Exhibit 2(a)(1)
CREDIT AGREEMENT
Dated As of March 15, 1996
by and among
TEXFI INDUSTRIES, INC.,
as Borrower,
the Lenders Referred to Herein,
NATIONSBANK, N.A.,
as Agent
and
NATIONSBANC COMMERCIAL CORPORATION,
as Disbursing Agent
TABLE OF CONTENTS
ARTICLE I - DEFINITIONS...................................... 1
SECTION 1.1 Definitions...................................... 1
SECTION 1.2 General.......................................... 19
SECTION 1.3 Accounting Matters............................... 19
SECTION 1.4 Other Definitions and Provisions................. 20
ARTICLE II - REVOLVING CREDIT FACILITY................................. 20
SECTION 2.1 Commitment....................................... 20
SECTION 2.2 Procedure for Advances........................... 21
SECTION 2.3 Repayment of Revolving Credit.................... 24
SECTION 2.4 Revolving Credit Notes........................... 24
SECTION 2.5 Voluntary Permanent Reduction of the Aggregate
Revolving Credit Commitment............. 25
SECTION 2.6 Termination of the Revolving Credit Facility..... 25
ARTICLE IIA - LETTER OF CREDIT FACILITY................................. 26
SECTION 2A.1 Commitment....................................... 26
SECTION 2A.2 Procedure for Issuance of Letters of Credit...... 26
SECTION 2A.3 Commissions and Other Charges.................... 27
SECTION 2A.4 L/C Participations............................... 27
SECTION 2A.5 Reimbursement Obligation of the Borrower......... 28
SECTION 2A.6 Obligations Absolute............................. 28
SECTION 2A.7 Effect of Application............................ 29
SECTION 2A.8 Outstanding Letter of Credit..................... 29
ARTICLE III - TERM LOAN FACILITY........................................ 29
SECTION 3.1 Term Loan........................................ 29
SECTION 3.2 Procedure for Advance of Term Loan............... 29
SECTION 3.3 Repayment of Term Loan........................... 30
SECTION 3.4 Optional Repayments of Term Loan................. 30
SECTION 3.5 Mandatory Prepayments of Term Loan.................30
SECTION 3.6 Term Notes.........................................31
ARTICLE IV - GENERAL LOAN PROVISIONS.................................... 31
SECTION 4.1 Interest.......................................... 31
SECTION 4.2 Notice and Manner of Conversion or Continuation of
Loans.................................... 34
SECTION 4.3 Commitment and Other Fees......................... 35
SECTION 4.4 Manner of Payment................................. 35
SECTION 4.5 Crediting of Payments and Proceeds................ 36
SECTION 4.6 Nature of Obligations of Lenders Regarding
Extensions of Credit; Assumption by
Disbursing Agent......................... 36
SECTION 4.7 Changed Circumstances............................. 37
SECTION 4.8 Indemnity......................................... 38
SECTION 4.9 Capital Requirements.............................. 39
SECTION 4.10 Taxes............................................. 39
SECTION 4.11 Change in Lending Office.......................... 41
SECTION 4.12 Use of Proceeds................................... 41
ARTICLE V - CLOSING; CONDITIONS OF CLOSING AND BORROWING.41
SECTION 5.1 Closing............................................41
SECTION 5.2 Conditions to Closing and Initial Extensions of
Credit....................................41
SECTION 5.3 Conditions to All Extensions of Credit.............47
ARTICLE VI - REPRESENTATIONS AND WARRANTIES OF
BORROWER...........................................48
SECTION 6.1 Representations and Warranties.....................48
SECTION 6.2 Survival of Representations and Warranties, Etc....54
ARTICLE VII - FINANCIAL INFORMATION AND NOTICES...........................54
SECTION 7.1 Financial Statements and Projections..............55
SECTION 7.2 Officer's Compliance Certificate..................56
SECTION 7.3 Other Reports.....................................56
SECTION 7.4 Notice of Litigation and Other Matters............57
SECTION 7.5 Accuracy of Information...........................58
ARTICLE VIII - AFFIRMATIVE COVENANTS............................. 59
SECTION 8.1 Preservation of Corporate Existence and Related
Matters.................................. 59
SECTION 8.2 Maintenance of Property........................... 59
SECTION 8.3 Insurance......................................... 59
SECTION 8.4 Accounting Methods and Financial Records.......... 59
SECTION 8.5 Payment and Performance of Obligations............ 60
SECTION 8.6 Compliance With Laws and Approvals................ 60
SECTION 8.7 Environmental Management.......................... 60
SECTION 8.8 Compliance with ERISA............................. 60
SECTION 8.9 Compliance With Agreements........................ 60
SECTION 8.10 Conduct of Business............................... 61
SECTION 8.11 Visits and Inspections............................ 61
SECTION 8.12 Audits............................................ 61
SECTION 8.13 Further Assurances................................ 61
ARTICLE IX - FINANCIAL COVENANTS........................................ 61
SECTION 9.1 Current Ratio..................................... 61
SECTION 9.2 Coverage Ratio. ................................. 62
SECTION 9.3 Leverage Ratio.................................... 62
SECTION 9.4 Minimum Net Worth................................. 62
ARTICLE X - NEGATIVE COVENANTS......................................... 63
SECTION 10.1 Limitations on Debt............................... 63
SECTION 10.2 Limitations on Guarantees......................... 63
SECTION 10.3 Limitations on Liens.............................. 64
SECTION 10.4 Limitations on Loans, Advances, Investments and
Acquisitions..............................65
SECTION 10.5 Limitations on Mergers and Liquidation.............66
SECTION 10.6 Limitations on Sale of Assets......................66
SECTION 10.7 Transactions with Affiliates.......................67
SECTION 10.8 Certain Accounting Changes.........................67
SECTION 10.9 Compliance with ERISA..............................67
SECTION 10.10 Modification of Factor Agreements and Credit
Insurance.................................68
SECTION 10.11 Restricted Payments................................68
ARTICLE XI - DEFAULT AND REMEDIES........................................68
SECTION 11.1 Events of Default..................................68
SECTION 11.2 Remedies...........................................71
SECTION 11.3 Rights and Remedies Cumulative; Non-Waiver; etc....72
ARTICLE XII - THE AGENT...................................................72
SECTION 12.1 Appointment........................................72
SECTION 12.2 Delegation of Duties...............................73
SECTION 12.3 Exculpatory Provisions.............................73
SECTION 12.4 Reliance by Agents.................................73
SECTION 12.5 Notice of Default..................................74
SECTION 12.6 Non-Reliance on the Agents and Other Lenders.......74
SECTION 12.7 Indemnification....................................75
SECTION 12.8 The Agent and Disbursing Agent in Their Individual
Capacities................................75
SECTION 12.9 Resignation of Agent; Successor Agents.............75
SECTION 12.10 Participation in Audits............................76
ARTICLE XIII - MISCELLANEOUS...............................................76
SECTION 13.1 Notices............................................76
SECTION 13.2 Expenses...........................................78
SECTION 13.3 Set-off............................................78
SECTION 13.4 Governing Law......................................79
SECTION 13.5 Consent to Jurisdiction............................79
SECTION 13.6 Waiver of Jury Trial...............................79
SECTION 13.7 Reversal of Payments...............................79
SECTION 13.8 Injunctive Relief..................................80
SECTION 13.9 Successors and Assigns; Participations.............80
SECTION 13.10 Amendments, Waivers and Consents...................83
SECTION 13.11 Performance of Borrower's Duties...................83
SECTION 13.12 Indemnification....................................83
SECTION 13.13 All Powers Coupled with Interest. ................84
SECTION 13.14 Survival of Indemnities............................84
SECTION 13.15 Titles and Captions................................84
SECTION 13.16 Severability of Provisions.........................84
SECTION 13.17 Counterparts.......................................84
SECTION 13.18 Term of Agreement..................................84
SECTION 13.19 Adjustments........................................84
SECTION 13.20 Independent Effect of Covenants....................85
SECTION 13.21 Legal Fees.........................................85
Exhibits and Schedules
EXHIBITS
Exhibit A-1 - Form of Revolving Credit Note
Exhibit A-2 - Form of Term Note
Exhibit B-1 - Form of Notice of Revolving Credit Loan Borrowing
Exhibit B-2 - Form of Notice of Term Loan Borrowing
Exhibit C - Form of Notice of Conversion/Continuation
Exhibit D - Form of Officer's Compliance Certificate
Exhibit E - Form of Assignment and Acceptance
Exhibit F - Form of Borrowing Base Certificate
SCHEDULES
Schedule 1.1(a) - Commitments
Schedule 1.1(b) - Encumbered Property
Schedule 6.1(a) - Jurisdictions of Organization and Qualification to Do
Business as Foreign Corporation
Schedule 6.1(f) - Environmental Matters
Schedule 6.1(g) - ERISA Plans
Schedule 6.1(j) - Intellectual Property Matters
Schedule 6.1(k) - Material Contracts
Schedule 6.1(l) - Employment, Non-Compete, Investment and
Shareholder Agreements
Schedule 6.1(p) - Material Contingent Liabilities
Schedule 6.1(u) - Debt and Guarantees
Schedule 10.1 - Permitted Debt
Schedule 10.3 - Liens
Schedule 10.4 - Loans, Advances and Investments
CREDIT AGREEMENT
CREDIT AGREEMENT, dated as of the 15th day of March, 1996, by and among
Texfi Industries, Inc., a corporation organized under the laws of Delaware (the
"Borrower"), the Lenders who are or may become a party to this Agreement
(collectively, the "Lenders"), NationsBank, N.A., a national banking
association, as Agent for the Lenders, and NationsBanc Commercial Corporation,
as Disbursing Agent for the Lenders.
STATEMENT OF PURPOSE
The Borrower has requested and the Lenders have agreed to extend a
revolving credit facility and a term loan facility to the Borrower on the terms
and conditions of this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. The following terms when used in this
Agreement shall have the meanings assigned to them below:
"Accounts" means, collectively, all rights to payment for goods sold or
leased or for services rendered or to be rendered, whether or not earned by
performance, and all sums of money or other proceeds due or becoming due
thereon, howsoever evidenced, including without limitation "accounts" as defined
in the Uniform Commercial Code of North Carolina, instruments, documents,
chattel paper and general intangibles, whether secured or unsecured, now
existing or hereafter created, all notes receivable and all proceeds thereof and
all rights, title, security interests and guarantees with respect to each of the
foregoing.
"Adjustment Date" shall have the meaning assigned thereto in Section
4.1(c).
"Affiliate" means, with respect to a Person, any other Person (other
than a Subsidiary) which directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with
such Person. The term "control" means (a) the power to vote twenty percent (20%)
or more of the securities or other equity interests of a Person
having ordinary voting power, or (b) the possession, directly or indirectly, of
any other power to direct or cause the direction of the management and policies
of a Person, whether through ownership of voting securities, by contract or
otherwise.
"Agent" means NationsBank, N.A. in its capacity as agent hereunder, and any
successor thereto appointed pursuant to Section 12.9.
"Agent's Office" means the office of the Agent specified in or
determined in accordance with the provisions of Section 13.1(c).
"Aggregate Revolving Credit Commitment" means the aggregate amount of
the Lenders' Revolving Credit Commitments hereunder, as such amount may be
reduced at any time or from time to time pursuant to Section 2.5. On the Closing
Date, the Aggregate Revolving Credit Commitment shall be Fifty-Five Million
Dollars ($55,000,000).
"Agreement" means this Credit Agreement, as amended or supplemented
from time to time.
"Applicable Law" means all applicable provisions of constitutions,
statutes, rules, regulations and orders of all Governmental Authorities and all
orders and decrees of all courts and arbitrators.
"Applicable Margin" shall have the meaning assigned thereto in Section
4.1(c).
"Application" means an application, in the form specified by the
Issuing Lender from time to time, requesting the Issuing Lender to issue a
Letter of Credit.
"Asset Sale" means any sale, sale-leaseback (other than sale-leasebacks
of Equipment to be purchased under the Borrower's 1996, 1997 and 1998 capital
expenditure plans as set forth in projections provided by the Borrower to the
Lenders which will be financed under operating leases to be entered into by the
Borrower with respect to such Equipment), mortgage of real property or any other
disposition (including the grant of any option, warrant or other right) by any
Person of any of its property or assets, other than (a) sales of Inventory in
the ordinary course of business, (b) the sale of Accounts to Factors and (c) the
sale of Equipment, the proceeds of which are applied either to the purchase of
replacement Equipment with like function or to the prepayment of any purchase
money Debt secured by a Lien on such Equipment, with the balance applied in
accordance with Section 3.5(a).
"Assignment and Acceptance" shall have the meaning assigned thereto in
Section 13.9(b)(iii).
"Assignment of Factoring Proceeds" means, collectively, the Assignment
of Factoring Proceeds between each Factor, the Borrower and the Agent pursuant
to which the Borrower
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assigns the Factoring Credit Balances to the Agent for the benefit of itself,
the Lenders and the Disbursing Agent.
"Base Rate" means, at any time, the higher of (a) the Prime Rate or (b)
the Federal Funds Rate plus 1/2 of 1%. Each change in the Base Rate shall take
effect simultaneously with the corresponding change or changes in the Prime Rate
or the Federal Funds Rate. Each determination of the Base Rate by the Agent or
the Disbursing Agent shall, in the absence of manifest error, be conclusive and
binding.
"Base Rate Loan" means any Loan bearing interest at a rate determined
with reference to the Base Rate as provided in Section 4.1(a) hereof.
"Borrowing Base" means the sum of (a) 90% of Eligible Accounts, plus
(b) 85% of House Accounts (subject to the applicable House Accounts Limit), plus
(c) an amount equal to the lesser of (i) 50% of Eligible Inventory, calculated
on the basis of the lower of cost or market, with cost calculated on a first-in,
first-out basis, or (ii) $10,000,000 less (d) the contingent liability of the
Lenders to CIT pursuant to the Indemnity Agreement of even date between the
Agent on behalf of the Lenders and CIT (the "CIT Indemnity"). No Accounts or
Inventory of any Person acquired by the Borrower after the Closing Date shall be
included in the Borrowing Base until the Agent shall have completed a field
examination of the Accounts and Inventory of such acquired Person, at the
Borrower's expense, and the Agent shall have received a report of such
examination in form reasonably satisfactory to the Majority Lenders.
"Borrowing Base Certificate" means the certificate of the Borrower
substantially in the form of Exhibit F attached hereto.
"Business Day" means (a) for all purposes other than as set forth in
clause (b) below, any day other than a Saturday, Sunday or legal holiday on
which banks in Charlotte, North Carolina and New York City are authorized or
required to close their commercial banking business, and (b) with respect to all
notices and determinations in connection with, and payments of principal and
interest on, any LIBOR Rate Loan, any day that is a Business Day described in
clause (a) and that is also a day for trading by and between banks in U.S.
Dollar deposits in the London interbank market.
"Capital Asset" means, with respect to the Borrower and its
Subsidiaries, any asset which should be classified and accounted for as a
capital asset on a Consolidated balance sheet of the Borrower and its
Subsidiaries.
"Capital Expenditures" means, with respect to the Borrower and its
Subsidiaries for any period, the aggregate cost of all Capital Assets acquired
by the Borrower and its Subsidiaries during such period, as determined in
accordance with GAAP.
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"Capital Lease" means, with respect to the Borrower and its
Subsidiaries, any lease of any property which should be classified and accounted
for as a capital lease on a Consolidated balance sheet of the Borrower and its
Subsidiaries.
"CD Assessment Rate" means, with respect to any Interest Period for any
CD Rate Loan, the then maximum net annual assessment rate for such Interest
Period for determining the annual assessment payable by NationsBank to the
Federal Deposit Insurance Corporation (or any successor) for insuring Dollar
deposits made at offices of NationsBank in the United States. The CD Base Rate
applicable to any CD Rate Loan for any Interest Period shall be adjusted
automatically on and as of the effective date of each change in the relevant CD
Assessment Rate during such Interest Period.
"CD Base Rate" means the secondary market rate of interest for
certificates of deposit for a maturity equal to the Interest Period selected as
determined by the Federal Reserve System and published in the Federal Reserve
Statistical release H.15(519) (or any successor publication) one Business Day
prior to the commencement of the applicable Interest Period. The CD Base Rate
used in determining the CD-Based Rate for Saturday and Sunday of each week shall
be the CD Base Rate for the immediately preceding Thursday. Whenever the day to
be used in determining the CD-Based Rate is a day for which the Federal Reserve
System does not publish the CD Base Rate, the CD Base Rate for the next
preceding day for which the CD Base Rate was published shall be used instead.
"CD-Based Rate" means a rate per annum (rounded upwards, if necessary,
to the next higher 1/100th of 1%) determined by NationsBank pursuant to the
following formula:
CD-Based Rate = CD Base Rate
__________________________ + CD Assessment Rate
1.00 - CD Reserve Percentage
"CD Rate Loan" means any Loan bearing interest at a rate based upon the
CD-Based Rate as provided in Section 4.1(a).
"CD Reserve Percentage" means, for any day, the percentage (expressed
as a decimal rounded upwards, if necessary, to the next higher 1/100th of 1%)
which is in effect for such day as prescribed by the Federal Reserve Board (or
any successor) for determining the maximum reserve requirement (including
without limitation any basic, supplemental or emergency reserves) for a member
bank of the Federal Reserve System in Charlotte in respect of new non-personal
time deposits in Charlotte having a maturity comparable to the Interest Period
selected and in an amount comparable to the CD Rate Loan which shall be
outstanding during such Interest Period.
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"Closing Date" means the date of this Agreement or such later Business
Day upon which each condition described in Section 5.2 shall be satisfied or
waived in all respects in a manner acceptable to the Agent, in its sole
discretion.
"Code" means the Internal Revenue Code of 1986, and the rules and
regulations thereunder, each as amended or supplemented.
"Collateral" means all the assets, property and interests in property
of the Borrower and its Subsidiaries, whether now owned or hereafter acquired,
that shall, from time to time, secure the Obligations including without
limitation the Collateral described in the Security Documents and any property
or interest provided in addition to or in substitution for any of the foregoing.
"Commitment Percentage" means, with respect to a particular Lender, the
percentage obtained by dividing (a) the amount of the Total Commitment of such
Lender by (b) the amount of the Total Commitments of all Lenders.
"Committed Amount" means an amount equal to the lesser of (i) the
Aggregate Revolving Credit Commitment or (ii) the Borrowing Base.
"Consolidated" means, with reference to financial statements or
financial statement items of the Borrower and its Subsidiaries, such statements
or items on a consolidated basis in accordance with applicable principles of
consolidation under GAAP.
"Coverage Ratio" means, as of any quarter end, the ratio of (x) EBITDAR
less Capital Expenditures both for the period of four (4) consecutive fiscal
quarters ending on such fiscal quarter end, to (y) the sum of (i) Interest
Expense plus (ii) Restricted Payments by the Borrower during such period (other
than mandatory payments under the Borrower's Subordinated Extendible Debentures
due April 1, 2000, Series C and mandatory payments under the Borrower's 11-1/4%
Convertible Senior Subordinated Debentures due October 1, 1997) to the extent
Restricted Payments are permitted hereunder, plus (iii) current maturities of
Debt during such period plus (iv) all rental and operating lease expenses
deducted in the determination of EBITDAR, all determined on the basis of a
Consolidated balance sheet of the Borrower and its Subsidiaries.
"Credit Risk" means the risk of loss resulting solely and exclusively
from an account debtor's failure to pay at maturity because of its financial
inability.
"Current Assets" means, at any date, all amounts which should be
included under current assets on a Consolidated balance sheet of the Borrower
and its Subsidiaries on such date in accordance with GAAP.
5
"Current Liabilities" means, at any date, all amounts which should be
included under current liabilities on a Consolidated balance sheet of the
Borrower and its Subsidiaries on such date in accordance with GAAP; provided,
that the current portion of all Debt shall be excluded from the computation of
Current Liabilities.
"Debt" means, with respect to any Person at any date, the sum of the
following calculated in accordance with GAAP: (a) all liabilities, obligations
and indebtedness for borrowed money including but not limited to obligations
evidenced by bonds, debentures, notes or other similar instruments, (b) all
obligations to pay the deferred purchase price of property or services
including, without limitation, all conditional sale obligations and seller notes
and earn-out obligations issued or incurred in connection with the acquisition
of any other Person, (c) all obligations as lessee under Capital Leases, (d) all
Debt of any other Person secured by a Lien on any asset of such Person, (e) all
obligations, contingent or otherwise, relative to the face amount of letters of
credit, whether or not drawn, including, without limitation, any Reimbursement
Obligation, and banker's acceptances in each case issued for the account of any
such Person, (f) all Guarantees by such Person, (g) all obligations to redeem,
repurchase, exchange, defease or otherwise make payments in respect of capital
stock or other securities of such Person and (h) all payments which would be due
and payable by any such Person upon termination of any Hedging Agreement.
"Deeds of Trust" means each of the Deeds of Trust, Mortgages and Deed
to Secure Debt executed by the Borrower or any of its Subsidiaries in favor of
the Agent, for the benefit of the Lenders and the Disbursing Agent, as amended
or supplemented from time to time. On the Closing Date, such Deeds of Trust,
Mortgages and Deed to Secure Debt shall encumber the properties listed on
Schedule 1.1(b).
"Default" means any of the events specified in Section 11.1 which with
the passage of time, the giving of notice or any other condition, would
constitute an Event of Default.
"Disbursing Agent" means NationsBanc Commercial Corporation in its
capacity as disbursing agent hereunder, and any successor thereto appointed
pursuant to Section 12.9.
"Dollars" or "$" means, unless otherwise qualified, dollars in lawful
currency of the United States.
"EBITDA" means, for any period of determination, (a) Net Income for
such period, plus (b) the sum of the following to the extent deducted in the
determination of Net Income: (i) income taxes, (ii) Interest Expense and (iii)
amortization, depreciation, charges incurred for discontinued operations during
fiscal year 1995 and other non-cash charges (including amortization of goodwill,
transaction expenses, covenants not to compete and other intangible assets).
6
"EBITDAR" means, for any period of determination, (a) EBITDA for such
period plus (b) all rental and operating lease expenses which accrue under
Material Leases and which are deducted in the determination of Net Income for
such period.
"Eligible Accounts" means the aggregate amount of all Accounts created
by the Borrower for which the Factors retain the Credit Risk under their
respective Factoring Agreements with the Borrower and all Accounts sold and
assigned to the Factors under their respective Factoring Agreements with
recourse to the Borrower but with respect to which the Credit Risk is fully
insured in form and substance reasonably satisfactory to the Agent and which
policy has been endorsed or assigned to the Agent, less all discounts, returns,
credits or allowances at any time issued, owing or outstanding, less the amount
by which the aggregate amount of all such Accounts sixty (60) days or more past
due exceeds 10% of all such Accounts, less all such Accounts which, to the best
knowledge of the Borrower, have remained unpaid for a period exceeding one
hundred eighty (180) days from the date of the invoice therefor, less all
reserves, less any commissions due the Factors under their respective Factoring
Agreements and less any commissions due any credit insurer under any policy of
credit insurance (including the policy of American Credit Indemnity Company).
"Eligible Assignee" means, with respect to any assignment of the
rights, interest and obligations of a Lender hereunder, a Person that is at the
time of such assignment (a) a commercial bank organized under the laws of the
United States or any state thereof, having total capital and surplus in excess
of $500,000,000, (b) a finance company, insurance company or other financial
institution which in the ordinary course of business extends credit of the type
extended hereunder and that has total capital and surplus in excess of
$500,000,000, (c) already a Lender hereunder (whether as an original party to
this Agreement or as the assignee of another Lender), (d) the successor (whether
by transfer of assets, merger or otherwise) to all or substantially all of the
commercial lending business of a Lender, (e) any Affiliate of the assigning
Lender or (f) any other Person that has been approved in writing as an Eligible
Assignee by the Borrower and the Agent.
"Eligible Inventory" means the gross dollar value of the raw materials,
greige goods and finished goods held for sale in the ordinary course of the
business of the Borrower and its Subsidiaries in which the Agent on behalf of
the Lenders and the Disbursing Agent has a first priority, perfected security
interest pursuant to the Security Agreement and which at all times continues to
be acceptable to the Agent in its sole, reasonable discretion, less (to the
extent otherwise included in Eligible Inventory) any supplies, spare parts,
work-in-process, goods rejected by any customer of the Borrower or its
Subsidiaries or returned by any customer unless suitable for sale to other
customers, goods to be returned to suppliers of the Borrower or its
Subsidiaries, goods in transit to third parties, Inventory subject to a Lien
other than a Lien in favor of the Agent or a Factor, Inventory on consignment to
or from the Borrower, obsolete Inventory, Inventory held by the Borrower for
more than twelve months, Inventory deemed ineligible in the sole reasonable
discretion of the Agent and less any
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irregular inventory and reserves required by GAAP for obsolete inventory and
market value declines, all as set forth and more particularly described in the
Borrowing Base Certificate.
"Employee Benefit Plan" means any employee benefit plan within the
meaning of Section 3(3) of ERISA which (a) is maintained for employees of the
Borrower or any ERISA Affiliate or (b) has at any time within the preceding six
years been maintained for the employees of the Borrower or any current or former
ERISA Affiliate.
"Environmental Laws" means any and all federal, state and local laws,
statutes, ordinances, rules, regulations, permits, licenses, approvals,
interpretations and orders of courts or Governmental Authorities, relating to
the protection of human health or the environment, including, but not limited
to, requirements pertaining to the manufacture, processing, distribution, use,
treatment, storage, disposal, transportation, handling, reporting, licensing,
permitting, investigation or remediation of Hazardous Materials. Environmental
Laws include, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. ss. 9601 et. seq.), the Hazardous
Material Transportation Act (49 U.S.C. ss. 331 et. seq.), the Resource
Conservation and Recovery Act (42 U.S.C. ss. 6901 et. seq.), the Federal Water
Pollution Control Act (33 U.S.C. ss. 1251 et. seq.), the Clean Air Act (42
U.S.C. ss. 7401 et. seq.), the Toxic Substances Control Act (15 U.S.C. ss. 2601
et. seq.), the Safe Drinking Water Act (42 U.S.C. ss. 300, et. seq.), the
Environmental Protection Agency's regulations relating to underground storage
tanks (40 C.F.R. Parts 280 and 281), and the rules and regulations promulgated
under each of these statutes, each as amended or supplemented.
"Equipment" means all equipment, including, without limitation, all
manufacturing, distribution, selling, data processing and office equipment, all
machinery, all furniture, furnishings, appliances, fixtures and trade fixtures,
tools, tooling, molds, dies, vehicles, vessels, aircraft and all other goods of
every type and description other than Inventory (collectively, "Equipment").
"ERISA" means the Employee Retirement Income Security Act of 1974, and
the rules and regulations thereunder, each as amended or supplemented.
"ERISA Affiliate" means any Person who together with the Borrower is
treated as a single employer within the meaning of Section 414(b), (c), (m) or
(o) of the Code or Section 4001(b) of ERISA.
"Event of Default" means any of the events specified in Section 11.1,
provided that any requirement for passage of time, giving of notice, or any
other condition, has been satisfied.
"Excess Cash Flow" means, for any period of determination, the sum of
(a) EBITDAR for such period, minus (b) income taxes (to the extent such taxes
are paid) and Interest
8
Expense paid and deducted in the determination of Net Income for such period,
minus (c) all principal payments made in respect of Consolidated Debt during
such period (excluding Excess Cash Flow Payments pursuant to Section 3.5) minus
(d) all Capital Expenditures made during such period (excluding Capital
Expenditures made with the proceeds of Consolidated Debt), minus (e) all rental
and operating lease payments during such period, plus or minus (f) the net
change in the working capital of the Borrower and its Subsidiaries during such
period and deferred financing costs associated with this transaction.
"Extensions of Credit" means, as to any Lender at any time, an amount
equal to the sum of (a) the aggregate principal amount of all Loans made by such
Lender then outstanding and (b) such Lender's Commitment Percentage of the
Letter of Credit Obligations then outstanding.
"Factor" means NCC, RFC, First Factors Corporation, The CIT
Group/Commercial Services, Inc. ("CIT") in its role as a factor under its
Factoring Agreement with the Borrower and any other factor approved by the Agent
(which approval will not be unreasonably withheld) which has executed and
delivered to the Agent documents sufficient to waive such factor's right of
off-set with respect to ledger debt and to assign the proceeds of all factored
Accounts to the Agent for the benefit of the Lenders and which contain
provisions substantially similar to those executed by the Factors at the closing
(collectively, "Factors").
"Factoring Agreement" means any agreement between the Borrower and a
Factor for the purchase by or assignment or transfer to such Factor of the
Accounts of the Borrower (collectively, the "Factoring Agreements").
"Factoring Credit Balances" means amounts due from a Factor to the
Borrower which have been assigned to the Agent for the benefit of the Lenders
and the Disbursing Agent.
"Federal Funds Rate" means, for any day, a fluctuating interest rate
per annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published at 11:00 a.m. (Charlotte time) for such day (or, if
such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
"Financing Statements" means financing statements approved for filing
in accordance with the applicable Uniform Commercial Code and all other titles,
documents and certificates that the Agent, the Disbursing Agent or the Lenders
may require from the Borrower to describe and perfect the security interests
created herein or in the other Loan Documents.
9
"Fiscal Year" means the fifty-two, fifty-three week fiscal year of the
Borrower ending on the Friday closest to October 31.
"Fixed Rate Loan" means either a CD Rate Loan or a LIBOR Rate Loan.
"GAAP" means generally accepted accounting principles, as recognized by
the American Institute of Certified Public Accountants and the Financial
Accounting Standards Board, applied and maintained on a consistent basis for the
Borrower and its Subsidiaries throughout the period indicated and consistent
with the prior financial practice of the Borrower.
"Governmental Approvals" means all authorizations, consents, approvals,
licenses and exemptions of, registrations and filings with, and reports to, all
Governmental Authorities.
"Governmental Authority" means any nation, province, state or political
subdivision thereof, and any government or any Person exercising executive,
legislative, regulatory or administrative functions of or pertaining to
government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"Guarantee" means, with respect to any Person on any date, any direct
or indirect liability, contingent or otherwise, of such Person with respect to
any indebtedness or other obligation of another Person if the primary purpose or
intent in incurring such liability, or the primary effect thereof, is to provide
assurance to the obligee of such indebtedness or other obligation that such
indebtedness or other obligation will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders of such
indebtedness or other obligation will be protected (in whole or in part) against
loss with respect thereto.
"Hazardous Materials" means any substances or materials (a) which are
or become defined as hazardous wastes, hazardous substances, pollutants,
contaminants or toxic substances under any Environmental Law, (b) which are
toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic or otherwise harmful to human health or the environment and are or
become regulated by any Governmental Authority, (c) the presence of which
require investigation or remediation under any Environmental Law, (d) the
discharge or emission or release of which requires a permit or license under any
Environmental Law or other Governmental Approval, (e) which are deemed to pose a
health or safety hazard to persons or neighboring properties, (f) which are
materials consisting of underground or aboveground storage tanks, whether empty,
filled or partially filled with any substance, or (g) which contain, without
limitation, friable or damaged asbestos, polychlo rinated biphenyls, urea
formaldehyde foam insulation, petroleum hydrocarbons, petroleum derived
substances or waste, crude oil, nuclear fuel, natural gas or synthetic gas.
10
"Hedging Agreement" means any agreement approved by the Agent and
Majority Lenders with respect to an interest rate swap, collar, cap, floor or a
forward rate agreement or other agreement regarding the hedging of interest rate
risk exposure executed by the Borrower or any of its Subsidiaries with any
financial institution that is or was a Lender at the time such agreement was
entered into, and any confirming letter executed pursuant to such agreement, all
as amended or supplemented.
"House Accounts" means all Accounts created by the Borrower in the
ordinary course of its business which satisfy and continue to satisfy the
following requirements:
(a) The Account is a bona fide existing obligation of the
named account debtor arising from the sale and delivery of merchandise
or the rendering of services to such account Debtor in the ordinary
course of the Borrower's business and is actually and absolutely owing
to the Borrower and is not contingent for any reason, and the Borrower
has lawful and absolute title to such Account and the unqualified right
to assign and grant a security interest therein to the Agent;
(b) The subject merchandise has been shipped or delivered on
open account to the named account debtor on an absolute sale basis and
not on consignment, on approval or on a return basis or subject to any
other repurchase or return agreement and no material part of the
subject merchandise has been returned;
(c) The Account is not evidenced by chattel paper or an
instrument of any kind, unless such chattel paper or instrument is
duly endorsed to and is in the possession of the Agent;
(d) The Account is a valid, legally enforceable obligation of
the account debtor and no offset (including without limitation
discounts, counterclaims or contra accounts) or other defense on the
part of such account debtor or any claim on the part of such account
debtor denying liability thereunder has been asserted;
(e) The Account is not subject to any lien or security
interest whatsoever, except for the Agent's security interest and other
security interests permitted herein, and a currently effective UCC
financing statement filed by the Agent against the Borrower covering
such Account is on file in all appropriate filing locations for all of
the Borrower's places of business and records concerning such Account;
(f) The Credit Risk with respect to the Account is fully
insured in form and substance reasonably satisfactory to the Agent or
confirmed letters of credit supporting payment of such Account have
been issued and transferred to the Agent under documents reasonably
satisfactory to the Agent; provided, that the value of such
11
Account shall be determined net of any commissions due in respect of
such insurance or letters of credit;
(g) The Account has not been specifically assigned to a Factor
and the account debtor on the Account is not the account debtor on any
Account which has been specifically assigned to a Factor;
(h) The Account is not due from an account debtor more than
fifty percent (50%) of whose Accounts have remained unpaid for a period
exceeding ninety (90) days from the respective dates of such invoices;
(i) The Account has not remained unpaid for a period exceeding
one hundred twenty (120) days from the date of such invoice;
(j) The Account at all times continues to be acceptable to
the Agent in its sole, reasonable discretion;
(k) The Account does not arise out of a contract with the
United States of America, or any department, agency, subdivision or
instrumentality thereof, or any State or municipality, or any agency
or unit thereof; and
(l) The Borrower shall have directed payment of such
Account to the Lockbox.
"House Accounts Limit" means $6,000,000 during the period from the
Closing Date through the fifth Business Day following receipt by the Agent of
the annual financial statements for the Borrower for Fiscal Year 1996,
$10,000,000 thereafter until the fifth Business Day following receipt by the
Agent of the financial statements of the Borrower for the second quarter of
Fiscal Year 1997, $15,000,000 thereafter until the fifth Business Day following
receipt by the Agent of the annual financial statements for the Borrower for
Fiscal Year 1997, and $18,000,000 thereafter; provided, that in no event shall
the House Accounts Limit increase after the occurrence and during the
continuance of an Event of Default.
"Interest Expense" means, for any period, the gross interest expense
(including without limitation, interest expense attributable to Capital Leases
and all net obligations pursuant to Hedging Agreements) of the Borrower and its
Subsidiaries for such period, all determined for such period on a Consolidated
basis in accordance with GAAP.
"Interest Period" shall have the meaning assigned thereto in Section
4.1(b).
"Inventory" means all inventory of the Borrower and its Subsidiaries
wherever located, including without limitation, all goods manufactured or
acquired for sale or lease and all raw materials, work in process and finished
merchandise, and all supplies and goods, used
12
or consumed in the operation of the business of the Borrower and its
Subsidiaries, whether or not the same is in transit or in the constructive,
actual or exclusive possession of the Borrower or its Subsidiaries or is held by
the Borrower, its Subsidiaries or by others for the account of the Borrower or
its Subsidiaries and the cash and non-cash proceeds thereof, including but not
limited to proceeds realized from the sale of such items and insurance proceeds.
"Issuing Lender" means NationsBank, in its capacity as issuer of any
Letter of Credit, or any successor thereto.
"L/C Commitment" means One Million Dollars ($1,000,000).
"L/C Facility" means the letter of credit facility established pursuant
to Article IIA hereof.
"L/C Participants" means the collective reference to all the Lenders
other than the Issuing Lender.
"Lender" means each Person executing this Agreement as a Lender set
forth on the signature pages hereto and each Person that hereafter becomes a
party to this Agreement as a Lender pursuant to Section 13.9.
"Lending Office" means, with respect to any Lender, the office of such
Lender maintaining such Lender's Loans.
"Letter of Credit Obligations" means at any time, an amount equal to
the sum of (a) the aggregate undrawn and unexpired amount of the then
outstanding Letters of Credit and (b) the aggregate amount of drawings under
Letters of Credit which have not then been reimbursed pursuant to Section 2A.5.
"Letters of Credit" shall have the meaning assigned thereto in Section
2A.1(a).
"Leverage Ratio" means as of any fiscal quarter end the ratio of (a)
Consolidated Debt of the Borrower and its Subsidiaries as of such fiscal quarter
end to (b) Consolidated EBITDA of the Borrower and its Subsidiaries for the
period of four consecutive fiscal quarters ending on such fiscal quarter end.
"LIBOR" means the rate of interest determined on the basis of the rate
for deposits in Dollars for a period equal to the Interest Period selected which
appears on the Telerate Page 3750 at approximately 11:00 a.m. London time, two
(2) Business Days prior to the commencement of the applicable Interest Period.
If, for any reason, such rate is not available, the "LIBOR" shall mean the rate
per annum at which, as determined by the Agent, Dollars in the amount of the
subject Loan are being offered to leading banks at approximately
13
11:00 a.m. London time, two (2) Business Days prior to the commencement of the
applicable Interest Period for settlement in immediately available funds by
leading banks in the London interbank market for a period equal to the Interest
Period selected.
"LIBOR Rate" means a rate per annum (rounded upwards, if necessary, to
the next higher 1/100th of 1%) determined by the Agent pursuant to the following
formula:
LIBOR Rate = LIBOR
--------------------------------------
1.00 - Reserve Requirement
"LIBOR Rate Loan" means any Loan bearing interest at a rate determined
with reference to the LIBOR Rate as provided in Section 4.1(a) hereof.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
For the purposes of this Agreement, a Person shall be deemed to own subject to a
Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, Capital Lease or other
title retention agreement relating to such asset.
"Loan" means any Revolving Credit Loan or any Term Loan made to the
Borrower pursuant to Articles II and III and all such Loans collectively as the
context requires.
"Loan Documents" means, collectively, this Agreement, the Notes, the
Security Documents, any Hedging Agreement, any Application, any lockbox or cash
management agreement with the Disbursing Agent or a Lender and each other
document, instrument and agreement executed and delivered by any Loan Party in
connection with this Agreement, all as amended or supplemented.
"Loan Party" means the Borrower and each other Person (other than the
Agent, the Disbursing Agent, the Factors and the Lenders) which is now or
hereafter party to any of the Loan Documents.
"Lockbox" means a post office box maintained by the Disbursing Agent to
which the proceeds of the House Accounts are to be remitted by the account
debtor on such House Account. The proceeds of House Accounts remitted to the
Lockbox shall be deposited into an account in the name and sole control of the
Disbursing Agent pending the application of such proceeds by the Disbursing
Agent as provided in this Agreement.
"Majority Lenders" means, at any date, any combination of Lenders
holding at least fifty-one percent (51%) of all Loans or, if no Loans are at the
time outstanding, Lenders whose Commitment Percentages aggregate at least
fifty-one percent (51%).
14
"Material Adverse Effect" means a material adverse effect on (a)
Collateral with an aggregate value of $1,000,000 or more, (b) the properties,
business, operations or financial condition of the Borrower and its
Subsidiaries, taken as a whole, or (c) the ability of the Borrower and its
Subsidiaries, taken as a whole, to perform their payment obligations or other
material obligations under the Loan Documents.
"Material Contract" means any written contract, agreement or other
instrument to which the Borrower or any of its Subsidiaries is a party (or by
which the Borrower or any of its Subsidiaries is bound), the cancellation,
non-performance or non-renewal of which by any party thereto would have a
Material Adverse Effect.
"Material Lease" means any lease, license or other similar agreement
which creates a possessory interest in personal property, the aggregate rentals
or payments under which exceed $50,000 during the term of such agreement or
whose term exceeds a period of one year.
"Maximum Rate" shall have the meaning assigned thereto in Section
4.1(f).
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is making, or
is accruing an obligation to make, contributions within the preceding six years.
"NationsBank" means NationsBank, N.A., a national banking association, and
its successors.
"NCC" means NationsBanc Commercial Corporation, and its successors.
"Net Income" means, with respect to the Borrower and its Subsidiaries
for any period, the Consolidated net income (or loss) of the Borrower and its
Subsidiaries for such period determined in accordance with GAAP; provided, that
there shall be excluded from Consolidated net income (or loss): (a) the income
(or loss) of any Person (other than a Subsidiary of the Borrower) in which the
Borrower has an ownership interest unless received by the Borrower in a cash
distribution, (b) the income (or loss) of any Person accrued prior to the date
it became a Subsidiary of the Borrower or is merged into or consolidated with
the Borrower and (c) extraordinary items.
"Net Proceeds" means, with respect to any sale, lease, transfer or
other disposition of assets by the Borrower or any of its Subsidiaries, or any
issuance by the Borrower or any of its Subsidiaries of any capital stock or
other debt or equity securities permitted hereunder, the aggregate amount of
cash received for such assets or securities (including, without limitation, any
payments received for non-competition covenants, consulting or management fees,
and any portion of the amount received evidenced by a seller promissory note or
other evidence of Debt), net of (i) amounts reserved, if any, for taxes payable
with respect to any
15
such sale (after application of any available losses, credits or other offsets),
(ii) reasonable and customary transaction costs properly attributable to such
transaction and payable by the Borrower or any of its Subsidiaries (other than
to an Affiliate) in connection with such sale, lease, transfer or other
disposition of assets or issuance of any capital stock or other securities,
including, without limitation, commissions and underwriting discounts, and (iii)
until actually received by the Borrower or any of its Subsidiaries, any portion
of the amount received held in escrow or evidenced by a seller promissory note
or non-compete agreement or covenant for which compensation is paid over time.
Upon receipt by the Borrower or any of its Subsidiaries of amounts referred to
in item (iii) of the preceding sentence, such amounts shall then be deemed to be
"Net Proceeds."
"Net Worth" means, at any date, the combined stockholders' equity
(including capital stock, additional paid-in capital and retained earnings,
after deducting treasury stock) of the Borrower and its Subsidiaries at such
time (excluding all Subordinated Debt) determined in accordance with GAAP.
"Notes" means the Revolving Credit Notes or the Term Notes, or any
combination thereof; "Note" means any of such Notes.
"Notice of Conversion/Continuation" shall have the meaning assigned thereto
in Section 4.2.
"Notice of Revolving Credit Loan Borrowing" shall have the meaning
assigned thereto in Section 2.2(a).
"Obligations" means, in each case, whether now in existence or
hereafter arising: (a) the principal of and interest on (including interest
accruing after the filing of any bankruptcy or similar petition) all Loans, (b)
the Letter of Credit Obligations, (c) all payment and other obligations owing by
the Borrower under any Hedging Agreement and (d) all other fees and commissions
(including reasonable attorney's fees), charges, indebtedness, loans,
liabilities, financial accommodations, obligations, covenants and duties owing
by the Borrower to the Lenders, the Agent or the Disbursing Agent arising under
this Agreement or any other Loan Document, of every kind, nature and
description, direct or indirect, absolute or contingent, due or to become due,
contractual or tortious, liquidated or unliquidated, and whether or not
evidenced by any note, and whether or not for the payment of money.
"Officer's Compliance Certificate" shall have the meaning assigned
thereto in Section 7.2.
"Other Taxes" shall have the meaning assigned thereto in Section 4.10(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
agency.
16
"Pension Plan" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to the provisions of Title IV of ERISA or
Section 412 of the Code and which (a) is maintained for employees of the
Borrower or any ERISA Affiliates or (b) has at any time within the preceding six
years been maintained for the employees of the Borrower or any of its current or
former ERISA Affiliates.
"Permitted Lien" means any of the Liens permitted under Section 10.3.
"Person" means an individual, corporation, partnership, association,
trust, business trust, joint venture, limited liability company, joint stock
company, pool, syndicate, sole proprietorship, unincorporated organization,
Governmental Authority or any other form of entity not specifically listed
herein.
"Preferred Stock" means any of the Borrower's Stock which gives the
holder thereof a preference over the holders of the Borrower's common stock with
respect to the payment of dividends or liquidation proceeds, or otherwise
designated by the Borrower as "preferred stock," including without limitation
the Borrower's Series A Junior Participating Preferred Stock.
"Prime Rate" means, at any time, the rate of interest per annum
publicly announced from time to time by the Agent as its prime rate. Each change
in the Prime Rate shall be effective as of the opening of business on the day
such change in the Prime Rate occurs. The parties hereto acknowledge that the
rate announced publicly by the Agent as its Prime Rate is an index or base rate
and shall not necessarily be its lowest rate charged to its customers or other
banks.
"Realty" means all of those certain tracts or parcels of land owned or
leased by the Borrower, some of which are more particularly described in the
Deeds of Trust, together with all easements, rights and appurtenances thereto,
and all buildings and improvements now or hereafter located thereon, and all
fixtures and all additions thereto and substitutions therefor, whether now or
hereafter existing, and all realty and interests in realty hereafter acquired or
leased by the Borrower in the United States.
"Register" shall have the meaning assigned thereto in Section 13.9(c).
"Reimbursement Obligation" means the obligation of the Borrower to
reimburse the Issuing Lender pursuant to Section 2A.5 for amounts drawn under
Letters of Credit.
"Required Lenders" means, at any date, any combination of Lenders
holding at least 66 2/3% of all Loans or, if no Loans are at the time
outstanding, Lenders whose Commitment Percentages aggregate at least 66 2/3%.
"Reserve Requirement" means, on any day, that percentage (expressed as
a decimal fraction) which is in effect on such day, as provided by the Board of
Governors of the Federal Reserve System (or any successor governmental body),
for determining the maximum reserve requirements (including, without limitation,
basic, supplemental, marginal and emergency
17
reserves) with respect to "Eurocurrency liabilities" as currently defined in
Regulation D of the Board of Governors of the Federal Reserve System, or under
any similar or successor regulation of the Board of Governors with respect to
Eurocurrency liabilities or Eurocurrency funding. Each determination by a Lender
of the Reserve Requirement shall, in the absence of manifest error, be
conclusive and binding.
"Restricted Payments" shall have the meaning assigned thereto in Section
10.11.
"Revolving Credit Commitment" means as to any Lender, the commitment of
such Lender to make Revolving Credit Loans as set forth on Schedule 1.1(a) of
this Agreement or in the most recent Assignment and Acceptance, if any, executed
by such Lender, as such amount may be reduced at any time or from time to time
pursuant to Section 2.5.
"Revolving Credit Facility" means the revolving credit facility
established pursuant to Article II hereof.
"Revolving Credit Loan" means any Revolving Credit Loan made to the
Borrower pursuant to Article II and all such Loans collectively as the context
requires.
"Revolving Credit Notes" means the separate Revolving Credit Notes made
by the Borrower payable to the order of each of the Lenders, substantially in
the form of Exhibit A-1 hereto, evidencing the Revolving Credit Facility, and
any amendments, modifications and supplements thereto, any substitutes therefor,
and any replacements, restatements, renewals or extension thereof, in whole or
in part.
"Revolving Credit Termination Date" means the earliest of the dates
referred to in Section 2.6.
"RFC" means Republic Factoring Corporation.
"Security Agreement" means the Security Agreement of even date between
the Borrower, as grantor, in favor of the Agent for the benefit of the Agent,
the Disbursing Agent and the Lenders, as amended or supplemented from time to
time.
"Security Documents" means the collective reference to the Security
Agreement, the Deeds of Trust, the Assignment of Factoring Proceeds, and each
other agreement or writing pursuant to which any Loan Party pledges or grants a
security interest in the Collateral or other collateral securing the Obligations
or such Person guarantees the payment and/or performance of the Obligations.
"Solvent" means, with respect to the Borrower and its Subsidiaries on a
Consolidated basis at any date, that the Borrower and its Subsidiaries (a) have
capital sufficient to carry on their businesses and transactions in which they
engage and are able to pay their debts as they mature, (b) own property having a
present fair saleable value on a going concern basis greater than the amount
required to pay their probable liabilities (including contingencies), and (c) do
not believe that they will incur debts or liabilities beyond their ability to
pay such debts
18
or liabilities as they mature. In determining the amount of contingent or
unliquidated liabilities at any date, such liabilities will be computed at the
amount which, in light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.
"Stock" means all shares, options, interests or other equivalents
(howsoever designated) of or in a corporation, whether voting or nonvoting,
including, without limitation, common stock, warrants, preferred stock,
convertible debentures and all agreements, instruments and documents
convertible, in whole or in part, into any one or more or all of the foregoing.
"Subordinated Debt" means any Debt which expressly contains in the
instruments evidencing such Debt, or in the indenture or other similar
instrument pursuant to which such Indebtedness is issued, subordination
provisions, in form and substance reasonably satisfactory to the Required
Lenders, to the effect that the holder agrees that the Indebtedness evidenced by
such instrument, and any renewals or extensions thereof, shall at all times and
in all respects be subordinate and junior in right of payment to the Obligations
hereunder and shall include, without limitation, the Borrower's 11-1/4%
Convertible Senior Subordinated Debentures due October 1, 1997, 8-3/4% Senior
Subordinated Debentures due August 1, 1999, and Subordinated Extendible
Debentures due April 1, 2000, Series C.
"Subsidiary" means, as to any Person, any other Person of which more
than fifty percent (50%) of the outstanding capital stock or other ownership
interests having ordinary voting power to elect a majority of the board of
directors or other managers of such Person is at the time, directly or
indirectly, owned by or the management is otherwise controlled by such Person
(irrespective of whether, at the time, capital stock or other ownership
interests shall have or might have voting power by reason of the happening of
any contingency). Unless otherwise qualified, references to "Subsidiary" or
"Subsidiaries" herein shall refer to those of the Borrower.
"Taxes" shall have the meaning assigned thereto in Section 4.10(a).
"Term Loan" means the Term Loan made to the Borrower pursuant to
Article III.
"Term Loan Commitment" means as to any Lender, the commitment of such
Lender to make the Term Loans as set forth on Schedule 1.1(a) of this Agreement.
"Term Loan Facility" means the term loan facility established pursuant
to Article III hereof.
"Term Loan Maturity Date" means September 15, 1998.
"Term Notes" means the Term Notes made by the Borrower payable to the
order of each of the Lenders, substantially in the form of Exhibit A-2 hereto,
evidencing the Term Loan Facility, and any amendments, modifications and
supplements thereto, any substitutes
19
therefor, and any replacements, restatements, renewals or extensions thereof, in
whole or in part.
"Termination Event" means, a "Reportable Event" described in Section
4043 of ERISA (other than a reportable event not subject to the provision for
30-day notice to the PBGC under regulations promulgated under such Section), (b)
the withdrawal of the Borrower or any ERISA Affiliate from a Pension Plan during
a plan year in which it was a "substantial employer" as defined in Section
4001(a)(2) of ERISA, (c) the termination of a Pension Plan, the filing of a
notice of intent to terminate a Pension Plan or the treatment of a Pension Plan
amendment as a termination under Section 4041 of ERISA, (d) the institution of
proceedings to terminate, or the appointment of a trustee with respect to, any
Pension Plan by the PBGC, (e) any other event or condition which would
constitute grounds under Section 4042(a) of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan, (f) the partial or
complete withdrawal of the Borrower or any ERISA Affiliate from a Multiemployer
Plan, (g) the imposition of a Lien pursuant to Section 412 of the Code or
Section 302 of ERISA, (h) any event or condition which results in the
reorganization or insolvency of a Multiemployer Plan under Sections 4241 or 4245
of ERISA, or (i) any event or condition which results in the termination of a
Multiemployer Plan under Section 4041A of ERISA or the institution by PBGC of
proceedings to terminate a Multiemployer Plan under Section 4042 of ERISA.
"Total Commitment" means, as to any Lender, the collective reference to
the total amount of (a) the Revolving Credit Commitment of such Lender and (b)
the Term Loan Commitment of such Lender.
SECTION 1.2 General. All terms of an accounting nature not specifically
defined herein shall have the meaning assigned thereto by GAAP. Unless otherwise
specified, a reference in this Agreement to a particular section, subsection,
Schedule or Exhibit is a reference to that section, subsection, Schedule or
Exhibit 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. Any reference herein to
"Charlotte time" or "Atlanta time" shall refer to the applicable time of day in
Charlotte, North Carolina, or Atlanta,Georgia, as the case may be.
SECTION 1.3 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 or any Subsidiary thereof to determine compliance with any covenant
contained herein, shall, except as otherwise expressly contemplated hereby or
unless there is an express written direction by the Agent with the consent of
the Required Lenders to the contrary agreed to by the Borrower, be performed in
accordance with GAAP as in effect on the Closing Date. In the event that changes
in GAAP (as in effect on the Closing Date) shall be mandated by the Financial
Accounting Standards Board, or any similar accounting body of comparable
standing, or shall be recommended by the Borrower's certified public
accountants, to the extent that such changes would modify such accounting terms
or the interpretation or computation thereof,
20
such changes shall be followed in defining such accounting terms only from and
after the date the Borrower and the Lenders shall have amended this Agreement to
the extent necessary to reflect any such changes in the financial covenants and
other terms and conditions of this Agreement.
SECTION 1.4 Other Definitions and Provisions.
(a) Use of Capitalized Terms. Unless otherwise defined therein, all
capitalized terms defined in this Agreement shall have the defined meanings when
used in this Agreement, the Notes and the other Loan Documents or any
certificate, report or other document made or delivered pursuant to this
Agreement.
(b) Miscellaneous. The words "hereof", "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
ARTICLE II
REVOLVING CREDIT FACILITY
SECTION 2.1 Commitment.
(a) Revolving Credit Loans. Subject to the terms and conditions of this
Agreement, each Lender severally agrees to make Revolving Credit Loans to the
Borrower from time to time from the Closing Date through but not including the
Revolving Credit Termination Date as requested by the Borrower in accordance
with Section 2.2; provided, that (a) the aggregate principal amount of all
outstanding Revolving Credit Loans (after giving effect to any amount requested)
shall not exceed an amount equal to the lesser of (i) the Aggregate Revolving
Credit Commitment less the Letter of Credit Obligations and the Borrowing Base
and (b) the sum of the principal amount of outstanding Revolving Credit Loans
from any Lender to the Borrower plus such Lender's Commitment Percentage of the
Letter of Credit Obligations then outstanding shall not at any time exceed an
amount equal to such Lender's Revolving Credit Commitment. Immediately after
giving effect to the initial Loans to be made and Letters of Credit to be issued
on the Closing Date, the Committed Amount shall exceed the aggregate outstanding
principal amount of all Revolving Credit Loans and Letter of Credit Obligations
by at least $2,500,000, and after giving effect to any voluntary prepayment by
the Borrower of any Debt for borrowed money, including Subordinated Debt but
excluding the Loans, and as a condition precedent to the Borrower's right to
make any investment permitted by Section 10.4(e), the Committed Amount shall
exceed the aggregate outstanding principal amount of all Revolving Credit Loans
and Letter of Credit Obligations by at least $5,000,000. Each Revolving Credit
Loan by a Lender shall be in a principal amount equal to such Lender's
Commitment Percentage of the aggregate principal amount of Revolving Credit
Loans requested on each occasion. Subject to the terms
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and conditions hereof, the Borrower may borrow, repay and reborrow Revolving
Credit Loans hereunder until the Revolving Credit Termination Date.
SECTION 2.2 Procedure for Advances.
(a) Initial Loan. On or prior to the Closing Date, the Borrower shall
give the Disbursing Agent irrevocable written notice in the form attached hereto
as Exhibit B-1 (a "Notice of Revolving Credit Loan Borrowing") of the Revolving
Credit Loan to be made on the Closing Date, which Loan shall be either a Base
Rate Loan or a CD Rate Loan, as elected by the Borrower.
(b) Subsequent Loans. With respect to all Revolving Credit Loans requested
by the Borrower subsequent to the Closing Date:
(i) The Borrower shall, not later than 11:00 a.m. (Atlanta
time) (1) at least one Business Day before each Base Rate Loan and (2)
at least three Business Days before each Fixed Rate Loan, give the
Disbursing Agent irrevocable written notice in the form of a Notice of
Revolving Credit Loan Borrowing (or telephonic notice of such requested
borrowing promptly confirmed by such written notice) specifying (A) the
date of such borrowing, which shall be a Business Day, (B) the amount
of such borrowing, which shall be with respect to Fixed Rate Loans in
the aggregate principal amount of $3,000,000 or a whole multiple of
$1,000,000 in excess thereof, (C) whether the Revolving Credit Loans
are to be Fixed Rate Loans or Base Rate Loans and (D) in the case of a
Fixed Rate Loan, the duration of the Interest Period applicable
thereto. Notices received after 11:00 a.m. (Atlanta time) shall be
deemed received on the next Business Day.
(ii) Upon receipt of each Notice of Revolving Credit Loan
Borrowing, the Disbursing Agent shall calculate the Borrowing Base as
of the date of such proposed borrowing, based on the information set
forth in the then most current Borrowing Base Certificate furnished to
the Disbursing Agent by the Borrower pursuant to Section 2.2 (c) and
the Disbursing Agent's determination of the amount of Eligible Accounts
and the Disbursing Agent shall determine the maximum amount of the
Revolving Credit Loans to be made. If the requested Loan is to be a
Base Rate Loan, the Disbursing Agent shall, subject to Section 4.6,
make the requested Loan on behalf of the Lenders, and each such advance
shall be deemed an advance under and shall be evidenced by, the
Revolving Credit Notes. Each Lender hereby assigns to the Disbursing
Agent a ratable portion of its respective Revolving Credit Note to the
extent of the Disbursing Agent's unpaid funding obligations and
interest accruing with respect thereto as set forth in this Section
2.2(b) hereof outstanding from time to time. Such assignment shall be
effective only to the extent of unpaid funding obligations and accrued
interest thereon due and payable at any time to the Disbursing Agent
and shall in no event affect any commitment or other fees due the
Lenders hereunder.
If the requested Loan is a Fixed Rate Loan, the Disbursing
Agent shall, on the date of receipt of the Notice of Revolving Credit
Loan Borrowing, notify the Lenders
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of such request for a Fixed Rate Loan, and not later than 2:00 p.m.
(Atlanta time) on the proposed borrowing date, each Lender will make
available to the Disbursing Agent, for the account of the Borrower, at
the office of the Disbursing Agent, such Lender's Commitment Percentage
of the Fixed Rate Loans to be made on such borrowing date. Promptly
after the Disbursing Agent's receipt of such funds and upon fulfillment
of the applicable conditions set forth in Article V, the Disbursing
Agent will (and each Lender hereby irrevocably authorizes the
Disbursing Agent to) make such funds available to the Borrower. Subject
to Section 4.6 hereof, the Disbursing Agent shall not be obligated to
disburse the proceeds of any Fixed Rate Loan requested pursuant to this
Section 2.2 until each Lender shall have made available to the
Disbursing Agent its Commitment Percentage of such Fixed Rate Loan.
The Disbursing Agent will settle with the Lenders by
accounting for all sums advanced to the Borrower by the Disbursing
Agent (and not reimbursed by the Lenders) and the proceeds of all
Factoring Credit Balances and other sums applied to the payment of such
advances, including all other sums held by the Disbursing Agent on (A)
Tuesday of each week (or if any such Tuesday is not a Business Day, on
the next succeeding Business Day) and (B) on such date as the sum of
all available Factor Credit Balances, all other sums held by the
Disbursing Agent, the amount of any requested Base Rate Loan and all
advances made by the Disbursing Agent on behalf of the Lenders and not
reimbursed by the Lenders exceeds $5,000,000. The date of each such
settlement and accounting is referred to herein as the "Settlement
Date."
Not later than 2:00 p.m. (Atlanta time) on the Settlement
Date, each Lender shall fund its Commitment Percentage of the net
amount of all advances by the Disbursing Agent outstanding after giving
effect to the requested borrowing, which amount shall thereafter be
reflected on the books and records of the Agent and Disbursing Agent as
Revolving Credit Loans of the Lenders bearing interest at the Base Rate
plus the Applicable Margin until repaid, the occurrence of a Default or
such Base Rate Loans are converted to Fixed Rate Loans in accordance
with Section 4.2.
(iii) On each Business Day, the Disbursing Agent shall apply
the proceeds of all available Factoring Credit Balances, together with
all other sums held by the Disbursing Agent, to the payment of first,
all outstanding advances by the Disbursing Agent to the Borrower on
behalf of the Lenders, and then to the payment of all other Base Rate
Loans then outstanding, with the balance to be retained by the
Disbursing Agent pending application as provided in this Agreement.
(iv) Each Lender acknowledges and agrees that its obligation
to fund interim advances made by the Disbursing Agent in accordance
with the terms of this Section 2.2(b) is absolute and that the
obligations of all the Lenders to fund is unconditional and shall not
be affected by any circumstance whatsoever.
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(c) Borrowing Base Certificate. On Tuesday of each week, the Borrower
shall furnish to the Agent and Disbursing Agent a certificate substantially in
the form of Exhibit F attached hereto setting forth, as of the previous Friday,
the amount of House Accounts, Eligible Inventory and Letter of Credit
Obligations, together with any supporting data related thereto that the
Disbursing Agent or the Agent may reasonably request. The Agent shall confirm to
the Disbursing Agent the amount of Letter of Credit Obligations set forth in the
certificate and the Agent's acceptance of the computation of House Accounts.
Based on the information set forth in such certificate and the Disbursing
Agent's determination of the amount of Eligible Accounts (which may be based on
information supplied by the Borrower to the Disbursing Agent certified by the
Borrower to be based on its on-line review of Factor books and records), the
Disbursing Agent shall compute the Borrowing Base as of the date of each
borrowing under Section 2.2 of this Agreement, or as of the date of receipt by
the Issuing Lender of an Application for the issuance of a Letter of Credit
under Section 2A.2 to determine the maximum amount of the Revolving Credit Loans
which may be advanced or Letters of Credit which may be issued as of such date.
Each determination of the Borrowing Base by the Disbursing Agent shall, in the
absence of manifest error, be conclusive and binding. A copy of each Borrowing
Base Certificate shall be furnished to the Lenders by the Disbursing Agent.
(d) CIT Indemnity. Pursuant to a separate indemnity agreement dated as
of March 15, 1996 (the "CIT Indemnity"), the Agent on behalf of the Lenders has
agreed to indemnify The CIT Group/Commercial Services, Inc. in an aggregate
amount not to exceed $3,500,000 (plus cost and expenses, including attorneys
fees, as provided in the CIT Indemnity) in respect of certain Ledger Debt
Obligations referred to therein. The Borrower agrees to reimburse the Lenders
for the amount of any such indemnity obligation paid by the Lenders immediately
upon notice from the Agent and to pay interest on any unreimbursed amounts at
the rate which would be payable on any outstanding Base Rate Loans which were
then overdue. If the Borrower fails to timely reimburse the Lenders for any such
indemnity obligation, the Borrower shall be deemed to have timely given a Notice
of Revolving Credit Loan Borrowing hereunder to the Disbursing Agent requesting
the Lenders to make a Base Rate Loan on such date in an amount equal to such
indemnity obligation and, subject to satisfaction or waiver of the conditions
precedent specified in Article V, the Lenders shall make Base Rate Loans in such
amount, the proceeds of which shall be applied to reimburse the Lenders for such
amount. The Borrower's obligations under this Section 2.2(d) shall be absolute
and unconditional under any and all circumstances and irrespective of any
set-off, counterclaim or defense to payment which the Borrower may have or have
had against the Agent or any Lender. By its execution hereof, each Lender hereby
authorizes the Agent to enter into the CIT Indemnity on its behalf and hereby
severally agrees to pay the indemnity obligations thereunder in an aggregate
amount not to exceed its Commitment Percentage of each such obligation. Each
Lender's obligation of indemnity hereunder shall be treated as a letter of
credit obligation of such Lender.
SECTION 2.3 Repayment of Revolving Credit.
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(a) Repayment on Revolving Credit Termination Date. The Borrower shall
repay the outstanding principal amount of all Revolving Credit Loans in full,
together with all accrued but unpaid interest thereon, on the Revolving Credit
Termination Date.
(b) Overadvances. If at any time the sum of the outstanding principal
amount of all Revolving Credit Loans exceeds the lesser of (i) the Aggregate
Revolving Credit Commitment less the Letter of Credit Obligations or (ii) the
Borrowing Base (an "Overadvance"), the Borrower shall immediately repay the
Revolving Credit Loans in an amount equal to the Overadvance. Each repayment
referred to in this Section 2.3(b) shall be shall be accompanied by accrued
interest and any amount required to be paid pursuant to Section 4.8 hereof.
(c) Optional Prepayments of Revolving Credit Loans. The Borrower may at
any time and from time to time prepay the Revolving Credit Loans, in whole or in
part, without prior notice with respect to Base Rate Loans and upon at least
three (3) Business Days irrevocable notice to the Agent with respect to Fixed
Rate Loans, specifying the Business Day and amount of prepayment and whether the
prepayment is of Fixed Rate Loans or Base Rate Loans or a combination thereof,
and, if of a combination thereof, the amount allocable to each. Upon receipt of
such notice, the Agent shall promptly notify each Lender. If any such notice is
given, the amount specified therein shall be due and payable on the date
specified therein. Partial prepayments shall be in an aggregate amount of
$3,000,000 or a whole multiple of $1,000,000 in excess thereof with respect to
Fixed Rate Loans except as to prepayments required by the provisions of Section
2.3(b). Each repayment referred to in this Section 2.3(c) shall be shall be
accompanied by accrued interest and any amount required to be paid pursuant to
Section 4.8 hereof.
(d) Limitation on Prepayment of Fixed Rate Loans. The Borrower may not
prepay any Fixed Rate Loan on any day other than on the last day of the Interest
Period applicable thereto unless such repayment is accompanied by any amount
required to be paid pursuant to Section 4.8 hereof.
SECTION 2.4 Revolving Credit Notes. Each Lender's Revolving Credit
Loans and the obligation of the Borrower to repay such Revolving Credit Loans
shall be evidenced by a Revolving Credit Note executed by the Borrower payable
to the order of such Lender representing the Borrower's obligation to pay such
Lender's Revolving Credit Commitment or, if less, the aggregate unpaid principal
amount of all Revolving Credit Loans made by such Lender to the Borrower
hereunder, plus interest on such principal amounts. Each Revolving Credit Note
shall be dated the date hereof and shall bear interest on the unpaid principal
amount thereof at the applicable interest rate per annum specified in Section
4.1.
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SECTION 2.5 Voluntary Permanent Reduction of the Aggregate Revolving Credit
Commitment.
(a) The Borrower shall have the right at any time and from time to time
prior to the Revolving Credit Termination Date, upon at least five (5) Business
Days prior written notice to the Agent and the Disbursing Agent, to permanently
reduce, from time to time, without premium or penalty, the Aggregate Revolving
Credit Commitment, each reduction to be in an aggregate principal amount of not
less than $1,000,000 or any integral multiple thereof. In no event shall the
Aggregate Revolving Credit Commitment be reduced below $10,000,000 until the
Term Loan is paid in full.
(b) Each permanent reduction permitted pursuant to this Section 2.5
shall be accompanied by a payment of principal sufficient to reduce the
aggregate outstanding Extensions of Credit of the Lenders (other than Term
Loans) after such reduction to the Aggregate Revolving Credit Commitment as so
reduced and by payment of accrued interest on the amount of such repaid
principal. Any reduction of the Aggregate Revolving Credit Commitment to zero
shall be accompanied by payment of all outstanding Obligations respecting the
Revolving Credit Facility and termination of the Aggregate Revolving Credit
Commitment and Revolving Credit Facility. If the reduction of the Aggregate
Revolving Credit Commitment requires the repayment of any Fixed Rate Loan, such
reduction may be made only on the last day of the then current Interest Period
applicable thereto unless such repayment is accompanied by any amount required
to be paid pursuant to Section 4.8 hereof.
SECTION 2.6 Termination of the Revolving Credit Facility. The Revolving
Credit Facility shall terminate on the earliest of (i) September 15, 1998, (ii)
the date of permanent reduction of the Aggregate Revolving Credit Commitment in
whole pursuant to Section 2.5 and (iii) the date of termination by the Agent on
behalf of the Lenders pursuant to Section 11.2(a); provided, that not earlier
than the 30th day prior to and not later than the 30th day after each of the
first and second anniversaries of the Closing Date, the Borrower may, by written
notice (an "Extension Request") given to the Agent, request that the Revolving
Credit Termination Date be extended in each instance to a date that is 364 days
after the Revolving Credit Termination Date then in effect; provided, however,
that the Revolving Credit Termination Date shall not thereby be extended beyond
September 15, 2000. The Agent shall promptly advise the Disbursing Agent and
each Lender of its receipt of any Extension Request. The Lenders shall provide
the Agent with a written acceptance or rejection of each Extension Request no
later than sixty (60) days after the date thereof; provided that the failure of
any Lender to provide such written acceptance or rejection shall be deemed to be
a rejection of the request. If each of the Lenders provides the Agent with a
written acceptance of the Borrower's request within such sixty (60) day period,
the Agent shall so notify the Borrower in writing, with a copy to the Disbursing
Agent.
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ARTICLE IIA
LETTER OF CREDIT FACILITY
SECTION 2A.1 Commitment. Subject to the terms and conditions hereof,
the Issuing Lender, in reliance on the agreements of the other Lenders set forth
in Section 2A.4(a), agrees to issue documentary or standby letters of credit
("Letters of Credit") for the account of the Borrower on any Business Day from
the Closing Date through but not including the date which is sixty (60) days
prior to the Revolving Credit Termination Date in such form as may be approved
from time to time by the Issuing Lender; provided, that the Issuing Lender shall
have no obligation to issue any Letter of Credit if, after giving effect to such
issuance, (a) the Letter of Credit Obligations would exceed the L/C Commitment
or (b) the sum of the aggregate principal amount of all outstanding Revolving
Credit Loans and Letter of Credit Obligations would exceed the Committed Amount.
Each Letter of Credit shall (i) be denominated in Dollars, (ii) be a documentary
or standby letter of credit issued to support obligations of the Borrower,
contingent or otherwise, incurred in the ordinary course of business, (iii)
expire on a date not more than one hundred eighty (180) days later in the case
of a documentary letter of credit and not more than one year later in the case
of a standby letter of credit but in no event later than the Revolving Credit
Termination Date and (iv) be subject to the Uniform Customs and Practice for
Documentary Credits and, to the extent not inconsistent therewith, the laws of
the State of North Carolina. The Issuing Lender shall not issue any Letter of
Credit hereunder if such issuance would conflict with, or cause the Issuing
Lender or any L/C Participant to exceed any limits imposed by any Applicable
Law. References herein to "issue" and derivations thereof with respect to
Letters of Credit shall also include extensions, modifications or confirmations
of any existing Letters of Credit, unless the context otherwise requires.
SECTION 2A.2 Procedure for Issuance of Letters of Credit. The Borrower
may from time to time request that the Issuing Lender issue a Letter of Credit
by delivering to the Issuing Lender at the Agent's Office an Application
therefor, completed to the reasonable satisfaction of the Issuing Lender, and
such other certificates, documents and other papers and information as the
Issuing Lender may reasonably request. Upon receipt of any Application, the
Issuing Lender shall process such Application and the certificates, documents
and other papers and information delivered to it in connection therewith in
accordance with its customary procedures and shall, subject to Section 2A.1 and
Article V hereof, promptly issue the Letter of Credit requested thereby (but in
no event shall the Issuing Lender be required to issue any Letter of Credit
earlier than three Business Days after its receipt of the Application therefor
and all such other certificates, documents and other papers and information
relating thereto) by issuing the original of such Letter of Credit to the
beneficiary thereof or as otherwise may be agreed by the Issuing Lender and the
Borrower. The Issuing Lender shall furnish to the Borrower a copy of such Letter
of Credit and furnish to each Lender a copy of such Letter of Credit and the
amount of each Lender's L/C Participation therein, all promptly following the
issuance of such Letter of Credit.
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SECTION 2A.3 Commissions and Other Charges.
(a) The Borrower shall pay to the Agent, for the account of the Issuing
Lender and the L/C Participants, a letter of credit commission on the face
amount of each Letter of Credit in an amount equal to the Applicable Margin for
LIBOR Loans as in effect from time to time. Such commission shall be payable
quarterly in arrears on the last Business Day of each fiscal quarter of the
Borrower and on the Revolving Credit Termination Date.
(b) In addition to the foregoing commission, the Borrower shall pay the
Issuing Lender an issuance fee of one-quarter percent (1/4%) per annum on the
face amount of each Letter of Credit, which fees shall be fully earned and be
payable upon the issuance of each Letter of Credit.
(c) The Agent shall, promptly following its receipt thereof, distribute
to the Issuing Lender and the L/C Participants all commissions received by the
Agent in accordance with their respective Commitment Percentages.
SECTION 2A.4 L/C Participations.
(a) The Issuing Lender irrevocably agrees to grant and hereby grants to
each L/C Participant, and, to induce the Issuing Lender to issue Letters of
Credit hereunder, each L/C Participant irrevocably agrees to accept and purchase
and hereby accepts and purchases from the Issuing Lender, on the terms and
conditions hereinafter stated, for such L/C Participant's own account and risk
an undivided interest equal to such L/C Participant's Commitment Percentage in
the Issuing Lender's obligations and rights under each Letter of Credit issued
hereunder and the amount of each draft paid by the Issuing Lender thereunder.
Each L/C Participant unconditionally and irrevocably agrees with the Issuing
Lender that, if a draft is paid under any Letter of Credit for which the Issuing
Lender is not reimbursed in full by the Borrower in accordance with the terms of
this Agreement, such L/C Participant shall pay to the Issuing Lender upon demand
at the Issuing Lender's address for notices specified herein an amount equal to
such L/C Participant's Commitment Percentage of the amount of such draft, or any
part thereof, which is not so reimbursed.
(b) Upon becoming aware of any amount required to be paid by any L/C
Participant to the Issuing Lender pursuant to Section 2A.4(a) in respect of any
unreimbursed portion of any payment made by the Issuing Lender under any Letter
of Credit, the Issuing Lender shall notify each L/C Participant of the amount
and due date of such required payment and such L/C Participant shall pay to the
Issuing Lender the amount specified on the applicable due date. If any such
amount is paid to the Issuing Lender after the date such payment is due, such
L/C Participant shall pay to the Issuing Lender on demand, in addition to such
amount, the product of (i) such amount, times (ii) the daily average Federal
Funds Rate as determined by the Agent during the period from and including the
date such payment is due to the date on which such payment is immediately
available to the Issuing Lender, times (iii) a fraction the numerator of which
is the number of days that elapse during such period and the denominator of
which is 360. A certificate of the Issuing Lender with respect to any amounts
owing under this Section shall be conclusive in the absence of manifest error.
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With respect to payment to the Issuing Lender of the unreimbursed amounts
described in this Section 2A.4(b), if the L/C Participants receive notice that
any such payment is due (A) prior to 1:00 p.m. (Charlotte time) on any Business
Day, such payment shall be due that Business Day, and (B) after 1:00 p.m.
(Charlotte time) on any Business Day, such payment shall be due on the following
Business Day.
(c) Whenever, at any time after the Issuing Lender has made payment
under any Letter of Credit and has received from any L/C Participant its
Commitment Percentage of such payment in accordance with this Section 2A.4, the
Issuing Lender receives any payment related to such Letter of Credit (whether
directly from the Borrower or otherwise, or any payment of interest on account
thereof, the Issuing Lender will promptly distribute to such L/C Participant its
pro rata share thereof; provided, that in the event that any such payment
received by the Issuing Lender shall be required to be returned by the Issuing
Lender, such L/C Participant shall return to the Issuing Lender the portion
thereof previously distributed by the Issuing Lender to it.
SECTION 2A.5 Reimbursement Obligation of the Borrower. The Borrower
agrees to reimburse the Issuing Lender on each date on which the Issuing Lender
notifies the Borrower of the date and amount of a draft paid under any Letter of
Credit for the amount of (a) such draft so paid and (b) any taxes, fees, charges
or other costs or expenses incurred by the Issuing Lender in connection with
such payment. Each such payment shall be made to the Issuing Lender at its
address for notices specified herein in lawful money of the United States and in
immediately available funds. Interest shall be payable on any and all amounts
remaining unpaid by the Borrower under this Article IIA from the date such
amounts become payable (whether at stated maturity, by acceleration or
otherwise) until payment in full at the rate which would be payable on any
outstanding Base Rate Loans which were then overdue. If the Borrower fails to
timely reimburse the Issuing Lender on the date the Borrower receives the notice
referred to in this Section 2A.5, the Borrower shall be deemed to have timely
given a Notice of Revolving Credit Loan Borrowing hereunder to the Disbursing
Agent requesting the Lenders to make a Base Rate Loan on such date in an amount
equal to the amount of such drawing and, subject to the satisfaction or waiver
of the conditions precedent specified in Article V, the Lenders shall make Base
Rate Loans in such amount, the proceeds of which shall be applied to reimburse
the Issuing Lender for the amount of the related drawing and costs and expenses.
SECTION 2A.6 Obligations Absolute. The Borrower's obligations under
this Article IIA (including without limitation the Reimbursement Obligation)
shall be absolute and unconditional under any and all circumstances and
irrespective of any set-off, counterclaim or defense to payment which the
Borrower may have or have had against the Issuing Lender or any beneficiary of a
Letter of Credit. The Borrower also agrees with the Issuing Lender that the
Issuing Lender shall not be responsible for, and the Borrower's Reimbursement
Obligation under Section 2A.5 shall not be affected by, among other things, the
validity or genuineness of documents or of any endorsements thereon, even though
such documents shall in fact prove to be invalid, fraudulent or forged, or any
dispute between or among the Borrower and any beneficiary of any Letter of
Credit or any other party to which such Letter of Credit may be transferred or
any claims whatsoever of a Borrower against any beneficiary
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of such Letter of Credit or any such transferee. The Issuing Lender shall not be
liable for any error, omission, interruption or delay in transmission, dispatch
or delivery of any message or advice, however transmitted, in connection with
any Letter of Credit, except for errors or omissions caused by the Issuing
Lender's gross negligence or willful misconduct. The Borrower agrees that any
action taken or omitted by the Issuing Lender under or in connection with any
Letter of Credit or the related drafts or documents, if done in the absence of
gross negligence or willful misconduct and in accordance with the standards of
care specified in the Uniform Customs and, to the extent not inconsistent
therewith, the UCC shall be binding on the Borrower and shall not result in any
liability of the Issuing Lender to the Borrower. The responsibility of the
Issuing Lender to the Borrower in connection with any draft presented for
payment under any Letter of Credit shall, in addition to any payment obligation
expressly provided for in such Letter of Credit, be limited to determining that
the documents (including each draft) delivered under such Letter of Credit in
connection with such presentment are in conformity with such Letter of Credit.
SECTION 2A.7 Effect of Application. To the extent that any provision of
any Application related to any Letter of Credit is inconsistent with the
provisions of this Article IIA, the provisions of this Article IIA shall apply.
SECTION 2A.8 Outstanding Letter of Credit. The Borrower, the Issuing
Lender, the Lenders and the Agent acknowledge that NationsBank, N.A. has
heretofore issued a letter of credit in the face amount of $125,000 which letter
of credit, as of the Closing Date, shall be deemed to be a Letter of Credit
issued by the Issuing Lender hereunder and subject to all of the terms and
conditions hereof.
ARTICLE III
TERM LOAN FACILITY
SECTION 3.1 Term Loan. Subject to the terms and conditions of this
Agreement, each Lender severally agrees to make a Term Loan to the Borrower on
the Closing Date in a principal amount equal to such Lender's Term Loan
Commitment.
SECTION 3.2 Procedure for Advance of Term Loan. Not later than 11:00
a.m. (Atlanta time) on the Closing Date, the Borrower shall give the Disbursing
Agent a Notice of Borrowing in the form attached hereto as Exhibit B-2 ("Notice
of Term Loan Borrowing"), requesting that the Lenders make the Term Loan. Upon
receipt of such Notice of Term Loan Borrowing from the Borrower, the Disbursing
Agent shall promptly notify each Lender thereof. Not later than 2:00 p.m.
(Atlanta time) on the Closing Date, each Lender will make available to the
Disbursing Agent for the account of the Borrower, at the office of the
Disbursing Agent in funds immediately available to the Disbursing Agent, an
amount equal to such Lender's Term Loan Commitment. The Borrower hereby
irrevocably authorizes the Disbursing Agent to disburse the proceeds of the Term
Loan in immediately
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available funds by wire transfer to such Person or Persons as may be designated
by the Borrower.
SECTION 3.3 Repayment of Term Loan. The Borrower shall repay the
principal amount of the Term Loan in thirty (30) consecutive monthly
installments on the last day of each month commencing April 30, 1996, the first
twenty-nine (29) of which shall be in the amount of $500,000 and the last of
which shall be in the amount of $4,500,000 or such other principal amount as
shall then remain unpaid under the Term Loan. If not sooner paid, the Term Loan
shall be paid in full, together with accrued interest thereon, on the Term Loan
Maturity Date.
SECTION 3.4 Optional Repayments of Term Loan.
(a) Optional Repayments. The Borrower shall have the right at any time
and from time to time, upon at least five (5) Business Days prior written notice
to the Disbursing Agent, to repay the Term Loan in whole or in part without
premium or penalty except as provided below. Each optional repayment of the Term
Loan hereunder shall be in an aggre gate principal amount of at least $1,000,000
or any whole multiple of $250,000 in excess thereof with respect to Base Rate
Loans and in an aggregate principal amount of at least $3,000,000 or any whole
multiple of $1,000,000 in excess thereof with respect to Fixed Rate Loans. Each
such repayment shall be applied to the principal installments of the Term Loan
in inverse order of maturity and shall be accompanied by accrued interest on the
amount repaid through the date of repayment and by any payment required under
Section 4.8 hereof.
(b) Limitation on Prepayment of Fixed Rate Loans. The Borrower may not
prepay any Fixed Rate Loan on any day other than on the last day of the Interest
Period applicable thereto unless such repayment is accompanied by any amount
required to be paid pursuant to Section 4.8 hereof.
SECTION 3.5 Mandatory Prepayments of Term Loan.
(a) Asset Sale; Issuance of Debt/Equity. Within ten (10) Business Days
after (i) the consummation by the Borrower or any Subsidiary of any Asset Sale,
or (ii) the public or private offering of any Debt and/or equity by the Borrower
or any Subsidiary (other than a conversion of Subordinated Debt into common
stock of the Borrower in accordance with the provisions of the Borrower's
11-1/4% Convertible Senior Subordinated Debentures due October 1, 1997 or the
sale of stock pursuant to employee stock options in an aggregate amount not to
exceed the lesser of (i) 850,000 shares of common stock or (ii) ten percent
(10%) of the outstanding common stock of the Borrower), the Borrower shall apply
an amount equal to the Net Proceeds realized from such Asset Sale or offering of
Debt and/or equity, to the extent that such Net Proceeds exceed an aggregate of
$50,000 in any fiscal quarter, to the prepayment of the Term Loan and then to
permanently reduce the Aggregate Revolving Credit Commitment.
31
(b) Excess Cash Flow Payments. The Borrower shall repay the Term Loan
on or before April 30 of each year that the Term Loan is outstanding in an
amount equal to 50% of the Excess Cash Flow for the immediately preceding fiscal
year.
(c) Manner of Application. Each mandatory repayment under this Section
3.5 shall be applied to the principal installments due on the Term Loan on a pro
rata basis. Each such repayment shall be accompanied by accrued interest on the
amount prepaid and by any payment required under Section 4.8 hereof.
SECTION 3.6 Term Notes. Each Lender's Term Loan and the obligation of
the Borrower to repay such Term Loan shall be evidenced by a Term Note in the
form attached hereto as Exhibit A-2, payable to the order of such Lender
representing the Borrower's obligation to pay such Lender's Term Loan
Commitment. Each Term Note shall be dated the Closing Date and shall bear
interest on the unpaid principal amount thereof at the applicable interest rate
per annum specified in Section 4.1.
ARTICLE IV
GENERAL LOAN PROVISIONS
SECTION 4.1 Interest.
(a) Interest Rate Options. Subject to the provisions of this Section
4.1, at the election of the Borrower, the principal balance of any Loan shall
bear interest at the Base Rate, the CD Rate or at the LIBOR Rate plus, in each
case, the Applicable Margin as set forth below. The Borrower shall select the
rate of interest and Interest Period, if any, applicable to any Loan at the time
a Notice of Revolving Credit Loan Borrowing is given pursuant to Section 2.2, or
prior to 12:00 noon (Atlanta time) on the Closing Date with respect to the Term
Loan or at the time a Notice of Conversion/Continuation is given pursuant to
Section 4.2. Each Loan bearing interest based on the Base Rate shall be a "Base
Rate Loan," each Loan bearing interest at the CD Rate shall be a "CD Rate Loan"
and each Loan bearing interest based on the LIBOR Rate shall be a "LIBOR Rate
Loan". Any Loan as to which the Borrower has not duly specified an interest rate
as provided herein shall be deemed a Base Rate Loan.
(b) Interest Periods. In connection with each Fixed Rate Loan, the
Borrower, by giving notice at the times described in Section 4.1(a), shall elect
an interest period (each, an "Interest Period") to be applicable to such Loan,
which Interest Period shall be a period of 30, 90 or 180 days in the case of CD
Rate Loans and 1, 2, 3 or 6 months in the case of LIBOR Loans; provided that:
32
(i) each Interest Period shall commence on the date of advance
of or conversion to any Fixed Rate Loan and, in the case of immediately
successive Interest Periods, each successive Interest Period shall
commence on the date on which the next preceding Interest Period
expires;
(ii) if any Interest Period would otherwise expire on a day
that is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day; provided, that if any Interest Period
would otherwise expire on a day that is not a Business Day but is a day
of the month after which no further Business Day occurs in such month,
such Interest Period shall expire on the next preceding Business Day;
(iii) any Interest Period that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month at the
end of such Interest Period;
(iv) no Interest Period for a Revolving Credit Loan shall
extend beyond the Revolving Credit Maturity Date, no Interest Period
for the Term Loan shall extend beyond the Term Loan Maturity Date and
no Interest Period shall be selected by the Borrower which would result
in the repayment of any Fixed Rate Loan prior to the end of an Interest
Period; and
(v) there shall be no more than ten (10) LIBOR Rate Loans in
effect at any time.
(c) Applicable Margin. The Applicable Margin provided for in Section
4.1(a) with respect to the Loans (the "Applicable Margin") shall, for the period
commencing on the Closing Date and ending on the day immediately preceding the
initial Adjustment Date, be 2.75% in the case of LIBOR Rate Loans, 2.75% in the
case of CD Rate Loans and 1.75% in the case of Base Rate Loans. Commencing on
such Adjustment Date and on each Adjustment Date thereafter, the Applicable
Margin shall be determined by reference to the Leverage Ratio in accordance with
the following pricing matrix:
Applicable Margin Per Annum
Leverage Ratio Base Rate + Fixed Rate +
greater than or equal
to 4.75 to 1.0 2.00% 3.00%
4.75 to 1.0 or less
but equal to or
greater than
4.0 to 1.0 1.75% 2.75%
4.0 to 1.0 or
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less but equal to
or greater than
3.25 to 1.0 1.50% 2.50%
3.25 to 1.0 or
less 1.25% 2.25%
Adjustments, if any, in the Applicable Margin shall be made by the Agent on the
fifth (5th) day (or, if not a Business Day, on the next succeeding Business Day)
following receipt by the Agent of the annual financial statements for the
Borrower for Fiscal Year 1996 and the accompanying Officer's Compliance
Certificate and thereafter on the 5th day (or, if not a Business Day, on the
next succeeding Business Day) following each receipt by the Agent of quarterly
financial statements for the Borrower and its Subsidiaries pursuant to Section
7.1(b) and the accompanying Officer's Compliance Certificate (each such date, an
"Adjustment Date"), setting forth the Leverage Ratio as of the most recent year
end or fiscal quarter end as applicable. In the event the Borrower fails to
deliver such financial statements and Certificate within the time required by
Sections 7.1 and 7.2 hereof, the Applicable Margin shall, subject to Section
4.1(d), be the highest Applicable Margin set forth above until the Adjustment
Date following the delivery of such financial statements and Certificate.
(d) Default Rate. Upon the occurrence and during the continuance of a
Default or Event of Default, the Borrower shall no longer have the option to
request Fixed Rate Loans, and upon the occurrence and during the continuance of
an Event of Default all amounts due and payable with respect to Fixed Rate Loans
shall bear interest at a rate per annum two percent (2%) in excess of the rate
then applicable to Fixed Rate Loans until the end of the applicable Interest
Period and thereafter at a rate equal to two percent (2%) in excess of the rate
then applicable to Base Rate Loans and (iii) all amounts due and payable with
respect to Base Rate Loans shall bear interest at a rate per annum equal to two
percent (2%) in excess of the rate then applicable to Base Rate Loans. Interest
shall continue to accrue on the Notes at the foregoing rate after the filing by
or against the Borrower of any petition seeking any relief in bankruptcy or
under any act or law pertaining to insolvency or debtor relief, whether state,
federal or foreign.
(e) Interest Payment and Computation. Interest on each Base Rate Loan
shall be paid to the Disbursing Agent (for the ratable benefit of the Disbursing
Agent and the Lenders) in arrears on the first Business Day of each calendar
month commencing April 1, 1996, and interest on each Fixed Rate Loan shall be
paid to the Disbursing Agent (for the ratable benefit of the Lenders) on the
last day of each Interest Period applicable thereto, and if such Interest Period
extends beyond 90 days, on the 90th day of the Interest Period. All interest
rates provided for hereunder, all fees provided for in Section 4.3 and all fees
and commissions provided for in Section 2A shall be computed on the basis of a
360-day year and assessed for the actual number of days elapsed.
(f) Maximum Rate. In no contingency or event whatsoever shall the aggregate
of all amounts deemed interest hereunder or under any of the Notes exceed the
highest rate permissible under any Applicable Law which a court of competent
jurisdiction shall, in a final
34
determination, deem applicable hereto. In the event that such a court determines
that the Lenders have contracted for, charged or received interest hereunder in
excess of the highest applicable rate, the rate in effect hereunder shall
automatically be reduced to the maximum rate permitted by Applicable Law and the
Lenders shall at the Agent's option promptly refund to the Borrower any interest
received by Lenders in excess of the maximum lawful rate or shall apply such
excess to the principal balance of the Obligations. It is the intent hereof that
the Borrower not pay or contract to pay, and that neither the Disbursing Agent
nor any Lender charge, receive or contract to receive, directly or indirectly in
any manner whatsoever, interest in excess of the maximum non-usurious rate that
may be paid by the Borrower under Applicable Law.
SECTION 4.2 Notice and Manner of Conversion or Continuation of Loans.
Provided that no Default or Event of Default has occurred and is then
continuing, (a) the Borrower shall have the option to convert at any time all or
any portion of its outstanding Base Rate Loans in a principal amount equal to
$3,000,000 or any whole multiple of $1,000,000 in excess thereof into one or
more Fixed Rate Loans and (b) upon the expiration of any Interest Period, the
Borrower may, or pursuant to Section 4.1(d) shall, convert all or any portion of
its outstanding Fixed Rate Loans into Base Rate Loans in a principal amount
equal to $1,000,000 or a whole multiple of $250,000 in excess thereof or
continue such Fixed Rate Loans as Fixed Rate Loans. Whenever the Borrower
desires to convert or continue Loans as provided above, the Borrower shall give
the Disbursing Agent irrevocable prior written notice in the form attached as
Exhibit C (a "Notice of Conversion/Continuation") not later than 11:00 a.m.
(Atlanta time) three (3) Business Days, in the event of a conversion to or
continuation as Fixed Rate Loans, and one (1) Business Day, in the event of a
conversion to Base Rate Loans, before the day on which a proposed conversion or
continuation of such Loan is to be effective specifying (i) the Loans to be
converted or continued, and, in the case of a Fixed Rate Loan to be converted or
continued, the last day of the Interest Period therefor, (ii) the effective date
of such conversion or continuation (which shall be a Business Day), (iii) the
principal amount of such Loans to be converted or continued and (iv) the
Interest Period to be applicable to such converted or continued Fixed Rate Loan.
The Disbursing Agent shall promptly notify the Lenders of such Notice of
Conversion/Continuation. If, within the time period required under the terms of
this Section 4.2, the Disbursing Agent does not receive a Notice of
Conversion/Continuation from the Borrower containing an election to continue
Fixed Rate Loans for an additional Interest Period or to convert such Fixed Rate
Loans, then, upon the expiration of the Interest Period therefor, such Loans
will be automatically converted to Base Rate Loans.
SECTION 4.3 Commitment and Other Fees.
(a) Commitment Fee. The Borrower shall pay to the Agent, for the
account of the Lenders, a non-refundable commitment fee at a rate per annum
equal to three-eighths of one percent (3/8 of 1%) on the average daily unused
portion of the Aggregate Revolving Credit Commitment. The commitment fee shall
be payable in arrears on the last Business Day of each calendar quarter,
commencing March 31, 1996 and continuing on the last Business Day of each
calendar quarter thereafter until and including the Revolving Credit Termination
Date.
35
Such commitment fee shall be distributed by the Agent to the Lenders pro rata in
accordance with the Lenders' respective Commitment Percentages.
(b) Other Fees and Compensation. The Borrower shall pay to the Agent,
for the account of the Agent and not for the account of the Lenders, certain
fees and other compensation established in a separate letter agreement dated
January 16, 1996 between the Agent and the Borrower.
SECTION 4.4 Manner of Payment. Each payment (including repayments or
prepayments described in Articles II and III) by the Borrower on account of the
principal of or interest on the Loans or of any fee or other amounts (including
the Reimbursement Obligation) payable to the Lenders or the Disbursing Agent
under this Agreement or any Note shall be made not later than 2:00 p.m. (Atlanta
time) on the date specified for payment under this Agreement to the Disbursing
Agent for the account of the Lenders pro rata (other than as set forth in the
last sentence of this Section) in accordance with their respective Commitment
Percentages at the Disbursing Agent's Office, in Dollars, in immediately
available funds and shall be made without any set-off, counterclaim or deduction
whatsoever. Any payment received after such time but before 5:00 p.m. (Atlanta
time) on such day shall be deemed a payment on such date for the purposes of
Section 11.1, but for all other purposes shall be deemed to have been made on
the next succeeding Business Day. Any payment received after 5:00 p.m. (Atlanta
time) shall be deemed to have been made on the next succeeding Business Day for
all purposes. Upon receipt by the Disbursing Agent of each such payment, the
Disbursing Agent shall credit each Lender's account with its pro rata share
(other than as set forth in the last sentence of this Section) of such payment
in accordance with such Lender's Commitment Percentage and shall wire advice of
the amount of such credit to each Lender. Each payment to the Disbursing Agent
of fees, expenses or other compensation of the Agent, the Disbursing Agent or
the Issuing Lender shall be made in like manner, but for the account of the
Agent, Disbursing Agent or Issuing Lender, as the case may be. Each payment to
the Agent of the Issuing Lender's fees or L/C Participants' commissions shall be
made in like manner, but for the account of the Issuing Lender or the L/C
Participants, as the case may be. 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 any interest due
hereunder; provided, that if such extension would cause payment of interest on
or principal of any LIBOR Rate Loan to be made in the next calendar month, such
payment shall be made on the next preceding Business Day. All amounts payable to
any Lender under Sections 4.7(c), 4.8, 4.9 and 4.10 shall be payable to such
Lender in accordance with the terms of such Sections.
SECTION 4.5 Crediting of Payments and Proceeds. In the event that the
Borrower shall fail to pay any of the Obligations when due and the Obligations
have been accelerated pursuant to Section 11.2, all payments received by the
Lenders upon the Notes and the other Obligations and all net proceeds from the
enforcement of the Obligations shall be applied first to all expenses then due
and payable by the Borrower hereunder, then to all indemnity obligations then
due and payable by the Borrower hereunder, then to all fees of the Agent,
Disbursing Agent or Issuing Lender then due and payable, then to all commitment
and
36
other fees then due and payable, then to accrued and unpaid interest on the
Notes and the Reimbursement Obligation and then to the principal amount of the
Notes and the Reimbursement Obligation, in that order.
SECTION 4.6 Nature of Obligations of Lenders Regarding Extensions of
Credit; Assumption by Disbursing Agent. The obligations of the Lenders under
this Agreement to make the Loans and issue or participate in Letters of Credit
are several and are not joint or joint and several. Unless the Disbursing Agent
shall have received notice from a Lender prior to a proposed borrowing date of
any Loan (including advances by the Disbursing Agent in accordance with Section
2.2(b)) that such Lender will not make available to the Disbursing Agent such
Lender's ratable portion of the amount to be borrowed on such date (which notice
shall not release such Lender of its obligations hereunder), the Disbursing
Agent may assume that such Lender has made such portion available to the
Disbursing Agent on the proposed borrowing date or will make such portion
available on the Settlement Date in accordance with Article II. The Disbursing
Agent may, in reliance upon such assumption, disburse the proceeds of the Term
Loan to the Borrower on the Closing Date and may disburse the proceeds of the
Revolving Credit Loans in accordance with Section 2.2 hereof. If such amount is
made available to the Disbursing Agent on a date after such borrowing date, such
Lender shall pay to the Disbursing Agent on demand an amount, until paid, equal
to the product of (a) the amount of such Lender's Commitment Percentage of such
borrowing, times (b) the daily average Federal Funds Rate during such period as
determined by the Agent, times (c) a fraction the numerator of which is the
number of days that elapse from and including such borrowing date to the date on
which such Lender's Commitment Percentage of such borrowing shall have become
immediately available to the Disbursing Agent and the denominator of which is
360. A certificate of the Disbursing Agent with respect to any amounts owing
under this Section shall be conclusive, absent manifest error. If such Lender's
Commitment Percentage of such borrowing is not made available to the Disbursing
Agent by such Lender within three (3) Business Days of such borrowing date, the
Disbursing Agent shall be entitled to recover such amount made available by the
Disbursing Agent with interest thereon at the rate per annum applicable to such
Loan, on demand, from the Borrower. The failure of any Lender to make its
Commitment Percentage of any Loan available shall not relieve it or any other
Lender of its obligation, if any, hereunder to make its Commitment Percentage of
such Loan available on such borrowing date, but no Lender shall be responsible
for the failure of any other Lender to make its Commitment Percentage of such
Loan available on the borrowing date.
SECTION 4.7 Changed Circumstances.
(a) Circumstances Affecting LIBOR Rate Availability. If, with respect
to any Interest Period, the Disbursing Agent or the Required Lenders (after
consultation with Disbursing Agent) shall determine that, by reason of
circumstances affecting the foreign exchange and interbank markets generally,
deposits in eurodollars in the applicable amounts are not being offered (or
quoted via Telerate Page 3750) to the Disbursing Agent or the Required Lenders
for such Interest Period, then the Disbursing Agent shall forthwith give notice
thereof to the Borrower (such determination to be made by the Disbursing Agent
or such Required Lenders in good faith and in a manner consistent with similar
determinations
37
made with respect to LIBOR Rate Loans to other borrowers under similar
circumstances). Thereafter, until the Disbursing Agent notifies the Borrower
that such circumstances no longer exist, the obligation of the Lenders to make
LIBOR Rate Loans, and the right of the Borrower to convert any Loan to or
continue any Loan as a LIBOR Rate Loan, shall be suspended, and the Borrower
shall repay in full (or cause to be repaid in full) the then outstanding
principal amount of each such LIBOR Rate Loan, together with accrued interest
thereon, on the last day of the then current Interest Period applicable to such
LIBOR Rate Loan or convert the then outstanding principal amount of each such
LIBOR Rate Loan to a Base Rate Loan or CD Rate Loan as of the last day of such
Interest Period.
(b) Laws Affecting LIBOR Rate Availability. If, after the date hereof,
the introduction of, or any change in, any Applicable Law or any change in the
interpretation or administration thereof by any Governmental Authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender (or any of their respective Lending
Offices) with any request or directive (whether or not having the force of law)
of any such Governmental Authority, central bank or comparable agency, shall
make it unlawful or impossible for any of the Lenders (or any of their
respective Lending Offices) to honor its obligations hereunder to make or
maintain any LIBOR Rate Loan, such Lender shall promptly give notice thereof to
the Disbursing Agent and the Disbursing Agent shall promptly give notice to the
Borrower and the other Lenders (such determination to be made by the Disbursing
Agent or such Lender in good faith and in a manner consistent with similar
determinations made with respect to LIBOR Rate Loans to other borrowers under
similar circumstances). Thereafter, until the Agent notifies the Borrower that
such circumstances no longer exist, (i) the obligations of the Lenders to make
LIBOR Rate Loans and the right of the Borrower to convert any Loan or continue
any Loan as a LIBOR Rate Loan shall be suspended and thereafter the Borrower may
select only Base Rate Loans or CD Rate Loans hereunder and (ii) if any of the
Lenders may not lawfully continue to maintain a LIBOR Rate Loan to the end of
the then current Interest Period applicable thereto, the applicable LIBOR Rate
Loan shall immediately be converted to a Base Rate Loan for the remainder of
such Interest Period.
(c) Increased Costs. If, after the date hereof, the introduction of, or
any change in, any Applicable Law, or in the interpretation or administration
thereof by any Governmental Authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any of the
Lenders (or any of their respective Lending Offices) with any request or
directive (whether or not having the force of law) of such Governmental
Authority, central bank or comparable agency:
(i) shall subject any of the Lenders (or any of their
respective Lending Offices) to any tax, duty or other charge with
respect to any LIBOR Rate Loan, Letter of Credit or Application or
shall change the basis of taxation of payments to any of the Lenders
(or any of their respective Lending Offices) of the principal of or
interest on any LIBOR Rate Loan, Letter of Credit or any other amounts
due under this Agreement in respect thereof (except for the imposition
of, or any change in the rate of tax on the net income of any of the
Lenders or any of their respective Lending
38
Offices imposed by the jurisdiction in which such Lender is organized
or is or should be qualified to do business or such Lending Office is
located); or
(ii) shall impose, modify or deem applicable any reserve
(including, without limitation, any reserve imposed by the Board of
Governors of the Federal Reserve System, other than any reserve
included in the Reserve Requirements), special deposit, insurance or
similar requirement against assets of, deposits with or for the account
of, or credit extended by any of the Lenders (or any of their
respective Lending Offices) with respect to LIBOR Rate Loans or shall
impose on any of the Lenders (or any of their respective Lending
Offices) or the foreign exchange and interbank markets any other
condition affecting any LIBOR Rate Loan;
and the result of any of the foregoing is to increase the costs to any
of the Lenders of maintaining any Fixed Rate Loan or to reduce the
yield or amount of any sum received or receivable by any of the Lenders
under this Agreement or under the Notes in respect of a Fixed Rate Loan
or Letter of Credit or Application, then such Lender shall promptly
notify the Disbursing Agent, and the Disbursing Agent shall promptly
notify the Borrower of such fact and demand compensation therefor and,
within fifteen (15) days after such notice by Disbursing Agent, the
Borrower shall pay to such Lender such additional amount or amounts as
(after good faith and reasonable computation) will compensate such
Lender or Lenders for such increased cost or reduction; provided,
however, that in demanding any such payment from the Borrower, such
Lender shall treat the Borrower in a manner consistent with its
treatment of other similarly situated debtors of such Lender. The
Disbursing Agent will promptly notify the Borrower of any event of
which it has knowledge which will entitle such Lender to compensation
pursuant to this Section 4.7(c); provided, that the Disbursing Agent
shall incur no liability whatsoever to the Lenders or the Borrower in
the event it fails to do so. A certificate of the Disbursing Agent or
applicable Lender setting forth the basis for determining such
additional amount or amounts necessary to compensate such Lender or
Lenders shall be conclusively presumed to be correct absent manifest
error.
SECTION 4.8 Indemnity. The Borrower hereby indemnifies each of the
Lenders against any loss or expense actually incurred by such Lender which
arises from or is attributable to such Lender's obtaining, liquidating or
employing deposits or other funds acquired to effect, fund or maintain the Loans
(a) as a consequence of any failure by the Borrower to make any payment when due
of any amount due hereunder in connection with a Fixed Rate Loan, (b) due to any
failure of the Borrower to borrow on a date specified therefor in a Notice of
Revolving Credit Loan Borrowing or Notice of Conversion/Continua tion or (c) due
to any payment, prepayment or conversion of any Fixed Rate Loan on a date other
than the last day of the Interest Period therefor. The amount of such loss or
expense shall be determined, based upon the assumption that such Lender funded
its Commitment Percentage of the LIBOR Rate Loans in the London interbank market
and using any reasonable attribution or averaging methods which such Lender
deems appropriate and practical. A certificate of such Lender setting forth the
basis for determining such amount or amounts necessary to compensate such Lender
shall be forwarded to the Borrowers through
39
the Agent and shall be conclusively presumed to be correct, absent manifest
error. The Borrower shall have the right to consult with the Agent prior to
making any indemnity payments provided for herein.
SECTION 4.9 Capital Requirements. If, after the date of this Agreement,
the introduction of, or any change in, or in the interpretation of, any
Applicable Law or compliance with any guideline or request from any central bank
or comparable agency or other Governmental Authority (whether or not having the
force of law), has the effect of reducing the rate of return on the capital of,
or has affected the amount of capital required to be maintained by, any Lender
or any corporation controlling such Lender as a consequence of, or with
reference to its Total Commitment and other commitments of this type, below the
rate which the Lender or such other corporation could have achieved but for such
introduc tion, change or compliance, then within fifteen (15) days after written
demand by any such Lender, the Borrower shall pay to such Lender from time to
time as specified by such Lender additional amounts sufficient (after good faith
and reasonable computation) to compensate such Lender or other corporation for
such reduction; provided, however, that in demanding any such payment from the
Borrower, such Lender shall treat the Borrower in a manner consistent with its
treatment of other similarly situated debtors of such Lender. A certificate as
to such amounts submitted to the Borrower and the Agent by such Lender, shall be
conclusively presumed to be correct, absent manifest error.
SECTION 4.10 Taxes.
(a) Payments Free and Clear. Any and all payments by the Borrower
hereunder or under the Notes or the Letters of Credit shall be made free and
clear of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholding, and all liabilities with respect
thereto excluding, (i) in the case of each Lender, the Agent and the Disbursing
Agent, income and franchise taxes imposed by the jurisdiction under the laws of
which such Lender, Agent or Disbursing Agent (as the case may be) is organized
or is or should be qualified to do business or any political subdivision thereof
and (ii) in the case of each Lender, income and franchise taxes imposed by the
jurisdiction of such Lender's Lending Office or any political subdivision
thereof (all such non-excluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as "Taxes"). If the
Borrower shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder or under any Note to any Lender or the Agent, (A) the sum
payable shall be increased as may be necessary so that after making all required
deductions (including, without limitation, deductions applicable to additional
sums payable under this Section 4.10) such Lender, Agent or Disbursing Agent (as
the case may be) receives an amount equal to the amount such party would have
received had no such deductions been made, (B) the Borrower shall make such
deductions, (C) the Borrower shall pay the full amount deducted to the relevant
taxing authority or other authority in accordance with applicable law, and (D)
the Borrower shall deliver to the Agent evidence of such payment to the relevant
taxing authority or other authority in the manner provided in Section 4.10(d).
40
(b) Stamp and Other Taxes. In addition, the Borrower shall pay any
present or future stamp, registration, recordation or documentary taxes or any
other similar fees or charges or excise or property taxes (other than excise and
property taxes to which the Agent, Disbursing Agent or any Lender would have
been subject in the absence of this Agreement and the provision for security in
connection with the execution of this Agreement), levies of the United States or
any state or political subdivision thereof or any applicable foreign
jurisdiction which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement, the
Loans, the Letters of Credit, the other Loan Documents, or the perfection of any
rights or security interest in respect thereto (hereinafter referred to as
"Other Taxes").
(c) Indemnity. The Borrower shall indemnify each Lender, the Agent and
the Disbursing Agent for the full amount of Taxes and Other Taxes (including,
without limitation, any Taxes and Other Taxes imposed by any jurisdiction on
amounts payable under this Section 4.10) paid by such Lender or the Agent (as
the case may be) and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto, whether or not such Taxes or Other
Taxes were correctly or legally asserted. Such indemnification shall be made
within thirty (30) days from the date such Lender, the Agent or the Disbursing
Agent (as the case may be) makes written demand therefor.
(d) Evidence of Payment. Within thirty (30) days after the date of any
payment of Taxes or Other Taxes, the Borrower shall furnish to the Agent, at its
address referred to in Section 13.1, the original or a certified copy of a
receipt evidencing payment thereof or other evidence of payment satisfactory to
the Agent.
(e) Delivery of Tax Forms. Each Lender organized under the laws of a
jurisdiction other than the United States or any state thereof shall deliver to
the Borrower, with a copy to the Agent, or concurrently with the delivery of the
relevant Assignment and Acceptance, as applicable, (i) two United States
Internal Revenue Service Forms 4224 or Forms 1001, as applicable (or successor
forms) properly completed and certifying in each case that such Lender is
entitled to a complete exemption from withholding or deduction for or on account
of any United States federal income taxes, and (ii) an Internal Revenue Service
Form W-8 or W-9 or successor applicable form, as the case may be, to establish
an exemption from United States backup withholding taxes. Each such Lender
further agrees to deliver to the Borrower, with a copy to the Agent, a Form 1001
or 4224 and Form W-8 or W-9, or successor applicable forms or manner of
certification, as the case may be, on or before 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 previously delivered by it to the Borrower,
certifying in the case of a Form 1001 or 4224 that such Lender is entitled to
receive payments under this Agreement without deduction or withholding of any
United States federal income taxes (unless in any such case a change in treaty,
law or regulation has occurred prior to the date on which any such delivery
would otherwise be required which renders such forms inapplicable or the
exemption to which such forms relate unavailable and such Lender notifies the
Borrower and the Agent that it is not entitled to receive payments without
deduction or withholding of United States federal income taxes) and, in the case
of a Form W-8 or W-9, establishing an exemption from United States backup
withholding tax.
41
(f) Survival. Without prejudice to the survival of any other agreement
of the Borrower hereunder, the agreements and obligations of the Borrower
contained in this Section 4.10 shall survive the payment in full of the
Obligations and the termination of the Total Commitments.
SECTION 4.11 Change in Lending Office. Each Lender agrees that, upon
the occurrence of any event giving rise to the operation of Sections 4.7, 4.8,
4.9 or 4.10 with respect to such Lender, it will use its best efforts to
designate another lending office as its Lending Office for any Loans affected by
such event with the intent of avoiding the consequence of the event giving rise
to the operation of any such Section; provided, that such designation is made on
such terms that such Lender and its Lending Office suffer no economic, legal or
regulatory disadvantage as a consequence thereof.
SECTION 4.12 Use of Proceeds. The Borrower shall use the proceeds of
the Loans (i) to refinance certain existing Debt of the Borrower and its
Subsidiaries, (ii) to pay certain fees and expenses related to the transactions
contemplated hereby and (iii) to provide for the ongoing working capital and
capital expenditure requirements of the Borrower and its Subsidiaries.
ARTICLE V
CLOSING; CONDITIONS OF CLOSING AND BORROWING
SECTION 5.1 Closing. The closing shall take place at the offices of
Xxxxxxx Xxxxxxxxx Xxxxxxx & Xxxxxxx, L.L.P., 000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000 on March 15, 1996 or on such other date as the
parties hereto shall mutually agree.
SECTION 5.2 Conditions to Closing and Initial Extensions of Credit. The
obligation of the Lenders to close this Agreement and to make the initial Loans
or issue the initial Letter of Credit is subject to the satisfaction of each of
the following conditions:
(a) Executed Loan Documents. The following Loan Documents, in form and
substance satisfactory to the Agent and each Lender:
(i) this Agreement;
(ii) the Notes;
(iii) the Security Documents; and
(iv) the Financing Statements
42
shall have been duly authorized, executed and delivered by the Borrower
and each other Loan Party, as applicable, shall be in full force and
effect and no Default or Event of Default shall exist thereunder, and
the Borrower and each other Loan Party, as applicable, shall have
delivered original counterparts thereof to the Agent.
(b) Collateral.
(i) Filings and Recordings. All filings necessary to
perfect the Liens of the Lenders in the Collateral described
in the Security Documents shall have been made in all
appropriate locations and the Agent shall have received
evidence satisfactory to the Agent that such Liens constitute
valid and perfected first priority Liens therein.
(ii) Lien Search. The Borrower shall have delivered
the results of a Lien search of all filings made against the
Borrower and each other Loan Party under the Uniform
Commercial Code as in effect in any state in which any of
their respective assets are located, indicating among other
things that their respective assets are free and clear of any
Lien except for the Liens permitted by Section 10.3.
(c) Insurance. The Agent shall have received certificates of
insurance and, if requested, certified copies of insurance policies in
the form required under Section 8.3 and the Security Documents and
otherwise in form and substance reasonably satisfactory to the Agent.
(d) Title Insurance. The Agent shall have received marked up
unconditional binders for ALTA title policies from a title insurance
company reasonably acceptable to the Agent, dated the Closing Date (or
an earlier date acceptable to the Agent in its sole discretion). The
binders shall (a) be in an amount not less than $18,000,000 in the
aggregate, (b) be issued at ordinary premium rates, (c) insure that the
Security Documents create a valid, first priority perfected Lien on the
Realty, free and clear of all defects and encumbrances except such
standard printed exceptions contained in the policy form referred to
below and such as the Agent may, in its sole discretion, permit, (d)
naming the Agent as the insured thereunder, (e) be in form of ALTA
standard coverage Lenders' policy--1992 and (f) contain such
endorsements and affirmative coverages as the Agent may reasonably
request, including, without limitation, endorsements for future
advances under this Agreement.
(e) Surveys. The Agent shall have received as-built surveys of
the Realty, satisfactory in form and substance to the Agent, certified
by independent surveyors licensed in the State in which the Realty is
situated, which surveys shall indicate the following: (a) an accurate
metes and bounds description of the Realty; (b) the correct location of
all buildings, structures and other improvements on the Realty,
including, without limitation, all streets, easements, rights-of-way
and utility lines; (c) the location of ingress and egress from the
Realty and the location of any set-back or other building lines
affecting the Realty; (d) a certification in form and substance
acceptable
43
to the Agent that no portion of the Realty is located in a flood hazard
area; and (e) a certification in form and substance acceptable to the
Agent to the accuracy and completeness of the survey and to such other
matters relating to the Realty and survey as the Agent shall reasonably
require.
(f) Environmental Assessment of Realty. The Borrower shall
have delivered to the Agent an environmental assessment report
addressed to the Agent by a qualified environmental consultant,
acceptable to the Lenders, in form and substance satisfactory to the
Lenders, indicating appropriate inquiry into the previous ownership and
use of the Realty being encumbered by the lien of the Deeds of Trust,
consistent with good commercial or customary practices and indicating
that except as set forth in such reports there are no present or
potential environmental problems or hazards on, under or about such
premises and confirming material compliance by the Borrower and its
Subsidiaries with all environmental laws; such assessment to include at
least the following: historical research into previous ownership and
uses, comprehensive governmental records review at federal, state and
local levels, review of available aerial photographs and topographical
maps, on-site visual investigation, review of surrounding land uses,
and review of manufacturing, processing, operating and housekeeping
practices of the Borrower (or its Subsidiary) at such facility.
(g) Closing Certificates and Opinions; etc.
(i) Certificate of the Borrower. The Agent shall have
received a certificate from the chief executive or chief
financial officer (or other officer acceptable to the Agent)
of the Borrower, in form and substance satisfactory to the
Agent, to the effect that, to the best of such officer's
knowledge, all representations and warranties of the Borrower
contained in this Agreement and the other Loan Documents are
true and correct in all material respects; that the Borrower
is not in violation of any of the covenants contained in this
Agreement and the other Loan Documents; that, after giving
effect to the transactions contemplated by this Agreement, no
Default or Event of Default has occurred and is continuing;
and that the Borrower has satisfied each of the closing
conditions.
(ii) Certificate of Secretary of the Borrower. The
Agent shall have received a certificate of the secretary or
assistant secretary of the Borrower, certifying that attached
thereto is a true and complete copy of the certificate of
incorporation of the Borrower and all amendments thereto,
certified as of a recent date by the appropriate Governmental
Authority in its jurisdiction of organization; that attached
thereto is a true and complete copy of the bylaws of the
Borrower as in effect on the date of such certification; that
attached thereto is a true and complete copy of resolutions
duly adopted by the Board of Directors of the Borrower
authorizing the borrowings contemplated hereunder and the
execution, delivery and performance of this Agreement and the
other Loan Documents to which the Borrower is a party; and as
to the
44
incumbency and genuineness of the signature of each officer of
the Borrower executing Loan Documents to which the Borrower is
a party.
(iii) Certificates of Good Standing. The Agent shall
have received long-form certificates as of a recent date of
the good standing of the Borrower under the laws of its
jurisdiction of organization and foreign qualification in each
jurisdiction where the Borrower is required to be qualified to
do business and a certificate of the relevant taxing authority
of the State of Delaware certifying that the Borrower has
filed required tax returns and owes no delinquent taxes.
(iv) Opinions of Counsel. The Agent shall have
received favorable opinions of counsel to the Borrower and
each of the other Loan Parties addressed to the Agent and
Lenders with respect to the Borrower, each of the other Loan
Parties, the Loan Documents and such other matters as the
Lenders shall reasonably request.
(v) Tax Forms. The Agent and the Borrower shall
have received originals of the United States Internal Revenue
Service forms required by Section 4.10(e) hereof.
(vi) Borrowing Base Certificate. The Agent shall have
received a Borrowing Base Certificate properly completed and
executed by the Borrower and the Borrowing Base, as computed
by the Disbursing Agent, shall evidence borrowing availability
in an amount equal to or greater than the amount of the
Revolving Credit Loan to be advanced plus any Letters of
Credit to be issued on the Closing Date plus $2,500,000.
(h) Consents; No Adverse Change.
(i) Governmental and Third Party Approvals. All
necessary approvals, authorizations and consents of any Person
and of all Governmental Authorities and courts having
jurisdiction with respect to the transactions contemplated by
this Agreement and the Loan Documents shall have been obtained
and remain in full force and effect.
(ii) Permits and Licenses. All permits and licenses,
including permits and licenses required under Applicable Laws,
necessary to the conduct of business by the Borrower shall
have been obtained and remain in full force and effect.
(iii) No Injunction, Etc. No action, proceeding,
investigation, regulation or legislation shall have been
instituted, or, to the best of the Borrower's knowledge,
threatened or proposed before any Governmental Authority to
enjoin, restrain, or prohibit, or to obtain substantial
damages in respect of, or which is related to or arises out of
this Agreement or the other
45
Loan Documents or the consummation of the transactions
contemplated hereby or thereby.
(iv) No Material Adverse Change. Since November 3,
1995, there shall not have occurred any event, condition or
state of facts that is reasonably likely to have a Material
Adverse Effect.
(v) No Event of Default. No Default or Event of
Default shall have occurred and be continuing.
(i) Financial Matters.
(i) Financial Statements. The Agent and each Lender
shall have received audited annual financial statements for
the Borrower and its Subsidiaries for Fiscal Year ending 1995.
(ii) Financial Condition Certificate. The chief
executive officer or chief financial officer of the Borrower
shall have delivered to the Agent a certificate stating that:
(A) the Borrower is Solvent, (B) the liquidity position of the
Borrower as of the Closing Date is not materially different
from the projections and other financial information
previously furnished to the Lenders, and (C) attached thereto
is a pro forma balance sheet of the Borrower as of the Closing
Date setting forth on a pro forma basis the financial
condition of the Borrower as of that date and reflecting on a
pro forma basis the effect of the transactions contemplated
herein, including all material fees and expenses in connection
herewith.
(iii) Projections. The Agent shall have received
projected financial statements of the Borrower and its
Subsidiaries for the Fiscal Years ending 1996, 1997 and 1998,
including Consolidated balance sheets, statements of income
and cash flow statements of the Borrower and its Subsidiaries
giving effect to the transactions contemplated by this
Agreement, together with appropriate supporting details and
such other facts as relate to the ongoing business of the
Borrower and its Subsidiaries (collectively, the
"Projections"). Such Projections shall be accompanied by a
certificate of the chief executive officer or chief financial
officer of the Borrower to the effect that the Projections are
based on reasonable estimates and assumptions, all of which
are fair in light of the conditions which existed at the time
the Projections were made, have been prepared on the basis of
the assumptions stated therein, and reflect, as of the time so
furnished and the Closing Date, the reasonable estimate of the
Borrower and its Subsidiaries of the results of the operations
and other information projected therein; provided, however,
that said representation is not an assurance that actual
results will not be different from those projected as a result
of changing circumstances now unforeseen or circumstances
outside of the Borrower's control.
46
(iv) Payment at Closing. There shall have been paid
by the Borrower to the Agent and the Lenders the fees set
forth or referenced in Section 4.3 and any other accrued and
unpaid fees or expenses due hereunder (including, without
limitation, reasonable legal fees and expenses), and to any
other Person such amount as may be due thereto in connection
with the transactions contemplated hereby, including all
taxes, fees and other charges in connection with the
execution, delivery, recording, filing and registration of any
of the Loan Documents. The Agent shall have received written
instructions from the Borrower directing the application of
the proceeds of Loans to be made under this Agreement on the
Closing Date.
(j) Factor Documents.
(i) Factoring agreement between the Borrower and NCC.
(ii) Factoring agreement between the Borrower and RFC.
(iii) Factoring agreement between the Borrower and First Factors
Corporation.
(iv) Factoring agreement between the Borrower and CIT.
(v) Assignment of Factoring Proceeds -- NCC.
(vi) Assignment of Factoring Proceeds -- RFC.
(vii) Assignment of Factoring Proceeds -- First Factors Corporation.
(viii) Assignment of Factoring Proceeds -- CIT.
(ix) Interfactor Agreement.
(k) Miscellaneous.
(i) Proceedings and Documents. All opinions,
certificates and other instruments and all proceedings in
connection with the transactions contemplated by this
Agreement shall be reasonably satisfactory in form to the
Lenders and shall comply as to substance with the requirements
of this Agreement. The Lenders shall have received copies of
all other instruments and other evidence as the Lenders may
reasonably request, in form and substance satisfactory to the
Lenders, with respect to the transactions contemplated by this
Agreement and the taking of all actions in connection
therewith.
(ii) Appraisals. The Agent and the Lenders shall have
received satisfactory appraisals of all of the tangible
personal property included within
47
the Collateral conducted by independent appraisal firms
satisfactory to each Lender.
(iii) Audits. The Agent shall have completed a field
examination of the Accounts and Inventory of the Borrower and
its Subsidiaries, at the Borrower's expense, and the Agent
shall have received an audit report in form reasonably
satisfactory to the Agent and each Lender.
(iv) Indebtedness to CIT. The outstanding Debt of the
Borrower and its Subsidiaries to CIT shall have been paid and
CIT shall have released its Liens on the assets of the
Borrower and its Subsidiaries.
(v) Due Diligence and Other Documents. The Borrower
shall have delivered to the Agent such other documents,
certificates and opinions as the Agent reasonably requests,
including a copy of the Borrower's standard form of Xxxx and
Hold Agreement.
(vi) Xxxxxxx Amendment. The Second Supplemental
Indenture between the Company and First Union National Bank of
North Carolina, as Trustee, shall be in form and substance
reasonably satisfactory to the Agent.
SECTION 5.3 Conditions to All Extensions of Credit. The obligation of
the Lenders to make any Loan or of the Issuing Lender to issue any Letter of
Credit is subject to the satisfaction of the following conditions precedent on
the relevant borrowing date:
(a) Continuation of Representations and Warranties. The
representations and warranties made by the Borrower contained in
Article VI shall be true and correct in all respects as of the date
made; provided, however, that the Borrower shall notify the Agent (and
the Agent shall notify each Lender and the Disbursing Agent) of any
material subsequent change in the representations and warranties made
in this Agreement at the time of or prior to any future Loan, such
notice to be given immediately following such change. Absent any such
notice from the Borrower, each Notice of Revolving Credit Loan
Borrowing shall be deemed a certification of the foregoing
representations and warranties, after giving effect to any notices of
material subsequent changes, both before and after giving effect to the
requested Extension of Credit.
(b) No Existing Default. No Default or Event of Default shall
have occurred and be continuing hereunder (i) on the borrowing date
with respect to such Loan or after giving effect to the Loans to be
made on such date or (ii) on the issue date with respect to such Letter
of Credit or after giving effect to such Letters of Credit on such
date.
ARTICLE VI
48
REPRESENTATIONS AND WARRANTIES OF BORROWER
SECTION 6.1 Representations and Warranties. To induce the Agent, the
Disbursing Agent and each Lender to enter into this Agreement and to make any
Loan or issue or participate in the Letters of Credit, the Borrower hereby
represents and warrants to the Agent, the Disbursing Agent and the Lenders that:
(a) Organization; Power; Qualification. The Borrower and each
of its Subsidiaries are duly organized, validly existing and in good
standing under the laws of the jurisdiction of their incorporation or
formation, have the power and authority to own their respective
properties and to carry on their respective businesses as now being and
hereafter proposed to be conducted and are duly qualified and
authorized to do business in each jurisdiction in which the character
of their respective properties or the nature of their respective
businesses requires such qualification and autho rization, except where
the failure to be so qualified and authorized could not reasonably be
expected to have a Material Adverse Effect. The jurisdictions in which
the Borrower and its Subsidiaries are organized and qualified to do
business as of the Closing Date are described on Schedule 6.1(a).
(b) Authorization of Agreement, Notes, Loan Documents and
Borrowing. The Borrower has the right, power and authority and has
taken all necessary corporate and other action to authorize the
execution, delivery and performance of this Agreement, the Notes and
each of the other Loan Documents to which each is a respective party in
accordance with their respective terms. As of the Closing Date and the
dates described in Article V hereof, this Agreement, the Notes and each
of the other Loan Documents to which the Borrower is a party have been
duly executed and delivered by the duly authorized officers of the
Borrower and, on and after such date, each such document constitutes
the legal, valid and binding obligation of the Borrower, enforceable in
accordance with its terms.
(c) Compliance of Agreement, Notes, Loan Documents and
Borrowing with Laws, Etc. The execution, delivery and performance by
the Borrower of the Loan Documents to which the Borrower is a party,
the borrowings hereunder and the transactions contemplated hereby and
thereby 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 except those approvals
which have been obtained, (ii) conflict with, result in a breach of or
constitute a default under (A) the articles of incorporation, bylaws or
other organizational documents of the Borrower or any Material Contract
to which the Borrower is a party or by which any of its properties may
be bound or (B) any Governmental Approval relating to the Borrower or
(iii) 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 Liens arising under the Loan Documents.
49
(d) Compliance with Law; Governmental Approvals. Except with
respect to Environmental Laws (which are covered by Section 6.1(f), the
Borrower and its Subsidiaries (i) have all material Governmental
Approvals required by any Applicable Law for them to conduct their
respective businesses, 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 best of the Borrower's knowledge, threatened
proceeding and (ii) are in compliance with each Governmental Approval
applicable to them and in compliance with all other Applicable Laws
relating to them or any of their respective properties, except in each
case where the failure to so comply could not reasonably be expected to
have a Material Adverse Effect.
(e) Tax Returns and Payments. The Borrower and its
Subsidiaries have duly filed or caused to be filed all federal, state,
local and other tax returns required by Applicable Law to be filed, and
have paid, or made adequate provision for the payment of, all federal,
state, local and other taxes, assessments and governmental charges or
levies upon them and their respective property, income, profits and
assets which are due and payable, except for any such taxes for the
current year not yet due and payable or where the payment of such tax
is being disputed in good faith and adequate reserves have been
established by the Borrower in accordance with GAAP. No Governmental
Authority has filed any Lien or asserted any claim against the Borrower
or its Subsidiaries with respect to material unpaid taxes which has not
been discharged or resolved or is not being contested in good faith.
The charges, accruals and reserves on the books of the Borrower and its
Subsidiaries in respect of federal, state, local and other taxes for
all Fiscal Years and portions thereof since the organization of the
Borrower and its Subsidiaries are in the judgment of the Borrower
adequate, and the Borrower does not anticipate any additional material
taxes or assessments for any of such years.
(f) Environmental Matters. Except as set forth on Schedule
6.1(f), (i) the properties of the Borrower and its Subsidiaries are in
compliance with all applicable Environmental Laws, and there is no
release or threatened release of Hazardous Materials at, under or about
such properties or such operations which could interfere in any
material respect with the continued operation of such properties or
impair in any way the fair saleable value thereof and (ii) neither the
Borrower nor any of its Subsidiaries has received any written notice of
any violation, alleged violation, non-compliance, liability or
potential liability regarding environmental matters or compliance with
Environmental Laws with regard to any of its properties or the
operations conducted in connection therewith which has not been fully
corrected or complied with, nor does the Borrower nor any of its
Subsidiaries have knowledge or reason to believe that any such notice
will be received or is being threatened.
(g) ERISA.
(i) As of the Closing Date, neither the Borrower nor
any ERISA Affiliate maintains or contributes to, or has any
obligation under, any Employee Benefit Plans other than those
identified on Schedule 6.1(g).
50
(ii) The Borrower and each ERISA Affiliate are in
compliance with all applicable provisions of ERISA and the
regulations and published interpretations thereunder with
respect to all Employee Benefit Plans except where the failure
to so comply could not reasonably be expected to have a
Material Adverse Effect and except for any required amendments
for which the remedial amendment period as defined in Section
401(b) of the Code has not yet expired. Each Employee Benefit
Plan that is intended to be qualified under Section 401(a) of
the Code has been determined by the Internal Revenue Service
to be so qualified, and each trust related to such plan has
been determined to be exempt under Section 501(a) of the Code.
No material liability has been incurred by the Borrower or any
ERISA Affiliate which remains unsatisfied for any taxes or
penalties with respect to any Employee Benefit Plan or any
Multiemployer Plan.
(iii) No Pension Plan has been terminated, nor has
any accumulated funding deficiency (as defined in Section 412
of the Code) been incurred (without regard to any waiver
granted under Section 412 of the Code), nor has any funding
waiver from the Internal Revenue Service been received or
requested with respect to any Pension Plan, nor has the
Borrower nor any ERISA Affiliate failed to make any
contributions or to pay any amounts due and owing as required
by Section 412 of the Code, Section 302 of ERISA or the terms
of any Pension Plan prior to the due dates of such
contributions under Section 412 of the Code or Section 302 of
ERISA, nor has there been any event requiring any disclosure
under Section 4041(c)(3)(C) or 4063(a) of ERISA with respect
to any Pension Plan.
(iv) Neither the Borrower nor any ERISA Affiliate
has: (A) engaged in a nonexempt prohibited transaction
described in Section 406 of the ERISA or Section 4975 of the
Code; (B) incurred any liability to the PBGC which remains
outstanding other than the payment of premiums and there are
no premium payments which are due and unpaid or (C) failed to
make a required contribution or payment to a Multiemployer
Plan.
(v) No Termination Event has occurred or is
reasonably expected to occur which in either case could
reasonably be expected to have a Material Adverse Effect.
(vi) No proceeding, claim (excluding routine
participant claims for benefits), lawsuit and/or investigation
is existing or, to the best knowledge of the Borrower after
due inquiry, threatened concerning or involving any (A)
employee welfare benefit plan (as defined in Section 3(1) of
ERISA) currently maintained or contributed to by the Borrower
or any ERISA Affiliate, (B) Pension Plan or (C) Multiemployer
Plan that in each case is reasonably likely to have a Material
Adverse Effect.
51
(h) Margin Stock. Neither the Borrower nor any of its
Subsidiaries is engaged principally or as one of its activities in the
business of extending credit for the purpose of "purchasing" or
"carrying" any "margin stock" (as each such term 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 or Letters of
Credit will be used for purchasing or carrying margin stock or for any
purpose which vio lates, or which would be inconsistent with, the
provisions of Regulation G, T, U or X of such Board of Governors.
(i) Government Regulation. Neither the Borrower nor any of its
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company" (as each such term is defined or used in the
Investment Company Act of 1940, as amended) and neither the Borrower
nor any of its Subsidiaries is, or will be, subject to regulation under
the Public Utility Holding Company Act of 1935, each as amended, or any
other Applicable Law which materially limits its ability to incur or
consummate the transactions contemplated hereby.
(j) Intellectual Property. To the best of the Borrower's
knowledge and after due inquiry, Schedule 6.1(j) hereto sets forth a
complete and accurate list of all patents, patent rights or licenses,
patent applications, trademarks, trademark rights, trade names, trade
name rights and copyrights (collectively, "Intellectual Property")
owned, licensed or otherwise lawfully used by the Borrower or its
Subsidiaries. Except as set forth on Schedule 6.1(j), as of the Closing
Date the Borrower and its Subsidiaries own, license or otherwise
possess the lawful right to use the Intellectual Property and all other
similar intangible assets which are necessary or required to conduct
their respective businesses as now and presently planned to be
conducted without conflict with the rights of others except where the
failure to so own or possess such may not reasonably be expected to
have a Material Adverse Effect. No event has occurred which permits, or
after notice or lapse of time or both would permit, the revocation or
termination of any such rights to the Intellectual Property or other
material intangible assets.
(k) Material Contracts. Schedule 6.1(k) sets forth a complete
and accurate list of all Material Contracts of the Borrower and its
Subsidiaries in effect as of the Closing Date not listed on any other
Schedule hereto. Except as set forth on Schedule 6.1(k), on the Closing
Date each such Material Contract is, and after giving effect to the
consummation of the transactions contemplated by the Loan Documents
will be, in full force and effect in accordance with the terms thereof
and there are no material defaults by the Borrower or any of its
Subsidiaries or, to the best of its knowledge, by any other party under
any such Material Contract.
(l) Employment, Non-Compete, Investment and Shareholder
Agreements. Schedule 6.1(l) sets forth a complete and accurate list of
(i) all employment agreements and executive compensation arrangements
to which the Borrower or a Subsidiary is a party which provide for
aggregate compensation (assuming compliance with or satisfaction of all
contingencies or conditions) to any Person of more than
52
$250,000 per year, (ii) all material agreements to which the Borrower
or a Subsidiary is a party under which any party thereto enters into
any covenant not to compete with, or solicit customers of, the other
party or any covenant to maintain the confidentiality of any customer
or employee lists or similar intangible assets, and (iii) all
agreements relating to the investment in, or the voting or disposition
of, any outstanding shares of capital stock of the Borrower or its
Subsidiaries. Each such agreement listed on Schedule 6.1(l) is, and
after giving effect to the transactions contemplated by the Loan
Documents will be, in full force and effect in accordance with the
terms thereof and there are no material defaults by the Borrower or any
of its Subsidiaries or, to the best of its knowledge, by any other
party under any such agreement.
(m) Employee Matters. The Borrower and its Subsidiaries are in
compliance in all material respects with all Applicable Laws with
respect to their employees including, without limitation, fair labor
standards laws, wage and hour laws, workers compensation laws, federal
and state withholding, social security and payroll laws and similar
laws. The Borrower and its Subsidiaries have paid all material federal,
state and local withholding, social security, payroll and other
employment related taxes which are due and payable.
(n) Trade Relations. To the Borrower's knowledge, there exists
no actual or threatened termination, cancellations or limitation of, or
any modification or change in, the business relationship of the
Borrower or any of its Subsidiaries with any customer or any group of
customers whose purchases individually or in the aggregate are material
to the business of the Borrower or its Subsidiary, or with any material
supplier. To the Borrower's knowledge, there exists no present
condition or state of facts or circumstance affecting any customer of
the Borrower or any of its Subsidiaries that could be reasonably
expected to have a Material Adverse Effect or prevent the Borrower or
any of its Subsidiaries from conducting its business after the
consummation of the transactions contemplated by this Agreement in
substantially the same manner in which it has heretofore been
conducted.
(o) Burdensome Provisions. To the best knowledge of the
Borrower after due inquiry, neither the Borrower nor any of its
Subsidiaries is a party to any Material Contract, or subject to any
corporate or partnership restriction, Governmental Approval or
Applicable Law which is so unusual or burdensome as in the foreseeable
future could reasonably be expected to have a Material Adverse Effect.
(p) Financial Statements. All quarterly and annual balance
sheets, statements of income, retained earnings, stockholders' equity
and cash flows, and all other financial statements of the Borrower and
its Subsidiaries which have been furnished by the Borrower to the Agent
and the Lenders for the purposes of or in connection with this
Agreement have been prepared in accordance with GAAP consis tently
applied throughout the periods involved and present fairly in all
material respects the matters reflected therein subject, in the case of
unaudited statements, to changes resulting from normal year-end audit
adjustments and information to be included in footnotes to the audited
statements. As of the Closing Date, except as set
53
forth on Schedule 6.1(p), neither the Borrower nor any of its
Subsidiaries has any material contingent liability or material
liability for taxes, long-term leases or unusual forward or long-term
commitments which are not reflected in the financial statements
described above or in the notes thereto.
(q) No Material Adverse Change. No event which has had or
could reasonably be expected to have a Material Adverse Effect has
occurred since November 3, 1995.
(r) Solvency. As of the Closing Date and after giving effect
to each Loan made hereunder, the Borrower will be Solvent.
(s) Titles to Properties. Subject to Permitted Liens, the
Borrower has good and marketable title to, or valid and subsisting
leasehold interests in, the Realty and valid and legal title to all of
its personal property, including, but not limited to, the real and
personal property reflected on the financial statements delivered
pursuant to Section 6.1(p), except property which has been disposed of
subsequent to such date, which dispositions have been in the ordinary
course of business or otherwise expressly permitted hereunder.
(t) Liens. None of the properties and assets of the Borrower
or its Subsidiaries is subject to any Lien other than Permitted Liens.
Except for financing statements evidencing leases permitted hereunder,
Debt no longer outstanding or that are filed in counties where the
Borrower no longer has a facility, no financing statement under the
Uniform Commercial Code of any state which names the Borrower or any of
its Subsidiaries or any of their respective trade names or divisions as
debtor and which has not been terminated, has been filed in any state
or other jurisdiction and neither the Borrower nor any of its
Subsidiaries has signed any such financing statement or any security
agreement authorizing any secured party thereunder to file any such
financing statement, except to perfect Permitted Liens.
(u) Debt and Guarantees. Schedule 6.1(u) sets forth a complete
and accurate listing of all Debt and Guarantees of the Borrower and its
Subsidiaries in excess of $250,000. The Borrower and its Subsidiaries
have performed and are in compliance in all material respects with all
of the material terms of such Debt and Guarantees, and no default or
event of default on the part of the Borrower or its Subsidiaries exists
with respect to any such Debt or Guarantee.
(v) Litigation. Except as set forth in Schedule 6.1(v), there
are no actions, suits or proceedings pending nor, to the knowledge of
the Borrower, threatened against or in any other way relating adversely
to or affecting the Borrower or any of its Subsidiaries or any of their
respective properties in any court or before any arbitrator of any kind
or before or by any Governmental Authority which, if adversely
determined, could reasonably be expected to have a Material Adverse
Effect.
54
(w) Absence of Defaults. No event has occurred or is
continuing which constitutes a Default or an Event of Default, and no
event has occurred which constitutes a default or event of default by
the Borrower or its Subsidiaries under any Material Contract or
judgment, decree or order to which the Borrower or its Subsidiaries is
a party or by which the Borrower or its Subsidiaries or any of their
respective properties may be bound or which would require the Borrower
or its Subsidiaries to make any payment thereunder prior to the
scheduled maturity date therefor.
(x) Accuracy and Completeness of Information. No document
furnished or written statement made to the Agent or the Lenders by the
Borrower or its Subsidiaries 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 its Subsidiaries or omits or will
omit to state a material fact necessary in order to make the statements
contained therein not misleading. The Borrower is not aware of any
facts which it has not disclosed in writing to the Agent having a
Material Adverse Effect, or insofar as the Borrower can now foresee,
could reasonably be expected to have a Material Adverse Effect.
SECTION 6.2 Survival of Representations and Warranties, Etc. All repre
sentations and warranties made under this Agreement shall survive the Closing
Date and shall not be waived by the execution and delivery of this Agreement,
any investigation made by or on behalf of the Lenders or any borrowing
hereunder.
ARTICLE VII
FINANCIAL INFORMATION AND NOTICES
Until all the Obligations have been indefeasibly paid and satisfied in
full and the Total Commitments terminated, unless consent has been obtained in
the manner set forth in Section 13.10 hereof, the Borrower will furnish or cause
to be furnished to the Agent at the Agent's Office (with copies for each
Lender), or such other office as may be designated by the Agent from time to
time:
SECTION 7.1 Financial Statements and Projections.
(a) Monthly Financial Statements. As soon as practicable and in any
event within thirty (30) days after the end of each accounting month of the
Borrower, an unaudited Consolidated and consolidating balance sheet of the
Borrower and its Subsidiaries as of the end of such month and related statements
of income, changes in stockholders' equity and cash flows for such month, all in
reasonable detail and prepared by the Borrower in accordance with GAAP, and
certified by the Chief Executive Officer or Chief Financial Officer of the
55
Borrower to be true and correct. (The Lenders acknowledge that the Borrower has
no active Subsidiaries and accordingly does not presently prepare consolidating
statements.)
(b) Quarterly Financial Statements. As soon as practicable and in any
event within sixty (60) days after the end of each fiscal quarter of the
Borrower (except the fourth quarter in each fiscal year), an unaudited
Consolidated and consolidating balance sheet of the Borrower and its
Subsidiaries as of the close of such fiscal quarter and unaudited Consolidated
and consolidating statements of income, retained earnings and cash flows for the
fiscal quarter then ended and that portion of the Fiscal Year then ended, all in
reasonable detail setting forth in comparative form the corresponding figures
for the preceding Fiscal Year and prepared by the Borrower in accordance with
GAAP, subject to year end adjustments and, if applicable, containing disclosure
of the effect on the financial position or results of operations of any change
in the application of accounting principles and practices during the period, and
certified by the chief executive officer or chief financial officer of the
Borrower to present fairly in all material respects the financial condition of
the Borrower and its Subsidiaries as of their respective dates and the results
of operations of the Borrower and its Subsidiaries for the respective periods
then ended, subject to normal year end adjustments. (The Lenders acknowledge
that the Borrower has no active Subsidiaries and accordingly does not presently
prepare consolidating statements.)
(c) Annual Financial Statements. As soon as practicable and in any
event within one hundred twenty (120) days after the end of each Fiscal Year, an
audited Consolidated and an unaudited consolidating balance sheet of the
Borrower and its Subsidiaries as of the close of such Fiscal Year and audited
Consolidated and unaudited consolidating statements of income, retained earnings
and cash flows for the Fiscal Year then ended, including the notes thereto, all
in reasonable detail setting forth in comparative form the corresponding figures
for the preceding Fiscal Year and prepared by an independent certified public
accounting firm in accordance with GAAP and, if applicable, containing
disclosure of the effect on the financial position or results of operation of
any change in the application of accounting principles and practices during the
year, and accompanied by a report thereon by such certified public accountants
that is not qualified with respect to scope limitations imposed by the Borrower
or any of its Subsidiaries or with respect to accounting principles followed by
the Borrower or any of its Subsidiaries not in accordance with GAAP. (The
Lenders acknowledge that the Borrower has no active Subsidiaries and accordingly
does not presently prepare consolidating statements.)
(d) Annual Financial Projections. As soon as practicable and in any
event no later than sixty (60) days after the end of each Fiscal Year, financial
projections of the Borrower and its Subsidiaries on a consolidated basis for the
ensuing twelve (12) months, such projections to include, on a monthly basis, the
following: projected statements of income and cash flows and balance sheets and
a report containing management's discussion and analysis of such projections,
accompanied by a certificate from the chief financial officer of the Borrower to
the effect that, to the best of such officer's knowledge, such projections are
good faith estimates of the financial condition and operations of the Borrower
and its Subsidiaries for such twelve (12) month period.
56
SECTION 7.2 Officer's Compliance Certificate. At each time financial
statements are delivered pursuant to Sections 7.1(b) and 7.1(c), a certificate
of the chief executive officer or chief financial officer of the Borrower in the
form of Exhibit D attached hereto (an "Officer's Compliance Certificate"):
(a) stating that such officer has reviewed the financial
statements of the Borrower and its Subsidiaries as of the end of such
fiscal quarter and such statements fairly present in all material
respects the financial condition of the Borrower and its Subsidiaries
as of the dates indicated and the results of their operations and cash
flows for the periods indicated, subject to normal year end adjustments
and information to be included in footnotes to the audited statements;
(b) stating that to such officer's knowledge, based on a
reasonable examination sufficient to enable him to make an informed
statement, no Default or Event of Default exists, or, if such is not
the case, specifying such Default or Event of Default 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; and
(c) setting forth as at the end of such fiscal quarter the
calculations required to establish (i) whether or not the Borrower and
its Subsidiaries were in compliance with the financial covenants set
forth in Article IX hereof and (ii) the calculation of the Applicable
Margin pursuant to Section 4.1(c) as at the end of such period.
SECTION 7.3 Other Reports.
(a) All reports and forms filed with respect to all Plans under ERISA
except as filed in the ordinary course of business and that would not result in
any adverse effect or action under ERISA;
(b) Promptly upon receipt thereof, copies of all material reports, if
any, submitted to the Borrower or its Board of Directors by its independent
public accountants in connection with their auditing function, including,
without limitation, any management report and any management responses thereto;
(c) If reasonably requested by the Agent, statements in conformity with
the requirements of Federal Reserve Form G-1 or U-1 referred to in Regulations G
and U, respectively, of the Board of Governors of the Federal Reserve System;
(d) Promptly but in any event within ten (10) Business Days after the
filing thereof, a copy of (i) each report or other filing made by the Borrower
or its Subsidiaries with the Securities and Exchange Commission ("SEC") and
required by the SEC to be delivered to the shareholders of the Borrower or any
of its Subsidiaries, and (ii) each report made by the Borrower or any of its
Subsidiaries to the SEC on Form 8-K and each final registration statement of the
Borrower or any of its Subsidiaries filed with the SEC other than those filed on
Form S-8;
57
(e) On Tuesday of each week, a Borrowing Base Certificate as described
in Section 2.2(c) and a "Cash Position" report in form reasonably satisfactory
to the Agent, on or prior to the fifteenth (15th) day of each month, a Factored
Accounts Receivable Aging Report and on or prior to thirty (30) days after each
accounting month of the Borrower, an Inventory Report, House Account Aging
Report and financial statements, all covering such periods and financial items
and in such form as shall be reasonably satisfactory to the Agent; and
(f) Such other information regarding the operations, business affairs
and financial condition of the Borrower and its Subsidiaries as the Agent may
reasonably request.
SECTION 7.4 Notice of Litigation and Other Matters. Prompt (but in no
event later than ten (10) days after the Chairman, Chief Executive Officer,
President or Chief Financial Officer of the Borrower obtains actual knowledge
thereof) telephonic and written notice of:
(a) the commencement of all material proceedings and
investigations by or before any Governmental Authority and all material
actions and proceedings in any court or before any arbitrator against
or involving the Borrower or any Subsidiary thereof or any of their
respective material properties, assets or businesses including any
material notice received from the Internal Revenue Service or other
taxing authority regarding employment related taxes which individually
or in the aggregate, if adversely determined could reasonably be
expected to have a Material Adverse Effect;
(b) any notice of any material violation received by the
Borrower or any Subsidiary thereof from any Governmental Authority
including, without limitation, any notice of material violation of
Environmental Laws which in any such case could reasonably be expected
to have a Material Adverse Effect;
(c) any labor controversy that has resulted in, or threatens
to result in, a strike or other work action against the Borrower or any
Subsidiary thereof that could reasonably be expected to have a Material
Adverse Effect;
(d) any Default or Event of Default or any other event which
could reasonably be expected to have a Material Adverse Effect; and
(e) to the extent it could reasonably be expected to have a
Material Adverse Effect (i) the establishment of any new Employee
Benefit Plan, the commencement of contributions to any plan to which
the Borrower or any ERISA Affiliate was not previously contributing or
any increase in the benefits of any existing Employee Benefit Plan,
(ii) each funding waiver request filed with respect to any Employee
Benefit Plan and all communications received or sent by the Borrower or
any ERISA Affiliate with respect to such request, (iii) the failure of
the Borrower or any ERISA Affiliate to make a required installment or
payment under Section 302 of ERISA or Section 412 of the Code by the
due date, (iv) any Termination Event or "prohibited transaction", as
such term is defined in Section 406 of ERISA or Section 4975 of the
58
Code, in connection with any Employee Benefit Plan or any trust created
thereunder, along with a description of the nature thereof, what action
the Borrower has taken, is taking or proposes to take with respect
thereto and, when known, any action taken or threatened by the Internal
Revenue Service, the Department of Labor or the PBGC with respect
thereto, (v) any favorable or unfavorable determination letter from the
Internal Revenue Service regarding the qualification of an Employee
Benefit Plan under Section 401(a) of the Code (along with a copy
thereof), (vi) all notices received by the Borrower or any ERISA
Affiliate of the PBGC's intent to terminate any Pension Plan or to have
a trustee appointed to administer any Pension Plan, (vii) each Schedule
B (Actuarial Information) to the annual report (Form 5500 Series) filed
by the Borrower or any ERISA Affiliate with the Internal Revenue
Service with respect to each Pension Plan, (viii) all notices received
by the Borrower or any ERISA Affiliate from a Multiemployer Plan
sponsor concerning the imposition or amount of withdrawal liability
pursuant to Section 4202 of ERISA and (ix) the Borrower obtaining
knowledge or reason to know that the Borrower or any ERISA Affiliate
has filed or intends to file a notice of intent to terminate any
Pension Plan under a distress termination within the meaning of Section
4041(c) of ERISA.
SECTION 7.5 Accuracy of Information. All written information, reports
and statements furnished by or on behalf of the Borrower to the Agent, the
Disbursing Agent or any Lender (other than financial forecasts) whether pursuant
to this Article VII or any other provision of this Agreement or any of the
Security Documents, shall be, at the time the same is so furnished, complete and
correct in all material respects to the extent necessary to give the Agent, the
Disbursing Agent or such Lender fair and reasonable knowledge of the subject
matter based on the Borrower's knowledge thereof.
ARTICLE VIII
AFFIRMATIVE COVENANTS
Until all of the Obligations have been indefeasibly paid and satisfied
in full and the Total Commitments terminated, unless consent has been obtained
in the manner provided for in Section 13.10, the Borrower will, and will cause
each of its Subsidiaries to:
SECTION 8.1 Preservation of Corporate Existence and Related Matters.
Except as permitted by Section 10.5, preserve and maintain its separate
corporate existence and all rights, franchises, licenses and privileges
necessary to the conduct of its business; and qualify and remain qualified as a
foreign corporation and authorized to do business in each
59
jurisdiction in which the failure to so qualify could reasonably be expected to
have a Material Adverse Effect.
SECTION 8.2 Maintenance of Property. In addition to the requirements of
any of the Security Documents, protect and preserve all properties necessary to
its business, including copyrights, patents, trade names and trademarks;
maintain in good working order and condition all buildings, equipment and other
tangible real and personal property in a manner which is customary in the
industry in which the Borrower or such Subsidiary is engaged; and from time to
time make or cause to be made all renewals, replacements and additions to such
property necessary for the conduct of its business, so that the business carried
on in connection therewith may be properly and advantageously conducted at all
times.
SECTION 8.3 Insurance.
(a) In addition to the requirements of any of the Security Documents,
maintain insurance with responsible insurance companies against such risks and
in such amounts as are customarily maintained in the industry in which the
Borrower is engaged and as may be required by Applicable Law.
(b) On the Closing Date and upon the reasonable request of the Agent
thereafter, deliver to the Agent (i) a detailed list of the insurance then in
effect, stating the names of the insurance companies, the amounts of the
insurance, the dates of the expiration thereof and the risks covered thereby and
(ii) a certified copy of the policies of insurance.
SECTION 8.4 Accounting Methods and Financial Records. Maintain a system
of accounting, and keep such books, records and accounts (which shall be true
and complete in all material respects) as may be required or as may be necessary
to permit the preparation of financial statements in accordance with GAAP and in
compliance with the regulations of any Governmental Authority having
jurisdiction over it or any of its properties.
SECTION 8.5 Payment and Performance of Obligations. Pay and perform all
Obligations under this Agreement and the other Loan Documents and pay or perform
(a) all taxes, assessments and other governmental charges that may be levied or
assessed upon it or any of its property (including, without limitation,
withholding, social security, payroll and similar employment related taxes on
the dates such taxes are due), and (b) all other indebtedness, obligations and
liabilities in accordance with customary trade practices; provided, that the
Borrower may contest any item described in clauses (a) and (b) hereof in good
faith so long as adequate reserves are maintained with respect thereto in
accordance with GAAP.
SECTION 8.6 Compliance With Laws and Approvals. Observe and remain in
compliance with all Applicable Laws and maintain in full force and effect all
Governmental Approvals, in each case applicable or necessary to the conduct of
its business, except to the
60
extent the failure to do so could not reasonably be expected to have a Material
Adverse Effect.
SECTION 8.7 Environmental Management. In addition to and without
limiting the generality of Section 8.6, maintain the Realty (whether leased or
owned in fee) free of any Hazardous Materials required to be removed in order to
be in compliance with Environmental Laws (provided that as to violations or
other matters disclosed in the environmental assessment reports delivered to the
Agent under Section 5.2(b)(vii) hereof, the Borrower shall not be in default
hereunder so long as proper procedures are promptly undertaken to remove or
remediate such violation, damage or noncompliance with all due diligence and are
continued until such violation, damage or noncompliance has been corrected or
cured to the reasonable satisfaction of the Agent), and adopt and maintain
Hazardous Materials management practices including generation, storage, disposal
and remediation as may be required to be in compliance in all material respects
with all Environmental Laws with respect to all other Hazardous Materials
located on its business premises.
SECTION 8.8 Compliance with ERISA. In addition to and without limiting
the generality of Section 8.6, make timely payment of contributions required to
meet the minimum funding standards set forth in ERISA with respect to any
Employee Benefit Plan; not take any action or fail to take action the result of
which could be a liability to the PBGC or to a Multiemployer Plan; not
participate in any prohibited transaction that could result in any material
civil penalty under ERISA or material tax under the Code; operate each Employee
Benefit Plan in such a manner that will not incur any tax liability under
Section 4980B of the Code or any liability to any qualified beneficiary as
defined in Section 4980B of the Code except where failure to do so could or
would not be expected to have a Material Adverse Effect; and furnish to the
Agent and each Lender upon the Agent's request such additional information about
any Employee Benefit Plan as may be reasonably requested by the Agent.
SECTION 8.9 Compliance With Agreements. Comply in all material respects
with each Material Contract entered into in the conduct of its business except
where the failure to do so could or would not be expected to have a Material
Adverse Effect; provided, that the Borrower or such Subsidiary may contest in
good faith any such Material Contract so long as adequate reserves are
maintained with respect thereto in accordance with GAAP.
SECTION 8.10 Conduct of Business. Engage only in the lines of business
conducted on the Closing Date and lines of business reasonably related thereto.
SECTION 8.11 Visits and Inspections. Permit representatives of the
Agent or any of the Lenders, from time to time, as often as may be reasonably
requested, but only during normal business hours (except upon, and during the
continuance of an Event of Default), to visit and inspect its properties;
inspect, audit and make extracts from its books, records and files, including,
but not limited to, management letters prepared by independent accountants; and
discuss with its principal officers, and its independent accountants, its
business, assets, liabilities, financial condition, results of operations and
business prospects.
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SECTION 8.12 Audits. Permit the Agent and a representative of up to two
other Lenders, at the Borrower's expense, to conduct, or cause to be conducted,
on a semi-annual basis, a field examination of the Accounts and Inventory of the
Borrower and its Subsidiaries; provided, that the Agent shall have the right to
conduct such audits on a more frequent basis if reasonably required by the Agent
in its sole discretion but shall in all events conduct such audits at least
semi-annually; and provided further, that a written copy of the results of such
field examination, if any, shall be provided to the Disbursing Agent and each
Lender by the Agent.
SECTION 8.13 Further Assurances. Make, execute and deliver all such
additional and further acts, things, deeds and instruments as the Agent or the
Required Lenders may reasonably require to document and consummate the
transactions contemplated hereby and to vest completely in and insure the Agent
and the Lenders their respective rights under this Agreement, the Notes, the
Letters of Credit and the other Loan Documents.
ARTICLE IX
FINANCIAL COVENANTS
Until all of the Obligations have been indefeasibly paid and satisfied
in full and the Total Commitments terminated, unless consent has been obtained
in the manner set forth in Section 13.10 hereof, the Borrower will not:
SECTION 9.1 Current Ratio. Permit the ratio of (a) Consolidated Current
Assets of the Borrower and its Subsidiaries to (b) Consolidated Current
Liabilities of the Borrower and its Subsidiaries to be less than 2.0 to 1.0, at
any time.
SECTION 9.2 Coverage Ratio. Permit the Coverage Ratio to be less than
the following ratios as of the date indicated:
Ratio Applicable Date
.9 to 1.0 At the end of the second quarter of Borrower's 1996 fiscal year.
1.0 to 1.0 At the end of the third quarter of Borrower's 1996 fiscal year.
1.0 to 1.0 At the end of the fourth quarter of Borrower's 1996 fiscal year.
1.1 to 1.0 At the end of each quarter of Borrower's 1997 fiscal year.
1.25 to 1.0 At the end of the first quarter of Borrower's 1998 fiscal year
and at the end of each fiscal quarter thereafter.
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SECTION 9.3 Leverage Ratio. Permit the Leverage Ratio to exceed the
following ratios as of the date indicated:
Ratio Applicable Date
5.0 to 1.0 At the end of the second quarter of Borrower's 1996 fiscal year.
5.0 to 1.0 At the end of the third quarter of Borrower's 1996 fiscal year.
4.5 to 1.0 At the end of the fourth quarter of Borrower's 1996 fiscal year.
4.5 to 1.0 At the end of the first quarter of Borrower's 1997 fiscal year.
4.0 to 1.0 At the end of the second quarter of Borrower's 1997 fiscal year.
4.0 to 1.0 At the end of the third quarter of Borrower's 1997 fiscal year.
3.5 to 1.0 At the end of the fourth quarter of Borrower's 1997 fiscal year
and at the end of each fiscal quarter thereafter.
SECTION 9.4 Minimum Net Worth. Permit Consolidated Net Worth, as of any
date, to be less than (a) $4,000,000 plus (b) fifty percent (50%) of
Consolidated Net Income (if positive) of the Borrower and its Subsidiaries for
each fiscal quarter occurring after the Closing Date plus (c) one hundred
percent (100%) of the aggregate Net Proceeds of any issuance or offering of
capital stock received by the Borrower or any of its Subsidiaries after the
Closing Date.
ARTICLE X
NEGATIVE COVENANTS
Until all of the Obligations have been indefeasibly paid and satisfied
in full and the Total Commitments terminated, unless consent has been obtained
in the manner set forth in Section 13.10 hereof, the Borrower will not and will
not permit any of its Subsidiaries to:
SECTION 10.1 Limitations on Debt. Create, incur or suffer to exist any
Debt, other than:
(a) the Obligations;
(b) Debt set forth on Schedule 10.1 hereto, including the
extension of maturity, modification or refinancing (but not in any such
case an increase in the principal amount nor a shortening of the
maturity thereof) thereof;
63
(c) Subordinated Debt owing to the Borrower or any Subsidiary
by any other Subsidiary;
(d) trade accounts payable arising in the ordinary course of
business and not more than ninety (90) days past due unless being
contested in good faith and by appropriate proceedings;
(e) Debt consisting of Guarantees permitted by Section 10.2
hereof;
(f) Obligations of the Borrower pursuant to any Hedging
Agreement to the extent such obligations constitute Debt;
(g) Surety bonds and appeal bonds acquired in the ordinary
course of business or in connection with the enforcement of rights or
claims of the Borrower or of any Subsidiary or in connection with
judgments that do not result in an Event of Default; and
(h) Debt of the Borrower and its Subsidiaries incurred in
connection with Capital Leases, purchase money Debt of the Borrower and
its Subsidiaries and additional Debt of the Borrower and its
Subsidiaries not otherwise permitted herein provided that the aggregate
amount of such Debt shall not exceed $2,000,000 on any date of
determination.
SECTION 10.2 Limitations on Guarantees. Create, incur, assume, or
suffer to exist any Guarantees except (a) Guarantees in favor of the Agent for
the benefit of the Lenders, (b) Guarantees existing on the Closing Date and set
forth on Schedule 6.1(u) hereto, and any renewal or modification (but not any
increase in the principal amount) thereof, (c) Guarantees representing the
endorsement of negotiable instruments for deposit or collection in the ordinary
course of business, (d) Guarantees of payments under any trade payable incurred
or operating lease entered into by the Borrower or any Subsidiary and any other
obligation (not constituting Debt) of the Borrower or any Subsidiary, all of
which Guarantees and obligations are incurred in the ordinary course of
business, and (e) Guarantees of any Debt in each case permitted by Section 10.1.
SECTION 10.3 Limitations on Liens. Create, incur, assume or suffer to
exist any Lien on or with respect to any of its assets or properties (including
shares of capital stock), real or personal, whether now owned or hereafter
acquired, except:
(a) Liens of the Agent for the benefit of the Lenders or the
Disbursing Agent;
(b) Liens existing on the Closing Date and set forth on
Schedule 10.3 hereto;
(c) Liens evidencing the interest of lessors under operating
leases in the property subject to such lease;
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(d) Liens incurred in connection with the Debt referred to in
Section 10.1(b);
(e) Liens for taxes, assessments and other governmental
charges or levies (excluding any Lien imposed pursuant to any of the
provisions of ERISA or Environmental Laws) not yet due or as to which
the period of grace, if any, related thereto has not expired or which
are being contested in good faith and by appropriate proceedings if
adequate reserves are maintained to the extent required by GAAP;
(f) the claims of materialmen, mechanics, carriers,
warehousemen, processors or landlords for labor, materials, supplies or
rentals incurred in the ordinary course of business, (i) which are not
overdue for a period of more than sixty (60) days or (ii) which are
being contested in good faith and by appropriate proceedings;
(g) Liens consisting of deposits or pledges made in the
ordinary course of business in connection with, or to secure payment
of, obligations under workers compensation, unemployment insurance or
similar legislation and utility deposits;
(h) Liens securing the performance of bids, tenders, statutory
obligations, surety and appeal bonds and other obligations of like
nature, incurred as an incident to and in the ordinary course of
business;
(i) Liens constituting encumbrances in the nature of zoning
restrictions, easements and rights or restrictions of record on the use
of real property, which in the aggregate do not, in any case,
materially detract from the value of such property or impair the use
thereof in the ordinary conduct of business;
(j) Leases and subleases not materially interfering with the
ordinary course of conduct of the businesses of the Borrower and its
Subsidiaries, taken as a whole;
(k) Judgement Liens which do not create an Event of Default
under Section 11.1(l);
(l) Liens noted on the title insurance policies delivered to
the Agent under Section 5.2(b)(v) hereof;
(m) Liens securing Capital Leases and purchase money Debt to
the extent permitted under Section 10.1(h) but only if such Liens are
at all times confined solely to the property which is the subject of
the Capital Lease or the purchase price of which was financed through
the incurrence of the purchase money Debt secured by such Lien; and
(n) Liens of Factors under the terms and conditions of the
Factoring Agreements.
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SECTION 10.4 Limitations on Loans, Advances, Investments and
Acquisitions. Purchase, own, invest in or otherwise acquire, directly or
indirectly, any capital stock, interests in any partnership or joint venture,
evidence of Debt or other obligation or security of any other Person,
substantially all or a material portion of the business or assets of any other
Person or any other investment or interest whatsoever in any other Person; or
make or permit to exist, directly or indirectly, any loans, advances or
extensions of credit to, or any investment in cash or by delivery of property
in, any Person; or enter into, directly or indirectly, any commitment or option
in respect of the foregoing except:
(a) investments in (i) marketable direct obligations issued or
unconditionally guaranteed by the United States or issued by any agency
thereof and backed by the full faith and credit of the United States,
in each case maturing within one year from the date of acquisition
thereof, (ii) commercial paper maturing no more than one year from the
date issued and, at the time of acquisition, having a rating of at
least A-1 from Standard & Poor's Corporation or at least P-1 from
Xxxxx'x Investors Service, Inc. and (iii) certificates of deposit or
bankers' acceptances maturing within one year from the date of issuance
thereof issued by, or overnight reverse repurchase agreements from, or
any time deposit or account with, or investment issued by, any
commercial bank organized under the laws of the United States of
America or any state thereof or the District of Columbia having
combined capital and surplus of not less than $500,000,000;
(b) loans and advances to employees for reasonable travel and
business expenses in the ordinary course of business;
(c) deposits for utilities, security deposits, leases and
similar prepaid expenses incurred in the ordinary course of business;
(d) trade accounts created in the ordinary course of business;
and
(e) investments by the Borrower in the form of joint ventures
or acquisitions of all or substantially all of the business or a line
of business (whether by the acquisition of capital stock, assets or any
combination thereof) of any other Person if each such investment or
acquisition meets all of the following requirements: (i) the businesses
of the joint venture or the Person to be acquired or the joint ventures
to be entered into shall be in the same lines of business as engaged in
by the Borrower on the Closing Date, (ii) no Default or Event of
Default shall have occurred and be continuing both before and after
giving effect to the acquisition or joint venture, (iii) the Borrower
has delivered to the Agent and the Lenders a certificate of the chief
financial officer of the Borrower demonstrating pro forma compliance
with the covenants contained in Article IX after giving effect to such
acquisition or joint venture, (iv) the fair market value of all
consideration paid in connection with such joint ventures or
acquisitions during any fiscal year of the Borrower shall not exceed
$1,000,000, of which cash consideration paid shall not exceed $500,000,
(v) in the case of the acquisition of the capital stock of any Person,
the Borrower or one of its
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Subsidiaries shall own the controlling interest in such Person after
giving effect to such an acquisition and (vi) the Obligations shall be
secured by a Lien on all assets acquired by the Borrower in connection
with such acquisition.
SECTION 10.5 Limitations on Mergers and Liquidation. Merge, consolidate
or enter into any similar combination with any other Person or liquidate,
wind-up or dissolve itself (or suffer any liquidation or dissolution) except any
Subsidiary of the Borrower may merge with the Borrower (so long as the Borrower
is the surviving corporation) or another Subsidiary of the Borrower.
SECTION 10.6 Limitations on Sale of Assets. Convey, sell, lease,
assign, transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, the sale of any receivables (other than to
Factors under the Factoring Agreements) and leasehold interests and any
sale-leaseback (other than sale-leasebacks of Equipment to be purchased under
the Borrower's 1996, 1997 and 1998 capital expenditure plans included in the
projections furnished by the Borrower to the Lenders which will be financed
under operating leases to be entered into by the Borrower with respect to such
Equipment) or similar transaction), whether now owned or hereafter acquired
except:
(a) the sale of assets no longer necessary or usable in the
business of the Borrower or such Subsidiary;
(b) the sale of inventory in the ordinary course of business;
(c) the sale by any Subsidiary of its business or assets to
the Borrower or another Subsidiary, provided that both before and after
giving effect to such sale no Default or Event of Default shall have
occurred and be continuing;
(d) any other sale or disposition of assets in any Fiscal Year
which, in the aggregate, based on the dispositions of proceeds
received, do not exceed an aggregate amount of $2,500,000; and
(e) the sale or discount without recourse of accounts
receivable arising in the ordinary course of business in connection
with the compromise or collection thereof to the extent permitted under
the Factoring Agreements.
SECTION 10.7 Transactions with Affiliates. Directly or indirectly, (a)
except as permitted pursuant to Section 10.4, make any loan or advance to, or
purchase or assume any note or other obligation to or from, any of its officers,
directors, shareholders or Affiliates, or to or from any member of the immediate
family of any of its officers, directors, shareholders or Affiliates, or
subcontract any operations to any of its Affiliates, or (b) enter into, or be a
party to, any transaction with any of its Affiliates, except pursuant to the
reasonable requirements of its business and upon fair and reasonable terms that
are fully disclosed to and approved in writing by the Required Lenders and are
no less favorable to it than would obtain in a comparable arm's length
transaction with a Person not its Affiliate.
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SECTION 10.8 Certain Accounting Changes. Change its Fiscal Year end, or
make any material change in its accounting treatment and reporting practices
except as required by GAAP.
SECTION 10.9 Compliance with ERISA. (a) Permit the occurrence of any
Termination Event which would result in a liability to the Borrower or any ERISA
Affiliate; (b) permit the present value of all benefit liabilities under all
Pension Plans (determined under the actuarial assumptions used for Code and
ERISA funding purposes) to exceed the current value of the assets of such
Pension Plans allocable to such benefit liabilities; (c) permit any accumulated
funding deficiency (as defined in Section 302 of ERISA and Section 412 of the
Code) with respect to any Pension Plan, whether or not waived; (d) fail to make
any contribu tion or payment to any Multiemployer Plan which the Borrower or any
ERISA Affiliate may be required to make under any agreement relating to such
Multiemployer Plan, or any law pertaining thereto; (e) engage, or permit any
ERISA Affiliate to engage, in any prohibited transaction under Section 406 of
ERISA or Section 4975 of the Code for which a civil penalty pursuant to Section
502(i) of ERISA or a tax pursuant to Section 4975 of the Code; (f) permit the
establishment of any Employee Benefit Plan providing post-retirement welfare
benefits (other than required pursuant to Section 4980B of the Code) or
establish or amend any Employee Benefit Plan which establishment or amendment
could result in liability to the Borrower or any ERISA Affiliate or increase the
obligation of the Borrower or any ERISA Affiliate to a Multiemployer Plan which
liability or increase, individually or together with all similar liabilities and
increases, is reasonably likely to have a Material Adverse Effect; or (g) fail,
or permit any ERISA Affiliate to fail, to establish, maintain and operate each
Employee Benefit Plan in compliance with the provisions of ERISA, the Code and
all other applicable laws and the regulations and interpretations thereof, which
failure is reasonably likely to have a Material Adverse Effect.
SECTION 10.10 Modification of Factor Agreements and Credit Insurance.
Amend or modify the Factoring Agreements or any policy of credit insurance
(including the Borrower's existing policy with American Credit Indemnity
Company), in any material respect, without the prior written consent of the
Required Lenders.
SECTION 10.11 Restricted Payments. Declare or pay any dividends on any
shares of stock of any class of the Borrower now or hereafter outstanding, or
purchase, redeem or otherwise retire any such shares, or apply or set apart any
of the assets therefor or make any other distribution (by reduction of capital
or otherwise) in respect of any such shares, or invest in (by capital
contribution or otherwise) or purchase or repurchase the stock or indebtedness
or all or a substantial part of the assets or properties of any Affiliate, or
make any payment of principal or interest with respect to any Subordinated Debt
or agree to do any of the foregoing (herein, "Restricted Payments"); provided
that if no Default or Event of Default shall have occurred and be continuing or
would result therefrom, the Borrower may (a) make payments of principal and
interest necessary to comply with its binding obligations under the instruments
evidencing the Subordinated Debt outstanding on the Closing Date and (b) subject
to compliance with Section 2.1, voluntarily prepay the Subordinated Extendible
Debentures due April 1, 2000, Series C.
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ARTICLE XI
DEFAULT AND REMEDIES
SECTION 11.1 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 Authority or otherwise:
(a) Default in Payment of Principal of Loans. The Borrower
shall default in any payment of principal of any Loan or Note or
Reimbursement Obligation when and as due (whether at maturity, by
reason of acceleration or otherwise).
(b) Other Payment Default. The Borrower shall default in the
payment when and as due (whether at maturity, by reason of acceleration
or otherwise) of interest on any Loan or Note or the payment of any
other Obligation, and such default shall continue unremedied for three
(3) Business Days.
(c) Misrepresentation. Any representation or warranty made or
deemed to be made by the Borrower or any other Loan Party under this
Agreement, 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 or deemed made.
(d) Default in Performance of Certain Covenants. The Borrower
shall default in the performance or observance of any covenant or
agreement contained in Section 7.4(d), Section 8.12, Section 8.13,
Article IX or Article X of this Agreement.
(e) Default in Performance of Certain Other Covenants. The
Borrower shall default in the performance or observance of any covenant
or agreement contained in Article VII of this Agreement (other than
Section 7.4(d)) and such default shall continue for a period of ten
(10) Business Days after the earlier of (i) written notice thereof from
the Agent to the Borrower, or (ii) any executive officer of the
Borrower knows or should have known of such default.
(f) Default in Performance of Other Covenants and Conditions.
The Borrower shall default in the performance or observance of any
term, covenant, condition or agreement contained in this Agreement
(other than as specifically provided for otherwise in this Section
11.1) or any other Loan Document and such default shall continue for a
period of thirty (30) Business Days after the earlier of (ii) written
notice thereof from the Agent to the Borrower, or (ii) any executive
officer of the Borrower knows or should have known of such default.
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(g) Cross-Default. The Borrower or any of its Subsidiaries
shall (i) default in the payment of any Debt (other than the Notes or
any Reimbursement Obligation) the outstanding aggregate balance of
which exceeds $250,000 beyond the period of grace, if any, provided in
the instrument or agreement under which such Debt or obligation was
created and such default is not cured or waived; or (ii) default in the
observance or performance of any other agreement or condition relating
to such Debt (other than the Notes or any Reimbursement Obligation)
contained in any instrument or agreement evidencing, securing or
relating thereto or any other event shall occur or condition exist, the
effect of which default or other event or condition is to permit the
holder or holders of such Debt (or a trustee or agent on behalf of such
holder or holders or beneficiary or beneficiaries), upon the giving of
notice if required, to cause any such Debt to become due prior to its
stated maturity (any applicable grace period having expired) and such
default is not cured or waived.
(h) 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 for the purpose of authorizing any of the foregoing.
(i) 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; or (ii)
the appointment of a trustee, receiver, custodian, liquidator or the
like for the Borrower or its Subsidiary or for all or any substantial
part of its assets, domestic or foreign, and such case or proceeding
shall continue undismissed or unstayed for a period of sixty (60)
consecutive calendar days, or an order granting the relief requested in
such case or proceeding (including, but not limited to, an order for
relief under such federal bankruptcy laws) shall be entered.
(j) Failure of Agreements. Any material provision of this
Agreement or of any other Loan Document shall for any reason be
declared by a court of competent jurisdiction to be null and void, or a
proceeding shall be commenced by the Borrower or any of its
Subsidiaries, or by any Governmental Authority having jurisdiction over
the Borrower or any of its Subsidiaries, seeking to establish the
invalidity or unenforceability thereof (exclusive of questions of
interpretation of any provision thereof), or the Borrower or any of its
Subsidiaries shall deny that it has any liability
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or obligation for the payment of any principal or interest purported to
be created under any Loan Document other than on account of the prior
payment thereof, or shall contest the viability of the Liens created
under the Security Documents.
(k) Termination Event. The occurrence of any of the following
events: (i) the Borrower or any ERISA Affiliate fails to make full
payment when due (or promptly after the Borrower obtains knowledge of
any such amounts) of all amounts which, under the provisions of any
Pension Plan or Section 412 of the Code, the Borrower or any ERISA
Affiliate is required to pay as contributions thereto, which failure is
reasonably likely to have a Material Adverse Effect; (ii) an
accumulated funding deficiency in excess of $250,000 occurs or exists,
whether or not waived, with respect to any Pension Plan; (iii) a
Termination Event resulting in liability to the Borrower or any ERISA
Affiliate in excess of $250,000; or (iv) the Borrower or any ERISA
Affiliate as employers under one or more Multiemployer Plan makes a
complete or partial withdrawal from any such Multiemployer Plan and the
plan sponsor of such Multiemployer Plans notifies such withdrawing
employer that such employer has incurred a withdrawal liability
requiring payments in an amount exceeding $250,000.
(l) Judgment. A judgment or order for the payment of money
which exceeds an amount equal to $250,000 in excess of any applicable
insurance coverage shall be entered against the Borrower by any court
and such judgment or order shall continue undischarged, unstayed or
unbonded for a period of thirty (30) days.
(m) Attachment. A warrant or writ of attachment or execution
or similar process shall be issued against any property of the Borrower
or any of its Subsidiaries and such warrant or process shall continue
undischarged, unstayed or unbonded for a period of thirty (30) days.
(n) Factoring Agreements. The Borrower shall default in the
performance or observance of any term, covenant, condition or agreement
contained in any of the Factoring Agreements and shall have received
notice of such default and such default shall continue beyond the
period of grace, if any, provided for therein.
(o) Termination of Material Contracts. Any Material Contract
(other than a purchase order) shall be terminated if the result of such
termination, together with the termination of any other Material
Contracts in the aggregate, shall or could reasonably be expected to
have a Material Adverse Effect.
(p) Change in Control. There shall have occurred under any
indenture or other instrument evidencing any Debt in excess of
$1,000,000 any "change in control" (as defined in such indenture or
other evidence of Debt) obligating the Borrower to repurchase, redeem
or repay all or any part of the Debt or capital stock provided for
therein.
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SECTION 11.2 Remedies. Upon the occurrence and during the continuance
of an Event of Default, with the consent of the Required Lenders, the Agent may,
or upon the request of the Required Lenders, the Agent shall, by written notice
to the Borrower, with a copy to the Disbursing Agent:
(a) Acceleration; Termination of Facility. Declare the
principal of and interest on the Loans, the Notes and the Reimbursement
Obligations at the time outstanding, and all other amounts owed to the
Lenders and to the Agent or Disbursing Agent under this Agreement or
any of the other Loan Documents (including, without limitation, all
Letter of Credit Obligations, whether or not the beneficiaries of the
then outstanding Letters of Credit shall have presented the documents
required thereunder) and all other Obligations, to be forthwith due and
payable, whereupon the same shall immediately become due and payable
without presentment, demand, protest or any additional notice of any
kind, all of which are expressly waived, anything in this Agreement or
the other Loan Documents to the contrary notwithstanding, and terminate
the Revolving Credit Commitment and the right of the Borrower to
request Letters of Credit hereunder; provided, that upon the occurrence
of an Event of Default specified in Section 10.1(g) or (h), the
Revolving Credit Commitment and the L/C Commitment shall be
automatically terminated and all Obligations shall automatically become
due and payable. Nothing herein shall be construed to permit the Agent,
the Disbursing Agent or any Lender to charge or collect any unmatured
or unearned interest.
(b) Letters of Credit. With respect to all Letters of Credit
with respect to which presentment for honor shall not have occurred at
the time of an acceleration pursuant to the preceding paragraph,
require the Borrower at such time to deposit in a cash collateral
account opened by the Disbursing Agent an amount equal to the aggregate
then undrawn and unexpired amount of such Letters of Credit. Amounts
held in such cash collateral account shall be applied by the Disbursing
Agent to the payment of drafts drawn under such Letters of Credit, and
the unused portion thereof after all such Letters of Credit shall have
expired or been fully drawn upon, if any, shall be applied to repay the
other Obligations. After all such Letters of Credit shall have expired
or been fully drawn upon, the Reimbursement Obligation shall have been
satisfied and all other Obligations shall have been paid in full, the
balance, if any, in such cash collateral account shall be returned to
the Borrower.
(c) Rights of Collection. Exercise on behalf of the Lenders
all of its other rights and remedies under this Agreement, the other
Loan Documents and Applicable Law, in order to satisfy all of the
Borrower's Obligations.
SECTION 11.3 Rights and Remedies Cumulative; Non-Waiver; etc. The
enumeration of the rights and remedies of the Agent, the Disbursing Agent and
the Lenders set forth in this Agreement is not intended to be exhaustive and the
exercise by the Agent, the Disbursing Agent and the Lenders of any right or
remedy shall not preclude the exercise of any other rights or remedies, all of
which shall be cumulative, and shall be in addition to any other right or remedy
given hereunder or under the Loan Documents or that may now or
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hereafter exist in law or in equity or by suit or otherwise. No delay or failure
to take action on the part of the Agent, the Disbursing Agent or Lender in
exercising any right, power or privilege shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right, power or privilege
preclude other or further exercise thereof or the exercise of any other right,
power or privilege or shall be construed to be a waiver of any Event of Default.
No course of dealing between the Borrower, the Agent, the Disbursing Agent and
the Lenders or their respective agents or employees shall be effective to
change, modify or discharge any provision of this Agreement or any of the other
Loan Documents or to constitute a waiver of any Event of Default.
ARTICLE XII
THE AGENT
SECTION 12.1 Appointment. Each of the Lenders hereby irrevocably
designates and appoints NationsBank as the Agent and NCC as the Disbursing Agent
of such Lender under this Agreement and the other Loan Documents and each such
Lender irrevocably authorizes NationsBank as Agent and NCC as the Disbursing
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 Agent and the Disbursing
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, neither the Agent nor the Disbursing Agent shall have any duties or
responsibilities, except those expressly set forth herein and therein, or any
fiduciary rela tionship 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 Agent or
the Disbursing Agent. To the extent any provision of this Agreement permits
action by the Agent, the Agent shall, subject to the provisions of Section 13.10
hereof and of this Article XII, take such action if directed in writing to do so
by the Required Lenders.
SECTION 12.2 Delegation of Duties. The Agent and the Disbursing Agent
may execute any of their respective 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. Neither
the Agent nor the Disbursing Agent shall be responsible for the negligence or
misconduct of any agents or attorneys-in-fact selected by it with reasonable
care.
SECTION 12.3 Exculpatory Provisions. Neither the Agent, the Disbursing
Agent nor any of their officers, directors, employees, agents,
attorneys-in-fact, Subsidiaries or Affiliates shall be (a) liable 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 (b) responsible in
any
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manner to any of the Lenders 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 Agent or
Disbursing Agent under or in connection with, this Agreement or the other Loan
Documents or for the value, validity, effectiveness, genuine ness,
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. Neither the Agent nor the Disbursing Agent shall 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 12.4 Reliance by Agents. The Agent and the Disbursing 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 Agent or
Disbursing Agent. The Agent and the Disbursing 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 13.10 hereof. The Agent and the
Disbursing 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 (or, when expressly
required hereby or by the relevant other Loan Document, all the 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 except for its own gross
negligence or willful misconduct. The Agent and the Disbursing 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
(or, when expressly required hereby, all the 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 12.5 Notice of Default. Neither the Agent nor the Disbursing
Agent shall be deemed to have knowledge or notice of the occurrence of any
Default or Event of Default hereunder unless it 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". In the
event that the Agent or the Disbursing Agent receives such a notice or otherwise
becomes aware of the occurrence of any Default or Event of Default, it shall
promptly give notice thereof to the Lenders. The Agent shall take such action
with respect to such Default or Event of Default as shall be reasonably directed
by the Required Lenders; provided that unless and until the Agent shall have
received such directions, the Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable in the best interests of the
Lenders.
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SECTION 12.6 Non-Reliance on the Agents and Other Lenders. Each Lender
expressly acknowledges that neither the Agent, the Disbursing Agent nor any of
their respective officers, directors, employees, agents, attorneys-in-fact,
Subsidiaries or Affiliates has made any representations or warranties to it and
that no act by the Agent or the Disbursing Agent hereinafter taken, including
any review of the affairs of the Borrower, shall be deemed to constitute any
representation or warranty by the Agent or Disbursing Agent to any Lender. Each
Lender represents to the Agent or Disbursing Agent that it has, independently
and without reliance upon the Agent, the Disbursing 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 and issue or participate in Letters of Credit
hereunder and enter into this Agreement. Each Lender also represents that it
will, independently and without reliance upon the Agent, the Disbursing 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. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the Agent or the
Disbursing Agent hereunder or by the other Loan Documents, neither the Agent nor
the Disbursing Agent shall 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 Agent or the Disbursing Agent or any
of their respective officers, directors, employees, agents, attorneys-in-fact,
Subsidiaries or Affiliates.
SECTION 12.7 Indemnification. The Lenders agree to indemnify the Agent
and Disbursing Agent in their capacity as such and (to the extent not reimbursed
by the Borrower and without limiting the obligation of the Borrower to do so),
ratably according to the respective amounts of their Commitment Percentages,
from and against any and all liabili ties, 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 or any Reimbursement Obligation) be
imposed on, incurred by or asserted against the Agent or Disbursing 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 Agent or Disbursing 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 Agent's or the
Disbursing Agent's bad faith, gross negligence or willful misconduct.
Notwithstanding the foregoing, the Agent agrees to indemnify the Disbursing
Agent from and against any and all losses which the Disbursing Agent may sustain
caused by the failure of any Lender to reimburse such Lender's funding
obligations under Section 2.2(b) or the failure of any Lender to indemnify the
Disbursing Agent as provided herein (which indemnity by the Agent shall not be
subject to the indemnification provisions set forth above). The agreements in
this Section 12.7 shall survive
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the payment of the Notes, any Reimbursement Obligation and all other amounts
payable hereunder and the termination of this Agreement.
SECTION 12.8 The Agent and Disbursing Agent in Their Individual
Capacities. The Agent and the Disbursing Agent and their respective Subsidiaries
and Affiliates may make loans to, accept deposits from and generally engage in
any kind of business with the Borrower as though the Agent or the Disbursing
Agent, as the case may be, were not an agent hereunder. With respect to any
Loans made or renewed by it and any Note issued to it, and with respect to any
Letter of Credit issued by it or participated in by it, the Agent shall have the
same rights and powers under this Agreement and the other Loan Documents as any
Lender and may exercise the same as though it were not an agent, and the terms
"Lender" and "Lenders" shall include the Agent in its individual capacity.
SECTION 12.9 Resignation and Removal of Agent; Successor Agents.
Subject to the appointment and acceptance of a successor as provided below, the
Agent may resign at any time by giving thirty (30) days prior notice thereof to
the Lenders and the Borrower. In addition, after eighteen (18) months have
expired since the Closing Date and at such time as the Agent's Total Commitment
is less than or equal to $10,000,000, the Agent may be removed at any time with
the written consent of the Borrower and the Required Lenders. Upon any such
resignation by the Agent, the Required Lenders shall have the right to appoint a
successor Agent from among the Lenders, and if no successor Agent shall have
been so appointed by the Required Lenders and shall have accepted such
appointment within fifteen (15) days after the retiring Agent's giving of notice
of resignation, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent from among the Lenders. Upon any such removal of the Agent, the
Required Lenders shall appoint a successor Agent. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, as the case may be, such
successor Agent shall thereupon succeed to and become vested with all rights,
powers, privileges and duties of the preceding Agent, and the preceding Agent
shall be discharged from its duties and obligations hereunder. After any
preceding Agent's resignation or removal hereunder as Agent, as the case may be,
the provisions of this Section 12.9 shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
the Agent.
The Disbursing Agent may resign at any time by giving thirty (30) days
prior notice thereof to the Lenders and the Borrower. Upon such resignation, the
Agent shall succeed to and become vested with all rights, powers, privileges and
duties of the retiring Disbursing Agent, and the retiring Disbursing Agent shall
be discharged from its duties and obligations hereunder. After any retiring
Disbursing Agent's resignation hereunder as Disbursing Agent, as the case may
be, the provisions of this Section 12.9 shall continue in effect for its benefit
in respect of any actions taken or omitted to be taken by it while it was acting
as the Disbursing Agent.
SECTION 12.10 Participation in Audits. The Lenders shall have the right
to participate in the field audits provided for in Section 8.12 on a rotating
basis.
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ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 Notices.
(a) Method of Communication. Except as otherwise provided in this
Agreement, all notices and communications hereunder shall be in writing, or by
telephone subsequently confirmed in writing if otherwise permitted by this
Agreement. Any notice shall be effective if delivered by hand delivery or sent
via telecopy, recognized overnight courier service or certified mail, return
receipt requested, and shall be presumed to be received by a party hereto (i) on
the date of delivery if delivered by hand or sent by telecopy, (ii) on the next
Business Day if sent by recognized overnight courier service and (iii) on the
fifth Business Day following the date sent by certified mail, return receipt
requested. A telephonic notice to the Agent as understood by the Agent will be
deemed to be the controlling and proper notice in the event of a discrepancy
with or failure to receive a confirming written notice.
(b) Addresses for Notices. Notices to any party shall be sent to it at
the following addresses, or any other address as to which all the other parties
are notified in writing.
If to the Borrower: Texfi Industries, Inc.
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Chief Financial Officer
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
with copies to: Xxxxxx Xxxx Xxxxxx Xxxx & Xxxxxxxxxx
0000 Xxxxxxxxxxx Xxxxx
000 Xxxxx Xxx Xxxxxx
Post Office Box 21847
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxx X. Xxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
If to NationsBank, N.A., NationsBank, N.A.
as Agent or Lender: 000 Xxxxx Xxxxx Xxxxxx, XX0-000-00-00
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: J. Xxxxxxx Xxxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
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with copies to: Xxxxxxx Xxxxxxxxx Xxxxxxx & Xxxxxxx, L.L.P.
NationsBank Corporate Center
Suite 4200
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: J. Xxxxxxx Xxxxxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
If to NationsBanc Commercial NationsBanc Commercial Corporation
Corporation, as Disbursing Xxxx Xxxxxx Xxx 0000
Xxxxx: Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxx
Telephone No.: (000) 000-0000
Telecopy No. (000) 000-0000
(c) Agent's Office. The Agent hereby designates its office located at
the address set forth above, or any subsequent office which shall have been
specified for such purpose by written notice to the Borrower and Lenders, as the
Agent's Office referred to herein, to which payments due are to be made and at
which Loans will be disbursed and Letters of Credit issued.
(d) Disbursing Agent's Office. The Disbursing Agent hereby designates
its office located at the address set forth above, or any subsequent office
which shall have been specified for such purpose by written notice to the
Borrower and Lenders, as the Disbursing Agent's office referred to herein, at
which Revolving Credit Loans will be disbursed.
SECTION 13.2 Expenses. The Borrower will pay all reasonable
out-of-pocket expenses of the Agent and the Disbursing Agent in connection with:
(a) the preparation, execution and delivery of this Agreement and each of the
other Loan Documents, whenever the same shall be executed and delivered,
including all reasonable syndication and due diligence expenses, reasonable
appraiser's fees, reasonable search fees, title insurance premiums, recording
fees, taxes and reasonable fees and disbursements of counsel for the Agent or
the Disbursing Agent; (b) the preparation, execution and delivery of any waiver,
amendment or consent by the Agent, the Disbursing Agent or the Lenders relating
to this Agreement or any of the other Loan Documents including reasonable fees
and disbursements of counsel for the Agent or the Disbursing Agent, reasonable
search fees, reasonable appraise r's fees, recording fees and taxes imposed in
connection therewith; and (c) consulting with one or more Persons, including
appraisers, accountants, engineers and attorneys, concerning or related to the
nature, scope or value of any right or remedy of the Agent, the Disbursing Agent
or any of the Lenders hereunder or under any of the other Loan Documents,
including any review of factual matters in connection therewith, which expenses
shall include the reasonable fees and disbursements of such Persons. In
addition, the Borrower will pay all reasonable out-of-pocket expenses of the
Agent and the Disbursing Agent and each Lender in connection with prosecuting or
defending any claim in any way arising out of, related to,
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connected with, or enforcing any provision of, this Agreement or any of the
other Loan Docu ments, which expenses shall include the reasonable fees and
disbursements of counsel and of experts and other consultants retained by the
Agent, the Disbursing Agent or any of the Lend ers.
SECTION 13.3 Set-off. In addition to any rights now or hereafter
granted under Applicable Law and not by way of limitation of any such rights,
upon and after the occurrence of any Event of Default and during the continuance
thereof, the Disbursing Agent, the Lenders and any assignee or participant of a
Lender in accordance with Section 13.9 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, time or
demand, 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 the Lenders, or any such assignee or participant to or for the
credit or the account of the Borrower against and on account of the Obligations
irrespective of whether or not (a) the Lenders shall have made any demand under
this Agreement or any of the other Loan Documents or (b) the Agent shall have
declared any or all of the Obligations to be due and payable as permitted by
Section 11.2.
SECTION 13.4 Governing Law. THIS AGREEMENT, THE NOTES AND THE OTHER
LOAN DOCUMENTS, UNLESS OTHERWISE EXPRESSLY SET FORTH THEREIN, SHALL BE GOVERNED
BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH
CAROLINA, WITHOUT REFERENCE TO THE CONFLICTS OR CHOICE OF LAW PRINCIPLES
THEREOF.
SECTION 13.5 Consent to Jurisdiction. The Borrower hereby irrevocably
consents to the personal jurisdiction of the state and federal courts located in
Mecklenburg County, North Carolina, in any action, claim or other proceeding
arising out of any dispute in connection with this Agreement, the Notes and the
other Loan Documents, any rights or obligations hereunder or thereunder, or the
performance of such rights and obligations. The Borrower hereby irrevocably
consents to the service of a summons and complaint and other process in any
action, claim or proceeding brought by the Agent or Lender in connection with
this Agreement, the Notes or the other Loan Documents, any rights or obligations
hereunder or thereunder, or the performance of such rights and obligations, on
behalf of itself or its property, by the mailing of copies thereof by registered
or certified mail, postage prepaid, to the Borrower at its address for notices
contained in Section 13.1. Nothing in this Section 13.5 shall affect the right
of the Agent or any Lender to serve legal process in any other manner permitted
by Applicable Law or affect the right of the Agent or any Lender to bring any
action or proceeding against the Borrower or its properties in the courts of any
other jurisdictions.
SECTION 13.6 Waiver of Jury Trial. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THE AGENT, THE DISBURSING AGENT, EACH LENDER
AND THE BORROWER HEREBY IRREVOCABLY WAIVE THEIR RESPECTIVE
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RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM OR OTHER PROCEEDING
ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR THE
OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE
PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.
SECTION 13.7 Reversal of Payments. To the extent the Borrower makes a
payment or payments to the Agent or the Disbursing Agent for the ratable benefit
of the Lenders or the Agent receives any payment or proceeds of the Collateral
which payments 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, then, to the extent of such
payment or proceeds repaid, the 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 the Agent or the Disbursing Agent.
SECTION 13.8 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 of law may prove to be
inadequate relief to the Lenders. Therefore, the Borrower agrees that the
Lenders, at the Lenders' option, shall be entitled to temporary and permanent
injunctive relief in any such case without the necessity of proving actual
damages.
SECTION 13.9 Successors and Assigns; Participations.
(a) Benefit of Agreement. This Agreement shall be binding upon and
inure to the benefit of the Borrower, the Agent, the Disbursing Agent and the
Lenders, all future holders of the Notes, and their respective 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) Assignment by Lenders. Each Lender may, with the consent of the
Agent and, so long as no Default or Event of Default shall have occurred and be
continuing, the Borrower, which consents shall not be unreasonably withheld,
assign to one or more Eligible Assignees all or a portion of its interests,
rights and obligations under this Agreement (including, without limitation, all
or a portion of the Obligations at the time owing to it and the Notes held by
it); provided, 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 Commitment of the assigning Lender after any such
assignment (determined as of the date the Assignment and Acceptance
with respect to such assignment is delivered to the Agent) shall in no
event be less than $5,000,000 and the Commitment so assigned shall not
be less than $5,000,000 (other than assignments of the entire
Commitment of a Lender);
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(iii) the parties to each such assignment shall execute and
deliver to the Agent, for its acceptance and recording in the Register,
an Assignment and Acceptance in the form of Exhibit E attached hereto
(an "Assignment and Acceptance"), together with any Note or Notes
subject to such assignment, and shall furnish the Disbursing Agent with
a copy of each such Assignment;
(iv) 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
(v) the assigning Lender shall pay to the Agent an assignment
fee of $3,000 upon the execution by such Lender of the Assignment and
Acceptance.
Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in each Assignment and Acceptance, which effective date
shall be at least five (5) Business Days after the execution thereof, (A) 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 hereby
and (B) the Lender thereunder shall, to the extent provided in such assignment,
be released from its obligations under this Agreement.
(c) Register. The Agent shall maintain a copy of each Assignment and
Acceptance delivered to it and a register for the recordation of the names and
addresses of the Lenders and the amount of the Obligations with respect to each
Lender from time to time (the "Register"). The entries in the Register shall be
conclusive, in the absence of manifest error, and the Borrower, the Agent, the
Disbursing Agent and the Lenders may treat each person whose name is recorded in
the Register as a Lender hereunder for all purposes of this Agreement. The
Register shall be available for inspection by the Borrower or Lenders at any
reasonable time and from time to time upon reasonable prior notice.
(d) Issuance of New Notes. Upon its receipt of an Assignment and
Acceptance executed by an assigning Lender and an Eligible Assignee together
with any Note or Notes subject to such assignment and the written consent to
such assignment, the Agent shall, if such Assignment and Acceptance has been
completed and is substantially in the form of Exhibit E:
(i) accept such Assignment and Acceptance;
(ii) record the information contained therein in the Register;
(iii) give prompt notice thereof to the Lenders and the
Borrower; and
(iv) promptly deliver a copy of such Assignment and Acceptance
to the Borrower.
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Within five (5) Business Days after receipt of notice, the Borrower shall
execute and deliver to the Agent, 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 Commitment assumed by the Lender 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 Commitment 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.
(e) Participations. Each Lender may sell participations to one or more
banks or other entities in all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its
Commitment and the Notes held by it); provided that:
(i) each such participation shall be in an amount not less
than $3,000,000;
(ii) such Lender's obligations under this Agreement
(including, without limitation, its Commitment) shall remain unchanged;
(iii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations;
(iv) such Lender shall remain the holder of the Notes held by
it for all purposes of this Agreement;
(v) the Borrower, the Agent and the other Lenders shall
continue to deal solely and directly with such Lender in connection
with such Lender's rights and obligations under this Agreement;
(vi) such Lender shall not permit such participant the right
to approve any waivers, amendments or other modifications to this
Agreement or any other Loan Document other than waivers, amendments or
modifications which would reduce the principal of or the interest rate
on any Loan or Reimbursement Obligation, extend the term or increase
the amount of the Lender's Commitment in which such participant
participates, reduce the amount of any fees to which such participant
is entitled, extend any scheduled payment date for principal or, except
as expressly contemplated hereby or permitted in this Agreement or the
Security Documents, release any Guarantors or any Collateral; and
(vii) any such disposition shall not, without the consent of
the Borrower, require the Borrower to file a registration statement
with the Securities and Exchange Commission to apply to qualify the
Loans or the Notes under the blue sky law of any state.
The Agent and the Lenders shall hold all non-public information with
respect to the Borrower or its Subsidiaries obtained pursuant to the Loan
Documents confidential in
82
accordance with their customary procedures of handling their own confidential
information. Any information disclosed by or on behalf of the Borrower or any
acquired Person to the Agent or any of the Lenders and any information obtained
by the Agent or any of the Lenders pursuant to the provisions of, or in
connection with, this Agreement shall be used solely for purposes of this
Agreement and not in any other manner, and, if such information is not otherwise
in the public domain, shall not be disclosed by the Agent or such Lender to any
other Person except (i) to its independent accountants and legal counsel (it
being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such information and instructed to keep
such information confidential), (ii) pursuant to statutory and regulatory
requirements, (iii) pursuant to any mandatory court order, subpoena or other
legal process or (iv) subject to a written agreement containing provisions
substantially the same as those of this Section, to any participant in or
assignee of, or prospective participant in or assignee of, any Loan.
(f) Certain Pledges or Assignments. Nothing herein shall prohibit any
Lender from pledging or assigning any Note to any Federal Reserve Bank in
accordance with Applicable Law.
SECTION 13.10 Amendments, Waivers and Consents. Except as set forth
below, any term, covenant, agreement or condition of this Agreement or any of
the other Loan Documents may be amended or waived by the Lenders, and any
consent given by the Lenders, if, but only if, such amendment, waiver or consent
is in writing signed by the Required Lenders (or by the Agent with the consent
of the Required Lenders) and delivered to the Agent and, in the case of an
amendment, signed by the Borrower; provided, that no amendment, waiver or
consent shall (a) increase the amount or extend the time of the obligation of
the Lenders to make Loans or issue or participate in Letters of Credit, (b)
extend the originally scheduled time or times of payment of the principal of any
Loan or Reimbursement Obligation or the time or times of payment of interest or
fees on any Loan or Reimbursement Obligation, (c) reduce the rate of interest or
fees payable on any Loan or Reimbursement Obligation, (d) permit any
subordination of the principal or interest on any Loan or Reimbursement
Obligation, (e) release any Collateral for any Obligation (other than as
specifically permitted in this Agreement or the Security Documents), (f) release
any of the Guarantors from the Guaranty Agreement, (g) amend the provisions of
this Section 13.10 or the definition of Majority Lenders or Required Lenders or
(h) the advance rates in the Borrowing Base definition, without the prior
written consent of each Lender. In addition, no amendment, waiver or consent to
the provisions of (a) Article XII shall be made without the written consent of
the Agent and (b) Article IIA without the written consent of the Issuing Lender.
SECTION 13.11 Performance of Borrower's Duties. 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.
SECTION 13.12 Indemnification. The Borrower agrees to reimburse the
Agent, the Disbursing Agent, the Lenders and their Affiliates and their
respective officers, directors, employees and agent for all reasonable costs and
expenses, including all reasonable counsel,
83
appraisal, or other expert or consultant fees and disbursements incurred, and to
indemnify and hold the Agent, the Disbursing Agent and the Lenders and their
Affiliates and their respective officers, directors, employees and agents
harmless from and against all losses suffered by the Agent, the Disbursing Agent
and the Lenders in connection with (a) the exercise by the Agent, the Disbursing
Agent or the Lenders of any right or remedy granted to them under this Agreement
or any of the other Loan Documents, (b) except for claims by the Lenders and the
Disbursing Agent against one another, any claim, and the prosecution or defense
thereof, arising out of or attributable to this Agreement or any of the other
Loan Documents, and (c) the collection or enforcement of the Obligations or any
of them; provided, that the Borrower shall not be obligated to reimburse the
Agent, the Disbursing Agent or any Lender for costs and expenses, or indemnify
the Agent, the Disbursing Agent or any Lender for any loss, resulting from the
gross negligence or willful misconduct of the Agent, the Disbursing Agent or
Lender.
SECTION 13.13 All Powers Coupled with Interest. All powers of attorney
and other authorizations granted to the Lenders, the Agent, the Disbursing Agent
and any Persons designated by the Agent, the Disbursing Agent or Lenders
pursuant to any provisions of this Agreement or any of the other Loan Documents
shall be deemed coupled with an interest and shall be irrevocable so long as any
of the Obligations remain unpaid or unsatisfied or the Commitments have not been
terminated.
SECTION 13.14 Survival of Indemnities. Notwithstanding any termination
of this Agreement, the indemnities to which the Agent, the Disbursing Agent and
the Lenders are entitled under the provisions of this Article XIII and any other
provision of this Agreement and the Loan Documents shall continue in full force
and effect and shall protect the Agent, the Disbursing Agent and the Lenders
against events arising after such termination as well as before.
SECTION 13.15 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 13.16 Severability of Provisions. Any provision of this
Agreement or any other 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 13.17 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 13.18 Term of Agreement. This Agreement shall remain in effect
from the Closing Date through and including the date upon which all Obligations
shall have
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been indefeasibly and 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 13.19 Adjustments. If any Lender (a "Benefitted Lender") shall
at any time receive any payment of all or part of the Obligations, or if any
Lender shall at any time receive any Collateral in respect to the Obligations
(whether voluntarily or involuntarily, by set-off or otherwise) in a greater
proportion than any such payment to and Collateral received by any other Lender,
such Benefitted Lender shall purchase for cash from the other Lenders
participations in such portion of each such other Lender's Loans, or shall
provide such other Lenders with the benefits of any such Collateral, or the
proceeds thereof, as shall be necessary to cause such Benefitted Lender to share
the excess payment or benefits of such Collateral or proceeds ratably with each
of the Lenders; provided, that if all or any portion of such excess payment or
benefits is thereafter recovered from such Benefitted Lender, such purchase
shall be rescinded, and the purchase price and benefits returned to the extent
of such recovery, but without interest. The Borrower agrees that each Lender so
purchasing a portion of another Lender's Loans may exercise all rights of
payment (including, without limitation, rights of set-off) with respect to such
portion as fully as if such Lender were the direct holder of such portion.
SECTION 13.20 Independent Effect of Covenants. The Borrower expressly
acknowledges and agrees that each covenant contained in Articles VIII, IX and X
hereof shall be given independent effect. Accordingly, the Borrower shall not
engage in any transaction or other act otherwise permitted under any covenant
contained in Articles VIII, IX and X if, before or after giving effect to such
transaction or act, the Borrower shall or would be in breach of any other
covenant contained in Articles VIII, IX or X.
SECTION 13.21 Legal Fees. Any references herein to fees of counsel
shall mean fees based upon such counsel's normal hourly rates.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed under seal by their duly authorized officers, all as of the day and
year first written above.
BORROWER:
TEXFI INDUSTRIES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Chief Executive Officer
AGENT:
NATIONSBANK, N.A.,
As Agent and Lender
85
By: /s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: Vice President
[SIGNATURES CONTINUED ON THE FOLLOWING PAGE]
86
DISBURSING AGENT
NATIONSBANC COMMERCIAL
CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
LENDERS:
NATIONSBANK, N.A.
By:/s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: Vice President
MELLON BANK, N.A.
By: /s/ Xxxxxxx X. Xxxxxxxxxxx
Name: Xxxxxxx X. Xxxxxxxxxxx
Title: Assistant Vice President
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ Xxxxxxx X. Xxxxxxxx
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President
CORESTATES BANK, N.A.
By: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: Vice President
NATWEST BANK N.A.
By: /s/ Xxxx X. Xxxxx
Name: Xxxx X. Xxxxx
Title: Vice President
00
XXXXXXXX XXXX XX XXXXXX
By: /s/ Xxxxxxx Xxxxxx
Name: Xxxxxxx Xxxxxx
Title: Vice President
By: /s/ Xxxx X. Council IV
Name: Xxxx X. Council IV
Title: Vice President
88
