid, except (i)
to the extent contested in good faith by proper proceedings which stay the
imposition of any penalty, fine and Lien resulting from the non-payment thereof
and with respect to which adequate reserves in accordance with GAAP have been
established for the payment thereof and (ii) Liens permitted by Section
7.01(c)(ii)(B) of the Financing Agreement.
(c) All Equipment and Inventory is located at the addresses specified
therefor in SCHEDULE V hereto or at such other locations permitted by the terms
of Section 5(b) hereof. The Grantor's chief place of business and chief
executive office, the place where the Grantor keeps its records concerning
Receivables and all originals of all chattel paper which constitute Receivables
are located at the addresses specified therefor in SCHEDULE V hereto. None of
the Receivables is evidenced by a promissory note or other instrument unless
such promissory note or instrument has been pledged to the Collateral Agent. Set
forth in SCHEDULE VI hereto is a complete and correct list of each trade name
used by the Grantor.
(d) The Grantor has delivered to the Collateral Agent complete and
correct copies of each Related Contract described on SCHEDULE I hereto, which
represent all of the Related Contracts existing on the date of this Agreement,
the Factoring Agreement, the Acquisition Agreement and each License described in
SCHEDULE II, SCHEDULE III and SCHEDULE IV hereto, including in each such case
all schedules and exhibits thereto. Each Related Contract,
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Factoring Agreement and License sets forth the entire agreement and
understanding of the parties thereto relating to the subject matter thereof, and
there are no other agreements, arrangements or understandings, written or oral,
relating to the matters covered thereby or the rights of the Grantor in respect
thereof. Each Related Contract now existing is, and each other Related Contract
will be, the legal, valid and binding obligation of the parties thereto,
enforceable against such parties in accordance with its terms, subject as to
enforceability to applicable bankruptcy, insolvency, reorganization and similar
laws affecting creditors' rights and to general principles of equity. To the
knowledge of the Grantor, no default thereunder by any such party has occurred,
nor does any defense, offset, deduction or counterclaim exist thereunder in
favor of any such party.
(e) The Grantor owns and controls, or otherwise possesses adequate
rights to use, all Trademarks, Patents and Copyrights, which are the only
trademarks, patents and copyrights necessary to conduct its business in
substantially the same manner as conducted as of the date hereof. SCHEDULE II
hereto sets forth a true and complete list of all Trademarks and Trademark
Licenses owned or used by the Grantor as of the date hereof. SCHEDULE III hereto
sets forth a true and complete list of all Patents and Patent Licenses owned or
used by the Grantor as of the date hereof. SCHEDULE IV hereto sets forth a true
and complete list of all Copyrights and Copyright Licenses owned or used by the
Grantor as of the date hereof. All of such Copyrights, Patents and Trademarks
are subsisting and in full force and effect, have not been adjudged invalid or
unenforceable, are valid and enforceable and have not been abandoned in whole or
in part. Except as set forth in SCHEDULE II, III or IV hereto, none of such
Copyrights, Patents or Trademarks is the subject of any licensing or franchising
agreement. The Grantor has no knowledge of any conflict with the rights of
others to any Trademark, Patent or Copyright and, to the best knowledge of the
Grantor, the Grantor is not now infringing or in conflict with any such rights
of others in any material respect, and to the best knowledge of the Grantor, no
other Person is now infringing or in conflict in any material respect with any
such properties, assets and rights owned or used by the Grantor.
(f) The Grantor is the sole and exclusive owner of the Collateral free
and clear of any Lien, except for (i) the security interest created by this
Agreement, (ii) the security interests and other encumbrances permitted by the
Financing Agreement and (iii) sales of assets permitted by the terms of the
Financing Agreement. No effective financing statement or other instrument
similar in effect covering all or any part of the Collateral is on file in any
recording or filing office, except (i) such as may have been filed in favor of
the Collateral Agent relating to this Agreement, and (ii) such as may have been
filed to perfect or protect any security interest or encumbrance permitted by
the Financing Agreement.
(g) The exercise by the Collateral Agent of any of its rights and
remedies hereunder will not contravene law or any contractual restriction
binding on or otherwise affecting the Grantor or any of its properties and will
not result in or require the creation of any Lien, security interest or other
charge or encumbrance upon or with respect to any of its properties.
(h) No authorization or approval or other action by, and no notice to
or filing with, any Governmental Authority or any other Person, is required for
(i) the grant by the Grantor, or the perfection, of the security interest
purported to be created hereby in the Collateral or (ii) the exercise by the
Collateral Agent of any of its rights and remedies hereunder, except (A)
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for the filing under the Uniform Commercial Code as in effect in the applicable
jurisdiction of the financing statements described in SCHEDULE VII hereto, (B)
with respect to the perfection of the security interest created hereby in the
United States Trademarks, United States Patents and United States Copyrights for
the recording of the Assignment for Security (Trademarks), substantially in the
form of Exhibit A hereto, the Assignment for Security (Patents), substantially
in the form of Exhibit B hereto, or the Assignment for Security (Copyrights),
substantially in the form of Exhibit C hereto, as applicable, in the United
States Patent and Trademark Office or the United States Copyright Office, as
applicable or (C) with respect to the perfection of the security interest
created hereby in foreign Trademarks, Patents and Copyrights, for registrations
and filings in jurisdictions located outside of the United States and covering
rights in such jurisdictions relating to Patents, Trademarks, Copyrights, Patent
Licenses, Trademark Licenses and Copyright Licenses.
(i) This Agreement creates valid security interests in favor of the
Collateral Agent for the benefit of the Lenders in the Collateral, as security
for the Obligations. The Collateral Agent's having possession of all instruments
and cash constituting Collateral from time to time, the recording of the
Assignment for Security (Trademarks), the Assignment for Security (Patents) and
the Assignment for Security (Copyrights), as applicable, executed pursuant
hereto in the United States Patent and Trademark Office and the United States
Copyright Office, as applicable, and the filing of the financing statements
described in SCHEDULE VII hereto and, with respect to Patents, Trademarks and
Copyrights hereafter existing and not covered by an Assignment for Security
(Trademarks), an Assignment for Security (Patents) or an Assignment for Security
(Copyrights), as applicable, the recording in the United States Patent and
Trademark Office or the United States Copyright Office, as applicable, of
appropriate instruments of assignment, result in the perfection of such security
interests. Such security interests are, or in the case of Collateral in which
the Grantor obtains rights after the date hereof, will be, perfected, first
priority security interests, subject only to the security interests and other
encumbrances permitted pursuant to the Financing Agreement.
SECTION 5. Covenants as to the Collateral. So long as any of the
Obligations shall remain outstanding or the Total Commitment shall not have
terminated, unless the Collateral Agent shall otherwise consent in writing:
(a) Further Assurances. The Grantor will at its expense, at any time
and from time to time, promptly execute and deliver all further instruments and
documents and take all further action that may be necessary or reasonably
desirable or that the Collateral Agent may reasonably request in order (i) to
perfect and protect the security interest purported to be created hereby; (ii)
to enable the Collateral Agent to exercise and enforce its rights and remedies
hereunder in respect of the Collateral; or (iii) otherwise to effect the
purposes of this Agreement, including, without limitation: (A) marking
conspicuously each chattel paper included in the Receivables and each License
and Related Contract and, at the request of the Collateral Agent, each of its
records pertaining to the Collateral with a legend, in form and substance
reasonably satisfactory to the Collateral Agent, indicating that such chattel
paper, License, Related Contract or Collateral is subject to the security
interest created hereby, (B) if any Receivable shall be evidenced by a
promissory note or other instrument or chattel paper, delivering and pledging to
the Collateral Agent hereunder any such note, instrument or chattel paper duly
endorsed and
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accompanied by executed instruments of transfer or assignment, all in form and
substance reasonably satisfactory to the Collateral Agent, (C) executing and
filing such financing or continuation statements, or amendments thereto, as may
be necessary or reasonably desirable or that the Collateral Agent may reasonably
request in order to perfect and preserve the security interest purported to be
created hereby, and (D) furnishing to the Collateral Agent from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as the Collateral Agent may
reasonably request, all in reasonable detail.
(b) Location of Equipment and Inventory. The Grantor will keep the
Equipment and Inventory (other than used Equipment and Inventory sold in the
ordinary course of business in accordance with Section 5(g) hereof) at the
locations specified therefor in Section 4(c) hereof, or, upon written notice to
the Collateral Agent in accordance with Section 7.01(n) of the Financing
Agreement accompanied by a new SCHEDULE V hereto indicating each new location of
the Equipment and Inventory, at such other locations in the continental United
States as the Grantor may elect, provided that (i) the Grantor shall promptly
have taken all action requested by the Collateral Agent to grant to the
Collateral Agent a perfected, first priority security interest in such Equipment
and Inventory, and (ii) the Collateral Agent's rights in such Equipment and
Inventory, including, without limitation, the existence, perfection and priority
of the security interest created hereby in such Equipment and Inventory, are not
adversely affected thereby.
(c) Condition of Equipment. The Grantor will maintain or cause to be
maintained in good working order and condition, excepting ordinary wear and tear
and damage due to casualty, all of the Equipment. The Grantor shall promptly
furnish to the Collateral Agent a statement describing in reasonable detail any
loss or damage in excess of $100,000 to any Equipment or Inventory due to
casualty.
(d) Taxes Etc. The Grantor will pay promptly when due all property and
other taxes, assessments and governmental charges or levies imposed upon, and
all claims (including claims for labor, materials and supplies) against, the
Equipment and Inventory, except (i) to the extent the validity thereof is being
contested in good faith by proper proceedings which stay the imposition of any
penalty, fine or Lien resulting from the non-payment thereof and with respect to
which adequate reserves in accordance with GAAP have been set aside for the
payment thereof or (ii) Liens permitted by Section 7.01(c)(ii)(B) of the
Financing Agreement.
(e) Insurance.
(i) The Grantor will, at its own expense, maintain insurance
as required by Section 7.01(h) of the Financing Agreement. Each policy for
liability insurance shall provide for all losses to be paid on behalf of the
Collateral Agent and the Grantor as their respective interests may appear. Each
policy for property damage insurance shall provide for all losses (except for
losses of less than $___________ per occurrence and losses accruing during the
continuance of an Event of Default), to be adjusted with, and paid directly to
the Collateral Agent. Each such policy shall in addition (A) name the Grantor
and the Collateral Agent as insured parties thereunder (without any
representation or warranty by or obligation upon the
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Collateral Agent) as their interests may appear, (B) contain the agreement by
the insurer that any loss thereunder shall be payable, notwithstanding any
action, inaction or breach of representation or warranty by the Grantor, (C)
provide that there shall be no recourse against the Collateral Agent for payment
of premiums or other amounts with respect thereto, and (D) provide that at least
30 days' prior written notice of cancellation or of lapse shall be given to the
Collateral Agent by the insurer. The Grantor will, if so requested by the
Collateral Agent, deliver to the Collateral Agent original or duplicate policies
of such insurance and, as often as the Collateral Agent may reasonably request,
a report of a reputable insurance broker with respect to such insurance. The
Grantor will also, at the request of the Collateral Agent, execute and deliver
instruments of assignment of such insurance policies and cause the respective
insurers to acknowledge notice of such assignment.
(ii) Payment under any liability insurance maintained by the
Grantor pursuant to this Section 5(e) may be paid directly to the Person who
shall have incurred liability covered by such insurance. In the case of any loss
involving damage to Equipment or Inventory as to which clause (iii) of this
Section 5(e) is not applicable, the Grantor will, in the exercise of its
reasonable business judgment, make or cause to be made the necessary repairs to
or replacements of such Equipment and Inventory, and any proceeds of insurance
maintained by the Grantor pursuant to this Section 5(e) shall upon receipt by
the Collateral Agent, be paid to the Grantor as reimbursement for the costs of
such repairs or replacements.
(iii) Upon the occurrence and during the continuance of an
Event of Default or the actual or constructive total loss (in excess of $______
per occurrence) of any Equipment or Inventory, all insurance payments in respect
of such Equipment and Inventory shall be paid to the Collateral Agent and
applied as specified in Section 7(b) hereof.
(f) Provisions Concerning the Receivables, the Related Contracts and
the Licenses.
(i) The Grantor will (A) give the Collateral Agent at least 30
days' prior written notice of any change in the Grantor's name, identity or
corporate structure, (B) keep its chief place of business and chief executive
office and all originals of all chattel paper which constitute Receivables at
the location(s) specified therefor in SCHEDULE V hereof or such other location
for which the Grantor has complied with all of the provisions of Section 5(b)
hereof, and (C) keep adequate records concerning the Receivables and such
chattel paper and permit representatives of the Collateral Agent during normal
business hours, upon reasonable notice and without undue interruption of the
business of the Grantor to inspect and make abstracts from such records and
chattel paper pursuant to the terms of the Financing Agreement, provided that
such notice shall not be required during the continuance of an Event of Default.
(ii) The Grantor will duly perform and observe all of its
obligations under each Related Contract and, except as otherwise provided in the
Factoring Agreement and in this subsection (f), continue to collect, at its own
expense, all amounts due or to become due under the Receivables. In connection
with such collections and subject to the prior rights of the Factor under the
Factoring Agreement and the Assignment Agreement, the Grantor may (and, at the
Collateral Agent's direction, will) take such action as the Grantor or the
Collateral Agent may deem necessary or advisable to enforce collection or
performance of the Receivables; provided,
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however, subject to the prior rights of the Factor under the Factoring Agreement
and the Assignment Agreement, the Collateral Agent shall have the right at any
time, upon the occurrence and during the continuance of an Event of Default, to
notify the Account Debtors or obligors under any Receivables of the assignment
of such Receivables to the Collateral Agent and to direct such Account Debtors
or obligors to make payment of all amounts due or to become due to the Grantor
thereunder directly to the Collateral Agent or its designated agent and, upon
such notification and at the expense of the Grantor and to the extent permitted
by law, 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 Grantor might have done. After receipt by the Grantor of a notice
from the Collateral Agent that the Collateral Agent has notified or intends to
notify the Account Debtors or obligors under any Receivables as referred to in
the proviso to the immediately preceding sentence and subject to the prior
rights of the Factor under the Factoring Agreement and the Assignment Agreement,
(A) all amounts and proceeds (including instruments) received by the Grantor in
respect of the Receivables shall be received in trust for the benefit of the
Collateral Agent hereunder, shall be segregated from other funds of the Grantor
and shall be forthwith paid over to the Collateral Agent in the same form as so
received (with any necessary indorsement) to be held as cash collateral and
either (1) credited to the Loan Account so long as no Event of Default shall
have occurred and be continuing or (2) if any Event of Default shall have
occurred and be continuing, applied as specified in Section 7(b) hereof, and (B)
the Grantor will not adjust, settle or compromise the amount or payment of any
Receivable or release wholly or partly any Account Debtor or obligor thereof or
allow any credit or discount thereon. In addition, subject to prior rights of
the Factor under the Factoring Agreement and the Assignment Agreement, upon the
occurrence and during the continuance of an Event of Default, the Collateral
Agent shall have the right to notify the United States Postal Service
authorities to change the address for delivery of mail addressed to the Grantor
to such address as the Collateral Agent may designate and to do all other acts
and things necessary to carry out this Agreement. For the avoidance of doubt, as
long as the Factoring Agreement remains in effect, the Collateral Agent will not
exercise any rights with respect to the Receivables prohibited by or which are
inconsistent with the terms of the Factoring Agreements or the Assignment
Agreement.
(iii) Upon the occurrence and during the continuance of any
breach or default under any Related Contract referred to in SCHEDULE I hereto or
otherwise specified in writing by the Collateral Agent from time to time or any
License referred to in SCHEDULE II, III or IV hereto by any party thereto other
than the Grantor, the Grantor will (A) promptly after obtaining knowledge
thereof, give the Collateral Agent written notice of the nature and duration
thereof, specifying what action, if any, it has taken and proposes to take with
respect thereto, and (B) upon written instructions from the Collateral Agent and
at the Grantor's expense, take such action as the Collateral Agent may deem
reasonably necessary or advisable in respect thereof.
(iv) The Grantor will, at its expense, promptly deliver to the
Collateral Agent a copy of each notice or other communication received by it by
which any other party to any Related Contract referred to in SCHEDULE I hereto
or otherwise specified by the Collateral Agent from time to time or any License
referred to in SCHEDULE II, III or IV hereto purports to exercise any of its
rights or affect any of its obligations thereunder which is reasonably likely to
have a Material Adverse Effect, together with a copy of any reply by the Grantor
thereto.
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(v) The Grantor will take all action necessary to maintain all
Licenses in full force and effect, except where such failure to maintain would
not be reasonably likely to have a Material Adverse Effect. The Grantor will
not, without the prior written consent of the Collateral Agent, cancel,
terminate, amend or otherwise modify in any respect, or waive any provision of,
any Related Contract referred to in SCHEDULE I hereto or any License referred to
in SCHEDULE II, III or IV hereto to the extent such action is reasonably likely
to have a Material Adverse Effect.
(g) Transfers and Other Liens.
(i) The Grantor will not sell, assign (by operation of law or
otherwise), lease, exchange or otherwise transfer or dispose of any of the
Collateral except to the extent permitted under Section 7.02(d)(ii) of the
Financing Agreement, subject to the obligation of the Grantor to make payments
pursuant to Section 2.07(g) of the Financing Agreement.
(ii) The Grantor will not create or suffer to exist any Lien,
security interest or other charge or encumbrance upon or with respect to any
Collateral, except for (A) the Liens and security interest created by this
Agreement and the other Loan Documents and (B) the Liens, security interests and
other encumbrances permitted by the Financing Agreement.
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(h) Trademarks, Patents and Copyrights.
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(i) If applicable, the Grantor has duly executed and delivered
the Assignment for Security (Trademarks) in the form attached hereto as Exhibit
A, the Assignment for Security (Patents) in the form attached hereto as Exhibit
B and the Assignment for Security (Copyrights) in the form attached hereto as
Exhibit C. The Grantor (either itself or through licensees) will, and will cause
each licensee thereof to, take all action reasonably necessary to maintain all
of the Trademarks, Patents and Copyrights in full force and effect, including,
without limitation, using the proper statutory notices and markings and using
the Trademarks on each applicable trademark class of goods in order to so
maintain the Trademarks in full force free from any claim of abandonment for
non-use, and the Grantor will not (and will not permit any licensee thereof to)
do any act or knowingly omit to do any act whereby any Trademark or Copyright
may become invalidated; provided, however, that so long as no Event of Default
has occurred and is continuing, the Grantor shall have no obligation to use or
to maintain any Trademark or Copyright (A) that relates solely to any product or
work that has been, or is in the process of being, discontinued, abandoned or
terminated, (B) that is being replaced with a trademark or copyright
substantially similar to the Trademark or Copyright, as the case may be, that
may be abandoned or otherwise become invalid, so long as such replacement
Trademark or Copyright, as the case may be is subject to the security interest
purported to be created by this Agreement, (C) that is substantially the same as
another Trademark or Copyright, as the case may be, that is in full force, so
long as such other Trademark or Copyright, as the case may be, is subject to the
Lien and security interest created by this Agreement, or (D) that is not
necessary for the operation of Grantor's business and is discontinued or
disposed of in the ordinary course of business. The Grantor will cause to be
taken all necessary steps in any proceeding before the United States Patent and
Trademark Office and the United States Copyright Office to maintain each
registration of the Trademarks, the Patents and the Copyrights (other than those
Trademarks and Copyrights described in the proviso to the immediately preceding
sentence), including, without limitation, filing of renewals, affidavits of use,
affidavits of incontestability and opposition, interference and cancellation
proceedings and payment of taxes. If any Trademark, Patent or Copyright is
infringed, misappropriated or diluted in any material respect by a third party,
the Grantor shall (x) upon learning of such infringement, misappropriation or
dilution, promptly notify the Collateral Agent and (y) to the extent the Grantor
shall deem appropriate under the circumstances, promptly xxx for infringement,
misappropriation or dilution, seek injunctive relief where appropriate and
recover any and all damages for such infringement, misappropriation or dilution,
or take such other actions as the Grantor shall deem appropriate under the
circumstances to protect such Trademark, Patent or Copyright. The Grantor shall
furnish to the Collateral Agent from time to time (but, unless an Event of
Default has occurred and is continuing, no more frequently than annually)
statements and schedules further identifying and describing the Patents, the
Trademarks and the Copyrights and such other reports in connection with the
Patents, the Trademarks and the Copyrights as the Collateral Agent may
reasonably request, all in reasonable detail and promptly upon request of the
Collateral Agent, following receipt by the Collateral Agent of any such
statements, schedules or reports, the Grantor shall modify this Agreement by
amending SCHEDULES II, III or IV hereto, as the case may be, to include any
Patent, Trademark or Copyright which becomes part of the Collateral under this
Agreement. Notwithstanding anything herein to the contrary, upon the occurrence
and during the continuance of an Event of Default the Grantor may not abandon or
otherwise permit a Trademark, Patent or Copyright to become invalid without the
prior written consent of the Collateral Agent, and if any Trademark, Patent or
Copyright is infringed, misappropriated or
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diluted in any material respect by a third party, the Grantor will take such
action as the Collateral Agent shall deem appropriate under the circumstances to
protect such Trademark, Patent or Copyright.
(ii) In no event shall the Grantor, either itself or through
any agent, employee, licensee or designee, file an application for the
registration of any Trademark or Copyright or the issuance of any Patent with
the United States Patent and Trademark Office or the United States Copyright
Office, as applicable, unless it gives the Collateral Agent written notice
thereof but in no event later than 5 Business Days after the filing of any such
application. Upon request of the Collateral Agent, the Grantor shall execute and
deliver any and all assignments, agreements, instruments, documents and papers
as the Collateral Agent may reasonably request to evidence the Collateral
Agent's security interest hereunder in such Trademark, Patent or Copyright and
the general intangibles of the Grantor relating thereto or represented thereby,
and the Grantor hereby constitutes the Collateral Agent its attorney-in-fact to
execute and file, during the continuance of an Event of Default, all such
writings for the foregoing purposes, all acts of such attorney being hereby
ratified and confirmed, and such power (being coupled with an interest) shall be
irrevocable until the termination of the Total Commitment, the repayment of all
of the Obligations in full and the termination of each of the Loan Documents.
(j) Inspection and Reporting. The Grantor shall permit the Collateral
Agent, the Administrative Agent or any Lender, or any agents or representatives
thereof or such professionals or other Persons as the Collateral Agent may
designate (i) to examine and inspect the books and records of the Grantor and
take copies and extracts therefrom, (ii) to verify materials, leases, notes,
receivables, inventory and other assets of the Grantor from time to time, and
(iii) to conduct physical counts, appraisals and/or valuations at the locations
of the Grantor, in each case as provided and subject to the confidentiality
requirements set forth in the Financing Agreement.
SECTION 6. Additional Provisions Concerning the Collateral.
(a) The Grantor hereby authorizes the Collateral Agent to file, without
the signature of the Grantor where permitted by law, one or more financing or
continuation statements, and amendments thereto, relating to the Collateral.
(b) The Grantor hereby irrevocably appoints the Collateral Agent the
Grantor's attorney-in-fact and proxy, with full authority in the place and stead
of the Grantor and in the name of the Grantor or otherwise, from time to time in
the Collateral Agent's discretion upon the occurrence and during the continuance
of an Event of Default, to take any action and to execute any instrument which
the Collateral Agent may deem necessary or advisable to accomplish the purposes
of this Agreement (subject to the rights of the Grantor under Section 5(f)
hereof), including, without limitation, (i) to obtain and adjust insurance
required to be paid to the Collateral Agent pursuant to Section 5(e) hereof and
to receive, indorse and collect any drafts or other instruments, documents and
chattel paper in connection therewith, (ii) to ask, demand, collect, xxx for,
recover, compound, receive and give acquittance and receipts for moneys due and
to become due under or in respect of any Collateral, (iii) to receive, indorse,
and
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collect any drafts or other instruments, documents and chattel paper in
connection with clause (i) or (ii) above, and (iv) to file any claims or take
any action or institute any proceedings which the Collateral Agent may deem
necessary or desirable for the collection of any Collateral or otherwise to
enforce the rights of the Collateral Agent with respect to any Collateral.
(c) For the purpose of enabling the Collateral Agent to exercise rights
and remedies hereunder at such time as the Collateral Agent shall be lawfully
entitled to exercise such rights and remedies, and for no other purpose, the
Grantor hereby grants to the Collateral Agent, to the extent assignable, an
irrevocable, non-exclusive license (exercisable without payment of royalty or
other compensation to the Grantor) to use, assign, license or sublicense any of
the Patents, Trademarks or Copyrights now owned or hereafter acquired by the
Grantor, wherever the same may be located, including in such license reasonable
access to all media in which any of the licensed items may be recorded or stored
and to all computer programs used for the compilation or printout thereof.
Notwithstanding anything contained herein to the contrary, but subject to the
provisions of the Financing Agreement that limits the right of the Grantor to
dispose of its property and Section 5(h) hereof so long as no Event of Default
shall have occurred and be continuing, the Grantor may exploit, use, enjoy,
protect, license, sublicense, assign, sell, dispose of or take other actions
with respect to the Patents, Trademarks or Copyrights in the ordinary course of
the business of the Grantor. In furtherance of the foregoing, unless an Event of
Default shall have occurred and be continuing the Collateral Agent shall
promptly from time to time, upon the request of the Grantor, execute and deliver
any instruments, certificates or other documents, in the form so requested,
which the Grantor shall have certified are appropriate (in its judgment) to
allow it to take any action permitted above (including relinquishment of the
license provided pursuant to this clause (c) as to any Patents, Trademarks or
Copyrights and the release of the Lien created hereby). Further, upon the
payment in full of all of the Obligations and cancellation or termination of the
Total Commitments, the Collateral Agent (subject to Section 10(e) hereof) shall
transfer to the Grantor all of the Collateral Agent's right, title and interest
in and to the Patents, Trademarks and Copyrights, and the Licenses, all without
recourse, representation or warranty whatsoever. The exercise of rights and
remedies hereunder by the Collateral Agent shall not terminate the rights of the
holders of any licenses or sublicenses theretofore granted by the Grantor in
accordance with the second sentence of this clause (c). The Grantor hereby
releases the Collateral Agent from any claims, causes of action and demands at
any time arising out of or with respect to any actions taken or omitted to be
taken by the Collateral Agent under the powers of attorney granted herein other
than actions taken or omitted to be taken through the Collateral Agent's gross
negligence or willful misconduct.
(d) If the Grantor fails to perform any agreement contained herein, the
Collateral Agent may itself perform, or cause performance of such agreement or
obligation, in the name of the Grantor or the Collateral Agent, and the expenses
of the Collateral Agent incurred in connection therewith shall be payable by the
Grantor pursuant to Section 8 hereof and shall be secured by the Collateral.
(e) The powers conferred on the Collateral Agent hereunder are solely
to protect its interest in the Collateral and shall not impose any duty upon it
to exercise any such powers. Except for the safe custody of any Collateral in
its possession and the accounting for
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moneys actually received by it hereunder, the Collateral Agent shall have no
duty as to any Collateral or as to the taking of any necessary steps to preserve
rights against prior parties or any other rights pertaining to any Collateral.
(f) Anything herein to the contrary notwithstanding (i) the Grantor
shall remain liable under the Related Contracts, Factoring Agreement and
Licenses and otherwise with respect to any of the Collateral to the extent set
forth therein to perform all of its obligations thereunder to the same extent as
if this Agreement had not been executed, (ii) the exercise by the Collateral
Agent of any of its rights hereunder shall not release the Grantor from any its
obligations under the Related Contracts, Factoring Agreement and Licenses or
otherwise in respect of the Collateral, and (iii) the Collateral Agent shall not
have any obligation or liability by reason of this Agreement under the Related
Contracts, Factoring Agreement and Licenses or with respect to any of the other
Collateral, nor shall the Collateral Agent be obligated to perform any of the
obligations or duties of the Grantor thereunder or to take any action to collect
or enforce any claim for payment assigned hereunder.
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SECTION 7. Remedies Upon Default. If any Event of Default shall have
occurred and be continuing:
(a) The Collateral Agent may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise available
to it, all of the rights and remedies of a secured party upon default under the
Code (whether or not the Code applies to the affected Collateral), and also may
(i) require the Grantor to, and the Grantor hereby agrees that it will at its
expense and upon request of the Collateral Agent forthwith, assemble all or part
of the Collateral as directed by the Collateral Agent and make it available to
the Collateral Agent at a place or places to be designated by the Collateral
Agent which is reasonably convenient to both parties and (ii) without notice
except as specified below, sell the Collateral or any part thereof in one or
more parcels at public or private sale, at any of the Collateral Agent's offices
or elsewhere, for cash, on credit or for future delivery, and at such price or
prices and upon such other terms as the Collateral Agent may deem commercially
reasonable. The Grantor agrees that, to the extent notice of sale shall be
required by law, at least 10 Business Days' notice to the Grantor of the time
and place of any public sale or the time after which any private sale is to be
made shall constitute reasonable notification. The Collateral Agent shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. The Collateral Agent may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was so
adjourned. The Grantor hereby waives any claims against the Collateral Agent and
the Lenders arising by reason of the fact that the price at which the Collateral
may have been sold at a private sale was less than the price which might have
been obtained at a public sale or was less than the aggregate amount of the
Obligations, even if the Collateral Agent accepts the first offer received and
does not offer the Collateral to more than one offeree and waives all rights
which the Grantor may have to require that all or any part of the Collateral be
marshalled upon any sale (public or private) thereof. In addition to the
foregoing, (i) upon written notice from the Collateral Agent, the Grantor shall
cease any use of the Trademarks, Patents or Copyrights or any xxxx, patent or
copyright similar thereto for any purpose described in such notice; (ii) the
Collateral Agent may, at any time and from time to time, upon 10 days' prior
notice to the Grantor, license, whether general, special or otherwise, and
whether on an exclusive or non-exclusive basis, any of the Trademarks, Patents
and Copyrights, throughout the world for such term or terms, on such conditions,
and in such manner, as the Collateral Agent shall in its sole discretion
determine; and (iii) the Collateral Agent may, at any time, pursuant to the
authority granted in Section 6 hereof (such authority being effective upon the
occurrence of an Event of Default), execute and deliver on behalf of the
Grantor, one or more instruments of assignment of the Trademarks, Patents and
Copyrights (or any application or registration thereof), in form suitable for
filing, recording or registration in any country.
(b) Any cash held by the Collateral Agent as Collateral and all cash
proceeds received by the Collateral Agent in respect of any sale of or
collection from, or other realization upon, all or any part the Collateral may,
in the discretion of the Collateral Agent, be held by the Collateral Agent as
collateral for, and/or then or at any time thereafter applied in whole or in
part by the Collateral Agent against, all or any part of the Obligations as
provided in Section 4.04(b) of the Financing Agreement.
(c) In the event that the proceeds of any such sale, collection or
realization are
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insufficient to pay all amounts to which the Collateral Agent and the Lenders
are legally entitled, the Grantor shall be liable for the deficiency, together
with interest thereon at the highest rate specified in any applicable Loan
Document for interest on overdue principal thereof or such other rate as shall
be fixed by applicable law, together with the costs of collection and the
reasonable fees, costs, expenses of any attorneys employed by the Collateral
Agent to collect such deficiency.
SECTION 8. Indemnity and Expenses.
(a) The Grantor agrees to indemnify and hold the Collateral Agent
harmless from and against any and all claims, damages, losses, liabilities,
obligations, penalties, costs or expenses (including, without limitation,
reasonable legal fees and disbursements of Collateral Agent's counsel) to the
extent that they arise out of or otherwise result from this Agreement
(including, without limitation, enforcement of this Agreement), except claims,
losses or liabilities resulting solely and directly from the Collateral Agent's
gross negligence or willful misconduct as determined by a final judgment of a
court of competent jurisdiction.
(b) The Grantor will upon demand pay to the Collateral Agent the amount
of any and all costs and expenses, including the reasonable fees and
disbursements of the Collateral Agent's counsel and of any experts and agents,
which the Collateral Agent may incur in connection with (i) the preparation,
negotiation, execution, delivery, recordation, administration, amendment, waiver
or other modification or termination of this Agreement, or (ii) the custody,
preservation, use or operation of, or the sale of, collection from, or other
realization upon, any Collateral, (iii) the exercise or enforcement of any of
the rights of the Collateral Agent hereunder, or (iv) the failure by the Grantor
to perform or observe any of the provisions hereof.
SECTION 9. Notices, Etc. All notices and other communications provided
for hereunder shall be in writing and shall be mailed (by certified mail,
postage prepaid and return receipt requested), telecopied or delivered, if to
the Grantor or the Collateral Agent, to the parties and at the addresses
specified in the Financing Agreement; or as to either such Person at such other
address as shall be designated by such Person in a written notice to such other
Person complying as to delivery with the terms of this Section 9. All such
notices and other communications shall be effective (i) if sent by certified
mail, return receipt requested, when received or 3 Business Days after mailing,
whichever first occurs, (ii) if telecopied, when transmitted and confirmation is
received, provided same is on a Business Day and, if not, on the next Business
Day or (iii) if delivered, upon delivery, provided same is on a Business Day
and, if not, on the next Business Day.
SECTION 10. Miscellaneous.
(a) No amendment of any provision of this Agreement shall be effective
unless it is in writing and signed by the Grantor and the Collateral Agent, and
no waiver of any provision of this Agreement, and no consent to any departure by
the Grantor therefrom, shall be effective unless it is in writing and signed by
the Collateral Agent, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
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(b) No failure on the part of the Collateral Agent to exercise, and no
delay in exercising, any right hereunder or under any other Loan Document shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right preclude any other or further exercise thereof or the exercise of any
other right. The rights and remedies of the Collateral Agent provided herein and
in the other Loan Documents are cumulative and are in addition to, and not
exclusive of any rights or remedies provided by law. The rights of the
Collateral Agent under any Loan Document against any party thereto are not
conditional or contingent on any attempt by the Collateral Agent to exercise any
of its rights under any other Loan Document against such party or against any
other Person.
(c) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining portions hereof or thereof or affecting the validity or enforceability
of such provision in any other jurisdiction.
(d) This Agreement shall create a continuing security interest in the
Collateral and shall (i) remain in full force and effect until the payment in
full of the Obligations after the Total Commitment has been terminated and all
Letters of Credit have been canceled or cash collateralized, and (ii) be binding
on the Grantor and its successors and assigns and shall inure, together with all
rights and remedies of the Collateral Agent hereunder, to the benefit of the
Collateral Agent and the Lenders their respective permitted successors,
transferees and assigns. Without limiting the generality of clause (ii) of the
immediately preceding sentence and subject to the terms of the Financing
Agreement, the Collateral Agent and Lenders may assign or otherwise transfer
their rights under this Agreement and any other Loan Document, to any other
Person and such other Person shall thereupon become vested with all of the
benefits in respect thereof granted to the Collateral Agent and the Lenders
herein or otherwise. None of the rights or obligations of the Grantor hereunder
may be assigned or otherwise transferred without the prior written consent of
the Collateral Agent, and any such assignment or transfer shall be null and
void.
(e) Upon the satisfaction in full of the Obligations after the Total
Commitment has been terminated and all Letters of Credit have been canceled or
cash collateralized, (i) this Agreement and the security interests created
hereby shall terminate and all rights to the Collateral shall revert to the
Grantor, and (ii) the Collateral Agent will, upon the Grantor's request and at
the Grantor's expense promptly, (A) return to the Grantor such of the Collateral
as shall not have been sold or otherwise disposed of or applied pursuant to the
terms hereof, and (B) execute and deliver to the Grantor such documents as the
Grantor shall reasonably request to evidence such termination, all without any
representation, warranty or recourse whatsoever.
(f) This Agreement shall be governed by, and construed and interpreted
in accordance with, the laws of the State of New York, except as required by
mandatory provisions of law and except to the extent that the validity and
perfection or the perfection and effect of perfection or non-perfection of the
security interest created hereby or remedies hereunder, in respect of any
particular Collateral are governed by the law of a jurisdiction other than the
State of New York.
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IN WITNESS WHEREOF, the Grantor has caused this Agreement to be
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
[GRANTOR]
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
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SCHEDULE I TO SECURITY AGREEMENT
RELATED CONTRACTS
121
SCHEDULE II TO SECURITY AGREEMENT
TRADEMARKS
AND
TRADEMARK LICENSES
122
SCHEDULE III TO SECURITY AGREEMENT
PATENTS AND PATENT LICENSES
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123
SCHEDULE IV TO SECURITY AGREEMENT
COPYRIGHTS AND COPYRIGHT LICENSES
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SCHEDULE V TO SECURITY AGREEMENT
I. Locations of Equipment and Inventory
II. Grantor's chief place of business, chief executive office and place
where the Grantor keeps its books and records
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SCHEDULE VI TO SECURITY AGREEMENT
TRADE NAMES
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SCHEDULE VII TO SECURITY AGREEMENT
UCC-1 FINANCING STATEMENTS
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EXHIBIT A
ASSIGNMENT FOR SECURITY
(TRADEMARKS)
WHEREAS, (the "Assignor") has adopted,
----------------------------
used and is using the trademarks and service marks listed on the annexed
Schedule 1A, which trademarks and service marks are registered or applied for in
the United States Patent and Trademark Office (the "Trademarks");
WHEREAS, the Assignor, has entered into a Security Agreement dated
September __, 1997 (the "Security Agreement") in favor of NATIONSBANC COMMERCIAL
CORPORATION., as collateral agent for certain lenders (the "Assignee");
WHEREAS, pursuant to the Security Agreement, the Assignor has assigned
to the Assignee and granted to the Assignee a security interest in all right,
title and interest of the Assignor in, to and under the Trademarks together with
the good-will of the business symbolized by the Trademarks and the applications
and restrictions thereof, and all proceeds thereof, including, without
limitation, any and all causes of action which may exist by reason of
infringement thereof (the "Collateral"), to secure the payment, performance and
observance of the Obligations (as defined in the Security Agreement);
NOW, THEREFORE, for good and valuable consideration, receipt of which
is hereby acknowledged, the Assignor does hereby assign unto the Assignee and
grants to the Assignee a security interest in the Collateral to secure the
prompt payment, performance and observance of the Obligations.
The Assignor does hereby further acknowledge and affirm that the rights
and remedies of the Assignee with respect to the Collateral are more fully set
forth in the Security Agreement, the terms and provisions of which are hereby
incorporated herein by reference as if fully set forth herein.
IN WITNESS WHEREOF, the Assignor has caused this Assignment to be duly
executed by its officer thereunto duly authorized as of , 199 .
------------- -
-------------------------
By:
-------------------------
Name:
-------------------------
Title:
-------------------------
-00-
000
XXXXX XX XXX XXXX
ss.:
COUNTY OF NEW YORK
On this ____ day of ___________, 19__, before me personally came
_________________, to me known to be the person who executed the foregoing
instrument, and who, being duly sworn by me, did depose and say that he is the
________________ of ___________________________, a __________ corporation, and
that he executed the foregoing instrument in the firm name of _________________,
and that he had authority to sign the same, and he acknowledged to me that he
executed the same as the act and deed of said firm for the uses and purposes
therein mentioned.
_______________________________
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SCHEDULE 1A TO ASSIGNMENT FOR SECURITY
(TRADEMARKS AND TRADEMARK APPLICATIONS)
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EXHIBIT B
ASSIGNMENT FOR SECURITY
(PATENTS)
WHEREAS, (the "Assignor") holds all
------------------------------
right, title and interest in the letter patents, design patents and utility
patents listed on the annexed Schedule 1A, which patents are issued or applied
for in the United States Patent and Trademark Office (the "Patents");
WHEREAS, the Assignor, has entered into a Security Agreement dated
September , 1997 (the "Security Agreement") in favor of NATIONSBANC COMMERCIAL
--
CORPORATION, as collateral agent for certain lenders (the "Assignee");
WHEREAS, pursuant to the Security Agreement, the Assignor has assigned
to the Assignee and granted to the Assignee a security interest in all right,
title and interest of the Assignor in, to and under the Patents and the
applications and registrations thereof, and all proceeds thereof, including,
without limitation, any and all causes of action which may exist by reason of
infringement thereof (the "Collateral"), to secure the payment, performance and
observance of the Obligations (as defined in the Security Agreement);
NOW, THEREFORE, for good and valuable consideration, receipt of which
is hereby acknowledged, the Assignor does hereby assign unto the Assignee and
grants to the Assignee a security interest in the Collateral to secure the
prompt payment, performance and observance of the Obligations.
The Assignor does hereby further acknowledge and affirm that the rights
and remedies of the Assignee with respect to the Collateral are more fully set
forth in the Security Agreement, the terms and provisions of which are hereby
incorporated herein by reference as if fully set forth herein.
IN WITNESS WHEREOF, the Assignor has caused this Assignment to be duly
executed by its officer thereunto duly authorized as of , 199 .
----------------- -
-------------------------
By:
-------------------------
Name:
-------------------------
Title:
-------------------------
-00-
000
XXXXX XX XXX XXXX
ss.:
COUNTY OF NEW YORK
On this ____ day of __________, 199__ before me personally came
_________________, to me known to be the person who executed the foregoing
instrument, and who, being duly sworn by me, did depose and say that he is the
_________________ of ___________________________, a ____________ corporation,
and that he executed the foregoing instrument in the firm name of _____________,
and that he had authority to sign the same, and he acknowledged to me that he
executed the same as the act and deed of said firm for the uses and purposes
therein mentioned.
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SCHEDULE 1A TO ASSIGNMENT FOR SECURITY
(PATENTS AND PATENT APPLICATIONS)
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EXHIBIT C
ASSIGNMENT FOR SECURITY
(COPYRIGHTS)
WHEREAS, _______________________________(the "Assignor") holds all
right, title and interest in the copyrights listed on the annexed Schedule 1A,
which copyrights are registered in the United States Copyright Office (the
"Copyrights");
WHEREAS, the Assignor, has entered into a Security Agreement dated
September __, 1997 (the "Security Agreement") in favor of NATIONSBANC COMMERCIAL
CORPORATION, as collateral agent for certain lenders (the "Assignee");
WHEREAS, pursuant to the Security Agreement, the Assignor has assigned
to the Assignee and granted to the Assignee a security interest in all right,
title and interest of the Assignor in, to and under the Copyrights and the
registrations thereof, and all proceeds thereof, including, without limitation,
any and all causes of action which may exist by reason of infringement thereof
(the "Collateral"), to secure the payment, performance and observance of the
Obligations (as defined in the Security Agreement);
NOW, THEREFORE, for good and valuable consideration, receipt of which
is hereby acknowledged, the Assignor does hereby assign unto the Assignee and
grants to the Assignee a security interest in the Collateral to secure the
prompt payment, performance and observance of the Obligations.
The Assignor does hereby further acknowledge and affirm that the rights
and remedies of the Assignee with respect to the Collateral are more fully set
forth in the Security Agreement, the terms and provisions of which are hereby
incorporated herein by reference as if fully set forth herein.
IN WITNESS WHEREOF, the Assignor has caused this Assignment to be duly
executed by its officer thereunto duly authorized as of ______________ , 199__.
__________________________
By: __________________________
Name: __________________________
Title:__________________________
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000
XXXXX XX XXX XXXX
ss.:
COUNTY OF NEW YORK
On this ____ day of _______________, 199__, before me personally came
_________________, to me known to be the person who executed the foregoing
instrument, and who, being duly sworn by me, did depose and say that he is the
_________________ of ____________________________, a ___________ corporation,
and that he executed the foregoing instrument in the firm name of ____________,
and that he had authority to sign the same, and he acknowledged to me that he
executed the same as the act and deed of said firm for the uses and purposes
therein mentioned.
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SCHEDULE 1A TO ASSIGNMENT FOR SECURITY
(COPYRIGHTS AND COPYRIGHT APPLICATIONS)
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EXHIBIT D-2
FORM OF GUARANTOR SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of September __, 1997 made by
____________________________, a Delaware corporation (the "Grantor"), in favor
of NATIONSBANC COMMERCIAL CORPORATION, as collateral agent for the Lenders
parties to the Financing Agreement referred to below (in such capacity, the
"Collateral Agent").
WITNESSETH:
WHEREAS, [Norton XxXxxxxxxx, Inc., a Delaware corporation (the
"Company"),] the Grantor, Norton XxXxxxxxxx of Xxxxxx, Inc., a New York
corporation ("Squire"), Miss Xxxxx, Inc., a Delaware corporation formerly known
as ME Acquisition Corp. ("MISS XXXXX" and, together with Squire, each a
"Borrower" and collectively the "Borrowers"), The CIT Group/Commercial Services,
Inc., as administrative agent (the "Administrative Agent"), the Collateral Agent
and the financial institutions from time to time party thereto (the "Lenders")
are parties to a Financing Agreement, dated as of September __, 1997 (such
Agreement, as amended, restated or otherwise modified from time to time, being
hereinafter referred to as the "Financing Agreement");
WHEREAS, pursuant to the Financing Agreement, the Lenders have agreed
to make (i) a term loan to Squire in the aggregate principal amount not to
exceed $15,000,000 (the "Term Loan") and (ii) revolving credit loans to the
Borrowers in an aggregate principal amount at any one time outstanding not to
exceed $125,000,000 (the "Revolving Credit Loans" and together with the Term
Loan, each a "Loan" and collectively the "Loans"), which may include letters of
credit (the "Letters of Credit") issued with the assistance of the Collateral
Agent and the Lenders for the account of the Borrowers;
WHEREAS, it is a condition precedent to the Lenders making any Loan or
assisting the Borrowers in obtaining the issuance of any Letter of Credit
pursuant to the Financing Agreement that the Grantor shall have executed and
delivered to the Collateral Agent a security agreement providing for the grant
to the Collateral Agent for the benefit of the Lenders of a security interest in
all personal property of the Grantor;
NOW, THEREFORE, in consideration of the premises and the agreements
herein and in order to induce the Lenders to make and maintain the Loans and to
assist the Borrowers in obtaining the issuance of Letters of Credit pursuant to
the Financing Agreement, the Grantor hereby agrees with the Collateral Agent as
follows:
SECTION 1. Definitions. Reference is hereby made to the Financing
Agreement for a statement of the terms thereof. All terms used in this Agreement
which are defined in the Financing Agreement or in Article 9 of the Uniform
Commercial Code (the "Code") currently in effect in the State of New York and
which are not otherwise defined herein shall have the same meanings herein as
set forth therein.
SECTION 2. Grant of Security Interest. As collateral security for all
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137
Guaranteed Obligations (as defined in Section 3 hereof), the Grantor hereby
pledges and collaterally assigns to the Collateral Agent, and grants to the
Collateral Agent for the benefit of the Lenders a continuing security interest
in, all personal property and fixtures of the Grantor, wherever located and
whether now or hereafter existing and whether now owned or hereafter acquired,
of every kind and description, tangible or intangible (the "Collateral"),
including, without limitation, all of the Grantor's right, title and interest in
and to the following:
(a) all equipment of any kind including, without limitation, all
furniture, fixtures and machinery, wherever located and whether now or hereafter
existing and whether now owned or hereafter acquired, together with all
substitutes, replacements, accessions and additions thereto, and all tools,
parts, accessories and attachments used in connection therewith (hereinafter
collectively referred to as the "Equipment");
(b) all inventory of any kind wherever located and whether now or
hereafter existing and whether now owned or hereafter acquired, (including,
without limitation, all types of inventory, merchandise, goods, property and
other assets that are held by the Grantor for sale, lease or other disposition
or to be furnished under a contract for services, whether such inventory,
merchandise, goods, property and other assets are raw, in process, finished,
trim or piece goods, and materials used or consumed in the business of the
Grantor, and goods returned to or repossessed by the Grantor and goods in which
the Grantor has an interest in mass or in joint or other interest or right of
any kind, including consigned goods and goods being processed), and all
accessions thereto and products thereof and all packing and shipping materials
(any and all such inventory, accessions and products being hereinafter referred
to as the "Inventory");
(c) (i) all present and future accounts, contract rights, chattel
paper, documents, instruments, general intangibles and other obligations of any
kind arising out of or in connection with the sale, lease or other disposition
of goods or the rendering of services or otherwise; (ii) all of the Grantor's
right, title and interest, and all of the Grantor's rights, remedies, security
and Liens, in, to and in respect of any credit insurance, accounts (including,
without limitation, rights of stoppage in transit, rep xxxxx, repossession,
reclamation and other rights and remedies of an unpaid vendor, lienor or secured
party), guaranties or other contracts of suretyship with respect to accounts,
and deposits or other security for the obligation of any Account Debtor; (iii)
all rights relating to the sale or other transfer of property to, or the
construction, renovation, processing or other improvement of property by or for
the Grantor; (iv) all rights now or hereafter existing in and to all letters of
credit, security agreements, leases and other contracts now or hereafter
existing and securing or otherwise relating to such accounts, contract rights,
chattel paper, instruments, documents, general intangibles or other rights or
obligations (including, without limitation, the contracts described in SCHEDULE
I hereto); and (v) all goods relating to, or which by sale have resulted in,
accounts, including, without limitation, all goods described in invoices or
other documents or instruments with respect to, or otherwise representing or
evidencing, any accounts, and all returned, reclaimed or repossessed goods (any
and all such accounts, contract rights, chattel paper, instruments, documents,
general intangibles and obligations being hereinafter referred to collectively
as the "Receivables", and any and all such credit insurance, guaranties, letters
of credit, security agreements, leases and other contracts being hereinafter
referred to collectively as the "Related Contracts");
(d) (i) all trademarks, service marks, trade names, business names,
trade
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styles, designs, logos and other source or business identifiers and all general
intangibles of like nature, now or hereafter owned, adopted, acquired or used by
the Grantor (including, without limitation, all trademarks, service marks, trade
names, business names, trade styles, designs, logos and other source or business
identifiers described in SCHEDULE II or VI hereto), all applications,
registrations and recordings thereof (including, without limitation,
applications, registrations and recordings in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
state thereof or any other country or any political subdivision thereof), and
all reissues, extensions or renewals thereof together with all goodwill of the
business symbolized by such marks and all customer lists, formulae and other
records of the Grantor relating to the distribution of products and services in
connection with which any of such marks are used, and all income, royalties,
damages and payments now or hereafter due and/or payable under and with respect
thereto, including, without limitation, payments under all licenses entered into
in connection therewith and damages and payments for past and future
infringements or dilution's thereof and the right to xxx for past, present and
future infringements and dilutions thereof (hereinafter referred to collectively
as the "Trademarks"), and (ii) all licenses, contracts or other agreements,
whether written or oral, naming the Grantor as licensor or licensee and
providing for the grant of any right to use any Trademark, including, without
limitation, all Trademark Licenses described in SCHEDULE II hereto, together
with any goodwill connected with and symbolized by any such trademark licenses
or agreements and the right to prepare for sale and sell any and all Inventory
now or hereafter owned by the Grantor and now or hereafter covered by such
licenses (hereinafter referred to collectively as the "Trademark Licenses");
(e) (i) all letters patent, design patents and utility patents, and all
inventions, trade secrets, proprietary information and technology, know-how,
formulae and other general intangibles of like nature, now existing or hereafter
acquired (including, without limitation, all letters patent, design patents and
utility patents described in SCHEDULE III hereto), all applications,
registrations and recordings thereof (including, without limitation,
applications, registrations and recordings in the United States Patent and
Trademark Office or in any similar office or agency of the United States or any
other country or any political subdivision thereof), and all reissues,
divisions, continuations, continuations in part and extensions or renewals
thereof (hereinafter referred to collectively as the "Patents"), and (ii) all
licenses, contracts or other agreements, whether written or oral, naming the
Grantor as licensee or licensor and providing for the grant of any right to
manufacture, use or sell any invention covered by any patent (hereinafter
referred to collectively as the "Patent Licenses") (including, without
limitation, all Patent Licenses set forth in SCHEDULE III hereto);
(f) (i) all copyrights, including, without limitation, all original
works of authorship fixed in any tangible medium of expression, acquired or used
by the Grantor (including, without limitation, all copyrights described in
SCHEDULE IV hereto), all applications, registrations and recordings thereof
(including, without limitation, applications, registrations and recordings in
the United States Copyright Office or in any similar office or agency of the
United States or any other country or any political subdivision thereof), and
all reissues, divisions, continuations, continuations in part and extensions or
renewals thereof (hereinafter referred to collectively as the "Copyrights"), and
(ii) all licenses, contracts or other agreements, whether written or oral,
naming the Grantor as licensee or licensor and providing for the grant of any
right to use or sell any works covered by any copyright (hereinafter referred to
collectively as the
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"Copyright Licenses" and together with the Trademark Licenses and the Patent
Licenses, the "Licenses") (including, without limitation, all Copyright Licenses
set forth in SCHEDULE IV hereto);
(g) (i) all moneys, securities and other property and the proceeds
thereof, now or hereafter held or received by, or in transit to, the Collateral
Agent, the Administrative Agent or any Lender from or for the Grantor, whether
for safekeeping, pledge, custody, transmission, collection or otherwise, and all
of the Grantor's sums and credits with, and all of the Grantor's claims against
the Collateral Agent, the Administrative Agent or any Lender at any time
existing; (ii) all rights, interests, choses in action, causes of actions,
claims and all other intangible property of every kind and nature, in each
instance whether now owned or hereafter acquired by the Grantor, including,
without limitation, all corporate and other business records, all loans,
royalties, and all other forms of obligations receivable whatsoever (other than
Receivables); (iii) all computer programs, software, printouts and other
computer materials, customer lists, credit files, correspondence, advertising
materials and other source or business identifiers; (iv) all customer and
supplier contracts, sale orders, rights under license and franchise agreements,
and other contracts and contract rights [,including without limitation, all
rights of Grantor in the Acquisition Agreement and all related agreements]; (v)
all interests in partnerships, limited liability companies and joint ventures,
including all moneys due from time to time in respect thereof; (vi) all federal,
state and local tax refunds and federal, state and local tax refund claims and
all judgments in favor of Grantor and all of Grantor's rights with respect
thereto; (vii) all right, title and interest under leases, subleases, licenses
and concessions and other agreements relating to personal property, including
all moneys due from time to time in respect thereof; (viii) all payments due or
made to the Grantor in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of any property by any Person or
Governmental Authority; (ix) all lock-box and all deposit accounts (general or
special) or other accounts with any bank or other financial institution,
including, without limitation, all depository or other accounts maintained by
the Grantor at the Administrative Agent, the Collateral Agent or any Lender and
all funds on deposit therein; (x) all credits with and other claims against
third parties (including carriers and shippers) (other than Receivables); (xi)
all rights to indemnification; (xii) all reversionary interests in pension and
profit sharing plans and reversionary, beneficial and residual interests in
trusts; (xiii) all proceeds of insurance of which the Grantor is the
beneficiary; (xiv) all letters of credit, guaranties, liens, security interests
and other security held by or granted to the Grantor; (xv) all instruments,
files, records, ledger sheets and documents covering or relating to any of the
Collateral; and (xvi) all general intangibles, whether or not similar to the
foregoing, in each instance, however and wherever arising;
(h) the books and records of the Grantor relating to any of the
foregoing Collateral, including, without limitation, all customer contracts,
sale orders, minute books, ledgers, records, computer programs, software,
printouts and other computer materials, customer lists, credit files,
correspondence and advertising materials, in each case indicating, summarizing
or evidencing any of the Collateral; and
(i) all cash and non-cash proceeds of any and all of the foregoing
Collateral (including, without limitation, (i) damages and payments for past or
future infringements of the Trademarks, the Patents or the Copyrights and (ii)
the right to xxx for past, present and future infringements of the Trademarks,
the Patents or the Copyrights) and, to the extent not otherwise
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included, all payments under insurance (whether or not the Collateral Agent is
the loss payee thereof) and any indemnity, warranty or guaranty payable by
reason of loss or damage to or otherwise with respect to any of the foregoing
Collateral;
in each case howsoever the Grantor's interest therein may arise or
appear (whether by ownership, security interest, claim or otherwise); provided
that, nothing hereunder constitutes or shall be deemed to constitute the grant
of a security interest in favor of the Collateral Agent in the Grantor's
interest in any Related Contract or other contract right, any License or other
license agreement, any lease or any other general intangible (other than any of
the foregoing constituting an account or a general intangible for money due or
to become due to which Section 9-318(4) of the Code applies) (each such contract
right, license agreement, lease and other general intangible, other than those
described in the preceding parenthesis, being hereinafter referred to as
"Excluded Property"), if the granting of a security interest therein by the
Grantor to the Collateral Agent is prohibited by the terms and provisions of the
written agreement, document or instrument creating or evidencing such Excluded
Property, and either (i) such agreement, document or instrument was entered into
prior to the date of this Agreement, or (ii) such agreement, document or
instrument is entered into after the date of this Agreement and the Grantor
delivers to the Collateral Agent a copy of such agreement, document or
instrument, provided, however, that (1) if and when the prohibition which
prevents the granting by the Grantor to the Collateral Agent of a security
interest in any Excluded Property is removed or otherwise terminated, the
Collateral Agent will be deemed to have, and at all times to have had, a
security interest in such Excluded Property, and (2) the Grantor shall use its
reasonable efforts to exclude from any written agreement, document or instrument
entered into on or after the date of this Agreement creating or evidencing any
contract right, license, lease or general intangible, any prohibition against
the granting by the Grantor to the Collateral Agent of a security interest
therein to the extent that such exclusion or such efforts would not result in
such agreement, document or instrument containing terms which are less favorable
to the Grantor than would be the case but for such exclusion or such efforts or
would result in a decision by the Persons proposed to be parties to such
agreement, document or instrument not to enter into such agreement, document or
instrument. Notwithstanding anything set forth herein to the contrary, the
Collateral Agent will be deemed to have, and at all times to have had, a
security interest in the proceeds of such Excluded Property.
SECTION 3. Security for Guaranteed Obligations. The security interest
created hereby in the Collateral constitutes continuing collateral security for
all of the following obligations, whether now existing or hereafter incurred
(the "Guaranteed Obligations"):
(a) the prompt payment by the Grantor, as and when due and payable, of
all amounts from time to time owing by it in respect of [its guaranty made
pursuant to Article XI of the Financing Agreement] [its Guaranty, dated as of
September __, 1997 (as amended or otherwise amended from time to time, the
"Guaranty"), in favor of each of the Lenders and the Collateral Agent] ,
including, without limitation, principal of and interest on the Loans
(including, without limitation, all interest that accrues after the commencement
of any case, proceeding or other action relating to the bankruptcy, insolvency
or reorganization of any Borrower, whether or not a claim for post-filing
interest is allowed in such proceeding), all Letter of Credit Obligations and
Ledger Debt and all interest thereon, all fees, commissions, expense
reimbursements, indemnifications and all other amounts due or to become due
under any Loan Document to
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which it is a party; and
(b) the due performance and observance by the Grantor of all of its
other obligations from time to time existing in respect of [Article XI of the
Financing Agreement] [its Guaranty] and all other Loan Documents to which it is
a party.
SECTION 4. Representations and Warranties. The Grantor represents and
warrants as follows:
(a) There is no pending or, to the knowledge of the Grantor, threatened
action , suit, proceeding or claim before any court or other Governmental
Authority or any arbitrator, or any order, judgment or award by any court or
other Governmental Authority or arbitrator, that may adversely affect the grant
by the Grantor, or the perfection, of the security interest purported to be
created hereby in the Collateral, or the exercise by the Collateral Agent of any
of its rights or remedies hereunder.
(b) All taxes, assessments and other governmental charges imposed upon
the Grantor or any property of the Grantor (including, without limitation, all
federal income and social security taxes on employees' wages) and which have
become due and payable on or prior to the date hereof have been paid, except (i)
to the extent contested in good faith by proper proceedings which stay the
imposition of any penalty, fine and Lien resulting from the non-payment thereof
and with respect to which adequate reserves in accordance with GAAP have been
established for the payment thereof and (ii) Liens permitted by Section
7.01(c)(ii)(B) of the Financing Agreement.
(c) All Equipment and Inventory is located at the addresses specified
therefor in SCHEDULE V hereto or at such other locations permitted by the terms
of Section 5(b) hereof. The Grantor's chief place of business and chief
executive office, the place where the Grantor keeps its records concerning
Receivables and all originals of all chattel paper which constitute Receivables
are located at the addresses specified therefor in SCHEDULE V hereto. None of
the Receivables is evidenced by a promissory note or other instrument unless
such promissory note or instrument has been pledged to the Collateral Agent. Set
forth in SCHEDULE VI hereto is a complete and correct list of each trade name
used by the Grantor.
(d) The Grantor has delivered to the Collateral Agent complete and
correct copies of each Related Contract described on SCHEDULE I hereto, which
represent all of the Related Contracts existing on the date of this Agreement[,
the Acquisition Agreement] and each License described in SCHEDULE II, SCHEDULE
III and SCHEDULE IV hereto, including in each such case all schedules and
exhibits thereto. Each Related Contract and License sets forth the entire
agreement and understanding of the parties thereto relating to the subject
matter thereof and there are no other agreements, arrangements or
understandings, written or oral, relating to the matters covered thereby or the
rights of the Grantor in respect thereof. Each Related Contract now existing is,
and each other Related Contract will be, the legal, valid and binding obligation
of the parties thereto, enforceable against such parties in accordance with its
terms, subject as to enforceability to applicable bankruptcy, insolvency,
reorganization and similar laws affecting creditors' rights and to general
principles of equity. To the knowledge of the Grantor, no default thereunder by
any such party has occurred, nor does any defense, offset, deduction or
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counterclaim exist thereunder in favor of any such party.
(e) The Grantor owns and controls, or otherwise possesses adequate
rights to use, all Trademarks, Patents and Copyrights, which are the only
trademarks, patents and copyrights necessary to conduct its business in
substantially the same manner as conducted as of the date hereof. SCHEDULE II
hereto sets forth a true and complete list of all Trademarks and Trademark
Licenses owned or used by the Grantor as of the date hereof. SCHEDULE III hereto
sets forth a true and complete list of all Patents and Patent Licenses owned or
used by the Grantor as of the date hereof. SCHEDULE IV hereto sets forth a true
and complete list of all Copyrights and Copyright Licenses owned or used by the
Grantor as of the date hereof. All of such Copyrights, Patents and Trademarks
are subsisting and in full force and effect, have not been adjudged invalid or
unenforceable, are valid and enforceable and have not been abandoned in whole or
in part. Except as set forth in SCHEDULE II, III or IV hereto, none of such
Copyrights, Patents or Trademarks is the subject of any licensing or franchising
agreement. The Grantor has no knowledge of any conflict with the rights of
others to any Trademark, Patent or Copyright and, to the best knowledge of the
Grantor, the Grantor is not now infringing or in conflict with any such rights
of others in any material respect, and to the best knowledge of the Grantor, no
other Person is now infringing or in conflict in any material respect with any
such properties, assets and rights owned or used by the Grantor.
(f) The Grantor is the sole and exclusive owner of the Collateral free
and clear of any Lien, except for (i) the security interest created by this
Agreement, (ii) the security interests and other encumbrances permitted by the
Financing Agreement and (iii) sales of assets permitted by the terms of the
Financing Agreement. No effective financing statement or other instrument
similar in effect covering all or any part of the Collateral is on file in any
recording or filing office, except (i) such as may have been filed in favor of
the Collateral Agent relating to this Agreement, and (ii) such as may have been
filed to perfect or protect any security interest or encumbrance permitted by
the Financing Agreement.
(g) The exercise by the Collateral Agent of any of its rights and
remedies hereunder will not contravene law or any contractual restriction
binding on or otherwise affecting the Grantor or any of its properties and will
not result in or require the creation of any Lien, security interest or other
charge or encumbrance upon or with respect to any of its properties.
(h) No authorization or approval or other action by, and no notice to
or filing with, any Governmental Authority or any other Person, is required for
(i) the grant by the Grantor, or the perfection, of the security interest
purported to be created hereby in the Collateral or (ii) the exercise by the
Collateral Agent of any of its rights and remedies hereunder, except (A) for the
filing under the Uniform Commercial Code as in effect in the applicable
jurisdiction of the financing statements described in SCHEDULE VII hereto, (B)
with respect to the perfection of the security interest created hereby in the
United States Trademarks, United States Patents and United States Copyrights for
the recording of the Assignment for Security (Trademarks), substantially in the
form of Exhibit A hereto, the Assignment for Security (Patents), substantially
in the form of Exhibit B hereto, or the Assignment for Security (Copyrights),
substantially in the form of Exhibit C hereto, as applicable, in the United
States Patent and Trademark Office or the United States Copyright Office, as
applicable or (C) with respect to the perfection of the security interest
created hereby in foreign Trademarks, Patents and Copyrights, for registrations
and
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filings in jurisdictions located outside of the United States and covering
rights in such jurisdictions relating to Patents, Trademarks, Copyrights, Patent
Licenses, Trademark Licenses and Copyright Licenses.
(i) This Agreement creates valid security interests in favor of the
Collateral Agent for the benefit of the Lenders in the Collateral, as security
for the Guaranteed Obligations. The Collateral Agent's having possession of all
instruments and cash constituting Collateral from time to time, the recording of
the Assignment for Security (Trademarks), the Assignment for Security (Patents)
and the Assignment for Security (Copyrights), as applicable, executed pursuant
hereto in the United States Patent and Trademark Office and the United States
Copyright Office, as applicable, and the filing of the financing statements
described in SCHEDULE VII hereto and, with respect to Patents, Trademarks and
Copyrights hereafter existing and not covered by an Assignment for Security
(Trademarks), an Assignment for Security (Patents) or an Assignment for Security
(Copyrights), as applicable, the recording in the United States Patent and
Trademark Office or the United States Copyright Office, as applicable, of
appropriate instruments of assignment, result in the perfection of such security
interests. Such security interests are, or in the case of Collateral in which
the Grantor obtains rights after the date hereof, will be, perfected, first
priority security interests, subject only to the security interests and other
encumbrances permitted pursuant to the Financing Agreement.
SECTION 5. Covenants as to the Collateral. So long as any of the
Guaranteed Obligations shall remain outstanding or the Total Commitment shall
not have terminated, unless the Collateral Agent shall otherwise consent in
writing:
(a) Further Assurances. The Grantor will at its expense, at any time
and from time to time, promptly execute and deliver all further instruments and
documents and take all further action that may be necessary or reasonably
desirable or that the Collateral Agent may reasonably request in order (i) to
perfect and protect the security interest purported to be created hereby; (ii)
to enable the Collateral Agent to exercise and enforce its rights and remedies
hereunder in respect of the Collateral; or (iii) otherwise to effect the
purposes of this Agreement, including, without limitation: (A) marking
conspicuously each chattel paper included in the Receivables and each License
and Related Contract and, at the request of the Collateral Agent, each of its
records pertaining to the Collateral with a legend, in form and substance
reasonably satisfactory to the Collateral Agent, indicating that such chattel
paper, License, Related Contract or Collateral is subject to the security
interest created hereby, (B) if any Receivable shall be evidenced by a
promissory note or other instrument or chattel paper, delivering and pledging to
the Collateral Agent hereunder any such note, instrument or chattel paper duly
endorsed and accompanied by executed instruments of transfer or assignment, all
in form and substance reasonably satisfactory to the Collateral Agent, (C)
executing and filing such financing or continuation statements, or amendments
thereto, as may be necessary or reasonably desirable or that the Collateral
Agent may reasonably request in order to perfect and preserve the security
interest purported to be created hereby, and (D) furnishing to the Collateral
Agent from time to time statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as the Collateral Agent may reasonably request, all in reasonable
detail.
(b) Location of Equipment and Inventory. The Grantor will keep the
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Equipment and Inventory (other than used Equipment and Inventory sold in the
ordinary course of business in accordance with Section 5(g) hereof) at the
locations specified therefor in Section 4(c) hereof or, upon written notice to
the Collateral Agent in accordance with Section 7.01(n) of the Financing
Agreement accompanied by a new SCHEDULE V hereto indicating each new location of
the Equipment and Inventory, at such other locations in the continental United
States as the Grantor may elect, provided that (i) the Grantor shall promptly
have taken all action requested by the Collateral Agent to grant to the
Collateral Agent a perfected, first priority security interest in such Equipment
and Inventory, and (ii) the Collateral Agent's rights in such Equipment and
Inventory, including, without limitation, the existence, perfection and priority
of the security interest created hereby in such Equipment and Inventory, are not
adversely affected thereby.
(c) Condition of Equipment. The Grantor will maintain or cause to be
maintained in good working order and condition, excepting ordinary wear and tear
and damage due to casualty, all of the Equipment. The Grantor shall promptly
furnish to the Collateral Agent a statement describing in reasonable detail any
loss or damage in excess of $100,000 to any Equipment or Inventory due to
casualty.
(d) Taxes Etc. The Grantor will pay promptly when due all property and
other taxes, assessments and governmental charges or levies imposed upon, and
all claims (including claims for labor, materials and supplies) against, the
Equipment and Inventory, except (i) to the extent the validity thereof is being
contested in good faith by proper proceedings which stay the imposition of any
penalty, fine or Lien resulting from the non-payment thereof and with respect to
which adequate reserves in accordance with GAAP have been set aside for the
payment thereof or (ii) Liens permitted by Section 7.01(c)(ii)(B) of the
Financing Agreement.
(e) Insurance.
(i) The Grantor will, at its own expense, maintain insurance
as required by Section 7.01(h) of the Financing Agreement. Each policy for
liability insurance shall provide for all losses to be paid on behalf of the
Collateral Agent and the Grantor as their respective interests may appear. Each
policy for property damage insurance shall provide for all losses (except for
losses of less than $____________ per occurrence and losses accruing during the
continuance of an Event of Default), to be adjusted with, and paid directly to
the Collateral Agent. Each such policy shall in addition (A) name the Grantor
and the Collateral Agent as insured parties thereunder (without any
representation or warranty by or obligation upon the Collateral Agent) as their
interests may appear, (B) contain the agreement by the insurer that any loss
thereunder shall be payable, notwithstanding any action, inaction or breach of
representation or warranty by the Grantor, (C) provide that there shall be no
recourse against the Collateral Agent for payment of premiums or other amounts
with respect thereto, and (D) provide that at least 30 days' prior written
notice of cancellation or of lapse shall be given to the Collateral Agent by the
insurer. The Grantor will, if so requested by the Collateral Agent, deliver to
the Collateral Agent original or duplicate policies of such insurance and, as
often as the Collateral Agent may reasonably request, a report of a reputable
insurance broker with respect to such insurance. The Grantor will also, at the
request of the Collateral Agent, execute and deliver instruments of assignment
of such insurance policies and cause the respective insurers to acknowledge
notice of such assignment.
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(ii) Payment under any liability insurance maintained by the
Grantor pursuant to this Section 5(e) may be paid directly to the Person who
shall have incurred liability covered by such insurance. In the case of any loss
involving damage to Equipment or Inventory as to which clause (iii) of this
Section 5(e) is not applicable, the Grantor will, in the exercise of its
reasonable business judgment, make or cause to be made the necessary repairs to
or replacements of such Equipment and Inventory, and any proceeds of insurance
maintained by the Grantor pursuant to this Section 5(e) shall upon receipt by
the Collateral Agent, be paid to the Grantor as reimbursement for the costs of
such repairs or replacements.
(iii) Upon the occurrence and during the continuance of an
Event of Default or the actual or constructive total loss (in excess of $______
per occurrence) of any Equipment or Inventory, all insurance payments in respect
of such Equipment and Inventory shall be paid to the Collateral Agent and
applied as specified in Section 7(b) hereof.
(f) Provisions Concerning the Receivables, the Related Contracts and
the Licenses.
(i) The Grantor will (A) give the Collateral Agent at least 30
days' prior written notice of any change in the Grantor's name, identity or
corporate structure, (B) keep its chief place of business and chief executive
office and all originals of all chattel paper which constitute Receivables at
the location(s) specified therefor in SCHEDULE V hereof or such other location
for which the Grantor has complied with all of the provisions of Section 5(b)
hereof, and (C) keep adequate records concerning the Receivables and such
chattel paper and permit representatives of the Collateral Agent during normal
business hours, upon reasonable notice and without undue interruption of the
business of the Grantor to inspect and make abstracts from such records and
chattel paper pursuant to the terms of the Financing Agreement, provided that
such notice shall not be required during the continuance of an Event of Default.
(ii) The Grantor will duly perform and observe all of its
obligations under each Related Contract and, except as otherwise provided in
this subsection (f), continue to collect, at its own expense, all amounts due or
to become due under the Receivables. In connection with such collections, the
Grantor may (and, at the Collateral Agent's direction, will) take such action as
the Grantor or the Collateral Agent may deem necessary or advisable to enforce
collection or performance of the Receivables; provided, however, the Collateral
Agent shall have the right at any time, upon the occurrence and during the
continuance of an Event of Default, to notify the Account Debtors or obligors
under any Receivables of the assignment of such Receivables to the Collateral
Agent and to direct such Account Debtors or obligors to make payment of all
amounts due or to become due to the Grantor thereunder directly to the
Collateral Agent or its designated agent and, upon such notification and at the
expense of the Grantor and to the extent permitted by law, 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 Grantor might
have done. After receipt by the Grantor of a notice from the Collateral Agent
that the Collateral Agent has notified or intends to notify the Account Debtors
or obligors under any Receivables as referred to in the proviso to the
immediately preceding sentence, (A) all amounts and proceeds (including
instruments) received by the Grantor in respect of the Receivables shall be
received in trust for the benefit of the Collateral Agent hereunder, shall be
segregated from other funds of the Grantor and shall be forthwith paid over to
the Collateral Agent in the same
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form as so received (with any necessary endorsement) to be held as cash
collateral and either (1) credited to the Loan Account so long as no Event of
Default shall have occurred and be continuing or (2) if any Event of Default
shall have occurred and be continuing, applied as specified in Section 7(b)
hereof, and (B) the Grantor will not adjust, settle or compromise the amount or
payment of any Receivable or release wholly or partly any Account Debtor or
obligor thereof or allow any credit or discount thereon. In addition, upon the
occurrence and during the continuance of an Event of Default, the Collateral
Agent shall have the right to notify the United States Postal Service
authorities to change the address for delivery of mail addressed to the Grantor
to such address as the Collateral Agent may designate and to do all other acts
and things necessary to carry out this Agreement.
(iii) Upon the occurrence and during the continuance of any
breach or default under any Related Contract referred to in SCHEDULE I hereto or
otherwise specified in writing by the Collateral Agent from time to time or any
License referred to in SCHEDULE II, III or IV hereto by any party thereto other
than the Grantor, the Grantor will (A) promptly after obtaining knowledge
thereof, give the Collateral Agent written notice of the nature and duration
thereof, specifying what action, if any, it has taken and proposes to take with
respect thereto, and (B) upon written instructions from the Collateral Agent and
at the Grantor's expense, take such action as the Collateral Agent may deem
reasonably necessary or advisable in respect thereof.
(iv) The Grantor will, at its expense, promptly deliver to the
Collateral Agent a copy of each notice or other communication received by it by
which any other party to any Related Contract referred to in SCHEDULE I hereto
or otherwise specified by the Collateral Agent from time to time or any License
referred to in SCHEDULE II, III or IV hereto purports to exercise any of its
rights or affect any of its obligations thereunder which is reasonably likely to
have a Material Adverse Effect, together with a copy of any reply by the Grantor
thereto.
(v) The Grantor will take all action necessary to maintain all
Licenses in full force and effect, except where such failure to maintain would
not be reasonably likely to have a Material Adverse Effect. The Grantor will
not, without the prior written consent of the Collateral Agent, cancel,
terminate, amend or otherwise modify in any respect, or waive any provision of,
any Related Contract referred to in SCHEDULE I hereto or any License referred to
in SCHEDULE II, III or IV hereto to the extent such action is reasonably likely
to have a Material Adverse Effect.
(g) Transfers and Other Liens.
(i) The Grantor will not sell, assign (by operation of law or
otherwise), lease, exchange or otherwise transfer or dispose of any of the
Collateral except to the extent permitted under Section 7.02(d)(ii) of the
Financing Agreement, subject to the obligation of Squire to make payments
pursuant to Section 2.07(g) of the Financing Agreement.
(ii) The Grantor will not create or suffer to exist any Lien,
security interest or other charge or encumbrance upon or with respect to any
Collateral, except for (A) the Liens and security interest created by this
Agreement and the other Loan Documents and (B) the Liens, security interests and
other encumbrances permitted by the Financing Agreement.
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(h) Trademarks, Patents and Copyrights.
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(i) If applicable, the Grantor has duly executed and delivered
the Assignment for Security (Trademarks) in the form attached hereto as Exhibit
A, the Assignment for Security (Patents) in the form attached hereto as Exhibit
B and the Assignment for Security (Copyrights) in the form attached hereto as
Exhibit C. The Grantor (either itself or through licensees) will, and will cause
each licensee thereof to, take all action reasonably necessary to maintain all
of the Trademarks, Patents and Copyrights in full force and effect, including,
without limitation, using the proper statutory notices and markings and using
the Trademarks on each applicable trademark class of goods in order to so
maintain the Trademarks in full force free from any claim of abandonment for
non-use, and the Grantor will not (and will not permit any licensee thereof to)
do any act or knowingly omit to do any act whereby any Trademark or Copyright
may become invalidated; provided, however, that so long as no Event of Default
has occurred and is continuing, the Grantor shall have no obligation to use or
to maintain any Trademark or Copyright (A) that relates solely to any product or
work that has been, or is in the process of being, discontinued, abandoned or
terminated, (B) that is being replaced with a trademark or copyright
substantially similar to the Trademark or Copyright, as the case may be, that
may be abandoned or otherwise become invalid, so long as such replacement
Trademark or Copyright, as the case may be is subject to the security interest
purported to be created by this Agreement, (C) that is substantially the same as
another Trademark or Copyright, as the case may be, that is in full force, so
long as such other Trademark or Copyright, as the case may be, is subject to the
Lien and security interest created by this Agreement, or (D) that is not
necessary for the operation of Grantor's business and is discontinued or
disposed of in the ordinary course of business. The Grantor will cause to be
taken all necessary steps in any proceeding before the United States Patent and
Trademark Office and the United States Copyright Office to maintain each
registration of the Trademarks, the Patents and the Copyrights (other than those
Trademarks and Copyrights described in the proviso to the immediately preceding
sentence), including, without limitation, filing of renewals, affidavits of use,
affidavits of incontestability and opposition, interference and cancellation
proceedings and payment of taxes. If any Trademark, Patent or Copyright is
infringed, misappropriated or diluted in any material respect by a third party,
the Grantor shall (x) upon learning of such infringement, misappropriation or
dilution, promptly notify the Collateral Agent and (y) to the extent the Grantor
shall deem appropriate under the circumstances, promptly xxx for infringement,
misappropriation or dilution, seek injunctive relief where appropriate and
recover any and all damages for such infringement, misappropriation or dilution,
or take such other actions as the Grantor shall deem appropriate under the
circumstances to protect such Trademark, Patent or Copyright. The Grantor shall
furnish to the Collateral Agent from time to time (but, unless an Event of
Default has occurred and is continuing, no more frequently than annually)
statements and schedules further identifying and describing the Patents, the
Trademarks and the Copyrights and such other reports in connection with the
Patents, the Trademarks and the Copyrights as the Collateral Agent may
reasonably request, all in reasonable detail and promptly upon request of the
Collateral Agent, following receipt by the Collateral Agent of any such
statements, schedules or reports, the Grantor shall modify this Agreement by
amending SCHEDULES II, III or IV hereto, as the case may be, to include any
Patent, Trademark or Copyright which becomes part of the Collateral under this
Agreement. Notwithstanding anything herein to the contrary, upon the occurrence
and during the continuance of an Event of Default the Grantor may not abandon or
otherwise permit a Trademark, Patent or Copyright to become invalid without the
prior written consent of the Collateral Agent, and if any Trademark, Patent or
Copyright is infringed, misappropriated or
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diluted in any material respect by a third party, the Grantor will take such
action as the Collateral Agent shall deem appropriate under the circumstances to
protect such Trademark, Patent or Copyright.
(ii) In no event shall the Grantor, either itself or through
any agent, employee, licensee or designee, file an application for the
registration of any Trademark or Copyright or the issuance of any Patent with
the United States Patent and Trademark Office or the United States Copyright
Office, as applicable, unless it gives the Collateral Agent written notice
thereof, but in no event later than 5 Business Days after the filing of any such
application. Upon request of the Collateral Agent, the Grantor shall execute and
deliver any and all assignments, agreements, instruments, documents and papers
as the Collateral Agent may reasonably request to evidence the Collateral
Agent's security interest hereunder in such Trademark, Patent or Copyright and
the general intangibles of the Grantor relating thereto or represented thereby,
and the Grantor hereby constitutes the Collateral Agent its attorney-in-fact to
execute and file, during the continuance of an Event of Default, all such
writings for the foregoing purposes, all acts of such attorney being hereby
ratified and confirmed, and such power (being coupled with an interest) shall be
irrevocable until the termination of the Total Commitment, the repayment of all
of the Guaranteed Obligations in full and the termination of each of the Loan
Documents.
(j) Inspection and Reporting. The Grantor shall permit the Collateral
Agent, the Administrative Agent or any Lender, or any agents or representatives
thereof or such professionals or other Persons as the Collateral Agent may
designate (i) to examine and inspect the books and records of the Grantor and
take copies and extracts therefrom, (ii) to verify materials, leases, notes,
receivables, inventory and other assets of the Grantor from time to time, and
(iii) to conduct physical counts, appraisals and/or valuations at the locations
of the Grantor, in each case as provided and subject to the confidentiality
requirements set forth in the Financing Agreement.
SECTION 6. Additional Provisions Concerning the Collateral.
(a) The Grantor hereby authorizes the Collateral Agent to file, without
the signature of the Grantor where permitted by law, one or more financing or
continuation statements, and amendments thereto, relating to the Collateral.
(b) The Grantor hereby irrevocably appoints the Collateral Agent the
Grantor's attorney-in-fact and proxy, with full authority in the place and stead
of the Grantor and in the name of the Grantor or otherwise, from time to time in
the Collateral Agent's discretion upon the occurrence and during the continuance
of an Event of Default, to take any action and to execute any instrument which
the Collateral Agent may deem necessary or advisable to accomplish the purposes
of this Agreement (subject to the rights of the Grantor under Section 5(f)
hereof), including, without limitation, (i) to obtain and adjust insurance
required to be paid to the Collateral Agent pursuant to Section 5(e) hereof, and
to receive, endorse and collect any drafts or other instruments, documents and
chattel paper in connection therewith, (ii) to ask, demand, collect, xxx for,
recover, compound, receive and give acquittance and receipts for moneys due and
to become due under or in respect of any Collateral, (iii) to receive, endorse,
and collect any drafts or other instruments, documents and chattel paper in
connection with clause (i)
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or (ii) above, and (iv) to file any claims or take any action or institute any
proceedings which the Collateral Agent may deem necessary or desirable for the
collection of any Collateral or otherwise to enforce the rights of the
Collateral Agent with respect to any Collateral.
(c) For the purpose of enabling the Collateral Agent to exercise rights
and remedies hereunder at such time as the Collateral Agent shall be lawfully
entitled to exercise such rights and remedies, and for no other purpose, the
Grantor hereby grants to the Collateral Agent, to the extent assignable, an
irrevocable, non-exclusive license (exercisable without payment of royalty or
other compensation to the Grantor) to use, assign, license or sublicense any of
the Patents, Trademarks or Copyrights now owned or hereafter acquired by the
Grantor, wherever the same may be located, including in such license reasonable
access to all media in which any of the licensed items may be recorded or stored
and to all computer programs used for the compilation or printout thereof.
Notwithstanding anything contained herein to the contrary, but subject to the
provisions of the Financing Agreement that limits the right of the Grantor to
dispose of its property and Section 5(h) hereof, so long as no Event of Default
shall have occurred and be continuing, the Grantor may exploit, use, enjoy,
protect, license, sublicense, assign, sell, dispose of or take other actions
with respect to the Patents, Trademarks or Copyrights in the ordinary course of
the business of the Grantor. In furtherance of the foregoing, unless an Event of
Default shall have occurred and be continuing the Collateral Agent shall
promptly from time to time, upon the request of the Grantor, execute and deliver
any instruments, certificates or other documents, in the form so requested,
which the Grantor shall have certified are appropriate (in its judgment) to
allow it to take any action permitted above (including relinquishment of the
license provided pursuant to this clause (c) as to any Patents, Trademarks or
Copyrights and the release of the Lien created hereby). Further, upon the
payment in full of all of the Guaranteed Obligations and cancellation or
termination of the Total Commitments, the Collateral Agent (subject to Section
10(e) hereof) shall transfer to the Grantor all of the Collateral Agent's right,
title and interest in and to the Patents, Trademarks and Copyrights, and the
Licenses, all without recourse, representation or warranty whatsoever. The
exercise of rights and remedies hereunder by the Collateral Agent shall not
terminate the rights of the holders of any licenses or sub licenses theretofore
granted by the Grantor in accordance with the second sentence of this clause
(c). The Grantor hereby releases the Collateral Agent from any claims, causes of
action and demands at any time arising out of or with respect to any actions
taken or omitted to be taken by the Collateral Agent under the powers of
attorney granted herein other than actions taken or omitted to be taken through
the Collateral Agent's gross negligence or willful misconduct.
(d) If the Grantor fails to perform any agreement contained herein, the
Collateral Agent may itself perform, or cause performance of, such agreement or
obligation, in the name of the Grantor or the Collateral Agent, and the expenses
of the Collateral Agent incurred in connection therewith shall be payable by the
Grantor pursuant to Section 8 hereof and shall be secured by the Collateral.
(e) The powers conferred on the Collateral Agent hereunder are solely
to protect its interest in the Collateral and shall not impose any duty upon it
to exercise any such powers. Except for the safe custody of any Collateral in
its possession and the accounting for moneys actually received by it hereunder,
the Collateral Agent shall have no duty as to any Collateral or as to the taking
of any necessary steps to preserve rights against prior parties or any
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other rights pertaining to any Collateral.
(f) Anything herein to the contrary notwithstanding (i) the Grantor
shall remain liable under the Related Contracts and Licenses and otherwise with
respect to any of the Collateral to the extent set forth therein to perform all
of its obligations thereunder to the same extent as if this Agreement had not
been executed, (ii) the exercise by the Collateral Agent of any of its rights
hereunder shall not release the Grantor from any its obligations under the
Related Contracts and Licenses or otherwise in respect of the Collateral, and
(iii) the Collateral Agent shall not have any obligation or liability by reason
of this Agreement under the Related Contracts and Licenses or with respect to
any of the other Collateral, nor shall the Collateral Agent be obligated to
perform any of the obligations or duties of the Grantor thereunder or to take
any action to collect or enforce any claim for payment assigned hereunder.
SECTION 7. Remedies Upon Default. If any Event of Default shall have
occurred and be continuing:
(a) The Collateral Agent may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise available
to it, all of the rights and remedies of a secured party upon default under the
Code (whether or not the Code applies to the affected Collateral), and also may
(i) require the Grantor to, and the Grantor hereby agrees that it will at its
expense and upon request of the Collateral Agent forthwith, assemble all or part
of the Collateral as directed by the Collateral Agent and make it available to
the Collateral Agent at a place or places to be designated by the Collateral
Agent which is reasonably convenient to both parties and (ii) without notice
except as specified below, sell the Collateral or any part thereof in one or
more parcels at public or private sale, at any of the Collateral Agent's offices
or elsewhere, for cash, on credit or for future delivery, and at such price or
prices and upon such other terms as the Collateral Agent may deem commercially
reasonable. The Grantor agrees that, to the extent notice of sale shall be
required by law, at least 10 Business Days' notice to the Grantor of the time
and place of any public sale or the time after which any private sale is to be
made shall constitute reasonable notification. The Collateral Agent shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. The Collateral Agent may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was so
adjourned. The Grantor hereby waives any claims against the Collateral Agent and
the Lenders arising by reason of the fact that the price at which the Collateral
may have been sold at a private sale was less than the price which might have
been obtained at a public sale or was less than the aggregate amount of the
Guaranteed Obligations, even if the Collateral Agent accepts the first offer
received and does not offer the Collateral to more than one offeree and waives
all rights which the Grantor may have to require that all or any part of the
Collateral be marshalled upon any sale (public or private) thereof. In addition
to the foregoing, (i) upon written notice from the Collateral Agent, the Grantor
shall cease any use of the Trademarks, Patents or Copyrights or any xxxx, patent
or copyright similar thereto for any purpose described in such notice; (ii) the
Collateral Agent may, at any time and from time to time, upon 10 days' prior
notice to the Grantor, license, whether general, special or otherwise, and
whether on an exclusive or non-exclusive basis, any of the Trademarks, Patents
and Copyrights, throughout the world for such term or terms, on such conditions,
and in such manner, as the Collateral Agent shall in its sole discretion
determine; and (iii) the Collateral Agent may, at any time, pursuant to the
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authority granted in Section 6 hereof (such authority being effective upon the
occurrence of an Event of Default), execute and deliver on behalf of the
Grantor, one or more instruments of assignment of the Trademarks, Patents and
Copyrights (or any application or registration thereof), in form suitable for
filing, recording or registration in any country.
(b) Any cash held by the Collateral Agent as Collateral and all cash
proceeds received by the Collateral Agent in respect of any sale of or
collection from, or other realization upon, all or any part the Collateral may,
in the discretion of the Collateral Agent, be held by the Collateral Agent as
collateral for, and/or then or at any time thereafter applied in whole or in
part by the Collateral Agent against, all or any part of the Guaranteed
Obligations as provided in Section 4.04(b) of the Financing Agreement.
(c) In the event that the proceeds of any such sale, collection or
realization are insufficient to pay all amounts to which the Collateral Agent
and the Lenders are legally entitled, the Grantor shall be liable for the
deficiency, together with interest thereon at the highest rate specified in any
applicable Loan Document for interest on overdue principal thereof or such other
rate as shall be fixed by applicable law, together with the costs of collection
and the reasonable fees, costs, expenses of any attorneys employed by the
Collateral Agent to collect such deficiency.
SECTION 8. Indemnity and Expenses.
(a) The Grantor agrees to indemnify and hold the Collateral Agent
harmless from and against any and all claims, damages, losses, liabilities,
obligations, penalties, costs or expenses (including, without limitation,
reasonable legal fees and disbursements of Collateral Agent's counsel) to the
extent that they arise out of or otherwise result from this Agreement
(including, without limitation, enforcement of this Agreement), except claims,
losses or liabilities resulting solely and directly from the Collateral Agent's
gross negligence or willful misconduct as determined by a final judgment of a
court of competent jurisdiction.
(b) The Grantor will upon demand pay to the Collateral Agent the amount
of any and all costs and expenses, including the reasonable fees and
disbursements of the Collateral Agent's counsel and of any experts and agents,
which the Collateral Agent may incur in connection with (i) the preparation,
negotiation, execution, delivery, recordation, administration, amendment, waiver
or other modification or termination of this Agreement, or (ii) the custody,
preservation, use or operation of, or the sale of, collection from, or other
realization upon, any Collateral, (iii) the exercise or enforcement of any of
the rights of the Collateral Agent hereunder, or (iv) the failure by the Grantor
to perform or observe any of the provisions hereof.
SECTION 9. Notices, Etc. All notices and other communications provided
for hereunder shall be in writing and shall be mailed (by certified mail,
postage prepaid and return receipt requested), telecopied or delivered, if to
the Grantor or the Collateral Agent, to the parties and at the addresses
specified in the Financing Agreement; or as to either such Person at such other
address as shall be designated by such Person in a written notice to such other
Person complying as to delivery with the terms of this Section 9. All such
notices and other communications shall be effective (i) if sent by certified
mail, return receipt requested, when received or 3 Business Days after mailing,
whichever first occurs, (ii) if telecopied, when
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transmitted and confirmation is received, provided same is on a Business Day
and, if not, on the next Business Day or (iii) if delivered, upon delivery,
provided same is on a Business Day and, if not, on the next Business Day.
SECTION 10. Miscellaneous.
(a) No amendment of any provision of this Agreement shall be effective
unless it is in writing and signed by the Grantor and the Collateral Agent, and
no waiver of any provision of this Agreement, and no consent to any departure by
the Grantor therefrom, shall be effective unless it is in writing and signed by
the Collateral Agent, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
(b) No failure on the part of the Collateral Agent to exercise, and no
delay in exercising, any right hereunder or under any other Loan Document shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right preclude any other or further exercise thereof or the exercise of any
other right. The rights and remedies of the Collateral Agent provided herein and
in the other Loan Documents are cumulative and are in addition to, and not
exclusive of, any rights or remedies provided by law. The rights of the
Collateral Agent under any Loan Document against any party thereto are not
conditional or contingent on any attempt by the Collateral Agent to exercise any
of its rights under any other Loan Document against such party or against any
other Person.
(c) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining portions hereof or thereof or affecting the validity or enforceability
of such provision in any other jurisdiction.
(d) This Agreement shall create a continuing security interest in the
Collateral and shall (i) remain in full force and effect until the payment in
full of the Guaranteed Obligations after the Total Commitment has been
terminated and all Letters of Credit have been canceled or cash collateralized,
and (ii) be binding on the Grantor and its successors and assigns and shall
inure, together with all rights and remedies of the Collateral Agent hereunder,
to the benefit of the Collateral Agent and the Lenders their respective
permitted successors, transferees and assigns. Without limiting the generality
of clause (ii) of the immediately preceding sentence and subject to the terms of
the Financing Agreement, the Collateral Agent and Lenders may assign or
otherwise transfer their rights under this Agreement and any other Loan
Document, to any other Person and such other Person shall thereupon become
vested with all of the benefits in respect thereof granted to the Collateral
Agent and the Lenders herein or otherwise. None of the rights or obligations of
the Grantor hereunder may be assigned or otherwise transferred without the prior
written consent of the Collateral Agent, and any such assignment or transfer
shall be null and void.
(e) Upon the satisfaction in full of the Guaranteed Obligations after
the Total Commitment has been terminated and all Letters of Credit have been
canceled or cash collateralized, (i) this Agreement and the security interests
created hereby shall terminate and all rights to the Collateral shall revert to
the Grantor, and (ii) the Collateral Agent will, upon the
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Grantor's request and at the Grantor's expense promptly, (A) return to the
Grantor such of the Collateral as shall not have been sold or otherwise disposed
of or applied pursuant to the terms hereof, and (B) execute and deliver to the
Grantor such documents as the Grantor shall reasonably request to evidence such
termination, all without any representation, warranty or recourse whatsoever.
(f) This Agreement shall be governed by, and construed and interpreted
in accordance with, the laws of the State of New York, except as required by
mandatory provisions of law and except to the extent that the validity and
perfection or the perfection and effect of perfection or non-perfection of the
security interest created hereby or remedies hereunder, in respect of any
particular Collateral are governed by the law of a jurisdiction other than the
State of New York.
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IN WITNESS WHEREOF, the Grantor has caused this Agreement to be
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
[GRANTOR]
By: __________________________
Name: ________________________
Title: _______________________
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SCHEDULE I TO SECURITY AGREEMENT
RELATED CONTRACTS
157
SCHEDULE II TO SECURITY AGREEMENT
TRADEMARKS
AND
TRADEMARK LICENSES
158
SCHEDULE III TO SECURITY AGREEMENT
PATENTS AND PATENT LICENSES
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SCHEDULE IV TO SECURITY AGREEMENT
COPYRIGHTS AND COPYRIGHT LICENSES
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SCHEDULE V TO SECURITY AGREEMENT
I. Locations of Equipment and Inventory
II. Grantor's chief place of business, chief executive office and place
where the Grantor keeps its books and records
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SCHEDULE VI TO SECURITY AGREEMENT
TRADE NAMES
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SCHEDULE VII TO SECURITY AGREEMENT
UCC-1 FINANCING STATEMENTS
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EXHIBIT A
ASSIGNMENT FOR SECURITY
(TRADEMARKS)
WHEREAS, ___________________________ (the "Assignor") has adopted, used
and is using the trademarks and service marks listed on the annexed Schedule 1A,
which trademarks and service marks are registered or applied for in the United
States Patent and Trademark Office (the "Trademarks");
WHEREAS, the Assignor, has entered into a Security Agreement dated
September __, 1997 (the "Security Agreement") in favor of NATIONSBANC COMMERCIAL
CORPORATION., as collateral agent for certain lenders (the "Assignee");
WHEREAS, pursuant to the Security Agreement, the Assignor has assigned
to the Assignee and granted to the Assignee a security interest in all right,
title and interest of the Assignor in, to and under the Trademarks together with
the good-will of the business symbolized by the Trademarks and the applications
and restrictions thereof, and all proceeds thereof, including, without
limitation, any and all causes of action which may exist by reason of
infringement thereof (the "Collateral"), to secure the payment, performance and
observance of the Guaranteed Obligations (as defined in the Security Agreement);
NOW, THEREFORE, for good and valuable consideration, receipt of which
is hereby acknowledged, the Assignor does hereby assign unto the Assignee and
grants to the Assignee a security interest in the Collateral to secure the
prompt payment, performance and observance of the Guaranteed Obligations.
The Assignor does hereby further acknowledge and affirm that the rights
and remedies of the Assignee with respect to the Collateral are more fully set
forth in the Security Agreement, the terms and provisions of which are hereby
incorporated herein by reference as if fully set forth herein.
IN WITNESS WHEREOF, the Assignor has caused this Assignment to be duly
executed by its officer thereunto duly authorized as of ________________, 199__.
______________________________
By: __________________________
Name: ________________________
Title: _______________________
-00-
000
XXXXX XX XXX XXXX
ss.:
COUNTY OF NEW YORK
On this ____ day of _________________, 19__, before me personally came
_________________, to me known to be the person who executed the foregoing
instrument, and who, being duly sworn by me, did depose and say that he is the
_________________ of ____________________________, a __________ corporation, and
that he executed the foregoing instrument in the firm name of
____________________________, and that he had authority to sign the same, and he
acknowledged to me that he executed the same as the act and deed of said firm
for the uses and purposes therein mentioned.
______________________________
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SCHEDULE 1A TO ASSIGNMENT FOR SECURITY
(TRADEMARKS AND TRADEMARK APPLICATIONS)
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166
EXHIBIT B
ASSIGNMENT FOR SECURITY
(PATENTS)
WHEREAS, ______________________________(the "Assignor") holds all
right, title and interest in the letter patents, design patents and utility
patents listed on the annexed Schedule 1A, which patents are issued or applied
for in the United States Patent and Trademark Office (the "Patents");
WHEREAS, the Assignor, has entered into a Security Agreement dated
September __, 1997 (the "Security Agreement") in favor of NATIONSBANC COMMERCIAL
CORPORATION, as collateral agent for certain lenders (the "Assignee");
WHEREAS, pursuant to the Security Agreement, the Assignor has assigned
to the Assignee and granted to the Assignee a security interest in all right,
title and interest of the Assignor in, to and under the Patents and the
applications and registrations thereof, and all proceeds thereof, including,
without limitation, any and all causes of action which may exist by reason of
infringement thereof (the "Collateral"), to secure the payment, performance and
observance of the Guaranteed Obligations (as defined in the Security Agreement);
NOW, THEREFORE, for good and valuable consideration, receipt of which
is hereby acknowledged, the Assignor does hereby assign unto the Assignee and
grants to the Assignee a security interest in the Collateral to secure the
prompt payment, performance and observance of the Guaranteed Obligations.
The Assignor does hereby further acknowledge and affirm that the rights
and remedies of the Assignee with respect to the Collateral are more fully set
forth in the Security Agreement, the terms and provisions of which are hereby
incorporated herein by reference as if fully set forth herein.
IN WITNESS WHEREOF, the Assignor has caused this Assignment to be duly
executed by its officer thereunto duly authorized as of _________________,
199__.
______________________________
By: __________________________
Name: ________________________
Title: _______________________
-00-
000
XXXXX XX XXX XXXX
ss.:
COUNTY OF NEW YORK
On this ____ day of _______________, 199__, before me personally came
_________________, to me known to be the person who executed the foregoing
instrument, and who, being duly sworn by me, did depose and say that he is the
_________________ of ___________________________, a ____________ corporation,
and that he executed the foregoing instrument in the firm name of
_______________________________, and that he had authority to sign the same, and
he acknowledged to me that he executed the same as the act and deed of said firm
for the uses and purposes therein mentioned.
______________________________
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SCHEDULE 1A TO ASSIGNMENT FOR SECURITY
(PATENTS AND PATENT APPLICATIONS)
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169
EXHIBIT C
ASSIGNMENT FOR SECURITY
(COPYRIGHTS)
WHEREAS, ______________________________(the "Assignor") holds all
right, title and interest in the copyrights listed on the annexed Schedule 1A,
which copyrights are registered in the United States Copyright Office (the
"Copyrights");
WHEREAS, the Assignor, has entered into a Security Agreement dated
September __ 1997 (the "Security Agreement") in favor of NATIONSBANC COMMERCIAL
CORPORATION, as collateral agent for certain lenders (the "Assignee");
WHEREAS, pursuant to the Security Agreement, the Assignor has assigned
to the Assignee and granted to the Assignee a security interest in all right,
title and interest of the Assignor in, to and under the Copyrights and the
registrations thereof, and all proceeds thereof, including, without limitation,
any and all causes of action which may exist by reason of infringement thereof
(the "Collateral"), to secure the payment, performance and observance of the
Guaranteed Obligations (as defined in the Security Agreement);
NOW, THEREFORE, for good and valuable consideration, receipt of which
is hereby acknowledged, the Assignor does hereby assign unto the Assignee and
grants to the Assignee a security interest in the Collateral to secure the
prompt payment, performance and observance of the Guaranteed Obligations.
The Assignor does hereby further acknowledge and affirm that the rights
and remedies of the Assignee with respect to the Collateral are more fully set
forth in the Security Agreement, the terms and provisions of which are hereby
incorporated herein by reference as if fully set forth herein.
IN WITNESS WHEREOF, the Assignor has caused this Assignment to be duly
executed by its officer thereunto duly authorized as of _______________, 199__.
______________________________
By: __________________________
Name: ________________________
Title: _______________________
-00-
000
XXXXX XX XXX XXXX
ss.:
COUNTY OF NEW YORK
On this ____ day of ___________________, 199__, before me personally
came _________________, to me known to be the person who executed the foregoing
instrument, and who, being duly sworn by me, did depose and say that he is the
_________________ of ___________________________, a ___________ corporation, and
that he executed the foregoing instrument in the firm name of
_______________________, and that he had authority to sign the same, and he
acknowledged to me that he executed the same as the act and deed of said firm
for the uses and purposes therein mentioned.
______________________________
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SCHEDULE 1A TO ASSIGNMENT FOR SECURITY
(COPYRIGHTS AND COPYRIGHT APPLICATIONS)
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EXHIBIT E-1
FORM OF BORROWER PLEDGE AGREEMENT
PLEDGE AND SECURITY AGREEMENT dated as of September__, 1997, made by
____________________, a ____________ corporation (the "Pledgor"), in favor of
NATIONSBANC COMMERCIAL CORPORATION, as collateral agent for the Lenders parties
to the Financing Agreement referred to below (in such capacity, the "Collateral
Agent").
WITNESSETH:
WHEREAS, Norton XxXxxxxxxx, Inc. (the "Company"), the Pledgor, [Norton
XxXxxxxxxx of Xxxxxx, Inc., a New York corporation] [Miss Xxxxx, Inc., a
Delaware corporation formerly known as ME Acquisition Corp.] (together with the
Pledgor, each a "Borrower" and collectively, the "Borrowers"), The CIT
Group/Commercial Services, Inc., as administrative agent (the "Administrative
Agent"), the Collateral Agent and the financial institutions from time to time
party thereto (the "Lenders") have entered into a Financing Agreement, dated the
date hereof (such Agreement, as amended or otherwise modified from time to time,
the "Financing Agreement");
WHEREAS, it is a condition precedent to the Lenders making and maintaining
Loans and assisting the Pledgor in obtaining Letters of Credit under the
Financing Agreement that the Pledgor shall have executed and delivered to the
Collateral Agent a pledge and security agreement providing for the pledge to the
Collateral Agent of, and the grant to the Collateral Agent for the benefit of
the Lenders of a security interest in, certain indebtedness from time to time
owing to the Pledgor and certain of the outstanding shares of capital stock from
time to time owned by the Pledgor of each Subsidiary now or hereafter existing
and in which Pledgor has any interest at any time;
WHEREAS, the Pledgor has determined that the execution, delivery and
performance of this Agreement directly benefits, and is in the best interest of
the Pledgor;
NOW, THEREFORE, in consideration of the premises and the agreements herein
and in order to induce the Collateral Agent and the Lenders to enter into the
Financing Agreement with the Pledgor, the Pledgor hereby agrees with the
Collateral Agent as follows:
SECTION 1. Definitions. All terms used in this Agreement which are defined
in the Financing Agreement or in Article 8 or Article 9 of the Uniform
Commercial Code (the "Code") currently in effect in the State of New York and
which are not otherwise defined herein shall have the same meanings herein as
set forth therein.
SECTION 2. Pledge and Grant of Security Interest. As collateral security
for all of the Obligations (as defined in Section 3 hereof), the Pledgor hereby
pledges and collaterally assigns to the Collateral Agent, and grants to the
Collateral Agent for the benefit of the Lenders a continuing security interest
in, the following (the "Pledged Collateral"): -
(a) the indebtedness described in Schedule I hereto and all indebtedness
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173
time to time required to be pledged to the Collateral Agent pursuant to the
terms of the Financing Agreement (the "Pledged Debt"), the promissory notes and
other instruments evidencing the Pledged Debt and all interest, cash,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of the Pledged
Debt;
(b) the shares of stock described in Schedule II hereto (the "Pledged
Shares") issued by the corporations described in such Schedule II (the "Existing
Subsidiaries"), the certificates representing the Pledged Shares, all options
and other rights, contractual or otherwise, in respect thereof and all
dividends, cash, instruments and other property (including but not limited to,
any stock dividend and any distribution in connection with a stock split) from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the Pledged Shares;
(c) the shares of stock at any time and from time to time acquired by the
Pledgor, of any and all Subsidiaries, whether now or hereafter existing, all or
a portion of the stock of which is acquired by the Pledgor at any time (such
Subsidiaries, together with the Existing Subsidiaries, being hereinafter
referred to collectively as the "Pledged Subsidiaries" and individually as a
"Pledged Subsidiary"), the certificates representing such shares, all options
and other rights, contractual or otherwise, in respect thereof and all
dividends, cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such shares;
(d) all additional shares of stock, from time to time acquired by the
Pledgor, of any Pledged Subsidiary, the certificates representing such
additional shares, all options and other rights, contractual or otherwise, in
respect thereof and all dividends, cash, instruments and other property from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of such additional shares; and
(e) all proceeds of any and all of the foregoing;
in each case, whether now owned or hereafter acquired by the Pledgor and
howsoever its interest therein may arise or appear (whether by ownership,
security interest, claim or otherwise).
SECTION 3. Security for Obligations. The security interest created hereby
in the Pledged Collateral constitutes continuing collateral security for all of
the following obligations whether now existing or hereafter incurred (the
"Obligations"):
(a) the prompt payment by the Pledgor, as and when due and payable, of all
amounts from time to time owing by it in respect of the Financing Agreement, the
Notes, its Guaranty and the other Loan Documents, including, without limitation,
principal of and interest on the Loans (including, without limitation, all
interest that accrues after the commencement of any case, proceeding or other
action relating to the bankruptcy, insolvency or reorganization of the Pledgor,
whether or not a claim for post-filing interest is allowed in such proceeding),
all Letter of Credit Obligations and all Ledger Debt and all interest thereon,
all fees, commissions, expense reimbursements, indemnifications and all other
amounts due or to become due under any
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174
Loan Document; and
(b) the due performance and observance by the Pledgor of all of its other
obligations from time to time existing in respect of the Financing Agreement and
the other Loan Documents.
SECTION 4. Delivery of the Pledged Collateral.
(a) All promissory notes currently evidencing the Pledged Debt and all
certificates currently representing the Pledged Shares shall be delivered to the
Collateral Agent on or prior to the execution and delivery of this Agreement.
All other promissory notes, certificates and instruments constituting Pledged
Collateral from time to time or required to be pledged to the Collateral Agent
pursuant to the terms of the Financing Agreement (the "Additional Collateral")
shall be delivered to the Collateral Agent within 10 Business Days of receipt
thereof by or on behalf of Pledgor. All such promissory notes, certificates and
instruments shall be held by or on behalf of the Collateral Agent pursuant
hereto and shall be delivered in suitable form for transfer by delivery or shall
be accompanied by duly executed instruments of transfer or assignment in blank,
all in form and substance reasonably satisfactory to the Collateral Agent.
Within 10 Business Days of the receipt by Pledgor of the Additional Collateral,
a Pledge Amendment, duly executed by the Pledgor, in substantially the form of
Schedule III hereto (a "Pledge Amendment") shall be delivered to the Collateral
Agent, in respect of the Additional Collateral which are to be pledged pursuant
to this Agreement and the Financing Agreement, which Pledge Amendment shall from
and after delivery thereof constitute part of Schedules I and II hereto. The
Pledgor hereby authorizes the Collateral Agent to attach each Pledge Amendment
to this Agreement and agrees that all promissory notes, certificates or
instruments listed on any Pledge Amendment delivered to the Collateral Agent
shall for all purposes hereunder constitute Pledged Collateral and the Pledgor
shall be deemed upon delivery thereof to have made the representations and
warranties set forth in Section 5 with respect to such Additional Collateral.
(b) If the Pledgor shall receive, by virtue of its being or having been an
owner of any Pledged Collateral, any (i) stock certificate (including, without
limitation, any certificate representing a stock dividend or distribution in
connection with any increase or reduction of capital, reclassification, merger,
consolidation, sale of assets, combination of shares, stock split, spinoff or
split-off), promissory note or other instrument, (ii) option or right, whether
as an addition to, substitution for, or in exchange for, any Pledged Collateral,
or otherwise, (iii) dividends payable in cash (except such dividends permitted
to be retained by the Pledgor pursuant to Section 7 hereof) or in securities or
other property or (iv) dividends or other distributions in connection with a
partial or total liquidation or dissolution or in connection with a reduction of
capital, capital surplus or paid-in surplus, the Pledgor shall receive such
stock certificate, promissory note, instrument, option, right, payment or
distribution in trust for the benefit of the Collateral Agent, shall segregate
it from the Pledgor's other property and shall deliver it forthwith to the
Collateral Agent in the exact form received, with any necessary indorsement
and/or appropriate stock powers duly executed in blank, to be held by the
Collateral Agent as Pledged Collateral and as further collateral security for
the Obligations.
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SECTION 5. Representations and Warranties. The Pledgor represents and
warrants as follows:
(a) The Existing Subsidiaries set forth in Schedule II hereto are the
Pledgor's only Subsidiaries existing on the date hereof. The Pledged Shares have
been duly authorized and validly issued, are fully paid and nonassessable and
constitute 100% of the issued shares of capital stock of the Pledged
Subsidiaries as of the date hereof. All other shares of stock constituting
Pledged Collateral will be, when issued, duly authorized and validly issued,
fully paid and nonassessable.
(b) The promissory notes[s] currently evidencing the Pledged Debt have
been, and all other promissory notes from time to time evidencing Pledged Debt,
when executed and delivered, will have been, duly authorized, executed and
delivered by the respective makers thereof, and all such promissory notes are or
will be, as the case may be, legal, valid and binding obligations of such
makers, enforceable against such makers in accordance with their respective
terms, subject as to enforceability to applicable bankruptcy, insolvency,
reorganization and similar laws affecting creditors' rights and to general
principles of equity.
(c) The Pledgor is and will be at all times the legal and beneficial owner
of the Pledged Collateral free and clear of any Lien, security interest, option
or other charge or encumbrance except for the security interest created by this
Agreement and Liens permitted by the Financing Agreement.
(d) The exercise by the Collateral Agent of any of its rights and remedies
hereunder will not contravene law or any material contractual restriction
binding on or affecting the Pledgor or any of its properties and will not result
in or require the creation of any Lien, security interest or other charge or
encumbrance upon or with respect to any of its properties other than pursuant to
this Agreement and the other Loan Documents.
(e) No authorization or approval or other action by, and no notice to or
filing with, any Governmental Authority is required to be obtained or made by
the Pledgor for (i) the due execution, delivery and performance by the Pledgor
of this Agreement, (ii) the grant by the Pledgor, or the perfection, of the
security interest purported to be created hereby in the Pledged Collateral or
(iii) the exercise by the Collateral Agent or the Lenders of any of their rights
and remedies hereunder, except as may be required in connection with any sale of
any Pledged Collateral by laws affecting the offering and sale of securities
generally.
(f) This Agreement creates a valid security interest in favor of the
Collateral Agent in the Pledged Collateral, as security for the Obligations. The
Collateral Agent's having possession of the promissory notes evidencing the
Pledged Debt, the certificates representing the Pledged Shares and all other
certificates, instruments and cash constituting Pledged Collateral from time to
time results in the perfection of such security interest. Such security interest
is, or in the case of Pledged Collateral in which the Pledgor obtains rights
after the date hereof, will be, a perfected, first priority security interest.
All action necessary or desirable to perfect and protect such security interest
has been duly taken, except for the Collateral Agent's having possession of
certificates, instruments and cash constituting Pledged Collateral after the
date hereof.
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SECTION 6. Covenants as to the Pledged Collateral. So long as any
Obligations shall remain outstanding, the Pledgor will, unless the Collateral
Agent shall otherwise consent in writing:
(a) keep adequate records concerning the Pledged Collateral and permit the
Collateral Agent or any agents or representatives thereof at any time or from
time to time to examine and make copies of and abstracts from such records
pursuant to the terms of Section 7.01(f) of the Financing Agreement;
(b) at its expense, upon the request of the Collateral Agent, promptly
deliver to the Collateral Agent a copy of each material notice or other
communication received by it in respect of the Pledged Collateral;
(c) at its expense, defend the Collateral Agent's right, title and
security interest in and to the Pledged Collateral against the claims of any
Person;
(d) at its expense, at any time and from time to time, promptly execute
and deliver all further instruments and documents and take all further action
that may be necessary or that the Collateral Agent may reasonably request in
order to (i) perfect and protect the security interest purported to be created
hereby, (ii) enable the Collateral Agent to exercise and enforce its rights and
remedies hereunder in respect of the Pledged Collateral or (iii) otherwise
effect the purposes of this Agreement, including, without limitation, delivering
to the Collateral Agent, after the occurrence and during the continuation of an
Event of Default, irrevocable proxies in respect of the Pledged Collateral;
(e) not sell, assign (by operation of law or otherwise), exchange or
otherwise dispose of any Pledged Collateral or any interest therein (other than
the Pledged Shares issued by Norty's, Inc.) except as permitted by Section
7(a)(i) hereof;
(f) not create or suffer to exist any Lien, security interest or other
charge or encumbrance upon or with respect to any Pledged Collateral except for
the security interest created hereby or pursuant to any other Loan Document and
Liens permitted by the Financing Agreement;
(g) not make or consent to any amendment or other modification or waiver
with respect to any Pledged Collateral or enter into any agreement or permit to
exist any restriction with respect to any Pledged Collateral other than pursuant
to the Loan Documents and applicable securities laws;
(h) not permit the issuance of (i) any additional shares of any class of
capital stock of any Pledged Subsidiary, (ii) any securities convertible
voluntarily by the holder thereof or automatically upon the occurrence or
non-occurrence of any event or condition into, or exchangeable for, any such
shares of capital stock or (iii) any warrants, options, contracts or other
commitments entitling any Person to purchase or otherwise acquire any such
shares of capital stock; and
(i) not take or fail to take any action which would in any manner impair
the enforceability of the Collateral Agent's security interest in any Pledged
Collateral.
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SECTION 7. Voting Rights, Dividends, Etc. in Respect of the Pledged
Collateral.
(a) So long as no Event of Default shall have occurred and be continuing:
(i) the Pledgor may exercise any and all voting and other consensual
rights pertaining to any Pledged Collateral for any purpose not inconsistent
with the terms of this Agreement, the Financing Agreement or the other Loan
Documents; provided, however, that (A) the Pledgor will not exercise or refrain
from exercising any such right, as the case may be, if the Collateral Agent
gives it notice that, in the Collateral Agent's reasonable judgment, such action
would have a Material Adverse Effect and (B) the Pledgor will give the
Collateral Agent at least 5 Business Days' notice of the manner in which it
intends to exercise, or the reasons for refraining from exercising, any such
right which is reasonably likely to have a Material Adverse Effect;
(ii) the Pledgor may receive and retain any and all dividends or
interest paid in respect of the Pledged Collateral; provided, however, that any
and all (A) dividends and interest paid or payable other than in cash in respect
of, and instruments and other property received, receivable or otherwise
distributed in respect of or in exchange for, any Pledged Collateral, (B)
dividends and other distributions paid or payable in cash in respect of any
Pledged Collateral in connection with a partial or total liquidation or
dissolution or in connection with a reduction of capital, capital surplus or
paid-in surplus, and (C) cash paid, payable or otherwise distributed in
redemption of, or in exchange for, any Pledged Collateral, shall be, and shall
forthwith be delivered to the Collateral Agent to hold as, Pledged Collateral
and shall, if received by the Pledgor, be received in trust for the benefit of
the Collateral Agent, shall be segregated from the other property or funds of
the Pledgor, and shall be forthwith delivered to the Collateral Agent in the
exact form received with any necessary indorsement and/or appropriate stock
powers duly executed in blank, to be held by the Collateral Agent as Pledged
Collateral and as further collateral security for the Obligations; and
(iii) the Collateral Agent will execute and deliver (or cause to be
executed and delivered) to the Pledgor all such proxies and other instruments as
the Pledgor may reasonably request for the purpose of enabling the Pledgor to
exercise the voting and other rights which it is entitled to exercise pursuant
to paragraph (i) of this Section 7(a) and to receive the dividends which it is
authorized to receive and retain pursuant to paragraph (ii) of this Section
7(a).
(b) Upon the occurrence and during the continuance of an Event of Default
and to the extent not inconsistent with the Financing Agreement:
(i) all rights of the Pledgor to exercise the voting and other
consensual rights which it would otherwise be entitled to exercise pursuant to
paragraph (i) of subsection (a) of this Section 7, and to receive the dividends
and interest payments which it would otherwise be authorized to receive and
retain pursuant to paragraph (ii) of subsection (a) of this Section 7, shall
cease, and all such rights shall thereupon become vested in the Collateral Agent
which shall thereupon have the sole right to exercise such voting and other
consensual rights and to receive and hold as Pledged Collateral such dividends
and interest payments;
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(ii) the Collateral Agent is authorized to notify each debtor with
respect to the Pledged Debt to make payment directly to the Collateral Agent and
may collect any and all monies due or to become due to the Pledgor in respect of
the Pledged Debt and the Pledgor hereby authorizes each such debtor to make such
payment directly to the Collateral Agent without any duty of inquiry;
(iii) without limiting the generality of the foregoing, the
Collateral Agent may at its option exercise any and all rights of conversion,
exchange, subscription or any other rights, privileges or options pertaining to
any of the Pledged Collateral as if it were the absolute owner thereof,
including, without limitation, the right to exchange, in its discretion, any and
all of the Pledged Collateral upon the merger, consolidation, reorganization,
recapitalization or other adjustment of any Pledged Subsidiary, or upon the
exercise by any Pledged Subsidiary of any right, privilege or option pertaining
to any Pledged Collateral, and, in connection therewith, to deposit and deliver
any and all of the Pledged Collateral with any committee, depository, transfer
agent, registrar or other designated agent upon such terms and conditions as it
may determine; and
(iv) all dividends and interest payments which are received by the
Pledgor contrary to the provisions of paragraph (i) of this Section 7(b) shall
be received in trust for the benefit of the Collateral Agent, shall be
segregated from other funds of the Pledgor, and shall be forthwith paid over to
the Collateral Agent as Pledged Collateral in the exact form received with any
necessary indorsement and/or appropriate stock powers duly executed in blank, to
be held by the Collateral Agent as Pledged Collateral and as further collateral
security for the Obligations.
SECTION 8. Additional Provisions Concerning the Pledged Collateral.
(a) The Pledgor hereby authorizes the Collateral Agent to file, without
the signature of the Pledgor where permitted by law, one or more financing or
continuation statements, and amendments thereto, relating to the Pledged
Collateral.
(b) The Pledgor hereby irrevocably appoints the Collateral Agent the
Pledgor's attorney-in-fact and proxy, with full authority in the place and stead
of the Pledgor and in the name of the Pledgor or otherwise, from time to time in
the Collateral Agent's discretion exercised reasonably and during the
continuance of an Event of Default, to take any action and to execute any
instrument which the Collateral Agent may deem necessary or reasonably advisable
to accomplish the purposes of this Agreement (subject to the rights of the
Pledgor under Section 7(a) hereof), including, without limitation, to receive,
indorse and collect all instruments made payable to the Pledgor representing any
dividend, interest payment or other distribution in respect of any Pledged
Collateral and to give full discharge for the same.
(c) If the Pledgor fails to perform any agreement or obligation contained
herein, the Collateral Agent itself may perform, or cause performance of, such
agreement or obligation, and the expenses of the Collateral Agent incurred in
connection therewith shall be payable by the Pledgor pursuant to Section 10
hereof.
(d) Other than the exercise of reasonable care to assure the safe custody
of the
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Pledged Collateral while held hereunder, the Collateral Agent shall have no duty
or liability to preserve rights pertaining thereto and shall be relieved of all
responsibility for the Pledged Collateral upon surrendering it or tendering
surrender of it to the Pledgor. The Collateral Agent shall be deemed to have
exercised reasonable care in the custody and preservation of the Pledged
Collateral in its possession if the Pledged Collateral is accorded treatment
substantially equal to that which the Collateral Agent accords its own property,
it being understood that the Collateral Agent shall not have responsibility for
(i) ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relating to any Pledged Collateral, whether
or not the Collateral Agent has or is deemed to have knowledge of such matters,
or (ii) taking any necessary steps to preserve rights against any parties with
respect to any Pledged Collateral.
(e) The Collateral Agent may at any time after the occurrence and during
the continuation of an Event of Default and to the extent not inconsistent with
the Financing Agreement in its discretion (i) without notice to the Pledgor,
transfer or register in the name of the Collateral Agent or any of its nominees
any or all of the Pledged Collateral, subject only to the revocable rights of
the Pledgor under Section 7(a) hereof, and (ii) exchange certificates or
instruments constituting Pledged Collateral for certificates or instruments of
smaller or larger denominations.
SECTION 9. Remedies Upon Default. If any Event of Default shall have
occurred and be continuing:
(a) The Collateral Agent may exercise in respect of the Pledged
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all of the rights and remedies of a secured party on
default under the Code then in effect in the State of New York; and without
limiting the generality of the foregoing and without notice except as specified
below, sell the Pledged Collateral or any part thereof in one or more parcels at
public or private sale, at any exchange or broker's board or elsewhere, at such
price or prices and on such other terms as the Collateral Agent may deem
commercially reasonable. The Pledgor agrees that, to the extent notice of sale
shall be required by law, at least 10 Business Days' notice to the Pledgor of
the time and place of any public sale or the time after which any private sale
is to be made shall constitute reasonable notification. The Collateral Agent
shall not be obligated to make any sale of Pledged Collateral regardless of
notice of sale having been given. The Collateral Agent may adjourn any public or
private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time and
place to which it was so adjourned.
(b) The Pledgor recognizes that it is impracticable to effect a public
sale of all or any part of the Pledged Shares or any other securities
constituting Pledged Collateral and that the Collateral Agent may, therefore,
determine to make one or more private sales of any such securities to a
restricted group of purchasers who will be obligated to agree, among other
things, to acquire such securities for their own account, for investment and not
with a view to the distribution or resale thereof. The Pledgor acknowledges that
any such private sale may be at prices and on terms less favorable to the seller
than the prices and other terms which might have been obtained at a public sale
and, notwithstanding the foregoing, agrees that such private sales shall be
deemed to have been made in a commercially reasonable manner and that the
Collateral
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Agent shall have no obligation to delay sale of any such securities for the
period of time necessary to permit the issuer of such securities to register
such securities for public sale under the Securities Act. The Pledgor further
acknowledges and agrees that any offer to sell such securities which has been
(i) publicly advertised on a bona fide basis in a newspaper or other publication
of general circulation in the financial community of New York, New York (to the
extent that such an offer may be so advertised without prior registration under
the Securities Act) or (ii) made privately in the manner described above to not
less than fifteen bona fide offerees shall be deemed to involve a "public sale"
for the purposes of Section 9-504(3) of the Code (or any successor or similar,
applicable statutory provision) as then in effect in the State of New York,
notwithstanding that such sale may not constitute a "public offering" under the
Securities Act, and that the Collateral Agent may, in such event, bid for the
purchase of such securities.
(c) Any cash held by the Collateral Agent as Pledged Collateral and all
cash proceeds received by the Collateral Agent in respect of any sale of,
collection from, or other realization upon, all or any part of the Pledged
Collateral may, in the discretion of the Collateral Agent, be held by the
Collateral Agent as collateral for, and/or then or at any time thereafter
applied (after payment of any amounts payable to the Collateral Agent pursuant
to Section 10 hereof) in whole or in part by the Collateral Agent against, all
or any part of the Obligations in such order as the Collateral Agent shall elect
consistent with the provisions of the Financing Agreement. Any surplus of such
cash or cash proceeds held by the Collateral Agent and remaining after payment
in full of all of the Obligations shall be paid over to the Pledgor or to such
person as may be lawfully entitled to receive such surplus.
(d) In the event that the proceeds of any such sale, collection or
realization are insufficient to pay all amounts to which the Collateral Agent or
any Lender is legally entitled, the Pledgor shall be liable for the deficiency,
together with interest thereon at the highest rate specified in the Financing
Agreement for interest on overdue principal thereof or such other rate as shall
be fixed by applicable law, together with the costs of collection and the
reasonable fees of any attorneys employed by the Collateral Agent and any Lender
to collect such deficiency.
SECTION 10. Indemnity and Expenses.
(a) The Pledgor agrees to indemnify the Collateral Agent from and against
any and all claims, losses and liabilities growing out of or resulting from this
Agreement (including, without limitation, enforcement of this Agreement), except
claims, losses or liabilities resulting solely and directly from the Collateral
Agent's gross negligence or willful misconduct as determined by a final judgment
of a court of competent jurisdiction.
(b) The Pledgor will upon demand pay to the Collateral Agent the amount of
any and all reasonable costs and expenses, including the reasonable fees and
disbursements of the Collateral Agent's counsel and of any experts and agents,
which the Collateral Agent may incur in connection with (i) the administration
of this Agreement, (ii) the custody, preservation, use or operation of, or the
sale of, collection from, or other realization upon, any Pledged Collateral,
(iii) the exercise or enforcement of any of the rights of the Collateral Agent
or any of the Lenders hereunder, or (iv) the failure by the Pledgor to perform
or observe any of the provisions hereof.
SECTION 11. Notices, Etc. All notices and other communications provided
for
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hereunder shall be in writing and shall be mailed (by certified mail, postage
prepaid and return receipt requested), telecopied or delivered, if to the
Pledgor, to it at its address specified in the Financing Agreement, and if to
the Collateral Agent, to it at its address specified in the Financing Agreement,
or as to either such Person at such other address as shall be designated by such
Person in a written notice to such other Person complying as to delivery with
the terms of this Section 11. All such notices and other communications shall be
effective (i) if sent by certified mail, return receipt requested, when received
or 3 Business Days after mailing, whichever first occurs, (ii) if telecopied,
when transmitted and confirmation is received, provided same is on a Business
Day and, if not, on the next Business Day, or (iii) if delivered, upon delivery,
provided same is on a Business Day and, if not, on the next Business Day.
SECTION 12. Consent to Jurisdiction, Etc.
(a) Any legal action or proceeding with respect to this Agreement or any
document related thereto may be brought in the courts of the State of New York
or of the United States of America for the Southern District of New York, and,
by execution and delivery of this Agreement, the Pledgor hereby accepts
unconditionally the jurisdiction of the aforesaid courts. The Pledgor hereby
irrevocably waives any objection, including without limitation, any objection to
the laying of venue or based on the grounds of forum non conveniens, which the
Pledgor may now or hereafter have to the bringing of any such action or
proceeding in such respective jurisdictions.
(b) The Pledgor irrevocably consents to the service of process of any of
the aforementioned courts in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to the Pledgor
at its address referred to in Section 11 hereof.
(c) Nothing contained in this Section 12 shall affect the right of the
Collateral Agent to serve legal process in any other manner permitted by law or
to commence legal proceedings or otherwise proceed against the Pledgor in any
other jurisdiction.
SECTION 13. Waiver of Jury Trial. EACH OF THE PLEDGOR AND THE COLLATERAL
AGENT (BY ACCEPTING THIS AGREEMENT) WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT OR ARISING FROM ANY OTHER LOAN DOCUMENT AND AGREES THAT
ANY SUCH ACTION, PROCEEDING OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND
NOT BEFORE A JURY.
SECTION 14. Miscellaneous.
(a) No amendment of any provision of this Agreement shall be effective
unless it is in writing and signed by the Pledgor and the Collateral Agent, and
no waiver of any provision of this Agreement, and no consent to any departure by
the Pledgor therefrom, shall be effective unless it is in writing and signed by
the Collateral Agent, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
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(b) No failure on the part of the Collateral Agent to exercise, and no
delay in exercising, any right hereunder or under any other document shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right preclude any other or further exercise thereof or the exercise of any
other right. The rights and remedies of the Collateral Agent provided herein and
in the other Loan Documents are cumulative and are in addition to, and not
exclusive of, any rights or remedies provided by law. The rights of the
Collateral Agent under any document against any party thereto are not
conditional or contingent on any attempt by the Collateral Agent to exercise any
of its rights under any other document against such party or against any other
person.
(c) Any provision of this Agreement which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
portions hereof or thereof or affecting the validity or enforceability of such
provision in any other jurisdiction.
(d) This Agreement shall create a continuing security interest in the
Pledged Collateral and shall (i) remain in full force and effect until the
payment in full or release of the Obligations after the Total Commitment has
been terminated and all Letters of Credit have been canceled or cash
collateralized and (ii) be binding on the Pledgor and by its acceptance hereof,
the Collateral Agent, and their respective successors and assigns and shall
inure, together with all rights and remedies of the Collateral Agent and the
Lenders hereunder, to the benefit of the Pledgor, the Collateral Agent and the
Lenders and their respective successors, transferees and assigns. Without
limiting the generality of clause (ii) of the immediately preceding sentence,
the Collateral Agent may assign or otherwise transfer its rights and obligations
under this Agreement to any other Person pursuant to the terms of the Financing
Agreement, and such other Person shall thereupon become vested with all of the
benefits in respect thereof granted to the Collateral Agent herein or otherwise.
Upon any such assignment or transfer, all references in this Agreement to the
Collateral Agent shall mean the assignee of the Collateral Agent. None of the
rights or obligations of the Pledgor hereunder may be assigned or otherwise
transferred without the prior written consent of the Collateral Agent.
(e) Upon the satisfaction in full of the Obligations after the Total
Commitment has been terminated and all Letters of Credit have been canceled or
cash collateralized, (i) this Agreement and the security interest created hereby
shall terminate and all rights to the Pledged Collateral shall revert to the
Pledgor, and (ii) the Collateral Agent will, upon the Pledgor's request and at
the Pledgor's expense promptly, (A) return to the Pledgor such of the Pledged
Collateral as shall not have been sold or otherwise disposed of or applied
pursuant to the terms hereof and (B) execute and deliver to the Pledgor, without
recourse, representation or warranty, such documents as the Pledgor shall
reasonably request to evidence such termination.
(f) This Agreement shall be governed by and construed in accordance with
the law of the State of New York, except as required by mandatory provisions of
law and except to the extent that the validity and perfection or the perfection
and the effect of perfection or non-perfection of the security interest created
hereby, or remedies hereunder, in respect of any particular Pledged Collateral
are governed by the law of a jurisdiction other than the State of New York.
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IN WITNESS WHEREOF, the Pledgor has caused this Agreement to be executed
and delivered by its officer thereunto duly authorized, as of the date first
above written.
[PLEDGOR]
By:.........................................
Name:
Title:
ACCEPTED AND AGREED:
NATIONSBANC COMMERCIAL CORPORATION,
as Collateral Agent
By:...........................
Name:.........................
Title:........................
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SCHEDULE I TO PLEDGE AND SECURITY AGREEMENT
Pledged Debt
Principal Amount
Name of Maker Description Outstanding as of
------------- ----------- -----------------
185
SCHEDULE II TO PLEDGE AND SECURITY AGREEMENT
Pledged Shares
Certificate
Name of Issuer Number of Shares Class No.(s)
------------- ---------------- ----- ------
186
SCHEDULE III
TO
PLEDGE AND SECURITY AGREEMENT
PLEDGE AMENDMENT
This Pledge Amendment, dated ________________________________, is
delivered pursuant to Section 4 of the Pledge Agreement referred to below. The
undersigned hereby agrees that this Pledge Amendment may be attached to the
Pledge Agreement, dated September __, 1997, as it may heretofore have been or
hereafter may be amended or otherwise modified or supplemented from time to time
and that the promissory notes or shares listed on this Pledge Amendment shall be
and become part of the Pledged Collateral referred to in said Pledge Agreement
and shall secure all of the Obligations referred to in said Pledge Agreement.
Pledged Debt
Principal Amount
Name of Maker Description Outstanding as of
------------- ----------- -----------------
Pledged Shares
--------------
Name of Issuer Number of Shares Class Certificate No(s)
-------------- ---------------- ----- -----------------
PLEDGOR
By:................................
Name:
Title:
187
EXHIBIT E-2
FORM OF PARENT PLEDGE AGREEMENT
PLEDGE AND SECURITY AGREEMENT dated as of September __ 1997, made by
NORTON XXXXXXXXXX, INC., a Delaware corporation (the "Pledgor"), in favor of
NATIONSBANC COMMERCIAL CORPORATION, as collateral agent for the Lenders parties
to the Financing Agreement referred to below (in such capacity, the "Collateral
Agent").
W I T N E S S E T H:
WHEREAS, the Pledgor, Norton XxXxxxxxxx of Xxxxxx, Inc., a New York
corporation ("Squire"), Miss Xxxxx, Inc., a Delaware corporation formerly known
as ME Acquisition Corp. ("MISS XXXXX" and, together with Squire, each a
"Borrower" and collectively, the "Borrowers"), The CIT Group/Commercial
Services, Inc., as administrative agent (the "Administrative Agent"), the
Collateral Agent and the financial institutions from time to time party thereto
(the "Lenders") have entered into a Financing Agreement, dated the date hereof
(such Agreement, as amended or otherwise modified from time to time, the
"Financing Agreement");
WHEREAS, pursuant to Article XI of the Financing Agreement, the Pledgor
has guaranteed all of the obligations of the Borrowers to the Administrative
Agent, the Collateral Agent and the Lenders under the Financing Agreement;
WHEREAS, as collateral security for the obligations of the Pledgor to the
Administrative Agent, the Collateral Agent and the Lenders under Article XI of
the Financing Agreement, the Pledgor has agreed to execute and deliver to the
Collateral Agent a pledge and security agreement providing for the pledge to the
Collateral Agent of and the grant to the Collateral Agent for the benefit of the
Lenders of a security interest in, certain indebtedness from time to time owing
to the Pledgor and certain of the outstanding shares of capital stock from time
to time owned by the Pledgor of each Subsidiary now or hereafter existing and in
which Pledgor has any interest at any time;
WHEREAS, the Pledgor has determined that the execution, delivery and
performance of this Agreement directly benefits, and is in the best interest of
the Pledgor;
NOW, THEREFORE, in consideration of the premises and the agreements herein
and in order to induce the Collateral Agent and the Lenders to enter into the
Financing Agreement with the Pledgor, the Pledgor hereby agrees with the
Collateral Agent as follows:
SECTION 1. Definitions. All terms used in this Agreement which are defined
in the Financing Agreement or in Article 8 or Article 9 of the Uniform
Commercial Code (the "Code") currently in effect in the State of New York and
which are not otherwise defined herein shall have the same meanings herein as
set forth therein.
SECTION 2. Pledge and Grant of Security Interest. As collateral security
for all
188
of the Obligations (as defined in Section 3 hereof), the Pledgor hereby pledges
and collaterally assigns to the Collateral Agent, and grants to the Collateral
Agent for the benefit of the Lenders a continuing security interest in, the
following (the "Pledged Collateral"):
(a) the indebtedness described in Schedule I hereto and all indebtedness
from time to time required to be pledged to the Collateral Agent pursuant to the
terms of the Financing Agreement (the "Pledged Debt"), the promissory notes and
other instruments evidencing the Pledged Debt and all interest, cash,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of the Pledged
Debt;
(b) the shares of stock described in Schedule II hereto (the "Pledged
Shares") issued by the corporations described in such Schedule II (the "Existing
Subsidiaries"), the certificates representing the Pledged Shares, all options
and other rights, contractual or otherwise, in respect thereof and all
dividends, cash, instruments and other property (including but not limited to,
any stock dividend and any distribution in connection with a stock split) from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the Pledged Shares;
(c) the shares of stock at any time and from time to time acquired by the
Pledgor, of any and all Subsidiaries, whether now or hereafter existing, all or
a portion of the stock of which is acquired by the Pledgor at any time (such
Subsidiaries, together with the Existing Subsidiaries, being hereinafter
referred to collectively as the "Pledged Subsidiaries" and individually as a
"Pledged Subsidiary"), the certificates representing such shares, all options
and other rights, contractual or otherwise, in respect thereof and all
dividends, cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such shares;
(d) all additional shares of stock, from time to time acquired by the
Pledgor, of any Pledged Subsidiary, the certificates representing such
additional shares, all options and other rights, contractual or otherwise, in
respect thereof and all dividends, cash, instruments and other property from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of such additional shares; and
(e) all proceeds of any and all of the foregoing;
in each case, whether now owned or hereafter acquired by the Pledgor and
howsoever its interest therein may arise or appear (whether by ownership,
security interest, claim or otherwise).
SECTION 3. Security for Guaranteed Obligations. The security interest
created hereby in the Pledged Collateral constitutes continuing collateral
security for all of the following obligations whether now existing or hereafter
incurred (the "Guaranteed Obligations"):
(a) the prompt payment by the Pledgor, as and when due and payable, of all
amounts from time to time owing by it in respect of its guaranty made pursuant
to Article XI of the Financing Agreement, including, without limitation,
principal of and interest on the Loans (including, without limitation, all
interest that accrues after the commencement of any case,
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proceeding or other action relating to the bankruptcy, insolvency or
reorganization of any Borrower, whether or not a claim for post-filing interest
is allowed in such proceeding), all Letter of Credit Obligations and Ledger Debt
and all interest thereon, all fees, commissions, expense reimbursements,
indemnifications and all other amounts due or to become due under any Loan
Document to which it is a party; and
(b) the due performance and observance by the Pledgor of all of its other
obligations from time to time existing in respect of Article XI of the Financing
Agreement and the other Loan Documents to which it is a party.
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SECTION 4. Delivery of the Pledged Collateral.
(a) All promissory notes currently evidencing the Pledged Debt and all
certificates currently representing the Pledged Shares shall be delivered to the
Collateral Agent on or prior to the execution and delivery of this Agreement.
All other promissory notes, certificates and instruments constituting Pledged
Collateral from time to time or required to be pledged to the Collateral Agent
pursuant to the terms of the Financing Agreement (the "Additional Collateral")
shall be delivered to the Collateral Agent within 10 Business Days of receipt
thereof by or on behalf of Pledgor. All such promissory notes, certificates and
instruments shall be held by or on behalf of the Collateral Agent pursuant
hereto and shall be delivered in suitable form for transfer by delivery or shall
be accompanied by duly executed instruments of transfer or assignment in blank,
all in form and substance reasonably satisfactory to the Collateral Agent.
Within 10 Business Days of the receipt by Pledgor of the Additional Collateral,
a Pledge Amendment, duly executed by the Pledgor, in substantially the form of
Schedule III hereto (a "Pledge Amendment") shall be delivered to the Collateral
Agent, in respect of the Additional Collateral which are to be pledged pursuant
to this Agreement and the Financing Agreement, which Pledge Amendment shall from
and after delivery thereof constitute part of Schedules I and II hereto. The
Pledgor hereby authorizes the Collateral Agent to attach each Pledge Amendment
to this Agreement and agrees that all promissory notes, certificates or
instruments listed on any Pledge Amendment delivered to the Collateral Agent
shall for all purposes hereunder constitute Pledged Collateral and the Pledgor
shall be deemed upon delivery thereof to have made the representations and
warranties set forth in Section 5 with respect to such Additional Collateral.
(b) If the Pledgor shall receive, by virtue of its being or having been
an owner of any Pledged Collateral, any (i) stock certificate (including,
without limitation, any certificate representing a stock dividend or
distribution in connection with any increase or reduction of capital,
reclassification, merger, consolidation, sale of assets, combination of shares,
stock split, spinoff or split-off), promissory note or other instrument, (ii)
option or right, whether as an addition to, substitution for, or in exchange
for, any Pledged Collateral, or otherwise, (iii) dividends payable in cash
(except such dividends permitted to be retained by the Pledgor pursuant to
Section 7 hereof) or in securities or other property or (iv) dividends or other
distributions in connection with a partial or total liquidation or dissolution
or in connection with a reduction of capital, capital surplus or paid-in
surplus, the Pledgor shall receive such stock certificate, promissory note,
instrument, option, right, payment or distribution in trust for the benefit of
the Collateral Agent, shall segregate it from the Pledgor's other property and
shall deliver it forthwith to the Collateral Agent in the exact form received,
with any necessary indorsement and/or appropriate stock powers duly executed in
blank, to be held by the Collateral Agent as Pledged Collateral and as further
collateral security for the Guaranteed Obligations.
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SECTION 5. Representations and Warranties. The Pledgor represents and
warrants as follows:
(a) The Existing Subsidiaries set forth in Schedule II hereto are the
Pledgor's only directly-owned Subsidiaries existing on the date hereof. The
Pledged Shares have been duly authorized and validly issued, are fully paid and
nonassessable and constitute 100% of the issued shares of capital stock of the
Pledged Subsidiaries as of the date hereof. All other shares of stock
constituting Pledged Collateral will be, when issued, duly authorized and
validly issued, fully paid and nonassessable.
(b) The promissory notes[s] currently evidencing the Pledged Debt have
been, and all other promissory notes from time to time evidencing Pledged Debt,
when executed and delivered, will have been, duly authorized, executed and
delivered by the respective makers thereof, and all such promissory notes are or
will be, as the case may be, legal, valid and binding obligations of such
makers, enforceable against such makers in accordance with their respective
terms, subject as to enforceability to applicable bankruptcy, insolvency,
reorganization and similar laws affecting creditors' rights and to general
principles of equity.
(c) The Pledgor is and will be at all times the legal and beneficial
owner of the Pledged Collateral free and clear of any Lien, security interest,
option or other charge or encumbrance except for the security interest created
by this Agreement and Liens permitted by the Financing Agreement.
(d) The exercise by the Collateral Agent of any of its rights and
remedies hereunder will not contravene law or any material contractual
restriction binding on or affecting the Pledgor or any of its properties and
will not result in or require the creation of any Lien, security interest or
other charge or encumbrance upon or with respect to any of its properties other
than pursuant to this Agreement and the other Loan Documents.
(e) No authorization or approval or other action by, and no notice to
or filing with, any Governmental Authority is required to be obtained or made by
the Pledgor for (i) the due execution, delivery and performance by the Pledgor
of this Agreement, (ii) the grant by the Pledgor, or the perfection, of the
security interest purported to be created hereby in the Pledged Collateral or
(iii) the exercise by the Collateral Agent or the Lenders of any of their rights
and remedies hereunder, except as may be required in connection with any sale of
any Pledged Collateral by laws affecting the offering and sale of securities
generally.
(f) This Agreement creates a valid security interest in favor of the
Collateral Agent in the Pledged Collateral, as security for the Obligations. The
Collateral Agent's having possession of the promissory notes evidencing the
Pledged Debt, the certificates representing the Pledged Shares and all other
certificates, instruments and cash constituting Pledged Collateral from time to
time results in the perfection of such security interest. Such security interest
is, or in the case of Pledged Collateral in which the Pledgor obtains rights
after the date hereof, will be, a perfected, first priority security interest.
All action necessary or desirable to perfect and protect such security interest
has been duly taken, except for the Collateral Agent's having possession of
certificates, instruments and cash constituting Pledged Collateral after the
date hereof.
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SECTION 6. Covenants as to the Pledged Collateral. So long as any
Guaranteed Obligations shall remain outstanding, the Pledgor will, unless the
Collateral Agent shall otherwise consent in writing:
(a) keep adequate records concerning the Pledged Collateral and permit
the Collateral Agent or any agents or representatives thereof at any time or
from time to time to examine and make copies of and abstracts from such records
pursuant to the terms of Section 7.01(f) of the Financing Agreement;
(b) at its expense, upon the request of the Collateral Agent, promptly
deliver to the Collateral Agent a copy of each material notice or other
communication received by it in respect of the Pledged Collateral;
(c) at its expense, defend the Collateral Agent's right, title and
security interest in and to the Pledged Collateral against the claims of any
Person;
(d) at its expense, at any time and from time to time, promptly execute
and deliver all further instruments and documents and take all further action
that may be necessary or that the Collateral Agent may reasonably request in
order to (i) perfect and protect the security interest purported to be created
hereby, (ii) enable the Collateral Agent to exercise and enforce its rights and
remedies hereunder in respect of the Pledged Collateral or (iii) otherwise
effect the purposes of this Agreement, including, without limitation, delivering
to the Collateral Agent, after the occurrence and during the continuation of an
Event of Default, irrevocable proxies in respect of the Pledged Collateral;
(e) not sell, assign (by operation of law or otherwise), exchange or
otherwise dispose of any Pledged Collateral or any interest therein (other than
the Pledged Shares issued by Norty's, Inc.) except as permitted by Section
7(a)(i) hereof;
(f) not create or suffer to exist any Lien, security interest or other
charge or encumbrance upon or with respect to any Pledged Collateral except for
the security interest created hereby or pursuant to any other Loan Document and
Liens permitted by the Financing Agreement;
(g) not make or consent to any amendment or other modification or
waiver with respect to any Pledged Collateral or enter into any agreement or
permit to exist any restriction with respect to any Pledged Collateral other
than pursuant to the Loan Documents and applicable securities laws;
(h) not permit the issuance of (i) any additional shares of any class
of capital stock of any Pledged Subsidiary, (ii) any securities convertible
voluntarily by the holder thereof or automatically upon the occurrence or
non-occurrence of any event or condition into, or exchangeable for, any such
shares of capital stock or (iii) any warrants, options, contracts or other
commitments entitling any Person to purchase or otherwise acquire any such
shares of capital stock; and
(i) not take or fail to take any action which would in any manner
impair the enforceability of the Collateral Agent's security interest in any
Pledged Collateral.
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SECTION 7. Voting Rights, Dividends, Etc. in Respect of the Pledged
Collateral.
(a) So long as no Event of Default shall have occurred and be
continuing:
(i) the Pledgor may exercise any and all voting and other
consensual rights pertaining to any Pledged Collateral for any purpose not
inconsistent with the terms of this Agreement, the Financing Agreement or the
other Loan Documents; provided, however, that (A) the Pledgor will not exercise
or refrain from exercising any such right, as the case may be, if the Collateral
Agent gives it notice that, in the Collateral Agent's reasonable judgment, such
action would have a Material Adverse Effect and (B) the Pledgor will give the
Collateral Agent at least 5 Business Days' notice of the manner in which it
intends to exercise, or the reasons for refraining from exercising, any such
right which is reasonably likely to have a Material Adverse Effect;
(ii) the Pledgor may receive and retain any and all dividends
or interest paid in respect of the Pledged Collateral; provided, however, that
any and all (A) dividends and interest paid or payable other than in cash in
respect of, and instruments and other property received, receivable or otherwise
distributed in respect of or in exchange for, any Pledged Collateral, (B)
dividends and other distributions paid or payable in cash in respect of any
Pledged Collateral in connection with a partial or total liquidation or
dissolution or in connection with a reduction of capital, capital surplus or
paid-in surplus, and (C) cash paid, payable or otherwise distributed in
redemption of, or in exchange for, any Pledged Collateral, shall be, and shall
forthwith be delivered to the Collateral Agent to hold as, Pledged Collateral
and shall, if received by the Pledgor, be received in trust for the benefit of
the Collateral Agent, shall be segregated from the other property or funds of
the Pledgor, and shall be forthwith delivered to the Collateral Agent in the
exact form received with any necessary indorsement and/or appropriate stock
powers duly executed in blank, to be held by the Collateral Agent as Pledged
Collateral and as further collateral security for the Guaranteed Obligations;
and
(iii) the Collateral Agent will execute and deliver (or cause
to be executed and delivered) to the Pledgor all such proxies and other
instruments as the Pledgor may reasonably request for the purpose of enabling
the Pledgor to exercise the voting and other rights which it is entitled to
exercise pursuant to paragraph (i) of this Section 7(a) and to receive the
dividends which it is authorized to receive and retain pursuant to paragraph
(ii) of this Section 7(a).
(b) Upon the occurrence and during the continuance of an Event of
Default and to the extent not inconsistent with the Financing Agreement:
(i) all rights of the Pledgor to exercise the voting and other
consensual rights which it would otherwise be entitled to exercise pursuant to
paragraph (i) of subsection (a) of this Section 7, and to receive the dividends
and interest payments which it would otherwise be authorized to receive and
retain pursuant to paragraph (ii) of subsection (a) of this Section 7, shall
cease, and all such rights shall thereupon become vested in the Collateral Agent
which shall thereupon have the sole right to exercise such voting and other
consensual rights and to receive and hold as Pledged Collateral such dividends
and interest payments;
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(ii) the Collateral Agent is authorized to notify each debtor
with respect to the Pledged Debt to make payment directly to the Collateral
Agent and may collect any and all monies due or to become due to the Pledgor in
respect of the Pledged Debt and the Pledgor hereby authorizes each such debtor
to make such payment directly to the Collateral Agent without any duty of
inquiry;
(iii) without limiting the generality of the foregoing, the
Collateral Agent may at its option exercise any and all rights of conversion,
exchange, subscription or any other rights, privileges or options pertaining to
any of the Pledged Collateral as if it were the absolute owner thereof,
including, without limitation, the right to exchange, in its discretion, any and
all of the Pledged Collateral upon the merger, consolidation, reorganization,
recapitalization or other adjustment of any Pledged Subsidiary, or upon the
exercise by any Pledged Subsidiary of any right, privilege or option pertaining
to any Pledged Collateral, and, in connection therewith, to deposit and deliver
any and all of the Pledged Collateral with any committee, depository, transfer
agent, registrar or other designated agent upon such terms and conditions as it
may determine; and
(iv) all dividends and interest payments which are received by
the Pledgor contrary to the provisions of paragraph (i) of this Section 7(b)
shall be received in trust for the benefit of the Collateral Agent, shall be
segregated from other funds of the Pledgor, and shall be forthwith paid over to
the Collateral Agent as Pledged Collateral in the exact form received with any
necessary indorsement and/or appropriate stock powers duly executed in blank, to
be held by the Collateral Agent as Pledged Collateral and as further collateral
security for the Guaranteed Obligations.
SECTION 8. Additional Provisions Concerning the Pledged Collateral.
(a) The Pledgor hereby authorizes the Collateral Agent to file, without
the signature of the Pledgor where permitted by law, one or more financing or
continuation statements, and amendments thereto, relating to the Pledged
Collateral.
(b) The Pledgor hereby irrevocably appoints the Collateral Agent the
Pledgor's attorney-in-fact and proxy, with full authority in the place and stead
of the Pledgor and in the name of the Pledgor or otherwise, from time to time in
the Collateral Agent's discretion exercised reasonably and during the
continuance of an Event of Default, to take any action and to execute any
instrument which the Collateral Agent may deem necessary or reasonably advisable
to accomplish the purposes of this Agreement (subject to the rights of the
Pledgor under Section 7(a) hereof), including, without limitation, to receive,
indorse and collect all instruments made payable to the Pledgor representing any
dividend, interest payment or other distribution in respect of any Pledged
Collateral and to give full discharge for the same.
(c) If the Pledgor fails to perform any agreement or obligation
contained herein, the Collateral Agent itself may perform, or cause performance
of, such agreement or obligation, and the expenses of the Collateral Agent
incurred in connection therewith shall be payable by the Pledgor pursuant to
Section 10 hereof.
(d) Other than the exercise of reasonable care to assure the safe
custody of the
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Pledged Collateral while held hereunder, the Collateral Agent shall have no duty
or liability to preserve rights pertaining thereto and shall be relieved of all
responsibility for the Pledged Collateral upon surrendering it or tendering
surrender of it to the Pledgor. The Collateral Agent shall be deemed to have
exercised reasonable care in the custody and preservation of the Pledged
Collateral in its possession if the Pledged Collateral is accorded treatment
substantially equal to that which the Collateral Agent accords its own property,
it being understood that the Collateral Agent shall not have responsibility for
(i) ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relating to any Pledged Collateral, whether
or not the Collateral Agent has or is deemed to have knowledge of such matters,
or (ii) taking any necessary steps to preserve rights against any parties with
respect to any Pledged Collateral.
(e) The Collateral Agent may at any time after the occurrence and
during the continuation of an Event of Default and to the extent not
inconsistent with the Financing Agreement in its discretion (i) without notice
to the Pledgor, transfer or register in the name of the Collateral Agent or any
of its nominees any or all of the Pledged Collateral, subject only to the
revocable rights of the Pledgor under Section 7(a) hereof, and (ii) exchange
certificates or instruments constituting Pledged Collateral for certificates or
instruments of smaller or larger denominations.
SECTION 9. Remedies Upon Default. If any Event of Default shall have
occurred and be continuing:
(a) The Collateral Agent may exercise in respect of the Pledged
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all of the rights and remedies of a secured party on
default under the Code then in effect in the State of New York; and without
limiting the generality of the foregoing and without notice except as specified
below, sell the Pledged Collateral or any part thereof in one or more parcels at
public or private sale, at any exchange or broker's board or elsewhere, at such
price or prices and on such other terms as the Collateral Agent may deem
commercially reasonable. The Pledgor agrees that, to the extent notice of sale
shall be required by law, at least 10 Business Days' notice to the Pledgor of
the time and place of any public sale or the time after which any private sale
is to be made shall constitute reasonable notification. The Collateral Agent
shall not be obligated to make any sale of Pledged Collateral regardless of
notice of sale having been given. The Collateral Agent may adjourn any public or
private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time and
place to which it was so adjourned.
(b) The Pledgor recognizes that it is impracticable to effect a public
sale of all or any part of the Pledged Shares or any other securities
constituting Pledged Collateral and that the Collateral Agent may, therefore,
determine to make one or more private sales of any such securities to a
restricted group of purchasers who will be obligated to agree, among other
things, to acquire such securities for their own account, for investment and not
with a view to the distribution or resale thereof. The Pledgor acknowledges that
any such private sale may be at prices and on terms less favorable to the seller
than the prices and other terms which might have been obtained at a public sale
and, notwithstanding the foregoing, agrees that such private sales shall be
deemed to have been made in a commercially reasonable manner and that the
Collateral
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Agent shall have no obligation to delay sale of any such securities for the
period of time necessary to permit the issuer of such securities to register
such securities for public sale under the Securities Act. The Pledgor further
acknowledges and agrees that any offer to sell such securities which has been
(i) publicly advertised on a bona fide basis in a newspaper or other publication
of general circulation in the financial community of New York, New York (to the
extent that such an offer may be so advertised without prior registration under
the Securities Act) or (ii) made privately in the manner described above to not
less than fifteen bona fide offerees shall be deemed to involve a "public sale"
for the purposes of Section 9-504(3) of the Code (or any successor or similar,
applicable statutory provision) as then in effect in the State of New York,
notwithstanding that such sale may not constitute a "public offering" under the
Securities Act, and that the Collateral Agent may, in such event, bid for the
purchase of such securities.
(c) Any cash held by the Collateral Agent as Pledged Collateral and all
cash proceeds received by the Collateral Agent in respect of any sale of,
collection from, or other realization upon, all or any part of the Pledged
Collateral may, in the discretion of the Collateral Agent, be held by the
Collateral Agent as collateral for, and/or then or at any time thereafter
applied (after payment of any amounts payable to the Collateral Agent pursuant
to Section 10 hereof) in whole or in part by the Collateral Agent against, all
or any part of the Obligations in such order as the Collateral Agent shall elect
consistent with the provisions of the Financing Agreement. Any surplus of such
cash or cash proceeds held by the Collateral Agent and remaining after payment
in full of all of the Obligations shall be paid over to the Pledgor or to such
person as may be lawfully entitled to receive such surplus.
(d) In the event that the proceeds of any such sale, collection or
realization are insufficient to pay all amounts to which the Collateral Agent or
any Lender is legally entitled, the Pledgor shall be liable for the deficiency,
together with interest thereon at the highest rate specified in the Financing
Agreement for interest on overdue principal thereof or such other rate as shall
be fixed by applicable law, together with the costs of collection and the
reasonable fees of any attorneys employed by the Collateral Agent and any Lender
to collect such deficiency.
SECTION 10. Indemnity and Expenses.
(a) The Pledgor agrees to indemnify the Collateral Agent from and
against any and all claims, losses and liabilities growing out of or resulting
from this Agreement (including, without limitation, enforcement of this
Agreement), except claims, losses or liabilities resulting solely and directly
from the Collateral Agent's gross negligence or willful misconduct as determined
by a final judgment of a court of competent jurisdiction.
(b) The Pledgor will upon demand pay to the Collateral Agent the amount
of any and all reasonable costs and expenses, including the reasonable fees and
disbursements of the Collateral Agent's counsel and of any experts and agents,
which the Collateral Agent may incur in connection with (i) the administration
of this Agreement, (ii) the custody, preservation, use or operation of, or the
sale of, collection from, or other realization upon, any Pledged Collateral,
(iii) the exercise or enforcement of any of the rights of the Collateral Agent
or any of the Lenders hereunder, or (iv) the failure by the Pledgor to perform
or observe any of the provisions hereof.
SECTION 11. Notices, Etc. All notices and other communications provided
for
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197
hereunder shall be in writing and shall be mailed (by certified mail, postage
prepaid and return receipt requested), telecopied or delivered, if to the
Pledgor, to it at its address specified in the Financing Agreement, and if to
the Collateral Agent, to it at its address specified in the Financing Agreement,
or as to either such Person at such other address as shall be designated by such
Person in a written notice to such other Person complying as to delivery with
the terms of this Section 11. All such notices and other communications shall be
effective (i) if sent by certified mail, return receipt requested, when received
or 3 Business Days after mailing, whichever first occurs, (ii) if telecopied,
when transmitted and confirmation is received, provided same is on a Business
Day and, if not, on the next Business Day, or (iii) if delivered, upon delivery,
provided same is on a Business Day and, if not, on the next Business Day.
SECTION 12. Consent to Jurisdiction, Etc.
(a) Any legal action or proceeding with respect to this Agreement or
any document related thereto may be brought in the courts of the State of New
York or of the United States of America for the Southern District of New York,
and, by execution and delivery of this Agreement, the Pledgor hereby accepts
unconditionally the jurisdiction of the aforesaid courts. The Pledgor hereby
irrevocably waives any objection, including without limitation, any objection to
the laying of venue or based on the grounds of forum non conveniens, which the
Pledgor may now or hereafter have to the bringing of any such action or
proceeding in such respective jurisdictions.
(b) The Pledgor irrevocably consents to the service of process of any
of the aforementioned courts in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to the Pledgor
at its address referred to in Section 11 hereof.
(c) Nothing contained in this Section 12 shall affect the right of the
Collateral Agent to serve legal process in any other manner permitted by law or
to commence legal proceedings or otherwise proceed against the Pledgor in any
other jurisdiction.
SECTION 13. Waiver of Jury Trial. EACH OF THE PLEDGOR AND THE
COLLATERAL AGENT (BY ACCEPTING THIS AGREEMENT) WAIVES ANY RIGHT TO A TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ARISING FROM ANY OTHER LOAN DOCUMENT AND
AGREES THAT ANY SUCH ACTION, PROCEEDING OR COUNTERCLAIM SHALL BE TRIED BEFORE A
COURT AND NOT BEFORE A JURY.
SECTION 14. Miscellaneous.
(a) No amendment of any provision of this Agreement shall be effective
unless it is in writing and signed by the Pledgor and the Collateral Agent, and
no waiver of any provision of this Agreement, and no consent to any departure by
the Pledgor therefrom, shall be effective unless it is in writing and signed by
the Collateral Agent, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
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(b) No failure on the part of the Collateral Agent to exercise, and no
delay in exercising, any right hereunder or under any other document shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right preclude any other or further exercise thereof or the exercise of any
other right. The rights and remedies of the Collateral Agent provided herein and
in the other Loan Documents are cumulative and are in addition to, and not
exclusive of, any rights or remedies provided by law. The rights of the
Collateral Agent under any document against any party thereto are not
conditional or contingent on any attempt by the Collateral Agent to exercise any
of its rights under any other document against such party or against any other
person.
(c) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining portions hereof or thereof or affecting the validity or enforceability
of such provision in any other jurisdiction.
(d) This Agreement shall create a continuing security interest in the
Pledged Collateral and shall (i) remain in full force and effect until the
payment in full or release of the Guaranteed Obligations after the Total
Commitment has been terminated and all Letters of Credit have been canceled or
cash collateralized and (ii) be binding on the Pledgor and by its acceptance
hereof, the Collateral Agent, and their respective successors and assigns and
shall inure, together with all rights and remedies of the Collateral Agent and
the Lenders hereunder, to the benefit of the Pledgor, the Collateral Agent and
the Lenders and their respective successors, transferees and assigns. Without
limiting the generality of clause (ii) of the immediately preceding sentence,
the Collateral Agent may assign or otherwise transfer its rights and obligations
under this Agreement to any other Person pursuant to the terms of the Financing
Agreement, and such other Person shall thereupon become vested with all of the
benefits in respect thereof granted to the Collateral Agent herein or otherwise.
Upon any such assignment or transfer, all references in this Agreement to the
Collateral Agent shall mean the assignee of the Collateral Agent. None of the
rights or obligations of the Pledgor hereunder may be assigned or otherwise
transferred without the prior written consent of the Collateral Agent.
(e) Upon the satisfaction in full of the Obligations after the Total
Commitment has been terminated and all Letters of Credit have been canceled or
cash collateralized, (i) this Agreement and the security interest created hereby
shall terminate and all rights to the Pledged Collateral shall revert to the
Pledgor, and (ii) the Collateral Agent will, upon the Pledgor's request and at
the Pledgor's expense promptly, (A) return to the Pledgor such of the Pledged
Collateral as shall not have been sold or otherwise disposed of or applied
pursuant to the terms hereof and (B) execute and deliver to the Pledgor, without
recourse, representation or warranty, such documents as the Pledgor shall
reasonably request to evidence such termination.
(f) This Agreement shall be governed by and construed in accordance
with the law of the State of New York, except as required by mandatory
provisions of law and except to the extent that the validity and perfection or
the perfection and the effect of perfection or non-perfection of the security
interest created hereby, or remedies hereunder, in respect of any particular
Pledged Collateral are governed by the law of a jurisdiction other than the
State of New York.
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IN WITNESS WHEREOF, the Pledgor has caused this Agreement to be
executed and delivered by its officer thereunto duly authorized, as of the date
first above written.
NORTON XXXXXXXXXX, INC.
By:________________________________
Name:
Title:
ACCEPTED AND AGREED:
NATIONSBANC COMMERCIAL CORPORATION,
as Collateral Agent
By:________________________________
Name:______________________________
Title:_____________________________
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SCHEDULE I TO PLEDGE AND SECURITY AGREEMENT
Pledged Debt
Principal Amount
Name of Maker Description Outstanding as of
------------- ----------- -----------------
201
SCHEDULE II TO PLEDGE AND SECURITY AGREEMENT
Pledged Shares
Certificate
Name of Issuer Number of Shares Class No.(s)
-------------- ---------------- ----- ------
202
SCHEDULE III
TO
PLEDGE AND SECURITY AGREEMENT
PLEDGE AMENDMENT
This Pledge Amendment, dated ________________________________, is
delivered pursuant to Section 4 of the Pledge Agreement referred to below. The
undersigned hereby agrees that this Pledge Amendment may be attached to the
Pledge Agreement, dated September , 1997, as it may heretofore have been or
hereafter may be amended or otherwise modified or supplemented from time to time
and that the promissory notes or shares listed on this Pledge Amendment shall be
and become part of the Pledged Collateral referred to in said Pledge Agreement
and shall secure all of the Obligations referred to in said Pledge Agreement.
Pledged Debt
Principal Amount
Name of Maker Description Outstanding as of
Pledged Shares
Name of Issuer Number of Shares Class Certificate No(s)
PLEDGOR
By:
Name:
Title:
000
Xxxxxxx X
XXXX XX XXX XXXX OPINION
[Letterhead of Borrowers' Counsel]
[Closing Date]
To each of the Lenders party
to the Financing Agreement
dated as of ______,1997 by and
among Norton XxXxxxxxxx, Inc.,
Norton XxXxxxxxxx of Xxxxxx, Inc. and
Miss Xxxxx, Inc., formerly known as ME
Acquisition, Inc., as Borrowers, certain
Lenders, NationsBanc Corporation, as
Structuring Agent for the Lenders and The
CIT Group/Commercial Services, Inc.,
as Administrative Agent for such Lenders
Re: Norton XxXxxxxxxx, Inc.
Ladies and Gentlemen:
We have acted as counsel to Norton XxXxxxxxxx, Inc., a Delaware
corporation (the "Company"), Norton XxXxxxxxxx of Xxxxxx, Inc., a Delaware
corporation ("Squire"), and Miss Xxxxx, Inc., a Delaware corporation formerly
known as ME Acquisition, Inc. ("Miss Xxxxx" and together with Squire, each a
"Borrower" and collectively the "Borrowers"), in connection with the making by
the Agents (as defined in the Financing Agreement hereinafter referred to) and
the financial institutions from time to time party to the Financing Agreement of
loans (the "Loans") to the Borrowers and the issuance by the L/C Issuer (as
defined in the Financing Agreement) of letters of credit for the account of the
Borrowers in an aggregate principal amount at any one time outstanding not to
exceed $140,000,000 pursuant to the Financing Agreement,
204
dated as of , 1997 (the "Financing Agreement"), by and among the
Company, the Borrowers, the financial institutions from time to time party
thereto (the "Lenders"), NationsBanc Commercial Corporation, as Structuring
Agent, and The CIT Group/Commercial Services, Inc., as Administrative Agent. The
joint and several obligation of the Borrowers to repay each Revolving Credit
Loan and the obligations of Squire to repay the Term Loan, is evidenced by
promissory notes of the Borrowers dated the date hereof (the "Notes") and is
secured, inter alia, by the security documents and guaranties referred to in
Section 5.01(d) of the Financing Agreement. This opinion is being delivered to
you pursuant to Section 5.01(d)(xiv) of the Financing Agreement. All capitalized
terms used and not defined herein have the same meanings herein as set forth in
the Financing Agreement.
In connection with this opinion, we have reviewed the organization and
existence of the Loan Parties, the proceedings of the Loan Parties in relation
to the Loan Documents, the Loan Documents, the financing statements which have
been executed and delivered to the Administrative Agent pursuant to Section
5.01(d)(viii) of the Financing Agreement (the "Financing Statements"), and such
certificates and other documents of public officials, officers and other
representatives of the Loan Parties as we have deemed relevant or proper as a
basis for our opinions set forth herein. In this regard, we have relied as to
factual matters on the representations and warranties contained in the Loan
Documents. In addition, we have assumed the genuineness of signatures on
original documents of all Persons other than officers and other representatives
of the Loan Parties, and the conformity to the original of all copies submitted
to us as photocopies or conformed copies.
Based upon the foregoing and such investigations as we deem advisable
and proper, we are of the opinion that:
1. Each Loan Party (i) is a corporation duly organized,
validly existing and in good standing under the laws of the state of
its incorporation, (ii) has all requisite power and authority to
conduct its business as now conducted and to consummate the
transactions contemplated by the Loan Documents to which it is a party,
and (iii) is duly qualified to do business and is in good standing in
each jurisdiction in which the character of the properties owned or
leased by it or in which the transaction of its business makes such
qualification necessary.
2. The execution and delivery by each of the Loan Parties of
each Financing Statement to which it is a party, and the execution,
delivery and performance by each of the Loan Parties of each Loan
Document to which it is a party, (i) have been duly authorized by all
necessary action, (ii) do not contravene its charter or by-laws, any
other applicable law or, to the best of our knowledge, any contractual
restriction binding on or affecting it or any of its properties, and
(iii) do not and will not result in or require the
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205
creation of any lien, security interest or other charge or encumbrance
(other than pursuant to the Loan Documents) upon or with respect to any
of its properties.
3. No authorization or approval or other action by, and no
notice to or filing with, any Governmental Authority or other
regulatory body is required of any Loan Party (i) in connection with
the due execution, delivery and performance by any Loan Party of any
Loan Document to which it is a party, (ii) for the grant by any Loan
Party pursuant to any Loan Document, or the perfection, of any lien or
security interest purported to be created thereby in any Collateral, or
(iii) for the exercise by the Agents and the Lenders of any of their
rights and remedies under any Loan Document (except for the recordings
and filings referred to in paragraph 5 below, all of which have been
duly obtained or made and are in full force and effect).
4. Each Loan Document and Financing Statement has been duly
executed and delivered by each Loan Party which is a party thereto.
Each such Loan Document constitutes the legal, valid and binding
obligation of the Loan Party which is a party thereto, enforceable
against such Loan Party in accordance with its terms, except to the
extent that the enforceability thereof may be limited by any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws from
time to time in effect affecting generally the enforcement of
creditors' rights and remedies and by general principles of equity.
5. Each of the Security Agreements creates a valid security
interest in favor of the Administrative Agent for the benefit of the
Lenders in the Collateral purported to be covered thereby as security
for the obligations purported to be secured thereby. Each Financing
Statement to be filed in the State of New York is in appropriate form
and when filed in the offices set forth in Schedule A hereto, which
filings, and the payment of any required fees, will result in the
perfection of the security interests in the Collateral covered by such
Financing Statements to the extent that such Collateral consists of the
type of property in which a security interest may be created under
Article 9 of the Uniform Commercial Code as currently in effect in the
State of New York (the "UCC") and in which a security interest may be
perfected by the filing of a financing statement in the State of New
York.
6. Each Loan Party which is a party to a Pledge and Security
Agreement is the owner of the Pledged Collateral (as defined in the
respective Pledge and Security Agreement) in existence on the date
hereof, free and clear of any Lien except for the security interest
created by such Pledge and Security Agreement. The Pledged Shares (as
defined in the respective Pledge and Security Agreement) have been duly
authorized and validly issued, are fully paid and nonassessable and
constitute 100% of the issued and
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206
outstanding shares of capital stock of the corporation or corporations
issuing such Pledged Shares.
7. Each Pledge and Security Agreement creates a valid security
interest in favor of the Administrative Agent for the benefit of the
Lenders in the Pledged Collateral as security for the obligations
purported to be secured thereby. The Administrative Agent's having
possession of the certificates representing the Pledged Shares and the
notes representing the Pledged Debt delivered to the Administrative
Agent on the date hereof results in the perfection of such security
interest. Such security interest is a perfected, first priority
security interest.
8. To the best of our knowledge there is no pending or
threatened action, suit or proceeding affecting any Loan Party before
any court, arbitrator, or Governmental Authority which may materially
adversely affect the operations or condition, financial or otherwise,
of any such Loan Party or the ability of any such Loan Party to perform
its obligations under any Loan Document to which it is a party.
9. Each Borrower and Guarantor has all federal, state and
local registrations, permits, licenses, authorizations and approvals
necessary to its business.
Very truly yours,
4
207
Schedule A
FILINGS OF FINANCING STATEMENTS
Debtor Office
5
208
Exhibit H
FORM OF OPINION OF LOCAL COUNSEL
[Letterhead of New Jersey Counsel]
[Closing Date]
To each of the Lenders party to the Financing Agreement dated as of ___________,
1997 by and among Norton XxXxxxxxxx, Inc., Norton XxXxxxxxxx of Xxxxxx, Inc. and
Miss Xxxxx, Inc., formerly known as ME Acquisition, Inc., as Borrowers, certain
Lenders, NationsBanc Commercial, as Structuring Agent for the Lenders and The
CIT Group/Commercial Services, Inc., as Administrative Agent for such Lenders
Re: Norton XxXxxxxxxx, Inc.
Ladies and Gentlemen:
We have acted as special New Jersey counsel to Norton XxXxxxxxxx, Inc.,
a Delaware corporation (the "Company"), Norton XxXxxxxxxx of Xxxxxx, Inc., a
Delaware corporation ("Squire"), and ME Acquisition, Inc., a Delaware
corporation ("ME Acquisition" and together with Squire, each a "Borrower" and
collectively the "Borrowers"), in connection with the Financing Agreement, dated
as of________, 1997 (the "Financing Agreement"), by and among the Company, the
Borrowers, the financial institutions from time to time party thereto (the
"Lenders"), NationsBanc Commercial Corporation, as Structuring Agent, and The
CIT Group/Commercial Services, Inc., as Administrative Agent, and the Security
Agreements dated the date hereof (the "Security Agreements"), made by each of
the Loan Parties in favor of the
209
Administrative Agent for the benefit of the Lenders, in the form of Exhibit D to
the Financing Agreement. This opinion is being delivered to you pursuant to
Section 5.01(d)(xv) of the Financing Agreement. All capitalized terms used and
not defined in this opinion have the same meanings herein as set forth in the
Financing Agreement or the Security Agreements.
In connection with this opinion, we have examined the executed copies
of the Financing Agreement, the Notes and the Security Agreements,
acknowledgment copies of financing statements which have been executed and
delivered by each of the Loan Parties pursuant to Section 5.01(d)(viii) of the
Financing Agreement and filed with the Secretary of State of the State of New
Jersey and with the ______ of________ County, New Jersey (the "Financing
Statements"), and such certificates and other documents of public officials and
officers of the Loan Parties as we have deemed relevant or proper as a basis for
this opinion. In this regard, we have relied as to factual matters on the
representations and warranties contained in the Financing Agreement and the
Security Agreements. In addition, we have assumed the genuineness of signatures
on original documents and the conformity to the original of all copies submitted
to us as photocopies or conformed copies.
Based upon the foregoing and such investigations as we deem advisable
and proper, and subject to the qualifications set forth below, we are of the
opinion that:
1. No authorization or approval or other action by, and no
notice to or filing with, any Governmental Authority or other
regulatory body is required of any Loan Party for (i) the grant by any
Loan Party pursuant to any Security Agreement to which it is a party,
or the perfection, of any lien or security interest purported to be
created thereby in any Collateral located in the State of New Jersey,
or (ii) the exercise by the Administrative Agent or any Lender of its
rights and remedies under any Security Agreement, except for the
filings referred to in paragraph 2 below, all of which have been duly
made and are in full force and effect.
2. Each Financing Statement is in appropriate form and has
been duly filed in the offices set forth in Schedule A hereto. Assuming
that each of the Security Agreements creates a valid security interest
in favor of the Agents in the Collateral located in the State of New
Jersey, as security for the obligations purported to be secured
thereby, such filings result in the perfection of such security
interest.
Very truly yours,
2
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Schedule A
FILINGS OF FINANCING STATEMENTS
Debtor Office
211
EXHIBIT I
FORM OF
ASSIGNMENT AND ACCEPTANCE
Dated ________, 199__
Reference is made to the Financing Agreement, dated as of ,
1997 (as the same may be further amended, supplemented or otherwise modified
from time to time, the "Financing Agreement") by and among Norton XxXxxxxxxx of
Xxxxxx, Inc. and Miss Xxxxx, Inc., formerly known as ME Acquisition Corp. (each
a "Borrower" and collectively the "Borrowers"), Norton XxXxxxxxxx, Inc., certain
lenders (each a "Lender" and collectively, the "Lenders"), NationsBanc
Commercial Corporation and The CIT Group/Commercial Services, Inc., as
administrative agent for the Lenders (in such capacity, the "Administrative
Agent"). Terms defined in the Financing Agreement are used herein as therein
defined.
_______________ (solely in its capacity as a Lender under the Financing
Agreement) (the "Assignor") and ________________ (the "Assignee") agree as
follows:
1. The Assignor hereby sells and assigns to the Assignee, without
recourse, representation or warranty, and the Assignee hereby purchases and
assumes from the Assignor, a ___%* interest (the "Assigned Interest") in and to
all of the Assignor's rights and obligations, solely as a Lender, under the
Financing Agreement and the other Loan Documents as of the Effective Date (as
defined below) (including, without limitation, (i) if the Loans shall not have
been terminated, (x) the Assignor's Revolving Credit Commitment set forth in
Section 2.01 of the Financing Agreement and (y) the Assignor's Term Loan
Commitment set forth in Section 2.01 of the Financing Agreement, (ii) the
outstanding principal amount of the Revolving Credit Loans made by the Assignor,
(iii) the outstanding principal amount of the Term Loan made by the Assignor,
(iv) the Lender's Pro Rata Share of Reimbursement Obligations; and (iv) the
Notes evidencing the Assignor's Loans).
2. The Assignor (i) represents and warrants as of the date hereof that
its Commitment (without giving effect to assignments thereof which have not yet
become effective) is _____% of _________; (ii) represents and warrants that it
is the legal and beneficial owner of the interest it is assigning hereunder;
(iii) makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made by or in
connection with the Financing Agreement, the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Financing Agreement,
any other Loan Document, or any other instrument or document furnished pursuant
thereto; (iv) makes no representation or warranty and assumes no responsibility
with respect to the financial condition of the Borrowers or the performance or
observance by the Borrowers of any of their obligations under the Financing
Agreement, any other Loan Document or any other instrument or document furnished
pursuant thereto; and (v) attaches the Notes referred to in paragraph 1 above,
and requests that the Administrative Agent exchange each such Note for new Notes
(appropriately dated so that no loss of interest accrued prior to the Effective
Date shall result with respect to the portion of the
--------------
* Specify percentage to no more than 4 decimal points.
212
Loans assigned or the portion of the Loans retained by the Assignor), consisting
of a Term Note in the principal amount of $__________, payable to the order of
the Assignee, a Term Note in the principal amount of $____________ payable to
the order of the Assignor, a Revolving Credit Note in the principal amount of
$_________, payable to the order of the Assignee, and a Revolving Credit Note in
the principal amount of $____________ payable to the order of the Assignor.
(a) The Assignee represents and warrants that it has become a party
hereto solely in reliance upon its own independent investigation of the
financial and other circumstances surrounding the Borrowers, the Collateral, the
Loans and the Letters of Credit and all aspects of the transactions evidenced by
or referred to in the Loan Documents, or has otherwise satisfied itself thereto,
and that it is not relying upon any representation, warranty or statement
(except any such representation, warranty or statement expressly set forth in
this Agreement) of the Assignor in connection with the assignment made under
this Agreement. The Assignee further acknowledges that the Assignee will,
independently and without reliance upon the Administrative Agent, the Assignor
or any other Lender and based upon the Assignee's review of such documents and
information as the Assignee deems appropriate at the time, make and continue to
make its own credit decisions in entering into this Agreement and taking or not
taking action under the Loan Documents. The Assignor shall have no duty or
responsibility either initially or on a continuing basis to make any such
investigation or any such appraisal on behalf of the Assignee or to provide the
Assignee with any credit or other information with respect thereto, whether
coming into its possession before the making of the initial extension of credit
under the Financing Agreement or at any time or times thereafter.
(b) The Assignee represents and warrants to the Assignor that it has
experience and expertise in the making of loans such as the Loans or with
respect to the other types of credit which may be extended under the Financing
Agreement; that it has acquired its Assigned Interest for its own account and
not with any intention of selling all or any portion of such interest; and that
it has received, reviewed and approved copies of all Loan Documents.
(c) The Assignor shall not be responsible to the Assignee for the
execution, effectiveness, accuracy, completeness, legal effect, genuineness,
validity, enforceability, collectibility or sufficiency of any of the Loan
Documents or for any representations, warranties, recitals or statements made
therein or in any written or oral statement or in any financial or other
statements, instruments, reports, certificates or any other documents made or
furnished or made available by the Assignor to the Assignee or by or on behalf
of the Borrower to the Assignor or the Assignee in connection with the Loan
Documents and the transactions contemplated thereby or for the financial
condition or business affairs of the Borrower or any other Person liable for the
payment of any Loans or payment of amounts owed in connection with other
extensions of credit under the Financing Agreement or the value of the
Collateral or any other matter. The Assignor shall not be required to ascertain
or inquire as to the performance or observance of any of the terms, conditions,
provisions, covenants or agreements contained in any of the Loan Documents or as
to the use of the proceeds of the Loans or other extensions of credit under the
Financing Agreement or as to the existence or possible existence of any Event of
Default or Default.
(d) Each party to this Agreement represents and warrants to the other
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party to this Agreement that it has full power and authority to enter into this
Agreement and to perform its obligations under this Agreement in accordance with
the provisions of this Agreement, that this Agreement has been duly authorized,
executed and delivered by such party and that this Agreement constitutes a
legal, valid and binding obligation of such party, enforceable in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, moratorium or other similar laws affecting creditors' rights
generally and by general equitable principles.
(e) Each party to this Agreement represents and warrants that the
making and performance by it of this Agreement do not and will not violate any
law or regulation of the jurisdiction of its incorporation or any other law or
regulation applicable to it.
(f) Each party to this Agreement represents and warrants that all
consents, licenses, approvals, authorizations, exemptions, registrations,
filings, opinions and declarations from or with any agency, department,
administrative authority, statutory corporation or judicial entity necessary for
the validity or enforceability of its obligations under this Agreement have been
obtained, and no governmental authorizations other than any already obtained are
required in connection with its execution, delivery and performance of this
Agreement.
(g) The Assignor represents and warrants that it is the legal and
beneficial owner of the interest being assigned and that such interest is free
and clear of any Lien.
(h) The Assignor makes no representation or warranty and assumes no
responsibility with respect to the operations, condition (financial or
otherwise), business or assets of the Borrowers or any of its Subsidiaries or
the performance or observance by the Borrowers of any of its obligations under
the Financing Agreement or any other Loan Document.
(i) The Assignee appoints and authorizes the Administrative Agent to
take such action as agent on its behalf and to exercise such powers under the
Loan Documents as are delegated to the Administrative Agent by the terms
thereof, together with such powers as are reasonably incidental thereto.
(j) The Assignee agrees that it will perform in accordance with their
terms all of the obligations which by the terms of the Financing Agreement are
required to be performed by it as a Lender.
(k) The Assignee confirms that it has received all documents and
information it has deemed appropriate to make its own credit analysis and
decision to enter into this Agreement.
(l) The Assignee specifies as its address for notices the office set
forth beneath its name on the signature pages hereof.
3. The effective date for this Assignment and Acceptance shall be
_____________ (the "Effective Date"), which date is at least three Business Days
after the execution of this Assignment and Acceptance and the delivery hereof to
the Administrative Agent for acceptance.
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4. Upon such acceptance, as of the Effective Date (i) the Assignee
shall, in addition to the rights and obligations under the Financing Agreement
and the other Loan Documents held by it immediately prior to the Effective Date,
have the rights and obligations under the Financing Agreement and the other Loan
Documents that have been assigned to it pursuant to this Agreement, and (ii) the
Assignor shall, to the extent provided in this Agreement, relinquish its rights
and be released from its obligations under the Financing Agreement and the other
Loan Documents that have been assigned by the Assignor to the Assignee pursuant
to this Agreement.
5. Upon such acceptance, from and after the Effective Date, the
Administrative Agent shall make all payments under the Financing Agreement and
the Notes in respect of the rights assigned hereby (including, without
limitation, all payments of principal, interest and fees with respect thereto)
to the Assignee. If the Assignor receives or collects any payment of interest or
fees attributable to the interests assigned to Assignee by this Agreement which
has accrued after the Assignment Effective Date, the Assignor shall distribute
to the Assignee such payment. If the Assignee receives or collects any payment
of interest or fees which is not attributable to the interests assigned to the
Assignee by this Agreement or which has accrued on or prior to the Assignment
Effective Date, the Assignee shall distribute to the Assignor such payment.
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6. This Agreement shall be governed by, and construed and interpreted
in accordance with, the laws of the State of New York applicable to contracts
made and to be performed entirely therein without consideration as to choice of
law.
[NAME OF ASSIGNOR]
By:___________________________
Name:
Title:
Date:
NOTICE ADDRESS AND PAYMENT
INSTRUCTIONS FOR ASSIGNOR
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Telephone No.
Telecopy No.
[NAME OF ASSIGNEE]
By:___________________________
Name:
Title:
Date:
NOTICE ADDRESS AND PAYMENT
INSTRUCTIONS FOR ASSIGNEE
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Telephone No.
Telecopy No.
ACCEPTED this ____ day
of ________ , 19__
THE CIT GROUP/COMMERCIAL
SERVICES, INC., as Administrative Agent
By:___________________________
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Name:
Title:
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EXHIBIT J
NOTICE OF BORROWING
___________, 199
The CIT Group/Commercial Services, Inc., as Administrative Agent for the Lenders
party to the Financing Agreement referred to below 0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention:
Ladies and Gentlemen:
The undersigned, ___________________, ("Borrower") refers to the
Financing Agreement dated as of , 1997 (the "Financing Agreement", the
terms defined therein being used herein as therein defined), by and among Norton
XxXxxxxxxx of Xxxxxx, Inc. and Miss Xxxxx, Inc. (formerly known as ME
Acquisition Corp.), as borrowers, and Norton XxXxxxxxxx, Inc., as guarantor,
certain Lenders, NationsBanc Commercial Corporation, as collateral agent, and
The CIT Group/Commercial Services, Inc., as administrative agent for such
Lenders (the "Administrative Agent"), and hereby gives you notice pursuant to
Section 2.03 of the Financing Agreement that the undersigned hereby requests a
Loan under the Financing Agreement, and in that connection sets forth below the
information relating to such Loan (the "Proposed Loan") as required by Section
2.03 of the Financing Agreement.
(i) The Proposed Loan is a [Eurodollar Loan] [Base Rate Loan].
(ii) If the Proposed Loan is a Eurodollar Loan, the Interest Period for
such Loan is [one] [three] [six] month(s).
(iii) The date of the Proposed Loan is ____________, 199_.
(iv) The Proposed Loan is a [Term Loan] [Revolving Credit Loan] and the
aggregate amount of the Proposed Loan is $___________.
(v) The proceeds of the Proposed Loan are to be advanced to the
undersigned and applied as follows:
The undersigned hereby certifies that the representations and
warranties contained in Section 6.01 of the Financing Agreement and in each
other Loan Document, certificate or other writing delivered to the
Administrative Agent pursuant thereto are correct as of the date
218
first above written (other than those which expressly speak only as of a
different date) and no Event of Default or Default has occurred or is continuing
as of the date first written above.
Very truly yours,
[BORROWER]
By:----------------------
Name:--------------------
Title:-------------------
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EXHIBIT K-1
MONTHLY BORROWING BASE CERTIFICATE
NORTON XXXXXXXXXX OF XXXXXX, INC.
and
MISS XXXXX, INC.
Reference is made to the Financing Agreement dated September 25, 1997
(as amended, restated, supplemented or otherwise modified from time to time, the
"Financing Agreement"), by and among Norton XxXxxxxxxx, Inc., a Delaware
corporation, Norton XxXxxxxxxx of Xxxxxx, Inc., a New York corporation
("Squire"), Miss Xxxxx, Inc., a Delaware corporation formerly known as ME
Acquisition Corp. ("Miss Xxxxx" and, together with Squire, each a "Borrower" and
collectively the "Borrowers"), certain lenders named from time to time party
thereto (the "Lenders"), NationsBanc Commercial Corporation, as collateral agent
(in such capacity, the "Collateral Agent"), and The CIT Group/Commercial
Services, Inc., as administrative agent (in such capacity, the "Administrative
Agent"). Capitalized terms used herein without definition shall have the same
meanings herein as set forth in the Financing Agreement. Pursuant to the
Financing Agreement, the undersigned certify as follows:
Computation Date:______________________
RECEIVABLES
1. Net Accounts Receivable purchased and credit approved under the Factoring $______
Agreements (after deducting taxes, discounts, credits, allowances, returns,
disputes, charge-backs, deductions for factoring charges, etc.)
2. Net Accounts Receivable purchased and not credit approved under the $______
Factoring Agreements (after deducting taxes, discounts, credits, allowances,
returns, charge-backs, deductions for factoring charges, etc.)
3. Ineligible Accounts Receivable purchased and not credit approved under the $_______
Factoring Agreements (sum of"3(a)" through "3(k)")
(a) Delivery of merchandise not completed or a return, rejection or $_______
repossession has occurred
(b) Accounts Receivable subject to disputes, setoffs, defense or $_______
counterclaims
(c) Accounts Receivable (i) subject to any Lien other than in favor $_______
of the Collateral Agent or the Factor or (ii) if purchased by
Factor, not subject to Assignment Agreement
(d) Accounts Receivable payable more than ninety (90) days from $_______
the original invoice date or evidenced by a note, instrument or
document, except Accounts Receivable of Miss Xxxxx existing
220
on the Effective Date for which Modecraft Fashion is the
Account Debtor
(e) Accounts Receivable unpaid more than ninety (90) days from $_______
the original invoice date or sixty (60) days from the
original invoice due date
(f) Accounts Receivable for which the Account Debtor is an $_______
Affiliate of a Borrower
(g) Accounts Receivable for which the Account Debtor is the $_______
United States of America or any Governmental Authority
(h) Accounts Receivable for which the Account Debtor is located $_______
outside of the continental United States other than sales secured
by stand-by letters of credit (in form and substance satisfactory
to the Collateral Agent)
(i) Accounts Receivable from sales to a supplier or creditor of a $_______
Borrower unless the Collateral Agent shall have received a no-
offset letter satisfactory to Collateral Agent
(j) Accounts Receivable of Account Debtors if fifty percent (50%) $_______
or more of the aggregate dollar amount of all outstanding
invoices are unpaid more than ninety (90) days from the original
invoice date or sixty (60) days from the original invoice due
date
(k) Accounts Receivable of Account Debtors subject to a $_______
Bankruptcy Proceeding
4. Eligible Accounts Receivable purchased and not credit approved under the $_______
Factoring Agreements (difference of "2" minus "3")
5. Net Amount of Eligible Accounts Receivable (sum of "1" and "4") $_______
6. Adjusted Net Amount of Eligible Accounts Receivable ("5" times 85%) $_______
INVENTORY
7. Total Gross Inventory, including in-transit Inventory (valued at lower of cost $_______
or market value)
8. Ineligible Inventory (sum of"8(a)" through "8(k)") $_______
(a) Inventory held on consignment $_______
(b) Inventory subject to a Lien other than in favor of the Collateral $_______
Agent
(c) Inventory not acquired in the ordinary course of business and $_______
damaged Inventory
(d) Inventory with respect to which an Account Receivable or $_______
document of title has been created (except documents of title
created pursuant to Letters of Credit referred to in 8(g) hereof)
(e) Inventory not readily marketable for sale $_______
(f) Inventory not located in one of the locations listed in Part A of $_______
Schedule 6.01(e) or at another location approved by the
Collateral Agent (each a "Permitted Location")
(g) "In-transit" Inventory which is not "in-transit" finished $_______
goods or uncut piece goods Inventory shipped or to be
shipped to a Permitted Location under a Letter of Credit
issued pursuant to Financing Agreement
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(h) Raw materials (except uncut piece goods in a Permitted $_______
Location) trim, work in process, supplies or samples
(i) Inventory sold under licensed trademark unless covered by $_______
licensor waiver letter satisfactory to Collateral Agent
(j) Ineligible Prior Season Inventory (sum of (i), (ii) and (iii) $_______
below)
(i) 25% of Prior Season Inventory for corresponding $_______
shipping season of immediately preceding year not
subject to confirmed purchased order, and
(ii) 50% of all other Prior Season Inventory from $_______
immediately preceding year (not covered by (i)
above) not subject to confirmed purchased order, and
(iii) 100% of all other Prior Season Inventory (not $_______
covered by (i) and (ii) above) not subject to
confirmed purchase order.
(k) Inventory not reasonably acceptable to the Collateral Agent $_______
9. Unadjusted Eligible finished goods and uncut piece goods Inventory $_______
(difference of "7" minus "8")
10. Adjusted Eligible finished goods and uncut piece goods Inventory (product of $_______
"9" times 60%)
11. Total Borrowing Base before Overadvance Amount and Borrowing Base $_______
Reserves (sum of "6" plus "10")
12. Less Borrowing Base Reserves (see definition of Borrowing Base) $_______
13. Total Borrowing Base before Overadvance Amount (difference of "11" minus $_______
"12")
14. Revolving Credit Commitment $125,000,000
15. Aggregate Revolving Credit Loans outstanding $_______
16. Aggregate Letters of Credit Obligations outstanding $_______
17. Availability before Overadvance Amount (difference of (lesser of "13" and $_______
"14") minus (sum of "15" plus "16"))
18. Overadvance Amount (not to exceed $10,000,000 at month end and $_______
$15,000,000 ($20,000,000 in July, August and September) at other times
during Fiscal Month)
19. Availability after Overadvance Amount $_______
This certificate is furnished to the Agents and the Lenders pursuant to
Section 7.01(a)(v)(B) of the Financing Agreement. This Borrowing Base
Certificate has been prepared in accordance with the provisions of the Financing
Agreement. This Borrowing Base Certificate and the information attached hereto
and the schedules, if any, delivered herewith represent an accurate statement of
the matters purported to be set forth herein or therein as of the date set forth
above.
Attached hereto and made a part hereof are calculations of the separate
Borrowing
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Base and Availability for each Borrower as of the date hereof presented in the
format set forth above.
NORTON XXXXXXXXXX OF XXXXXX, INC.
By:
Title:
MISS XXXXX, INC.
By:
Title:
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EXHIBIT K-2
WEEKLY BORROWING BASE CERTIFICATE
NORTON XXXXXXXXXX OF XXXXXX, INC.
and
MISS XXXXX, INC.
Reference is made to the Financing Agreement dated September ___, 1997
(as amended, restated, supplemented or otherwise modified from time to time, the
"Financing Agreement"), by and among Norton XxXxxxxxxx, Inc., a Delaware
corporation, Norton XxXxxxxxxx of Xxxxxx, Inc., a New York corporation
("Squire"), Miss Xxxxx, Inc., a Delaware corporation formerly known as ME
Acquisition Corp. ("Miss Xxxxx" and, together with Squire, each a "Borrower" and
collectively the "Borrowers"), certain lenders named from time to time party
thereto (the "Lenders"), NationsBanc Commercial Corporation, as collateral agent
(in such capacity, the "Collateral Agent"), and The CIT Group/Commercial
Services, Inc., as administrative agent (in such capacity, the "Administrative
Agent"). Capitalized terms used herein without definition shall have the same
meanings herein as set forth in the Financing Agreement. Pursuant to the
Financing Agreement, the undersigned certify as follows:
Computation Date:____________________________________
RECEIVABLES
1. Net Accounts Receivable purchased and credit approved under the Factoring $_______
Agreements (after deducting taxes, discounts, credits, allowances, returns,
disputes, charge-backs, deductions for factoring charges, etc.)
2. Net Accounts Receivable purchased and not credit approved under the $_______
Factoring Agreements (after deducting taxes, discounts, credits, allowances,
returns, charge-backs, deductions for factoring charges, etc.)
3. Ineligible Accounts Receivable purchased and not credit approved under the $_______
Factoring Agreements (sum of "3(a)" through "3(k)")
(a) Delivery of merchandise not completed or a return, rejection or $_______
repossession has occurred
(b) Accounts Receivable subject to disputes, setoffs, defense or $_______
counterclaims
(c) Accounts Receivable (i) subject to any Lien other than in favor $_______
of the Collateral Agent or the Factor or (ii) if purchased by
Factor, not subject to Assignment Agreement
(d) Accounts Receivable payable more than ninety (90) days from $_______
the original invoice date or evidenced by a note, instrument or
document, except Accounts Receivable of Miss Xxxxx existing
on the Effective Date for which Modecraft Fashion is the
Account Debtor
(e) Accounts Receivable unpaid more than ninety (90) days from $_______
the original invoice date or sixty (60) days from the original
224
invoice due date
(f) Accounts Receivable for which the Account Debtor is an $_______
Affiliate of a Borrower
(g) Accounts Receivable for which the Account Debtor is the $_______
United States of America or any Governmental Authority
(h) Accounts Receivable for which the Account Debtor is located $_______
outside of the continental United States other than sales secured
by stand-by letters of credit (in form and substance satisfactory
to the Collateral Agent)
(i) Accounts Receivable from sales to a supplier or creditor of a $_______
Borrower unless the Collateral Agent shall have received a no-
offset letter satisfactory to Collateral Agent
(j) Accounts Receivable of Account Debtors if fifty percent (50%) $_______
or more of the aggregate dollar amount of all outstanding
invoices are unpaid more than ninety (90) days from the original
invoice date or sixty (60) days from the original invoice due
date
(k) Accounts Receivable of Account Debtors subject to a $_______
Bankruptcy Proceeding
4. Eligible Accounts Receivable purchased and not credit approved under the $_______
Factoring Agreements (difference of "2" minus "3")
5. Net Amount of Eligible Accounts Receivable (sum of "1" and "4") $_______
6. Adjusted Net Amount of Eligible Accounts Receivable ("5" times 85%) $_______
INVENTORY
7. Gross Eligible finished goods and uncut piece goods Inventory (sum of "7(a)" $_______
through "7(e)")
(a) Finished goods Inventory located in one of the locations listed $_______
in Part A of Schedule 6.01(e) or at another location approved by
the Collateral Agent (each a "Permitted Location")
(b) "In-transit" Inventory which is "in-transit" finished goods or $_______
uncut piece goods Inventory shipped or to be shipped to a
Permitted Location under a Letter of Credit issued pursuant to
Financing Agreement
(c) 20% of the amount of drawings during such week under Letters
of Credit issued pursuant to the Financing Agreement
(d) Uncut piece goods Inventory located in a Permitted Location $_______
(e) Eligible Prior Season Inventory (sum of (i), (ii) and (iii) below) $_______
(i) 75% of Prior Season Inventory for corresponding $_______
shipping season of immediately preceding year not
subject to confirmed purchased order, and
(ii) 50% of all other Prior Season Inventory from $_______
immediately preceding year (not covered by (i)
above) not subject to confirmed purchased order, and
(iii) 100% of all other Prior Season Inventory (not $_______
covered by (i) and (ii) above) subject to confirmed
purchase order.
8. Inventory not reasonably acceptable to the Collateral Agent $_______
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225
9. Unadjusted Eligible finished goods and uncut piece goods Inventory $________
(difference of "7" minus "8")
10. Adjusted Eligible finished goods and uncut piece goods Inventory $________
(product of "9" times 60%)
11. Total Borrowing Base before Overadvance Amount and Borrowing Base $________
Reserves (sum of "6" plus "10")
12. Less Borrowing Base Reserves (see definition of Borrowing Base) $________
13. Total Borrowing Base before Overadvance Amount (difference of "11" $________
minus "12")
14. Revolving Credit Commitment $125,000,000
15. Aggregate Revolving Credit Loans outstanding $________
16. Aggregate Letters of Credit Obligations outstanding $________
17. Availability before Overadvance Amount (difference of (lesser of $________
"13" and "14") minus (sum of "15" plus "16"))
18. Overadvance Amount (not to exceed $10,000,000 at month end and $________
$15,000,000 ($20,000,000 in July, August and September) at other
times during Fiscal Month)
19. Availability after Overadvance Amount $________
This certificate is furnished to the Agents and the Lenders pursuant
to Section 7.01(a)(v)(C) of the Financing Agreement. This Borrowing Base
Certificate has been prepared in accordance with the provisions of the
Financing Agreement. This Borrowing Base Certificate and the information
attached hereto and the schedules, if any, delivered herewith represent an
accurate statement of the matters purported to be set forth herein or therein
as of the date set forth above.
Attached hereto and made a part hereof are calculations of the separate
Borrowing Base and Availability for each Borrower as of the date hereof
presented in the format set forth above.
MISS XXXXX, INC.
By:
-------------------------------
Title:
----------------------------
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EXHIBIT L
RELEASE CERTIFICATE
________________________, the chief executive officer of Norton
XxXxxxxxxx, Inc. (the "Company"), pursuant to the terms of Section 12.18 of the
Financing Agreement, dated as of September 25, 1997 (as amended or otherwise
modified from time to time, the "Financing Agreement"; all capitalized terms
used herein and not otherwise defined herein shall have the meanings ascribed to
them in the Financing Agreement), among the Company, the Borrowers, the Lenders,
the Collateral Agent and the Administrative Agent, does hereby certify that as
of the date hereof:
1. The Company hereby requests the Collateral Agent to (i) release its
Lien on the Collateral described in Schedule I hereto in connection with the
Permitted Disposition described in Schedule I hereto, and (ii) execute and
deliver to the Company the documents that the Company is requesting the
Collateral Agent to execute in connection with the proposed release, which
documents are specified in Schedule II hereto and are attached hereto signed by
all parties other than the Collateral Agent.
2. The Permitted Disposition will occur on _________________ and is in
compliance with all of the terms and conditions of the Financing Agreement.
3. The aggregate book value (net of reserves) of the Collateral to be
released is $_____________.
4. All conditions or obligations required under the terms of the Financing
Agreement to be satisfied or performed before the Collateral Agent makes the
release requested hereby, including all of the conditions set forth in Section
12.18 of the Financing Agreement, have been satisfied or performed or will,
prior to, or simultaneously with, the release of the Collateral described in
Schedule I, be satisfied and performed.
5. Both immediately before and immediately after giving effect to the
requested release, no Default or Event of Default has occurred and is
continuing. Attached hereto as Schedule III hereto is a calculation of the Net
Proceeds of such Permitted Disposition and the Net Proceeds of such Permitted
Disposition have been paid to the Administrative Agent or, as a condition to the
requested release, will be paid to the Administrative Agent within two Business
Days after receipt thereof.
227
6. [In the event that paragraph 5 indicates that a prepayment is required
to be made to the Administrative Agent of the Net Proceeds, the Company
[represents and warrants that such payment of Net Proceeds has been made on or
prior to the date hereof] [covenants that such payment of Net Proceeds will be
made within two Business Days of the release of the Collateral described in
Schedule I hereto].]
IN WITNESS WHEREOF, the undersigned has signed this certificate as of the
___ day of___________ ,19__.
____________________________________________________
[Name]:
[Title]:
228
SCHEDULE I
TO EXHIBIT L
TO FINANCING AGREEMENT
SCHEDULE I
DESCRIPTION OF COLLATERAL
PURCHASE PRICE
COLLATERAL BOOK VALUE OR OTHER VALUE RECEIVED
---------- ---------- -----------------------
229
SCHEDULE II
TO EXHIBIT L
TO FINANCING AGREEMENT
SCHEDULE II
DESCRIPTION OF RELEASE DOCUMENTS
230
SCHEDULE III
TO EXHIBIT L
TO FINANCING AGREEMENT
SCHEDULE III
CALCULATION OF NET PROCEEDS
231
EXHIBIT M-1
FORM OF SUBORDINATED INTERCOMPANY TERM NOTE
$____________ Dated: September __, 0000
Xxx Xxxx, Xxx Xxxx
FOR VALUE RECEIVED, Miss Xxxxx, Inc., a Delaware corporation (the
"Borrower"), HEREBY PROMISES TO PAY to the order of Norton XxXxxxxxxx of Xxxxxx,
Inc., a New York corporation (the "Lender") (i) the principal amount of Fifteen
Million Dollars ($15,000,000), payable in the same installments and at the same
times as are specified with respect to the Term Loan as defined in the Financing
Agreement dated as of September ___, 1997 by and among Norton XxXxxxxxxx, Inc.,
a Delaware corporation, the Borrower, the Lender, the financial institutions
from time to time party thereto, NationsBanc Commercial Corporation, as
collateral agent (the "Collateral Agent")and The CIT Group/Commercial Services,
Inc., as administrative agent (the "Administrative Agent" and together with the
Collateral Agent and the aforementioned financial institutions, collectively the
"Senior Lenders") (as amended or otherwise modified from time to time, the
"Financing Agreement") and (ii) interest on the unpaid principal amount hereof
from the date hereof until all such principal amount is paid in
full, at the same interest rates, and payable at the same times, as are
specified with respect to the Term Loan in the Financing Agreement. Capitalized
terms used herein and not otherwise defined herein shall have the meanings set
forth in the Financing Agreement.
The payment of the principal of, all accrued and unpaid interest on and
any other amounts that now or hereafter may be owing by the Borrower to the
Lender pursuant to this Note (collectively, the "Subordinated Debt") is hereby
expressly made subordinate and subject in right of payment to the prior payment
and satisfaction in full of any and all Obligations.
The Senior Lenders are irrevocably authorized and empowered but shall have
no obligation, in any proceeding with respect to the Borrower under any federal
or state bankruptcy or insolvency law, or any other reorganization, dissolution
or liquidation proceedings with respect to the Borrower, to file a proof of
claim on behalf of the Lender with respect to the principal of and interest on
this Note, to accept and receive any payment or distribution which may be
payable or deliverable at any time upon or in respect of this Note in an amount
not in excess of the Obligations then outstanding, and to take such other action
(including voting the principal of and interest on this Note) as may be
reasonably necessary to effectuate the foregoing. The Lender shall provide to
the Senior Lenders all information and documents necessary to present claims or
seek enforcement as aforesaid and will duly and promptly take such action as the
Senior Lenders may request to collect the principal of and interest on this Note
for the account of the Senior Lenders and to file appropriate claims or proofs
of claim with respect thereto. Without limiting the foregoing, the Lender shall
execute and deliver to the Senior
232
Lenders such powers of attorney, assignments or other instruments as the Senior
Lenders may request in order to enable them to enforce any and all claims with
respect to this Note and to collect and receive any and all payments or
distributions which may be payable or deliverable upon or with respect to this
Note. If the Senior Lenders do not exercise their right to vote the principal of
and interest on this Note or otherwise act in any such reorganization proceeding
as set forth in this paragraph (including the right to vote to accept or reject
any plan of partial or complete liquidation, reorganization, arrangement,
composition or extension), the Lender shall not take any action or vote in any
way so as to contest (a) the validity or enforceability of the Financing
Agreement or any Loan Document, (b) the rights and duties of the Senior Lenders
established in the Financing Agreement and the Loan Documents, or (c) the
validity or enforceability of the subordination provisions set forth in this
Note.
The Senior Lenders may: (i) enter into any agreement or arrangement with
the Loan Parties under the Financing Agreement with respect to the Obligations
and any amendments thereto, as the Senior Lenders may deem proper; (ii) extend
the time for payment and/or renew any or all of the Obligations; and (iii)
surrender any security, collateral or guarantees held with respect to any or all
of the Obligations, make any settlements and compromises thereof as it may deem
proper and take any other action whether or not similar to the foregoing, all
without notice to or consent from the Lender and without in any way impairing or
affecting the subordination provisions of this Note thereby.
Subject to the provisions of the following paragraph, should any payment
with respect to the Subordinated Debt be received by the Lender in any form and
from any source whatsoever prior to the payment in full in cash of all of the
Obligations after all Commitments have terminated and all Letters of Credit have
been canceled or cash collateralized, the Lender immediately shall deliver to
the Senior Lenders any monies, securities or other property so received by it,
or its equivalent in cash, with proper endorsements or assignments if necessary
and without recourse, to be applied (in the case of cash) to, or held as
collateral (in the case of securities or other non-cash property) for the
payment or prepayment of the Obligations; and pending such delivery, the Lender
shall hold such monies, securities or other property as trustee for the account
of the Senior Lenders.
Notwithstanding anything to the contrary stated herein, the Borrower may
make payments of, and the Lender may demand, receive and retain payments of (i)
accrued and unpaid interest on the principal amount of this Note when due,
strictly in accordance with the terms and provisions of this Note and (ii) the
principal amount of this Note strictly in accordance with the terms and
provisions of this Note, unless, in the case of clauses (i) and (ii) above, a
Default or an Event of Default has occurred and is continuing or would result
from the making of such payment. Except as otherwise provided in this paragraph,
the Lender shall not take, demand, receive or accelerate any payment of the
Subordinated Debt and the Borrower shall not give, make or permit any such
payment other than where expressly approved by the Senior Lenders and the Lender
shall not assert, participate in or bring any sort of action, suit or proceeding
(including, without limitation, bankruptcy or insolvency proceedings) either at
law or in equity for
233
the enforcement, collection or realization of all or any part of the
Subordinated Debt. Notwithstanding the foregoing, should any action be taken, at
any time, by or against the Borrower for any relief or arrangement under any
federal or state bankruptcy or insolvency law, the Subordinated Debt shall be
subordinated to the prior payment of the Obligations of the Senior Lenders in
accordance with the subordination provisions described herein. The Borrower will
(x) not make any payment in respect of any of the Subordinated Debt, or take any
other action, in contravention of the provisions of this Note and (y) promptly
notify the Collateral Agent in writing of the occurrence of a Default or an
Event of Default not later than one Business Day after the occurrence thereof
shall have become known to the Borrower.
The Lender shall have no right to accelerate or to commence legal action
to enforce collection of all or any part of the principal of and interest on
this Note except in the event that the Borrower files or has filed against it
(other than by the Lender) a petition under the United States Bankruptcy Code
(11 U.S.C. Section 101 et seq.), as amended, and any successor statute, provided
that any such involuntary proceeding which is commenced against the Borrower is
not dismissed or discharged within 45 days after commencement thereof, provided,
however, that any amount received by the Lender in advance of its scheduled due
date (without giving effect to any acceleration) hereunder as a result of any
acceleration permitted above, prior to payment in full in cash of the
Obligations and the termination of the Financing Agreement, shall be held in
trust and paid to the Senior Lenders.
The Lender covenants and agrees with the Senior Lenders that, except as
otherwise specifically permitted by this Note, the Lender shall not, directly or
indirectly: (i) demand or receive payment of, (ii) exchange, cancel, discharge,
forgive or modify, (iii) request or obtain collateral, security or guarantees
for, (iv) except in favor of the Senior Lenders, effect a subordination,
assignment, pledge, transfer, sale or other hypothecation of, or (v) commence
any legal action with respect to, the whole or any part of the principal of and
interest on this Note. The Lender further agrees that until such time as all of
the Obligations is paid and satisfied in full in cash, it shall not assert or be
entitled to any subrogation rights. This Note may not be amended without
obtaining the prior written consent of the Collateral Agent.
All rights and interests of the Senior Lenders hereunder, and all
agreements and obligations of the Lender and the Borrower hereunder, shall
remain in full force and effect irrespective of: (i) any lack of validity or
enforceability of the Financing Agreement or any Loan Document or any other
agreement or instrument relating thereto, (ii) any change in the time, manner or
place of payment of, or in any other term in respect of, all or any of the
Obligations, or any other amendment or waiver of or any consent to departure
from the Financing Agreement or any Loan Document, (iii) any exchange or release
of, or non-perfection of any Lien on or security interest in, any collateral, or
any release or amendment or waiver of or consent to departure from any guaranty,
for all or any of the Obligations, or (iv) any other circumstance which might
otherwise constitute a defense available to, or a discharge of the Loan Party in
respect of the Obligations or the Lender or the Borrower in respect of this
Note.
234
The Lender waives any and all demands, presentments or notices (other than
notices specifically provided for in this Note) to which it otherwise might be
entitled, including, without limitation, any and all notices (i) of the creation
or accrual of any of the Obligations, (ii) of any extension, modification or
renewal of any of the Obligations, and (iii) of the Senior Lenders' reliance on
the subordination provisions of this Note.
The Borrower may at any time prepay the whole or any part of the unpaid
principal amount of this Note, without penalty or premium, with interest accrued
to the date fixed for prepayment.
235
This Note shall be governed by, and construed and interpreted in
accordance with, the internal laws of the State of New York applicable to
contracts made and to be performed therein without consideration as to choice of
law.
MISS XXXXX, INC.
By:
--------------------------------
Name:
Title:
ACCEPTED AND AGREED:
NORTON XxXXXXXXXX OF XXXXXX, INC.
By:
----------------------------------------
Name:
Title:
PAY TO THE ORDER OF:
NATIONSBANC COMMERCIAL CORPORATION,
as Collateral Agent
NORTON XxXXXXXXXX OF XXXXXX, INC.
By:
-----------------------------------
Name:
Title:
236
EXHIBIT M-2
FORM OF SUBORDINATED INTERCOMPANY REVOLVING CREDIT NOTE
$______________ Dated: ___________, 0000
Xxx Xxxx, Xxx Xxxx
FOR VALUE RECEIVED, Norton XxXxxxxxxx of Xxxxxx, Inc., a New York
corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of Miss Xxxxx,
Inc., a Delaware corporation (the "Lender") (i) the principal amount of One
Hundred Twenty-Five Million Dollars ($125,000,000), or if less, an amount equal
to the aggregate unpaid principal amount of loans made from time to time by the
Lender to the Borrower, payable on the same terms and conditions as the
Revolving Credit Note (as defined in the Financing Agreement dated as of
September ___, 1997 by and among Norton XxXxxxxxxx, Inc., a Delaware
corporation, the Borrower, the Lender, the financial institutions from time to
time party thereto, NationsBanc Commercial Corporation, as collateral agent (the
"Collateral Agent") and The CIT Group/Commercial Services, Inc., as
administrative agent (the "Administrative Agent" and together with the
Collateral Agent and the aforementioned financial institutions, collectively the
"Senior Lenders") (as amended or otherwise modified from time to time, the
"Financing Agreement")) and (ii) interest in an amount equal to the unpaid
principal amount of the Revolving Credit Note, from the date hereof until all
such principal amounts are paid in full, at the same interest rates, and payable
at the same times, as are specified in the Financing Agreement with respect to
the Revolving Credit Note. Capitalized terms used herein and not otherwise
defined herein shall have the meanings set forth in the Financing Agreement.
The payment of the principal of, all accrued and unpaid interest on and
any other amounts that now or hereafter may be owing by the Borrower to the
Lender pursuant to this Note (collectively, the "Subordinated Debt") is hereby
expressly made subordinate and subject in right of payment to the prior payment
and satisfaction in full of any and all Obligations.
The Senior Lenders are irrevocably authorized and empowered but shall have
no obligation, in any proceeding with respect to the Borrower under any federal
or state bankruptcy or insolvency law, or any other reorganization, dissolution
or liquidation proceedings with respect to the Borrower, to file a proof of
claim on behalf of the Lender with respect to the principal of and interest on
this Note, to accept and receive any payment or distribution which may be
payable or deliverable at any time upon or in respect of this Note in an amount
not in excess of the Obligations then outstanding, and to take such other action
(including voting the principal of and interest on this Note) as may be
reasonably necessary to effectuate the foregoing. The Lender shall provide to
the Senior Lenders all information and documents necessary to present claims or
seek
237
enforcement as aforesaid and will duly and promptly take such action as the
Senior Lenders may request to collect the principal of and interest on this Note
for the account of the Senior Lenders and to file appropriate claims or proofs
of claim with respect thereto. Without limiting the foregoing, the Lender shall
execute and deliver to the Senior Lenders such powers of attorney, assignments
or other instruments as the Senior Lenders may request in order to enable them
to enforce any and all claims with respect to this Note and to collect and
receive any and all payments or distributions which may be payable or
deliverable upon or with respect to this Note. If the Senior Lenders do not
exercise their right to vote the principal of and interest on this Note or
otherwise act in any such reorganization proceeding as set forth in this
paragraph (including the right to vote to accept or reject any plan of partial
or complete liquidation, reorganization, arrangement, composition or extension),
the Lender shall not take any action or vote in any way so as to contest (a) the
validity or enforceability of the Financing Agreement or any Loan Document, (b)
the rights and duties of the Senior Lenders established in the Financing
Agreement and the Loan Documents, or (c) the validity or enforceability of the
subordination provisions set forth in this Note.
The Senior Lenders may: (i) enter into any agreement or arrangement with
the Loan Parties under the Financing Agreement with respect to the Obligations
and any amendments thereto, as the Senior Lenders may deem proper; (ii) extend
the time for payment and/or renew any or all of the Obligations; and (iii)
surrender any security, collateral or guarantees held with respect to any or all
of the Obligations, make any settlements and compromises thereof as it may deem
proper and take any other action whether or not similar to the foregoing, all
without notice to or consent from the Lender and without in any way impairing or
affecting the subordination provisions of this Note thereby.
Subject to the provisions of the following paragraph, should any payment
with respect to the Subordinated Debt be received by the Lender in any form and
from any source whatsoever prior to the payment in full in cash of all of the
Obligations after all Commitments have terminated and all Letters of Credit have
been canceled or cash collateralized, the Lender immediately shall deliver to
the Senior Lenders any monies, securities or other property so received by it,
or its equivalent in cash, with proper endorsements or assignments if necessary
and without recourse, to be applied (in the case of cash) to, or held as
collateral (in the case of securities or other non-cash property) for the
payment or prepayment of the Obligations; and pending such delivery, the Lender
shall hold such monies, securities or other property as trustee for the account
of the Senior Lenders.
Notwithstanding anything to the contrary stated herein, the Borrower may
make payments of, and the Lender may demand, receive and retain payments of (i)
accrued and unpaid interest on the principal amount of this Note when due,
strictly in accordance with the terms and provisions of this Note and (ii) the
principal amount of this Note strictly in accordance with the terms and
provisions of this Note, unless, in the case of clauses (i) and (ii) above, a
Default or an Event of Default has occurred and is continuing or would result
from the making of such payment. Except as otherwise provided in this paragraph,
the Lender shall not take, demand, receive or accelerate any
238
payment of the Subordinated Debt and the Borrower shall not give, make or permit
any such payment other than where expressly approved by the Senior Lenders and
the Lender shall not assert, participate in or bring any sort of action, suit or
proceeding (including, without limitation, bankruptcy or insolvency proceedings)
either at law or in equity for the enforcement, collection or realization of all
or any part of the Subordinated Debt. Notwithstanding the foregoing, should any
action be taken, at any time, by or against the Borrower for any relief or
arrangement under any federal or state bankruptcy or insolvency law, the
Subordinated Debt shall be subordinated to the prior payment of the Obligations
of the Senior Lenders in accordance with the subordination provisions described
herein. The Borrower will (x) not make any payment in respect of any of the
Subordinated Debt, or take any other action, in contravention of the provisions
of this Note and (y) promptly notify the Collateral Agent in writing of the
occurrence of a Default or an Event of Default not later than one Business Day
after the occurrence thereof shall have become known to the Borrower.
The Lender shall have no right to accelerate or to commence legal action
to enforce collection of all or any part of the principal of and interest on
this Note except in the event that the Borrower files or has filed against it
(other than by the Lender) a petition under the United States Bankruptcy Code
(11 U.S.C. Section 101 et seq.), as amended, and any successor statute, provided
that any such involuntary proceeding which is commenced against the Borrower is
not dismissed or discharged within 45 days after commencement thereof, provided,
however, that any amount received by the Lender in advance of its scheduled due
date (without giving effect to any acceleration) hereunder as a result of any
acceleration permitted above, prior to payment in full in cash of the
Obligations and the termination of the Financing Agreement, shall be held in
trust and paid to the Senior Lenders.
The Lender covenants and agrees with the Senior Lenders that, except as
otherwise specifically permitted by this Note, the Lender shall not, directly or
indirectly: (i) demand or receive payment of, (ii) exchange, cancel, discharge,
forgive or modify, (iii) request or obtain collateral, security or guarantees
for, (iv) except in favor of the Senior Lenders, effect a subordination,
assignment, pledge, transfer, sale or other hypothecation of, or (v) commence
any legal action with respect to, the whole or any part of the principal of and
interest on this Note. The Lender further agrees that until such time as all of
the Obligations is paid and satisfied in full in cash, it shall not assert or be
entitled to any subrogation rights. This Note may not be amended without
obtaining the prior written consent of the Collateral Agent.
All rights and interests of the Senior Lenders hereunder, and all
agreements and obligations of the Lender and the Borrower hereunder, shall
remain in full force and effect irrespective of: (i) any lack of validity or
enforceability of the Financing Agreement or any Loan Document or any other
agreement or instrument relating thereto, (ii) any change in the time, manner or
place of payment of, or in any other term in respect of, all or any of the
Obligations, or any other amendment or waiver of or any consent to departure
from the Financing Agreement or any Loan Document, (iii) any exchange or release
of, or non-perfection of any Lien on or security interest in, any collateral, or
any release or amendment or waiver of or consent to departure from any
239
guaranty, for all or any of the Obligations, or (iv) any other circumstance
which might otherwise constitute a defense available to, or a discharge of, the
Loan Parties in respect of the Obligations or the Lender or the Borrower in
respect of this Note.
The Lender waives any and all demands, presentments or notices (other than
notices specifically provided for in this Note) to which it otherwise might be
entitled, including, without limitation, any and all notices (i) of the creation
or accrual of any of the Obligations, (ii) of any extension, modification or
renewal of any of the Obligations and (iii) of the Senior Lenders' reliance on
the subordination provisions of this Note.
The Borrower may at any time prepay the whole or any part of the unpaid
principal amount of this Note, without penalty or premium, with interest accrued
to the date fixed for prepayment.
240
This Note shall be governed by, and construed and interpreted in
accordance with, the internal laws of the State of New York applicable to
contracts made and to be performed therein without consideration as to choice of
law.
NORTON XxXXXXXXXX OF XXXXXX, INC.
By:
-----------------------------
Name:
Title:
ACCEPTED AND AGREED:
MISS XXXXX, INC.
By:
--------------------------
Name:
Title:
PAY TO THE ORDER OF:
NATIONSBANC COMMERCIAL CORPORATION,
as Collateral Agent
MISS XXXXX, INC.
By:
-----------------------------
Name:
Title:
241
EXHIBIT M-3
FORM OF SUBORDINATED INTERCOMPANY REVOLVING CREDIT NOTE
$_____________ Dated: September __, 0000
Xxx Xxxx, Xxx Xxxx
FOR VALUE RECEIVED, Miss Xxxxx, Inc., a Delaware corporation (the
"Borrower"), HEREBY PROMISES TO PAY to the order of Norton XxXxxxxxxx of Xxxxxx,
Inc., a New York corporation (the "Lender") (i) the principal amount of One
Hundred Twenty-Five Million Dollars ($125,000,000), or if less, an amount equal
to the aggregate unpaid principal amount of loans made from time to time by the
Lender to the Borrower, payable on the same terms and conditions as the
Revolving Credit Note (as defined in the Financing Agreement dated as of
September __, 1997 by and among Norton XxXxxxxxxx, Inc., a Delaware corporation,
the Borrower, the Lender, the financial institutions from time to time party
thereto, NationsBanc Commercial Corporation, as collateral agent (the
"Collateral Agent") and The CIT Group/Commercial Services, Inc., as
administrative agent (the "Administrative Agent" and together with the
Collateral Agent and the aforementioned financial institutions, collectively the
"Senior Lenders") (as amended or otherwise modified from time to time, the
"Financing Agreement")) and (ii) interest in an amount equal to the unpaid
principal amount of the Revolving Credit Note, from the date hereof until all
such principal amounts are paid in full, at the same interest rates, and payable
at the same times, as are specified in the Financing Agreement with respect to
the Revolving Credit Note. Capitalized terms used herein and not otherwise
defined herein shall have the meanings set forth in the Financing Agreement.
The payment of the principal of, all accrued and unpaid interest on and
any other amounts that now or hereafter may be owing by the Borrower to the
Lender pursuant to this Note (collectively, the "Subordinated Debt") is hereby
expressly made subordinate and subject in right of payment to the prior payment
and satisfaction in full of any and all Obligations.
The Senior Lenders are irrevocably authorized and empowered but shall have
no obligation, in any proceeding with respect to the Borrower under any federal
or state bankruptcy or insolvency law, or any other reorganization, dissolution
or liquidation proceedings with respect to the Borrower, to file a proof of
claim on behalf of the Lender with respect to the principal of and interest on
this Note, to accept and receive any payment or distribution which may be
payable or deliverable at any time upon or in respect of this Note in an amount
not in excess of the Obligations then outstanding, and to take such other action
(including voting the principal of and interest on this Note) as may
242
be reasonably necessary to effectuate the foregoing. The Lender shall provide to
the Senior Lenders all information and documents necessary to present claims or
seek enforcement as aforesaid and will duly and promptly take such action as the
Senior Lenders may request to collect the principal of and interest on this Note
for the account of the Senior Lenders and to file appropriate claims or proofs
of claim with respect thereto. Without limiting the foregoing, the Lender shall
execute and deliver to the Senior Lenders such powers of attorney, assignments
or other instruments as the Senior Lenders may request in order to enable them
to enforce any and all claims with respect to this Note and to collect and
receive any and all payments or distributions which may be payable or
deliverable upon or with respect to this Note. If the Senior Lenders do not
exercise their right to vote the principal of and interest on this Note or
otherwise act in any such reorganization proceeding as set forth in this
paragraph (including the right to vote to accept or reject any plan of partial
or complete liquidation, reorganization, arrangement, composition or extension),
the Lender shall not take any action or vote in any way so as to contest (a) the
validity or enforceability of the Financing Agreement or any Loan Document, (b)
the rights and duties of the Senior Lenders established in the Financing
Agreement and the Loan Documents, or (c) the validity or enforceability of the
subordination provisions set forth in this Note.
The Senior Lenders may: (i) enter into any agreement or arrangement with
the Loan Parties under the Financing Agreement with respect to the Obligations
and any amendments thereto, as the Senior Lenders may deem proper; (ii) extend
the time for payment and/or renew any or all of the Obligations; and (iii)
surrender any security, collateral or guarantees held with respect to any or all
of the Obligations, make any settlements and compromises thereof as it may deem
proper and take any other action whether or not similar to the foregoing, all
without notice to or consent from the Lender and without in any way impairing or
affecting the subordination provisions of this Note thereby.
Subject to the provisions of the following paragraph, should any payment
with respect to the Subordinated Debt be received by the Lender in any form and
from any source whatsoever prior to the payment in full in cash of all of the
Obligations after all Commitments have terminated and all Letters of Credit have
been canceled or cash collateralized, the Lender immediately shall deliver to
the Senior Lenders any monies, securities or other property so received by it,
or its equivalent in cash, with proper endorsements or assignments if necessary
and without recourse, to be applied (in the case of cash) to, or held as
collateral (in the case of securities or other non-cash property) for the
payment or prepayment of the Obligations; and pending such delivery, the Lender
shall hold such monies, securities or other property as trustee for the account
of the Senior Lenders.
Notwithstanding anything to the contrary stated herein, the Borrower may
make payments of, and the Lender may demand, receive and retain payments of (i)
accrued and unpaid interest on the principal amount of this Note when due,
strictly in accordance with the terms and provisions of this Note and (ii) the
principal amount of this Note strictly in accordance with the terms and
provisions of this Note, unless, in the case of clauses (i) and (ii) above, a
Default or an Event of Default has occurred and is
243
continuing or would result from the making of such payment. Except as otherwise
provided in this paragraph, the Lender shall not take, demand, receive or
accelerate any payment of the Subordinated Debt and the Borrower shall not give,
make or permit any such payment other than where expressly approved by the
Senior Lenders and the Lender shall not assert, participate in or bring any sort
of action, suit or proceeding (including, without limitation, bankruptcy or
insolvency proceedings) either at law or in equity for the enforcement,
collection or realization of all or any part of the Subordinated Debt.
Notwithstanding the foregoing, should any action be taken, at any time, by or
against the Borrower for any relief or arrangement under any federal or state
bankruptcy or insolvency law, the Subordinated Debt shall be subordinated to the
prior payment of the Obligations of the Senior Lenders in accordance with the
subordination provisions described herein. The Borrower will (x) not make any
payment in respect of any of the Subordinated Debt, or take any other action, in
contravention of the provisions of this Note and (y) promptly notify the
Collateral Agent in writing of the occurrence of a Default or an Event of
Default not later than one Business Day after the occurrence thereof shall have
become known to the Borrower.
The Lender shall have no right to accelerate or to commence legal action
to enforce collection of all or any part of the principal of and interest on
this Note except in the event that the Borrower files or has filed against it
(other than by the Lender) a petition under the United States Bankruptcy Code
(11 U.S.C. Section 101 et seq.), as amended, and any successor statute, provided
that any such involuntary proceeding which is commenced against the Borrower is
not dismissed or discharged within 45 days after commencement thereof, provided,
however, that any amount received by the Lender in advance of its scheduled due
date (without giving effect to any acceleration) hereunder as a result of any
acceleration permitted above, prior to payment in full in cash of the
Obligations and the termination of the Financing Agreement, shall be held in
trust and paid to the Senior Lenders.
The Lender covenants and agrees with the Senior Lenders that, except as
otherwise specifically permitted by this Note, the Lender shall not, directly or
indirectly: (i) demand or receive payment of, (ii) exchange, cancel, discharge,
forgive or modify, (iii) request or obtain collateral, security or guarantees
for, (iv) except in favor of the Senior Lenders, effect a subordination,
assignment, pledge, transfer, sale or other hypothecation of, or (v) commence
any legal action with respect to, the whole or any part of the principal of and
interest on this Note. The Lender further agrees that until such time as all of
the Obligations is paid and satisfied in full in cash, it shall not assert or be
entitled to any subrogation rights. This Note may not be amended without
obtaining the prior written consent of the Collateral Agent.
All rights and interests of the Senior Lenders hereunder, and all
agreements and obligations of the Lender and the Borrower hereunder, shall
remain in full force and effect irrespective of: (i) any lack of validity or
enforceability of the Financing Agreement or any Loan Document or any other
agreement or instrument relating thereto, (ii) any change in the time, manner or
place of payment of, or in any other term in respect of, all or any of the
Obligations, or any other amendment or waiver of or any consent to departure
from the Financing Agreement or any Loan Document,
244
(iii) any exchange or release of, or non-perfection of any Lien on or security
interest in, any collateral, or any release or amendment or waiver of or consent
to departure from any guaranty, for all or any of the Obligations, or (iv) any
other circumstance which might otherwise constitute a defense available to, or a
discharge of, the Loan Parties in respect of the Obligations or the Lender or
the Borrower in respect of this Note.
The Lender waives any and all demands, presentments or notices (other than
notices specifically provided for in this Note) to which it otherwise might be
entitled, including, without limitation, any and all notices (i) of the creation
or accrual of any of the Obligations, (ii) of any extension, modification or
renewal of any of the Obligations and (iii) of the Senior Lenders' reliance on
the subordination provisions of this Note.
The Borrower may at any time prepay the whole or any part of the unpaid
principal amount of this Note, without penalty or premium, with interest accrued
to the date fixed for prepayment.
245
This Note shall be governed by, and construed and interpreted in
accordance with, the internal laws of the State of New York applicable to
contracts made and to be performed therein without consideration as to choice of
law.
MISS XXXXX, INC.
By:
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Name:
Title:
ACCEPTED AND AGREED:
NORTON XxXXXXXXXX OF XXXXXX, INC.
By:
--------------------------------
Name:
Title:
PAY TO THE ORDER OF:
NATIONSBANC COMMERCIAL CORPORATION,
as Collateral Agent
NORTON XxXXXXXXXX OF XXXXXX, INC.
By:
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Name:
Title:
