INSTALLMENT NOTE
$1,580,717.73
BIRMINGHAM, ALABAMA
MAY 1, 1994
For value received, the under signed (whether one or more, hereafter called the
"Obligors") promise(s) to pay to the order of SOUTHTRUST BANK OF ALABAMA,
NATIONAL ASSOCIATION (hereinafter called the "Bank" or, together with any other
holder of this note, the "Holder"), at any office of the Bank in BIRMINGHAM,
ALABAMA, or at such other place as the Holder may designate, the principal sum
of ONE MILLION FIVE HUNDRED EIGHTY THOUSAND SEVEN HUNDRED SEVENTEEN, AND 73/100
Dollars, together with interest thereon at the rate provided below from the date
of this note (or other interest accrual date shown below) until maturity
(whether as originally scheduled or upon acceleration following default), and
with interest on the unpaid balance of the principal sum (plus accrued but
unpaid interest at maturity, to the extent permitted by law) at the rate which
is 2 percent per annum in excess of the rate provided below or the maximum rate
allowed by law, whichever is less, from maturity until said indebtedness is paid
in full, Interest will continue to accrue daily on the entire unpaid balance of
the principal sum of this note until each payment under this note is received by
the Holder at the address provided above. Interest will accrue beginning on the
date of this note unless another date is shown here: APRIL 29, 1994.
INTEREST RATE -----Variable Rate Interest will accrue on the above-stated
principal sum as follows (mark applicable provision): Interest will accrue on
the above-stated principal sum at the rate per annum which is __________
percentage points in excess of the Index Rate. Unless another rate is made
applicable below, the "Index Rate" is the rate of interest designated by the
Bank periodically as its Base Rate. The Base Rate is not necessarily the lowest
rate charged by the Bank. The Base Rate on the date of this note is _____
percent. _____ (check box if applicable) The "Index Rate" is the weekly auction
average yield of ____ -week U.S. Treasury Bills at the most recent auction prior
to the date of the interest rate payable under this note is calculated. The
Index Rate on the date of this note is ______ percent. The rate of interest
payable under this note will change to reflect any change in the Index Rate:
_____ on any day the Index Rate changes. ___ on the _________ day of each month
hereafter. _____ on the day each payment of interest is due as provided below.
_________________________ Obligors may prepay this note in full at any time
without penalty.
_____ Fixed Rate Interest will accrue on the above-stated principal sum at the
rate of 7.70 percent per annum.
Interest on the principal sum will be calculated at the rate set forth above on
the basis of a 360-day year and the actual number of days elapsed by multiplying
the principal sum by the per annum rate set forth above, multiplying the product
thereof by the actual number of days elapsed, and dividing the product so
obtained by 360.
PAYMENT SCHEDULE _______ Installments of Principal, Interest Paid Separately The
above-stated principal sum and interest thereon shall be paid as follows (mark
applicable provision): The Obligors promise to pay the above-stated principal
sum in ________ consecutive _____ monthly installments _____ quarterly
installments _________ installments in the amount of $ _________ each, beginning
_______, 19 ____ and continuing on the same day of each month, quarter, or other
period (as applicable) thereafter until _________, 19___ at which time a final
installment in the amount of the unpaid balance of the principal sum and all
accrued but unpaid interest thereon shall be due and payable.
The Obligors promise to pay accrued interest on the principal sum: _____ monthly
____ quarterly __________________________ beginning ____________ 19,____ and
continuing on the same day of each month, quarter, or other period (as
applicable) thereafter until final maturity of the principal sum.
_X_ Installments of Principal and Interest The Obligors promise to pay the
above-stated principal sum and interest thereon in 59 consecutive _X_ monthly
installments ___ quarterly installments ______ installments in the amount of
$31,824.79 each, beginning June 1, 1994 and continuing on the same day of each
month, quarter, or other period (as applicable ) thereafter until May 1, 1999 at
which time a final installment in the amount of the unpaid balance of the
principal sum and all accrued but unpaid interest thereon shall be due and
payable.
All payments under this note shall be made in U.S. dollars and in immediately
available funds at the place where payment is due.
LOAN FEE (This provision applicable only if completed):
A loan fee in the amount of $ -0- has been included in the amount of this note
and paid to the Bank from the loan proceeds ____ paid to the Bank by cash or
check at closing. The loan fee is earned by the Bank when paid and is not
subject to refund except to the extent required by law.
LATE CHARGE If any scheduled payment is in default 10 days or more, Obligors
agree to pay a late charge equal to 5% of the amount of the payment which is in
default, but not less than $.50 or more than the maximum amount allowed by
applicable law. The preceding sentence does not apply if the original principal
amount of this Note is less than $2,000.
COLLATERAL This note is secured by every security agreement, pledge, assignment,
stock power, mortgage, deed of trust, security deed and/or other instrument
covering personal or real property (all of which are hereinafter included in the
term "Separate Agreements") which secures an obligation so defined as to include
this note, including without limitation all such Separate Agreements which are
of even date herewith and/or described in the space below. In addition, as
security for the payment of any and all liabilities and obligations of the
Obligors to the Holder (including this note and the indebtedness evidenced by
this note and all extensions, renewals and modifications thereof, and all
writings delivered in substitution therefor) and all claims of every nature of
the Holder against the Obligors, whether present or future, and whether joint or
several, absolute or contingent, matured or unmatured, liquidated or
unliquidated, direct or indirect (all of the foregoing are hereinafter included
in the term "Obligations"), the Obligor hereby assign to the Holder and grant to
the Holder a security interest in and security title to the property (the
"Collateral") described below: (Describe Separate Agreements and Collateral.)
VARIOUS EQUIPMENT MORE PARTICULARLY DESCRIBED ON SECURITY AGREEMENT DATED MAY 1,
1994 AND MADE PART THEREOF BY THIS REFERENCE.
The Obligors are jointly and severally liable for the payment of this note and
have subscribed their names hereto without condition that anyone else should
sign or become bound hereon and without any other condition whatever being made.
The provisions printed on the back of this page are a part of this note. The
provisions of this note are binding on the heirs, executors, administrators,
successors and assigns of each and every Obligor and shall inure to the behalf
of the Holder, its successors and assigns. This note is executed under the seal
of each of the Obligors and of the indorsers, if any, with the intention that it
be an instrument under seal.
CAUTION; IT IS IMPORTANT THAT YOU THOROUGHLY READ THE CONTRACT BEFORE YOU SIGN
IT.
Address of Obligor: 215 COMMERCE BLVD.
ANDERSON, SOUTH CAROLINA 29622
No. 5160099/15583
HAMPSHIRE DESIGNERS, INC.
By: /s/ Charles W. Clayton, Vice President
If the Obligors fail to pay any installment of principal or interest or any
other sum under this note exactly when it is due or fail to perform any other
covenant under this Note when due (time being of the essence of every term of
this note); or if any of the Obligors shall fail to pay any other debt or
obligation to the Holder exactly when due; or if any of the Obligors or any
guarantor or indorser of this note shall die (if an individual) or dissolve or
cease to do business (if a partnership or corporation); or (if any of the
Obligors or any guarantor or indorser of this note become insolvent, or makes a
general assignment for the benefit of creditors, or files or has filed against
him, her, or if a petition under any chapter of the United States Bankruptcy
Code, or files, or has filed against him, her, or if an application in any court
for the appointment of a receive or trustee for any substantial part of his,
hers, or its property or assets; or if a judgment or arbitration award is
entered against any of the Obligors or any such guarantor or indorser or a levy,
writ of execution, attachment, garnishment, seizure or similar writ or judicial
process is issued against any of the Obligers or any such guarantor or indorser
or any of his, hers, or its property or assets; or if any Obligor, indorser or
guarantor of this note transfers all or any valuable part of his, her or its
assets outside the ordinary course of business, or wastes, losses, or dissipates
or permits waste, loss or dissipation of any valuable part of such person's
assets; of if any Obligor, indorser or guarantor of this note is a partnership,
and any general partner of such partnership withdraws or is removed; or if any
obligor, indorser or guarantor of this note is a corporation and ownership or
power to vote more than 50 percent of the voting stock of such corporation is
transferred, directly or indirectly (including through any voting trust,
irrevocable proxy, or the like), during any 12 month period; or if any default
or breach occurs under any of the Separate Agreements; or if any of the Obligors
or any indorser or guarantor breaches any subordination agreement or enter
creditor agreement made with or for the benefit of the holder; or if at any time
in the opinion of the Holder the prospect of payment or performance by any
Obligor or any guarantor or indorser of this note becomes impaired, then , if
any of the foregoing shall occur, the entire unpaid principal sum of this note
and all accrued but unpaid interest thereon shall, at the option of the Holder
and without requirement of notice or demand, become due and payable immediately,
notwithstanding any time or credit allowed under this note or under any other
agreement made by the Holder with Obligors.
Each Obligor and each guarantor and indorser agrees (a) in the event such
Obligor, guarantor or indorser is other than an individual, to furnish the
Holder at least annually, within 120 days after the end of each calendar year or
other fiscal year of such entity, a current financial statements, including a
balance sheet and statements of income, cash flows and changes in capital for
such year, setting forth in each case in comparative form the corresponding
figures for the previous year, together with accompanying schedules and
footnotes along with the accountant's letter accompanying the financial
statement (if the financial statements were complied or certified by a public
accountant, such financial statements to be certified by the chief executive
officer, chief financial officer, managing partner or comparable financial
officer of such Obligor, guarantor or indorser to be true and complete to the
best of his or her knowledge and information and to have been prepared in
accordance with generally accepted accounting principles or, if not so prepared,
setting forth the manner in which such financial statement departs form
generally accepted accounting principles; (b) in the event such Obligor,
guarantor or indorser is an individual, to furnish the Holder at least annually,
within 90 days after each anniversary date of this note, a personal financial
statements in form satisfactory to the Holder, certified by such person to be
true and complete to the best of his or her knowledge and belief, and to furnish
the Holder, within 30 days after the Holder's request therefore, a copy of the
federal income tax return most recently filed by such person; and (c) that this
paragraph applies in addition to and not in lieu of any other agreement with the
Holder which requires the furnishing of financial information.
As additional Collateral for the payment of all Obligations, the Obligors
jointly and severally transfer, assign, pledge, whether in trust for any Obligor
or for custody, pledge, collection or otherwise, is now or hereafter in the
actual or constructive possession of, or in transit to, the Holder in any
capacity, its correspondents or agents, and also continuing lien upon and right
of set-off against deposits and credits of each Obligor with, and all claims of
each Obligor against the Holder now or at any time or times and without prior
notice to apply such property, deposits, credits and claims, in whole or in part
and in such order as the Holder may elect, to the payment of, or as a reserve
against, one or more of the Obligations, whether other Collateral therefor is
deemed adequate or not. All such property, deposits, credits and claims of the
Obligors are included in the term Collateral, and the Holder shall have (unless
prohibited by law) the same rights with respect to such collateral as it has
with respect to other Collateral.
Without the necessity for any further notice to or consent of any Obligor, the
Holder may exercise any rights of any of the Obligors with respect to any
Collateral, including without limitation thereto the following rights: (1) to
record or register in, or otherwise transfer into, the name of the Holder or its
nominees any part of the Collateral, without disclosing that the Holder's
interest is that of a secured part; (2) to pledge or otherwise transfer any or
all of the Obligations and/or Collateral, whereupon any pledgee or transferee
shall have all the rights of the Holder hereunder, and the Holder shall
thereafter be fully discharged and relieved from all responsibility and
liability for the Collateral so transferred but shall retain all rights and
powers thereunder as to all Collateral not so transferred; (3) to take
possession of any Collateral and to receive any proceeds of and dividends and
income on any Collateral, including money, and to hold the same as Collateral or
apply the same to any of the Obligations, the manner, order and extent of such
application to be in the sole discretion of the Holder; (4) to exercise any and
all rights of voting, conversion, exchange, subscription and other rights or
options pertaining to any Collateral; and (5) to liquidate, demand, due for,
collect, compromise, receive and give receipt for the cash or surrender value of
any Collateral. If for any reason whatsoever the collateral shall cease to be
satisfactory to the Holder, the Obligors shall upon demand deposit with the
Holder additional Collateral satisfactory to the Holder. Surrender of this note,
upon payment or otherwise, shall not affect the right of the Holder to retain
the Collateral as security for other Obligations. Upon default, the Obligors
agree to assemble the Collateral and make it available to Holder at such place
or places as the Holder shall designate.
The Holder shall be deemed to have exercised reasonable care in the custody and
preservation of any of the Collateral which is in its possession if it takes
such reasonable actions for that purpose as the pledgor of such collateral shall
request in writing, but the Holder shall have the sole discretion to determine
whether such actions are reasonable. Any omissions to do any act not requested
by the pledgor shall not be deemed a failure to exercise reasonable care. The
Obligors shall be responsible for the preservation of the Collateral and shall
take all steps to preserve rights against prior parties. The holder shall not be
liable for, and no Obligor, indorser, or guarantor shall be discharged to any
extent on account of, any failure to realize upon, or to exercise any right or
power with respect to, any of the Obligations or Collateral, or for any delay in
so doing.
The Holder, without making any demand whatsoever, shall have the right to sell
all or any part of the collateral, although the Obligations may be contingent or
unmatured, whenever the Holder considers such sale necessary for its protection.
Sale of the Collateral may be made, at any time and from time to time, at any
public or private sale, at the option of the Holder, without advertisement or
notice to any Obligor, except such notice as is required by law and cannot be
waived. The Holder may purchase the Collateral at any such sale (unless
prohibited by law) free from any equity of redemption and from all other claims.
After deducting all expenses including legal expenses and attorney's fees as
provided below, for maintaining or selling the Collateral and collecting the
proceeds of sale, the Holder shall have the right to apply the remainder of said
proceeds in payment of, or as a reserve against, any of the Obligations, the
manner, order and extent of such application to be in the sole discretion of the
Holder. To the extent notice of any sale or other disposition of the Collateral
is required by law to be given to any Obligor and cannot be waived, the
requirement of reasonable notice shall be met by sending such notice, as
provided below, at least ten (10) calendar days before the time of sale or
disposition. The Obligor shall remain liable to the Holder for the payment of
any deficiency with interest at the rate provided hereinabove. However, the
Holder shall not be obligated to resort to any Collateral but, at its election,
may proceed to enforce any of the obligations in default against any or all of
the Obligors.
With respect to any and all Obligations, to the extent permitted by applicable
law, the Obligors and any endorsers of this note jointly and severally waive the
following: (1) all rights of exemption of property from levy or sale under
execution or other process for the collection of debts under the constitution
and laws of the United Sates or of any state thereof; (2) demand, presentment,
protest, notice of dishonor, suit against any party and all other requirements
necessary to charge or hold any Obligor or indorser liable on any Obligation:
(3) any further receipt for or acknowledgment of the Collateral now or hereafter
deposited and any statement of indebtedness; (4) all statutory provisions and
requirement for the benefit of any Obligor or indorser, now or hereafter in
force (to the extent that same may be waived); (5) the right to interpose any
set-off or counterclaim of any nature or description in any litigation in which
the Holder and any Obligor or endorser shall be adverse parties; and (6) notice
of any intended public or private sale or sales or other intended disposition by
the Holder or the Collateral or any part thereof. The Obligors and indorsers
agree that any obligations of any Obligor or indorser may, from time to time, in
whole or in part, be renewed, extended, modified, accelerated, compromises,
discharged or released by the Holder, and any Collateral, security interest,
lien and/or right of set-off securing any Obligation may from time to time, in
whole or in part, be exchanged, sold, released, or otherwise impaired, all
without notice to or further reservations of rights against any Obligor or any
other person and all without in any way affecting or discharging the liability
of any Obligor or indorser.
The Obligors jointly and severally agree to pay all filing fees and taxes in
connection with this note or the Collateral and all costs of collecting or
securing or attempting to collect or secure any of the Obligations, including an
attorney's fee in the amount which is 15% of the unpaid balance of this note if
an attorney who is not a salaried employee of the Holder is consulted with
reference to suit, bankruptcy proceedings, or otherwise following any default
hereunder by the Obligors.
The Holder shall not by any act, delay, omission or otherwise be deemed to have
waived any of its rights or remedies. No officer or agent of the Holder has the
authority to amend or waive any of the terms of this note orally, and no
amendment or waiver of any kind shall be valid unless in writing and signed by
the Holder. All rights and remedies of the Holder under the terms of this note
under the Separate Agreements, and under statutes or rules of law are cumulative
and may be exercised successively or concurrently. The Obligors jointly and
severally agree that the Holder shall be entitled to all rights of a holder in
due course of a negotiable instrument. This note shall be governed by and
construed in accordance with the substantive laws of the United States and the
state where the office of the Bank set forth above in the first paragraph of
this note is located, without regard to the rules of such state governing
conflicts of law. Any provision of this note which may be unenforceable or
invalid under applicable law shall be ineffective to the extent of such
unenforceablity or invalidity without affecting the enforceability or validity
of any other provision hereof. Any notice required to be given to any person
shall be deemed sufficient if delivered to such person or if mailed, postage
prepaid, to such person's address as it appears on this note or, if none
appears, to any address of such person in the Holder's files. the Holder shall
have the right to correct patent errors in this note. A photocopy of this note
may be filed as a financing statement in any public office.
The Obligors understand that the Bank may enter into participation agreements
with participating banks whereby the Bank will sell undivided interests in this
note to such other banks. The Obligors consent that the Bank may furnish
information regarding the Obligors, including financial information, to such
banks from time to time and also to prospective participating banks in order
that such banks may make an informed decision whether to purchase a
participation in this note. The Obligors hereby grant to each such participating
bank, to the extent of its participation in this note, the right to apply
deposit accounts maintained by the Obligors, or any of them with such bank,
against unpaid sums owed under this note. Upon written request from the Holder,
the Obligors agree to make each payment under this note directly to each such
participating bank in proportion to the participant's interest in this note as
set forth in such request from the Holder.
If, at any time, the rate or amount of interest, late charge, attorney's fee or
any other charge payable under this note shall exceed the maximum rate or amount
permitted by applicable law, then, for such time or amount would be excessive,
its application shall be suspended and there shall be charged instead the
maximum rate or amount permitted under such law, and any excess interest or
other charge paid by the Obligors or collected by the Holder shall be refunded
to the Obligors or credited against the principal sum of this note, at the
election of the Holder or as required by applicable law. Obligors agree that the
late charge provided in this note is a reasonable estimate of probable
additional unanticipated internal costs to the Holder of reporting, accounting
for, and collecting the late payment, that such costs are difficult or
impossible to estimate accurately, and that the agreement to pay a late charge
is reasonable liquidated damages provision.
The provisions of this paragraph shall control, when applicable, notwithstanding
any provision of this note to the contrary; if the Obligors are one or more
natural person and the loan is used for personal, family, or household use other
than for the purchase of real property, the following provisions are applicable:
(a) the waivers of exemption of property from levy or sale under execution or
other process for the collection of debts as hereinabove provided applies only
with respect to the Collateral, if any for this note; (b) to the extent that any
Separate Agreement covers property which is "household goods", as that term is
defined in 12C.F.R. Section 227.12(d), an to the extent the proceeds of the loan
evidenced by this note were not used to purchase such property, such "household
goods" do not constitute any part of Collateral for the Obligations, and (c)
whether or not the loan is used to purchase real property, no consumer
protection provision of applicable law and no limitation on the remedy of
garnishment provided under federal or state law is waived hereby. If the
proceeds of the loan evidenced by this note are used primarily for personal,
family, household or agricultural purposes, and if Alabama law governs this
note, the agreement hereinabove made to pay an attorney's fee to collection
following default applies only if the original principal balance of the loan
exceed $300, and the attorney's fee shall be a reasonable fee not exceeding 15%
of the unpaid balance of this note after default and referral of this note to an
attorney, not a salaried employee of the Holder, for collection. If the proceeds
of the loan evidenced by this note are used primarily for personal, family, or
household use, and if any of the Separate Agreements grants the Holder a lien on
or title to the principal dwelling of any of the Obligors, the Holder waives the
benefit of such Obligor's principal dwelling as security for the Obligations,
unless such Separate Agreement is specifically described on the reverse side of
this note.
EACH INDORSER OF THIS NOTE AGREES TO BE BOUND BY THE PROVISIONS PRINTED OR
OTHERWISE APPEARING ABOVE AN DON THE FACE OF THIS NOTE, INCLUDING THE PROVISION
FOR PAYMENT OF ATTORNEYS' FEES FOR COLLECTION.
SEE SEPARATE GUARANTEE DATED MAY 1, 1994.
CAUTION - IT IS IMPORTANT THAT YOU THOROUGHLY READ THE CONTACT BEFORE YOU SIGN
IT.
Signature _________________________________
ADDENDUM 1 TO INSTALLMENT NOTE
EARLY TERMINATION
THIS ADDENDUM I IS HEREBY ATTACHED TO AND MADE A PART OF THAT CERTAIN
"INSTALLMENT NOTE" DATED MAY 1, 1994 BETWEEN HAMPSHIRE DESIGNERS, INC.
("BORROWER" OR "OBLIGOR"), HAMPSHIRE GROUP, LIMITED ("GUARANTOR") AND SOUTHTRUST
BANK OF ALABAMA, N.A. ("SECURED PARTY").
The interest rate on this note is a fixed rate. Obligor may not prepay this note
in whole or in part during the first eighteen months after the date of this
note. Thereafter, prepayment, either in whole or in part, will be permitted on
any scheduled payment date. for a partial payoff, the payoff amount will be
based on the percentage of original cost (new equipment) or appraised value
(used equipment) at loan inception for the equipment to be paid off. (Appraised
values for the used equipment are shown on Seclude "A"0. At the time of payoff
obligor will pay that percentage of the then principal balance plus accrued
interest.
SECURITY AGREEMENT
EQUIPMENT, FARM EQUIPMENT OR CONSUMER GOODS
Debtor(s):
HAMPSHIRE DESIGNERS, INC.
215 COMMERCE BLVD.
ANDERSON, SC 29621
Secured Party:
SOUTHTRUST BANK OF ALABAMA, N.A.
PO BOX 2554
BIRMINGHAM, ALABAMA 35290
MAY 1, 1994
1. In consideration of the loan or other extension of credit this day made to
the undersigned or any of them by the Secured Party named above (hereinafter
called "Secured Party"), and of any loans or other extensions of credit
presently outstanding and any loans or other extension of credit hereafter made
to the undersigned or any of them by the Secured Party, and of the renewal or
extension of any such loan or other extension of credit, and of any loan or
other extension of credit to any other person or entity the payment of which is
guaranteed by any of the undersigned, and in consideration of $10 and other
valuable consideration to Debtor, receipt of which is hereby acknowledged, and
for the purpose of securing the payment as and when due of all such loans and
extensions of credit and the interest and other lawful charges thereon and any
and all other indebtedness or liability of the undersigned or any of them to the
Secured Party, the undersigned (whether one or more, hereinafter called
"Debtor") hereby assigns, transfers and conveys to Secured Party, and grants to
Secured Party a security interest in, the property described below, all
substitutions therefore, and all additions, accessions, accessories and option
equipment now or hereafter affixed thereto or used in connection therewith
(sometimes hereinafter collectively referred to as "the Collator"); (Describe
Collateral)
MORE PARTICULARLY DESCRIBED ON SCHEDULE A ATTACHED HERETO AND MADE A PART HEREOF
BY THIS REFERENCE, INCLUDING ALL PARTS ACCESSORIES AND ATTACHMENTS NOW OR
HEREAFTER AFFIXED THERETO. PROCEEDS OF THE COLLATERAL INCLUDING PROCEEDS OF ALL
INSURANCE ON THE COLLATERAL ARE ALSO SECURITY FOR THIS LOAN. "PURCHASE MONEY
SECURITY INTEREST."
Including the following motor vehicles which are a part of the Collateral:
New or Used
Year Model
Number of Cylinders
Make
Body, Type, if Truck Ton Capacity
Model or Series
Manufacturer's Serial Number
Motor Number
Proceeds and products of the above described property are also covered by the
security interest created by this agreement. coverage of proceeds and product
shall not be construed as giving Debtor any additional rights with respect to
the Collateral, and Debtor is not authorized to sell, lease, otherwise transfer,
furnish under contract of service manufacture process or assemble the Collateral
except in accordance with Secured Party's written consent obtained in advance.
2. A security interest in, and title to, the Collateral shall be and remain in
Secured Party until all sums secured by this agreement have been paid in full
and Secured Party is duly executed and delivered a written termination of its
interest hereunder. The security interest of Secured Party hereunder secures the
performance of the covenants and agreements herein set forth, the payment of all
indebtedness and other obligations described in paragraph 1 hereof and the
interest thereon, all costs and expenses incurred by Secured Party in the
collection of said indebtedness, the enforcement of Secured Party's rights
hereunder, including the payment of legal expenses and attorney's fees as herein
provided, and the payment of any and all liabilities and obligations of Debtor
to Secure Party and claims of every nature and description of Secured Party
against Debtor, whether present or future, contracted directly with Secured
Party or acquired by Secured Party from another, joint or several, absolute or
contingent, matured or unmatured, liquidated or unliquidated, direct or
indirect. (All of the foregoing in this paragraph are hereinafter included in
the term "the Obligations").
3. Debtor hereby warrants, represents and agrees that:
(a) Except for the security interest created by this agreement, Debtor is the
absolute owner of the Collateral free from any adverse claim, lien, security
interest or encumbrance, and the same shall be true of Collateral acquired
hereafter when acquired; no financial statement or other record of lien,
security interest or encumbrance has been filed which relates to the Collateral
or which through general language or inclusion of proceeds could relate thereto;
and Debtor at Debtor's cost and expense will protect and defend the Collateral
against all claims and demands of all persons at any time claiming the same or
any interest therein.
(b) The Collateral has been acquire and is used, or will be acquired and will be
used, by Debtor primarily for the purpose checked below. (Check 1,2 or 3).
_X_1. In business
___ 2. For Personal, Family or Household Purposes
___ 3. In Framing Operations
(c) ___ If this block is checked, this agreement creates a purchase money
security interest, and the consideration given for this agreement and for the
promissory note(s) executed in connection herewith shall be used to purchase the
Collateral, and Secured Party is authorized to disburse such consideration
directly to the seller of the Collateral.
(d) The Collateral is kept and will be kept at (attach additional sheets if
necessary) Rouse Industrial Park, Chilhowie, Smyth County, Virginia 24319, or if
left blank, at the address shown at the beginning of this agreement.
(e) If the collateral has been acquired or is used primarily for personal,
family or household purposes or for farming operations, Debtor's residence is
the address shown at the beginning of this agreement and if the address so shown
is in a different state from the address shown in (d) above, then Debtor has no
residence in the state where the Collateral is kept.
(f) If the Collateral includes equipment which is normally used in more than one
state (such as motor vehicles, rolling stock, airplanes, road building
equipment, commercial harvesting equipment, and construction machinery) and
Debtor has a place of business in more than one state, Debtor's chief place of
business is:
Street Address
City
County
State/Zip
of if left blank, is the address shown at the beginning of this agreement. If
certificates of title are issued or outstanding with respect to any of the
Collateral, Debtor will cause the interest of Secured Party to be properly noted
thereon.
(g) The Collateral is not and shall not be affixed to real estate so as to be or
become a fixture or fixtures, unless such is indicated below in this agreement
or unless such is subsequently consented to in writing by Secured Party.
___ If this block is checked, the Collateral is or will be affixed to the real
estate describe don an exhibit attached hereto and made a part hereof name of
the record owner of the real estate is ______________ If the Collateral is
affixed to real estate prior to the perfection of the security interest created
by this agreement, Debtor will, on demand of Secured Party, further Secured
Party with a disclaimer or disclaimers, signed by all persons having an interest
in the real estate, of any interest in the Collateral which is prior Secured
Party's interest.
4. Debtor agrees not to use the Collateral in violation of any law nor give a
security interest in, assign, sell, transfer, mortgage or in any way encumbrance
any of the Collateral without the written consent of Secured Party. Debtor
agrees not to conceal nor abandon the Collateral nor remove the Collateral
address other than the address specified in this agreement as the place where
the Collateral will be kept without giving written notice to Secured Party such
removal within five (5) days thereof. Debtor agrees not to rent or lend any
motor vehicle or other Collateral to any person or persons or permit the to be
used as a taxi for hire. Debtor agrees to pay when due all rents, taxes,
assessments and charges levied against the Collateral and other claims that are
or may become liens against the collateral or any part thereof and all charges
for the use, storage, maintenance and repair of the Collateral, Debtor a to
perform or comply with the terms of any lease covering the premises wherein the
Collateral is located and any orders, ordinances, and laws of any government
body or agency concerning such premises or the conduct of business therein.
5. Debtor agrees to keep the collateral in good condition and repair, normal
wear and tear alone expected, without any cost or liability to Secured Party
Debtor agrees not to permit anything to be done that may impair the value of the
Collateral or the security intended to be afforded by this agreement in the
event of loss or damage to the Collateral, Debtor will immediately send Secured
Party written notice thereof and of the extent thereof. The loss, injury or
destruction of the Collateral shall not release or any of the Debtor's
Obligations to Secured Party, if for any reason whatever the Collateral shall
cease to be satisfactory to Secured Party, Debtor agrees to give Secured Party
such additional Collateral or other security for the payment of the Obligations
as Secured Party may demand.
6. Secured Party may, in its discretion and before or after default (a) inspect
the Collateral and inspect and copy all records relating to the Collateral and
the Obligations; (b) terminate, on notice to Debtor, Debtor's authority to sell,
lease, otherwise transfer, manufacture, process, assemble, or furnish under
contracts of service any Collateral as to which any such permission has been
given; (c) require Debtor to give possession or control of the collateral to
Secured Party; (d) take possession or control of all proceeds of the Collateral,
including cash and insurance proceeds payable in the event of any damage to or
loss of the Collateral, and apply such proceeds in payment of, or as a reserve
against any of the Obligations, the manner, order and extent of such application
to be in the sole discretion of Secured Party: (e) take any action Debtor is
required to take or which is necessary to obtain, preserve or enforce the
security interest created by this agreement, or to maintain and preserve the
collateral, without notice to Debtor, and add the costs of same to the
Obligations (but Secured Party is under no duty to take any such action); (f)
release nay Collateral in Secured party's possession to Debtor, temporarily or
otherwise, without waiving any rights to retake or repossess such Collateral;
and (g) reject as unsatisfactory any property hereafter offered by Debtor as
Collateral.
7. Debtor agrees at all times to maintain insurance against loss of or damage to
the collateral against risks of fire (including so-called extended coverage),
theft, collision and such other risks as Secured Party may require, and as are
allowed by law, in an amount not less than the fair market value of the
collateral or the unpaid balance of the Obligations, whichever is less, and
written by such insurance companies as shall be satisfactory to Secured party,
Debtor may provide such insurance through an existing policy or pa policy
independently obtained and paid for by Debtor. Debtor hereby assigns to Secured
Party all of Debtor's right, title and interest in and to any and all insurance
policies covering the collateral now or hereafter obtained, including all losses
payable thereunder, if any, and agrees to deliver said policies or, at Secured
Party's election, certificates thereof, to Secured party. Secured Parties shall
be named as loss payee in all such policies of insurance and all such policies
shall provided a minimum 10 days written notice to Secured Party before
cancellation. Debtor authorized Secured Party to procure such insurance and/or
to pay t he premiums therefore, if Debtor shall fail to procure such insurance
and/or to pay the premiums therefor, and to add the amounts so paid to the
Obligations hereby secured; however, Secured Party is under no duty either to
procure such insurance and/or to pay the premiums herefor. Secured Party is
hereby appointed attorney-in-fact for Debtor with power to compromise, settle or
release any claims pertaining to or arising out of said policies and to take
possession of and indorse in the name of Debtor any checks or other instruments
for the payment of money representing losses payable, return or unearned
premiums, and all rights under said policies. Every power herein conferred upon
Secured Party is coupled with an interest and is irrevocable by the death or
dissolution of Debtor or otherwise. All moneys received by Secured Party on
account of losses payable, return or unearned premiums, and all other rights
under said policies may, at Secured Party's option, be used to purchase other
insurance or to repair, restore, or replace the collateral or may be applied in
payment of, or as a reserve against, any of the Obligations, the manner, order
and extent of such use or application to be in the sole discretion of Secured
Party.
8. Debtor agrees to notify Secured Party in writing within five (5) days after
any change in (a) Debtor's name, identity or form or organization; (b) Debtor's
mailing address: (c) Debtor's corporate structure; (d) Debtor's chief executive
office, principal place of business and/or residence, or (e) any change of use
or location of any part of the Collateral in any jurisdiction.
9. Debtor promises to pay all fees, taxes and other costs connected with filing
any financing or continuation statements and notation of liens on certificates
of title which Secured Party deems necessary or desirable with respect to the
security interest created by this agreement. Secured Party is hereby appointed
the Debtor's attorney-in-fact to do, at Secured Party's option and at Debtor's
expense, al acts and things which Secured Party may deem necessary to perfect
and continue perfected the security interest created by this agreement and to
protect the collateral, including, without limitation, the completion of this
agreement and/or any financing statement consistent with the parties agreement
and the signing and filing of financing statements and/or any applications for
certificates of title or notation of liens thereon for Debtor at an time with
respect to the Collateral. Debtor agrees that a carbon or photostatic copy of
this agreement may be filed as a financing statements in an public office.
10. As additional Collateral for the payment of the Obligations, Debtor hereby
grants to Secured Party a continuing lien upon and security interest in any and
all property of Debtor that for any purpose, whether in trust for Debtor or for
custody, pledge, collection or otherwise, is now or hereafter in the actual or
constructive possession of, or in transit to, Secured Party in any capacity, or
its correspondent or agents, and also a continuing lien upon and right of
set-off against all deposits and credits of Debtor with, and all claims of
Debtor against, Secured Party at any time existing. Secured Party is hereby
authorized at any time or times and without prior notice, to apply such
property, deposits, credits and claims, in whole or in part and in such order as
Secured Party may elect, to the payment of, or as a reserve against, one or more
of the Obligations, whether other Collateral therefore is deemed adequate or
not.
11. If default occurs in the payment as and when due of the Obligations hereby
secured or any part thereof; or if Debtor breaches or fails to keep any of the
covenants or warranties herein contained, or if for any reason whatever the
Collateral shall cease to be satisfactory to Secured Party, or if Debtor
abandons the Collateral, or if any representation made by Debtor herein or in
any statement given to Secured Party shall be materially untrue when made, or if
at any time, in the sole option of Secured Party, the financial responsibility
of Debtor shall become material impaired; or if any of the following events
should occur with respect to Debtor; death (if an individual) or dissolution (if
a partnership or corporation); insolvency; assignment for the benefit of
creditors; calling of a meeting of any creditors; appointment of a committee of
any creditors or liquidating agent; offering to or receiving from any creditors
a composition or extension of any of Debtor's indebtedness; making, or sending
notice of an intended, bulk transfer; the whole or partial of payment; the whole
or partial suspension or liquidation of Debtor's usual business; Debtor's
failing, after demand, to furnish Secured Party any financial information or to
permit Secured Party to inspect Debtor's books or records of account;
commencement of any proceeding, suit, or action (at law or in equity, or under
any provisions of the Bankruptcy Code or amendments thereto) for entry of an
order for relief, reorganization, composition, arrangement, wage earner's plan,
receivership, appointment of a trustee liquidation or dissolution, whether filed
by or against Debtor; entry of a judgment or issuance of a writ of attachment or
garnishment against, or against any of the property of, Debtor; issuance of an
execution against property of Debtor or commencement against Debtor of any
proceeding for enforcement of a money judgment, then, upon the happening of any
of the foregoing in this paragraph, the Obligations hereby secured , although
not yet due, shall at the option of the Secured Party and with or without notice
or demand, become immediately due and payable, notwithstanding any time or
credit allowed under any of the Obligations or under any instrument evidencing
the same.
12. Upon the happening of any default or event set forth in the preceding
paragraph, Secured Party will have the right to take possession of the
Collateral without taking possession thereof, to sell or otherwise dispose of
the Collateral. Upon demand by Secured Party, Debtor will assemble the
Collateral and make it available to Secured Party at a place designated by
Secured Party. Sale or other disposition of the Collateral may be made, at any
time and from time to time, at one or more public or private sales, at the
option of Secured Party, without advertisement or notice to Debtor, except such
notice as is required by law and cannot be waived. To the extent notice of any
sale or other disposition of the Collateral is required by law to be given to
Debtor and cannot be waived, the requirement of reasonable notice shall be met
by giving such notice as provided below, at least ten (10) calendar days before
the time of sale or disposition. Secured Party may purchase the collateral at
any such sale unless prohibited by law) free from any equity of redemption and
from all other claims. After deducting all expenses, including legal expenses
and attorney's fees in the amount of 15% of the unpaid Obligations in default,
for retaking, maintaining and selling the Collateral and for collecting the
proceeds of sale. Secured Party shall have the right to apply the remainder of
said proceeds in payment of, or as a reserve against, any of the Obligations,
the manner, order and extent of such application to be in the sole discretion of
Secured Party. Debtor shall remain liable to Secured Party for the payment of
any deficiency. Secured Party shall not be obligated to resort to any
collateral, but at its election, may proceed to enforce any of the Obligations
in default against Debtor.
13. Secured Party and its agents may come upon any premises where the collateral
is located from time to time to inspect the Collateral and if any event
described in paragraph 11 above, shall have occurred, to repossess the
Collateral. Debtor agrees that any entry upon such premises for these purposes
will not be a trespass on the premises and that Secured Party's repossession of
the Collateral after default will not be a trespass to or a conversion of the
Collateral. Upon the occurrence of any event set forth in paragraph 11 above,
Debtor agrees to remove any non-collateral personal property from the
Collateral. If Secured Party should repossess the Collateral or any part of it
when Debtor is not in default, or should Secured Party take possession of any
non-collateral personal property in connection with any repossession of the
Collateral. Debtor agrees that Secured Party's liability will be limited solely
to the fair rental value of any such property during the period after Debtor
makes formal demand on Secured Party for the return of such property wrongfully
taken, which demand must describe specifically the property requested to be
returned and the time Secured Party returns possession of such property to
Debtor.
14. All rights and powers of Secured Party under this agreement and all right,
title and interest of Secured Party in and to the Collateral herein described
shall inure to the benefit of Secured Party and is successors and assigns. All
covenants, representations, warranties, and agreements of Debtor contained in
this agreement are joint and several if there is more than one Debtor, and shall
bind each such Debtor's personal representatives, heirs, successors, and
assigns. Secured Party will not by any act, delay, omission or otherwise be
deemed to have waived any of its rights or remedies hereunder or under any
applicable law, and no waiver or amendment of any kind shall be valid unless in
writing and signed by Secured Party. All rights and remedies of Secured Party
under this agreement and under any statute or rule of law shall be cumulative
and may be exercised successively or concurrently. This agreement shall not be
terminated, but instead shall continue in force and effect, and shall secure all
Obligations of Debtor to Secured Party incurred or arising prior to the
execution and delivery of a written termination of this agreement by Secured
Party, even though from time to time there may be no outstanding Obligations.
Any provision of this agreement which may be unenforceable or invalid under
applicable law shall be ineffective to the extent of such unenforceability or
invalidity without affecting the enforceability or validity of any other
provision hereof. Debtor hereby waives with respect to the Obligations all
rights of exemption of the Collateral from levy or sale under execution or other
process for collection of debts under the constitution and laws of the United
States or of any state thereof. This agreement shall be governed by and
construed according to the substantive laws, other than rules governing
conflicts of law, of the state where the address of Secured Party set forth
above is located. Any notice required to be given to any person shall be deemed
given when delivered or mailed, postage prepaid, to such person's address as it
appears on this agreement or the address such person shall have furnished to the
other party hereto in writing for such purpose after the date of this agreement.
Secured Party has the right to correct patent errors herein.
15. Notwithstanding any provision of this agreement to the contrary, if the
Debtor is one or more natural persons and the Obligations are used for personal,
family, or household use other than the purchase of real property, the following
provisions are applicable: (a) the waivers of exemption of property from levy or
sale under execution nor their process for the collection of debts, as
hereinabove provided, applies only with respect to the Collateral; (b) to the
extent that the Collateral includes property which is "household goods", as that
term is defined in 12 C.F.R. Section 227.12(d), and to the extent the
Obligations were not used to purchase such property, such "household goods" do
not constitute any part of the Collateral for such non-purchase money
Obligations, and (c) no consumer protection provision of applicable law and no
limitation on the remedy of garnishment provided under federal or state law is
waived hereby. Notwithstanding any provision of this agreement to the contrary,
if the Obligations were used primarily for personal, family, household or
agricultural purposes, the agreement hereinabove made to pay an attorney's fee
following default applies only if the original balance of the Obligations
exceeds $300, and the attorney's fee shall be a reasonable fee not exceeding 15%
of the unpaid balance of the Obligations after default and referral of the
Obligations or this agreement to an attorney, not a salaried employee of Secured
Party, for collection or foreclosure, and Debtor acknowledges Secured Party's
banker's lien and right of set off by operation of law, but does not grant a
lien or security interest under paragraph 10 hereof unless such security
interest is properly disclosed on the disclosure statement provided to Debtor.
16. Loan covenants attached hereto and made a part hereof as Addendum 1 to
Security Agreement.
IN WITNESS WHEREOF, the undersigned has executed this agreement, consisting of
both sides of this page, and any attachments hereto, on the date first set forth
above, with the intention that it constitute a contract under seal.
DEBTOR(S)
/s/ Charles W. Clayton
Vice President
HAMPSHIRE DESIGNERS, INC.
ADDENDUM 1 TO SECURITY AGREEMENT
LOAN COVENANTS
THIS ADDENDUM I IS HEREBY ATTACHED TO AND MADE A PART OF THAT CERTAIN "SECURITY
AGREEMENT" DATED MAY 1, 1994 BETWEEN HAMPSHIRE DESIGNERS, INC. ("BORROWER"),
HAMPSHIRE GROUP, LIMITED ("GUARANTOR") AND SOUTHTRUST BANK OF ALABAMA, N.A.
("SECURED PARTY").
1) HGL will provide a Consolidating fiscal year end statement within 120 days of
the fiscal year end.
2) There shall be no payments or dividends (excluding operating expenses and
management fees) paid to HGL, on a fiscal year basis, by any subsidiary which
exceeds that subsidiary's Net Income for such fiscal year.
3) Tangible Net Worth to be less than $12 million for HGL, $8.2 million for
Hampshire Designers, Inc. and $3.8 million for Hampshire Hosiery, Inc.
("Tangible Net Worth", for the subsidiaries, includes amounts owed to HGL, which
have been subordinated to the National Westminster Bank and/or BHF Bank.)
4) Any default in the Loan Agreement and any default in the Senior Debt
Agreement, will result in a default under this agreement.