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EXHIBIT 10.3
PROMISSORY NOTE
U.S. $30,000,000 June 19, 1998
FOR VALUE RECEIVED, the undersigned, CONSO PRODUCTS COMPANY, a South
Carolina corporation ("Conso"), and SIMPLICITY PATTERN CO., INC., a Delaware
corporation ("Simplicity") (hereinafter Conso and Simplicity are sometimes
collectively referred to as the "Borrowers"), jointly and severally promise to
pay to the order of
NATIONSBANK, N.A., a national banking association (the "Bank") at its
office in Charlotte, North Carolina (or at such other place or places as the
Bank may designate) the principal sum of up to
THIRTY MILLION DOLLARS (U.S. $30,000,000), or such lesser amount as may
constitute the unpaid principal amount of the Dollar Advances (as hereinafter
defined), pursuant to the terms and conditions hereinafter set forth and the
terms and conditions set forth in that certain Modified and Restated Loan
Agreement, dated June 19, 1998, executed by and among the Borrowers and the Bank
(the "Loan Agreement").
Advances. The Borrowers, in accordance with the terms hereof, may from
time to time until December 1, 2000 (the "Termination Date") request advances
from the Bank in U.S. dollars (hereinafter the "Dollar Advances") in an
aggregate amount up to $30,000,000 less the outstanding principal amount of all
loans made pursuant to that certain Promissory Note dated June __, 1998 executed
by British Trimmings Limited ("Trimmings") in favor of the Bank in the original
face amount of (pound)7,000,000 (the "Sterling Note") (such amount is
hereinafter referred to as the "Dollar Committed Amount"). Upon receipt of such
a request for a Dollar Advance hereunder, the Bank shall make any such Dollar
Advance hereunder available to the Borrowers on the date requested for such
Advance on the terms and conditions set forth herein and in the Loan Agreement;
provided, however, the Bank shall not be obligated to make such advance unless
the Borrowers have satisfied the conditions set forth in Section 2.05 of the
Loan Agreement.
Principal. The outstanding principal balance of the Dollar Advances
shall be due and payable on the Termination Date.
Interest. Dollar Advances hereunder shall bear interest on the
outstanding balance hereunder at a per annum interest rate equal to the Floating
LIBOR Rate plus the Applicable Margin. For purposes hereof, "Floating LIBOR
Rate" means the fluctuating interest rate per annum for the London InterBank
Offered Rates (LIBOR) one month rate quoted in the "Money Rates" section of The
Wall Street Journal. Changes in the Floating LIBOR Rate shall be effective for
purposes of this Note on the dates of such changes. Unless otherwise agreed,
accrued interest with respect to each Dollar Advance shall be payable in arrears
on the first day of each month. Whenever a payment on this Note is stated to be
due on a day which is not a business day, such payment shall be made on the next
succeeding business day with interest
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accruing to the date of payment. Interest hereunder shall be computed on the
basis of actual number of days elapsed over a year of 360 days.
Unused Fee. The Borrowers shall pay the Bank a commitment fee on the
unused amount of the Dollar Committed Amount during each calendar quarter in an
amount equal to the average unused amount of the Dollar Committed Amount for
each such calendar quarter multiplied by the Applicable Percentage. Such
commitment fee for any calendar quarter shall be payable in arrears on the first
day of the following calendar quarter. The commitment fee shall be computed on
the basis of actual number of days elapsed over a year of 360 days.
Applicable Margin. Applicable Margin means the following percentages
determined and adjusted quarterly on the first day of the month following the
receipt by the Bank of Conso's Form 10-Q for any fiscal quarter or Form 10-K for
any fiscal year and based on the following levels of the ratio of Consolidated
Funded Indebtedness (as defined in the Loan Agreement and as computed on the
last day of such fiscal quarter or such fiscal year) to Consolidated EBITDA (as
defined in the Loan Agreement and as computed for the twelve months then ended)
(the "Consolidated Leverage Ratio") as set forth in a letter from Conso to the
Bank accompanying such Form 10-Q or Form 10-K:
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APPLICABLE MARGIN
FOR FLOATING LIBOR APPLICABLE MARGIN
CONSOLIDATED LEVERAGE RATIO RATE ADVANCES FOR COMMITMENT FEE
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>2.75 to 1.0 1.75% .35%
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>1.75 to 1.0 but <=2.75 to 1.0 1.50% .30%
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>1.25 to 1.0 but <=1.75 to 1.0 1.25% .25%
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>.75 to 1.0 but <=1.25 to 1.0 1.00% .20%
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<=.75 to 1.0 .75% .15%
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Supersession. It is understood and agreed by the Bank and the Borrowers
that this Note amends, restates, supplements and supersedes in all respects the
promissory note dated November 25, 1996 in the original principal amount of up
to $15,000,000 heretofore issued by Conso to the Bank.
Payments. All payments made on this Note shall be in U.S. dollars.
Subject to the conditions set forth herein and in the Loan Agreement, amounts
repaid may be reborrowed.
Prepayments. The Borrowers may repay this Note in whole or in part at
any time without any penalty whatsoever.
Capital Adequacy. If the Bank shall have determined that the adoption
or effectiveness of any applicable law, rule or regulation regarding capital
adequacy, or any change therein, or any change after the date hereof in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by the Bank with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has the effect of materially reducing the
rate of return on the Bank's capital
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or assets as a consequence of its commitments or obligations hereunder to a
level below that which the Bank could have achieved but for such adoption,
effectiveness, change or compliance (taking into consideration the Bank's
policies with respect to capital adequacy), then from time to time, within 15
days after written demand by the Bank the Borrowers shall pay to the Bank such
additional amount or amounts as will compensate the Bank for such reduction.
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. Determination by the Bank of amounts
owing under this paragraph shall, absent evidence of error, be binding on the
parties hereto. Failure on the part of the Bank to demand compensation for any
period hereunder shall not constitute a waiver of the Bank's rights to demand
any such compensation in such period or in any other period.
Taxes. All payments made by the Borrowers hereunder will be made
without (but without waiving any rights with respect to) setoff or counterclaim.
Promptly upon notice from the Bank to the Borrowers, the Borrowers will pay,
prior to the date on which penalties attach thereto, but without duplication,
all present and future, stamp and other taxes, levies, or costs and charges
whatsoever imposed, assessed, levied or collected on or in respect of advances
hereunder (all such taxes, levies, costs and charges being herein collectively
called "Taxes"), provided that Taxes shall not include taxes imposed on or
measured by the income of the Bank by the United States of America or any
political subdivision or taxing authority thereof or therein, or taxes on or
measured by the overall net income of any foreign office, branch or subsidiary
of the Bank by any foreign country of subdivision thereof in which that office,
branch or subsidiary is doing business. Promptly after the date on which payment
of any such Tax is due pursuant to applicable law, the Borrowers will at the
request of the Bank, furnish to the Bank evidence, in form and substance
satisfactory to the Bank, that the Borrowers have met their obligations under
this paragraph. The Borrowers will indemnify the Bank against, and reimburse the
Bank on demand for, any Taxes, as determined by the Bank in its good faith
discretion. The Bank shall provide the Borrowers with appropriate receipts for
any payments or reimbursements made by the Borrowers pursuant to this Section.
Events of Default. Upon the occurrence of an Event of Default under the
Loan Agreement, (a) this Note and all other debts due the Bank by the Borrowers
shall immediately become due and payable upon written notice to the Borrowers
(except that in the case of any Event of Default relating to a bankruptcy
petition filed by either Borrower, this Note and all other debts due the Bank
shall become immediately due and payable without the necessity of demand or
other action by the Bank) without the necessity of any other demand,
presentment, protest or notice of any kind, all of which are hereby waived by
the Borrowers, (b) the then remaining unpaid principal amount and accrued but
unpaid interest shall bear interest at a per annum rate equal to the prime rate
of NationsBank (as it changes from time to time) plus two percent (2%) until
such principal and interest has been paid in full and (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 this Note all money owed by the
Bank in any capacity to either Borrower, 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.
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No Waiver. 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 it
preclude any other or further exercise thereof. The Borrowers assent to any one
or more extensions or postponements of the time of payment or other indulgences,
to any substitutions, exchanges or releases of collateral if at any time there
is collateral available to the holder of this Note, and to the additions or
releases of any other parties or persons primarily or secondarily liable.
Late Charge. Should any payment due hereunder be in default for more
than fifteen (15) days, there may be imposed, to the extent permitted by law, a
delinquency charge not to exceed four percent (4%) of such payment in default.
In addition, at the option of the Bank, any accrued and unpaid interest, fees or
charges may, for purposes of computing accruing interest on a daily basis after
the due date for such interest fees or charges, be deemed to be a part of the
principal balance thereof, and interest shall accrue on a daily compounded basis
after such date at the rate provided for hereunder until the entire balance of
principal and interest is paid in full.
Notices. All notices and other communications hereunder shall be
sufficiently given and shall be deemed given when delivered or when mailed by
registered or certified mail, postage prepaid, addressed as follows:
(a) If to the Borrowers:
c/o Conso Products Company
000 Xxxxx Xxxxxx Xxxxxx
P.O. Box 326
Union, South Carolina 29379
Attn: Mr. X. 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 0000
000 X. Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attn: Xxxx X. Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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(b) If to the Bank:
NationsBank, N.A.
NationsBank Plaza, NC1-002-03-10
Charlotte, North Carolina 28255
Attention: Xxxxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attorneys' Fees. In the event this Note is not paid when due at any
stated or accelerated maturity, the Borrowers will pay, in addition to principal
and interest, all costs of collection, including reasonable attorneys' fees.
Choice of Law. This Note shall be governed by and construed in
accordance with, the laws of the State of North Carolina. In addition, the
Borrowers hereby consent and submit to the jurisdiction and venue of the federal
and state courts located in Mecklenburg County, North Carolina.
Joint and Several Obligations. The obligations of the Borrowers
hereunder shall be joint and several.
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IN WITNESS WHEREOF, the Borrowers have caused this Note to be executed
under seal by its 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 Xxxxxxx
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Title Secretary Title Chairman
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(Corporate Seal)
SIMPLICITY PATTERN CO., INC.
ATTEST:
By /s/ Xxxxx X. Xxxxx By /s/ Xxxxx X. Xxxxxx
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Title Secretary Title President and Chief Executive Officer
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(Corporate Seal)
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SCHEDULE A TO THE
$30,000,000 PROMISSORY NOTE
DATED JUNE 19, 1998
Name of
Principal Person
Amount of Applicable Payment Making
Date Advance Interest Rate Principal Interest Notation
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