FOURTH AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Executed to be effective as of September 30, 1997
by and between
XXXXXX COLOR-FI, INC., STAR FIBERS CORP.,
CUSTOM COLORANTS, INC., XXXXXXXX INDUSTRIES, INC.,
PALMETTO SPINNING CORPORATION
AND
NATIONSBANK, N.A.
AS SUCCESSOR TO NATIONSBANK, NATIONAL ASSOCIATION (CAROLINAS)
AND NATIONSBANK OF SOUTH CAROLINA, N.A.
THIS AGREEMENT IS SUBJECT TO THE FEDERAL
ARBITRATION ACT AND THE SOUTH CAROLINA ARBITRATION
ACT SECTION 15-48-10, ET. SEQ. CODE OF LAWS OF
SOUTH CAROLINA 1976 AS AMENDED
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TABLE OF CONTENTS
Preliminary Statement..........................................................1
1. DEFINITIONS
1.1. Defined Terms................................................2
1.2. Other Definitional Provisions...............................11
2. THE REVOLVING CREDIT LOAN
2.1. General Terms of the Revolving Credit Loan..................12
2.2. Disbursements of the Revolving Credit Loan..................12
2.3. The Revolving Credit Note...................................13
2.4. Adjustments to Revolving Credit Loan Amount.................13
2.5. Margin Requirements under the Revolving Credit Loan.........13
2.6. Termination of the Revolving Credit Loan....................13
2.7. Fees........................................................13
2.8. Conditional Consent to Inclusion of
Assets of any Approved Subsidiary........................14
2.9. Account Warranties..........................................14
2.10. Lock Box/Collateral Account.................................14
2.11. Documentation and Security for Revolving Credit Loan........15
2.12. Disbursement to MCF.........................................15
2.13. Verification of Accounts....................................15
3. TERM LOAN
3.1. Term Loan Terms.............................................15
3.2. Repayment of Term Loan......................................15
3.3. Balance.....................................................16
3.1.A. 1997 TERM LOAN.........................................................16
3.1.A. 1997 Term Loan Terms..........................................16
3.2.A. Repayment of 1997 Term Loan...................................16
3.3.A. Disbursements Under 1997 Term Loan............................16
3.4.A. Draw Requests for 1997 Term Loan..............................16
3.5.A. Amount of Each Disbursement...................................17
3.6.A. Fee...........................................................17
4. CONDITIONS FOR DISBURSEMENTS AND OTHER AGREEMENTS
4.1. Conditions Precedent to Disbursements.......................17
4.1.1. Loan Documents.....................................17
4.1.2. Wachovia Participation.............................17
4.1.3. Authority Documents................................17
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4.1.4. Attorney's Opinion.................................17
4.1.5. Miscellaneous......................................18
4.1.6. No Defaults........................................18
4.1.7. Draw Request.......................................18
4.2. Payment to Bank.............................................18
4.3. Risk of Loss................................................18
4.4. Waivers.....................................................18
4.5. Intangible Taxes............................................18
5. ADDITIONAL COLLATERAL SECURITY
5.1. Nature of Collateral........................................18
5.2. Rights in Property Held by Bank.............................18
5.3. Rights in Property Held by Borrowers........................19
5.4. Financing Statements........................................19
6. REPRESENTATIONS AND WARRANTIES.
6.1. Original....................................................20
6.2. Survival....................................................24
7. BORROWERS' COVENANTS
7.1. Affirmative Covenants.......................................24
7.2. Negative Covenants..........................................29
7.3. Agreements, Representations and
Covenants of Any Approved Subsidiary......................30
7.4. Additional Covenants........................................30
8. BANK'S RIGHTS
8.1 Appraisal...................................................30
8.2. Remedies Cumulative; Nonwaiver..............................31
8.3. No Liability of Bank........................................31
8.4. Environmental Assessments...................................31
8.5. Audits......................................................31
9. DEFAULT.
9.1. Events of Default...........................................31
9.2. Acceleration................................................33
9.3. Remedies after Acceleration.................................33
9.4. Remedies Alternative to Acceleration........................34
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10. MISCELLANEOUS
10.1. Construction................................................35
10.2. Further Assurances..........................................35
10.3. Enforcement and Waiver......................................35
10.4. Bank's Expenses.............................................35
10.5. Notices.....................................................35
10.6. Waiver and Release by Borrowers.............................36
10.7. Participation...............................................36
10.8. Governing Law...............................................36
10.9. Amendment Agreement.........................................36
10.10. Assignment..................................................36
10.11. Benefit; Binding............................................37
10.12. Severability................................................37
10.13. Counterparts................................................37
10.14. Entire Agreement............................................37
10.15. Arbitration.................................................37
10.16. Amendment and Restatement...................................38
LIST OF EXHIBITS AND SCHEDULES
EXHIBIT 2-2 - Form of Collateral Certificate
EXHIBIT 2-3 - Form of Monthly Borrowing Base Certificate
Schedule 6-1(a) - List of Jurisdictions
Schedule 6-1(h) - List of Indebtedness
Schedule 6-1(s) - List of Collateral Locations
Schedule 6-1(t) - List of Trade Names
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FOURTH AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
THIS FOURTH AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT (the "Agreement") made and entered to be effective as of this 30th day
of September, 1997 by and between XXXXXX COLOR-FI, INC. ("MCF"), a South
Carolina corporation, STAR FIBERS CORP., a South Carolina special purpose
corporation and wholly-owned subsidiary of MCF ("Star Fibers"), CUSTOM
COLORANTS, INC., a South Carolina corporation and wholly-owned subsidiary of MCF
("CC"), XXXXXXXX INDUSTRIES, INC., a South Carolina corporation and wholly-owned
subsidiary of MCF ("BI"), and PALMETTO SPINNING CORPORATION, a South Carolina
corporation and wholly-owned subsidiary of MCF ("PS"). (MCF, Star Fibers, CC, BI
and PS are individually or collectively, as the context requires, referred to as
the "Borrower" or "Borrowers") and NATIONSBANK, N.A., as successor to
NATIONSBANK, NATIONAL ASSOCIATION (CAROLINAS) and NATIONSBANK OF SOUTH CAROLINA,
N.A., a federally chartered banking association ("Bank").
PRELIMINARY STATEMENT.
A. Borrowers have requested Bank to extend the maturity date of the
existing revolving line of credit (the "Revolving Credit Loan") and to increase
the maximum principal amount available under the Revolving Credit Loan
to$30,000,000. The proceeds of the Revolving Credit Loan shall be used (i) to
satisfy Borrowers' working capital needs; (ii) to issue letters of credit in the
aggregate principal amount outstanding at any one time not to exceed $750,000;
and (iii) to pay Bank approved soft costs incurred by Borrowers in connection
with the making and the closing of modifications to the Revolving Credit Loan.
B. Bank previously extended to Borrowers a cumulative line of
credit/term loan in the principal amount of $36,310,000.00 (the "Term Loan"),
the proceeds of which were used (i) to satisfy existing term indebtedness of MCF
and Star Fibers in the approximate amount of $21,310,000.00; (ii) to purchase
the assets of Palmetto Spinning Corporation and Xxxxxxxx Industries, Inc. in the
approximate, aggregate amount of $6,000,000.00; (iii) to finance fiscal year
1994 capital expenditures of Borrowers in the approximate amount of
$3,000,000.00; (iv) to finance fiscal year 1995 capital expenditures and
equipment purchases in an amount not to exceed $3,000,000.00; (v) to finance
fiscal year 1996 capital expenditure and equipment purchases in an amount not to
exceed $3,000,000.00; and (vi) to pay Bank approved soft costs incurred by
Borrowers in connection with the making and the closing of the modifications
Term Loan.
C. Bank also previously extended a loan to Borrowers on a cumulative
line of credit/term loan basis in the principal amount of up to $5,000,000 (the
"1997 Term Loan"), the proceeds of which have been or will be used (i) to
finance fiscal year 1996 capital expenditures and equipment purchases and up to
$3,000,000 of fiscal year 1997 capital expenditures and
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equipment purchases; and (ii) to pay Bank approved soft costs incurred by
Borrowers in connection with the closing of the 1997 Term Loan.
D. Bank has agreed to continue to extend to Borrowers the Revolving
Credit Loan, the Term Loan and the 1997 Term Loan pursuant to the terms and
conditions of this Agreement.
E. The Revolving Credit Loan, the Term Loan and the 1997 Term Loan
were extended to Borrowers pursuant to (i) that certain Loan and Security
Agreement dated July 14, 1994 as previously amended pursuant to that certain
First Amendment to Loan Documents and Agreement dated February 15, 1995 by and
between Borrowers and Bank and that certain Second Amendment to Loan Documents
and Agreement dated April 7, 1995; (ii) that certain Amended and Restated Loan
and Security Agreement dated August 9, 1995, as subsequently amended by other
certain letter modification agreements dated December 18, 1995, February 12,
1996 and October 25, 1996 and respectively; (iii) that certain Second Amended
and Restated Loan and Security Agreement dated as of December 16, 1996 as
amended by that certain letter modification agreement dated February 18, 1997
and (iv) that certain Third Amended and Restated Loan and Security Agreement
dated as of March 27, 1997, as amended by those certain letter modification
agreements dated as of May 2, 1997, June 2, 1997 and August 6, 1997.
NOW, THEREFORE, Borrowers and Bank agree as follows:
1. DEFINITIONS.
1.1. DEFINED TERMS. As used herein:
"1997 Term Loan" shall mean the cumulative line of credit/term loan
extended by Bank to Borrowers in the original principal amount of up to
$5,000,000.00 pursuant to the terms of, and as more particularly described in,
Article 3A. of this Agreement.
"1997 Term Loan Documents" shall mean and refer to, collectively, all
those certain documents and instruments executed in connection with the 1997
Term Loan, including this Agreement, the 1997 Term Note, the Mortgages, the
Security Agreements, the Assignment of Leases, the Assignment of Contracts, the
Financing Statements and any other documents executed in connection with the
1997 Term Loan as such documents and instruments may be amended, substituted or
renewed from time to time.
"1997 Term Note" shall mean that certain 1997 Term Loan Promissory Note
in the original principal amount of up to $5,000,000.00 dated as of March 27,
1997 executed by Borrowers in favor of Bank evidencing the 1997 Term Loan, as
the same may be amended, substituted, modified or renewed from time to time.
"Adjusted LIBOR" means a rate per annum equal to the quotient obtained
(rounded upwards, if necessary, to the next higher 1/100ths of one percent) by
dividing (i) LIBOR by (ii) one minus the LIBOR Reserve Percentage.
"Account Debtor" shall mean any Person who is obligated on or under any
Account.
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"Accounts" shall mean any of the Borrowers' presently existing and
hereafter arising or acquired accounts, accounts receivable, margin accounts,
futures positions, book debts, instruments, notes, drafts, acceptances, chattel
paper, and other forms of obligations now or hereafter owned or held by or
payable to any of the Borrowers relating in any way to Inventory or arising from
the sale of Inventory or the rendering of services by any of the Borrowers or
howsoever otherwise arising, including the right to payment of any interest or
finance charges with respect thereto, together with all merchandise represented
by any of the Accounts; all such merchandise that may be reclaimed or
repossessed or returned to any of the Borrowers; all of the Borrowers' rights as
an unpaid vendor, including stoppage in transit, reclamation, replevin, and
sequestration; all pledged assets and all letters of credit, guaranty claims,
liens, and security interests held by or granted to any of the Borrowers to
secure payment of any Accounts; all proceeds and products of all of the
foregoing described properties and interests in properties; and all proceeds of
insurance with respect thereto, including the proceeds of any applicable credit
insurance or fidelity bond, whether payable in cash or in kind; and all ledgers,
books of account, records, computer programs, computer disks or tape files,
computer printouts, computer runs, and other computer prepared information
relating to any of the foregoing.
"Affiliate" shall mean any Person (as hereinafter defined) (i) that
directly or indirectly, through one or more intermediaries, controls or is
controlled by, or is under common control with any of the Borrowers, including,
without limitation, the officers and directors of any of the Borrowers (ii) that
directly or beneficially owns or holds 5% or more of any equity interest in any
of the Borrowers, or (iii) 5% or more of whose voting stock (or in the case of a
Person which is not a corporation, 5% or more of any equity interest) is owned
directly or beneficially by any of the Borrowers. As used herein, the term
"control" shall mean possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through ownership of securities, by contract or otherwise.
"Approved Subsidiary" or "Approved Subsidiaries" shall mean the
individual or collective reference as the context requires to any wholly-owned
subsidiary of MCF acceptable to Bank in its sole discretion.
"Assignment of Contracts" means the Assignment of Contracts in form and
content acceptable to Bank executed by Borrowers as of July 14, 1994 providing
to Bank a perfected, first priority assignment of all Borrowers' contracts, as
amended or modified.
"Assignment of Lease" means the Assignment of Leases in form and
content acceptable to Bank executed by Star Fibers as of July 14, 1994 providing
to Bank a perfected, first priority security interest and assignment of all
leases related to the Star Fibers Property, as amended or modified.
"Business Day" shall mean any day other than Saturday, Sunday or other
day on which banks in Columbia, South Carolina are authorized or required to be
closed.
"Chattel Paper," "Contracts," "Documents," "General Intangibles,"
"Goods," "Instruments" and "Proceeds" shall have the same respective meanings as
are given to those terms in the Secured Transactions chapter of the Uniform
Commercial Code as adopted by the State of South Carolina.
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"Closing Date" shall mean the date as of which this Agreement is
executed by Borrowers and Bank.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral" shall mean, collectively, all real or personal property on
which a lien is placed or in which a security interest is granted to secure the
Loans pursuant to this Agreement or pursuant to any of the other Loan Documents
which includes all assets of Borrowers.
"Collateral Account" shall mean that certain account established and
maintained pursuant to section 2.10 hereof and any substitute accounts therefor
or replacement accounts thereof;
"Collateral Certificate" shall mean the weekly collateral certificate
delivered by Borrower to Bank pursuant to sections 2.2 and 7.1(k) of this
Agreement substantially in the form attached hereto as Exhibit 2-2, as such
certificate may be amended from time to time.
"Commitment Letter" shall mean, collectively, Bank's commitment letters
dated November 25, 1996 and August 11, 1997 the terms of which are incorporated
herein by reference, but to the extent of any conflict between the terms of this
Agreement or Loan Documents and the Commitment Letter, the terms of this
Agreement or the Loan Documents shall control.
"Xxxxxx Property" shall mean that certain real property more
particularly described on Exhibit A-1 to the Security Agreement, and all
improvements located or to be located thereon.
"Debt Service Ratio" shall mean, for the period in question, the ratio
of (net income after taxes plus depreciation plus amortization plus interest
expense plus non-cash expenditures less dividends) TO (prior year's current
maturities of long term debt plus interest expense plus net capital expenditures
that are not financed under financing arrangements acceptable to Bank in its
sole discretion), all computed in accordance with GAAP. The "Income Recapture
Payment" as required in section 3.2 of this Agreement and in the Term Note shall
not be included in the definition of "prior year's current maturities and
long-term debt" for purposes of calculating the Debt Service Ratio.
"Default Condition" shall mean the occurrence or existence of an event
or condition which, upon the giving of notice or the passage of time, or both,
would constitute an Event of Default.
"Determination Date" shall mean the first Business Day of each calendar
month.
"Dollars" and "$" shall mean dollars and lawful currency of the United
States of America.
"Edgefield Property" shall mean the real property more particularly
described on Exhibit A-2 to the Security Agreement, and all improvements located
or to be located thereon.
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"Elkhart Property" shall mean the real property more particularly
described on Exhibit A-3 to the Security Agreement, and all improvements located
or to be located thereon.
"Eligible Accounts Receivable" shall mean Accounts, Instruments,
Documents, Chattel Paper, Contracts, and General Intangibles from customers of
Borrowers or any Approved Subsidiary in which Bank has a perfected first
priority security interest subject to Bank's credit approvals thereof other than
the following: (i) Accounts which remain unpaid ninety (90) days after the date
of the applicable invoice; (ii) Accounts with respect to which the Account
Debtor is an Affiliate of any of the Borrowers, or a director, officer or
employee of any of the Borrowers; (iii) Accounts with respect to which the
Account Debtor is the United States of America or any department, agency or
instrumentality thereof, unless filings in accordance with the Assignment of
Claims Act have been completed and filed in a manner satisfactory to the Agent
or, as to any government contract entered into after the date of this Agreement,
concurrently with the execution and delivery of that government contract; (iv)
Accounts with respect to which the Account Debtor is not a resident of the
United States or Canada except if such Accounts (1) are secured by irrevocable
trade letter(s) of credit in form and content acceptable to Bank and confirmed
by a United States financial institution acceptable to Bank, (2) are secured by
standby letters of credit with an expiration of date of at least one hundred
twenty (120) days from the date of shipment confirmed by United States Bank
acceptable to Bank and otherwise in form and content acceptable to Bank, or (3)
are insured by a company acceptable to Bank, which insurance covers business and
political risk; (v) Accounts arising with respect to goods which have not been
shipped and delivered to and accepted as satisfactory by the Account Debtor or
arising with respect to services which have not been fully performed and
accepted as satisfactory by the Account Debtor; (vi) Accounts for which the
prospect of payment in full or performance in a timely manner by the Account
Debtor is or is likely to become impaired as determined by the Bank in its
reasonable discretion; (vii) Accounts which are not invoiced (and dated as of
the date of such invoice) and sent to the Account Debtor within fifteen (15)
days after delivery of the underlying goods to, or performance of the underlying
services for, the Account Debtor; (viii) Accounts with respect to which Bank
does not have a first and valid fully perfected security interest; (ix) Accounts
with respect to which the Account Debtor is the subject of bankruptcy or a
similar insolvency proceeding or has made an assignment for the benefit of
creditors or whose assets have been conveyed to a receiver or trustee, except if
Bank is delivered evidence acceptable to Bank as to the collectability in the
normal course of business of such Accounts; (x) Accounts with respect to which
the Account Debtor's obligation to pay the Account is conditional upon the
Account Debtor's approval or is otherwise subject to any repurchase obligation
or return right, as with sales made on a xxxx-and-hold, guaranteed sale,
sale-and-return, sale on approval (except with respect to Accounts in connection
with which Account Debtors are entitled to return Inventory solely on the basis
on the quality of such Inventory) or consignment basis; (xi) Accounts with
respect to which the Account Debtor is located in Minnesota unless the
applicable Borrower has filed a Notice of Business Activities Report with the
Secretary of State of Minnesota for the then current year; (xiv) all Accounts of
any Account Debtor if twenty-five percent (25.0%) or more of all Accounts of
such Account Debtor have ceased to be Eligible Accounts Receivable; and (xii)
Accounts with respect to which the Account Debtors are residents of Canada to
the extent the aggregate sum exceeds $750,000.00. The approvals of Account
Debtors and Accounts shall be for Bank purposes only and shall not constitute
any representation by Bank as to the credit worthiness of any such Account
Debtor or the advisability or profitability of doing business with such Account
Debtor.
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"Eligible Inventory" shall mean Inventory (but not including prepaid
Inventory) which the Bank reasonably determines to meet all of the following
requirements: (a) such Inventory (i) is owned by one of the Borrowers; (ii) is
subject to a perfected, first priority security interest in favor of Bank; and
(iii) is subject to no other lien or encumbrance whatsoever other than Permitted
Liens; (b) such Inventory is in good condition and meets all standards imposed
by any governmental agency, or department or division thereof, having regulatory
authority over such goods, their use or sale; (c) such Inventory is currently
either usable or salable in the normal course of the businesses of Borrowers;
(d) such Inventory is located at one of the locations set forth in this
Agreement; (e) such Inventory is located within the continental United States;
and (f) such Inventory is not determined by Bank in good faith to be ineligible
for any other reason.
"Environmental Laws" shall mean any and all foreign, federal, state,
local or municipal laws, rules, orders, regulations, statutes, ordinances,
codes, decrees, requirements of any Governmental Authority or requirements of
law (including common law) regulating, relating to or imposing liability or
standards of conduct concerning protection of human health or the environment,
as now or may anytime hereafter be in effect.
"Equipment" shall mean all furniture, fixtures, equipment, apparatus,
motor vehicles, tractors, rolling stock, fittings and other tangible personal
property (other than Inventory) of every kind and description used in any of the
Borrowers' business operations or owned by any of the Borrowers and all proceeds
and products thereof.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Event of Default" shall mean the occurrence of any event specified in
section 9 hereof or as set forth in any of the other Loan Documents.
"Financing Statements" shall mean the Uniform Commercial Code financing
statements executed and delivered by all of the Borrowers, as debtors, naming
Bank, as secured party, to be filed in the applicable recording offices any
jurisdiction (State and County) that Borrowers conduct business or where
collateral is located.
"Funded Debt" shall mean (i) Indebtedness, including Subordinated
Indebtedness, for borrowed money or Indebtedness for the deferred purchase price
of property or services, (ii) obligations evidenced by bonds, notes, debentures
or other similar instruments, and (iii) obligations as lessee under leases which
have been or should be, in accordance with GAAP, recorded as capital leases.
"Funded Debt Ratio" shall mean the ratio, for the period in question,
of Funded Debt TO (earnings before interest, taxes, depreciation and
amortization), computed in accordance with GAAP.
"GAAP" shall mean generally accepted accounting principals in the
United States of America in effect from time to time, applied on a consistency
basis.
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"Governmental Authority" shall mean any nation or government, any state
or other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Indebtedness" shall mean, as to Borrowers, and any Approved
Subsidiary, all items of indebtedness, obligation, or liability thereof, whether
matured or unmatured, liquidated or unliquidated, direct or contingent, joint or
several, and interest due thereon and costs due in connection therewith.
"Indemnification Agreement" shall mean that certain Indemnification
Agreement executed by and among inter xxxx Xxxxxxx America, Inc., S.F.
Liquidation, Inc. and Federal Pacific Electric Company (whose obligations are
guaranteed by Reliance Electric Company) related to the Star Fibers Property.
"Interest Period" shall mean each period of time commencing on a
Determination Date and ending the day before the next successive Determination
Date.
"Inventory" shall have the same meaning as is given to that term in the
Secured Transactions chapter of the Uniform Commercial Code as adopted by South
Carolina, S.C. Code Xxx. 36-9-109 (4) (1976), and shall include customer
returns, manufacturers' trade-ins, and repossessions from customers, except
"inventory" does not include any hazardous or toxic substance, by-product,
waste, or other material.
"Land" or "Lands" shall mean, individual or collective references to
those parcels of real property more particularly described in Exhibits A-1
through A-6 to the Security Agreement and the Whitecrest Land.
"Laurens Property" shall mean that certain real property more
particularly described on Exhibit A-4 to the Security Agreement, and all
improvements located or to be located thereon.
"Laws" shall mean all ordinances, statutes, regulations, orders,
injunctions, writs, or decrees of any governmental or political subdivision or
agency thereof, or any court or similar entity established by any thereof.
"Leverage Ratio" shall mean the ratio of (total liabilities less
Subordinated Indebtedness) TO (Tangible Net Worth plus Subordinated
Indebtedness), as computed in accordance with GAAP.
"LIBOR" shall mean, for each Interest Period, (i) the arithmetic mean
(rounded upwards, if necessary, to the nearest 1/100th of one percent) of the
90-day London Interbank Offered Rates for U. S. Dollar deposits appearing on the
Reuters Screen LIBOR page (or such other display as may replace such page on the
Xxxxxx'x Screen) as of 11:00 a.m. London time on the Determination Date included
in such Interest Period, or (ii) if no such rate appears on the Reuters Screen
LIBOR page on such Determination Date, LIBOR will be the arithmetic average
(rounded upward, if necessary, to the next higher 1/100th of one percent) of
rates quoted by not less than two major banks in New York City, selected by the
Bank at approximately 10:00 a.m., Columbia, South Carolina time on such
Determination Date for deposits in U.S. Dollars offered
7
to leading European Banks, or (iii) if none of the above methods for determining
LIBOR shall be available, a rate determined by a substitute method of
determination agreed on by Borrower and Bank; provided, if such agreement is not
reached within a reasonable period of time (in Bank's judgment), a rate
reasonably determined by Bank as a rate being paid, as of each Determination
Date, by first class banking organizations (as determined by Bank) in the London
interbank market for U. S. Dollar deposits.
"LIBOR Reserve Percentage" means the maximum aggregate rate at which
reserves (including, without limitation, any marginal, supplemental or emergency
reserves) are required to be maintained under Regulation D by member banks of
the Federal Reserve System with respect to dollar funding in the London
interbank market. Without limiting the effect of the foregoing, the LIBOR
Reserve Percentage shall reflect any other reserves required to be maintained by
such member banks by reason of any applicable regulatory change against (i) any
category of liability which includes deposits by reference to which the Adjusted
LIBOR is to be determined or (ii) any category of extensions or credit or other
assets related to LIBOR.
"Loan" or "Loans" shall mean the individual or collective reference, as
the context requires, to the Revolving Credit, the Term Loan and the 1997 Term
Loan.
"Loan Documents" shall mean the collective reference to this Agreement,
the Notes, the Mortgages, the Security Agreements, the Assignment of Leases,
Assignment of Contracts, the Financing Statements, the Swap Agreement, waivers,
estoppels and any other documents or instruments executed in connection with the
Loans.
"Material Environmental Amount" shall mean an amount payable by any of
the Borrowers in excess of $100,000.00 for remedial costs, compliance costs,
compensatory damages, punitive damages, fines, penalties or any combination of
these.
"Materials of Environmental Concern" shall mean any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum products or
any hazardous or toxic substances, materials or waste, defined or regulated as
such in or under any Environmental Law (including, without limitation, asbestos,
polychlorinated biphenyls and ureaformaldehyde insulation.
"Monthly Borrowing Base Certificate" shall mean the borrowing base
certificate submitted by Borrower to Bank pursuant to sections 2.2 and 7.1(k) of
this Agreement, substantially in the form attached hereto as Exhibit 2-3, as the
same may be amended from time to time.
"Mortgage" or "Mortgages" shall mean the individual or collective
reference as the context requires to those certain mortgages, deeds to secure
debt, deeds of trust or other documents executed by the applicable Borrower
pursuant to which Bank is granted a title- insured, first priority lien on the
Properties, as may be amended or modified.
"Multiemployer Plan" shall mean a Plan which is a Multiemployer Plan as
defined in Section 4001(a)(3) of ERISA.
8
"Notes" shall mean and refer to, collectively, the Revolving Credit
Note, the Term Note, the 1997 Term Note and any other notes as may be
outstanding from time to time, under this Agreement, which are properly
executed, completed, and delivered to Bank, as the same may be amended from time
to time, and all other notes delivered in substitution, addition, or exchange
for any thereof.
"Obligations" means the joint and several obligations of Borrowers: (a)
to pay the principal of and interest on the Notes in accordance with the terms
thereof, to reimburse Bank for Bank's expenses pursuant to section 10.4, and to
pay or satisfy all of its other obligations of Borrowers to Bank whether
hereunder, the Loan Documents or otherwise including obligations under any Swap
Agreement with the Bank, whether now existing or hereafter incurred, matured or
unmatured, direct or contingent, joint or several, including any extensions,
modifications, or renewals thereof; (b) to repay Bank all amounts advanced
hereunder or otherwise on behalf of Borrowers, including without limitation
advances for principal or interest to prior secured parties, mortgagees, or
lienors, or for taxes, levies, rent, insurance, repairs to or maintenance or
storage of any of the Collateral; and (c) to reimburse Bank, on demand, for all
of Bank's expenses and costs, including the reasonable fees and expenses of its
counsel, in connection with any proceeding brought to enforce payment of any of
the obligations referred to in the foregoing paragraph (a) or (b) or otherwise
in connection with the enforcement or maintenance of the Loans.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
"Permitted Encumbrances" shall mean all existing encumbrances against
any of the Collateral, including the Properties, specifically approved by Bank
in writing which include the encumbrances set forth in Exhibit B's to the
Mortgages.
"Person" shall mean an individual, any entity, or government or
political subdivision or agency thereof, as may be appropriate.
"Plan" shall mean at a particular time, any employee benefit plan which
is covered by ERISA and in respect of which Borrower is (or if such Plan were
terminated at such time, would be under Section 4069 of ERISA deemed) an
"Employer" as defined in Section 3(5) of ERISA.
"Properties" shall mean the collective reference to the Xxxxxx
Property, the Edgefield Property, the Elkhart Property, the Laurens Property,
the Star Fibers Property, the Sumter Property and the Whitecrest Property.
"Reportable Event" shall mean any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty (30) day notice
period is waived under Subsection .13, .14, .16, .18, .19 or .20 of PBGC Reg.
ss. 2615.
"Revolving Credit Loan" shall mean the revolving credit loan in the
maximum principal amount of up to $30,000,000.00 pursuant to the terms of and as
more particularly set forth in Article 2 of this Agreement.
9
"Revolving Credit Loan Documents" shall mean and refer to,
collectively, all those certain documents and instruments executed in connection
with the Revolving Credit Loan including this Agreement, the Revolving Credit
Note, the Mortgages, the Security Agreements, the Assignment of Leases,
Assignment of Contracts, Financing Statements and any other documents executed
in connection with the Revolving Credit Loan as such documents and instruments
may be amended, substituted or renewed from time to time.
"Revolving Credit Note" shall mean and refer to that certain third
amended and restated revolving credit promissory note in the original principal
amount of up to $30,000,000 dated as of the Closing Date which is an amendment
and restatement of that certain second amended and restated revolving credit
promissory note in the original principal amount of up to $25,000,000.00 dated
December 16, 1996, that certain revolving credit note in the original principal
amount of $28,000,000 dated as of July 14, 1994 and that certain amended and
restated revolving credit promissory note in the original principal amount of
$25,000,000 dated as of August 9, 1995 as the same may be amended, renewed or
substituted from time to time.
"Security Agreement" or "Security Agreements" shall mean the individual
or collective reference as the context requires to those certain security
agreements executed by the Borrowers pursuant to which Bank is granted a
perfected, first priority security interest in all personal property of
Borrowers, now owned or hereafter acquired and wherever located, including,
Accounts, Inventory and Equipment, as may be amended, modified, or restated from
time to time.
"Single Employer Plan" shall mean any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.
"Star Fibers Property" shall mean that certain real property more
particularly described on Exhibit A-5 to the Security Agreement, and all
improvements located or to be located thereon.
"Subordinated Debt" shall mean Subordinated Indebtedness of MCF owed to
(a) Xxxxxxx Xxxx Xxxxx, Jr., Xxxx Xxxxx Xxxxx, Xxxxxxx Xxxx Xxxxx and Xxxxxxx
Xxxx Xxxxx, Jr., as Custodian for Xxxxxx Xxxxx Xxxxx, a Minor, and (b) Xxxxxxxx
Industries, Inc., a Georgia corporation, its shareholders or their successors
and assigns.
"Subordinated Indebtedness" shall mean all Indebtedness incurred at any
time by any of the Borrowers and owed to Affiliates of Borrowers any other
Indebtedness required to be subordinated by Bank pursuant to subordination
agreements acceptable to Bank.
"Sumter Property" shall mean that certain real property more
particularly described on Exhibit A-6 to the Security Agreement, and all
improvements located or to be located thereon.
"Swap Agreement" shall mean any swap agreement executed by the
Borrowers and a provider of an interest rate swap, the form, terms and provider
of such agreement to be in form and content acceptable to Bank, pursuant to
which Borrowers "swap" all or a portion of the risk associated with the variable
interest rates provided for under the Notes with a fixed rate, as such agreement
may be amended or modified from time to time.
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"Tangible Net Worth" shall mean stockholder's equity of Borrowers
prepared on a consolidated basis determined in accordance with GAAP, with no
adjustment due to re-evaluation of assets, except as required by GAAP, minus the
sum of the book value assets which are treated as intangibles under GAAP,
including, but not limited to, leasehold improvements, good will, tradenames,
trademarks, copy rights, patents, franchise agreements and unamortized debt
expenses.
"Term Loan" shall mean the term loan extended by Bank to Borrowers in
the original principal amount of up to $36,310,000.00 pursuant to the terms of
and as more particularly described in Article 3 of this Agreement.
"Term Loan Documents" shall mean and refer to, collectively, all those
certain documents and instruments executed in connection with the Term Loan
including this Agreement, the Term Note, the Mortgages, the Security Agreements,
the Assignment of Leases, the Assignment of Contracts, the Financing Statement
and any other documents executed in connection with the Term Loan as such
documents and instruments may be amended, substituted or renewed from time to
time.
"Term Note" shall mean that certain second amended and restated term
loan promissory note in the original principal amount of $36,310,000.00 dated as
of December 16, 1996 executed by Borrowers in favor of Bank evidencing the Term
Loan which is an amendment and restatement of that certain Term Loan Promissory
Note in the original principal amount of $36,310,000.00 dated July 14, 1994 and
that certain Amended and Restated Term Loan Promissory Note in the original
principal amount of $36,310,000 dated as of August 9, 1995, as the same may be
amended, substituted, modified or renewed from time to time.
"Value" means with respect to any Inventory, the lesser of (i) the fair
market value of such Inventory; and (ii) the cost of such Inventory calculated
in accordance with the "specific identification" method.
"Wachovia" shall mean Wachovia Bank, N.A., as successor in interest to
Wachovia Bank of South Carolina, N. A. and its successors and assigns.
"Whitecrest Land" shall mean that certain approximately 4 acre parcel
of real property located on Brookhollow Industrial Boulevard, Dalton, Georgia.
"Whitecrest Property" shall mean the Whitecrest Land and all
improvements located or to be located thereon.
1.2. OTHER DEFINITIONAL PROVISIONS:
(a) Unless otherwise specified therein, all terms defined in this
Agreement shall have the defined meanings when used in the
Notes or any other of the Loan Documents unless the context
would specifically require otherwise.
(b) As used herein and in the Notes, and in any of the other Loan
Documents, accounting terms relating to any of the Borrowers
not defined in Subsection 1.1
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and accounting terms partly defined in Subsection 1.1, to the
extent not defined, shall have the respective meanings given
to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provisions of
this Agreement.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such
terms.
2. THE REVOLVING CREDIT LOAN.
2.1. General Terms of the Revolving Credit Loan. During the period of
time commencing on the Closing Date and ending on June 2, 1999 and subject to
the terms of this Agreement, Bank will lend, on a revolving credit basis, to
Borrower and Borrowers will borrow from Bank such sums as Borrowers may from
time to time request but which will not exceed an aggregate principal amount
outstanding at any one time, equal to the lesser of (a) the amount available to
be outstanding in accordance with the margin requirements stated in section 2.5
hereof, or (b) Thirty Million and No/100 Dollars ($30,000,000.00), which amount
may be subject to adjustment as provided in this Agreement. The proceeds of the
Revolving Credit Loan shall be used for the purposes set forth in Paragraph A of
the Preliminary Statement section of this Agreement. The face amount of any
letter(s) of credit outstanding and issued by Bank naming any of the Borrowers
as account party shall be included in the principal amount outstanding under the
Revolving Credit Loan for purposes of subsection (b) above. Bank shall not be
obligated to issue letter(s) of credit such that the face amount of all
letter(s) of credit outstanding exceed $750,000. Borrowers will be required to
make repayments of principal under the Revolving Credit Loan (i) as and when and
in amounts necessary such that the margin requirements contained in Section 2.5
of this Agreement are satisfied at all times, (ii) immediately upon demand by
Bank in connection with an acceleration of the Revolving Credit Loan pursuant to
Section 9.2 of this Agreement, and (iii) immediately upon the termination of
Article 2 of this Agreement in accordance with Section 2.6 of this Agreement.
2.2. Disbursements of the Revolving Credit Loan. During the continuance
of Article 2 of this Agreement, disbursements of principal under the Revolving
Credit Loan may be made on any Business Day, provided that, in addition to all
other terms of this Agreement: (A) Borrowers shall have delivered to Bank oral
or written notice in form and content acceptable to Bank no later than 11:00
a.m. (Columbia, South Carolina time) on the proposed funding date, which notice
shall specify the proposed funding day, the amount requested and contain other
information required by Bank. (B) Borrowers and any Approved Subsidiary shall
have delivered to Bank an executed, properly completed then current Monthly
Borrowing Base Certificate and a then current weekly Collateral Certificate,
with the then current Collateral Certificate governing the availability under
the Revolving Credit Loan for the current week; and (C) no Event of Default or
Default Condition has occurred. Each delivery of an executed and properly
completed Monthly Borrowing Base Certificate and Collateral Certificate shall
constitute a representation by the Borrowers and any Approved Subsidiary that,
as of the date of such Monthly Borrowing Base Certificate or Collateral
Certificate, (1) all material representations and warranties made by the
Borrowers or any Approved Subsidiary in this Agreement are true and
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correct, unless otherwise disclosed to Bank in writing and approved by Bank, (2)
Borrowers or any Approved Subsidiary have not failed to observe any of its
undertakings hereunder, (3) no Event of Default has occurred, and (4) no fact,
condition, or event has occurred or exists that, with the giving of notice or
the passage of time or both, could become an Event of Default. Bank will credit
the proceeds of all disbursements under the Revolving Credit Loan to the
Collateral Account. Bank shall not incur any liability to any of the Borrowers
(i) for acting upon any telephonic notice or other oral notice for a requested
disbursement that Bank believes in good faith was given by the Controller, the
Chief Financial Officer or another officer deemed acceptable to Bank in its sole
discretion, or (ii) for otherwise acting good faith in disbursing proceeds under
the Revolving Credit Loan.
2.3. The Revolving Credit Note. The Revolving Credit Loan shall be
evidenced by and repaid in accordance with the Revolving Credit Note the terms
of which are incorporated herein by reference, and the Revolving Credit Loan
shall be repaid in accordance with the terms of this Agreement or Revolving
Credit Note.
2.4. Adjustments to Revolving Credit Loan Amount. Bank may, at
Borrowers request and at Bank's sole discretion, consent to an increase in the
amount of the Revolving Credit Loan. If such increase is temporary, all payments
received by Bank shall be applied in Bank's discretion to the reduction of the
balance evidenced by the Revolving Credit Note or any other note in addition to
the Revolving Credit Note evidencing the Revolving Credit Loan.
2.5. Margin Requirements under the Revolving Credit Loan. In addition
to the limitations set forth in Section 2.01 of this Agreement, the aggregate
principal amount outstanding at any one time under the Revolving Credit Loan may
not exceed, as determined in accordance with the most current Collateral
Certificate, the sum of: (a) ninety percent (90.0%) of the face value of
Borrowers and any Approved Subsidiary's Eligible Accounts Receivable which are
subject to factoring agreements with NationsBanc Commercial Corporation that are
acceptable to Bank; plus (b) 80% of the face value of Borrowers and any Approved
Subsidiary's Eligible Accounts Receivable which are not subject to factoring
agreements with NationsBanc Capital Corporation that are acceptable to Bank;
plus (c) fifty percent (50.0%) of the Value of Borrowers and any Approved
Subsidiary's Eligible Inventory; provided, however, that the aggregate principal
amount outstanding under the Revolving Credit Loan supported by Borrowers' and
any Approved Subsidiaries' Eligible Inventory shall not exceed, at any one time,
fifty-five percent (55%) of the total principal outstanding under the Revolving
Credit Loan. The availability under the Revolving Credit Loan for each week
shall be determined by the then current Collateral Certificate delivered in
accordance with Section 7.1(k).
2.6. Termination of the Revolving Credit Loan. This Agreement as it
relates to the Revolving Credit Loan shall be terminated: (a) by Bank on notice
to Borrower at any time in connection with any acceleration pursuant to section
9.2; or (b) if not sooner demanded on June 2, 1999. Termination of this
Agreement as it relates to the Revolving Credit Loan shall in no way affect or
impair any right of Bank arising prior thereto or by reason hereof, nor shall
any such termination relieve Borrowers of any Obligations under the Revolving
Credit Loan until all Obligations under the Revolving Credit Loan are fully paid
and performed, nor shall any such termination affect any right or remedy of Bank
arising from any other Obligations. All agreements, warranties, and
representations of Borrowers shall survive termination.
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2.7. Fees. In connection with Bank providing the renewal commitment for
the Revolving Credit Loan, Borrowers shall pay a commitment fee equal to
$37,500. Borrowers further shall pay a user fee under the Revolving Credit Loan
on a quarterly basis, to be assessed, and due and payable on the 2nd day of each
January, April, July, and October, during the term of the Revolving Credit Loan,
which fee will equal one-eighth of one percent (0.125%) per annum of the average
unused portion of the Revolving Credit Loan calculated on a daily basis.
2.8. Conditional Consent to Inclusion of Assets of any Approved
Subsidiary. Bank and Borrowers contemplate that Borrowers will include on its
Monthly Borrowing Base Certificate and Collateral Certificate certain assets of
Approved Subsidiaries. Prior to any such inclusion and as a condition to Bank's
obligation to fund proceeds under the Revolving Credit Loan based on the
inclusion of such assets, Borrower shall cause any such Approved Subsidiary to
execute any documents and instruments reasonably required by Bank, including,
without limitation, documents and instruments (a) to perfect Bank's first
priority security interest in any such assets; (b) to confirm that any such
Approved Subsidiary agrees and consents to the terms of this Agreement; and (c)
to provide Bank the Approved Subsidiary's unconditional guaranty of or become a
co-obligor under the Obligations.
2.9. Account Warranties. With respect to Accounts scheduled, listed or
referred to on any Collateral Certificate or Monthly Borrowing Base Certificate,
the Borrowers warrant and represent to the Bank that, except as otherwise
disclosed: (i) the Accounts are genuine, are in all respects what they purport
to be, and are not evidenced by a judgment; (ii) they represent undisputed, bona
fide transactions completed in accordance with the terms and provisions
contained in the documents delivered to the Agent with respect thereto; (iii)
the amounts shown on the applicable Collateral Certificate or Monthly Borrowing
Base Certificate and on the Borrowers' books and records and all invoices and
statements which may be delivered to the Bank with respect thereto are actually
and absolutely owing to one of the Borrowers and are not in any way contingent;
(iv) there are no setoffs, counterclaims or disputes existing or asserted with
respect thereto and the Borrowers have not made any agreement with any Account
Debtor for any deduction therefrom except a discount or allowance in the
ordinary course of business for prompt payment; (v) to the best of the
Borrowers' knowledge there are no facts, events or occurrences which in any way
impair the validity or enforcement thereof or tend to reduce the amount payable
thereunder as shown on the respective Collateral Certificate or Monthly
Borrowing Base Certificate the Borrowers' books and records and all invoices and
statements delivered to the Agent with respect thereto; (vi) to the best of the
Borrowers' knowledge as of the date any certificate or report delivered to Bank
pursuant to this Agreement, all Account Debtors have the capacity to contract
and are solvent; (vii) the services furnished and/or goods sold giving rise
thereto are not subject to any lien, claim, encumbrance or security interest
except that of the Borrowers', or Bank, and except as expressly contemplated
hereby; and (viii) except as otherwise disclosed to Bank in writing, to the best
of the Borrowers' knowledge as of the date of any certificate or report
delivered to Bank pursuant to this Agreement, there are no proceedings or
actions which are threatened or pending against any Account Debtor which might
result in any material adverse change in such Account Debtor's financial
condition.
2.10. Lock Box/Collateral Account. Borrowers must direct all
collections to a Bank lock box. Additionally, Bank shall continue to maintain a
Collateral Account into which Borrower will deposit all payments and other
income received by Borrowers, except such
14
payments and other income, if any, that Bank may exclude in writing from time to
time. Bank shall have exclusive possession, custody and control of and over the
balances in the Collateral Account, as they may exist from time to time, except
as provided hereinafter with respect to joint control over certain disbursements
therefrom. Such deposits will be made no later than the first business day
following receipt thereof by Borrower or receipt by Bank from the lock box. All
such deposits will be in the original form received by Borrowers except for such
endorsements as may be necessary, and Borrowers hereby authorize Bank to execute
such endorsement on behalf of Borrowers. Pending such deposit, Borrowers will
hold such payment, checks, drafts, and income separate from other funds and
property and upon express trust for Bank. Funds may be withdrawn from the
Collateral Account only by Borrower with Bank's consent, except that Bank may
withdraw funds at any time for application against any Obligations in the order
and method desired by Bank, and Bank shall give Borrowers notice of any
withdrawal within a reasonable period of time after such withdrawal. Each such
deposit and the proceeds thereof shall continue to be Collateral hereunder and
shall not constitute the payment of any Obligations until specifically applied
thereto.
2.11. Documentation and Security for Revolving Credit Loan. The terms
and provisions of the other Revolving Credit Loan Documents are incorporated
herein by reference and are still in full force and effect. All of the other
Revolving Credit Loan Documents which grant liens in favor of or assign rights
to Bank also are in full force and effect. The security interests granted
pursuant to the other Revolving Credit Loan Documents are in addition to the
security interest and assignments granted in favor of Bank elsewhere in this
Agreement or any of the other Loan Documents to secure the Obligations of
Borrower under the Revolving Credit Loan.
2.12. Disbursement to MCF. Borrowers agree that all disbursements made
by Bank under the Revolving Credit Loan shall be made to or for the benefit of
MCF as described in Section 2.2 of this Agreement and any such disbursements
made to MCF shall be made for the benefit of the other Borrowers if so stated in
Borrowers' written request pursuant to section 2.02. Borrowers further (A)
consent to any and all disbursements made by Bank to MCF; (B) agree that Bank
shall incur no liability in connection with the Revolving Credit Loan or any
disbursements made under the Revolving Credit Loan; (C) will not contest any
disbursement made by Bank; (D) acknowledge the direct benefit of the Revolving
Credit Loan and disbursements of proceeds under the Revolving Credit Loan to
MCF; and (E) acknowledge and agree to their liability for and under the
Revolving Credit Loan and all Obligations.
2.13. Verification of Accounts. The Bank shall have the right, during
the pendency of an Event of Default, in the Bank's name, to verify the validity,
amount or any other matter relating to any Account, by mail, telephone, or in
person.
3. TERM LOAN.
3.1. Term Loan Terms. The Bank has fully disbursed to Borrowers all
proceeds available under the Term Loan. The Term Loan is evidenced by the Term
Note. The proceeds of the Term Loan were used by Borrowers for the purposes set
forth in Paragraph B of the Preliminary Statement section of this Agreement.
15
3.2. Repayment of Term Loan. The outstanding principal balance of the
Term Loan shall bear interest and principal and interest shall be repayable in
accordance with the terms of the Term Note. In addition to the scheduled and
other repayments of the Term Loan as set forth in the Term Note or elsewhere in
this Agreement, Borrowers must make an additional annual repayment as set forth
in the Term Note (each, an "Income Recapture Payment") which shall be due and
payable on the earlier of (i) thirty (30) days after receipt by Bank of
Borrowers' audited financial statements required to be delivered pursuant to
Section 7.1(i) of this Agreement, or (ii) July 30th of each year during the term
of the Term Loan. The amount of each Income Recapture Payment shall be equal to
twenty-five percent (25%) of Borrowers' consolidated net income as reflected on
such current audited financial statement or as estimated by Bank if Borrowers
have not received such statement. So long as no Event of Default shall have
occurred or is continuing, each Income Recapture Payment shall be applied to
principal outstanding under the Term Loan evidenced by the Term Note in the
inverse order of scheduled maturities. Borrowers, however, shall not be required
to make an Income Recapture Payment in a year when, based on the then current
audited financial statements of Borrowers for the fiscal year ending immediately
preceding such year, the Leverage Ratio is less than or equal to 1.75 to 1.00.
3.3. Balance. The Borrowers and the Bank acknowledge and agree that the
principal balance of the Term Loan as of the date of this Agreement is
$25,186,100.
3.A. 1997 TERM LOAN.
3.1.A. 1997 Term Loan Terms. Subject to the terms and conditions of
this Agreement, Bank will lend, on a cumulative line of credit basis, and
Borrowers will borrow up to a principal sum of the lesser of: (A) $5,000,000.00;
or (B) the difference of (i) seventy-five percent (75.0%) of the value
determined by Bank of Collateral (other than Accounts and Inventory) owned by
Borrowers and otherwise acceptable to Bank at any one time; and (ii) the
principal outstanding under the Term Loan. Borrowings under the 1997 Term Loan
shall be on a cumulative line of credit/term basis and will be evidenced by the
1997 Term Note. The proceeds of the 1997 Term Loan have been or will be used by
Borrowers for the purposes set forth in Paragraph C of the Preliminary Statement
section of this Agreement.
3.2.A. Repayment of 1997 Term Loan. The outstanding principal balance
of the 1997 Term Loan shall bear interest and principal and interest shall be
repayable in accordance with the terms of the 1997 Term Note.
3.3.A. Disbursements Under 1997 Term Loan. Subject to the terms of this
Agreement, Bank shall disburse, upon the request of Borrower, to or for the
benefit of Borrowers proceeds available under the 1997 Term Loan. Bank agrees
that it will, from time to time, but no more frequently than once a month,
disburse proceeds of the 1997 Term Loan under the following conditions and so
long as all of the following items have been satisfied in a manner acceptable to
Bank: (i) no Default Condition or Event of Default exists; (ii) Borrowers are in
compliance with all covenants of this Agreement and the Loan Documents; (iii)
Bank approves Borrowers' capital expenditure budget for fiscal year 1997 and
other information deemed necessary by Bank, including the business plan of
Borrowers, which justifies the need for such expenditures and outlines projected
increases in revenues based on such expenditures;
16
and (iv) principal outstanding under the 1997 Term Loan does not and will not
exceed the amounts set forth in Section 3.1.A above. Proceeds of the 1997 Term
Loan will be available to Borrowers only for the period of time commencing on
March 27, 1997 and ending on December 31, 1997, and Bank will not be obligated
to advance to Borrowers any unfunded portion of the 1997 Term Loan after
December 31, 1997.
3.4.A. Draw Requests for 1997 Term Loan. At least one (1) day prior to
each 1997 Term Loan disbursement by the Bank, Borrowers must submit to the Bank
a draw request in the form acceptable to Bank, which shall include a completed
request for disbursement in a format acceptable to the Bank setting forth the
amount of 1997 Term Loan proceeds desired, together with such certifications and
additional information as the Bank may require, including invoices for that
portion of the Equipment to be purchased (or other approved expenditures made
(or for which Borrowers shall request to be reimbursed)) with such 1997 Term
Loan proceeds, signed by an appropriate representative for the Borrowers, for
the purpose of submitting any such draw requests.
3.5.A. Amount of Each Disbursement. Subject to the provisions of this
Agreement, Bank shall disburse proceeds under the 1997 Term Loan in the amount
of 75% at an aggregate value of invoices submitted with each draw request for
Equipment or other approved expenditures made by the Borrowers which
expenditures previously have not been funded with proceeds under the 1997 Term
Loan.
3.6.A. Balance. The Borrowers and the Bank acknowledge and agree that
the principal balance of the 1997 Term Loan as of the date of this Agreement is
$2,284,776.35 and the remaining principal amount available is $2,681,890.32.
4. CONDITIONS FOR DISBURSEMENTS AND OTHER AGREEMENTS
4.1. Conditions Precedent to Disbursements. Bank shall not be obligated
to consummate the transaction contemplated by this Agreement or to make any
further disbursements under the Revolving Credit Loan until all of the following
conditions have been satisfied by proper evidence, execution and/or delivery to
Bank of the following items, all in form and substance reasonably satisfactory
to Bank and Bank's counsel:
4.1.1 Loan Documents. The Loan Documents.
4.1.2 Wachovia Participation. Bank receives the fully executed
amendment and restated participation agreement, from Wachovia, in form and
content acceptable to Bank, related to the consummation of the transactions
contemplated by this Agreement and otherwise outlining the rights between Bank
and Wachovia.
4.1.3 Authority Documents: (a) Articles of incorporation certified by
the office of the Secretary of State of South Carolina of Borrowers; (b) Bylaws
of Borrowers, certified by an officer of the Borrowers; (c) current Certificate
of Existence of Borrowers issued by the Secretary of State of South Carolina and
Tax Compliance Letters on Borrowers issued by the South Carolina Tax Commission;
(d) Affidavit on behalf of Borrowers; (e) Officer's and Incumbency Certificate
of Borrowers; (f) Corporate Resolutions of Borrowers and (f) Certificates
17
of Foreign Qualification from the applicable office in any State where any of
the Borrowers conduct business.
4.1.4 Attorney's Opinions: The written opinion of Xxxxxxx & Xxxx, P.A.,
counsel to Borrowers and such other lawyers as deemed necessary by Bank.
4.1.5 Miscellaneous: All Loan Documents or items that are customarily
provided in loan transactions of this type and all other loan documents or items
set forth in the Commitment.
4.1.6 No Defaults: No Default Condition or Event of Default shall
exist.
4.1.7 Draw Request: Bank shall have received the Borrowers' request for
disbursement under the Revolving Credit Loan.
4.2. Payment to Bank. All sums payable to Bank under the Loans shall be
paid directly to Bank in immediately available funds prior to 12:00 Noon,
Columbia, South Carolina time, on the due date of any such sums payable. Bank
shall send to Borrowers statements of all amounts due hereunder, which
statements shall be deemed correct and conclusively binding on Borrower unless
Borrower notifies Bank in writing to the contrary within one (1) year of the
date of the statement which Borrower considers incorrect. Alternatively, at
Bank's discretion and with prior notice to Borrower, Bank may charge against any
deposit account of Borrower all or any part of any amount due hereunder.
4.3. Risk of Loss. As between Borrowers and Bank, Borrowers shall bear
all risk of loss of or fluctuation in value of each item of Collateral.
4.4. Waivers. Borrowers hereby waive and forever release from, and
agree to indemnify and hold the Bank harmless for, any and all claims, causes of
action or any other loss that Bank may incur in connection with the making,
closing or administration of the Loans.
4.5 Intangible Taxes. Borrower has paid intangible taxes (i) related to
the Xxxxxx Property Deed to Secure Debt held by Bank based on the value of the
Xxxxxx Property being equal to $2,000,000.00 and (ii) related to the Whitecrest
Property Deed to Secure Debt held by Bank based on the value of the Whitecrest
Property being equal to $1,310,000.00. From time to time, Borrowers upon the
demand of Bank must pay any additional intangible taxes related to the Xxxxxx
Property Deed to Secure Debt or the Whitecrest Property Deed to Secure Debt (i)
based on an increase in the value of the Xxxxxx Property or the Whitecrest
Property, as applicable, as reflected on any current appraisal, or (ii) as
otherwise required under the laws of the State of Georgia.
5. ADDITIONAL COLLATERAL SECURITY.
5.1. Nature of Collateral. In addition to all other liens, assignments
and all other rights of Bank granted pursuant to any of the Loan Documents, the
Collateral, together with all of Borrowers' other property of any kind held by
Bank, shall stand as one general, continuing
18
collateral security for all Obligations and may be retained by Bank until all
Obligations have been satisfied in full.
5.2. Rights in Property Held by Bank. As security for the timely
satisfaction of all Obligations and in addition to all other liens, assignments
and all other rights of Bank granted pursuant to any of the Loan Documents,
Borrowers hereby continue to assign, transfer, and set over to Bank a lien on
and a security interest in all amounts that may be owing from time to time by
Borrowers to Bank in any capacity, including without limitation any balance or
share of Borrower in or of the Collateral Account or any other deposit or other
account with Bank, which lien and security interest shall be independent of and
in addition to any right of set-off which Bank may have.
5.3. Rights in Property Held by Borrowers. As further security for the
prompt satisfaction of all Obligations, Borrowers hereby continues to assign to
Bank all of their right, title, and interest in and to, and grant to Bank a lien
and security interest in, all personal property whether tangible or intangible
including the following, wherever located, whether now owned or hereafter
acquired, together with all replacements and Proceeds (including without
limitation insurance proceeds) thereof including, without contribution to the
following: (a) Accounts; (b) Chattel Paper; (c) Contracts, including the
Indemnification Agreement; (d) Documents; (e) equipment, (f) fixtures, (g)
furniture, (h) General Intangibles, including the Indemnification Agreement; (i)
Instruments; (j) Inventory; (k) Rights as seller or lessor of Goods or services
and rights to returned or repossessed Goods; (l) Proceeds of public liability,
fire, and extended coverage insurance and returned and unearned premiums for
such insurance; (m) all records pertaining to any other item or matter of
Collateral; (n) all securities, guaranties, and deposits received or held by
Borrower in respect to Goods sold or leased or services rendered by Borrower;
(o) all other rights to payment for Goods sold or leased or services rendered,
regardless of whether or not the same has been earned by performance; or (p) if
any of the Inventory consists of items which are subject to a patent, copyright,
trademark, or other intellectual property right, all of Borrower's rights to
exploit such patent, copyright, trademark, or other intellectual property right.
5.4. Financing Statements. Borrowers will: (a) join with Bank in
executing such financing statements (including amendments thereto and
continuation statements thereof) in form satisfactory to Bank as Bank may
specify; (b) pay or reimburse Bank for all costs and taxes of filing or
recording the same in such public offices as Bank may designate; and (c) take
such other steps as Bank may direct, including making notations of Bank's lien,
to perfect Bank's interest in the Collateral. In addition to the foregoing, (d)
the parties hereto agree that a photocopy or other reproduction of this
Agreement shall be sufficient as a financing statement and may be filed in any
appropriate office in lieu thereof; and (e) to the extent lawful, Borrowers
hereby appoint Bank as Borrowers' attorney-in-fact (without requiring Bank so to
act) to execute any financing statement in any of the Borrowers' name and to
perform all other acts and deeds that Bank deems appropriate to perfect and
continue its security interest in, and to preserve and protect, the Collateral.
19
6. REPRESENTATIONS AND WARRANTIES.
6.1. Original. To induce Bank to enter into this Agreement, Borrowers
represent and warrant to Bank as follows:
(a) Borrowers are corporations duly organized, validly existing,
and in good standing under the Laws of the State of South
Carolina and are duly qualified and in good standing to do
business in each jurisdiction where such qualification is
necessary. All jurisdictions where MCF or any of the Borrowers
are qualified or should be qualified are listed on Schedule
6-1(a) attached to this Agreement.
(b) None of the Borrowers is in default with respect to any of its
existing Indebtedness, and the making or performance of this
Agreement will not (immediately, with the passage of time or
giving of notice, or both): (i) violate the provisions of the
charter or bylaws of any of the Borrowers, or violate any
Laws, or result in a default under any contract, agreement, or
instrument to which any of the Borrowers are a party or by
which any of the Borrowers or any of their property are bound,
except in connection with indebtedness satisfied with the
proceeds of the Loan; or (ii) result in the creation or
imposition of any security interest in, or lien or encumbrance
upon, any assets of any of the Borrowers, except as same may
be in favor of Bank.
(c) Borrowers have full right, power, and authority to enter into
and perform the Loan Documents, and to incur the Obligations
herein and therein provided for, and have taken all corporate
action and obtained all consents necessary to authorize the
execution, delivery, and performance thereof.
(d) This Agreement and the remainder of the Loan Documents, when
delivered, will be valid, binding, and enforceable against
Borrowers, as applicable, in accordance with their respective
terms.
(e) Except as set forth in a written disclosure statement
delivered to the Bank within ten (10) business days prior to
the execution of this Agreement, no litigation, proceeding,
arbitration, or investigation is in process, pending or
threatened against any of the Borrowers which, if determined
adversely to such Borrowers, would have a material adverse
effect on the business, properties, or financial condition of
Borrowers.
(f) Borrowers have good and marketable title to all of their
assets, subject to no security interest, encumbrance or lien,
or any other claim except: (i) such claims specifically
disclosed in the application for the Loans, (ii) such claims
created by this Agreement in favor of Bank, (iii) liens for
real property taxes not yet due and payable and (iv) the
Permitted Encumbrances.
(g) Borrowers' financial statements provided to Bank for the
fiscal year ended December 31, 1996, and the interim financial
statements for the six (6) months ended June 30, 1997, have
been prepared in accordance with GAAP and fairly
20
reflect the financial condition of Borrowers and the results
of its operations as of the dates and for the periods stated
therein. No material adverse changes have since occurred or
are threatened.
(h) As of the date hereof, Borrowers, in the aggregate, have no
material Indebtedness in excess of $100,000.00 of any nature,
including without limitation liabilities for taxes and
interest or penalties relating thereto, except: (i) to the
extent reflected and reserved against in the most recent
financial statements prior to the date hereof; (ii) as created
in this Agreement, or (iii) as listed on Schedule 6-1(h)
attached hereto and incorporated herein by reference.
(i) Borrowers have filed all federal, state, and local tax returns
and reports it is required by all Laws (including the Fair
Labor Standards Act) to file prior to the date of this
Agreement and have paid or caused to be paid all taxes,
interest and penalties due and payable therein. Borrowers have
not agreed to an extension, of the period within which the
Internal Revenue Service may audit Borrowers tax returns.
(j) All information and representations made and any information
or documents submitted in connection with the application for
the Loans were true, complete and correct as of the date of
such submission and (except for financial statement
information provided with reference to a specific date) are
true, complete and correct as of the date hereof unless
otherwise modified or altered by subsequent written
information and representations made to Bank.
(k) No representation or warranty by any of the Borrowers
contained herein or in any certificate or other document
furnished by or on behalf of Borrowers pursuant hereto
contains any untrue statement of material fact or omits to
state a material fact necessary to make such representation or
warranty not misleading in light of the circumstances under
which it was made.
(l) No Reportable Event has occurred during the 5-year period
prior to the Closing Date with respect to any Plan, any of the
Borrower and each Plan has complied and all material
specifications with applicable provisions of ERISA and the
Code. The present value of all accrued benefits under each
Single Employer Plan maintained by any of the Borrowers (based
on those assumptions used to fund the Plans) did not, as of
the last annual evaluation date prior to the date of this
Agreement, exceed the value of the assets of such Plan
allocable to such accrued benefits. The present value
(determined using actuarial and other assumptions which are
reasonable in respect of the benefits provided and the
employees participating) of the liability of any of the
Borrowers for post retirement benefits to be provided to their
current and former employees under Plans which are welfare
benefits (as defined in Section 3(1) of ERISA) equals or
exceeds the assets under such Plans allocable to such
benefits.
21
(m) The proceeds of the Loans shall be used by Borrowers in the
ordinary course of Borrowers' and for the particular purposes
set forth elsewhere in this Loan Agreement.
(n) Except as to the Star Fibers Property and to the extent
disclosed to Bank in writing, the Properties do not contain,
and have not previously contained, any Materials of
Environmental Concern in amounts or concentrations which (i)
constitute a violation of, or (ii) could be reasonably given
rise to liability under Environmental Laws. Except as to the
Star Fibers Property and to the extent disclosed to Bank in
writing, the Properties and all operations of the Properties
are in compliance, and have in the past two years been in
material compliance and specifications with all applicable
Environmental Laws, there is no contamination at, under or
about the Properties (except as disclosed to Bank in writing),
or violation of any Environmental Law with respect to the
Properties which could interfere with the continued operation
of the Properties or materially impair the fair salable value
thereof. None of the Borrowers have not received any notice of
violation, alleged violation, non-compliance, liability or
potential liability regarding environmental matters or
compliance with Environmental Laws with regard to any of the
Properties, nor do any of the Borrowers have knowledge or
reason to believe that any such notice will be received or is
being threatened except so far as such notice or threat notice
or any aggregation thereof, does not involve a matter or
matters that is or are reasonably likely to result in the
payment by any of the Borrowers of a Material Environmental
Amount. To the best knowledge of Borrowers, after reasonable
investigation, Materials of Environmental Concern have not
been transported or disposed of from the Properties in
violation of, or in a manner or to a location which could
reasonably give rise to liability under Environmental Laws,
nor have any Materials of Environmental Concern have
generated, treated, stored or disposed of at, on or under any
of the Properties in violation of, or in a manner that could
give rise to liability under, any applicable Environmental
Laws except insofar as any such violation or liability is
referred to above, or any aggregation thereof, is not
reasonably likely to result in the payment by Borrowers of a
Material Environmental Amount. No judicial proceeding or
governmental or administrative action is pending, or, to the
knowledge of Borrowers, threatened, under any Environmental
Law to which Borrowers are or will be named as a party which
respect to the Properties, nor are there any consent decrees
or other decrees, consent orders, administrative orders or
other orders, or other administrative or judicial requirements
outstanding under any Environmental Laws with respect to the
Properties except insofar as such proceeding, action, decree,
order or other requirement or any aggregation thereof is not
reasonably likely to result in the payment of Material
Environmental Amounts. There has been no release or threat of
release of Materials of Environmental Concern at or from the
Properties, or arising from or related to the operation of any
of the Borrowers in connection with the Properties in
violation of or in amounts or in a manner that could give rise
to liability under Environmental Laws except insofar as such
violation or liability referred to above, or any aggregation
thereof, is not reasonably likely to result in the payment of
Material Environmental Amounts.
22
The representations contained in this Subsection 6.1(n) are
subject to Materials of Environmental Concern or other matters
related to Environmental Laws specifically disclosed in
writing to Bank, including the environmental condition of the
Star Fibers Property.
(o) Borrowers maintain with one or more financially sound and
reputable insurance companies, with premiums at all times
currently paid, insurance upon fixed assets and inventory,
including public liability insurance, fire and all other risks
insured against by extended coverage, fidelity bond coverage,
business interruption insurance and all other insurance
required by law, all in a form and amount required by law and
customary to the respective nature of the businesses of
Borrowers and Borrowers' properties, except in a case where
failure to maintain such insurance will not have or
potentially have an adverse effect on the Borrowers or any of
Borrowers' properties or assets.
(p) All of the Properties and the use of the Properties shall
comply and shall continue to comply in all material respects
with all applicable Laws, including zoning resolutions,
building codes, Environmental Laws (except as disclosed in
writing to Bank), subdivision and other applicable laws, rules
and regulations and are covered by existing valid certificates
of occupancy and all those certificates and permits required
by applicable laws, rules, regulations and ordinances or in
connection with the use, occupancy and operation of the
Properties. No material portion of any of the Properties has
been damaged in any respect as a result of fire, explosion,
accident, flood or other casualty. No condemnation or eminent
domain proceeding has been commenced or to the knowledge of
Borrowers are about to be commenced against any portion of the
Properties. No notice of violation of any federal, state or
local law or ordinance or order or requirement has been issued
with respect to any Properties.
(q) Each of the Borrowers is solvent as defined or used in the
Bankruptcy Act of the United States, as amended, and will
continue to be solvent as defined or used in the Bankruptcy
Act of the United States following the consummation of the
transactions contemplated by this Agreement.
(r) Borrowers are in compliance with all applicable Laws, rules,
regulations, and orders of all governmental authorities
(federal, state, local or foreign, and including, without
limitation, Environmental Laws, rules, regulations, and
orders) a breach of which would materially and adversely
affect any of the Borrowers' business, credit, operations,
financial condition, or prospects.
(s) As of the date of this Agreement, the principal place of
business and chief executive office of all of the Borrowers is
000 Xxxx Xxxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx. Borrowers'
additional place of business or places where assets of
Borrowers are located are set forth on Schedule 6-1(s). The
location of the principal places of business and chief
executive offices of the Borrowers and the locations of any
Collateral shall not be changed nor shall there be established
additional places of business or additional locations where
Collateral is stored,
23
kept or processed without Bank's prior written consent, and
prior to making any such change or establishing such new
location, Borrowers agree to execute any additional financing
statements or other documents or notices required by Bank. As
of the date of this Agreement, the books and records of
Borrowers and all records and accounts are located and
hereafter shall continue to be located at the principal place
of business and chief executive office of Borrower.
(t) Business conducted by Borrowers has not been conducted by or
under any corporate, trade or fictitious name other than those
listed on Schedule 6-1(t) attached to this Agreement, and
following the date of this Agreement, Borrower will not
conduct their business under any trade or fictitious name
other than the duly registered names listed on Schedule 6-1
(t) attached to this Agreement, except with the prior consent
of Bank.
(u) As of the date of this Agreement, Borrowers have no
investments in any Person, and is not engaged in any joint
venture or partnership with any other Person.
(v) All representations and warranties contained in the Loan
Documents are incorporated herein by reference and constitute
a part hereof as fully as if the same were set forth herein.
6.2. Survival. All of the representations and warranties in section 6.1
shall survive until all Obligations are satisfied.
7. BORROWERS' COVENANTS.
Borrowers do hereby covenant and agree with Bank that, unless Bank
specifically consents in writing to the contrary and for as long as any
Obligations have not been satisfied in full, Borrowers will comply with the
following covenants:
7.1. Affirmative Covenants.
(a) Borrowers, as applicable, will use the proceeds of the Loans
only for valid business purposes and for the purposes set
forth in this Agreement and will furnish to Bank such evidence
as Bank may reasonably request with respect to such use;
(b) Borrowers will maintain, or cause to be maintained (1) public
liability, fire, and extended coverage insurance on all assets
owned by it or used by it in its business, all in such form
and amounts as are reasonably satisfactory to Bank, (2) all
workmen's compensation or similar insurance as may be required
under Laws applicable to Borrower, and (3) business
interruption insurance as may be required by Bank. Borrower
will furnish Bank such evidence of insurance as Bank may
reasonably require;
(c) Borrowers will cause to be paid when due all taxes,
assessments, charges, and levies imposed upon them or any of
their properties which they are required to
24
pay over, except when contested in good faith by appropriate
proceeding with adequate reserves therefor having been set
aside on its books and segregated where required by GAAP;
provided, that Borrowers shall either pay or cause to be paid
forthwith all taxes, assessments, levies, and charges whenever
foreclosure of any lien that attaches (or other security
therefor) appears threatened or have such encumbrances "bonded
off";
(d) Borrowers will take all necessary steps to preserve its
corporate existence, rights, contracts, franchises, and
tradenames necessary or desirable in the conduct of Borrowers'
business, and comply with all present and future Laws,
including Environmental Laws, applicable to Borrowers and with
all material agreements to which or by which any of Borrowers'
property is bound;
(e) Borrowers will give immediate notice to Bank of (1) any
litigation or proceedings in which either one of them is a
party if an adverse decision therein would require it to pay
money or deliver assets in an aggregate amount or value in
excess of One Hundred Thousand and No/100 Dollars
($100,000.00) (regardless of whether or not the claim is
considered to be covered by insurance); (2) the institution of
any other suit or proceeding involving Borrowers that might
materially and adversely affect their operations, financial
condition, property, or business; or (3) the occurrence of any
casualty which might have a material adverse effect on the
businesses of Borrowers;
(f) Borrowers will pay when due, or within the applicable grace
period, all Indebtedness due third parties, except when the
amount, applicability, or validity thereof is being contested
in good faith by appropriate proceedings and with adequate
reserves therefor being set aside on its books;
(g) Borrowers will (1) maintain its Inventory, supplies,
Equipment, real property, and other properties, including the
Properties, in good condition and repair (normal wear and tear
excepted), (2) pay and discharge or cause to be paid and
discharged when due the cost of repairs to or maintenance of
the same, (3) pay or cause to be paid all rental, lease, or
mortgage payments due with respect to same, (4) maintain and
keep any of their tangible personal property at their
principal places of business or at one of the locations set
forth on Schedule 6-1(h), and (5) not change their principal
places of business or the location of any Collateral in such a
manner as to cause Bank's first priority perfected lien on
such Collateral to be lost or jeopardized;
(h) Borrowers, as applicable, shall endorse without limitation, or
otherwise properly assign to Bank, all negotiable Instruments
and other Chattel Paper received by it in connection with any
payment on account of any item of Collateral;
(i) Borrowers will furnish to Bank, and deliver to Bank within one
hundred fifty (150) days from the closing date thereof,
Borrowers consolidated fiscal year-end audited financial
statements (including without limitation, its balance sheet,
income statement, statement of cash flows, and accountant's
comments), fiscal
25
year end audit management letter and Borrowers consolidating
year-end company prepared financial statements (including,
without limitation, its balance sheet and income statement)
and otherwise in form and content acceptable to Bank (all such
statements to be prepared in accordance with GAAP) and, with
respect to the audited financial statements, certified by a
certified public accountant acceptable to Bank simultaneously
with the delivery to Bank of each fiscal-year end audited
financial statement;
(j) Borrowers will furnish to Bank, within forty-five (45) days of
the end of each fiscal quarter, its then current internally
prepared consolidated and consolidating financial statements
for each fiscal quarter and year-to-date, signed by an officer
of Borrowers as applicable certifying the accuracy of such
statement, all in such form as is reasonably satisfactory to
Bank. In connection with the financial statements delivered
pursuant to subsection 7.1(i) and this subsection 7.1(j),
Borrowers must furnish to Bank, a Compliance Certificate in
form and content acceptable to Bank executed by an officer of
the Borrowers, which Certificate includes Borrower's
computation of all restrictive and other covenants contained
in this Agreement and list of all contingent liabilities;
provided, Borrowers shall be required to disclose only the
contingent or threatened liabilities arising from claims,
causes of action or litigation against any of the Borrowers'
under which such of the Borrowers' exposure may exceed
$500,000.00, with such disclosure to be made in connection
with delivery of the financial statement which is due
immediately after the first to occur of the following: (i)
Borrowers, in good faith, believe such claim, action or
litigation will be prosecuted; or (ii) the filing of such
claim, cause of action or litigation against any of the
Borrowers by the claimant with the court, tribunal or agency
having jurisdiction over such matter;
(k) Borrowers will furnish to Bank within fifteen (15) days of the
end of each month a then current Monthly Borrowing Base
Certificate executed by an officer of Borrower, along with an
aged Accounts Receivable Report and summary reports on
Inventory. Borrowers further must furnish to Bank on a weekly
basis then current Collateral Certificates executed by an
officer or corporate controller of Borrowers. Borrowers shall
submit to Bank accounts payable reports upon the request of
Bank. All such information must be in form and content
acceptable to Bank;
(l) As and when requested by Bank which will not be more often
than twice in any one year, Borrowers will provide to Bank (1)
a certificate signed by an officer of the Borrowers that
summarizes the property, casualty and liability insurance
policies carried by the Borrowers and that certifies that Bank
is loss payee of all property and casualty insurance policies
(such certificate to be in form and content acceptable to
Bank), and (2) written notification of any cancellation or any
material change of such insurance by Borrowers within five (5)
Business Days after receipt of any such notice (whether formal
or informal) of such cancellation or change by any of their
insurers;
26
(m) Borrowers will operate their businesses in full compliance
with all applicable federal, state, and local Laws, including
specifically without limitation the Fair Labor Standards Act;
(n) Borrowers will notify Bank immediately upon receipt by any of
the Borrowers of oral or written notice that any of Borrowers'
customers contests the amount, validity, or due date of any of
Borrowers' Accounts, Contracts, Chattel Paper, or Contract
Rights, which disputed amount exceeds Two Hundred Thousand and
No/100 Dollars ($200,000.00);
(o) Borrowers, on a consolidated basis, must maintain a Leverage
Ratio of less than or equal to 3.00 to 1.00, with such
Leverage Ratio to be computed and tested as of the end of each
fiscal quarter;
(p) Borrowers will maintain executive personnel and management
reasonably satisfactory to Bank;
(q) Borrowers will notify Bank immediately if it becomes aware of
the occurrence of any Event of Default or Default Condition,
or the failure of Borrowers to observe any of its undertakings
hereunder;
(r) Borrowers, on a consolidated basis, must achieve a Debt
Service Ratio greater than or equal to 1.00 to 1.00 (i) for
each period of time commencing on January 1 and ending on the
next successive June 30; and (ii) for each fiscal year during
the term of this Agreement including any renewal terms.
(s) Subject to the limitation on costs to Borrowers as set forth
in Section 8.5 below, Borrower will permit any representative
or agent of Bank to examine and audit any of the Borrowers'
books and records when reasonably requested by Bank;
(t) The operation of the Properties do not and will not violate
any Environmental Laws and Borrowers will not use or permit
any other party to use any Materials of Environmental Concern
on the Properties except such materials as are incidental to
Borrowers' normal course of business, maintenance and repairs
and do not violate any Environmental Laws. Borrowers agrees to
permit Bank, its agents, contractors and employees, to enter
and inspect the Properties at any reasonable time for the
purpose of conducting Environmental Investigation Audit
(including physical samples) to insure that Borrowers are
complying with this covenant. Borrowers shall provide Bank,
its agents, contractors, employees and representatives, with
access to and copies of all data and documents relating to or
dealing with any Materials of Environmental Concern used,
generated, manufactured or stored or disposed of on, under or
about the Properties within five (5) business days of request
for such information by Bank;
(u) Borrowers shall immediately advise Bank in writing of (i) any
and all enforcement, cleanup, remedial, removal or other
government or regulatory actions instituted, completed or
threatened pursuant to any Environmental Laws
27
relating to Materials of Environmental Concern affecting the
Properties; and (ii) all claims made or threatened by and any
third parties against any of the Borrowers relating to
damages, contribution, cost, recovery compensation, loss or
injury resulting from Materials of Environmental Concern.
Borrowers shall immediately notify Bank of any remedial action
taken by Borrowers with respect to the Properties;
(v) Borrowers shall jointly and severally indemnify, defend and
hold Bank and its successors and assigns harmless from and
against any and all claims, demands, suits, losses, damages,
assessments, fines, penalties, costs or other expenses
(including attorney's fees and court costs) arising from or in
any way related to actual or threatened damage to the
environmental, agency cost or investigation, personal injury
or death or property damage due to the release or alleged
release of Materials of Environmental Concern on or about the
Properties or in the surface or ground water located on or
under the Properties or gaseous emissions from the Properties
or any other condition existing on the Properties resulting
from the use or existence of Materials of Environmental
Concern, whether such claim proves to be true or false or
further agrees that its indemnity obligation shall include,
but not be limited to, liability for damages resulting from
personal injury or death of an employee of any of the
Borrowers regardless of whether Borrowers have paid the
employee under Workers' Compensation Laws or any other state
or other similar federal or state legislation for the
protection of employees. Borrowers' obligation under this
Section 7.1(v) shall survive the repayment of the Loans and
any deed in lieu of foreclosure of any of the mortgages
securing the Loans;
(w) Borrowers will continue to engage in business of the same
general type as now conducted by Borrowers and preserve, renew
and keep in full force and effect its corporate existence and
take all reasonable action to maintain all rights, privileges
and franchises necessary or desirable in the normal course of
Borrowers business;
(x) Borrowers acknowledge that the Loans shall be
cross-collateralized and cross- defaulted, and Borrowers agree
to execute any documents required by Bank, before, on or after
the Closing Date, to effectuate this cross-collateralization
and cross-default;
(y) Star Fibers is and will remain a special purpose wholly owned
subsidiary of MCF and its only business shall consist of
owning, and leasing to MCF, the Star Fibers Property; and
(z) Borrowers, on a consolidated basis, must achieve and maintain
a consolidated Tangible Net Worth equal to a minimum of
$27,240,000 at fiscal year 1997 which Tangible Net Worth must
increase by a minimum of $3,000,000 for each fiscal year
thereafter.
(aa) Borrowers, on a consolidated basis, must maintain a Funded
Debt Ratio of less than or equal to 3.00 to 1.00 (i) for
fiscal year 1997; and (ii) for each twelve (12)
28
month period ending on the closing date of each of Borrowers'
fiscal quarters commencing with the first fiscal quarter of
fiscal year 1998.
7.2. Negative Covenants. Without Bank's written consent, Borrowers, as
applicable, will not:
(a) Enter into any merger, consolidation, reorganization,
recapitalization, reclassification of its capital stock;
(b) Change its primary ownership such that Xxxxx X. Xxxxxx and
Xxxxx X. Xxxxxx in the aggregate own less than 52.0% of the
full and legal interest of the outstanding common (or any
other type, class or series of) stock of MCF, or change
control or key management of Borrowers;
(c) Sell, transfer, lease or otherwise dispose of, directly, or
indirectly, in one or more transactions, all or (except in the
ordinary course of business) any material part of its assets,
including the Collateral;
(d) Become liable, directly or indirectly, as guarantor or
endorser or otherwise, for any obligation of any other Person,
except for the endorsement of commercial paper for deposit or
collection in the ordinary course of business;
(e) Except for current Indebtedness listed on Schedule 6-1(h)
attached hereto and incorporated herein by reference, incur,
create, assume, or permit to exist any Indebtedness, including
purchase money obligations, in excess of the aggregate of
$100,000.00 of unsecured debt of Borrowers in any fiscal year,
except: (i) the Loans; (ii) trade indebtedness incurred in the
ordinary course of business; and (iii) indebtedness permitted
under this Agreement;
(f) Enter into any stock repurchase, retirement, or redemption
programs except for the repurchase program pursuant to that
certain Corporate Buy-Sell Agreement dated May 3, 1993, or in
connection with (i) MCF's qualified 401K plan approved by Bank
or (ii) other Bank approved repurchases of MCF stock in
connection with similar stock repurchase plans approved by
MCF's executive committee;
(g) Make any loans or advances to any officer, stockholder,
director, employee, subsidiaries or Affiliates of Borrowers
except for temporary advances in the ordinary course of
business;
(h) Make capital expenditures, in the aggregate, in excess of
$7,000,000 in any fiscal year.
(i) Directly or indirectly apply any part of the proceeds of the
Loans for the immediate, incidental, or ultimate purpose of
carrying any "margin stocks" within the meaning of Regulation
U of the Board of Governors of the Federal Reserve System, or
any regulation, interpretations, or rulings thereunder;
29
(j) Except in connection with the permitted liens set forth in
section 7.2(m) below, execute or file in any jurisdiction a
financing statement (including amendments and extensions
thereof) under the Uniform Commercial Code which names any of
the Borrowers as debtor, or execute any security agreement or
other document authorizing any secured party thereunder to
file any such financing statement, except such financing
statement as may be necessary for the perfection of a security
interest in favor of Bank;
(k) Pay bonuses to officers, directors or shareholders of
Borrowers, except for bonuses in the aggregate amount of up to
20% of income before income taxes and any such bonuses in any
fiscal year so long as the payment of such bonuses would not
cause a violation of any covenants of this Agreement.
(l) Change (i) the name under which any of the Borrowers conduct
business; (ii) the nature of any of Borrowers business; or
(iii) the locations where tangible Collateral will be stored
or located;
(m) Grant liens, pledge or grant security interests in any assets
of Borrowers or incur purchase money obligations, except for
subordinate liens granted to NationsBanc Commercial
Corporation related to Borrowers' delinquent Accounts, and
(n) Pay cash dividends or distributions in an amount such that the
Tangible Net Worth requirements of Section 7.1(z) would be
violated.
7.3 Agreements, Representations and Covenants of Any Approved
Subsidiary. Borrowers acknowledge and agree that any Approved Subsidiary will be
bound by the terms and conditions of this Agreement, including all
representations and covenants, to the same extent that Borrowers are bound by
this Agreement. Borrowers further will cause any such Approved Subsidiary to
execute documentation necessary to effectuate this provision; provided, however,
this Section is deemed to be self-operative and enforceable without further
writing or agreement signed by any Approved Subsidiary.
7.4. Additional Covenants. All covenants, whether affirmative or
negative, contained in the Loan Documents are incorporated herein by reference
and constitute a part hereof as fully as if the same were set forth herein.
8. BANK'S RIGHTS.
In addition to all other rights and remedies contained herein in favor of Bank,
Bank shall have the following rights and be governed by the following
provisions:
8.1. Appraisal. From time to time during the terms of the Loans, Bank,
as required under any applicable federal law or regulation, shall order and pay
for then current appraisals, in form and content acceptable to Bank, on any of
the Collateral, including the Properties. Borrowers agree to reimburse Bank upon
the demand of Bank for all costs and expenses incurred by Bank in connection
with any such appraisals. Within a reasonable period of time after receipt
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by Bank of the reimbursement by Borrowers of the costs and expenses of any
Appraisal, Bank shall deliver to Borrowers a copy of such Appraisal.
8.2. Remedies Cumulative; Nonwaiver. All remedies of Bank provided for
in the Loan Documents are cumulative and shall be in addition to any and all
rights and remedies provided for or available under any Loan Documents or at law
or in equity. The exercise of any right or remedy by Bank hereunder shall not in
any way constitute a cure or waiver of a default condition or an event of
default hereunder or under any of the Loan Documents or validate any act done
pursuant to any notice of the occurrence of default condition or an event of
default or prejudice the Bank in the exercise of any of its rights under any of
the Loan Documents unless, in the exercise of said rights, Bank realizes all
amounts owed to Bank under the Loan Documents.
8.3. No Liability of Bank. Whether or not Bank elects to employ any and
all remedies available to it in the event of an occurrence of a Default
Condition or an Event of Default, Bank shall not be liable for the payment of
any expense incurred in connection with the exercise of any remedy available to
Bank or the performance or nonperformance of any obligation of Borrowers.
8.4. Environmental Assessments. Updated Environmental Assessments of
the Properties shall be prepared at Borrowers' expense and submitted to Bank
upon Bank's reasonable request at any time or times during the terms of the
Loans, including upon the occurrence of an Event of Default or as may be
required by any Environmental Laws or if Materials of Environmental Concern are
discovered or potentially exist on any of the Properties.
8.5. Audits. Audits of Inventory and Accounts, Chattel Paper,
Contracts, Documents, General Intangibles and other right to receive money for
goods received of Borrowers or any Approved Subsidiary will be conducted by Bank
or Bank's agents or representatives no less frequently than two (2) times per
fiscal year. Borrowers will bear the expenses of all normally scheduled audits
in the amount of up to $5,000.00 per audit.
9. DEFAULT.
9.1. Events of Default. An "Event of Default" shall be the occurrence
or existence of any one of the following conditions described in subsequent
subsections of this Section 9.1 and the continuance thereof for either (i) the
specific period of time, if any, specified with respect to such event or
condition, (ii) a period of five (5) days after delivery of written notice to
Borrowers from Bank if no period is specified and the event or condition is a
failure to pay money to Bank as and when due; provided that Bank shall not be
required to give notice more than twice in any twelve (12) month period or at
maturity of any of the Loans; or (iii) a period of thirty (30) days after (x)
delivery of written notice to Borrowers from Bank or (y) the date Bank should
have been notified by Borrowers of such condition pursuant to Section 7.1(q)
(which date, for defaults that the Borrower are made aware by the annual audit,
shall be deemed to be the date that MCF receives the final, completed audit), if
no period is specified and if the event or condition is not a failure to pay
money; provided, however, notwithstanding anything contained herein to the
contrary, there shall be no obligation of Bank to give notice and no right of
Borrowers to cure if the event or condition is either the institution of a
voluntary bankruptcy,
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insolvency or receivership action, the giving of any material false or
fraudulent representation to Bank, the failure to keep any of the Collateral
free and clear of any liens, except for the Permitted Encumbrances and for
disputed liens that are "bonded off" within thirty (30) days after Borrower has
notice of such lien, not approved in writing in advance by Bank;
(a) Borrowers' failure to pay when due any payment of principal,
interest, fee, or other charge payable under this Agreement,
the Notes or any of the other Loan Documents except for
Borrowers' failure to pay principal as required in accordance
with Section 2.1(i) of this Agreement;
(b) The failure of Borrowers', as applicable, to observe or
perform any other obligation required, directly or indirectly,
to be observed or performed by it hereunder or under the Notes
or under the other Loan Documents, or the failure of any party
to any subordinate agreement with respect to any Subordinated
Indebtedness to breach any condition of or to comply with
terms of such subordination agreement;
(c) Any of the Borrowers shall (i) fail to pay when due including
applicable grace period any Indebtedness due to Bank or any
third Person, or (ii) suffer to exist any other event of
default under any material agreement binding upon the
applicable Borrowers or any of their properties;
(d) Any financial statement, representation, warranty, or
certificate made or furnished to Bank by or on behalf of any
of the Borrowers in connection with this Agreement or the
Loans, or any separate statement or document delivered or to
be delivered to Bank hereunder, shall be discovered by Bank to
have been materially false, incorrect, incomplete or otherwise
misleading when made;
(e) Any of the Borrowers shall admit its inability to pay its
debts as they mature or shall make any assignment for the
benefit of any of its creditors;
(f) Proceedings in bankruptcy, or for reorganization of any of the
Borrowers, or for the adjustment or readjustment of the debts
of any one or more of them, under the Bankruptcy Act, as
amended, or under any other Laws for the relief of debtors, or
any part of any thereof, whether now existing or hereafter
effective, shall be commenced by or against any of the
Borrowers;
(g) Proceedings shall be instituted for the appointment of a
receiver or trustee for any of the Borrowers or for any
substantial part of their respective assets, or any
proceedings shall be instituted for the dissolution or full or
partial liquidation of any one or more of them, or any one or
more of them shall discontinue or materially change the nature
of its business or sell all or substantially all of its
assets;
(h) Any of the Borrowers shall suffer one or more final judgments
for the payment of money or the delivery of property or both
with the sum of such money and the
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value of such property aggregating at least Fifty Thousand and
No/100 Dollars ($50,000.00), unless execution has been
effectively stayed;
(i) Any Person other than Borrowers or any person acting on behalf
of Bank shall obtain possession of any of the Collateral by
any means, including without limitation, levy, distraint,
replevin, or self-help;
(j) Any obligee of Subordinated Debt shall fail to comply with the
subordination provisions of the instrument evidencing such
Subordinated Debt or contained in any subordination agreement;
(k) Any loss, theft, substantial damage, or destruction of all or
any part of the Collateral in excess of $100,000.00 which is
not adequately covered by insurance;
(l) A default under any obligation, whether now owed or hereafter
owing, by any of the Borrowers to Bank or any of its
affiliates or related entities; or
(m) Borrowers' failure to pay principal as required under Section
2.1(i) of this Agreement or otherwise to comply with the
requirements of Section 2.5 of this Agreement and such failure
together with any subsequent failures under Section 2.1(i) or
Section 2.5 occurring within fourteen (14) days thereafter
(collectively, a "Margin Failure") continues for a period of
time more than fourteen (14) days after the effective date of
the Collateral Certificate which first reflects Borrowers'
initial failure to comply with the provisions of Section 2.5
of this Agreement; provided and notwithstanding anything to
the contrary contained in this Section 9.1 or elsewhere in
this Agreement, Borrowers must cure immediately, and without
notice, any such failures to comply with the provisions of
Section 2.1(i) or Section 2.5 which occur after the second
(2nd) Margin Failure in any twelve (12) month period.
The Events of Default set forth in this section 9.1 are in addition to those
Events of Default set forth and defined elsewhere in the Loan Documents. In the
event of any direct conflict in provisions related to Events of Default,
including the requirements or applicability of any grace periods, contained in
this Agreement and in the other Loan Documents, the terms and provisions of this
Agreement shall govern and control.
9.2. Acceleration. Immediately and without notice upon the occurrence
of an Event of Default, at Bank's option, all of Bank's duties and obligations
hereunder shall terminate and all Obligations or any part thereof as determined
by Bank shall immediately become due and payable without further action of any
kind.
9.3. Remedies after Acceleration. After any acceleration as provided in
section 9.2, Bank shall have, in addition to the rights and remedies given, all
of those remedies allowed by all applicable Laws, including without limitation
the Uniform Commercial Code, enacted in any jurisdiction in which any Collateral
may be located or otherwise applicable to the Loans or Borrowers. Without
limiting the generality of the foregoing, Bank may, at any time after
acceleration, without any demand or notice (except as may be required by this
Agreement or
33
applicable Laws) to any of the Borrowers, all of which are hereby expressly
waived, and with or without advertisement, sell at public or private sale or
otherwise realize upon the whole or, from time to time, any part of the
Collateral or any interest of any of the Borrowers. After deducting from the
proceeds of such sale or disposition of the Collateral all expenses (including
reasonable expenses for professional services), Bank shall apply such proceeds
toward satisfying so much of the Obligations as were so accelerated. Any
remainder of such proceeds after satisfaction in full of such Obligations shall
be distributed as required by applicable Laws. Notice of any such sale or other
disposition shall be given where practicable to Borrower at least five (5) days
prior to the date of any intended public sale or of the time after which any
intended private sale or other disposition is to be made, and Borrowers agree
that such notice is and shall be deemed to be reasonable. Borrowers agree to
assemble, or cause to be assembled, at its own expense the Collateral at such
place or places as Bank may designate. At any such sale or other disposition,
Bank may, to the extent permissible under applicable Laws, purchase the whole or
any part of the Collateral, free of any right of redemption on the part of any
of the Borrowers, which right is hereby waived and released by Borrowers.
Without limiting the generality of any rights and remedies available to Bank
under this section, Bank may at its option and discretion, to the full extent
permitted by applicable Laws:
(a) Enter upon any of the Properties, exclude therefrom Borrowers,
or any Affiliate, employee, or other representative thereof,
and take immediate possession of the Collateral, either
personally or by use of a receiver appointed by a court, using
all necessary force to do so;
(b) Use, operate, manage, sell, lease, and control the Collateral
in any lawful manner;
(c) Collect and receive all rents, income, revenue, earnings,
issues, and profits from the Collateral; and
(d) Maintain, repair, renovate, alter, or remove the Collateral.
9.4. Remedies Alternative to Acceleration. In each instance in which
the Event of Default involves the failure to pay when due a sum of money or to
perform when required one or more particular Obligations, Bank may, at its
option and in lieu of accelerating as permitted in section 9.2, pay such sum or
sums or cause to be performed such obligation or obligations on behalf of
Borrowers and collect the amount of Bank's costs in so doing (including
reasonable professional expenses) (a) as principal hereunder upon which interest
accrues at the then-applicable rate set forth in the Term Note, or (b) by direct
charge to any deposit accounts of any of the Borrowers maintained with Bank.
Bank's exercise of such option at any time shall not obligate Bank to exercise
such option upon the subsequent occurrence of the same or any other Event of
Default.
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10. MISCELLANEOUS.
10.1. Construction.
(a) The provision(s) of this Agreement shall be in addition to
those of the other Loan Documents, the terms of such Loan
Documents are incorporated herein by reference, held by or in
favor of Bank, all of which shall be construed as
complementary to each other. Nothing contained herein shall
prevent Bank from enforcing any or all other notes or
guaranty, pledge or security agreements, or other such
evidences of liability in accordance with their respective
terms.
(b) Where appropriate, the reference herein to any gender, whether
masculine, feminine, or neuter, shall include the other
genders, and the reference herein to the singular number shall
include the plural and vice versa.
10.2. Further Assurances. From time to time, Borrowers will execute and
deliver or have executed and delivered to Bank such additional documents and
will provide such additional information as Bank may reasonably require to carry
out the terms of this Agreement and be informed of the respective status and
affairs of Borrowers.
10.3. Enforcement and Waiver. Bank shall have the right at all times to
enforce the provisions of this Agreement and the other Loan Documents in strict
accordance with the terms hereof and thereof, notwithstanding any conduct of
Bank in refraining from so doing at any time or times. Bank's failure to enforce
any such provision or to exercise any right available to Bank upon the
occurrence of an Event of Default shall not constitute a waiver of, or bar Bank
from enforcing or exercising, any such provision or right upon the subsequent
occurrence of the same or any other Event of Default. All rights and remedies of
Bank are cumulative and concurrent, and the exercise of any right or remedy
shall not be deemed a waiver or release of any other right or remedy.
10.4. Bank's Expenses. Borrowers will, on demand, reimburse Bank for
all costs and expenses, including reasonable fees and expenses of Bank caused,
incurred or paid by Bank in connection with the preparation, administration,
amendment, modification, enforcement, or attempted enforcement of this Agreement
other than the collection or attempted collection of the Notes.
10.5. Notices. Any notices or consents required or permitted under this
Agreement shall be in writing, sent prepaid, by person, by telegram, or by any
form of U. S. Mail which provides a receipt therefore, to the parties at the
following addresses except as any such address is changed by written notice:
(a) To Borrowers: 000 Xxxx Xxxxxx
Post Office Box 469
Edgefield, South Carolina 29824
35
(b) To Bank: NationsBank, N.A.
0000 Xxxx Xxxxxx
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
Location Code: SC 3 240-03-07
Attention: Xxxx X. Xxxxxxxx
The same shall be deemed to be delivered as of the time of personal delivery,
the time stated on the telegram, or the third (3rd) business day after the day
of deposit thereof in the U.S. Mail Depository.
10.6. Waiver and Release by Borrowers. To the maximum extent permitted
by applicable Laws, Borrowers (a) waive in addition to any other items or
matters waived herein: (i) all notices of any kind connected with any commercial
paper at any time held by Bank on which any of the Borrowers are in any way
liable; and (ii) notice or opportunity to be heard, after acceleration pursuant
to section 9.2 hereof, before Bank's exercise of any remedies of self- help,
set-off or any other summary procedures permitted by any applicable Laws or by
any agreement with any of the Borrowers, and, except where required hereby or by
any applicable Laws, notice of any other action taken by Bank; and (b) release
Bank and its officers, directors, agents, attorneys, servants, and employees
from all claims of loss or damage caused by any act or omission on the part of
any of them except willful misconduct.
10.7. Participation. Notwithstanding any other provision hereof, Bank
may at any time enter into one or more agreements with one or more participants
whereby Bank agrees to allocate a certain percentage or Dollar amount of the
Loans to them. Borrowers acknowledge that, for the convenience of all parties,
this Agreement is being entered into with Bank only and that Borrowers'
obligations hereunder are undertaken for the benefit of, and as an inducement
to, any such participant as well as Bank. Borrowers, hereby grant to each such
participant, to the extent of its participation in the Loans, the right to
set-off in accordance with applicable Laws deposit accounts maintained by them
with such participant. Borrowers hereby consent to the delivery by Bank, to any
such participant or prospective participant, of any information and document
submitted by or on behalf of either or both of them to Bank under this Agreement
or otherwise in connection with the Loans. For all purposes where applicable,
any reference to Bank in this Agreement shall include any such participant, to
the extent of its participation in the Loan.
10.8. Governing Law. This Agreement, and all other documents in
connection therewith shall be governed by and construed in accordance with the
Laws of the State of South Carolina.
10.9. Amendment Agreement. This Agreement may be amended only in
writing signed by, at least, the party against whom such amendment is sought to
be enforced. This Agreement, and the documents executed and delivered pursuant
hereto, constitute the entire agreement between the parties.
10.10. Assignment. Borrowers may not assign any of their rights,
duties, or obligations hereunder without Bank's prior written consent.
36
10.11. Benefit; Binding. This Agreement shall be binding upon and inure
to the benefit of the parties hereto, their respective successors, authorized
assigns, and legal representatives.
10.12. Severability. If any provision of this Agreement shall be held
to be invalid under any applicable Laws, such invalidity shall not affect any
other provision hereof that can be given effect without the invalid provision
and, to this end, the provisions hereof are severable.
10.13. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall constitute an original and all of which shall
constitute a single instrument.
10.14 Entire Agreement. This Agreement, including all exhibits,
schedules and other documents attached to this Agreement or incorporated by
reference, constitute the entire agreement of the parties with respect to the
subject matter of this Agreement and supersede all other understandings, oral or
written, with respect to the subject matter of this Agreement.
10.15 Arbitration. ANY CONTROVERSY OR CLAIM BETWEEN THE BANK OR THE
BORROWERS INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY RELATED AGREEMENTS OR INSTRUMENTS, INCLUDING ANY CLAIM BASED ON
OR ARISING FROM AN ALLEGED TORT, SHALL BE DETERMINED BY BINDING ARBITRATION IN
ACCORDANCE WITH THE FEDERAL ARBITRATION ACT (OR IF NOT APPLICABLE, THE
APPLICABLE STATE LAW), THE RULES OF PRACTICE AND PROCEDURE FOR THE ARBITRATION
OF COMMERCIAL DISPUTES OF JUDICIAL ARBITRATION AND MEDIATION SERVICES, INC.
(J.A.M.S.), AND THE "SPECIAL RULES" SET FORTH BELOW. IN THE EVENT OR ANY
INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT UPON ANY ARBITRATION
AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY PARTY TO THIS
AGREEMENT MAY BRING ANY ACTION, INCLUDING A SUMMARY OR EXPEDITED PROCEEDING, TO
COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH THIS AGREEMENT APPLIES
IN ANY COURT HAVING JURISDICTION OVER SUCH ACTION.
A. SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN THE CITY OF
COLUMBIA, SOUTH CAROLINA AND ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN
ARBITRATOR; IF J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE
ARBITRATION, THEN THE AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL
ARBITRATION HEARINGS WILL BE COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR
ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE, BE
PERMITTED TO EXTEND THE COMMENCEMENT OF SUCH HEARING FOR UP TO AN ADDITIONAL 60
DAYS.
B. RESERVATION OF RIGHTS. NOTHING IN THIS AGREEMENT SHALL BE DEEMED TO
(I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF LIMITATION
OR REPOSE AND ANY WAIVERS CONTAINED IN THIS AGREEMENT; (II) BE A WAIVER BY THE
BANK OF THE PROTECTION AFFORDED TO IT BY 12 U.S.C. SECTION 91 OR ANY
37
SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT THE RIGHT OF THE BANK HERETO
(A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED TO) SETOFF; (B) TO
FORECLOSE AGAINST ANY REAL OR PERSONAL PROPERTY COLLATERAL; OR (C) TO OBTAIN
FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED TO)
INJUNCTIVE RELIEF OR THE APPOINTMENT OF A RECEIVER. THE BANK MAY EXERCISE SUCH
SELF HELP RIGHTS, FORECLOSURE UPON SUCH PROPERTY, OR OBTAIN SUCH PROVISIONAL OR
ANCILLARY REMEDIES BEFORE, DURING OR AFTER THE PENDENCY OR ANY ARBITRATION
PROCEEDING BROUGHT PURSUANT TO THIS AGREEMENT.
10.16 Amendment and Restatement. It is the intent of the parties that
this Agreement constitutes a modification and restatement of a prior loan
agreement and under no circumstances shall constitute a novation of the
Revolving Credit Loan, the Term Loan or the 1997 Term Loan. All Loan Documents,
including all Mortgages and Security Agreements, are modified as necessary such
that the Collateral securing the Obligations shall secure and continue to secure
the Obligations and the liens in favor of Bank on such Collateral will maintain
the priority originally granted. Without limiting the generality of the
foregoing, each of the Borrowers hereby grant to Bank a lien and security
interest in accordance with all Mortgages, Security Agreements and other
documents securing the Loan in order that the Notes, as amended hereby, shall
remain secured thereby.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered to be effective as of the day and year first written
above.
BORROWERS:
XXXXXX COLOR-FI, INC. (SEAL)
By:
Witness Its: Chief Financial Officer
Witness
STAR FIBERS CORP. (SEAL)
By:
Witness Its: Chief Financial Officer
Witness
CUSTOM COLORANTS, INC. (SEAL)
By:
Witness Its: Chief Financial Officer
Witness
XXXXXXXX INDUSTRIES, INC. (SEAL)
By:
Witness Its: Chief Financial Officer
Witness
PALMETTO SPINNING CORPORATION
(SEAL)
By:
Witness Its: Chief Financial Officer
Witness
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BANK:
NATIONSBANK, N. A. (SEAL)
By:
Witness Its: Vice President
Witness
40
LIST OF EXHIBITS AND SCHEDULES
EXHIBIT 2-2 - Form of Collateral Certificate
EXHIBIT 2-3 - Form of Monthly Borrowing Base Certificate
Schedule 6-1(a) - List of Jurisdictions
Schedule 6-1(h) - List of Indebtedness
Schedule 6-1(s) - List of Collateral Locations
Schedule 6-1(t) - List of Trade Names
41
