LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (as it may be amended, this "Agreement")
is entered into on April 28, 2000, by and among BANC OF AMERICA COMMERCIAL
FINANCE CORPORATION THROUGH ITS COMMERCIAL FUNDING DIVISION (together with its
successors and assigns, "LENDER"), having an address at 1177 Avenue of the
Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 and XXXXXXX & XXXXX, INC., a
Delaware corporation ("XXXXXXX"); MACPHERSON MEISTERGRAM, INC., a North Carolina
corporation ("MACPHERSON"); LEADTEC SYSTEMS, INC., a Delaware corporation
("LEADTEC"); EMTEX LEASING CORPORATION, a Georgia corporation ("EMTEX"); WG
APPAREL, INC., a Delaware corporation ("WG"); CLINTON MACHINERY CORPORATION, a
Delaware corporation ("CLINTON MACHINERY"); CLINTON MANAGEMENT CORP., a Florida
corporation ("CLINTON MANAGEMENT"); CLINTON LEASING CORP., a Florida corporation
("CLINTON LEASING"); CLINTON EQUIPMENT CORP., a Florida corporation ("CLINTON
EQUIPMENT"); J&E SEWING SUPPLIES, INC., a New York corporation ("J&E"); W&G
DAON, INC., a Delaware corporation ("DAON"); and PARADISE COLOR INCORPORATED, a
Florida corporation ("PARADISE;" Willcox, Macpherson, Leadtec, Emtex, WG,
Clinton Machinery, Clinton Management, Clinton Leasing, Clinton Equipment, J&E,
Daon and Paradise are referred to herein individually as a "BORROWER" and
collectively as "Borrowers"), whose chief executive offices are located at the
Addresses set forth in Section 9(j) of Schedule A ("BORROWERS' ADDRESS"). The
Schedules to this Agreement are an integral part of this Agreement and are
incorporated herein by reference. Terms used, but not defined elsewhere, in this
Agreement are defined in Schedule B.
R E C I T A L S:
Borrowers have requested that Lender make available a revolving loan
facility to Borrowers, which shall be used by Borrowers to finance their mutual
and collective enterprise of distribution of replacement parts, supplies and
ancillary equipment to the apparel and other sewn products industry.
In order to utilize the financial powers of each Borrower in the most
efficient and economical manner, and in order to facilitate the financing of
each Borrower's needs, Lender will make revolving loans to all Borrowers under
the loan facility on a combined basis and in accordance with the provisions
hereinafter set forth. Borrowers' business is a mutual and collective
enterprise, and Borrowers believe that the consolidation of all loans under this
Agreement will enhance the aggregate borrowing powers of each Borrower and ease
the administration of their loan relationship with Lender, all to the mutual
advantage of Borrowers. Lender's willingness to extend credit to Borrowers and
to administer each Borrower's collateral security therefor, on a combined basis
as more fully set forth in this Agreement, is done solely as an accommodation to
Borrowers and at Borrowers' request in furtherance of Borrowers' mutual and
collective enterprise.
Each Borrower has agreed to guarantee the obligations of each of the other
Borrowers under this Agreement and each of the other Loan Documents.
NOW, THEREFORE, for Ten Dollars ($10.00) and other good and valuable
consideration, the receipt and sufficiency of which are hereby severally
acknowledged, the parties hereto hereby agree as follows:
1. LOANS AND CREDIT ACCOMMODATIONS.
1.1 AMOUNT. Subject to the terms and conditions contained in this
Agreement and satisfaction of all of the conditions precedent set forth in
Schedule C attached hereto in form and substance satisfactory to Lender in its
sole discretion, Lender will:
(a) REVOLVING LOANS AND CREDIT ACCOMMODATIONS. From time to time
during the Term at any Borrower's request and, provided that no Event of Default
exists, make revolving loans to Borrowers ("REVOLVING LOANS"), and may (as
provided in Section 1.3 hereof) make letters of credit, bankers acceptances and
other credit accommodations ("CREDIT ACCOMMODATIONS") available to Borrowers, in
each case, to the extent that there is sufficient Availability at the time of
such request to cover, dollar for dollar, the requested Revolving Loan or Credit
Accommodation; PROVIDED, that after giving effect to such Revolving Loan or
Credit Accommodation, (x) the outstanding balance of all monetary Obligations
(INCLUDING the principal balance of any Term Loan and, solely for the purpose of
determining compliance with this provision, the Credit Accommodation Balance)
will not exceed the Maximum Facility Amount set forth in Section 1(a) of
Schedule A and (y) none of the other Loan Limits set forth in Section 1 of
Schedule A will be exceeded. For this purpose, "AVAILABILITY" means: (i) the
aggregate amount of Eligible Accounts, Eligible Extended Accounts and Eligible
Foreign Accounts multiplied by the applicable Accounts Advance Rates set forth
in Section 1(b)(i) of Schedule A, but not to exceed the Accounts Sublimits set
forth in Section 1(c) of Schedule A;
PLUS
(ii) the value of Eligible Inventory, Eligible In-Transit
Inventory and Eligible Leased Inventory multiplied by the applicable
Inventory Advance Rates set forth in Section 1(b)(ii) of Schedule A,
but not to exceed the applicable Inventory Sublimits set forth in
Section 1(d) of Schedule A;
PLUS
(iii) the face amount of each Barudan LC multiplied by the
Barudan LC Advance Rate set forth in Section 1(b)(iii) of Schedule
A, but not to exceed, in the aggregate, the Barudan LC Sublimit set
forth in Section 1(e) of Schedule A;
PLUS
(iv) at any time the New LC Loan Conditions have been
satisfied, as determined by Lender in its sole discretion, the face
amount of the New LC multiplied by 90%, but not to exceed, in the
aggregate, $2,000,000 (provided, that such amount shall be reduced
to $0 five days prior to the expiration date of the New LC);
MINUS
(v) all Reserves which Lender has established pursuant to
Section 1.2 (including those to be established in connection with
the requested Revolving Loan or Credit Accommodation);
MINUS
(vi) the outstanding balance of all of the monetary
Obligations (EXCLUDING the Credit Accommodation Balance and the
principal balance of the Term Loan); and
PLUS
(vii) the Overadvance Amount, if any, set forth in Section
1(h) of Schedule A.
(b) TERM LOAN. On the date of this Agreement, make (i) an advance to
Borrowers computed with respect to the value of Borrowers' Eligible Equipment
(the "EQUIPMENT ADVANCE") in the principal amount, if any, set forth in Section
2(a)(i) of Schedule A, and (ii) an advance to Borrowers computed with respect to
the value of Borrowers' Eligible Real Property (the "REAL PROPERTY ADVANCE") in
the principal amount, if applicable, set forth in Section 2(a)(ii) of Schedule
A. The Equipment Advance and the Real Property Advance are collectively referred
to as the "TERM LOAN."
1.2 RESERVES. Lender may from time to time establish and revise such
reserves as Lender deems appropriate in its sole discretion exercised in good
faith ("RESERVES") to reflect (i) events, conditions, contingencies or risks
which adversely affect or may adversely affect (A) the Collateral or its value,
or the security interests and other rights of Lender in the Collateral or (B)
the assets, business or prospects of any Borrower or any Obligor, (ii) Lender's
good faith determination that any Collateral report or financial information
furnished by or on behalf of any Borrower or any Obligor to Lender is or may
have been incomplete, inaccurate or misleading in any material respect, (iii)
any fact or circumstance which Lender determines in good faith constitutes a
Default or Event of Default or (iv) any other events or circumstances which
Lender determines in good faith make the establishment or revision of a Reserve
prudent. Without limiting the foregoing, Lender shall (x) in the case of each
Credit Accommodation issued for the purchase of Inventory (a) which meets the
criteria for Eligible Inventory set forth in clauses (i), (ii), (iii), (v) and
(vi) of the definition of Eligible Inventory, (b) which is or will be in transit
to one of the locations set forth in Section 9(d) of Schedule A, (c) which is
fully insured in a manner satisfactory to Lender and (d) with respect to which
Lender is in possession of all bills of lading and all other documentation which
Lender has requested, all in form and substance satisfactory to Lender in its
sole discretion, establish a Reserve equal to the cost of such Inventory (plus
all duties, freight, taxes, insurance, costs and other charges and expenses
relating to such Credit Accommodation or such Eligible Inventory) multiplied by
a percentage equal to 100% minus the Inventory Advance Rate then applicable to
such Inventory and (y) in the case of any other Credit Accommodation issued for
any purpose, establish a Reserve equal to the full amount of such Credit
Accommodation plus all costs and other charges and expenses relating to such
Credit Accommodation. In addition, (x) Lender shall establish a permanent
Reserve in the amount, if any, set forth in Section 1(g) of Schedule A, and (y)
if the outstanding principal balance of the Term Loan advance with respect to
Eligible Equipment exceeds the percentage set forth in Section 2(a)(i) of
Schedule A of the appraised value of such Eligible Equipment, Lender may
establish an additional Reserve in the amount of such excess (and, for this
purpose, if payments of principal on the Term Loan advances against Eligible
Equipment and Eligible Real Property are not calculated separately, payments of
principal of the Term Loan made by Borrowers shall be deemed to apply to the
Term Loan advance with respect to Eligible Equipment and Eligible Real Property,
respectively, in proportion to the original principal amounts of such advances).
Lender may, in its discretion, establish and revise Reserves by deducting them
in determining Availability or by reclassifying Eligible Accounts, Eligible
Extended Accounts and Eligible Foreign Accounts or Eligible Inventory, Eligible
In-Transit Inventory and Eligible Leased Inventory as ineligible. In no event
shall the establishment of a Reserve in respect of a particular actual or
contingent liability obligate Lender to make advances hereunder to pay such
liability or otherwise obligate Lender with respect thereto.
1.3 OTHER PROVISIONS APPLICABLE TO CREDIT ACCOMMODATIONS. Lender may, in
its sole discretion and on terms and conditions acceptable to Lender, make
Credit Accommodations available to Borrowers either by issuing them, or by
causing other financial institutions to issue them supported by Lender's
guaranty or indemnification; PROVIDED, that after giving effect to each Credit
Accommodation, the Credit Accommodation Balance will not exceed the Credit
Accommodation Limit set forth in Section 1(f) of Schedule A. Any amounts paid by
Lender in respect of a Credit Accommodation will be treated for all purposes as
a Revolving Loan which shall be secured by the Collateral and bear interest, and
be payable, in the same manner as a Revolving Loan. Borrowers shall have no
obligation to enter into any Credit Accommodation made available to Borrowers by
Lender, but in the event Borrowers accept any such Credit Accommodations made
available by Lender, Borrowers shall execute all documentation required by
Lender or the issuer of any Credit Accommodation in connection with any such
Credit Accommodation. Borrowers may not procure Credit Accommodations from any
other Person without the prior written consent of Lender.
1.4 REPAYMENT. Accrued interest on all monetary Obligations shall be
payable on the first day of each month. Principal of the Term Loan shall be
repaid as set forth in Section 2(b) of Schedule A. If at any time any of the
Loan Limits are exceeded, Borrowers will immediately pay to Lender such amounts
(or provide cash collateral to Lender with respect to the Credit Accommodation
Balance in the manner set forth in Section 7.3), as shall cause Borrowers to be
in full compliance with all of the Loan Limits. Notwithstanding the foregoing,
Lender may, in its sole discretion, make or permit Revolving Loans, the Term
Loan, any Credit Accommodations or any other monetary Obligations to be in
excess of any of the Loan Limits; PROVIDED, that Borrowers shall, upon Lender's
demand, pay to Lender such amounts as shall cause Borrowers to be in full
compliance with all of the Loan Limits. All unpaid monetary Obligations shall be
payable in full on the Maturity Date (as defined in Section 7.1) or, if earlier,
the date of any early termination pursuant to Section 7.2. If any amount payable
under this Agreement is due on a day that is not a Business Day, such amount
shall be due and payable on the next succeeding Business Day.
1.5 MINIMUM BORROWING. Subject to the terms and conditions of this
Agreement, Borrowers intend to (i) borrow sufficient amounts to cause the
outstanding principal balance of the Loans to equal or exceed, at all times
prior to the Maturity Date, the Minimum Loan Amount set forth in Section 4 of
Schedule A and (ii) maintain Availability sufficient to enable Borrowers to do
so. However, Lender shall not be obligated to loan Borrowers the Minimum Loan
Amount other than in accordance with all of the terms and conditions of this
Agreement; and at any time the outstanding principal balance of the Loans is
less than the Minimum Loan Amount, Borrowers shall pay Lender a Minimum
Borrowing Fee in accordance with Section 2.2(e).
1.6 ALL LOANS TO CONSTITUTE ONE OBLIGATION. All Loans and Credit
Accommodations shall constitute one general Obligation of Borrowers and shall be
secured by Lender's Lien upon all of the Collateral; PROVIDED, that Lender shall
be deemed to be a creditor of each Borrower and the holder of a separate claim
against each Borrower to the extent of any Obligations jointly and severally
owed by Borrowers to Lender.
1.7 BORROWERS' REPRESENTATIVE. Each Borrower hereby irrevocably appoints
Xxxxxxx, and Xxxxxxx agrees to act under this Agreement, as the agent and
representative of itself and each other Borrower for all purposes under this
Agreement, including receiving account statements and other notices and
communications to Borrowers (or any of them) from Lender. Lender may rely, and
shall be fully protected in relying, on any request, reports, information or any
other notice or communication made or given by Xxxxxxx, whether in its own name,
on behalf of any Borrower or on behalf of "the Borrowers," and Lender shall have
no obligation to make any inquiry or request any confirmation from or on behalf
of any other Borrower as to the binding effect on such Borrower of any such
request, instruction, report, information, notice or communication, nor shall
the joint and several character of Borrowers' liability for the Loans and other
Obligations be affected, provided that the provisions of this Section 1.7 shall
not be construed so as to preclude any Borrower from directly taking other
actions permitted to be taken by "a Borrower" hereunder. Lender intends to
maintain a single Loan Account in the name of "Xxxxxxx & Xxxxx, Inc." hereunder,
and each Borrower expressly agrees to such arrangement and confirms that such
arrangement shall have no effect on the joint and several character of such
Borrower's liability for the Loans and other Obligations.
2. INTEREST AND FEES.
2.1 INTEREST. The principal amount of all Loans and other monetary
Obligations shall bear interest at the Interest Rate(s) set forth in Section 3
of Schedule A, except where expressly set forth to the contrary in this
Agreement or another Loan Document; PROVIDED, that after the occurrence of an
Event of Default, the principal amount of all Loans and other monetary
Obligations shall, at Lender's option, bear interest at a rate per annum equal
to two percent (2%) in excess of the rate otherwise applicable thereto (the
"DEFAULT RATE") until paid in full (notwithstanding the entry of any judgment
against any Borrower or the exercise of any other right or remedy by Lender),
and all such interest shall be payable on demand. Changes in the Interest Rate
shall be effective as of the date of any change in the Prime Rate.
Notwithstanding anything to the contrary contained in this Agreement, the
aggregate of all amounts deemed to be interest hereunder and charged or
collected by Lender is not intended to exceed the highest rate permissible under
any Applicable Law, but if it should, such interest shall automatically be
reduced to the extent necessary to comply with Applicable Law, and Lender will
refund to Borrowers any such excess interest received by Lender.
2.2 FEES. Borrowers shall be jointly and severally liable to pay to Lender
the following fees, which are in addition to all interest and other sums payable
by Borrowers to Lender under this Agreement, and are not refundable:
(a) CLOSING FEE. A closing fee in the amount set forth in Section
6(a) of Schedule A, which shall be deemed to be fully earned as of, and payable
on, the Closing Date.
(b) FACILITY FEES. (i) A facility fee for the Initial Term, which
shall be fully earned as of the Closing Date, and shall be payable in the amount
set forth in Section 6(b)(i) of Schedule A on each anniversary date of this
Agreement during the Initial Term, and (ii) a facility fee for each Renewal
Term, which shall be fully earned as of the first day of such Renewal Term, and
shall be payable in equal installments in the amount set forth in Section
6(b)(ii) of Schedule A on the first day of such Renewal Term and on each
anniversary thereof during such Renewal Term.
(c) SERVICING FEE. A monthly servicing fee in the amount set forth
in Section 6(c) of Schedule A, in consideration of Lender's administration and
other services for each month (or part thereof), which shall be fully earned as
of, and payable in advance on, the date of this Agreement and on the first day
of each month thereafter so long as any of the Obligations are outstanding.
(d) UNUSED LINE FEE. An unused line fee at a rate equal to the
percentage per annum set forth in Section 6(d) of Schedule A of the amount by
which the Maximum Facility Amount exceeds the greater of (i) the average daily
outstanding principal balance of the Loans and the Credit Accommodation Balance
during the immediately preceding month (or part thereof) and (ii) the Minimum
Loan Amount, which fee shall be payable, in arrears, on the first day of each
month so long as any of the Obligations are outstanding and on the Maturity
Date.
(e) MINIMUM BORROWING FEE. A minimum borrowing fee equal to the
excess, if any, of (i) interest which would have been payable in respect of each
period set forth in Section 6(e)(i) of Schedule A if, at all times during such
period, the principal balance of the Loans was equal to the Minimum Loan Amount
over (ii) the actual interest payable in respect of such period, which fee shall
be fully earned as of the last day of such period and payable on the date set
forth in Section 6(e)(ii) of Schedule A and on the Maturity Date. The minimum
borrowing fee shall be calculated by Lender and , in Lender's discretion, may be
charged to the Loan Account as set forth in Section 2.4 hereof.
(f) CREDIT ACCOMMODATION FEES. All of the fees relating to Credit
Accommodations set forth in Section 6(g) of Schedule A.
2.3 COMPUTATION OF INTEREST AND FEES. All interest and fees shall be
calculated daily on the closing balances in the Loan Account based on the actual
number of days elapsed in a year of 360 days. For purposes of calculating
interest and fees, if the outstanding daily principal balance of the Revolving
Loans is a credit balance, such balance shall be deemed to be zero.
2.4 LOAN ACCOUNT; MONTHLY ACCOUNTINGS. Lender shall maintain a loan
account for Borrowers reflecting all advances, charges, expenses and payments
made pursuant to this Agreement to or by any Borrower (the "LOAN ACCOUNT"), and
shall provide Borrowers with a monthly accounting reflecting the activity in the
Loan Account. Each accounting shall be deemed correct, accurate and binding on
all Borrowers and an account stated (except for reverses and reapplications of
payments made and corrections of errors discovered by Lender), unless Borrowers
notify Lender in writing to the contrary within 60 days after such account is
rendered, describing the nature of any alleged errors or admissions. However,
Lender's failure to maintain the Loan Account or to provide any such accounting
shall not affect the legality or binding nature of any of the Obligations.
Interest, fees and other monetary Obligations due and owing under this Agreement
(including fees and other amounts paid by Lender to issuers of Credit
Accommodations) may, in Lender's discretion, be charged to the Loan Account, and
will thereafter be deemed to be Revolving Loans and will bear interest at the
same rate as other Revolving Loans.
3. SECURITY INTEREST.
3.1 To secure the full payment and performance of all of the Obligations,
each Borrower hereby grants to Lender a continuing security interest in all of
such Borrower's property and interests in property, whether tangible or
intangible, now owned or in existence or hereafter acquired or arising, wherever
located, including such Borrower's interest in all of the following, whether or
not eligible for lending purposes: (i) all Accounts, Chattel Paper, Instruments,
Documents, Goods (including Inventory, Equipment, farm products and consumer
goods), Investment Property, General Intangibles, Deposit Accounts and money,
(ii) all proceeds and products of all of the foregoing (including proceeds of
any insurance policies, proceeds of proceeds and claims against third parties
for loss or any destruction of any of the foregoing), and (iii) all books and
records relating to any of the foregoing.
4. ADMINISTRATION.
4.1 LOCK BOXES AND BLOCKED ACCOUNTS. Each Borrower will, at its expense,
establish (and revise from time to time as Lender may require) collection
procedures acceptable to Lender, in Lender's sole discretion, for the collection
of checks, wire transfers and other proceeds of Accounts ("ACCOUNT PROCEEDS"),
which may include (i) directing all Account Debtors to send all such proceeds
directly to a post office box designated by Lender either in the name of such
Borrower (but as to which Lender has exclusive access) or, at Lender's option,
in the name of Lender (a "LOCK BOX") or (ii) depositing all Account Proceeds
received by such Borrower into one or more bank accounts maintained in Lender's
name (each, a "BLOCKED ACCOUNT"), under an arrangement acceptable to Lender with
a depository bank acceptable to Lender, pursuant to which all funds deposited
into each Blocked Account are to be transferred to Lender in such manner, and
with such frequency, as Lender shall specify or (iii) a combination of the
foregoing. Each Borrower agrees to execute, and cause its depository banks to
execute, such Lock Box and Blocked Account agreements and other documentation as
Lender shall require from time to time in connection with the foregoing.
4.2 REMITTANCE OF PROCEEDS. Except as provided in Section 4.1, all
proceeds arising from the sale or other disposition of any Collateral shall be
delivered, in kind, by each Borrower to Lender in the original form in which
received by such Borrower not later than the following Business Day after
receipt by such Borrower. Until so delivered to Lender, each Borrower shall hold
such proceeds separate and apart from such Borrower's other funds and property
in an express trust for Lender. Nothing in this Section 4.2 shall limit the
restrictions on disposition of Collateral set forth elsewhere in this Agreement.
4.3 APPLICATION OF PAYMENTS. Lender may, in its sole discretion, apply,
reverse and re-apply all cash and non-cash proceeds of Collateral or other
payments received with respect to the Obligations to the payment of the
Obligations, in such order and manner as Lender shall determine, whether or not
the Obligations are due, and whether before or after the occurrence of a Default
or an Event of Default. For purposes of determining Availability, such amounts
will be credited to the Loan Account and the Collateral balances to which they
relate upon Lender's receipt of advice from Lender's Bank (set forth in Section
11 of Schedule A) that such items have been credited to Lender's account at
Lender's Bank (or upon Lender's deposit thereof at Lender's Bank in the case of
payments received by Lender in kind), in each case, subject to final payment and
collection. However, for purposes of computing interest on the Obligations, such
items shall be deemed applied by Lender three Business Days after Lender's
receipt of advice of deposit thereof in Lender's account at Lender's Bank.
4.4 NOTIFICATION; VERIFICATION. Lender or its designee may, from time to
time, whether or not a Default or Event of Default exists: (i) verify directly
with the Account Debtors the validity, amount and other matters relating to the
Accounts and Chattel Paper, by means of mail, telephone or otherwise, either in
the name of any Borrower or Lender or such other name as Lender may choose and
(ii) notify Account Debtors that Lender has a security interest in the Accounts
and that payment thereof is to be made directly to Lender. At any time a Default
or Event of Default exists, Lender or its designee may, from time to time,
demand, collect or enforce payment of any Accounts and Chattel Paper (but
without any duty to do so).
4.5 POWER OF ATTORNEY. Each Borrower hereby grants to Lender an
irrevocable power of attorney, coupled with an interest, authorizing and
permitting Lender (acting through any of its officers, employees, attorneys or
agents), at any time (whether or not a Default or Event of Default has occurred
and is continuing, except as expressly provided below), at Lender's option, but
without obligation, with or without notice to any Borrower, and at Borrowers'
expense, to do any or all of the following, in such Borrower's name or
otherwise, to the fullest extent permitted by Applicable Law: (i) execute on
behalf of such Borrower any documents that Lender may, in its sole discretion,
deem advisable in order to perfect and maintain Lender's security interests in
the Collateral, to exercise a right of such Borrower or Lender, or to fully
consummate all the transactions contemplated by this Agreement and the other
Loan Documents (including such financing statements and continuation financing
statements, and amendments thereto, as Lender shall deem necessary or
appropriate) and to file as a financing statement any copy of this Agreement or
any financing statement signed by such Borrower; (ii) at any time an Event of
Default exists, execute on behalf of such Borrower any document exercising,
transferring or assigning any option to purchase, sell or otherwise dispose of
or lease (as lessor or lessee) any real or personal property which is part of
the Collateral or in which Lender has an interest; (iii) at any time an Event of
Default exists, execute on behalf of such Borrower any invoices relating to any
Accounts, any draft against any Account Debtor, any proof of claim in
bankruptcy, any notice of Lien or claim, and any assignment or satisfaction of
mechanic's, materialman's or other Lien; (iv) execute on behalf of such Borrower
any notice to any Account Debtor; (v) receive and otherwise take control in any
manner of any cash or non-cash items of payment or proceeds of Collateral; (vi)
endorse such Borrower's name on all checks and other forms of remittances
received by Lender; (vii) pay, contest or settle any Lien, or adverse claim in
or to any of the Collateral, or any judgment based thereon, or otherwise take
any action to terminate or discharge the same; (viii) at any time an Event of
Default exists, grant extensions of time to pay, compromise claims relating to,
and settle Accounts, Chattel Paper and General Intangibles for less than face
value and execute all releases and other documents in connection therewith; (ix)
pay any sums required on account of such Borrower's taxes or to secure the
release of any Liens therefor; (x) pay any amounts necessary to obtain, or
maintain in effect, any of the insurance described in Section 5.12; (xi) at any
time an Event of Default exists settle and adjust, and give releases of, any
insurance claim that relates to any of the Collateral and obtain payment
therefor; (xii) instruct any third party having custody or control of any
Collateral or books or records belonging to, or relating to, such Borrower to
give Lender the same rights of access and other rights with respect thereto as
Lender has under this Agreement; and (xiii) at any time an Event of Default
exists, change the address for delivery of such Borrower's mail and receive and
open all mail addressed to such Borrower. Any and all sums paid, and any and all
costs, expenses, liabilities, obligations and reasonable attorneys' fees
incurred, by Lender with respect to the foregoing shall be added to and become
part of the Obligations, shall be payable on demand, and shall bear interest at
a rate equal to the highest interest rate applicable to any of the Obligations.
Each Borrower agrees that Lender's rights under the foregoing power of attorney
or any of Lender's other rights under this Agreement or the other Loan Documents
shall not be construed to indicate that Lender is in control of the business,
management or properties of such Borrower.
4.6 DISPUTES. Each Borrower shall promptly notify Lender of any dispute or
claim in excess of $50,000 relating to any Accounts or Chattel Paper. No
Borrower will, without Lender's prior written consent, compromise or settle any
Account or Chattel Paper for less than the full amount thereof (except that
Borrowers may compromise or settle for less than the full amount thereof
Accounts which do not constitute Eligible Accounts with an aggregate value not
to exceed $500,000 during the term of this Agreement), grant any extension of
time of payment of any Account or Chattel Paper, release (in whole or in part)
any Account Debtor or other person liable for the payment of any Account or
Chattel Paper or grant any credits, discounts, allowances, deductions, return
authorizations or the like in excess of $50,000 with respect to any Account or
Chattel Paper; except that for so long as no Event of Default exists, each
Borrower may take any of such actions in the ordinary course of its business,
PROVIDED that such Borrower reports the same to Lender on a weekly basis.
4.7 INVOICES. At Lender's request at any time an Event of Default exists,
each Borrower will cause all invoices and statements which it sends to Account
Debtors or other third parties to be marked, in a manner satisfactory to Lender,
to reflect Lender's security interest therein.
4.8 INVENTORY.
(a) RETURNS. Provided that no Event of Default exists, if any
Account Debtor returns any Inventory to any Borrower in the ordinary course of
its business, such Borrower will promptly determine the reason for such return
and promptly issue a credit memorandum to the Account Debtor in the appropriate
amount (and if such credit equals or exceeds $50,000, Borrower shall promptly
send a copy to Lender). At any time an Event of Default exists, no Borrower will
accept any return of any Inventory with a aggregate fair market value in excess
of $50,000 without Lender's prior written consent.
(b) OTHER COVENANTS. No Borrower will (i) without Lender's prior
written consent, store any Inventory with any warehouseman or other third party
other than as set forth in Section 9(d) of Schedule A or as permitted by Section
5.6 hereof, or (ii) sell any Inventory with a fair market value in excess of
$50,000 on a sale-or-return, guaranteed sale, consignment, or other contingent
basis at any time without Lender's prior written consent. All of the Inventory
has been produced only in accordance with the Fair Labor Standards Act of 1938
and all rules, regulations and orders promulgated thereunder.
4.9 ACCESS TO COLLATERAL, BOOKS AND RECORDS. At reasonable times, and on
one Business Day's notice at any time prior to the existence of a Default or
Event of Default, and at any time and with or without notice at any time a
Default or an Event of Default exists, Lender or its agents shall have the right
to inspect the Collateral, and the right to examine and copy each Borrower's
books and records. Lender shall take reasonable steps to keep confidential all
information obtained in any such inspection or examination, but Lender shall
have the right to disclose any such information to its auditors, regulatory
agencies, attorneys and participants, and pursuant to any subpoena or other
legal process. Each Borrower agrees to give Lender access to any or all of such
Borrower's premises to enable Lender to conduct such inspections and
examinations. Such inspections and examinations shall be at Borrowers' expense
and the charge therefor shall be $750 per person per day (or such higher amount
as shall represent Lender's then current standard charge), plus reasonable
out-of-pocket expenses. In connection with such examinations and inspections,
Lender may, at Borrowers' expense and to the extent Lender, in its sole
discretion, deems appropriate, use any Borrower's personnel, computer and other
equipment, programs, printed output and computer readable media, supplies and
premises for the collection, sale or other disposition of Collateral as provided
for in this Agreement. Each Borrower hereby irrevocably authorizes all
accountants and third parties to disclose and deliver to Lender, at Borrowers'
expense, all financial information, books and records, work papers, management
reports and other information in their possession regarding any Borrower. No
Borrower will enter into any agreement with any accounting firm, service bureau
or third party to store such Borrower's books or records at any location other
than Borrowers' Address without first obtaining Lender's written consent (which
consent may be conditioned upon such accounting firm, service bureau or other
Person agreeing to give Lender the same rights with respect to access to books
and records and related rights as Lender has under this Agreement).
4.10 NATURE AND EXTENT OF EACH BORROWER'S LIABILITY.
(a) JOINT AND SEVERAL LIABILITY. Each Borrower shall be liable for,
on a joint and several basis, and hereby guarantees the timely payment by all
other Borrowers of, all Loans and other Obligations, regardless of which
Borrower actually may have received the proceeds of the Loans or other
extensions of credit hereunder or the amount of the Loans received or the manner
in which Lender accounts for the Loans or other extensions of credit on its
books and records, it being acknowledged and agreed that the proceeds of the
Loans to any Borrower inure to the mutual benefit of all Borrowers and that
Lender is relying on the joint and several liability of Borrowers in extending
the Loans and other financial accommodations hereunder. Each Borrower hereby
unconditionally and irrevocably agrees that upon default in the payment when due
(whether at stated maturity, by acceleration or otherwise) of any principal of,
or interest owed on, any of the Loans or other Obligations, such Borrower shall
forthwith pay the same, without notice or demand.
(b) UNCONDITIONAL NATURE OF LIABILITY. Each Borrower's joint and
several liability hereunder with respect to, and guaranty of, the Loans and
other Obligations shall, to the fullest extent permitted by Applicable Law, be
unconditional irrespective of (i) the validity, enforceability, avoidance or
subordination of any of the Obligations or of any promissory note or other
document evidencing all or any part of the Obligations, (ii) the absence of any
attempt to collect any of the Obligations from any other Borrower or any Obligor
or any Collateral or other security therefor, or the absence of any other action
to enforce the same, (iii) the waiver, consent, extension, forbearance or
granting of any indulgence by Lender with respect to any provision of any
instrument evidencing or securing the payment of any of the Obligations, or any
other agreement now or hereafter executed by any other Borrower and delivered to
Lender, (iv) the failure by Lender to take any steps to perfect or maintain the
perfected status of its security interest in or Lien upon, or to preserve its
rights to, any of the Collateral or other security for the payment or
performance of any of the Obligations or Lender's release of any Collateral or
of its Liens upon any Collateral, (v) Lender's election, in any proceeding
instituted under the Bankruptcy Code, for the application of Section 1111(b)(2)
of the Bankruptcy Code, (vi) any borrowing or grant of a security interest by
any other Borrower, as debtor-in-possession under Section 364 of the Bankruptcy
Code, (vii) the release or compromise, in whole or in part, of the liability of
any Obligor for the payment of any of the Obligations, (ix) any amendment or
modification of any of the Loan Documents or waiver of any Default or Event of
Default thereunder, (x) any increase in the amount of the Obligations beyond any
limits imposed herein or in the amount of any interest, fees or other charges
payable in connection therewith, or any decrease in the same, (xi) the
disallowance of all or any portion of Lender's claims for the repayment of any
of the Obligations under Section 502 of the Bankruptcy Code, or (viii) any other
circumstance that might constitute a legal or equitable discharge or defense of
any Borrower. After the occurrence and during the continuance of any Event of
Default, Lender may proceed directly and at once, without notice to any Borrower
or any Obligor, against any or all Borrower or Obligors to collect and recover
all or any part of the Obligations, without first proceeding against any other
Borrower or any Obligor or against any Collateral or other security for the
payment or performance of any of the Obligations, and each Borrower waives any
provision that might otherwise require Lender under Applicable Law to pursue or
exhaust its remedies against any Collateral, Borrower or Obligor before pursuing
another Borrower or Obligor. Each Borrower consents and agrees that Lender shall
be under no obligation to xxxxxxxx any assets in favor of any Borrower or any
Obligor or against or in payment of any or all of the Obligations.
(c) NO REDUCTION IN LIABILITY FOR OBLIGATIONS. No payment or
payments made by a Borrower or an Obligor or received or collected by Lender
from a Borrower, Obligor or any other Person by virtue of any action or
proceeding or any setoff or appropriation or application at any time or from
time to time in reduction of or in payment of the Obligations shall be deemed to
modify, reduce, release or otherwise affect the liability of any Borrower under
this Agreement, each of whom shall remain jointly and severally liable for the
payment and performance of the Loans and other Obligations until the Obligations
are paid in full and this Agreement is terminated.
(d) CONTRIBUTION. Each Borrower is unconditionally obligated to
repay the Obligations as a joint and several obligor under this Agreement. If,
as of any date, the aggregate amount of payments made by a Borrower on account
of the Obligations and proceeds of such Borrower's Collateral that are applied
to the Obligations EXCEEDS the aggregate amount of Loan proceeds actually used
by such Borrower in its business (such excess amount being referred to as an
"ACCOMMODATION PAYMENT"), then each of the other Borrowers (each such Borrower
being referred to as a "CONTRIBUTING BORROWER") shall be obligated to make
contribution to such Borrower (the "PAYING BORROWER") in an amount equal to (A)
the product derived by multiplying the sum of each Accommodation Payment of each
Borrower by the Allocable Percentage of the Borrower from whom contribution is
sought LESS (B) the amount, if any, of the then outstanding Accommodation
Payment of such Contributing Borrower (such last mentioned amount which is to be
subtracted from the aforesaid product to be increased by any amounts theretofore
paid by such Contributing Borrower by way of contribution hereunder, and to be
decreased by any amounts theretofore received by such Contributing Borrower by
way of contribution hereunder); PROVIDED, that a Paying Borrower's recovery of
contribution hereunder from the other Borrowers shall be limited to that amount
paid by the Paying Borrower in excess of its Allocable Percentage of all
Accommodation Payments then outstanding of all Borrowers. As used herein, the
term "ALLOCABLE PERCENTAGE" shall mean, on any date of determination thereof, a
fraction the denominator of which shall be equal to the number of Borrowers who
are parties to this Agreement on such date and the numerator of which shall be
1; PROVIDED, that such percentages shall be modified in the event that
contribution from a Borrower is not possible by reason of insolvency, bankruptcy
or otherwise by reducing such Borrower's Allocable Percentage equitably or as
may be required under Applicable Law and by adjusting the Allocable Percentage
of the other Borrowers proportionately so that the Allocable Percentages of all
Borrowers at all times equals one hundred percent (100%).
(e) SUBORDINATION. Each Borrower hereby subordinates any claims,
including any right of payment, subrogation, contribution and indemnity, that it
may have from or against any other Borrower or Obligor, and any successor or
assign of any other Borrower or Obligor, including any trustee, receiver or
debtor-in-possession, howsoever arising, due or owing or whether heretofore, now
or hereafter existing, to the payment in full of all of the Obligations.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS.
To induce Lender to enter into this Agreement, each Borrower makes the
representations, warranties and covenants set forth below. Each such
representation and warranty will be deemed remade as of the date on which each
Loan is made and each Credit Accommodation is provided and shall not be affected
by any knowledge of, or any investigation by, Lender, and (ii) the accuracy of
each such representation, warranty and covenant (subject to changes in the
nature of a Borrower's business or operations that may occur after the date
hereof in the ordinary course of business so long as Lender has consented to
such changes or such changes are not violative of any provision of this
Agreement) will be a condition to each Loan and Credit Accommodation.
Notwithstanding the foregoing, representations and warranties which by their
terms are applicable only to a specific date shall be deemed made only at and as
of such date.
5.1 EXISTENCE AND AUTHORITY. Each Borrower is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or formation. Each Borrower is qualified and licensed to do
business in all jurisdictions in which any failure to do so would have a
Material Adverse Effect. The execution, delivery and performance by each
Borrower of this Agreement and all of the other Loan Documents have been duly
and validly authorized, do not violate such Borrower's articles or certificate
of incorporation, by-laws or other organizational documents, or any law or any
agreement or instrument or any court order which is binding upon such Borrower
or its property, do not constitute grounds for acceleration of any indebtedness
or obligation under any agreement or instrument which is binding upon such
Borrower or its property, and do not require the consent of any Person (other
than consents which have been previously obtained and provided to Lender in
writing). This Agreement and such other Loan Documents have been duly executed
and delivered by, and are enforceable against, each Borrower, and all other
Obligors who have signed them, in accordance with their respective terms.
Sections 9(g) and 9(h) of Schedule A set forth the ownership of each Borrower
and the names and ownership of each Borrower's Subsidiaries as of the date of
this Agreement.
5.2 NAME; TRADE NAMES AND STYLES. The name of each Borrower set forth in
the heading to this Agreement is its correct and complete legal name as of the
date hereof. Listed in Sections 9(a), 9(b) and 9(c) of Schedule A are all prior
names of each Borrower and all of such Borrower's present and prior trade names.
Each Borrower shall give Lender at least thirty days' prior written notice
before changing its name or doing business under any other name. Each Borrower
has complied with all laws relating to the conduct of business under a
fictitious business name. Each Borrower represents and warrants that (i) each
trade name does not refer to another corporation or other legal entity; (ii) all
Accounts invoiced under any such trade names are owned exclusively by such
Borrower and are subject to the security interest of Lender and the other terms
of this Agreement and (iii) all schedules of Accounts, including any sales made
or services rendered using any trade name shall show such Borrower's name as
assignor or seller.
5.3 TITLE TO COLLATERAL; PERMITTED LIENS. Each Borrower has good and
marketable title to the Collateral. The Collateral now is and will remain free
and clear of any and all Liens and adverse claims, except for Permitted Liens.
Lender now has, and will continue to have, a first-priority perfected and
enforceable security interest in all of the Collateral, and each Borrower will
at all times defend Lender and the Collateral against all claims of others. None
of the Collateral which is Equipment is or will be affixed to any real property
in such a manner, or with such intent, as to become a fixture. Except for leases
or subleases as to which a Borrower has notified Lender in writing, no Borrower
is a lessee or sublessee under any real property lease or sublease pursuant to
which the lessor or sublessor may obtain any rights in any of the Collateral,
and no such lease or sublease now prohibits, restrains, impairs or conditions,
or will prohibit, restrain, impair or condition, such Borrower's right to remove
any Collateral from the premises, and, with respect to such real property
leases, Borrowers shall deliver to Lender any landlord's waiver required by
Lender in form and substance satisfactory to Lender. Whenever any Collateral
with an aggregate fair market value in excess of $10,000 is located upon
premises in which any third party has an interest (whether as owner, mortgagee,
beneficiary under a deed of trust, lien or otherwise), each Borrower shall,
whenever requested by Lender, use its best efforts to cause each such third
party to execute and deliver to Lender, in form and substance reasonably
acceptable to Lender, such waivers and subordinations as Lender shall specify,
so as to ensure that Lender's rights in the Collateral are, and will continue to
be, superior to the rights of any such third party. Each Borrower will keep in
full force and effect, and will comply in all material respects with all the
terms of, any lease of real property where any of the Collateral now or in the
future may be located. Notwithstanding the foregoing, Borrowers may maintain
demonstration Inventory or Equipment with a fair market value not to exceed
$200,000 at any time at the premises of third parties without providing Lender
with any agreement with such third party.
5.4 ACCOUNTS AND CHATTEL PAPER. As of each date reported by each Borrower,
all Accounts which such Borrower has reported to Lender as being Eligible
Accounts, Eligible Extended Accounts and Eligible Foreign Accounts comply in all
respects with the criteria for eligibility established by Lender and in effect
at such time. Except as disclosed by Borrower in writing to Lender in connection
with the Collateral reporting required under this Agreement, all Accounts and
Chattel Paper are genuine and in all respects what they purport to be, arise out
of a completed, bona fide and unconditional and non-contingent sale and delivery
of goods or rendition of services by a Borrower in the ordinary course of its
business and in accordance with the terms and conditions of all purchase orders,
contracts or other documents relating thereto; to the best knowledge of such
Borrower, each Account Debtor thereunder had the capacity to contract at the
time any contract or other document giving rise to such Accounts and Chattel
Paper were executed; and the transactions giving rise to such Accounts and
Chattel Paper comply with all Applicable Law.
5.5 INVESTMENT PROPERTY. Each Borrower will take any and all actions
required or requested by Lender, from time to time, to (i) cause Lender to
obtain exclusive control of any Investment Property in a manner acceptable to
Lender and (ii) obtain from any issuers of Investment Property and such other
Persons as Lender shall specify, for the benefit of Lender, written confirmation
of Lender's exclusive control over such Investment Property and take such other
actions as Lender may request to perfect Lender's security interest in such
Investment Property. For purposes of this Section 5.5, Lender shall have
exclusive control of Investment Property if (A) such Investment Property
consists of certificated securities and any Borrower delivers such certificated
securities to Lender (with appropriate endorsements if such certificated
securities are in registered form); (B) such Investment Property consists of
uncertificated securities and either (x) any Borrower delivers such
uncertificated securities to Lender in the manner required by Applicable Law
(including Article 8 of the UCC) or (y) the issuer thereof agrees, pursuant to
documentation in form and substance satisfactory to Lender, that it will comply
with instructions originated by Lender without further consent by any Borrower;
and (C) such Investment Property consists of security entitlements and either
(x) Lender becomes the entitlement holder thereof or (y) the appropriate
securities intermediary agrees, pursuant to documentation in form and substance
satisfactory to Lender, that it will comply with entitlement orders originated
by Lender without further consent by any Borrower.
5.6 PLACE OF BUSINESS; LOCATION OF COLLATERAL. Each Borrower's Address is
such Borrower's chief executive office and the location of its books and
records. In addition, except as provided in the immediately following sentence,
each Borrower has places of business and Collateral located only at the
locations set forth on Sections 9(d) and 9(e) of Schedule A. Each Borrower will
give Lender at least thirty days' prior written notice before opening any
additional place of business, changing its chief executive office or the
location of its books and records, or moving any of the Collateral to a location
other than such Borrower's Address or one of the locations set forth in Sections
9(d) and 9(e) of Schedule A, and will promptly execute and deliver all financing
statements and other agreements, instruments and documents which Lender shall
require as a result thereof, including, without limitation, any landlord or
warehouseman agreements or waivers.
5.7 FINANCIAL CONDITION, STATEMENTS AND REPORTS. All financial statements
delivered to Lender by or on behalf of any Borrower have been prepared in
conformity with GAAP and completely and fairly reflect the financial condition
of such Borrower, at the times and for the periods therein stated. Between the
last date covered by any such financial statement provided to Lender and the
date hereof (or, with respect to the remaking of this representation in
connection with the making of any Loan or the providing of any Credit
Accommodation, the date such Loan is made or such Credit Accommodation is
provided), there has been no material adverse change in the financial condition
or business of such Borrower. Each Borrower is solvent and able to pay its debts
as they come due, and has sufficient capital to carry on its business as now
conducted and as proposed to be conducted. All schedules, reports and other
information and documentation delivered by any Borrower to Lender with respect
to the Collateral are, or will be, when delivered, true, correct and complete as
of the date delivered or the date specified therein.
5.8 TAX RETURNS AND PAYMENTS; PENSION CONTRIBUTIONS. Each Borrower has
timely filed all tax returns and reports required by Applicable Law, has timely
paid all applicable taxes, assessments, deposits and contributions owing by such
Borrower and will timely pay all such items in the future as they became due and
payable. Each Borrower may, however, defer payment of any contested taxes;
PROVIDED, that such Borrower (i) in good faith contests such Borrower's
obligation to pay such taxes by appropriate proceedings promptly and diligently
instituted and conducted; (ii) notifies Lender in writing of the commencement
of, and any material development in, the proceedings; (iii) posts bonds or takes
any other steps required to keep the contested taxes from becoming a Lien upon
any of the Collateral; and (iv) maintains adequate reserves therefor in
conformity with GAAP. Each Borrower is unaware of any claims or adjustments
proposed for any of such Borrower's prior tax years which could result in
additional taxes becoming due and payable by such Borrower. Each Borrower has
paid, and shall continue to pay, all amounts necessary to fund all present and
future pension, profit sharing and deferred compensation plans in accordance
with their terms, and such Borrower has not withdrawn from participation in,
permitted partial or complete termination of, or permitted the occurrence of any
other event with respect to, any such plan which could result in any liability
of such Borrower, including any liability to the Pension Benefit Guaranty
Corporation or any other governmental agency, which could reasonably be expected
to have a Material Adverse Effect.
5.9 COMPLIANCE WITH LAWS. Each Borrower has complied in all material
respects with all provisions of all Applicable Laws and regulations, including
those relating to such Borrower's ownership of real or personal property, the
conduct and licensing of such Borrower's business, the payment and withholding
of taxes, ERISA and other employee matters, safety and environmental matters.
5.10 LITIGATION. Section 9(f) of Schedule A discloses all claims,
proceedings, litigation or investigations pending or (to the best of each
Borrower's knowledge) threatened against any Borrower as of the date hereof.
There is no claim, suit, litigation, proceeding or investigation pending or (to
the best of each Borrower's knowledge) threatened by or against or affecting any
Borrower in any court or before any governmental agency (or any basis therefor
known to any Borrower) which could reasonably be expected to have a Material
Adverse Effect, either separately or in the aggregate. Each Borrower will
promptly inform Lender in writing of any claim, proceeding, litigation or
investigation in the future threatened or instituted by or against such
Borrower.
5.11 USE OF PROCEEDS. All proceeds of all Loans will be used solely for
lawful business purposes.
5.12 INSURANCE. Each Borrower will at all times carry property, liability
and other insurance, with insurers reasonably acceptable to Lender, in such form
and amounts, and with such deductibles and other provisions, as Lender shall
reasonably require, and such Borrower will provide evidence of such insurance to
Lender, so that Lender is satisfied that such insurance is, at all times, in
full force and effect. Each property insurance policy shall name Lender as
lender's loss payee and mortgagee and shall contain a lender's loss payable
endorsement in form acceptable to Lender, each liability insurance policy shall
name Lender as an additional insured, and each business interruption insurance
policy shall be collaterally assigned to Lender, all in form and substance
satisfactory to Lender. All policies of insurance shall provide that they may
not be cancelled or changed without at least thirty days' prior written notice
to Lender, shall contain breach of warranty coverage, and shall otherwise be in
form and substance satisfactory to Lender. Upon receipt of the proceeds of any
such insurance, Lender shall apply such proceeds in reduction of the Obligations
as Lender shall determine in its sole discretion. Each Borrower will promptly
deliver to Lender copies of all reports made to insurance companies.
5.13 FINANCIAL AND COLLATERAL REPORTS. Each Borrower has kept and will
keep adequate records and books of account with respect to its business
activities and the Collateral in which proper entries are made in accordance
with GAAP reflecting all its financial transactions, and will cause to be
prepared and furnished to Lender the following (all to be prepared in accordance
with GAAP, unless such Borrower's certified public accountants concur in any
change therein and such change is disclosed to Lender):
(a) COLLATERAL REPORTS. On or before the fifteenth day of each
month, an aging of such Borrower's Accounts, Chattel Paper and notes receivable,
and weekly Inventory reports, all in such form, and together with such
additional certificates, schedules and other information with respect to the
Collateral or the business of any Borrower or any Obligor, as Lender shall
request; PROVIDED, that any Borrower's failure to execute and deliver the same
shall not affect or limit Lender's security interests and other rights in any of
the Accounts, nor shall Lender's failure to advance or lend against a specific
Account affect or limit Lender's security interest and other rights therein. At
Lender's request, together with each such schedule, each Borrower shall furnish
Lender with copies (or, at Lender's request, originals) of all contracts,
orders, invoices, and other similar documents, and all original shipping
instructions, delivery receipts, bills of lading, and other evidence of
delivery, for any goods the sale or disposition of which gave rise to such
Accounts, and each Borrower warrants the genuineness of all of the foregoing. In
addition, each Borrower shall deliver to Lender the originals of all
Instruments, Chattel Paper (other than the Emtex Leases), security agreements,
guaranties and other documents and property evidencing or securing any Accounts,
immediately upon receipt thereof and in the same form as received, with all
necessary endorsements. Lender may destroy or otherwise dispose of all
documents, schedules and other papers delivered to Lender pursuant to this
Agreement (other than originals of Instruments, Chattel Paper, security
agreements, guaranties and other documents and property evidencing or securing
any Accounts) six months after Lender receives them, unless a Borrower requests
their return in writing in advance and arranges for their return to such
Borrower at Borrowers' expense.
(b) ANNUAL STATEMENTS. Not later than 90 days after the close of
each fiscal year of Xxxxxxx, unqualified (except for a qualification for a
change in accounting principles with which the accountant concurs) audited
financial statements of Xxxxxxx and its Subsidiaries as of the end of such year,
on a Consolidated and consolidating basis, certified by a firm of independent
certified public accountants of recognized standing selected by Xxxxxxx but
reasonably acceptable to Lender, together with a copy of any management letter
issued in connection therewith and a letter from such accountants acknowledging
that Lender is relying on such financial statements;
(c) INTERIM STATEMENTS. Not later than 30 days after the end of each
month hereafter, including the last month of Xxxxxxx'x fiscal year, unaudited
interim financial statements of Xxxxxxx and its Subsidiaries as of the end of
such month and of the portion of Xxxxxxx'x fiscal year then elapsed, on a
Consolidated and consolidating basis, certified by the principal financial
officer of Xxxxxxx as prepared in accordance with GAAP and fairly presenting the
Consolidated financial position and results of operations of Xxxxxxx and its
Subsidiaries for such month and period subject only to changes from audit and
year-end adjustments and except that such statements need not contain notes;
(d) PROJECTIONS, ETC. Such business projections, Availability
projections, business plans, budgets and cash flow statements for each Borrower
and its Subsidiaries as Lender shall request from time to time;
(e) SHAREHOLDER REPORTS, ETC. Promptly after the sending or filing
thereof, as the case may be, copies of any proxy statements, financial
statements or reports which any Borrower has made available to its shareholders
and copies of any regular, periodic and special reports or registration
statements which any Borrower files with the Securities and Exchange Commission
or any governmental authority which may be substituted therefor, or any national
securities exchange;
(f) ERISA REPORTS. Upon request by Lender, copies of any annual
report to be filed pursuant to the requirements of ERISA in connection with each
plan subject thereto; and
(g) OTHER INFORMATION. Such other data and information (financial
and otherwise) as Lender, from time to time, may reasonably request, bearing
upon or related to the Collateral or any Borrower's and any of its Subsidiary's
financial condition or results of operations.
5.14 LITIGATION COOPERATION. Should any third-party suit or proceeding be
instituted by or against Lender with respect to any Collateral or in any manner
relating to any Borrower, each Borrower shall, without expense to Lender, make
available such Borrower and its officers, employees and agents, and such
Borrower's books and records, without charge, to the extent that Lender may deem
them reasonably necessary in order to prosecute or defend any such suit or
proceeding.
5.15 MAINTENANCE OF COLLATERAL, ETC. Each Borrower will maintain all of
its Equipment in good working condition, ordinary wear and tear excepted, and no
Borrower will use the Collateral for any unlawful purpose. Each Borrower will
immediately advise Lender in writing of any material loss or damage to the
Collateral and of any investigation, action, suit, proceeding or claim relating
to the Collateral which could reasonably be expected to have a Material Adverse
Effect.
5.16 NOTIFICATION OF CHANGES. Each Borrower will promptly notify Lender in
writing of any change in its officers or directors, the opening of any new bank
account or other deposit account, or any material adverse change in the business
or financial affairs of such Borrower or the existence of any circumstance which
would make any representation or warranty of such Borrower untrue in any
material respect or constitute a material breach of any covenant of such
Borrower.
5.17 RESERVED.
5.18 FURTHER ASSURANCES. Each Borrower agrees, at its expense, to take all
actions to perfect and maintain Lender's security interests in the Collateral
and to fully effectuate the transactions contemplated by this Agreement or any
of the other Loan Documents. Without limiting the foregoing, each Borrower
agrees to execute or cause to be executed and delivered to Lender all promissory
notes, security agreements, and other agreements, instruments and documents as
Lender may request from time to time and such agreements with landlords,
mortgagees and processors and other bailees, subordination and intercreditor
agreements as Lender may request from time to time.
5.19 NEGATIVE COVENANTS. Except as set forth in Section 13 of Schedule A,
no Borrower will, without Lender's prior written consent, (i) merge or
consolidate with another Person, form any new Subsidiary or acquire any interest
in any Person; (ii) acquire any assets except in the ordinary course of business
and as otherwise permitted by this Agreement and the other Loan Documents; (iii)
enter into any transaction outside the ordinary course of business; (iv) sell or
transfer any Collateral or other assets, except that a Borrower may sell
finished goods Inventory in the ordinary course of its business and WG may sell
all of the assets of one of the divisions of WG as required by Item 12(ii) of
Schedule A; (v) make any loans to, or investments in, any Affiliate or other
Person in the form of money or other assets; (vi) incur any debt outside the
ordinary course of business; (vii) guaranty or otherwise become liable with
respect to the obligations of another party or entity (except to Lender pursuant
to this Agreement); (viii) pay or declare any dividends or other distributions
on such Borrower's stock, if such Borrower is a corporation (except for
dividends payable solely in capital stock of Borrower) or with respect to any
equity interests, if such Borrower is not a corporation (except dividends and
distributions paid and payable to another Borrower); (ix) redeem, retire,
purchase or otherwise acquire, directly or indirectly, any of such Borrower's
capital stock or other equity interests (except from another Borrower); (x) make
any change in such Borrower's capital structure; (xi) dissolve or elect to
dissolve; (xii) pay any principal or interest on any indebtedness owing to an
Affiliate, (xiii) enter into any transaction with an Affiliate other than on
arms-length terms; or (xiv) agree to do any of the foregoing. Notwithstanding
the foregoing, Borrowers may (i) at any time the Affiliate Sale Conditions -
Level 1 are satisfied, sell Inventory to Affiliates so long as the Affiliate
Sale Balance does not exceed $4,000,000 and (ii) at any time the Affiliate Sale
Conditions - Level 2 are satisfied, sell Inventory to Affiliates so long as the
Affiliate Sale Balance does not exceed $5,000,000.
5.20 BANKRUPTCY PLAN. Borrower shall not amend the Bankruptcy Plan without
the prior written consent of Lender.
5.21 FINANCIAL COVENANTS.
(a) CAPITAL EXPENDITURES. Borrowers will not expend or commit to
expend, directly or indirectly, for capital expenditures (including capital
lease obligations) an aggregate amount in excess of the amount set forth in
Section 8(a) of Schedule A as the Capital Expenditure Limitation in any fiscal
year.
(b) CONSOLIDATED NET LOSSES. Borrowers will not permit their
Consolidated cumulative net loss (excluding extraordinary items) to exceed the
amount set forth in Section 8(b) of Schedule A.
(c) OTHER FINANCIAL COVENANTS. Borrowers will comply with any
additional financial covenants set forth in Section 8(e) of Schedule A.
6. RELEASE AND INDEMNITY.
6.1 RELEASE. Each Borrower hereby releases Lender and its Affiliates and
their respective directors, officers, employees, attorneys and agents and any
other Person representing Lender (the "RELEASED PARTIES") from any and all
liability arising from acts or omissions under or pursuant to this Agreement,
whether based on errors of judgment or mistake of law or fact, except for those
arising from willful misconduct or gross negligence and those arising from a
breach by Lender of its obligations under this Agreement and the other Loan
Documents. However, in no circumstance will any of the Released Parties be
liable for lost profits or other special or consequential damages. Such release
is made on the date hereof and remade upon each request for a Loan or Credit
Accommodation by any Borrower. Without limiting the foregoing:
(a) Lender shall not be liable for (i) any shortage or discrepancy
in any Goods, the sale or other disposition of which gave rise to an Account
(and only to the extent that Lender has possession of such Goods) or any damage
to or loss or destruction of any Goods; (ii) any error, act, omission, or delay
of any kind occurring in the settlement, failure to settle, collection or
failure to collect any Account; (iii) settling any Account in good faith for
less than the full amount thereof; or (iv) any of Borrowers' obligations under
any contract or agreement giving rise to an Account; and
(b) In connection with Credit Accommodations or any underlying
transaction, Lender shall not be responsible for the conformity of any Goods to
the documents presented, the validity or genuineness of any documents, delay,
default or fraud by any Borrower, shippers and/or any other Person. Each
Borrower agrees that any action taken by Lender, if taken in good faith, or any
action taken by an issuer of any Credit Accommodation, under or in connection
with any Credit Accommodation, shall be binding on such Borrower and shall not
create any resulting liability to Lender. In furtherance thereof, Lender shall
have the full right and authority to clear and resolve any questions of non-
compliance of documents, to give any instructions as to acceptance or rejection
of any documents or Goods, to execute for each Borrower's account any and all
applications for steamship or airway guaranties, indemnities or delivery orders,
to grant any extensions of the maturity of, time of payment for, or time of
presentation of, any drafts, acceptances or documents, and jointly with the
applicable Borrower, to agree to any amendments, renewals, extensions,
modifications, changes or cancellations of any of the terms or conditions of any
of the Credit Accommodations or applications and other documentation pertaining
thereto.
6.2 INDEMNITY. Each Borrower hereby agrees to indemnify and defend the
Released Parties and hold them harmless from and against any and all claims,
debts, liabilities, demands, obligations, actions, causes of action, penalties,
costs and expenses (including reasonable attorneys' fees), of every nature,
character and description, which the Released Parties may sustain or incur based
upon or arising out of any of the transactions contemplated by this Agreement or
the other Loan Documents or any of the Obligations, including any transactions
or occurrences relating to the issuance of any Credit Accommodation, the
Collateral relating thereto, any drafts thereunder and any errors or omissions
relating thereto (including any loss or claim due to any action or inaction
taken by the issuer of any Credit Accommodation) (and for this purpose any
charges to Lender by any issuer of Credit Accommodations shall be conclusive as
to their appropriateness and may be charged to the Loan Account), or any other
matter, cause or thing whatsoever occurred, done, omitted or suffered to be done
by Lender relating to any Borrower or the Obligations (except any such amounts
sustained or incurred as the result of the gross negligence or willful
misconduct of any Released Party). Notwithstanding any provision in this
Agreement to the contrary, the indemnity agreement set forth in this Section
shall survive any termination of this Agreement.
7. TERM.
7.1 TERM. Lender's obligation to make Loans and to provide Credit
Accommodations under this Agreement shall commence upon satisfaction of all of
the conditions precedent set forth in Schedule C, in form and substance
satisfactory to Lender in its sole discretion, and initially continue in effect
until the Initial Maturity Date set forth in Section 7 of Schedule A (the
"INITIAL TERM"); PROVIDED, that such date shall automatically be extended (the
Initial Maturity Date, as it may be so extended, being referred to as the
"MATURITY DATE") for successive additional terms of three years each (each a
"RENEWAL TERM"), unless one party gives written notice to the other, not less
than sixty days prior to the Maturity Date, that such party elects not to extend
the Maturity Date. This Agreement and the other Loan Documents and Lender's
security interests in and Liens upon the Collateral, and all representations,
warranties and covenants of each Borrower contained herein and therein, shall
remain in full force and effect after the Maturity Date until all of the
monetary Obligations are indefeasibly paid in full.
7.2 EARLY TERMINATION. Lender's obligation to make Loans and to provide
Credit Accommodations under this Agreement may be terminated prior to the
Maturity Date as follows: (i) by Borrowers, effective twenty (20) Business Days
after written notice of termination is given to Lender or (ii) by Lender at any
time an Event of Default exists, upon notice to Borrowers, effective
immediately; PROVIDED, that if any Affiliate of any Borrower is also a party to
a financing arrangement with Lender, no such early termination shall be
effective unless such Affiliate simultaneously terminates its financing
arrangement with Lender. If so terminated under this Section 7.2, Borrowers
shall pay to Lender (i) an early termination fee (the "EARLY TERMINATION FEE")
in the amount set forth in Section 6(f) of Schedule A plus (ii) any earned but
unpaid Facility Fee. Such fee shall be due and payable on the effective date of
termination and thereafter shall bear interest at a rate equal to the highest
rate applicable to any of the Obligations. In addition, if Borrowers so
terminate and repay the Obligations without having provided Lender with at least
twenty (20) Business Days' prior written notice thereof, Borrowers shall jointly
and severally pay to Lender an additional amount equal to 20 days of interest at
the applicable Interest Rate(s), based on the average outstanding amount of the
Obligations for the six month period immediately preceding the date of
termination.
7.3 PAYMENT OF OBLIGATIONS. On the Maturity Date or on any earlier
effective date of termination, Borrowers shall be jointly and severally liable
to pay in full all Obligations, whether or not all or any part of such
Obligations are otherwise then due and payable. Without limiting the generality
of the foregoing, if, on the Maturity Date or on any earlier effective date of
termination, there are any outstanding Credit Accommodations, then on such date
Borrowers shall provide to Lender cash collateral in an amount equal to 110% of
the Credit Accommodation Balance to secure all of the Obligations (including
estimated attorneys' fees and other expenses) relating to said Credit
Accommodations or such greater percentage or amount as Lender reasonably deems
appropriate, pursuant to a cash pledge agreement in form and substance
satisfactory to Lender. Such cash collateral with respect to any single Credit
Accommodation shall be released by Lender upon the indefeasible payment in full
of all of the Obligations (including estimated attorneys' fees and other
expenses) relating to such Credit Accommodation.
7.4 EFFECT OF TERMINATION. No termination shall affect or impair any right
or remedy of Lender or relieve any Borrower of any of the Obligations until all
of the monetary Obligations have been indefeasibly paid in full. Upon
indefeasible payment and performance in full of all of the monetary Obligations
(and the provision of cash collateral with respect to any Credit Accommodation
Balance as required by Section 7.3) and termination of this Agreement, Lender
shall promptly deliver to Borrowers termination statements, requests for
reconveyances and such other documents as may be reasonably required to
terminate Lender's security interests in the Collateral.
8. EVENTS OF DEFAULT AND REMEDIES.
8.1 EVENTS OF DEFAULT. The occurrence of any of the following events shall
constitute an "EVENT OF DEFAULT" under this Agreement, and each Borrower shall
give Lender immediate written notice thereof: (i) if any warranty,
representation, statement, report or certificate made or delivered to Lender by
any Borrower or any Borrower's officers, employees or agents is untrue or
misleading in any material respect; (ii) if any Borrower fails to pay when due
any principal or interest on any Loan or any other monetary Obligation; (iii) if
any Borrower breaches any covenant or obligation contained in this Agreement or
any other Loan Document or fails to perform any other non- monetary Obligation;
PROVIDED, THAT any breach of Sections 5.13(b), 5.13(c), 5.13(d), 5.13(e) or
5.13(f) of this Agreement shall not constitute a Default or an Event of Default
until 10 days after the earlier of such Borrower's knowledge of such breach or
notice by Lender to Xxxxxxx of such breach; (iv) if any levy, assessment,
attachment, seizure, lien or encumbrance (other than a Permitted Lien) is made
or permitted to exist on all or any part of the Collateral; (v) if one or more
judgments aggregating in excess of $100,000, or any injunction or attachment, is
obtained against any Borrower or any Obligor which remains unstayed for more
than 20 days or is enforced; (vi) the occurrence of any default under any
financing agreement, security agreement or other agreement, instrument or
document (other than the Loan Documents) executed and delivered by (A) any
Borrower with, or in favor of, any Person other than Lender or an Affiliate of
Lender to the extent such financing agreement, security agreement or other
agreement, instrument or document creates or relates to any debt in excess of
$25,000 if the payment or maturity of such debt may be accelerated in
consequence of such default or demand for payment of such debt may be made or
such agreement may be terminated, or (B) any Borrower or any Affiliate of any
Borrower with, or in favor of, Lender or any Affiliate of Lender; (vii) the
dissolution, death, termination of existence in good standing (unless all
actions necessary to cure such termination of existence in good standing have
been taken by such Borrower within 10 days after the earlier of such Borrower's
knowledge of such breach or notice by Lender to Borrowers), insolvency or
business failure or suspension or cessation of business as usual of any Borrower
or any Obligor (or of any general partner of any Borrower or any Obligor if it
is a partnership) or the appointment of a receiver, trustee or custodian for all
or any part of the property of, or an assignment for the benefit of creditors by
any Borrower or any Obligor, or the commencement of any proceeding by any
Borrower or any Obligor under any reorganization, bankruptcy, insolvency,
arrangement, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction, now or in the future in effect, or if any Borrower makes or
sends a notice of a bulk transfer or calls a meeting of its creditors generally
for any of the foregoing purposes; (viii) the commencement of any proceeding
against any Borrower or any Obligor under any reorganization, bankruptcy,
insolvency, arrangement, readjustment of debt, dissolution or liquidation law or
statute of any jurisdiction, now or in the future in effect; (ix) the actual or
attempted revocation or termination of, or limitation or denial of liability
upon, any guaranty of the Obligations, or any security document securing the
Obligations, by any Obligor; (x) if any Borrower makes any payment on account of
any indebtedness or obligation which has been subordinated to the Obligations
other than as permitted in the applicable subordination agreement, or if any
Person who has subordinated such indebtedness or obligations attempts to limit
or terminate its subordination agreement; (xi) if there is any indictment of any
Borrower or any Obligor under any criminal statute or commencement of criminal
or civil proceedings against any Borrower or any Obligor, pursuant to which the
potential penalties or remedies sought or available include forfeiture of any
property of any Borrower or such Obligor; (xii) if any one Person becomes the
record or beneficial owner of an aggregate of more than 35% of the outstanding
shares of stock of any Borrower, without the prior written consent of Lender;
(xiii) if there is any change in the chief executive officer, chief operating
officer or chief financial officer of Xxxxxxx, unless such person is replaced by
an officer acceptable to Lender and having similar experience and expertise
within thirty (30) days; (xiv) any Borrower breaches its obligations or
otherwise defaults under the Bankruptcy Plan; (xv) any Borrower breaches its
duties or obligations under any Distribution Agreement which breach gives the
other party to such Distribution Agreement the right to terminate such
Distribution Agreement; or (xvi) if Lender determines in good faith that the
Collateral is insufficient to fully secure the Obligations or that the prospect
of payment or performance of the Obligations is impaired in any material
respect.
8.2 REMEDIES. At any time any Event of Default exists, Lender, at its
option, may cease making Loans or otherwise extending credit to any Borrower
under this Agreement or any other Loan Document and may terminate any obligation
to extend further credit to any Borrower. At any time any Event of Default
exists, Lender, at its option, and without notice or demand of any kind (all of
which are hereby expressly waived by each Borrower), may do any one or more of
the following: (i) cease making Loans or otherwise extending credit to Borrowers
under this Agreement or any other Loan Document and terminate the Loan
Documents; (ii) accelerate and declare all or any part of the Obligations to be
immediately due, payable and performable, notwithstanding any deferred or
installment payments allowed by any instrument evidencing or relating to any of
the Obligations; (iii) take possession of any or all of the Collateral wherever
it may be found, and for that purpose each Borrower hereby authorizes Lender,
without judicial process (to the fullest extent permitted by Applicable Law), to
enter onto any of such Borrower's premises without interference to search for,
take possession of, keep, store, or remove any of the Collateral, and remain (or
cause a custodian to remain) on the premises in exclusive control thereof,
without charge for so long as Lender deems it reasonably necessary in order to
complete the enforcement of its rights under this Agreement or any other
agreement; PROVIDED, that if Lender seeks to take possession of any of the
Collateral by court process, each Borrower hereby irrevocably waives (to the
fullest extent permitted by Applicable Law): (A) any bond and any surety or
security relating thereto required by law as an incident to such possession, (B)
any demand for possession prior to the commencement of any suit or action to
recover possession thereof and (C) any requirement that Lender retain possession
of, and not dispose of, any such Collateral until after trial or final judgment;
(iv) require such Borrower to assemble any or all of the Collateral and make it
available to Lender at one or more places designated by Lender which are
reasonably convenient to Lender and such Borrower, and to remove the Collateral
to such locations as Lender may deem advisable; (v) complete the processing,
manufacturing or repair of any Collateral prior to a disposition thereof and,
for such purpose and for the purpose of removal, Lender shall have the right to
use such Borrower's premises, vehicles and other Equipment and all other
property without charge; (vi) sell, lease or otherwise dispose of any of the
Collateral, in its condition at the time Lender obtains possession of it or
after further manufacturing, processing or repair, at one or more public or
private sales, in lots or in bulk, for cash, exchange or other property, or on
credit (a "SALE"), and to adjourn any such Sale from time to time without notice
other than oral announcement at the time scheduled for Sale (and, in connection
therewith, (A) Lender shall have the right to conduct such Sale on such
Borrower's premises without charge, for such times as Lender deems reasonable,
on Lender's premises, or elsewhere, and the Collateral need not be located at
the place of Sale; (B) Lender may directly or through any of its Affiliates
purchase or lease any of the Collateral at any such public disposition, and if
permissible under Applicable Law, at any private disposition; and (C) any Sale
of Collateral shall not relieve such Borrower of any liability any Borrower may
have if any Collateral is defective as to title, physical condition or otherwise
at the time of sale); (vii) demand payment of and collect any Accounts, Chattel
Paper, Instruments and General Intangibles included in the Collateral and, in
connection therewith, such Borrower irrevocably authorizes Lender to endorse or
sign such Borrower's name on all collections, receipts, Instruments and other
documents, to take possession of and open mail addressed to such Borrower and
remove therefrom payments made with respect to any item of Collateral or
proceeds thereof and, in Lender's sole discretion, to grant extensions of time
to pay, compromise claims and settle Accounts, General Intangibles and the like
for less than face value; and (viii) demand and receive possession of any of
such Borrower's federal and state income tax returns and the books and records
utilized in the preparation thereof or relating thereto. In addition to the
rights and remedies set forth above, Lender shall have all the other rights and
remedies accorded a secured party after default under the UCC and under all
other Applicable Law, and under any other Loan Document, and all of such rights
and remedies are cumulative and non-exclusive. Exercise or partial exercise by
Lender of one or more of its rights or remedies shall not be deemed an election
or bar Lender from subsequent exercise or partial exercise of any other rights
or remedies. The failure or delay of Lender to exercise any rights or remedies
shall not operate as a waiver thereof, but all rights and remedies shall
continue in full force and effect until all of the Obligations have been fully
paid and performed. If notice of any Sale or other disposition of Collateral is
required by Applicable Law, notice at least ten (10) days prior to the Sale
designating the time and place of the Sale in the case of a public sale or the
time after which any private sale or other disposition is to be made shall be
deemed to be reasonable notice, and each Borrower waives any other notice.
8.3 APPLICATION OF PROCEEDS. Subject to any application required by law,
all proceeds realized as the result of any Sale shall be applied by Lender to
the Obligations in such order as Lender shall determine in its sole discretion.
Any surplus shall be paid to Borrowers or other Persons legally entitled
thereto; but Borrowers shall remain jointly and severally liable to Lender for
any deficiency. If Lender, in its sole discretion, directly or indirectly enters
into a deferred payment or other credit transaction with any purchaser at any
Sale, Lender shall have the option, exercisable at any time, in its sole
discretion, of either reducing the Obligations by the principal amount of the
purchase price or deferring the reduction of the Obligations until the actual
receipt by Lender of the cash therefor.
9. GENERAL PROVISIONS.
9.1 NOTICES. All notices to be given under this Agreement shall be in
writing and shall be given either personally, by reputable private delivery
service, by regular first-class mail or certified mail return receipt requested,
addressed to Lender or Borrowers at their respective address set forth in this
Agreement, or by facsimile to the facsimile number shown in Section 9(i) of
Schedule A, or at any other address (or to any other facsimile number)
designated in writing by one party to the other party in the manner prescribed
in this Section 9.1. All notices shall be deemed to have been given when
received or when delivery is refused by the intended recipient.
9.2 SEVERABILITY. If any provision of this Agreement, or the application
thereof to any party or circumstance, is held to be void or unenforceable by any
court of competent jurisdiction, such defect shall not affect the remainder of
this Agreement, which shall continue in full force and effect.
9.3 INTEGRATION. This Agreement and the other Loan Documents represent the
final, entire and complete agreement between Borrowers and Lender and supersede
all prior and contemporaneous negotiations, oral representations and agreements,
all of which are merged and integrated into this Agreement. THERE ARE NO ORAL
UNDERSTANDINGS, REPRESENTATIONS OR AGREEMENTS BETWEEN THE PARTIES WHICH ARE NOT
SET FORTH IN THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS.
9.4 WAIVERS. The failure of Lender at any time or times to require any
Borrower to strictly comply with any of the provisions of this Agreement or any
other Loan Documents shall not waive or diminish any right of Lender later to
demand and receive strict compliance therewith. Any waiver of any default shall
not waive or affect any other default, whether prior or subsequent, and whether
or not similar. None of the provisions of this Agreement or any other Loan
Document shall be deemed to have been waived by any act or knowledge of Lender
or its agents or employees, but only by a specific written waiver signed by an
authorized officer of Lender and delivered to Borrower. Each Borrower waives
demand, protest, notice of protest and notice of default or dishonor, notice of
payment and nonpayment, release, compromise, settlement, extension or renewal of
any commercial paper, Instrument, Account, General Intangible, Document, Chattel
Paper, Investment Property or guaranty at any time held by Lender on which such
Borrower is or may in any way be liable, and notice of any action taken by
Lender, unless expressly required by this Agreement, and notice of acceptance
hereof.
9.5 AMENDMENT. The terms and provisions of this Agreement may not be
amended or modified except in a writing executed by Borrowers and a duly
authorized officer of Lender.
9.6 TIME OF ESSENCE. Time is of the essence in the performance by
Borrowers of each and every obligation under this Agreement and the other Loan
Documents.
9.7 ATTORNEYS FEES AND COSTS. Borrowers shall be jointly and severally
liable to reimburse Lender for all reasonable attorneys' and paralegals' fees
(including the allocated cost of in-house attorneys and paralegals employed by
Lender) and all filing, recording, search, title insurance, appraisal, audit,
and other costs incurred by Lender, pursuant to, in connection with, or relating
to this Agreement, including all reasonable attorneys' fees and costs Lender
incurs to prepare and negotiate this Agreement and the other Loan Documents; to
obtain legal advice in connection with this Agreement and the other Loan
Documents or any Borrower or any Obligor; to administer this Agreement and the
other Loan Documents (including the cost of periodic financing statement, tax
lien and other searches conducted by Lender); to enforce, or seek to enforce,
any of its rights; prosecute actions against, or defend actions by, Account
Debtors; to commence, intervene in, or defend any action or proceeding; to
initiate any complaint to be relieved of the automatic stay in bankruptcy; to
file or prosecute any probate claim, bankruptcy claim, third-party claim, or
other claim; to examine, audit, copy, and inspect any of the Collateral or any
of any Borrower's books and records; to protect, obtain possession of, lease,
dispose of, or otherwise enforce Lender's security interests in, the Collateral;
and to otherwise represent Lender in any litigation relating to any Borrower. If
either Lender or any Borrower files any lawsuit against the other predicated on
a breach of this Agreement, the prevailing party in such action shall be
entitled to recover its reasonable costs and attorneys' fees, including
reasonable attorneys' fees and costs incurred in the enforcement of, execution
upon or defense of any order, decree, award or judgment. All attorneys' fees and
costs to which Lender may be entitled pursuant to this Section shall immediately
become part of the Obligations, shall be due on demand, and shall bear interest
at a rate equal to the highest interest rate applicable to any of the
Obligations.
9.8 BENEFIT OF AGREEMENT; ASSIGNABILITY. The provisions of this Agreement
shall be binding upon and inure to the benefit of the respective successors and
assigns of each Borrower and Lender; PROVIDED, that no Borrower may assign or
transfer any of its rights under this Agreement without the prior written
consent of Lender, and any prohibited assignment shall be void. Unless otherwise
agreed to by Lender in writing, no consent by Lender to any assignment shall
release any Borrower from its liability for any of the Obligations. Lender shall
have the right to assign all or any of its rights and obligations under the Loan
Documents, and to sell participating interests therein, to one or more other
Persons, and each Borrower agrees to execute all agreements, instruments and
documents requested by Lender in connection with each such assignment and
participation (provided that such documents do not contain provisions
inconsistent with those contained in this Agreement).
9.9 HEADINGS; CONSTRUCTION. Section and subsection headings are used in
this Agreement only for convenience. Each Borrower and Lender acknowledge that
the headings may not describe completely the subject matter of the applicable
Sections or subsections, and the headings shall not be used in any manner to
construe, limit, define or interpret any term or provision of this Agreement.
This Agreement has been fully reviewed and negotiated between the parties and no
uncertainty or ambiguity in any term or provision of this Agreement shall be
construed strictly against Lender or Borrowers under any rule of construction or
otherwise.
9.10 GOVERNING LAW; CONSENT TO FORUM, ETC. THIS AGREEMENT HAS BEEN
NEGOTIATED, EXECUTED AND DELIVERED, AND SHALL BE DEEMED TO HAVE BEEN MADE, IN
NEW YORK, NEW YORK, AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF SUCH STATE. EACH BORROWER HEREBY CONSENTS AND AGREES THAT THE STATE
AND FEDERAL COURTS IN NEW YORK OR THE STATE IN WHICH ANY OF THE COLLATERAL IS
LOCATED SHALL HAVE NON-EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS
OR DISPUTES BETWEEN SUCH BORROWER AND LENDER PERTAINING TO THIS AGREEMENT, ANY
OTHER LOAN DOCUMENTS OR ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT
OR THE OTHER LOAN DOCUMENTS. EACH BORROWER EXPRESSLY SUBMITS AND CONSENTS IN
ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT,
AND WAIVES ANY OBJECTION WHICH SUCH BORROWER MAY HAVE BASED UPON LACK OF
PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS. EACH BORROWER
ALSO AGREES THAT ANY CLAIM OR DISPUTE BROUGHT BY SUCH BORROWER AGAINST LENDER
PURSUANT TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY MATTER ARISING OUT OF
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL BE BROUGHT EXCLUSIVELY IN THE
XXXXX XXX XXXXXXX XXXXXX XX XXX XXXX XXXXXX. EACH BORROWER HEREBY WAIVES
PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH
ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER
PROCESS MAY BE MADE IN THE MANNER AND SHALL BE DEEMED RECEIVED AS SET FORTH IN
SECTION 9.1 FOR NOTICES, TO THE EXTENT PERMITTED BY LAW. NOTHING IN THIS
AGREEMENT SHALL BE DEEMED OR OPERATE TO AFFECT THE RIGHT OF LENDER TO SERVE
LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW, OR TO PRECLUDE THE
ENFORCEMENT BY LENDER OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE
TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE THE SAME IN ANY OTHER
APPROPRIATE FORUM OR JURISDICTION.
9.11 WAIVER OF JURY TRIAL, ETC. EACH BORROWER WAIVES (I) THE RIGHT TO
TRIAL BY JURY (WHICH LENDER ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE LOAN DOCUMENTS,
THE OBLIGATIONS OR THE COLLATERAL OR ANY CONDUCT, ACTS OR OMISSIONS OF LENDER OR
ANY BORROWER OR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES,
ATTORNEYS OR AGENTS OR ANY OTHER PERSONS AFFILIATED WITH LENDER OR ANY BORROWER,
WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE; (II) THE RIGHT TO INTERPOSE ANY
CLAIMS, DEDUCTIONS, SETOFFS OR COUNTERCLAIMS OF ANY KIND IN ANY ACTION OR
PROCEEDING INSTITUTED BY LENDER WITH RESPECT TO THE LOAN DOCUMENTS OR ANY MATTER
RELATING THERETO, EXCEPT FOR COMPULSORY COUNTERCLAIMS; (III) NOTICE PRIOR TO
LENDER'S TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR ANY BOND OR SECURITY
WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING LENDER TO EXERCISE ANY OF
LENDER'S REMEDIES AND (IV) THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND
EXEMPTION LAWS. EACH BORROWER ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A
MATERIAL INDUCEMENT TO LENDER'S ENTERING INTO THIS AGREEMENT AND THAT LENDER IS
RELYING UPON THE FOREGOING WAIVERS IN ITS FUTURE DEALINGS WITH SUCH BORROWER.
EACH BORROWER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS
WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION,
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
IN WITNESS WHEREOF, EACH BORROWER AND LENDER HAVE SIGNED THIS AGREEMENT ON
THE DATE SET FORTH IN THE HEADING.
BORROWERS:
XXXXXXX & XXXXX, INC.
WG APPAREL, INC.
ATTEST: PARADISE COLOR INC.
______________________________ By:______________________________
XXXX-XXXX KIERAN, Secretary XXXX X. XXXXXXX, XX.,
Chief Financial Officer
[CORPORATE SEALS]
MACPHERSON MEISTERGRAM, INC.
LEADTEC SYSTEMS, INC.
EMTEX LEASING, INC.
CLINTON MACHINERY CORPORATION
CLINTON MANAGEMENT CORPORATION
CLINTON LEASING CORPORATION
ATTEST: CLINTON EQUIPMENT CORP.
______________________________ By:______________________________
XXXX-XXXX KIERAN, Secretary XXXX X. XXXXXXX, XX.,
Chief Financial Officer
[CORPORATE SEALS]
[Signatures continued on the following page]
J&E SEWING SUPPLIES, INC.
W&G DAON, INC.
By:______________________________
XXXX X. XXXXXXX, XX.,
Vice President and Secretary
[CORPORATE SEALS]
Accepted in New York, New York:
LENDER:
BANC OF AMERICA COMMERCIAL
FINANCE CORPORATION THROUGH ITS
COMMERCIAL FUNDING DIVISION
By:______________________________
Its Authorized Signatory
SCHEDULE A
DESCRIPTION OF CERTAIN TERMS
This Schedule is an integral part of the Loan and Security Agreement
dated April ___, 2000, by and among XXXXXXX & XXXXX, INC., MACPHERSON
MEISTERGRAM, INC., LEADTEC SYSTEMS, INC., EMTEX LEASING CORPORATION, WG APPAREL,
INC., CLINTON MACHINERY CORPORATION, CLINTON MANAGEMENT CORP., CLINTON LEASING
CORP., CLINTON EQUIPMENT CORP., J&E SEWING SUPPLIES, INC., W&G DAON, INC., and
PARADISE COLOR INCORPORATED. and BANC OF AMERICA COMMERCIAL FINANCE CORPORATION
THROUGH ITS COMMERCIAL FUNDING DIVISION (the "AGREEMENT").
1. Loan Limits for Revolving Loans:
(a) Maximum Facility Amount: An amount equal to (i) $26,000,000
during the period from the Closing
Date through October 28, 2000, (ii)
$23,000,000 during the period from
October 29, 2000, through April 28,
2000 and (iii) $20,000,000
commencing on April 29, 2000, and
at all times thereafter
(b) Advance Rates:
(i) Accounts Advance Rate:
(A) Eligible Accounts 85%; PROVIDED, that if the Dilution
and Eligible Extended Percentage with respect to such
Accounts: Accounts exceeds 5.0%, such advance
rate will be reduced by the number
of full or partial percentage
points of such excess
(B) Eligible Foreign 85% of the coinsurance amount (as
Accounts: set forth in Borrower's foreign
credit insurance policies),
PROVIDED, that if the Dilution
Percentage with respect to such
Accounts exceeds 5.0%, such advance
rate will be reduced by the number
of full or partial percentage
points of such excess
(ii) Inventory Advance Rates:
(A) Eligible Inventory: The lesser of (i) 50% of the value
of Eligible Inventory valued at the
lower of cost or market or (ii) 80%
of the value of Eligible Inventory
valued at the appraised net orderly
liquidation value (as defined in
the most recent inventory
appraisal)
(B) Eligible In-Transit The lesser of (i) 50% of the value
Inventory: of Eligible In-Transit Inventory
valued at the lower of cost or
market or (ii) 80% of the value of
Eligible In- Transit Inventory
valued at the appraised net orderly
liquidation value (as defined in
the most recent inventory
appraisal)
(C) Eligible Leased The lesser of (i) 85% of the net
Inventory: orderly liquidation value (as
determined by the most recent
inventory appraisal of similar
Inventory) of Eligible Leased
Inventory or (ii) 85% of the
aggregate amount of the Accounts
generated from or related to
Eligible Leased Inventory (less
maximum existing or asserted taxes,
discounts, credits and allowances
to the extent included in such
amount) multiplied by 85%,
PROVIDED, that if the Dilution
Percentage exceeds 3.0%, such rate
will be reduced by the number of
full or partial percentage points
of such excess
(iii) Barudan LC Advance 90% of the face amount of each
Rate: Barudan LC; PROVIDED, that
Borrowers shall procure and deliver
to Lender on or before the
twentieth day of each fiscal
quarter a certificate signed by
Barudan stating that Barudan has no
offset claims with respect to
Barudan LC # 1 or, if Barudan does
have an offset claim, the amount of
such offset claim. To the extent
Barudan makes any offset claim
against Barudan LC # 1, Lender's
Advance Rate with respect to
Barudan LC # 1 shall be equal to
90% multiplied by the sum of the
face amount of Barudan LC # 1 less
any offset claimed by Barudan. In
the event that Borrowers fail to
deliver to Lender the required
quarterly certificate from Barudan
as required herein, Lender's
Advance Rate with respect to
Barudan LC # 1 shall be equal to
45% multiplied by the face amount
of Barudan LC # 1 until such time
as the required certificate is
delivered to Lender.
(c) Accounts Sublimits:
(i) Eligible Accounts: Not Applicable
(ii) Eligible Extended Accounts: An amount equal to (i) $1,600,000
during the period from the Closing
Date through October 28, 2000, and
(ii) $1,200,000 at all times
thereafter
(iii) Eligible Foreign Accounts: $3,000,000
(d) Inventory Sublimits:
(i) Overall sublimit on $10,000,000
advances against Eligible
Inventory
(ii) Sublimit on advances $600,000
against Eligible
In-Transit Inventory
(iii) Sublimit on advances $2,000,000
against Eligible
Leased Inventory
(e) Barudan LC Sublimit: An amount equal to (i) $1,200,000
during the period from the Closing
Date through July 30, 2000, (ii)
$500,000 from July 31, 2000 through
January 30, 2001, and (iii) $0 at
all times after January 30, 2001.
(f) Credit Accommodation Limit: $4,000,000
(g) Permanent Reserve Amount: Not Applicable
(h) Overadvance Amount: Not Applicable
2. Loan Limits for Term Loan
(a) Principal Amount:
(i) Equipment Advance Not Applicable
(ii) Real Property Advance Not Applicable
(b) Repayment Schedule:
(i) Equipment Advance: Not Applicable
(ii) Real Property Advance: Not Applicable
3. Interest Rates:
(a) Revolving Loans: 0.75% per annum in excess of the
Prime Rate
(b) Term Loan: Not Applicable
4. Minimum Loan Amount: $17,000,000; PROVIDED, that the
Minimum Loan Amount shall be
reduced to $15,000,000 at such time
(and at all times thereafter) as
the Maximum Facility Amount is
reduced to $23,000,000 or less as
set forth herein
5. Maximum Days: 90 days
Maximum days after original INVOICE
DATE for Eligible Accounts:
6. Fees:
(a) Closing Fee: $125,000 ($62,500 of which was paid
upon issuance and acceptance of the
commitment letter and $62,500 of
which is due and payable on the
Closing Date)
(b) Facility Fee:
(i) First Year of the Initial $115,000 (.50% of the Maximum
Term: Facility Amount in effect on the
date such Facility Fee is due and
payable)
(ii) Second Year of the Initial $100,000 (.50% of the Maximum
Term: Facility Amount in effect on the
date such Facility Fee is due and
payable)
(iii) Renewal Term(s): $100,000 per year (.50% of the
Maximum Facility Amount in effect
on the date such Facility Fee is
due and payable)
(c) Servicing Fee: $2,000 per month
(d) Unused Line Fee: 0.25% per annum
(e) Minimum Borrowing Fee:
(i) Applicable period: Each one year period from the date
of the Agreement
(ii) Date payable: Each anniversary of the date of the
Agreement
(f) Early Termination Fee: 3.0% of the Maximum Facility Amount
if terminated during the first year
of the Initial Term, 2.0% of the
Maximum Facility Amount if
terminated during the second year
of the Initial Term, and 0.50% of
the Maximum Facility Amount if
terminated thereafter and prior to
the Initial Maturity Date;
PROVIDED, that if after expiration
of a period of 18 months from the
date of the Agreement the
Obligations are repaid in full from
financing received from Bank of
America, N.A., or its Affiliates
then no Early Termination Fee shall
be due.
(g) Fees for letters of credit 1.0% per annum of the face amount
and other Credit Accommodations of each open Credit Accommodation,
(or guaranties thereof by Lender): plus all costs and fees charged by
the issuer
7. Initial Maturity Date: April 28, 2003
8. Financial Covenants:
(a) Capital Expenditure Limitation: $1,000,000 during the first year of
the Initial Term and $750,000 each
year thereafter
(b) Maximum Consolidated Cumulative $750,000 on a cumulative pre- tax
Net Loss: basis (and before extraordinary
items), measured monthly and
commencing on the first day of the
month following the Closing Date
(c) Limitation on Purchase $500,000
Money Security Interests:
(d) Limitation on Equipment Leases: $500,000
(e) Additional Financial Covenants: None
9. Borrower Information:
(a) Prior Names of Borrowers: Xxxxxxx
- WG, Inc.
Macpherson
- Xxxxxxxx Xxxxxxxxxx Inc.
- Xxxxxxxx Xxxxxxxxxx, Inc.
Leadtec
- W&G Leadtec of Delaware, Inc.
Emtex
- Embroidery Leasing Corporation
(b) Prior Trade Names of Borrowers: None
(c) Existing Trade Names of Xxxxxxx
Borrowers: - WG Apparel
WG
- Sunbrand
- Unity Sewing Supply
- Leadtec
- Clinton 00.xxx
- Macpherson
- WG Original Quality Parts
- X.X. Xxxxxxxx
Daon
- Sunbrand
Clinton Machinery
- Clinton Machinery & Supply
- Clinton 00.xxx
Clinton Management
- Clinton Machinery & Supply
- Clinton 00.xxx
Clinton Leasing
- Clinton Machinery & Supply
- Clinton 00.xxx
Xxxxxxxxxx
- Xxxxxxxxxx Meistergram
- The Embroidery Store
Emtex
- ELC
Leadtec
- Leadtec
- Satelite Plus
(d) Inventory Locations: 000 Xxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx 00000
0000 Xxxxxxxx Xxxxxx
Xxxxx Xx Xxxxxxx, Xxxxxxxxxx 00000
0000 Xxxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx Xxxx, Xxxxxxxxxx 00000
000 Xxxx 0xx Xxxxxx
Xxx Xxxxxxx XX, 00000
0000 Xxxxx Xxxxx Xx.
Xxxxx Xxxxx XX, 00000
000 XX 00xx Xxxxxx
Xxxxx, Xxxxxxx 00000
000 XX 00xx Xxxxxx
Xxxxx, Xxxxxxx 00000
0000 Xxxxx Xxxxxxxxxx Xxx
Xxxxxxx, Xxxxxxx 00000
0 Xxxx Xxxxxx
Xxxx Xxxxx, Xxxxxxxxxxxxx 00000
00-00 Xxxxxx Xx.
Xxxxxxxxx XX, 00000
000 Xxxxxxxxx Xxxxx Xxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
0000 Xxxxxxxx Xxxxxxx Xxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
0000-X Xxxxxx Xxxxx Xxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
0000 Xxxxxxxx Xxxx
Xxxxx Xxxx, Xxxx 00000
0000 Xxxxxxxxxxxxxx Xxxx., Xxxxx 00
(c\o Caravan Packaging)
Xxxxxxxx Xxxxxxx XX, 00000
0000 Xxxxxxxx Xx. (c\o Xxxxxxx-
Xxxx Transfer & Storage, Inc.)
Xxxxx Xxxx XX, 00000
000 Xxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
0000 Xx Xxxx Xxxxx
Xx Xxxx, Xxxxx 00000
(e) Other Locations: None
(f) Litigation: Xxxxxxx Xxxx Xxxxxxxx v.
Sunbrand, a Division of
WG Apparel, Inc.
Civil Action No. 1:98 cvs 00559
M.D. of North Carolina
Age discrimination case
Xxxxx X. Xxxxxx v. Sunbrand, a
Division of WG Apparel, Inc.
Civil Action Xx. 000 xx 0000
X.X. xx Xxxxxxx Xxxxxxx Division
Sexual harassment case
Xxxxxxxx / Unity Sewing Supply Inc.
Ref No. E99B4382-00se/0340985308
California Department of Fair
Employment & Housing
Potential employment discrimination
suit in which a complaint has been
filed
Advance Machining Inc. vs.
Xxxxxxx & Xxxxx, Inc.
Civil Action No. 98 CVH 04-3133
(Ohio)
DJ-056709-99 (New Jersey)
Ohio Court of Common Pleas
Superior Court of New Jersey
Judgment has been issued for
$196,990.06 against Xxxxxxx &
Xxxxx, Inc. in the Common
Pleas Court of Franklin
County, Ohio and a Judgment
has been recorded for $61,419.86
in New Jersey
M&R Printing vs. Xxxxxxx &
Xxxxx, Inc.
No. 13-118-00980-98
Arbitration before the
American Arbitration
Association in New York
Dispute concerns whether M&R's
products were defective under
its warranties sufficient to
justify W&G to withhold
payment of $122,000
Xxxxxxx & Xxxxx, Inc.
Small claims action against
Xxxxxxx & Xxxxx, Inc. on
Series B Notes
Speedway Printing Inc. d/b/a
Gabol Printing vs. Clinton
Leasing Corp., The Manifest
Group, Ideal Equipment Co. Ltd.
Case No. 96S11101 (Division 13)
17th Judicial Circuit
(Xxxxxx County)
Contract breach, fraudulent conduct
(g) Ownership of Borrowers: Xxxxxxx is a publicly owned
corporation For all other Borrowers
see clause (h) below
(h) Subsidiaries (and ownership
thereof):
Xxxxxxx - 100% of WG
WG - 100% of Macpherson
- 100% of Leadtec
- 100% of Emtex
- 100% of Daon
- 100% of J&E
- 100% of Clinton Machinery
- 100% of Clinton Management
- 100% of Clinton Leasing
- 100% of Clinton Equipment
- 100% of Paradise
- 100% of Xxxxxxx & Xxxxx, Ltd.
- 100% of Sunbrand S.A. de C.V.
- 100% of Sunbrand Caribe S.A.
- 100% of Sunbrand de
Columbia E.U.
- 100% of Sunbrand Honduras, S.A.
- 90% of Xxxxx xx Xxxxxxxx
- 00% xx Xxxxxxx xx Xxxxxx
Xxxxxxx & Xxxxx, Ltd.
- 100% of Eildon Electronics Ltd.
- 100% of MEC
(Sewing Machines) Ltd.
- 50% of Xxxxxxx-Xxxxxxx Ltd.
Macpherson
- 50% of Veristitch, Inc.
(i) Facsimile Numbers:
Borrower: 000-000-0000
Lender: 000 000-0000
(j) Chief Executive Office of 000 Xxxxx Xxxxxx
each Borrower: Xxxxxxxx, Xxx Xxxxxx 00000
10. Description of Real Property: 00-00 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxxx
11. Lender's Bank: Bank One, N.A.
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx
12. Other Covenants: (i) Borrowers agree that Lender or
independent appraisers acceptable
to Lender may (at Lender's option)
conduct appraisals of Borrowers'
Inventory once every six (6) months
and that Borrower shall pay all of
the costs and expenses arising from
such appraisals.
(ii) On or before 45 days after the
Closing Date, WG shall have
consummated the sale of all assets
of one of the divisions of WG to a
Person acceptable to Lender for a
sale price of not less than the
aggregate amount of Loans
outstanding on such date with
respect to the assets being sold
and on terms and conditions
acceptable to Lender, and WG shall
have delivered or caused to be
delivered to Lender a (i) a Letter
of Credit in form and substance
satisfactory to Lender naming
Lender as beneficiary in the face
amount of the purchase price and
(ii) an assignment of WG's rights
and sums due under such sale
agreement and an acknowledgment of
such assignment from the purchaser,
each in form and substance
satisfactory to Lender.
(iii)Prior to any permitted sale of any
Emtex Leases as provided for in the
Agreement, Borrowers shall at all
times maintain the Emtex Leases in
such manner and at such location as
Lender may approve in its sole
discretion, and upon the occurrence
of an Event of Default, at the
request of Lender, shall deliver
the originals of such Emtex Leases
to Lender pursuant to Lender's
written instructions.
(iv) On or before 60 days after the
Closing Date, each Borrower shall
have established a new blocked
account or lockbox arrangement with
a bank acceptable to Lender and on
terms acceptable to Lender, in its
sole discretion.
(v) On or before 10 days after the
Closing Date, Borrowers shall have
deposited all of the Emtex Leases
in a safety deposit box established
by Lender.
13. Exceptions to Negative Covenants: Notwithstanding anything to the
contrary in the Agreement,
Borrowers may (i) lease Inventory
which is or is to be the subject of
an Eligible Emtex Lease, (ii) sell
the Emtex Leases provided that all
of the Emtex Lease Sale Conditions
have been satisfied and (iii) for
so long as no Event of Default
exists and after giving Lender not
less than ten (10) days prior
written notice, (A) sell or
otherwise dispose of obsolete or
slow moving Inventory of Borrowers
with an aggregate fair market value
not to exceed $100,000 and (B) sell
or otherwise dispose of other
obsolete or slow moving Inventory
of such Borrower, provided that the
sale price is not less than 80% of
the net orderly liquidation value
of such Collateral and other assets
and the proceeds from such sale are
promptly remitted to Lender for
application against the
Obligations.
IN WITNESS WHEREOF, each Borrower and Lender have signed this Schedule A
on the date set forth in the heading of the Agreement.
BORROWERS:
XXXXXXX & XXXXX, INC.
WG APPAREL, INC.
ATTEST: PARADISE COLOR INC.
______________________________ By:______________________________
XXXX-XXXX KIERAN, Secretary XXXX X. XXXXXXX, XX.,
Chief Financial Officer
[CORPORATE SEALS]
[Signatures continued on the following page]
MACPHERSON MEISTERGRAM, INC.
LEADTEC SYSTEMS, INC.
EMTEX LEASING, INC.
CLINTON MACHINERY CORPORATION
CLINTON MANAGEMENT CORPORATION
CLINTON LEASING CORPORATION
ATTEST: CLINTON EQUIPMENT CORP.
______________________________ By:______________________________
XXXX-XXXX KIERAN, Secretary XXXX X. XXXXXXX, XX.,
Chief Financial Officer
[CORPORATE SEALS]
J&E SEWING SUPPLIES, INC.
W&G DAON, INC.
By:______________________________
XXXX X. XXXXXXX, XX.,
Vice President and Secretary
[CORPORATE SEALS]
Accepted in New York, New York:
LENDER:
BANC OF AMERICA COMMERCIAL
ITS COMMERCIAL FUNDING DIVISION
By:______________________________
Its Authorized Signatory
SCHEDULE B
DEFINITIONS
This Schedule is an integral part of the Loan and Security Agreement dated
April ___, 2000, by and among XXXXXXX & XXXXX, INC., MACPHERSON MEISTERGRAM,
INC., LEADTEC SYSTEMS, INC., EMTEX LEASING CORPORATION, WG APPAREL, INC.,
CLINTON MACHINERY CORPORATION, CLINTON MANAGEMENT CORP., CLINTON LEASING CORP.,
CLINTON EQUIPMENT CORP., J&E SEWING SUPPLIES, INC., W&G DAON, INC., and PARADISE
COLOR INCORPORATED and BANC OF AMERICA COMMERCIAL FINANCE CORPORATION THROUGH
ITS COMMERCIAL FUNDING DIVISION (the "AGREEMENT").
As used in the Agreement, the following terms have the following meanings:
"ACCOUNT" means any right to payment for Goods sold (but not leased) or
for services rendered which is not evidenced by an Instrument or Chattel Paper,
whether or not it has been earned by performance.
"ACCOUNT DEBTOR" means the obligor on an Account or Chattel Paper.
"ACCOUNT PROCEEDS" has the meaning set forth in Section 4.1.
"AFFILIATE" means, with respect to any Person, a relative, partner,
shareholder, member, manager, director, officer, or employee of such Person, any
parent or subsidiary of such Person, or any Person controlling, controlled by or
under common control with such Person or any other Person affiliated, directly
or indirectly, by virtue of family membership, ownership, management or
otherwise.
"AFFILIATE SALE BALANCE" means the intercompany balance as shown on
Borrowers' books with respect to sales of Inventory at any time made from
Borrowers to any Affiliates of Borrowers (and which shall include the Current
Affiliate Sales Balance).
"AFFILIATE SALE CONDITIONS - LEVEL 1" means the following conditions, the
satisfaction of each in a manner satisfactory to Lender is a condition precedent
to any sale of Inventory by Borrowers to any Affiliate of Borrowers: (i) no
Default or Event of Default exists or would exist as a result of such sale of
Inventory to such Borrowers' Affiliates, (ii) Borrowers' Availability at the
time of such sale of Inventory to Borrowers' Affiliates is not and after giving
effect thereto would not be less than zero, (iii) not more than an amount equal
to the Permitted Past Due Sale Balance of the Current Affiliate Sales Balance
shall be more than 120 days past the original invoice date (as at any time shown
on Borrowers books).
"AFFILIATE SALE CONDITIONS - LEVEL 2" means the following conditions, the
satisfaction of each in a manner satisfactory to Lender is a condition precedent
to any sale of Inventory by Borrowers to any Affiliate of Borrowers: (i) no
Default or Event of Default exists or would exist as a result of such sale of
Inventory to such Borrowers' Affiliates, (ii) Borrowers' Availability at the
time of such sale of Inventory to Borrowers' Affiliates is not and after giving
effect thereto would not be less than $1,000,000, (iii) Borrowers shall have no
past due taxes or accounts payable more than 60 days past due, (iv) not more
than an amount equal to the Permitted Past Due Sale Balance of the Current
Affiliate Sales Balance shall be more than 120 days past the original invoice
date (as at any time shown on Borrowers books).
"AGREEMENT" and "THIS AGREEMENT" mean the Loan and Security Agreement of
which this Schedule B is a part and the Schedules thereto.
"APPLICABLE LAW" means all laws, rules and regulations applicable to the
Person, conduct, transaction, covenant or Loan Document in question, including
all applicable common law and equitable principles; all provisions of all
applicable state, federal and foreign constitutions, statutes, rules,
regulations and orders of governmental bodies; and orders, judgments and decrees
of all courts and arbitrators.
"AVAILABILITY" has the meaning set forth in Section 1.1(a).
"BANKRUPTCY CODE" means the United States Bankruptcy Code (11 U.S.C. 101
et seq.).
"BANKRUPTCY PLAN" shall mean the Joint Plan of Reorganization of Xxxxxxx &
Xxxxx, Inc. and certain Subsidiaries dated as of February 24, 2000, including
any exhibits or schedules annexed thereto and all amendments and modifications
thereto, which was confirmed by an order of the United States Bankruptcy Court
for the District of Delaware on April 3, 2000.
"BARUDAN" means Barudan America, Inc..
"BARUDAN LC" means those certain irrevocable letters of credit each dated
January 20, 2000, in the face amount of $500,000 ("BARUDAN LC # 1") and
$711,834.60, respectively, each issued by Xxxxxxxx Xxxx Xxxx, Xxxxxxxxx, Xxxx,
at the request of Barudan as support for the payment of the Barudan Notes.
"BARUDAN NOTES" means, collectively, (i) that certain Promissory Notes
dated January 20, 2000, executed by Barudan in favor of Xxxxxxx in the original
principal amount of $711,834.60 and (ii) that certain Promissory Notes dated
January 20, 2000, executed by Barudan in favor of Xxxxxxx in the original
principal amount of $500,000.00.
"BLOCKED ACCOUNT" has the meaning set forth in Section 4.1.
"BORROWER" has the meaning set forth in the heading to the Agreement.
"BORROWER'S ADDRESS" means the address for Borrowers set forth in the
heading to the Agreement.
"BUSINESS DAY" means a day other than a Saturday or Sunday or any other
day on which Lender or banks in New York are authorized to close.
"CHATTEL PAPER" has the meaning set forth in the UCC.
"CLOSING DATE" means the date on which all of the conditions precedent in
Schedule C are satisfied or waived by Lender and the initial Loans are made
under the Agreement.
"COLLATERAL" means all property and interests in property in or upon which
a security interest or other Lien is granted pursuant to this Agreement or the
other Loan Documents.
"CONSOLIDATED" means consolidation in accordance with GAAP of the accounts
or other items as to which such term applies.
"CREDIT ACCOMMODATION" has the meaning set forth in Section 1.1(a).
"CREDIT ACCOMMODATION BALANCE" means the sum of (i) the aggregate undrawn
face amount of all outstanding Credit Accommodations and (ii) all interest, fees
and costs due or, in Lender's reasonable estimation, likely to become due in
connection therewith.
"CURRENT AFFILIATE SALES BALANCE" means an amount equal to $3,000,000.
"DEFAULT" means any event which with notice or passage of time, or both,
would constitute an Event of Default.
"DEFAULT RATE" has the meaning set forth in Section 2.1.
"DEPOSIT ACCOUNT" has the meaning set forth in the UCC.
"DILUTION PERCENTAGE" means the gross amount of all returns, allowances,
discounts, credits, write- offs and similar items relating to each Borrower's
Accounts computed as a percentage of such Borrower's gross sales, calculated on
either a ninety (90) day rolling average or twelve (12) consecutive month
period, whichever yields the highest dilution percentage.
"DISTRIBUTION AGREEMENTS" means collectively, (i) that certain
Distributorship Agreement between Xxxxxxx and Barudan dated January 20, 2000,
(ii) that certain Distributorship Agreement between Xxxxxxx and Barudan Co.,
Ltd. dated January 19, 2000, (iii) that certain Distributorship Agreement
between Xxxxxxx and Pegasus Sewing Machine Mfg. Co. Ltd. dated January 1, 1995,
and (iv) that certain Distributorship Agreement between Xxxxxxx and X.X. Xxxxx
AG dated February 15, 2000
"DOCUMENT" has the meaning set forth in the UCC.
"DOMESTIC SUBSIDIARY" means a Subsidiary of any Borrower that is
incorporated under the laws of a state of the United States or the District of
Columbia.
"EARLY TERMINATION FEE" has the meaning set forth in Section 7.2.
"ELIGIBLE ACCOUNT" means, at any time of determination, an Account of any
Borrower which satisfies the general criteria set forth below and which is
otherwise acceptable to Lender acting in good faith (PROVIDED, that Lender may,
in its sole discretion exercised in good faith, change the general criteria for
acceptability of Eligible Accounts upon at least fifteen (15) days' prior notice
to Borrowers). An Account shall be deemed to meet the current general criteria
if (i) neither the Account Debtor nor any of its Affiliates is an Affiliate,
creditor or supplier of any Borrower; (ii) it does not remain unpaid more than
the number of days after the original INVOICE DATE set forth in Section 5(a) of
Schedule A; (iii) not more than 50% of all of the Accounts owing to any Borrower
by such Account Debtor or its Affiliates are more than 120 days past the
original invoice date; (iv) all Accounts owing by the Account Debtor or its
Affiliates do not represent more than (A) 10% of all otherwise Eligible Accounts
during the period from the Closing Date through October 28, 2000 (PROVIDED, that
Accounts which are deemed to be ineligible solely by reason of this clause
(iv)(A) shall be considered Eligible Accounts to the extent of the amount
thereof which does not exceed 10% of all otherwise Eligible Accounts) or (B) 15%
of all otherwise Eligible Accounts at all times after October 28, 2000
(PROVIDED, that Accounts which are deemed to be ineligible solely by reason of
this clause (iv)(B) shall be considered Eligible Accounts to the extent of the
amount thereof which does not exceed 15% of all otherwise Eligible Accounts);
(v) no covenant, representation or warranty contained in this Agreement with
respect to such Account (including any of the representations set forth in
Section 5.4) has been breached; (vi) the Account is not subject to any contra
relationship, counterclaim, dispute, set-off, asserted taxes, discounts, credits
or allowances (PROVIDED, that Accounts which are deemed to be ineligible solely
by reason of this clause (vi) shall be considered Eligible Accounts to the
extent of the amount thereof which is not affected by such contra relationships,
counterclaims, disputes, set-offs, asserted taxes, discounts, credits or
allowances); (vii) the Account Debtor's chief executive office or principal
place of business is not located outside the United States or Provinces of
Canada which have adopted the Personal Property Security Act or a similar act;
(viii) it is absolutely owing to a Borrower and does not arise from a sale on a
xxxx-and-hold, guarantied sale, sale-or-return, sale-on-approval, consignment,
retainage or any other repurchase or return basis or consist of progress
xxxxxxxx; (ix) to the extent deemed necessary by Lender, in its sole discretion,
Lender shall have verified the Account in a manner satisfactory to Lender; (x)
the Account Debtor is not the United States of America or any state or political
subdivision (or any department, agency or instrumentality thereof), unless the
applicable Borrower has complied with the Assignment of Claims Act of 1940 (31
U.S.C. 203 et seq.) or other applicable similar state or local law in a manner
satisfactory to Lender; (xi) it is at all times subject to Lender's duly
perfected, first priority security interest and to no other Lien that is not a
Permitted Lien, and the goods giving rise to such Account (A) were not, at the
time of sale, subject to any Lien except Permitted Liens and (B) have been
delivered to and accepted by the Account Debtor, or the services giving rise to
such Account have been performed by a Borrower and accepted by the Account
Debtor; (xii) the Account is not evidenced by Chattel Paper or an Instrument of
any kind and has not been reduced to judgment; (xiii) the Account Debtor's total
indebtedness to any Borrower does not exceed the amount of any credit limit
established by Borrowers or Lender and the Account Debtor is otherwise deemed to
be creditworthy by Lender (PROVIDED, that Accounts which are deemed to be
ineligible solely by reason of this clause (xiii) shall be considered Eligible
Accounts to the extent the amount of such Accounts does not exceed the lower of
such credit limits); (xiv) there are no facts or circumstances existing, or
which could reasonably be anticipated to occur, which might result in any
material adverse change in the Account Debtor's financial condition or impair or
delay the collectibility of all or any portion of such Account; (xv) Lender has
been furnished with all documents and other information pertaining to such
Account which Lender has requested, or which a Borrower is obligated to deliver
to Lender, pursuant to this Agreement; (xvi) a Borrower has not made an
agreement with the Account Debtor to extend the time of payment thereof beyond
the time periods set forth in clause (ii) above; (xvii) the Account Debtor
thereunder had the capacity to contract at the time any contract or other
document giving rise to such Account were executed; and (xviii) a Borrower has
not posted a surety or other bond in respect of the contract under which such
Account arose.
"ELIGIBLE EQUIPMENT" means, at any time of determination, Equipment owned
by a Borrower which Lender, in its sole discretion, deems to be eligible for
borrowing purposes.
"ELIGIBLE EXTENDED ACCOUNT" means an Account of any Borrower that is
unpaid more than 90 days after the original invoice date but not more than 120
days after the original invoice date and which would otherwise constitute an
Eligible Account or an Eligible Foreign Account except for the fact that the
Account is unpaid more than 90 days after the original invoice date.
"ELIGIBLE FOREIGN ACCOUNT" means any Account of any Borrower owed by an
Account Debtor having its chief executive office or principal place of business
located outside of the United States or Canada, and (i) for which (A) the
Account is fully backed by a letter of credit, guaranty or acceptance acceptable
to Lender in its sole discretion, and if backed by a letter of credit, such
letter of credit has been issued or confirmed by a bank satisfactory to Lender,
is sufficient to cover such Account, and if required by Lender, the original of
such letter of credit has been delivered to Lender or Lender's agent and the
issuer thereof notified of the assignment of the proceeds of such letter of
credit to Lender or (B) such Account is subject to credit insurance payable to
Lender issued by an insurer and on terms and in an amount acceptable to Lender
and (ii) which Account would otherwise constitute an Eligible Account except for
the fact that the Account Debtor has its chief executive office or principal
place of business located outside of the United States or Canada.
"ELIGIBLE IN-TRANSIT INVENTORY" means Inventory of any Borrower in transit
between locations of Borrowers located in the United States, and which would
otherwise constitute Eligible Inventory except for the fact that such Inventory
is not situated at an Inventory Location listed in Section 9(d) of Schedule A.
"ELIGIBLE INVENTORY" means, at any time of determination, Inventory of any
Borrower (other than packaging materials and supplies) which satisfies the
general criteria set forth below and which is otherwise acceptable to Lender
acting in good faith (PROVIDED, that Lender may, in its sole discretion
exercised in good faith, change the general criteria for acceptability of
Eligible Inventory upon at least fifteen (15) days' prior written notice to
Borrowers). Inventory shall be deemed to meet the current general criteria if
(i) it consists of raw materials or finished goods; (ii) it is in good, new (or
refurbished) and saleable condition; (iii) it is not slow-moving, obsolete,
unmerchantable or returned or repossessed (unless such Borrower has disclosed
such returns or repossessions to Lender in writing and such returned or
repossessed Inventory is in refurbished condition acceptable to Lender); (iv) it
is not in the possession of a processor, consignee or bailee, or located on
premises leased or subleased to a Borrower, or on premises subject to a mortgage
in favor of a Person other than Lender, unless such processor, consignee, bailee
or mortgagee or the lessor or sublessor of such premises, as the case may be,
has executed and delivered all documentation which Lender shall require to
evidence the subordination or other limitation or extinguishment of such
Person's rights with respect to such Inventory and Lender's right to gain access
thereto (PROVIDED, that the provisions of this clause (iv) shall not apply with
respect to leased or subleased locations or premises of a Borrower if Lender, in
its sole and absolute discretion, elects to waive the requirement that such
lessor or sublessor deliver to Lender a subordination or other limitation or
extinguishment of such lessor's or sublessor's rights with respect to such
Inventory and Lender's right to gain access thereto); (v) it meets all standards
imposed by any governmental agency or authority; (vi) it conforms in all
respects to any covenants, warranties and representations set forth in the
Agreement; (vii) it is at all times subject to Lender's duly perfected, first
priority security interest and no other Lien except a Permitted Lien; (viii) it
is not leased to any Person; and (ix) it is situated at an Inventory Location
listed in Section 9(d) of Schedule A or other location of which Lender has been
notified as required by Section 5.6.
"ELIGIBLE LEASED INVENTORY" means Inventory of any Borrower that (i) is
leased to any Person and with respect to which (A) the lease payments with
respect to such Inventory are not more than three (3) payments past due pursuant
to the underlying lease arrangement between such Borrower and such Person (the
"Lease Agreement"), (B) such Borrower has provided Lender with the underlying
lease agreement not less than ten (10) days prior to the commencement of the
lease relating to such Inventory, and such lease is an Emtex Lease or Lender has
reviewed and found acceptable, in its sole discretion, such underlying lease
agreement, (C) such Borrower has directed the lessee in writing to remit all
payments under the lease directly to Lender or the Lock Box, (D) the underlying
lease agreement has not been sold, otherwise disposed of or encumbered by
Borrower and (E) the original of the underlying lease has been delivered to
Lender or to a third party acceptable to Lender pursuant to arrangements
acceptable to Lender in its sole discretion; and (ii) which would otherwise
constitute Eligible Inventory except for the fact that such Inventory is leased
and located at the location of the lessee.
"ELIGIBLE REAL PROPERTY" means, at any time of determination, Real
Property owned by a Borrower which Lender, in its sole discretion, deems to be
eligible for borrowing purposes.
"EMTEX LEASE" means a lease of Inventory by Emtex under the terms of a
lease agreement in the form of Exhibit A attached hereto, or such other form as
Lender may approve in its sole and absolute discretion.
"EMTEX LEASE SALE CONDITIONS" means the following conditions, the
satisfaction of each in a manner satisfactory to Lender is a condition precedent
to any sale of any Emtex Lease: (i) no Event of Default exists, (ii) Borrowers
shall have provided Lender a list of all Emtex Leases being sold not less than
ten (10) days prior to such sale, (iii) the underlying purchase agreement with
respect to such sale shall be in the form of Exhibit B attached hereto, or such
other form as Lender may approve in its sole and absolute discretion, (iv) the
sale price of such Emtex Lease shall not be less than the product of (A) the
Inventory Advance Rate for Eligible Leased Inventory set forth in Section
1(b)(ii) of Schedule A multiplied by (B) the Eligible Leased Inventory with is
the subject of such sale and (iv) Borrowers shall have directed the purchaser of
such Emtex Leases in writing to make all payments owing to Borrowers as a result
of such sale directly to Lender or the Lock Box.
"EQUIPMENT" means all Goods which are used or bought for use primarily in
business (including farming or a profession) or by a Person who is a non-profit
organization or governmental subdivision or agency and which are not Inventory,
farm products or consumer goods, including all machinery, molds, machine tools,
motors, furniture, equipment, furnishings, fixtures, trade fixtures, motor
vehicles, tools, parts, dies and jigs, and all attachments, accessories,
accessions, replacements, substitutions, additions or improvements to, or spare
parts for, any of the foregoing.
"EQUIPMENT ADVANCE" has the meaning set forth in Section 1.1(b).
"ERISA" means the Employee Retirement Income Security Act of 1974 and all
rules, regulations and orders promulgated thereunder.
"EVENT OF DEFAULT" has the meaning set forth in Section 8.1.
"FOREIGN SUBSIDIARY" means a Subsidiary of any Borrower that is not
incorporated under the laws of a state of the United States or the District of
Columbia.
"GAAP" means generally accepted accounting principles as in effect from
time to time, consistently applied.
"GENERAL INTANGIBLES" has the meaning set forth in the UCC, and includes
all books and records pertaining to the Collateral and other business and
financial records in the possession of a Borrower or any other Person,
inventions, designs, drawings, blueprints, patents, patent applications,
trademarks, trademark applications (other than "intent to use" applications
until a verified statement of use is filed with respect to such applications)
and the goodwill of the business symbolized thereby, names, trade names, trade
secrets, goodwill, copyrights, registrations, licenses, franchises, customer
lists, security and other deposits, causes of action and other rights in all
litigation presently or hereafter pending for any cause or claim (whether in
contract, tort or otherwise), and all judgments now or hereafter arising
therefrom, rights to purchase or sell real or personal property, rights as a
licensor or licensee of any kind, royalties, telephone numbers, internet
addresses, proprietary information, purchase orders, and all insurance policies
and claims (including life insurance, key man insurance, credit insurance,
liability insurance, property insurance and other insurance), tax refunds and
claims, letters of credit, banker's acceptances and guaranties, computer
programs, discs, tapes and tape files in the possession of a Borrower or any
other Person, claims under guaranties, security interests or other security held
by or granted to such Borrower, all rights to indemnification and all other
intangible property of every kind and nature.
"GOODS" means all things which are movable at the time the security
interest attaches or which are fixtures (other than money, Documents,
Instruments, Investment Property, Accounts, Chattel Paper, General Intangibles,
or minerals or the like (including oil and gas) before extraction), including
standing timber which is to be cut and removed under a conveyance or contract
for sale, the unborn young of animals, and growing crops.
"GOVERNMENTAL AUTHORITY" means any federal, state, municipal, national,
foreign or other governmental department, commission, board, bureau, court,
agency or instrumentality or political subdivision thereof or any entity or
officer exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to any government or any court, in
each case whether associated with a state of the United States, the District of
Columbia or a foreign entity or government.
"INITIAL TERM" has the meaning set forth in Section 7.1.
"INSTRUMENT" has the meaning set forth in the UCC.
"INVENTORY" means all Goods held for sale or lease or furnished or to be
furnished under contracts of service, including all raw materials, work in
process, finished goods, goods in transit and materials and supplies which are
or might be used or consumed in a business or used in connection with the
manufacture, packing, shipping, advertising, selling or finishing of such Goods,
and all products of the foregoing, and shall include interests in Goods
represented by Accounts, returned, reclaimed or repossessed goods and rights as
an unpaid vendor.
"INVESTMENT PROPERTY" means all of any Borrower's securities, whether
certificated or uncertificated, securities entitlements, securities accounts,
commodity contracts and commodity accounts.
"LENDER" has the meaning set forth in the heading to the Agreement.
"LIEN" means any interest in property securing an obligation owed to, or a
claim by, a Person other than the owner of the property, whether such interest
is based on common law, statute or contract, including rights of sellers under
conditional sales contracts or title retention agreements and reservations,
exceptions, encroachments, easements, rights-of-way, covenants, conditions,
restrictions, leases and other title exceptions and encumbrances affecting
property. For the purpose of this Agreement, each Borrower shall be deemed to be
the owner of any property which it has acquired or holds subject to a
conditional sale agreement or other arrangement pursuant to which title to the
property has been retained by or vested in some other Person for security
purposes.
"LOAN ACCOUNT" has the meaning set forth in Section 2.4.
"LOAN DOCUMENTS" means the Agreement and all notes, guaranties, security
agreements, certificates, landlord's agreements, Lock Box and Blocked Account
agreements and all other agreements, documents and instruments now or hereafter
executed or delivered by any Borrower or any Obligor in connection with, or to
evidence the transactions contemplated by, this Agreement.
"LOAN LIMITS" means, collectively, the Availability limits and all other
limits on the amount of Loans and Credit Accommodations set forth in the
Agreement."Loans" means, collectively, the Revolving Loans and any Term Loan.
"LOCK BOX" has the meaning set forth in Section 4.1.
"MATURITY DATE" has the meaning set forth in Section 7.1.
"MATERIAL ADVERSE EFFECT" means the effect of any event or condition
which, alone or when taken together with other events or conditions occurring or
existing concurrently therewith, (i) has a material adverse effect upon the
business, operations, properties or condition (financial or otherwise) of any of
Willcox, Macpherson, Leadtec, Xxxxx, XX or Xxxxxxx Management or of the
Borrowers and their Subsidiaries taken as a whole; (ii) has or may be reasonably
expected to have any material adverse effect whatsoever upon the validity or
enforceability of the Agreement or any of the other Loan Documents; (iii) has
any material adverse effect upon the value of the whole or any material part of
the Collateral, the Liens of Lender with respect to such Collateral or the
priority of any such Liens; (iv) materially impairs the ability of any other
Obligor to perform its obligations under the Agreement or any of the other Loan
Documents, including repayment of any of the Obligations when due; or (v)
materially impairs the ability of Lender to enforce or collect the Obligations
or realize upon any of the Collateral in accordance with the Loan Documents and
Applicable Law.
"NEW LC" means the Standby Letter of Credit to be issued in connection
with the sale of a division of WG as set forth in Item 14 of Schedule C to this
Agreement.
"NEW LC LOAN CONDITIONS" means the following conditions, the satisfaction
of each of which is a condition precedent to Lender's obligation to make any
Loan against the New LC: (i) no Default or Event of Default exists, (ii) the New
LC shall be in an amount and in form and substance satisfactory to Lender, in
its sole discretion, (iii) the New LC shall be issued naming Lender as
beneficiary or all payments due to WG under the New LC shall be payable solely
and directly to Lender.
"OBLIGATIONS" means all present and future Loans, advances, debts,
liabilities, obligations, guaranties, covenants, duties and indebtedness at any
time owing by any Borrower to Lender, whether evidenced by or arising under the
Agreement or any other Loan Document, whether arising from an extension of
credit, opening of a Credit Accommodation, guaranty, indemnification or
otherwise (including all fees and other amounts which may be owing to issuers of
Credit Accommodations and all taxes, duties, freight, insurance, costs and other
expenses, costs or amounts payable in connection with Credit Accommodations or
the underlying goods), whether direct or indirect (including those acquired by
assignment and any participation by Lender in any Borrower's indebtedness owing
to others), whether absolute or contingent, whether due or to become due, and
whether arising before or after the commencement of a proceeding under the
Bankruptcy Code or any similar statute, including all interest, charges,
expenses, fees, reasonable attorney's fees, expert witness fees, audit fees,
letter of credit fees, loan fees, Early Termination Fees, Minimum Borrowing Fees
and any other sums chargeable to any Borrower under the Agreement or under any
other Loan Document.
"OBLIGOR" means any guarantor, endorser, acceptor, surety or other person
liable on, or with respect to, the Obligations or who is the owner of any
property which is security for the Obligations, other than a Borrower.
"PERMITTED LIENS" means: (i) purchase money security interests in specific
items of Equipment in an aggregate amount not to exceed the limit set forth in
Section 8(c) of Schedule A; (ii) leases of specific items of Equipment in an
aggregate amount not to exceed the limit set forth in Section 8(d) of Schedule
A; (iii) Liens for taxes not yet due and payable or that are being contested in
good faith by any Borrower through appropriate proceedings and for which such
Borrower has implemented appropriate reserves in accordance with GAAP; (iv)
additional Liens which are fully subordinate to the security interests of Lender
and are consented to in writing by Lender; (v) security interests being
terminated concurrently with the execution of this Agreement; (vi) Liens of
materialmen, mechanics, warehousemen or carriers arising in the ordinary course
of business and securing obligations which are not delinquent; (vii) Liens
incurred in connection with the extension, renewal or refinancing of the
indebtedness secured by Liens of the type described in clause (i) or (ii) above;
PROVIDED, that any extension, renewal or replacement Lien is limited to the
property encumbered by the existing Lien and the principal amount of the
indebtedness being extended, renewed or refinanced does not increase; (viii)
Liens in favor of customs and revenue authorities which secure payment of
customs duties in connection with the importation of goods; (ix) security
deposits posted in connection with real property leases or subleases; (x) cash
pledges or deposits to secure (A) obligations under workmens's compensation laws
or similar legislation or (B) public or statutory obligations of any Borrower;
(xi) zoning restrictions, easements, licenses, covenants, reservations, utility
company rights, restrictions on the use of real property or minor irregularities
of title incident thereto which do not in the aggregate materially detract from
the value of the property or assets of any Borrower and its Subsidiaries, taken
as a whole, or which could not reasonably be expected to have a Material Adverse
Effect; and (xii) cash pledges or cash collateral to secure letters of credit
currently outstanding with The CIT Group/Business Credit, Inc. ("CIT"), in an
amount not to exceed 105% of the face amount of the letters of credit currently
outstanding and which cash shall be released by CIT on the conditions set forth
in the cash collateral and release agreement between certain of the Borrowers
and CIT dated on or about the date hereof, a copy of which has been delivered to
Lender. Lender will have the right to require, as a condition to its consent
under clause (iv) above, that the holder of the additional Lien sign an
intercreditor agreement in form and substance satisfactory to Lender, in its
sole discretion, acknowledging that the Lien is subordinate to the security
interests of Lender, and agreeing not to take any action to enforce its
subordinate Lien so long as any Obligations remain outstanding, and that all
Borrowers agree that any uncured default in any obligation secured by the
subordinate Lien shall also constitute an Event of Default under this Agreement.
"PERMITTED PAST DUE SALE BALANCE" shall mean an amount equal to (i)
$2,600,000 from the Closing Date through the date forty- five (45) days from the
Closing Date and (ii) $2,100,000 at all times thereafter.
"PERSON" means any individual, sole proprietorship, partnership, joint
venture, limited liability company, trust, unincorporated organization,
association, corporation, government or any agency or political division
thereof, or any other entity.
"PRIME RATE" means, at any given time, the prime rate as quoted in THE
WALL STREET JOURNAL (EASTERN EDITION) as the base rate on corporate loans posted
as of such time by at least 75% of the nation's 30 largest banks (which rate is
not necessarily the lowest rate offered by such banks).
"REAL PROPERTY" means the real property described in Section 10 of
Schedule A.
"REAL PROPERTY ADVANCE" has the meaning set forth in Section 1.1(b).
"RELEASED PARTIES" has the meaning set forth in Section 6.1.
"RENEWAL TERM" has the meaning set forth in Section 7.1.
"RESERVES" has the meaning set forth in Section 1.2.
"REVOLVING LOANS" has the meaning set forth in Section 1.1(a).
"SALE" has the meaning set forth in Section 8.2.
"SUBSIDIARY" means any corporation or other entity of which a Person owns,
directly or indirectly, through one or more intermediaries, more than 50% of the
capital stock or other equity interest at the time of determination.
"TERM" means the period commencing on the date of this Agreement and
ending on the Maturity Date.
"TERM LOAN" has the meaning set forth in Section 1.1(b).
"UCC" means, at any given time, the Uniform Commercial Code as adopted and
in effect at such time in the State of New York.
All accounting terms used in the Agreement, unless otherwise indicated,
shall have the meanings given to such terms in accordance with GAAP. All other
terms contained in the Agreement, unless otherwise indicated, shall have the
meanings provided by the UCC, to the extent such terms are defined therein. The
term "including," whenever used in the Agreement, shall mean "including, but not
limited to." The singular form of any term shall include the plural form, and
vice versa, when the context so requires. References to Sections, subsections
and Schedules are to Sections and subsections of, and Schedules to, the
Agreement. All references to agreements and statutes shall include all
amendments, modifications, extensions, replacements and restatements thereto and
successor statutes in the case of statutes.
IN WITNESS WHEREOF, each Borrower and Lender have signed this Schedule B
on the date set forth in the heading to the Agreement.
BORROWERS:
XXXXXXX & XXXXX, INC.
WG APPAREL, INC.
ATTEST: PARADISE COLOR INC.
______________________________ By:______________________________
XXXX-XXXX KIERAN, Secretary XXXX X. XXXXXXX, XX.,
Chief Financial Officer
[CORPORATE SEALS]
[Signatures continued on the following page]
MACPHERSON MEISTERGRAM, INC.
LEADTEC SYSTEMS, INC.
EMTEX LEASING, INC.
CLINTON MACHINERY CORPORATION
CLINTON MANAGEMENT CORPORATION
CLINTON LEASING CORPORATION
ATTEST: CLINTON EQUIPMENT CORP.
______________________________ By:______________________________
XXXX-XXXX KIERAN, Secretary XXXX X. XXXXXXX, XX.,
Chief Financial Officer
[CORPORATE SEALS]
J&E SEWING SUPPLIES, INC.
W&G DAON, INC.
By:______________________________
XXXX X. XXXXXXX, XX.,
Vice President and Secretary
[CORPORATE SEALS]
Accepted in New York, New York:
LENDER:
BANC OF AMERICA COMMERCIAL
ITS COMMERCIAL FUNDING DIVISION
By:______________________________
Its Authorized Signatory
SCHEDULE C
CONDITIONS PRECEDENT
This Schedule is an integral part of the Loan and Security Agreement dated
April ___, 2000, by and among XXXXXXX & XXXXX, INC., MACPHERSON MEISTERGRAM,
INC., LEADTEC SYSTEMS, INC., EMTEX LEASING CORPORATION, WG APPAREL, INC.,
CLINTON MACHINERY CORPORATION, CLINTON MANAGEMENT CORP., CLINTON LEASING CORP.,
CLINTON EQUIPMENT CORP., J&E SEWING SUPPLIES, INC., W&G DAON, INC., and PARADISE
COLOR INCORPORATED and BANC OF AMERICA COMMERCIAL FINANCE CORPORATION THROUGH
ITS COMMERCIAL FUNDING DIVISION (the "AGREEMENT").
Lender's obligation to make any Loans or Credit Accommodations under the
Loan Agreement is subject to the satisfaction of all of the conditions precedent
set forth on this Schedule C, all in form and substance satisfactory to Lender
in its sole discretion.
o No Event of Default exists at the time, or would result from the
funding, of any Loan or other extension of credit.
o Each of the Loan Documents shall have been duly executed and
delivered to Lender by each of the signatories thereto, and each
Borrower shall be in compliance with all of the terms thereof.
o Lender shall have received copies of all filing receipts or
acknowledgments issued by any Governmental Authority to evidence any
filing or recordation necessary to perfect the Liens of Lender in
the Collateral and evidence that such Liens constitute valid and
perfected security interests and Liens, and that there are no other
Liens upon any Collateral except for Permitted Liens.
o Lender shall have received resolutions of the board of directors of
each Borrower authorizing the transactions set forth in the Loan
Agreement, copies of each Borrower's bylaws and all amendments
thereto, and copies of the articles of incorporation and other
organizational documents of each Borrower, and all amendments
thereto, certified by the Secretary of State or other appropriate
officials of the jurisdiction of each Borrower's states of
organization.
o Lender shall have received good standing certificates for each
Borrower, issued by the Secretary of State or other appropriate
official of such Borrower's jurisdiction of organization and each
jurisdiction where the conduct of such Borrower's business
activities or ownership of its property necessitates qualification.
o Lender shall have received and found acceptable in all respects any
and all modifications, amendments or changes to the form of
Bankruptcy Plan delivered to Lender and attached hereto as Exhibit
C, and the Bankruptcy Plan shall have been confirmed by a
confirmation order issued by the Bankruptcy Court and a period of
not less than eleven (11) days shall have expired since the issuance
of such confirmation order without any objections or appeals having
been filed with respect thereto.
o Lender shall have received a first priority Mortgage or Deed to
Secure Debt with respect to Borrowers' Real Property located at
00-00 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxxx.
o Lender shall have received the Note Pledge Agreements for the
Barudan Notes held by Borrowers.
o Lender shall have received the original stock certificates for all
Domestic Subsidiaries and Foreign Subsidiaries (with respect to the
Foreign Subsidiaries, limited to 65%) and Stock Pledge Agreements
for all Foreign Subsidiaries (with respect to the Foreign
Subsidiaries, limited to 65%).
o Lender shall have determined that immediately after Lender has made
the initial Loans and Credit Accommodations to be made on the
Closing Date and Borrowers have paid (or made provision for payment
of) all closing costs incurred in connection with the Agreement, and
after giving effect to the other transactions to occur on the
Closing Date (i) Borrowers have no post-petition accounts payable
more than sixty (60) days past due, (ii) Borrowers' have no past due
taxes and (iii) Borrowers' Availability is not less than $2,800,000.
For purposes hereof, the term "Availability" shall include lockbox
cash receipts, less any outstanding checks and/or book overdrafts.
o Borrowers' shall have a Consolidated Tangible Net Worth on the
Closing Date of not less than $3,500,000. For purposes hereof, the
term "Consolidated Tangible Net Worth" means Borrowers' Consolidated
total shareholder's equity (including capital stock, additional
paid-in capital and retained earnings, after deducting treasury
stock) which would appear as such on a Consolidated balance sheet of
Borrowers prepared in accordance with GAAP, after deducting
therefrom the amount of all intangible items reflected therein, all
in accordance with GAAP.
o Lender shall have received and found acceptable the Barudan LCs, and
all payments due to Borrowers under such Barudan LCs shall be
payable solely and directly to Lender or such Baradan LCs shall be
transferred and assigned to Lender.
o Lender shall have received and found acceptable (i) the Sale and
Purchase agreement of a division of WG, (ii) resolutions of the
board of directors of WG approving such sale and (iii) the form of
letter of credit naming Lender as beneficiary to be issued by the
purchaser in the face amount of not less than the net value of the
Collateral being sold.
o To the extent requested by Lender, Lender shall have received a Debt
Subordination Agreement with respect to any debt of Borrowers not
specifically permitted under the Agreement.
o Lender shall have received and found acceptable certified copies of
Borrowers' foreign accounts receivable credit insurance policies in
an amount not less than $3,000,000, and Lender shall have received
of an assignment of such insurance policies.
o Lender shall have received the original life insurance policy in an
amount not less than $2,000,000 on the life of Xxxx Xxxxxxx, Sr. and
an assignment of such insurance policy to Lender.
o Lender shall have reviewed and found acceptable copies of all Emtex
Leases from Borrowers and the originals of the underlying Emtex
Leases shall have been delivered to Lender or to a third party
acceptable to Lender pursuant to arrangements acceptable to Lender
in its sole discretion.
o Lender shall have received Landlord waivers with respect to each
Borrower's leased premises from each Borrower's landlords, to the
extent required by Lender.
o Lender shall have received a favorable, written opinions of Xxxxxx
Xxxxxxx & Xxxx, LLP, Emtex's local Georgia counsel and Macpherson's
local North Carolina counsel.
o Lender shall have received certified copies of the property and
casualty insurance policies, insurance certificates regarding such
insurance with respect to the Collateral, together with loss payable
endorsements on Lender's standard form of lender's loss payee
endorsement naming Lender as loss payee with respect to each such
policy and certified copies of each Borrower's liability insurance
policies, including product liability policies, together with
endorsements naming Lender as an additional insured, all as required
by the Loan Documents.
o Lender shall have received the duly executed agreements establishing
the Lockbox Account with a financial institution acceptable to
Lender for the collection or servicing of the Accounts.
o Lender shall have received assurances satisfactory to it that there
are no threats of strikes or work stoppages by any employees, or
organization of employees, of any Borrower which Lender reasonably
determines may have a Material Adverse Effect.
o Lender shall have determined that none of the Loan Documents or any
of the transactions contemplated thereby violate any Applicable Law,
court order or agreement binding upon any Borrower.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, each Borrower and Lender have signed this Schedule C
on the date set forth in the heading to the Agreement.
BORROWERS:
XXXXXXX & XXXXX, INC.
WG APPAREL, INC.
ATTEST: PARADISE COLOR INC.
______________________________ By:______________________________
XXXX-XXXX KIERAN, Secretary XXXX X. XXXXXXX, XX.,
Chief Financial Officer
[CORPORATE SEALS]
MACPHERSON MEISTERGRAM, INC.
LEADTEC SYSTEMS, INC.
EMTEX LEASING, INC.
CLINTON MACHINERY CORPORATION
CLINTON MANAGEMENT CORPORATION
CLINTON LEASING CORPORATION
ATTEST: CLINTON EQUIPMENT CORP.
______________________________ By:______________________________
XXXX-XXXX KIERAN, Secretary XXXX X. XXXXXXX, XX.,
Chief Financial Officer
[CORPORATE SEALS]
J&E SEWING SUPPLIES, INC.
W&G DAON, INC.
By:______________________________
Xxxx X. Xxxxxxx, Xx.,
Vice President and Secretary
[CORPORATE SEALS]
[Signatures continued on the following page]
Accepted in New York, New York:
LENDER:
BANC OF AMERICA COMMERCIAL
ITS COMMERCIAL FUNDING DIVISION
By:______________________________
Its Authorized Signatory
EXHIBIT A
SEE ATTACHED FORM OF EMTEX LEASE
EXHIBIT B
SEE ATTACHED FORM OF EMTEX LEASE PURCHASE AGREEMENTS
[SEE ATTACHED CIT AND TEXTRON PROGRAM AGREEMENTS]
EXHIBIT C
SEE ATTACHED FORM OF BANKRUPTCY PLAN
