EXHIBIT 10.1
AMENDED AND RESTATED
REVOLVING CREDIT, TERM LOAN
AND
SECURITY AGREEMENT
GMAC COMMERCIAL FINANCE LLC,
AS AGENT AND LENDER
WITH
DELTA XXXXX, INC.,
AS BORROWER
MAY 30, 2006
TABLE OF CONTENTS
Page
----
SECTION 1. DEFINITIONS.................................................................. 1
1.1 Accounting Terms....................................................... 1
1.2 General Terms.......................................................... 1
1.3 Uniform Commercial Code Terms.......................................... 20
1.4 Certain Matters of Construction........................................ 20
SECTION 2. ADVANCES, PAYMENTS........................................................... 20
2.1 Total Revolving Advances............................................... 20
2.2 Procedure for Borrowing................................................ 22
2.3 Disbursement of Advance Proceeds....................................... 22
2.4 Term Loan.............................................................. 22
2.5 Maximum Revolving Advances............................................. 23
2.6 Repayment of Revolving Advances........................................ 23
2.7 Repayment of Excess Advances........................................... 23
2.8 Statement of Account................................................... 24
2.9 Letters of Credit...................................................... 24
2.10 Issuance of Letters of Credit.......................................... 24
2.11 Requirements For Issuance of Letters of Credit......................... 25
2.12 Additional Payments.................................................... 26
2.13 Manner of Borrowing and Payment........................................ 26
2.14 Mandatory Prepayments.................................................. 28
2.15 Use of Proceeds........................................................ 28
2.16 Defaulting Lender...................................................... 28
SECTION 3. INTEREST AND FEES............................................................ 29
3.1 Interest............................................................... 29
3.2 Letter of Credit Fees.................................................. 29
3.3 Commitment Fee......................................................... 30
3.4 Computation of Interest and Fees....................................... 30
3.5 Collateral Monitoring Fee.............................................. 30
3.6 Facility Fee........................................................... 31
3.7 Administration Fee..................................................... 31
3.8 Maximum Charges........................................................ 31
SECTION 4. COLLATERAL: GENERAL TERMS.................................................... 31
4.1 Security Interest in the Collateral.................................... 31
4.2 Perfection of Security Interest........................................ 31
4.3 Disposition of Collateral.............................................. 35
4.4 Preservation of Collateral............................................. 35
4.5 Ownership of Collateral................................................ 35
4.6 Defense of Agent's and Lender's Interests.............................. 35
4.7 Books and Records...................................................... 36
4.8 Financial Disclosure................................................... 36
4.9 Compliance with Laws................................................... 36
4.10 Inspection of Premises and Inventory Appraisals........................ 36
4.11 Insurance.............................................................. 37
4.12 Failure to Pay Insurance............................................... 37
4.13 Payment of Taxes....................................................... 38
4.14 Payment of Leasehold Obligations....................................... 38
4.15 Receivables............................................................ 38
4.16 Inventory.............................................................. 40
4.17 Maintenance of Equipment............................................... 40
4.18 Exculpation of Liability............................................... 41
4.19 Environmental Matters.................................................. 41
4.20 Financing Statements................................................... 43
SECTION 5. REPRESENTATIONS AND WARRANTIES............................................... 43
5.1 Authority.............................................................. 43
5.2 Formation and Qualification............................................ 43
5.3 Survival of Representations and Warranties............................. 43
5.4 Tax Returns............................................................ 43
5.5 Financial Statements................................................... 44
5.6 Corporate Name......................................................... 44
5.7 O.S.H.A. and Environmental Compliance.................................. 44
5.8 Solvency; No Litigation, Violation, Indebtedness or Default............ 45
5.9 Patents, Trademarks, Copyrights and Licenses........................... 46
5.10 Licenses and Permits................................................... 46
5.11 Default of Indebtedness................................................ 47
5.12 No Default............................................................. 47
5.13 No Burdensome Restrictions............................................. 47
5.14 No Labor Disputes...................................................... 47
5.15 Margin Regulations..................................................... 47
5.16 Investment Company Act................................................. 47
5.17 Disclosure............................................................. 47
5.18 Swaps.................................................................. 47
5.19 Conflicting Agreements................................................. 48
5.20 Application of Certain Laws and Regulations............................ 48
5.21 Business and Property of Borrower...................................... 48
SECTION 6. AFFIRMATIVE COVENANTS........................................................ 48
6.1 Payment of Fees........................................................ 48
6.2 Conduct of Business and Maintenance of Existence and Assets............ 48
6.3 Violations............................................................. 48
6.4 Government Receivables................................................. 48
6.5 Execution of Supplemental Instruments.................................. 49
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6.6 Payment of Indebtedness................................................ 49
6.7 Standards of Financial Statements...................................... 49
6.8 Amendment of Senior Notes Indenture; Pledge of Term Loan Collateral.... 49
6.9 Financial Covenants.................................................... 49
6.10 [Intentionally Omitted]................................................ 50
6.11 Material Contracts..................................................... 50
SECTION 7. NEGATIVE COVENANTS........................................................... 50
7.1 Merger, Consolidation, Acquisition and Sale of Assets.................. 50
7.2 Creation of Liens...................................................... 50
7.3 Guarantees............................................................. 50
7.4 Investments............................................................ 51
7.5 Loans.................................................................. 51
7.6 Capital Expenditures................................................... 51
7.7 Dividends.............................................................. 51
7.8 Indebtedness........................................................... 51
7.9 Nature of Business..................................................... 51
7.10 Transactions with Affiliates........................................... 51
7.11 Leases................................................................. 52
7.12 Subsidiaries........................................................... 52
7.13 Fiscal Year and Accounting Changes..................................... 52
7.14 Pledge of Credit....................................................... 52
7.15 Amendment of Articles of Incorporation, By-Laws........................ 52
7.16 Compliance with ERISA.................................................. 52
7.17 Prepayment of Indebtedness............................................. 53
7.18 Management Compensation and Bonuses.................................... 53
SECTION 8. CONDITIONS PRECEDENT......................................................... 53
8.1 Conditions to Initial Advances......................................... 53
8.2 Conditions to Each Advance............................................. 56
SECTION 9. INFORMATION AS TO BORROWER................................................... 58
9.1 Disclosure of Material Matters......................................... 58
9.2 Schedules.............................................................. 58
9.3 Environmental Reports.................................................. 58
9.4 Litigation............................................................. 59
9.5 Material Occurrences................................................... 59
9.6 Government Receivables................................................. 59
9.7 Annual Financial Statements............................................ 59
9.8 Quarterly Financial Statements......................................... 60
9.9 Monthly Financial Statements........................................... 60
9.10 Other Reports.......................................................... 60
9.11 Additional Information................................................. 60
9.12 Projected Operating Budget............................................. 61
9.13 Variances From Operating Budget........................................ 61
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9.14 Notice of Suits, Adverse Events........................................ 61
9.15 ERISA Notices and Requests............................................. 61
9.16 Additional Documents................................................... 62
SECTION 10. EVENTS OF DEFAULT........................................................... 62
SECTION 11. LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT.................................. 65
11.1 Rights and Remedies.................................................... 65
11.2 Agent's Discretion..................................................... 65
11.3 Setoff................................................................. 66
11.4 Rights and Remedies not Exclusive...................................... 66
SECTION 12. WAIVERS AND JUDICIAL PROCEEDINGS............................................ 66
12.1 Waiver of Notice....................................................... 67
12.2 Delay.................................................................. 67
12.3 JURY TRIAL WAIVER...................................................... 67
SECTION 13. EFFECTIVE DATE AND TERMINATION.............................................. 67
13.1 Term................................................................... 67
13.2 Termination............................................................ 68
SECTION 14. REGARDING AGENT............................................................. 68
14.1 Appointment............................................................ 68
14.2 Nature of Duties....................................................... 68
14.3 Lack of Reliance on Agent and Resignation.............................. 69
14.4 Certain Rights of Agent................................................ 69
14.5 Reliance............................................................... 70
14.6 Notice of Default...................................................... 70
14.7 Indemnification........................................................ 70
14.8 Agent in its Individual Capacity....................................... 70
14.9 Delivery of Documents.................................................. 71
14.10 Borrower's Undertaking to Agent........................................ 71
SECTION 15. MISCELLANEOUS............................................................... 71
15.1 GOVERNING LAW.......................................................... 71
15.2 Entire Understanding................................................... 72
15.3 Successors and Assigns; Participations; New Lenders.................... 73
15.4 Application of Payments................................................ 74
15.5 Indemnity.............................................................. 74
15.6 Notice................................................................. 74
15.7 Survival............................................................... 75
15.8 Severability........................................................... 75
15.9 Expenses............................................................... 75
15.10 Injunctive Relief...................................................... 76
15.11 Consequential Damages.................................................. 76
15.12 Captions............................................................... 76
iv
15.13 Counterparts; Telecopied Signatures.................................... 76
15.14 Construction........................................................... 76
15.15 Acknowledgment and Restatement......................................... 76
v
INDEX
TO
EXHIBITS AND SCHEDULES
Exhibit 2.1(a) Form of Revolving Credit Note
Exhibit 2.4(b) Form of Term Loan Note
Exhibit 5.5(b) Financial Projections
Exhibit 15.3 Form of Commitment Transfer Supplement
Schedule 1.2 Liens
Schedule 4.2(b) Chattel Paper; Instruments
Schedule 4.2(d) Deposit Accounts
Schedule 4.2(e) Investment Property
Schedule 4.2(f) Letters of Credit
Schedule 4.2(g) Commercial Tort Claims
Schedule 4.2(h) Documents of Title
Schedule 4.5 Locations of Inventory
Schedule 4.15(c) Location of Chief Executive Office
Schedule 5.6 Corporate Name
Schedule 5.7 Environmental
Schedule 5.8(b) Litigation
Schedule 5.8(d) ERISA
Schedule 5.9 Intellectual Property
Schedule 5.10 Licenses and Permits
Schedule 5.14 Labor
Schedule 7.3 Guarantees
Schedule 7.4 Investments
Schedule 7.8 Indebtedness
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AMENDED AND RESTATED
REVOLVING CREDIT, TERM LOAN
AND
SECURITY AGREEMENT
Amended and Restated Revolving Credit, Term Loan and Security Agreement
(this "Agreement") dated May ___, 2006 among DELTA XXXXX, INC., a corporation
organized under the laws of the State of Delaware ("Borrower"), the undersigned
financial institutions (collectively, the "Lenders" and each individually a
"Lender") and GMAC COMMERCIAL FINANCE LLC ("GMAC CF"), a limited liability
company formed under the laws of the State of Delaware, as agent for the Lenders
(GMAC CF, in such capacity, the "Agent").
IN CONSIDERATION of the mutual covenants and undertakings herein
contained, each of Borrower, Lenders and Agent hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Accounting Terms. As used in this Agreement, the Notes or any
certificate, report or other document made or delivered pursuant to this
Agreement, accounting terms not defined in Section 1.2 or elsewhere in this
Agreement and accounting terms partly defined in Section 1.2 to the extent not
defined, shall have the respective meanings given to them under GAAP; provided,
however, whenever such accounting terms are used for the purposes of determining
compliance with financial covenants in this Agreement, such accounting terms
shall be defined in accordance with GAAP applied in preparation of all financial
statements of Borrower. All references herein to "consolidated basis" shall
apply to Borrower and all of its subsidiaries.
1.2 General Terms. For purposes of this Agreement the following
terms shall have the following meanings:
"Accountants" shall have the meaning set forth in Section 9.7
hereof.
"Accounts" shall mean all present and future rights of Borrower to
payment of a monetary obligation, whether or not earned by performance, which is
not evidenced by chattel paper or an instrument, (a) for property that has been
or is to be sold, leased, licensed, assigned, or otherwise disposed of, (b) for
services rendered or to be rendered, (c) for a secondary obligation incurred or
to be incurred, or (d) arising out of the use of a credit or charge card or
information contained on or for use with the card.
"Accounts Advance Rate" shall have the meaning set forth in Section
2.1(a)(i)(y) hereof.
"Advances" shall mean and include the Revolving Advances, Letters of
Credit and Term Loans.
"Advance Rates" shall have the meaning set forth in Section
2.1(a)(y)(ii) hereof.
"Affiliate" of any Person shall mean (a) any Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled by,
or is under common control with such Person, or (b) any Person who is a director
or officer (i) of such Person, (ii) of any Subsidiary of such Person or (iii) of
any Person described in clause (a) above. For purposes of this definition,
control of a Person shall mean the power, direct or indirect, (x) to vote ten
percent (10%) or more of the securities having ordinary voting power for the
election of directors of such Person, or (y) to direct or cause the direction of
the management and policies of such Person whether by contract or otherwise.
"Agent" shall have the meaning set forth in the preamble to this
Agreement and shall include its successors and assigns.
"Agent's security interest" or words of similar import shall have
the meaning set forth in Section 4.1 hereof.
"Agreement" shall have the meaning set forth in the preamble to this
Agreement.
"Assignment of Factoring Proceeds" shall mean the Amended and
Restated Assignment of Factoring Proceeds dated May ___, 2006 between Borrower,
Agent and Factor, as amended, restated, renewed, extended, supplemented,
substituted or otherwise modified from time to time.
"Authority" shall have the meaning set forth in Section 4.19(d)
hereof.
"Availability Block" shall mean (a) $7,000,000 and, (b) in the event
that Agent makes a Term Loan on the Funding Date in connection with the
consummation of the Offer, an amount, in Agent's discretion, of not less than
$5,500,000 and not more than $7,000,000; provided that such amount shall be
increased on the first day of each calendar month after the Funding Date in an
amount equal to $250,000 until such amount shall equal $7,000,000.
"Bank" shall mean The Bank of New York, and its successors and
assigns.
"Blocked Accounts" shall have the meaning set forth in Section
4.15(h) hereof.
"Borrower" shall have the meaning set forth in the preamble to this
Agreement and shall include its permitted successors and assigns.
"Business Day" shall mean any day other than a day on which
commercial banks in New York or South Carolina are authorized or required by law
to close.
"Capital Lease" shall mean, as applied to any Person, any lease of
any property (whether real, personal or mixed) by that Person as lessee which,
in accordance with GAAP, is or should be accounted for as a capital lease on the
balance sheet of that Person.
"Capital Stock" shall mean (a) in the case of a corporation, capital
stock, (b) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
capital stock, (c) in the case of a partnership, partnership
2
interests (whether general or limited), (d) in the case of a limited liability
company, membership interests and (e) any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distribution of assets of, the issuing Person.
"Cash Equivalents" shall mean: (a) securities or marketable direct
obligations issued or unconditionally guaranteed by the United States of America
or issued or unconditionally guaranteed by any agency or instrumentality thereof
and backed by the full faith and credit of the United States, in each case
maturing within one year from the date of acquisition thereof; (b) commercial
paper maturing no more than six (6) months from the date issued and, at the time
of acquisition, having a rating of at least A-1 from Standard & Poor's
Corporation ("S&P") or at least P-1 from Xxxxx'x Investors Service, Inc.
("Moody's") or carrying an equivalent rating by a nationally recognized rating
agency if both of the two rating agencies named above cease publishing ratings
of commercial paper issuers generally; (c) certificates of deposit, time
deposits, overnight bank deposits or bankers' acceptances maturing within one
year from the date of issuance thereof issued by, or overnight reverse
repurchase agreements from, any commercial bank organized under the laws of the
United States of America or any state thereof or the District of Columbia having
combined capital and surplus of not less than $500,000,000 and whose debt
obligations, or those of a holding company of which it is a Subsidiary, are
rated not less than A (or the equivalent rating) by a nationally recognized
investment rating agency; (d) securities with maturities of one year or less
from the date of acquisition backed by standby letters of credit issued by any
Lender or any commercial bank satisfying the requirements of clause (c) above;
(e) money market mutual or similar funds that invest at least 95% in assets
satisfying the requirements of any of clauses (a)-(d) of this definition; or (f)
money market funds that (i) comply with the criteria asset forth in SEC Rule
2a-7 under the Investment Company Act of 1940, as amended, (ii) are rated AAA by
S&P and Aaa by Moody's and (iii) have portfolio assets of at least
$5,000,000,000.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. Sections 9601 et
seq.
"Change of Control" shall mean the occurrence of any of the
following events: (a) the Original Owner shall fail to own, directly or
indirectly, one hundred percent (100%) of the capital stock of Borrower; or (b)
the occurrence of a "Change of Control" under and as defined in the Senior Note
Indenture.
"Charges" shall mean all taxes, charges, fees, imposts, levies or
other assessments, including, without limitation, all net income, gross income,
gross receipts, sales, use, ad valorem, value added, transfer, franchise,
profits, inventory, capital stock, license, withholding, payroll, employment,
social security, unemployment, excise, severance, stamp, occupation and property
taxes, custom duties, fees, assessments, liens, claims and charges of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts, imposed by any taxing or other authority, domestic or
foreign (including, without limitation, the PBGC or any environmental agency or
superfund), upon the Collateral, Borrower or any of its Affiliates.
"Closing Date" shall mean the date hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time and the regulations promulgated thereunder.
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"Collateral" shall mean all assets of Borrower, including, without
limitation:
(a) all Accounts;
(b) all Equipment;
(c) all General Intangibles;
(d) all Inventory;
(e) all Real Property;
(f) all Subsidiary Stock;
(g) all present and future right, title and interest in and to
(i) goods and other property including, but not limited to, all merchandise
returned or rejected by Customers, relating to or securing any of the
Receivables; (ii) all additional amounts due to Borrower from any Customer
relating to the Receivables; (iii) other property, including warranty claims,
relating to any goods securing this Agreement; (iv) all contract rights, rights
of payment which have been earned under a contract right, instruments (including
all promissory notes), documents, chattel paper (including all tangible and
electronic chattel paper), warehouse receipts, deposit accounts, money,
securities and investment property (including securities, whether certificated
or uncertificated, securities accounts, security entitlements, commodity
contracts or commodity accounts), credit balances and other property of Borrower
now or hereafter held or received by or in transit to any Lender or any of any
Lender's Affiliates or at any other depository or other institution from or for
the account of Borrower whether for safekeeping, pledge, custody, transmission,
collection or otherwise; (v) any other goods, personal property or real property
now owned or hereafter acquired in which Borrower has expressly granted a
security interest or may in the future grant a security interest to Agent for
the benefit of Lenders hereunder, or in any amendment or supplement hereto or
thereto, or under any other agreement between Agent and Borrower; (vi) all
letters of credit, banker's acceptances and similar instruments and including
all letter-of-credit rights, and (vii) all commercial tort claims, including,
without limitation, all commercial tort claims set forth on Schedule 4.2(g);
(h) all present and future supporting obligations and all
present and future liens, security interests, rights, remedies, title and
interest in, to and in respect of Receivables and other Collateral, including
(i) rights and remedies under or relating to guaranties, contracts of
suretyship, letters of credit and credit and other insurance related to the
Collateral, (ii) rights of stoppage in transit, setoff, detinue, replevin,
repossession, reclamation, repurchase and other rights and remedies of an unpaid
vendor, consignor, consignee, mechanic, artisan, lienor or secured party, (iii)
goods described in invoices, documents, contracts or instruments with respect
to, or otherwise representing or evidencing, Receivables or other Collateral,
including returned, repossessed and reclaimed goods, and (iv) if and when
obtained by Borrower, all real and personal property of third parties in which
Borrower has been granted a lien or security interest as security for the
payment or enforcement of Receivables and including deposits by and property of
account debtors or other persons securing the obligations of account debtors;
4
(i) to the extent not otherwise described above, all
Receivables;
(j) all Records relating to (a), (b), (c), (d), (e), (f), (g),
(h) or (i) of this definition; and
(k) all proceeds and products of (a), (b), (c), (d), (e), (f),
(g), (h), (i) and (j) of this definition in whatever form, including, but not
limited to: cash, deposit accounts (whether or not comprised solely of
proceeds), certificates of deposit, insurance proceeds (including hazard, flood,
business interruption and credit insurance), negotiable instruments and other
instruments for the payment of money, chattel paper, security agreements,
documents, eminent domain proceeds, condemnation proceeds and tort claim
proceeds.
"Commitment Percentage" of any Lender shall mean the percentage set
forth below such Lender's name on the signature page hereof as same may be
adjusted upon any assignment by a Lender pursuant to Section 15.3(c) hereof.
"Commitment Transfer Supplement" shall mean a document in the form
of Exhibit 15.3 hereto, properly completed and otherwise in form and substance
satisfactory to Agent by which the Purchasing Lender purchases and assumes a
portion of the obligation of Lenders to make Advances under this Agreement.
"Consents" shall mean all filings and all licenses, permits,
consents, approvals, authorizations, qualifications and orders of governmental
authorities and other third parties, domestic or foreign, necessary to carry on
Borrower's business, including, without limitation, any Consents required under
all applicable federal, state or other applicable law.
"Controlled Group" shall mean all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with Borrower, are treated as a single employer
under Section 414 of the Code.
"Credit Risk" shall have the meaning set forth in the Factoring
Agreement.
"Customer" shall mean and include the account debtor with respect to
any Receivable and/or the prospective purchaser of goods, services or both with
respect to any contract or contract right, and/or any party who enters into or
proposes to enter into any contract or other arrangement with Borrower, pursuant
to which Borrower is to deliver any personal property or perform any services.
"Default" shall mean an event which, with the giving of notice or
passage of time or both, would constitute an Event of Default.
"Default Rate" shall mean a rate equal to two percent (2%) per annum
in excess of (a) the Revolving Interest Rate, the Term Loan Rate and the Letter
of Credit Fees in the absence of an Overadvance, and (b) the Overadvance Rate
during the existence of an Overadvance.
"Defaulting Lender" shall have the meaning set forth in Section
2.16(a) hereof.
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"Deposit Account Control Agreement" shall mean an agreement in
writing, in form and substance satisfactory to Agent, by and among Agent,
Borrower and any bank at which any deposit account of Borrower is at any time
maintained which provides that such bank will comply with the irrevocable
instructions originated by Agent directing disposition of the funds in the
deposit account without further consent by Borrower and such other terms and
conditions as Agent may require, including as to any such agreement with respect
to any Blocked Account, providing that all items received or deposited in the
Blocked Accounts are the property of Agent, that the bank has no lien upon, or
right to setoff against, the Blocked Accounts, the items received for deposit
therein, or the funds from time to time on deposit therein and that the bank
will wire, or otherwise transfer, in immediately available funds, on a daily
basis to an account designated by Agent in writing all funds received or
deposited into the Blocked Accounts.
"Depository Accounts" shall have the meaning set forth in Section
4.15(h) hereof.
"Dispute" shall have the meaning set forth in the Factoring
Agreement.
"Documents" shall have the meaning set forth in Section 8.1(c)
hereof.
"Dollars" and the sign "$" shall mean lawful money of the United
States of America.
"EBITDA" shall mean for any given period for Borrower on a
consolidated basis (a) net income (or loss) determined in accordance with GAAP
less all extraordinary gains or losses plus (b) the aggregate amount of all
depreciation and amortization and other non-cash expenses during such period
plus (c) the aggregate amount of interests expense for such period plus (d) the
aggregate amount of all income taxes reflected on Borrower's financial
statements for such period.
"Eligible Accounts" shall mean and include each Account of Borrower
arising in the ordinary course of Borrower's business and which Factor has
assumed and retained the Credit Risk under the Factoring Agreement or which
Agent, in its sole credit judgment, shall deem to be an Eligible Account, based
on such considerations as Agent may from time to time deem appropriate. An
Account shall not be deemed eligible unless such Account is subject to Agent's
first priority perfected security interest and no other Lien (other than
Permitted Encumbrances), and is evidenced by an invoice or other documentary
evidence satisfactory to Agent. In addition, no Account which Factor has not
assumed and retained the Credit Risk shall be an Eligible Account if:
(a) it arises out of a sale made or rendition of service by
Borrower to an Affiliate of Borrower or to a Person controlled by an Affiliate
of Borrower;
(b) it is due or unpaid more than ninety (90) days after the
original invoice date or more than sixty (60) days after the original due
date;
(c) fifty percent (50%) or more of the Accounts from the
Customer are not deemed Eligible Accounts hereunder, provided that such
percentage may, in Agent's sole discretion, be increased or decreased from
time to time;
(d) any covenant, representation or warranty contained in this
Agreement with respect to such Account has been breached;
6
(e) the Customer shall (i) apply for, suffer, or consent to
the appointment of, or the taking of possession by, a receiver, custodian,
trustee or liquidator of itself or of all or a substantial part of its
property or call a meeting of its creditors, (ii) admit in writing its
inability, or be generally unable, to pay its debts as they become due or
cease operations of its present business, (iii) make a general assignment
for the benefit of creditors, (iv) commence a voluntary case under any
state or federal bankruptcy laws (as now or hereafter in effect), (v) be
adjudicated a bankrupt or insolvent, (vi) file a petition seeking to take
advantage of any other law providing for the relief of debtors, (vii)
acquiesce to, or fail to have dismissed, any petition which is filed
against it in any involuntary case under such bankruptcy laws, or (viii)
take any action for the purpose of effecting any of the foregoing;
(f) the sale or rendition of services is to a Customer outside
the continental United States of America, unless the sale is on letter of
credit, guaranty or acceptance terms, in each case acceptable to Agent in
its sole discretion;
(g) the sale to the Customer is on a xxxx-and-hold, guaranteed
sale, sale-and-return, sale on approval, consignment or any other
repurchase or return basis or is evidenced by chattel paper, unless
expressly permitted by Agent;
(h) Agent believes, in its sole judgment, that collection of
such Account is insecure or that such Account may not be paid by reason of
the Customer's financial inability to pay;
(i) the Customer is the United States of America, or any
department, agency or instrumentality of it, unless the applicable
Borrower effectuates an assignment of its right to payment of such Account
to Agent pursuant to the Assignment of Claims Act of 1940, as amended (31
U.S.C. Sub-Section 3727 et seq. and 41 U.S.C. Sub-Section 15 et seq.) or
has otherwise complied with other applicable statutes or ordinances;
(j) the goods giving rise to such Account have not been
shipped and delivered to and accepted by the Customer or the services
giving rise to such Account have not been performed by Borrower and
accepted by the Customer or the Account otherwise does not represent a
final sale or completed rendition of service;
(k) the Accounts of the Customer exceed a credit limit
determined by Agent, in its sole discretion, to the extent such Account
exceeds such limit;
(l) the Account is subject to (but only to the extent of) any
offset, deduction, defense, dispute, or counterclaim, the Customer is also
a creditor or supplier of Borrower (but only to the extent of any
potential offset by such Customer) or the Account is contingent in any
respect or for any reason;
(m) Borrower has made any agreement with a Customer for any
deduction therefrom, but only to the extent of such deduction, and except
for discounts or allowances
7
made in the ordinary course of business for prompt payment, all of which
discounts or allowances are reflected in the calculation of the face value
of each respective invoice related thereto;
(n) shipment of the merchandise or the rendition of services
has not been completed;
(o) any return, rejection or repossession of the merchandise
whose sale gave rise to the Account has occurred;
(p) such Account is not payable to Borrower or assigned to
Factor; or
(q) such Account is not otherwise satisfactory to Agent.
"Eligible Inventory" shall mean and include raw material and
finished goods Inventory of Borrower located in the continental United States,
excluding work in process, valued at the lower of cost or market value,
determined on a first-in-first-out basis, which is not, in Agent's opinion,
obsolete, slow moving or unmerchantable and which Agent, in its judgment
exercised in good faith, shall not deem ineligible Inventory, based on such
considerations as Agent may from time to time deem appropriate including,
without limitation, whether the Inventory is subject to a perfected, first
priority security interest in favor of Agent, for the ratable benefit of
Lenders, and whether the Inventory conforms to all standards imposed by any
governmental agency, division or department thereof which has regulatory
authority over such goods or the use or sale thereof. Notwithstanding anything
to the contrary contained herein, Eligible Inventory shall include Eligible L/C
Inventory and shall not include Inventory located in any public warehouse or
other rented or leased location unless (a) such rented or leased location is
located in the continental United States, and (b) the warehousemen, lessor or
other third party owner of such location has executed a waiver with respect to
such Person's rights to the Inventory located at such premises, in form and
content satisfactory to Agent.
"Eligible L/C Inventory" shall mean all raw material and finished
goods Inventory owned by Borrower and covered by Letters of Credit, and which
raw material and finished goods Inventory are in transit to one of Borrower's
locations in the continental United States, and which raw material and finished
goods Inventory (a) as of the date such Inventory is owned by Borrower (b) is
fully insured, (c) is subject to a first priority security interest in and lien
upon such goods in favor of Agent, for the ratable benefit of Lenders (except
for any possessory lien upon such goods in the possession of a freight carrier
or shipping company securing only the freight charges for the transportation of
such goods to Borrower), (d) all documents, notices, instruments, statements and
bills of lading relating thereto, if any, which Agent may deem necessary or
desirable to evidence ownership by Borrower and/or to give effect to and protect
the liens, security interests and other rights of Agent in connection therewith,
are delivered to Agent; and (e) are and remain acceptable to Agent for lending
purposes in its sole and absolute discretion.
"Environmental Complaint" shall have the meaning set forth in
Section 4.19(d) hereof.
8
"Environmental Laws" shall mean all federal, state and local
environmental, land use, zoning, health, chemical use, safety and sanitation
laws, statutes, ordinances and codes relating to the protection of the
environment and/or governing the use, storage, treatment, generation,
transportation, processing, handling, production or disposal of Hazardous
Substances and the rules, regulations, policies, guidelines, interpretations,
decisions, orders and directives of federal, state and local governmental
agencies and authorities with respect thereto, including, without limitation,
CERCLA and RCRA.
"Equipment" shall mean and include all of Borrower's goods
(excluding Inventory) whether now owned or hereafter acquired and wherever
located including, without limitation, all equipment, machinery, apparatus,
motor vehicles, fittings, furniture, furnishings, fixtures, parts, accessories
and all replacements and substitutions therefor or accessions thereto.
"ERISA Plan" shall mean any employee benefit plan within the meaning
of Section 3(3) of ERISA, maintained for employees of Borrower or any member of
the Controlled Group or any such Plan to which Borrower or any member of the
Controlled Group is required to contribute on behalf of any of its employees.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time and the rules and regulations promulgated
thereunder.
"Event of Default" shall mean the occurrence of any of the events
set forth in Section 10 hereof.
"Existing Agreements" shall mean the Revolving Credit and Security
Agreement dated March 31, 2000 among Borrower, the lenders party thereto and
Agent, as amended, restated, renewed, extended, supplemented, substituted or
otherwise modified, and any and all other agreements, instruments and documents,
including, without limitation, notes, guaranties, pledges, additional security
agreements, powers of attorney, consents, and all other writings executed by
Borrower and/or delivered to Agent or any Lender in respect of the transactions
contemplated thereby.
"Factor" shall mean GMAC Commercial Finance LLC and its successors
and assigns.
"Factoring Agreement" shall mean, collectively, (i) the Amended and
Restated Factoring Agreement (Collection) effective as of May ___, 2006 between
Borrower and Factor and (ii) the Amended and Restated Factoring Agreement
(Maturity) effective as of May ___, 2006 between Borrower and Factor, as each
such agreement exists, has been or may hereafter be amended, restated, renewed,
extended, supplemented, substituted or otherwise modified from time to time.
"Federal Funds Rate" shall mean, for any day, the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or
if such day is not a Business Day, for the next immediately preceding Business
Day) by the Federal Reserve Bank of New York, or if such rate is not so
published for any day which is a Business Day, the average of quotations for
such day on such transactions received by the Bank from three Federal funds
brokers of recognized standing selected by the Bank.
9
"Fixed Charge Coverage Ratio" shall mean, as of the last day of each
fiscal quarter of Borrower, the ratio of (a) EBITDA less unfinanced capital
expenditures for the period of four consecutive fiscal quarters ending on such
date to (b) the sum of all principal, interest and loan fees and charges paid
with respect to any Indebtedness, plus cash taxes and dividends actually paid,
in each case during the period of four consecutive quarters ending on such date.
Notwithstanding anything to the contrary set forth herein, (a) any one-time
charges incurred in connection with Borrower's closing of the contemplated sales
of approximately 60 acres of excess land at Borrower's Xxxxxxx plant and of
Borrower's Cypress and Pamplico plants shall be excluded from the calculation of
the Fixed Charge Coverage Ratio and (b) for purposes of calculating the Fixed
Charge Coverage Ratio, "unfinanced capital expenditures" shall mean capital
expenditures net of the cash proceeds of Borrower's sales of assets during the
period of calculation.
"Formula Amount" shall have the meaning set forth in Section 2.1(a)
hereof.
"Funded Indebtedness" means, with respect to any Person, without
duplication, (a) all Indebtedness of such Person other than Indebtedness of the
types referred to in clause (e), (f), (g), (i), (k), (l) and (m) of the
definition of "Indebtedness" set forth in this Section 1.2, (b) all Indebtedness
of another Person of the type referred to in clause (a) above secured by (or for
which the holder of such Funded Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien on, or payable out of the proceeds of
production from, property owned or acquired by such Person, whether or not the
obligations secured thereby have been assumed, (c) all Guaranty Obligations of
such Person with respect to Indebtedness of the type referred to in clause (a)
above of another Person, (d) Indebtedness of the type referred to in clause (a)
above of any partnership or unincorporated joint venture in which such Person is
legally obligated or has a reasonable expectation of being liable with respect
thereto, and (e) all Indebtedness of such Person of the type referred to in
clause (a) above relating to deferred compensation of employees, officers and
directors of such Person.
"Funding Date" shall mean the date on which on which Borrower shall
purchase Senior Notes in accordance with and pursuant to the terms of the Offer.
"GAAP" shall mean generally accepted accounting principles in the
United States of America in effect from time to time.
"General Intangibles" shall mean and include all of Borrower's
general intangibles, whether now owned or hereafter acquired including, without
limitation, all choses in action, causes of action, corporate or other business
records, patents, patent rights, patent applications, equipment formulations,
manufacturing procedures, quality control procedures, trademarks, service marks,
service xxxx applications, goodwill (including any goodwill associated with any
trademark or the license of any trademark), copyrights, works which are the
subject matter of copyrights, rights in works of authorship, copyright
registrations, inventions, trade secrets, formulae, processes, compounds,
drawings, designs, blueprints, surveys, reports, manuals and operating
standards, design rights, registrations, licenses, franchises, customer lists,
tax refunds, tax refund claims, computer programs, Internet domain names,
Internet domain name registrations, software and contract rights
10
relating to software, all claims under guaranties, security interests or other
security held by or granted to Borrower to secure payment of any of the
Receivables by a Customer, all rights of indemnification and all other
intangible property of every kind and nature (other than Receivables).
"GMAC CF" shall have the meaning set forth in the preamble to this
Agreement and shall include its successors and assigns.
"Governmental Body" shall mean any nation or government, any state
or other political subdivision thereof or any entity exercising the legislative,
judicial, regulatory or administrative functions of or pertaining to a
government.
"Guarantor" shall mean, individually and collectively, Delta Xxxxx
Marketing, Inc., a Delaware corporation, and any other Person that at any time
executes a Guaranty.
"Guaranty" shall mean, individually and collectively, each guaranty
of the obligations of Borrower executed by a Guarantor in favor of Lenders.
"Guaranty Obligations" means, with respect to any Person, without
duplication, any obligations of such Person (other than endorsements in the
ordinary course of business of negotiable instruments for deposit or collection)
guaranteeing or intended to guarantee any Indebtedness of any other Person in
any manner, whether direct or indirect, and including without limitation any
obligation, whether or not contingent, (a) to purchase any such Indebtedness or
any property constituting security therefor, (b) to advance or provide funds or
other support for the payment or purchase of any such Indebtedness or to
maintain working capital, solvency or other balance sheet condition of such
other Person (including without limitation keep well agreements, maintenance
agreements, comfort letters or similar agreements or arrangements) for the
benefit of any holder of Indebtedness of such other Person, (c) to lease or
purchase property, securities or services primarily for the purpose of assuring
the holder of such Indebtedness, or (d) to otherwise assure or hold harmless the
holder of such Indebtedness against loss in respect thereof. The amount of any
Guaranty Obligation hereunder shall (subject to any limitations set forth
therein) be deemed to be an amount equal to the outstanding principal amount (or
maximum principal amount, if larger) of the Indebtedness in respect of which
such Guaranty Obligation is made.
"Hazardous Discharge" shall have the meaning set forth in Section
4.19(d) hereof.
"Hazardous Substance" shall mean, without limitation, any flammable
explosives, radon, radioactive materials, asbestos, urea formaldehyde foam
insulation, polychlorinated biphenyls, petroleum and petroleum products,
methane, hazardous materials, Hazardous Wastes, hazardous or toxic substances or
related materials as defined in CERCLA, the Hazardous Materials Transportation
Act, as amended (49 U.S.C. Sections 1801, et seq.), RCRA, Articles 15 and 27 of
the New York State Environmental Conservation Law or any other applicable
Environmental Law and in the regulations adopted pursuant thereto.
"Hazardous Wastes" shall mean all waste materials subject to
regulation under CERCLA, RCRA or applicable state law, and any other applicable
Federal and state laws now in force or hereafter enacted relating to hazardous
waste disposal.
11
"Hedging Agreements" means any interest rate protection agreement or
foreign currency exchange agreement.
"Indebtedness" of any Person means (a) all obligations of such
Person for borrowed money, (b) all obligations of such Person evidenced by
bonds, debentures, notes or similar instruments, or upon which interest payments
are customarily made, (c) all obligations of such Person under conditional sale
or other title retention agreements relating to property purchased by such
Person (other than customary reservations or retentions of title under
agreements with suppliers entered into in the ordinary course of business), (d)
all obligations of such Person issued or assumed as the deferred purchase price
of property or services purchased by such Person (other than (i) trade debt
incurred in the ordinary course of business and due within six months of the
incurrence thereof and (ii) deferred compensation payable to employees of such
Person on a basis generally consistent with past practices) which would appear
as liabilities on a balance sheet of such Person, (e) all obligations of such
Person under take-or-pay or similar arrangements or commodities agreements not
entered into in the ordinary course of such Person's business, (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on,
or payable out of the proceeds of production from, property owned or acquired by
such Person, whether or not the obligations secured thereby have been assumed,
(g) all Guaranty Obligations of such Person, (h) the principal portion of all
obligations of such Person under Capital Leases (but not under Operating
Leases), (i) all obligations of such Person under Hedging Agreements, (j) the
maximum amount of all standby letters of credit issued or bankers' acceptances
facilities created for the account of such Person and, without duplication, all
drafts drawn thereunder (to the extent unreimbursed), (k) all preferred Capital
Stock issued by such Person and required by the terms thereof to be redeemed, or
for which mandatory sinking fund payments are due, by a fixed date, (l) the
principal portion of all obligations of such Person under synthetic leases and
(m) the Indebtedness of any partnership or unincorporated joint venture in which
such Person is a general partner or a joint venturer.
"Inventory" shall mean all of Borrower's now owned and hereafter
existing or acquired goods, wherever located, which (a) are leased by Borrower
as lessor; (b) are held by Borrower for sale or lease or to be furnished under a
contract of service; (c) are furnished by Borrower under a contract of service;
or (d) consist of raw materials, work in process, finished goods or materials
used or consumed in its business, together with all documents of title or other
documents representing or relating to any of the foregoing.
"Inventory Advance Rate" shall have the meaning set forth in Section
2.1(a)(y)(ii) hereof.
"Inventory Cap" shall mean $15,000,000, it being acknowledged by
Borrower that Agent may, in its sole and absolute discretion, modify from time
to time the limit on the maximum amount of Revolving Advances made in respect of
Eligible Inventory.
"Investment Property Control Agreement" shall mean an agreement in
writing, in form and substance satisfactory to Agent, by and among Agent,
Borrower and any securities intermediary, commodity intermediary or other person
who has custody, control or possession of any
12
investment property of Borrower acknowledging that such securities intermediary,
commodity intermediary or other person has custody, control or possession of
such investment property on behalf of Agent, that it will comply with
entitlement orders originated by Agent with respect to such investment property,
or other instructions of Agent, or (as the case may be) apply any value
distributed on account of any commodity contract as directed by Agent, in each
case, without the further consent of Borrower and including such other terms and
conditions as Agent may require.
"Lender" and "Lenders" shall have the meaning ascribed to such term
in the preamble to this Agreement, including without limitation, GMAC CF in its
capacity as Lender, and shall include each Person which is a transferee,
successor or assign of any Lender.
"Letters of Credit" shall have the meaning set forth in Section 2.9
hereof.
"Letter of Credit Fees" shall have the meaning set forth in Section
3.2 hereof.
"Leverage Ratio" shall mean, as of the last day of each fiscal
quarter of Borrower, the ratio of (a) the average outstanding Funded
Indebtedness on the last day of each month of the four consecutive fiscal
quarters of Borrower's ending on such date to (b) EBITDA for the four
consecutive fiscal quarters of Borrower's ending on such date.
"Lien" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, security interest, lien (whether statutory or
otherwise), claim or encumbrance, or preference, priority or other security
agreement or preferential arrangement held or asserted in respect of any asset
of any kind or nature whatsoever including, without limitation, any conditional
sale or other title retention agreement, any lease having substantially the same
economic effect as any of the foregoing, and the filing of, or agreement to
give, any financing statement under the UCC or comparable law of any
jurisdiction.
"Material Adverse Effect" shall mean a material adverse effect upon
(a) the condition, operations, assets or business of the applicable Person or
Persons, (b) Borrower's ability to pay the Obligations in accordance with the
terms thereof, (c) the value of the Collateral or (d) the practical realization
of the benefits of Lender's rights and remedies under this Agreement and the
material Other Documents.
"Maximum Loan Amount" shall mean $40,000,000.
"Maximum Revolving Advance Amount" shall mean, as at any time, an
amount equal to (a) $40,000,000 minus (b) the sum of (i) the aggregate principal
amount of the Term Loans then outstanding and, (ii) prior to the expiration of
the Term Loan Commitment Period, an amount equal to the Maximum Term Loan Amount
minus the aggregate principal amount of the Term Loans then outstanding.
"Maximum Term Loan Amount" shall mean $9,000,000.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Sections 3(37) and 4001(a)(3) of ERISA.
13
"Net Cash Proceeds" shall mean, in connection with sale or
disposition of any Collateral, the proceeds thereof in the form of cash and Cash
Equivalents of such disposition net of, to the extent applicable, (i) attorneys'
fees, accountants' fees, investment banking fees and all other professionals'
and advisors' fees, (ii) amounts required to be applied (and actually applied)
to the repayment of Indebtedness secured by a Lien expressly permitted hereunder
on any asset that is the subject of such sale or disposition, including, without
limitation, all premiums, penalties, breakage, indemnity, consent fees and
similar amounts in connection therewith, and distributions, (iii) all reserves
reasonably established by Borrower in respect of post-closing adjustments,
payments, indemnities and other contingent liabilities, provided that upon the
date upon which such reserve is no longer required to be maintained, the
remaining amount of such reserve shall then be deemed Net Cash Proceeds, and
(iv) all other customary fees and expenses actually incurred in connection
therewith and net of taxes paid or reasonably estimated to be payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements).
"Net Worth" at a particular date, shall mean all amounts which would
be included under shareholders' equity on a balance sheet of Borrower on a
consolidated basis determined in accordance with GAAP as at such date.
"Note" or "Notes" shall mean, individually or collectively, the
Revolving Credit Note and any Term Loan Notes.
"Obligations" shall mean and include all loans, indebtedness,
liabilities, obligations, covenants and duties of Borrower to Agent and/or
Lenders, of every kind, nature and description, arising under or relating to
this Agreement, the Other Documents, or the transactions hereunder or relating
hereto or under any of the foregoing, including principal, interest, charges,
fees, costs and expenses, however evidenced, whether as principal, surety,
endorser, guarantor or otherwise, whether arising under this Agreement or the
Other Documents, whether now existing or hereafter arising, whether arising
before, during or after the initial Term or any renewal Term of this Agreement
or after the commencement of any case with respect to Borrower under the United
States Bankruptcy Code or any similar statute (including, without limitation,
the payment of interest and other amounts which would accrue and become due but
for the commencement of such case), whether direct or indirect, absolute or
contingent, joint or several, due or not due, primary or secondary, liquidated
or unliquidated, secured or unsecured, original, renewed or extended, and
whether arising directly or acquired from others, and including, without
limitation, Lenders' and Agent's fees, charges, commissions, interest, expenses,
costs and attorneys' fees chargeable to Borrower under this Agreement, the Other
Documents or in connection with any of the foregoing.
"Offer" shall mean the offer by Borrower to purchase Senior Notes
pursuant to that certain Offer to Purchase & Consent Solicitation by Delta
Xxxxx, Inc. of 9-5/8% Senior Notes due 2007, dated April 17, 2006, as amended
from time to time.
"Operating Leases" means, as applied to any Person, any lease
(including, without limitation, leases which may be terminated by the lessee at
any time) of any property (whether real, personal or mixed) which is not a
Capital Lease other than any such lease in which that Person is the lessor.
14
"Original Owner" shall mean Delta Woodside Industries, Inc., and its
permitted successors and assigns.
"Other Documents" shall mean the Notes, the Questionnaire, the
Assignment of Factoring Proceeds and any and all other agreements, instruments
and documents, including, without limitation, notes, guaranties, pledges,
additional security agreements, powers of attorney, consents, and all other
writings heretofore, now or hereafter executed by Borrower and/or delivered to
Agent or any Lender in respect of the transactions contemplated by this
Agreement.
"Overadvance" shall have the meaning set forth in Section 3.1
hereof.
"Overadvance Rate" shall mean a per annum rate equal to one-half of
one percent (1/2%) in excess of the (a) Revolving Interest Rate, (b) the Term
Loan Rate and (c) the Letter of Credit Fees.
"Parent" of any Person shall mean a corporation or other entity
owning, directly or indirectly, at least fifty percent (50%) of the shares of
stock or other ownership interests having ordinary voting power to elect a
majority of the directors of the Person, or other Persons performing similar
functions for any such Person.
"Payment Office" shall mean initially Agent's office at 0000 Xxxxxx
xx xxx Xxxxxxxx, Xxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx; thereafter, such other office
of Agent, if any, which it may designate by notice to Borrower to be the Payment
Office.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Permitted Encumbrances" shall mean (a) Liens in favor of Agent for
itself and the ratable benefit of Lenders; (b) Liens for taxes, assessments or
other governmental charges not delinquent or being contested in good faith and
by appropriate proceedings and with respect to which proper reserves have been
taken by Borrower; provided, that the Lien shall have no effect on the priority
of the Liens in favor of Agent or the value of the assets in which Agent has
such a Lien and a stay of enforcement of any such Lien shall be in effect; (c)
Liens disclosed in the financial statements referred to in Section 5.5, the
existence of which Agent has consented to in writing; (d) deposits or pledges of
cash to secure obligations under worker's compensation, social security or
similar laws, or under unemployment insurance; (e) deposits or pledges of cash
to secure bids, tenders, contracts (other than contracts for the payment of
money), leases, statutory obligations, surety and appeal bonds and other
obligations of like nature arising in the ordinary course of Borrower's
business; (f) judgment Liens that have been stayed or bonded and mechanics',
workers', materialmen's or other like Liens arising in the ordinary course of
Borrower's business with respect to obligations which are not due or which are
being contested in good faith by Borrower; (g) Liens placed upon fixed assets
hereafter acquired to secure a portion of the purchase price thereof; provided
that (x) any such lien shall not encumber any other property of Borrower and (y)
the aggregate amount of Indebtedness secured by such Liens incurred as a result
of such purchases during any fiscal year shall not exceed the amount provided
for in Section 7.6; (h) other Liens incidental to the conduct of Borrower's
business or the ownership of its property and assets which were not incurred in
connection with the borrowing of money or the obtaining of advances or credit,
and which do not in the aggregate
15
materially detract from Lender's rights in and to the Collateral or the value of
Borrower's property or assets or which do not materially impair the use thereof
in the operation of Borrower's business; (i) Liens granted to Factor under the
Factoring Agreement, and (j) Liens disclosed on Schedule 1.2.
"Person" shall mean any individual, sole proprietorship,
partnership, corporation, business trust, joint stock company, trust,
unincorporated organization association, limited liability company, institution,
public benefit corporation, joint venture, entity or government (whether
Federal, state, county, city, municipal or otherwise, including any
instrumentality, division, agency, body or department thereof).
"Plan" shall mean any employee benefit plan within the meaning of
Section 3(3) of ERISA, maintained for employees of Borrower or any member of the
Controlled Group or any such Plan to which Borrower or any member of the
Controlled Group is required to contribute on behalf of any of its employees.
"Prepayment Date" shall have the meaning set forth in Section 13.1
hereof.
"Prime Rate" shall mean the prime commercial lending rate of the
Bank as publicly announced to be in effect from time to time, such rate to be
adjusted automatically, without notice, on the effective date of any change in
such rate. This rate of interest is determined from time to time by the Bank as
a means of pricing some loans to its customers and is neither tied to any
external rate of interest or index nor does it necessarily reflect the lowest
rate of interest actually charged by the Bank to any particular class or
category of customers of the Bank.
"Pro Forma Balance Sheet" shall have the meaning set forth in
Section 5.5(a) hereof.
"Pro Forma Financial Statements" shall have the meaning set forth in
Section 5.5(b) hereof.
"Projections" shall have the meaning set forth in Section 5.5(b)
hereof.
"Purchasing Lender" shall have the meaning set forth in Section
15.3(c) hereof.
"Questionnaire" shall mean the Questionnaire and the responses
thereto provided by Borrower and delivered to Agent.
"RCRA" shall mean the Resource Conservation and Recovery Act, 42
U.S.C. Sections 6901 et seq., as same may be amended from time to time.
"Real Property" shall mean all of Borrower's right, title and
interest in and to its existing and future owned or leased real property.
"Receivables" shall mean all of the following now owned or hereafter
arising or acquired property of Borrower: (a) all Accounts; (b) all amounts at
any time payable to Borrower in respect of the sale or other disposition by
Borrower or any Account or other obligation for the payment of money; (c) all
interest, fees, late charges, penalties, collection fees and other amounts due
16
or to become due or otherwise payable in connection with any Account; (d) all
payment intangibles of Borrower and other contract rights, chattel paper,
instruments, notes, and other forms of obligations owing to Borrower, whether
from the sale and lease of goods or other property, licensing of any property
(including General Intangibles), rendition of services or from loans or advances
by Borrower, or to or for the benefit of any third person (including loans or
advances to any Affiliates or Subsidiaries of Borrower) or otherwise associated
with any Accounts, Inventory or General Intangibles of Borrower (including,
without limitation, choses in action, causes of action, tax refunds, tax refund
claims, any funds which may become payable to Borrower in connection with the
termination of any Plan or other employee benefit plan and any other amounts
payable to Borrower from any Plan or other employee benefit plan, rights and
claims against carriers and shippers, rights to indemnification, business
interruption insurance and proceeds thereof, casualty or any similar types of
insurance and any proceeds thereof and proceeds of insurance covering the lives
of employees on which Borrower is beneficiary).
"Records" shall mean all of Borrower's present and future books of
account of every kind or nature, purchase and sale agreements, invoices, ledger
cards, bills of lading and other shipping evidence, statements, correspondence,
memoranda, credit files and other data relating to the Collateral or any account
debtor, together with the tapes, disks, diskettes and other data and software
storage media and devices, file cabinets or containers in or on which the
foregoing are stored (including any rights of Borrower with respect to the
foregoing maintained with or by any other person).
"Releases" shall have the meaning set forth in Section 5.7(c)(i)
hereof.
"Reportable Event" shall mean a reportable event described in
Section 4043(b) of ERISA or the regulations promulgated thereunder.
"Required Lenders" shall mean Lenders holding at least fifty-one
percent (51%) of the Advances.
"Reserves" shall mean (a) the Term Loan Reserve, and (b) the sum,
from time to time, of all ineligible Receivables, ineligible Inventory,
disputes, deductions, allowances, credits, retention, standby and documentary
Letters of Credit, airway releases, steamship guarantees, and any other offsets
asserted or granted and such additional reserves, including, without limitation,
reserves in respect any existing or future Obligations due or to become due, the
Collateral, results of operations, changes in business plan or performance, as
are deemed appropriate in Agent's sole discretion. The Reserves may be increased
or decreased by Agent at any time and from time to time in the exercise of its
reasonable discretion. Borrower consents to any such increases or decreases and
acknowledges that increasing the Reserves may limit or restrict Advances
requested by Borrower.
"Revolving Advances" shall mean all Advances made other than Term
Loans and Letters of Credit.
"Revolving Credit Notes" shall have the meaning set forth in Section
2.1(a) hereof.
"Revolving Interest Rate" shall mean at any time and from time to
time, an interest
17
rate per annum equal to the sum of the Prime Rate plus two and seventy-five
hundredths percent (2.75%).
"Senior Notes" shall mean, individually and collectively, any one of
the 9 5/8% Notes due 2007 issued by Borrower in favor of the Senior Noteholders
pursuant to the Senior Note Indenture (including, without limitation, the
exchange of Senior B Notes for Senior A Notes thereunder) as such Senior Notes
may be amended, modified, restated or supplemented and in effect from time to
time.
"Senior Note Indenture" shall mean that certain Indenture dated as
of August 25, 1997 by and among Borrower, Delta Xxxxx Marketing, Inc. and The
Bank of New York, in its capacity as trustee for the Senior Noteholders, as the
same may be amended, modified, restated or supplemented and in effect from time
to time.
"Senior Noteholder" shall mean any one of the holders from time to
time of the Senior Notes.
"Settlement Date" shall mean the Closing Date and thereafter
Wednesday of each week unless such day is not a Business Day in which case it
shall be the next succeeding Business Day.
"Subsidiary" shall mean a corporation or other entity of whose
shares of stock or other ownership interests having ordinary voting power (other
than stock or other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the directors of such
corporation, or other Persons performing similar functions for such entity, are
owned, directly or indirectly, by such Person.
"Subsidiary Stock" shall mean all of the capital stock of any now
existing or hereafter organized Subsidiary of Borrower.
"Term" shall mean the Closing Date through May ___, 2009.
"Term Loan Collateral" shall mean all Collateral except for those
items and types that are described in clause (vii) of the definition of
"Permitted Liens" in Section 1.01 of the Senior Note Indenture.
"Term Loan Commitment Period" shall mean the Funding Date through
the earlier of (a) the date on which Borrower has repurchased all of the
outstanding Senior Notes and (b) March 31, 2007.
"Term Loan Note" shall have the meaning set forth in Section 2.4(b).
"Term Loan Rate" shall mean an interest rate per annum equal to the
sum of the Prime Rate plus four percent (4.00%).
"Term Loan Reserve" shall mean:
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(a) in the event that Borrower does not (i) obtain the consents
required to amend the Senior Note Indenture in accordance with Section 6.8
hereof or (ii) consummate the Offer, an amount equal to the aggregate
outstanding principal amount of the Term Loans; and
(b) upon (i) receipt of the consents required to amend the Senior
Note Indenture in accordance with Section 6.8 hereof and (ii) the consummation
of the Offer, an amount equal to (x) the aggregate principal amount of the Term
Loans then outstanding, minus (y) the Value of the Term Loan Collateral, to the
extent that such amount is greater than zero.
"Term Loans" shall have the meaning set forth in Section 2.4(a), and
"Term Loan" means each such Advance.
"Termination Date" shall mean the earlier of (a) the last day of the
Term and (b) the day on which this Agreement is terminated as herein provided.
"Termination Event" shall mean (a) a Reportable Event with respect
to any Plan or Multiemployer Plan; (b) the withdrawal of Borrower or any member
of the Controlled Group from a Plan or Multiemployer Plan during a plan year in
which such entity was a "substantial employer" as defined in Section 4001(a)(2)
of ERISA; (c) the providing of notice of intent to terminate a Plan in a
distress termination described in Section 4041(c) of ERISA; (d) the institution
by the PBGC of proceedings to terminate a Plan or Multiemployer Plan; (e) any
event or condition (i) which might constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Plan or Multiemployer Plan, or (ii) that may result in termination of a
Multiemployer Plan pursuant to Section 4041A of ERISA; or (f) the partial or
complete withdrawal within the meaning of Sections 4203 and 4205 of ERISA, of
Borrower or any member of the Controlled Group from a Multiemployer Plan.
"Toxic Substance" shall mean and include any material present on the
Real Property which has been shown to have significant adverse effect on human
health or which is subject to regulation under the Toxic Substances Control Act
(TSCA), 15 U.S.C. Sections 2601 et seq., applicable state law, or any other
applicable Federal or state laws now in force or hereafter enacted relating to
toxic substances. "Toxic Substance" includes but is not limited to asbestos,
polychlorinated biphenyls (PCBs) and lead-based paints.
"Transactions" shall have the meaning set forth in Section 5.5(a)
hereof.
"Transferee" shall have the meaning set forth in Section 15.3(b)
hereof.
"Value of Term Loan Collateral" shall mean a value for the purposes
of making Advances against the Term Loan Collateral, as determined by Agent in
its sole discretion, based upon advance formulas established by Agent against
the appraised value of the Term Loan Collateral, after taking into consideration
the results of appraisals, environmental reports and other information received
or required by Agent with respect to such Term Loan Collateral. As of the
Funding Date, the Value of Term Loan Collateral established by Agent is
$6,400,000, which Value of Term Loan Collateral may be adjusted by Agent from
time to time, upon notice to Borrower, based upon (i) subsequent sales or other
dispositions of Term Loan Collateral as permitted
19
hereunder; (ii) the receipt by Agent of environmental reports, in form and
content and prepared by an environmental engineer acceptable to Agent, with
respect to Borrower's Real Properties commonly referred to as Delta Plant No. 2
and Delta Plant No. 3, the results of which reports shall be satisfactory to
Agent in all respects, and (iii) such other appraisals, environmental reports or
other information received by Agent affecting the Value of Term Loan Collateral,
as determined by Agent, in its sole discretion.
"Week" shall mean the time period commencing with a Wednesday and
ending on the following Tuesday.
"UCC" shall mean the Uniform Commercial Code as in effect in the
State of New York and any successor statute, as in effect from time to time
(except that terms used herein which are defined in the Uniform Commercial Code
as in effect in the State of New York on the date hereof shall continue to have
the same meaning notwithstanding any replacement or amendment of such statute
except as Agent may otherwise determine).
"Undrawn Availability" shall mean for any given date, the sum of (a)
the lesser of the Maximum Revolving Advance Amount and the Formula Amount minus
(b) the sum of (i) the aggregate outstanding Advances (other than the Term
Loans) on such date plus (ii) the aggregate amount of Borrower's accounts
payable which are thirty (30) days or more past due on such date.
1.3 Uniform Commercial Code Terms. All terms used herein and defined
in the UCC shall have the meaning given therein unless otherwise defined herein.
1.4 Certain Matters of Construction. The terms "herein", "hereof"
and "hereunder" and other words of similar import refer to this Agreement as a
whole and not to any particular section, paragraph or subdivision. Any pronoun
used shall be deemed to cover all genders. Wherever appropriate in the context,
terms used herein in the singular also include the plural and vice versa. All
references to statutes and related regulations shall include any amendments of
same and any successor statutes and regulations. All references to any
instruments or agreements, including, without limitation, references to any of
the Other Documents shall include any and all modifications or amendments
thereto and any and all extensions or renewals thereof. All references to the
term "good faith" used herein when applicable to Agent or any Lender shall mean,
notwithstanding anything to the contrary contained herein or in the UCC, honesty
in fact in the conduct or transaction concerned. Borrower shall have the burden
of proving any lack of good faith on the part of Agent or any Lender alleged by
Borrower at any time.
SECTION 2. ADVANCES, PAYMENTS
2.1 Total Revolving Advances.
(a) Subject to the terms and conditions set forth in this Agreement,
including, without limitation, Sections 2.1(b) and 2.1(c), each Lender,
severally and not jointly, shall make Revolving Advances to Borrower in
aggregate amounts outstanding at any time not greater than such Lender's
Commitment Percentage of the lesser of (x) the Maximum Revolving Advance Amount,
less the aggregate undrawn amount of outstanding Letters of Credit, and (y) an
amount equal to the sum of:
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(i) up to ninety percent (90%), subject to the provisions of
Section 2.1(b) hereof (the "Accounts Advance Rate"), of Eligible Accounts; plus
(ii) the lesser of (A) up to fifty percent (50%), subject to
the provisions of Section 2.1(b) hereof (the "Inventory Advance Rate", and,
together with the Accounts Advance Rate, the "Advance Rates"), of the value of
Eligible Inventory and (B) the Inventory Cap; minus
(iii) the aggregate undrawn amount of outstanding Letters of
Credit; minus
(iv) Reserves, minus
(v) the Availability Block.
The amount derived from the sum of 2.1(a)(y)(i), plus 2.1(a)(y)(ii), minus
2.1(a)(y)(iii), minus 2.1(a)(y)(iv) and minus 2.1(a)(y)(v) at any time and from
time to time shall be referred to herein as the "Formula Amount". The Revolving
Advances made by each Lender shall be evidenced by the secured promissory note
payable to the order of each such Lender substantially in the form attached
hereto as Exhibit 2.1(a) (collectively, "Revolving Credit Notes"), appropriately
completed, in a principal amount equal to the Maximum Revolving Advance Amount
multiplied by such Lender's Commitment Percentage. Borrower may from time to
time borrow, repay and re-borrow under this Section 2.1 without penalty or
premium.
(b) Anything to the contrary in this Section 2.1 notwithstanding,
Agent shall have the right, without declaring an Event of Default, to reduce
Advance Rates or amend or establish Reserves in such amounts, and with respect
to such matters, as Agent in its sole discretion shall deem necessary or
appropriate, including, without limitation, with respect to (i) sums that
Borrower is required to pay (such as taxes, assessments, insurance premiums, or,
in the case of leased assets, rents or other amounts payable under such leases)
and have failed to pay under any Section of this Agreement or any Other
Document, (ii) as determined by Agent in its sole discretion based on
noncompliance with the covenants set forth in Section 6 and Section 7, or (iii)
amounts owing by Borrower to any Person to the extent secured by a Lien on, or
trust over, any of the Collateral (other than any existing Permitted Encumbrance
set forth on Schedule 1.2 which is specifically identified thereon as entitled
to have priority over Agent's Liens), which Lien or trust, in the sole
discretion of Agent likely would have a priority superior to Agent's Liens (such
as Liens or trusts in favor of landlords, warehousemen, carriers, mechanics,
materialmen, laborers, or suppliers, or Liens or trusts for ad valorem, excise,
sales, or other taxes where given priority under applicable law) in and to such
item of the Collateral.
(c) Agent shall have no obligation to make additional Advances
(other than the Term Loans) hereunder to the extent such additional Advances
would be Overadvances or cause the aggregate balance of Revolving Advances plus
the aggregate face amount of Letters of Credit outstanding at any time to exceed
the Maximum Revolving Advance Amount. Notwithstanding anything to the contrary
set forth herein, in no event shall the aggregate outstanding amounts of
Revolving Advances, Letters of Credit and Term Loans exceed the Maximum Loan
Amount.
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2.2 Procedure for Borrowing. Borrower may notify Agent prior to
11:00 a.m. on a Business Day of a Borrower's request to incur, on that day, a
Revolving Advance hereunder. Subject to the satisfaction of the conditions set
forth in Section 8.3, in the event Borrower desires a Term Loan (other than any
initial Term Loan made on the Funding Date) during the Term Loan Commitment
Period, Borrower shall give Agent at least five (5) Business Days prior written
notice. Any such request shall indicate the amount of the requested Advance.
Should any amount required to be paid as interest hereunder, or as fees or other
charges under this Agreement or any other agreement with Agent or any Lender, or
with respect to any other Obligation, become due, same shall be deemed a request
for a Revolving Advance as of the date such payment is due, in the amount
required to pay in full such interest, fee, charge or Obligation under this
Agreement or any other agreement with Agent or any Lender, and such request
shall be irrevocable.
2.3 Disbursement of Advance Proceeds. All Advances shall be
disbursed from whichever office or other place Agent may designate from time to
time and, together with any and all other Obligations of Borrower to Agent or
Lenders, shall be charged to Borrower's account on Agent's books. During the
Term, Borrower may use the Revolving Advances by borrowing, prepaying and
reborrowing, all in accordance with the terms and conditions of this Agreement.
The proceeds of each Revolving Advance requested by Borrower or deemed to have
been requested by Borrower under Section 2.2 hereof shall, with respect to
requested Revolving Advances to the extent Lenders make such Revolving Advances,
be made available to Borrower on the day so requested by way of credit to
Borrower's operating account at Wachovia Bank, account number 2079900431737,
entitled ["Master Account for Delta Xxxxx, Inc."], or such other bank as
Borrower may designate following notification to Agent, in federal funds or
other immediately available funds or, with respect to Revolving Advances deemed
to have been requested by Borrower, be disbursed to Agent to be applied to the
outstanding Obligations giving rise to such deemed request.
2.4 Term Loans.
(a) Subject to the terms and conditions set forth in this Agreement,
including, without limitation, Section 8.3 hereof, each Lender, severally and
not jointly, agrees to make Advances to Borrower from time to time during the
Term Loan Commitment Period, at Borrower's request, to finance Borrower's
purchase of Senior Notes (the "Term Loans"), in the sum equal to such Lender's
Commitment Percentage of an amount not to exceed the net cost of such Senior
Notes purchased by Borrower (which shall be exclusive of fees and expenses
relating to any such purchase); provided, that the total amount of the
outstanding Term Loans shall not exceed the Maximum Term Loan Amount. Once
repaid, a Term Loan may not be reborrowed.
(b) Each Advance constituting a Term Loan shall be repaid in equal
monthly principal installments (together with all accrued but unpaid interest
thereon), commencing on the first Business Day of the calendar month immediately
following the making of such Advance and thereafter on the first Business Day of
each consecutive calendar month, in monthly principal amounts commensurate with
a sixty (60) month amortization schedule; provided, however, that the entire
aggregate outstanding principal balance of all Term Loans, and all accrued but
unpaid interest thereon, shall be due and payable on the Termination Date and
shall be subject to acceleration upon the occurrence and continuation of an
Event of Default under this Agreement in accordance with
22
Section 11.1 or termination of this Agreement pursuant to Section 13.1. Each
Lender's Commitment Percentage of the Term Loans shall be evidenced by, and
shall be subject to, the terms of one or more secured promissory notes, in
substantially the form attached hereto as Exhibit 2.4(b) (each, a "Term Loan
Note"). Borrower shall be entitled to prepay Term Loans in whole or in part, at
any time without premium or penalty (any such prepayment to be accompanied by
all interest accrued but unpaid on the principal amount being prepaid);
provided, that such prepayment would not result in the occurrence of any Default
or Event of Default.
2.5 Maximum Revolving Advances. The aggregate balance of Revolving
Advances plus the aggregate face amount of Letters of Credit outstanding at any
time shall not exceed the lesser of (a) Maximum Revolving Advance Amount and (b)
the Formula Amount.
2.6 Repayment of Revolving Advances.
(a) The Revolving Advances shall be due and payable in full on the
last day of the Term subject to earlier prepayment as herein provided.
(b) Agent agrees to credit Borrower's account as of the Business Day
on which Agent receives the proceeds of Receivables remitted to Agent by Factor
from time to time. With respect to all other items of payment received by Agent,
such items of payment shall be applied by Agent on account of the Obligations
upon confirmation to Agent by the Blocked Account bank or Depository Account
bank, as provided for in Section 4.15(h) hereof, that such items of payment have
been collected in good funds and finally credited to Agent's account. Agent is
not, however, required to credit Borrower's account for the amount of any item
of payment which is unsatisfactory to Agent and Agent may also charge Borrower's
account for the amount of any item of payment which is returned to Agent unpaid.
(c) All payments of principal, interest and other amounts payable
hereunder, or under any of the related agreements shall be made to Agent for
itself and the other Lenders at the Payment Office not later than 1:00 P.M. (New
York Time) on the due date therefor in lawful money of the United States of
America in federal funds or other funds immediately available to Agent. Agent
shall have the right to effectuate payment on any and all Obligations due and
owing hereunder by charging Borrower's account or by making Revolving Advances
as provided in Section 2.2 hereof.
(d) Borrower shall pay principal, interest, and all other amounts
payable hereunder, or under any Other Documents, without any deduction
whatsoever, including, but not limited to, any deduction for any setoff or
counterclaim.
(e) Provided that no Revolving Advances are then outstanding and
provided further that no Event of Default has occurred and is continuing, Agent
shall remit to an operating account of Borrower, as directed by Borrower, all
credit balances of Borrower in good and collected funds.
2.7 Repayment of Excess Advances. The aggregate balance of Advances
(other than Term Loans) outstanding at any time in excess of the lesser of the
Maximum Revolving
23
Advance Amount and the Formula Amount shall be immediately due and payable
without the necessity of any notice demand or other formality, at the Payment
Office, whether or not a Default or Event of Default has occurred.
2.8 Statement of Account. Agent shall maintain, in accordance with
its customary procedures, a loan account in the name of Borrower in which shall
be recorded the date and amount of each Advance made by Lenders and the date and
amount of each payment in respect thereof; provided, however, the failure by
Agent to record the date and amount of any Advance shall not adversely affect
Agent or any Lender. Each month, Agent shall send to Borrower a statement
showing the accounting for the Advances made, payments made or credited in
respect thereof, and other transactions between Lenders and Borrower during such
month. The monthly statements shall be deemed correct and binding upon Borrower
in the absence of manifest error and shall constitute an account stated between
Lenders and Borrower unless Agent receives a written statement of Borrower's
specific exceptions thereto within thirty (30) days after such statement is
received by Borrower. The records of Agent with respect to the loan account
shall be prima facie evidence of the amounts of Advances and other charges
thereto and of payments applicable thereto.
2.9 Letters of Credit. Subject to the terms and conditions hereof,
Agent shall issue or cause the issuance of Letters of Credit ("Letters of
Credit") on behalf of Borrower; provided, however, that Agent will not be
required to issue or cause to be issued any Letters of Credit to the extent that
the face amount of such Letters of Credit would then cause sum of the
outstanding Revolving Advances plus the outstanding Letters of Credit (with the
requested Letter of Credit being deemed to be outstanding for purposes of this
calculation) to exceed the lesser of (x) the Maximum Revolving Advance Amount or
(y) the Formula Amount. Notwithstanding anything to the contrary contained
herein, the maximum amount of outstanding Letters of Credit shall not exceed
$2,000,000 in the aggregate at any time. All disbursements or payments related
to Letters of Credit shall be deemed to be Revolving Advances and shall bear
interest at the Revolving Interest Rate; Letters of Credit that have not been
drawn upon shall not bear interest but shall be subject to payment of the Letter
of Credit Fees.
2.10 Issuance of Letters of Credit.
(a) Borrower may request Agent to issue or cause the issuance of a
Letter of Credit by delivering to Agent at the Payment Office, Bank's standard
form of Letter of Credit Application (the "Letter of Credit Application")
completed to the satisfaction of Agent and Bank; and, such other certificates,
documents and other papers and information as Agent and Bank may reasonably
request. Each Letter of Credit shall be either (x) a standby Letter of Credit
issued to support the obligations (including pension or insurance obligations),
contingent or otherwise, of Borrower or any of its subsidiaries, or (y) a
commercial Letter of Credit in respect of the purchase of goods or services by
Borrower or any of its subsidiaries in the ordinary course of business.
(b) Each Letter of Credit shall, among other things, provide for the
payment of sight drafts when presented for honor thereunder in accordance with
the terms thereof and when accompanied by the documents described therein and
have an expiry date not later than one (1) year after such Letter of Credit's
date of issuance and in no event later than the last day of the Term. Each
24
Letter of Credit Application and each Letter of Credit shall be subject to the
Uniform Customs and Practice for Documentary Credits (1993 Revision),
International Chamber of Commerce Publication No. 500, and any amendments or
revision thereof and, to the extent not inconsistent therewith, the laws of the
State of New York.
2.11 Requirements For Issuance of Letters of Credit.
(a) In connection with the issuance of any Letter of Credit,
Borrower shall indemnify, save and hold Agent and each Lender harmless from any
loss, cost, expense or liability, including, without limitation, payments made
by Agent and any Lender, and expenses and reasonable attorneys' fees incurred by
Agent or any Lender arising out of, or in connection with, any Letter of Credit
to be issued or created for Borrower. Borrower shall be bound by Agent's or any
issuing or accepting bank's regulations and good faith interpretations of any
Letter of Credit issued or created for its account, although this interpretation
may be different from its own; and, neither Agent nor any Lender, the bank which
opened the Letter of Credit, nor any of its correspondents shall be liable for
any error, negligence, or mistakes, whether of omission or commission, in
following Borrower's instructions or those contained in any Letter of Credit or
of any modifications, amendments or supplements thereto or in issuing or paying
any Letter of Credit, except for Agent's or such Lender's or such
correspondents' own willful misconduct.
(b) Borrower shall authorize and direct any bank which issues a
Letter of Credit to name Borrower as the "Account Party" therein and to deliver
to Agent all instruments, documents, and other writings and property received by
the bank pursuant to the Letter of Credit and to accept and rely upon Agent's
instructions and agreements with respect to all matters arising in connection
with the Letter of Credit, the application therefor or any acceptance
thereunder.
(c) In connection with all Letters of Credit issued or caused to be
issued by Agent under this Agreement, Borrower hereby appoints Agent, or its
designee, as its attorney, with full power and authority to sign and/or endorse
Borrower's name upon any warehouse or other receipts, letter of credit
applications and acceptances; to sign Borrower's name on bills of lading; to
clear Inventory through the United States of America Customs Department
("Customs") in the name of Borrower or Agent or Agent's designee, and to sign
and deliver to Customs officials powers of attorney in the name of Borrower for
such purpose; and to complete in Borrower's name or Agent's name, or in the name
of Agent's designee, any order, sale or transaction, obtain the necessary
documents in connection therewith, and collect the proceeds thereof. Neither
Agent nor its attorneys will be liable for any acts or omissions nor for any
error of judgment or mistakes of fact or law, except for Agent's or its
attorney's own willful misconduct. This power, being coupled with an interest,
is irrevocable during the Term and as long thereafter as any Letters of Credit
remain outstanding.
(d) Each Lender shall be deemed to have irrevocably purchased an
undivided participation in Agent's credit support enhancement provided to the
issuing bank of any Letter of Credit and each Revolving Advance made as a
consequence of the issuance of a Letter of Credit and all disbursements
thereunder in an amount equal to such Lender's applicable Commitment Percentage
multiplied by the outstanding amount of the Letters of Credit and disbursements
25
thereunder. In the event that at the time a disbursement under a Letter of
Credit is made the unpaid balance of Revolving Advances exceeds or would exceed,
with the making of such disbursement, the lesser of the Maximum Revolving
Advance Amount or the Formula Amount, and such disbursement is not reimbursed by
Borrower within two (2) Business Days, Agent shall promptly notify each Lender
and upon Agent's demand each Lender shall pay to Agent such Lender's pro rata
share of such unreimbursed disbursement together with such Lender's pro rata
share of Agent's unreimbursed costs and expenses relating to such unreimbursed
disbursement. Upon receipt by Agent of a repayment from Borrower of any amount
disbursed under a Letter Credit by Agent for which Agent had already been
reimbursed by Lenders, Agent shall deliver to each Lender that Lender's pro rata
share of such repayment. Each Lender's participation commitment shall continue
until the last to occur of any of the following events: (A) Agent ceases to be
obligated to issue Letters of Credit hereunder; (B) no Letter of Credit issued
hereunder remains outstanding and uncancelled or (C) all Persons (other than
Borrower) have been fully reimbursed for all payments made under or relating to
Letters of Credit.
2.12 Additional Payments. Any sums expended by Agent or any Lender
due to Borrower's failure to perform or comply with its Obligations under this
Agreement or any of the Other Documents including, without limitation,
Borrower's obligations under Sections 4.2, 4.4, 4.12, 4.13, 4.14 and 6.1 hereof,
may be charged to Borrower's account as a Revolving Advance, shall bear interest
at the Revolving Interest Rate and shall be added to the Obligations.
2.13 Manner of Borrowing and Payment.
(a) Each borrowing of Revolving Advances and each Term Loan shall be
advanced according to the applicable Commitment Percentages of Lenders.
(b) Each payment (including each prepayment and the proceeds of
Receivables remitted to Agent by Factor) by Borrower on account of the principal
of and interest on the Revolving Advances, shall be applied to the Revolving
Advances pro rata according to the applicable Commitment Percentages of Lenders.
Each payment (including each prepayment) by Borrower on account of the principal
of the Term Loans, shall be applied to the Term Loans pro rata according to the
Commitment Percentage of Lenders. Except as expressly provided herein, all
payments (including prepayments and the proceeds of Receivables remitted to
Agent by Factor) to be made by Borrower on account of principal, interest and
fees shall be made without set off or counterclaim and shall be made to Agent on
behalf of the Lenders to the Payment Office, in each case on or prior to 1:00
P.M., New York time, in Dollars and in immediately available funds.
(c) (i) Notwithstanding anything to the contrary contained in
Sections 2.13(a) and (b) hereof, commencing with the first Business Day
following the Closing Date, each borrowing of Revolving Advances shall be
advanced by Agent and each payment by Borrower on account of Revolving Advances
shall be applied first to those Revolving Advances made by Agent. On or before
1:00 P.M., New York time, on each Settlement Date commencing with the first
Settlement Date following the Closing Date, Agent and Lenders shall make certain
payments as follows: (1) if the aggregate amount of new Revolving Advances made
by Agent during the preceding Week (if any) exceeds the aggregate amount of
repayments applied to outstanding Revolving Advances during
26
such preceding Week, then each Lender shall provide Agent with funds in an
amount equal to its applicable Commitment Percentage of the difference between
(x) such Revolving Advances and (y) such repayments and (2) if the aggregate
amount of repayments applied to outstanding Revolving Advances during such Week
exceeds the aggregate amount of new Revolving Advances made during such Week,
then Agent shall provide each Lender with funds in an amount equal to its
applicable Commitment Percentage of the difference between (x) such repayments
and (y) such Revolving Advances.
(ii) Each Lender shall be entitled to earn interest at the
Revolving Interest Rate on outstanding Advances which it has funded.
(iii) Promptly following each Settlement Date, Agent shall
submit to each Lender a certificate with respect to payments received and
Advances made during the Week immediately preceding such Settlement Date. Such
certificate of Agent shall be conclusive in the absence of manifest error.
(d) If any Lender or any Transferee (a "benefited Lender") shall at
any time receive any payment of all or part of its Advances, or interest
thereon, or receive any Collateral in respect thereof (whether voluntarily or
involuntarily or by set-off) in a greater proportion than any such payment to
and Collateral received by any other Lender, if any, in respect of such other
Lender's Advances, or interest thereon, and such greater proportionate payment
or receipt of Collateral is not expressly permitted hereunder, such benefited
Lender shall purchase for cash from the other Lenders such portion of each such
other Lender's Advances, or shall provide such other Lender with the benefits of
any such Collateral, or the proceeds thereof, as shall be necessary to cause
such benefited Lender to share the excess payment or benefits of such Collateral
or proceeds ratably with each of Lenders; provided, however, that if all or any
portion of such excess payment or benefits is thereafter recovered from such
benefited Lender, such purchase shall be rescinded, and the purchase price and
benefits returned in cash, to the extent of such recovery, but without interest.
Each Lender so purchasing a portion of another Lender's Advances may exercise
all rights of payment (including, without limitation, rights of set off) with
respect to such portion as fully as if such Lender were the direct holder of
such portion.
(e) Unless Agent shall have been notified by telephone, confirmed in
writing, by any Lender that such Lender will not make the amount which would
constitute its applicable Commitment Percentage of the Advances available to
Agent, Agent may (but shall not be obligated to) assume that such Lender shall
make such amount available to Agent and, in reliance upon such assumption, make
available to Borrower a corresponding amount. Agent will promptly notify
Borrower of its receipt of any such notice from a Lender. If such amount is made
available to Agent on a date after a Settlement Date, such Lender shall pay to
Agent on demand an amount equal to the product of (i) the daily average Federal
Funds Rate (computed on the basis of a year of 360 days) during such period as
quoted by Agent times (ii) such amount, times (iii) the number of days from and
including such Settlement Date to the date on which such amount becomes
immediately available to Agent. A certificate of Agent submitted to any Lender
with respect to any amounts owing under this paragraph (e) shall be conclusive,
in the absence of manifest error. If such amount is not in fact made available
to Agent by such Lender within three (3) Business Days after such
27
Settlement Date, Agent shall be entitled to recover such an amount, with
interest thereon at the rate per annum then applicable to such Revolving
Advances hereunder, on demand from Borrower; provided, however, that Agent's
right to such recovery shall not prejudice or otherwise adversely affect
Borrower's rights (if any) against such Lender.
2.14 Mandatory Prepayments. In the event that (a) Borrower sells or
otherwise disposes of any Collateral, other than (i) as permitted under Section
4.3 hereof and (ii) sales or dispositions of Collateral that result in less than
$50,000 of aggregate Net Cash Proceeds to Borrower during any fiscal year, (b)
Borrower or any of its Subsidiaries issues any Capital Stock for cash or cash
equivalents or (c) Borrower consummates the contemplated sales of approximately
60 acres of excess land at Borrower's Xxxxxxx plant and of Borrower's Cypress
and Pamplico plants, Borrower shall repay the Advances in an amount equal to the
Net Cash Proceeds of such sale or disposition, such repayments to be made
promptly but in no event more than three (3) Business Days following receipt of
such Net Cash Proceeds, and until the date of payment, such proceeds shall be
held in trust for Agent. The foregoing shall not be deemed to be implied consent
to any such sale otherwise prohibited by the terms and conditions hereof. The
Advance repayments required by the first sentence of this Section 2.14 shall be
applied in the order determined by Agent in its sole discretion.
2.15 Use of Proceeds. Borrower shall apply the proceeds of Revolving
Advances to (a) provide for its ongoing working capital including letters of
credit; (b) pay fees and expenses relating to this transaction; and (c) provide
for its general corporate purposes. Borrower shall apply the proceeds of Term
Loans to provide funds for the purchase of Senior Notes as permitted under
Section 2.4 hereof.
2.16 Defaulting Lender.
(a) Notwithstanding anything to the contrary contained herein, in
the event any Lender (x) has refused (which refusal constitutes a breach by such
Lender of its obligations under this Agreement) to make available its portion of
any Advance or (y) notifies either Agent or Borrower that it does not intend to
make available its portion of any Advance (if the actual refusal would
constitute a breach by such Lender of its obligations under this Agreement)
(each, a "Lender Default"), all rights and obligations hereunder of such Lender
(a "Defaulting Lender") as to which a Lender Default is in effect and of the
other parties hereto shall be modified to the extent of the express provisions
of this Section 2.16 while such Lender Default remains in effect.
(b) Advances shall be incurred pro rata from Lenders (the
"Non-Defaulting Lenders") which are not Defaulting Lenders based on their
respective Commitment Percentages, and no Commitment Percentage of any Lender or
any pro rata share of any Advances required to be advanced by any Lender shall
be increased as a result of such Lender Default. Amounts received in respect of
principal of any type of Advances shall be applied to reduce the applicable
Advances of each Lender pro rata based on the aggregate of the outstanding
Advances of that type of all Lenders at the time of such application; provided,
that such amount shall not be applied to any Advances of a Defaulting Lender at
any time when, and to the extent that, the aggregate amount of Advances of any
Non-Defaulting Lender exceeds such Non-Defaulting Lender's Commitment Percentage
of all Advances then outstanding.
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(c) A Defaulting Lender shall not be entitled to give instructions
to Agent or to approve, disapprove, consent to or vote on any matters relating
to this Agreement and the Other Documents. All amendments, waivers and other
modifications of this Agreement and the Other Documents may be made without
regard to a Defaulting Lender and, for purposes of the definition of "Required
Lenders", a Defaulting Lender shall be deemed not to be a Lender and not to have
Advances outstanding.
(d) Other than as expressly set forth in this Section 2.16, the
rights and obligations of a Defaulting Lender (including the obligation to
indemnify Agent) and the other parties hereto shall remain unchanged. Nothing in
this Section 2.16 shall be deemed to release any Defaulting Lender from its
obligations under this Agreement and the Other Documents, shall alter such
obligations, shall operate as a waiver of any default by such Defaulting Lender
hereunder, or shall prejudice any rights which Borrower, Agent or any Lender may
have against any Defaulting Lender as a result of any default by such Defaulting
Lender hereunder.
(e) In the event a Defaulting Lender retroactively cures to the
satisfaction of Agent the breach which caused a Lender to become a Defaulting
Lender, such Defaulting Lender shall no longer be a Defaulting Lender and shall
be treated as a Lender under this Agreement.
SECTION 3. INTEREST AND FEES
3.1 Interest. Interest on Advances shall be payable in arrears on
the last day of each month. Interest charges shall be computed on the actual
principal of Advances outstanding during the month at a rate per annum equal to
(i) with respect to Revolving Advances, the Revolving Interest Rate and (ii)
with respect to Term Loans, the Term Loan Rate. Whenever, subsequent to the date
of this Agreement, the Prime Rate is increased or decreased, the Revolving
Interest Rate and the Term Loan Rate shall be similarly changed without notice
or demand of any kind by an amount equal to the amount of such change in the
Prime Rate during the time such change or changes remain in effect. In the event
that the aggregate outstanding amount of all Revolving Advances exceeds the
lesser of the Maximum Revolving Advance Amount and the Formula Amount for five
(5) or more days in any month during the Term (such excess, an "Overadvance"),
the average daily balance of all Advances and other amounts charged or
chargeable to Borrower's account for such month shall bear interest at the
Overadvance Rate. Upon and after the occurrence of an Event of Default, and
during the continuation thereof, the Obligations shall bear interest at the
Default Rate.
3.2 Letter of Credit Fees.
(a) Borrower shall pay to (i) Agent for the ratable benefit of
Lenders a fee computed at a rate of one-eighth of one percent (1/8%) per month
on the outstanding face amount of Letters of Credit during such month and (ii)
Agent, fees and charges customarily charged by Agent for bank fees and charges
payable in connection with Letters of Credit as in effect from time to time (the
"Letter of Credit Fees"). Such fees and charges shall be payable (x) in the case
of any Letter of Credit (which is not a standby Letter of Credit), on its
opening, (y) in the case of a standby Letter of Credit, (1) monthly thereafter
in advance and (2) upon each increase in the outstanding amount
29
thereof, and (z) in the case of any Letter of Credit that is not a standby
Letter of Credit, at the time of each increase in face amount thereof. Any such
charge in effect at the time of a particular transaction shall be the charge for
that transaction, notwithstanding any subsequent change in Bank's prevailing
charges for that type of transaction. All Letter of Credit Fees payable
hereunder shall be deemed earned in full on the date when the same are due and
payable hereunder and shall not be subject to rebate or proration upon the
termination of this Agreement for any reason.
(b) Upon termination of this Agreement or upon the occurrence and
continuance of an Event of Default, Borrower will cause cash to be deposited and
maintained in an account with Agent, as cash collateral for the ratable benefit
of Lenders, in an amount equal to outstanding Letters of Credit, and Borrower
hereby irrevocably authorizes Agent, in its discretion, on Borrower's behalf and
in Borrower's name, to open such an account and to make and maintain deposits
therein, or in an account opened by Borrower, in the amounts required to be made
by Borrower, out of the proceeds of Receivables or other Collateral or out of
any other funds of Borrower coming into Agent's possession at any time. Agent
will invest such cash collateral (less applicable reserves) in such short-term
money-market items as to which Agent and Borrower mutually agree and the net
return on such investments shall be credited to such account and constitute
additional cash collateral. Borrower may not withdraw amounts credited to any
such account except upon payment and performance in full of all Obligations and
termination of this Agreement.
3.3 Commitment Fee. If, for any month during the Term, the average
daily outstanding balance of the Revolving Advances for each day of such month
is less than the Maximum Revolving Advance Amount, then Borrower shall pay to
Agent, for the ratable benefit of Lenders, a fee equal to the product of (a) the
amount by which the Maximum Revolving Advance Amount in effect at such time
exceeds such average daily outstanding balance of the Advances multiplied by (b)
a rate equal to 0.30% per annum. The commitment fee shall be payable to Agent,
for the ratable benefit of Lenders, in arrears on the last day of each month,
shall be fully earned as of the last day of the applicable month in which such
fee becomes due and shall not be subject to refund, rebate or proration for any
reason whatsoever.
3.4 Computation of Interest and Fees. Interest and fees hereunder
shall be computed on the basis of a year of 360 days and for the actual number
of days elapsed. If any payment to be made hereunder becomes due and payable on
a day other than a Business Day, the due date thereof shall be extended to the
next succeeding Business Day and interest thereon shall be payable at the
Revolving Interest Rate during such extension.
3.5 Collateral Monitoring Fee. Borrower shall pay to Agent, for
Agent's own account, on the first day of each month following any month in which
Agent performs any collateral monitoring - namely any audit, field examination,
collateral analysis or other business analysis, the need for which is to be
reasonably determined by Agent and which monitoring is undertaken by Agent or
for Agent's benefit - a collateral monitoring fee in an amount equal to Agent's
per diem rate then in effect for each person employed to perform such
monitoring, plus all reasonable costs and disbursements incurred by Agent in the
performance of such examination or analysis (including, without limitation,
charges for fees and expenses of outside auditors used by Agent).
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3.6 Facility Fee. On each date that the Lenders make a Term Loan,
Borrower shall pay to Agent, for the ratable benefit of the Lenders, a fee in an
amount equal to 1% of the principal amount of such Term Loan, which fee shall be
fully earned as of such date and shall not be subject to refund, rebate or
proration for any reason whatsoever.
3.7 Administration Fee. Borrower shall pay to Agent, for Agent's own
account, on the Closing Date and on the first and second anniversaries of the
Closing Date, an administration fee in the amount of $10,000 per year, payable
in advance, which fee shall be fully earned as of the date when due and shall
not be subject to refund, rebate or proration for any reason whatsoever.
3.8 Maximum Charges. In no event whatsoever shall interest and other
charges charged hereunder exceed the highest rate permissible under law which a
court of competent jurisdiction shall, in a final determination, deem applicable
hereto. In the event that a court determines that Agent or any Lender has
received interest and other charges hereunder in excess of the highest rate
permissible hereto, such excess amount shall be first applied to any unpaid
principal balance owed by Borrower, and if the then remaining excess amount is
greater than the previously unpaid principal balance, Lenders shall promptly
refund such excess amount to Borrower and the provisions hereof shall be deemed
amended to provide for such permissible rate.
SECTION 4. COLLATERAL: GENERAL TERMS
4.1 Security Interest in the Collateral. To secure the prompt
payment and performance to Agent and each Lender of the Obligations, Borrower
hereby assigns, pledges and grants to Agent, for itself and the ratable benefit
of each Lender, a continuing, exclusive (except for Receivables factored and
assigned to Factor) first priority security interest in and to all of its
Collateral, whether now owned or existing or hereafter acquired or arising and
wheresoever located, except that, (a) the security interest in and to the
Receivables granted by Borrower to Factor shall be senior to the security
interests of Agent in and to such Receivables and (b) the security interest in
and to the Term Loan Collateral shall be effective only upon the assignment and
pledge thereof and grant of a security interest therein by Borrower in
accordance with Section 6.8 hereof. Borrower shall xxxx its books and records as
may be necessary or appropriate to evidence, protect and perfect Agent's
security interest ("Agent's security interest") and shall cause its financial
statements to reflect such security interest.
4.2 Perfection of Security Interest.
(a) Borrower irrevocably and unconditionally authorizes Agent (or
its agent) to file at any time and from time to time such financing statements
with respect to the Collateral naming Agent or its designee as the secured party
and Borrower as debtor, as Agent may require, and including any other
information with respect to Borrower or otherwise required by Article 9 of the
UCC of such jurisdiction as Agent may determine, together with any amendment and
continuations with respect thereto, which authorization shall apply to all
financing statements filed on, prior to or after the date hereof. Borrower
hereby ratifies and approves all financing statements naming Agent or its
designee as secured party and Borrower as debtor with respect to the Collateral
(and any amendments with respect to such financing statements) filed by or on
behalf of Agent prior to the date hereof and ratifies and confirms the
authorization of Agent to file such financing statements
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(and amendments, if any). Borrower hereby authorizes Agent to adopt on behalf of
Borrower any symbol required for authenticating any electronic filing. In no
event shall Borrower at any time file, or permit or cause to be filed, any
correction statement or termination statement with respect to any financing
statement (or amendment or continuation with respect thereto) naming Agent or
its designee as secured party and Borrower as debtor. In the event that the
description of the collateral in any financing statement naming Agent or its
designee as the secured party and Borrower as debtor includes assets and
properties of Borrower that do not any time constitute Collateral, whether
hereunder, under any of the Other Documents or otherwise, the filing of such
financing statement shall nonetheless be deemed authorized by Borrower to the
extent of the Collateral included in such description and it shall not render
the financing statement ineffective as to any of the Collateral or otherwise
affect the financing statement as it applies to any of the Collateral.
(b) Borrower does not have any chattel paper (whether tangible or
electronic) or instruments as of the date hereof, except as set forth on
Schedule 4.2(b). In the event that Borrower shall be entitled to or shall
receive any chattel paper or instrument after the date hereof, Borrower shall
promptly notify Agent thereof in writing. Promptly upon the receipt thereof by
or on behalf of Borrower (including by any agent or representative), Borrower
shall deliver, or cause to be delivered to Agent, all tangible chattel paper and
instruments that Borrower may at any time acquire, accompanied by such
instruments of transfer or assignment duly executed in blank as Agent may from
time to time specify, in each case except as Agent may otherwise agree. At
Agent's option, Borrower shall, or Agent may at any time on behalf of Borrower,
cause the original of any such instrument or chattel paper to be conspicuously
marked in a form and manner acceptable to Agent with a legend, to be approved by
Agent, indicating that the chattel paper or instrument, as applicable, is
subject to the security interest of and rights of Agent.
(c) In the event that Borrower shall at any time hold or acquire an
interest in any electronic chattel paper or any "transferable record" (as such
term is defined in Section 201 of the Federal Electronic Signatures in Global
and National Commerce Act or in Section 16 of the Uniform Electronic
Transactions Act as in effect in any relevant jurisdiction), Borrower shall
promptly notify Agent thereof in writing. Promptly upon Agent's request,
Borrower shall take, or cause to be taken, such actions as Agent may reasonably
request to give Agent control of such electronic chattel paper under Section
9-105 of the UCC and control of such transferable record under Section 201 of
the Federal Electronic Signatures in Global and National Commerce Act or, as the
case may be, Section 16 of the Uniform Electronic Transactions Act, as in effect
in such jurisdiction.
(d) Borrower does not have any deposit accounts as of the date
hereof, except as set forth on Schedule 4.2(d). Borrower shall not, directly or
indirectly, after the date hereof open, establish or maintain any deposit
account unless each of the following conditions is satisfied: (i) Agent shall
have received not less than five (5) Business Days prior written notice of the
intention of Borrower to open or establish such account which notice shall
specify in reasonable detail and specificity acceptable to Agent the name of the
account, the owner of the account, the name and address of the bank at which
such account is to be opened or established, the individual at such bank with
whom Borrower is dealing and the purpose of the account, (ii) the bank where
such account is opened or maintained shall be acceptable to Agent, and (iii) on
or before the opening of such deposit account, Borrower shall as Agent may
specify either (A) deliver to Agent a Deposit Account Control
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Agreement with respect to such deposit account duly authorized, executed and
delivered by Borrower and the bank at which such deposit account is opened and
maintained or (B) arrange for Agent to become the customer of the bank with
respect to the deposit account on terms and conditions acceptable to Agent. The
terms of this subsection (d) shall not apply to deposit accounts specifically
and exclusively used for payroll, payroll taxes and other employee wage and
benefit payments to or for the benefit of Borrower's salaried employees.
(e) Borrower does not own or hold, directly or indirectly,
beneficially or as record owner or both, any investment property, as of the date
hereof, or have any investment account, securities account, commodity account or
other similar account with any bank or other financial institution or other
securities intermediary or commodity intermediary as of the date hereof, in each
case except as set forth on Schedule 4.2(e).
(i) In the event that Borrower shall be entitled to or shall
at any time after the date hereof hold or acquire any certificated securities,
Borrower shall promptly endorse, assign and deliver the same to Agent,
accompanied by such instruments of transfer or assignment duly executed in blank
as Agent may from time to time specify. If any securities now or hereafter
acquired by Borrower are uncertificated and are issued to Borrower or its
nominee directly by the issuer thereof, Borrower shall immediately notify Agent
thereof and shall as Agent may specify, either (A) cause the issuer to agree to
comply with instructions from Agent as to such securities, without further
consent of Borrower or such nominee, or (B) arrange for Agent to become the
registered owner of the securities.
(ii) Borrower shall not, directly or indirectly, after the
date hereof open, establish or maintain any investment account, securities
account, commodity account or any other similar account (other than a deposit
account) with any securities intermediary or commodity intermediary unless each
of the following conditions is satisfied: (A) Agent shall have received not less
than five (5) Business Days prior written notice of the intention of Borrower to
open or establish such account which notice shall specify in reasonable detail
and specificity acceptable to Agent the name of the account, the owner of the
account, the name and address of the securities intermediary or commodity
intermediary at which such account is to be opened or established, the
individual at such intermediary with whom Borrower is dealing and the purpose of
the account, (B) the securities intermediary or commodity intermediary (as the
case may be) where such account is opened or maintained shall be acceptable to
Agent, and (C) on or before the opening of such investment account, securities
account or other similar account with a securities intermediary or commodity
intermediary, Borrower shall as Agent may specify either (1) execute and
deliver, and cause to be executed and delivered to Agent, an Investment Property
Control Agreement with respect thereto duly authorized, executed and delivered
by Borrower and such securities intermediary or commodity intermediary or (2)
arrange for Agent to become the entitlement holder with respect to such
investment property on terms and conditions acceptable to Agent.
(f) Borrower is not the beneficiary or otherwise entitled to any
right to payment under any letter of credit, banker's acceptance or similar
instrument as of the date hereof, except as set forth on Schedule 4.2(f). In the
event that Borrower shall be entitled to or shall receive any right to payment
under any letter of credit, banker's acceptance or any similar instrument,
whether as
33
beneficiary thereof or otherwise after the date hereof, Borrower shall promptly
notify Agent thereof in writing. Borrower shall immediately, as Agent may
specify, either (i) deliver, or cause to be delivered to Agent, with respect to
any such letter of credit, banker's acceptance or similar instrument, the
written agreement of the issuer and any other nominated person obligated to make
any payment in respect thereof (including any confirming or negotiating bank),
in form and substance satisfactory to Agent, consenting to the assignment of the
proceeds of the letter of credit to Agent by Borrower and agreeing to make all
payments thereon directly to Agent or as Agent may otherwise direct or (ii)
cause Agent to become, at Borrower's expense, the transferee beneficiary of the
letter of credit, banker's acceptance or similar instrument (as the case may
be).
(g) Borrower does not have any commercial tort claims as of the date
hereof, except as set forth on Schedule 4.2(g). In the event that Borrower shall
at any time after the date hereof have any commercial tort claims, Borrower
shall promptly notify Agent thereof in writing, which notice shall (i) set forth
in reasonable detail the basis for and nature of such commercial tort claim and
(ii) include the express grant by Borrower to Agent of a security interest in
such commercial tort claim (and the proceeds thereof). In the event that such
notice does not include such grant of a security interest, the sending thereof
by Borrower to Agent shall be deemed to constitute such grant to Agent. Upon the
sending of such notice, any commercial tort claim described therein shall
constitute part of the Collateral and shall be deemed included therein. Without
limiting the authorization of Agent provided in Section 4.2(a) hereof or
otherwise arising by the execution by Borrower of this Agreement or any of the
Other Documents, Agent is hereby irrevocably authorized from time to time and at
any time to file such financing statements naming Agent or its designee as
secured party and Borrower as debtor, or any amendments to any financing
statements, covering any such commercial tort claim as Collateral. In addition,
Borrower shall promptly upon Agent's request, execute and deliver, or cause to
be executed and delivered, to Agent such other agreements, documents and
instruments as Agent may require in connection with such commercial tort claim.
(h) Borrower does not have any goods, documents of title or other
Collateral in the custody, control or possession of a third party as of the date
hereof, except as set forth on Schedule 4.2(h) and except for goods located in
the United States in transit to a location of a Borrower permitted herein in the
ordinary course of business of Borrower in the possession of the carrier
transporting such goods.
(i) Borrower shall take any other actions reasonably requested by
Agent from time to time to cause the attachment, perfection and first priority
of, and the ability of Agent to enforce, the security interest of Agent in any
and all of the Collateral, including, without limitation, (i) executing,
delivering and, where appropriate, filing financing statements and amendments
relating thereto under the UCC or other applicable law, to the extent, if any,
that Borrower's signature thereon is required therefor, (ii) causing Agent's
name to be noted as secured party on any certificate of title for a titled good
if such notation is a condition to attachment, perfection or priority of, or
ability of Agent to enforce, the security interest of Agent in such Collateral,
(iii) complying with any provision of any statute, regulation or treaty of the
United States as to any Collateral if compliance with such provision is a
condition to attachment, perfection or priority of, or ability of Agent to
enforce, the security interest of Agent in such Collateral, (iv) obtaining the
consents and approvals of any Governmental Body or third party, including,
without limitation, any consent of any licensor,
34
lessor or other person obligated on Collateral, and taking all actions required
by any earlier versions of the UCC or by other law, as applicable in any
relevant jurisdiction.
4.3 Disposition of Collateral. Borrower will safeguard and protect
all Collateral for Agent's general account and make no disposition thereof
whether by sale, lease or otherwise except (a) the sale of Inventory in the
ordinary course of business, (b) the transfer and/or sale of Receivables to
Factor, and (c) dispositions permitted under this Agreement.
4.4 Preservation of Collateral. In addition to the rights and
remedies set forth in Section 11.1 hereof, Agent: (a) may at any time take such
steps as Agent deems necessary to protect Agent's security interest in and to
preserve the Collateral, including the hiring of such security guards or the
placing of other security protection measures as Agent may deem appropriate; (b)
may employ and maintain at Borrower's premises a custodian who shall have full
authority to do all acts necessary to protect Agent's security interests in the
Collateral; (c) may lease warehouse facilities to which Agent may move all or
part of the Collateral; (d) may use Borrower's owned or leased lifts, hoists,
trucks and other facilities or equipment for handling or removing the
Collateral; and (e) shall have, and is hereby granted, a right of ingress and
egress to the places where the Collateral is located, and may proceed over and
through Borrower's owned or leased property. Borrower shall cooperate fully with
all of Agent's efforts to preserve the Collateral and will take such actions to
preserve the Collateral as Agent may direct. All of Agent's expenses of
preserving the Collateral, including any costs, fees and expenses relating to
the bonding of a custodian, shall be charged to Borrower's account as a
Revolving Advance, shall bear interest at the Revolving Interest Rate and shall
be added to the Obligations. Agent shall, at Borrower's request from time to
time, provide to Borrower documentation substantiating any costs, fees and
expenses charged to Borrower's account under this Section 4.4.
4.5 Ownership of Collateral. With respect to the Collateral, at the
time the Collateral becomes subject to Agent's security interest: (a) Borrower
shall be the sole owner of and fully authorized and able to sell, transfer,
pledge and/or grant a first priority security interest in each and every item of
its respective Collateral to Agent; and, except for Permitted Encumbrances the
Collateral shall be free and clear of all Liens and encumbrances whatsoever; (b)
each document and agreement executed by Borrower or delivered to Agent or any
Lender in connection with this Agreement shall be true and correct in all
material respects; (c) all signatures and endorsements of Borrower that appear
on such documents and agreements shall be genuine and Borrower shall have full
capacity to execute same; and (d) Borrower's Inventory shall be located as set
forth on Schedule 4.5 and shall not be removed from such location(s) without the
prior written consent of Agent except with respect to the sale of Inventory in
the ordinary course of business.
4.6 Defense of Agent's and Lender's Interests. Until (a) payment and
performance in full of all of the Obligations and (b) termination of this
Agreement, Agent's security interests in the Collateral shall continue in full
force and effect. During such period Borrower shall not, without Agent's prior
written consent, pledge, sell (except Inventory in the ordinary course of
business and Receivables to Factor), assign, transfer, create or suffer to exist
a Lien upon or encumber or allow or suffer to be encumbered in any way except
for Permitted Encumbrances, any part of the Collateral. Borrower shall defend
Agent's security interests in the Collateral against any
35
and all Persons whatsoever. At any time following demand by Agent for payment of
all Obligations, Agent shall have the right to take possession of the indicia of
the Collateral and the Collateral in whatever physical form contained, including
without limitation: labels, stationery, documents, instruments and advertising
materials. If Agent exercises this right to take possession of the Collateral,
Borrower shall, upon demand, assemble it in the best manner possible and make it
available to Agent at a place reasonably convenient to Agent. In addition, with
respect to all Collateral, Agent and Lenders shall be entitled to all of the
rights and remedies set forth herein and further provided by the UCC or other
applicable law. Borrower shall, and Agent may, at its option, instruct all
suppliers, carriers, forwarders, warehouses or others receiving or holding cash,
checks, Inventory, documents or instruments in which Agent holds a security
interest to deliver same to Agent and/or subject to Agent's order and if they
shall come into Borrower's possession, they, and each of them, shall be held by
Borrower in trust as Agent's trustee, and Borrower will immediately deliver them
to Agent in their original form together with any necessary endorsement.
4.7 Books and Records. Borrower shall (a) keep proper books of
record and account in which full, true and correct entries will be made of all
dealings or transactions of or in relation to its business and affairs; (b) set
up on its books accruals with respect to all taxes, assessments, charges, levies
and claims; and (c) on a reasonably current basis set up on its books, from its
earnings, allowances against doubtful Receivables, advances and investments and
all other proper accruals (including without limitation by reason of
enumeration, accruals for premiums, if any, due on required payments and
accruals for depreciation, obsolescence, or amortization of properties), which
should be set aside from such earnings in connection with its business. All
determinations pursuant to this subsection shall be made in accordance with, or
as required by, GAAP consistently applied in the opinion of the Accountants, as
shall then be regularly engaged by Borrower.
4.8 Financial Disclosure. Borrower hereby irrevocably authorizes and
directs all accountants and auditors employed by Borrower at any time during the
Term to exhibit and deliver to Agent and each Lender copies of any of Borrower's
financial statements, trial balances or other accounting records of any sort in
the accountant's or auditor's possession, and to disclose to Agent and each
Lender any information such accountants may have concerning Borrower's financial
status and business operations.
4.9 Compliance with Laws. Borrower shall comply with all acts,
rules, regulations and orders of any legislative, administrative or judicial
body or official applicable to its respective Collateral or any part thereof or
to the operation of Borrower's business the non-compliance with which could have
a Material Adverse Effect on Borrower.
4.10 Inspection of Premises and Inventory Appraisals.
(a) At all reasonable times, Agent and each Lender shall have full
access to and the right to audit, check, inspect and make abstracts and copies
from Borrower's books, records, audits, correspondence and all other papers
relating to the Collateral and the operation of Borrower's business. Agent, any
Lender and their agents may enter upon Borrower's premises at any time during
business hours and at any other reasonable time, and from time to time, for the
purpose of
36
inspecting the Collateral and any and all records pertaining thereto and the
operation of Borrower's business.
(b) At any time that the amount equal to (i) the lesser of the
Maximum Revolving Advance Amount and the Formula Amount minus (ii) the average
daily outstanding balance of Advances (other than Term Loans) is less than Five
Million Dollars ($5,000,000) for a period of thirty consecutive Business Days,
Agent may, at its option, conduct, and Borrower hereby consents to and shall
cooperate with an appraisal of Borrower's Inventory by an appraiser acceptable
to Agent in its sole and absolute discretion. The cost of such appraisal,
including reasonable fees and disbursements of such appraiser, shall be for the
account of Borrower and Borrower shall pay any invoice directly delivered to it
by such appraiser. To the extent Borrower fails to make any such payment, the
amount due to the appraiser shall be an expense payable by Borrower under
Section 15.9 hereof.
4.11 Insurance. Borrower shall bear the full risk of any loss of any
nature whatsoever with respect to the Collateral except to the extent that
Factor has assumed and retained the Credit Risk on any Receivable pursuant to
the Factoring Agreement. At Borrower's own cost and expense in amounts and with
carriers acceptable to Agent, Borrower shall keep all its insurable properties
and properties in which Borrower has an interest insured against the hazards of
fire, flood, sprinkler leakage, those hazards covered by extended coverage
insurance and such other hazards, and for such amounts, as is customary in the
case of companies engaged in businesses similar to Borrower's including, without
limitation, business interruption insurance; maintain public and product
liability insurance against claims for personal injury, death or property damage
suffered by others; maintain all such worker's compensation or similar insurance
as may be required under the laws of any state or jurisdiction in which Borrower
is engaged in business; furnish Agent with copies of all policies and evidence
of the maintenance of such policies by the renewal thereof at least thirty (30)
days before any expiration date, and appropriate loss payable endorsements in
form and substance satisfactory to Agent, naming Agent as a co-insured and loss
payee as its interests may appear with respect to all insurance coverage
referred to above with respect to property in which Agent has an interest and
providing (A) that all proceeds thereunder shall be payable to Agent, (B) no
such insurance shall be affected by any act or neglect of the insured or owner
of the property described in such policy, and (C) that such policy and loss
payable clauses may not be canceled, amended or terminated unless at least
thirty (30) days' prior written notice is given to Agent. In the event of any
loss thereunder, the carriers named therein hereby are directed by Agent and
Borrower to make payment for such loss to Agent and not to Borrower and Agent
jointly. If any insurance losses are paid by check, draft or other instrument
payable to Borrower and Agent jointly, Agent may endorse Borrower's name thereon
and do such other things as Agent may deem advisable to reduce the same to cash.
Agent is hereby authorized to adjust and compromise claims under insurance
coverage referred to in clauses (a) and (b) above. All loss recoveries received
by Agent upon any such insurance may be applied to the Obligations, in such
order as Agent in its sole discretion shall determine. Any surplus shall be paid
by Agent to Borrower or applied as may be otherwise required by law. Any
deficiency thereon shall be paid by Borrower to Agent, on demand.
4.12 Failure to Pay Insurance. If Borrower fails to obtain insurance
as hereinabove provided, or to keep the same in force, Agent, if Agent so
elects, may obtain such insurance and pay
37
the premium therefor for Borrower's account, and charge Borrower's account
therefor and such expenses so paid shall be part of the Obligations.
4.13 Payment of Taxes. Borrower will pay, when due, all taxes,
assessments and other Charges lawfully levied or assessed upon Borrower or any
of the Collateral including, without limitation, real and personal property
taxes, assessments and charges and all franchise, income, employment, social
security benefits, withholding, and sales taxes except that Borrower may contest
such taxes, assessments and charges in good faith; provided that Borrower has
taken adequate reserves on its books and records for such taxes and has
prosecuted such contests in accordance with all applicable tax regulations for
appeal. If any Charge by any governmental authority is or may be imposed on or
as a result of any transaction between Borrower, Agent and Lenders which Agent
or any Lender may be required to withhold or pay or if any Charges remain unpaid
after the date fixed for their payment, or if any claim shall be made which, in
Agent's or Lenders' judgment may possibly create a valid Lien on the Collateral,
Agent may without notice to Borrower pay the Charges and Borrower hereby
indemnifies and holds Agent and each Lender harmless in respect thereof. The
amount of any payment by Agent under this Section 4.13 shall be charged to
Borrower's account as a Revolving Advance and added to the Obligations and,
until Borrower shall furnish Agent and each Lender with an indemnity therefor
(or supply Agent with evidence satisfactory to Agent and each Lender that due
provision for the payment thereof has been made), Agent may hold without
interest any balance standing to Borrower's credit and Agent shall retain
Agent's security interest in any and all Collateral held by Agent.
4.14 Payment of Leasehold Obligations. Borrower shall at all times
pay, when and as due, its rental obligations under all material leases under
which it is a tenant, and shall otherwise comply, in all material respects, with
all other terms of such leases and, at Agent's reasonable request, will provide
evidence of having done so.
4.15 Receivables.
(a) Nature of Receivables. Each of the Receivables shall be a bona
fide and valid account representing a bona fide indebtedness incurred by the
Customer therein named, for a fixed sum as set forth in the invoice relating
thereto (provided immaterial invoice errors shall not be deemed to be a breach
hereof) with respect to an absolute sale or lease and delivery of goods upon
stated terms of Borrower, or work, labor or services theretofore rendered by
Borrower as of the date each Receivable is created. Each Receivable shall be due
and owing in accordance with Borrower's standard terms of sale for such Customer
without dispute, setoff or counterclaim except as may be stated on the accounts
receivable schedules delivered by Borrower to Agent.
(b) Solvency of Customers. Each Customer, to the extent of
Borrower's actual knowledge, as of the date each Receivable is created, is and
will be solvent and able to pay all Receivables on which the Customer is
obligated in full when due or with respect to such Customers of Borrower who are
not solvent Borrower has set up on its books and in its financial records bad
debt reserves adequate to cover such Receivables.
(c) Locations of Borrower. Borrower's chief executive office is
located at the address set forth on Schedule 4.15(c) hereto. Until written
notice is given to Agent by Borrower of
38
any other office at which Borrower keeps its records pertaining to Receivables,
all such records shall be kept at such executive office.
(d) Collection of Receivables. Subject to the rights of Factor under
the Factoring Agreement, until Borrower's authority to do so is terminated by
Agent (which notice Agent may give at any time following the occurrence of an
Event of Default or a Default or when Agent in its sole discretion deems it to
be in Lenders' best interests to do so), Borrower will, at Borrower's sole cost
and expense, but on Agent's behalf and for Agent's account, collect as Agent's
property and in trust for Agent all amounts received on Receivables, and shall
not commingle such collections with Borrower's funds or use the same except to
pay Obligations. Borrower shall, upon request, deliver to Agent, the Blocked
Account or the Depository Account in original form and on the date of receipt
thereof, all checks, drafts, notes, money orders, acceptances, cash and other
evidences of Indebtedness.
(e) Notification of Assignment of Receivables. Subject to the rights
of Factor under the Factoring Agreement, and upon the consent of the Factor,
Agent shall have the right to send notice of the assignment of, and Agent's
security interest in, the Receivables to any and all Customers or any third
party holding or otherwise concerned with any of the Collateral. Thereafter,
Agent shall have the sole right to collect the Receivables, take possession of
the Collateral, or both. Agent's actual collection expenses, including, but not
limited to, stationery and postage, telephone and telegraph, secretarial and
clerical expenses and the salaries of any collection personnel used for
collection, may be charged to Borrower's account and added to the Obligations.
(f) Power of Agent to Act on Borrower's Behalf. Subject to the
rights of Factor under the Factoring Agreement, Agent shall have the right to
receive, endorse, assign and/or deliver in the name of Agent or Borrower any and
all checks, drafts and other instruments for the payment of money relating to
the Receivables, and Borrower hereby waives notice of presentment, protest and
non-payment of any instrument so endorsed. Borrower hereby constitutes Agent or
Agent's designee as Borrower's attorney with power (1) to endorse Borrower's
name upon any notes, acceptances, checks, drafts, money orders or other
evidences of payment or Collateral; (2) to sign Borrower's name on any invoice
or xxxx of lading relating to any of the Receivables, drafts against Customers,
assignments and verifications of Receivables; (3) to send verifications of
Receivables to any Customer; (4) to sign Borrower's name on all financing
statements or any other documents or instruments deemed necessary or appropriate
by Agent to preserve, protect, or perfect Agent's security interest in the
Collateral and to file same; (5) to demand payment of the Receivables; (6) to
enforce payment of the Receivables by legal proceedings or otherwise; (7) to
exercise all of Borrower's rights and remedies with respect to the collection of
the Receivables and any other Collateral; (8) to settle, adjust, compromise,
extend or renew the Receivables; (9) to settle, adjust or compromise any legal
proceedings brought to collect Receivables; (10) to prepare, file and sign
Borrower's name on a proof of claim in bankruptcy or similar document against
any Customer; (11) to prepare, file and sign Borrower's name on any notice of
Lien, assignment or satisfaction of Lien or similar document in connection with
the Receivables; and (12) to do all other acts and things necessary to carry out
this Agreement. All acts of said attorney or designee are hereby ratified and
approved, and said attorney or designee shall not be liable for any acts of
omission or commission nor for any error of judgment or mistake of fact or of
law, unless done maliciously or with gross (not
39
mere) negligence; this power being coupled with an interest is irrevocable
during the Term and thereafter while any of the Obligations remain unpaid. Agent
shall have the right at any time following the occurrence of an Event of Default
to change the address for delivery of mail addressed to Borrower to such address
as Agent may designate and to receive, open and dispose of all mail addressed to
Borrower.
(g) No Liability. Neither Agent nor any Lender shall, under any
circumstances or in any event whatsoever, have any liability for any error or
omission or delay of any kind occurring in the settlement, collection or payment
of any of the Receivables or any instrument received in payment thereof, or for
any damage resulting therefrom. Subject to the Rights of the Factor under the
Factoring Agreement, Agent may, without notice or consent from Borrower, xxx
upon or otherwise collect, extend the time of payment of, compromise or settle
for cash, credit or upon any terms any of the Receivables or any other
securities, instruments or insurance applicable thereto and/or release any
obligor thereof. Agent is authorized and empowered to accept the return of the
goods represented by any of the Receivables, without notice to or consent by
Borrower, all without discharging or in any way affecting Borrower's liability
hereunder.
(h) Establishment of a Lockbox Account, Dominion Account. All
proceeds of Collateral shall, at the direction of Agent, be deposited by
Borrower into a lockbox account, dominion account or such other blocked account
("Blocked Accounts") as Agent may require pursuant to an arrangement with such
bank as may be selected by Borrower and be acceptable to Agent. Borrower shall
issue to any such bank, an irrevocable letter of instruction directing said bank
to transfer such funds so deposited to Agent, either to any account maintained
by Agent at said bank or by wire transfer to appropriate account(s) of Agent.
All funds deposited in such Blocked Account shall immediately become the
property of Agent and Borrower shall obtain the agreement by such bank to waive
any offset rights against the funds so deposited. Neither Agent nor any Lender
assumes any responsibility for any Blocked Account arrangement, including,
without limitation, any claim of accord and satisfaction or release with respect
to deposits accepted by any bank thereunder. Alternatively, Agent may establish
depository accounts ("Depository Accounts") in the name of Agent at a bank or
banks for the deposit of such funds and Borrower shall deposit all proceeds of
Collateral or cause same to be deposited, in kind, in such Depository Accounts
of Agent in lieu of depositing same to the Blocked Accounts.
(i) Adjustments. Borrower will not, without Agent's consent,
compromise or adjust any Receivables (or extend the time for payment thereof) or
accept any returns of merchandise or grant any additional discounts, allowances
or credits thereon except for those compromises, adjustments, returns,
discounts, credits and allowances (a) that are customary in the business of
Borrower or (b) to which the Factor has consented.
4.16 Inventory. All Inventory has been, and will be, produced by
Borrower in accordance with the Federal Fair Labor Standards Act of 1938, as
amended, and all rules, regulations and orders thereunder.
4.17 Maintenance of Equipment. The Equipment material to the conduct
of Borrower's business shall be maintained in good operating condition and
repair (reasonable wear and
40
tear excepted) and all necessary replacements of and repairs thereto shall be
made so that the value and operating efficiency of the Equipment shall be
maintained and preserved to the extent and in the manner customary for companies
in businesses similar to Borrower.
4.18 Exculpation of Liability. Nothing herein contained shall be
construed to constitute Agent or any Lender as Borrower's agent for any purpose
whatsoever, nor shall Agent or any Lender be responsible or liable for any
shortage, discrepancy, damage, loss or destruction of any part of the Collateral
wherever the same may be located and regardless of the cause thereof. Neither
Agent nor any Lender, whether by anything herein or in any assignment or
otherwise, assume Borrower's obligations under any contract or agreement
assigned to Agent or such Lender, and neither Agent nor any Lender shall be
responsible in any way for the performance by Borrower of any of the terms and
conditions thereof.
4.19 Environmental Matters.
(a) Borrower shall ensure that the Real Property remains in
compliance with all applicable Environmental Laws and shall not place or permit
to be placed any Hazardous Substances on any Real Property except as authorized
by applicable Environmental Laws.
(b) Borrower shall establish and maintain a system to assure and
monitor continued compliance with all applicable Environmental Laws which system
shall include periodic reviews of such compliance.
(c) Borrower shall employ in connection with the use of the Real
Property appropriate technology necessary to maintain compliance with any
applicable Environmental Laws and dispose of any and all Hazardous Waste
generated at the Real Property only at facilities and with carriers that
maintain valid permits under RCRA and any other applicable Environmental Laws.
Borrower shall use its best efforts to obtain certificates of disposal, such as
hazardous waste manifest receipts, from all treatment, transport, storage or
disposal facilities or operators employed by Borrower in connection with the
transport or disposal of any Hazardous Waste generated at the Real Property.
(d) If Borrower obtains, gives or receives notice of any Release or
threat of Release of a reportable quantity of any Hazardous Substances at the
Real Property (any such event being hereinafter referred to as a "Hazardous
Discharge") or receives any notice of violation, request for information or
notification that it is potentially responsible for investigation or cleanup of
environmental conditions at the Real Property, demand letter or complaint,
order, citation, or other written notice with regard to any Hazardous Discharge
or violation of Environmental Laws affecting the Real Property or Borrower's
interest therein (any of the foregoing is referred to herein as an
"Environmental Complaint") from any Person, including any state agency
responsible in whole or in part for environmental matters in the state in which
the Real Property is located or the United States Environmental Protection
Agency (any such person or entity hereinafter the "Authority") in each case,
then Borrower shall promptly, and in any event within ten (10) Business Days,
give written notice of same to Agent detailing facts and circumstances of which
Borrower is aware giving rise to the Hazardous Discharge or Environmental
Complaint. Such information is to be provided to allow Agent to protect its
security interest in the Collateral and is not intended to create nor shall it
create
41
any obligation upon Agent or any Lender with respect thereto.
(e) Borrower shall promptly forward to Agent copies of any request
for information, notification of potential liability, demand letter relating to
potential responsibility with respect to the investigation or cleanup of
Hazardous Substances at any other site owned, operated or used by Borrower to
dispose of Hazardous Substances and shall continue to forward copies of material
correspondence between Borrower and the Authority regarding such claims to Agent
until the claim is settled. Borrower shall promptly forward to Agent copies of
all documents and reports concerning a Hazardous Discharge at the Real Property
that Borrower is required to file under any Environmental Laws. Such information
is to be provided solely to allow Agent to protect Agent's security interest in
the Collateral.
(f) Borrower shall respond promptly to any Hazardous Discharge or
Environmental Complaint and take all necessary action in order to safeguard the
health of any Person and to avoid subjecting the Collateral or Real Property to
any Lien.
(g) Promptly upon the written request of Agent, Borrower shall
provide Agent, at Borrower's expense, with an environmental site assessment or
environmental audit report prepared by an environmental engineering firm
acceptable in the reasonable opinion of Agent, to assess with a reasonable
degree of certainty the existence of a Hazardous Discharge and the potential
costs in connection with abatement, cleanup and removal of any Hazardous
Substances found on, under, at or within the Real Property. Any report or
investigation of such Hazardous Discharge proposed and acceptable to an
appropriate Authority that is charged to oversee the clean-up of such Hazardous
Discharge must be acceptable to Agent. If such estimates, individually or in the
aggregate, exceed $100,000, Agent shall have the right to require Borrower to
post a bond, letter of credit or other security reasonably satisfactory to Agent
to secure payment of these costs and expenses. Notwithstanding anything
contained in this Section 4.19(g) to the contrary, so long as Borrower has not
requested that Agent and the Lenders make any Advances based upon the value, as
determined by Agent, of Borrower's Real Properties commonly referred to as Delta
Plant No. 2 and Delta Plant No. 3, Agent shall not request any environmental
site assessment or environmental audit report as provided in this Section
4.19(g) with respect to such Real Properties.
(h) Borrower shall defend and indemnify Agent and Lenders and hold
Agent, Lenders and their respective employees, agents, directors and officers
harmless from and against all loss, liability, damage and expense, claims,
costs, fines and penalties, including attorney's fees, suffered or incurred by
Agent or Lenders under or on account of any Environmental Laws, including,
without limitation, the assertion of any Lien thereunder, with respect to any
Hazardous Discharge, the presence of any Hazardous Substances affecting the Real
Property, whether or not the same originates or emerges from the Real Property
or any contiguous real estate, including any loss of value of the Real Property
as a result of the foregoing except to the extent such loss, liability, damage
and expense is attributable to any Hazardous Discharge resulting from actions on
the part of Agent or any Lender. Borrower's obligations under this Section 4.19
shall arise upon the discovery of the presence of any Hazardous Substances at
the Real Property, whether or not any federal, state, or local environmental
agency has taken or threatened any action in connection with the presence of any
Hazardous Substances. Borrower's obligation and the indemnifications hereunder
shall survive the
42
termination of this Agreement.
(i) For purposes of Section 4.19 and 5.7, all references to Real
Property shall be deemed to include all of Borrower's right, title and interest
in and to its owned and leased premises.
4.20 Financing Statements. Except as respects the financing
statements filed by Agent and the financing statements described on Schedule
1.2, no financing statement covering any of the Collateral or any proceeds
thereof is on file in any public office.
SECTION 5. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to the Agent and each of the Lenders as
follows:
5.1 Authority. Borrower has full power, authority and legal right to
enter into this Agreement and the Other Documents and to perform all its
Obligations hereunder and thereunder. The execution, delivery and performance of
this Agreement and of the Other Documents (a) are within Borrower's corporate
powers, have been duly authorized, are not in contravention of law or the terms
of Borrower's by-laws, certificate of incorporation or other applicable
documents relating to Borrower's formation or to the conduct of Borrower's
business or of any material agreement or undertaking to which Borrower is a
party or by which Borrower is bound, and (b) will not conflict with nor result
in any breach in any of the provisions of or constitute a default under or
result in the creation of any Lien except Permitted Encumbrances upon any asset
of Borrower under the provisions of any agreement, charter document, instrument,
by-law, or other instrument to which Borrower or its property is a party or by
which it may be bound.
5.2 Formation and Qualification.
(a) Borrower is duly incorporated and in good standing under the
laws of Delaware and is qualified to do business and is in good standing in the
state of South Carolina which constitutes the only state in which qualification
and good standing are necessary for Borrower to conduct its business and own its
property and where the failure to so qualify could have a Material Adverse
Effect on Borrower. Borrower has delivered to Agent true and complete copies of
its certificate of incorporation and by-laws and will promptly notify Agent of
any amendment or changes thereto.
(b) The only Subsidiary of Borrower is Delta Xxxxx Marketing, Inc.,
a Delaware corporation.
5.3 Survival of Representations and Warranties. All representations
and warranties of Borrower contained in this Agreement and the Other Documents
shall be true at the time of Borrower's execution of this Agreement and the
Other Documents, and shall survive the execution, delivery and acceptance
thereof by the parties thereto and the closing of the transactions described
therein or related thereto.
5.4 Tax Returns. Borrower's federal tax identification number is
00-0000000. Borrower has filed all federal, state and local tax returns and
other reports it is required by law to file
43
through fiscal year 1998 and has paid all taxes, assessments, fees and other
governmental charges that are due and payable except for those being contested
in good faith in accordance with Section 4.13 of this Agreement. Borrower has
not received any notice of audit or investigation with respect to its returns
through fiscal year 1998. The provision for taxes on the books of Borrower are
adequate for all years not closed by applicable statutes, and for its current
fiscal year, and Borrower has no knowledge of any deficiency or additional
assessment in connection therewith not provided for on its books.
5.5 Financial Statements.
(a) The pro forma balance sheets of Borrower on a consolidated basis
(the "Pro Forma Balance Sheet") furnished to Agent on the Closing Date reflects
the consummation of the transactions contemplated under this Agreement and the
Offer (collectively, the "Transactions") and is accurate, complete and correct
and fairly reflects the financial condition of Borrower on a consolidated basis
as of the Closing Date after giving effect to the Transactions, and has been
prepared in accordance with GAAP, consistently applied. The Pro Forma Balance
Sheet has been certified as accurate, complete and correct in all material
respects by the President or Chief Financial Officer of Borrower. All financial
statements referred to in this subsection 5.5(a), including the related
schedules and notes thereto, have been prepared, in accordance with GAAP, except
as may be disclosed in such financial statements.
(b) The twelve-month cash flow projections of Borrower on a
consolidated basis and its projected balance sheets as of June 3, 2006 (the
"Projections"), when furnished to Agent as provided under this Agreement, shall
have been prepared by the Chief Financial Officer of Borrower, shall have been
based on underlying assumptions which provide a reasonable basis for the
projections contained therein and shall reflect Borrower's judgment based on
present circumstances of the most likely set of conditions and course of action
for the projected period. The cash flow Projections together with the Pro Forma
Balance Sheet, are referred to as the "Pro Forma Financial Statements".
5.6 Corporate Name. Borrower has not been known by any other
corporate name in the past five years and does not sell Inventory or perform
services under any other name except as set forth on Schedule 5.6, nor has
Borrower been the surviving corporation of a merger or consolidation or acquired
all or substantially all of the assets of any Person during the preceding five
(5) years.
5.7 O.S.H.A. and Environmental Compliance.
(a) Borrower has duly complied with, and its facilities, business,
assets, property, leaseholds and Equipment are in compliance in all material
respects with, the provisions of the Federal Occupational Safety and Health Act,
the Environmental Protection Act, RCRA and all other Environmental Laws; there
are no outstanding citations, notices or orders of non-compliance issued to
Borrower or relating to its business, assets, property, leaseholds or Equipment
under any such laws, rules or regulations.
(b) Except to the extent non-compliance would not have a Material
Adverse
44
Effect, Borrower has been issued all required federal, state and local licenses,
certificates or permits relating to all applicable Environmental Laws.
(c) To the best of Borrower's knowledge, (i) there are no visible
signs of releases, spills, discharges, leaks or disposal (collectively referred
to as "Releases") of Hazardous Substances at, upon, under or within any Real
Property; (ii) except as disclosed on Schedule 5.7, there are no underground
storage tanks or polychlorinated biphenyls on the Real Property; (iii) the Real
Property has never been used as a treatment, storage or disposal facility of
Hazardous Waste; and (iv) no Hazardous Substances are present on the Real
Property, excepting such quantities as are handled in accordance with all
applicable manufacturer's instructions and governmental regulations and in
proper storage containers and as are necessary for the operation of the
commercial business of Borrower or of its tenants.
5.8 Solvency; No Litigation, Violation, Indebtedness or Default.
(a) From and after the expiration of the Term Loan Commitment
Period, Borrower will be solvent, able to pay its debts as they mature, will
have capital sufficient to carry on its business and all businesses in which it
is about to engage, and (i) from and after the expiration of the Term Loan
Commitment Period, the fair present saleable value of its assets, calculated on
a going concern basis, will be in excess of the amount of its liabilities and
(ii) from and after the expiration of the Term Loan Commitment Period, the fair
saleable value of its assets (calculated on a going concern basis) will be in
excess of the amount of its liabilities.
(b) Except as disclosed in Schedule 5.8(b), Borrower does not have
(i) any pending or threatened, litigation, arbitration, actions or proceedings
which involve a reasonable possibility of having a Material Adverse Effect on
Borrower, and (ii) any Indebtedness other than the Obligations.
(c) Borrower is not in violation of any applicable statute,
regulation or ordinance in any respect which could reasonably be expected to
have a Material Adverse Effect on Borrower, nor is Borrower in violation of any
order of any court, governmental authority or arbitration board or tribunal.
(d) Neither Borrower nor any member of the Controlled Group
maintains or contributes to any ERISA Plan other than those listed on Schedule
5.8(d) hereto. Except as set forth in Schedule 5.8(d), (i) no Plan has incurred
any "accumulated funding deficiency," as defined in Section 302(a)(2) of ERISA
and Section 412(a) of the Code, whether or not waived, and Borrower and each
member of the Controlled Group has met all applicable minimum funding
requirements under Section 302 of ERISA in respect of each Plan, (ii) each Plan
which is intended to be a qualified plan under Section 401(a) of the Code as
currently in effect has been determined by the Internal Revenue Service to be
qualified under Section 401(a) of the Code and the trust related thereto is
exempt from federal income tax under Section 501(a) of the Code, (iii) neither
Borrower nor any member of the Controlled Group has incurred any liability to
the PBGC other than for the payment of premiums, and there are no premium
payments which have become due which are unpaid, (iv) no Plan has been
terminated by the plan administrator thereof nor by the PBGC, and there is no
occurrence which would cause the PBGC to institute proceedings under Title IV of
45
ERISA to terminate any Plan, (v) at this time, the current value of the assets
of each Plan exceeds the present value of the accrued benefits and other
liabilities of such Plan and neither Borrower nor any member of the Controlled
Group knows of any facts or circumstances which would materially change the
value of such assets and accrued benefits and other liabilities, (vi) neither
Borrower or any member of the Controlled Group has breached any of the
responsibilities, obligations or duties imposed on it by ERISA with respect to
any Plan, (vii) neither Borrower or any member of a Controlled Group has
incurred any liability for any excise tax arising under Section 4972 or 4980B of
the Code, and no fact exists which could give rise to any such liability, (viii)
neither Borrower nor any member of the Controlled Group or any fiduciary of, or
any trustee to, any Plan, has engaged in a "prohibited transaction" described in
Section 406 of the ERISA or Section 4975 of the Code or taken any action which
would constitute or result in a Termination Event with respect to any such Plan
which is subject to ERISA, (ix) Borrower and each member of the Controlled Group
has made all contributions due and payable with respect to each Plan, (x) there
exists no event described in Section 4043(b) of ERISA, for which the thirty (30)
day notice period contained in 29 CFR Section 2615.3 has not been waived, (xi)
no Borrower or any member of the Controlled Group has any fiduciary
responsibility for investments with respect to any plan existing for the benefit
of persons other than employees or former employees of Borrower and any member
of the Controlled Group, and no Borrower or and (xii) during the last three
years neither Borrower nor any member of the Controlled Group has withdrawn,
completely or partially, from any Multiemployer Plan so as to incur liability
under the Multiemployer Pension Plan Amendments Act of 1980.
5.9 Patents, Trademarks, Copyrights and Licenses. All patents,
patent applications, trademarks, trademark applications, service marks, service
xxxx applications, copyrights, copyright applications, design rights,
tradenames, assumed names, trade secrets and licenses owned or utilized by
Borrower are set forth on Schedule 5.9, are valid and have been duly registered
or filed with all appropriate governmental authorities and constitute all of the
intellectual property rights which are necessary for the operation of its
business; there is no pending or to the knowledge of Borrower threatened
challenge to the validity of any such material patent, trademark, copyright,
design right, tradename, trade secret or license and Borrower is not aware of
any grounds for any challenge, except as set forth in Schedule 5.9 hereto. Each
patent, patent application, patent license, trademark, trademark application,
trademark license, service xxxx, service xxxx application, service xxxx license,
copyright, copyright application and copyright license owned or held by Borrower
and all trade secrets used by Borrower consist of original material or property
developed by Borrower or was lawfully acquired by Borrower from the proper and
lawful owner thereof. Each of such items has been maintained so as to preserve
the value thereof from the date of creation or acquisition thereof. With respect
to all software used by Borrower, Borrower is in possession of all source and
object codes related to each piece of software or is the beneficiary of a source
code escrow agreement, each such source code escrow agreement being listed on
Schedule 5.9 hereto.
5.10 Licenses and Permits. Except as set forth in Schedule 5.10,
Borrower (a) is in compliance with and (b) has procured and is now in possession
of, all material licenses or permits required by any applicable federal, state
or local law or regulation for the operation of its business in each
jurisdiction wherein it is now conducting or proposes to conduct business and
where the failure to procure such licenses or permits could reasonably be
expected to have a Material Adverse Effect on Borrower.
46
5.11 Default of Indebtedness. Borrower is not in default in the
payment of the principal of or interest on any Indebtedness or under any
instrument or agreement under or subject to which any Indebtedness has been
issued and no event has occurred under the provisions of any such instrument or
agreement which with or without the lapse of time or the giving of notice, or
both, constitutes or would constitute an event of default thereunder.
5.12 No Default. Borrower is not in default in the payment or
performance of any of its contractual obligations which default could have a
Material Adverse Effect and no Default has occurred.
5.13 No Burdensome Restrictions. Borrower is not party to any
contract or agreement the performance of which could reasonably be expected to
have a Material Adverse Effect on Borrower. Except in connection with the Senior
Notes, no Borrower has agreed or consented to cause or permit in the future
(upon the happening of a contingency or otherwise) any of its property, whether
now owned or hereafter acquired, to be subject to a Lien which is not a
Permitted Encumbrance.
5.14 No Labor Disputes. Borrower is not involved in any labor
dispute; there are no strikes or walkouts or union organization of Borrower's
employees threatened or in existence and no labor contract is scheduled to
expire during the Term other than as set forth on Schedule 5.14 hereto.
5.15 Margin Regulations. Borrower is not engaged, nor will it
engage, principally or as one of its important activities, in the business of
extending credit for the purpose of "purchasing" or "carrying" any "margin
stock" within the respective meanings of each of the quoted terms under
Regulation U of the Board of Governors of the Federal Reserve System as now and
from time to time hereafter in effect. No part of the proceeds of any Advance
will be used for "purchasing" or "carrying" "margin stock" as defined in
Regulation U of such Board of Governors.
5.16 Investment Company Act. Borrower is not an "investment company"
registered or required to be registered under the Investment Company Act of
1940, as amended, nor is it controlled by such a company.
5.17 Disclosure. No representation or warranty made by Borrower in
this Agreement or in any financial statement, report, certificate or any other
document furnished in connection herewith or therewith contains any untrue
statement of fact or omits to state any fact necessary to make the statements
herein or therein not materially misleading. There is no fact known to Borrower
or which reasonably should be known to Borrower which Borrower has not disclosed
to Agent in writing with respect to the Transactions which could reasonably be
expected to have a Material Adverse Effect on Borrower.
5.18 Swaps. Borrower is not a party to, nor will it be a party to,
any swap agreement whereby Borrower has agreed or will agree to swap interest
rates or currencies unless same provides that damages upon termination following
an event of default thereunder are payable on an unlimited "two-way basis"
without regard to fault on the part of either party.
47
5.19 Conflicting Agreements. No provision of any material mortgage,
indenture, contract, agreement, judgment, decree or order that is binding on
Borrower or affecting the Collateral conflicts with, or requires any Consent
which has not already been obtained to, or would in any way prevent the
execution, delivery or performance of, the terms of this Agreement or the Other
Documents.
5.20 Application of Certain Laws and Regulations. Neither Borrower
or any Affiliate of Borrower is subject to any statute, rule or regulation which
regulates the incurrence of any Indebtedness.
5.21 Business and Property of Borrower. Upon and after the Closing
Date, Borrower does not propose to engage in any business other than the
manufacturing, marketing and sale of textiles and related accessories and
activities necessary to conduct the foregoing. On the Closing Date, Borrower
will own all the property and possess all of the rights and Consents necessary
for the conduct of the business of Borrower.
SECTION 6. AFFIRMATIVE COVENANTS
Borrower shall, until payment in full of the Obligations and termination
of this Agreement:
6.1 Payment of Fees. Pay to Agent when due all fees and expenses
which Agent incurs in connection with (a) the forwarding of Advance proceeds and
(b) the establishment and maintenance of any Blocked Accounts or Depository
Accounts as provided for in Section 4.15(h). Agent may, without making demand,
charge the account of Borrower for all such fees and expenses.
6.2 Conduct of Business and Maintenance of Existence and Assets. (a)
Conduct continuously and operate actively its business according to good
business practices and maintain all of its properties useful or necessary in its
business in good working order and condition (reasonable wear and tear excepted
and except as may be disposed of in accordance with the terms of this
Agreement), including, without limitation, all material licenses, patents,
copyrights, design rights, tradenames, trade secrets and trademarks and take all
actions necessary to enforce and protect the validity of any material
intellectual property right or other right included in the Collateral; (b) keep
in full force and effect its existence and comply with the laws and regulations
governing the conduct of its business except where noncompliance would
reasonably be expected not to have a Material Adverse Effect; and (c) make all
such reports and pay all such franchise and other taxes and license fees and do
all such other acts and things as may be lawfully required to maintain its
material rights, licenses, leases, powers and franchises under the laws of the
United States or any political subdivision thereof.
6.3 Violations. Promptly notify Agent in writing of any violation of
any law, statute, regulation or ordinance of any Governmental Body, or of any
agency thereof, applicable to Borrower which might reasonably be expected to
have a Material Adverse Effect on Borrower.
6.4 Government Receivables. Take all steps necessary to protect
Agent's interest in the Collateral under the Federal Assignment of Claims Act or
other applicable state or local statutes or ordinances and deliver to Agent
appropriately endorsed, any instrument or chattel paper
48
connected with any Receivable arising out of contracts between Borrower and the
United States, any state or any department, agency or instrumentality of any of
them.
6.5 Execution of Supplemental Instruments. Execute and deliver to
Agent from time to time, upon demand, such supplemental agreements, statements,
assignments and transfers, or instructions or documents relating to the
Collateral, and such other instruments as Agent may request, in order that the
full intent of this Agreement and the Other Documents may be carried into
effect.
6.6 Payment of Indebtedness. Pay, discharge or otherwise satisfy at
or before maturity (subject, where applicable, to specified grace periods and,
in the case of the trade payables, to normal payment practices) all its
obligations and liabilities of whatever nature, except when the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings and Borrower shall have provided for such reserves as Agent may
reasonably deem proper and necessary, subject at all times to any applicable
subordination arrangement in favor of Lenders.
6.7 Standards of Financial Statements. Cause all financial
statements referred to in Sections 9.7, 9.8, 9.9, 9.10, 9.11, 9.12 and 9.13 as
to which GAAP is applicable to be complete and correct in all material respects
(subject, in the case of interim financial statements, to normal year-end audit
adjustments) and to be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein (except as
concurred in by such reporting accountants or officer, as the case may be, and
disclosed therein).
6.8 Amendment of Senior Notes Indenture; Pledge of Term Loan
Collateral. (a) Immediately upon the consummation of the Offer, which
consummation shall require that the Senior Noteholders having more than a
majority in aggregate principal amount of the outstanding Senior Notes consent
thereto, amend the provisions of the Senior Note Indenture which are restrictive
of the grant of Liens on Borrower's assets, to permit the pledge of the Term
Loan Collateral to Agent, for itself and for the ratable benefit of the Lenders,
as security for the Obligations hereunder and (b) immediately thereafter assign,
pledge and grant a continuing, exclusive, first priority security interest in
the Term Loan Collateral to Agent, for itself and for the ratable benefit of the
Lenders, as security for the Obligations hereunder.
6.9 Financial Covenants.
(a) EBITDA. Maintain, as of the last day of each fiscal quarter of
Borrower in its fiscal year ending July 1, 2007, EBITDA (calculated quarterly on
a trailing 12-month basis) of not less than the following:
Fiscal quarter ending on or about September 30, 2006: $ 2,300,000
Fiscal quarter ending on or about December 31, 2006: $ 3,600,000
Fiscal quarter ending on or about March 31, 2007: $ 4,200,000
Fiscal quarter ending on or about June 30, 2007: $ 4,400,000.
49
The failure of Agent and Borrower to execute a written amendment hereto
establishing an EBITDA covenant for the period subsequent to Borrower's 2007
Fiscal Year shall constitute an Event of Default hereunder.
(b) [Intentionally Omitted].
(c) [Intentionally Omitted].
6.10 [Intentionally Omitted].
6.11 Material Contracts. Deliver to Agent, upon Agent's reasonable
request from time to time, all material contracts of Borrower, including,
without limitation, management contracts, Hedging Agreements, compensation
programs, leases, union contracts, labor contracts, vendor supply contracts,
lease agreements and any other contracts which in each case are material to the
Collateral and/or Borrower's operation and the conduct of its business.
SECTION 7. NEGATIVE COVENANTS
Borrower shall not, until satisfaction in full of the Obligations and
termination of this Agreement:
7.1 Merger, Consolidation, Acquisition and Sale of Assets.
(a) Without the prior written consent of Agent (not to be
unreasonably withheld or delayed), enter into any merger, consolidation or other
reorganization with or into any other Person or acquire all or a substantial
portion of the assets or stock of any Person or permit any other Person to
consolidate with or merge with it (except for purchases of Inventory of similar
type to that used by Borrower in the ordinary course of its business).
(b) During the Term, sell, lease, transfer or otherwise dispose of
any of its properties or assets, in which the proceeds of such sale, lease or
transfer exceeds an aggregate amount of $5,000,000 without the prior written
consent of Agent (not to be unreasonably withheld or delayed), except (i) as
permitted under Section 4.3 of this Agreement and (ii) the contemplated sales of
approximately 60 acres of excess land at Borrower's Xxxxxxx plant and of
Borrower's Cypress and Pamplico plants, all of which such contemplated sales are
hereby consented to by Agent and the Lenders.
7.2 Creation of Liens. Create or suffer to exist any Lien or
transfer upon or against any of its property or assets now owned or hereafter
acquired, except Permitted Encumbrances.
7.3 Guarantees. Become liable upon the obligations of any Person by
assumption, endorsement or guaranty thereof or otherwise (other than to Lenders)
except (a) as disclosed on Schedule 7.3, and (b) the endorsement of checks in
the ordinary course of business.
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7.4 Investments. Purchase or acquire obligations or stock of, or any
other interest in, any other Person, except (a) obligations issued or guaranteed
by the United States of America or any agency thereof; (b) commercial paper with
maturities of not more than 180 days and a published rating of not less than A-1
or P-1 (or the equivalent rating); (c) certificates of time deposit and bankers'
acceptances having maturities of not more than 180 days and repurchase
agreements backed by United States government securities of a commercial bank if
(i) such bank has a combined capital and surplus of at least $500,000,000, or
(ii) its debt obligations, or those of a holding company of which it is a
Subsidiary, are rated not less than A (or the equivalent rating) by a nationally
recognized investment rating agency; and (d) U.S. money market funds that invest
solely in obligations issued or guaranteed by the United States of America or an
agency thereof; and (e) investments disclosed on Schedule 7.4 annexed hereto.
7.5 Loans. Make advances, loans or extensions of credit to any
Person, including without limitation, any Parent, or any Subsidiary or Affiliate
that is not a Guarantor except with respect to the extension of commercial trade
credit in connection with the sale of Inventory in the ordinary course of its
business
7.6 Capital Expenditures. For each of Borrower's fiscal years, make
expenditures, on a consolidated basis, in connection with the maintenance of its
capital assets in excess of $15,000,000.
7.7 Dividends. Declare, pay or make any dividend or distribution on
any shares of the common stock or preferred stock of Borrower (other than
dividends or distributions payable in its stock, or split-ups or
reclassifications of its stock) or apply any of its funds, property or assets to
the purchase, redemption or other retirement of any common or preferred stock,
or of any options to purchase or acquire any such shares of common or preferred
stock of Borrower.
7.8 Indebtedness. Create, incur, assume or suffer to exist any
Indebtedness (exclusive of trade debt) except in respect of (a) Obligations to
Lenders; (b) Indebtedness incurred for capital expenditures permitted under
Section 7.6 hereof; (c) Indebtedness owing under the Senior Notes; and (d)
Indebtedness disclosed on Schedule 7.8 hereof.
7.9 Nature of Business. Substantially change the nature of the
business in which it is presently engaged, nor except as specifically permitted
herein purchase or invest, directly or indirectly, in any assets or property
other than in the ordinary course of business for assets or property which are
useful in, necessary for and are to be used in its business as presently
conducted.
7.10 Transactions with Affiliates. Directly or indirectly, purchase,
acquire or lease any property from, or sell, transfer or lease any property to,
or otherwise deal with, any Affiliate, except transactions in the ordinary
course of business, on an arm's-length basis on terms no less favorable than
terms which would have been obtainable from a Person other than an Affiliate;
provided that dealings pursuant to the Management Services Agreement and Income
Tax Sharing Agreement with Delta Woodside Industries, Inc. are specifically
permitted.
51
7.11 Leases. Enter as lessee into any Operating Lease which, after
giving effect thereto, would cause Borrower's aggregate annual rental payments
for all leased property to exceed $5,000,000 in any one fiscal year.
7.12 Subsidiaries.
(a) Form any Subsidiary.
(b) Enter into any partnership, joint venture or similar
arrangement.
7.13 Fiscal Year and Accounting Changes. Change its fiscal year from
the Saturday closest to June 30 or make any change (a) in accounting treatment
and reporting practices except as permitted by GAAP or (b) in tax reporting
treatment except as permitted by law.
7.14 Pledge of Credit. Except as permitted by this Agreement, now or
hereafter pledge Agent's or any Lender's credit on any purchases or for any
purpose whatsoever or use any portion of any Advance in or for any business
other than Borrower's business as conducted on the date of this Agreement.
7.15 Amendment of Certificate of Incorporation, By-Laws. Amend,
modify or waive any term or material provision of its Certificate of
Incorporation or By-Laws in any manner adverse to the Agent or the Lenders
hereunder or that would affect in any way the perfection of Agent's security
interest in the Collateral or the preservation of the Collateral, unless
required by law.
7.16 Compliance with ERISA. (i) (x) Maintain, or permit any member
of the Controlled Group to maintain, or (y) become obligated to contribute, or
permit any member of the Controlled Group to become obligated to contribute, to
any material ERISA Plan that is a defined benefit pension plan, other than those
material ERISA Plans disclosed on Schedule 5.8(d), if such maintenance or
obligation to contribute would create a material liability for Borrower or the
Controlled Group; (ii) engage, or permit any member of the Controlled Group to
engage, in any non-exempt "prohibited transaction", as that term is defined in
section 406 of ERISA and Section 4975 of the Code where such prohibited
transaction would create a material liability for Borrower or the Controlled
Group; (iii) incur, or permit any member of the Controlled Group to incur, any
"accumulated funding deficiency", as that term is defined in Section 302 of
ERISA or Section 412 of the Code; (iv) terminate, or permit any member of the
Controlled Group to terminate, any material ERISA Plan that is a defined benefit
pension plan where such event could reasonably result in any material ERISA
liability of Borrower or any member of the Controlled Group or the imposition of
a lien on the property of Borrower or any member of the Controlled Group
pursuant to Section 4068 of ERISA; (v) except for payments due at Closing which
shall not exceed $100,000, incur, or permit any member of the Controlled Group
to incur, any withdrawal liability to any Multiemployer Plan; (vi) fail promptly
to notify Agent of the occurrence of any Termination Event; (vii) fail to
comply, or permit a member of the Controlled Group to fail to comply in any
material respects, with the requirements of ERISA or the Code or other
applicable laws in respect of any material ERISA Plan where such failure could
reasonably result in a liability for Borrower or the Controlled Group; (viii)
52
fail to meet, or permit any member of the Controlled Group to fail to meet, all
minimum funding requirements under ERISA.
7.17 Prepayment of Indebtedness. At any time, directly or
indirectly, prepay any Indebtedness (other than to Lenders), or repurchase,
redeem, retire or otherwise acquire any Indebtedness of Borrower, except that
Borrower may from time to time make prepayments or repurchases in respect of the
Senior Notes; provided that, after giving effect to any such prepayment, no
Event of Default then exists or would exist and Borrower shall have an Undrawn
Availability of not less than $1.00.
7.18 Management Compensation and Bonuses. Declare, pay or make any
bonuses to Borrower's management personnel in cash or Collateral unless, after
giving effect to any such payment, no Event of Default exists or would then
exist and an Undrawn Availability of at least $1.00 exists or then would exist.
7.19 Consummation of the Offer. Consummate the Offer unless the
Senior Noteholders having more than a majority in aggregate principal amount of
the outstanding Senior Notes consent to amend the provisions of the Senior Note
Indenture which are restrictive of the grant of Liens on Borrower's assets, to
permit the pledge of the Term Loan Collateral to Agent, for itself and for the
ratable benefit of the Lenders, as security for the Obligations hereunder.
SECTION 8. CONDITIONS PRECEDENT
8.1 Conditions to Initial Advances. The agreement of Lenders to make
the Advances requested to be made on the Closing Date or the Funding Date, as
applicable, is subject to the satisfaction, or waiver by Lenders, immediately
prior to or concurrently with the making of such Advances, of the following
conditions precedent:
(a) Notes. Agent shall have received the Notes duly executed and
delivered by an authorized officer of Borrower;
(b) Filings, Registrations and Recordings. Each document (including,
without limitation, any UCC financing statement) required by this Agreement, or
any Other Document required under law or reasonably requested by the Agent to be
filed, registered or recorded in order to create, in favor of Agent, a perfected
security interest in or lien upon the Collateral shall have been properly filed,
registered or recorded in each jurisdiction in which the filing, registration or
recordation thereof is so required or requested, and Agent shall have received
an acknowledgment copy, or other evidence satisfactory to it, of each such
filing, registration or recordation and satisfactory evidence of the payment of
any necessary fee, tax or expense relating thereto;
(c) Corporate Proceedings of Borrower and Guarantor. Agent shall
have received, in form and substance reasonably satisfactory to Agent, a copy of
the resolutions in form and substance satisfactory to Agent in its sole
discretion, of the Board of Directors of Borrower and Guarantor authorizing (i)
the execution, delivery and performance of this Agreement and the Other
Documents, the Notes, any related agreements to any of the foregoing,
(collectively the "Documents") and (ii) the granting by Borrower and each
Guarantor of the Liens upon the Collateral
53
in favor of Agent for itself and the ratable benefit of Lenders, in each case
certified by the Secretary or an Assistant Secretary of Borrower and Guarantor
as of the Closing Date; and, such certificate shall state that the resolutions
thereby certified have not been amended, modified, revoked or rescinded as of
the date of such certificate;
(d) Incumbency Certificate of Borrower and Guarantor. Agent shall
have received, in form and substance reasonably satisfactory to Agent, a
certificate of the Secretary or an Assistant Secretary of Borrower and
Guarantor, dated the Closing Date, as to the incumbency and signature of the
officers of Borrower and Guarantor executing this Agreement, and Borrower
executing any of the Other Documents or any certificate or other documents to be
delivered by it pursuant hereto, together with evidence of the incumbency of
such Secretary or Assistant Secretary;
(e) Certificates. Agent shall have received, in form and substance
satisfactory to Agent in its sole discretion, a copy of the Certificate of
Incorporation or other charter documents of Borrower and Guarantor and all
amendments thereto, certified by the Secretary of State or other appropriate
official of its jurisdiction of incorporation together with copies of the
By-Laws of Borrower and Guarantor, and all agreements of Borrower's shareholders
certified as accurate and complete by the Secretary of Borrower and Guarantor;
(f) Good Standing Certificates. Agent shall have received, in form
and substance satisfactory to Agent in its sole discretion, good standing
certificates for Borrower and Guarantor dated not more than thirty (30) days
prior to the Closing Date, issued by the Secretary of State or other appropriate
official of Borrower's and Guarantor's jurisdiction of incorporation and each
jurisdiction where the conduct of Borrower's and Guarantor's business activities
or the ownership of its properties necessitates qualification;
(g) Legal Opinions. Agent shall have received the executed legal
opinion of Wyche, Burgess, Xxxxxxx & Xxxxxx, PA in form and substance reasonably
satisfactory to Agent in its sole discretion, which shall cover such matters
incident to the transactions contemplated by this Agreement, the Notes, and
related agreements as Agent may reasonably require and Borrower hereby
authorizes and directs such counsel to deliver such opinions to Agent and
Lenders;
(h) No Litigation. (i) No litigation, investigation or proceeding
before or by any arbitrator or Governmental Body shall be continuing or
threatened against Borrower or Guarantor or against the officers or directors of
Borrower or Guarantor or (A) in connection with the Documents or any of the
Transactions and which, in the reasonable opinion of Agent, is deemed material
or (B) which if adversely determined, could, in the reasonable opinion of Agent,
have a Material Adverse Effect on Borrower or Guarantor; and (ii) no injunction,
writ, restraining order or other order of any nature materially adverse to
Borrower or Guarantor or the conduct of its business or inconsistent with the
due consummation of the Transactions shall have been issued by any Governmental
Body;
(i) [INTENTIONALLY DELETED]
(j) Collateral Examination; Environmental Audit. Agent, or third
parties on behalf of Agent, shall have completed (i) Collateral examinations of
the Receivables, Inventory, General Intangibles and other Collateral (including,
without limitation, the Term Loan Collateral) of
54
Borrower and all books and records in connection therewith, the results of which
shall be satisfactory in form and substance to Agent and shall value the Term
Loan Collateral at not less than $6,400,000, and, (ii) if required by Agent in
its sole discretion, an environmental audit, the results of which shall be
satisfactory in form and substance to Agent;
(k) Fees. Agent shall have received all fees that are due and
payable to Agent and Lenders on or prior to the Closing Date pursuant to Section
3 hereof;
(l) Financial Projections and Other Financial Information. Agent
shall have received, in form and substance reasonably satisfactory to Agent,
financial projections for Borrower on a consolidated basis satisfactory to Agent
and upon which Agent may rely for the purposes of entering into this Agreement.
(m) Other Documents. Agent shall have received final executed copies
of the Factoring Agreement and all related agreements, documents and instruments
as in effect on the Closing Date and the transactions contemplated by such
documentation shall be consummated concurrently with the making of the initial
Advances, and executed Notes and all Other Documents, each in form and substance
reasonably satisfactory to Agent;
(n) Guaranties. Agent shall have received an original, executed
Guaranty from each Guarantor and all related documents, each in form and
substance reasonably satisfactory to Agent;
(o) Insurance. Agent shall have received in form and substance
reasonably satisfactory to Agent, a certificate with respect to Borrower's
casualty insurance policies, together with loss payable endorsements on Agent's
standard form of loss payee endorsement naming Agent as loss payee;
(p) Undrawn Availability. On the Funding Date, Borrower shall have
Undrawn Availability of not less than $2,500,000 after giving effect to all
Reserves, the payment of all fees and expenses payable hereunder and any trade
accounts payable that remain outstanding beyond the due dates thereof;
(q) Consents. Agent shall have received, in form and substance
reasonably satisfactory to Agent, any and all Consents necessary to permit the
effectuation of the transactions contemplated by this Agreement and the Other
Documents; and, Agent shall have received such Consents and waivers of such
third parties as might assert claims with respect to or impede Agent's access to
the Collateral, as Agent and its counsel shall deem necessary or desirable;
(r) No Adverse Material Change. (i) Since April 3, 2006, there shall
not have occurred (w) any material adverse change in the condition, financial or
otherwise, operations, properties or prospects of Borrower or Guarantor, (x) any
material damage or destruction to any of the Collateral, including, without
limitation, the Term Loan Collateral, nor any material depreciation in the value
of the Receivables or Inventory and (y) any event, condition or state of facts
which could reasonably be expected to have a Material Adverse Effect on Borrower
or Guarantor, and (z) any material deviation from the forecasts furnished to
Agent with respect to Borrower, and (ii) no
55
representations made or information supplied to Agent shall have been proven to
be inaccurate or misleading in any material respect;
(s) Leasehold Agreements. Agent shall have received landlord,
mortgagee or warehouseman agreements in form and substance reasonably
satisfactory to Agent with respect to all premises leased by Borrower;
(t) [Intentionally Omitted].
(u) Closing Certificate. Agent shall have received, in form and
substance reasonably satisfactory to Agent, a closing certificate signed by the
Chief Financial Officer of Borrower dated as of the date hereof, stating that
(i) all representations and warranties set forth in this Agreement and the Other
Documents are true and correct on and as of such date, (ii) Borrower is on such
date in compliance with all the terms and provisions set forth in this Agreement
and the Other Documents and (iii) on such date no Default or Event of Default
has occurred or is continuing;
(v) Borrowing Base. Agent shall have received, in form and substance
satisfactory to Agent, evidence from Borrower that the aggregate amount of
Eligible Accounts and Eligible Inventory is sufficient in value and amount to
support Advances in the amount requested by Borrower on the Closing Date;
(w) Other. Agent shall have received in form and substance
reasonably satisfactory to Agent, evidence of all corporate and other
proceedings, and all documents, instruments and other legal matters in
connection with the Transactions shall be reasonably satisfactory in form and
substance to Agent, Lenders and their counsel.
8.2 Conditions to Each Advance. The agreement of Lenders to make any
Advance requested to be made on any date (including, without limitation, the
initial Advance), is subject to the satisfaction of the following conditions
precedent as of the date such Advance is made:
(a) Representations and Warranties. Each of the representations and
warranties made by Borrower in or pursuant to this Agreement, the Other
Documents and any related agreements to which it is a party, and each of the
representations and warranties contained in any certificate, document or
financial or other statement furnished at any time under or in connection with
this Agreement, the Other Documents or any related agreement shall be true and
correct in all material respects on and as of such date as if made on and as of
such date, except to the extent such representation and warranty specifically
relates to an earlier date;
(b) No Default. No Event of Default or Default shall have occurred
and be continuing on such date, or would exist after giving effect to the
Advances requested to be made, on such date, provided, however, that Lenders, in
their sole discretion, may continue to make Advances notwithstanding the
existence of an Event of Default or Default and that any Advances so made shall
not be deemed a waiver of any such Event of Default or Default; and
(c) Maximum Revolving Advances. In the case of any Revolving
Advances requested to be made, after giving effect thereto, the aggregate
Revolving Advances shall not exceed
56
the maximum amount of Revolving Advances permitted under Section 2.5 hereof.
Each request for an Advance by Borrower hereunder shall constitute a
representation and warranty by Borrower as of the date of such Advance that the
conditions contained in this subsection shall have been satisfied.
8.3 Conditions to Each Term Loan.
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(a) The agreement of Lenders to make any Term Loan is subject to
satisfaction of the following additional conditions precedent: (i) the terms of
the purchase of the Senior Notes, including, without limitation, the aggregate
principal amount of Senior Notes to be purchased with the proceeds of such Term
Loan and the purchase price thereof, shall be acceptable to Agent; (ii) Agent
shall have received such documentation and evidence of the purchase of Senior
Notes that Agent may reasonably request; and (ii) after giving effect thereto,
the aggregate Term Loans shall not exceed the Maximum Term Loan Amount.
(b) Each request for a Term Loan by Borrower hereunder shall
constitute a representation and warranty by Borrower as of the date of such Term
Loan that the conditions contained in this subsection shall have been satisfied.
SECTION 9. INFORMATION AS TO BORROWER
Borrower shall, until satisfaction in full of the Obligations and the
termination of this Agreement:
9.1 Disclosure of Material Matters. Promptly upon learning thereof,
report to Agent all matters materially affecting the value, enforceability or
collectibility of any portion of the Collateral including, without limitation,
Borrower's reclamation or repossession of, or the return to Borrower of, a
material amount of goods or claims or disputes asserted by any Customer or other
obligor.
9.2 Schedules. Deliver to Agent on the fifteenth day of each
calendar month for the immediately preceding calendar month or more frequently
as Agent may request from time to time, (a) a Borrowing Base Certificate, (b)
Inventory reports, (c) accounts receivable reports, (d) accounts payable
schedules, and (e) cash collection reports. In addition, Borrower will deliver
to Agent at such intervals as Agent may require: (i) confirmatory assignment
schedules (ii) copies of Customer's invoices, (iii) evidence of shipment or
delivery, and (iv) such further schedules, documents and/or information
regarding the Collateral as Agent may reasonably require including, without
limitation, trial balances and test verifications. Agent shall have the right to
confirm and verify all Receivables by any manner and through any medium it
considers advisable and do whatever it may deem reasonably necessary to protect
its interests hereunder. The items to be provided under this Section are to be
in form satisfactory to Agent and executed by Borrower and delivered to Agent
from time to time solely for Agent's convenience in maintaining records of the
Collateral, and Borrower's failure to deliver any of such items to Agent shall
not affect, terminate, modify or otherwise limit Agent's security interest with
respect to the Collateral.
9.3 Environmental Reports. Furnish Agent, at Agent's reasonable
request from time to time, with a certificate signed by the President and/or
Chief Financial Officer of Borrower stating, to the best of his knowledge, that
Borrower is in compliance in all material respects with all federal, state and
local laws relating to environmental protection and control and occupational
safety and health. To the extent Borrower is not in compliance with the
foregoing laws, the certificate shall set forth with specificity all areas of
non-compliance and the proposed action Borrower will implement in order to
achieve full compliance.
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9.4 Litigation. Promptly notify Agent in writing of any litigation,
suit or administrative proceeding affecting Borrower, whether or not the claim
is covered by insurance, and of any suit or administrative proceeding, which may
be reasonably expected to have a Material Adverse Effect on Borrower.
9.5 Material Occurrences. Promptly notify Agent in writing upon the
occurrence of (a) any Event of Default or Default; (b) any default or event of
default under the Senior Note Indenture; (c) any event, development or
circumstance whereby any financial statements or other reports furnished to
Agent fail in any material respect to present fairly, in accordance with GAAP
consistently applied, the financial condition or operating results of Borrower
as of the date of such statements; (d) any accumulated retirement plan funding
deficiency which, if such deficiency continued for two plan years and was not
corrected as provided in Section 4971 of the Code, could subject Borrower to a
tax imposed by Section 4971 of the Code; (e) each and every default by Borrower
which might result in the acceleration of the maturity of any Indebtedness,
including the names and addresses of the holders of such Indebtedness with
respect to which there is a default existing or with respect to which the
maturity has been or could be accelerated, and the amount of such Indebtedness;
and (f) any other development in the business or affairs of Borrower which would
have a Material Adverse Effect; in each case describing the nature thereof and
the action Borrower proposes to take with respect thereto.
9.6 Government Receivables. Notify Agent immediately if any of its
Receivables arise out of contracts between Borrower and the United States, any
state, or any department, agency or instrumentality of any of them.
9.7 Annual Financial Statements. Furnish Agent and each of the
Lenders within ninety (90) days after the end of each fiscal year of Borrower,
as the case may be, financial statements of Borrower on a consolidated and
consolidating basis, including, but not limited to, statements of income and
stockholders' equity and cash flow from the beginning of the current fiscal year
to the end of such fiscal year and the balance sheet as at the end of such
fiscal year, all prepared in accordance with GAAP applied on a basis consistent
with prior practices, and in reasonable detail and reported upon without
qualification by an independent certified public accounting firm satisfactory to
Agent (the "Accountants"). The audit report of such accounting firm with respect
to Borrower's financial statements shall be accompanied by a statement of such
accounting firm certifying that (a) they have caused this Agreement to be
reviewed, (b) in making the examination upon which such report was based either
no information came to their attention which to their knowledge constituted an
Event of Default or a Default under this Agreement or any Other Document or, if
such information came to their attention, specifying any such Default or Event
of Default, its nature, when it occurred and whether it is continuing, and such
report shall contain or have appended thereto calculations which set forth
Borrower's compliance with the requirements or restrictions imposed by Sections
6.10 and 7.6. In addition, Borrower's reports shall be accompanied by a
certificate of the President and/or Chief Financial Officer of Borrower which
shall state that, based on an examination sufficient to permit him to make an
informed statement, no Default or Event of Default exists, or, if such is not
the case, specifying such Default or Event of Default, its nature, when it
occurred, whether it is continuing and the steps being taken by Borrower with
respect
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to such default and, such certificate shall have appended thereto calculations
which set forth Borrower's compliance with the requirements or restrictions
imposed by Sections 6.9 and 7.6 hereof.
9.8 Quarterly Financial Statements. Furnish Agent and each of the
Lenders, within forty-five (45) days after the end of each fiscal quarter of
Borrower, an unaudited balance sheet of Borrower, on both a consolidated and
consolidating basis, and unaudited statements of income and stockholders' equity
and cash flow of Borrower reflecting results of operations for the consecutive
twelve month period ending on the last day of such quarter and for such quarter,
prepared on a basis consistent with prior practices and complete and correct in
all material respects, subject to normal year end adjustments and, if Borrower
is required to furnish or is voluntarily furnishing such financial statements to
the Securities and Exchange Commission, in the form so furnished. Borrower's
reports shall be accompanied by a certificate signed by the President and/or
Chief Financial Officer of Borrower, which shall state that, based on an
examination sufficient to permit him to make an informed statement, no Default
or Event of Default exists, or, if such is not the case, specifying such Default
or Event of Default, its nature, when it occurred, whether it is continuing and
the steps being taken by Borrower with respect to such default and, such
certificate shall have appended thereto calculations which set forth Borrower's
compliance with the requirements or restrictions imposed by Sections 6.9 and 7.6
hereof.
9.9 Monthly Financial Statements. Furnish Agent and each of the
Lenders within thirty (30) days after the end of each month, an unaudited
balance sheet of Borrower, on a consolidated and consolidating basis, and
unaudited statements of income and stockholders' equity and cash flow of
Borrower, on a consolidated and consolidating basis, reflecting results of
operations from the beginning of the fiscal year to the end of such month and
for such month, prepared on a basis consistent with prior practices and complete
and correct in all material respects, subject to normal year end adjustments.
The reports shall be accompanied by a certificate signed by the President and/or
Chief Financial Officer of Borrower, which shall state that, based on an
examination sufficient to permit him to make an informed statement, no Default
or Event of Default exists, or, if such is not the case, specifying such Default
or Event of Default, its nature, when it occurred, whether it is continuing and
the steps being taken by Borrower with respect to such event and, such
certificate shall have appended thereto calculations which set forth Borrower's
compliance with the requirements or restrictions imposed by Sections 6.10 and
7.6 hereof.
9.10 Other Reports. Furnish Agent and each of the Lenders as soon as
available, but in any event within ten (10) days after the issuance thereof,
with (a) copies of such financial statements, reports and returns as Borrower
shall send to its stockholders, and (b) copies of all notices sent to the
Securities and Exchange Commission. In addition to and not in limitation of the
foregoing, Borrower shall cause Guarantors to furnish Agent with annual
financial statements requested by Agent from time in form and substance
satisfactory to Agent.
9.11 Additional Information. Furnish Agent and each of the Lenders
with such additional information as Agent shall reasonably request in order to
enable Agent to determine whether the terms, covenants, provisions and
conditions of this Agreement have been complied with by Borrower including,
without limitation and without the necessity of any request by Agent, (a) copies
of all environmental audits and reviews, if any (b) at least thirty (30) days
prior thereto, notice
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of Borrower's opening of any new office or place of business that is material or
Borrower's closing of any existing office or place of business that is material,
and (c) promptly upon Borrower's learning thereof, notice of any labor dispute
to which Borrower may become a party, any strikes or walkouts relating to any of
its plants or other facilities, and the expiration of any labor contract to
which Borrower is a party or by which Borrower is bound.
9.12 Projected Operating Budget. Furnish Agent and each of the
Lenders, no later than thirty (30) days prior to the beginning of Borrower's
fiscal years commencing with fiscal year 2001, a month by month projected
operating budget and cash flow of Borrower, on a consolidated and consolidating
basis, for such fiscal year (including an income statement, statements of cash
disbursements, cash collections and borrowing base projections for each month
and a balance sheet as at the end of the last month in each fiscal quarter),
such projections to be accompanied by a certificate signed by the President or
Chief Financial Officer of Borrower to the effect that such projections have
been prepared on the basis of sound financial planning practice consistent with
past budgets and financial statements and that such officer has no reason to
question the reasonableness of any material assumptions on which such
projections were prepared. Borrower shall furnish Agent with such updated
projections as Agent may request from time to time.
9.13 Variances From Operating Budget. Furnish Agent and each of the
Lenders, concurrently with the delivery of the financial statements referred to
in Sections 9.7, 9.8 and 9.9, respectively, a written report summarizing all
material variances from budgets submitted by Borrower pursuant to Section 9.12
and a discussion and analysis by management with respect to such variances.
9.14 Notice of Suits, Adverse Events. Furnish Agent with prompt
notice of (a) any lapse or other termination of any Consent issued to Borrower
by any Governmental Body, (b) any refusal by any Governmental Body to renew or
extend any such Consent; and (c) copies of any periodic or special reports filed
by Borrower with any Governmental Body, if such reports indicate any material
change in the business, operations, affairs or condition of Borrower, or if
copies thereof are requested by Lender, and copies of any material notices and
other communications from any Governmental Body which specifically relate to
Borrower.
9.15 ERISA Notices and Requests. Furnish Agent with immediate
written notice in the event that (a) Borrower or any member of the Controlled
Group knows or has reason to know that a Termination Event has occurred,
together with a written statement describing such Termination Event and the
action, if any, which Borrower or member of the Controlled Group has taken, is
taking, or proposes to take with respect thereto and, when known, any action
taken or threatened by the Internal Revenue Service, Department of Labor or PBGC
with respect thereto, (b) Borrower or any member of the Controlled Group knows
or has reason to know that a prohibited transaction (as defined in Sections 406
of ERISA and 4975 of the Code) has occurred together with a written statement
describing such transaction and the action which Borrower or any member of the
Controlled Group has taken, is taking or proposes to take with respect thereto,
(c) a funding waiver request has been filed with respect to any Plan together
with all communications received by Borrower or any member of the Controlled
Group with respect to such request, (d) any increase in the benefits of any
existing defined benefit pension Plan or the establishment of any new defined
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benefit pension Plan or the commencement of contributions to any defined benefit
pension Plan to which Borrower or any member of the Controlled Group was not
previously contributing shall occur, (e) Borrower or any member of the
Controlled Group shall receive from the PBGC a notice of intention to terminate
a Plan or to have a trustee appointed to administer a Plan, together with copies
of each such notice, (f) Borrower or any member of the Controlled Group shall
receive any favorable or unfavorable determination letter from the Internal
Revenue Service regarding the qualification of a Plan under Section 401(a) of
the Code, together with copies of each such letter; (g) Borrower or any member
of the Controlled Group shall receive a notice regarding the imposition of
withdrawal liability, together with copies of each such notice; (h) Borrower or
any member of the Controlled Group shall fail to make a required installment or
any other required payment under Section 412 of the Code on or before the due
date for such installment or payment; (i) Borrower or any member of the
Controlled Group knows that (i) a Multiemployer Plan has been terminated, (ii)
the administrator or plan sponsor of a Multiemployer Plan intends to terminate a
Multiemployer Plan, or (iii) the PBGC has instituted or will institute
proceedings under Section 4042 of ERISA to terminate a Multiemployer Plan.
9.16 Additional Documents. Execute and deliver to Agent, upon
request, such documents and agreements as Agent may, from time to time,
reasonably request to carry out the purposes, terms or conditions of this
Agreement.
SECTION 10. EVENTS OF DEFAULT
The occurrence of any one or more of the following events shall constitute
an "Event of Default":
10.1 (a) failure by Borrower to pay any principal on the Obligations
when due, whether at maturity or by reason of acceleration pursuant to the terms
of this Agreement, or by required prepayment or failure to pay any other
liabilities or make any other payment, fee or charge provided for herein or any
Other Document when due;
(b) failure by Borrower to pay any interest on the Obligations
when due or reimburse Agent and Lenders for any Obligations under drawings on
Letters of Credit when due which is unremedied for a period of three (3) days;
10.2 any representation or warranty made by Borrower in this
Agreement, the Factoring Agreement, the letter re: Trade Styles, the Note, the
Stock Pledge and Security Agreement or any related agreement or in any
certificate, document or financial or other statement furnished at any time in
connection herewith or therewith shall prove to have been misleading in any
material respect on the date when made;
10.3 failure by Borrower to (a) furnish financial information when
due or when requested, or (b) permit the inspection of its books or records;
10.4 issuance of a notice of Lien, levy, assessment, injunction or
attachment against a material portion of Borrower's property;
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10.5 failure or neglect of Borrower to perform, keep or observe any
term, provision, condition, covenant herein contained, or contained in any other
agreement or arrangement, now or hereafter entered into between Borrower and any
Lender;
10.6 any judgment is rendered or judgment liens filed against
Borrower for an aggregate amount in excess of $250,000 which within thirty (30)
days of such rendering or filing is not either satisfied, stayed or discharged
of record, or which at any time is unstayed;
10.7 Borrower shall (a) apply for, consent to or suffer the
appointment of, or the taking of possession by, a receiver, custodian, trustee,
liquidator or similar fiduciary of itself or of all or a substantial part of its
property, (b) make a general assignment for the benefit of creditors,
(c)commence a voluntary case under any state or federal bankruptcy laws (as now
or hereafter in effect), (d) be adjudicated a bankrupt or insolvent, (e) file a
petition seeking to take advantage of any other law providing for the relief of
debtors, (f) acquiesce to, or fail to have dismissed, within thirty (30) days,
any petition filed against it in any involuntary case under such bankruptcy
laws, (g) or take any action for the purpose of effecting any of the foregoing;
10.8 Borrower shall admit in writing its inability, or be generally
unable, to pay its debts as they become due or cease operations of its present
business;
10.9 the Original Owner or any Subsidiary of Borrower, or any
Guarantor shall (a) apply for, consent to or suffer the appointment of, or the
taking of possession by, a receiver, custodian, trustee, liquidator or similar
fiduciary of itself or of all or a substantial part of its property, (b) admit
in writing its inability, or be generally unable, to pay its debts as they
become due or cease operations of its present business, (c) make a general
assignment for the benefit of creditors, (d) commence a voluntary case under any
state or federal bankruptcy laws (as now or hereafter in effect), (e) be
adjudicated a bankrupt or insolvent, (f) file a petition seeking to take
advantage of any other law providing for the relief of debtors, (g) acquiesce
to, or fail to have dismissed, within thirty (30) days, any petition filed
against it in any involuntary case under such bankruptcy laws, or (h) take any
action for the purpose of effecting any of the foregoing;
10.10 any change in Borrower's condition or affairs (financial or
otherwise) which in Lenders' good faith opinion, impairs the ability of Borrower
to perform its Obligations under this Agreement;
10.11 any Lien created hereunder or provided for hereby or under any
related agreement that is intended to be an exclusive, first priority interest
for any reason ceases to be or is not a valid and perfected Lien having a first
priority interest;
10.12 an event of default has occurred and been declared under the
Senior Note Indenture which default has not been cured or waived within any
applicable grace period and for which the trustee thereunder is permitted to
take action;
10.13 a default of the obligations of Borrower under any other
agreement to which it is a party (including, without limitation, a default under
or termination of the Factoring Agreement)
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shall occur which materially adversely affects its condition, affairs or
prospects (financial or otherwise) which default is not cured within any
applicable grace period;
10.14 termination or breach of any Guaranty or similar agreement
executed and delivered to Agent in connection with the Obligations of Borrower,
or if any Guarantor attempts to terminate, challenges the validity of, or its
liability under, any such Guaranty or similar agreement;
10.15 any Change of Control shall occur;
10.16 any material provision of this Agreement or any of the Other
Documents shall, for any reason, cease to be valid and binding on Borrower, or
Borrower shall so claim in writing to Agent;
10.17 if (a) any Governmental Body shall (A) revoke, terminate,
suspend or adversely modify any license, permit, patent, trademark or tradename
of Borrower, or (B) commence proceedings to suspend, revoke, terminate or
adversely modify any such license, permit, trademark, tradename or patent and
such proceedings shall not be dismissed or discharged within sixty (60) days, or
(C) schedule or conduct a hearing on the renewal of any license, permit,
trademark, tradename or patent necessary for the continuation of Borrower's
business and the staff of such Governmental Body issues a report recommending
the termination, revocation, suspension or material, adverse modification of
such license, permit, trademark, tradename or patent; and (b) any agreement
which is necessary or material to the operation of Borrower's business shall be
revoked or terminated and not replaced by a substitute acceptable to Agent
within thirty (30) days after the date of such revocation or termination, and
such revocation or termination and non-replacement could have a Material Adverse
Effect on Borrower;
10.18 any portion of the Collateral shall be seized or taken by a
Governmental Body, or Borrower or the title and rights of Borrower or any other
Person with respect to any material portion of the Collateral shall have become
the subject matter of litigation which might, in the reasonable opinion of
Lenders, upon final determination, result in impairment or loss of the security
provided by this Agreement or the Other Documents;
10.19 an event or condition specified in Sections 7.16 or 9.15
hereof shall occur or exist with respect to any Plan and, as a result of such
event or condition, together with all other such events or conditions, Borrower
or any member of the Controlled Group shall incur, or in the opinion of Lenders
be reasonably likely to incur, a liability to a Plan or the PBGC (or both)
which, in the reasonable judgment of Agent, could reasonably be expected to have
a Material Adverse Effect on Borrower;
10.20 Borrower shall not have purchased all of the outstanding
Senior Notes prior to March 31, 2007; and
10.21 any bank at which any deposit account of Borrower is
maintained shall fail to comply with any of the terms of any Deposit Account
Control Agreement to which such bank is a party or any securities intermediary,
commodity intermediary or other financial institution at any
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time in custody, control or possession of any investment property of Borrower
shall fail to comply with any of the terms of any Investment Property Control
Agreement to which such person is a party.
SECTION 11. LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT
11.1 Rights and Remedies. Upon the occurrence of (a) a Default
pursuant to Section 10.7(f) or any other Event of Default pursuant to Section
10.7 all Obligations shall be immediately due and payable and this Agreement and
the obligation of Lenders to make Advances shall be deemed terminated; and (b)
any of the other Events of Default and at any time thereafter (such default not
having previously been cured), at the option of Required Lenders all Obligations
shall be immediately due and payable and Lenders shall have the right to
terminate this Agreement and to terminate all obligations of Lenders herewith,
including, without limitation, the obligation to make Advances. Upon the
occurrence of any Event of Default, Agent shall have the right to exercise any
and all other rights and remedies provided for herein, any of the Other
Documents under the UCC and at law or equity generally, including, without
limitation, the right to foreclose the security interests granted herein and to
realize upon any Collateral by any available judicial procedure and/or to take
possession of and sell any or all of the Collateral with or without judicial
process. Agent may enter Borrower's premises or other premises without legal
process and without incurring liability to Borrower therefor, and Agent may
thereupon, or at any time thereafter, in its discretion without notice or
demand, take the Collateral and remove the same to such place as Agent may deem
advisable and Agent may require Borrower to make the Collateral available to
Lenders at a convenient place. With or without having the Collateral at the time
or place of sale, Agent may sell the Collateral, or any part thereof, at public
or private sale, at any time or place, in one or more sales, at such price or
prices, and upon such terms, either for cash, credit or future delivery, as
Agent may elect. Except as to that part of the Collateral which is perishable or
threatens to decline speedily in value or is of a type customarily sold on a
recognized market, Agent shall give Borrower reasonable notification of such
sale or sales, it being agreed that in all events written notice mailed to
Borrower at least ten (10) days prior to such sale or sales is reasonable
notification. At any public sale Agent or any Lender may bid for and become the
purchaser, and Agent, any Lender or any other purchaser at any such sale
thereafter shall hold the Collateral sold absolutely free from any claim or
right of whatsoever kind, including any equity of redemption and such right and
equity are hereby expressly waived and released by Borrower. In connection with
the exercise of the foregoing remedies, Agent is granted permission, without
charge, to use all of Borrower's trademarks, trade styles, trade names, patents,
patent applications, licenses, franchises and other proprietary rights which are
used in connection with (a) Inventory for the purpose of disposing of such
Inventory and (b) Equipment for the purpose of completing the manufacture of
unfinished goods. The proceeds realized from the sale of any Collateral shall be
applied as follows: first, to the reasonable costs, expenses and attorneys' fees
and expenses incurred by Agent and Lenders for collection and for acquisition,
completion, protection, removal, storage, sale and delivery of the Collateral;
second, to interest due upon any of the Obligations; and, third, to the
principal of the Obligations. If any deficiency shall arise, Borrower shall
remain liable to Agent and Lenders therefor.
11.2 Agent's Discretion. Agent shall have the right in its sole
discretion to determine which rights, Liens, security interests or remedies
Agent may at any time pursue, relinquish, subordinate, or modify or to take any
other action with respect thereto and such
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determination will not in any way modify or affect any of Agent's or Lenders'
rights hereunder. To the extent that applicable law imposes duties on Agent to
exercise remedies in a commercially reasonable manner (which duties cannot be
waived under such law), Borrower acknowledges and agrees that it is not
commercially unreasonable for Agent (a) to fail to incur expenses reasonably
deemed significant by Agent to prepare Collateral for disposition or otherwise
to complete raw material or work in process into finished goods or other
finished products for disposition, (b) to fail to obtain third party consents
for access to Collateral to be disposed of, or to obtain or, if not required by
other law, to fail to obtain consents of any Governmental Body or other third
party for the collection or disposition of Collateral to be collected or
disposed of, (c) to fail to exercise collection remedies against account
debtors, secondary obligors or other persons obligated on Collateral or to
remove liens or encumbrances on or any adverse claims against Collateral, (d) to
exercise collection remedies against account debtors and other persons obligated
on Collateral directly or through the use of collection agencies and other
collection specialists, (e) to advertise dispositions of Collateral through
publications or media of general circulation, whether or not the Collateral is
of a specialized nature, (f) to contact other persons, whether or not in the
same business as Borrower for expressions of interest in acquiring all or any
portion of the Collateral, (g) to hire one or more professional auctioneers to
assist in the disposition of Collateral, whether or not the collateral is of a
specialized nature, (h) to dispose of Collateral by utilizing Internet sites
that provide for the auction of assets of the types included in the Collateral
or that have the reasonable capability of doing so, or that match buyers and
sellers of assets, (i) to dispose of assets in wholesale rather than retail
markets, (j) to disclaim disposition warranties, (k) to purchase insurance or
credit enhancements to insure Agent against risks of loss, collection or
disposition of Collateral or to provide to Agent a guaranteed return from the
collection or disposition of Collateral, or (l) to the extent deemed appropriate
by Agent, to obtain the services of other brokers, investment bankers,
consultants and other professionals to assist Agent in the collection or
disposition of any of the Collateral. Borrower acknowledges that the purpose of
this Section 11.2 is to provide non-exhaustive indications of what actions or
omissions by Agent would not be commercially unreasonable in Agent's exercise of
remedies against the Collateral and that other actions or omissions by Agent
shall not be deemed commercially unreasonable solely on account of not being
indicated in this Section 11.2. Without limitation of the foregoing, nothing
contained in this Section 11.2 shall be construed to grant any rights to
Borrower or to impose any duties on Agent that would not have been granted or
imposed by this Agreement or by applicable law in the absence of this Section
11.2.
11.3 Setoff. In addition to any other rights which Agent or any
Lender may have under applicable law, upon the occurrence of an Event of Default
hereunder, Agent and each Lender shall have a right to apply Borrower's property
held by Agent, such Lender or by the Bank to reduce the Obligations.
11.4 Rights and Remedies not Exclusive. The enumeration of the
foregoing rights and remedies is not intended to be exhaustive and the exercise
of any right or remedy shall not preclude the exercise of any other right or
remedies provided for herein or otherwise provided by law, all of which shall be
cumulative and not alternative.
SECTION 12. WAIVERS AND JUDICIAL PROCEEDINGS
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12.1 Waiver of Notice. Borrower hereby waives notice of non-payment
of any of the Receivables, demand, presentment, protest and notice thereof with
respect to any and all instruments, notice of acceptance hereof, notice of loans
or advances made, credit extended, Collateral received or delivered, or any
other action taken in reliance hereon, and all other demands and notices of any
description, except such as are expressly provided for herein.
12.2 Delay. No delay or omission on Agent's or any Lender's part in
exercising any right, remedy or option shall operate as a waiver of such or any
other right, remedy or option or of any default.
12.3 JURY TRIAL WAIVER. EACH PARTY TO THIS AGREEMENT HEREBY
EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN
ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES
HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE
TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND
EACH PARTY HEREBY CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO
THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF THE PARTIES HERETO TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
SECTION 13. EFFECTIVE DATE AND TERMINATION
13.1 Term. This Agreement, which shall inure to the benefit of and
shall be binding upon the respective successors and permitted assigns of
Borrower, Agent and each Lender, shall become effective on the date hereof and
shall continue in full force and effect until the last day of the Term unless
sooner terminated as herein provided. Borrower may terminate this Agreement at
any time upon sixty (60) days' prior written notice upon payment in full of the
Obligations, including, without limitation, all fees payable hereunder for the
balance of the Term. In the event that this Agreement is terminated and the
Obligations are prepaid in full prior to the last day of the Term (the date of
such prepayment hereinafter referred to as the "Prepayment Date"), Borrower
shall pay to Agent for the ratable benefit of Lenders an early termination fee
in an amount equal to (x) three percent (3%) of the Maximum Loan Amount if the
Prepayment Date occurs on or after the Closing Date to and including the date
immediately preceding the first anniversary of the Closing Date, (y) two percent
(2%) of the Maximum Loan Amount if the Prepayment Date occurs on or after the
first anniversary of the Closing Date to and including the date immediately
preceding the second anniversary of the Closing Date, and (z) one percent (1%)
of the Maximum Loan Amount if the Prepayment Date occurs on or after the second
anniversary of the Closing Date to and including the
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date immediately preceding the last day of the Term or during any renewal Term.
In each case, the Maximum Loan Amount is the one in effect on the Termination
Date.
13.2 Termination. The termination of the Agreement shall not affect
Borrower's, Agent's or any Lender's rights, or any of Borrower's Obligations
having their inception prior to the effective date of such termination, and the
provisions hereof shall continue to be fully operative until all transactions
entered into, rights or interests created or Obligations have been fully
disposed of, concluded or liquidated. The Liens and rights granted to Agent and
Lenders hereunder and the financing statements filed hereunder shall continue in
full force and effect, notwithstanding the termination of this Agreement or the
fact that Borrower's respective account may from time to time be temporarily in
a zero or credit position, until all of the Obligations of Borrower have been
paid or performed in full after the termination of this Agreement or Borrower
has furnished Agent and Lenders with an indemnification satisfactory to Agent
and Lenders with respect thereto. Accordingly, Borrower waives any rights which
it may have under Section 9-504(1) of the UCC to demand the filing of
termination statements with respect to the Collateral, and Agent shall not be
required to send such termination statements to Borrower, or to file them with
any filing office, unless and until this Agreement shall have been terminated in
accordance with its terms and all Obligations paid in full in immediately
available funds. All representations, warranties, covenants, waivers and
agreements contained herein shall survive termination hereof until all
Obligations are paid or performed in full.
SECTION 14. REGARDING AGENT
14.1 Appointment. Each Lender hereby designates GMAC CF to act as
Agent for such Lender under this Agreement and the Other Documents. Each Lender
hereby irrevocably authorizes Agent to take such action on its behalf under the
provisions of this Agreement and the Other Documents and to exercise such powers
and to perform such duties hereunder and thereunder as are specifically
delegated to or required of Agent by the terms hereof and thereof and such other
powers as are reasonably incidental thereto and Agent shall hold all Collateral,
payments of principal and interest, fees (except the fees set forth in Section
3.5), charges and collections (without giving effect to any collection days)
received pursuant to this Agreement, for the ratable benefit of Lenders. Agent
may perform any of its duties hereunder by or through its agents or employees.
As to any matters not expressly provided for by this Agreement (including,
without limitation, the collection of any note evidencing any of the
Obligations,) Agent shall not be required to exercise any discretion or take any
action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Required Lenders, and such instructions shall be binding; provided, however,
that Agent shall not be required to take any action which exposes Agent to
liability or which is contrary to this Agreement or the Other Documents or
applicable law unless Agent is furnished with an indemnification reasonably
satisfactory to Agent with respect thereto.
14.2 Nature of Duties. Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement and the
Other Documents. Neither Agent nor any of its officers, directors, employees or
agents shall be (a) liable for any action taken or omitted by them as such
hereunder or in connection herewith, unless caused by their willful misconduct
or gross (not
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mere) negligence, or (b) responsible in any manner for any recitals, statements,
representations or warranties made by Borrower or any officer thereof contained
in this Agreement, or in any of the Other Documents or in any certificate,
report, statement or other document referred to or provided for in, or received
by Agent under or in connection with, this Agreement or any of the Other
Documents or for the value, validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement, or any of the Other Documents or for any
failure of Borrower to perform its obligations hereunder. Agent shall not be
under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any of the Other Documents, or to inspect the properties,
books or records of Borrower. The duties of Agent as respects the Advances to
Borrower shall be mechanical and administrative in nature; Agent shall not have
by reason of this Agreement a fiduciary relationship in respect of any Lender;
and nothing in this Agreement, expressed or implied, is intended to or shall be
so construed as to impose upon Agent any obligations in respect of this
Agreement except as expressly set forth herein.
14.3 Lack of Reliance on Agent and Resignation. Independently and
without reliance upon Agent or any other Lender, each Lender has made and shall
continue to make (a) its own independent investigation of the financial
condition and affairs of Borrower in connection with the making and the
continuance of the Advances hereunder and the taking or not taking of any action
in connection herewith, and (b) its own appraisal of the creditworthiness of
Borrower. Agent shall have no duty or responsibility, either initially or on a
continuing basis, to provide any Lender with any credit or other information
with respect thereto, whether coming into its possession before making of the
Advances or at any time or times thereafter except as shall be provided by
Borrower pursuant to the terms hereof. Agent shall not be responsible to any
Lender for any recitals, statements, information, representations or warranties
herein or in any agreement, document, certificate or a statement delivered in
connection with or for the execution, effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Agreement or any Other
Document, or of the financial condition of Borrower, or be required to make any
inquiry concerning either the performance or observance of any of the terms,
provisions or conditions of this Agreement, the Other Documents or the financial
condition of Borrower, or the existence of any Event of Default or any Default.
Agent may resign on sixty (60) days' written notice to each of Lenders and
Borrower and upon such resignation, the Required Lenders will promptly designate
a successor Agent reasonably satisfactory to Borrower.
Any such successor Agent shall succeed to the rights, powers and duties of
Agent, and the term "Agent" shall mean such successor agent effective upon its
appointment, and the former Agent's rights, powers and duties as Agent shall be
terminated, without any other or further act or deed on the part of such former
Agent. After any Agent's resignation as Agent, the provisions of this Section 14
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement.
14.4 Certain Rights of Agent. If Agent shall request instructions
from Lenders with respect to any act or action (including failure to act) in
connection with this Agreement or any Other
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Document, Agent shall be entitled to refrain from such act or taking such action
unless and until Agent shall have received instructions from the Required
Lenders; and Agent shall not incur liability to any Person by reason of so
refraining. Without limiting the foregoing, Lenders shall not have any right of
action whatsoever against Agent as a result of its acting or refraining from
acting hereunder in accordance with the instructions of the Required Lenders.
14.5 Reliance. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any note, writing, resolution, notice, statement,
certificate, telex, teletype or telecopier message, cablegram, order or other
document or telephone message believed by it to be genuine and correct and to
have been signed, sent or made by the proper person or entity, and, with respect
to all legal matters pertaining to this Agreement and the Other Documents and
its duties hereunder, upon advice of counsel selected by it. Agent may employ
agents and attorneys-in-fact and shall not be liable for the default or
misconduct of any such agents or attorneys-in-fact selected by Agent with
reasonable care.
14.6 Notice of Default. Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default hereunder or
under the Other Documents, unless Agent has received notice from a Lender or a
Borrower referring to this Agreement or the Other Documents, describing such
Default or Event of Default and stating that such notice is a "notice of
default". In the event that Agent receives such a notice, Agent shall give
notice thereof to Lenders. Agent shall take such action with respect to such
Default or Event of Default as shall be reasonably directed by the Required
Lenders; provided, that unless and until Agent shall have received such
directions, Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of Lenders.
14.7 Indemnification. To the extent Agent is not reimbursed and
indemnified by Borrower, each Lender will reimburse and indemnify Agent in
proportion to its respective portion of the Advances (or, as to any Defaulting
Lender, if no Advances are outstanding, according to its Commitment Percentage),
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by or asserted
against Agent in performing its duties hereunder, or in any way relating to or
arising out of this Agreement or any Other Loan Document or any transaction
contemplated herein or therein or referred to herein or therein; provided that
Lenders shall not be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from Agent's gross negligence (but not mere negligence)
or willful misconduct.
14.8 Agent in its Individual Capacity. With respect to the
obligation of Agent to lend under this Agreement, the Advances made by it shall
have the same rights and powers hereunder as any other Lender and as if it were
not performing the duties as Agent specified herein; and the term "Lender" or
any similar term shall, unless the context clearly otherwise indicates, include
Agent in its individual capacity as a Lender. Agent may engage in business with
Borrower as if it were not performing the duties specified herein, and may
accept fees and other consideration
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from Borrower for services in connection with this Agreement or otherwise
without having to account for the same to Lenders.
14.9 Delivery of Documents. To the extent Agent receives documents
and information from Borrower pursuant to the terms of this Agreement, Agent
will promptly furnish such documents and information to Lenders.
14.10 Borrower's Undertaking to Agent. Without prejudice to its
obligations to Lenders under the other provisions of this Agreement, Borrower
hereby undertakes with Agent to pay to Agent from time to time on demand all
amounts from time to time due and payable by it for the account of Agent or
Lenders or any of them pursuant to this Agreement to the extent not already
paid. Any payment made pursuant to any such demand shall pro tanto satisfy
Borrower's obligations to make payments for the account of Lenders pursuant to
this Agreement.
SECTION 15. MISCELLANEOUS
15.1 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLIED TO
CONTRACTS TO BE PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK. ANY JUDICIAL
PROCEEDING BROUGHT BY OR AGAINST ANY OF THE PARTIES HERETO WITH RESPECT TO ANY
OF THE OBLIGATIONS, THIS AGREEMENT OR ANY RELATED AGREEMENT MAY BE BROUGHT IN
ANY COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW YORK, UNITED STATES OF
AMERICA, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES
HERETO ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS, AND
IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION
WITH THIS AGREEMENT. BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY
REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO BORROWER AT ITS ADDRESS
SET FORTH IN SECTION 15.6 AND SERVICE SO MADE SHALL BE DEEMED COMPLETED FIVE (5)
DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE MAILS OF THE UNITED
STATES OF AMERICA, OR, AT THE AGENT'S AND/OR ANY LENDER'S OPTION, BY SERVICE
UPON BORROWER. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY
MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF AGENT OR ANY LENDER TO BRING
PROCEEDINGS AGAINST BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. BORROWER
WAIVES ANY OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED
HEREUNDER AND SHALL NOT ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION OR
VENUE OR BASED UPON FORUM NON CONVENIENS. ANY JUDICIAL PROCEEDING BY BORROWER
AGAINST AGENT OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER OR
CLAIM IN ANY WAY ARISING OUT OF, RELATED TO OR CONNECTED WITH THIS AGREEMENT OR
ANY RELATED AGREEMENT, SHALL BE BROUGHT ONLY IN A FEDERAL OR STATE COURT LOCATED
IN XXX XXXX XX XXX XXXX, XXXXX XX XXX XXXX.
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15.2 Entire Understanding.
(a) This Agreement and the documents executed concurrently herewith
contain the entire understanding between Borrower, Agent and each Lender and
supersedes all prior agreements and understandings, if any, relating to the
subject matter hereof. Any promises, representations, warranties or guarantees
not herein contained and hereinafter made shall have no force and effect unless
in writing, signed by Borrower's, Agent's and each Lender's respective officers.
Neither this Agreement nor any portion or provisions hereof may be changed,
modified, amended, waived, supplemented, discharged, canceled or terminated
orally or by any course of dealing, or in any manner other than by an agreement
in writing, signed by the party to be charged. Borrower acknowledges that it has
been advised by counsel in connection with the execution of this Agreement and
Other Documents and is not relying upon oral representations or statements
inconsistent with the terms and provisions of this Agreement.
(b) The Required Lenders, Agent with the consent in writing of the
Required Lenders, and Borrower may, subject to the provisions of this Section
15.2(b), from time to time enter into written supplemental agreements to this
Agreement or the Other Documents executed by Borrower, for the purpose of adding
or deleting any provisions or otherwise changing, varying or waiving in any
manner the rights of Lenders, Agent or Borrower thereunder or the conditions,
provisions or terms thereof of waiving any Event of Default thereunder, but only
to the extent specified in such written agreements; provided, however, that no
such supplemental agreement shall, without the consent of all Lenders:
(i) increase the Commitment Percentage of any Lender;
(ii) increase the Maximum Loan Amount, the Maximum Revolving
Advance Amount or the Maximum Term Loan Amount;
(iii) extend the maturity of any instrument evidencing any of
the Obligations or the due date for any amount payable hereunder, or decrease
the rate of interest or reduce any fee payable by Borrower to Lenders pursuant
to this Agreement;
(iv) alter the definition of the term Required Lenders or
alter, amend or modify this Section 15.2(b);
(v) release any Collateral during any calendar year having an
aggregate value in excess of $100,000; or
(vi) change the rights and duties of Agent.
Any such supplemental agreement shall apply equally to each Lender and shall be
binding upon Borrower, Lenders and Agent and all future holders of the
Obligations. In the case of any waiver, Borrower, Agent and Lenders shall be
restored to their former positions and rights, and any Event of Default waived
shall be deemed to be cured and not continuing, but no waiver of a specific
Event of Default shall extend to any subsequent Event of Default (whether or not
the subsequent Event of
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Default is the same as the Event of Default which was waived), or impair any
right consequent thereon.
15.3 Successors and Assigns; Participations; New Lenders.
(a) This Agreement shall be binding upon and inure to the benefit of
Borrower, Agent, each Lender, all future holders of the Obligations and their
respective successors and assigns, except that Borrower may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of Agent and each Lender.
(b) Borrower acknowledges that in the regular course of commercial
banking business one or more Lenders may at any time and from time to time sell
participating interests in the Advances to other financial institutions (each
such transferee or purchaser of a participating interest, a "Transferee").
Transferee may exercise all rights of payment (including without limitation
rights of set-off) with respect to the portion of such Advances held by it or
other Obligations payable hereunder as fully as if such Transferee were the
direct holder thereof provided that Borrower shall not be required to pay to any
Transferee more than the amount which it would have been required to pay to
Lender which granted an interest in its Advances or other Obligations payable
hereunder to such Transferee had such Lender retained such interest in the
Advances hereunder or other Obligations payable hereunder and in no event shall
Borrower be required to pay any such amount arising from the same circumstances
and with respect to the same Advances or other Obligations payable hereunder to
both such Lender and such Transferee. Borrower hereby grants to any Transferee a
continuing security interest in any deposits, moneys or other property actually
or constructively held by such Transferee as security for the Transferee's
interest in the Advances.
(c) With the prior written consent of the Agent, which shall not be
unreasonably withheld, any Lender may sell, assign or transfer all or any part
of its rights under this Agreement and the Other Documents to one or more
additional banks or financial institutions and one or more additional banks or
financial institutions may commit to make Advances hereunder (each a "Purchasing
Lender"), in minimum amounts of not less than $5,000,000, pursuant to a
Commitment Transfer Supplement, executed by a Purchasing Lender, the transferor
Lender, and Agent and delivered to Agent for recording. Upon such execution,
delivery, acceptance and recording, from and after the transfer effective date
determined pursuant to such Commitment Transfer Supplement, (i) Purchasing
Lender thereunder shall be a party hereto and, to the extent provided in such
Commitment Transfer Supplement, have the rights and obligations of a Lender
thereunder with a Commitment Percentage as set forth therein, and (ii) the
transferor Lender thereunder shall, to the extent provided in such Commitment
Transfer Supplement, be released from its obligations under this Agreement, the
Commitment Transfer Supplement creating a novation for that purpose. Such
Commitment Transfer Supplement shall be deemed to amend this Agreement to the
extent, and only to the extent, necessary to reflect the addition of such
Purchasing Lender and the resulting adjustment of the Commitment Percentages
arising from the purchase by such Purchasing Lender of all or a portion of the
rights and obligations of such transferor Lender under this Agreement and the
Other Documents. Borrower hereby consents to the addition of such Purchasing
Lender and the resulting adjustment of the Commitment Percentages arising from
the purchase by such Purchasing Lender of all or a portion of the rights and
obligations of such transferor Lender under this
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Agreement and the Other Documents. Borrower shall execute and deliver such
further documents and do such further acts and things in order to effectuate the
foregoing.
(d) Agent shall maintain at its address a copy of each Commitment
Transfer Supplement delivered to it and a register (the "Register") for the
recordation of the names and addresses of the Advances owing to each Lender from
time to time. The entries in the Register shall be conclusive, in the absence of
manifest error, and Borrower, Agent and Lenders may treat each Person whose name
is recorded in the Register as the owner of the Advance recorded therein for the
purposes of this Agreement. The Register shall be available for inspection by
Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice. Agent shall receive a fee in the amount of $2,500
payable by the applicable Purchasing Lender upon the effective date of each
transfer or assignment to such Purchasing Lender.
(e) Borrower authorizes each Lender to disclose to any Transferee or
Purchasing Lender and any prospective Transferee or Purchasing Lender any and
all financial information in such Lender's possession concerning Borrower which
has been delivered to such Lender by or on behalf of Borrower pursuant to this
Agreement or in connection with such Lender's credit evaluation of Borrower.
15.4 Application of Payments. Agent shall have the continuing and
exclusive right to apply or reverse and re-apply any payment and any and all
proceeds of Collateral to any portion of the Obligations. To the extent that
Borrower makes a payment or Agent or any Lender receives any payment or proceeds
of the Collateral for Borrower's benefit, which are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid to
a trustee, debtor in possession, receiver, custodian or any other party under
any bankruptcy law, common law or equitable cause, then, to such extent, the
Obligations or part thereof intended to be satisfied shall be revived and
continue as if such payment or proceeds had not been received by Agent or such
Lender.
15.5 Indemnity. Borrower shall indemnify Agent, each Lender and each
of their respective officers, directors, Affiliates, employees and agents from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses and disbursements of any kind or
nature whatsoever (including, without limitation, reasonable fees and
disbursements of counsel) which may be imposed on, incurred by, or asserted
against Agent or any Lender in any litigation, proceeding or investigation
instituted or conducted by any governmental agency or instrumentality or any
other Person with respect to any aspect of, or any transaction contemplated by,
or referred to in, or any matter related to, this Agreement or the Other
Documents, whether or not Agent or any Lender is a party thereto, except to the
extent that any of the foregoing arises out of the willful misconduct or gross
(not mere) negligence of the party being indemnified.
15.6 Notice. Any notice or request hereunder may be given to
Borrower or to Agent or any Lender at their respective addresses set forth below
or at such other address as may hereafter be specified in a notice designated as
a notice of change of address under this Section. Any notice or request
hereunder shall be given by (a) hand delivery, (b) overnight courier, (c)
registered or certified mail, return receipt requested, (d) telex or telegram,
subsequently confirmed by registered or certified mail, or (e) telecopy to the
number set out below (or such other number as may hereafter
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be specified in a notice designated as a notice of change of address) with
telephone communication to a duly authorized officer of the recipient confirming
its receipt as subsequently confirmed by registered or certified mail. Any
notice or other communication required or permitted pursuant to this Agreement
shall be deemed given (a) when personally delivered to any officer of the party
to whom it is addressed, (b) on the earlier of actual receipt thereof or three
(3) days following posting thereof by certified or registered mail, postage
prepaid, or (c) upon actual receipt thereof when sent by a recognized overnight
delivery service or (d) upon actual receipt thereof when sent by telecopier to
the number set forth below with telephone communication confirming receipt and
subsequently confirmed by registered, certified or overnight mail to the address
set forth below, in each case addressed to each party at its address set forth
below or at such other address as has been furnished in writing by a party to
the other by like notice:
If to Agent at: GMAC Commercial Finance LLC
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention:
Telephone:
Telecopier:
If to a Lender other than Agent, as specified on the signature pages
hereof
If to Borrower: Delta Xxxxx, Inc.
000 Xxxxx Xxxxx Xxxxx
Xxxxxxxx Xxx, Xxxxx Xxxxxxxx 00000
Attention: Chief Financial Officer
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
15.7 Survival. The obligations of Borrower under Sections 3.7, 3.8
and 15.5 shall survive termination of this Agreement and the Other Documents and
payment in full of the Obligations.
15.8 Severability. If any part of this Agreement is contrary to,
prohibited by, or deemed invalid under applicable laws or regulations, such
provision shall be inapplicable and deemed omitted to the extent so contrary,
prohibited or invalid, but the remainder hereof shall not be invalidated thereby
and shall be given effect so far as possible.
15.9 Expenses. All costs and expenses, including, without
limitation, reasonable attorneys' fees and disbursements, incurred by Agent,
Agent on behalf of Lenders and Lenders (a) in all efforts made to enforce
payment of any Obligation or effect collection of any Collateral, or (b) in
connection with the entering into, modification, amendment, administration and
enforcement of this Agreement or any consents or waivers hereunder and all
related agreements, documents and instruments, or (c) in instituting,
maintaining, preserving, enforcing and foreclosing on Agent's security interest
in or Lien on any of the Collateral, whether through judicial proceedings or
otherwise, or (d) in defending or prosecuting any actions or proceedings arising
out of or relating to Agent's or any Lender's transactions with Borrower, or (e)
in connection with any advice given to
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Agent or any Lender with respect to its rights and obligations under this
Agreement and all related agreements, may be charged to Borrower's account and
shall be part of the Obligations.
15.10 Injunctive Relief. Borrower recognizes that, in the event
Borrower fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, any remedy at law may prove to be inadequate
relief to Lenders; therefore, each Lender, if such Lender so requests, shall be
entitled to temporary and permanent injunctive relief in any such case without
the necessity of proving that actual damages are not an adequate remedy.
15.11 Consequential Damages. Neither Agent, any Lender nor any agent
or attorney for any of them shall be liable to Borrower for consequential
damages arising from any breach of contract, tort or other wrong relating to the
establishment, administration or collection of the Obligations.
15.12 Captions. The captions at various places in this Agreement are
intended for convenience only and do not constitute and shall not be interpreted
as part of this Agreement.
15.13 Counterparts; Telecopied Signatures. This Agreement may be
executed in any number of and by different parties hereto, on separate
counterparts, all of which when so executed, shall be deemed an original, but
all such counterparts shall constitute one and the same agreement. Any signature
delivered by a party by facsimile transmission shall be deemed to be an original
signature hereto.
15.14 Construction. The parties acknowledge that each party and its
counsel have reviewed this Agreement and that the normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or any amendments,
schedules or exhibits thereto.
15.15 Acknowledgment and Restatement.
(a) Existing Obligations. Borrower hereby acknowledges, confirms and
agrees that Borrower is indebted to the Lenders for loans and advances under the
Existing Agreements, as of the close of business on May 30, 2006, in the
aggregate principal amount of $19,740,057.07 and the aggregate amount of
$986,410 in respect of Letters of Credit (as defined in the Existing
Agreements), together with all interest accrued thereon as of May 30, 2006 (to
the extent applicable), and all fees, costs, expenses and other charges relating
thereto, all of which are unconditionally owing by Borrower to the Lenders,
without offset, defense or counterclaim of any kind, nature or description
whatsoever.
(b) Acknowledgment of Security Interests.
(i) Borrower hereby acknowledges, confirms and agrees that
Agent, for the ratable benefit of the Lenders, has and shall continue to have a
security interest in and lien upon the Collateral (as defined in the Existing
Agreements) heretofore granted to Agent, for the ratable benefit of the Lenders,
pursuant to the Existing Agreements to secure the Obligations (as defined in the
Existing Agreements), as well as a security interest in and lien upon the
Collateral granted under
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this Agreement or any of the Other Documents or otherwise granted to or held by
Agent, for the ratable benefit of the Lenders, to secure the Obligations.
(ii) The liens and security interests of Agent, for the
ratable benefit of the Lenders, in the Collateral shall be deemed to have been
continuously granted and perfected from the earliest date of the granting and
perfection of such liens and security interests to Agent, for the ratable
benefit of the Lenders, whether under the Existing Agreements, this Agreement or
any of the Other Documents.
(c) Existing Agreements. Borrower hereby acknowledges, confirms and
agrees that: (i) the Existing Agreements have been duly executed and delivered
by Borrower and, (ii) immediately prior to the execution and delivery hereof,
(x) the Existing Agreements are in full force and effect, (y) the agreements and
obligations of Borrower contained in the Existing Agreements constitute the
legal, valid and binding obligations of Borrower enforceable against it in
accordance with their respective terms and Borrower has no valid defense to the
enforcement of such obligations and (z) Agent and the Lenders are entitled to
all of the rights and remedies provided for in the Existing Agreements.
(d) Restatement.
(i) Except as otherwise stated in Section 15.150 hereof and
this Section 15.15(d), as of the date hereof, the terms, conditions, agreements,
covenants, representations and warranties set forth in the Existing Agreements
are hereby amended and restated in their entirety, and as so amended and
restated, replaced and superseded, by the terms, conditions, agreements,
covenants, representations and warranties set forth in this Agreement and the
Other Documents, except that nothing herein or in the Other Documents shall
impair or adversely affect the continuation of the liability of Borrower for the
Obligations (as defined in the Existing Agreements) heretofore incurred and the
security interests, liens and other interests in the Collateral (as defined in
the Existing Agreements) heretofore granted, pledged and/or assigned by Borrower
to Agent, for the ratable benefit of the Lenders, which on and after the date
hereof shall be deemed to have been granted to Agent, for the ratable benefit of
the Lenders. The amendment and restatement contained herein shall not, in any
manner, be construed to constitute payment of, or impair, limit, cancel or
extinguish, or constitute a novation in respect of, the indebtedness and the
Obligations (as defined in the Existing Agreements) of Borrower evidenced by or
arising under the Existing Agreements, and the liens and security interests of
Agent, for the ratable benefit of the Lenders, securing such indebtedness and
the Obligations (as defined in the Existing Agreements), which shall not in any
manner be impaired, limited, terminated, waived or released, but shall continue
in full force and effect in favor of Agent, for the ratable benefit of the
Lenders.
(ii) The principal amount of the Advances (as defined in the
Existing Agreements) and the amount of the Letters of Credit (as defined in the
Existing Agreements) outstanding as of the date hereof under the Existing
Agreements shall be allocated to the Revolving Advances and Letters of Credit
hereunder in such manner and in such amounts as Agent shall determine.
(e) Release. Borrower for itself and its successors and assigns does
hereby
77
remise, release, discharge and hold Agent and each Lender, its respective
officers, directors, agents and employees and their respective predecessors,
successors and assigns harmless from all claims, demands, debts, sums of money,
accounts, damages, judgments, financial obligations, actions, causes of action,
suits at law or in equity, of any kind or nature whatsoever, whether or not now
existing or known, which Borrower or its successors or assigns has had or may
now or hereafter claim to have against Agent or any Lender or any of their
respective officers, directors, agents and employees and their respective
predecessors, successors and assigns in any way arising from or connected with
the Existing Agreements or the arrangements set forth therein or transactions
thereunder up to and including the date hereof.
[SIGNATURE PAGE FOLLOWS]
78
Each of the parties has signed this Agreement as of the day and year first
above written.
DELTA XXXXX, INC.
By:
---------------------------------------
Its:
--------------------------------------
GMAC COMMERCIAL FINANCE LLC,
as Lender and as Agent
By:
---------------------------------------
Its:
--------------------------------------
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Commitment Percentage: 100%
00
XXXXX XX XXXXX XXXXXXXX )
) ss.
COUNTY OF GREENVILLE )
On this _____ day of May, 2006, before me personally came ______________,
to me known, who, being by me duly sworn, did depose and say that he is the
___________ of DELTA XXXXX, INC. the corporation described in and which
executed the foregoing instrument and that he is authorized to execute said
instrument on behalf of said corporation.
-------------------------------------------
NOTARY PUBLIC
STATE OF NEW YORK )
)ss.
COUNTY OF NEW YORK )
On this _____ day of May, 2006, before me personally came ______________,
to me known, who, being by me duly sworn, did depose and say that he is the
___________ of GMAC COMMERCIAL FINANCE LLC, the corporation described in and
which executed the foregoing instrument and that he is authorized to execute
said instrument on behalf of said corporation.
-------------------------------------------
NOTARY PUBLIC
