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EXHIBIT 10.1
MODIFIED AND RESTATED LOAN AGREEMENT
THIS MODIFIED AND RESTATED LOAN AGREEMENT dated as of June 19, 1998
(the "Loan Agreement") by and among CONSO PRODUCTS COMPANY, a South Carolina
corporation ("Conso"), and SIMPLICITY PATTERN CO., INC., a Delaware corporation
("Simplicity" -- hereinafter Conso and Simplicity are sometimes individually
referred to as a "Borrower" or collectively referred to as the "Borrowers"); and
NATIONSBANK, N.A., a national banking association existing under the
laws of the United States and having offices in Charlotte, North Carolina (the
"Bank").
RECITALS:
A. The Borrowers have requested that the Bank provide (i)
revolving loans of up to $30,000,000, (pound)7,000,000 of which would be
available for direct borrowing by British Trimmings Limited, an English company
("Trimmings"), and the balance of which would be available for the Borrowers,
(ii) letters of credit in an amount up to $3,000,000 and (iii) a term loan of
$20,000,000. The proceeds of the loans will be used to acquire 100% of the
capital stock of Simplicity Capital Corporation, a Delaware corporation ("SCC")
that is the indirect parent of Simplicity, to refinance existing indebtedness of
Conso and Trimmings to the Bank and to finance the ongoing working capital needs
of the Borrowers and Trimmings.
B. The Bank is willing to make the above-described credit
available to the Borrowers and Trimmings in accordance with the terms of this
Loan Agreement.
C. This Loan Agreement also amends and restates in its entirety
the terms and conditions of the Loan Agreement, dated as of November 25, 1996,
as amended as of June 5, 1997 and November 17, 1997, by and between Conso and
the Bank.
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, the Borrowers and the Bank hereby agree as
follows:
ARTICLE I
Definitions
1.01 For the purposes hereof:
"Advances" shall have the meaning given to such term in
Section 2.01;
"Business Day" means a day on which banks are open for the
transaction of business of the nature required in this Loan Agreement
in Charlotte, North Carolina;
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"Consistent Basis" in reference to the application of
Generally Accepted Accounting Principles, means that the accounting
principles observed in the period referred to are comparable in all
material respects to those applied in the most recent preceding period
except as to any changes required by the American Institute of
Certified Public Accountants or the Financial Accounting Standards
Board;
"Consolidated EBITDA" means, for any 12 month period of
computation, the sum of Consolidated Net Income for such period plus
interest, income taxes, depreciation and amortization to the extent
deducted in determining such Consolidated Net Income;
"Consolidated Fixed Charge Coverage Ratio" means for any
fiscal quarter, the ratio of (x) Consolidated EBITDA minus capital
expenditures (other than capital expenditures made in connection with
the construction of Conso's distribution and xxxxxxxx facilities and
related relocation and upfitting costs in the current facilities in
Union, South Carolina) minus income taxes (each computed for the 12
month period then ended) to (y) current maturities of Consolidated
Funded Indebtedness plus current maturities of capitalized leases plus
interest plus dividends (each computed for such 12 month period);
"Consolidated Funded Indebtedness" means as of the date of
determination, all Indebtedness of Conso and its Subsidiaries,
determined on a consolidated basis in accordance with Generally
Accepted Accounting Principles applied on a Consistent Basis, which by
its terms matures more than one year after the date of calculation, and
any such Indebtedness maturing within one year from such date which is
renewable or extendable at the option of the obligor to a date more
than one year from such date including, in any event, all Indebtedness
under this Loan Agreement;
"Consolidated Net Income" means for any period of computation,
the net income of Conso and its Subsidiaries, determined on a
consolidated basis in accordance with Generally Accepted Accounting
Principles applied on a Consistent Basis;
"Consolidated Tangible Net Worth" means at any time,
consolidated net stockholders' equity, determined in accordance with
Generally Accepted Accounting Principles applied on a Consistent Basis
minus the book value of assets which would be treated as intangibles
under Generally Accepted Accounting Principles, including, but not
limited to, goodwill, trade names, trademarks, copyright, patents and
unamortized debt discount and expenses;
"Dollar Advances" shall have the meaning given to such term in
Section 2.01;
"Dollar Note" shall have the meaning given to such term in
Section 2.03;
"Exchange Rate" means, in relation to the purchase of one
currency (for purposes of this definition the "first currency") with
another currency (for purposes of this definition the "second
currency") on a given date, the Bank's spot rate of exchange, for the
amount in question, in the London interbank market at or about 11:00
a.m. (Charlotte,
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North Carolina time) on such date for the purchase of the first
currency with the second currency, for delivery two Business Days
later;
"Financing Statements" means the financing statements and all
renewals and amendments thereto, whereby the Bank perfects its security
interest in the collateral described therein;
"Generally Accepted Accounting Principles" means those
principles of accounting set forth in pronouncements of the Financial
Accounting Standards Board, the American Institute of Certified Public
Accountants or which have other substantial authoritative support and
are applicable in the circumstances as of the date of a report, as such
principles are from time to time supplemented and amended;
"Guaranty" means (i) the Guaranty Agreement, dated as of the
date hereof, whereby the Borrowers guarantee the obligations of
Trimmings to the Bank under the Sterling Note and (ii) the Guaranty
Agreement, dated as of the date hereof, whereby SCC and Simplicity
Holdings, Inc. guarantee the obligations of the Borrowers to the Bank;
"Indebtedness" of any Person at any date means:
(a) all indebtedness of such Person for borrowed
money or for the deferred purchase price of property or
services (other than current trade liabilities incurred in the
ordinary course of business (and not incurred through the
borrowing of money) and payable in accordance with customary
practices);
(b) any other indebtedness which is evidenced by
a note, bond, debenture or similar instrument,
(c) all capital lease obligations of such
Person,
(d) all obligations of such Person in respect of
outstanding letters of credit, acceptances and similar
obligations created for the account of such Person, and
(e) all liabilities secured by any lien on any
property owned by such Person even though such Person has not
assumed or otherwise become liable for the payment thereof.
"Letter of Credit Applications" shall have the meaning given
to such term in Section 2.07 hereof;
"Letter of Credit Obligations" shall have the meaning given to
such term in Section 2.07 hereof;
"Letters of Credit" shall have the meaning given to such term
in Section 2.07 hereof;
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"Loan Documents" means this Loan Agreement, the Notes, the
Security Agreement, the Mortgages, the Financing Statements, the
Guaranty and the Letter of Credit Applications;
"Mortgages" means mortgages on the Borrower's facilities in
Union, South Carolina and Simplicity's facility in Niles, Michigan;
"Notes" means a collective reference to the Dollar Note, the
Term Note and the Sterling Note;
"Permitted Liens" shall mean, when used with respect to
Conso's and Simplicity's assets (real or personal, tangible or
intangible), any of the following liens or encumbrances:
(i) liens securing any indebtedness
(specifically including any liens created under any of the
Loan Documents or heretofore existing in favor of the Bank) to
the Bank or any of its successors or assigns;
(ii) liens imposed by mandatory provisions of law
of carriers, warehousemen, mechanics and materialmen incurred
in the ordinary course of business;
(iii) liens incurred in the ordinary course of
business in connection with worker's compensation,
unemployment insurance or other forms of governmental
insurance or benefits;
(iv) liens for taxes, assessments or governmental
charges or levies if the underlying obligations for the same
are not delinquent or are being contested in good faith and
with due diligence by appropriate proceedings;
(v) liens set forth on Exhibit A hereto; and
(vi) liens incurred in the ordinary course of
business that are not material to Conso's consolidated
financial position;
(vii) extensions or renewals of any Permitted
Lien.
"Person" means an individual, partnership, limited liability
company, corporation, trust, unincorporated organization, association,
joint venture or a government or agency or political subdivision
thereof;
"Revolving Loan Committed Amount" shall have the meaning given
to such term in Section 2.01;
"Security Agreement" means the Security Agreement, dated as of
the date hereof, whereby Conso and Simplicity grant to the Bank a
security interest in all of their United States personal property
assets, tangible or intangible, whether now owned or hereinafter
acquired, as set forth therein;
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"Sterling Advances" shall have the meaning given to such term
in Section 2.01;
"Sterling Note" shall have the meaning given to such term in
Section 2.02;
"Subsidiary" or "Subsidiaries" means any corporation or
corporations of which more than fifty percent (50%) of the voting stock
at the time of computation is owned, directly or indirectly, by Conso
or a Subsidiary;
"Termination Date" means December 1, 2000; provided, however,
the Bank in its sole discretion may elect to extend such date for
additional two-year periods upon the request of Conso; provided
further, that in the event the Bank elects not to extend the
Termination Date or any extension thereof for an additional two-year
period in accordance with the request of Conso, the Bank shall give
Conso notice thereof at least 60 days prior to the end of the
applicable period (regardless of whether Conso shall have theretofore
formally requested an extension);
"Term Loan" shall have the meaning given to such term in
Section 2.08.
"Term Note" shall have the meaning given to such term in
Section 2.08.
"Trimmings" shall have the meaning given to such term in
Recital A hereof; and
"Trimmings Company" means a collective reference to Trimmings
and each of its Subsidiaries.
1.02 All accounting terms not specifically defined herein shall be
construed in accordance with Generally Accepted Accounting Principles applied on
a Consistent Basis.
ARTICLE II
Revolving Loans, Letters of Credit and Term Loan
2.01 The Bank agrees, on the terms herein set forth, to make
revolving loan advances (the "Advances") from time to time during the period
from the date hereof to the Termination Date in an amount equal to $30,000,000
(or such higher or lesser amount as the parties hereto may from time to time
agree) (the "Revolving Loan Committed Amount"). The Bank agrees that a portion
of the Advances shall be available to Trimmings for direct borrowings in U.K.
Pounds Sterling (the "Sterling Advances") in an aggregate amount up to
(pound)7,000,000 at any time outstanding. The Bank agrees that the remaining
portion of the Advances shall be available to the Borrowers in U.S. dollars (the
"Dollar Advances"). Within the limits set forth herein and in the Sterling Note
(as hereinafter defined) and the Dollar Note (as hereinafter defined), the Bank
shall make Advances, accept payments and prepayments pursuant to the terms
hereof and readvance any amount so paid or prepaid.
2.02 The Sterling Advances shall be made, shall be repaid and shall
bear interest in accordance with the terms of that certain Promissory Note of
even date herewith executed by
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Trimmings in favor of the Bank in the original principal amount of up to
(pound)7,000,000 (the "Sterling Note"), the terms of which are incorporated
herein by reference.
2.03 The Dollar Advances shall be made, shall be repaid and shall
bear interest in accordance with the terms of that certain Promissory Note of
even date herewith executed by the Borrowers in favor of the Bank in the
original principal amount of up to $30,000,000 (the "Dollar Note"), the terms of
which are incorporated herein by reference.
2.04 If the U.S. dollar equivalent of the outstanding principal
balance of the Sterling Note (based upon the most recently available Exchange
Rate) plus the outstanding principal balance of the Dollar Note plus the then
outstanding Letter of Credit Obligations shall at any time exceed U.S.
$33,000,000, the Borrowers shall within five Business Days after receiving
notice thereof from the Bank make a repayment to the Bank for purposes of
eliminating such excess, with such repayment to be applied first to the Dollar
Note and then to the Sterling Note to the extent of any surplus payment amount.
The Borrowers agree to deliver to the Bank within 15 days after the end of each
month a certificate setting forth as of the last day of such month (i) the U.S.
dollar equivalent of the outstanding principal balance of the Sterling Note
(based upon the Exchange Rate as of the last day of such month), (ii) the
outstanding principal balance of the Dollar Note, (iii) the outstanding Letter
of Credit Obligations, (iv) the sum of items (i) and (ii) above and (v) and the
difference between the Revolving Loan Committed Amount and the sum of items (i)
and (ii).
2.05 The obligation of the Bank to make any Advance or to issue any
Letter of Credit shall be subject to the satisfaction of the following
conditions:
(a) the representations and warranties set forth in
Article IV hereof shall be true and correct in all material respects as
of the day of the making of such Advance or the issuance of such Letter
of Credit, except to the extent any such representation or warranty
relates to a prior date;
(b) at the time of the making of and immediately after
the making of such Advance or the issuance of such Letter of Credit
there shall have occurred or be continuing no Event of Default, or
event which upon notice or lapse of time or both would constitute an
Event of Default; and
(c) immediately after the making of such Advance or the
issuance of such Letter of Credit, the sum of the U.S. dollar
equivalent of the outstanding principal balance of the Sterling Note
(based upon the most recently available Exchange Rate) plus the
outstanding principal balance of the Dollar Note plus the then
outstanding Letter of Credit Obligations shall not exceed U.S.
$33,000,000.
Each Advance made at the request of either Borrower or Trimmings, as the case
may be, hereunder shall be deemed to be a reaffirmation on the date of such
Advance as to the matters specified in subsections (a) and (b) hereof.
2.06 The Borrowers shall have the right from time to time, upon
written notice to the Bank, to voluntarily reduce the Revolving Loan Committed
Amount; provided, however, if upon such reduction the U.S. dollar equivalent of
the outstanding principal balance of the Sterling
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Note (based upon the most recently available Exchange Rate) plus the outstanding
principal balance of the Dollar Note shall exceed such reduced Revolving Loan
Committed Amount, the Borrowers shall make a repayment to the Bank for purposes
of eliminating such excess, with such repayment to be applied first to the
Dollar Note and then to the Sterling Note to the extent of any surplus payment
amount.
2.07 The Bank also agrees to issue standby and documentary letters
of credit (the "Letters of Credit") on the Borrowers' application from time to
time at the Borrowers' request in accordance with the following terms and
conditions:
(a) The Borrowers will execute a letter of credit
application on the Bank's standard form in connection with the issuance
of each Letter of Credit (hereinafter the "Letter of Credit
Applications");
(b) Each Letter of Credit shall be in the Bank's then
customary form for letters of credit of this type;
(c) No Letter of Credit shall have a term in excess of
one year;
(d) No Letter of Credit shall have an expiration date
more than six months beyond the Termination Date;
(e) (i) The aggregate undrawn amounts of the Letters
of Credit at any time outstanding plus the outstanding principal amount
of amounts drawn under the Letters of Credit and not reimbursed by the
Borrowers (the "Letter of Credit Obligations") shall not exceed
$3,000,000 and (ii) the Letter of Credit Obligations plus the
outstanding principal balance of the Dollar Advances plus the U.S.
dollar equivalent of the Sterling Advances (based upon the most
recently available Exchange Rate) shall not exceed U.S. $33,000,000;
(f) The Bank is authorized to reimburse itself for
amounts drawn under the Letters of Credit by disbursing directly to
itself proceeds of the Dollar Advances;
(g) Amounts drawn under the Letters of Credit shall be
payable in accordance with the terms of the Letter of Credit
Applications; and
(h) The Borrowers shall pay the Bank a fee with respect
to each standby Letter of Credit equal to 1% per annum on the amount of
such Letter of Credit for the period commencing on the date of its
issuance through the date of its expiration, such fee to be payable
quarterly in arrears. The Borrowers shall pay the Bank such fees with
respect to the documentary Letters of Credit as are agreed to by the
Borrowers and the Bank from time to time.
(i) If at any time after the date hereof, and from time
to time, the Bank reasonably determines that the adoption or
modification of any applicable law, rule or regulation regarding
taxation, the Bank's required levels of reserves, deposits, insurance
or capital (including any allocation of capital requirements or
conditions), or similar requirements, or any interpretation or
administration thereof by any governmental authority, central
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bank or comparable agency charged with the interpretation,
administration or compliance of the Bank with any of such requirements,
has or would have the effect of (i) increasing the Bank's costs
relating to the Letters of Credit hereunder, or (ii) reducing the yield
or rate of return of the Bank on the Letters of Credit hereunder, to a
level below that which the Bank could have achieved but for the
adoption or modification of any such requirements, the Borrowers shall,
within 15 days of any written request (which request shall state in
reasonable detail the basis therefor) by the Bank, pay to the Bank such
additional amounts as will compensate the Bank for such increase in
costs or reduction in yield or rate of return of the Bank for the
period commencing 90 days prior to the date of such written request.
Upon determining in good faith that any additional amounts will be
payable pursuant to this Section, the Bank will give prompt written
notice thereof to the Borrowers, which notice shall set forth in
reasonable detail the basis of the calculation of such additional
amounts. Nothing herein contained shall be construed or so operate as
to require the Borrowers to pay any interest, fees, costs or charges
greater than is permitted by applicable law.
2.08 The Bank agrees to make a term loan of $20,000,000 to the
Borrowers on the date hereof (the "Term Loan"). The Term Loan shall be paid and
shall bear interest in accordance with further terms of that certain Promissory
Note of even date herewith executed by the Borrowers in favor of the Bank in the
original principal amount of $20,000,000 (the "Term Note), the terms of which
are incorporated herein by reference.
ARTICLE III
Security
3.01 The Borrowers will deliver the following documents:
(a) the Mortgages;
(b) the Security Agreement;
(c) the Financing Statements; and
(d) the Guaranty.
The collateral granted to the Bank by the Borrowers under the Security
Agreement and the Mortgages secures the obligations of the Borrowers to the Bank
under this Loan Agreement, the Dollar Note, the Term Note and the Guaranty. The
Borrowers have guaranteed the obligations of Trimmings to the Bank under the
Sterling Note pursuant to the Guaranty.
3.02 At the request of the Bank, the Borrowers will execute by
their duly authorized officers, alone or with the Bank, any certificate,
instrument, statement or document and will procure any such certificate,
instrument, statement or document (and pay all reasonable connected costs) which
the Bank reasonably deems necessary to preserve the security interest of the
Bank contemplated hereby.
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3.03 The Bank agrees to release its lien and/or security interest
in the Borrowers' real estate and machinery and equipment upon the receipt by
the Bank of audited financial statements of the Borrowers confirming that the
Borrowers' ratio of Consolidated Funded Indebtedness (as of the date of such
financial statements) to Consolidated EBITDA (for the four fiscal quarterly
periods ending as of the date of such financial statements) is less than 1.0 to
1.0; provided, however, the Bank shall not be obligated to release its lien
and/or security interest as described above if an Event of Default, or an event
which constitute such an Event of Default but for the requirement that notice be
given or time elapse or both, then exists.
ARTICLE IV
Representations and Warranties
4.0l The Borrowers represent and warrant that:
(a) (i) Conso and each of its Subsidiaries is a
corporation, duly organized, validly existing and in good
standing under the laws of the jurisdictions in which they are
incorporated;
(ii) Conso and each of its Subsidiaries has the
corporate power and authority to own its properties and assets
and to carry on its business as now being conducted and is
qualified to do business in every jurisdiction in which, by
reason of the character of its business, it is required to
qualify as a foreign corporation (other than those
jurisdictions where the failure to so qualify could not be
reasonably expected to subject any such Person to any material
liability or disability);
(iii) Each Borrower has the corporate power and
authority to execute and perform this Loan Agreement, to
borrow hereunder and to execute and deliver each of the Loan
Documents to which it is a party, and all other certificates,
instruments and documents with respect to the indebtedness of
each Borrower hereunder;
(iv) Trimmings has the corporate power and
authority to execute and perform the Sterling Note, to borrow
thereunder and to execute and deliver all other certificates,
instruments and documents with respect to the indebtedness of
Trimmings thereunder;
(v) when executed and delivered, the Loan
Documents will be valid and binding obligations of Conso,
Simplicity and Trimmings enforceable in accordance with their
respective terms, except as enforceability (i) may be limited
by bankruptcy, insolvency, moratorium, reorganization or other
similar laws relating to creditors rights generally and (ii)
is subject to general principles of equity;
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(vi) the material Subsidiaries of Conso as of the
date hereof are set forth on Exhibit B attached hereto and
except as set forth on Exhibit B, Conso has no material
Subsidiaries;
(b) the execution, delivery and performance of the Loan
Documents:
(i) have been duly authorized by all requisite
corporate action of Conso, Simplicity and Trimmings required
for the lawful execution and delivery thereof;
(ii) do not violate any provisions of law, any
order of any court or other agency of government or the
charter documents or by-laws (or any other applicable organic
document) of Conso, Simplicity or Trimmings;
(iii) will not be in conflict with, result in a
breach of or constitute an event of default nor an event
which, upon notice or lapse of time, or both, would constitute
such an event of default under any indenture, agreement or
other instrument to which Conso, Simplicity or Trimmings is a
party, except for any such conflict, breach or default that
could not be reasonably expected to have a material adverse
effect on Conso's consolidated financial condition;
(iv) will not result in the creation or
imposition of any lien, charge or encumbrance of any nature
whatsoever upon any of the properties or assets of Conso,
Simplicity or Trimmings except to the extent any liens are
created by such Loan Documents;
(c) (i) Conso has heretofore furnished the Bank with
an (A) audited consolidated balance sheet of Conso and its
Subsidiaries as of June 28, 1997 and the related audited
consolidated statements of operations for the 12 months then
ended and the notes thereto and (B) an unaudited consolidated
balance sheet of Conso and its Subsidiaries as of March 28,
1998 and the related unaudited consolidated statements of
operations for the nine months then ended. Such financial
statements have been prepared in accordance with Generally
Accepted Accounting Principles applied on a Consistent Basis
throughout the period involved (except that the unaudited
financial statements are subject to normal year-end
adjustments and lack certain notes); the consolidated balance
sheets and the notes thereto present fairly in all material
respects the financial position of Conso and its Subsidiaries
as of the dates thereof, and the consolidated statements of
operations and the notes thereto present fairly in all
material respects the results of the operation of Conso and
its Subsidiaries for the periods indicated;
(ii) since the date of the financial statements
described in Section 4.01(c)(i) hereinabove, except for (A)
matters disclosed in documents and reports filed by Conso with
the United States Securities
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and Exchange Commission and (B) the acquisition of all of the
outstanding capital stock of SCC, there has been no material
adverse change in the condition, financial or otherwise, of
Conso and its Subsidiaries nor have their businesses or
properties been adversely affected as a result of any fire,
explosion, earthquake, accident, strike, lockout, combination
of workers, flood, embargo, acts of God or by cancellation or
loss of any major contract;
(d) there is no action, suit or proceeding at law or in
equity or by or before any governmental instrumentality or agency or
arbitral body now pending or, to the knowledge of Conso, threatened by
or against or affecting Conso or any of its Subsidiaries or any
properties or rights of Conso or any of its Subsidiaries which, if
adversely determined, would materially impair the right of Conso or any
of its Subsidiaries to carry on business substantially as now conducted
or could be reasonably expected to materially adversely affect the
financial condition, business or operations of Conso or any of its
Subsidiaries;
(e) (i) Conso has filed or caused to be filed all
federal and all material state and local tax returns which are required
to be filed and has paid or caused to be paid or is otherwise
contesting in good faith all taxes as shown on said returns or on any
assessment received by it, to the extent that such taxes have become
due and (ii) each of its Subsidiaries has filed or caused to be filed
all material tax returns which are required to be filed and have paid
or caused to be paid or is otherwise contesting in good faith all taxes
as shown on said returns or on any assessment received by them, to the
extent that such taxes have become due (except with respect to clauses
(i) and (ii), where the failure to file any such return or to pay any
such taxes could not be reasonably expected to have a material adverse
effect on Conso and its Subsidiaries taken as a whole);
(f) neither Conso nor any of its Subsidiaries is
(i) a party to any judgment, order, decree or
any agreement or instrument or subject to corporate
restrictions materially adversely affecting its business,
properties or assets, operations or condition (financial or
otherwise);
(ii) in default in the performance, observance or
fulfillment of any material obligations, covenants or
conditions contained in any material agreement or instrument
to which it is a party;
(g) no part of the proceeds of any loan hereunder will be
used to purchase or carry or to reduce or retire any loan incurred to
purchase or carry, any "margin stock" (within the meaning of Regulation
U of the Board of Governors of the Federal Reserve System) or to extend
credit to others for the purpose of purchasing or carrying any such
margin stocks; provided, however, nothing contained herein shall
prohibit Conso from (i) instituting a loan program pursuant to which it
makes loans to employees and other participants in its employee stock
option plan to fund their payment of the exercise price for stock
options granted
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pursuant to such plan or (ii) repurchasing up to 500,000 shares of its
common stock after the date hereof so long as no Event of Default
exists immediately prior to or immediately after any such repurchase.
Neither Conso nor any of its Subsidiaries is engaged, as one of their
important activities, in extending credit for the purpose of purchasing
or carrying such margin stock. If requested by the Bank and to the
extent applicable, Conso, Simplicity and Trimmings will furnish to the
Bank in connection with any loan hereunder, a statement in conformance
with the requirements of Federal Reserve Form U-1 referred to in said
Regulation. In addition, no part of the proceeds of any loan hereunder
will be used for the purchase of commodity future contracts (or margins
therefor for short sales) for any commodity not required for the normal
raw material inventory of Conso or any of its Subsidiaries;
(h) Conso and each of its Subsidiaries possess all
necessary material patents, licenses, trademarks, trademark rights,
tradenames, tradename rights, copyrights or other similar intellectual
property rights to conduct their respective businesses without known
conflict with any patent, license, trademark, tradename, copyrights or
other similar intellectual property rights of any other Person except
for any such conflict which could not be reasonably expected to have a
material adverse effect on Conso and its Subsidiaries;
(i) none of the Loan Documents contains any material
misrepresentation or untrue statement of a material fact or omits to
state a material fact necessary in order to make any such
representation or statement contained therein not misleading;
(j) neither the nature of Conso or any of its
Subsidiaries nor of their respective businesses or properties, nor any
relationship between Conso or any of its Subsidiaries and any other
Person, nor any circumstance in connection with the offer, issue, sale
or delivery of the Notes is such as to require a consent, approval or
authorization of, or filing, registration or qualification with, any
governmental authority on the part of Conso, Simplicity or Trimmings as
a condition to the execution and delivery of this Loan Agreement or any
other Loan Document;
(k) neither Conso nor any of its Subsidiaries has
incurred or assumed any liability for any accumulated unfunded
deficiency within the meaning of the Employee Retirement Income
Security Act of 1974 as amended ("ERISA") or has incurred any material
liability to the Pension Benefit Guaranty Corporation ("PBGC")
established under ERISA (or any successor thereto under ERISA) in
connection with any employee benefit plan established or maintained by
Conso and any of its Subsidiaries;
(l) except as set forth on Exhibit A and for other
Permitted Liens, the Borrowers have good and marketable fee simple
title to their assets; and
(m) the business of Conso and its Subsidiaries has been
operated in compliance in all respects with all applicable federal,
state, local and foreign laws, regulations, orders, ordinances,
judgments and decrees (including, for example, matters
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relating to the environment, discrimination, employment and health and
safety), except for such matters, if any, as may have been previously
disclosed by Conso to the Bank in writing and for violations which
could not be reasonably expected to have a material adverse effect on
the financial condition, business or results of operations of Conso.
All material permits, certificates, licenses, approvals, and other
authorizations that are required in connection with the operation of
the respective businesses of Conso and its Subsidiaries have been
issued, and, as of the date hereof and immediately thereafter Conso and
its Subsidiaries will have all material permits, certificates,
licenses, approvals and other authorizations required in connection
with the operation of their respective businesses.
ARTICLE V
Affirmative Covenants
5.01 Conso covenants and agrees that from the date hereof and until
payment in full of all principal and interest on the Notes and until the
commitment of the Bank to make loans and issue Letters of Credit hereunder has
been terminated (unless the Bank shall otherwise consent in writing), Conso
will:
(a) as soon as practical and in any event not later than
within one hundred twenty (120) days of the end of each fiscal year
ending after the date hereof, deliver to the Bank a financial report in
U.S. Dollars including a consolidated balance sheet of Conso and its
Subsidiaries as at the end of such fiscal year, and the related
consolidated statements of operations, shareholders' equity and cash
flows for such fiscal year and the notes thereto, setting forth in each
case comparative financial statements for the preceding year, all
prepared in accordance with Generally Accepted Accounting Principles
applied on a Consistent Basis and containing an unqualified opinion of
independent certified public accountants selected by Conso and
reasonably acceptable to the Bank (it being understood and agreed that
delivery by Conso to the Bank of its Annual Report on Form 10-K as
filed with the Securities and Exchange Commission shall be deemed to
satisfy this Section 5.01(a));
(b) as soon as practical and in any event not later than
within fifty (50) days after the end of each fiscal quarter (except the
fourth and final fiscal quarter) of each fiscal year of Conso, deliver
to the Bank a financial report in U.S. Dollars including a consolidated
balance sheet of Conso and its Subsidiaries as at the end of such
quarterly period and the related consolidated statements of operations,
shareholders' equity and cash flows for the period from the beginning
of the current fiscal year to the end of such quarterly period (it
being understood and agreed that delivery by Conso to the Bank of its
Quarterly Report on Form 10-Q as filed with the Securities and Exchange
Commission shall be deemed to satisfy this Section 5.01(b)), together
with a financial covenant compliance report setting forth the actual
results of the covenants set forth in Sections 5.01(g), (h) and (i)
below as of the last day of such quarter then ending, all prepared in
accordance with Generally Accepted Accounting Principles applied on a
Consistent Basis
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(subject to normal year-end adjustments which could not be reasonably
expected to have a material adverse affect on Conso's consolidated
financial condition, and the absence of certain footnotes) and
certified by the chief financial officer of Conso as presenting fairly
in all material respects the consolidated financial condition of Conso
and its Subsidiaries;
(c) together with each delivery of financial reports
required by Sections 5.01(a) and (b) hereof, deliver to the Bank a
statement signed by the chief financial officer of Conso setting forth
that, to the best of his knowledge, the Borrowers and Trimmings have
kept, observed, performed and fulfilled in all material respects each
and every material agreement binding on them contained in the Loan
Documents and that no Event of Default specified in Article VII hereof,
nor any event, which, upon notice or lapse of time or both, would
constitute such an Event of Default, has occurred, or if such Event of
Default exists or would occur as the case may be, stating the nature
thereof, the period of existence thereof and what action Conso proposes
to take with respect thereto;
(d) promptly upon becoming available, deliver to the Bank
a copy of all documents filed by Conso with the Securities and Exchange
Commission;
(e) promptly, from time to time, deliver to the Bank such
other information regarding the operations, business, affairs and
financial condition of Conso and its Subsidiaries as the Bank may
reasonably request. The Bank is hereby authorized to deliver a copy of
any such financial information delivered hereunder to the Bank to any
regulatory authority having jurisdiction over the Bank that requests
such information;
(f) together with each delivery of the financial
statements required by Section 5.01(a) hereof, deliver to the Bank a
letter of Conso's certified public accountants stating that in
performing the examination necessary to render an opinion on the
financial statements delivered therewith, they obtained no knowledge of
any Event of Default by Conso in the fulfillment of the terms and
provisions of the financial covenants contained in Sections 5.01(g)-(i)
of this Loan Agreement; and if the accountants have obtained knowledge
of such an Event of Default a statement specifying, to the best of
their knowledge, the nature and period of existence thereof;
(g) maintain for Conso and its Subsidiaries on a
consolidated basis at the end of each fiscal quarter a ratio of
Consolidated Funded Indebtedness (computed on the last day of such
quarter) to Consolidated EBITDA (computed for the 12 months then ended)
of no greater than 3.0 to 1.0;
(h) maintain for Conso and its Subsidiaries on a
consolidated basis at the end of each fiscal quarter a Consolidated
Fixed Charge Coverage Ratio of at least 1.5 to 1.0 (computed for the
fiscal 12 months then ending);
(i) maintain for Conso and its Subsidiaries on a
consolidated basis at the end of each fiscal quarter a ratio of
Consolidated Funded Indebtedness
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(computed on the last day of such quarter) to Consolidated Funded
Indebtedness plus Consolidated Tangible Net Worth (each computed on the
last day of such quarter) of not greater than .75 to 1.0.;
(j) maintain, and cause each of its Subsidiaries to
maintain, all material items of personal property in good working order
and condition and make all material needed repairs, replacements and
renewals as is necessary to conduct the business in accordance with its
customary business practices;
(k) do or cause to be done all things necessary to
preserve and keep in full force and effect the corporate existence,
rights and franchises of Conso, Simplicity and Trimmings;
(l) pay all taxes, assessments, governmental charges,
material claims for labor, significant amounts of supplies, rent and
any other material obligation which, if unpaid, might become a lien
against any of the property of Conso and its Subsidiaries except (i)
liabilities being contested in good faith and against which, if
reasonably requested by the Bank, reserves reasonably satisfactory to
the Bank will be established, or (ii) liabilities the payment of which
could not be reasonably expected to have a material adverse effect on
the condition of Conso and its Subsidiaries, taken as a whole;
(m) maintain insurance covering Conso's and Simplicity's
inventory, property, plant and equipment that shall provide that, in
case of each separate loss with respect to casualty insurance in excess
of $100,000, the full amount of insurance proceeds with respect thereto
shall be payable to the Bank as secured party, or otherwise as its
interest may appear. All such insurance proceeds received by the Bank
shall at its option be applied to reduce the outstanding balance under
the Notes and the Loan Agreement with the excess proceeds, if any,
remitted in full to Conso;
(n) continue to conduct and operate the business of Conso
and its Subsidiaries substantially as such businesses were conducted
and operated during the present and preceding fiscal year;
(o) preserve, protect, retain and maintain free from
material encumbrances the material patents, licenses, trademarks,
trademark rights, tradenames, tradename rights and copyrights of Conso
and its Subsidiaries;
(p) keep accurate books of records and accounts in
accordance with Generally Accepted Accounting Principles applied on a
Consistent Basis, and in which full, accurate and correct entries will
be made of all of the dealings and transactions of Conso and its
Subsidiaries;
(q) permit any officer of the Bank designated in writing
by the Bank to visit and inspect any of the properties, corporate books
and financial records of Conso and its Subsidiaries at such times as
the Bank may reasonably request upon reasonable notice and during
ordinary business hours;
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16
(r) upon the written request of the Bank, authorize any
officer of the Bank to discuss the financial statements and financial
affairs of Conso, Simplicity or Trimmings at any time from time to time
with Conso's independent certified public accountants upon reasonable
notice and during ordinary business hours;
(s) deliver to the Bank forthwith, upon any officer of
Conso obtaining knowledge of an Event of Default or an event which
would constitute such an Event of Default but for the requirement that
notice be given or time elapse or both, a certificate of the chief
executive officer or treasurer of Conso specifying the nature and
period of existence thereof and what action Conso proposes to take with
respect thereto;
(t) notify the Bank in writing within five (5) Business
Days of the earlier of the occurrence or the obtaining of any knowledge
by any executive officer of Conso of any of the following with respect
to Conso or any of its Subsidiaries:
(i) the pendency or commencement of any material
action, suit or proceeding at law or in equity wherein the
opposing party seeks damages of more than $250,000 which is
not dismissed within 30 days of the filing thereof;
(ii) any levy of an attachment, execution or
other process against the assets of Conso or any of its
Subsidiaries worth in excess of $100,000 in the aggregate
which is not released, dismissed or discharged within 30 days
of such levy;
(iii) any change in any existing agreement or
contract which could be reasonably expected to materially
adversely affect the business or affairs, financial or
otherwise, of Conso and its Subsidiaries taken as a whole;
(iv) if the consummation thereof would have a
material effect on the condition of Conso and its Subsidiaries
taken as a whole, the intent of Conso or any of its
Subsidiaries to enter into any agreement or plan of merger or
acquisition, and the effect of any such merger or acquisition
on the financial condition of Conso and its Subsidiaries;
(u) make prompt payment of all contributions required
under all employee benefit plans ("Plans") and required to meet the
minimum funding standard set forth in ERISA with respect to the Plans
of Conso; (b) upon the request of the Bank furnish to the Bank copies
of each annual report/return (Form 5500 Series), as well as all
schedules and attachments required to be filed with the Department of
Labor and/or the Internal Revenue Service pursuant to ERISA, and the
regulations promulgated thereunder, in connection with each of the
Plans of Conso for each plan year; (c) notify the Bank promptly of any
fact, including, but not limited to, any Reportable Event (as defined
in ERISA) arising in connection
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17
with any of the Plans of Conso, which would reasonably be expected to
constitute grounds for termination thereof by the PBGC or for the
appointment by the appropriate United States District Court of a
trustee to administer such United States District Court of a trustee to
administer such Plan, (d) provide the Bank with a statement, if
requested by the Bank, as to the reason therefor and the action, if
any, proposed to be taken with respect thereto, together with a copy of
the notice of such Reportable Event given to the PBGC or a statement
that said notice will be filed with the annual report to the United
States Department of Labor with respect to such Plan if such filing has
been authorized, (e) promptly after receipt thereof, provide the Bank
with a copy of any material notice Conso may receive from the United
States Department of Labor, the Internal Revenue Service or the PBGC
with respect to such Plan; and (f) furnish to the Bank, upon its
request, such additional information concerning any of the Plans of
Conso as may be reasonably requested;
(v) comply with or contest in good faith, and cause each
of its Subsidiaries to comply with or contest in good faith, all
material statutes and governmental regulations (including all federal,
state and local requirements relating to protection of health or the
environment) in connection with the operation of Conso's or any of such
Subsidiaries' business;
(w) maintain its and its Subsidiaries' primary banking
relationships with the Bank (provided, that Trimmings may maintain its
existing banking relationships in the United Kingdom with its current
lender (or such lender's successors)); and
(x) offer the Bank the first opportunity to negotiate
with Conso with respect to the financing needs of any Trimmings
Company.
ARTICLE VI
Negative Covenants
6.01 Until payment in full of the principal and interest of the
Notes and until the commitment of the Bank to make loans and issue Letters of
Credit hereunder has been terminated, Conso covenants that (without the prior
written consent of the Bank) it will not, nor will it permit any of its
Subsidiaries to:
(a) incur or permit to exist any Indebtedness other than
(i) Indebtedness of any Trimmings Company consisting of an overdraft
facility of up to (pound)600,000, a letter of credit facility of up to
(pound)260,000 and a term loan of (pound)62,500 maturing June, 1998;
(ii) Indebtedness owed to the Bank; or (iii) $500,000 for purchase
money and other Indebtedness;
(b) incur, create or permit to exist any pledge, security
interest, lien, charge or other encumbrance of any nature whatsoever on
any assets (real or personal, tangible or intangible) of Conso or any
of its Subsidiaries, whether now
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owned or hereafter acquired, other than the Permitted Liens and
pledges, security interests, liens, charges and encumbrances securing
Indebtedness permitted by Section 6.01(a); or
(c) make or permit (i) all directors and executive
officers of Conso as a group to own less than 30% of the issued and
outstanding shares of common stock, no par value, of Conso, (ii) any
change in ownership of Simplicity that would result in Simplicity
ceasing to be a direct or indirect Subsidiary of Conso or (iii) any
change in ownership of Trimmings or any other Trimmings Company if any
such change in ownership would have a material adverse effect on Conso
and its Subsidiaries, taken as a whole.
ARTICLE VII
Events of Default and Acceleration
7.01 Any of the following shall constitute an event of default
hereunder (hereinafter an "Event of Default"):
(a) the failure of Conso, Simplicity or Trimmings to make
payment when due of any installment of principal or payment of interest
required by any of the Notes and the continuation of such failure for a
period of 3 days;
(b) the failure of Conso, Simplicity or Trimmings to
comply with any other covenants or terms in this Loan Agreement or any
other Loan Document and the continuation of such failure for a period
of thirty (30) days after Conso receives written notice thereof from
the Bank;
(c) if any representation or warranty made by Conso or
Simplicity in this Loan Agreement or in any other Loan Document or by
Conso, Simplicity or Trimmings in any certificate, statement or report
heretofore or hereafter furnished by Conso, Simplicity or Trimmings to
the Bank shall be untrue in any material respect;
(d) in the event that Conso or Simplicity
(i) shall make an assignment for the benefit of
creditors; or
(ii) has a petition initiating a proceeding under
any section or chapter of the Bankruptcy Code or its
amendments, filed by or against it and, if against it, such
petition is not set aside within sixty (60) days after such
filing; or
(iii) shall file any proceedings for dissolution
or liquidation; or
(iv) has a receiver, trustee or custodian
appointed for all or part of its assets; or
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(v) seeks to make an adjustment, settlement or
extension of its debts with its creditors generally; or
(vi) has a notice of an action for enforcement of
a lien filed or recorded or a judgment lien or execution
obtained against it in excess of an aggregate of $250,000.00
which notice of lien or judgment lien or execution is not
removed, or satisfied or contested in good faith within sixty
(60) days after any of its officers becomes aware thereof; or
(e) in the event that:
(i) any petition is presented by any Person
(other than a petition which, in the reasonable opinion of the
Bank, is frivolous or vexatious and which is withdrawn or
stayed within 60 days) or any order is made by any competent
court or any resolution is passed by any Trimmings Company for
its winding up or dissolution or for the appointment of a
liquidator of any Trimmings Company (except for the purpose of
a solvent amalgamation or reconstruction on terms and
conditions which shall have first been approved by the Bank);
(ii) any Trimmings Company has a receiver or
administrative receiver or manager or sequestrator appointed
over the whole or any part of the undertakings, assets, rights
or revenues of such Trimmings Company and such action is not
lifted or discharged within sixty (60) days after any of its
officers becomes aware thereof;
(iii) any Trimmings Company proposes or enters
into any composition or other arrangement for the benefit of
its creditors generally; or
(iv) any Trimmings Company has notice of any
proposed distress or other process to be levied or enforced on
any of the assets, rights or remedies of such Trimmings
Company in respect of any indebtedness in excess of $250,000
and any such action is not lifted, discharged, satisfied or
contested in good faith within 60 days after any of is
officers becomes aware thereof;
(f) if Conso or any of its Subsidiaries defaults in the
performance of any agreement between it and the Bank or any other
lender with respect to indebtedness for borrowed money in excess of
$250,000.00 of Conso or any of such Subsidiaries (including capitalized
lease indebtedness) and such default results in the acceleration of
such indebtedness or would permit the Bank or such other lender to
accelerate such indebtedness.
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7.02 Upon the occurrence of any Event of Default:
(a) the Bank's commitment to make Advances shall
terminate and all of the indebtedness of any and every kind owing by
Conso, Simplicity or Trimmings to the Bank shall become due and payable
upon written notice to Conso (other than an Event of Default described
in Section 7.01(d) or (e) in which case the Bank's commitment to make
Advances shall automatically terminate and such indebtedness shall
become due and payable immediately without necessity of written demand)
without the necessity of any other demand, presentment, protest or
notice upon Conso, Simplicity and/or Trimmings, all of which are hereby
expressly waived by Conso, Simplicity and Trimmings;
(b) all of the obligations of Conso, Simplicity and
Trimmings under the Loan Documents shall upon delivery of such written
notice be immediately due and payable without the necessity of any
other demand, presentment, protest or notice upon Conso, Simplicity
and/or Trimmings, all of which are hereby expressly waived by Conso,
Simplicity and Trimmings;
(c) regardless of the adequacy of the collateral, the
Bank shall have the right, immediately and without further action by
it, to set-off against the Notes all money owed by the Bank in any
capacity to Conso, Simplicity or Trimmings, whether or not due, and the
Bank shall be deemed to have exercised such right of set-off and to
have made a charge against any such money immediately upon the
occurrence of such Event of Default even though such charge is made or
entered on the books of the Bank subsequent thereto; and
(d) the Bank may demand, and Conso and Simplicity shall
immediately pay to the Bank upon such demand, cash in an amount equal
to the then outstanding Letter of Credit Obligations which will be held
in a cash collateral account in the name of the Bank and under the
dominion and control of the Bank as additional security for the
reimbursement obligations which may thereafter arise on account of
subsequent drawings or payments under the Letters of Credit.
ARTICLE VIII
Miscellaneous
8.01 Any notice shall be conclusively deemed to have been received
by any party hereto and be effective on the day on which delivered to such party
at the address set forth below or such other address as such party shall specify
to the other party in writing, or if sent prepaid by certified or registered
mail or by telegram or telex (where the receipt of such message is verified by
return) on the third Business Day after the day on which mailed (or sent),
addressed to such party at said address:
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(a) if to Conso, Simplicity or Trimmings at the following
address:
c/o Conso Products Company
X.X. Xxx 000
000 Xxxxx Xxxxxx Xxxxxx
Xxxxx, Xxxxx Xxxxxxxx 00000
Attention: S. Xxxxx Xxxxxxxxxxx, Xx.
Telephone: 000-000-0000
Telecopy: 000-000-0000
with a copy to:
Xxxxxxx Xxxxxxxxx Xxxxxxx & Xxxxxxx, L.L.P.
NationsBank Corporate Center
Suite 4200
000 X. Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxx
Telephone: 000-000-0000
Telecopy: 704-331-7598
(b) if to the Bank:
NationsBank, N.A.
XxxxxxxXxxx Xxxxx, XX0-000-00-00
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Telephone: 000-000-0000
Telecopy: 000-000-0000
8.02 No failure or delay on the part of the Bank in the exercise of
any right, power or privilege hereunder or under any other Loan Document shall
operate as a waiver of any such right, power or privilege nor shall any such
failure or delay preclude any other or further exercise of any such right, power
or privilege. The rights and remedies herein provided are cumulative and not
exclusive or any rights or remedies provided by law.
8.03 All covenants, agreements, representations and warranties made
herein and in the other Loan Documents shall survive the making by the Bank of
the loans and the issuance of the Letters of Credit herein contemplated and the
execution and delivery to the Bank of the Loan Documents and shall continue in
full force and effect so long as any of the indebtedness of Conso, Simplicity or
Trimmings to the Bank hereunder or any obligations of Conso, Simplicity or
Trimmings to the Bank hereunder remain outstanding and unpaid. Whenever in this
Loan Agreement, any of the parties hereto is referred to, such reference shall
be deemed to include the successors and assigns of such party and all covenants,
provisions and agreements by or on behalf of Conso, Simplicity or Trimmings
which are contained in the Loan Documents or this Loan Agreement shall inure to
the benefit of the successors and assigns of the Bank. Notwithstanding the
foregoing, prior to the occurrence of an Event of Default, the Bank may not
sell, assign, transfer or otherwise dispose of or create participations in this
Loan Agreement or
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any of the other Loan Documents or any portions thereof, including without
limitation, any of the Bank's rights, title, interests, remedies, powers and
duties hereunder or thereunder, without the prior written consent of Conso.
8.04 Conso agrees to pay all reasonable costs and expenses in
connection with the preparation, execution and delivery of the Loan Documents,
including, without limitation, the reasonable fees and out-of-pocket expenses of
special counsel to the Bank, and reasonable costs and expenses of the Bank in
connection with the implementation and/or enforcement of the Loan Documents and
this Loan Agreement, as well as any filing and recording fees and stamp and
other taxes with respect thereto and to hold the Bank harmless from any and all
such costs, expenses and liabilities.
8.05 No approval, decision, opinion or action required of the Bank
("Approval") hereunder nor any modification, amendment or waiver ("Waiver") of
any provision of this Agreement or any other Loan Document, nor any consent to
any departure by Conso, Simplicity or Trimmings therefrom ("Consent") shall in
any event be effective unless the same shall be delivered in accordance with the
provisions of Section 8.01 hereof, and then such Approval, Waiver or Consent
shall be effective only in the specific instance and for the purpose for which
given, but any such Approval, Waiver or Consent when so signed shall be
effective and binding upon the Bank. Notice to or demand on Conso, Simplicity or
Trimmings in any case shall not entitle Conso, Simplicity or Trimmings, as the
case may be, to any other or further notice or demand in the same, similar or
other circumstances.
8.06 Except as set forth in the Sterling Note, interest, fees and
premiums hereunder shall be computed on the basis of a three hundred sixty (360)
day year for the actual number of days in the interest period.
8.07 Should any installment or other payment of the principal of or
interest on any Note become due and payable on other than a Business Day, the
maturity thereof shall be extended to the next succeeding Business Day
thereafter and in the case of an installment of principal, interest shall be
payable thereon at the rate per annum herein specified during such extension.
8.08 This Loan Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, and it shall not be necessary in making proof of this Loan Agreement
to produce or account for more than one such counterpart.
8.09 The terms hereof shall extend to any subsequent holder of the
Notes to the extent such holder has acquired the Notes in accordance with the
terms hereof.
8.10 The term of this Loan Agreement shall be until (a) payment in
full of all sums payable by Conso, Simplicity and Trimmings hereunder, under the
Notes, or otherwise payable to the Bank, howsoever evidenced, whichever is later
and (b) termination of the obligation of the Bank to make Advances and issue
Letters of Credit.
8.11 All documents executed pursuant to the transactions
contemplated herein, including without limitation this Loan Agreement, the
Dollar Note and the Term Note (but not the Sterling Note), shall be deemed to be
contracts made under, and for all purposes shall be construed in
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23
accordance with, the internal laws and judicial decisions of the State of North
Carolina. Conso and Simplicity hereby submit to the jurisdiction and venue of
the state and federal courts of North Carolina for the purposes of resolving
disputes hereunder or for the purposes of collection.
8.12 All obligations of the Borrowers hereunder shall be joint and
several.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed under seal by their duly authorized officers as of the day and year
first above written.
CONSO PRODUCTS COMPANY
ATTEST:
By /s/ Konstance X. X. Xxxxxxx By /s/ X. Xxxx Findlay
-------------------------------- ------------------------------------------
Title Secretary Title Chairman
----------------------------- ---------------------------------------
(Corporate Seal)
SIMPLICITY PATTERN CO., INC.
ATTEST:
By /s/ Xxxxx X. Xxxxx By /s/ Xxxxx X. Xxxxxx
-------------------------------- ------------------------------------------
Title Secretary Title President and Chief Executive Officer
-------------------------- ---------------------------------------
(Corporate Seal)
NATIONSBANK, N.A.
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------------
Xxxxxxx X. Xxxxxxxx
Senior Vice President
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EXHIBIT A
PERMITTED LIENS
1. Encumbrances on, or other defects in title to, Conso's real
and personal property in favor of Union County, South Carolina in connection
with a "fee-in-lieu of taxes" arrangement.
2. The liens set forth on Attachment I hereto which are
incorporated herein by reference.
3. The exceptions set forth on Attachment II hereto which are
incorporated herein by reference.
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ATTACHMENT I
UCC Financing Statements
-------------------------------------------------------------------------------------------------
Jurisdiction/ Date of Filing Debtor Original Collateral
File No. Secured Party
-------------------------------------------------------------------------------------------------
Secretary of 6/20/91 Simplicity Xxxxxxxx/ Leased
State/Michigan Pattern Co., Inc. XxXxxxxx Computer
12193B Associates, Inc. Equipment
Continuation 4/17/96
69982B
-------------------------------------------------------------------------------------------------
Secretary of 1/23/95 Simplicity Minolta Copier Leased Copier
State/New York Pattern Co., Inc. Corp
014711
-------------------------------------------------------------------------------------------------
New York 1/25/95 Simplicity Minolta Copier Leased Copier
County/NY Pattern Co., Inc. Corp.
95PN03622
-------------------------------------------------------------------------------------------------
Secretary of 4/22/96 Simplicity Minolta Copier Leased Copiers
State/New York Pattern Co., Inc. Corp.
079888
-------------------------------------------------------------------------------------------------
Secretary of 4/22/96 Simplicity Minolta Copier Leased Copiers
State/New York Pattern Co., Inc. Corp.
079975
-------------------------------------------------------------------------------------------------
Secretary of 5/5/97 Simplicity Minolta Leased Copiers
State/New York Pattern Co., Inc. Business
091969 Systems
-------------------------------------------------------------------------------------------------
New York 6/17/97 Simplicity Minolta Business Leased Copier
County/NY Pattern Co., Inc. Systems
97PN26850
-------------------------------------------------------------------------------------------------
Secretary of 3/10/95 Simplicity BESCO Graphic All inventory
State/Michigan Pattern Co., Inc. Systems Corp. delivered in the
53527B (Consignee) (Consignor) future under
consignment
Assignment 5/12/95 arrangement
969453
To: Shawmut
Capital
Corporation
-------------------------------------------------------------------------------------------------
Berrien County, 3/10/95 Simplicity BESCO Graphic All goods and
Michigan Pattern Co., Inc. Systems Corp. inventory
421 (Consignee) (Consignor) delivered in the
future in
Assignment 5/22/95 connection with
982 the printing
To: Shawmut prepress and
Capital press room
Corporation operations.
-------------------------------------------------------------------------------------------------
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-------------------------------------------------------------------------------------------------
Jurisdiction/ Date of Filing Debtor Original Collateral
File No. Secured Party
-------------------------------------------------------------------------------------------------
Berrien County, 9/3/85 Simplicity Greyhound Leasing & Printing Press.
Michigan Pattern Co., Inc. Financial Corp. Real Estate in
2303 Niles Michigan.
-------------------------------------------------------------------------------------------------
New York 1/8/96
County, NY
Judgement Lien
in the amount of
$3053.04
-------------------------------------------------------------------------------------------------
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Attachment II
South Carolina Fee Mortgage
FIRST AMERICA TITLE INSURANCE COMPANY
SCHEDULE B-II
(EXCEPTIONS)
Agent's
File No.: 09168022A Commitment No. FA-CC-09168022A
SCHEDULE B OF THE POLICY OR POLICIES TO BE ISSUED WILL CONTAIN EXCEPTIONS TO THE
FOLLOWING MATTERS UNLESS THE SAME ARE DISPOSED OF TO THE SATISFACTION OF THE
COMPANY.
1. Defects, liens, encumbrances, adverse claims, or other matters, if any,
created, first appearing in the public records or attaching subsequent
to the effective date hereof but prior to the date the proposed Insured
acquires for value of record the estate or interest or mortgage thereon
covered by this Commitment.
2. Rights or claims of parties in possession not shown by the public
records.
3. Easements, or claims of easement, not shown by the public records.
4. Encroachments, overlaps, boundary line disputes, or other matters which
would be disclosed by an accurate survey or inspection of the premises.
5. Any lien, or right to a lien, for services, labor, or material
heretofore or hereafter furnished, imposed by law and not shown by the
public records.
6. Any adverse claim to any portion of said land which has been created by
artificial means or has accreted to any such portion so created and
riparian rights, if any.
7. Taxes or special assessments which are not shown as existing liens by
the public records.
Standard Exceptions 3, 4, 5, 6 and 7 are deleted.
THE FOLLOWING EXCEPTIONS APPLY TO PARCEL NO. 1 ONLY:
8. Easement granted to Duke Power Company by instrument dated January 24,
1928, filed January 31, 1928, in Deed Book 56, Page 445, Office of the
Clerk of Court for Union County, South Carolina.
9. Easements granted to Southern Xxxx Telephone and Telegraph Co., Inc. by
instrument dated April 5, 1930, recorded May 6, 1930, in Deed Book 61,
Page 16, Office of the Clerk of Court for Union County, South Carolina.
10. Easement granted to City of Union by instrument dated April 18, 1995,
recorded August 30, 1995 in Deed Book 213, Page 63, Office of the Clerk
of Court of Union County, South Carolina.
11. Rights of others in and to the use of so much of insured premises as
lies within the road along the eastern boundary line as shown on plat
of survey by Xxxxxxxx-Xxxxxxxxxxx & Associates dated May 18, 1993, and
recorded in Plat Cabinet A, Slide 314, Page 1, Office of the Clerk of
Court for Union County, South Carolina.
See Attached Schedule B-2 Continued
119
29
Attachment II
South Carolina Fee Mortgage
FIRST AMERICAN TITLE INSURANCE COMPANY
SCHEDULE B2 (CONTINUED)
Agent's
File No.: 09168022A Commitment No. FA-CC-09168022A
Policy No.: FA-
12. Sanitary sewer line and easement incident thereto crossing northwestern
corner of insured premises as shown on plat of survey by
Xxxxxxxx-Xxxxxxxxxxx & Associates dated May 18, 1993, recorded in Plat
Cabinet A Slide 314, Page 1, Office of the Clerk of Court of Union
County, South Carolina.
13. Such state of facts occurring subsequent to May 18, 1993, the date of
survey of Tract A of Parcel 1 comprising a part of the insured premises
made by Xxxxxxxx-Xxxxxxxxxxx & Associates, Inc. recorded in Plat
Cabinet A, Slide 314, Page 1, Office of the Clerk of Court for Union
County, South Carolina. NOTE: This exception may be modified in
accordance with any matters revealed by the current boundary survey
required in Item 12 in Schedule B-1.
The following exceptions apply to PARCEL 2 ONLY:
14. Restrictions appearing of record in Book 154, Page 598 and 600, Office
of the Clerk of Court for Union County, South Carolina.
15. Right of way and easement granted to Duke Power Company recorded in
Deed Book 56, Page 439, Office of the Clerk of Court for Union County,
South Carolina.
16. Right of way and easement granted to Broad River Power Company recorded
in Deed Book 56, Page 197, Office of the Clerk for Union County, South
Carolina.
17. Right of way and easement granted to Broad River Power Company recorded
in Book 54, Page 488, Office of the Clerk of Court for Union County,
South Carolina.
18. Right of way and easement granted to Southern Xxxx Telephone and
Telegraph Company recorded in Deed Book 61, Page 22, Office of the
Clerk of Court for Union County, South Carolina.
19. Right of way and easement granted to Lockhart Power Company recorded in
Deed Book 147, Page 447, Office of the Clerk of Court for Union County,
South Carolina.
20. The following matters that are shown by survey prepared by X. X.
Xxxxxxxxxxx, Xx., Registered Land Surveyor, dated July 15, 1992,
recorded in Plat Book 27, Page 193, Office of the Clerk of Court for
Union County, South Carolina: (a) Power lines located on the subject
property; (b) Note: Underground utilities not located by surveyor and
therefore excluded from coverage hereunder.
See Attached Schedule B-2 Continued
120
30
Attachment II
South Carolina Fee Mortgage
FIRST AMERICAN TITLE INSURANCE COMPANY
SCHEDULE B2 (CONTINUED)
Agent's
File No.: 09168022A Commitment No. FA-CC-09168022A
Policy No.: FA-
21. Such states of facts occurring subsequent to July 15, 1992, the date of
the survey of Parcel 2 comprising a part of the insured premises
prepared by X. X. Xxxxxxxxxxx, Xx., Registered Land Surveyor, recorded
in Plat Book 27, Page 193, Office of the Clerk for Union County, South
Carolina.
THE FOLLOWING EXCEPTIONS APPLY TO BOTH PARCELS NO. 1 AND 2:
22. Property taxes for 1998 and all subsequent years, a lien not yet due
are payable.
23. No insurance is afforded as to the amount of acreage contained in the
property described herein.
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31
Attachment II
South Carolina Leasehold Mortgage
FIRST AMERICAN TITLE INSURANCE COMPANY
SCHEDULE B-II
(EXCEPTIONS)
Agent's
File No.: 09168022B Commitment No. FA-CC-09168022B
SCHEDULE B OF THE POLICY OR POLICIES TO BE ISSUED WILL CONTAIN EXCEPTIONS TO THE
FOLLOWING MATTERS UNLESS THE SAME ARE DISPOSED OF TO THE SATISFACTION
OF THE COMPANY.
1. Defects, liens, encumbrances, adverse claims, or other matters, if any,
created, first appearing in the public records or attaching subsequent
to the effective date hereof but prior to the date the proposed Insured
acquires for value of record the estate or interest or mortgage thereon
covered by the Commitment.
2. Rights or claims of parties in possession not shown by the public
records.
3. Easements, or claims of easement, not shown by the public records.
4. Encroachments, overlaps, boundary line disputes, or other matters which
would be disclosed by an accurate survey or inspection of the premises.
5. Any lien, or right to a lien, for services, labor, or material
heretofore or hereafter furnished, imposed by law and not shown by the
public records.
6. Any adverse claim to any portion of said land which has been created by
artificial means or has accreted to any such portion so created and
riparian rights, if any.
7. Taxes or special assessments which are not shown as existing liens by
the public records.
Standard Exceptions 3, 4, 5, 6 and 7 are deleted.
8. Property taxes for 1998 and all subsequent years, a lien not yet due
and payable.
9. The terms and conditions of the lease set forth in Schedule A, Part II.
10. Lease, dated December 10, 1997, by and between Union County, as
Landlord, and Conso Products Company, as Tenant, together with
Supplements thereto, as evidenced in Memorandum of Lease recorded
December 30, 1997, in Deed Book 217, Page 7, Office of the Clerk of
Court for Union County, South Carolina.
11. Terms and Conditions of Option to Purchase between Union County, South
Carolina, and Conso Products Company dated December 10, 1997, and
recorded December 30, 1997, in Deed Book 217, Page 8, Office of the
Clerk of Court for Union County, South Carolina.
12. Easement granted to Duke Power Company by instrument dated January 24,
1928, filed January 31, 1928, in Deed Book 56, Page 445, Office of the
Clerk of Court for Union County, South Carolina.
See Attached Schedule B-2 Continued
122
32
Attachment II
South Carolina Leasehold Mortgage
FIRST AMERICAN TITLE INSURANCE COMPANY
SCHEDULE B2 (CONTINUED)
Agent's
File No.: 09168022B Commitment No. FA-CC-09168022B
Policy No.: FA-
13. Easements granted to Southern Xxxx Telephone and Telegraph Co., Inc. by
instrument dated April 5, 1930, recorded May 6, 1930, in Deed Book 61,
Page 16, Office of the Clerk of Court for Union County, South Carolina.
14. Easement granted to City of Union by instrument dated May 2, 1995,
recorded August 30, 1995, in Deed Book 213, Page 66, Office of the
Clerk of Court for Union County, South Carolina.
15. Easement granted to Conso Products Company by instrument dated October
31, 1996, recorded November 8, 1996, in Deed Book 215, Page 103, Office
of the Clerk for Union County, South Carolina.
16. Reciprocal Easement Agreement between Loubev Family Partnership and
Conso Products Company dated July 22, 1997, recorded July 23, 1997 in
Deed Book 216k, Page 258, Office of the Clerk of Court for Union
County, South Carolina.
17. Right of others thereto entitled in and to the continued uninterrupted
flow of the creek which marks the eastern boundary line of the insured
premises as shown on plat dated April 24, 1997, prepared for Conso
Products Company by Piedmont Xxxxx Xxxxxxx, Surveyors/Mappers, and
recorded in Plat Cabinet A, Slide 250, Page 16, Office of the Clerk of
Court for Union County, South Carolina.
18. Easement granted to City of Union by instrument dated April 18, 1995,
recorded August 30, 1995 in Deed Book 213, Page 63, Office of the Clerk
for Union County, South Carolina.
19. Rights of others in and to the use of so much of insured premises as
lies within the road along the eastern boundary line as shown on plat
of survey by Xxxxxxxx-Xxxxxxxxxxx & Associates dated May 18, 1993, and
recorded in Plat Cabinet A, Slide 314, Page 1, Office of the Clerk of
Court for Union County, South Carolina.
20. Sanitary sewer line and easement incident thereto crossing northwestern
corner of insured premises as shown on plat of survey by
Xxxxxxxx-Xxxxxxxxxxx & Associates dated May 18, 1993, recorded in Plat
Cabinet A Slide 314, Page 1, Office of the Clerk of Court for Union
County, South Carolina.
21. Such state of facts as would be revealed by an accurate survey and
inspection of the premises. Note: This exception may be modified or
deleted in accordance with any matters revealed by a current ALTA/ACSM
Survey of the premises acceptable to the Company.
See Attached Schedule B-2 Continued
123
33
Attachment II
South Carolina Leasehold Mortgage
FIRST AMERICAN TITLE INSURANCE COMPANY
SCHEDULE B2 (CONTINUED)
Agent's
File No.: 09168022B Commitment No. FA-CC-09168022B
Policy No.: FA-
22. No insurance is afforded as to the amount of acreage contained in the
property described herein.
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34
Attachment II
Michigan Mortgage
SCHEDULE B - SECTION II
EXCEPTIONS
COMMITMENT NO. BN - 7578
Any policy we issue will have the following exceptions unless they are
taken care of to our satisfaction.
1. Any discrepancies or conflicts in boundary lines, any shortages in
area, or any encroachment or overlapping of improvements.
2. Any facts, rights, interests or claims which are not shown by the
public record but which could be ascertained by an accurate survey of
the land or by making inquiry of persons in possession thereof.
3. Easements, liens or encumbrances or claims thereof, which are not shown
by the public record.
4. Any lien or right to lien for services, labor or material imposed by
law and not shown by the public record.
5. All assessments and taxes due in 1997, and thereafter.
6. Easements in favor of Indiana & Michigan Electric Company (now known as
Indiana Michigan Power Company), a corporation, recorded October 27,
1960, in Liber 183 of Misc., pages 335 and 345; and recorded June 21,
1949, in Liber 113 of Misc., page 429, Berrien County Records.
7. Easement in favor of Michigan Central Railroad Company, recorded
February 11, 1976, in Liber 1014, page 228, Berrien County Records.
8. Agreement, between the City of Niles, a municipal corporation and
Garden City Fan and Blower Company, an Illinois Corporation, recorded
August 4, 1976, in Liber 1026, page 435, Berrien County Records.
9. Right of ingress and egress in favor of Niles Chamber of Commerce,
Inc., recorded November 2, 1932, in Liber 284 of Deeds, page 363,
Berrien County Records.
10. Easement in favor of Berrien County Board of Public Works and City of
Niles, a municipal corporation, recorded February 17, 1976, in Liber
1014, page 476, Berrien County Records.
11. Reservation on portions of captioned land as disclosed by Deed,
recorded February 11, 1976, in Liber 1014, page 206, Berrien County
Records.
12. Rights of the public and of any governmental unit in any part thereof
taken, used, or deeded for street, road, or highway purposes, thereof
lying in Lake and Thirteenth Streets.
13. Taxes and assessments not due and payable at date of commitment.
14. Encroachments, as disclosed by Survey, prepared by Xxxxxx Engineering,
dated January 26, 1988.
125
35
EXHIBIT B
MATERIAL SUBSIDIARIES
British Trimmings Limited
Itatrim Limited
MacCulloch & Wallis (London) Limited
Pattern Masters Limited
Simplicity Pattern Co., Inc.
Val-Mex, S.A. de C.V.
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