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LOAN AND SECURITY AGREEMENT
Dated as of March 24, 1998
Between
ITHACA INDUSTRIES, INC.
(the Borrower)
and
THE LENDERS PARTY
HERETO FROM TIME TO TIME
(the Lenders)
and
NATIONSBANK, N.A.
(the Collateral Agent)
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TABLE OF CONTENTS
Page
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ARTICLE 1
DEFINITIONS............................... 1
SECTION 1.1 Definitions.................................................... 1
SECTION 1.2 General........................................................ 24
ARTICLE 2
[INTENTIONALLY DELETED]......................... 24
ARTICLE 3
[INTENTIONALLY DELETED]......................... 24
ARTICLE 4
TERM LOAN FACILITY............................ 24
SECTION 4.1 Term Loan...................................................... 24
SECTION 4.2 Manner of Borrowing Term Loan.................................. 25
SECTION 4.3 Repayment of Term Loan......................................... 25
SECTION 4.4 Term Notes..................................................... 25
SECTION 4.5 Prepayment of Term Loan........................................ 25
ARTICLE 5
GENERAL LOAN PROVISIONS......................... 26
SECTION 5.1 Interest....................................................... 26
SECTION 5.2 Certain Fees................................................... 27
SECTION 5.3 Manner of Payment.............................................. 27
SECTION 5.4 General........................................................ 28
SECTION 5.5 Loan Accounts; Statements of Accounts.......................... 28
SECTION 5.6 Termination of Agreement....................................... 29
SECTION 5.7 [Intentionally Deleted......................................... 29
SECTION 5.8 Settlement..................................................... 29
SECTION 5.9 [Intentionally Deleted]........................................ 30
SECTION 5.10 Prepayment Fee................................................. 30
SECTION 5.11 [Intentionally Deleted]........................................ 31
SECTION 5.12 [Intentionally Deleted]........................................ 31
SECTION 5.13 [Intentionally Deleted]........................................ 31
SECTION 5.14 [Intentionally Deleted]........................................ 31
SECTION 5.15 [Intentionally Deleted]........................................ 31
SECTION 5.16 [Intentionally Deleted]........................................ 31
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ARTICLE 6
CONDITIONS PRECEDENT........................... 31
SECTION 6.1 Conditions Precedent to Loans.................................. 31
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF BORROWER............... 36
SECTION 7.1 Representations and Warranties................................. 36
SECTION 7.2 [Intentionally Deleted]........................................ 47
ARTICLE 8
SECURITY INTEREST............................ 47
SECTION 8.1 Security Interest.............................................. 47
SECTION 8.2 Continued Priority of Security Interest........................ 48
ARTICLE 9
COLLATERAL COVENANTS........................... 49
SECTION 9.1 [Intentionally Deleted]........................................ 49
SECTION 9.2 Verification and Notification.................................. 49
SECTION 9.3 [Intentionally Deleted]........................................ 49
SECTION 9.4 [Intentionally Deleted]........................................ 49
SECTION 9.5 Delivery of Instruments........................................ 49
SECTION 9.6 Sales of Inventory............................................. 49
SECTION 9.7 Ownership and Defense of Title................................. 49
SECTION 9.8 Insurance...................................................... 50
SECTION 9.9 Location of Offices and Collateral............................. 51
SECTION 9.10 Records Relating to Collateral................................. 51
SECTION 9.11 Inspection..................................................... 52
SECTION 9.12 Information and Reports........................................ 52
SECTION 9.13 Power of Attorney.............................................. 52
SECTION 9.14 Additional Real Estate and Leases.............................. 53
SECTION 9.15 Assignment of Claims Act....................................... 53
SECTION 9.16 Covenant to Guarantee Obligations and Give Security............ 53
ARTICLE 10
AFFIRMATIVE COVENANTS.......................... 55
SECTION 10.1 Preservation of Corporate Existence and Similar
Matters........................................................ 55
SECTION 10.2 Compliance with Applicable Laws................................ 55
SECTION 10.3 Maintenance of Property........................................ 55
SECTION 10.4 Conduct of Business............................................ 55
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SECTION 10.5 Insurance...................................................... 55
SECTION 10.6 Payment of Taxes and Claims.................................... 56
SECTION 10.7 Accounting Methods and Financial Records....................... 56
SECTION 10.8 Use of Proceeds................................................ 56
SECTION 10.9 Hazardous Waste and Substances; Environmental
Requirements................................................... 56
SECTION 10.10 [Intentionally Deleted]........................................ 57
SECTION 10.11 [Intentionally Deleted]........................................ 57
ARTICLE 11
INFORMATION............................... 57
SECTION 11.1 Financial Statements........................................... 57
SECTION 11.2 Accountants' Certificate....................................... 58
SECTION 11.3 Officer's Certificate.......................................... 58
SECTION 11.4 Copies of Other Reports........................................ 59
SECTION 11.5 Notice of Litigation and Other................................. 59
SECTION 11.6 ERISA.......................................................... 60
SECTION 11.7 Accuracy of Information........................................ 60
SECTION 11.8 Revisions or Updates to Schedules.............................. 60
SECTION 11.9 Seller Subordinated Indebtedness Certificate................... 61
ARTICLE 12
NEGATIVE COVENANTS............................ 61
SECTION 12.1 Financial Ratios............................................... 61
SECTION 12.2 Indebtedness for Money Borrowed................................ 62
SECTION 12.3 Guarantees..................................................... 63
SECTION 12.4 Investments.................................................... 63
SECTION 12.5 Capital Expenditures........................................... 63
SECTION 12.6 Restricted Payments, Etc....................................... 63
SECTION 12.7 Merger, Consolidation and Sale of Assets....................... 63
SECTION 12.8 Transactions with Affiliates................................... 64
SECTION 12.9 Liens.......................................................... 64
SECTION 12.10 Capitalized Lease Obligations.................................. 64
SECTION 12.11 Operating Lease Obligations.................................... 64
SECTION 12.12 Plans.......................................................... 65
SECTION 12.13 Amendments of Other Agreements................................. 65
SECTION 12.14 [Intentionally Deleted]........................................ 65
SECTION 12.15 Fiscal Year.................................................... 65
SECTION 12.16 Limitation on Issuance of Capital Stock........................ 65
SECTION 12.17 Limitation on Certain Restrictions on Subsidiaries............. 65
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ARTICLE 13
DEFAULT................................. 66
SECTION 13.1 Events of Default.............................................. 66
SECTION 13.2 Remedies....................................................... 69
SECTION 13.3 Application of Proceeds........................................ 72
SECTION 13.4 Power of Attorney.............................................. 72
SECTION 13.5 Miscellaneous Provisions ...................................... 73
ARTICLE 14
ASSIGNMENTS............................... 74
SECTION 14.1 Successors and Assigns; Participations......................... 74
SECTION 14.2 Representation of Lenders...................................... 76
ARTICLE 15
COLLATERAL AGENT............................. 76
SECTION 15.1 Appointment of Collateral Agent................................ 76
SECTION 15.2 Delegation of Duties........................................... 77
SECTION 15.3 Exculpatory Provisions......................................... 77
SECTION 15.4 Reliance by Collateral Agent................................... 77
SECTION 15.5 Notice of Default.............................................. 78
SECTION 15.6 Non-Reliance on Collateral Agent and Other Lenders............. 78
SECTION 15.7 Indemnification................................................ 78
SECTION 15.8 Collateral Agent in Its Individual Capacity.................... 79
SECTION 15.9 Successor Collateral Agent..................................... 79
SECTION 15.10 [Intentionally Deleted]........................................ 80
SECTION 15.11 [Intentionally Deleted......................................... 80
SECTION 15.12 Intercreditor Agreement........................................ 80
ARTICLE 16
MISCELLANEOUS.............................. 80
SECTION 16.1 Notices........................................................ 80
SECTION 16.2 Expenses....................................................... 81
SECTION 16.3 Stamp and Other Taxes.......................................... 82
SECTION 16.4 Setoff......................................................... 82
SECTION 16.5 Litigation..................................................... 83
SECTION 16.6 Waiver of Rights............................................... 83
SECTION 16.7 Consent to Advertising and Publicity........................... 84
SECTION 16.8 Reversal of Payments........................................... 84
SECTION 16.9 Injunctive Relief.............................................. 84
SECTION 16.10 Accounting Matters............................................. 84
SECTION 16.11 Amendments; Waivers............................................ 85
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SECTION 16.12 Assignment..................................................... 86
SECTION 16.13 Performance of Borrower's Duties............................... 87
SECTION 16.14 Indemnification................................................ 87
SECTION 16.15 All Powers Coupled with Interest............................... 87
SECTION 16.16 Survival....................................................... 87
SECTION 16.17 Titles and Captions............................................ 88
SECTION 16.18 Severability of Provisions..................................... 88
SECTION 16.19 Governing Law.................................................. 88
SECTION 16.20 Counterparts................................................... 88
SECTION 16.21 Reproduction of Documents...................................... 88
SECTION 16.22 Term of Agreement.............................................. 89
SECTION 16.23 Pro-Rata Participation......................................... 89
SECTION 16.24 Receivables Securitization..................................... 89
SECTION 16.25 Final Agreement................................................ 90
SECTION 16.26 Waiver of Consequential Damages, Etc........................... 90
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ANNEXES, EXHIBITS AND SCHEDULES
EXHIBIT A FORM OF TERM NOTE
EXHIBIT D FORM OF ASSIGNMENT AND ACCEPTANCE
Schedule 1.1A Permitted Liens
Schedule 1.1B Excepted Accounts
Schedule 7.1(a) Organization
Schedule 7.1(c) Subsidiaries; Ownership of Stock
Schedule 7.1(e) Compliance with Laws
Schedule 7.1(f) Description of Business
Schedule 7.1(g) Governmental Approvals
Schedule 7.1(h) Title to Properties
Schedule 7.1(i) Liens
Schedule 7.1(j) Indebtedness and Guarantees
Schedule 7.1(k) Litigation
Schedule 7.1(l) Tax Matters
Schedule 7.1(p) ERISA
Schedule 7.1(t) Location of Offices and Receivables
Schedule 7.1(u) Locations of Inventory
Schedule 7.1(v) Locations of Equipment
Schedule 7.1(w) Real Estate
Schedule 7.1(x) Corporate and Fictitious Names
Schedule 7.1(aa) Employee Relations
Schedule 7.1(bb) Proprietary Rights
Schedule 7.1(cc) Trade Names
Schedule 10.8 Use of Proceeds
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LOAN AND SECURITY AGREEMENT
Dated as of March 24, 1998
ITHACA INDUSTRIES, INC., a Delaware corporation, the Lenders party
to this Agreement from time to time, and NATIONSBANK, N.A., a national banking
association, as collateral agent for the Lenders, agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1 Definitions. For the purposes of this Agreement:
"Account Debtor" means a Person who is obligated on a Receivable.
"Acquire" or "Acquisition", as applied to any Business Unit or
Investment, means the acquiring or acquisition of such Business Unit or
Investment by purchase, exchange, issuance of stock or other securities, or by
merger, reorganization or any other method.
"Acquired Assets" means the assets and business of the Seller
acquired by the Borrower from the Seller pursuant to the Acquisition Documents.
"Acquisition Agreement" means the Asset Purchase Agreement dated as
of March 13, 1998 between the Seller and the Borrower, as the same may be
amended up to and through the Effective Date with the consent of the Lenders.
"Acquisition Documents" means, collectively, the Acquisition
Agreement and all other documents, agreements and certificates executed in
connection with the consummation of the transactions contemplated by the
Acquisition Agreement.
"Acquisition Documents Assignment" means the Collateral Assignment
of Acquisition Documents, in form and substance satisfactory to the Collateral
Agent, dated on or about the Effective Date, made by the Borrower in favor of
the Collateral Agent, for the benefit of the Secured Creditors, as such
agreement may be amended, modified or supplemented from time to time.
"Affiliate" means, with respect to a Person, (a) any partner,
officer, shareholder (if holding more than 10% of the outstanding shares of
capital stock of such Person), director, employee or managing agent of such
Person, (b) any other Person (other than a Subsidiary) that, (i) directly or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, such given Person, (ii) directly or indirectly
beneficially owns or holds 10% or more of any class of voting stock or
partnership or other voting interest of such Person or any Subsidiary of such
Person, or (iii) 10% or more of the voting stock or partnership
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or other voting interest of which is directly or indirectly beneficially owned
or held by such Person or a Subsidiary of such Person. Notwithstanding the
foregoing, when used in subpart (c) of the definition of "Restricted Payment",
and in Section 12.8, "Affiliate" means (a) any partner, officer, director,
employee or managing agent of such Person, (b) any other Person (other than a
Subsidiary) that, (i) directly or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, such given
Person, (ii) directly or indirectly beneficially owns or holds 50% or more of
any class of voting stock or partnership or other voting interest of such Person
or any Subsidiary of such Person, or (iii) 50% or more of the voting stock or
partnership or other voting interest of which is directly or indirectly
beneficially owned or held by such Person or a Subsidiary of such Person. The
term "control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through ownership of voting securities or partnership or other voting
interest, by contract or otherwise.
"Agreement" means and includes this Agreement, including all
Annexes, Schedules, Exhibits and other attachments hereto, and all amendments,
modifications and supplements hereto and thereto.
"Agreement Date" means the date as of which this Agreement is dated.
"Applicable Laws" means all applicable provisions of constitutions,
statutes, rules, regulations and orders of all governmental bodies and of all
orders and decrees of all courts and arbitrators, including, without limitation,
Environmental Laws.
"Asset Disposition" means the disposition of any asset of the
Borrower or any of its Subsidiaries, other than sales of Inventory in the
ordinary course of business.
"Assignment and Acceptance" means an assignment and acceptance in
the form attached hereto as Exhibit D assigning all or a portion of a Lender's
interests, rights and obligations under this Agreement pursuant to Section 14.1.
"Assignment of Factoring Proceeds" means an assignment by the
Borrower of the factoring proceeds payable to the Borrower pursuant to the terms
of the Non-Notification Factoring Agreement, executed by the Borrower, the
Collateral Agent, and the Factor.
"Benefit Plan" means an "employee pension benefit plan" as defined
in Section 3(2) of ERISA (other than a Multiemployer Plan) in respect of which
the Borrower or any Related Company is, or within the immediately preceding six
years was, an "employer" as defined in Section 3(5) of ERISA, including such
plans as may be established after the Agreement Date.
"Borrower" means Ithaca Industries, Inc., a Delaware corporation,
and its successors and permitted assigns.
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"Business Day" means any day other than a Saturday, Sunday or other
day on which banks in Atlanta, Georgia or Los Angeles, California are authorized
or required to close.
"Business Unit" means the assets constituting the business or a
division or operating unit thereof of any Person.
"Capital Expenditures" means all capitalized expenditures, plus all
capitalized Enterprise Resource Planning expenditures, in each case as
determined in accordance with GAAP, but excluding any such expenditure made (i)
to restore, replace or rebuild property to the condition of such property
immediately prior to any damage, loss, destruction or condemnation of such
property, to the extent such expenditure is made with insurance proceeds or
condemnation awards relating to any such damage, loss, destruction or
condemnation or (ii) proceeds from the sale exchange of property to the extent
utilized to purchase functionally equivalent property or equipment.
"Capitalized Lease" means a lease that is required to be capitalized
for financial reporting purposes in accordance with GAAP.
"Capitalized Lease Obligation" means Indebtedness represented by
obligations under a Capitalized Lease, and the amount of such Indebtedness shall
be the capitalized amount of such obligations determined in accordance with
GAAP.
"Cash Equivalents" means
(a) direct obligations of the United States of America or any agency
or instrumentality of the United States of America, the payment or guarantee of
which constitutes a full faith and credit obligation of the United States of
America, in each case maturing no later than 90 days from the date of
acquisition;
(b) certificates of deposit maturing no later than 90 days from the
date of acquisition issued by U.S. commercial banks having a combined capital
and surplus of over $200,000,000 and having a long-term debt rating of A- by S&P
or A3 or better by Xxxxx'x;
(c) commercial paper of a domestic issuer rated A-1 by S&P and P-1
by Xxxxx'x and maturing not more than ninety days after the date of acquisition;
(d) securities with maturities of 90 days or less from the date of
acquisition backed by standby letters of credit issued by any Lender or any
commercial bank satisfying the requirements of clause (b) of this definition;
and
(e) shares in money market mutual or similar funds which invest
exclusively in assets satisfying the requirements of clauses (a) through (d) of
this definition.
"Collateral" means and includes, collectively, all of the collateral
referred to in each of the Security Documents and all of the Borrower's right,
title and interest in and to each
3
of the following, wherever located and whether now or hereafter existing or now
owned or hereafter acquired or arising:
(a) all Receivables,
(b) all Inventory,
(c) all Equipment,
(d) all Contract Rights,
(e) all General Intangibles,
(f) all Real Estate,
(g) all goods and other property, whether or not delivered,
(i) the sale or lease of which gives or purports to give rise
to any Receivable, including, but not limited to, all merchandise returned
or rejected by or repossessed from customers, or
(ii) securing any Receivable,
including, without limitation, all rights as an unpaid vendor or lien or
(including, without limitation, stoppage in transit, replevin and
reclamation) with respect to such goods and other property,
(h) all mortgages, deeds to secure debt and deeds of trust on real
or personal property, guaranties, leases, security agreements, and other
agreements and property which secure or relate to any Receivable or other
Collateral, or are acquired for the purpose of securing and enforcing any
item thereof,
(i) all documents of title, policies and certificates of insurance,
securities, chattel paper and other documents and instruments evidencing
or pertaining to any and all items of Collateral,
(j) any demand, time, savings, passbook, money market or like
depository account, and all certificates of deposit, maintained with a
bank, savings and loan association, credit union or like organization,
other than an account evidenced by a certificate of deposit that is an
instrument under the UCC,
(k) all Pledged Stock and all securities accounts, all commodity
contracts and all commodity accounts,
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(l) (i) any investment account maintained by or on behalf of the
Borrower with the Collateral Agent or any Lender or any Affiliate of the
Collateral Agent or any Lender, (ii) any agreement governing such account,
(iii) all cash, money, notes, securities, instruments, goods, accounts,
documents, chattel paper, general intangibles and other property now or
hereafter held by the Collateral Agent or any Lender or any Affiliate of
the Collateral Agent or any Lender on behalf of the Borrower in connection
with such investment account or deposited by the Borrower or on the
Borrower's behalf to such investment account or otherwise credited thereto
for the Borrower's benefit, or distributable to the Borrower from such
investment account, together with all contracts for the sale or purchase
of the foregoing, (iv) all of the Borrower's right, title and interest
with respect to the deposit, investment, allocation, disposition,
distribution or withdrawal of the foregoing, (v) all of the Borrower's
right, title and interest with respect to the making of amendments,
modifications or additions of or to the terms and conditions under which
the investment account or investments maintained therein is to be
maintained by the Borrower, the Collateral Agent, any Lender or any
Affiliate of the Collateral Agent or any Lender on the Borrower's behalf,
and (vi) all of the Borrower's books, records and receipts pertaining to
or confirming any of the foregoing,
(m) all files, correspondence, computer programs, tapes, discs and
related data processing software which contain information identifying or
pertaining to any of the Receivables, or any Account Debtor, or showing
the amounts thereof or payments thereon or otherwise necessary or helpful
in the realization thereon or the collection thereof,
(n) all cash and Cash Equivalents deposited with the Collateral
Agent or any Lender or any Affiliate of the Collateral Agent or any Lender
or which the Collateral Agent, for the benefit of the Secured Creditors,
or any Lender or such Affiliate is entitled to retain or otherwise possess
as collateral pursuant to the provisions of this Agreement or any of the
Security Documents, but specifically excluding deposits in the Excepted
Accounts, and
(o) any and all products and proceeds of the foregoing (including,
but not limited to, any claim to any item referred to in this definition,
and any claim against any third party for loss of, damage to or
destruction of any or all of, the Collateral or for proceeds payable
under, or unearned premiums with respect to, policies of insurance) in
whatever form, including, but not limited to, cash, negotiable instruments
and other instruments for the payment of money, chattel paper, security
agreements and other documents.
"Collateral Agent" means NationsBank, N.A., a national banking
association, and any successor agent appointed pursuant to Section 15.9 hereof.
"Consolidated Fixed Charge Coverage Ratio" means the ratio of (a)
Consolidated Operating Cash Flow less Unfunded Capital Expenditures (other than
Unfunded Capital Expenditures consisting of capitalized Enterprise Resource
Planning expenditures) less cash
5
dividends paid less cash taxes paid to (b) Consolidated Fixed Charges; provided,
that in calculating the Consolidated Fixed Charge Coverage Ratio for any fiscal
period which includes the period from February 1, 1998 to and including the
Effective Date, the Seller shall be deemed to have been a Consolidated
Subsidiary of the Borrower for the period from February 1, 1998 to and including
the Effective Date for all purposes except for the calculation of cash
dividends.
"Consolidated Fixed Charges" means, on a consolidated basis for the
Borrower and its Consolidated Subsidiaries, the sum of cash Interest Expense
(excluding the Collateral Agent's annual $75,000 fee described in Section 5.2(b)
of the Senior Loan Agreement) and scheduled principal payments, determined in
accordance with GAAP.
"Consolidated Funded Indebtedness" means (a) all Indebtedness under
this Agreement and the First Lien Senior Secured Facility and (b) all other
Indebtedness for Money Borrowed of the Borrower and its Consolidated
Subsidiaries.
"Consolidated Net Income" means, for any period, net income (income
after tax payments) determined on a consolidated basis for the Borrower and its
Consolidated Subsidiaries in accordance with GAAP; provided, however, that there
shall not be included in such Consolidated Net Income:
(a) any net income of any Person if such person is not a Subsidiary,
except that equity in the net income of any such Person for such period
shall be included in such Consolidated Net Income up to the aggregate
amount of cash actually distributed by such Person to the Borrower or any
of its Consolidated Subsidiaries as a dividend or other distribution
(subject, in the case of a dividend or other distribution to a
Consolidated Subsidiary, to the limitation contained in clause (c) below);
(b) any net income of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition;
(c) any net income of any Subsidiary if such Subsidiary is subject
to restrictions, directly or indirectly, on the payment of dividends or
the making of distributions by such Subsidiary, directly or indirectly, to
the Borrower to the extent of such restrictions, except that equity in the
net income of any such Subsidiary for such period shall be included in
such Consolidated Net Income up to the aggregate amount of cash actually
distributed by such Subsidiary to the Borrower or any of its Consolidated
Subsidiaries during such period as a dividend or other distribution
(subject, in the case of a dividend or other distribution to another
Subsidiary, to the limitation contained in this clause);
(d) any gain or loss realized upon the sale or other disposition of
any property, plant or equipment (including pursuant to any sale-leaseback
arrangement) which is not sold or otherwise disposed of in the ordinary
course of business and any gain or loss realized upon the sale or other
disposition of any capital stock of any Person; or
6
(e) other extraordinary items.
"Consolidated Operating Cash Flow" means, in respect of any period,
the sum of (a) Consolidated Net Income for such period and (b) the amount of all
Interest Expense, depreciation, amortization and income taxes of the Borrower
and its Consolidated Subsidiaries, but only to the extent deducted in the
determination of Consolidated Net Income for such period; provided, that, in
calculating Consolidated Operating Cash Flow (except as such term is used to
calculate Excess Cash Flow) for any fiscal period which includes the period from
February 1, 1998 to and including the Effective Date, the Seller shall be deemed
to have been a Consolidated Subsidiary of the Borrower for the period from
February 1, 1998 to and including the Effective Date.
"Consolidated Subsidiaries" means, as to the Borrower, the
Subsidiaries of the Borrower whose accounts are at the time in question
consolidated with those of the Borrower in accordance with GAAP.
"Consolidated Tangible Net Worth" means the consolidated
shareholders' equity of the Borrower as would be shown on a consolidated balance
sheet of the Borrower less the book value of all assets which would be shown as
intangible assets, all determined in accordance with GAAP.
"Contaminant" means any waste, pollutant, hazardous substance, toxic
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, or any constituent of any such substance or waste.
"Contract Rights" means any rights under contracts not yet earned by
performance and not evidenced by an instrument or chattel paper.
"Copyrights" means and includes, in each case whether now existing
or hereafter arising, all of the Borrower's right, title and interest in and to
(a) all copyrights, rights and interests in copyrights, works protectable by
copyright, copyright registrations and copyright applications, (b) all renewals
of any of the foregoing, (c) all income, royalties, damages and payments now or
hereafter due and/or payable from third parties under any of the foregoing,
including, without limitation, damages or payments for past or future
infringements of any of the foregoing, (d) the right to xxx for past, present
and future infringements of any of the foregoing, and (e) all rights
corresponding to any of the foregoing throughout the world.
"Default" means any of the events specified in Section 13.1 which
with the passage of time or giving of notice or both would constitute an Event
of Default.
"Dollar" and "$" means freely transferable United States dollars.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as in effect from time to time.
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"Effective Date" means the later of (a) the Agreement Date, and (b)
the first date on which all of the conditions set forth in Article 6 shall have
been fulfilled or waived.
"Effective Interest Rate" means each rate of interest per annum on
the Term Loan in effect from time to time pursuant to the provisions of Sections
5.1(a), (c), and (d).
"Eligible Assignee" means (a) a commercial bank, financial
institution or other "accredited investor" (as defined in Rule 501(a)(1), (2),
(3), or (7) of Regulation D of the Securities Act of 1933); (b) any Lender
listed on the signature page of this Agreement; and (c) any Affiliate of any
Lender, if such Affiliate is an "accredited investor".
"Environmental Indemnity Agreement" means the Environmental
Indemnity Agreement, dated as of the Effective Date, between the Borrower and
the Collateral Agent, for the ratable benefit of the Secured Creditors, pursuant
to which the Borrower agrees to indemnify the Collateral Agent and the Secured
Creditors for certain matters related to Environmental Laws, as amended,
modified or supplemented from time to time.
"Environmental Laws" means all federal, state, local and foreign
laws now or hereafter in effect relating to pollution or protection of the
environment, including laws relating to emissions, discharges, Releases or
threatened Releases of pollutants, Contaminants, chemicals, or industrial, toxic
or hazardous substances or wastes into the environment (including, without
limitation, ambient air, surface water, ground water, or land), or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, removal, transport, or handling of pollutants, Contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes, and any and
all regulations, notices or demand letters issued, entered, promulgated or
approved thereunder; such laws and regulations include but are not limited to
the Resource Conservation and Recovery Act, 42 U.S.C. ss. 6901 et seq., as
amended; the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. ss. 9601 et seq., as amended; the Toxic Substances Control Act,
15 U.S.C. ss. 2601 et seq., as amended; the Clean Air Act, 46 U.S.C. ss. 7401 et
seq., as amended; and state and federal lien and environmental cleanup programs.
"Environmental Lien" means a Lien in favor of any governmental
entity for (a) any liability under Environmental Laws or (b) damages arising
from, or costs incurred by such governmental entity in response to, a Release or
threatened Release of Contaminant into the environment.
"Equipment" means and includes, all machinery, apparatus, equipment,
motor vehicles, tractors, trailers, rolling stock, fittings, fixtures and other
tangible personal property (other than Inventory) of every kind and description
used in the Borrower's business operations or owned by the Borrower or in which
the Borrower has an interest, and all parts, accessories and special tools and
all increases and accessions thereto and substitutions and replacements
therefor.
8
"Event of Default" means any of the events specified in Section
13.1, provided that any requirement for notice or lapse of time or any other
condition has been satisfied.
"Excepted Accounts" means those certain depository and other bank
accounts listed on Schedule 1.1B, so long as (excluding the Borrower's payroll
accounts and Honduran Accounts) no more than $10,000 is on deposit in any such
account at any time. The Honduran Accounts shall be considered Excepted Accounts
so long as no more than $250,000 is on deposit in any such account for more than
5 consecutive Business Days; provided, however, a Honduran Account may, for no
more than 5 consecutive Business Days during the month of June of each year and
5 consecutive Business Days during the month of December of each year have
additional deposits of up to $1,500,000 for payment of extra payroll and other
benefit payments in accordance with the customs and practice of the Borrower's
Honduran Subsidiaries and still be considered an Excepted Account hereunder.
"Excess Cash Flow" means, for any fiscal year, (a) Consolidated
Operating Cash Flow less (b) the sum of the Borrower's and its Consolidated
Subsidiaries' cash Interest Expense, scheduled and mandatory principal payments,
cash taxes, Unfunded Capital Expenditures and WIP Deductions (as that term is
defined in the Senior Loan Agreement).
"Factor" means Republic Business Credit Corporation, its successors,
or another factor reasonably acceptable to the Collateral Agent.
"Financial Officer" means the chief financial officer, treasurer or
controller of the Borrower.
"Financing Statements" means any and all Uniform Commercial Code
financing statements, in form and substance satisfactory to the Lenders,
executed and delivered by the Borrower to the Collateral Agent, naming the
Collateral Agent, for the benefit of the Secured Creditors, as secured party and
the Borrower as debtor, in connection with this Agreement.
"First Lien Senior Secured Facility" means the $95,000,000 of first
lien senior secured Indebtedness of the Borrower pursuant to the terms of the
Senior Loan Agreement.
"GAAP" means generally accepted accounting principles consistently
applied and maintained throughout the period indicated and, when used with
reference to the Borrower or any Subsidiary, consistent with the prior financial
practice of the Borrower, as reflected on the financial statements referred to
in Section 7.1(n); provided, however, that, in the event that changes shall be
mandated by the Financial Accounting Standards Board or any similar accounting
authority of comparable standing, or shall be recommended by the Borrower's
independent public accountants, such changes shall be included in GAAP as
applicable to the Borrower only from and after such date as the Borrower and the
Required Lenders shall have amended this Agreement to the extent necessary to
reflect any such changes in the financial covenants set forth in Article 12. The
parties hereto agree to promptly enter into reasonable amendments in order to
reflect such changes in GAAP.
9
"General Intangibles" means all of the Borrower's now owned or
hereafter acquired general intangibles, choses in action and causes of action
and all other intangible personal property of the Borrower of every kind and
nature (other than Accounts), including, without limitation, all Proprietary
Rights, corporate or other business records, inventions, designs, blueprints,
plans, specifications, goodwill, computer software, customer lists,
registrations, licenses, franchises, tax refund claims, reversions or any rights
thereto and any other amounts payable to the Borrower from any Plan or other
employee benefit plan, rights and claims against carriers and shippers, rights
to indemnification, business interruption insurance and proceeds thereof,
property, casualty or any similar type of insurance and any proceeds thereof,
proceeds of insurance covering the lives of key employees on which the Borrower
is beneficiary and any letter of credit, guarantee, claims, security interest or
other security held by or granted to the Borrower to secure payment by an
Account Debtor of any of the Accounts.
"Governmental Approvals" means all authorizations, consents,
approvals, licenses and exemptions of, registrations and filings with, and
reports to, all governmental bodies, whether federal, state, local or foreign
national or provincial and all agencies thereof.
"Guaranty", "Guaranteed" or to "Guarantee" as applied to any
obligation of another Person shall mean and include
(a) a guaranty (other than by endorsement of negotiable instruments
for collection in the ordinary course of business), directly or
indirectly, in any manner, of any part or all of such obligation of such
other Person, and
(b) an agreement, direct or indirect, contingent or otherwise, and
whether or not constituting a guaranty, the practical effect of which is
to assure the payment or per formance (or payment of damages in the event
of nonperformance) of any part or all of such obligation of such other
Person whether by
(i) the purchase of securities or obligations,
(ii) the purchase, sale or lease (as lessee or lessor) of
property or the purchase or sale of services primarily for the purpose of
enabling the obligor with respect to such obligation to make any payment
or performance (or payment of damages in the event of nonperformance) of
or on account of any part or all of such obligation, or to assure the
owner of such obligation against loss,
(iii) the supplying of funds to or in any other manner
investing in the obligor with respect to such obligation,
(iv) repayment of amounts drawn down by beneficiaries of
letters of credit, or
(v) the supplying of funds to or investing in a Person on
account of all or any part of such Person's obligation under a Guaranty of
any obligation or
10
indemnifying or holding harmless, in any way, such Person against any part
or all of such obligation.
"Honduran Account" means active deposit and other bank accounts of
the Borrower or the Borrower's Honduran Subsidiaries located in Honduras,
Central America, whether such accounts are now existing or established in the
future.
"Indebtedness" of any Person means, without duplication, all (a)
Indebtedness for Money Borrowed, (b) redemption obligations (but excluding
redemption obligations that occur only upon the occurrence of a contingency if
such obligations are expressly subject to repayment in full of the Secured
Obligations) in respect of mandatorily redeemable preferred stock, but only if
the redemption obligations mature within six years of the Effective Date, (c)
liabilities for the deferred purchase price of acquired property (excluding
accounts payable not overdue by more than 60 days that arise in the ordinary
course of business, and excluding accounts payable overdue by more than 60 days
provided such accounts payable are being disputed in good faith by the Borrower,
but including all liabilities created through any conditional sale or title
retention agreement with respect to acquired property), (d) rentals capitalized
in accordance with GAAP under any Capitalized Lease, (e) all liabilities in
respect of unreimbursed draws under letters of credit or similar instruments,
(f) payment obligations with respect to interest rate swaps, currency swaps and
similar obligations which require payments, whether periodically or upon the
happening of a contingency, and (g) all Indebtedness or other obligations of
others with respect to which such Person has become liable through a Guarantee.
"Installment Payment Date" means September 30, 2003.
"Intercreditor Agreement" means the Intercreditor Agreement, dated
as of the Effective Date, between the Collateral Agent, the Lenders, the Senior
Lenders, NationsBanc Xxxxxxxxxx Securities LLC, as syndication agent and
arranger under the Senior Loan Agreement, BankAmerica Business Credit, Inc., as
documentation agent under the Senior Loan Agreement, and NationsBank in its
capacity as the agent under the Senior Loan Agreement.
"Interest Expense" means interest on Indebtedness during the period
for which computation is being made, excluding (a) the amortization of fees and
costs incurred with respect to the closing of loans which have been capitalized
as transaction costs, and (b) interest paid in kind and other non-cash interest.
"Interest Payment Date" means the first day of each calendar month
commencing on April 1, 1998.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended.
"Inventory" means all inventory as such term is defined in the
Uniform Commercial Code and shall include, without limitation, (a) all goods
intended for sale or lease by the Borrower, or for display or demonstration, and
other products intended for sale by the
11
Borrower to its customers, (b) all work in process, (c) all raw materials and
other materials and supplies of every nature and description used or which might
be used in connection with the manufacture, packing, shipping, advertising,
selling, leasing or furnishing of such goods or otherwise used or consumed in
the Borrower's business, and (d) all documents evidencing and general
intangibles relating to any of the foregoing.
"Investment" means, with respect to any Person, (a) the acquisition
or ownership by such Person of any share of capital stock, evidence of
Indebtedness or other security issued by any other Person, (b) any loan, advance
or extension of credit to, or contribution to the capital of, any other Person,
excluding advances to employees in the ordinary course of business for business
expenses and extensions of trade credit in the ordinary course of business, (c)
any Guaranty of the obligations of any other Person, (d) any other investment
(other than the Acquisition of a Business Unit) in any other Person, and (e) any
commitment or option to make any of the investments listed in clauses (a)
through (d) above if, in the case of an option, the consideration therefor
exceeds $100.
"IRS" means the Internal Revenue Service.
"Lender" means at any time any lender party to this Agreement at
such time, including any such Person becoming a party hereto pursuant to the
provisions of Article 14, and its successors and assigns, and "Lenders" means at
any time all of the lenders party to this Agreement at such time, including any
such Persons becoming parties hereto pursuant to the provisions of Article 14,
and their successors and assigns.
"Lien" as applied to the property of any Person means (a) any
mortgage, deed to secure debt, deed of trust, lien, pledge, charge, lease
constituting a Capitalized Lease Obligation, conditional sale or other title
retention agreement, or other security interest, security title or similar
encumbrance of any kind in respect of any property of such Person, or upon the
income or profits therefrom, (b) any arrangement, express or implied, under
which any property of such Person is transferred, sequestered or otherwise
identified for the purpose of subjecting the same to the payment of Indebtedness
or performance of any other obligation in priority to the payment of the
general, unsecured creditors of such Person, and (c) the filing of, or any
agreement to give, any financing statement under the Uniform Commercial Code or
its equivalent in any jurisdiction, excluding informational financing statements
relating to property leased or intellectual property licensed by the Borrower.
"Loan" means any Term Loan, as well as all such loans collectively,
as the context requires.
"Loan Account" and "Loan Accounts" shall have the meanings ascribed
thereto in Section 5.5.
"Loan Documents" means collectively this Agreement, the Notes, the
Security Documents and each other instrument, agreement or document executed by
the Borrower or any
12
Subsidiary of the Borrower in connection with the making of any Loan under this
Agreement, whether on or after the Effective Date.
"Materially Adverse Effect" means any act, omission, situation,
circumstance, event or undertaking which would, singly or in any combination
with one or more other related acts, omissions, situations, circumstances,
events or undertakings have a materially adverse effect upon (a) the business,
assets, properties, liabilities, condition (financial or otherwise), results of
operations or business prospects of the Borrower and its Subsidiaries, taken as
a whole, (b) the value of the Collateral or the Real Estate taken as a whole,
(c) the Security Interest or the priority of the Security Interest, (d) the
ability of the Borrower or any of its Subsidiaries to perform in any material
respect any material obligations under this Agreement or any other Loan Document
to which it is a party, or (e) the legality, validity, binding effect,
enforceability or admissibility into evidence of any Loan Document or the
ability of the Collateral Agent or any Lender to enforce any material rights or
remedies under or in connection with any Loan Document.
"Money Borrowed" means, as applied to Indebtedness, (a) Indebtedness
for money borrowed, (b) Indebtedness, whether or not in any such case the same
was for money borrowed, (i) represented by notes payable, and drafts accepted,
that represent extensions of credit, (ii) constituting obligations evidenced by
bonds, debentures, notes or similar instruments, or (iii) upon which interest
charges are customarily paid or that was issued or assumed as full or partial
payment for property (other than trade credit that is incurred in the ordinary
course of business), (c) Indebtedness that constitutes a Capitalized Lease
Obligation, and (d) Indebtedness that is such by virtue of clause (h) of the
definition thereof, but only to the extent that the obligations Guaranteed are
obligations that would constitute Indebtedness for Money Borrowed.
"Moody's" means Xxxxx'x Investor Service, Inc. (or its successor).
"Mortgages" means and includes any and all of the mortgages,
leasehold mortgages, deeds of trust, deeds to secure debt, assignments and other
instruments executed and delivered by the Borrower pursuant to which the
Borrower grants to the Collateral Agent a Lien on all the Borrower's Real Estate
(excluding leasehold interests, other than the lease of the Borrower's Real
Estate located in Xxxxx City, North Carolina and Qualifying Leases) and a
collateral assignment of the Borrower's interest under the lease of Borrower's
Real Estate located in Silver City, North Carolina and under Qualifying Leases,
and all amendments, modifications and supplements thereto.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which the Borrower or a Related Company is
required to contribute or has contributed within the immediately preceding six
years.
"NationsBank" means NationsBank, N.A., and its successors and
permitted assigns.
13
"Net Proceeds" means proceeds received by the Borrower or any of its
Subsidiaries in cash from any Asset Disposition, net of: (a) the transaction
costs of such sale, lease, transfer or other disposition; (b) any tax liability
arising from such transaction; (c) amounts applied to repayment of Indebtedness
(other than the Secured Obligations) secured by a Lien on the asset or property
disposed; (d) reasonable reserves related to any contingent liability relating
to the asset or property disposed which the Borrower or its Subsidiaries will
retain following such Asset Disposition; and (e) amounts held in escrow pending
resolution of contingencies or the like until actually received.
"Net Worth" means, with respect to any Person, such Person's 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 balance sheet of such Person prepared in accordance with GAAP.
"Non-Notification Factoring Agreement" means an agreement regarding
the factoring of certain Receivables of the Borrower by and between the Factor
and the Borrower.
"Note" means any of the Term Notes and "Notes" means more than one
such Note.
"Operating Lease" means any lease (other than a lease constituting a
Capitalized Lease Obligation) of real or personal property.
"PBGC" means the Pension Benefit Guaranty Corporation and any
successor agency.
"Patent Assignment" means the Conditional Assignment and Patent
Security Agreement, dated on or about the Effective Date, executed and delivered
by the Borrower to the Collateral Agent, for the benefit of the Secured
Creditors, as the same may be amended, modified or supplemented from time to
time.
"Patents" means and includes, in each case whether now existing or
hereafter arising, all of the Borrower's right, title and interest in and to (a)
any and all patents and patent applications, (b) inventions and improvements
described and claimed therein, (c) reissues, divisions, continuations, renewals,
extensions and continuations-in-part and continued prosecution applications
thereof, (d) income, royalties, damages, claims and payments now or hereafter
due and/or payable under and with respect thereto, including, without
limitation, damages and payments for past and future infringements thereof, (e)
rights to xxx for past, present and future infringements thereof, and (f) all
rights corresponding to any of the foregoing throughout the world.
"Permitted Guarantees" means (a) Guarantees by the Borrower of
obligations of its Subsidiary Guarantors, (b) Guarantees by the Borrower of
obligations of its other Subsidiaries to the extent such Guarantees constitute a
"Permitted Investment" under clause (e) or (f) of the definition thereof, (c)
Guarantees by the Subsidiary Guarantors of the Borrower's
14
obligations under the First Lien Senior Secured Facility, and (d) Guarantees by
the Subsidiary Guarantors of the Borrower's obligations under the Loan Agreement
and the other Loan Documents.
"Permitted Investments" means Investments in:
(a) direct obligations of the United States of America or any agency
or instrumentality of the United States of America, the payment or
guarantee of which constitutes a full faith and credit obligation of the
United States of America, in each case maturing no later than one year
from the date of acquisition;
(b) certificates of deposit maturing no later than one year from the
date of acquisition issued by U.S. commercial banks having a combined
capital and surplus of over $200,000,000 and having a long-term debt
rating of A- by S&P, or A3 or better by Moody's;
(c) commercial paper of a domestic issuer rated A-1 by S&P and P-1
by Moody's and maturing not more than 270 days after the date of
acquisition;
(d) Investments in or to existing Subsidiary Guarantors;
(e) Investments in the ordinary course of business in the working
capital of Borrower's Honduran Subsidiaries, in an aggregate outstanding
amount not to exceed $4,000,000 at any time;
(f) Investments in other Subsidiaries in an aggregate outstanding
amount not to exceed $500,000 at any time;
(g) Investments made in the ordinary course of business;
(h) other Investments (in addition to clauses (a) through (g) above)
not exceeding at any time the greater of (i) $100,000, or (ii) the amount
that is available for Restricted Payments; and
(i) Investments received in connection with the settlement of
accounts receivable that arose in the ordinary course of business.
"Permitted Liens" means (a) Liens securing taxes, assessments and
other govern mental charges or levies (excluding any Lien imposed pursuant to
any of the provisions of ERISA) or the claims of materialmen, mechanics,
carriers, warehousemen or landlords for labor, materials, supplies or rentals
incurred in the ordinary course of business, but in all cases only if payment
shall not at the time be required to be made in accordance with Section 10.6,
(b) Liens resulting from a judgment or award which is being contested in good
faith by appropriate proceedings and for which reserves in respect of the
reasonably anticipated liability therefor have been appropriately established,
but only if the enforcement of any such Lien has
15
been stayed within 30 days by appropriate proceedings, (c) Liens arising in the
ordinary course of business that do not secure the repayment of Indebtedness for
Money Borrowed (i) to secure the performance of bids, trade contracts, statutory
obligations, surety and appeal bonds, performance bonds and other obligations of
a like nature, (ii) in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods, (iii) consisting of restrictions (other than pledges or
other security interests) on the transferability of Investments in favor of
co-investors or the issuers of such Investments or imposed by law, and (iv) on
Trademarks, Patents, Copyrights and other intellectual property (whether
individually or as part of a group) consisting of the license or similar
disposition of such property made in the ordinary course of business, (d) Liens
constituting Permitted Encumbrances, as defined in the Mortgages, and other
Liens on the Borrower's Real Estate in the nature of zoning restrictions,
easements, and rights or restrictions of record on the use of real property,
which do not materially detract from the value of such property or impair the
use thereof in the business of the Borrower, (e) Purchase Money Liens securing
Permitted Purchase Money Indebtedness, (f) Liens shown on Schedule 1.1A
Permitted Liens (and replacements, extensions and renewals of any such Lien upon
or in the same property theretofore subject thereto or the replacement,
extension or renewal (without increase in the amount or change in any direct or
contingent obligor) of the Indebtedness secured thereby), (g) Liens securing
Indebtedness owed by a Subsidiary to the Borrower or to a Subsidiary Guarantor,
(h) Liens securing the First Lien Senior Secured Facility, subject to the terms
of the Intercreditor Agreement, (i) Liens on Receivables arising under the Non-
Notification Factoring Agreement, so long as the Assignment of Factoring
Proceeds is in full force and effect, and (j) Liens of the Collateral Agent, for
the benefit of the Secured Creditors, arising under this Agreement and the other
Loan Documents.
"Permitted Purchase Money Indebtedness" means Indebtedness of the
Borrower and its Subsidiaries (a) which is secured by a Purchase Money Lien, and
(b) which, when aggregated with the principal amount of all other such
Indebtedness and Capitalized Lease Obligations of the Borrower at the time
outstanding, does not exceed $10,000,000. For the purposes of this definition,
the principal amount of any Indebtedness consisting of Capitalized Leases shall
be computed as a Capitalized Lease Obligation.
"Permitted Refinancing Indebtedness" means, with respect to the
First Lien Senior Secured Facility, the Indebtedness arising out of Borrower's
refinancing thereof that meets the following conditions: (a) the terms
(including advance rates, interest rates, amortization schedules, covenants,
defaults and lien subordination terms, and the like) shall be no less favorable
in any material respect to the Borrower and the Lenders than those contained in
the Senior Loan Agreement, in the reasonable determination of the Required
Lenders; (b) the sum of all revolving loan facility commitments and term loan
fundings, together with the fees and costs paid in respect thereof, under such
refinancing indebtedness shall not exceed the maximum revolving commitment and
outstanding term loan balance of the First Lien Senior Secured Facility on the
date of such refinancing; and (c) the collateral agent, if any, for the lenders
providing such financing, shall be reasonably acceptable to the Lenders.
16
"Person" means an individual, limited liability company,
corporation, partnership, association, trust or unincorporated organization, or
a government or any agency or political subdivision thereof.
"Plan" means any employee benefit plan as defined in Section 3(3) of
ERISA in respect of which the Borrower or any Related Company is, or within the
immediately preceding six years was, an "employer" as defined in Section 3(5) of
ERISA but only with respect to the time during such six-year period which the
Borrower or any Related Company was an "employer" with respect to a given
employee benefit plan.
"Pledged Stock" means all stock of the Borrower's Subsidiaries
assigned and pledged to the Collateral Agent, for the benefit of the Secured
Creditors, pursuant to the Stock Pledge Agreement and Section 9.16.
"Pro Forma" means the pro forma balance sheet of the Borrower and
its Subsidiaries as at January 31, 1998, after giving effect to the transactions
contemplated by this Agreement, the Acquisition Agreement and the Acquisition
Documents.
"Projections" means the forecasted (a) balance sheets, (b) income
statements, and (c) cash flow statements, of the Borrower and its Subsidiaries
for the Borrower's 1999 through 2002 fiscal years, together with appropriate
supporting details and a statement of underlying assumptions.
"Proportionate Share" or "Ratable", as applied to a Lender, means
such Lender's share of an amount in Dollars or other property at the time of
determination equal to (i) on the Effective Date, the amount set forth on Annex
II attached hereto, and (ii) after the funding of the Loans, the percentage of
the total principal amount of Loans outstanding at such time obtained by
dividing the principal amount of the Loans then owing to such Lender by the
total principal amount of all Loans then owing to all Lenders.
"Proprietary Rights" means all of the Borrower's now owned and
hereafter arising or acquired: Patents, Copyrights, Trademarks, including,
without limitation, those Proprietary Rights set forth on Schedule 7.1(bb)
hereto, and all other rights under any of the foregoing, all extensions,
renewals, reissues, divisions, continuations, and continuations-in-part of any
of the foregoing, and all rights to xxx for past, present and future
infringement of any of the foregoing.
"Purchase Money Lien" means any Lien incurred to secure the payment
of the purchase price or costs of construction incurred with the acquisition of,
or improvement to, fixed assets, including any Lien existing on such fixed
assets at the time of acquisition thereof or at the time of acquisition by the
Borrower or any of its Subsidiaries of any business entity then owning such
fixed assets (so long as they were not incurred or extended in contemplation of
such acquisition), provided that (a) such Lien shall attach solely to the fixed
assets acquired or purchased, (b) such Lien shall have been created or incurred
within 180 days of the date of acquisition of such fixed assets (with the
exception that in the case of construction or
17
acquisition of improvements to real estate, the land on which such improvements
are located shall not be required to have been acquired within such 180 day
period), and (c) the Indebtedness secured by such Lien does not exceed 100% of
the purchase price of assets so acquired.
"Qualifying Lease" means a lease of real estate entered into by the
Borrower or by a Subsidiary of the Borrower as lessee after the Effective Date,
provided such lease meets each of the following requirements: (a) either (i)
such lease has an initial term equal to or greater than five years from the date
such lease is executed, or (ii) such lease has a term (including both the
initial term and any renewal terms that are exercisable by the Borrower or the
Borrower's Subsidiary and are binding on the lessor if exercised) equal to or
greater than ten years from the date such lease is executed, and (b) the
aggregate dollar amount of lease payments (including the aggregate amount of all
required lessee payments of taxes, insurance and maintenance charges, whether
paid directly by the lessee or reimbursed to the lessor) for any one year period
of the lease term is at least $50,000; and (c) the gross area leased pursuant to
such lease exceeds 10,000 square feet.
"Real Estate" means all of the Borrower's now or hereafter owned or
leased estates in real property, including, without limitation, all fees,
leaseholds and future interests, together with all of the Borrower's now or
hereafter owned or leased interests in the improvements and emblements thereon,
the fixtures attached thereto and the easements appurtenant thereto, including,
without limitation the real property described on Schedule 7.1(w).
"Receivables" means and includes (a) any and all rights to the
payment of money or other forms of consideration of any kind (whether classified
under the Uniform Commercial Code as accounts, contract rights, chattel paper,
general intangibles, or otherwise) including, but not limited to, accounts
receivable, letters of credit and the right to receive payment thereunder,
chattel paper, tax refunds, insurance proceeds, Contract Rights, notes, drafts,
instruments, documents, acceptances, and all other debts, obligations and
liabilities in whatever form from any Person, (b) all guarantees, security and
Liens for payment thereof, (c) all goods, whether now owned or hereafter
acquired, and whether sold, delivered, undelivered, in transit or returned,
which may be represented by, or the sale or lease of which may have given rise
to, any such right to payment or other debt, obligation or liability, and (d)
all proceeds of any of the foregoing.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System (or any successor).
"Related Company" means any (i) corporation which is a member of the
same controlled group of corporations (within the meaning of Section 414(b) of
the Internal Revenue Code) as the Borrower; (ii) partnership or other trade or
business (whether or not incorporated) under common control (within the meaning
of Section 414(c) of the Internal Revenue Code) with the Borrower; or (iii)
member of the same affiliated service group (within the meaning of
18
Section 414(m) of the Internal Revenue Code) as the Borrower, any corporation
described in clause (i) above or any partnership, trade or business described in
clause (ii) above.
"Release" means release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment or into or out of any property, including the
movement of Contaminants through or in the air, soil, surface water or
groundwater.
"Remedial Action" means actions required pursuant to Environmental
Laws to (i) clean up, remove, treat or in any other way address Contaminants in
the indoor or outdoor environment; (ii) prevent the Release or threat of Release
or minimize the further Release of Contaminants so they do not migrate or
endanger or threaten to endanger public health or welfare or the indoor or
outdoor environment; or (iii) perform pre-remedial studies and investigations
and post-remedial monitoring and care.
"Reportable Event" has the meaning set forth in Section 4043(b) of
ERISA, but shall not include a Reportable Event as to which the provision for 30
days notice to the PBGC is waived under applicable regulations.
"Required Lenders" means, at any time, any combination of Lenders
holding, in the aggregate, in excess of 50% of the aggregate principal amount of
the Term Loans outstanding at such time.
"Restricted Dividend Payment" means any dividend, distribution or
payment on or with respect to (a) any shares of a Person's capital stock (other
than dividends payable solely in shares of its capital stock) or (b) any
partnership interest in a Person, excluding, however, any such dividend,
distribution or payment to the Borrower by any Subsidiary of the Borrower.
"Restricted Payment" means (a) any redemption, retirement or payment
with respect to the Seller Subordinated Indebtedness other than in accordance
with the subordination provisions set forth in the Seller Subordinated Note, (b)
the payment by any Person of the principal amount of or interest on any
Indebtedness (other than trade debt) owing to any Affiliate of the Borrower, and
(c) the payment of any management, consulting or similar fee by any Person to
any Affiliate of such Person, other than payments of amounts due under
employment contracts in the ordinary course of business.
"Restricted Purchase" means any payment on account of the purchase,
redemption or other acquisition or retirement by a Person of any (a) shares of
such Person's capital stock (except shares acquired on the conversion thereof
into other shares of capital stock of such Person), (b) a partnership interest
in such Person, if such Person is a partnership, or (c) a membership interest in
such Person, if such Person is a limited liability company.
"S&P" means Standard & Poor's Ratings Group, a Division of McGraw
Hill, Inc. (or its successors).
19
"Secured Creditors" means, collectively, the Collateral Agent, the
Lenders, and each of their respective Affiliates.
"Secured Obligations" means, in each case whether now in existence
or hereafter arising, (a) the principal of, and interest and premium, if any,
on, the Term Loans and (b) all indebtedness, liabilities, obligations, covenants
and duties of the Borrower to the Secured Creditors of every kind, nature and
description arising under or in respect of this Agreement, the Notes or any of
the other Loan Documents, whether direct or indirect, absolute or contin gent,
due or not due, contractual or tortious, liquidated or unliquidated, and whether
or not evidenced by any note, and whether or not for the payment of money,
including without limitation, fees required to be paid pursuant to Article 5 and
expenses required to be paid or reimbursed pursuant to Section 16.2.
"Security Documents" means each of the following:
(a) the Mortgages,
(b) the Financing Statements,
(c) the Acquisition Documents Assignment,
(d) the Trademark Assignment and the Patent Assignment, and
(e) each other writing executed and delivered by the Borrower or any
other Person securing the Secured Obligations.
"Security Interest" means the Liens of the Collateral Agent, for the
benefit of the Secured Creditors, on and in the Collateral effected hereby or by
any of the Security Documents or pursuant to the terms hereof or thereof.
"Seller" means Glendale Hosiery Company, a North Carolina
corporation.
"Seller Subordinated Indebtedness" means the Indebtedness of the
Borrower evidenced by the Seller Subordinated Note, including principal thereof
and interest and premium, if any, thereon, together with any and all
Indebtedness related thereto.
"Seller Subordinated Note" means the Subordinated Promissory Note
dated the Effective Date, in an original principal amount not to exceed the
amount required under the Acquisition Agreement, executed by the Borrower in
favor of the Seller, as the same may be amended, modified, extended, renewed or
replaced from time to time with the consent of the Required Lenders.
"Senior Lender" means a Lender, as that term is defined in the
Senior Loan Agreement.
20
"Senior Loan Agreement" means the Loan and Security Agreement dated
of even date herewith between the Borrower, NationsBank, N.A., as agent, the
Senior Lenders, NationsBanc Xxxxxxxxxx Securities, LLC, as syndication agent and
arranger, and BankAmerica Business Credit, Inc., as documentation agent.
"Stock Pledge Agreement" means the Stock Pledge Agreement, dated as
of the Effective Date, executed by the Borrower pursuant to which the Borrower
assigns and pledges 65% of the capital stock of each of its foreign
Subsidiaries.
"Subsidiary"
(a) when used to determine the relationship of a Person to another
Person, means a Person of which an aggregate of 50% or more of the stock
of any class or classes or 50% or more of other ownership interests is
owned of record or beneficially by such other Person, or by one or more
Subsidiaries of such other Person, or by such other Person and one or more
Subsidiaries of such Person,
(i) if the holders of such stock, or other ownership
interests, (A) are ordinarily, in the absence of contingencies, entitled
to vote for the election of a majority of the directors (or other
individuals performing similar functions) of such Person, even though the
right so to vote has been suspended by the happening of such a
contingency, or (B) are entitled, as such holders, to vote for the
election of a majority of the directors (or individuals performing similar
functions) of such Person, whether or not the right so to vote exists by
reason of the happening of a contingency, or
(ii) in the case of such other ownership interests, if such
ownership interests constitute a majority voting interest, and
(b) when used with respect to a Plan, ERISA or a provision of the
Internal Revenue Code pertaining to employee benefit plans, also means any
corporation, trade or business (whether or not incorporated) which is
under common control with the Borrower and is treated as a single employer
with the Borrower under Section 414(b) or (c) of the Internal Revenue Code
and the regulations thereunder.
(c) a Subsidiary will not cease to be considered wholly-owned by
reason of the issuance of capital stock as directors' qualifying shares.
"Subsidiary Guarantor" means each U.S. Subsidiary of the Borrower
which Guarantees the Secured Obligations, and grants the Collateral Agent, for
the benefit of the Secured Creditors, a first priority security interest in all
of its assets, in accordance with Section 9.16.
"Supermajority Lenders" means, at any time, any combination of
Lenders holding Term Loans representing in excess of 66.6% of the aggregate
principal amount of Term Loans outstanding at such time.
21
"Term Loan" means each loan made to the Borrower pursuant to Section
4.1, as well as all such loans collectively, as the context requires.
"Term Loan Facility" means the principal amount of $15,000,000.
"Term Note " means each Term Note made by the Borrower payable to
the order of a Lender evidencing the obligation of the Borrower to pay the
aggregate unpaid principal amount of the Term Loan made to it by such Lender
(and any promissory note or notes that may be issued from time to time in
substitution, renewal, extension, replacement or exchange therefor whether
payable to such Lender or to a different Lender in connection with a Person
becoming a Lender after the Effective Date or otherwise) substantially in the
form of Exhibit A-2 hereto, with all blanks properly completed, either as
originally executed or as the same may from time to time be supplemented,
modified, amended, renewed, extended or refinanced.
"Termination Date" means September 30, 2003, such earlier date as
the Secured Obligations shall have been accelerated pursuant to the provisions
of Section 13.2, such earlier date as all Secured Obligations shall have been
irrevocably paid in full, or such later date as to which the same may be
extended pursuant to the provisions of Section 2.5.
"Termination Event" means (a) a Reportable Event, or (b) the filing
of a notice of intent to terminate a Plan or the treatment of a Plan amendment
as a termination under Section 4041 of ERISA, or (c) the institution of
proceedings to terminate a Plan by the PBGC under Section 4042 of ERISA, or the
appointment of a trustee to administer any Plan.
"Trademark Assignment" means the Conditional Assignment and
Trademark Security Agreement, dated on or about the Effective Date, executed and
delivered by the Borrower, as the same may be amended, modified or supplemented
from time to time.
"Trademarks" means and includes in each case whether now existing or
hereafter arising, all of the Borrower's right, title and interest in and to (a)
trademarks (including service marks), trade names and trade styles and the
registrations and applications for registration thereof and the goodwill of the
business symbolized by the trademarks, (b) licenses of the foregoing, whether as
licensee or licensor, (c) applications therefor and renewals and continued
prosecution applications thereof, (d) income, royalties, damages and payments
now or hereafter due and/or payable with respect thereto, including, without
limitation, damages, claims and payments for past and future infringements
thereof, (e) rights to xxx for past, present and future infringements thereof,
including the right to settle suits involving claims and demands for royalties
owing, and (f) all rights corresponding to any of the foregoing throughout the
world.
"Unfunded Capital Expenditures" means all Capital Expenditures,
other than those which are paid for with the proceeds of Indebtedness for Money
Borrowed with a maturity of more than one year (other than the Revolving Credit
Loans (as defined in the Senior Loan Agreement)) incurred to finance such
Capital Expenditures and other than those represented by Capitalized Lease
Obligations with a maturity of more than one year.
22
"Unfunded Vested Accrued Benefits" means with respect to any Plan at
any time, the amount (if any) by which (a) the present value of all vested
nonforfeitable benefits under such Plan exceeds (b) the fair market value of all
Plan assets allocable to such benefits, all determined as of the then most
recent valuation date for such Plan.
"Uniform Commercial Code" means the Uniform Commercial Code as in
effect from time to time in the State of Georgia.
SECTION 1.2 General. All terms of an accounting nature not
specifically defined herein shall have the meaning ascribed thereto by GAAP.
Except as otherwise defined in Section 1.1, the terms accounts, chattel paper,
contract rights, documents, equipment, instruments, general intangibles and
inventory, as and when used in this Agreement or the Security Documents, shall
have the meanings given those terms in the Uniform Commercial Code. Unless
otherwise specified, a reference in this Agreement to a particular section or
subsection is a reference to that section or subsection of this Agreement, and
the words "hereof," "herein," "hereunder" and words of similar import, when used
in this Agreement, refer to this Agreement as a whole and not to any particular
provision, section or subsection of this Agreement. Wherever from the context it
appears appropriate, each term stated in either the singular or plural shall
include the singular and plural, and pronouns stated in the masculine, feminine
or neuter gender shall include the masculine, the feminine and the neuter. Words
denoting individuals include corporations and vice versa. References to any
legislation or statute or code, or to any provisions of any legislation or
statute or code, shall include any modification or reenactment of, or any
legislative, statutory or code provision substituted for, such legislation,
statute or code or provision thereof. References to any document or agreement
(including this Agreement) shall include references to such document or
agreement as amended, novated, supplemented, modified or replaced from time to
time, so long as and to the extent that such amendment, novation, supplement,
modification or replacement is either not prohibited by the terms of this
Agreement or is consented to by the Required Lenders and the Collateral Agent.
References to any Person include its successor or permitted substitutes and
assigns.
ARTICLE 2
[INTENTIONALLY DELETED]
ARTICLE 3
[INTENTIONALLY DELETED]
ARTICLE 4
TERM LOAN FACILITY
SECTION 4.1 Term Loan. Upon the terms and subject to the conditions
of, and in reliance upon the representations and warranties made under, this
Agreement, each Lender
23
agrees severally, but not jointly, to make a Term Loan to the Borrower on the
Effective Date in a principal amount equal to such Lender's Proportionate Share
of the Term Loan Facility.
SECTION 4.2 Manner of Borrowing Term Loan. The Borrower shall give
Lenders a notice of borrowing with respect to the Term Loan not later than 11:00
a.m. (Atlanta time) on the Effective Date. Not later than 1:00 p.m. (Atlanta
time) on the Effective Date, upon satisfaction of the applicable conditions set
forth in Sections 6.1 and 6.2, the Lenders will disburse the Term Loan, in same
day funds in accordance with the terms of the notice of borrowing.
SECTION 4.3 Repayment of Term Loan. The principal amount of the Term
Loan is due and payable, and shall be repaid in full by the Borrower, on
September 30, 2003.
The Borrower hereby irrevocably instructs the Collateral Agent, in its capacity
as agent under the Senior Loan Agreement, subject to the terms of the
Intercreditor Agreement, to charge the Borrower's Loan Accounts (as defined in
the Senior Loan Agreement), on each Installment Payment Date and Interest
Payment Date, for all principal and interest due on the Term Loan.
SECTION 4.4 Term Notes. The Term Loan made by each Lender and the
obligation of the Borrower to repay such Loan shall also be evidenced by a Term
Note payable to the order of such Lender. Each such Term Note shall be dated the
Effective Date (or the later "effective date" under any Assignment and
Acceptance) and be duly and validly executed and delivered by the Borrower.
SECTION 4.5 Prepayment of Term Loan.
(a) Voluntary Prepayment. The Borrower shall have the right at any
time and from time to time, upon at least one Business Day's prior written
notice to the Lenders, to prepay the Term Loan in whole or in part on any
Business Day. Each partial prepayment of the Term Loan shall be in a minimum
amount of $1,000,000. On the prepayment date, the Borrower shall pay interest on
the amount prepaid, accrued to the prepayment date, as well as all other amounts
due hereunder with respect to such prepayment, including all amounts due under
Section 5.10. Any notice of prepayment given by the Borrower hereunder shall be
irrevocable, and the amount to be prepaid (including accrued interest and any
prepayment fees) shall be due and payable on the date designated in the notice.
(b) Mandatory Prepayment. The Borrower shall also be obligated to
prepay the Term Loan in full, together with accrued and unpaid interest thereon,
as well as all other amounts due hereunder with respect to such prepayment,
including all amounts due under Section 5.10, upon any termination of this
Agreement pursuant to Section 5.6, or otherwise or upon any acceleration of the
Term Loan pursuant to Article 13.
24
ARTICLE 5
GENERAL LOAN PROVISIONS
SECTION 5.1 Interest.
(a) Loans. Subject to the provisions of Section 5.1(d), the Borrower
will pay interest on the unpaid principal amount of each Loan, for each day from
the day such Loan is made until such Loan is paid (whether at maturity, by
reason of acceleration, or otherwise) at the rate of 15% per annum, payable
monthly in arrears as it accrues on each Interest Payment Date and when such
Loan is due (whether at maturity, by reason of acceleration or otherwise).
(b) [Intentionally Deleted]
(c) Other Secured Obligations. The Borrower will, to the extent
permitted by Applicable Laws, pay interest on the unpaid principal amount of any
Secured Obligation that is due and payable, other than the Loans, in accordance
with Sections 5.1(a) or (d), as applicable, as if such Secured Obligation were a
Loan.
(d) Default Rate. If there shall occur and be continuing an Event of
Default, at the election of the Required Lenders, the unpaid principal amount of
the Loans and other Secured Obligations shall no longer bear interest in
accordance with the terms of Section 5.1(a) or (c), but shall bear interest for
each day from the date of such Event of Default until such Event of Default
shall have been cured or waived at the rate of 17% per annum, payable on demand.
The interest rate provided for in the preceding sentence shall, to the extent
permitted by Applicable Laws, apply to and accrue on the amount of any judgment
entered with respect to any Secured Obligation and shall continue to accrue at
such rate during any proceeding described in Section 13.1(g) or (h).
(e) Calculation of Interest. The interest rates provided for in
Sections 5.1(a), (c) and (d) shall be computed on the basis of a year of twelve
30 day months and the actual number of days elapsed.
(f) Maximum Rate. It is not intended by the Lenders, and nothing
contained in this Agreement, in the Notes or in any of the Mortgages shall be
deemed, to establish or require the payment of a rate of interest in excess of
the maximum rate permitted by Applicable Laws (the "Maximum Rate"). If, in any
month, the Effective Interest Rate, absent such limitation, would have exceeded
the Maximum Rate, then the Effective Interest Rate for that month shall be the
Maximum Rate, and, if in future months, the Effective Interest Rate would
otherwise be less than the Maximum Rate, then the Effective Interest Rate shall
remain at the Maximum Rate until such time as the amount of interest paid
hereunder equals the amount of interest which would have been paid if the same
had not been limited by the Maximum Rate. In the event, upon payment in full of
the Secured Obligations, the total amount of interest paid or accrued under the
terms of this Agreement is less than the total amount of interest which would
have been paid or accrued if the Effective Interest Rate had at all times been
in effect,
25
then the Borrower shall, to the extent permitted by Applicable Laws, pay to the
Lenders an amount equal to the excess, if any, of (i) the lesser of (A) the
amount of interest which would have been charged if the Maximum Rate had, at all
times, been in effect and (B) the amount of interest which would have accrued
had the Effective Interest Rate, at all times, been in effect and (ii) the
amount of interest actually paid or accrued under this Agreement. In the event
the Lenders receive, collect or apply as interest any sum in excess of the
Maximum Rate, such excess amount shall be applied to the reduction of the
principal balance of the Secured Obliga tions, and if no such principal is then
outstanding, such excess or part thereof remaining, shall be paid to the
Borrower.
SECTION 5.2 Certain Fees.
(a) Closing Fees. As additional consideration for the extensions of
credit provided for hereunder, in addition to any interest due under this
Agreement, on the Effective Date, the Borrower shall pay to the Lenders a
closing fee in the amount of $600,000. The closing fee shall compensate the
Lenders for the internal costs associated with the origination, structuring,
processing, approving and closing of the transactions contemplated by this
Agreement, but not including any out-of-pocket expenses for which the Borrower
has agreed to reimburse the Lenders, including, without limitation, the Lenders'
reasonable out-of-pocket expenses incurred in connection with its due diligence
examination of the Borrower and the closing of the transactions contemplated by
this Agreement. Such closing fee shall be fully earned on the Effective Date and
shall not be subject to refund or rebate.
(b) [Intentionally Deleted]
(c) [Intentionally Deleted]
(d) [Intentionally Deleted]
(e) [Intentionally Deleted]
(f) General. All fees shall be fully earned by the identified
recipient thereof when due and payable and, except as otherwise set forth herein
or required by Applicable Law, shall not be subject to refund or rebate. All
fees provided for in this Section 5.2 are for compensation for services and are
not, and shall not be deemed to be, interest or a charge for the use of money.
SECTION 5.3 Manner of Payment.
(a) Each payment (including prepayments) by the Borrower on account
of the principal of or interest on the Loans or of any other amounts payable to
each of the Lenders under this Agreement or any Note shall be made not later
than 1:30 p.m. (Atlanta time) on the date specified for payment under this
Agreement to each such Lender, at such Lender's office designated to the
Borrower, in Dollars, in immediately available funds and shall be made without
any setoff, counterclaim or deduction whatsoever. Any payment received after
such
26
time but before the close of business on such day shall be deemed a payment on
such date for the purposes of Section 13.1, but for all other purposes shall be
deemed to have been made on the next succeeding Business Day.
(b) During any Event of Default, subject to the terms of the
Intercreditor Agreement, the Borrower hereby irrevocably authorizes each Lender
and each Affiliate of such Lender and each participant herein to charge any
account of the Borrower maintained with such Lender or such Affiliate or
participant with such amounts as may be necessary from time to time to pay any
Secured Obligations (whether or not owed to such Lender, Affiliate or
participant) which are not paid when due.
(c) Each Lender hereby severally (but not jointly) represents that,
under Applicable Law and treaties in effect on the date of this Agreement, no
United States federal taxes will be required to be withheld by the Borrower with
respect to any payments to be made to such Lender in respect of this Agreement.
Each Lender that itself is not incorporated under the laws of the United States
or a state thereof agrees severally (but not jointly) that, prior to the
Effective Date and the date that any such form expires or becomes obsolete or
after the occurrence of any event requiring a change in the most recent form
delivered by it to the Borrower, it will deliver to the Borrower two duly
completed copies of either United States Internal Revenue Service Form W-8, 1001
or 4224, or successor applicable form, certifying in each case that such Lender
is entitled to receive all payments under this Agreement and the Notes payable
to it without deduction or withholding of any United States federal income
taxes. The Borrower shall not have any obligation under Section 5.3(a) to pay
any amount to or for the account of any Lender without any setoff, counterclaim
or deduction to the extent that such amount results from the failure of any
Lender to comply with its obligations pursuant to this Section 5.3(c).
SECTION 5.4 General. If any payment under this Agreement or any Note
shall be specified to be made upon a day which is not a Business Day, it shall
be made on the next succeeding day which is a Business Day and such extension of
time shall in such case be included in computing interest, if any, in accordance
with such payment.
SECTION 5.5 Loan Accounts; Statements of Accounts.
(a) Each Lender shall open and maintain on its books a loan account
in the Borrower's name (each, a "Loan Account" and collectively, the "Loan
Accounts"). Each such Loan Account shall show as debits thereto each Loan made
under this Agreement by such Lender to the Borrower and as credits thereto all
payments received by such Lender and applied to principal of such Loan, so that
the balance of the Loan Account at all times reflects the principal amount due
such Lender from the Borrower.
(b) [Intentionally Deleted]
27
(c) The entries made in the accounts pursuant to subsection (a)
shall be prima facie evidence, in the absence of manifest error, of the
existence and amounts of the obligations of the Borrower therein recorded.
(d) [Intentionally Deleted]
SECTION 5.6 Termination of Agreement. Subject to the provisions of
Section 5.10, the Borrower shall have the right, at any time, to terminate this
Agreement upon not less than 10 Business Days' prior written notice to the
Lenders of its intention to terminate this Agreement, which notice shall specify
the effective date of such termination. On the date specified in such notice,
such termination shall be effected, provided that the Borrower shall, on or
prior to such date, pay to the Lenders and the Collateral Agent, in same day
funds, an amount equal to all Secured Obligations then outstanding, including,
without limitation, all (i) accrued interest thereon, (ii) all accrued fees
provided for hereunder, and (iii) any amounts payable to the Collateral Agent
and the Secured Creditors pursuant to Sections 5.10, 16.2, 16.3 and 16.14.
Following a notice of termination as provided for in this Section 5.6 and upon
payment in full of the amounts specified in this Section 5.6, this Agreement
shall be terminated and the Collateral Agent and the Lenders shall have no
further obligations to the Borrower. Borrower may, not later than one Business
Day prior to the effective date of such termination, provide the Lenders written
notice of withdrawal of its notice of termination, whereupon such notice of
termination shall be of no further force or effect.
SECTION 5.7 [Intentionally Deleted]
SECTION 5.8 Settlement.
(a) [Intentionally Deleted]
(b) [Intentionally Deleted]
(c) [Intentionally Deleted]
(d) General Settlement Procedures.
(i) [Intentionally Deleted]
(ii) [Intentionally Deleted]
(e) Settlement of Other Secured Obligations. All proceeds from the
sale of, or other realization upon, all or any part of the Collateral following
an Event of Default that are received by the Collateral Agent on or prior to
1:00 p.m. (Atlanta time) on a Business Day, subject to the terms of the
Intercreditor Agreement, will be paid by the Collateral Agent to each Secured
Creditor on the same Business Day, and any such amounts that are received by the
Collateral Agent after 1:00 p.m. (Atlanta time) will be paid by the Collateral
Agent to each Secured Creditor on the following Business Day. Unless otherwise
stated herein, the Collateral
28
Agent shall, subject to the terms of the Intercreditor Agreement, distribute
proceeds from the sale of, or other realization upon, all or any part of the
Collateral following an Event of Default ratably to the Secured Creditors based
on the amount of the Secured Obligations then owing to each Secured Creditor.
(f) Allocation of Payments from Borrower. All monies to be applied
to the Secured Obligations, whether such monies represent voluntary payments by
the Borrower or are received pursuant to demand for payment or realized from any
disposition of Collateral, shall be allocated among the Collateral Agent and
such of the Lenders and other holders of the Secured Obligations as are entitled
thereto (and, with respect to monies allocated to the Lenders, on a Ratable
basis unless otherwise provided in this Section 5.8(f)): (i) first, to the
Collateral Agent to pay the amount of expenses that have not been reimbursed to
the Collateral Agent by the Borrower or the Lenders, together with interest
accrued thereon; (ii) second, to the Collateral Agent to pay any indemnified
amount that has not been paid to it by the Borrower or the Lenders, together
with interest accrued thereon; (iii) third, to the Lenders for any indemnified
amount that they have paid to the Collateral Agent and for any expenses that
they have reimbursed to the Collateral Agent; and (iv) fourth, to the Lenders in
payment of the unpaid principal and accrued interest in respect of the Loans and
any other Secured Obligations arising under this Agreement (and the other Loan
Documents) then due and held by any Lender to be shared among Lenders on a
Ratable basis, or on such other basis as may be agreed upon in writing by all of
the Lenders (which agreement or agreements may be entered into without notice to
or the consent or approval of the Borrower). The allocations set forth in this
Section 5.8(f) are solely to determine the rights and priorities of the Secured
Creditors as among themselves and may be changed by the Secured Creditors
without notice or the consent of approval of the Borrower or any other Person.
Whenever allocation is made pursuant to this Section 5.8(f) to the holder of
Secured Obligations in which another Lender acquires a participation, the monies
received by such holder shall be shared as between such holder and such
participants on a Ratable basis.
SECTION 5.9 [Intentionally Deleted]
SECTION 5.10 Prepayment Fee.
(a) [Intentionally Deleted]
(b) Prepayment of Term Loan. If the Borrower voluntarily prepays the
Term Loan in whole or in part prior to the third anniversary of the Agreement
Date, the Borrower shall pay to the Lenders, on such date of prepayment, as
liquidated damages and compensation for the costs of making funds available to
the Borrower under this Agreement, and not as a penalty, an amount equal to (i)
3% of the principal balance of the Term Loan prepaid if such prepayment occurs
prior to the first anniversary of the Agreement Date, (ii) 2% of the principal
balance of the Term Loan if such prepayment occurs after the first anniversary
of the Agreement Date but on or prior to the second anniversary of the Agreement
Date, and (iii) 1% of the amount of the Term Loan prepaid if such prepayment
occurs after the second anniversary of the Agreement Date but on or prior to the
third anniversary of the Agreement Date. If the
29
Borrower prepays, or is required to prepay, the Term Loan upon the occurrence of
an Event of Default set forth in Sections 13.1(n) or (o), then (in lieu of any
other amount set forth in the preceding sentence if such Event of Default occurs
on or prior to the third anniversary of the Agreement Date) the Borrowers shall
pay to the Lenders, on such date of prepayment, as liquidated damages and
compensation for the costs of making funds available to the Borrower under this
Agreement, and not as a penalty, an amount equal to 1% of the principal balance
of the Term Loan prepaid.
SECTION 5.11 [Intentionally Deleted]
SECTION 5.12 [Intentionally Deleted]
SECTION 5.13 [Intentionally Deleted]
SECTION 5.14 [Intentionally Deleted]
SECTION 5.15 [Intentionally Deleted]
SECTION 5.16 [Intentionally Deleted]
ARTICLE 6
CONDITIONS PRECEDENT
SECTION 6.1 Conditions Precedent to Loans. Notwithstanding any other
provision of this Agreement, the Term Loans will not be made until the
fulfillment of each of the following conditions prior to or contemporaneously
with the making of the first to be made of such Loans:
(a) Financial Condition. The Borrower shall have delivered to the
Lenders a fair saleable value balance sheet, dated as of January 31, 1998,
prepared and certified to by the Financial Officer in form and substance
satisfactory to the Lenders, and setting forth valuations of the Borrower's
assets, the Projections and the Pro Forma, together with a certificate executed
by the Financial Officer, in form and substance satisfactory to the Lenders,
certifying that as of the Effective Date, after giving effect to the
consummation of the transactions contemplated by the Acquisition Documents, the
Senior Loan Agreement, the extension of the Term Loans, and the payment of all
fees and expenses in connection with such transactions, the fair saleable value
of the Borrower's assets will exceed the amount required to pay its debts as
they become absolute and matured (including contingent, subordinated, unmatured
and unliquidated liabilities), the Borrower is able and anticipates that it will
be able to meet its debts as they mature, and the Borrower has adequate capital
to conduct the business in which it is or proposes to be engaged, together with
attachments demonstrating the basis of such conclusions.
(b) [Intentionally Deleted]
30
(c) Acquisition. On the Effective Date, (i) the Lenders shall have
received true and complete executed or conformed copies of the Acquisition
Documents and any amendments thereto; (ii) the Acquisition Documents shall be in
full force and effect and no material term or condition thereof shall have been
amended, modified or waived after the execution thereof (other than solely to
extend the date by which the Acquisition is required to occur) except with the
prior written consent of the Lenders; (iii) none of the parties to any of the
Acquisition Documents shall have failed to perform any material obligation or
covenant required by such Acquisition Document to be performed or complied with
by it on or before the Effective Date; (iv) all representations and warranties
of the Borrower and the Seller contained in the Acquisition Agreement and the
other Acquisition Documents shall be true and correct in all material respects
with the same effect as though made on and as of the Effective Date; (v) all
requisite approvals by governmental authorities and regulatory bodies having
jurisdiction over the parties to the Acquisition Agreement in respect of the
acquisition of the Acquired Assets shall have been obtained by such parties, and
no such approvals shall impose any conditions to the consummation of the
acquisition of the Acquired Assets; (vi) the acquisition of the Acquired Assets
shall have been consummated in accordance with the terms and provisions of the
Acquisition Agreement and the other Acquisition Documents, without any amendment
or waiver of any material provision thereof; and (vii) the Lenders shall have
received a certificate from an officer of the Borrower, or other evidence
satisfactory to them, that each of the conditions set forth in clauses (i)
through (vi) above shall have been satisfied. In addition, all opinion letters
delivered in connection with the Acquisition Documents and the transactions
contemplated thereby shall be addressed to the Lenders, or accompanied by a
written authorization from the firm delivering such opinion letter stating that
such parties may rely on such opinion letter as though it were addressed to
them.
(d) Security Interests. The Lenders shall have received satisfactory
evidence that the Collateral Agent (for the benefit of the Secured Creditors)
has a valid and perfected second priority security interest as of such date in
all of the Collateral, subject only to Permitted Liens.
(e) Closing Documents. The Lenders shall have received each of the
follow ing documents, all of which shall be satisfactory in form and substance
to the Lenders and their counsel:
(i) certified copies of the articles or certificate of
incorporation and bylaws of the Borrower as in effect on the Effective Date,
(ii) certified copies of all corporate action, including
shareholder approval, if necessary, taken by the Borrower to authorize the
execution, delivery and performance of this Agreement, the Loan Documents, the
borrowings under this Agreement, and the execution, delivery and performance of
the Acquisition Agreement and the Acquisition Documents,
(iii) certificates of incumbency and specimen signatures with
respect to each of the officers of the Borrower authorized to execute and
deliver this Agreement and
31
the Loan Documents on behalf of the Borrower and to request borrowings under
this Agreement,
(iv) a certificate evidencing the good standing of the
Borrower in the jurisdiction of its incorporation and in each other jurisdiction
in which it is required to be qualified as a foreign corporation to transact its
business as presently conducted,
(v) copies of all financial statements referred to in Section
7.1(n) and meeting the requirements thereof,
(vi) a signed opinion of Xxxx, Weiss, Rifkind, Xxxxxxx &
Xxxxxxxx, counsel for the Borrower, substantially in the form of Exhibit C to
the Senior Loan Agreement, and of such local counsel for the Borrower as may be
required, opining as to such matters in connection with the transactions
contemplated by this Agreement as the Lenders or their counsel may reasonably
request, including local counsel opinions regarding the Mortgages and the Real
Estate,
(vii) the Financing Statements duly executed and delivered by
the Borrower and acknowledgment copies evidencing the filing of such Financing
Statements in each jurisdiction where such filing may be necessary or
appropriate to perfect the Security Interest,
(viii) a certification from the principal officers of the
Borrower as to such factual matters as shall be requested by the Lenders,
(ix) certificates or binders of insurance relating to each of
the policies of insurance covering any of the Collateral together with loss
payable clauses which comply with the terms of Section 9.8,
(x) a certificate of the President or a Financial Officer of
the Borrower stating that, to the best of his knowledge and based on an
examination sufficient to enable him to make an informed statement,
(A) all of the representations and warranties made or
deemed to be made by the Borrower under this Agreement are true and
correct in all material respects as of the Effective Date, after giving
effect to the Term Loans to be made at such time and the application of
the proceeds thereof, and
(B) no Default or Event of Default exists,
(xi) [Intentionally Deleted]
(xii) copies of the Mortgages, duly executed and delivered by
the Borrower, in proper form for recording in the appropriate jurisdiction, in
order to create a valid first Lien on and security title to the Real Estate
described therein,
32
(xiii) one or more fully paid unconditional commitments for
the issuance of mortgagee title insurance policies with all requirements and
conditions to the issuance of the final policy deleted or marked satisfied,
issued by First American Title Insurance Company, each in an amount equal to not
less than the fair market value of the Real Estate subject to the Mortgage
insured thereby, insuring that such Mortgage creates a valid first Lien on, and
security title to, all Real Estate described therein, with exceptions only for
the Permitted Encumbrances (as defined in each Mortgage),
(xiv) [Intentionally Deleted]
(xv) landlord's or mortgagee's waiver and consent agreements
duly executed on behalf of each landlord or mortgagee, as the case may be, of
Real Estate and any other real property on which any Collateral is located, to
the extent Borrower can obtain such landlord's or mortgagee's waiver and consent
agreements using all reasonable efforts,
(xvi) the Acquisition Documents Assignment, duly executed by
the Borrower,
(xvii)[Intentionally Deleted]
(xviii) a notice of borrowing, duly executed by the Borrower,
(xix) [Intentionally Deleted]
(xx) copies of each of the other Loan Documents duly executed
by the parties thereto, and
(xxi) such other documents and instruments as the Collateral
Agent or any Lender may reasonably request.
(f) Notes. Each Lender shall have received a Term Note, each duly
executed and delivered by the Borrower, complying with the terms of Section 4.4.
(g) First Lien Senior Secured Facility. All conditions to the
closing of the First Lien Senior Secured Facility (other than the funding of the
Term Loans) shall have been met, in accordance with the terms of the Senior Loan
Agreement, or waived by the Senior Lenders.
(h) Intercreditor Agreement. The Senior Lenders and NationsBank, as
their agent, shall have duly executed and delivered the Intercreditor Agreement,
in form and substance satisfactory to the Lenders.
(i) Stock Pledge Agreement. The Collateral Agent shall have received
the Stock Pledge Agreement, and corresponding blank stock powers and stock
certificates, in form and substance satisfactory to the Lenders, duly executed
and delivered by the Borrower.
33
(j) Other Security Documents. The Collateral Agent shall have
received each other Security Document, in form and substance satisfactory to the
Lenders, duly executed and delivered by the Borrower.
(k) Seller Subordinated Note. The Lenders shall have received a copy
of the Seller Subordinated Note, in form and substance satisfactory to the
Lenders, duly executed and delivered by the Borrower.
(l) Environmental Indemnity Agreement. The Lenders shall have
received the Environmental Indemnity Agreement, in form and substance
satisfactory to the Lenders, duly executed and delivered by the Borrower.
(m) [Intentionally Deleted]
(n) No Injunctions, Etc. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or proposed
before any court, governmental agency or legislative body to enjoin, restrain,
or prohibit, or to obtain damages in respect of, or which is related to or
arises out of this Agreement, the Acquisition Documents, or the consummation of
the transactions contemplated hereby or thereby, or which, in the Lenders'
reasonable judgment, would make it inadvisable to consummate the transactions
contemplated by this Agreement.
(o) Material Adverse Change. Except as previously disclosed in
writing to the Lenders, there shall not have occurred any change which is
materially adverse, in the Lenders' reasonable judgment, to the assets,
liabilities, businesses, operations, condition (financial or otherwise) or
prospects of the Borrower, the Seller, and their respective Subsidiaries, from
those presented by the financial statements described in Section 7.1(n)(i)(A)
and (ii)(A).
(p) Release of Security Interests. The Lenders shall have received
evidence satisfactory to them of the release and termination of all Liens other
than Permitted Liens.
(q) Representations and Warranties. all of the representations and
warranties made or deemed to be made under this Agreement shall be true and
correct in all material respects at such time both with and without giving
effect to the Loan to be made at such time and the application of the proceeds
thereof, except that representations and warranties which by their terms are
applicable only to a particular date shall be deemed to be made only at and as
of such date.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF BORROWER
SECTION 7.1 Representations and Warranties. The Borrower represents
and warrants to the Collateral Agent and to the Lenders as follows:
34
(a) Organization; Power; Qualification. The Borrower and each of its
Subsidiaries is a corporation, duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, having the power
and authority to own its properties and to carry on its business as now being
and hereafter proposed to be conducted. The Borrower is duly qualified and
authorized to do business in each jurisdiction in which the character of its
properties or the nature of its business requires such qualification or
authorization except where the failure to be so qualified would not have a
Material Adverse Effect. The jurisdictions in which each of the Borrower and
each of its Subsidiaries is qualified to do business as a foreign corporation on
the Effective Date are listed on Schedule 7.1(a).
(b) Capitalization. The outstanding capital stock of the Borrower
has been duly and validly issued and is fully paid and nonassessable. The
issuance and sale of the Borrower's capital stock have been registered or
qualified under applicable federal and state securities laws or are exempt
therefrom.
(c) Subsidiaries. Schedule 7.1(c) correctly sets forth the name of
each Subsidiary of the Borrower, its jurisdiction of incorporation, the name of
its immediate parent or parents, and the percentage of its issued and
outstanding securities owned by the Borrower or any other Subsidiary of the
Borrower and indicating whether such Subsidiary is a Consolidated Subsidiary, in
each case as of the Effective Date. Except as set forth on Schedule 7.1(c), (i)
no Subsidiary of the Borrower has issued any securities convertible into shares
of such Subsidiary's capital stock or any options, warrants or other rights to
acquire any shares or securities convertible into such shares, (ii) the
outstanding stock and securities of each Subsidiary of the Borrower are owned by
the Borrower free and clear of all Liens (other than Permitted Liens), warrants,
options and rights of others of any kind whatsoever, and (iii) the Borrower has
no Subsidiaries, other than Subsidiaries that it has created after the Effective
Date in compliance with this Agreement. The outstanding capital stock of each
Subsidiary of the Borrower has been duly and validly issued and is fully paid
and nonassessable by the issuer, and the number and owners of the shares of such
capital stock are set forth on Schedule 7.1(c) as the same may hereafter be
updated from time to time to reflect the creation of Subsidiaries in accordance
with this Agreement.
(d) Authorization of Agreement, Notes, Loan Documents and Borrowing.
The Borrower has the right and power, and has taken all necessary corporate
action to authorize it, to execute, deliver and perform this Agreement and each
of the Loan Documents in accordance with their respective terms. This Agreement
and each of the Loan Documents have been duly executed and delivered by the duly
authorized officers of the Borrower and each is, or each when executed and
delivered in accordance with this Agreement will be, a legal, valid and binding
obligation of the Borrower, enforceable in accordance with its terms, subject to
the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
and other similar laws relating to or affecting creditor's rights generally,
general equitable principles and an implied covenant of good faith and fair
dealing.
(e) Compliance of Agreement, Notes, Loan Documents and Borrowing
with Laws, Etc. Except as set forth on Schedule 7.1(e), the execution, delivery
and performance of
35
this Agreement and each of the Loan Documents in accordance with their
respective terms and the borrowings hereunder do not and will not, by the
passage of time, the giving of notice or otherwise, (i) require any Governmental
Approval or violate any Applicable Law relating to the Borrower or any of its
Subsidiaries, (ii) conflict with, result in a breach of or constitute a default
under the articles or certificate of incorporation or by-laws of the Borrower or
any of its Subsidiaries, (iii) conflict with, result in a breach of or
constitute a default under any material provisions of any indenture, agreement
or other instrument to which the Borrower or any of its Subsidiaries is a party
or by which the Borrower, any of its Subsidiaries or any of the Borrower's or
such Subsidiaries' property may be bound or any Governmental Approval relating
to the Borrower or any of its Subsidiaries, or (iv) result in or require the
creation or imposition of any Lien upon or with respect to any property now
owned or hereafter acquired by the Borrower other than the Security Interest.
(f) Business. The Borrower is engaged in the business described on
Schedule 7.1(f) and businesses related thereto.
(g) Compliance with Law; Governmental Approvals.
(i) Except as set forth in Schedule 7.1(g), the Borrower and
each of its Subsidiaries (A) has all Governmental Approvals, including permits
relating to federal, state and local Environmental Laws, ordinances and
regulations, required by any Applicable Law for it to conduct its business, each
of which is in full force and effect, is final and not subject to review on
appeal and is not the subject of any pending or, to the knowledge of the
Borrower, threatened attack by direct or collateral proceeding, and (B) is in
compliance with each Governmental Approval applicable to it and in compliance
with all other Applicable Laws relating to it, including, without being limited
to, all Environmental Laws and all occupational health and safety laws
applicable to the Borrower, any of its Subsidiaries or their respective
properties, except for instances of noncompliance which would not, singly or in
the aggregate, cause a Default or Event of Default or have a Materially Adverse
Effect and in respect of which reserves in respect of the Borrower's or such
Subsidiary's reasonably anticipated liability therefor have been established on
the books of the Borrower or such Subsidiary, as applicable, if such reserves
would be required by GAAP.
(ii) Without limiting the generality of the above, except as
disclosed on an environmental report previously delivered to the Lenders or with
respect to matters which could not reasonably be expected to have, singly or in
the aggregate, a Materially Adverse Effect, (A) the operations of the Borrower
and each of its Subsidiaries comply in all material respects with all applicable
Environmental Laws; (B) the Borrower and each of its Subsidiaries has obtained
all permits required pursuant to Environmental Laws and necessary for its
operation, and all such permits are in good standing and the Borrower and each
of its Subsidiaries is in compliance in all material respects with all terms and
conditions of such permits; (C) neither the Borrower nor any of its Subsidiaries
nor any of their respective present or past property or operations are subject
to any order from or agreement with any public authority or private party
respecting (1) any Environmental Laws, (2) any Remedial Action, or (3) any
liabilities and costs arising from the Release or threatened Release of a
Contaminant
36
into the environment; (D) none of the operations of the Borrower or of any of
its Subsidiaries is subject to any judicial or administrative proceeding
alleging a violation of any Environmental Laws; (E) none of the present nor past
operations of the Borrower or any of its Subsidiaries is the subject of any
investigation by any public authority evaluating whether any Remedial Action is
needed to respond to a Release or threatened Release of a Contaminant into the
environment; (F) neither the Borrower nor any of its Subsidiaries has filed any
notice under any requirement of Environmental Laws indicating past or present
treatment, storage or disposal of a hazardous waste, as that term is defined
under 40 CFR Part 261 or any state equivalent; (G) neither the Borrower nor any
of its Subsidiaries has filed any notice under any requirement of Environmental
Law reporting a Release of a Contaminant into the environment; (H) Except in
compliance in all material respects with applicable Environmental Laws, during
the course of the Borrower's or any of its Subsidiaries' ownership of or
operations on the Real Estate, there have been no (1) generation, treatment,
recycling, storage or disposal of hazardous waste, as that term is defined under
40 CFR Part 261 or any state equivalent, (2) use of underground storage tanks or
surface impoundments, (3) use of asbestos-containing materials, or (4) use of
polychlorinated biphenyls (PCB) used in hydraulic oils, electrical transformers
or other equipment; (I) neither the Borrower nor any of its Subsidiaries has
entered into any negotiations or agreements with any Person (including, without
limitation, any prior owner of any of the Real Estate or other property of the
Borrower or any of its Subsidiaries) relating to any Remedial Action or
environmental related claim; (J) neither the Borrower nor any of its
Subsidiaries has received any notice or claim to the effect that it is or may be
liable to any Person as a result of the Release or threatened Release of a
Contaminant into the environment; (K) neither the Borrower nor any of its
Subsidiaries has any material contingent liability in connection with any
Release or threatened Release of any Contaminant into the environment; (L) no
Environmental Lien has attached to any of the Real Estate or other property of
the Borrower or of any of its Subsidiaries; (M) the presence and condition of
all asbestos- containing material which is on or part of the Real Estate
(excluding any raw materials used in the manufacture of products or products
themselves) do not violate in any material respect any currently applicable
requirement of Applicable Laws; and (N) neither the Borrower nor any of its
Subsidiaries manufactures, distributes or sells, and has never manufactured,
distributed or sold, products which contain asbestos-containing material.
(iii) The Borrower has notified the Lenders of the receipt by
it or by any of its Subsidiaries of any notice of a material violation of any
Environmental Laws and occupational health and safety laws applicable to the
Borrower, any of its Subsidiaries or any of their respective properties.
(h) Title to Properties. Except for Permitted Liens and as otherwise
set forth in Schedule 7.1(h), the Borrower and each of its Subsidiaries has
valid and legal title to or leasehold interest in all personal property, Real
Estate owned and other assets used in its business.
(i) Liens. Except as set forth in Schedule 7.1(i), none of the
properties and assets of the Borrower or any Subsidiary of the Borrower is
subject to any Lien, except Permitted Liens. Other than financing statements
filed with respect to Permitted Liens and the
37
Financing Statements, no financing statement under the Uniform Commercial Code
of any State or other instrument evidencing a Lien which names the Borrower or
any Subsidiary of the Borrower as debtor has been filed (and has not been
terminated) in any State or other jurisdiction, and neither the Borrower nor any
Subsidiary of the Borrower has signed any such financing statement or other
instrument or any security agreement authorizing any secured party thereunder to
file any such financing statement or instrument, except to perfect those Liens
listed on Schedule 7.1(i). Except for financing statements filed with respect to
Permitted Liens, no financing statement under the Uniform Commercial Code of any
State or other instrument evidencing a Lien which names the Seller as debtor and
covers any of the Acquired Assets has been filed (and has not been terminated)
in any State or other jurisdiction.
(j) Indebtedness and Guarantees. Schedule 7.1(j) is a complete and
correct listing of all Indebtedness for Money Borrowed and Guarantees of the
Borrower and each of its Subsidiaries as of the Effective Date. Each of the
Borrower and its Subsidiaries has per formed in all material respects and is in
material compliance with all of the terms of such Indebtedness and Guarantees
and all instruments and agreements relating thereto, and no default or event of
default, or event or condition which with notice or lapse of time or both would
constitute such a default or event of default, which in either event would
constitute a Default or Event of Default hereunder, exists with respect to any
such Indebtedness or Guaranty.
(k) Litigation. Except as set forth on Schedule 7.1(k), there are no
actions, suits or proceedings pending (nor, to the knowledge of the Borrower,
are there any actions, suits or proceedings threatened, or any reasonable basis
therefor) against the Borrower or such Subsidiaries or any of the Acquired
Assets or any of the Borrower's or any of its Subsidiaries' other properties in
any court or before any arbitrator of any kind or before or by any governmental
body, except actions, suits or proceedings of the character normally incident to
the kind of business conducted by the Borrower or any of its Subsidiaries which,
if adversely determined, would not singly or in the aggregate have a Materially
Adverse Effect, and there are no strikes or walkouts in progress, pending or
contemplated relating to any labor contracts to which the Borrower or any of its
Subsidiaries is a party, relating to any labor contracts being negotiated, or
otherwise.
(l) Tax Returns and Payments. Except as set forth on Schedule
7.1(l), all United States federal, state and local as well as material foreign
national, provincial and local and other tax returns of the Borrower and each of
its Subsidiaries required by Applicable Laws to be filed have been duly filed,
and all United States federal, state and local and foreign national, provincial
and local and other taxes, assessments and other governmental charges or levies
upon the Borrower and each of its Subsidiaries and the Borrower's and any of its
Subsidiaries' property, income, profits and assets which are due and payable
have been paid, except any such nonpayment which is at the time permitted under
Section 10.6. The charges, accruals and reserves on the books of the Borrower
and each of its Subsidiaries in respect of United States federal, state and
local and foreign national, provincial and local taxes for all fiscal years and
portions thereof since the organization of the Borrower are in the judgment of
the Borrower adequate, and the Borrower knows of no reason to anticipate any
additional
38
assessments for any of such years which, singly or in the aggregate, could
reasonably be expected to have a Materially Adverse Effect.
(m) Burdensome Provisions. Neither the Borrower nor any of its
Subsidiaries is a party to any indenture, agreement, lease or other instrument,
or subject to any charter or corporate restriction, Governmental Approval or
Applicable Law compliance with the terms of which could reasonably be expected
to have a Materially Adverse Effect.
(n) Financial Statements.
(i) The Borrower has furnished to the Lenders copies of (A)
the Seller's consolidated audited balance sheet as of December 28, 1996 and the
related consolidated statements of operations, cash flow and shareholders'
equity for the fiscal year then ended, and (B) the Seller's unaudited balance
sheet as of December 27, 1997 and the related statements of operations, cash
flow and shareholders' equity for the fiscal period then ended, which financial
statements present fairly in all material respects in accordance with GAAP the
financial position of the Seller and its consolidated Subsidiaries as of such
dates and the results of operations of the Seller and its consolidated
Subsidiaries for the periods then ended, subject to, in the case of unaudited
financial statements, normal year-end adjustments and the absence of complete
footnotes,
(ii) The Borrower has furnished to the Lenders copies of (A)
the Borrower's consolidated audited balance sheet as of February 1, 1997 and the
related consolidated statements of operations, cash flows and shareholder's
equity for the fiscal year then ended, and (B) the Borrower's consolidated
unaudited balance sheet as of January 3, 1998 and the related consolidated
statements of operations, cash flow and shareholders' equity for the 11 fiscal
month period then ended, which financial statements present fairly in all
material respects in accordance with GAAP the financial position of the Borrower
and its Consolidated Subsidiaries as of such dates and the results of operations
of the Borrower and its Consolidated Subsidiaries for the periods then ended.
(iii) The Borrower has furnished to the Lenders copies of the
Pro Forma. The Pro Forma presents fairly, on a pro forma basis, the financial
position of the Borrower and its Consolidated Subsidiaries as at January 31,
1998.
(iv) The Borrower has furnished to the Lenders copies of the
Projections. The Projections have been be prepared by the Borrower in good faith
in light of the past operations of the business of the Seller, the Borrower and
their respective Subsidiaries.
(v) Except as disclosed or reflected in the financial
statements described in clauses (i) and (ii) above, as of the Effective Date,
neither the Borrower nor any of its Consolidated Subsidiaries has any material
liabilities, contingent or otherwise, and there were no material unrealized or
anticipated losses of the Borrower or any of its Consolidated Subsidiaries, in
either case of a type or nature required to be disclosed or reflected in such
financial statements.
39
(o) Adverse Change. Since the date of the last financial statements
of the Borrower and the Seller delivered to the Lenders pursuant to Section
7.1(n)(i) and (ii), after giving effect to the transactions reflected in the Pro
Forma, (i) no material adverse change has occurred in the business, assets,
liabilities, financial condition, results of operations or business prospects of
the Borrower or its Consolidated Subsidiaries, and (ii) no event has occurred or
failed to occur which has had, or may have, singly or in the aggregate, a
Materially Adverse Effect.
(p) ERISA. Except as set forth on Schedule 7.1(p):
(i) As of the Effective Date, neither the Borrower nor any
Related Company maintains or contributes to any Benefit Plan.
(ii) No Benefit Plan has been terminated or partially
terminated, and no Multiemployer Plan is insolvent or in reorganization, nor
have any proceedings been instituted to terminate any Benefit Plan or to
reorganize any Multiemployer Plan.
(iii) Neither the Borrower nor any Related Company has
withdrawn from any Benefit Plan or Multiemployer Plan, nor has a condition
occurred which if continued would result in a withdrawal.
(iv) Neither the Borrower nor any Related Company has incurred
any withdrawal liability, including contingent withdrawal liability, to any
Multiemployer Plan pursuant to Title IV of ERISA.
(v) Neither the Borrower nor any Related Company has incurred
any liability to the PBGC other than for required insurance premiums which have
been paid when due.
(vi) No Reportable Event has occurred with respect to a Plan.
(vii) No Benefit Plan has an "accumulated funding deficiency"
(whether or not waived) as defined in Section 302 of ERISA or in Section 412 of
the Internal Revenue Code.
(viii) Each Plan is in substantial compliance with ERISA, and
neither the Borrower nor any Related Company has received any communication from
a governmental agency asserting that a Plan is not in compliance with ERISA.
(ix) Each Plan which is intended to be a qualified Plan has
been determined by the IRS to be qualified under Section 401(a) of the Internal
Revenue Code as currently in effect or will be submitted to the IRS for such
determination prior to the end of the remedial amendment period under Section
401(b) of the Internal Revenue Code and the regulations promulgated thereunder
and neither the Borrower nor any Related Company knows or has reason to know why
each such Plan should not continue to be so qualified, and each trust
40
related to such Plan that has been submitted to the IRS for determination of
exempt status has been determined to be exempt from federal income tax under
Section 501(a) of the Internal Revenue Code or will be submitted to the IRS for
a determination of exempt status.
(x) As of the Effective Date, neither the Borrower nor any
Related Company maintains or contributes to any employer welfare benefit plan
within the meaning of Section 3(l) of ERISA which provides benefits to employees
after termination of employment other than as required by Section 601 of ERISA.
(xi) Schedule B to the most recent annual report filed with
the IRS with respect to each Benefit Plan and furnished to the Lenders is
complete and accurate. Since the date of each such Schedule B, there has been no
adverse change in funding status or financial condition of the Benefit Plan
relating to such Schedule B.
(xii) Neither the Borrower nor any Related Company has failed
to make a required installment under Subsection (m) of Section 412 of the
Internal Revenue Code or any other payment required under Section 412 of the
Internal Revenue Code on or before the due date for such installment or other
payment.
(xiii) Neither the Borrower nor any Related Company is
required to provide security to a Benefit Plan under Section 401(a)(29) of the
Internal Revenue Code due to a Benefit Plan amendment that results in an
increase in current liability for the plan year.
(xiv) Neither the Borrower, nor any Related Company, nor any
other "party-in-interest" or "disqualified person" has engaged in a nonexempt
"prohibited transaction," as such terms are defined in Section 4975 of the
Internal Revenue Code and Section 406 of ERISA, in connection with any Plan or
has taken or failed to take any action which would constitute or result in a
Termination Event.
(xv) Neither the Borrower nor any Related Company has failed
to comply with the health care continuation coverage requirements of Section
4980B of the Internal Revenue Code in respect of employees and former employees
of the Borrower or such Related Company and their dependents and beneficiaries
which alone or in the aggregate would subject the Borrower or such Related
Company to any material liability.
(xvi) Neither the Borrower nor any Related Company has (A)
failed to make a required contribution or payment to a Multiemployer Plan or (B)
made a complete or partial withdrawal under Sections 4203 or 4205 of ERISA from
a Multiemployer Plan. To the best knowledge of the Borrower after due inquiry,
neither the Borrower nor any Related Company shall have any obligation to (x)
make contributions to any Multiemployer Plan on or after the Effective Date, or
(y) pay withdrawal liability to any Multiemployer Plan in an amount in excess of
a "de minimis amount" as such term is defined in Section 4209 of ERISA.
(q) Absence of Defaults. Neither the Borrower nor any of its
Subsidiaries is in default under its articles or certificate of incorporation or
by-laws and no event has
41
occurred, which has not been remedied, cured or waived, (i) which constitutes a
Default or an Event of Default, or (ii) which constitutes, or which with the
passage of time or giving of notice or both would constitute, a default or event
of default by the Borrower or any of its Subsidiaries under any material
agreement (other than this Agreement) or judgment, decree or order to which the
Borrower or any of its Subsidiaries is a party or by which the Borrower, any of
its Subsidiaries or any of the Borrower's or any of its Subsidiaries' properties
may be bound or which would require the Borrower or any of its Subsidiaries to
make any payment under any thereof prior to the scheduled maturity date
therefor, except, in the case only of any such agreement, for alleged defaults
which are being contested in good faith by appropriate proceedings and with
respect to which reserves in respect of the Borrower's or such Subsidiary's
reasonably anticipated liability have been established on the books of the
Borrower or such Subsidiary.
(r) Accuracy and Completeness of Information.
(i) All written information, reports and other papers and data
produced by or on behalf of the Borrower (including information, reports and
other papers and data relating to the Seller) and furnished to the Collateral
Agent or any Lender were, at the time the same were so furnished, complete and
correct in all material respects. No fact is known to the Borrower which has
had, or could reasonably be expected to have, a Materially Adverse Effect, which
has not been set forth in the financial statements or disclosure delivered prior
to the Agreement Date, in each case referred to in Section 7.1(n), or in such
written information, reports or other papers or data or otherwise disclosed in
writing to the Lenders prior to the Agreement Date. No document prepared by or
on behalf of the Borrower or written statement made by or on behalf of the
Borrower to any Lender in connection with the negotiation, preparation or
execution of this Agreement or any of the Loan Documents contains or will
contain any untrue statement of a fact material to the creditworthiness of the
Borrower or omits or will omit to state a material fact necessary in order to
make the statements contained therein not misleading.
(ii) The Borrower has no reason to believe that any document
furnished or written statement made to any Lender by any Person other than the
Borrower in connection with the negotiation, preparation or execution of this
Agreement or any of the Loan Documents contained any incorrect statement of a
material fact or omitted to state a material fact necessary in order to make the
statements made, in light of the circumstances under which they were made, not
misleading.
(s) Solvency. In each case after giving effect to the Indebtedness
represented by the Loans outstanding and to be incurred, and the transactions
contemplated by this Agree ment, the Senior Loan Agreement, the Acquisition
Agreement and the Acquisition Documents, the Borrower is solvent, having assets
of a fair salable value which exceeds the amount required to pay its debts as
they become absolute and matured (including contingent, subordinated, unmatured
and unliquidated liabilities), and the Borrower is able to and anticipates that
it will be able to meet its debts as they mature and has adequate capital to
conduct the business in which it is or proposes to be engaged.
42
(t) Receivables. The chief executive office of the Borrower and the
books and records relating to the Receivables are located at the address or
addresses set forth on Schedule 7.1(t). The Borrower has not maintained its
chief executive office or books and records relating to any Receivables at any
other address at any time during the five years immediately preceding the
Agreement Date, except as disclosed on Schedule 7.1(t) with respect to the
Receivables of the Borrower and the Seller.
(u) Inventory. All Inventory included in any Borrowing Base
Certificate (as defined in the Senior Loan Agreement), is in merchantable
condition, meets all standards imposed by any governmental agency, or department
or division thereof, having regulatory authority over such goods, their use or
sale, and is currently either usable or salable in the normal course of the
Borrower's business, except to the extent reserved against in the financial
statements referred to in Section 7.1(n) or delivered pursuant to Article 11 or
as disclosed to the Lenders pursuant to Section 9.12. All Inventory is located
on the premises set forth on Schedule 7.1(u) or is Inventory in transit to one
of such locations, (or Collateral Agent has otherwise perfected its second
priority Lien therein, for the benefit of the Secured Creditors), except as
otherwise disclosed in writing to the Lenders. Such Inventory has not, in the
last year, been located at premises other than those set forth on Schedule
7.1(u).
(v) Equipment. All Equipment is in good order and repair in all
material respects and is located on the premises set forth on Schedule 7.1(v)
and has been so located at all times during the last year.
(w) Real Property. The Borrower owns no Real Estate and leases no
Real Estate other than that described on Schedule 7.1(w) and other than Real
Estate acquired or leased after the Effective Date for which the Borrower has
complied with the requirements of Section 9.14.
(x) Corporate and Fictitious Names. Except as otherwise disclosed on
Schedule 7.1(x), during the five-year period preceding the Agreement Date,
neither the Borrower nor any predecessor thereof (including the Seller) has been
known as or used any corporate or fictitious name other than the corporate name
of the Borrower on the Effective Date.
(y) Federal Reserve Regulations. Neither the Borrower nor any of its
Subsidiaries is engaged and none will engage, principally or as one of its
important activities, in the business of extending credit for the purpose of
"purchasing" or "carrying" any "margin stock" (as each of the quoted terms is
defined or used in Regulations G and U of the Board of Governors of the Federal
Reserve System). No part of the proceeds of any of the Loans will be used for so
purchasing or carrying margin stock or, in any event, for any purpose which
violates, or which would be inconsistent with, the provisions of Regulation G,
T, U or X of such Board of Governors. If requested by any Lender, the Borrower
will furnish to the Lenders a statement or statements in conformity with the
requirements of said Regulation G, T, U or X to the foregoing effect.
43
(z) Investment Company Act. The Borrower is not an "investment
company" or a company "controlled" by an "investment company" (as each of the
quoted terms is defined or used in the Investment Company Act of 1940, as
amended).
(aa) Employee Relations. Neither the Borrower nor any of its
Subsidiaries as of the Effective Date, except as set forth on Schedule 7.1(aa),
is party to any collective bargaining agreement nor has any labor union been
recognized as the representative of the Borrower's or any of its Subsidiaries'
employees, and the Borrower knows of no pending, threatened or contemplated
strikes, work stoppage or other labor disputes involving the Borrower's or any
of its Subsidiaries' employees that could reasonably be expected to have a
Material Adverse Effect.
(bb) Proprietary Rights. Schedule 7.1(bb) sets forth a correct and
complete list, as of the Effective Date, of all of the Proprietary Rights. As of
the Effective Date, none of the Proprietary Rights is subject to any licensing
agreement or similar arrangement except as set forth on Schedule 7.1(bb) or as
entered into in the sale or distribution of the Borrower's Inventory in the
ordinary course of business. To the best of the Borrower's knowledge, none of
the Proprietary Rights infringes on or conflicts with any other Person's
property, and no other Person's property infringes on or conflicts with the
Proprietary Rights, in either case in a manner that will have a Material Adverse
Effect. The Proprietary Rights described on Schedule 7.1(bb) constitute all of
the property of such type necessary to the current and anticipated future
conduct of the Borrower's business.
(cc) Trade Names. All trade names or styles under which the Borrower
sells (or the Seller sold) Inventory or Equipment or creates Receivables, or to
which instruments in payment of Receivables are made payable, in each case as of
or prior to the Effective Date are listed on Schedule 7.1(cc).
(dd) Acquisition Agreement. The Borrower has heretofore furnished to
the Lenders true, complete and correct copies of the Acquisition Agreement
(including any schedules, exhibits and annexes thereto) and each Acquisition
Document. The Acquisition Agreement has not been amended, supplemented or
modified except as previously disclosed in writing to the Lenders and, together
with the other Acquisition Documents, copies of which have been delivered to the
Lenders, constitute the complete understanding between the Borrower and the
Seller in respect of the acquisition of the Acquired Assets and the other
matters and transactions covered thereby. To the Borrower's knowledge, the
Acquisition Agreement and each of the other Acquisition Documents has been duly
executed and delivered by the Seller and is a valid, legal and binding
obligation of the Seller. The representations and warranties of the Borrower
contained in the Acquisition Agreement and each of the other Acquisition
Documents are (or will be) true and correct in all material respects on the
Effective Date as if made on and as of such date, and the Lenders are entitled
to rely on such representations and warranties with the same force and effect as
though they were incorporated in this Agreement and made to the Lenders
directly. On and as of the Effective Date, the Borrower knows of no reason to
believe that the representations and warranties of, and
44
information concerning, the Seller contained in the Acquisition Agreement and
each of the other Acquisition Documents are not true and correct in all material
respects.
(ee) Consummation of Transactions. Upon the Effective Date, the
transactions contemplated by the Acquisition Agreement and the other Acquisition
Documents have been consummated in accordance with Applicable Laws and, except
as previously disclosed in writing to the Lenders, in the manner provided
therein in accordance with the terms thereof without any material waivers or
amendments thereto, and each of the conditions to such consummation set forth in
the Acquisition Agreement and the other Acquisition Documents shall have been
fulfilled without any waiver of any thereof.
(ff) Seller Subordinated Indebtedness. The Borrower has delivered to
the Lenders a complete and correct copy of all documents evidencing or relating
to the Seller Subordinated Indebtedness, and each of the representations and
warranties given by the Borrower therein is true and correct in all material
respects.
(gg) [Intentionally Deleted]
SECTION 7.2 [Intentionally Deleted]
ARTICLE 8
SECURITY INTEREST
SECTION 8.1 Security Interest.
(a) To secure the payment, observance and performance of the Secured
Obligations, the Borrower hereby mortgages, pledges and assigns all of the
Collateral to the Collateral Agent, for the benefit of the Secured Creditors,
and grants to the Collateral Agent, for the benefit of the Secured Creditors, a
continuing security interest in, and a continuing Lien upon, all of the
Collateral.
(b) As additional security for all of the Secured Obligations, the
Borrower grants to the Collateral Agent, for the benefit of the Secured
Creditors, a security interest in, and assigns to the Collateral Agent, for the
benefit of the Secured Creditors, all of the Borrower's right, title and
interest in and to, any deposits or other sums at any time credited by or due
from each Lender and each Affiliate of a Lender to the Borrower, or credited by
or due from any participant of any Lender to the Borrower, with the same rights
therein as if the deposits or other sums were credited by or due from such
Lender The Borrower hereby authorizes each Lender and each Affiliate of such
Lender and each participant to pay or deliver to the Collateral Agent, for the
account of the Lenders, without any necessity on the Collateral Agent's or any
Lender's part to resort to other security or sources of reimbursement for the
Secured Obligations, at any time during the continuation of any Event of Default
or in the event that the Lenders should make demand for payment hereunder and
without further notice to the Borrower (such notice being expressly waived), any
of the aforesaid deposits (general or special, time or
45
demand, provisional or final) or other sums for application to any Secured
Obligation, irrespective of whether any demand has been made or whether such
Secured Obligation is mature, and the rights given the Collateral Agent, the
Lenders, their Affiliates and participants hereunder are cumulative with such
Person's other rights and remedies, including other rights of set-off. The
Collateral Agent will promptly notify the Borrower of its receipt of any such
funds for application to the Secured Obligations, but failure to do so will not
affect the validity or enforceability thereof.
SECTION 8.2 Continued Priority of Security Interest.
(a) The Security Interest granted by the Borrower shall at all times
be valid, perfected and enforceable against the Borrower and all third parties
in accordance with the terms of this Agreement, as security for the Secured
Obligations, and the Collateral shall not at any time be subject to any Liens
that are prior to, on a parity with or junior to the Security Interest, other
than Permitted Liens.
(b) The Borrower shall, at its sole cost and expense, take all
action that may be reasonably necessary or desirable, or that the Collateral
Agent or the Lender may reasonably request, so as at all times to maintain the
validity, perfection, enforceability and rank of the Security Interest in the
Collateral in conformity with the requirements of Section 8.2(a), or to enable
the Collateral Agent and the Lenders to exercise or enforce their rights
hereunder, including, but not limited to: (i) paying all taxes, assessments and
other claims lawfully levied or assessed on any of the Collateral, except to the
extent that such taxes, assessments and other claims constitute Permitted Liens,
(ii) using all reasonable efforts to obtain landlords', mortgagees' and
mechanics' releases, subordinations or waivers, (iii) delivering to the
Collateral Agent, for the benefit of the Secured Creditors, endorsed or
accompanied by such instruments of assignment as the Collateral Agent may
specify, and stamping or marking, in such manner as the Collateral Agent may
specify, any and all chattel paper, instruments, letters and advices of guaranty
and documents evidencing or forming a part of the Collateral, and (iv) executing
and delivering financing statements, pledges, designations, hypothecations,
notices and assignments in each case in form and substance reasonably
satisfactory to the Collateral Agent and the Lenders relating to the creation,
validity, perfection, maintenance or continuation of the Security Interest under
the Uniform Commercial Code or other Applicable Laws.
(c) The Collateral Agent is hereby authorized to file one or more
financing or continuation statements or amendments thereto without the signature
of or in the name of the Borrower for any purpose described in Section 8.2(b).
The Collateral Agent will give the Borrower notice of the filing of any such
statements or amendments, which notice shall specify the locations where such
statements or amendments were filed. No representation or warranty is made by
the Borrower respecting the accuracy or adequacy of the foregoing. A carbon,
photographic, xerographic or other reproduction of this Agreement or of any of
the Security Documents or of any financing statement filed in connection with
this Agreement is sufficient as a financing statement.
46
(d) The Borrower shall xxxx its books and records as directed by the
Collateral Agent and as may be necessary or appropriate to evidence, protect and
perfect the Security Interest and shall cause its financial statements to
reflect the Security Interest.
ARTICLE 9
COLLATERAL COVENANTS
Until the Secured Obligations have been paid in full:
SECTION 9.1 [Intentionally Deleted]
SECTION 9.2 Verification and Notification. The Lenders shall have
the right (a) at any time and from time to time after the First Lien Senior
Secured Facility has been paid in full, (i) in the name of the Lenders or in the
name of the Borrower, to verify the validity, amount or any other matter
relating to any Receivables by mail, telephone, telegraph or otherwise, and (ii)
to review, audit and make extracts from all records and files related to any of
the Receivables; and (b) subject to the terms of the Intercreditor Agreement, if
an Event of Default exists, to notify the Account Debtors or obligors under any
Receivables of the assignment of such Receivables to the Collateral Agent, for
the benefit of the Secured Creditors, and to direct such Account Debtor or
obligors to make payment of all amounts due or to become due thereunder directly
to the Collateral Agent, for the account of the Lenders, and, upon such
notification and at the expense of the Borrower, to enforce collection of any
such Receivables and to adjust, settle or compromise the amount or payment
thereof, in the same manner and to the same extent as the Borrower might have
done.
SECTION 9.3 [Intentionally Deleted].
SECTION 9.4 [Intentionally Deleted].
SECTION 9.5 Delivery of Instruments. In the event any Receivable is
at any time evidenced by a promissory note, trade acceptance or any other
instrument for the payment of money, the Borrower will immediately thereafter
deliver such instrument to the Collateral Agent, appropriately endorsed to the
Collateral Agent, for the benefit of the Secured Creditors.
SECTION 9.6 Sales of Inventory. All sales of Inventory will be made
in material compliance with all requirements of Applicable Laws.
SECTION 9.7 Ownership and Defense of Title.
(a) Except for Permitted Liens, the Borrower or its Subsidiaries
shall at all times be the sole owner or lessee of each and every item of
Collateral and shall not create any lien on, or sell, lease, exchange, assign,
transfer, pledge, hypothecate, grant a security interest or security title in or
otherwise dispose of, any of the Collateral or any interest therein, except for
sales of Inventory in the ordinary course of business, for cash or on open
account or on
47
terms of payment ordinarily extended to its customers, and except for
dispositions that are otherwise expressly permitted under this Agreement
(including, without limitation, such dispositions as permitted under Section
12.7(f) hereof). The inclusion of "proceeds" of the Collateral under the
Security Interest shall not be deemed a consent by the Collateral Agent or the
Lenders to any other sale or other disposition of any part or all of the
Collateral.
(b) The Borrower shall defend its title or leasehold interest in and
to, and the Security Interest in, the Collateral against the claims and demands
of all Persons.
SECTION 9.8 Insurance.
(a) The Borrower shall at all times maintain insurance on the
Inventory and Equipment against loss or damage by fire, theft (excluding theft
by employees), burglary, pilferage, loss in transit and such other hazards as
the Senior Lenders (or, after the First Lien Senior Secured Facility and any
Permitted Refinancing Indebtedness has been paid in full, the Lenders) shall
reasonably specify, in amounts not to exceed those obtainable at commercially
reasonable rates and under policies issued by insurers acceptable to the Senior
Lenders (or, after the First Lien Senior Secured Facility and any Permitted
Refinancing Indebtedness has been paid in full, the Lenders) in the exercise of
their reasonable judgment. All premiums on such insurance shall be paid by the
Borrower and copies of the policies delivered to the Lenders upon request. The
Borrower will not use or permit the Inventory or Equipment to be used in
material violation of Applicable Laws or in any manner which might render
inapplicable any insurance coverage.
(b) All insurance policies required under Section 9.8(a) shall name
the Collateral Agent, for the benefit of the Senior Lenders and the Lenders (as
their interests may appear), as an additional insured and shall contain loss
payable clauses in the form submitted to the Borrower by the Collateral Agent,
or otherwise in form and substance reasonably satis factory to the Senior
Lenders (or, after the First Lien Senior Secured Facility and any Permitted
Refinancing Indebtedness has been paid in full, the Lenders), naming the
Collateral Agent, for the benefit of the Senior Lenders and the Lenders (as
their interests may appear), as loss payee, as its interests may appear, and
providing that (i) subject to the terms of the Intercreditor Agreement, all
proceeds thereunder shall be payable to the Collateral Agent, for the benefit of
the Senior Lenders and the Lenders (as their interests may appear), (ii) no such
insurance shall be affected by any act or neglect of the insurer or owner of the
property described in such policy, and (iii) such policy and loss payable
clauses may be canceled, amended or terminated only upon at least 30 days prior
written notice given to the Collateral Agent.
(c) Any proceeds of insurance referred to in this Section 9.8 which
are paid to the Collateral Agent, and which are, pursuant to the Intercreditor
Agreement, for the account of the Lenders, shall be, at the option of the
Required Lenders in their sole discretion, either (i) applied to replace the
damaged or destroyed property, or (ii) applied to the payment or prepayment of
the Secured Obligations; provided, however, if (A) no Event of Default exists
hereunder, and (B) the amount of insurance proceeds with respect to such loss is
in an aggregate amount of less than $5,000,000, and (C) the damaged or destroyed
property is of the type or
48
nature that can be repaired or restored, and (D) the Borrower provides the
Lenders with a certificate stating that the insurance proceeds will be used to
repair or restore the damaged or destroyed property within a one-year period
from the date of the loss, then such insurance proceeds shall be held by the
Collateral Agent and disbursed to the Borrower for application to the costs and
expenses of such repair or restoration pursuant to a disbursement procedure, and
under such terms and conditions as shall be acceptable to Collateral Agent and
the Required Lenders.
SECTION 9.9 Location of Offices and Collateral.
(a) The Borrower will not change the location of its chief executive
office or the place where it keeps its books and records relating to the
Collateral or change its name, its identity or corporate structure without
giving the Collateral Agent and the Lenders 30 days prior written notice
thereof.
(b) All Inventory, other than Inventory in transit to any such
location or Inventory meeting the terms of clauses (a) and (f) of the definition
of Eligible Inventory (as defined in the Senior Loan Agreement), will at all
times be kept by the Borrower at the locations set forth in Schedule 7.1(u) (as
updated from time to time), and shall not, without the prior written consent of
the Collateral Agent, be removed therefrom except pursuant to sales of Inventory
permitted under Section 9.7(a).
(c) If any Inventory is in the possession or control of any of the
Borrower's agents or processors, the Borrower shall notify such agents or
processors of the Security Interest (and shall promptly provide copies of any
such notice to the Collateral Agent and the Lenders) and, upon the occurrence of
an Event of Default, shall instruct them (and cause them to acknowledge such
instruction) to hold all such Inventory for the account of the Lenders, subject
to the instructions of the Collateral Agent.
SECTION 9.10 Records Relating to Collateral.
(a) The Borrower will at all times (i) keep complete and accurate
records of Inventory on a basis consistent with past practices of the Borrower
so as to permit comparison of Inventory records relating to different time
periods, itemizing and describing the kind, type and quantity of Inventory and
the Borrower's cost therefor and a current price list for such Inventory, and
(ii) keep complete and accurate records of all other Collateral.
(b) The Borrower will prepare a physical listing of all Inventory,
(other than documents evidencing and general intangibles relating to the
inventory that comprises the Borrower's Inventory), wherever located, at least
annually.
SECTION 9.11 Inspection. The Collateral Agent and each Lender
holding at least $5,000,000 in principal amount of Term Loans (by any of their
officers, employees or agents) shall have the right, to the extent that the
exercise of such right shall be within the control of the Borrower, at any time
or times to (a) upon reasonable notice, if no Event of
49
Default exists, and without notice if an Event of Default does exist, visit the
properties of the Borrower and its Subsidiaries, inspect the Collateral and the
other assets of the Borrower and its Subsidiaries and inspect and make extracts
from the books and records of the Borrower and its Subsidiaries, including but
not limited to management letters prepared by independent accounts, all during
customary business hours at such premises; (b) discuss the Borrower's and its
Subsidiaries' business, assets, liabilities, financial condition, results of
operations and business prospects, insofar as the same are reasonably related to
the rights of the Collateral Agent or the Lenders hereunder or under any of the
Loan Documents, with the Borrower's and its Subsidiaries' (i) principal
officers, (ii) independent accountants, and (iii) any other Person (except that
any such discussion with any third parties shall be conducted only in accordance
with the Collateral Agent's or such Lender's standard operating procedures
relating to the maintenance of the confidentiality of confidential information
of Borrower); and (c) verify the amount, quantity, value and condition of, or
any other matter relating to, any of the Collateral (other than Receivables) and
in this connection to review, audit and make extracts from all records and files
related to any of the Collateral. The Borrower will deliver to the Collateral
Agent, for the benefit of the Lenders, any instrument necessary for it to obtain
records from any service bureau maintaining records on behalf of the Borrower.
SECTION 9.12 Information and Reports.
(a) [Intentionally Deleted]
(b) [Intentionally Deleted]
(c) [Intentionally Deleted]
(d) [Intentionally Deleted]
(e) [Intentionally Deleted]
(f) Additional Information. The Borrower shall provide the Lenders
with copies of all schedules and reports in respect of the Collateral delivered
pursuant to the terms of the Senior Loan Agreement to the Senior Lenders or
their agents, at the same time each is delivered to such parties. The Borrower
will also furnish to the Collateral Agent and each Lender such other information
with respect to the Collateral as the Collateral Agent or the Required Lenders
may from time to time reasonably request.
SECTION 9.13 Power of Attorney. The Borrower hereby appoints the
Collateral Agent as its attorney, with power (a) during the existence of an
Event of Default (i) to endorse the name of the Borrower on any checks, notes,
acceptances, money orders, drafts or other forms of payment or security that may
come into the Collateral Agent's or any Lender's possession, and (ii) to sign
the name of the Borrower on any invoice or xxxx of lading relating to any
Receivable, Inventory or other Collateral, on any drafts against customers
related to letters of credit, on schedules and assignments of Receivables
furnished to the Collateral Agent or any Lender by the Borrower, on notices of
assignment, financing statements and other public
50
records relating to the perfection or priority of the Security Interest, and (b)
at any time, to sign the name of the Borrower on verifications of Receivables
and notices to or from Account Debtors.
SECTION 9.14 Additional Real Estate and Leases.
(a) Promptly upon the Borrower's acquisition of any interest in any
Real Estate, including the Borrower's entry into any Qualifying Lease, the
Borrower shall deliver to the Collateral Agent, for the benefit of the Secured
Creditors, an executed Mortgage in form and substance reasonably satisfactory to
the Collateral Agent, conveying to the Collateral Agent, for the benefit of the
Secured Creditors, a second priority Lien on such Real Estate interest, subject
only to such prior Liens as the Lenders shall consent to in writing. If
reasonably requested by the Lenders, the Borrower shall also deliver to the
Collateral Agent, at the Borrower's expense, a mortgagee title insurance policy
in favor of the Collateral Agent and the Secured Creditors insuring such
Mortgage to create and convey such Lien, subject only to such exceptions
consented to by the Lenders, and shall deliver to the Collateral Agent the other
items set forth in Sections 6.1(e)(xiii) and (xv) with respect to such Real
Estate, together with such environmental audits of such Real Estate as the
Lenders reasonably request, all in form and substance satisfactory to the
Lenders.
(b) Promptly upon the Borrower's entry into any other lease of Real
Estate (other than a Qualifying Lease), the Borrower shall use all reasonable
efforts to deliver to the Collateral Agent an executed landlord's waiver and
consent with respect to such lease in form and substance satisfactory to the
Lenders.
SECTION 9.15 Assignment of Claims Act. Upon the request of the
Collateral Agent or the Lenders, the Borrower shall execute any documents or
instruments and shall take such steps or actions reasonably required by the
Collateral Agent or the Lenders so that all monies due or to become due under
any contract with the United States of America, the District of Columbia or any
state, county, municipality or other domestic or foreign governmental entity, or
any department, agency or instrumentality thereof, will be assigned to the
Collateral Agent, for the benefit of the Secured Creditors, and notice given
thereof in accordance with the requirements of the Assignment of Claims Act of
1940, as amended, or any other laws, rules or regulations relating to the
assignment of any such contract and monies due to or to become due.
SECTION 9.16 Covenant to Guarantee Obligations and Give Security.
Upon the formation or acquisition of any new direct or indirect Subsidiaries by
the Borrower, then the Borrower shall, within 10 days after such formulation or
acquisition, at its expense:
(a) cause each such U.S. Subsidiary to duly execute and deliver to
the Collateral Agent a Guaranty, in form and substance satisfactory to the
Lenders, guaranteeing the payment in full of the Secured Obligations and the
performance of all of the Borrower's obligations under the Loan Documents (each
a "Subsidiary Guaranty"),
51
(b) cause each such U.S. Subsidiary to duly execute and deliver to
the Collateral Agent mortgages, pledges, assignments and other security
agreements, as specified by and in form and substance consistent with this
Agreement and otherwise reasonably satisfactory to the Lenders, securing such
Subsidiary's obligations under its Subsidiary Guaranty and constituting first
priority Liens on all of such Subsidiary's assets (real and personal, including
Qualifying Leases), subject only to Permitted Liens,
(c) duly execute and deliver to the Collateral Agent a stock pledge
agreement and blank stock power, as specified by and in form and substance
satisfactory to the Lenders, securing the Secured Obligations and constituting a
first priority Lien on, in the case of U.S. Subsidiaries, all of each such U.S.
Subsidiary's capital stock, and in the case of foreign Subsidiaries, 65% of each
such foreign Subsidiary's capital stock, subject only to Permitted Liens,
(d) take, and cause such Subsidiary to take, such action (including,
without limitation, the recording of mortgages, the filing of Uniform Commercial
Code financing statements, and the delivery of original stock certificates) as
may be reasonably necessary or advisable in the opinion of the Lenders to vest
in the Collateral Agent, for the benefit of the Secured Creditors, valid and
subsisting perfected Liens on the properties purported to be subject to the
mortgages, pledges, assignments and security agreements delivered pursuant to
this Section 9.16, enforceable against all third parties in accordance with
their terms, subject only to Permitted Liens,
(e) to the extent the same are requested by the Senior Lenders,
deliver to the Collateral Agent, upon the request of the Lenders in their sole
discretion, a signed copy of a favorable opinion of counsel for the Borrower and
such Subsidiary, addressed to the Collateral Agent and the other Secured
Creditors, acceptable to the Lenders as to the matters contained in clauses (a),
(b), (c) and (d) above, as to such guaranties, mortgages, pledges, assignments
and security agreements being legal, valid and binding obligations of each party
thereto enforceable in accordance with their terms, and as to such other matters
as the Lenders may reasonably request, and
(f) to the extent the same are requested by the Senior Lenders,
deliver to the Collateral Agent, upon the request of the Lenders in their sole
discretion, with respect to each parcel of real property owned or held by such
Subsidiary, all items set forth in Sections 6.1(e)(xiii) and (xv) with respect
to such real property, together with such environmental audits of such real
property as the Lenders reasonably request, all in form and substance reasonably
satisfactory to the Lenders.
ARTICLE 10
AFFIRMATIVE COVENANTS
Until all the Secured Obligations have been paid in full, the
Borrower will, and will cause each of its Subsidiaries to:
52
SECTION 10.1 Preservation of Corporate Existence and Similar
Matters. Preserve and maintain its corporate existence, and its material rights,
franchises, licenses and privileges in the jurisdiction of its incorporation and
qualify and remain qualified as a foreign corporation and authorized to do
business in each jurisdiction in which the character of its properties or the
nature of its business requires such qualification or authorization.
SECTION 10.2 Compliance with Applicable Laws. Comply with all
Applicable Laws relating to the Borrower or such Subsidiary except respecting
matters that could not reasonably be expected to have a Material Adverse Effect,
except to the extent being contested in good faith by appropriate proceedings
and for which reserves in respect of the Borrower's or such Subsidiary's
reasonably anticipated liability therefor have been appropriately established.
SECTION 10.3 Maintenance of Property. In addition to, and not in
derogation of, the requirements of Section 9.7 and of the Security Documents,
(a) protect and preserve all properties material to its business, including
copyrights, patents, trade names and trademarks, and maintain in good repair,
working order and condition in all material respects, with reasonable allowance
for wear and tear, all tangible properties, and (b) from time to time make or
cause to be made all needed and appropriate repairs, renewals, replacements and
additions to such properties necessary for the conduct of its business, so that
the business carried on in connection therewith may be properly conducted at all
times.
SECTION 10.4 Conduct of Business. At all times carry on its business
in an efficient manner and engage in the business described on Schedule 7.1(f)
and businesses related thereto.
SECTION 10.5 Insurance. Maintain, in addition to the coverage
required by Section 9.8 and the Security Documents, insurance with responsible
insurance companies against such risks and in such amounts as is customarily
maintained by similar businesses or as may be required by Applicable Laws, and
from time to time deliver to the Lenders upon their request a detailed list of
the insurance then in effect, stating the names of the insurance companies, the
amounts and rates of the insurance, the dates of the expiration thereof and the
properties and risks covered thereby.
SECTION 10.6 Payment of Taxes and Claims. Pay or discharge when due
(a) all taxes, assessments and governmental charges or levies imposed upon it or
upon its income or profits or upon any properties belonging to it, except that
real property ad valorem taxes shall be deemed to have been so paid or
discharged if the same are paid before they become delinquent, and (b) all
lawful claims of materialmen, mechanics, carriers, warehousemen, landlords and
other similar Liens for labor, materials, supplies and rentals which, if unpaid,
might become a Lien on any of its properties; except that this Section 10.6
shall not require the payment or discharge of any such tax, assessment, charge,
levy or claim which is being contested in good faith by appropriate proceedings
and for which reserves in respect of the reasonably anticipated liability
therefor have been appropriately established.
53
SECTION 10.7 Accounting Methods and Financial Records. Maintain a
system of accounting, and keep such books, records and accounts (which shall be
true and complete), as may be required or as may be necessary to permit the
preparation of financial statements in accordance with GAAP.
SECTION 10.8 Use of Proceeds.
(a) Use the proceeds of the Term Loan to pay amounts indicated on
Schedule 10.8 to the Persons indicated thereon.
(b) Not use any part of such proceeds to purchase or, to carry or
reduce or retire or refinance any credit incurred to purchase or carry, any
margin stock (within the meaning of Regulation G or U of the Board of Governors
of the Federal Reserve System) or, in any event, for any purpose which would
involve a violation of such Regulation G or U or of Regulation T or X of such
Board of Governors, or for any purpose prohibited by law or by the terms and
conditions of this Agreement.
SECTION 10.9 Hazardous Waste and Substances; Environmental
Requirements.
(a) In addition to, and not in derogation of, the requirements of
Section 10.2 and of the Security Documents, comply in all material respects with
all applicable Environmental Laws and all Applicable Laws relating to
occupational health and safety (except for instances of noncompliance that are
being contested in good faith by appropriate proceedings if reserves in respect
of the Borrower's or such Subsidiary's reasonably anticipated liability therefor
have been appropriately established and would be required by GAAP), promptly
notify the Collateral Agent and the Lenders of its receipt of any notice of a
material violation of any such Environmental Laws or other such Applicable Laws
and indemnify and hold the Collateral Agent and the Lenders harmless from all
loss, cost, damage, liability, claim and expense incurred by or imposed upon the
Collateral Agent or any Lender on account of the Borrower's failure to perform
its obligations under this Section 10.9.
(b) Whenever the Borrower gives notice to the Collateral Agent and
the Lenders pursuant to this Section 10.9 with respect to a matter that
reasonably could be expected to result in liability to the Borrower or such
Subsidiary in excess of $500,000 in the aggregate, the Borrower shall, at the
Collateral Agent's or the Lenders' request and the Borrower's expense (i) cause
an independent environmental engineer acceptable to the Collateral Agent to
conduct an assessment, including tests where necessary, of the site where the
noncompliance or alleged noncompliance with Environmental Laws has occurred and
prepare and deliver to the Collateral Agent and the Lenders a report setting
forth the results of such assessment, a proposed plan to bring the Borrower or
such Subsidiary into compliance with such Environmental Laws (if such assessment
indicates noncompliance) and an estimate of the costs thereof, and (ii) provide
to the Collateral Agent and the Lenders a supplemental report of such engineer
whenever the scope of the noncompliance, or the response thereto or the
estimated costs thereof, shall materially adversely change.
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SECTION 10.10 [Intentionally Deleted]
SECTION 10.11 [Intentionally Deleted]
ARTICLE 11
INFORMATION
Until the Secured Obligations have been paid in full, the Borrower
will furnish to each Lender at the offices then designated for such notices
pursuant to Section 16.1:
SECTION 11.1 Financial Statements.
(a) Opening Balance Sheet. As soon as available, but in any event
within 90 days after the Effective Date, a copy of the Final Audit and the
Statement (as such terms are defined in the Acquisition Agreement) required to
be delivered pursuant to Sections 3.2(a) and (b) of the Acquisition Agreement,
and, as soon as available, any final determination of Closing Net Worth
delivered by the Accounting Firm (as such terms are defined in the Acquisition
Agreement) pursuant to Section 3.2(b) of the Acquisition Agreement;
(b) Audited Year-End Statements. As soon as available, but in any
event within 90 days after the end of each fiscal year of the Borrower, copies
of the consolidated balance sheets of the Borrower and its Consolidated
Subsidiaries as at the end of such fiscal year and the related statements of
operations, cash flow and shareholders' equity for such fiscal year, in each
case setting forth in comparative form the figures for the previous fiscal year
of the Borrower, reported on without qualification as to the scope of the audit
or the status of the Borrower and its Consolidated Subsidiaries as a "going
concern", by independent certified public accountants of nationally recognized
standing;
(c) Monthly Financial Statements. As soon as available after the end
of each month, but in any event within 45 days after the end of each month,
copies of the unaudited consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as at the end of such month and the related unaudited
consolidated statements of operations, cash flow and shareholders' equity for
the Borrower and its Consolidated Subsidiaries for such month and for the
portion of the fiscal year through such month, certified by a Financial Officer
as presenting fairly the financial condition and results of operations of the
Borrower and its Consolidated Subsidiaries; and
(d) Annual Budget. As soon as available, but in any event at least
30 days prior to the beginning of each fiscal year, an operating budget for the
Borrower and its Consolidated Subsidiaries for such fiscal year, in the form
customarily prepared by management of the Borrower consistent with past
practice, together with a statement of the assumptions upon which such budget
was prepared.
55
All such financial statements delivered pursuant to clauses (b) and (c) shall
present fairly in all material respects the financial position of the Borrower
and its Consolidated Subsidiaries as of such dates and results of operations for
such period and shall be prepared in accordance with GAAP (except, with respect
to interim financial statements, for the omission of footnotes and for the
effect of normal year-end audit adjustments) applied consistently throughout the
periods reflected therein.
SECTION 11.2 Accountants' Certificate. Together with the financial
statements referred to in Section 11.1(b), the Borrower shall deliver a
certificate of such accountants addressed to the Lenders having attached the
calculations, prepared by the Borrower and reviewed by such accountants,
required to establish whether or not the Borrower is in compliance with the
covenants contained in Section 12.1 as at the date of such financial statements.
SECTION 11.3 Officer's Certificate. At the time that the Borrower
furnishes the financial statements pursuant to Section 11.1(c) for any month
that is the last month of a fiscal quarter of the Borrower, the Borrower shall
also furnish a certificate of its President or a Financial Officer,
substantially in the form attached to the Senior Loan Agreement as Exhibit F,
(a) setting forth as at the end of such fiscal quarter or fiscal
year, as the case may be, the calculations required to establish whether or not
the Borrower was in compliance with the requirements of Sections 12.1, 12.2,
12.5, 12.6, 12.10, 12.11 and 12.14, as at the end of each respective period,
(b) stating that the information on the schedules to this Agreement
are complete and accurate as of the date of such certificate or, if such is not
the case, attaching to such certificate updated schedules, and
(c) stating that, based on a reasonably diligent examination, no
Default or Event of Default exists, or, if such is not the case, specifying such
Default or Event of Default and its nature, when it occurred, whether it is
continuing and the steps being taken by the Borrower with respect to such
Default or Event of Default.
SECTION 11.4 Copies of Other Reports.
(a) Promptly upon receipt thereof, copies of all reports, if any,
submitted to the Borrower or its Board of Directors by its independent public
accountants, including, without limitation, any management letters and
management reports.
(b) As soon as practicable, but in any event within 15 days of their
becoming available, copies of all financial statements and reports that the
Borrower shall send to its shareholders generally and of all registration
statements and all regular or periodic reports which the Borrower shall file
with the Securities and Exchange Commission or any successor commission.
56
(c) From time to time and as soon as reasonably practicable
following each request, such forecasts, data, certificates, reports, statements,
documents or further information regarding the business, assets, liabilities,
financial condition, results of operations or business prospects of the Borrower
or any of its Subsidiaries as any Lender may reasonably request and that the
Borrower has or without unreasonable expense can obtain; provided, however, that
the Lenders shall, to the extent reasonably practicable, coordinate examinations
of the Borrower's records by their respective internal auditors. The rights of
the Lenders under this Section 11.4 are in addition to and not in derogation of
their rights under any other provision of this Agreement or of any other Loan
Document.
(d) If requested by any Lender, the Borrower will furnish to the
Lenders statements in conformity with the requirements of Federal Reserve Form
G-3 or U-1 referred to in Regulation G and U, respectively, of the Board of
Governors of the Federal Reserve System.
SECTION 11.5 Notice of Litigation and Other. Prompt notice of:
(a) the commencement, to the extent the Borrower is aware of the
same, of all proceedings and investigations by or before any governmental or
nongovernmental body and all actions and proceedings in any court or before any
arbitrator against or in any other way relating to or affecting the Borrower,
any of its Subsidiaries or any of the Borrower's or any of its Subsidiaries'
properties, assets or businesses, which might, singly or in the aggregate,
result in the occurrence of a Default or an Event of Default, or have a
Materially Adverse Effect,
(b) any amendment of the articles of incorporation or by-laws of the
Borrower or any of its Subsidiaries,
(c) any change in the business, assets, liabilities, financial
condition, results of operations or business prospects of the Borrower or any of
its Subsidiaries which has had or is reasonably likely to have, singly or in the
aggregate, a Materially Adverse Effect, and any change in the executive officers
of the Borrower, and
(d) any Default or Event of Default or any event which constitutes
or which with the passage of time or giving of notice or both would constitute a
default or event of default by the Borrower or any of its Subsidiaries under any
material agreement (other than this Agreement) to which the Borrower or any of
its Subsidiaries is a party or by which the Borrower, any of its Subsidiaries or
any of the Borrower's or any of its Subsidiaries' properties may be bound.
SECTION 11.6 ERISA. As soon as possible and in any event within 30
days after the Borrower knows, or has reason to know, that:
(a) any Termination Event with respect to a Plan has occurred or
will occur, or
57
(b) any Plan has a funded current liability percentage, as defined
in Section 302(d)(8) of ERISA, less than 90% or the aggregate present value of
the Unfunded Vested Accrued Benefits under all Plans is equal to an amount in
excess of $500,000, or
(c) the Borrower or any of its Subsidiaries is in "default" (as
defined in Section 4219(c)(5) of ERISA) with respect to payments to a
Multiemployer Plan required by reason of the Borrower's or such Subsidiary's
complete or partial withdrawal (as described in Section 4203 or 4205 of ERISA)
from such Multiemployer Plan,
a certificate of the President or a Financial Officer of the Borrower setting
forth the details of such event and the action which is proposed to be taken
with respect thereto, together with any notice or filing which may be required
by the PBGC or other agency of the United States government with respect to such
event.
SECTION 11.7 Accuracy of Information. All written information,
reports, statements and other papers and data furnished to any Lender by or on
behalf of the Borrower, whether pursuant to this Article 11 or any other
provision of this Agreement or of any other Loan Document, shall be, at the time
the same is so furnished, complete and correct in all material respects to the
extent necessary to give the Lenders materially true and accurate knowledge of
the subject matter.
SECTION 11.8 Revisions or Updates to Schedules. Should any of the
information or disclosures provided on any of the Schedules originally attached
hereto become outdated or incorrect in any material respect, the Borrower shall
deliver to the Lenders as part of the officer's certificate required pursuant to
Section 11.3(b) such revisions or updates to such Schedule(s) as may be
necessary or appropriate to update or correct such Schedule(s), provided that no
such revisions or updates to any Schedule(s) shall be deemed to have amended,
modified or superseded such Schedule(s) as originally attached hereto, or to
have cured any breach of warranty or representation resulting from the
inaccuracy or incompleteness of any such Schedule(s), unless and until the
Required Lenders in their sole and absolute discretion, shall have accepted in
writing such revisions or updates to such Schedule(s).
SECTION 11.9 Seller Subordinated Indebtedness Certificate. Not less
than five Business Days prior to any payment of any principal of, or interest or
other amounts on, the Seller Subordinated Indebtedness, and as a condition
precedent to making such payment, the Borrower shall furnish to the Lenders a
certificate of the Financial Officer stating: (a) that no Default or Event of
Default is in existence as of the date of the certificate or will be in
existence as of the date of such payment, both with and without giving effect to
the making of such payment, and (b) the amount of principal and interest to be
paid.
58
ARTICLE 12
NEGATIVE COVENANTS
Until the Secured Obligations have been paid in full, the Borrower
will not directly or indirectly and, in the case of Sections 12.2 through 12.18,
will not permit its Subsidiaries to:
SECTION 12.1 Financial Ratios.
(a) Minimum Tangible Net Worth. Permit Consolidated Tangible Net
Worth of the Borrower and its Consolidated Subsidiaries, as of any fiscal
quarter end, to be less than $15,000,000 plus 75% of Consolidated Net Income
(without deduction for any net loss) on a cumulative basis from the first day of
fiscal year 1999 to and including such fiscal quarter end.
(b) Minimum Cash Flow. Permit Consolidated Operating Cash Flow,
measured as of the end of the second fiscal quarter of fiscal year 1999 on a
fiscal year to date basis, to be less than $7,500,000.
(c) Minimum Fixed Charge Coverage Ratio. Permit the Consolidated
Fixed Charge Coverage Ratio, as of the end of any fiscal quarter, calculated on
a rolling four-quarter basis (except for the calculation as of the end of the
third fiscal quarter of fiscal year 1999, which shall be on a fiscal year to
date basis), to be less than 1.0 to 1 as of the end of the third fiscal quarter
of fiscal year 1999, and as of the end of any fiscal quarter thereafter.
(d) Maximum Funded Indebtedness to Cash Flow Ratio. Permit the ratio
of (i) Consolidated Funded Indebtedness as of any fiscal quarter end to (ii)
Consolidated Operating Cash Flow to be greater than: 5.75 to 1.0 as of the end
of the second fiscal quarter of fiscal year 1999; 5.00 to 1.0 as of the end of
the third fiscal quarter of fiscal year 1999; 4.0 to 1.0 as of fiscal year end
1999 or the end of any of the first three fiscal quarters of fiscal year 2000;
3.75 to 1.0 as of fiscal year end 2000 or the end of any of the first three
fiscal quarters of fiscal year 2001; 3.50 to 1.0 as of fiscal year end 2001 or
the end of any of the first three fiscal quarters of fiscal year 2002; or 3.25
to 1.0 as of fiscal year end 2002 or the end of any fiscal quarter thereafter.
Consolidated Operating Cash Flow shall be calculated on an annualized fiscal
year to date basis in the case of the calculation of this covenant as of the end
of the second and third fiscal quarters of fiscal year 1999, and on a rolling
four-quarter basis for all calculations thereafter. Consolidated Operating Cash
Flow, for the purpose of this covenant, will include, or exclude, as applicable,
the effect of acquisitions and divestitures on a proforma basis as if such
acquisitions or divestitures occurred on the first day of such applicable
period.
SECTION 12.2 Indebtedness for Money Borrowed. Create, assume, or
otherwise become or remain obligated in respect of, or permit or suffer to exist
or to be created, assumed or incurred or to be outstanding, any Indebtedness for
Money Borrowed, except that this Section 12.2 shall not apply to:
59
(a) Indebtedness represented by the Loans, the Notes and the other
Loan Documents,
(b) Indebtedness incurred under the First Lien Senior Secured
Facility in an aggregate principal amount not to exceed $95,000,000 and any
Permitted Refinancing Indebtedness,
(c) Indebtedness of a Subsidiary of the Borrower owing to the
Borrower or a wholly-owned Subsidiary Guarantor,
(d) Indebtedness for Money Borrowed reflected on Schedule 7.1(j)
excluding any such Indebtedness that is to be paid in full on the Effective Date
(the "Surviving Indebtedness"), and any Indebtedness extending the maturity of,
or refinancing, in whole or in part, any Surviving Indebtedness, provided that
the principal amount of such Surviving Indebtedness shall not be increased above
the principal amount thereof outstanding immediately prior to such extension or
refinancing,
(e) Permitted Purchase Money Indebtedness,
(f) Indebtedness of any Subsidiary existing at the time such
Subsidiary becomes a Subsidiary, provided that the incurrence of such
Indebtedness was not in anticipation of the acquisition of such Subsidiary and
no Default or Event of Default shall result therefrom, and
(g) Other unsecured Indebtedness provided no Default or Event of
Default would result therefrom under any other section of this Agreement.
SECTION 12.3 Guarantees. Become or remain liable with respect to any
Guaranty of any obligation of any other Person, other than Permitted Guarantees.
SECTION 12.4 Investments. Acquire, after the Agreement Date, any
Business Unit or Investment, provided, that if no Default or Event of Default
exists or would result therefrom, the Borrower may make Permitted Investments.
SECTION 12.5 Capital Expenditures. Make or incur any Capital
Expenditures in the aggregate (for the Borrower and its Subsidiaries) in excess
of the amount set forth below for the fiscal year set forth opposite such
amount:
Fiscal Year Amount
----------- ------
1999 $13,000,000
2000 $ 9,500,000
2001 $ 8,000,000
2002 $ 8,000,000
2003 $ 8,000,000
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Notwithstanding the foregoing, up to 50% of the unused portion of the limit set
forth above with respect to any fiscal year may be carried forward and utilized
in the immediately succeeding fiscal year.
SECTION 12.6 Restricted Payments, Etc. Declare, make or become
obligated to make any Restricted Dividend Payment, Restricted Payment or
Restricted Purchase; provided, that (a) the Borrower's Subsidiaries may make
dividends, distributions and other payments to the Borrower, (b) if no Default
or Event of Default exists or would result therefrom, the Borrower may make
Restricted Dividend Payments, Restricted Payments and Restricted Purchases
during any fiscal year in an aggregate amount not to exceed 50% of Excess Cash
Flow for the previous fiscal year, and (c) in any fiscal year, up to $250,000 of
capital stock or options owned by Borrower's terminated employees may be
repurchased by the Borrower.
SECTION 12.7 Merger, Consolidation and Sale of Assets. Merge or
consolidate with any other Person, or sell, lease, transfer or otherwise dispose
of all or a substantial part of its assets (including stock of any Subsidiary)
to any Person, other than:
(a) sales of inventory in the ordinary course of business;
(b) the merger or consolidation of any Subsidiary with or into the
Borrower or any Subsidiary Guarantor that is wholly-owned by the Borrower;
(c) the sale, lease or other disposal of all or a substantial part
of its assets by a Subsidiary to the Borrower or any Subsidiary Guarantor that
is wholly-owned by the Borrower;
(d) the sale of Borrower's narrow fabrics business, the disposition
of plant and equipment held for disposal as of the Agreement Date, and the
disposition of the Borrower's hosiery plant located in Robbins, North Carolina,
provided the Net Proceeds of any such sale or disposition are applied as set
forth in Section 5.9 of the Senior Loan Agreement, or, if the Senior Loans have
been paid in full, applied to the Term Loans to the extent that it would have
been required to be applied to reduce the First Lien Senior Secured Facility;
(e) the disposition of fixed assets the proceeds of which the
Borrower reasonably expects to reinvest within six months in productive assets
of a kind then used or useable in the business of the Borrower and that are not
subject to any Lien other than Permitted Liens or Liens in favor of the
Collateral Agent, for the benefit of the Secured Creditors, provided the Net
Proceeds of any such disposition are applied as set forth in Section 5.9 of the
Senior Loan Agreement, or, if the Senior Loans have been paid in full, applied
to the Term Loans to the extent that it would have been required to be applied
to reduce the First Lien Senior Secured Facility; and
(f) the disposition of other fixed assets in an aggregate amount not
to exceed $1,000,000 in any fiscal year, provided the Net Proceeds of any such
disposition are applied as
61
set forth in Section 5.9 of the Senior Loan Agreement, or, if the Senior Loans
have been paid in full, applied to the Term Loans to the extent that it would
have been required to be applied to reduce the First Lien Senior Secured
Facility.
Upon the sale or other disposition of assets of the Borrower or any
Subsidiary as permitted in this Agreement, Collateral Agent shall execute and
deliver to Borrower any mortgage release, UCC termination statement, or other
instrument or document reasonably requested by Borrower for the release of the
Collateral Agent's lien on such assets upon the actual sale or other disposition
of such assets.
SECTION 12.8 Transactions with Affiliates. Effect any transaction
with any Affiliate on a basis less favorable to it than would be the case if
such transaction had been effected with a Person not an Affiliate.
SECTION 12.9 Liens. Create, assume or permit or suffer to exist or
to be created or assumed any Lien on any of the Collateral or its other assets,
other than Permitted Liens.
SECTION 12.10 Capitalized Lease Obligations. Incur or permit to
exist any Capitalized Lease Obligation if such Capitalized Lease Obligation,
when added to existing Capitalized Lease Obligations and Permitted Purchase
Money Indebtedness, would exceed $10,000,000 in the aggregate.
SECTION 12.11 Operating Lease Obligations. Enter into any Operating
Lease if the aggregate annual rental payable under all Operating Leases of the
Borrower and its Subsidiaries would exceed $15,000,000 in the aggregate.
SECTION 12.12 Plans. Permit any condition to exist in connection
with any Plan which might constitute grounds for the PBGC to institute
proceedings to have such Plan terminated or a trustee appointed to administer
such Plan, and any other condition, event or transaction with respect to any
Plan which could result in the incurrence by the Borrower or any of its
Subsidiaries of any material liability, fine or penalty.
SECTION 12.13 Amendments of Other Agreements. Amend in any way (a)
the subordination provisions applicable to the Seller Subordinated Indebtedness,
(b) the interest rate (or formula pursuant to which such interest rate is
determined) or principal amount or schedule of payments of principal and
interest with respect to the Seller Subordinated Indebtedness other than to
reduce the interest rate or extend the schedule of payments with respect
thereto, (c) the interest rate (or formula pursuant to which such interest rate
is determined) or principal amount or schedule of payments (including mandatory
prepayments) of principal and interest with respect to the First Lien Senior
Secured Facility other than to reduce the interest rate or extend the schedule
of payments with respect thereto, (d) the aggregate revolving loan commitment
amounts or term loan principal balance outstanding under the First Lien Senior
Secured Facility, other than to reduce the same, (e) the definition of "Excess
Cash Flow" under the Senior Loan Agreement, or the percentages set forth in the
"Excess Cash Flow" recapture
62
covenant in the Senior Loan Agreement, so as to increase the amount of the First
Lien Senior Secured Facility loans required to be prepaid therefrom, (f) the
advance rates as set forth in the Senior Loan Agreement, so as to increase the
amount of revolving loan availability under the Senior Loan Agreement.
SECTION 12.14 [Intentionally Deleted]
SECTION 12.15 Fiscal Year. Change the end of its fiscal year from
the Saturday nearest January 31 of each year.
SECTION 12.16 Limitation on Issuance of Capital Stock. Permit any
Subsidiary to issue any stock of such Subsidiary (except for the purpose of
qualifying directors and except for issuances of stock by foreign Subsidiaries
to other foreign Subsidiaries that are wholly-owned (other than directors'
qualifying shares), directly or indirectly, by the Borrower), except to the
Borrower or a wholly-owned Subsidiary Guarantor or to satisfy the rights of
minority shareholders to receive issuances of stock which are non-dilutive to
the Borrower and/or any Subsidiary.
SECTION 12.17 Limitation on Certain Restrictions on Subsidiaries.
The Borrower will not, and will not permit any of its Subsidiaries to, directly
or indirectly, create or otherwise cause or suffer to exist or become effective
any encumbrance or restriction on the ability of any such Subsidiary to (a) pay
dividends or make any other distributions on its capital stock or any other
interest or participation in its profits owned by the Borrower or any Subsidiary
of the Borrower, or pay any Indebtedness owed to the Borrower or a Subsidiary of
the Borrower, (b) make loans or advances to the Borrower or any of the
Borrower's Subsidiaries, or (c) transfer any of its properties or assets to the
Borrower, except for such encumbrances or restrictions existing under or by
reason of (i) Applicable Laws, (ii) this Agreement and the other Loan Documents,
(iii) the Senior Loan Agreement and any Permitted Refinancing Indebtedness; (iv)
customary provisions restricting subletting or assignment of any lease governing
a leasehold interest of the Borrower or a Subsidiary of the Borrower, and (v)
customary provisions restricting assignment of any licensing agreement entered
into by the Borrower or a Subsidiary of the Borrower in the ordinary course of
business.
ARTICLE 13
DEFAULT
SECTION 13.1 Events of Default. Each of the following shall
constitute an Event of Default, whatever the reason for such event and whether
it shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment or order of any court or any order, rule or regulation
of any governmental or nongovernmental body:
(a) Default in Principal Payment. The Borrower shall default in any
payment of principal of or premium on any Loan or any Note when and as due
(whether at maturity, by reason of acceleration or otherwise).
63
(b) Other Payment Default. The Borrower shall default in the
payment, as and when due, of interest on, or any other Secured Obligation, and
such default shall continue for a period of five days.
(c) Misrepresentation. Any representation or warranty made or deemed
to be made by the Borrower under this Agreement or any Loan Document, or any
amendment hereto or thereto, shall at any time prove to have been incorrect or
misleading in any material respect when made.
(d) Default in Performance. The Borrower shall default in the
performance or observance of any term, covenant, condition or agreement to be
performed by the Borrower, contained in this Agreement (other than as
specifically provided for otherwise in this Section 13.1) and such default shall
continue for a period of 30 days after the earlier of the date on which an
officer of the Borrower becomes aware of such default and written notice thereof
has been given to the Borrower by the Lenders.
(e) Indebtedness Cross-Default.
(i) The Borrower or any Subsidiary of the Borrower shall fail
to pay when due and payable the principal of or interest on any Indebtedness for
Money Borrowed (other than the Loans) in an amount in excess of $1,000,000, or
(ii) the maturity of any such Indebtedness for Money Borrowed
shall have been accelerated in accordance with the provisions of any indenture,
contract or instrument providing for the creation of or concerning such
Indebtedness, or
(iii) any default shall have occurred and be continuing which
would permit any holder or holders of such Indebtedness for Money Borrowed, any
trustee or agent acting on behalf of such holder or holders or any other Person
so to accelerate such maturity, and the Borrower shall have failed to cure such
default prior to the expiration of any applicable cure or grace period, or
(iv) The Borrower and any Subsidiary of the Borrower shall
have, in the aggregate, more than $1,000,000 of accounts payable that are past
due by more than 60 days and that are not being disputed in good faith by the
Borrower or the applicable Subsidiary.
(f) Other Cross-Defaults. The Borrower or any of its Subsidiaries
shall default in the payment when due, or in the performance or observance, of
any obligation or condition of any agreement, contract or lease (other than this
Agreement, the Security Documents or any such agreement, contract or lease
relating to Indebtedness for Money Borrowed) if the existence of any such
defaults, singly or in the aggregate, could in the reasonable judgment of the
Lenders have a Materially Adverse Effect; provided, however, that for the
purposes of this provision where such a default could result only in a monetary
loss, a Material Adverse Effect shall not be deemed to have occurred unless the
aggregate of such losses would exceed $1,000,000.
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(g) Voluntary Bankruptcy Proceeding. The Borrower or any of its
Subsidiaries shall (i) commence a voluntary case under the federal bankruptcy
laws (as now or hereafter in effect), (ii) file a petition seeking to take
advantage of any other laws, domestic or foreign, relating to bankruptcy,
insolvency, reorganization, winding up or composition for adjustment of debts,
(iii) consent to or fail to contest in a timely and appropriate manner any
petition filed against it in an involuntary case under such bankruptcy laws or
other laws, (iv) apply for or consent to, or fail to contest in a timely and
appropriate manner, the appointment of, or the taking of possession by, a
receiver, custodian, trustee, or liquidator of itself or of a substantial part
of its property, domestic or foreign, (v) admit in writing its inability to pay
its debts as they become due, (vi) make a general assignment for the benefit of
creditors, or (vii) take any corporate action authorizing any of the foregoing.
(h) Involuntary Bankruptcy Proceeding. A case or other proceeding
shall be commenced against the Borrower or any of its Subsidiaries in any court
of competent jurisdiction seeking (i) relief under the federal bankruptcy laws
(as now or hereafter in effect) or under any other laws, domestic or foreign,
relating to bankruptcy, insolvency, reorganization, winding up or adjustment of
debts, (ii) the appointment of a trustee, receiver, custodian, liquidator or the
like of the Borrower, any of its Subsidiaries or of all or any substantial part
of the assets, domestic or foreign, of the Borrower or any of its Subsidiaries,
and such case, proceeding or appointment shall continue undismissed or unstayed
for a period of 60 consecutive calendar days, or an order granting the relief
requested in such case or proceeding against the Borrower or any of its
Subsidiaries (including, but not limited to, an order for relief under such
federal bankruptcy laws) shall be entered.
(i) Failure of Agreements. The Borrower shall challenge the validity
and binding effect of any provision of any Loan Document after delivery thereof
hereunder or shall state its intention to make such a challenge in writing, or
any Loan Document, after delivery thereof hereunder, shall for any reason
(except to the extent permitted by the terms thereof) cease to create a valid
and perfected first priority Lien (except for Permitted Liens) on, or security
interest in, any of the Collateral purported to be covered thereby.
(j) Judgment. One or more judgments or orders for the payment of
money in an amount that exceeds $500,000 individually or in the aggregate shall
be entered against the Borrower or any of its Subsidiaries by any court and such
judgments or orders shall continue undischarged or unstayed for 30 days.
(k) Attachment. One or more warrants or writs of attachment or
execution or similar process which exceeds $500,000 individually or in the
aggregate in value shall be issued against any property of the Borrower or any
of its Subsidiaries and such warrants or process shall continue undischarged or
unstayed for 30 days.
(l) Loan Documents. Any event of default under any Loan Document
shall occur or the Borrower shall default in the performance or observance of
any term, covenant, condition or agreement contained in, or the payment of any
other sum covenanted to be paid by the Borrower under, any Loan Document;
provided, however that no event of default under
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any Loan Document shall be deemed to have occurred until any notice required
under such Loan Document has been given and any grace period granted under such
Loan Document has expired.
(m) ERISA.
(i) Any Termination Event with respect to a Plan shall occur
that, after taking into account the excess, if any, of (A) the fair market value
of the assets of any other Plan with respect to which a Termination Event occurs
on the same day (but only to the extent that such excess is the property of the
Borrower) over (B) the present value on such day of all vested nonforfeitable
benefits under such other Plan, results in an Unfunded Vested Accrued Benefit in
excess of $0.00, or
(ii) any Plan shall incur an "accumulated funding deficiency"
(as defined in Section 412 of the Internal Revenue Code or Section 302 of ERISA)
for which a waiver has not been obtained in accordance with the applicable
provisions of the Internal Revenue Code and ERISA, or
(iii) the Borrower or any of its Subsidiaries is in "default"
(as defined in Section 4219(c)(5) of ERISA) with respect to payments to a
Multiemployer Plan resulting from the Borrower's or any such Subsidiary's
complete or partial withdrawal (as described in Section 4203 or 4205 of ERISA)
from such Multiemployer Plan.
(n) Change in Control. At any time after the Agreement Date, (i) a
Person or "group" of Persons (within the meaning of Section 13(d) of the
Securities Exchange Act of 1934, as amended, and the rules promulgated
thereunder), shall acquire, beneficially or of record, 50% or more of the
outstanding voting stock (stock entitled to vote for election of directors
excluding rights subject to a contingency) of the Borrower or (ii) during any
period of two consecutive calendar years, individuals who at the beginning of
such period constituted the Board of Directors of the Borrower (together with
any new directors whose election by the Board of Directors of the Borrower or
whose nomination for election by the shareholders of the Borrower, as the case
may be, was approved by a vote of a majority of the directors then still in
office who either were directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the directors of the Borrower, as the case
may be, then in office.
(o) Change in Management. For any reason the Borrower's chief
executive officer is no longer actively involved in such role, unless a
replacement reasonably satisfactory to the Required Lenders is appointed within
120 days.
(p) [Intentionally Deleted]
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SECTION 13.2 Remedies.
(a) Automatic Acceleration and Termination of Facilities. Upon the
occurrence of an Event of Default specified in Section 13.1(g) or (h), the
principal of and the interest on the Loans and any Note at the time outstanding,
and all other amounts owed to the Collateral Agent or the Lenders under this
Agreement or any of the Loan Documents and all other Secured Obligations, shall
thereupon become due and payable without presentment, demand, protest, or other
notice of any kind, all of which are expressly waived, anything in this
Agreement or any of the Loan Documents to the contrary notwithstanding.
(b) Other Remedies. If any Event of Default shall have occurred, and
during the continuance of any such Event of Default, the Required Lenders may,
in their sole and absolute discretion, declare the principal of and interest on
the Loans and any Note at the time outstanding, and all other amounts owed to
the Collateral Agent or the Lenders under this Agreement or any of the Loan
Documents and all other Secured Obligations, to be forthwith due and payable,
whereupon the same shall immediately become due and payable without presentment,
demand, protest or other notice of any kind, all of which are expressly waived,
anything in this Agreement or the Loan Documents to the contrary
notwithstanding. In addition, if any Event of Default, shall have occurred, and
during the continuance of any such Event of Default, the Collateral Agent shall,
at the direction of the Required Lenders:
(i) [Intentionally Deleted]
(ii) [Intentionally Deleted]
(iii) notify, or request the Borrower to notify, in writing or
otherwise, any Account Debtor or obligor with respect to any one or more of the
Receivables to make payment to the Collateral Agent for the benefit of the
Lenders, or any agent or designee of the Collateral Agent, at such address as
may be specified by the Collateral Agent and if, notwith standing the giving of
any notice, any Account Debtor or other such obligor shall make payments to the
Borrower, the Borrower shall hold all such payments it receives in trust for the
Collateral Agent, for the account of the Lenders, without commingling the same
with other funds or property of, or held by, the Borrower, and shall deliver the
same to the Collateral Agent or any such agent or designee of the Collateral
Agent immediately upon receipt by the Borrower in the identical form received,
together with any necessary endorsements;
(iv) settle or adjust disputes and claims directly with
Account Debtors and other obligors on Receivables for amounts and on terms which
the Collateral Agent considers advisable and in all such cases only the net
amounts received by the Collateral Agent, for the account of the Lenders, in
payment of such amounts, after deductions of costs and attorneys' fees, shall
constitute Collateral and the Borrower shall have no further right to make any
such settlements or adjustments or to accept any returns of merchandise;
(v) enter upon any premises in which Inventory or Equipment
may be located and, without resistance or interference by the Borrower, take
physical possession of
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any or all thereof and maintain such possession on such premises or move the
same or any part thereof to such other place or places as the Collateral Agent
shall choose, without being liable to the Borrower on account of any loss,
damage or depreciation that may occur as a result thereof, so long as the
Collateral Agent shall act reasonably and in good faith;
(vi) require the Borrower to and the Borrower shall, without
charge to the Collateral Agent or any Lender, assemble the Inventory and
Equipment and maintain or deliver it into the possession of the Collateral Agent
or any agent or representative of the Collateral Agent at such place or places
as the Collateral Agent may designate and as are reasonably convenient to both
the Collateral Agent and the Borrower;
(vii) at the expense of the Borrower, cause any of the
Inventory and Equipment to be placed in a public or field warehouse, and the
Collateral Agent shall not be liable to the Borrower on account of any loss,
damage or depreciation that may occur as a result thereof, so long as the
Collateral Agent shall act reasonably and in good faith;
(viii) without notice, demand or other process, and without
payment of any rent or any other charge, enter any of the Borrower's premises
and, without breach of the peace, until the Collateral Agent, on behalf of the
Secured Creditors, completes the enforcement of its rights in the Collateral,
take possession of such premises or place custodians in exclusive control
thereof, remain on such premises and use the same and any of the Borrower's
Equipment, for the purpose of (A) completing any work in process, preparing any
Inventory for disposition and disposing thereof, and (B) collecting any
Receivable, and the Collateral Agent for the benefit of the Lenders is hereby
granted a license or sublicense and all other rights as may be necessary,
appropriate or desirable to use the Proprietary Rights in connection with the
foregoing, and the rights of the Borrower under all licenses, sublicenses and
franchise agreements shall inure to the Collateral Agent for the benefit of the
Lenders (provided, however, that any use of any federally registered trademarks
as to any goods shall be subject to the control as to the quality of such goods
of the owner of such trademarks and the goodwill of the business symbolized
thereby);
(ix) exercise any and all of its rights under any and all of
the Security Documents;
(x) apply any Collateral consisting of cash to the payment of
the Secured Obligations as set forth herein or use such cash in connection with
the exercise of any of its other rights hereunder or under any of the Security
Documents;
(xi) establish or cause to be established one or more
lockboxes or other arrangement for the deposit of proceeds of Receivables, and,
in such case, the Borrower shall cause to be forwarded to the Collateral Agent,
on a daily basis, copies of all checks and other items of payment and deposit
slips related thereto deposited in such lockboxes, together with collection
reports in form and substance satisfactory to the Collateral Agent; and
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(xii) exercise all of the rights and remedies of a secured
party under the Uniform Commercial Code and under any other Applicable Law,
including, without limitation, the right, without notice except as specified
below and with or without taking the possession thereof, to sell the Collateral
or any part thereof in one or more parcels at public or private sale, at any
location chosen by the Collateral Agent, for cash, on credit or for future
delivery, and at such price or prices and upon such other terms as the
Collateral Agent may deem commercially reasonable. The Borrower agrees that, to
the extent notice of sale shall be required by law, at least 10 days notice to
the Borrower of the time and place of any public sale or the time after which
any private sale is to be made shall constitute reasonable notification, but
notice given in any other reasonable manner or at any other reasonable time
shall constitute reasonable notification. The Collateral Agent shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. The Collateral Agent may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was so
adjourned.
SECTION 13.3 Application of Proceeds. Subject to the terms of the
Intercreditor Agreement, all proceeds from each sale of, or other realization
upon, all or any part of the Collateral following an Event of Default shall be
applied or paid over as follows:
(a) First: to the payment of all costs and expenses incurred in
connection with such sale or other realization, including reasonable attorneys'
fees of counsel to Collateral Agent and counsel to the Lenders,
(b) Second: to the payment of the Secured Obligations (with the
Borrower remaining liable for any deficiency) as set forth in Section 5.8(f),
(c) Third: the balance (if any) of such proceeds shall be paid to
the Borrower, subject to any duty imposed by law, or otherwise to whomsoever
shall be entitled thereto.
The Borrower shall remain liable and will pay, on demand, any deficiency
remaining in respect of the Secured Obligations, together with interest thereon
at a rate per annum equal to the highest rate then payable hereunder on such
Secured Obligations, which interest shall constitute part of the Secured
Obligations.
SECTION 13.4 Power of Attorney. In addition to the authorizations
granted to the Collateral Agent under Section 9.13 or under any other provision
of this Agreement or of any other Loan Document, during the continuance of an
Event of Default, the Borrower hereby irrevocably designates, makes, constitutes
and appoints the Collateral Agent (and all Persons designated by the Collateral
Agent from time to time) as the Borrower's true and lawful attorney, and agent
in fact, and the Collateral Agent, or any agent of the Collateral Agent, may,
without notice to the Borrower, and at such time or times as the Collateral
Agent or any such agent in its sole discretion may determine, in the name of the
Borrower, the Collateral Agent or the Lenders, (i) demand payment of the
Receivables, (ii) enforce payment of the Receivables by legal proceedings or
otherwise, (iii) exercise all of the Borrower's rights and remedies with
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respect to the collection of Receivables, (iv) settle, adjust, compromise,
extend or renew any or all of the Receivables, (v) settle adjust or compromise
any legal proceedings brought to collect the Receivables, (vi) discharge and
release the Receivables, or any of them, (vii) prepare, file and sign the name
of the Borrower on any proof of claim in bankruptcy or any similar document
against any Account Debtor, (viii) prepare, file and sign the name of the Bor
rower on any notice of Lien, assignment or satisfaction of Lien, or similar
document in connection with any of the Collateral, (ix) endorse the name of the
Borrower upon any chattel paper, document, instrument, notice, freight xxxx,
xxxx of lading or similar document or agreement relating to the Receivables, the
Inventory or any other Collateral, (x) use the stationery of the Borrower and
sign the name of the Borrower to verifications of the Receivables and on any
notice to the Account Debtors, (xi) open the Borrower's mail, (xii) notify the
post office authorities to change the address for delivery of the Borrower's
mail to an address designated by the Collateral Agent, and (xiii) use the
information recorded on or contained in any data processing equipment and
computer hardware and software relating to the Receivables, Inventory or other
Collateral to which the Borrower has access.
SECTION 13.5 Miscellaneous Provisions.
(a) Rights Cumulative. The rights and remedies of the Collateral
Agent and the Lenders under this Agreement, the Notes and each of the Loan
Documents shall be cumulative and not exclusive of any rights or remedies which
it or they would otherwise have. In exercising such rights and remedies the
Collateral Agent and the Lenders may be selective and no failure or delay by the
Collateral Agent or any Lender in exercising any right shall operate as a waiver
of it, nor shall any single or partial exercise of any power or right preclude
its other or further exercise or the exercise of any other power or right.
(b) Waiver of Marshaling. The Borrower hereby waives any right to
require any marshaling of assets and any similar right.
(c) Limitation of Liability. Nothing contained in this Article 13 or
elsewhere in this Agreement or in any of the Loan Documents shall be construed
as requiring or obligating the Collateral Agent, any Lender or any agent or
designee of the Collateral Agent or any Lender to make any demand, or to make
any inquiry as to the nature or sufficiency of any payment received by it, or to
present or file any claim or notice or take any action, with respect to any
Receivable or any other Collateral or the monies due or to become due thereunder
or in connection therewith, or to take any steps necessary to preserve any
rights against prior parties, and the Collateral Agent, the Lenders and their
agents or designees shall have no liability to the Borrower for actions taken
pursuant to this Article 13, any other provision of this Agreement or any of the
Loan Documents so long as the Collateral Agent or such Lender shall act
reasonably and in good faith.
(d) Appointment of Receiver. In any action under this Article 13,
the Collateral Agent shall be entitled during the continuance of an Event of
Default to the appointment of a receiver, without notice of any kind whatsoever,
to take possession of all or
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any portion of the Collateral and to exercise such power as the court shall
confer upon such receiver.
ARTICLE 14
ASSIGNMENTS
SECTION 14.1 Successors and Assigns; Participations.
(a) This Agreement shall be binding upon and inure to the benefit of
the Borrower, the Lenders, the Collateral Agent, all future holders of the
Notes, and their respective permitted successors and assigns, except that the
Borrower may not assign or transfer any of its rights or obligations under this
Agreement without the prior written consent of each Lender.
(b) Each Lender may, with the consent of the Borrower (whose consent
shall not be unreasonably withheld or delayed, and whose consent shall not be
required if an Event of Default exists), assign to one or more Eligible
Assignees all or a portion of its rights, obligations, interests, or rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Loans at the time owing to it and the Notes held by it);
provided, however, that (i) each such assignment shall be of a constant, and not
a varying, percentage of all the assigning Lender's rights and obligations under
this Agreement, (ii) the amount of the Loan of the assigning Lender that is
subject to each such assignment shall in no event be less than $5,000,000,
unless (a) such assigning Lender holds less than $5,000,000 and is assigning all
of its Loan, or (b) such assignment is to another Lender, or (c) there is an
Event of Default under this Agreement, (iii) in the case of a partial
assignment, the amount of the Term Loans that is retained by the assigning
Lender shall in no event be less than $5,000,000, (iv) the parties to each such
assignment shall execute and deliver an Assignment and Acceptance, (v) such
assignment shall not, without the consent of the Borrower, require the Borrower
to file a registration statement with the Securities and Exchange Commission or
apply to or qualify the Loans or the Notes under the blue sky laws of any state,
and shall be made in compliance with all applicable securities laws, and (vi)
the representation contained in Section 14.2 hereof shall be true with respect
to any such proposed assignee. Upon such execution, delivery and acceptance,
from and after the effective date specified in each Assignment and Acceptance,
(x) the assignee thereunder shall be a party hereto and, to the extent provided
in such Assignment and Acceptance, have the rights and obligations of a Lender
hereunder, and (y) the Lender assignor thereunder shall, to the extent provided
in such assignment, be released from its obligations under this Agreement.
(c) By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than the
representation and warranty that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse claim, such Lender
assignor makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with this Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value
71
of this Agreement or any other instrument or document furnished pursuant hereto;
(ii) such Lender assignor makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or the
performance or observance by the Borrower of any of its obligations under this
Agreement or any other instrument or document furnished pursuant hereto; (iii)
such assignee confirms that it has received a copy of this Agreement, together
with copies of the most recent financial statements delivered pursuant to
Section 11.1 and such other documents and information (including a copy of the
Intercreditor Agreement) as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance; (iv) such
assignee will, independently and without reliance upon the Collateral Agent,
such Lender assignor or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement; (v) such
assignee confirms that it is an Eligible Assignee; (vi) such assignee appoints
and authorizes the Collateral Agent to take such action as agent on its behalf
and to exercise such powers under this Agreement and the other Loan Documents as
are delegated to the Collateral Agent by the terms hereof and thereof, together
with such powers as are reasonably incidental thereto; and (vii) such assignee
agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender.
(d) [Intentionally Deleted]
(e) Within five Business Days after receipt of notice, the Borrower
shall execute and deliver to the assigning Lender and Eligible Assignee Lender
in exchange for the surrendered Note or Notes a new Note or Notes to the order
of such Eligible Assignee in amounts equal to the Loans assigned to such
Eligible Assignee pursuant to such Assignment and Acceptance and a new Note or
Notes to the order of the assigning Lender in an amount equal to the Loan
retained by it hereunder. Such new Note or Notes shall be in an aggregate
principal amount equal to the aggregate principal amount of such surrendered
Note or Notes, shall be dated the effective date of such Assignment and
Acceptance and shall otherwise be in substantially the form of the assigned
Notes delivered to the assigning Lender. Each surrendered Note or Notes shall be
canceled and returned to the Borrower.
(f) Each Lender may sell participations to one or more Persons in
all or a portion of its rights, obligations or rights and obligations under this
Agreement (including all or a portion of its Loans); provided, however, that (i)
such Lender's obligations under this Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) the participant shall be entitled to the
benefit of the rights of set-off contained in this Agreement, and (iv) the
Borrower shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement, and
such Lender shall retain the sole right to enforce the obligations of the
Borrower relating to its Loans and its Note and to approve any amendment,
modification, or waiver of any provision of this Agreement (other than
amendments, modifications, or waivers decreasing the amount of principal of or
the rate at which interest is
72
payable on such Loans or Note, extending any scheduled principal payment date or
date fixed for the payment of interest on such Loans or Note).
(g) Notwithstanding any other provision set forth in this Agreement,
any Lender may at any time assign and pledge all or any portion of its Loans and
its Note to any Federal Reserve Bank as collateral security pursuant to
Regulation A and any Operating Circular issued by such Federal Reserve Bank. No
such assignment shall release the assigning Lender from its obligations
hereunder.
(h) Any Lender may, in connection with any assignment, proposed
assignment, participation or proposed participation pursuant to this Section
14.1, disclose to the assignee, participant, proposed assignee or proposed
participant, any information relating to the Borrower furnished to such Lender
by or on behalf of the Borrower; provided that, prior to any such disclosure,
each such assignee, proposed assignee, participant or proposed participant shall
agree with the Borrower or such Lender (which in the case of an agreement with
only such Lender, the Borrower shall be recognized as a third party beneficiary
thereof) to preserve the confidentiality of any confidential information
relating to the Borrower received from such Lender and shall use such
information solely for the purpose of effecting the proposed assignment or
participation and shall make no other use thereof.
SECTION 14.2 Representation of Lenders. Each Lender hereby
represents that it will make each Loan hereunder as a commercial loan for its
own account in the ordinary course of its business; provided, however, that
subject to Section 14.1 hereof, the disposition of the Notes or other evidence
of the Secured Obligations held by any Lender shall at all times be within its
exclusive control.
ARTICLE 15
COLLATERAL AGENT
SECTION 15.1 Appointment of Collateral Agent. Each of the Lenders
hereby irrevocably designates and appoints NationsBank, N.A. as the Collateral
Agent of such Lender under this Agreement and the other Loan Documents, and each
such Lender irrevocably authorizes Collateral Agent, as the Collateral Agent for
such Lender to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to the Collateral Agent by the terms of
this Agreement and such other Loan Documents, together with such other powers as
are reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Agreement or such other Loan Documents, the Collateral Agent
shall not have any duties or responsibilities, except those expressly set forth
herein and therein, or any fiduciary relationship with any Lender, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or the other Loan Documents or
otherwise exist against the Collateral Agent. Each of the Lenders expressly
acknowledges that the Collateral Agent is acting as agent solely with respect to
the Collateral and that the Collateral Agent is not acting as agent in any other
capacity.
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SECTION 15.2 Delegation of Duties. The Collateral Agent may execute
any of its duties under this Agreement and the other Loan Documents by or
through agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Collateral Agent shall not
be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.
SECTION 15.3 Exculpatory Provisions. Neither the Collateral Agent
nor any of its trustees, officers, directors, employees, agents,
attorneys-in-fact or Affiliates shall be (i) liable to any Lender (or any
Lender's participants) for any action lawfully taken or omitted to be taken by
it or such Person under or in connection with this Agreement or the other Loan
Documents (except for its or such Person's own gross negligence or willful
misconduct), or (ii) responsible in any manner to any Lender (or any Lender's
participants) for any recitals, statements, representations or warranties made
by the Borrower or any officer thereof contained in this Agreement or the other
Loan Documents or in any certificate, report, statement or other document
referred to or provided for in, or received by the Collateral Agent under or in
connection with, this Agreement or the other Loan Documents or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or the other Loan Documents or for any failure of the Borrower to
perform its obligations hereunder or thereunder. The Collateral Agent shall not
be under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement, or to inspect the properties, books or records of the
Borrower.
SECTION 15.4 Reliance by Collateral Agent. The Collateral Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
Note, writing, resolution, notice, consent, certificate, affidavit, letter,
cablegram, telegram, telecopy, telex or teletype message, statement, order or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon advice
and statements of legal counsel (including, without limitation, counsel to the
Borrower), independent accountants and other experts selected by the Collateral
Agent. The Collateral Agent may deem and treat the payee of any Note as the
owner thereof for all purposes unless such Note shall have been transferred in
accordance with Section 14.1. The Collateral Agent shall be fully justified in
failing or refusing to take any action under this Agreement and the other Loan
Documents unless it shall first receive such advice or concurrence of the
Required Lenders as it deems appropriate or it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action. The
Collateral Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement and the Notes in accordance with a
request of the Required Lenders, and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the Lenders and all
future holders of the Notes.
SECTION 15.5 Notice of Default. The Collateral Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default hereunder unless the Collateral Agent has received notice from a Lender
or the Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". The Collateral
Agent shall take such action with respect to such Default or Event
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of Default as shall be reasonably directed by the Required Lenders; provided
that unless and until the Collateral Agent shall have received such directions,
the Collateral Agent may (but shall not be obligated to) take such other action,
or refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of the Lenders.
SECTION 15.6 Non-Reliance on Collateral Agent and Other Lenders.
Each Lender expressly acknowledges that neither the Collateral Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact or Affiliates has
made any representations or warranties to it and that no act by the Collateral
Agent hereinafter taken, including any review of the affairs of the Borrower,
shall be deemed to constitute any representation or warranty by the Collateral
Agent to any Lender. Each Lender represents to the Collateral Agent that it has,
independently and without reliance upon the Collateral Agent or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of the
Borrower and made its own decision to make its Loans hereunder and enter into
this Agreement. Each Lender also represents that it will, independently and
without reliance upon the Collateral Agent or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Borrower. The Collateral Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the business,
operations, property, financial and other condition or creditworthiness of the
Borrower which may come into the possession of the Collateral Agent or any of
its officers, directors, employees, agents, attorneys-in-fact or Affiliates.
SECTION 15.7 Indemnification. The Lenders agree to indemnify the
Collateral Agent in its capacity as such (to the extent not reimbursed by the
Borrower and without limiting the obligation of the Borrower to do so), ratably
according to their respective Proportionate Share from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the Notes)
be imposed on, incurred by or asserted against the Collateral Agent in any way
relating to or arising out of this Agreement or the other Loan Documents, or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Collateral
Agent under or in connection with any of the foregoing; provided that no Lender
shall be liable for the payment of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting solely from the Collateral Agent's gross negligence or
willful misconduct or resulting solely from transactions or occurrences that
occur at a time after such Lender has assigned all of its interests, rights and
obligations under this Agreement pursuant to Section 14.1 or, in the case of a
Lender to which an assignment is made hereunder pursuant to Section 14.1, at a
time before such assignment. The agreements in this subsection shall survive the
payment of the
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Notes, the Secured Obligations and all other amounts payable hereunder and the
termination of this Agreement.
SECTION 15.8 Collateral Agent in Its Individual Capacity. The
Collateral Agent and its Affiliates may make loans to, accept deposits from and
generally engage in any kind of business with the Borrower and its Subsidiaries
as if the Collateral Agent were not the Collateral Agent hereunder.
SECTION 15.9 Successor Collateral Agent. The Collateral Agent may
resign as Collateral Agent upon five Business Days notice to the Lenders and the
Borrower; provided, however, that (a) if any obligations remain outstanding
under the First Lien Senior Secured Facility, the Collateral Agent may only
resign hereunder if the Collateral Agent, in its capacity as agent under the
Senior Loan Agreement, is resigning under the Senior Loan Agreement, and (b)
such resignation shall not take effect until a successor agent has been
appointed. If the Collateral Agent shall resign as collateral agent under this
Agreement and in its capacity as agent under the Senior Loan Agreement, the
Lenders agree that they shall appoint as successor collateral agent the
successor agent appointed by the Senior Lenders under the Senior Loan Agreement,
provided such successor is reasonably acceptable to the Lenders. If the
Collateral Agent shall resign as Collateral Agent under this Agreement after the
payment in full of all obligations under the First Lien Senior Secured Facility,
then the Required Lenders shall appoint from among the Lenders a successor
collateral agent for the Lenders which successor collateral agent, if it is
other than Foothill Capital Corporation, shall be approved by the Borrower
(which approval shall not be unreasonably withheld or delayed). Any successor
collateral agent shall succeed to the rights, powers and duties of the
Collateral Agent, and the term "Collateral Agent" shall mean such successor
collateral agent effective upon its appointment, and the former Collateral
Agent's rights, powers and duties as Collateral Agent shall be terminated,
without any other or further act or deed on the part of such former Collateral
Agent or any of the parties to this Agreement or any holders of the Notes. If
the Required Lenders have failed to appoint, or the Borrower has failed to
approve, a successor collateral agent within 30 days after the resignation
notice given by the Collateral Agent as provided above, then the Collateral
Agent shall be entitled to appoint a successor collateral agent from among the
Lenders, and no such approval of Borrower shall be required. The Collateral
Agent and the Borrower agree to enter into all instruments and agreements,
execute any documents, and take any other action reasonably required or
requested by such successor collateral agent to effect the transfer of all Liens
in favor of the Collateral Agent to the successor collateral agent, in all such
cases at the sole cost and expense of the Borrower. After any retiring
Collateral Agent's resignation hereunder as Collateral Agent, the provisions of
Article 15 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Collateral Agent under this Agreement.
SECTION 15.10 [Intentionally Deleted]
SECTION 15.11 [Intentionally Deleted]
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SECTION 15.12 Intercreditor Agreement. Each Lender expressly
acknowledges that it has received a copy of the Intercreditor Agreement and that
the Intercreditor Agreement contains, among other provisions, provisions
relating to the subordination of the Lenders' security interest in the
Collateral, and allowing the Senior Lenders to direct the Collateral Agent as to
certain actions with respect to the Collateral.
ARTICLE 16
MISCELLANEOUS
SECTION 16.1 Notices.
(a) Method of Communication. Except as specifically provided in this
Agreement or in any of the Loan Documents, all notices and the communications
hereunder and thereunder shall be in writing or by telephone, subsequently
confirmed in writing. Notices in writing shall be delivered personally or sent
by certified or registered mail, postage pre-paid, or by overnight courier,
telex or facsimile transmission and shall be deemed received in the case of
personal delivery, when delivered, in the case of mailing, when receipted for,
in the case of overnight delivery, on the next Business Day after delivery to
the courier, and in the case of telex and facsimile transmission, upon
transmittal.
(b) Addresses for Notices. Notices to any party shall be sent to it
at the following addresses, or any other address of which all the other parties
are notified in writing
If to the Borrower: Ithaca Industries, Inc.
Xxx. 000 Xxxx, X.X. Xxx 000
Xxxxxxxxxx, XX 00000
Attn.: Chief Financial Officer
Facsimile No.: 000-000-0000
If to the Collateral Agent: NationsBank, N.A.
Business Credit Division
000 Xxxxxxxxx Xxxxxx
00 Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attn.: Xxxx Xxxxx
Facsimile No.: 000-000-0000
If to a Lender: At the address of such Lender set forth on
the signature page hereof.
(c) [Intentionally Deleted]
SECTION 16.2 Expenses. The Borrower agrees to pay or reimburse on
demand all out-of-pocket costs and expenses reasonably incurred by the
Collateral Agent, including,
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without limitation, the reasonable fees and disbursements of outside counsel, in
connection with (a) the negotiation, preparation, execution, delivery,
administration, enforcement and termination of this Agreement and each of the
other Loan Documents, whenever the same shall be executed and delivered,
including, without limitation (i) the administration and interpretation of this
Agreement and the other Loan Documents; (ii) the costs and expenses of
appraisals of the Collateral; (iii) the costs and expenses of lien and title
searches and title insurance; (iv) the costs and expenses of environmental
reports with respect to the Real Estate; (v) taxes, fees and other charges for
recording the Mortgages, filing the Financing Statements and continuations, and
the costs and expenses of taking other actions to perfect, protect, and continue
the Security Interests (other than taxes based on gross receipts, income or
revenue); (b) the preparation, execution and delivery of any waiver, amendment,
supplement or consent by the Collateral Agent and the Lenders relating to this
Agreement or any of the Loan Documents; (c) sums paid or incurred to pay any
amount or take any action required of the Borrower under the Loan Documents that
the Borrower fails to pay or take; (d) costs of inspections and verifications of
the Collateral, including, without limitation, standard per diem fees charged by
the Collateral Agent for travel, lodging and meals for inspections of the
Collateral and the Borrower's operations and books and records by the Collateral
Agent's representatives and agents; (e) costs and expenses of preserving and
protecting the Collateral; and (f) consulting, after the occurrence of a
Default, with one or more Persons, including appraisers, accountants and
lawyers, concerning the value of any Collateral for the Secured Obligations or
the nature, scope or value of any right or remedy of the Collateral Agent or any
Lender hereunder or under any of the Loan Documents, including any review of
factual matters in connection therewith, which expenses shall include the fees
and disbursements of such Persons.
The Borrower further agrees to pay or reimburse on demand all costs
and expenses incurred by the Collateral Agent and Foothill Capital Corporation,
including, without limitation, the reasonable fees and disbursements of counsel,
experts and other consultants to the Collateral Agent and any Lender, in
connection with (a) the negotiation, preparation, execution, delivery,
administration, enforcement and termination of this Agreement and each of the
other Loan Documents whenever the same shall be executed and delivered, (b) any
Default or Event of Default or any modification, amendment, waiver,
restructuring or forbearance with respect to any of the Loan Documents in
connection with such Default or Event of Default, and (c) any actions taken to
obtain payment of the Secured Obligations, enforce the Security Interests, sell
or otherwise realize upon the Collateral, and otherwise enforce the provisions
of the Loan Documents, or to prosecute or defend any claim in any way arising
out of, related to or connected with, this Agreement or any of the Loan
Documents.
The foregoing shall not be construed to limit any other provisions
of the Loan Documents regarding costs and expenses to be paid by the Borrower.
The Borrower hereby authorizes the Senior Lenders, and NationsBank as their
agent, to debit the Borrower's Loan Accounts (as defined in the Senior Loan
Agreement) (by increasing the principal amount of the Revolving Credit Loan (as
defined in the Senior Loan Agreement)) in the amount of any such costs and
expenses owed by the Borrower when due; provided, however, debiting such Loan
Account shall not be deemed conclusive evidence of the accuracy of the cost or
expense so debited.
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SECTION 16.3 Stamp and Other Taxes. The Borrower will pay any and
all stamp, registration, recordation and similar taxes, fees or charges (other
than taxes based on gross receipts, income or revenue) and shall indemnify the
Collateral Agent and the Lenders against any and all liabilities with respect to
or resulting from any delay in the payment or omission to pay any such taxes,
fees or charges, which may be payable or determined to be payable in connection
with the execution, delivery, performance or enforcement of this Agreement and
any of the Loan Documents or the perfection of any rights or security interest
thereunder, including, without limitation, the Security Interest.
SECTION 16.4 Setoff. In addition to any rights now or hereafter
granted under Applicable Laws and not by way of limitation of any such rights,
during the continuance of any Event of Default, each Lender, any participant
with such Lender in the Loans and each Affiliate of each Lender are hereby
authorized by the Borrower at any time or from time to time, without notice to
the Borrower or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and to apply any and all deposits (general
or special, including, but not limited to, indebtedness evidenced by
certificates of deposit, whether matured or unmatured) and any other
indebtedness at any time held or owing by any Lender or any Affiliate of any
Lender or any participant to or for the credit or the account of the Borrower
against and on account of the Secured Obligations irrespective or whether or not
(a) the Collateral Agent or such Lender shall have made any demand under this
Agreement or any of the Loan Documents, or (b) the Collateral Agent or such
Lender shall have declared any or all of the Secured Obligations to be due and
payable as permitted by Section 13.2 and although such Secured Obligations shall
be contingent or unmatured.
SECTION 16.5 Litigation. THE BORROWER, THE COLLATERAL AGENT AND EACH
LENDER HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY WAIVE TRIAL BY JURY IN
ANY ACTION OR PROCEEDING OF ANY KIND OR NATURE IN ANY COURT IN WHICH AN ACTION
MAY BE COMMENCED BY OR AGAINST THE BORROWER, THE COLLATERAL AGENT AND SUCH
LENDER ARISING OUT OF THIS AGREEMENT, THE COLLATERAL OR ANY ASSIGNMENT THEREOF
OR BY REASON OF ANY OTHER CAUSE OR DISPUTE WHATSOEVER BETWEEN THE BORROWER AND
THE COLLATERAL AGENT OR ANY LENDER OF ANY KIND OR NATURE. THE BORROWER THE
COLLATERAL AGENT AND THE LENDERS HEREBY AGREE THAT THE FEDERAL COURT OF THE
NORTHERN DISTRICT OF GEORGIA OR, AT THE OPTION OF THE COLLATERAL AGENT OR ANY
LENDER, ANY COURT IN WHICH THE COLLATERAL AGENT OR SUCH LENDER SHALL INITIATE
LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER JURISDICTION OVER
THE MATTER IN CONTROVERSY, SHALL HAVE NONEXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE BORROWER AND THE COLLATERAL AGENT
OR SUCH LENDER, PERTAINING DIRECTLY OR INDIRECTLY TO THIS AGREEMENT OR THE LOAN
DOCUMENTS OR TO ANY MATTER ARISING THEREFROM. THE BORROWER EXPRESSLY SUBMITS AND
CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED
IN SUCH COURTS, HEREBY WAIVING PERSONAL SERVICE OF THE SUMMONS AND COMPLAINT, OR
OTHER
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PROCESS OR PAPERS ISSUED THEREIN AND AGREEING THAT SERVICE OF SUCH SUMMONS AND
COMPLAINT OR OTHER PROCESS OR PAPERS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO THE BORROWER AT THE ADDRESS OF THE BORROWER SET FORTH IN SECTION
16.1.
SECTION 16.6 Waiver of Rights. THE BORROWER HEREBY KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY WAIVES ALL RIGHTS WHICH BORROWER HAS UNDER CHAPTER
14 OF TITLE 44 OF THE OFFICIAL CODE OF GEORGIA OR UNDER ANY SIMILAR PROVISION OF
APPLICABLE LAW TO NOTICE AND TO A JUDICIAL HEARING PRIOR TO THE ISSUANCE OF A
WRIT OF POSSESSION ENTITLING THE COLLATERAL AGENT OR ANY LENDER, OR THE
SUCCESSORS AND ASSIGNS OF THE COLLATERAL AGENT OR SUCH LENDER TO POSSESSION OF
THE COLLATERAL UPON EVENT OF DEFAULT. WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING AND WITHOUT LIMITING ANY OTHER RIGHT WHICH THE COLLATERAL AGENT OR THE
LENDERS MAY HAVE, THE BORROWER CONSENTS THAT IF THE COLLATERAL AGENT FILES A
PETITION FOR AN IMMEDIATE WRIT OF POSSESSION IN COMPLIANCE WITH SECTIONS 44-
14-261 AND 44-14-262 OF THE OFFICIAL CODE OF GEORGIA OR UNDER ANY SIMILAR
PROVISION OF APPLICABLE LAW, AND THIS WAIVER OR A COPY HEREOF IS ALLEGED IN SUCH
PETITION AND ATTACHED THERETO, THE COURT BEFORE WHICH SUCH PETITION IS FILED MAY
DISPENSE WITH ALL RIGHTS AND PROCEDURES HEREIN WAIVED AND MAY ISSUE FORTHWITH AN
IMMEDIATE WRIT OF POSSESSION IN ACCORDANCE WITH CHAPTER 14 OF TITLE 44 OF THE
OFFICIAL CODE OF GEORGIA OR IN ACCORDANCE WITH ANY SIMILAR PROVISION OF
APPLICABLE LAW, WITHOUT THE NECESSITY OF AN ACCOMPANYING BOND AS OTHERWISE
REQUIRED BY SECTION 00-00-000 OF THE OFFICIAL CODE OF GEORGIA OR BY ANY SIMILAR
PROVISION UNDER APPLICABLE LAW. THE BORROWER HEREBY ACKNOWLEDGES THAT IT HAS
READ AND FULLY UNDERSTANDS THE TERMS OF THIS WAIVER AND THE EFFECT HEREOF.
SECTION 16.7 Consent to Advertising and Publicity. With the prior
written consent of the Borrower, which consent shall not be unreasonably
withheld, the Collateral Agent or the Lenders may issue and disseminate to the
public information describing the credit accommodation entered into pursuant to
this Agreement, including the name and address of the Borrower, the amount,
interest rate, maturity, collateral and a general description of the Borrower's
business.
SECTION 16.8 Reversal of Payments. The Collateral Agent and each
Lender shall have the continuing and exclusive right to apply, reverse and
re-apply any and all payments to any portion of the Secured Obligations in a
manner consistent with the terms of this Agreement. To the extent any payment or
proceeds of the Collateral for the Borrower's benefit, which payment(s) or
proceeds or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside and/or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, state or federal law,
common law or equitable cause,
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then, to the extent of such payment or proceeds received, the Secured
Obligations or part thereof intended to be satisfied shall be revived and
continued in full force and effect, as if such payment or proceeds had not been
received by such Lender.
SECTION 16.9 Injunctive Relief. The Borrower recognizes that, in the
event the Borrower fails to perform, observe or discharge any of its obligations
or liabilities under this Agreement, any remedy at law may prove to be
inadequate relief to the Collateral Agent and the Lenders; therefore, the
Borrower agrees that if any Event of Default shall have occurred and be
continuing, the Collateral Agent and the Lenders, if the Collateral Agent or any
Lender so requests, shall be entitled to temporary and permanent injunctive
relief without the necessity of proving actual damages.
SECTION 16.10 Accounting Matters. All financial and accounting
calculations, measurements and computations made for any purpose relating to
this Agreement, including, without limitation, all computations utilized by the
Borrower to determine whether it is in compliance with any covenant contained
herein, shall, unless this Agreement otherwise provides or unless Required
Lenders shall otherwise consent in writing, be performed in accordance with
GAAP.
SECTION 16.11 Amendments; Waivers.
(a) Except as set forth in subsection (b) below, any term, covenant,
agreement or condition of this Agreement or any of the Loan Documents may be
amended or waived, and any departure therefrom may be consented to by the
Required Lenders, if, but only if, such amendment, waiver or consent is in
writing signed by the Required Lenders and, in the case of an amendment (other
than an amendment described in Section 16.11(d)), by the Borrower, and in any
such event, the failure to observe, perform or discharge any such term,
covenant, agreement or condition (whether such amendment is executed or such
waiver or consent is given before or after such failure) shall not be construed
as a breach of such term, covenant, agreement or condition or as a Default or an
Event of Default; provided that:
(i) [Intentionally Deleted]
(ii) [Intentionally Deleted]
(iii) without the written consent of the Collateral Agent, no
amendment or waiver shall be made to any provision of Article 15 as such
provisions apply to the Collateral Agent or to any other provision of any Loan
Document as such provisions relate to the rights and obligations of the
Collateral Agent,
(iv) without the written consent of the Supermajority Lenders,
no amendment or waiver of this Agreement or the other Loan Documents shall be
made in order to permit a Receivables securitization described in Section 16.24,
and
(v) [Intentionally Deleted].
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Unless otherwise specified in such waiver or consent, a waiver
or consent given hereunder shall be effective only in the specific instance and
for the specific purpose for which given. In the event that any such waiver or
amendment is requested by the Borrower, the Collateral Agent and the Lenders may
require and charge a fee in connection therewith and consideration thereof in
such amount as shall be determined by the Collateral Agent and the Required
Lenders in their discretion.
(b) Except as otherwise set forth in this Agreement, without the
prior unanimous written consent of the Lenders,
(i) no amendment, consent or waiver shall affect the amount or
extend the originally scheduled time or times of payment of the principal of any
Loan, or alter the time or times of payment of interest on any Loan or the
amount of the principal thereof or the rate of interest thereon or the amount of
any commitment fee payable hereunder, or permit any subordination of the
principal or interest on such Loan, or permit the subordination of the Security
Interests in any material Collateral (except as may occur as a result of a
transaction described in Section 16.24), or amend the provisions of Article 13
or of this Section 16.11(b),
(ii) [Intentionally Deleted]
(iii) no amendment shall be made to the definitions of
"Eligible Assignee", "Proportionate Share", "Ratable", "Required Lenders",
"Secured Obligations", or "Supermajority Lenders", and
(iv) neither the Collateral Agent nor any Lender shall consent
to any amendment to or waiver of the amortization, deferral or subordination
provisions of the Seller Subordinated Note or any other instrument or agreement
evidencing or relating to obligations of the Borrower that are expressly
subordinate to any of the Secured Obligations if such amendment or waiver would
be adverse to the Lenders in their capacities as Lenders hereunder;
provided, however, that anything herein to the contrary notwithstanding,
Required Lenders shall have the right to waive any Default or Event of Default
and the consequences hereunder of such Default or Event of Default provided only
that such Default or Event of Default does not arise under Section 13.1 (g) or
(h) or out of a breach of or failure to perform or observe any term, covenant or
condition of this Agreement or any other Loan Document (other than the
provisions of Article 13 of this Agreement) the amendment of which requires the
unanimous consent of the Lenders. The Required Lenders shall have the right,
with respect to any Default or Event of Default that may be waived by them, to
enter into an agreement with the Borrower providing for the forbearance from the
exercise of any remedies provided hereunder or under the other Loan Documents
without waiving any Default or Event of Default.
(c) The making of Loans hereunder by the Lenders during the
existence of a Default or Event of Default shall not be deemed to constitute a
waiver of such Default or Event of Default.
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(d) Notwithstanding any provision of this Agreement or the other
Loan Documents to the contrary, no consent, written or otherwise, of the
Borrower shall be necessary or required in connection with any amendment to
Article 15 or Section 5.7, and any amendment to such provisions shall be
effected solely by and among the Collateral Agent and the Lenders, provided that
no such amendment shall impose any obligation on the Borrower.
SECTION 16.12 Assignment. All the provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective permitted successors and assigns, except that the Borrower may not
assign or transfer any of its rights under this Agreement, and except that
assignments of each Lender's rights under this Agreement shall be in accordance
with Section 14.1.
SECTION 16.13 Performance of Borrower's Duties.
(a) The Borrower's obligations under this Agreement and each of the
Loan Documents shall be performed by the Borrower at its sole cost and expense.
(b) If the Borrower shall fail to do any act or thing which it has
covenanted to do under this Agreement or any of the Loan Documents, then the
Lenders, may (but shall not be obligated to) cause it to be done by the
Collateral Agent (to the extent consistent with this Agreement) or do the same
in the name of the Lenders or in the name and on behalf of the Bor rower, and
the Borrower hereby irrevocably authorizes the Collateral Agent and Lenders so
to act.
SECTION 16.14 Indemnification. The Borrower agrees to reimburse the
Collateral Agent and the Lenders, and their Affiliates, agents, employees,
officers, directors, Subsidiaries, successors and assigns (the "Indemnitees"),
for all costs and expenses, including reasonable counsel fees and disbursements,
incurred, and to indemnify and hold the Indemnitees harmless from and against
all losses suffered by, any Indemnitee in connection with (i) the exercise by
any Indemnitee of any right or remedy granted to it under this Agreement or any
of the Loan Documents, (ii) any claim, and the prosecution or defense thereof,
arising out of or in any way connected with this Agreement or any of the Loan
Documents, including without limitation any claim relating to Environmental
Laws, (iii) the collection or enforcement of the Secured Obligations or any of
them, and (iv) any Acquisition or proposed Acquisition by the Borrower or any of
its Subsidiaries (including without limitation the Acquisition of the Acquired
Assets and any of the transactions contemplated thereby), other than such costs,
expenses and liabilities arising out of any Indemnitee's gross negligence or
willful misconduct.
SECTION 16.15 All Powers Coupled with Interest. All powers of
attorney and other authorizations granted to the Collateral Agent and the
Lenders and any Persons designated by the Collateral Agent or the Lenders
pursuant to any provisions of this Agreement or any of the Loan Documents shall
be deemed coupled with an interest and shall be irrevocable so long as any of
the Secured Obligations remain unpaid or unsatisfied.
SECTION 16.16 Survival. Notwithstanding any termination of this
Agreement,
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(a) until all Secured Obligations have been irrevocably paid in full
or otherwise satisfied, the Collateral Agent, for the benefit of the Secured
Creditors, shall retain its Security Interest and shall retain all rights under
this Agreement and each of the Security Documents with respect to such
Collateral as fully as though this Agreement had not been terminated,
(b) the indemnities to which the Collateral Agent and the Lenders
are entitled under the provisions of this Article 16 and any other provision of
this Agreement and the Loan Documents (including Section 15.7) shall continue in
full force and effect and shall protect the Collateral Agent and the Lenders
against events arising after such termination as well as before, and
(c) in connection with the termination of this Agreement and the
release and termination of the Security Interests, the Collateral Agent, on
behalf of itself as agent and the Lenders, may require such assurances and
indemnities as it shall reasonably deem necessary or appropriate to protect the
Collateral Agent and the Lenders against loss on account of such release and
termination, including, without limitation, with respect to credits previously
applied to the Secured Obligations that may subsequently be reversed or revoked.
SECTION 16.17 Titles and Captions. Titles and captions of Articles,
Sections and subsections in this Agreement are for convenience only, and neither
limit nor amplify the provisions of this Agreement.
SECTION 16.18 Severability of Provisions. Any provision of this
Agreement or any Loan Document which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only to the extent
of such prohibition or unenforceability without invalidating the remainder of
such provision or the remaining provisions hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.
SECTION 16.19 Governing Law. This Agreement and the Notes shall be
construed in accordance with and governed by the law of the State of Georgia
applicable to agreements made and to be performed entirely within such state.
SECTION 16.20 Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and shall be
binding upon all parties, their successors and assigns, and all of which taken
together shall constitute one and the same agreement.
SECTION 16.21 Reproduction of Documents. This Agreement, each of the
Loan Documents and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by the Collateral Agent or any Lender, and (c)
financial statements, certificates and other information previously or hereafter
furnished to the Collateral Agent or any Lender, may be reproduced by the
Collateral Agent or such Lender by any photographic, photostatic, microfilm,
microcard, miniature photographic or other similar process and such Person may
destroy any original
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document so produced. Each party hereto stipulates that, to the extent permitted
by Applicable Laws, any such reproduction shall be as admissible in evidence as
the original itself in any judicial or administrative proceeding (whether or not
the original shall be in existence and whether or not such reproduction was made
by the Collateral Agent or such Lender in the regular course of business), and
any enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
SECTION 16.22 Term of Agreement. This Agreement shall remain in
effect from the Agreement Date through the Termination Date and thereafter until
all Secured Obligations shall have been irrevocably paid and satisfied in full.
No termination of this Agreement shall affect the rights and obligations of the
parties hereto arising prior to such termination.
SECTION 16.23 Pro-Rata Participation.
(a) Each Lender agrees that if, as a result of the exercise of a
right of setoff, banker's lien or counterclaim or other similar right or the
receipt of a secured claim it receives any payment in respect of the Secured
Obligations, it shall promptly notify the Collateral Agent and the other Lenders
thereof. If, as a result of such payment, such Lender receives a greater
percentage of the Secured Obligations owed to it under this Agreement than the
percentage received by any other Lender, such Lender shall purchase a
participation (which it shall be deemed to have purchased simultaneously upon
the receipt of such payment) in the Secured Obligations then held by such other
Lenders so that all such recoveries of principal and interest with respect to
all Secured Obligations owed to each Lender shall be pro rata on the basis of
its respective amount of the Secured Obligations owed to all Lenders, provided
that if all or part of such proportionately greater payment received by such
purchasing Lender is thereafter recovered by or on behalf of the Borrower from
such Lender, such purchase shall be rescinded and the purchase price paid for
such participation shall be returned to such Lender to the extent of such
recovery, but without interest.
(b) Each Lender which receives such a secured claim shall exercise
its rights in respect of such secured claim in a manner consistent with the
rights of the Lenders entitled under this Section 16.23 to share in the benefits
of any recovery on such secured claim.
(c) The Borrower expressly consents to the foregoing arrangements
and agrees that any holder of a participation in any Secured Obligation so
purchased or otherwise acquired may exercise any and all rights of banker's
lien, set-off or counterclaim with respect to any and all monies owing by the
Borrower to such holder as fully as if such holder were a holder of such Secured
Obligation in the amount of the participation held by such holder.
SECTION 16.24 Receivables Securitization. The Collateral Agent and
each of the Lenders hereby acknowledges that the Borrower is considering
entering into a securitization transaction with respect to its Receivables. The
Borrower hereby acknowledges that the consummation of such a securitization
transaction will require the prior written consent of the Supermajority Lenders.
85
SECTION 16.25 Final Agreement. This Agreement and the other Loan
Documents are intended by the parties hereto as the final, complete and
exclusive expression of the agreement among them with respect to the subject
matter hereof and thereof. This Agreement and the other Loan Documents supersede
any and all prior oral or written agreements between the parties hereto relating
to the subject matter hereof and thereof.
SECTION 16.26 Waiver of Consequential Damages, Etc. THE BORROWER
AGREES NOT TO ASSERT ANY CLAIM AGAINST THE COLLATERAL AGENT, ANY LENDER, ANY OF
THEIR AFFILIATES, OR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES,
ATTORNEYS AND COLLATERAL AGENTS, ON ANY THEORY OF LIABILITY, FOR INDIRECT OR
CONSEQUENTIAL DAMAGES ARISING OUT OF OR OTHERWISE RELATING TO ANY OF THE
TRANSACTIONS CONTEMPLATED HEREIN OR IN ANY OTHER LOAN DOCUMENT OR THE ACTUAL OR
PROPOSED USE OF THE PROCEEDS OF THE LOANS.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers in several counterparts all as of
the day and year first written above.
BORROWER:
ITHACA INDUSTRIES, INC.
[Corporate Seal]
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------
Attest: Name: Xxxxxxx X. Xxxxxx
Title: Senior V.P.
By: /s/ Xxxx X. Xxxxxxx
--------------------------
Name: Xxxx X. Xxxxxxx
Title: Asst. Secretary
86
LENDERS:
FOOTHILL CAPITAL CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
----------------------------
Name: Xxxxx X. Xxxxxxx
Title: V.P.
Address: 00000 Xxxxx Xxxxxx Xxxx.,
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attn.: Xx. Xxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
COLLATERAL AGENT:
NATIONSBANK, N.A.
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Assistant Vice President
Address: 000 Xxxxxxxxx Xxxxxx, X.X.
00 Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attn.: Business Credit
Facsimile No.: 000-000-0000
87
ANNEX II
Proportionate
Share of Term Loans
-------------------
Foothill Capital Corporation $15,000,000
Annex II
1
EXHIBIT A-2
FORM OF TERM NOTE
US $___________ Date: March __, 1998
FOR VALUE RECEIVED, ITHACA INDUSTRIES,INC., a Delaware corporation (the
"Borrower") promises to pay to the order of _______________________
(hereinafter, together with any holder hereof, called "Holder"), at [ insert
address ] (or at such other place as the Holder may designate in writing to the
undersigned), the principal amount of $____________.
The Borrower shall pay the principal amount of this Note, and interest
thereon, as provided in that certain Loan and Security Agreement (as the same
may be amended, modified or supplemented from time to time, the "Loan
Agreement"), dated as of March 24, 1998, among the Borrower, the lenders party
thereto from time to time (the "Lenders") and NationsBank, N.A., as collateral
agent for the Lenders.
This Note is subject to the terms and conditions of the Loan Agreement.
This Note is entitled to the benefits of the Security Documents (as defined in
the Loan Agreement). The Loan Agreement contains provisions for the acceleration
of the maturity hereof upon the happening of certain stated events, and
provisions for voluntary and mandatory partial or full prepayments of this Note.
No delay or failure on the part of the Holder in the exercise of any right
or remedy hereunder, under the Loan Agreement or at law or in equity shall
operate as a waiver thereof, and no single or partial exercise by the Holder of
any right or remedy hereunder, under the Loan Agreement or at law or in equity
shall preclude or estop another or further exercise thereof or the exercise of
any other right or remedy.
Principal and interest on this Note shall be payable and paid in lawful
money of the United States of America.
The Borrower waives presentment, notice of dishonor and protest.
Time is of the essence of this Note and, in case this Note is collected by
law or through an attorney at law or under advice therefrom, the Borrower agrees
to pay all costs of collection, including reasonable attorneys' fees if
collected by or through an attorney.
Exhibit A-2
1
The provisions of this Note shall be construed and interpreted and all
rights and obligations of the parties hereunder determined in accordance with
the laws of the State of Georgia.
IN WITNESS WHEREOF, the Borrower has caused this Note to be executed and
sealed in its corporate name, by and through its duly authorized officers, as of
the day and year first above written.
ITHACA INDUSTRIES, INC.
By: ___________________________
Name: _________________________
Title: ________________________
Attest: _______________________
Name: _________________________
Title: ________________________
[CORPORATE SEAL]
Exhibit A-2
2
EXHIBIT D
FORM OF ASSIGNMENT AND ACCEPTANCE
________________, Assignee
Dated: ______________________, _____
Reference is made to the Loan and Security Agreement, dated as of
March ___, 1998 (as amended to the date hereof, the "Loan Agreement"), by and
among ITHACA INDUSTRIES, INC., a Delaware corporation (the "Borrower"), the
lenders party to the Loan Agreement from time to time (the "Lenders"), and
NATIONSBANK, N.A., a national banking association, as collateral agent for the
Lenders (the "Collateral Agent"). Terms used herein that are defined in the Loan
Agreement are used with the meanings therein ascribed to them.
____________________ (the "Assignor") and _________________________
(the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, without recourse
(except with respect to any representation of the Assignor expressly set forth
herein or in the Loan Agreement), an interest in and to such of the Assignor's
rights and obligations as a Lender under the Loan Agreement as of the Effective
Date (as hereinafter defined) as represent a ___% interest in and to all of the
outstanding rights and obligations of the Assignor outstanding on the Effective
Date, and such percentage interest in the Notes owing to the Assignor). The
Assignee shall have not interest in any interest that is payable with respect to
a period prior to the Effective Date.
2. The Assignor (i) represents that as of the date hereof, the
outstanding balance of its Term Loan is $__________, (unreduced by any
assignments thereof which have not yet become effective); (ii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the Loan
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Loan Agreement or any other instrument or document
furnished pursuant thereto, other than that it is the legal and beneficial owner
of the interest being assigned by it hereunder and that such interest is free
and clear of any adverse claim, lien or encumbrance; and (iii) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower or any Person or the performance or
observance by the Borrower or any other Person of any of its obligations under
the Loan Agreement or any other Loan Documents.
3. The Assignee (i) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (ii) confirms that it
has received a copy of the Loan Agreement, together with copies of the most
recent financial statements delivered pursuant to
Exhibit D
1
Section 11.1 thereof and such other documents and information (including a copy
of the Intercreditor Agreement) as it has deemed appropriate to make its own
credit analysis and decision to enter into this Assignment and Acceptance; (iii)
agrees that it will, independently and without reliance upon the Collateral
Agent, the Assignor or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Loan Agreement; (iv)
confirms that it is an Eligible Assignee; (v) appoints and authorizes the
Collateral Agent to take such action as collateral agent on its behalf and to
exercise such powers under the Loan Agreement as are delegated to the Collateral
Agent by the terms thereof, together with such powers as are reasonably
incidental thereto; (vi) agrees that it will perform in accordance with their
terms all obligations which by the terms of the Loan Agreement are required to
be performed by it as a Lender; and (vii) specifies as its address for notices
the office set forth beneath its name on the signature pages hereof.
4. The effective date for this Assignment and Acceptance shall be
_________, _____ (the "Effective Date").
5. From and after the Effective Date, (i) the Assignee shall be a
party to the Loan Agreement and, to the extent provided in this Assignment and
Acceptance, shall have the rights and obligations of a Lender thereunder, and
(ii) Assignor shall, to the extent provided in this Assignment and Acceptance,
relinquish its rights and be released from its obligations under the Loan
Agreement.
6. Upon such acceptance and recording, from and after the Effective
Date, the Borrower shall make all payments in respect of the interest assigned
hereby (including payments of principal, interest, fees and other amounts) to
the Assignee. The Assignor and the Assignee shall make all appropriate
adjustments in payments for periods prior to the Effective Date by the
Collateral Agent or with respect to the making of this Assignment and Acceptance
directly between themselves.
Exhibit D
2
7. This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of California, without
reference to any provision which would render such choice invalid.
ASSIGNOR:
By: ___________________________
Name: _________________________
Title: ________________________
ASSIGNEE:
By: ___________________________
Name: _________________________
Title: ________________________
Address:
_______________________________
_______________________________
Acknowledged this ____ day of
__________, 199__.
NATIONSBANK, N.A.,
as Collateral Agent
By: ___________________________
Name: _________________________
Title: ________________________
ITHACA INDUSTRIES, INC.,
a Delaware corporation
By: ___________________________
Name: _________________________
Title: ________________________
Exhibit D
3
