EXHIBIT 10.66
AMENDED AND RESTATED GENERAL SECURITY AGREEMENT
[FARAH INCORPORATED]
AMENDED AND RESTATED GENERAL SECURITY AGREEMENT dated as of this 1st
day of June, 1997, by FARAH INCORPORATED, a Texas corporation ("Guarantor") to
and in favor of CONGRESS FINANCIAL CORPORATION (SOUTHWEST), a Texas corporation
("Lender").
W I T N E S S E T H
WHEREAS, Lender has entered or is about to enter into financing
arrangements with Farah U.S.A., Inc. ("Farah USA"), a Texas corporation, Value
Clothing Company, Inc., a Texas corporation ("Value Clothing") and Farah
Manufacturing (U.K.) Limited, a corporation incorporated under the law of
England ("Farah UK" and together with Farah USA and Value Clothing,
collectively, "Borrower"), pursuant to which Lender may make loans and advances
and provide other financial accommodations to Borrower; and
WHEREAS, Guarantor originally entered into a General Security
Agreement, dated as of August 2, 1990, which Lender and Guarantor desire hereby
to amend and restate as of the date hereof pursuant to this Agreement; and
WHEREAS, Guarantor has executed and delivered to Lender a guarantee in
favor of Lender, dated as of August 2, 1990, which Guarantor is confirming as of
the date hereof pursuant to which Guarantor intends, absolutely and
unconditionally, to guarantee to Lender the payment and performance of all now
existing and hereafter arising Obligations, liabilities and indebtedness of
Borrower to Lender; and
WHEREAS, in order to induce Lender to enter into the Financing
Agreements and to make loans and advances and provide other financial
accommodations to Borrower pursuant thereto, Guarantor has agreed to grant to
Lender certain collateral security as set forth herein;
NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Guarantor hereby agrees as follows:
1. DEFINITIONS
As used above and in this General Security Agreement the following
terms shall have the respective meanings given to them below:
(a) All terms used herein which are defined in Article 1 or Article 9 of
the Uniform Commercial Code shall have the meanings set forth therein unless
otherwise defined in this Agreement and all references to the plural herein
shall also mean the singular and all references to the singular shall also mean
the plural.
(b) All references to the term "Guarantor" wherever used herein shall be
deemed to mean the signatory hereto and its successors and assigns. All
references to the term "Lender" and the term "Borrower" wherever used herein
shall be deemed to include their respective successors and assigns.
(c) "Affiliate" shall mean, with respect to a specified Person, any other
Person (i) who, directly or indirectly, through one or more intermediaries,
controls or is controlled by or is under common control with such Person, or
(ii) who is a director, officer, shareholder or employee of such Person.
(d) [INTENTIONALLY DELETED]
(e) [INTENTIONALLY DELETED]
(f) [INTENTIONALLY DELETED]
(g) "Borrower Foreign Subsidiary" shall mean Touche Industrial, S.A. de
C.V. and its respective successors and assigns.
(h) "Collateral" shall mean all of the now owned and hereafter acquired
property and assets of Guarantor, wherever located, of every kind and
description, mixed, real or personal, tangible or intangible, including, but not
limited to:
(i) all present and future: (A) accounts, contract rights, general
intangibles, chattel paper, documents and instruments (collectively,
"Accounts"), including, without limitation, all obligations for the payment of
money arising out of the sale, lease or other disposition of goods or other
property or rendition of services; (B) all monies, securities and other property
and the proceeds thereof, now or hereafter held or received by, or in transit
to, Lender or any participant from or for Guarantor, whether for safekeeping,
pledge, custody, transmission, collection or otherwise, and all of Guarantor's
deposits (general or special), balances, sums and credits with Lender or any
participant at any time existing; (C) all of Guarantor's right, title and
interest, and all of Guarantor's rights, remedies, security and liens, in, to
and in respect of the Accounts and other collateral, including, without
limitation, rights of stoppage in transit, replevin, repossession and
reclamation and other rights and remedies of an unpaid vendor, lienor or secured
party, guaranties or other contracts of suretyship with respect to the Accounts,
deposits or other security for the obligation of any account debtor, credit and
other insurance; (D) all of Guarantor's right, title and interest in, to and in
respect of all goods relating to, or which by sale have resulted in Accounts,
including, without limitation, all goods described in invoices, documents,
contracts or instruments with respect to, or otherwise representing or
evidencing, any Account or other collateral, including, without limitation, all
returned, reclaimed or repossessed goods; (E) all deposit accounts; and (F) all
other general intangibles of every kind and description, including, without
limitation, (1) trade names and trademarks, and the goodwill of the business
symbolized thereby, (2) patents, (3) copyrights, (4) licenses, (5) claims and
other choses in action, and (6) Federal, State, local and foreign tax refund
claims of all kinds;
(ii) all raw materials, work-in-process, finished goods and all other
inventory of whatsoever kind or nature, wherever located, whether now owned or
hereafter existing or acquired by Guarantor, including, without limitation, all
wrapping, packaging, advertising, shipping materials and all other goods
consumed in Guarantor's business, all labels and other devices, names or marks
affixed to or to be affixed thereto for purposes of selling or of identifying
the same or the seller or manufacturer thereof and all of Guarantor's right,
title and interest therein and thereto;
(iii) all equipment, machinery, computers and computer hardware, vehicles,
tool, dies, jigs, furniture, trade fixtures and fixtures, all attachments,
accessions and property now or hereafter affixed thereto or used in connection
therewith, substitutions and replacements thereof, wherever located, whether now
owned or hereafter acquired by Guarantor;
(iv) all right, title and interest of Guarantor, in, to and in respect of
any real property, including leasehold interests, together with all buildings,
structures, and other improvements located thereon and all licenses, easements
and appurtenances relating thereto, wherever located, whether now owned or
hereafter acquired;
(v) all present and future books, records, ledger cards, computer programs
and other property and general intangibles evidencing or relating to any of the
above, any other collateral or any account debtor, together with the file
cabinets or containers in which the foregoing are stored; and
(vi) all products and proceeds of the foregoing, in any form, including,
without limitation, any insurance proceeds and any claims against third persons
for loss or damage to or destruction of any or all of the foregoing.
(i) "Consolidated Tangible Net Worth" shall mean, as to any Person, at any
time, in accordance with GAAP, on a consolidated basis for such Person and its
Subsidiaries, the amount equal to the difference between: (i) the aggregate net
book value of all assets of such Person and its subsidiaries (excluding the book
value of patents, trademarks, licenses, good will and other intangible assets),
calculating the book value of inventory for this purpose on a first-in-first-out
basis, after deducting from such book values all appropriate reserves (including
all reserves for doubtful receivables, obsolescence, depreciation and
amortization) and (ii) the total aggregate Indebtedness of such Person and its
subsidiaries (including tax and other proper accruals).
(j) "Consolidated Working Capital" shall mean, as to any Person, at any
time, on a consolidated basis for such Person and its Subsidiaries, the amount
equal to the difference between: (i) the aggregate net book value of all assets
of such Person and its subsidiaries, on a consolidated basis, calculating the
book value of inventory for this purpose on a first-in-first-out basis, which
would, in accordance with GAAP, be classified as current assets and (ii) all
Indebtedness of such Person and its subsidiaries, on a consolidated basis, which
would in accordance with GAAP, be classified as current liabilities; and in any
event including Indebtedness payable on demand or within one (1) year from the
date of determination without any option of the obligor to extend or renew
beyond such year, all accruals for federal or other taxes based on or measured
by income and payable within such year, and including the current portion of
long term debt required to be paid within one (1) year.
(k) "Costa Rica Subsidiary" shall mean Corporacion Farah-Costa Rica S.A., a
wholly owned Subsidiary of Farah (Far East) Limited.
(l) "Event of Default" shall mean the occurrence or existence of any act,
event or condition described in Section 4 hereof.
(m) "Excess Availability" shall mean, at any time, an amount equal to the
excess availability pursuant to the advance formulas with respect to eligible
accounts and eligible inventory of Borrower, subject to the maximum credit or
any sublimits, after deducting the amount of all then outstanding Obligations
and reserves, less the aggregate amount of trade payables of Borrower
outstanding at such time which are more than thirty (30) days past due.
(n) "Financing Agreements" shall mean, collectively, the Amended and
Restated Accounts Financing Agreement [Security Agreement], dated of even date
herewith, between Borrower and Lender and all agreements, documents and
instruments now or at any time hereafter executed and/or delivered in connection
therewith or related thereto, including, but not limited to, each Guarantee and
this Agreement, as all of the foregoing now exist or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced from time to
time.
(o) "Foreign Subsidiaries" shall mean, collectively, Farah (Far East)
Limited, Farah UK, Farah (Australia) Pty. Limited, the Costa Rica Subsidiary,
Farah Limited (Ireland), Farah (New Zealand) Limited and their respective
successors and assigns.
(p) "GAAP" shall mean generally accepted accounting principles as in effect
on the date hereof consistently applied.
(q) "Guarantee" shall mean the Guarantee and Waiver, dated as of August 2,
1990, as confirmed as of the date hereof, of Guarantor in favor of Lender
absolutely and unconditionally guaranteeing all of the now existing and
hereafter arising Obligations, liabilities and indebtedness of Borrower to
Lender, including, without limitation, those arising under, related to or
evidenced by the Financing Agreements (as the same may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced from time to
time).
(r) "Indebtedness" shall mean, as to any Person, all items which, in
accordance with GAAP, would be included in determining total liabilities shown
on the liability side of its balance sheet as at the date such Indebtedness is
to be calculated (except any liability shown on the balance sheet for the
deferred gain from the sale of Borrower's premises at 0000 Xxxxxxx Xxxx, Xx
Xxxx, Xxxxx) and, in any event, shall include any liabilities secured by any
mortgage, pledge, lien or security interest existing on such person's owned or
acquired property.
(s) "Obligations" shall mean all now existing and hereafter arising
obligations, liabilities and indebtedness of Guarantor to Lender and/or its
affiliates or participants, of every kind and description, however evidenced,
including, without limitation, the Obligations, whether direct or indirect,
absolute or contingent, joint or several, secured or unsecured, due or not due,
primary or secondary, liquidated or unliquidated, whether arising before, during
or after the initial or any renewal term of the Financing Agreements, or after
the commencement of any case with respect to Guarantor or Borrower under the
Bankruptcy Code or any similar statute, whether arising directly or acquired by
Lender from any other person, conditionally or as collateral security, by
assignment, merger with any other person, assumption, subrogation or otherwise
(including, without limitation, participations or interests of Lender in the
obligations of Guarantor to others), whether arising under this Agreement, the
Guarantee, the other Financing Agreements, by operation of law or otherwise, and
whether incurred by Guarantor as principal, surety, endorser, guarantor or
otherwise and including, without limitation, all principal, interest, financing
charges, early termination and other fees, commissions, costs, expenses and
attorneys' and accountants' fees and legal expenses incurred in connection with
any of the foregoing.
(t) "Person" or "person" shall mean an individual, a partnership, a
corporation (including a business trust), a joint stock company, a trust, an
unincorporated association, a joint venture or other entity or a government or
any agency, instrumentality or political subdivision thereof.
(u) "Subordinated Debentures" shall mean the 8.5% Convertible Subordinated
Debentures due February 1, 2004, issued by Guarantor, pursuant to the Indenture,
dated February 1, 1994, between Texas Commerce Bank N.A., as trustee, and
Guarantor.
(v) "Subsidiary" or "subsidiary", shall mean any corporation, association
or organization, active or inactive, as to which more than fifty (50%) percent
of the outstanding voting stock or shares or interests shall now or hereafter be
owned or controlled, directly or indirectly by a person, any Subsidiary of such
person, or any Subsidiary of such Subsidiary.
2. GRANT OF SECURITY INTEREST
(a) As collateral security for the prompt performance, observance and
indefeasible payment in full of all of the Obligations, Guarantor hereby grants
to Lender a continuing security interest in and a lien upon and hereby pledges,
assigns and transfers to Lender all of the Collateral and Guarantor hereby
grants to Lender a right of setoff against any Collateral consisting of money,
securities and other property of Guarantor now or hereafter in the possession of
or on deposit with Lender or any other person, whether held in a general or
special account or deposit or for safekeeping or otherwise. All Collateral shall
be security for the performance, observance and indefeasible payment in full of
all of the Obligations notwithstanding the maintenance of separate accounts by
Lender or the existence of any instruments evidencing any of the Obligations.
(b) Guarantor hereby constitutes Lender and its agent and any designee of
Lender as Guarantor's attorney-in-fact and authorizes Lender or such agent or
designee, at Guarantor's cost and expense, to exercise at any time or times in
Lender's discretion all or any of the following powers, which power-of-attorney
being coupled with an interest shall be irrevocable until all Obligations have
been paid in full: (i) receive, take, endorse, assign, deliver, accept and
deposit, in the name of Lender or Guarantor, any and all cash, checks, drafts,
remittances and other instruments and documents relating to the Collateral, (ii)
on or after the occurrence of an Event of Default, receive and open all mail
addressed to Guarantor and notify postal authorities to change the address for
delivery thereof to such address as Lender may designate, (iii) transmit to
account debtors notice of the interest of Lender in the Collateral or request
from such account debtors at any time, in the name of Guarantor, Lender or any
designee of Lender, information concerning the Collateral and any amounts owing
with respect thereto, (iv) on or after the occurrence of an Event of Default,
notify account debtors to make payment directly to Lender, (v) on or after the
occurrence of an Event of Default, take or bring, in the name of Lender or
Guarantor, all steps, actions, suits or proceedings deemed by Lender necessary
or desirable to effect collection of the Collateral, (vi) enter Guarantor's
premises for the purpose of inspecting, verifying, auditing, maintaining,
preserving, protecting and removing the Collateral, and execute in the name and
on behalf of Guarantor one or more Uniform Commercial Code financing statements
or amendments with respect to the Collateral, naming Guarantor as debtor and
Lender as secured party and indicating and describing therein the types and the
items of Collateral. Guarantor hereby releases Lender, its officers, employees
and designees, from any liability arising from any act or acts taken under such
power-of-attorney under the Guarantee, this Agreement, the other Financing
Agreements or in furtherance hereof or thereof, whether of omission or
commission, and whether based upon any error of judgment or mistake of law or
fact, except for Lender's own gross negligence or willful misconduct.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS
Guarantor hereby represents, warrants and covenants to Lender the
following (which shall survive the execution and delivery of this Agreement),
the truth and accuracy of which, or compliance with, being a continuing
condition of the making of loans by Lender to Borrower under the Financing
Agreements:
(a) Guarantor will not directly or indirectly sell, lease, transfer,
abandon or otherwise dispose of all or any substantial portion of its property
or assets or consolidate or merge with or into any other entity or permit any
other entity to consolidate or merge with or into it; provided that a
wholly-owned subsidiary of Guarantor (other than Borrower) may, or at least ten
(10) days prior written notice to Lender, merge with and into Guarantor or
another wholly-owned Subsidiary of Guarantor so long as (i) Guarantor is the
surviving corporation, (ii) a Borrower is the surviving corporation, or (iii)
another wholly-owned Subsidiary of Guarantor is the surviving corporation and
has executed such agreements as reasonably requested by, and in favor of, Lender
and in form and substance satisfactory to Lender. Guarantor will at all times
preserve, renew and keep in full force and effect its existence as a corporation
and the rights and franchises with respect thereto and continue to engage in
business of the same type as it is engaged as of the date hereof. Guarantor will
give Lender thirty (30) days prior written notice of any proposed change in its
corporate name which notice shall set forth the new name.
(b) Guarantor's books and records and chief executive office are maintained
at the address referred to below. Guarantor shall not change such location
without Lender's prior written consent and prior to making any such change,
Guarantor agrees to execute any additional financing statements or other
documents or notices which Lender may require. The only locations of any
Collateral are those addresses listed on Exhibit A hereto and made a part
hereof. Exhibit A sets forth the owner and/or operator of the premises at such
addresses for all locations which Guarantor does not own and operate and all
mortgages, if any, with respect to the premises. Guarantor will not remove any
Collateral from such locations, without Lender's prior written consent, except
for sales of Inventory in the ordinary course of Guarantor's business.
(c) Guarantor will maintain its books, records and accounts in accordance
with GAAP. Guarantor agrees to furnish Lender with interim financial statements
(including balance sheets, statements of income and retained earnings and cash
flow statements), and to furnish Lender, at any time or from time to time with
such other information regarding its business affairs and financial condition as
Lender may reasonably request, including, without limitation, balance sheets,
statements of income, financial statements of cash flows and projections,
forecasts, schedules, agings and reports. Guarantor hereby irrevocably
authorizes and directs all accountants, auditors or other third parties to
deliver to Lender, at Guarantors expense, copies of its financial statements,
papers related thereto, and other accounting records of any nature in their
possession and to disclose to Lender any information they may have regarding its
business affairs and financial conditions. Guarantor will furnish Lender with
audited financial statements on an annual basis certified by independent public
accounts selected by Guarantor and acceptable to Lender. All such statements and
information will fairly present Guarantors financial condition as of the dates
and the results of Guarantor's operations for the periods, for which the same
are furnished. Any documents, schedules or other papers delivered to Lender may
be destroyed or otherwise disposed of by Lender one (1) year after the same are
delivered to Lender, unless Guarantor makes written request therefor and pays
all expenses attendant to their return, in which event Lender shall return same
when Lender's actual or anticipated need therefor has ceased.
(d) Guarantor will duly pay and discharge all taxes, assessments,
contributions and governmental charges upon or against Guarantor or its
properties or assets prior to the date on which penalties attach thereto.
Guarantor will be liable for any tax or penalty imposed upon any transaction
under this Agreement or giving rise to the Accounts or any other Collateral or
which Lender may be required to withhold or pay for any reason and Guarantor
agrees to indemnify and hold Lender harmless with respect thereto, and to repay
to Lender on demand the amount thereof, and until paid by Guarantor such amount
shall be added to and deemed part of the Obligations.
(e) Except as otherwise disclosed to Lender in writing and investigations
of Guarantor by the Internal Revenue Service or other governmental authorities
in accordance with their ordinary customs and past practice with respect to
Guarantor, there is no present investigation by any governmental agency pending
or threatened against Guarantor and there is no action, suit, proceeding or
claim pending or threatened against Guarantor or its assets or goodwill, or
affecting any transactions contemplated by this Agreement or the other Financing
Agreements, or any instruments or documents delivered in connection herewith or
therewith before any court, arbitrator, or governmental or administrative body
or agency which if adversely determined with respect to Guarantor would result
in any material adverse change in Guarantor's business, properties, assets,
goodwill, or condition, financial or otherwise.
(f) The execution, delivery and performance of this Agreement are within
Guarantor's corporate powers, have been duly authorized, are not in
contravention of law or the terms of Guarantor's Charter, By-Laws or other
incorporation papers, or of any material indenture, agreement or undertaking to
which Guarantor is a party or by which Guarantor is bound.
(g) Guarantor will, at all times, maintain a Consolidated Tangible Net
Worth of not less than $38,800,000.
(h) Guarantor will, at all times, maintain a Consolidated Working Capital
of not less than $22,500,000.
(i) Guarantor will not, and will not permit any Subsidiary to, in the
aggregate for all of them, directly or indirectly, expend or commit to expend
(through purchase, capital leases or otherwise) fixed or capital assets, or
incur Indebtedness to finance the acquisition of fixed or capital assets, on a
non-cumulative basis (such that expenditures not made or committed to be made in
any one fiscal year may not be made or committed to be made in any following
fiscal year) in excess of $30,000,000 in 1997 and $6,500,000 in any fiscal year
of Guarantor thereafter; provided, that in the event the $30,000,000 limitation
referenced above exceeds the amount of capital expenditures actually made in
1997 by all such Subsidiaries (including Farah USA), then, in addition to the
amount of capital expenditures which may otherwise be made in 1998, Guarantor
and its Subsidiaries, may make or commit to make capital expenditures in 1998 to
the extent of such excess (in addition to the aforesaid amount allowed in 1998)
for all such Subsidiaries and Guarantor.
(j) Guarantor does not have any Subsidiaries as of the date hereof except
as set forth on Exhibit B hereto. The common stock of Guarantor is publicly
traded and registered with the New York Stock Exchange and is publicly traded
(but not registered) with the Pacific Stock Exchange. Guarantor will not form or
acquire any Subsidiaries without the prior written consent of Lender. In the
event Lender so consents, promptly upon such formation or acquisition:
(i) as to any Subsidiary incorporated or otherwise formed under the laws of
any jurisdiction in the United States of America, Guarantor will cause any such
Subsidiary to execute and deliver to Lender, in form and substance satisfactory
to Lender and its counsel: (A) an absolute and unconditional guarantee of
payment of any and all present and future Obligations of Borrower to Lender, (B)
a general security agreement granting to Lender a first and only lien (except as
otherwise consented to by Lender) upon all of such Subsidiary's assets, (C)
related Uniform Commercial Code Financing Statements, and (D) such other
agreements, documents and instruments as Lender may require, including, but not
limited to, supplements and amendments hereto and other loan agreements or
instruments evidencing indebtedness of such new Subsidiary to Lender; and
(ii) as to any Subsidiary incorporated or otherwise formed under the laws
of any jurisdiction outside the United States of America, Guarantor will execute
and deliver, or cause to be executed and delivered, to Lender, in form and
substance satisfactory to Lender and its counsel: (A) a pledge and security
agreement granting Lender a first and only pledge of and security interest in
all of the issued and outstanding shares of capital stock of such Subsidiary,
(B) all original certificates and other evidence of such shares of capital
stock, together with stock powers duly executed in blank with respect thereto
and (C) such other agreements, documents and instruments as Lender may require,
including, but not limited to, supplements and amendments hereto.
(k) Guarantor will not, and will not permit any Subsidiary to, create,
incur, assume or permit to exist, contingently or otherwise, any Indebtedness,
except:
(i) Indebtedness to Lender;
(ii) Indebtedness consisting of unsecured current liabilities incurred in
the ordinary course of its business which are not past due;
(iii) Indebtedness incurred in the ordinary course of its business secured
only by liens permitted under Sections 3(l)(ii) and 3(l)(iii) hereof;
(iv) Indebtedness of the Borrower Foreign Subsidiary permitted under
Section 3(m)(v) hereof;
(v) Indebtedness other than unsecured current liabilities of any of the
Foreign Subsidiaries to persons other than Lender incurred in the ordinary
course of its business and Indebtedness other than unsecured current liabilities
of any indirect Subsidiary of Guarantor incorporated in a jurisdiction outside
the United States of America which is otherwise permitted by Lender;
(vi) unsecured Indebtedness owing to a Borrower evidencing loans made by
such Borrower to another Borrower, provided that such Borrower collaterally
assigns to Lender the note and/or other agreements evidencing such Indebtedness
in form and substance satisfactory to Lender;
(vii) Indebtedness evidencing letter of credits issued by third parties on
behalf of Farah UK in an aggregate amount not to exceed 500,000 in British
Pounds Sterling at any time outstanding;
(viii) unsecured Indebtedness of Farah UK under custom guarantees in
respect of the payment of import duties in an aggregate amount not to exceed
250,000 in British Pounds Sterling;
(ix) unsecured or secured Indebtedness of Borrower for borrowed money
received by Borrower in the form of cash or other immediately available funds
arising after the date hereof, which is in all respects subject and subordinate
in right of payment to the Indebtedness and other Obligations of Borrower to
Lender, provided that, (A) the terms and conditions of such Indebtedness,
including, without limitation, the terms of the subordination thereof, shall be,
in all respects, in form and substance satisfactory to Lender, (B) Lender shall
have received thirty (30) days prior written notice of Borrower's intention to
incur such Indebtedness and (C) prior to incurring such Indebtedness, the lender
or lenders with respect to such Indebtedness and Borrower shall duly and validly
execute and deliver to Lender a subordination agreement in favor of Lender with
respect to such Indebtedness, in form and substance satisfactory to Lender;
(x) Indebtedness owing to any one person existing on the date hereof in an
amount less than $100,000 and any other Indebtedness existing on the date hereof
equal to or in excess of such amount which is described on Exhibit C hereto,
provided, that: (A) Guarantor and its subsidiaries may only make regularly
scheduled payments of principal and interest in respect of such Indebtedness as
set forth on Exhibit C, (B) Guarantor will not, directly or indirectly, (1) make
any prepayments or other non-mandatory payments in respect of any such
Indebtedness or (2) redeem, retire, defease, purchase or otherwise acquire such
Indebtedness, or set aside or otherwise deposit or invest any sums for such
purpose or (3) amend, modify, alter or change the terms of the arrangements
relating thereto or any agreement or instrument evidencing such Indebtedness,
and (C) Guarantor and its subsidiaries will furnish to Lender all notices,
demands or other materials concerning such Indebtedness, promptly after receipt
thereof or concurrently with the sending thereof, as the case may be;
(xi) Indebtedness of Guarantor existing on the date hereof pursuant to the
Subordinated Debentures and which is unsecured, provided, that: (i) no payments
of such Indebtedness will be made, except that unless and until the occurrence
of an Event of Default or an act, event or condition which with notice or
passage of time or both would constitute an Event of Default, Guarantor may make
regularly scheduled payments of principal and interest in respect of such
Indebtedness in accordance with the terms of the Subordinated Debentures as in
effect on the date hereof; (ii) Guarantor will not, directly or indirectly, (A)
make any prepayments or other non-mandatory payments in respect of the
Subordinated Debentures or any payments pursuant to the purported acceleration
of the Subordinated Debentures or (B) amend, modify, alter or change the terms
of the Subordinated Debentures or any agreement or instrument related thereto,
or (C) redeem, retire, defease, purchase or otherwise acquire such Indebtedness,
or act aside or otherwise deposit or invest any sums for such purpose, and (iii)
Guarantor will furnish to Lender all notices, demands or other materials
received concerning such Indebtedness, promptly after receipt thereof or
concurrently with the sending thereof, as the case may be;
(xii) unsecured Indebtedness of the Costa Rica Subsidiary owing to Farah
USA in respect of payments by the Costa Rica Subsidiary owing to Farah USA for
trade payables paid by Farah USA and incurred by the Costa Rica Subsidiary in
the ordinary course of business;
(xiii) unsecured Indebtedness of Farah USA under importer bond in respect
of payment of import duties in an amount not to exceed $500,000;
(xiv) unsecured Indebtedness of Farah USA in the Costa Rica Subsidiary in
respect of payments of trade payable incurred by the Costa Rica Subsidiary in
the ordinary course of business;
(xv) unsecured Indebtedness owing to a Borrower evidencing loans made by
such Borrower to another Borrower, provided that such Borrower collaterally
assigns the notes and/or agreements evidencing such loans to Lender in form and
substance satisfactory to Lender;
(xvi) Indebtedness arising, directly or indirectly, from the issuance of
industrial revenue bonds, in form and substance satisfactory to Lender, for the
sole purpose of providing Farah USA with funds to purchase the distribution
center to be located in New Mexico for Farah USA and equipment to be used
therein;
(xvii) Indebtedness of Farah USA owed to a third party lender secured by
liens permitted under Sections 3(l)(vii) and 3(l)(xi) hereof;
(xviii) Indebtedness to third party lenders of Farah UK if Farah UK
terminates its Obligations under the Amended and Restated Accounts Financing
Agreement, the Farah UK Supplement, the Farah UK Agreements, and the other
Financing Agreements in accordance with the terms and conditions of Section 8 of
the Farah UK Supplement;
(xix) unsecured Indebtedness evidencing loans by Farah (Australia) Pty.
Limited to Farah (New Zealand) Limited not to exceed $1,010,000 (Australia
Dollars);
(xx) unsecured Indebtedness evidencing advances made by Farah (Australia )
Pty. Limited to Farah (New Zealand) Limited in respect of trade payables
incurred in the ordinary course of business not to exceed in the aggregate at
any one time $500,000 (Australia Dollars); and
(xxi) Indebtedness to third party lenders of Farah (Australia) Pty. Limited
and/or Farah (New Zealand) Limited incurred after the date hereof.
(l) Guarantor will not, and will not permit any subsidiary to, create or
suffer to exist any mortgage, pledge, security interest, lien, encumbrance,
defect in title or restriction upon the use of their real or personal
properties, whether now owned or hereafter acquired, except:
(i) the liens or security interests in favor of Lender;
(ii) tax, mechanics and other like statutory liens arising in the ordinary
course of Guarantor's or its subsidiary's respective businesses to the extent
(A) such liens secure Indebtedness which is not overdue or (B) until foreclosure
or similar proceedings shall have been commenced, such liens secure Indebtedness
relating to claims or liabilities which are being contested in good faith by
appropriate proceedings available to Guarantor or its subsidiaries prior to the
commencement of foreclosure or other similar proceedings and are adequately
escrowed for or reserved against in Lender's judgment;
(iii) purchase money mortgages or other purchase money liens or security
interests upon any specific fixed assets now existing or hereafter acquired, or
mortgages, liens or security interests existing on any such fixed assets at the
time of acquisition thereof (including, without limitation, capitalized or
finance leases) or in connection with the refinancing of the existing
capitalized leases with respect to specific assets, provided, that, (A) no such
purchase money or other mortgage, lien or security interest (or capitalized or
finance lease, as the case may be) with respect to specific future fixed assets
or as refinanced shall extend to or cover any other property, other than the
specific fixed assets so acquired, or acquired or refinanced subject to such
mortgage, lien or security interest (or lease) and the proceeds thereof, (B)
such mortgage, lien or security interest secures the obligation to pay the
purchase price of such specific fixed assets only (or the obligations under the
capitalized or finance lease), and (C) the principal amount secured thereby
shall not exceed one hundred (100%) percent of the cost of the fixed assets so
acquired; and
(iv) the liens and security interests granted by Borrower and Guarantor to
the Banks to secure the Indebtedness permitted under Section 3(k)(viii), which
liens and security interests are, in all respects, subordinate and subject to
the liens and security interests in favor of Congress;
(v) the existing liens, encumbrances or security interests described on
Exhibit D hereto or on the title insurance policy issued in favor of Lender with
respect to the real property of Borrower, provided, that, such liens,
encumbrances or security interests with respect to the real property: (i) do not
interfere with the use of the real property or the ordinary conduct of Borrower,
business as currently conducted, or proposed to be conducted, thereon and (ii)
do not impair the value of the affected property;
(vi) liens and security interests securing Indebtedness described in
Section 3(k)(ix) hereof; provided that such liens and security interests are
subordinated pursuant to an subordination agreement acceptable to Lender;
(vii) liens and security interests upon the computer equipment of Farah USA
securing Indebtedness of Farah USA owed to a third party lender, provided that
the principal balance advanced to Farah USA by such third party lender in
respect of such computer equipment shall not exceed $750,000; and in furtherance
of the liens permitted under this Section 3(l)(vii) Lender shall, upon Farah
USA's request, execute and deliver to Farah USA such documents and UCC-3
Financing Statements evidencing the release of Lender's security interest in
such computer equipment as Farah USA may reasonably request;
(viii) liens, security interests and charges against the assets of Farah UK
securing the Indebtedness described in Section 3(k)(xviii) above;
(ix) liens, security interests and charges against the assets of Farah
(Australia) Pty. Limited and Farah (New Zealand) Limited securing Indebtedness
described in Section 3(k)(xxi) hereof;
(x) liens against the distribution center, equipment therein and real
property thereunder securing the Indebtedness referred to in Section 3(k)(xvi)
hereof; and
(xi) liens and security interests upon manufacturing equipment of Farah USA
to be located in Mexico securing Indebtedness of Farah USA owed to a third party
lender in connection with "Torreon Project," provided that the principal balance
advanced to Farah USA by such third party lender in respect of such equipment
shall not exceed $1,000,000. In furtherance of the liens permitted under this
Section 3(l)(xi) Lender shall, upon Farah USA's request, execute and deliver to
Farah USA such documents and UCC-3 Financing Statements evidencing the release
of Lender's security interest in such equipment as Farah USA may reasonably
request; and
(m) Guarantor will not, and will not permit any Subsidiary to, directly or
indirectly, make any loans or advance money or property to any Person, or invest
in (by capital contribution, dividend or otherwise) or purchase or repurchase
the stock or Indebtedness or all or a substantial part of the assets or property
of any Person, or guarantee, assume, endorse, or otherwise become responsible
for (directly or indirectly) the Indebtedness, performance, obligations or
dividends of any Person or agree to do any of the foregoing, except:
(i) guarantees in favor of Lender;
(ii) the guarantee by [Farah (Far East) Limited in favor of the Bank of New
Zealand of the obligations of Farah (Fiji) Limited in an amount up to $950,000
(Fiji Dollars) as in effect on the date hereof;
(iii) the endorsement of instruments for collection or deposit in the
ordinary course of business;
(iv) investments by Guarantor and its subsidiaries in the stock of any
Subsidiary existing as of the date hereof or hereafter approved by Lender;
(v) unless and until the occurrence of an Event of Default, advances by
Borrower in the ordinary course of business from time to time for the account of
the Borrower Foreign Subsidiary for their working capital or otherwise in the
ordinary course of their respective businesses;
(vi) loans by a Borrower to any other Borrower, provided that such Borrower
collaterally assigns the note and agreements evidencing such loans to Lender in
form and substance satisfactory to Lender;
(vii) guarantee or assumption by Farah USA of the obligations of Global
Sourcing Services, L.L.C. to vendors of new machinery and equipment and/or
investment by Farah U.S.A. in Global Sourcing Services, L.L.C. by transfer of
new machinery and equipment of Farah USA to Global Sourcing Services, L.L.C.,
provided that the aggregate amount of such guaranty obligations and such
investments shall not exceed $3,500,000. In furtherance of the foregoing, in the
event Farah USA transfers any equipment described above to the capital of Global
Sourcing Services, L.L.C., Lender shall, upon Farah USA's request, execute and
deliver to Farah USA such documents and UCC-3 Financing Statements evidencing
the release of Lender's security interest in such equipment as Farah USA may
reasonably request; provided, however, that, prior to such release, Farah USA
shall have executed and delivered to Lender a pledge and security agreement of
Farah USA's member interest in such limited liability company in form and
substance satisfactory to Lender;
(viii) after written notice thereof to Lender, investments in the following
instruments, which shall be pledged and delivered to Lender upon Lender's
request, (A) marketable obligations issued or guaranteed by the United States of
America or an instrumentality or agency thereof, maturing not more than one (1)
year after the date of acquisition thereof, (B) certificates of deposit or other
obligations maturing not more than one (1) year after the date of acquisition
thereof issued by any bank or trust company organized under the laws of and
located in the United States of America or any State thereof and having capital,
surplus and undivided profits of at least $100,000,000, and (C) open market
commercial paper with a maturity not in excess of two hundred seventy (270) days
from the date of acquisition thereof which have the highest credit rating by
either Standard & Poor's Corporation or Xxxxx'x Investors Service, Inc.
(ix) investment by Farah USA in 50% of the capital of Global Sourcing
Services, L.L.C.;
(x) the guarantees by Guarantor of the obligations of Value Slacks, Inc.
and Value Clothing pursuant to certain real property leases, provided, that, (A)
in no event shall the aggregate liability of Guarantor thereunder exceed
$5,000,000; (B) Guarantor will not, and will not permit Value Slacks, Inc. and
Value Clothing to, amend, modify, alter or change the terms of such guarantees
or leases in any material respect so as to increase the liabilities of Guarantor
or Value Slacks, Inc. or Value Clothing thereunder; and (C) Guarantor will
furnish to Lender all material notices, demands or other materials concerning
such guarantees and leases, promptly after receipt thereof or concurrently with
the sending thereof, as the case may be;
(xi) the guarantees by Value Slacks, Inc. of the obligations of Value
Clothing pursuant to certain real property leases, provided, that (A) in no
event shall the aggregate liability of Guarantor thereunder exceed $4,000,000;
(B) Guarantor will not permit Value Clothing to, amend, modify, alter or change
the terms of such guarantees or leases in any material respect so as to increase
the liabilities of Value Slacks, Inc. or Value Clothing thereunder, and (C)
Guarantor will cause Value Slacks and Value Clothing to furnish to Lender all
material notices, demands or other materials concerning such guarantees and
leases, promptly after receipt thereof or concurrently with the sending thereof,
as the case may be;
(xii) investment by Farah Offshore Sourcing Company in 50% of the capital
of Global Sourcing Services, Inc., a Cayman Islands company;
(xiii) investment by Farah Offshore Sourcing Company in 50% of the capital
of JBRM Manufacturing Services, Inc., a Cayman Islands company;
(xiv) advances by Farah USA to the Costa Rica Subsidiary in respect of
payments of trade payables incurred by the Costa Rica Subsidiary in the ordinary
course of business;
(xv) Indebtedness of the Costa Rica Subsidiary owed to Farah USA in respect
of payments by the Costa Rica Subsidiary to Farah USA for trade payables
incurred by the Costa Rica Subsidiary in the ordinary course of business;
(xvi) guarantee by Farah International, Inc. and/or Guarantor of the
obligations described in Section 3(k)(xxii) hereof in favor of third party
lenders of Farah (Australia) Pty. Limited and Farah (New Zealand) Limited;
(xvii) the guarantee by Guarantor of the obligations of Farah (Australia)
Pty. Limited to Australia and New Zealand Banking Group Limited;
(xviii) guarantee by Guarantor and Farah USA pursuant to the
indemnification obligations under that certain Asset Purchase Agreement dated as
of May 20, 1996, among Xxxxx & Lord, Inc., Xxxxx and Lord Industries, Inc.,
Guarantor, Farah USA and Dimmit Industries, S.A. de C.V.
(xix) guarantee by Guarantor of real property lease obligations of Farah
USA under the terms of that certain Lease Agreement dated as of October 4, 1996,
between Farah USA and Orso Partners, Ltd., as amended from time to time;
(xx) guarantee by Guarantor of real property lease obligations of Farah USA
under the terms of that certain Standard Industrial/Commercial Single-Tenant
Lease-Net dated November 30, 1996, between Farah USA and Santa Xxxxxx Limited
Partnership, as amended from time to time;
(xxi) advances made by Farah (Australia) Pty. Limited to Farah (New
Zealand) Limited in respect of trade payables incurred in the ordinary course of
business not to exceed in the aggregate at any one time $500,000 (Australia
Dollars);
(xxii) loans by Farah (Australia) Pty. Limited to Farah (New Zealand)
Limited not to exceed $1,010,000 (Australia Dollars);
(xxiii) the guarantees by Guarantor of the purchase money obligations of
its Subsidiaries to third party lenders which are permitted pursuant to Sections
3(l)(iii) hereof; and
(xxiv) investments of Farah (Far East) Limited in 50% of the capital stock
of each of Farah (Fiji) Limited and South Pacific Investments Limited;
(n) Guarantor will not, and will not permit any subsidiary to, directly or
indirectly:
(i) purchase, acquire or lease any property or receive any services from,
or sell, transfer or lease any property or services to, any Affiliate of
Guarantor, except on prices and terms no less favorable than would have been
obtained in an arm's length transaction with a non-affiliated person; or
(ii) make any payment of management fees or other or of the principal
amount of or interest on any Indebtedness owing to any shareholder, officer,
director or other Affiliate of Guarantor, except: (A) the Subsidiaries of
Guarantor (other than Borrower) may pay any management or other fees, and (B)
the Subsidiaries of Guarantor (other than Borrower) may repay any Indebtedness
owing to Guarantor or any of its other Subsidiaries and (C) Borrower may pay
consulting fees, salaries, director fees and expenses incurred in the ordinary
course of business to each member of the Board of Directors.
(o) Guarantor will not, and will not permit Borrower to, directly or
indirectly, during any fiscal year, commencing with the current fiscal year,
declare or pay any dividends on account of any shares of any class of capital
stock of Guarantor or Borrower now or hereafter outstanding, or set aside or
otherwise deposit or invest any sums for such purpose, or redeem, retire,
defease, purchase or otherwise acquire any shares of any class of capital stock
(or set aside or otherwise deposit or invest any sums for such purpose) for any
consideration other than stock or apply or set apart any sums, or make any other
distribution (by reduction of capital or otherwise) in respect of any such
shares or agree to do any of the foregoing.
(p) All notes receivable now or hereafter executed in favor of Guarantor
evidence a valid and legally enforceable indebtedness of the maker thereof and
the face amount of which is unconditionally owing to Guarantor, without offset,
defense or counterclaim of any kind, nature or description whatsoever.
Guarantor, as payee with respect to any promissory note, now existing or
hereafter arising, or with respect to which Guarantor is otherwise entitled to
payment, in either case as to which the original principal amount equals or
exceeds $10,000, will endorse, or cause to be endorsed, all such notes
receivable to the order of Lender and shall immediately upon receipt of any such
notes deliver the originals thereof so endorsed to Lender as additional
Collateral.
(q) Guarantor will permit representatives of Lender at any time to inspect
its inventory, equipment and other tangible Collateral and to have free access
to and right of inspection of any papers, instruments and records pertaining to
any of the Collateral and make abstracts or photocopies from Guarantor's books
and records, at the expense of Guarantor, pertaining to inventory, accounts,
contract rights, chattel paper, instruments, documents and other Collateral. The
foregoing rights shall be in addition to and shall not limit Lender's rights and
remedies with respect to the Collateral upon or at any time after the occurrence
of an Event of Default (as provided hereunder).
(r) Guarantor will at all times maintain, with financially sound and
reputable insurers, casualty and hazard insurance with respect to the Collateral
for not less than its full market value and against all risks to which it may be
exposed except to the extent Guarantor is self insured for losses up to
$250,000. All such insurance policies shall be in such form, substance, amounts
and coverage as may be satisfactory to Lender and shall provide for thirty (30)
days' minimum prior cancellation notice in writing to Lender. Lender may act as
attorney for Guarantor in obtaining, adjusting, settling, amending and canceling
such insurance. Guarantor will promptly (i) obtain endorsements to all existing
and future insurance policies with respect to the Collateral specifying that the
proceeds of such insurance shall be payable to Lender and Guarantor as their
interests may appear and further specifying that Lender shall be paid regardless
of any act, omission or breach of warranty by Guarantor, (ii) deliver to Lender
an original executed copy of, or executed certificate of the insurance carrier
with respect to, such endorsement and, at the Lender's request, the original or
a certified duplicate copy of the underlying insurance policy, and (iii) deliver
to Lender such other evidence which is satisfactory to Lender of compliance with
the provisions hereof. Guarantor will promptly notify Lender in writing of the
details of any material loss, damage, investigation, action, suit, proceeding or
claim relating to the Collateral or which would result in any material adverse
change in Guarantor's business, properties, assets, goodwill or condition,
financial or otherwise. At Lender's option, Lender may apply any insurance
monies received at any time to the cost of repairs to or replacement for the
Collateral and/or to payment of any of the Obligations, whether or not due, in
any order and in such manner as Lender, in its discretion, may determine.
(s) Upon Lender's request, on or after the occurrence of an Event of
Default at any time and from time to time, but in no event prior to the
occurrence of an Event of Default more than once in any twelve (12) consecutive
month period, Guarantor will, at its sole cost and expense, execute and deliver
to Lender written reports or appraisals as to the Collateral consisting of
inventory and equipment listing all items and categories thereof, describing the
condition of same and setting forth the value thereof (the lower of cost or
market value of the inventory and the lower of net cost less depreciation, fair
market value and/or liquidation value of the equipment), in such form as is
satisfactory to Lender.
(t) Guarantor will, at its own expense, keep the Collateral consisting of
equipment in good order, repair, running and marketable condition, ordinary wear
and tear excepted and except for Collateral consisting of equipment which is not
used or useful in the conduct of Guarantors business as of the date hereof.
(u) Guarantor will (i) use, store and maintain the Collateral consisting of
inventory and equipment with all reasonable care and caution, and (ii) use such
Collateral for lawful purposes only and in conformity with applicable laws,
ordinances and regulations.
(v) At its option, Lender may discharge taxes, liens or security interests
or other encumbrances at any time levied or placed on the Collateral and may pay
for the maintenance and preservation of the Collateral and Guarantor agrees to
reimburse Lender on demand, together with interest therein at the rate specified
in the Financing Agreements, for any payment made or expense incurred by Lender
in connection with the foregoing and any such payment or expense shall
constitute a part of the Obligations secured hereby.
(w) All Collateral consisting of inventory shall be produced in accordance
with the requirements of the Federal Fair Labor Standards Act of 1938, as
amended and all rules, regulations and orders related thereto. The Collateral
consisting of inventory and equipment is and will be used in Guarantor's
business and not for personal, family, household or farming use. The Collateral
consisting of equipment is now and will remain personal property and Guarantor
will not permit any of the equipment to be or become a part of or affixed to
real property without (i) prior written notice to Lender and Lender's written
consent and (ii) first making all arrangements, and delivering or causing to be
delivered to Lender, such agreements and other documentation requested by Lender
for the protection and preservation of Lender's security interests and liens, in
form and satisfactory to Lender, including, without limitation, waivers and
subordination agreements by any landlords or mortgagees of statutory and
non-statutory liens and rights of distraint. Guarantor assumes all
responsibility and liability arising from or relating to the use, sale or other
disposition of its inventory and equipment as between Guarantor and Lender.
(x) Guarantor will, at its expense, duly execute and deliver, or cause to
be duly executed and delivered, such further agreements, instruments and
documents, including, without limitation, additional security agreements,
mortgages, deeds of trust, deeds to secure debt, collateral assignments, Uniform
Commercial Code financing statements or amendments or continuations thereof,
landlords or mortgagee's waivers of liens and consents to the exercise by Lender
of all Lender's rights and remedies hereunder, under any of the other Financing
Agreements or applicable law with respect to the Collateral, and do or cause to
be done such further acts as may be necessary or proper in Lender's opinion to
evidence, perfect, maintain and enforce Lender's security interest and the
priority thereof in the Collateral and to otherwise effectuate the provisions or
purposes of this Agreement or any of the other Financing Agreements. Where
permitted by law, Guarantor hereby authorizes Lender to execute and file one or
more Uniform Commercial Code financing statements signed only by Lender.
(y) Guarantor will promptly pay Lender any and all sums, costs and expenses
which Lender may pay or incur in connection with the preparation and negotiation
of this Agreement, the Guarantee, any of the other Financing Agreements, and any
related agreements or instruments, or in defending, protecting or enforcing the
security interest granted herein or in enforcing payment of the Obligations or
otherwise in connection with the provisions hereof, including without
limitation, all search, filing and recording fees, taxes, and attorneys' fees
and all fees and expenses for the service and filing of papers, marshals,
sheriffs, custodians, auctioneers and others, and all court costs and collection
charges, all of which shall be part of the Obligations secured hereby and shall
be payable on demand.
4. EVENTS OF DEFAULT
All Obligations shall be, at Lender's option, immediately due and
payable without notice or demand (notwithstanding any deferred or installment
payments allowed, if any, by any instrument evidencing or relating to the
Obligations) and any provision of the Financing Agreements as to future loans
and advances by Lender to Borrower shall, at Lender's option, terminate
forthwith, upon the occurrence of any one or more of the following ("Events of
Default"):
(a) Guarantor shall be in default in the payment of any of the Obligations
when due, which default shall continue for three (3) days; or
(b) Guarantor shall fail to observe or perform any covenant or agreement
contained herein or in any of the other Financing Agreements other than as
described in subsection (a) above and such failure shall continue for five (5)
business days, provided, that, such five (5) business day period shall not apply
in the case of: (i) any failure to observe any such covenant or agreement which
is not capable of being cured at all or within such five (5) business day period
or which has been the subject of a prior failure within a six (6) month period
or (ii) an intentional breach by Guarantor or its management of any such
covenant or agreement; or
(c) any other guarantor, endorser or person liable on the Obligations shall
terminate or breach any of the terms, covenants, conditions or provisions of any
guarantee, endorsement or other agreement of such person with, or in favor of,
Lender; or
(d) any representation, warranty or statement of fact when made to Lender
at any time by or on behalf of Guarantor is false or misleading in any material
respect; or
(e) Guarantor or any other guarantor, endorser or person liable on the
Obligations shall become insolvent, generally unable to pay its debts as they
mature, call a meeting of creditors or have a creditors' committee appointed,
make a general assignment for the benefit of creditors, suspend or discontinue
doing business for any reason, or shall commence or have commenced against it
any action or proceeding for the appointment of any trustee, receiver, custodian
or liquidator of it or all or any part of its properties or assets; or
(f) a judgment is rendered against Guarantor or any other guarantor,
endorser or person liable on the Obligations in excess of $250,000 in any one
case or in excess of $500,000 in the aggregate and the same shall remain
undischarged for a period in excess of thirty (30) days or execution shall at
any time not be effectively stayed; or
(g) Guarantor or any other guarantor, endorser or person liable on the
Obligations shall commence any action or proceeding for relief under the
Bankruptcy Code or any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under the Bankruptcy Code or any
other present or future statute, law or regulation or shall take any corporate
action to authorize any of such actions or proceedings; or
(h) Guarantor or any other guarantor, endorser or person liable on the
Obligations shall have commenced against it any action or proceeding for relief
under the Bankruptcy Code or any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under the Bankruptcy
Code or any other present or future statute, law or regulation which is not
dismissed within thirty (30) days of its commencement, or Guarantor, any other
guarantor, endorser or person shall file any answer admitting or not contesting
the allegations of a petition filed against it in any such proceeding or by any
act or omission indicates its consent to, acquiescence in or approval of, any
such action or proceeding or if the relief requested is granted sooner; or
(i) there shall be a material adverse change in the business, assets
or condition (financial or otherwise) of Guarantor from the date hereof; or
(j) there is any change in the majority control or ownership of Guarantor;
or
(k) at any time, Lender shall, in its reasonable discretion, consider the
Obligations insecure or all or any part of the Collateral unsafe, insecure or
insufficient and Guarantor shall not on Lender's demand furnish other Collateral
or make payment on account, reasonably satisfactory to Lender; or
(l) Guarantor or any other guarantor, endorser or person liable on the
Obligations shall default in the payment of any amounts at any time due on any
indebtedness owed by it or in the performance of any of the other terms or
covenants of any evidence of such indebtedness or of any material mortgage,
security agreement, indenture, pledge or other agreement relating thereto or
securing such indebtedness or with respect to any material contract, lease,
license or other agreement with any person other than Lender, which default
continues for more than the applicable cure period, if any, with respect
thereto; or
(m) the occurrence of an event of default under any of the other Financing
Agreements.
5. RIGHTS AND REMEDIES
(a) Upon the occurrence of any Event of Default and at any time thereafter,
in addition to all other rights and remedies of Lender, whether provided under
the Uniform Commercial Code or other applicable law, this Agreement, the
Guarantee, the other Financing Agreements or otherwise, Lender shall have the
following rights and remedies which may be exercised, in its discretion, at any
time or times, with or without judicial process, with or without the assistance
of others and without notice to or consent by Guarantor except as such notice or
consent or judicial process is expressly provided for hereunder or required by
law:
(i) accelerate payment of all Obligations and demand immediate payment
thereof to Lender;
(ii) enter upon any premises on or in which any of the Collateral may be
located and, without resistance or interference by Guarantor, take possession of
the Collateral;
(iii) complete processing, manufacturing and repair of all or any portion
of the Collateral;
(iv) require Guarantor, at its expense, to assemble and make available to
Lender any part or all of the Collateral at any place and time designated by
Lender; and
(v) remove any or all of the Collateral from any premises on or in which
the same may be located, for the purpose of effecting the sale, foreclosure or
other disposition thereof or for any other lawful purpose;
(vi) appropriate, set off and apply to the payment of any or all of the
Obligations, any or all Collateral, in such manner as Lender shall in Lender's
sole discretion determine, and enforce payment of any Collateral, settle,
compromise or release in whole or in part any amounts owing on the Collateral,
prosecute any action, suit or proceeding with respect to the Collateral, extend
the time of payment of any and all Collateral, make allowances and adjustments
with respect thereto, and issue credits in Lender's or Guarantor's name; and
(vii) sell, assign, foreclose or otherwise dispose of and deliver any or
all of the Collateral, at public or private sale, at broker's board, for cash,
upon credit or otherwise, at Lender's sole option and discretion, on or in any
of Guarantor's premises or premises of any other person, and Lender may bid or
become purchaser at any such sale, if public, free from any right of redemption
which is hereby expressly waived.
(b) In the event Lender seeks to take possession of all or any portion of
the Collateral by judicial process, Guarantor irrevocably waives: (i) the
posting of any bond, surety or security with respect thereto which might
otherwise be required, (ii) any demand for possession prior to the commencement
of any suit or action to recover the Collateral, and (iii) any requirement that
Lender retain possession and not dispose of any Collateral until after trial or
final judgment.
(c) Guarantor agrees that the giving of five (5) days notice by Lender to
Guarantor's address set forth below, designating the place and time of any
public sale or of the time after which any private sale or other intended
disposition of the Collateral is to be made, shall be deemed to be reasonable
notice thereof and Guarantor waives any other notice with respect thereto.
(d) The net cash proceeds resulting from the exercise of any of the
foregoing rights or remedies shall be applied by Lender to the payment of the
Obligations in such order as Lender may elect, and Guarantor shall remain liable
to Lender for any deficiency. Without limiting the generality of the foregoing,
if Lender enters into any credit transaction, directly or indirectly, in
connection with the disposition of any Collateral, Lender shall have the option,
at any time, in its sole discretion, to reduce the Obligations by the principal
amount of such credit transaction or to defer the reduction thereof until actual
receipt by Lender of cash or other immediately available funds in connection
therewith.
(e) The enumeration of the foregoing rights and remedies is not intended to
be exclusive, and such rights and remedies are in addition to and not by way of
limitation of any other rights or remedies Lender may have under the Uniform
Commercial Code or other applicable law. Lender shall have the right, in
Lender's sole discretion, to determine which rights and remedies, and in which
order any of the same, are to be exercised, and to determine which Collateral is
to be proceeded against and in which order, and the exercise of any right or
remedy shall not preclude the exercise of any others. Lender may at any time
pursue, relinquish, subordinate, modify or take any other action with respect
thereto, without in any way modifying or affecting any of the Obligations.
Lender may, at any time or times, proceed directly against Guarantor or any
other person liable on the Obligations to enforce payment of the Obligations and
shall not be required to take any action of any kind to preserve, collect or
protect Lender's or Guarantor's rights in the Collateral.
(f) No act, failure or delay by Lender shall constitute a waiver of any of
Lender's rights and remedies. No single or partial waiver by Lender of any
provision of this Agreement or any supplement hereto, or breach or default
thereunder, or of any right or remedy which Lender may have shall operate as a
waiver of any other provision, breach, default, right or remedy or of the same
provision, breach, default, right or remedy on a future occasion.
(g) Guarantor waives presentment, notice of dishonor, protest and notice of
protest of all instruments included in or evidencing any of the Obligations or
the Collateral and any and all notices or demands whatsoever (except as
expressly provided herein).
(h) All rights, remedies, powers and benefits granted to Lender by
Guarantor or any other person liable on or in respect of the Obligations under
this Agreement, the Guarantee, the other Financing Agreements, or any other
agreement, or granted by applicable law, whether expressly granted or implied in
law, are cumulative, not exclusive and enforceable alternatively, successively,
or concurrently on any one or more occasions and shall include, without
limitation, the right to apply to a court of equity for an injunction to
restrain a breach or threatened breach by Guarantor or any other person liable
on or in respect of the Obligations of this Agreement, the Guarantee, the other
Financing Agreements or such other agreements.
6. MISCELLANEOUS
(a) Notwithstanding that Lender, whether on its own behalf and/or on behalf
of others, may continue to hold Collateral, and regardless of the value thereof,
Guarantor and each other person liable on or in respect of the Obligations shall
be and remain jointly and severally liable for the payment in full, including
principal and interest, of any balance of the Obligations and expenses hereunder
at any time unpaid.
(b) Guarantor and Lender waive all rights to trial by jury in any action or
proceeding instituted by either of them against the other arising on, out of or
by reason of this Agreement, the Guarantee, the other Financing Agreements, the
Obligations, the Collateral, any alleged tortious conduct by either party hereto
or in any way arising out of or related to the relationship between Guarantor
and Lender or Borrower and Lender. In no event will Lender be liable for lost
profits or other special or consequential damages.
(c) Guarantor waives all rights to interpose any claims, defenses,
deductions, setoffs or counterclaims of any kind, nature or description in any
action or proceeding instituted by Lender with respect to this Agreement, the
Guarantee, the other Financing Agreements, the Obligations, the Collateral or
any matter arising therefrom or relating hereto or thereto, except compulsory
counterclaims.
(d) Guarantor hereby expressly submits and irrevocably consents in advance
to the non-exclusive jurisdiction of the District Courts of the State of Texas
and the United States District court for the Northern District of Texas in
connection with any action or proceeding arising out of or relating to this
Agreement, the Guarantee, the other Financing Agreements, the Obligations, the
Collateral or any document or instrument delivered pursuant hereto or thereto.
Guarantor hereby waives personal service of the summons and complaint or other
process or notice of motion or other application or papers issued therein, and
agrees that the service of such summons and complaint or other process or papers
may be served: (i) inside or outside the State of Texas by registered or
certified mail, return receipt requested, addressed to Guarantor at its chief
executive office set forth below and service or notice so served shall be deemed
complete five (5) business days after the same shall have been posted or (ii) in
such other manner as may be permissible under the rules of said Courts.
(e) All notices, requests and demands hereunder shall be in writing and (i)
made to Lender at 0000 Xxxx Xxxxxx, Xxxxxx, Xxxxx 00000 and to Guarantor at its
chief executive office set forth below, or to such other address as each party
may designate by written notice to the other in accordance with this provision,
and (ii) deemed to have been given or made: if by hand, telex, telecopy or
telegram, immediately upon sending; if by Federal Express, Express Mail or other
overnight delivery service, one (1) day after dispatch; and if by certified
mail, return receipt requested, five (5) days after mailing.
(f) The provisions of this Agreement are severable, and if any clause or
provision hereof shall be held invalid or unenforceable in whole or in part in
any jurisdiction, then such invalidity or unenforceability shall attach only to
such clause or provision in any such jurisdiction or part thereof, and shall not
in any manner affect such clause or provision in any other jurisdiction or any
other clause or provision in this Agreement or the other Financing Agreements in
any jurisdiction.
(g) Under no circumstances shall Lender be deemed to have assumed any
responsibility for or obligation or duty of any nature or kind with respect to
any Collateral, or any matter or proceedings arising out of or relating thereto,
but the same shall be at the sole risk of Guarantor at all times. Guarantor
hereby releases Lender from any claims, causes of action and demands at any time
arising out of, relating to or with respect to this Agreement, the Guarantee,
the other Financing Agreements, the Obligations, the Collateral and/or any
actions taken or omitted to be taken by Lender with respect thereto, and
Guarantor hereby agrees to indemnify and hold Lender harmless from and with
respect to any and all such claims, causes of action and demands whether
pursuant to negligence or otherwise by any person, other than Lender's own acts
of gross negligence or willful misconduct.
(h) This Agreement shall inure to the benefit of Guarantor and Lender and
their respective successors and assigns and shall be binding upon Guarantor and
its successors and assigns.
(i) This Agreement and any other agreement, document or instrument
delivered in connection herewith, and the obligations of the parties hereunder
or thereunder shall be governed by, and construed and interpreted in accordance
with the laws of the State of Texas, except to the extent that the law of any
other jurisdiction is required to be applied with respect to the enforcement of
Lender's rights in Collateral located in such jurisdiction.
IN WITNESS WHEREOF, Guarantor has caused these presents to be duly
executed and delivered on the day and year first above written.
FARAH INCORPORATED
By: /s/ Xxxxxxx X. Xxxxxx
Title: Chief Financial Officer
Chief Executive Office of Signatory
0000 Xxxxx Xxxx
Xxxxxxxx X
Xxxxx 000
Xx Xxxx, Xxxxx 00000
