1
Exhibit 10.6
CONFORMED EXECUTION COPY
REVOLVING CREDIT
AND
TERM LOAN AGREEMENT
by and among
HANOVER DIRECT, INC.,
as Borrower,
the Lenders from time to time party hereto
and
NATIONSBANK OF NORTH CAROLINA, NATIONAL ASSOCIATION,
as Agent
October 12, 1994
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND TERMS
1.01 Definitions
1.02 Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . . 21
1.03 Terms Consistent . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE II
THE LOANS
2.01 Revolving Credit Loans . . . . . . . . . . . . . . . . . . . . . . 22
2.02 Competitive Bid Loans . . . . . . . . . . . . . . . . . . . . . . . 24
2.03 Term Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.04 Payment of Interest . . . . . . . . . . . . . . . . . . . . . . . . 29
2.05 Payment of Principal . . . . . . . . . . . . . . . . . . . . . . . 30
2.06 Non-Conforming Payments . . . . . . . . . . . . . . . . . . . . . . 30
2.07 Borrower's Account . . . . . . . . . . . . . . . . . . . . . . . . 31
2.08 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.09 Pro Rata Payments . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.10 Reductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.11 Increase and Decrease in Amounts . . . . . . . . . . . . . . . . . 33
2.12 Conversions and Elections of Subsequent Interest Periods . . . . . 33
2.13 Facility Fee and Upfront Fee . . . . . . . . . . . . . . . . . . . 33
2.14 Deficiency Advances . . . . . . . . . . . . . . . . . . . . . . . . 34
2.15 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.16 Extension of Revolving Credit Termination Date . . . . . . . . . . 34
2.17 Additional Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE III
YIELD PROTECTION AND ILLEGALITY
3.01 Additional Costs . . . . . . . . . . . . . . . . . . . . . . . . . 35
3.02 Suspension of Loans . . . . . . . . . . . . . . . . . . . . . . . . 37
3.03 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.04 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
3.05 Alternate Interest Rate. . . . . . . . . . . . . . . . . . . . . 38
3.06 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE IV
CONDITIONS TO MAKING LOANS
4.01 Conditions of Initial Advance . . . . . . . . . . . . . . . . . . . 40
4.02 Conditions of Loans . . . . . . . . . . . . . . . . . . . . . . . . 42
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 Representations and Warranties . . . . . . . . . . . . . . . . . . 44
ARTICLE VI
AFFIRMATIVE COVENANTS
6.01 Financial Reports, Etc . . . . . . . . . . . . . . . . . . . . . . 51
6.02 Maintain Properties . . . . . . . . . . . . . . . . . . . . . . . . 52
6.03 Existence, Qualification, Etc . . . . . . . . . . . . . . . . . . . 52
6.04 Regulations and Taxes . . . . . . . . . . . . . . . . . . . . . . . 53
6.05 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.06 True Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.07 Right of Inspection . . . . . . . . . . . . . . . . . . . . . . . . 54
6.08 Observe all Laws . . . . . . . . . . . . . . . . . . . . . . . . . 54
6.09 Covenants Extending to Subsidiaries . . . . . . . . . . . . . . . . 54
6.10 Officer's Knowledge of Default . . . . . . . . . . . . . . . . . . 54
6.11 Suits or Other Proceedings . . . . . . . . . . . . . . . . . . . . 54
6.12 Notice of Discharge of Hazardous Material or
Environmental Complaint . . . . . . . . . . . . . . . . . . . . . 54
6.13 Environmental Compliance . . . . . . . . . . . . . . . . . . . . . 54
6.14 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . 55
6.15 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . 55
6.16 Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
6.17 Continued Operations . . . . . . . . . . . . . . . . . . . . . . . 56
6.18 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . 56
6.19 New Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE VII
NEGATIVE COVENANTS
7.01 Consolidated Fixed Charge Ratio . . . . . . . . . . . . . . . . . . 57
7.02 Consolidated Funded Indebtedness to EBITDA . . . . . . . . . . . . 58
7.03 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
7.04 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
7.05 Investments; Acquisitions . . . . . . . . . . . . . . . . . . . . . 61
7.06 Merger or Consolidation . . . . . . . . . . . . . . . . . . . . . . 63
7.07 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . 64
7.08 Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
7.09 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
7.10 Dissolution, etc. . . . . . . . . . . . . . . . . . . . . . . . . . 65
7.11 Rate Hedging Obligations . . . . . . . . . . . . . . . . . . . . . 65
7.12 Dividends, Redemptions and Other Payments . . . . . . . . . . . . . 65
7.13 Subordinated Debt . . . . . . . . . . . . . . . . . . . . . . . . . 66
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ARTICLE VIII
EVENTS OF DEFAULT AND ACCELERATION
8.01 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . 66
8.02 Agent to Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
8.03 Cumulative Rights . . . . . . . . . . . . . . . . . . . . . . . . . 71
8.04 No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
8.05 Allocation of Proceeds . . . . . . . . . . . . . . . . . . . . . . 71
ARTICLE IX
THE AGENT
9.01 Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
9.02 Attorneys-in-fact . . . . . . . . . . . . . . . . . . . . . . . . . 72
9.03 Limitation on Liability . . . . . . . . . . . . . . . . . . . . . . 72
9.04 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
9.05 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . 73
9.06 No Representations . . . . . . . . . . . . . . . . . . . . . . . . 73
9.07 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . 74
9.08 Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
9.09 Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
9.10 Sharing of Payments, etc. . . . . . . . . . . . . . . . . . . . . . 75
ARTICLE X
MISCELLANEOUS
10.01 Assignments and Participations . . . . . . . . . . . . . . . . . . 76
10.02 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.03 Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
10.04 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
10.05 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
10.06 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
10.07 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
10.08 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
10.09 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . 82
10.10 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . 82
10.11 Headings and References . . . . . . . . . . . . . . . . . . . . . 83
10.12 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
10.13 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 83
10.14 Agreement Controls . . . . . . . . . . . . . . . . . . . . . . . . 83
10.15 Usury Savings Clause . . . . . . . . . . . . . . . . . . . . . . . 83
10.16 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . 84
EXHIBIT A Revolving Credit Commitments . . . . . . . . . . . . . . . A-1
EXHIBIT B Form of Assignment and Acceptance . . . . . . . . . . . . . B-1
EXHIBIT C Notice of Appointment (or Revocation) of
Authorized Representative . . . . . . . . . . . . . . . . . C-1
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EXHIBIT D Form of Borrowing Notice . . . . . . . . . . . . . . . . . D-1
EXHIBIT E Form of Competitive Bid Note . . . . . . . . . . . . . . . E-1
EXHIBIT F Form of Revolving Credit Note . . . . . . . . . . . . . . F-1
EXHIBIT G Form of Term Note . . . . . . . . . . . . . . . . . . . . . G-1
EXHIBIT H Interest Rate Selection Notice . . . . . . . . . . . . . . H-1
EXHIBIT I Form of Competitive Bid Quote Request . . . . . . . . . . . I-1
EXHIBIT J Form of Competitive Bid Quote . . . . . . . . . . . . . . . J-1
EXHIBIT K Form of Opinion of Counsel to the Borrower and
the Guarantors . . . . . . . . . . . . . . . . . . . . . . K-1
EXHIBIT L Form of Compliance Certificate . . . . . . . . . . . . . . L-1
EXHIBIT M Form of Guaranty Agreement . . . . . . . . . . . . . . . . M-1
EXHIBIT N Form of Subordination Agreement . . . . . . . . . . . . . . N-1
EXHIBIT O Upfront Fees . . . . . . . . . . . . . . . . . . . . . . . O-1
Schedule 5.01(c) Guarantors excluded from Solvency
Representation and Warranty
Schedule 5.01(d) Subsidiaries
Schedule 5.01(e) Investments in Other Persons
Schedule 5.01(f) Contingent Liabilities
Schedule 5.01(g) Liens
Schedule 5.01(h) Tax Matters
Schedule 5.01(j) Litigation
Schedule 5.01(m) Patents, Etc.
Schedule 5.01(o) Consents
Schedule 5.01(r) Hazardous Materials
Schedule 6.05 Insurance
Schedule 7.03(i) Existing Indebtedness
Schedule 7.03(xi) Capital Leases
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REVOLVING CREDIT AND TERM LOAN AGREEMENT
THIS REVOLVING CREDIT AND TERM LOAN AGREEMENT, dated as of October 12,
1994 (the "Agreement"), is made by and among:
HANOVER DIRECT, INC., a Delaware corporation having its principal
place of business in Weehawken, New Jersey (the "Borrower");
Each Lender executing and delivering a signature page hereto and each
other lender which may hereafter execute and deliver an instrument of
assignment and assumption with respect to this Agreement pursuant to Section
10.01 hereof (hereinafter such lenders may be referred to individually as a
"Lender" or collectively as the "Lenders"); and
NATIONSBANK OF NORTH CAROLINA, NATIONAL ASSOCIATION, a national
banking association organized and existing under the laws of the United States
of America ("NationsBank") in its capacity as agent for the Lenders (in such
capacity, and any successor appointed in accordance with the terms of Section
9.09 hereof, the "Agent");
W I T N E S S E T H:
WHEREAS, the Borrower has requested that the Lenders make available to
the Borrower a credit facility in the maximum aggregate principal amount at any
time outstanding of $20,000,000, which shall include a competitive bid
facility, the proceeds thereof to be used to finance certain acquisitions; and
WHEREAS, the Lenders are willing to make such credit facility
available to the Borrower upon the terms and conditions set forth herein;
NOW, THEREFORE, the Borrower, the Lenders and the Agent hereby agree
as follows:
ARTICLE I
DEFINITIONS AND TERMS
1.01 DEFINITIONS. For the purposes of this Agreement, in addition to
the definitions set forth above, the following terms shall have the respective
meanings set forth below:
"Absolute Rate" has the meaning assigned to such term in
Section 2.02(d)(iii) hereof;
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"Absolute Rate Auction" means any solicitation of Competitive
Bid Quotes setting forth Absolute Rates pursuant to Section 2.02(c)
hereof;
"Account Purchase Agreement" shall have the meaning assigned
thereto in Section 7.03(v) hereof;
"Acquisition" means the acquisition of (i) a controlling
equity interest in another Person (other than the purchase of an
option, warrant or convertible or other similar security to acquire
such a controlling interest), whether by purchase of such equity
interest or upon exercise of an option or warrant for, or conversion
of securities into, such equity interest, (ii) assets of another
Person for which the Cost of Acquisition equals or exceeds one percent
(1%) of Consolidated Total Assets determined as of the last day of the
fiscal quarter of the Borrower immediately preceding the date of the
agreement related to such Acquisition, or (iii) a line of business or
division of another Person;
"Advance" means any borrowing (other than a Term Loan Segment)
under (i) the Revolving Credit Facility consisting of a Base Rate Loan
or a LIBOR Loan, as the case may be, or (ii) the Competitive Bid
Facility consisting of a Competitive Bid Loan;
"Affiliate" means a Person (i) which directly or indirectly
through one or more intermediaries controls, or is controlled by, or
is under common control with, the Borrower; (ii) which beneficially
owns or holds 10% or more of any class of the outstanding voting stock
of the Borrower; or (iii) 10% or more of any class of the outstanding
voting stock (or in the case of a Person which is not a corporation,
10% or more of the equity interest) of which is beneficially owned or
held by the Borrower. The term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction
of the management and policies of such Person, whether through
ownership of voting stock, by contract or otherwise;
"Applicable Commitment Percentage" means, at any time for each
Lender with respect to the Revolving Credit Facility, a fraction
(expressed as a percentage), (A) the numerator of which shall be the
amount of such Lender's Revolving Credit Commitment at such date of
determination (which Revolving Credit Commitment for each Lender as of
the Closing Date is set forth on Exhibit A attached hereto and
incorporated herein by reference), and (B) the denominator of which
shall be the Total Revolving Credit Commitment at such date of
determination; provided that the Applicable Commitment Percentage of
each Lender shall be increased or decreased to reflect any assignments
to or by such Lender effected in accordance with Section 10.01 hereof;
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"Applicable Margin" means for purposes of calculating (i) the
applicable interest rate for the Interest Period for any LIBOR Loan
and (ii) the applicable rate of the Facility Fee for any date for
purposes of Section 2.13 hereof, that percent per annum set forth
below, which shall be (A) determined as of each Determination Date
based upon the computations set forth in the compliance certificates
delivered to the Agent pursuant to Sections 4.01(m), 6.01(a)(ii) and
6.01(b)(ii) hereof, subject to review and approval of such
computations by the Agent, and delivered to the Agent not later than
the time set forth in Sections 4.01, 6.01(a) and 6.01(b) hereof (the
"Compliance Date") and (B) applicable to all LIBOR Loans made, renewed
or converted, and any Facility Fee due and payable, on or after the
most recent Compliance Date to occur based upon the ratio of
Consolidated Funded Indebtedness as at the Determination Date to
Consolidated EBITDA for the Four- Quarter Period then ended, as
specified below:
Ratio of
Consolidated Funded
Indebtedness to Applicable Applicable
Consolidated Margin Margin for
EBITDA for LIBOR Loans Facility Fee
-------------------------- --------------------- ---------------
Greater than 2.00
to 1.00 .50% .25%
Greater than 1.00
to 1.00 but
less than or equal
to 2.00 to 1.00 .425% .20%
Less than 1.00 to 1.00 .35% .15%
"Assignment and Acceptance" shall mean an Assignment and
Acceptance in the form of Exhibit B attached hereto and incorporated
herein by reference (with blanks appropriately filled in) delivered to
the Agent in connection with an assignment of a Lender's interest
under this Agreement pursuant to Section 10.01;
"Authorized Representative" means any of the Chairman, Vice
Chairman, President, Executive Vice Presidents, Senior Vice Presidents
or Vice Presidents of the Borrower and, with respect to financial
matters, the Treasurer or Chief Financial Officer of the Borrower or
any other person expressly designated by the Board of Directors of the
Borrower (or the appropriate committee thereof) as an Authorized
Representative of the Borrower, as set forth from time to time in a
certificate in the form attached hereto as Exhibit C and incorporated
herein by reference;
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"Base Rate" means, for any Base Rate Loan, the greater of (i)
the Prime Rate or (ii) the Federal Funds Effective Rate plus one-half
of one percent (.5%), each change in such Base Rate to be effective as
of the effective date of any change in the Prime Rate or the Federal
Funds Effective Rate giving rise thereto;
"Base Rate Loan" means any Revolving Credit Loan or Term Loan
Segment for which the rate of interest is determined by reference to
the Base Rate;
"Board" means the Board of Governors of the Federal Reserve
System (or any successor body);
"Borrower's Account" means demand deposit account number
02309028 with the Agent, or any successor account with the Agent,
which may be maintained at one or more offices of the Agent or an
agent of the Agent;
"Borrowing Notice" means the notice delivered by an Authorized
Representative in connection with an Advance under the Revolving
Credit Facility, in the form attached hereto as Exhibit D and
incorporated herein by reference;
"Business Day" means any day which is not a Saturday, Sunday
or a day on which banks in the State of New York or State of North
Carolina are authorized or obligated by law, executive order or
governmental decree to be closed;
"Capital Expenditures" means, with respect to the Borrower and
its Subsidiaries, for any period the sum of (without duplication) (i)
all expenditures (whether paid in cash or accrued as liabilities) by
the Borrower or any Subsidiary during such period for items that would
be classified as "property, plant or equipment" or comparable items on
the consolidated balance sheet of the Borrower and its Subsidiaries,
including without limitation all transactional costs incurred in
connection with such expenditures, excluding, however, the amount of
any Capital Expenditures paid for with proceeds of casualty insurance
as evidenced in writing and submitted to the Agent together with any
compliance certificate delivered pursuant to Section 6.01(a) or (b)
hereof, and (ii) with respect to any Capital Lease entered into by the
Borrower or its Subsidiaries during such period, the present value of
the lease payments due under such Capital Lease over the term of such
Capital Lease applying a discount rate equal to the interest rate
provided in such lease (or in the absence of a stated interest rate,
that rate used in the preparation of the financial statements
described in Section 6.01(a) hereof);
"Capital Leases" means all leases which have been or should be
capitalized in accordance with Generally Accepted
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Accounting Principles, including Statement No. 13 of the Financial
Accounting Standards Board and any successor thereof, applied on a
Consistent Basis;
"Closing Date" means the date as of which this Agreement is
executed by the Borrower, the Lenders and the Agent and on which the
conditions set forth in Section 4.01 hereof have been satisfied;
"Code" means the Internal Revenue Code of 1986, as amended,
any successor provision or provisions and any regulations promulgated
thereunder;
"Common Stock" means the common stock, par value $.662/3 per
share, of the Borrower;
"Competitive Bid Borrowing" has the meaning assigned to such
term in Section 2.02 hereof;
"Competitive Bid Facility" means the facility described in
Section 2.02 hereof providing for Competitive Bid Loans to the
Borrower;
"Competitive Bid Loan Commitment" means the aggregate amount
which a Lender has offered to loan to the Borrower pursuant to a
Competitive Bid Quote, not to exceed in the aggregate the amount of
the Competitive Bid Borrowing for such Interest Period and which
together with all other Outstandings shall not exceed in the aggregate
the amount of the Total Revolving Credit Commitment;
"Competitive Bid Loans" means the Loans bearing interest at an
Absolute Rate provided for in Section 2.02 hereof;
"Competitive Bid Notes" means, collectively, the promissory
notes of the Borrower with respect to Competitive Bid Loans provided
for by Section 2.02 hereof executed and delivered in the form attached
hereto as Exhibit E and incorporated herein by reference, with
appropriate insertions as to amounts, dates and names of Lenders, and
all promissory notes delivered in substitution or exchange therefor,
in each case as the same shall be amended, modified or supplemented
and in effect from time to time;
"Competitive Bid Outstandings" means, as of any date of
determination, the aggregate principal Indebtedness of the Borrower on
all Competitive Bid Loans then outstanding;
"Competitive Bid Quote" means an offer in accordance with
Section 2.02 hereof by a Lender to make a Competitive Bid Loan with an
Absolute Rate, in the form of Exhibit J attached hereto and
incorporated herein by reference;
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"Competitive Bid Quote Request" means a request in accordance
with Section 2.02 hereof by the Borrower for Competitive Bid
Borrowings, in the form of Exhibit I attached hereto and incorporated
herein by reference;
"Compliance Date" has the meaning assigned to such term in the
definition of "Applicable Margin" in Section 1.01 hereof;
"Consistent Basis" in reference to the application of
Generally Accepted Accounting Principles means the accounting
principles observed in the period referred to are comparable in all
material respects to those applied in the preparation of the audited
financial statements of the Borrower referred to in Section 5.01(f)(i)
hereof;
"Consolidated EBITDA" means, with respect to the Borrower and
its Subsidiaries for any period of computation thereof, the sum of,
without duplication, (i) Consolidated Net Income, (ii) Consolidated
Interest Expense, (iii) taxes paid on income, (iv) amortization, and
(v) depreciation, all determined on a consolidated basis in accordance
with Generally Accepted Accounting Principles applied on a Consistent
Basis;
"Consolidated Fixed Charge Ratio" means, with respect to the
Borrower and its Subsidiaries for the Four-Quarter Period ending on
the date of computation thereof, the ratio of (i) the difference of
(A) Consolidated EBITDA for such period plus, to the extent deducted
in arriving at Consolidated EBITDA for such period, lease, rental and
all other payments made in respect of or in connection with operating
leases, minus (B) Capital Expenditures for such period, excluding, for
any Four-Quarter Period of computation thereof ending on or prior to
April 1, 1995, Capital Expenditures paid during such Four-Quarter
Period with respect to the construction of the Borrower's Roanoke,
Virginia fulfillment facility or with respect to refurbishment of the
Gump's retail facility, to (ii) Consolidated Fixed Charges for such
period;
"Consolidated Fixed Charges" means, with respect to Borrower
and its Subsidiaries for any period of computation thereof, the sum
of, without duplication, (i) Consolidated Interest Expense, (ii) to
the extent deducted in arriving at Consolidated EBITDA, lease, rental
and all other payments made in respect of or in connection with
operating leases, (iii) current maturities of Consolidated Funded
Indebtedness, (iv) all dividends and other distributions (other than
distributions in the form of any stock (including without limitation
capital stock of the Borrower), security, note or other instrument)
paid during such period (regardless of when declared) on any shares of
capital stock of the Borrower then outstanding, including without
limitation its Common Stock and
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its Preferred Stock, and (v) all payments made during such period in
respect of or in connection with repurchases or redemptions of any
shares of capital stock of the Borrower then outstanding, including
without limitation its Common Stock and Preferred Stock, all
determined on a consolidated basis in accordance with Generally
Accepted Accounting Principles applied on a Consistent Basis;
"Consolidated Funded Indebtedness" means, with respect to the
Borrower and its Subsidiaries, at any time as of which the amount
thereof is to be determined, the sum of (i) Indebtedness for Money
Borrowed of the Borrower and its Subsidiaries and (ii) the face amount
of all outstanding letters of credit (other than documentary letters
of credit) issued for the account of the Borrower or any of its
Subsidiaries and all obligations (to the extent not duplicative)
arising under such letters of credit, all determined on a consolidated
basis in accordance with Generally Accepted Accounting Principles
applied on a Consistent Basis;
"Consolidated Interest Expense" means, with respect to any
period of computation thereof, the gross interest expense of the
Borrower and its Subsidiaries, including without limitation (i) the
amortization of debt discounts, (ii) the amortization of all fees
(including, without limitation, fees payable in respect of a Swap
Agreement) payable in connection with the incurrence of Indebtedness
to the extent included in interest expense and (iii) the portion of
any payments made in connection with Capital Leases allocable to
interest expense, all determined on a consolidated basis in accordance
with Generally Accepted Accounting Principles applied on a Consistent
Basis;
"Consolidated Net Income" means, for any period of computation
thereof, the gross revenues from operations of the Borrower and its
Subsidiaries (including interest income from investments), less all
operating and non-operating expenses of the Borrower and its
Subsidiaries including taxes on income, all determined on a
consolidated basis in accordance with Generally Accepted Accounting
Principles applied on a Consistent Basis, but excluding as income (i)
net gains on the sale, conversion or other disposition of capital
assets, net gains on the acquisition, retirement, sale or other
disposition of capital stock and other securities of the Borrower or
its Subsidiaries, and net gains on the collection of proceeds of life
insurance policies, (ii) any write-up of any asset, and (iii) any
other net gain or credit of an extraordinary nature, all determined in
accordance with Generally Accepted Accounting Principles applied on a
Consistent Basis;
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"Consolidated Total Assets" means, as at any time of
calculation thereof, the net book value of all assets of the Borrower
and its Subsidiaries as determined on a consolidated basis in
accordance with Generally Accepted Accounting Principles applied on a
Consistent Basis;
"Contingent Obligation" of any Person means all contingent
liabilities (other than obligations of the Borrower and its
Subsidiaries with respect to the fulfillment of purchase orders issued
in the ordinary course of business) required (or which, upon the
creation or incurring thereof, would be required) to be included in
the consolidated financial statements (including footnotes) of such
Person in accordance with Generally Accepted Accounting Principles
applied on a Consistent Basis, including Statement No. 5 of the
Financial Accounting Standards Board, and any obligation of such
Person guaranteeing or in effect guaranteeing any Indebtedness,
dividend or other obligation of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, including
obligations of such Person however incurred:
(i) to purchase such Indebtedness or other
obligation or any property or assets constituting security
therefor;
(ii) to advance or supply funds in any manner (A)
for the purchase or payment of such Indebtedness or other
obligation, or (B) to maintain a minimum working capital, net
worth or other balance sheet condition or any income statement
condition of the primary obligor;
(iii) to grant or convey any Lien, security
interest, pledge, charge or other encumbrance on any property
or assets of such Person to secure payment of such
Indebtedness or other obligation;
(iv) to lease property or to purchase securities
or other property or services primarily for the purpose of
assuring the owner or holder of such Indebtedness or
obligation of the ability of the primary obligor to make
payment of such Indebtedness or other obligation; or
(v) otherwise to assure the owner of the
Indebtedness or such obligation of the primary obligor against
loss in respect thereof.
With respect to Contingent Obligations (such as litigation, guarantees
and pension plan liabilities), such liabilities shall be computed at
the amount which, in light of all the facts and circumstances existing
at the time, represent the present value of the amount which can
reasonably be expected to become an actual or matured liability;
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"Cost of Acquisition" means, with respect to any Acquisition,
as at the date of entering into any agreement therefor, the sum of the
following: (i) the value of the capital stock, warrants or options to
acquire capital stock of Borrower or any Subsidiary to be transferred
in connection therewith, (ii) any cash or other property (excluding
property described in clause (i)) and the unpaid principal amount of
any debt instrument given as consideration, and (iii) any Indebtedness
or liabilities assumed by the Borrower or its Subsidiaries in
connection with such Acquisition; provided that "Cost of Acquisition"
shall not include out of pocket transaction costs for the services and
expenses of attorneys, accountants and other consultants incurred in
effecting such a transaction, and other similar transaction costs so
incurred, in an aggregate amount not to exceed ten percent (10%) of
the Costs of Acquisition for such transaction (all such costs in
excess of such amount being included as a "Cost of Acquisition" for
such transaction). For purposes of determining the Cost of
Acquisition for any transaction, (A) the capital stock of the Borrower
shall be valued at its market value as reported on the American Stock
Exchange, (B) the capital stock of any Subsidiary shall be valued as
determined by the Board of Directors of such Subsidiary and determined
to be a reasonable valuation by the independent public accountants
referred to in Section 6.01(a) hereof, and (C) with respect to any
Acquisition accomplished pursuant to the exercise of options or
warrants or the conversion of securities, the Cost of Acquisition
shall include both the cost of acquiring such option, warrant or
convertible security as well as the cost of exercise or conversion;
"Default" means any event or condition which, with the giving
or receipt of notice or lapse of time or both, would constitute an
Event of Default hereunder;
"Determination Date" means the last day of each fiscal quarter
of the Borrower;
"Dollars" and the symbol "$" means dollars constituting legal
tender for the payment of public and private debts in the United
States;
"Eligible Securities" means the following obligations and any
other obligations previously approved in writing by the Agent:
(i) Government Securities;
(ii) the following debt securities of the
following agencies or instrumentalities of the United States
if at all times the full faith and credit of the United States
is pledged to the full and timely payment of all interest and
principal thereof:
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(A) all direct or fully guaranteed obligations of
the United States Treasury; and
(B) mortgage-backed securities and participation
certificates guaranteed by the Government National Mortgage
Association;
(iii) the following obligations of the following
agencies or instrumentalities of or corporations established
by the United States:
(A) participation certificates and debt obligations
of the Federal Home Loan Mortgage Corporation;
(B) consolidated debt obligations, and obligations
secured by a letter of credit, of the Federal Home Loan
Banks; and
(C) debt obligations and mortgage-backed securities
of the Federal National Mortgage Association which have not
had the interest portion thereof severed therefrom;
(iv) obligations of any corporation organized
under the laws of any state of the United States or under the
laws of any other nation, payable in the United States,
expressed to mature not later than 90 days following the date
of issuance thereof and rated in an investment grade rating
category by S&P and Moody's;
(v) interest bearing demand or time deposits
issued by any Lender or certificates of deposit maturing
within one year from the date of acquisition issued by a bank
or trust company organized under the laws of the United States
or of any state thereof having capital surplus and undivided
profits aggregating at least $250,000,000 and being rated
"A-2" or better by S&P or "A" or better by Moody's;
(vi) Repurchase Agreements;
(vii) Pre-Refunded Municipal Obligations;
(viii) shares of mutual funds which invest in
obligations described in paragraphs (i) through (vii) above,
the shares of which mutual funds are at all times rated "AAA"
by S&P; and
(ix) asset-backed remarketed certificates of
participation representing a fractional undivided interest in
the assets of a trust, which certificates are rated at least
"A-1" by S&P and "P-1" by Moody's;
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"Environmental Laws" means any statute, law, ordinance, code,
rule, regulation, order or decree, of the United States or any foreign
nation or any province, territory, state, protectorate or other
political subdivision thereof, regulating, relating to, or imposing
liability or standards of conduct concerning, any hazardous or toxic
waste, substance or material, as now or at any time hereafter in
effect, including but not limited to the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, the
Superfund Amendments and Reauthorization Act of 1986, the Resource
Conservation and Recovery Act, the Toxic Substances Control Act, as
amended, the Clean Air Act, as amended, the Clean Water Act, as
amended, any other "Superfund" or "Superlien" law;
"ERISA" means, at any date, the Employee Retirement Income
Security Act of 1974, as amended, and the regulations thereunder, all
as the same shall be in effect at such date;
"ERISA Affiliate" means any entity which would be aggregated
at any relevant time with the Borrower pursuant to Section 4001(b)(1)
of ERISA;
"Event of Default" means any of the occurrences set forth as
such in Section 8.01 hereof;
"Facility Fee" has the meaning assigned to such term in
Section 2.13(a) hereof;
"Federal Funds Effective Rate" for any day, as used herein,
means the rate per annum (rounded upward to the nearest 1/100 of 1%)
announced by the Federal Reserve Bank of New York (or any successor)
on such day as being the weighted average of the rates on overnight
Federal funds transactions arranged by Federal funds brokers on the
previous trading day, as computed and announced by such Federal
Reserve Bank (or any successor) in substantially the same manner as
such Federal Reserve Bank computes and announces the weighted average
it refers to as the "Federal Funds Effective Rate" as of the date of
this Agreement; provided, if such Federal Reserve Bank (or its
successor) does not announce such rate on any day, the "Federal Funds
Effective Rate" for such day shall be the Federal Funds Effective Rate
for the last day on which such rate was announced;
"Fiscal Year" means 52-week or 53-week period of the Borrower
ending on the Saturday closest to December 31;
"Flexible Term Notes" means the $20,000,000 Flexible Term
Notes (Hanover Direct, Inc.) of the Borrower to be issued to finance
the construction of a fulfillment center in Roanoke, Virginia;
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"Four-Quarter Period" means a period of four full consecutive
fiscal quarters of the Borrower, taken together as one accounting
period;
"Generally Accepted Accounting Principles" means those
principles of accounting set forth in pronouncements of the Financial
Accounting Standards Board, the American Institute of Certified Public
Accountants or which have other substantial authoritative support and
are applicable in the circumstances as of the date of a report, as
such principles are from time to time supplemented and amended,
subject to compliance at all times with Section 1.02 hereof;
"Government Securities" means direct obligations of, or
obligations the timely payment of principal and interest on which are
fully and unconditionally guaranteed by, the United States;
"Governmental Authority" shall mean any Federal, state,
municipal, national or other governmental department, commission,
board, bureau, agency or instrumentality or political subdivision
thereof or any entity or officer exercising executive, legislative or
judicial, regulatory or administrative functions of or pertaining to
any government or any court, in each case whether a state of the
United States, the United States or foreign nation, state, province or
other governmental instrumentality;
"Guarantor" means any Material Subsidiary now or hereafter
party to a Guaranty;
"Guaranty" means collectively each Guaranty Agreement executed
by a Material Subsidiary of the Borrower (whether of even date
herewith or delivered after the Closing Date pursuant to Section 6.19
hereof and whether executed individually or jointly and severally with
other Subsidiaries) in favor of the Agent guaranteeing in whole or in
part the payment of the Obligations, substantially in the form of
Exhibit M attached hereto and incorporated herein by reference;
"Hazardous Material" means a material that is defined or
regulated under an Environmental Law as a hazardous or toxic waste,
substance or material, the generation, handling, storage, disposal,
treatment or emission of which is subject to any Environmental Law;
"Indebtedness" of a Person shall mean, without duplication,
(i) all Indebtedness for Money Borrowed, (ii) obligations of such
Person arising under acceptance facilities, (iii) the undrawn face
amount of, and unpaid reimbursement obligations in respect of, all
letters of credit issued for the account of such Person, (iv) all
obligations of
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such Person upon which interest charges are customarily paid, (v) all
obligations of such Person under conditional sale or other title
retention agreements relating to property purchased by such Person
(even though the rights and remedies of the seller or lender under
such agreement in the event of default are limited to repossession or
sale of such property), (vi) all executory obligations of such Person
in respect of Rate Hedging Obligations and (vii) all Contingent
Obligations in respect of Indebtedness of other Persons;
"Indebtedness for Money Borrowed" means for any Person all
indebtedness in respect of money borrowed, including without
limitation all Capital Leases and the deferred purchase price of any
property or asset, evidenced by a promissory note, bond, debenture or
similar written obligation for the payment of money (including, but
not limited to, conditional sales or similar title retention
agreements);
"Interest Period" (i) for each LIBOR Loan means a period
commencing on the date such LIBOR Loan is made or converted and each
subsequent period commencing on the last day of the immediately
preceding Interest Period for such LIBOR Loan, and ending, at the
Borrower's option, on the date one, two, three or six months
thereafter as notified to the Agent by the Authorized Representative
three (3) LIBOR Business Days prior to the beginning of such Interest
Period; provided, that,
(A) if the Authorized Representative fails to
notify the Agent of the length of an Interest Period three (3)
LIBOR Business Days prior to the first day of such Interest
Period, the Loan for which such Interest Period was to be
determined shall be deemed to be a Base Rate Loan;
(B) if an Interest Period for a LIBOR Loan would
end on a day which is not a LIBOR Business Day such Interest
Period shall be extended to the next LIBOR Business Day
(unless such extension would cause the applicable Interest
Period to end in the succeeding calendar month, in which case
such Interest Period shall end on the next preceding LIBOR
Business Day);
(C) any Interest Period which begins on the last
LIBOR 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 LIBOR Business Day of a calendar month;
(D) no Interest Period with respect to Revolving
Credit Loans shall extend past the Revolving Credit
Termination Date;
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(E) on any day, with respect to all Revolving
Credit Loans, there shall be not more than ten (10) Interest
Periods in effect; and
(ii) for each Competitive Bid Loan means the period
commencing on the date of such borrowing and ending on such date as
may be mutually agreed upon by the Borrower and the Lender making such
Competitive Bid Loan; provided that no Interest Period for a
Competitive Bid Loan shall be for a period of less than 7 or greater
than 180 days;
"Interest Rate Selection Notice" means the notice delivered by
an Authorized Representative in connection with the election of a
subsequent interest period for any LIBOR Loan or the conversion of any
LIBOR Loan into a Base Rate Loan or the conversion of any Base Rate
Loan into a LIBOR Loan, in the form of Exhibit H attached hereto and
incorporated herein by reference;
"Lending Office" means, as to each Lender, the Lending Office
of such Lender designated on the signature pages hereof or in an
Assignment and Acceptance or such other office of such Lender (or of
an affiliate of such Lender) as such Lender may from time to time
specify to the Authorized Representative and the Agent as the office
by which its Loans are to be made and maintained;
"LIBOR Base Rate" means for any LIBOR Loan, in respect of the
Interest Period specified (or deemed specified) by the Authorized
Representative in the Borrowing Notice or Interest Rate Selection
Notice for such LIBOR Loan, the rate (expressed as a percentage and
rounded upward if necessary to the nearest 1/100 of 1%) (which shall
be the same for each day of such Interest Period) determined by the
Agent in good faith in accordance with its usual procedures for its
customers generally to be the average of the rates per annum for
deposits in Dollars offered to major banks in the London interbank
market at approximately 11:00 A.M. Charlotte, North Carolina time two
(2) LIBOR Business Days prior to the commencement of the applicable
Interest Period in an amount approximately equal to the principal
amount of, and for a period comparable to the Interest Period for,
such LIBOR Loan;
"LIBOR Business Day" means a Business Day on which the
relevant international financial markets are open for the transaction
of the business contemplated by this Agreement in London, England, New
York, New York and Charlotte, North Carolina;
"LIBOR Loan" means a Revolving Credit Loan or Term Loan
Segment for which the rate of interest is determined by reference to
the LIBOR Rate;
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"LIBOR Rate" means, for the Interest Period for any LIBOR
Loan, the rate of interest per annum determined pursuant to the
following formula:
LIBOR LIBOR Base Rate Applicable
= ----------------------- +
Rate 1 - Reserve Requirement Margin
"Lien" means any interest in property securing any obligation
owed to, or a claim by, a Person other than the owner of the property,
whether such interest is based on the common law, statute or contract,
and including but not limited to the lien or security interest arising
from a mortgage, encumbrance, pledge, security agreement, conditional
sale or trust receipt or a lease, consignment or bailment for security
purposes. For the purposes of this Agreement, the Borrower and its
Subsidiaries shall be deemed to be the owners of any property which
either of them have acquired or hold subject to a conditional sale
agreement, financing lease, or other arrangement pursuant to which
title to the property has been retained by or vested in some other
Person for security purposes;
"Loan" or "Loans" means any of the Revolving Credit Loans,
Competitive Bid Loans or the Term Loan;
"Loan Documents" means this Agreement, the Notes, the
Guaranty, the Subordination Agreement and all other instruments and
documents heretofore or hereafter executed or delivered to and in
favor of any Lender or the Agent in connection with the Loans made
under this Agreement as the same may be amended, modified or
supplemented from time to time;
"Material Adverse Effect" means a material adverse effect on
the business, properties, operations or condition, financial or
otherwise, of the Borrower and its Subsidiaries, taken as a whole, on
a consolidated basis;
"Material Subsidiary" means any direct or indirect Subsidiary
of the Borrower which (i) has total assets equal to or greater than 5%
of Consolidated Total Assets (calculated as of the most recent fiscal
period with respect to which the Agent shall have received financial
statements required to be delivered pursuant to Sections 6.01(a) or
(b) (or if prior to delivery of any financial statements pursuant to
such Sections, then calculated with respect to the Fiscal Year end
financial statements referenced in Section 5.01(f) hereof) (the
"Required Financial Information")) or (ii) has net income equal to or
greater than 5% of Consolidated Net Income (each calculated for the
most recent period for which the Agent has received the Required
Financial Information); provided, however, that notwithstanding the
foregoing, the term "Material Subsidiaries" shall mean Subsidiaries of
the
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Borrower that together have assets equal to not less than 85% of
Consolidated Total Assets (calculated as described above) and net
income of not less than 85% of Consolidated Net Income (calculated as
described above); provided further that if more than one combination
of Subsidiaries satisfies such threshold, then those Subsidiaries so
determined to be "Material Subsidiaries" shall be specified by the
Borrower;
"Moody's" means Moody's Investors Services, Inc.;
"Multi-employer Plan" means an employee pension benefit plan
covered by Title IV of ERISA in respect of which the Borrower or any
Subsidiary is an "employer" as described in Section 4001(b) of ERISA
and which is also a multi-employer plan as defined in Section
4001(a)(3) of ERISA;
"Net Proceeds" from a disposition of assets (other than assets
sold in the ordinary course of business) or issuance of equity or
Indebtedness means cash payments received therefrom as and when
received, net of all reasonable legal, accounting, banking,
underwriting, title and recording expenses, commissions, discounts and
other fees and expenses incurred in connection therewith and all taxes
required to be paid or accrued as a consequence of such disposition or
issuance;
"Notes" means, collectively, the Revolving Credit Notes, the
Competitive Bid Notes and the Term Notes;
"Obligations" means the obligations, liabilities and
Indebtedness of the Borrower with respect to (i) the principal and
interest on the Loans as evidenced by the Notes, (ii) all liabilities
of Borrower to any Lender which arise under a Swap Agreement, and
(iii) the payment and performance of all other obligations,
liabilities and Indebtedness of the Borrower to the Lenders or the
Agent hereunder, under any one or more of the other Loan Documents or
with respect to the Loans;
"Outstandings" means, at any time of determination, (a) the
sum of the (i) Revolving Credit Outstandings and (ii) Competitive Bid
Outstandings or (b) Term Loan Outstandings, as applicable;
"Person" means an individual, partnership, corporation, trust,
unincorporated organization, association, joint venture or a
government or agency or political subdivision thereof;
"Preferred Stock" means the 6% Series A Convertible Preferred
Stock, $10 stated value, of the Borrower;
"Pre-Refunded Municipal Obligations" means obligations of any
state of the United States of America or of any municipal corporation
or other public body organized under the laws of any such state which
are rated, based on the escrow, in the
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highest investment rating category by both S&P and Moody's and which
have been irrevocably called for redemption and advance refunded
through the deposit in escrow of Government Securities or other debt
securities which are (i) not callable at the option of the issuer
thereof prior to maturity, (ii) irrevocably pledged solely to the
payment of all principal and interest on such obligations as the same
becomes due and (iii) in a principal amount and bear such rate or
rates of interest as shall be sufficient to pay in full all principal
of, interest, and premium, if any, on such obligations as the same
becomes due as verified by a nationally recognized firm of certified
public accountants;
"Prime Rate" means the rate of interest per annum announced
publicly by NationsBank as its prime rate from time to time. The
Prime Rate is not necessarily the best or the lowest rate of interest
offered by NationsBank;
"Principal Office" means the office of the Agent at
NationsBank of North Carolina, National Association, NationsBank
Plaza, 6th Floor, NC1002-06-19, Charlotte, North Carolina 28255,
Attention: Agency Services, or such other office and address as the
Agent may from time to time designate;
"Quotation Date" means the date by which Competitive Bid
Quotes must be submitted to the Agent and shall be the Business Day
immediately preceding the date of the proposed Competitive Bid
Borrowing;
"Rate Hedging Obligations" means any and all obligations of
the Borrower, whether absolute or contingent and howsoever and
whensoever created, arising, evidenced or acquired (including all
renewals, extensions and modifications thereof and substitutions
therefor), under (i) any and all agreements, devices or arrangements
designed to protect at least one of the parties thereto from the
fluctuations of interest rates, exchange rates or forward rates
applicable to such party's commodities, assets, liabilities or
exchange transactions, including, but not limited to,
Dollar-denominated or cross-currency interest rate exchange
agreements, forward currency exchange agreements, interest rate cap or
collar protection agreements, forward rate currency or interest rate
options, puts, warrants and those commonly known as interest rate
"swap" agreements, and forward commodity price options, puts, warrants
and those commonly known as commodity "swap" agreements; and (ii) any
and all cancellations, buybacks, reversals, terminations or
assignments of any of the foregoing;
"Regulation D" means Regulation D of the Board as the same may
be amended or supplemented from time to time;
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"Regulatory Change" means any change in, or the adoption or
making of new, United States Federal or state laws or regulations
(including Regulation D and capital adequacy regulations) or foreign
laws or regulations or the adoption or making after such date of any
interpretations, directives or requests applying to a class of banks,
which includes any of the Lenders, under any United States Federal or
state or foreign laws or regulations (whether or not having the force
of law) by any court or governmental or monetary authority charged
with the interpretation or administration thereof or compliance by any
Lender with any request or directive regarding capital adequacy,
whether or not having the force of law, whether or not failure to
comply therewith would be unlawful;
"Repurchase Agreement" means a repurchase agreement entered
into with (i) any financial institution whose debt obligations are
rated "A" by either of S&P or Moody's or whose commercial paper is
rated "A-1" by S&P or "P-1" by Moody's, or (ii) any Lender;
"Required Lenders" means, as of any date, Lenders on such date
having Credit Exposures (as defined below) aggregating at least 662/3%
of the aggregate Credit Exposures of all the Lenders on such date.
For purposes of the preceding sentence, the amount of the "Credit
Exposure" of each Lender shall be equal at all times (i) other than
following the occurrence and during the continuance of an Event of
Default, to its Revolving Credit Commitment or the Term Loan
Outstandings evidenced by the Term Loan Note payable to such Lender,
as applicable, and (ii) following the occurrence and during the
continuance of an Event of Default, to the aggregate principal amount
of Revolving Credit Loans and Competitive Bid Loans owing to such
Lender plus the aggregate unutilized amount of such Lender's Revolving
Credit Commitment or to the aggregate principal amount of the Term
Loan owing to such Lender, as applicable;
"Reserve Requirement" means, for any LIBOR Loan, the maximum
aggregate rate at which reserves (including, without limitation, any
marginal, supplemental or emergency reserves) are required to be
maintained with respect thereto under Regulation D by the member banks
of the Federal Reserve System with respect to Dollar funding in the
London interbank market. Without limiting the effect of the
foregoing, the Reserve Requirement shall reflect any other reserves
required to be maintained by such member banks by reason of any
Regulatory Change against (i) any category of liabilities which
includes deposits by reference to which the LIBOR Base Rate is to be
determined or (ii) any category of extensions of credit or other
assets which include LIBOR Loans;
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"Revolving Credit Commitment" means with respect to each
Lender, the obligation of such Lender to make Revolving Credit Loans
to the Borrower up to an aggregate principal amount at any one time
outstanding equal to the amount set forth opposite such Lender's name
on Exhibit A hereto as the same may be increased or decreased from
time to time pursuant to this Agreement;
"Revolving Credit Facility" means the facility described in
Section 2.01 hereof providing for Loans to the Borrower by the Lenders
in an aggregate principal amount equal to (i) the Total Revolving
Credit Commitment less (ii) Competitive Bid Outstandings;
"Revolving Credit Loan" means any Loan made under the
Revolving Credit Facility and evidenced by a Revolving Credit Note;
"Revolving Credit Notes" means, collectively, the promissory
notes of the Borrower evidencing Revolving Credit Loans executed and
delivered to the Lenders as provided in Section 2.08(a) hereof
substantially in the form attached hereto as Exhibit F and
incorporated herein by reference, with appropriate insertions as to
amounts, dates and names of Lenders, as the same shall be amended,
modified or supplemented and in effect from time to time;
"Revolving Credit Outstandings" means, as of any date of
determination, the aggregate principal Indebtedness of the Borrower on
all Revolving Credit Loans then outstanding;
"Revolving Credit Termination Date" means the earliest to
occur of (i) October 11, 1995 or such later date as the Borrower and
the Lenders shall agree in writing pursuant to Section 2.16 hereof, or
(ii) the date of termination of Lenders' obligations pursuant to
Section 8.01 upon the occurrence of an Event of Default, or (iii) such
date as the Borrower may voluntarily and permanently terminate the
Revolving Credit Facility by payment in full of all Outstandings
pursuant to Section 2.10 hereof;
"S&P" means Standard & Poor's Corporation, a New York
corporation;
"Scheduled Term Loan Termination Date" shall have the meaning
assigned thereto in Section 2.03 hereof;
"Single Employer Plan" means any employee pension benefit plan
covered by Title IV of ERISA in respect of which the Borrower or any
Subsidiary is an "employer" as described in Section 4001(b) of ERISA
and which is not a Multi-employer Plan;
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"$60,000,000 Credit Facility" means the credit facilities
provided to the Borrower by the Lenders pursuant to the Credit
Facilities and Reimbursement Agreement of even date herewith;
"$60,000,000 Credit Facility Documents" means the Credit
Facilities and Reimbursement Agreement of even date herewith by and
among the Borrower, the Agent and the Lenders and each of the
documents executed in connection therewith;
"Solvent" means, when used with respect to any Person, that at
the time of determination:
(i) the fair value of its assets (both at fair
valuation and at present fair saleable value on an orderly
basis) is in excess of the total amount of its liabilities,
including, without limitation, Contingent Obligations; and
(ii) it is then able and expects to be able to pay
its debts as they mature; and
(iii) it has capital sufficient to carry on its
business as conducted and as proposed to be conducted.
"Subordinated Debt" means the 9.25% Senior Subordinated Notes
due August 1, 1998 issued in the original principal amount of
$20,000,000 to Sun Life Insurance Company of America pursuant to an
Indenture dated as of August 17, 1993 among the Borrower (successor to
the Hanover Companies and the Horn and Hardart Company), certain
Subsidiaries of the Borrower and First Trust National Association, as
Trustee;
"Subordination Agreement" means that Subordination Agreement
of even date herewith among First Trust National Association, Sun Life
Insurance Company of America, the Borrower, certain Subsidiaries of
the Borrower and the Agent, substantially in the form of Exhibit N
attached hereto and incorporated herein by reference, whereby the
holders of the Subordinated Debt have subordinated their rights to
receive payment thereunder to the rights of the Agent and the Lenders
to receive payment under the Loan Documents and the $60,000,000 Credit
Facility Documents;
"Subsidiary" means any corporation or other entity in which
more than 50% of its outstanding stock having ordinary voting power or
more than 50% of all equity interests is owned directly or indirectly
by the Borrower and/or by one or more of the Borrower's Subsidiaries
at or after the Closing Date;
"Swap Agreement" means one or more agreements with respect to
Indebtedness evidenced by the Notes between the Borrower and a Lender,
on terms mutually acceptable to such
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Borrower and such Lender, which agreements create Rate Hedging
Obligations;
"Term Loan" means the term loan described in Section 2.03
hereof;
"Term Loan Option" shall have the meaning assigned thereto in
Section 2.03(a) hereof;
"Term Loan Outstandings" means, at any date of determination,
the principal Indebtedness of the Borrower on any Term Loan then
outstanding;
"Term Loan Segment" means any portion of a Term Loan which has
been designated by an Authorized Representative as a Base Rate Loan
(or otherwise deemed to be a Base Rate Loan pursuant to the terms
hereof) or as a LIBOR Loan for an applicable Interest Period;
"Term Loan Termination Date" means the earliest to occur of
(i) the Scheduled Term Loan Termination Date, or (ii) such date of
termination of Lenders' obligations pursuant to Section 8.01 upon the
occurrence of an Event of Default, or (iii) such date as the Borrower
may voluntarily and permanently terminate the Term Loan by payment in
full of all principal and interest on the Term Loan as evidenced by
the Term Notes;
"Term Notes" means, collectively, the promissory notes of the
Borrower evidencing the Term Loan executed and delivered to the
Lenders as provided in Sections 2.03 and 2.08 hereof substantially in
the form attached hereto as Exhibit G and incorporated herein by
reference, with appropriate insertions as to amounts, dates and names
of Lenders, as the same shall be amended, modified or supplemented and
in effect from time to time;
"Total Revolving Credit Commitment" means an amount equal to
$20,000,000, as reduced from time to time in accordance with Sections
2.10 and 2.16 hereof;
"Upfront Fee" shall have the meaning assigned thereto in
Section 2.13(b) hereof; and
"Variable Rate Demand Bonds" means the $8,000,000 Variable
Rate Demand Industrial Revenue Bonds (Hanover House Industries, Inc.
Project) Series 1987 to be issued in connection with the refunding of
industrial revenue bonds due 2003, the proceeds of which were used to
acquire the Borrower's Hanover, Pennsylvania facility.
1.02 ACCOUNTING TERMS. All accounting terms not specifically defined
herein shall have the meanings assigned to such terms by,
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and shall be interpreted in accordance with, Generally Accepted Accounting
Principles as in effect on the date of the audited financial statements of the
Borrower referred to in Section 5.01(f)(i) hereof and applied on a Consistent
Basis.
1.03 TERMS CONSISTENT. All of the terms defined in this Agreement
shall have such defined meanings when used in any of the Loan Documents unless
the context shall require otherwise. All references to the Borrower, the Agent
and any Lender shall be deemed to include any successor or permitted assign of
any thereof. All plural references and definitions shall have a corresponding
meaning in the singular, and all singular references and definitions shall have
a corresponding meaning in the plural.
ARTICLE II
THE LOANS
2.01 REVOLVING CREDIT LOANS.
(a) COMMITMENT.
(i) Subject to the terms and conditions of this
Agreement, each Lender severally agrees to make Advances under the
Revolving Credit Facility to the Borrower from time to time on a pro
rata basis as to the total borrowing requested by the Borrower on any
day determined by its Applicable Commitment Percentage of the Total
Revolving Credit Commitment up to but not exceeding the Revolving
Credit Commitment of such Lender; provided, however, that the Lenders
will not be required and shall have no obligation to make any Advance
under the Revolving Credit Facility (A) so long as a Default or an
Event of Default has occurred and is continuing or (B) if the Agent
has accelerated the maturity of the Revolving Credit Notes as a result
of an Event of Default; provided further, that immediately after
giving effect to each such Advance, the sum of all Outstandings shall
not exceed the Total Revolving Credit Commitment.
(ii) Within such limits, the Borrower may borrow, repay
and reborrow hereunder, on a Business Day in the case of a Base Rate
Loan and on a LIBOR Business Day in the case of a LIBOR Loan, from the
Closing Date until, but (as to borrowings and reborrowings) not
including, the Revolving Credit Termination Date; provided, however,
that (A) no LIBOR Loan shall be made which has an Interest Period that
extends beyond the Revolving Credit Termination Date and (B) each
LIBOR Loan may, subject to the provisions of Section 2.12, be repaid
only on the last day of the Interest Period with respect thereto.
(b) AMOUNTS. Except as otherwise permitted by the Lenders from
time to time, the sum of all Outstandings shall not exceed at any time an
amount equal to the Total Revolving Credit Commitment.
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Each Revolving Credit Loan made, converted or continued, shall be in a
principal amount of at least $5,000,000, and, if greater than $5,000,000, an
integral multiple of $1,000,000.
(c) ADVANCES AND RATE SELECTION.
(i) An Authorized Representative shall give the Agent (A)
irrevocable telephonic notice of each LIBOR Loan, whether representing
an additional Advance hereunder or the conversion of borrowings
hereunder from Base Rate Loans to LIBOR Loans or the election of a
subsequent Interest Period for any LIBOR Loan, prior to 11:30 A.M.
Charlotte, North Carolina time at least three (3) LIBOR Business Days
prior to the day such Advance is to be made or such Loan is to be
converted or continued; and (B) irrevocable telephonic notice of each
Base Rate Loan representing an additional Advance hereunder or the
conversion of borrowings hereunder from LIBOR Loans to Base Rate Loans
prior to 10:30 A.M. Charlotte, North Carolina time on the day such
Advance is to be made or such Loan is to be converted. Each such
notice, which shall be effective upon receipt by the Agent, shall
specify the amount of the Advance, the type of Loan (Base Rate or
LIBOR), the date of the Advance and, if a LIBOR Loan, the Interest
Period to be used in the computation of interest. The Authorized
Representative shall provide the Agent written confirmation of each
such telephonic notice on the same day by telefacsimile transmission
in the form of a Borrowing Notice for additional Advances, or in the
form of an Interest Rate Selection Notice for the selection or
conversion of interest rates for outstanding Revolving Credit Loans,
in each case with appropriate insertions, but failure to provide such
confirmation shall not affect the validity of such telephonic notice.
The Borrower shall have the option to elect the duration of subsequent
Interest Periods and to convert the Revolving Credit Loans in
accordance with Section 2.12 hereof. If the Agent does not receive a
notice of election of duration of an Interest Period or to convert by
the time prescribed hereby and by Section 2.12 hereof, the Borrower
shall be deemed to have elected to convert to or continue such
Revolving Credit Loan as a Base Rate Loan until the Borrower otherwise
notifies the Agent in accordance herewith and with Section 2.12.
(ii) Notice of receipt of each Borrowing Notice and Interest
Selection Notice shall be provided by the Agent to each Lender with
reasonable promptness, but not later than 1:00 P.M., Charlotte, North
Carolina time on the same day as Agent's receipt of such notice. The
Agent shall provide each Lender written confirmation of such
telephonic notice by telefacsimile transmission, but failure to
provide such notice shall not affect the validity of such telephonic
notice.
(iii) Not later than 2:30 P.M., Charlotte, North Carolina
time on the date specified for each Advance of a Revolving
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Credit Loan, each Lender shall, pursuant to the terms and subject to
the conditions of this Agreement, make the amount of the Revolving
Credit Loan or Loans to be made by it on such day available to the
Agent by depositing or transferring the proceeds thereof in
immediately available funds at the Principal Office. The amount so
received by the Agent shall, subject to the terms and conditions of
this Agreement, be made available to the Borrower by delivery of the
proceeds thereof to the Borrower's Account or otherwise as shall be
directed in the applicable Borrowing Notice by the Authorized
Representative.
2.02 COMPETITIVE BID LOANS. (a) In addition to Revolving Credit Loans,
at any time prior to the Revolving Credit Termination Date during which the
conditions set forth in Section 2.02(b) below re satisfied, the Borrower may,
as set forth in this Section 2.02, request the Lenders to make offers to make
Competitive Bid Loans to the Borrower in Dollars. The Lenders may, but shall
have no obligation to, make such offers and the Borrower may, but shall have no
obligation to, accept any such offers in the manner set forth in this Section
2.02. There may be no more than ten (10) different Interest Periods for both
Revolving Credit Loans and Competitive Bid Loans outstanding at the same time
(for which purpose Interest Periods for each LIBOR Loan and each Competitive
Bid Loan shall be deemed to be different Interest Periods even if they are
coterminous). Each Competitive Bid Loan shall reduce availability under the
Revolving Credit Facility. The making of a Competitive Bid Loan by any Lender
shall not reduce such Lender's Revolving Credit Commitment except as calculated
based upon the Total Revolving Credit Commitment as reduced by such Competitive
Bid Loan. Competitive Bid Outstandings, together with all other Outstandings,
shall not exceed the Total Revolving Credit Commitment at any time.
(b) When the Borrower wishes to request offers to make Competitive
Bid Loans, it shall give the Agent (which shall promptly notify the Lenders) a
Competitive Bid Quote Request to be received no later than 11:00 a.m.
Charlotte, North Carolina time two (2) the Business Days prior to the date of
borrowing proposed therein (or such other time and date as the Borrower and the
Agent, with the consent of the Required Lenders, may agree). The Borrower may
request offers to make Competitive Bid Loans for up to two (2) different
Interest Periods in a single notice; provided that the request for each
separate Interest Period shall be deemed to be a separate Competitive Bid Quote
Request for a separate borrowing (a "Competitive Bid Borrowing") and there
shall not be outstanding at any one time more than four (4) Competitive Bid
Borrowings. Each such Competitive Bid Quote Request shall be substantially in
the form of Exhibit I attached hereto and incorporated herein by reference and
shall specify as to each Competitive Bid Borrowing:
(i) the proposed date of such borrowing, which shall be a
Business Day;
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(ii) the aggregate amount of such Competitive Bid Borrowing,
which shall be at least $5,000,000 (or in increments of $1,000,000 in
excess thereof) but shall not cause the limits specified in Section
2.02(a) hereof to be violated;
(iii) the duration of the Interest Period applicable thereto
(which may be not less than 7 nor more than 180 days); and
(iv) the Quotation Date.
Except as otherwise provided in this Section 2.02(b), no Competitive Bid Quote
Request shall be given within five (5) Business Days (or such other number of
days as the Borrower and the Agent, with the consent of the Required Lenders,
may agree) of any other Competitive Bid Quote Request.
(c) Each Lender may submit one or more Competitive Bid Quotes,
each containing an offer to make a Competitive Bid Loan in response to any
Competitive Bid Quote Request; provided that, if the Borrower's request under
Section 2.02(b) hereof specified more than one Interest Period, such Lender may
make a single submission containing one or more Competitive Bid Quotes for each
such Interest Period. Each Competitive Bid Quote must be submitted to the
Agent not later than 10:00 a.m. Charlotte, North Carolina time on the Quotation
Date (or such other time and date as the Borrower and the Agent, with the
consent of the Required Lenders, may agree), provided that any Competitive Bid
Quote may be submitted by NationsBank only if NationsBank notifies the Borrower
of the terms of the offer contained therein not later than 9:45 a.m. Charlotte,
North Carolina time on the Quotation Date. Subject to Articles III, IV and
VIII hereof, any Competitive Bid Quote so made shall be irrevocable except with
the consent of the Agent given on the instructions of the Borrower.
(d) Each Competitive Bid Quote shall be substantially in the form
of Exhibit J attached hereto and incorporated herein by reference and shall
specify:
(i) the proposed date of borrowing and the Interest
Period therefor;
(ii) the principal amount of the Competitive Bid Loan for
which each such offer is being made, which principal amount shall be
at least $1,000,000 (or in increments of $100,000 in excess thereof);
provided that the aggregate principal amount of all Competitive Bid
Loans for which a Lender submits Competitive Bid Quotes may not exceed
the principal amount of the Competitive Bid Borrowing for a particular
Interest Period for which offers were requested;
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(iii) the rate of interest per annum (rounded upwards, if
necessary, to the nearest 1/100th of 1%) offered for each such
Competitive Bid Loan (the "Absolute Rate"); and
(iv) the identity of the quoting Lender.
Unless otherwise agreed by the Agent and the Borrower, no Competitive Bid Quote
shall contain qualifying, conditional or similar language or propose terms
other than or in addition to those set forth in the applicable Competitive Bid
Quote Request. Any subsequent Competitive Bid Quote submitted by a Lender that
amends, modifies or is otherwise inconsistent with a previous Competitive Bid
Quote submitted by such Lender with respect to the same Competitive Bid Quote
Request shall be disregarded by the Agent unless such subsequent Competitive
Bid Quote is submitted solely to correct a manifest error in such former
Competitive Bid Quote.
(e) The Agent shall as promptly as practicable after a Competitive
Bid Quote is submitted (but in any event not later than 10:30 a.m. Charlotte,
North Carolina time on the Quotation Date), notify the Borrower of the terms of
any Competitive Bid Quote submitted by a Lender that is in accordance with
Sections 2.02(c) and (d) hereof. The Agent's notice to the Borrower shall
specify (i) the aggregate principal amount of the Competitive Bid Borrowing for
which Competitive Bid Quotes have been received and (ii) the respective
principal amount and Absolute Rate so offered by each Lender (identifying the
Lender that made each Competitive Bid Quote).
(f) Not later than 11:00 a.m. Charlotte, North Carolina time on
the Quotation Date (or such other time and date as the Borrower and the Agent,
with the consent of the Required Lenders, may agree), the Borrower shall notify
the Agent of its acceptance or nonacceptance of the Competitive Bid Quotes so
notified to it pursuant to Section 2.02(e) hereof (the failure of the Borrower
to give such notice by such time shall constitute nonacceptance), and the Agent
shall promptly notify each affected Lender. In the case of acceptance, such
notice shall specify the aggregate principal amount of offers for each Interest
Period that are accepted. The Borrower may only accept a Competitive Bid Quote
for the entire amount of the Competitive Bid Loan so offered as opposed to any
portion thereof, except as provided in Section 2.02(g) hereof. The Borrower's
acceptance of Competitive Bid Quotes is further subject to the following
conditions:
(i) the aggregate principal amount of each Competitive
Bid Borrowing may not exceed the applicable amount set forth in the
related Competitive Bid Quote Request;
(ii) the aggregate principal amount of each Competitive
Bid Borrowing shall be at least $5,000,000 (or an increment of
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$1,000,000 in excess thereof) but shall not cause the limits specified
in Section 2.02(a) hereof to be violated;
(iii) acceptance of Competitive Bid Quotes may be made only
in ascending order of Absolute Rates beginning with the lowest rate so
offered; and
(iv) the Borrower may not accept any Competitive Bid Quote
if the Agent has correctly advised the Borrower that such Competitive
Bid Quote fails to comply with Section 2.02(d) hereof or otherwise
fails to comply with the requirements of this Agreement (including,
without limitation, Section 2.02(a) hereof).
(g) If Competitive Bid Quotes are made by two or more Lenders with
the same Absolute Rates for a greater aggregate principal amount than the
amount in respect of which Competitive Bid Quotes are accepted for the related
Interest Period, the principal amount of Competitive Bid Loans in respect of
which such Competitive Bid Quotes are accepted shall be allocated by the
Borrower among such Lenders as nearly as possible (in amounts of at least
$500,000 or in increments of $100,000 in excess thereof) in proportion to the
aggregate principal amount of such Competitive Bid Quotes. Determinations by
the Borrower of the amounts of Competitive Bid Loans and the lowest bid as
provided in Section 2.02(f)(iii) shall be conclusive absent manifest error.
(h) Any Lender whose offer to make any Competitive Bid Loan has
been accepted shall, not later than 1:00 p.m. Charlotte, North Carolina time
on the date specified for the making of such Loan, make the amount of such Loan
available to the Agent at the Principal Office in Dollars and in immediately
available funds, for account of the Borrower. The amount so received by the
Agent shall, subject to the terms and conditions of this Agreement, be made
available to the Borrower on such date by depositing the same, in Dollars and
in immediately available funds, in an account of the Borrower maintained at the
Principal Office.
(i) Together with each Competitive Bid Quote Request, the Borrower
shall pay to the Agent for the account of the Agent a bid administration fee of
$1,500.
2.03 TERM LOAN.
(a) TERM LOAN OPTION. In the event the Borrower fails to exercise
its option to extend the Revolving Credit Termination Date or the Lenders fail
to consent to such extension, the Borrower shall have the option to convert the
Revolving Credit Outstandings as of the Revolving Credit Termination Date into
a term loan in the original principal amount equal thereto (the "Term Loan
Option"). Such Term Loan shall mature four years from the date of the Term
Loan Notes in the event the Term Loan Option is exercised in 1995; three years
from the date of the Term Loan Notes in the event the
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Term Loan Option is exercised in 1996; two years from the date of the Term Loan
Notes in the event the Term Loan Option is exercised in 1997 and one year from
the date of the Term Loan Notes in the event the Term Loan Option is exercised
in 1998 (in each case, the "Scheduled Term Loan Termination Date"). In the
event the Borrower shall exercise such Term Loan Option, the outstanding
Revolving Credit Notes shall be cancelled and replaced by Term Notes dated as
of the Revolving Credit Termination Date, as the same may have been extended
pursuant to Section 2.16 hereof, as set forth in Section 2.08 hereof and the
Revolving Credit Facility and the Revolving Credit Commitment of each Lender
shall terminate. The principal amount of such Term Loan shall be due and
payable in equal quarterly installments due on the last Business Day of each
September, December, March and June, beginning with the last Business Day of
the September immediately following the Borrower's execution and delivery of
the Term Loan Notes and quarterly thereafter until the Term Loan Termination
Date, when the entire unpaid principal balance, including any accrued and
unpaid interest, shall be due and payable.
(b) EXERCISE OF TERM LOAN OPTION. The Borrower may exercise the
Term Loan Option only if the following conditions are met: (i) the Borrower
shall have given written notice to the Agent of its intention to exercise the
Term Loan Option no less than thirty (30) days prior to the Revolving Credit
Termination Date, which notice shall promptly be delivered by the Agent to each
Lender; (ii) no Default or Event of Default shall have occurred or be
continuing as of the date of such notice; (iii) the Revolving Credit
Termination Date shall not have occurred in accordance with clause (ii) or
(iii) of the definition thereof; and (iv) the Borrower shall have paid on or
before the Revolving Credit Termination Date all accrued and unpaid interest
with respect to Revolving Credit Outstandings as of the Revolving Credit
Termination Date.
(c) INTEREST SELECTION.
(i) An Authorized Representative shall give the Agent (A)
irrevocable telephonic notice of each Term Loan Segment which shall be
a LIBOR Loan, whether representing the conversion of a Term Loan
Segment from a Base Rate Loan to a LIBOR Loan or the election of a
subsequent Interest Period for a Term Loan Segment which is a LIBOR
Loan, prior to 11:30 A.M. Charlotte, North Carolina time at least
three (3) LIBOR Business Days prior to the day such Term Loan Segment
is to be converted or continued; and (B) irrevocable telephonic notice
of each Term Loan Segment which shall be a Base Rate Loan,
representing the conversion of any Term Loan Segment from a LIBOR Loan
to a Base Rate Loan, prior to 10:30 A.M. Charlotte, North Carolina
time of the day such Term Loan Segment is to be converted. Each such
notice, which shall be effective upon receipt by the Agent, shall
specify the amount of such Term Loan Segment, the interest rate (Base
or LIBOR) and, if a LIBOR Loan, the Interest Period to be used in the
computation
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of Interest. The Authorized Representative shall provide the Agent
written confirmation of each such telephonic notice on the same day by
telefacsimile transmission in the form of an Interest Rate Selection
Notice, with appropriate insertions, but failure to provide such
confirmation shall not affect the validity of such telephonic notice.
The Borrower shall have the option to elect the duration of subsequent
Interest Periods and to convert Term Loan Segments in accordance with
Section 2.12 hereof. If the Agent does not receive a notice of
election of duration of an Interest Period or to convert by the time
prescribed hereby and by Section 2.12 hereof, the Borrower shall be
deemed to have elected to convert such Term Loan Segment to (or to
continue such Term Loan Segment as) a Base Rate Loan until the
Borrower otherwise notifies the Agent in accordance herewith and with
Section 2.12.
(ii) Notice of receipt of each Interest Selection Notice
shall be provided by the Agent to each Lender with reasonable
promptness, but not later than 1:00 P.M. Charlotte, North Carolina
time of the same day as the Agent's receipt of such notice. The Agent
shall provide each Lender written confirmation of such telephonic
confirmation by telefacsimile transmission, but failure to provide
such confirmation shall not affect the validity of such telephonic
notice.
(iii) No Interest Period with respect to a Term Loan
Segment shall extend beyond the Scheduled Term Loan Termination Date.
2.04 PAYMENT OF INTEREST. (a) The Borrower shall pay interest to the
Agent at the Principal Office for the account of each Lender on the outstanding
and unpaid principal amount of each Loan made by such Lender for the period
commencing on the date of such Loan until such Loan shall be due (i) in the case
of each Revolving Credit Loan or Term Loan Segment, at the LIBOR Rate or the
Base Rate, as elected or deemed elected by the Borrower or otherwise applicable
to such Loan as herein provided; and (ii) in the case of each Competitive Bid
Loan, at the applicable Absolute Rate; provided, however, that if any amount
shall not be paid when due (at maturity, by acceleration or otherwise), all
amounts outstanding hereunder shall bear interest thereafter (A) in the case of
a LIBOR Loan, at a rate of interest per annum which shall be two percent (2%)
above the LIBOR Rate for such LIBOR Loan until the end of the Interest Period
during which such payment was due, and thereafter at a rate of interest per
annum which shall be two percent (2%) above the Base Rate, (B) in the case of
a Base Rate Loan, at a rate of interest per annum which shall be two percent
(2%) above the Base Rate, and (C) in the case of a Competitive Bid Loan, at a
rate of interest per annum which shall be two percent (2%) above the Absolute
Rate for such Competitive Bid Loan until the end of the Interest Period during
which such payment was due, and thereafter at a rate of interest per annum
which shall be two percent (2%) above the Base Rate, or (in each case) the
maximum
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rate permitted by applicable law, whichever is lower, from the date such amount
was due and payable until the date such amount is paid in full.
(b) Interest on the outstanding principal balance of each Loan shall
be computed on the basis of a year of 360 days and calculated for the actual
number of days elapsed. Interest on each Loan shall be paid (i) quarterly in
arrears on the last Business Day of each December, March, June and September
commencing December 1994, on each Base Rate Loan, (ii) on the last day of the
applicable Interest Period for each LIBOR Loan and Competitive Bid Loan and,
for any LIBOR Loan or Competitive Bid Loan having an Interest Period extending
beyond three (3) months or ninety (90) days, as applicable, also on the date
occurring three (3) months or ninety (90) days after the commencement of such
Interest Period, and (iii) upon payment in full of the principal amount of such
Loan.
2.05 PAYMENT OF PRINCIPAL. The principal amount of all Revolving
Credit Outstandings shall be due and payable to the Agent for the benefit of
each Lender in full on the Revolving Credit Termination Date, subject to
Section 2.03 hereof, or earlier as herein expressly provided. The principal
amount of the Term Loan shall be due and payable to the Agent for the benefit
of each Lender in full on the Term Loan Termination Date or earlier as herein
expressly provided. The principal amount of all Competitive Bid Loans shall
be due and payable to the Lender making such Competitive Bid Loan in full on the
last day of the Interest Period therefor or earlier as herein expressly
provided. The principal amount of Base Rate Loans may be prepaid in whole or in
part at any time without premium or penalty. The principal amount of LIBOR
Loans and Competitive Bid Loans may only be prepaid at the end of the applicable
Interest Period, unless the Borrower shall pay to the Agent for the account of
the Lenders the amount, if any, required under Section 3.04 hereof. In the
event that at any time the sum of all Outstandings exceeds the Total Revolving
Credit Commitment, a principal amount of the Revolving Credit Outstandings equal
to or greater than such excess shall be due and payable immediately. All
prepayments made by the Borrower shall be in the amount of $1,000,000 or an
integral multiple of $1,000,000 in excess thereof, or such other amount as
necessary to comply with this Section 2.05 or with Section 2.10 or with the
covenants set forth in Article IX hereof.
2.06 NON-CONFORMING PAYMENTS. (a) Each payment of principal
(including any prepayment) and payment of interest shall be made to the Agent
at the Principal Office, for the account of each Lender's applicable Lending
Office, in Dollars and in immediately available funds before 2:30 P.M.
Charlotte, North Carolina time on the date such payment is due. The Agent may,
but shall not be obligated to, debit the amount of any such payment which is not
made by such time to any ordinary deposit account, if any, of the Borrower with
the Agent. The Borrower shall give the Agent prior telephonic notice
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of any payment of principal, such notice to be given by not later than 11:00
a.m. Charlotte, North Carolina time, on the date of such payment.
(b) The Agent shall deem any payment by or on behalf of the
Borrower hereunder that is not made both (i) in Dollars and in immediately
available funds and (ii) prior to 2:30 P.M. Charlotte, North Carolina time on
the date payment is due to be a non- conforming payment. Any such payment
shall not be deemed to be received by the Agent until the time such funds
become available funds. Any non-conforming payment (other than a
non-conforming prepayment) may constitute or become a Default or Event of
Default. The Agent shall give prompt notice to the Authorized Representative
and each of the Lenders (confirmed in writing) if any payment (other than a
prepayment) is non-conforming. Interest shall continue to accrue on any
principal as to which a non-conforming payment is made until such funds become
available funds (but in no event less than the period from the date of such
payment to the next succeeding Business Day) at the respective rates of
interest per annum specified in Section 2.04(a) with respect to late payments
of interest (other than with respect to non-conforming prepayments, with
respect to which interest shall continue to accrue on any principal as to which
such non-conforming payment is made until such funds become available funds at
the Base Rate or LIBOR Rate, as applicable) from the date such amount was due
and payable until the date such amount is paid in full.
(c) In the event that any payment hereunder or under the Notes
becomes due and payable on a day other than a Business Day, then such due date
shall be extended to the next succeeding Business Day unless provided otherwise
under clause (i)(B) of the definition of "Interest Period;" provided that
interest shall continue to accrue during the period of any such extension.
2.07 BORROWER'S ACCOUNT. Until the Revolving Credit Termination Date
or the Term Loan Termination, whichever shall last occur, the Borrower shall
continuously maintain the Borrower's Account for the purposes herein
contemplated.
2.08 NOTES. (a) Revolving Credit Loans made by each Lender shall be
evidenced by, and be repayable with interest in accordance with the terms of,
the Revolving Credit Note payable to the order of such Lender in the amount of
its Applicable Commitment Percentage of the Total Revolving Credit Commitment,
which Revolving Credit Notes shall be dated the Closing Date or such later date
pursuant to an Assignment and Acceptance and shall be duly completed, executed
and delivered by the Borrower.
(b) Competitive Bid Loans made by any Lender shall be evidenced by,
and be repayable with interest in accordance with the terms of, the Competitive
Bid Note payable to the order of such Lender, which Competitive Bid Note shall
be dated the Closing Date
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and otherwise duly completed, executed and delivered by the Borrower.
(c) The Term Loan, if any, shall be evidenced by, and be repayable
with interest in accordance with the terms of, the Term Notes payable to the
order of each Lender in the amount of its Applicable Commitment Percentage of
the original principal amount of the Term Loan, which Term Notes shall be duly
completed, executed and delivered by the Borrower.
2.09 PRO RATA PAYMENTS. Except as otherwise provided herein, (a) each
payment and prepayment on account of the principal of and interest on the
Revolving Credit Loans and the Term Loan and the fees described in Section 2.13
hereof shall be made to the Agent for the account of the Lenders in the
aggregate amount payable to the Lenders pro rata based on their Applicable
Commitment Percentages, and (b) each payment of principal of and interest on
the Competitive Bid Loans shall be made to the Agent for the account of the
respective Lender making such Competitive Bid Loan. All payments to be made by
the Borrower for the account of each of the Lenders on account of principal,
interest and fees, shall be made without set-off or counterclaim. The Agent
will promptly distribute such payments received to the Lenders as provided for
herein.
2.10 REDUCTIONS. The Borrower shall have the right from time to time
(but not more frequently than once during any fiscal quarter of the Borrower)
prior to the Revolving Credit Termination Date, upon not less than five (5)
Business Days written notice from an Authorized Representative to the Agent, to
reduce the Total Revolving Credit Commitment. The Agent shall give each Lender,
within one (1) Business Day, telephonic notice (confirmed in writing) of such
reduction. Each such reduction shall be in the amount of $5,000,000 or an
integral multiple of $5,000,000 in excess thereof, and shall permanently reduce
the Total Revolving Credit Commitment and the Revolving Credit Commitment of
each Lender pro rata. No such reduction shall be permitted that results in the
payment of any LIBOR Loan other than on the last day of the Interest Period of
such Loan unless such prepayment is accompanied by amounts due, if any, under
Section 3.04. Each reduction of the Total Revolving Credit Commitment shall be
accompanied by payment of the principal amount of the Revolving Credit
Outstandings to the extent that the sum of all Outstandings exceeds the Total
Revolving Credit Commitment after giving effect to such reduction, together with
accrued and unpaid interest on the amounts prepaid. A reduction of the Total
Revolving Credit Commitment to zero and payment by the Borrower of all
Obligations (including the discharge of all obligations of the Lenders with
respect to Competitive Bid Loans) shall, subject to the terms and conditions of
Section 10.08 hereof, be deemed a cancellation and termination of this Agreement
(other than with respect to Sections 6.14, 9.07, 10.05 and 10.10 hereof, which
shall survive any such termination).
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2.11 INCREASE AND DECREASE IN AMOUNTS. The amount of the Total
Revolving Credit Commitment which shall be available to the Borrower shall be
reduced by the aggregate amount of all Outstandings and shall be reinstated
(subject to Section 2.10 hereof) as such Outstandings are reduced.
2.12 CONVERSIONS AND ELECTIONS OF SUBSEQUENT INTEREST PERIODS.
Provided that no Default or Event of Default shall have occurred
and be continuing and subject to the limitations set forth below
and in Sections 3.01(b), 3.02 and 3.03 hereof, the Borrower may:
(a) upon notice to the Agent on or before 10:30 A.M. Charlotte,
North Carolina time on any Business Day convert all or a part of LIBOR Loans to
Base Rate Loans on the last day of the Interest Period for such LIBOR Loans;
and
(b) upon three (3) LIBOR Business Days' notice to the Agent on or
before 11:30 A.M. Charlotte, North Carolina time:
(i) elect a subsequent Interest Period for all or a portion
of LIBOR Loans to begin on the last day of the current Interest Period
for such LIBOR Loans; or
(ii) convert Base Rate Loans to LIBOR Loans on any LIBOR
Business Day.
Notice of any such elections or conversions shall specify the
effective date of such election or conversion and, with respect to LIBOR
Loans, the Interest Period to be applicable to the Loan as continued or
converted. Each election and conversion pursuant to this Section 2.12 shall be
subject to the limitations on LIBOR Loans set forth in the definition of
"Interest Period" herein and in Sections 2.01(a), (b) and (c) and Article III
hereof. All such continuations or conversions of Loans shall be effected pro
rata based on the Applicable Commitment Percentages of the Lenders.
2.13 FACILITY FEE AND UPFRONT FEE. (a) For the period beginning on the
Closing Date and ending on the Revolving Credit Termination Date, as the same
may be extended pursuant to Section 2.16 hereof, the Borrower agrees to pay to
the Agent, for the pro rata benefit of the Lenders based on their Applicable
Commitment Percentages of the Total Revolving Credit Commitment, a quarterly
facility fee (the "Facility Fee") equal in amount to the product of Applicable
Margin for calculating the Facility Fee multiplied by the average daily Total
Revolving Credit Commitment for such period. Payments of the Facility Fee shall
be due in arrears on the last Business Day of each December, March, June and
September beginning December 1994 to and on the Revolving Credit Termination
Date. Notwithstanding the foregoing, so long as any Lender fails to make
available any portion of its Revolving Credit Commitment when requested, such
Lender shall not be entitled to receive payment of its pro rata share of the
Facility Fee until such Lender
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shall make available such portion. The Facility Fee shall be calculated on the
basis of a year of 360 days for the actual number of days elapsed.
(b) The Borrower agrees to pay to the Agent, for the benefit of
each Lender, a fee on the Closing Date (the "Upfront fee") in the amounts set
forth on Exhibit O attached hereto and incorporated herein by reference.
2.14 DEFICIENCY ADVANCES. No Lender shall be responsible for any
default of any other Lender in respect to such other Lender's obligation to make
any Loan hereunder nor shall the Revolving Credit Commitment of any Lender
hereunder be increased as a result of such default of any other Lender. Without
limiting the generality of the foregoing, in the event any Lender shall fail to
advance funds to the Borrower as herein provided, the Agent may in its
discretion, but shall not be obligated to, advance under the applicable
Revolving Credit Note in its favor as a Lender all or any portion of such amount
or amounts (each, a "deficiency advance") and shall thereafter be entitled to
payments of principal of and interest on such deficiency advance in the same
manner and at the same interest rate or rates to which such other Lender would
have been entitled had it made such advance under its applicable Note; provided
that, upon payment to the Agent from such other Lender of the entire outstanding
amount of each such deficiency advance, together with accrued and unpaid
interest thereon, from the most recent date or dates interest was paid to the
Agent by the Borrower on each Loan comprising the deficiency advance at the
interest rate per annum for overnight borrowing by the Agent from the Federal
Reserve Bank, then such payment shall be credited against the applicable Note of
the Agent in full payment of such deficiency advance and the Borrower shall be
deemed to have borrowed the amount of such deficiency advance from such other
Lender as of the most recent date or dates, as the case may be, upon which any
payments of interest were made by the Borrower thereon.
2.15 USE OF PROCEEDS. The proceeds of the Loans made pursuant to the
Revolving Credit Facility shall be used by the Borrower to finance acquisitions
in similar lines of business of the Borrower and its Subsidiaries but shall in
no event be used to (a) prepay any portion of the Subordinated Debt or (b)
finance any Acquisition that is approved by less than a majority of the Board of
Directors or other governing body of the Person to be so acquired as of the date
of such Acquisition.
2.16 EXTENSION OF REVOLVING CREDIT TERMINATION DATE.
(a) The Borrower shall have the option to extend the Revolving
Credit Termination Date for an additional 364-day period beginning on the
scheduled Revolving Credit Termination Date and ending October 10, 1996. The
Total Revolving Credit Commitment during such additional period shall be equal
to the Total Revolving
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Credit Commitment as of the scheduled Revolving Credit Termination Date less
$5,000,000.
(b) The Revolving Credit Termination Date may be so extended only
if the following conditions are met: (i) the Borrower shall have given written
notice to the Agent of its intention to so extend no less than sixty (60) days
prior to the immediately preceding scheduled Revolving Credit Termination Date,
which notice shall promptly be delivered by the Agent to each Lender; (ii) no
Default or Event of Default shall have occurred or be continuing as of the date
of such notice; (iii) the Revolving Credit Termination Date shall not have
occurred in accordance with clause (ii) or (iii) of the definition thereof; and
(iv) all of the Lenders shall have agreed in writing to so extend the Revolving
Credit Termination Date not less than thirty (30) days prior to the scheduled
Revolving Credit Termination Date.
(c) In the event the Revolving Credit Termination Date is extended
pursuant to Section 2.16(a), the Borrower shall have the option to again extend
the Revolving Credit Termination Date for an additional 364-day period in each
of 1996 and 1997 (assuming the Revolving Credit Termination Date is extended in
each preceding year) upon compliance with Section 2.16(b). The Total Revolving
Credit Commitment during each such additional period shall be equal to the
Total Revolving Credit Commitment as of the immediately preceding scheduled
Revolving Credit Termination Date less $5,000,000.
2.17 ADDITIONAL FEES. In addition to any fees described above, the
Borrower agrees to pay to the Agent and NationsBank such other fees as may be
agreed to in a separate writing or writings.
ARTICLE III
YIELD PROTECTION AND ILLEGALITY
3.01 ADDITIONAL COSTS. (a) The Borrower shall promptly pay to the Agent
for the account of a Lender from time to time, without duplication, such amounts
as such Lender may reasonably determine to be necessary to compensate it for any
costs incurred by such Lender attributable to its making or maintaining any Loan
or its obligation to make any Loans, or any reduction in any amount receivable
by such Lender under this Agreement or the Notes in respect of any of such
Loans, including reductions in the rate of return on a Lender's capital (such
increases in costs and reductions in amounts receivable and returns being herein
called "Additional Costs"), resulting from any Regulatory Change which (i)
changes the basis of taxation of any amounts payable to such Lender under this
Agreement or the Notes in respect of any of such Loans (other than taxes imposed
on or measured by the income, revenues or assets of any Lender); or (ii) imposes
or modifies any reserve, special deposit, or similar requirements relating to
any extensions of credit or other assets of, or any deposits with or
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other liabilities of, such Lender (other than any such reserve, deposit or
requirement reflected in the LIBOR Base Rate computed in accordance with the
definition of such term set forth in Section 1.01 hereof); or (iii) has or
would have the effect of reducing the rate of return on capital of any such
Lender to a level below that which the Lender could have achieved but for such
Regulatory Change (taking into consideration such Lender's policies, or
policies of the parent corporation of such Lender, with respect to capital
adequacy); or (iv) imposes any other condition not set forth in clauses (i),
(ii) or (iii) above which adversely affects the amounts which would have been
received by the Agent or the Lenders under this Agreement or the Notes but for
such Regulatory Change. Each Lender will notify the Authorized Representative
and the Agent of any event occurring after the Closing Date which would entitle
it to compensation pursuant to this Section 3.01(a) as promptly as practicable
after it obtains knowledge thereof and determines to request such compensation.
(b) Without limiting the effect of the foregoing provisions of
this Section 3.01, in the event that, by reason of any Regulatory Change, any
Lender either (i) incurs Additional Costs based on or measured by the excess
above a specified level of the amount of a category of deposits or other
liabilities of the Lender which includes deposits by reference to which the
interest rate on LIBOR Loans is determined as provided in this Agreement or a
category of extensions of credit or other assets of any Lender which includes
LIBOR Loans or (ii) becomes subject to restrictions on the amount of such a
category of liabilities or assets which it may hold, then, if the Lender so
elects by notice to the Agent (which shall promptly deliver such notice to the
other Lenders), the obligation hereunder of such Lender to make and continue,
and to convert Base Rate Loans into, LIBOR Loans that are the subject of such
restrictions shall be suspended until the date such Regulatory Change ceases to
be in effect and the Borrower shall, on the last day(s) of the then current
Interest Period(s) for outstanding LIBOR Loans convert such LIBOR Loans into
Base Rate Loans; provided, however, that the suspension of such obligation and
the conversion of any LIBOR Loans into Base Rate Loans shall apply only to any
Lender who is affected by such restrictions and who has provided such notice to
the other Lenders, and the obligation of the other Lenders to make, and to
convert Base Rate Loans into, LIBOR Loans shall not be affected by such
restrictions. In the event that the obligation of some, but not all of the
Lenders to make, or to convert Base Rate Loans into, LIBOR Loans is suspended,
then any request by the Borrower during the pendency of such suspension for a
LIBOR Loan shall be deemed a request for such LIBOR Loan from the Lender(s) not
subject to such suspension and for a Base Rate Loan from the Lender(s) who are
subject to such suspension, in each case in the respective amounts based on the
Lenders' respective Applicable Commitment Percentages.
(c) Reasonable determinations by any Lender for purposes of this
Section 3.01 of the effect of any Regulatory Change on its
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costs of making or maintaining, or being committed to make, Loans or on amounts
receivable by any Lender in respect of Loans, and of the additional amounts
required to compensate the Lender in respect of any Additional Costs shall be
made taking into account such Lender's policies, or the policies of the parent
corporation of such Lender, as to the allocation of capital, costs and other
items and shall be conclusive absent manifest error. The Lender requesting
such compensation shall furnish to the Authorized Representative and the Agent
an explanation of the Regulatory Change and calculations, in reasonable detail,
setting forth such Lender's determination of any such Additional Costs.
3.02 SUSPENSION OF LOANS. Anything herein to the contrary
notwithstanding, if, on or prior to the determination of any interest rate for
any LIBOR Loan for any Interest Period, the Agent determines (which
determination shall be conclusive absent manifest error) that:
(a) quotations of interest rates for the relevant
deposits referred to in the definition of LIBOR Rate in Section 1.01
hereof are not being provided in the relevant amounts or for the
relevant maturities for purposes of determining the rate of interest
for such LIBOR Loan as provided in this Agreement; or
(b) the relevant rates of interest referred to in the
definition of "LIBOR Base Rate" in Section 1.01 hereof upon the basis
of which the LIBOR Rate for such Interest Period is to be determined
do not adequately reflect the cost to the Lenders of making or
maintaining such LIBOR Loan for such Interest Period;
then the Agent shall give the Authorized Representative prompt notice thereof,
and so long as such condition remains in effect, the Lenders shall be under no
obligation to make LIBOR Loans that are subject to such condition, or to
convert Loans into LIBOR Loans, and the Borrower shall on the last day(s) of
the then current Interest Period(s) for outstanding LIBOR Loans convert such
LIBOR Loans into Base Rate Loans. The Agent shall give the Authorized
Representative notice describing any event or condition described in this
Section 3.02 promptly following the determination by the Agent that the
availability of LIBOR Loans is, or is to be, suspended as a result thereof.
3.03 ILLEGALITY. Notwithstanding any other provision of this Agreement,
in the event that it becomes unlawful for any Lender to honor its obligation to
make or maintain LIBOR Loans hereunder, then such Lender shall promptly notify
the Borrower thereof (with a copy to the Agent) and such Lender's obligation to
make or continue LIBOR Loans, or convert Base Rate Loans into LIBOR Loans, shall
be suspended until such time as such Lender may again make and maintain LIBOR
Loans, and such Lender's outstanding LIBOR Loans shall be converted into Base
Rate Loans in accordance with
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Section 2.12 hereof. In the event that the obligation of some, but not all of
the Lenders to make, or to convert Base Rate Loans into LIBOR Loans is
suspended, then any request by the Borrower during the pendency of such
suspension for a LIBOR Loan shall be deemed a request for such LIBOR Loan from
the Lender(s) not subject to such suspension and for a Base Rate Loan from the
Lender(s) who are subject to such suspension, in each case in the respective
amounts based on the Lenders' respective Applicable Commitment Percentages.
3.04 COMPENSATION. The Borrower shall promptly pay to each Lender, upon
the request of such Lender, such amount or amounts as shall be sufficient (in
the reasonable determination of such Lender) to compensate it for any loss, cost
or expense incurred by it as a result of:
(a) any payment, prepayment or conversion of a LIBOR Loan
on a date other than the last day of the Interest Period for such
LIBOR Loan, including without limitation any conversion required
pursuant to this Article III; or
(b) any failure by the Borrower to borrow a LIBOR Loan or
to convert a Base Rate Loan into a LIBOR Loan on the date for such
borrowing or conversion specified in the relevant Borrowing Notice or
Interest Rate Selection Notice under Article II hereof;
such compensation to include, without limitation, an amount equal to the
excess, if any, of (i) the amount of interest which would have accrued on the
principal amount so paid, prepaid or converted or not borrowed for the period
from the date of such payment, prepayment or conversion or failure to borrow or
convert to the last day of the then current Interest Period for such Loan (or,
in the case of a failure to borrow or convert, the Interest Period for such
Loan which would have commenced on the date scheduled for such borrowing or
conversion) at the applicable rate of interest for such LIBOR Loan provided for
herein over (ii) the LIBOR Base Rate (as reasonably determined by the Agent)
for Dollar deposits of amounts comparable to such principal amount and
maturities comparable to such period. A good faith determination of a Lender
as to the amounts payable pursuant to this Section 3.04 shall be conclusive
absent manifest error. The Lender requesting compensation under this Section
3.04 shall furnish to the Authorized Representative and the Agent calculations
in reasonable detail setting forth such Lender's determination of the amount of
such compensation.
3.05 ALTERNATE INTEREST RATE. In the event any Lender suspends the
making of any LIBOR Loan pursuant to this Article III (a "Restricted Lender"),
the Restricted Lender's Applicable Commitment Percentage of any LIBOR Loan shall
bear interest at the Base Rate until the Restricted Lender once again makes
available the applicable LIBOR Loan. Notwithstanding the provisions of Section
2.04(b), interest shall be payable to the Restricted Lender
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at the time and in the manner paid to those Lenders making available LIBOR
Loans.
3.06 TAXES. (a) All payments by the Borrower of principal of, and
interest on, the Loans and all other amounts payable hereunder shall be made
free and clear of and without deduction for any present or future excise, stamp
or other taxes, fees, duties, levies, imposts, charges, deductions, withholdings
or other charges of any nature whatsoever imposed by any taxing authority, but
excluding (i) franchise taxes, (ii) any taxes other than withholding taxes,
(iii) taxes that would be imposed as a result of a connection between a Lender
or the Agent and the jurisdiction imposing such taxes (other than a connection
arising solely by virtue of the activities of such Lender or the Agent pursuant
to or in respect of this Agreement or any other Loan Document), (iv) any taxes
which become payable as a result of a failure by any Person to comply with its
obligations set forth in Section 3.06(b) or which would not have been imposed
but for (A) a sale, assignment, grant of a participation, or any other transfer
or disposition of any interest in this Agreement or any other Loan Document or
(B) a change by a Lender of the Lending Office of such Lender designated on the
signature pages herein or in an Assignment and Acceptance, and (v) any taxes
imposed on or measured by any Lender's assets, net income, receipts or branch
profits (such non-excluded items being collectively called "Taxes"). In the
event that any withholding or deduction from any payment to be made by the
Borrower hereunder is required in respect of any Taxes pursuant to any
applicable law, rule or regulation, then the Borrower shall:
(A) pay directly to the relevant authority the full
amount required to be so withheld or deducted;
(B) if requested by the Agent, promptly forward to the
Agent an official receipt or other documentation reasonably
satisfactory to the Agent evidencing such payment to such authority;
and
(C) pay to the Agent for the account of the Lenders such
additional amount or amounts as is necessary to ensure that the net
amount actually received by each Lender will equal the full amount
such Lender would have received had no such withholding or deduction
been required.
(b) Prior to the date that any Lender or participant organized
under the laws of a jurisdiction outside the United States becomes a party
hereto, such Person shall deliver to the Borrower and the Agent such
certificates, documents or other evidence, as required by the Code, properly
completed, currently effective and duly executed by such Lender or participant
establishing that such payment is (i) not subject to United States Federal
backup withholding tax and (ii) not subject to United States Federal
withholding tax under the Code because such payment is either effectively
connected with the conduct by such Lender or
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participant of a trade or business in the United States or totally exempt from
United States Federal withholding tax by reason of the application of the
provisions of a treaty to which the United States is a party or such Lender is
otherwise exempt.
(c) If the Borrower fails to pay any Taxes when due to the
appropriate taxing authority or fails to remit to the Agent, for the account of
the respective Lender, the required receipts or other required documentary
evidence, the Borrower shall indemnify the Lenders for any incremental Taxes,
interest or penalties that may become payable by any Lender as a result of any
such failure. For purposes of this Section 3.06, a distribution hereunder by
the Agent or any Lender to or for the account of any Lender shall be deemed a
payment by the Borrower.
ARTICLE IV
CONDITIONS TO MAKING LOANS
4.01 CONDITIONS OF INITIAL ADVANCE. The obligation of the Lenders to
make the initial Advance is subject to the conditions precedent that the Agent
shall have received on or before the Closing Date, in form and substance
satisfactory to the Agent and Lenders, the following:
(a) executed originals of each of this Agreement, the
Notes, the Guaranty and the other Loan Documents, together with all
schedules and exhibits thereto;
(b) executed originals of the $60,000,000 Credit Facility
Documents;
(c) favorable written opinion of counsel to the Borrower
and the Guarantors dated the Closing Date, addressed to the Agent and
the Lenders and reasonably satisfactory to Smith Helms Mulliss &
Moore, L.L.P., special counsel to the Agent, substantially in the form
of Exhibit K attached hereto and incorporated herein by reference;
(d) resolutions of the board of directors or other
appropriate governing body (or of the appropriate committee thereof)
of the Borrower, certified by its secretary or assistant secretary or
other appropriate officer as of the Closing Date, appointing the
initial Authorized Representative and approving and adopting the Loan
Documents to be executed by such Person, and authorizing the
execution, delivery and performance thereof;
(e) resolutions of the board of directors or other
appropriate governing body (or of the appropriate committee thereof)
of each Guarantor, certified by its secretary or assistant secretary
or other appropriate officer as of the Closing Date approving and
adopting the Loan Documents to be
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executed on behalf of such Guarantor and authorizing the execution,
delivery and performance thereof;
(f) specimen signatures of officers of the Borrower
executing the Loan Documents on behalf of the Borrower, certified by
the secretary or assistant secretary or other appropriate officer of
the Borrower;
(g) specimen signatures of officers of each Guarantor
executing the Loan Documents on behalf of such Guarantor certified by
the secretary or assistant secretary or other appropriate officer of
such Guarantor;
(h) the charter documents of each of the Borrower and the
Guarantors certified as of a recent date by the Secretary of State or
other appropriate Governmental Authority of its jurisdiction of
incorporation;
(i) the by-laws of each of the Borrower and the
Guarantors certified as of the Closing Date as true and correct by its
secretary or assistant secretary;
(j) with respect to the Borrower and each Guarantor,
certificates issued as of a recent date by the Secretary of State or
other appropriate Governmental Authority of its jurisdiction of
incorporation as to its due existence and good standing therein;
(k) with respect to the Borrower and each Guarantor,
appropriate certificates of qualification to do business, good
standing and, where appropriate, authority to conduct business under
assumed name, issued as of a recent date by the Secretary of State or
other appropriate Governmental Authority of each jurisdiction in which
the failure to be qualified to do business or authorized so to conduct
business could result in a Material Adverse Effect;
(l) notice of appointment of the initial Authorized
Representative of the Borrower in the form of Exhibit C hereto;
(m) certificate of an Authorized Representative dated the
Closing Date demonstrating compliance with the financial covenants
contained in Sections 7.01 and 7.02, all as of the immediately
preceding Determination Date, substantially in the form of Exhibit L
attached hereto;
(n) evidence of insurance required by the Loan Documents
other than policies for director and officer indemnification insurance
and immaterial policies issued to Subsidiaries;
(o) copies of all documents evidencing the Subordinated
Debt;
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(p) evidence reasonably satisfactory to the Agent of
repayment of all Indebtedness of the Borrower outstanding under, and
evidence of termination of, that certain Second Amended and Restated
Loan and Security Agreement dated as of October 27, 1993 by and among
the Borrower (successor to Hanover Direct Pennsylvania, Inc.),
Congress Financial Corporation and certain Subsidiaries, as amended to
date;
(q) UCC-3 Termination Statements executed on behalf of
Congress Financial Corporation, in form and number satisfactory to the
Agent, sufficient upon filing by the Agent in the appropriate offices
to terminate all security interests granted by the Borrower or any of
its Subsidiaries to Congress Financial Corporation;
(r) an initial Borrowing Notice;
(s) all fees payable by the Borrower on the Closing Date
to the Agent, NationsBank and the Lenders; and
(t) such other documents, instruments, certificates and
opinions as the Agent or any Lender may reasonably request on or prior
to the Closing Date in connection with the consummation of the
transactions contemplated hereby.
4.02 CONDITIONS OF LOANS. The obligations of the Lenders to make any
Loans or to convert or continue the interest rates thereof pursuant to Section
2.12 (other than any conversion required by Article III hereof) hereunder on or
subsequent to the Closing Date are subject to the satisfaction of the following
conditions:
(a) the Agent shall have received a notice of such
borrowing or request as required by Article II hereof;
(b) the representations and warranties of the Borrower
set forth in Article V hereof and in each of the other Loan Documents
shall be true and correct in all material respects on and as of the
date of such Advance, conversion or continuation as the case may be,
with the same effect as though such representations and warranties had
been made on and as of such date, except (i) to the extent that such
representations and warranties expressly relate to an earlier date,
(ii) that the representations and warranties set forth in Section
5.01(d) and (e) shall be deemed to include and take into account any
merger or consolidation permitted under Section 7.06 hereof, and (iii)
that the financial statements referred to in Section 5.01(f)(i) shall
be deemed to be those financial statements most recently delivered to
the Agent and the Lenders pursuant to Section 6.01 hereof;
(c) at the time of each such Advance, conversion or
continuation, no Default or Event of Default shall have occurred and
be continuing;
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(d) immediately after giving effect to any Loan (i)
Outstandings shall not exceed the Total Revolving Credit Commitment,
and (ii) each Lender's Applicable Commitment Percentage of Loans shall
not exceed its Revolving Credit Commitment;
(e) notwithstanding Section 7.05 hereof, in the event the
proceeds of such Advance are to be used to finance an Acquisition, the
Agent and each Lender shall have received not less than fifteen (15)
Business Days prior to the date such Advance is to be made:
(i) historical audited financial statements of
the Person to be acquired for its two (2) most recently
completed fiscal years, including a balance sheet as of the
end of each such year and related statements of operations,
cash flows and shareholders' equity for each such year (other
than with respect to the Borrower's proposed Acquisitions of
Regal Shop Ltd. and Joan Rivers Production Company, for which
the Borrower shall deliver to the Agent and Lenders such
financial statements as are available and in form and
substance reasonably acceptable to the Agent);
(ii) a consolidated pro forma balance sheet of the
Borrower and its Subsidiaries and related pro forma
consolidated statement of operations, in each case giving
effect to such Acquisition, as of the end of the most recently
completed Fiscal Year and in form and substance reasonably
acceptable to the Agent;
(iii) consolidated financial projections on a pro
forma basis for the Borrower and its Subsidiaries giving
effect to such Acquisition for the three-year period
immediately following the consummation of such Acquisition, in
form and substance reasonably acceptable to the Agent; and
(iv) a certificate of an Authorized Representative
as to the absence of any Default or Event of Default and
demonstrating compliance with Sections 7.01 and 7.02 of this
Agreement, in each case for the most recently ended fiscal
quarter after giving effect to such Acquisition on a pro forma
basis;
and in the event the Required Lenders shall fail to give written
notice to the Borrower of any objection to the form or substance of
such financial statements and certificate within ten (10) Business
Days following receipt thereof, the same shall be deemed acceptable to
the Agent and the Lenders. In addition, the Agent and the Lenders
shall receive copies of the principal documents relating to such
Acquisition, to the extent the same are available, together with the
financial
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information described in clauses (i) through (iv) above or as soon
thereafter as practicable.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 REPRESENTATIONS AND WARRANTIES. The Borrower represents and
warrants with respect to itself and to its Subsidiaries (which representations
and warranties shall survive the delivery of the documents mentioned herein and
the making of Loans), that:
(a) ORGANIZATION AND AUTHORITY.
(i) the Borrower and each Subsidiary is a corporation
duly organized and validly existing under the laws of the jurisdiction
of its incorporation or creation;
(ii) the Borrower and each Subsidiary (A) has the
requisite power and authority to own its properties and assets and to
carry on its business as now being conducted and as contemplated in
the Loan Documents, and (B) is qualified to do business in every
jurisdiction in which failure so to qualify would have a Material
Adverse Effect;
(iii) the Borrower has the power and authority to execute,
deliver and perform this Agreement and the Notes, and to borrow
hereunder, and to execute, deliver and perform each of the other Loan
Documents to which it is a party; and
(iv) when executed and delivered, each of the Loan
Documents to which the Borrower is a party will be the legal, valid
and binding obligation or agreement, as the case may be, of the
Borrower, enforceable against it in accordance with its respective
terms, subject to the effect of any applicable bankruptcy, moratorium,
insolvency, reorganization or other similar law affecting the
enforceability of creditors' rights generally and to the effect of
general principles of equity which may limit the availability of
equitable remedies (whether in a proceeding at law or in equity);
(b) LOAN DOCUMENTS. The execution, delivery and performance by the
Borrower and each Guarantor of each of the Loan Documents to which it is a
party:
(i) have been duly authorized by all requisite corporate
action (including any required shareholder approval) of the Borrower
or such Guarantor, as applicable, required for the lawful execution,
delivery and performance thereof;
(ii) do not violate any provisions of (A) law, rule or
regulation applicable to the Borrower or such Guarantor, (B) any order
of any court or other agency of government binding
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on the Borrower or such Guarantor, or their respective properties, or
(C) the charter documents, documents of organization or governance or
by-laws of Borrower or such Guarantor, in each case, which violation
could reasonably be expected to have a Material Adverse Effect;
(iii) will not be in conflict with, result in a breach of
or constitute an event of default, or an event which, with notice or
lapse of time, or both, would constitute an event of default, under
any indenture, agreement or other instrument to which Borrower or such
Guarantor is a party or by which its properties or assets are bound
which conflict, breach or event of default could reasonably be
expected to have a Material Adverse Effect; and
(iv) will not result in the creation or imposition of any
Lien, charge or encumbrance of any nature whatsoever upon any of the
properties or assets of Borrower or such Guarantor except any Liens in
favor of the Agent and the Lenders created by the Loan Documents;
(c) SOLVENCY. Borrower and each Guarantor (other than the
Guarantors listed on Schedule 5.01(c) hereto) are Solvent after giving effect
to the transactions contemplated by this Agreement and the other Loan
Documents;
(d) SUBSIDIARIES AND STOCKHOLDERS. Borrower has no Subsidiaries
other than those Persons listed as Subsidiaries in Schedule 5.01(d) hereto, as
the same may be hereafter amended; Schedule 5.01(d), as the same may be
hereafter amended, states the authorized and issued capitalization of each
Subsidiary listed thereon, the number of shares or other equity interests of
each class of capital stock or interest issued and outstanding of each such
Subsidiary and the number and/or percentage of outstanding shares or other
equity interest (including options, warrants and other rights to acquire any
interest) of each such class of capital stock or equity interest owned by the
Borrower or by any such Subsidiary; the outstanding shares or other equity
interests of each such Subsidiary have been duly authorized and validly issued
and are fully paid and nonassessable; and the Borrower and each such Subsidiary
owns beneficially and of record all the shares and other interests it is listed
as owning in Schedule 5.01(d), free and clear of any Lien other than Permitted
Liens described in Section 7.04(ii) hereof;
(e) OWNERSHIP INTERESTS. Borrower owns no interest in any
Affiliate (excluding Subsidiaries) other than the Persons listed in Schedule
5.01(e) hereto, as the same may be hereafter amended;
(f) FINANCIAL CONDITION.
(i) The Borrower has heretofore furnished to the Agent
audited consolidated balance sheets of the Borrower and its
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Subsidiaries as at January 1, 1994 and the notes thereto and the
related consolidated statements of operations, cash flows, and
shareholders' equity for the Fiscal Year then ended as examined and
certified by Arthur Andersen & Co., and unaudited interim consolidated
financial statements of Borrower and its Subsidiaries consisting of a
consolidated balance sheet and related consolidated statements of
earnings and cash flows, without notes, for and as of the six-month
period ended July 2, 1994. Except as set forth therein, such
financial statements (including the notes thereto) present fairly the
financial condition of the Borrower and its Subsidiaries as of the end
of such Fiscal Year and such six-month period and results of their
operations and the changes in their shareholders' equity for such
Fiscal Year and such six-month period, all in conformity with
Generally Accepted Accounting Principles applied on a Consistent Basis
(subject, in the case of the interim statements, to year-end
adjustments and the absence or reduced scope of footnote disclosures);
(ii) since January 1, 1994, there has not occurred any
Material Adverse Effect, and the businesses, properties and operations
of the Borrower and its Subsidiaries, considered as a whole, have not
been materially adversely affected as a result of any fire, explosion,
earthquake, accident, strike, lockout, combination of workers, flood,
embargo or act of God;
(iii) since January 1, 1994, except as set forth in the
financial statements referred to in Section 5.01(f)(i) or in Schedule
5.01(f) or Schedule 5.01(j) attached hereto, or as permitted under
Section 7.03 hereof, neither the Borrower nor any Subsidiary has
incurred, other than in the ordinary course of business, any material
Indebtedness or Contingent Obligations that remain outstanding or
unsatisfied;
(g) TITLE TO PROPERTIES. The Borrower and its Subsidiaries have
title to all their respective owned real and personal properties, subject to no
transfer restrictions or Liens of any kind, except for (i) the transfer
restrictions and Liens described in Schedule 5.01(g) attached hereto, (ii)
Liens permitted under Section 7.04 hereof, (iii) with respect to any personal
property that constitutes a security, transfer restrictions imposed under
Federal and state securities laws and regulations, and (iv) when the lack of
title or the presence of such transfer restrictions could not reasonably be
expected to have a Material Adverse Effect;
(h) TAXES. Except as set forth in Schedule 5.01(h) attached
hereto, the Borrower and its Subsidiaries have filed or caused to be filed all
Federal, state, local and foreign tax returns which are required to be filed by
them and which the failure to file could reasonably be expected to have a
Material Adverse Effect and, except for taxes and assessments being contested
in good faith by appropriate proceedings diligently conducted and against which
reserves satisfactory to the Borrower's independent certified
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public accountants have been established, have paid or caused to be paid all
taxes as shown on said returns or on any assessment received by them, to the
extent that such taxes have become due unless the failure to pay the same could
not reasonably be expected to have a Material Adverse Effect;
(i) OTHER AGREEMENTS. Neither the Borrower nor any Subsidiary is:
(i) a party to any judgment, order, decree or any
agreement or instrument or subject to restrictions which could
reasonably be expected to have a Material Adverse Effect; or
(ii) in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions
contained in any agreement or instrument to which the Borrower or any
Subsidiary is a party, which default has, or if not remedied within
any applicable grace period could reasonably be expected to have, a
Material Adverse Effect;
(j) LITIGATION. Except as set forth in Schedule 5.01(j) attached
hereto, there is no action, suit or proceeding at law or in equity or by or
before any governmental instrumentality or agency or arbitral body pending, or,
to the knowledge of the Borrower, threatened by or against the Borrower or any
Subsidiary or affecting the Borrower or any Subsidiary or any properties or
rights of the Borrower or any Subsidiary, which could reasonably be expected to
have a Material Adverse Effect;
(k) MARGIN STOCK. Neither the Borrower nor any Subsidiary owns
any "margin stock" as such term is defined in Regulation U, as amended (12
C.F.R. Part 221), of the Board. The proceeds of the borrowings made pursuant
to Article II hereof will be used by the Borrower and its Subsidiaries only for
the purposes set forth in Section 2.15 hereof. None of such proceeds will be
used, directly or indirectly, for the purpose of purchasing or carrying any
margin stock or for the purpose of reducing or retiring any Indebtedness which
was originally incurred to purchase or carry margin stock or for any other
purpose which might constitute any of the Loans under this Agreement a "purpose
credit" within the meaning of said Regulation U or Regulation X (12 C.F.R. Part
224) of the Board. Neither the Borrower nor any agent acting on its behalf has
taken or will take any action which might cause this Agreement or any of the
documents or instruments delivered pursuant hereto to violate any regulation of
the Board or to violate the Securities Exchange Act of 1934, as amended, or the
Securities Act of 1933, as amended, or any state securities laws, in each case
as in effect on the date hereof;
(l) INVESTMENT COMPANY. Neither the Borrower nor any Subsidiary
is an "investment company," or an "affiliated person" of, or "promoter" or
"principal underwriter" for, an "investment company," as such terms are defined
in the Investment Company Act
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of 1940, as amended (15 U.S.C. Section 80a-1, et seq.). The application of
the proceeds of the Loans and repayment thereof by the Borrower and the
performance by the Borrower of the transactions contemplated by this Agreement
will not violate any provision of said Act, or any rule, regulation or order
issued by the Securities and Exchange Commission thereunder, in each case as in
effect on the date hereof;
(m) PATENTS, ETC. Except as set forth in Schedule 5.01(m)
attached hereto, the Borrower and its Subsidiaries own or have the right to
use, under valid license agreements or otherwise, all material patents,
licenses, franchises, trademarks, trademark rights, trade names, trade name
rights, trade secrets and copyrights necessary to the conduct of their
businesses as now conducted, without known conflict with any patent, license,
franchise, trademark, trade secrets and confidential commercial or proprietary
information, trade name, copyright, rights to trade secrets or other
proprietary rights of any other Person;
(n) NO UNTRUE STATEMENT. Neither this Agreement nor any other
Loan Document or certificate or document executed and delivered by or on behalf
of the Borrower in accordance with or pursuant to any Loan Document contains
any misrepresentation or untrue statement of material fact or omits to state a
material fact necessary, in light of the circumstances under which such
representation or statement was made, in order to make any such representation
or statement contained herein or therein not misleading in any material
respect;
(o) NO CONSENTS, ETC. Except as set forth in Schedule 5.01(o)
attached hereto, neither the respective businesses or properties of the
Borrower or any Subsidiary, nor any relationship between the Borrower or any
Subsidiary and any other Person, nor any circumstance in connection with the
execution, delivery and performance of the Loan Documents and the transactions
contemplated hereby is such as to require a consent, approval or authorization
of, or filing, registration or qualification with, any Governmental Authority
or other authority or any other Person on the part of the Borrower or any
Subsidiary as a condition to the execution, delivery and performance of, or
consummation of the transactions contemplated by, this Agreement or the other
Loan Documents or if so, such consent, approval, authorization, filing,
registration or qualification has been obtained or effected, as the case may
be;
(p) BENEFIT PLANS.
(i) None of the employee benefit plans sponsored and
maintained at any time by the Borrower or any ERISA Affiliate or the
trusts created thereunder has engaged in a prohibited transaction
which could reasonably be expected to subject any such employee
benefit plan or trust to a tax or penalty on prohibited transactions
imposed under Code Section 4975 or
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ERISA, which tax or penalty could reasonably be expected to have a Material
Adverse Effect;
(ii) None of the Single-employer Plans maintained at any time by the
Borrower or any ERISA Affiliate or the trusts created thereunder has been
terminated so as to result in any liability of the Borrower under ERISA that
could reasonably be expected to have a Material Adverse Effect nor has any such
Single-employer Plan of the Borrower or any ERISA Affiliate incurred any
liability to the Pension Benefit Guaranty Corporation established pursuant to
ERISA, other than for required insurance premiums which have been paid or are
not yet due and payable, which could reasonably be expected to have a Material
Adverse Effect; the Borrower and each ERISA Affiliate have made or provided for
all contributions to all such Single-employer Plans and Multi-employer Plans
which they maintain and which are required as of the end of the most recent
fiscal year under each such plan; neither the Borrower nor any ERISA Affiliate
has incurred any accumulated funding deficiency with respect to any such plan,
whether or not waived, which termination could reasonably be expected to have a
Material Adverse Effect; nor has there been any reportable event, or other event
or condition, which presents a risk of termination of any such Single-employer
Plan by such Pension Benefit Guaranty Corporation, which could reasonably be
expected to have a Material Adverse Effect;
(iii) The present value of all vested accrued benefits under the
Single-employer Plans which are subject to Title IV of ERISA, maintained by the
Borrower or any ERISA Affiliate, did not, as of the most recent valuation date
for each such plan, exceed the then current value of the assets of such employee
benefit plans allocable to such benefits;
(iv) The consummation of the Loans provided for in Article II will not
involve any prohibited transaction under ERISA which is not subject to a
statutory or administrative exemption;
(v) To the best of the Borrower's knowledge, each employee pension
benefit plan subject to Title IV of ERISA, maintained by the Borrower or any
ERISA Affiliate, has been administered in accordance with its terms in all
material respects and is in compliance in all material respects with all
applicable requirements of ERISA and other applicable laws, regulations and
rules;
(vi) There has been no withdrawal liability incurred and unpaid with
respect to any Multi-employer Plan to which the Borrower or any ERISA Affiliate
is a contributor that could reasonably be expected to have a Material Adverse
Effect;
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(vii) As used in this Agreement, the terms "employee benefit plan,"
"employee pension benefit plan," "accumulated funding deficiency,"
"reportable event," and "accrued benefits" shall have the respective
meanings assigned to them in ERISA, and the term "prohibited transaction"
shall have the meaning assigned to it in Code Section 4975 and ERISA;
(viii) Neither the Borrower nor any ERISA Affiliate has any liability
not disclosed on any of the financial statements furnished to the Lenders
pursuant to Section 5.01(f)(i) or Section 6.01 hereof, contingent or
otherwise, under any plan or program or the equivalent for unfunded
post-retirement benefits, including pension, medical and death benefits,
which liability could reasonably be expected to have a Material Adverse
Effect;
(q) NO DEFAULT. As of the date hereof, there does not exist any
Default or Event of Default hereunder;
(r) HAZARDOUS MATERIALS. Other than as set forth on Schedule 5.01(r)
hereof, (i) the Borrower and each Subsidiary is in compliance in all material
respects with all applicable Environmental Laws; and (ii) neither the Borrower
nor any Subsidiary has been notified of any action, suit, proceeding or
investigation which alleges lack of compliance by the Borrower or any
Subsidiary with any Environmental Laws or which seeks to suspend, revoke or
terminate any license, permit or approval necessary for the generation,
handling, storage, treatment or disposal of any Hazardous Material, which
non-compliance, suspension, revocation or termination could reasonably be
expected to have a Material Adverse Effect;
(s) EMPLOYMENT MATTERS. Except as disclosed on Schedule 5.01(j)
hereto, the Borrower and all Subsidiaries are in compliance in all material
respects with all applicable laws, rules and regulations pertaining to labor or
employment matters, including without limitation those pertaining to wages,
hours, occupational safety and taxation, the noncompliance with which could
reasonably be expected to have a Material Adverse Effect, and there is neither
pending nor, to the knowledge of the Borrower, any threatened litigation,
administrative proceeding or investigation in respect of such matters an
adverse ruling or determination in which could reasonably be expected to have a
Material Adverse Effect.
ARTICLE VI
AFFIRMATIVE COVENANTS
Until the Obligations have been paid and satisfied in full and this
Agreement has been terminated in accordance with the terms hereof, unless the
Required Lenders shall otherwise consent in writing, the Borrower will:
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6.01 FINANCIAL REPORTS, ETC. (a) as soon as practical and in any event
within 90 days after the end of each Fiscal Year, deliver or cause to be
delivered to the Agent and each Lender (i) the consolidated and consolidating
balance sheets of the Borrower and its Subsidiaries, in each case with the notes
thereto, and the related consolidated statements of operations, cash flow, and
shareholders' equity and the respective notes thereto, for such Fiscal Year,
setting forth in the case of the consolidated statements comparative financial
statements for the preceding Fiscal Year, all prepared in accordance with
Generally Accepted Accounting Principles applied on a Consistent Basis and
containing, with respect to the consolidated financial reports, opinions of
Arthur Andersen & Co., or other such independent certified public accountants
selected by the Borrower and approved by the Agent, which approval shall not be
unreasonably withheld, which are unqualified and without exception; and (ii) a
certificate of an Authorized Representative as to the absence of any Default or
Event of Default and demonstrating compliance with Sections 7.01 and 7.02 of
this Agreement, which certificate shall be in the form attached hereto as
Exhibit L and incorporated herein by reference;
(b) as soon as practical and in any event within 45 days after the
end of each fiscal quarter beginning with the fiscal quarter ended October 1,
1994, deliver to the Agent and each Lender (i) the consolidated and
consolidating balance sheets of the Borrower and its Subsidiaries as of the end
of such fiscal quarter, and the related consolidated statements of operations,
cash flow, and shareholders' equity for such fiscal quarter and for the period
from the beginning of the Fiscal Year through the end of such fiscal quarter,
accompanied by a certificate of an Authorized Representative to the effect that
such financial statements present fairly the financial position of the Borrower
and its Subsidiaries as of the end of such fiscal quarter and the results of
their operations and the changes in their financial position for such fiscal
quarter, in conformity with the standards set forth in Section 5.01(f)(i) with
respect to interim financials, and (ii) a certificate of an Authorized
Representative as to the absence of any Default or Event of Default and
containing computations for such quarter comparable to that required pursuant
to Section 6.01(a)(ii);
(c) together with each delivery of the financial statements
required by Section 6.01(a)(i) hereof, deliver to the Agent and each Lender a
letter from the Borrower's accountants specified in Section 6.01(a)(i) hereof
stating that, in performing the audit necessary to render an opinion on the
financial statements delivered under Section 6.01(a)(i), they obtained no
knowledge of any Default or Event of Default by the Borrower in the fulfillment
of the terms and provisions of this Agreement insofar as they relate to
financial matters (which at the date of such statement remains uncured); and if
the accountants have obtained knowledge of such Default or Event of Default, a
statement specifying the nature and period of existence thereof;
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(d) (i) not later than the last Business Day of January 1995, deliver
to the Agent and each Lender three-year consolidated financial projections for
the Borrower and its Subsidiaries prepared on an annual basis in accordance
with Generally Accepted Accounting Principles applied on a Consistent Basis;
provided, however, that projections for the Fiscal Year ending December 30,
1995 shall be prepared on a quarterly basis, and (ii) not later than the last
Business Day of each January thereafter, deliver to the Agent and each Lender
consolidated financial projections for such Fiscal Year for the Borrower and
its Subsidiaries prepared on a quarterly basis and in accordance with Generally
Accepted Accounting Principles applied on a Consistent Basis;
(e) promptly upon their becoming available to the Borrower, the
Borrower shall deliver to the Agent and each Lender a copy of (i) all regular
or special reports or effective registration statements which the Borrower or
any Subsidiary shall file from and after the date hereof with the Securities
and Exchange Commission (or any successor thereto) or any securities exchange,
(ii) any proxy statement distributed by the Borrower to its shareholders,
bondholders or the financial community in general, and (iii) any management
letter or other report submitted to the Borrower or any of its Subsidiaries by
independent accountants in connection with any annual, interim or special audit
of the Borrower or any of its Subsidiaries; and
(f) promptly, from time to time, deliver or cause to be delivered to
the Agent and each Lender such other information regarding Borrower's and each
Subsidiary's operations, business affairs and financial condition as the Agent
or such Lender may reasonably request. Subject to the terms of that
Confidentiality Agreement by and among the Agent and each of the Lenders and of
which the Borrower is an intended third-party beneficiary, the Agent and the
Lenders are hereby authorized to deliver a copy of any such financial
information delivered hereunder to the Lenders (or any affiliate of any Lender)
or to the Agent, to any regulatory authority having jurisdiction over any of
the Lenders pursuant to any written request therefor, or, subject to Section
10.01 hereof, to any other Person who shall acquire or consider the acquisition
of a participation interest in or assignment of any Loan permitted by this
Agreement, provided that such assignee is not engaged in any line of business
conducted by the Borrower or any of its Subsidiaries.
6.02 MAINTAIN PROPERTIES. Maintain all properties necessary to its
operations in good working order and condition (ordinary wear and tear excepted)
and make all needed repairs, replacements and renewals as are necessary to
conduct its business in accordance with customary business practices.
6.03 EXISTENCE, QUALIFICATION, ETC. Do or cause to be done all things
necessary to preserve and keep in full force and effect its existence and all
material rights and franchises, trade names,
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trademarks and permits, except to the extent conveyed in connection with a
transaction permitted under Section 7.05 hereof, and maintain its license or
qualification to do business as a foreign corporation and good standing in each
jurisdiction in which its ownership or lease of property or the nature of its
business makes such license or qualification necessary and in which failure to
maintain such license, qualification and good standing could reasonably be
expected to result in a Material Adverse Effect.
6.04 REGULATIONS AND TAXES. Comply with all statutes and governmental
regulations if noncompliance therewith could reasonably be expected to have a
Material Adverse Effect and pay all taxes, assessments, governmental charges,
claims for labor, supplies, rent and any other obligation which, if unpaid,
might become a Lien against any of its properties that could reasonably be
expected to have a Material Adverse Effect except any of the foregoing being
contested in good faith by appropriate proceedings diligently conducted and
against which adequate reserves have been established.
6.05 INSURANCE. (a) Keep all of its insurable properties adequately
insured at all times with responsible insurance carriers against loss or damage
by fire and other hazards as are customarily insured against by similar
businesses owning such properties similarly situated, (b) maintain general
public liability insurance at all times with responsible insurance carriers
against liability on account of damage to persons and property having such
limits, deductibles, exclusions and co-insurance and other provisions providing
no less coverage than that specified in Schedule 6.05 attached hereto, such
insurance policies to be in form reasonably satisfactory to the Agent, and (c)
maintain insurance under all applicable workers' compensation laws (or in the
alternative, maintain required reserves if self-insured for workers'
compensation purposes). Insurance otherwise acceptable to the Agent which
provides for a deductible per incident of not more than $250,000 (or not more
than $500,000 with respect to policies for director and officer indemnification
insurance) shall satisfy clauses (a), (b) and (c) hereof. Each of the policies
of insurance described in this Section 6.05 shall provide that the insurer shall
give the Agent not less than thirty (30) days' prior written notice before any
such policy shall be terminated (other than with respect to termination for
non-payment of premiums, in which case such policies shall provide not less than
ten (10) days' prior written notice to the Agent), lapse, cancelled or
materially amended.
6.06 TRUE BOOKS. Keep true books of record and account in which full,
true and correct entries shall be made of all of its dealings and transactions
in accordance with customary business practices, and set up on its books such
reserves as may be required by Generally Accepted Accounting Principles with
respect to doubtful accounts and all taxes, assessments, charges, levies and
claims and with respect to its business in general, and include such reserves in
interim as well as year-end financial statements.
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6.07 RIGHT OF INSPECTION. Permit any Person (other than a Person
engaged in a line of business that competes with the Borrower or any Subsidiary)
designated by any Lender or the Agent, at the Borrower's expense, to visit and
inspect any of the properties, corporate books and financial reports of the
Borrower and its Subsidiaries, and to discuss their respective affairs, finances
and accounts with their principal officers and independent certified public
accountants, all at reasonable times, at reasonable intervals and with
reasonable prior notice.
6.08 OBSERVE ALL LAWS. Conform to and duly observe in all material
respects all laws, rules and regulations and all other valid requirements of any
Governmental Authority with respect to the conduct of its business and
applicable to the Borrower or any Subsidiary and with which the failure to
comply could reasonably be expected to have a Material Adverse Effect.
6.09 COVENANTS EXTENDING TO SUBSIDIARIES. Without duplication, cause
each of its Subsidiaries to do with respect to itself, its business and its
assets, each of the things required of the Borrower in Sections 6.02 through
6.08, inclusive.
6.10 OFFICER'S KNOWLEDGE OF DEFAULT. Upon any Authorized Representative
or officer of the Borrower obtaining knowledge of any Default or Event of
Default hereunder or under any other obligation of the Borrower or any
Subsidiary, promptly deliver to the Agent written notice thereof, the period of
existence thereof, and what action the Borrower proposes to take with respect
thereto.
6.11 SUITS OR OTHER PROCEEDINGS. Upon any Authorized Representative or
officer of the Borrower obtaining knowledge of any litigation or other
proceedings being instituted against the Borrower or any Subsidiary, or any
attachment, levy, execution or other process being instituted against any assets
of the Borrower or any Subsidiary, in an aggregate amount greater than $500,000
not otherwise covered by insurance, promptly deliver to the Agent written notice
thereof stating the nature and status of such litigation, dispute, proceeding,
levy, execution or other process.
6.12 NOTICE OF DISCHARGE OF HAZARDOUS MATERIAL OR ENVIRONMENTAL
COMPLAINT. Promptly provide to the Agent true, accurate and complete copies of
any and all notices, complaints, orders, directives, claims, or citations
received by the Borrower or any Subsidiary relating to any material (a)
violation or alleged violation by the Borrower or any Subsidiary of any
applicable Environmental Laws; (b) release or threatened release by the Borrower
or any Subsidiary of any Hazardous Material, except where occurring legally; or
(c) liability or alleged liability of the Borrower or any Subsidiary for the
costs of cleaning up, removing, remediating or responding to a release of
Hazardous Materials.
6.13 ENVIRONMENTAL COMPLIANCE. If the Borrower or any Subsidiary shall
receive notice from any Governmental Authority
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that the Borrower or any Subsidiary has violated any applicable Environmental
Laws, related to any Hazardous Material or is liable for the costs of cleaning
up, removing, remediating or responding to a release of Hazardous Materials,
the Borrower shall, within the time period permitted by the applicable
Governmental Authority, remove or remedy, or cause the applicable Subsidiary to
remove or remedy, such violation or release or satisfy such liability unless
the applicability of the Environmental Law, the fact of such violation or
liability or what is required to remove or remedy such violation is being
contested by the Borrower or the applicable Subsidiary by appropriate
proceedings diligently conducted and all reserves with respect thereto as may
be required under Generally Accepted Accounting Principles, if any, have been
made.
6.14 INDEMNIFICATION. The Borrower hereby agrees to defend, indemnify
and hold the Agent and the Lenders, and their respective officers, directors,
employees and agents, harmless from and against any and all claims, losses,
liabilities, damages and expenses (including, without limitation, cleanup costs
and reasonable attorneys' fees) arising directly or indirectly from, out of or
by reason of the handling, storage, treatment, emission or disposal of any
Hazardous Material by or in respect of the Borrower or any Subsidiary or
property owned or leased or operated by the Borrower or any Subsidiary. The
provisions of this Section 6.14 shall survive repayment of the Obligations,
occurrence of the Revolving Credit Termination Date and expiration or
termination of this Agreement.
6.15 FURTHER ASSURANCES. At the Borrower's cost and expense, upon
request of the Agent, duly execute and deliver or cause to be duly executed and
delivered, to the Agent such further instruments, documents, certificates,
agreements, financing and continuation statements, and do and cause to be done
such further acts that may be reasonably necessary or advisable in the
reasonable opinion of the Agent to carry out more effectively the provisions and
purposes of this Agreement and the other Loan Documents.
6.16 BENEFIT PLANS. Comply in all material respects with all
requirements of ERISA applicable to it and furnish to the Agent as soon as
possible and in any event (a) within thirty (30) days after the Borrower knows
or has reason to know that any reportable event with respect to any employee
benefit plan maintained by the Borrower or any ERISA Affiliate which could give
rise to termination or the imposition of any material tax or material penalty
has occurred, written statement of an Authorized Representative describing in
reasonable detail such reportable event or such other event and any action which
the Borrower or ERISA Affiliate proposes to take with respect thereto, together
with a copy of the notice of such reportable event given to the Pension Benefit
Guaranty Corporation or a statement that said notice will be filed with the
annual report of the United States Department of Labor with respect to such plan
if such filing has been authorized, (b) promptly after receipt thereof, a copy
of any
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notice that the Borrower or any ERISA Affiliate may receive from the Pension
Benefit Guaranty Corporation relating to the intention of the Pension Benefit
Guaranty Corporation to terminate any Single-employer Plans of the Borrower or
any ERISA Affiliate or to appoint a trustee to administer any such plan, and
(c) within 10 days after a filing with the Pension Benefit Guaranty Corporation
pursuant to Section 412(n) of the Code of a notice of failure to make a
required installment or other payment with respect to a plan, a certificate of
an Authorized Representative setting forth details as to such failure and the
action that the Borrower or ERISA Affiliate proposes to take with respect
thereto, together with a copy of such notice given to the Pension Benefit
Guaranty Corporation.
6.17 CONTINUED OPERATIONS. Continue at all times (a) to conduct its
business and engage principally in the same or complementary line or lines of
business substantially as heretofore conducted and (b) preserve, protect and
maintain free from Liens (other than Liens permitted under Section 7.04 hereof)
its material patents, copyrights, licenses, trademarks, trademark rights, trade
names, trade name rights, trade secrets and know-how necessary or useful in the
conduct of its operations except to the extent failure to preserve, protect and
maintain the same free from Liens could not reasonably be expected to have a
Material Adverse Effect.
6.18 USE OF PROCEEDS. Use the proceeds of the Loans solely for the
purposes specified in Section 2.15 hereof.
6.19 NEW SUBSIDIARIES. In the event of the acquisition or creation of
any Material Subsidiary, or upon any previously existing Person becoming a
Material Subsidiary, cause to be delivered to the Agent for the benefit of the
Lenders each of the following within ten (10) Business Days of the acquisition
or creation of a Material Subsidiary or, with respect to an existing Person
becoming a Material Subsidiary, within ten (10) Business Days of delivery of
financial statements pursuant to Section 8.01(a) or (b) hereof with respect to
the fiscal quarter of the Borrower during which such Person acquired such assets
or achieved such net income as to become a Material Subsidiary:
(i) a Guaranty executed by such Material Subsidiary,
substantially in the form of Exhibit M attached hereto;
(ii) an opinion of counsel to such Material Subsidiary dated
as of the date of delivery of such Guaranty and addressed to the Agent
and the Lenders, in form and substance reasonably acceptable to the
Agent (which opinion may include assumptions and qualifications of
similar effect to those contained in the opinions of counsel delivered
pursuant to Section 4.01 hereof), to the effect that:
(A) such Material Subsidiary is duly organized,
validly existing and in good standing in the jurisdiction
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of its organization, has the requisite power and authority to
own its properties and conduct its business as then owned and
proposed to be conducted and is duly qualified to transact
business and is in good standing as a foreign corporation in
each other jurisdiction in which the character of the
properties owned or leased, or the business carried on by it,
requires such qualification and in which the failure to so
qualify could reasonably be expected to have a Material
Adverse Effect; and
(B) the execution, delivery and performance of
such Guaranty have been duly authorized by all requisite
corporate action (including any required shareholder
approval), such Guaranty has been duly executed and delivered
and constitutes a valid and binding obligation of such
Material Subsidiary, enforceable against such Subsidiary in
accordance with its terms, subject to applicable bankruptcy,
moratorium, insolvency, reorganization or other similar law
affecting the enforceability of creditors' rights generally
and to the effect of general principles of equity which may
limit the availability of equitable remedies (whether in a
proceeding at law or in equity).
(iii) current copies of the charter or other organizational
documents, any bylaws of such Material Subsidiary, minutes of duly
called and conducted meetings (or duly effected consent actions) of
the Board of Directors, or appropriate committees thereof (and, if
required by such charter or other organizational documents, bylaws or
by applicable laws, of the shareholders) of such Material Subsidiary
authorizing the actions and the execution and delivery and performance
of such Guaranty and evidence satisfactory to the Agent (confirmation
of the receipt of which will be provided by the Agent to the Lenders)
that such Material Subsidiary is Solvent as of such date after giving
effect to such Guaranty.
ARTICLE VII
NEGATIVE COVENANTS
Until the Obligations have been paid and satisfied in full and this
Agreement has been terminated in accordance with the terms hereof, unless the
Required Lenders shall otherwise consent in writing, the Borrower will not, nor
will it permit any Subsidiary to:
7.01 CONSOLIDATED FIXED CHARGE RATIO. Permit, at any time during any
Four-Quarter Period of the Borrower ending during the periods set forth below,
the Consolidated Fixed Charge Ratio for such Four Quarter Period to be equal to
or less than the ratios set forth opposite the respective periods below:
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Period Ratio
------ -----
Four-Quarter Period ending 1.25 to 1.00
July 1, 1995
Four-Quarter Period ending 1.50 to 1.00
June 29, 1996
Four-Quarter Period ending 2.00 to 1.00
June 28, 1997 and thereafter
7.02 CONSOLIDATED FUNDED INDEBTEDNESS TO EBITDA. Permit at any time
during any Four-Quarter Period of the Borrower ending during the periods set
forth below, the ratio of Consolidated Funded Indebtedness to Consolidated
EBITDA for such Four-Quarter Period to be equal to or greater than the ratio set
forth opposite the respective periods set forth below:
Period Ratio
------ -----
Four-Quarter Period ending 3.50 to 1.00
April 1, 1995
Four-Quarter Period ending 3.00 to 1.00
July 1, 1995
Four-Quarter Period ending 2.75 to 1.00
June 29, 1996 and thereafter
Four-Quarter Period ending 2.25 to 1.00
June 28, 1997 and thereafter
7.03 INDEBTEDNESS. Incur, create, assume or permit to exist any
Indebtedness of the Borrower and its Subsidiaries determined on a consolidated
basis, howsoever evidenced, except:
(i) Indebtedness existing as of the date hereof and as
set forth in Schedule 7.03(i) attached hereto and incorporated herein
by reference and any extension, renewal or refinancing thereof that
does not increase the principal amount thereof or interest rate
payable thereon from that existing immediately prior to such
extension, renewal or refinancing; provided, none of the instruments
and agreements evidencing or governing such Indebtedness shall be
amended, modified or supplemented after the Closing Date to change any
terms of repayment or rights of conversion, put, exchange or other
rights from such terms and rights as in effect on the Closing Date
unless such amendments, modifications or supplements do not have a
Material Adverse Effect on the Borrower, or its creditworthiness with
respect to its Obligations as reasonably determined by the Agent;
(ii) Indebtedness owing to the Agent or any Lenders in
connection with this Agreement, any Note or other Loan Document;
(iii) Indebtedness consisting of Rate Hedging Obligations
permitted under Section 7.11 hereof;
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(iv) the endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business;
(v) Indebtedness incurred pursuant to the Account Purchase Agreement
dated December 21, 1992 by and among the Borrower, Brawn of California, Inc. and
General Electric Capital Corporation ("GECC"), as the same may be amended,
modified or supplemented from time to time (the "Account Purchase Agreement"),
or any extension, renewal, refinancing, refunding or replacement thereof,
whether direct or indirect, and whether or not among the same parties, provided,
however, that with respect to any refinancing or replacement with any financier
other than GECC, such financier shall provide substantially similar services at
substantially similar quality and levels as those provided to the Borrower under
the Account Purchase Agreement;
(vi) Indebtedness evidenced by the Flexible Term Notes and the Variable
Rate Demand Bonds;
(vii) documentary letters of credit (other than Commercial Letters of
Credit as defined in the $60,000,000 Credit Facility Documents) in an aggregate
stated amount not to exceed $15,000,000 at any time and issued upon terms and
fees more favorable than available for the issuance of Commercial Letters of
Credit under the $60,000,000 Credit Facility Documents;
(viii) Indebtedness under the $60,000,000 Credit Facility Documents;
(ix) (A) purchase money Indebtedness and (B) Indebtedness
incurred with respect to financing of capital expenditures, not to
exceed an aggregate outstanding amount at any time of $10,000,000;
(x) Indebtedness of any Subsidiary owing to the Borrower
or another Subsidiary and Indebtedness of the Borrower owing to any
Subsidiary;
(xi) Indebtedness consisting of Capital Leases relating to
the acquisition of computer and telecommunications equipment more
specifically described on Schedule 7.03(xi) attached hereto and
incorporated herein by reference, provided that such Indebtedness
shall not exceed an aggregate amount outstanding at any time of
$7,600,000;
(xii) Indebtedness of Subsidiaries acquired after the
Closing Date hereof, provided that (A) such Indebtedness (1) is
recorded in the financial books and records of such Subsidiary prior
to such Acquisition, (2) was not incurred by such Subsidiary in
anticipation of such Acquisition, and
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(3) is non-recourse to the Borrower and each Guarantor and not
subsequently assumed by the Borrower or any Guarantor, and (B)
immediately after such Acquisition, no Default or Event of Default has
occurred or is continuing;
(xiii) Indebtedness of Subsidiaries evidenced by guaranties
of such Subsidiaries of documentary letters of credit permitted under
Section 7.03(vii); and
(xiv) additional Indebtedness not to exceed an aggregate
outstanding amount at any time of $1,000,000.
7.04 LIENS. Incur, create or permit to exist any pledge, Lien, charge
or other encumbrance of any nature whatsoever with respect to any property or
assets now owned or hereafter acquired by the Borrower or any of its
Subsidiaries, including without limitation any capital stock of the Borrower or
any of its Subsidiaries, other than:
(i) Liens existing as of the date hereof and as set forth
in Schedule 5.01(g) attached hereto;
(ii) Liens imposed by law for taxes, assessments or charges of
any Governmental Authority for claims not yet due or which are being
contested in good faith by appropriate proceedings diligently conducted
and with respect to which adequate reserves or other appropriate
provisions are being maintained in accordance with Generally Accepted
Accounting Principles;
(iii) Liens in respect of purchase money Indebtedness permitted
to be incurred pursuant to Section 7.03 hereof in connection with the
acquisition of certain tangible property; provided that (A) the
original principal balance of the Indebtedness secured by such Lien
constitutes not less than 80% of the purchase price of the property
acquired and (B) such Lien extends only to the property acquired with
the proceeds of the Indebtedness so secured;
(iv) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens imposed by law or
created in the ordinary course of business and in existence less than
120 days from the date of creation thereof for amounts not yet due or
which are being contested in good faith by appropriate proceedings
diligently conducted and with respect to which adequate reserves or
other appropriate provisions are being maintained in accordance with
Generally Accepted Accounting Principles;
(v) Liens in favor of contractors and vendors incurred in
connection with (A) the construction, refurbishment and upgrading of
Borrower's distribution facility located in Roanoke, Virginia, or (B)
the construction, refurbishment and
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remodeling of the new retail store of Gump's Inc. located in San
Francisco, provided, that, in each case, such Liens attach only to
property located at the respective construction locations and are
released and terminated not later than six (6) months following
completion of the construction, refurbishment, upgrading or remodeling
at such location;
(vi) Liens incurred or deposits made in the ordinary
course of business (including, without limitation, surety bonds and
appeal bonds) in connection with workers' compensation, unemployment
insurance and other types of social security benefits or to secure the
performance of tenders, bids, leases, contracts (other than for the
repayment of Indebtedness), statutory obligations and other similar
obligations or arising as a result of progress payments under
government contracts;
(vii) Liens created under the Account Purchase Agreement;
(viii) Liens in favor of Congress Financial Corporation,
provided that the Borrower delivers as of the Closing Date hereof
UCC-3 Termination Statements executed by Congress Financial
Corporation sufficient to terminate such Liens upon filing thereof by
the Agent in the appropriate offices;
(ix) easements (including, without limitation, reciprocal
easement agreements and utility agreements), rights- of-way, covenants,
consents, reservations, encroachments, variations and zoning and other
restrictions, charges or encumbrances (whether or not recorded), which
do not interfere with the ordinary conduct of the business of the
Borrower or any Subsidiary and do not impair the use of the property to
which they attach to the extent that such interference or impairment
could reasonably be expected to have a Material Adverse Effect; and
(x) Liens on real property securing Indebtedness
permitted under Section 7.03 hereof.
7.05 INVESTMENTS; ACQUISITIONS. Make any Acquisition or otherwise
purchase, own, invest in or otherwise acquire, directly or indirectly, any stock
or other securities, or make or permit to exist any interest whatsoever in any
other Person or permit to exist any loans or advances to any Person, except that
Borrower and its Subsidiaries may maintain investments or invest in:
(i) Eligible Securities;
(ii) investments existing as of the date hereof and as set
forth in Schedule 5.01(d) attached hereto;
(iii) accounts receivable arising and trade credit granted
in the ordinary course of business and any securities received
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in satisfaction or partial satisfaction thereof in connection with accounts of
financially troubled Persons to the extent reasonably necessary in order to
prevent or limit loss;
(iv) loans and advances to and investments in Subsidiaries;
(v) (A) investments in the capital stock or other equity interest in
another Person, which when added to equity interests held prior to such
investment constitute less than 50% of the capital stock or other equity
interests having ordinary voting power therein (a "Minority Investment"), (B)
investments in debt securities that do not constitute Eligible Securities issued
by any Person in which the Borrower or any Subsidiary has a Minority Investment
and (C) contributions to joint ventures, the aggregate of such investments and
contributions described in clauses (A), (B) and (C) made during the term of this
Agreement not to exceed $20,000,000;
(vi) loans and advances to non-consolidated Persons not to exceed in
the aggregate $7,500,000;
(vii) investments consisting of the exercise of options to acquire (A)
406,714 shares of common stock of Aegis Safety Holdings, Inc. at a price of
$7.00 per share, subject to adjustment for antidilution, and (B) 1,536,345
shares of the common stock of Boston Publishing Company at a price of $2.08 per
share, subject to adjustment for antidilution;
(viii) investments consisting of the mandatory acquisition of (A) all
then outstanding shares of Aegis Safety Holdings, Inc. after December 31, 1998
in accordance with the terms of the stock option agreement dated as of September
30, 1993 between Aegis Safety Holdings, Inc., Hanover Holdings, Inc., certain
stockholders of Aegis Safety Holdings, Inc. and FL Holdings, Inc.; and (B) all
outstanding shares of common stock of Boston Publishing Company in 1997 in
accordance with the terms of the stock option and put agreement dated as of
February 25, 1994 between Boston Publishing Company, Inc., Hanover Holdings,
Inc., Boston Publishing Limited Partnership, certain partners of Boston
Publishing Limited Partnership and the Borrower; and
(ix) loans and advances to its officers, directors and employees for
the purpose of purchasing capital stock of the Borrower, provided that (A) such
officer, director or employee shall pay to the Borrower at least 20% of the
purchase price for such securities out of his or her own funds, and (B) the
securities purchased with the proceeds of such loans shall be pledged as
collateral security therefor, and (C) the aggregate principal amount of such
loans at any time outstanding shall not exceed $3,700,000;
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(x) loans and advances to its officers, directors and employees for any
business purpose other than purchasing the capital stock of the Borrower in
the aggregate principal amount at any time outstanding not to exceed
$1,000,000; and
(xi) other investments in an aggregate principal amount at any time
outstanding not to exceed $1,000,000.
Notwithstanding the foregoing, the Borrower and its Subsidiaries may make
Acquisitions so long as: (a) immediately prior to, and immediately after, the
consummation of such Acquisition, no Default or Event of Default has occurred
and is continuing, (b) not less than 67% of the sales and operating profits
generated by such Person (or assets) so acquired or invested are derived from
the same or complementary line or lines of business engaged in by the Borrower
immediately prior to such Acquisition, which, for purposes of this Agreement,
shall be defined as catalog and mail-order sales fulfillment (the Borrower's
proposed Acquisitions of Regal Shop Ltd. and Joan Rivers Production Company
shall be specifically excluded from the restriction of this clause (b) provided
that the aggregate Cost of Acquisition with respect to such Acquisitions shall
not exceed $5,000,000), (c) pro forma historical financial statements as of the
end of the most recently completed Fiscal Year giving effect to such Acquisition
are delivered to the Agent not less than five (5) Business Days prior to the
consummation of such Acquisition, together with a certificate of an Authorized
Representative demonstrating compliance with Sections 7.01 and 7.02 of this
Agreement giving effect to such Acquisition, (d) the Cost of Acquisition with
respect to any Acquisition entered into during the term of this Agreement, other
than any Acquisition financed or funded in whole by the Net Proceeds of the
issuance of capital stock by the Borrower ("Equity Financed Acquisitions"),
shall not exceed $30,000,000, (e) the aggregate amount of those portions of all
Costs of Acquisitions that are paid or financed other than with the Net Proceeds
of the issuance of capital stock of the Borrower shall not exceed $40,000,000
during the term of the Agreement and (f) the Cost of Acquisition with respect to
any single Equity Financed Acquisition shall not exceed $60,000,000.
7.06 MERGER OR CONSOLIDATION. (a) Consolidate with or merge into any
other Person, or (b) permit any other Person to merge into it, or (c) liquidate,
wind-up or dissolve or sell, transfer or lease or otherwise dispose of all or a
substantial part of its assets (other than sales in the ordinary course of
business); provided, however, any Subsidiary of the Borrower may merge or
transfer all or substantially all of its assets into or consolidate with the
Borrower or any wholly owned Subsidiary of the Borrower, and any Person may
merge with the Borrower if the Borrower shall be the survivor thereof and such
merger shall not cause, create or result in the occurrence of any Default or
Event of Default hereunder.
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7.07 TRANSACTIONS WITH AFFILIATES. Other than transactions permitted
under Sections 7.05 and 7.06 hereof, enter into any transaction after the
Closing Date, including, without limitation, the purchase, sale, lease or
exchange of property, real or personal, or the rendering of any service, with
any Affiliate of the Borrower, except (a) that such Persons may render services
to the Borrower or its Subsidiaries for compensation at the same rates generally
paid by Persons engaged in the same or similar businesses for the same or
similar services and (b) in the ordinary course of and pursuant to the
reasonable requirements of the Borrower's (or any Subsidiary's) business
consistent with past practice of the Borrower and its Subsidiaries and upon fair
and reasonable terms no less favorable to the Borrower (or any Subsidiary) than
would be obtained in a comparable arm's-length transaction with a Person not an
Affiliate, provided that the Borrower and its Subsidiaries, in connection with
the acquisition of an equity interest in an Affiliate and thereafter, may
provide services to Affiliates upon terms less favorable to the Borrower and its
Subsidiaries than would be obtained in comparable arm's-length transactions with
Persons that are not Affiliates to the extent such terms are consistent with
reasonable business practices in relation to such Affiliate.
7.08 BENEFIT PLANS. With respect to all employee pension benefit
plans maintained by the Borrower or any ERISA Affiliate:
(i) allow or suffer the termination of any of such employee
pension benefit plans so as to incur any liability to the Pension
Benefit Guaranty Corporation that could reasonably be expected to have
a Material Adverse Effect;
(ii) allow or suffer to exist any prohibited transaction
involving any of such employee pension benefit plans or any trust
created thereunder which would subject the Borrower or any ERISA
Affiliate to a tax or penalty or other liability on prohibited
transactions imposed under Code Section 4975 or ERISA, which tax,
penalty or liability could reasonably be expected to have a Material
Adverse Effect;
(iii) allow or suffer to exist any accumulated funding
deficiency, whether or not waived, with respect to any such
Single-employer Plan that could reasonably be expected to have a
Material Adverse Effect;
(iv) allow or suffer to exist any occurrence of a reportable
event or any other event or condition, which presents a risk of
termination by the Pension Benefit Guaranty Corporation of any such
employee pension benefit plan that is a Single Employer Plan, which
termination could result in any liability to the Pension Benefit
Guaranty Corporation and which liability could reasonably be expected
to have a Material Adverse Effect; or
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(v) incur any withdrawal liability with respect to any
Multi-employer Plan that could reasonably be expected to have a
Material Adverse Effect.
7.09 FISCAL YEAR. Change its Fiscal Year.
7.10 DISSOLUTION, ETC. Wind up, liquidate or dissolve (voluntarily or
involuntarily) or commence or suffer any proceedings seeking any such winding
up, liquidation or dissolution, except in connection with the merger or
consolidation of Subsidiaries into each other or into a Borrower permitted
pursuant to Section 7.06.
7.11 RATE HEDGING OBLIGATIONS. Incur any Rate Hedging Obligations or
enter into any agreements, arrangements, devices or instruments relating to Rate
Hedging Obligations, except (i) pursuant to Swap Agreements in an aggregate
notional amount not to exceed at any time the Total Revolving Credit Commitment
and (ii) Rate Hedging Obligations with respect to materials used in the ordinary
course of business of the Borrower and its Subsidiaries and not for speculative
purposes.
7.12 DIVIDENDS, REDEMPTIONS AND OTHER PAYMENTS. Declare or pay any cash
dividends or make any other payment or distribution on account of its capital
stock (other than dividends payable in the ordinary course of business solely in
Common Stock or Preferred Stock) on any shares of stock of any class of the
Borrower, now or hereafter outstanding, or purchase, redeem or otherwise retire
any such shares in consideration of cash or capital stock of any Subsidiary of
the Borrower ("Restricted Stock"), or apply or set apart any of their assets
therefor or make any other distribution (by redemption of capital or otherwise)
in respect of any such shares in consideration of cash or Restricted Stock, or
agree to do any of the foregoing, other than (i) conversion of any of the
Borrower's securities into Common Stock which are so convertible in accordance
with their terms; (ii) cash dividends payable by any Subsidiary to another
Subsidiary or to the Borrower; (iii) cash dividends payable by the Borrower on
its Preferred Stock provided the aggregate amount of such dividends declared and
paid during any Fiscal Year shall not exceed $100,000; (iv) other cash dividends
payable by the Borrower or any Subsidiary on outstanding shares of any class of
its preferred stock or its common stock, provided that (A) the aggregate amount
of such dividends declared or paid during any Four-Quarter Period shall not
exceed 25% of Consolidated Net Income for the immediately preceding Four-Quarter
Period, (B) with respect to dividends payable on preferred stock of any
Subsidiary, such Subsidiary becomes a Guarantor and executes and delivers the
documents required under Section 8.19 hereof, and (C) with respect to dividends
payable on preferred stock of the Borrower or any Subsidiary, such preferred
stock shall in no event have any right of redemption or conversion, put or call
rights, voting rights (other than voting rights contingent upon nonpayment of
dividends) or other rights in addition to the rights holders of common stock
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of the Borrower or such Subsidiary other than preferential liquidation or
dividend rights; and (v) stock purchases for purposes of contributing such
shares to the Borrower's existing or hereafter created stock purchase plans,
stock option plans or other employee benefit plans provided that (A) the
purchase price for such shares shall be paid by the Borrower from operating
revenues of the Borrower and its Subsidiaries and (B) in no event shall the
number of shares so purchased during the term of this Agreement exceed
1,000,000.
7.13 SUBORDINATED DEBT. (a) Pay any amounts owing with respect to the
Subordinated Debt except in accordance with the terms thereof; provided that the
Subordinated Debt may be prepaid, in whole or in part, subject to the following
conditions:
(i) any such prepayment shall be made out of the operating
revenues of the Borrower and its Subsidiaries as opposed to proceeds
of any borrowings hereunder or under the $60,000,000 Credit Facility;
(ii) no Default or Event of Default shall occur as a result of any
such prepayment; and
(iii) the Borrower shall provide to the Agent, on the same
Business Day that such prepayment is made, (A) a statement of the
sources and uses of funds therefor evidencing that such funds were not
proceeds of borrowings hereunder or under the $60,000,000 Credit
Facility and (B) a certificate of an Authorized Representative as to
the absence of any Default or Event of Default and demonstrating
compliance with Sections 9.01 and 9.02 of this Agreement, in each case
giving effect to such prepayment.
(b) Materially amend the subordination provisions of or terminate
(other than in connection with the full and final payment of the Subordinated
Debt) any document related to the Subordinated Debt without the prior written
consent of the Required Lenders.
ARTICLE VIII
EVENTS OF DEFAULT AND ACCELERATION
8.01 EVENTS OF DEFAULT. If any one or more of the following events
(herein called "Events of Default") shall occur for any reason whatsoever (and
whether such occurrence shall be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) if default shall be made in the due and punctual payment of
the principal of any Loan, when and as the same shall be due and
payable whether pursuant to any provision of
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Article II hereof, at maturity, by acceleration or otherwise; or
(b) if default shall be made in the due and punctual payment of any
amount of interest on any Loan or of any fees or other amounts payable to the
Lenders, the Agent or NationsBank under the Loan Documents on the date on which
the same shall be due and payable; or
(c) if default shall be made in the performance or observance of any
covenant set forth in Sections 6.11, 6.12, 6.18 , or Article VII hereof (other
than Section 7.04 or 7.07 hereof); or
(d) if default shall be made in the performance or observance of the
covenants set forth in Sections 6.07, 6.17 , 7.04 or 7.07 hereof and the
Borrower shall fail to cure such default within five (5) Business Days of
receipt of notice of such default by the Authorized Representative from the
Agent;
(e) if a default shall be made in the performance or observance of, or
shall occur under, any covenant, agreement or provision contained in this
Agreement or the Notes (other than as described in clauses (a), (b) or (c)
above) and such default shall continue for thirty (30) or more days after the
earlier of receipt of notice of such default by the Authorized Representative
from the Agent or the Borrower becomes aware of such default, or if a default
shall be made in the performance or observance of, or shall occur under, any
covenant, agreement or provision contained in any of the other Loan Documents
(beyond the applicable grace period, if any, contained therein) or in any
instrument or document evidencing or creating any obligation, guaranty, or Lien
in favor of the Agent or the Lenders or delivered to the Agent or the Lenders in
connection with or pursuant to this Agreement or any of the Obligations, or if
any Loan Document ceases to be in full force and effect (other than by reason of
any action by the Agent), or if without the written consent of the Agent, this
Agreement or any other Loan Document shall be disaffirmed or shall terminate, be
terminable or be terminated or become void or unenforceable for any reason
whatsoever (other than in accordance with its terms in the absence of default or
by reason of any action by the Agent or any Lender); or
(f) if a default shall occur, which is not waived, (i) in the payment
of any principal, interest, premium or other amounts with respect to any
Indebtedness (other than the Obligations) of the Borrower or of any Subsidiary,
including without limitation Indebtedness under the Flexible Term Notes, the
Variable Rate Demand Bonds, the $60,000,000 Credit Facility Documents and the
Subordinated Debt, in an amount not less than $250,000 in the aggregate
outstanding, or (ii) in the performance, observance or fulfillment of any term
or
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covenant contained in any agreement or instrument under or pursuant to which any
such Indebtedness may have been issued, created, assumed, guaranteed or secured
by the Borrower or any Subsidiary, including without limitation Indebtedness
under the Flexible Term Notes, the Variable Rate Demand Bonds, the $60,000,000
Credit Facility Documents and the Subordinated Debt, and such default shall
continue for more than the period of grace, if any, therein specified, or if
such default shall permit the holder of any such Indebtedness to accelerate the
maturity thereof, provided that such default under clause (ii) with respect to
such Indebtedness (other than Indebtedness under the Notes, the Bonds or the
$60,000,000 Credit Facility Documents) shall not constitute an Event of Default
hereunder for a period of thirty (30) Business Days after the occurrence thereof
if during such period the Borrower or such Subsidiary is diligently and in good
faith pursuing a waiver or cure of such default and notifies the Agent of such
efforts; or
(g) if any representation, warranty or other statement of fact
contained herein or any other Loan Document or in any writing, certificate,
report or statement at any time furnished to the Agent or any Lender by or on
behalf of the Borrower or any Guarantor pursuant to or in connection with this
Agreement or the other Loan Documents, or otherwise, shall be false or
misleading when given or made or deemed given or made and, as a result thereof,
could reasonably be expected to have a Material Adverse Effect; or
(h) if the Borrower or any Guarantor shall be unable to pay its debts
generally as they become due; file a petition to take advantage of any
insolvency, reorganization, bankruptcy, receivership or similar law, domestic or
foreign; make an assignment for the benefit of its creditors; commence a
proceeding for the appointment of a receiver, trustee, liquidator or conservator
of itself or of the whole or any substantial part of its property; file a
petition or answer seeking reorganization or arrangement or similar relief under
the Federal bankruptcy laws or any other applicable law or statute, Federal,
state or foreign; or
(i) if a court of competent jurisdiction shall enter an order, judgment
or decree appointing a custodian, receiver, trustee, liquidator or conservator
of the Borrower or any Guarantor or of the whole or any substantial part of its
properties and such order, judgment or decree continues unstayed and in effect
for a period of sixty (60) days, or approve a petition filed against the
Borrower or any Guarantor seeking reorganization or arrangement or similar
relief under the Federal bankruptcy laws or any other applicable law or statute
of the United States of America or any state or foreign country, province or
other political subdivision, which petition is not dismissed within sixty (60)
days; or if, under the provisions of any other law for the relief or aid of
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debtors, a court of competent jurisdiction shall assume custody or control of
the Borrower or any Guarantor or of the whole or any substantial part of its
properties, which control is not relinquished within sixty (60) days; or if
there is commenced against the Borrower or any Guarantor any proceeding or
petition seeking reorganization, arrangement or similar relief under the Federal
bankruptcy laws or any other applicable law or statute of the United States of
America or any state or foreign country, province or other political subdivision
which proceeding or petition remains undismissed for a period of sixty (60)
days; or if the Borrower or any Guarantor takes any action to indicate its
consent to or approval of any such proceeding or petition; or
(j) if (i) any judgment where the amount not covered by insurance (or
the amount as to which the insurer denies liability) is in excess of $500,000 is
rendered against the Borrower or any Guarantor, or (ii) there is any attachment,
injunction or execution against any of the Borrower's or any Guarantor's
properties for any amount in excess of $500,000; and such judgment, attachment,
injunction or execution remains unpaid, unstayed, undischarged, unbonded or
undismissed for a period of sixty (60) days; or
(k) if the Borrower or any Guarantor shall suspend (other than for a
period not to exceed sixty (60) days by reason of force majeure) all or any part
of its operations and such suspension could reasonably be expected to have a
Material Adverse Effect, provided that, notwithstanding the occurrence of any
event of force majeure, neither the Borrower nor any Guarantor shall be deemed
to have suspended all or any part of its operations if the Borrower or the
Guarantor, as appropriate, has replaced the function or operation of the
business effected by the force majeure during such 60 day period, irrespective
of the method, manner or physical location of such replacement. By way of
illustration and not of limitation, the shutdown of any telemarketing center of
the Borrower or any Guarantor as a result of the occurrence of an event of force
majeure shall not be deemed a suspension of all or any part of the operations of
the Borrower or such Guarantor if the telemarketing functions previously
conducted at the center that was shut down otherwise are being conducted by or
on behalf of the Borrower or any Guarantor at another location owned by the
Borrower or any Guarantor or owned by a third party; or
(l) if the Borrower or any Subsidiary shall default in the payment of
principal, interest, premium or other amounts under any Swap Agreement and such
breach shall continue beyond any grace period, if any, relating thereto pursuant
to its terms, or the Borrower or any Subsidiary shall disaffirm or seek to
disaffirm any Swap Agreement or any of its Rate Hedging Obligations thereunder;
or
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(m) if the Borrower shall become a party to or the subject of any
agreement, transaction or related series of transactions pursuant to or as
a result of which (i) any Person or group of Persons acting in concert
(other than the NAR Group Limited or any other shareholder of the Borrower
that as of the Closing Date owns five percent (5%) or more of the shares of
the issued and outstanding capital stock of any class of the Borrower
having voting rights in the election of directors or is required to file a
Schedule 13D or 13G pursuant to the Securities Exchange Act of 1934, as
amended, with respect to its ownership of capital stock of the Borrower
having such rights), acquires voting control, directly or indirectly,
whether by tender offer or in one or more negotiated block or market
transactions, of more than thirty percent (30%) of the shares of the issued
and outstanding capital stock of any class of the Borrower having voting
rights in the election of directors or (ii) the NAR Group Limited shall
control, directly or indirectly, less than forty-five percent (45%) of the
shares of the issued and outstanding capital stock of any class of the
Borrower having such rights, unless such decrease in control shall occur as
a result of an increase in the total number of shares outstanding of such
class and not by reason of disposition of shares of such class by NAR Group
Limited;
then, and in any such event and at any time thereafter, if such Event of Default
or any other Event of Default shall have not been waived,
(A) either or both of the following actions may be taken: (i)
the Agent may, and at the direction of the Required Lenders shall,
declare any obligation of the Lenders to make further Loans terminated,
whereupon the obligation of each Lender to make further Loans hereunder
shall terminate immediately, and (ii) the Agent shall at the direction
of the Required Lenders, at their option, declare by notice to the
Borrower any or all of the Obligations to be immediately due and
payable, and the same, including all interest accrued thereon and all
other Obligations of the Borrower to the Agent and the Lenders, shall
forthwith become immediately due and payable without presentment,
demand, protest, notice or other formality of any kind, all of which
are hereby expressly waived, anything contained herein or in any
instrument evidencing the Obligations to the contrary notwithstanding;
provided, however, that notwithstanding the above, if there shall occur
an Event of Default under clause (h) or (i) above, then the obligation
of the Lenders to make Advances hereunder shall automatically terminate
and any and all of the Obligations shall be immediately due and payable
without the necessity of any action by the Agent or the Required
Lenders or notice to the Agent or the Lenders; and
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(B) the Agent and the Lenders shall have all of the rights and
remedies available under the Loan Documents or under any applicable
law.
8.02 AGENT TO ACT. In case any one or more Events of Default shall
occur and not have been waived, the Agent may, and at the direction of the
Required Lenders shall, proceed to protect and enforce their rights or remedies
either by suit in equity or by action at law, or both, whether for the specific
performance of any covenant, agreement or other provision contained herein or in
any other Loan Document, or to enforce the payment of the Obligations or any
other legal or equitable right or remedy.
8.03 CUMULATIVE RIGHTS. No right or remedy herein conferred upon the
Lenders or the Agent is intended to be exclusive of any other rights or remedies
contained herein or in any other Loan Document, and every such right or remedy
shall be cumulative and shall be in addition to every other such right or remedy
contained herein and therein or now or hereafter existing at law or in equity or
by statute, or otherwise.
8.04 NO WAIVER. No course of dealing between the Borrower and any
Lender or the Agent or any failure or delay on the part of any Lender or the
Agent in exercising any rights or remedies under any Loan Document or otherwise
available to it shall operate as a waiver of any rights or remedies and no
single or partial exercise of any rights or remedies shall operate as a waiver
or preclude the exercise of any other rights or remedies hereunder or of the
same right or remedy on a future occasion.
8.05 ALLOCATION OF PROCEEDS. If an Event of Default has occurred and
not been waived, and the maturity of the Notes has been accelerated pursuant to
Article VIII hereof, all payments received by the Agent hereunder, in respect of
any principal of or interest on the Obligations or any other amounts payable by
the Borrower hereunder shall be applied by the Agent in the following order:
(a) amounts due to NationsBank and the Lenders pursuant
to Sections 2.13, 6.15, 10.05 and 10.10 hereof;
(b) amounts due to NationsBank and/or the Agent pursuant
to Sections 2.02(i) and 2.17 hereof;
(c) payments of interest on Loans;
(d) payments of principal on Loans;
(e) payment of Obligations owed a Lender or Lenders
pursuant to Swap Agreements and payment of all outstanding
reimbursement obligations of the Borrower and its Subsidiaries with
respect to letters of credit issued by the Lenders for
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the account of the Borrower or any Subsidiary permitted under Section
7.03 hereof;
(f) payments of all other amounts due under this
Agreement, if any, to be applied for the ratable benefit of the
Lenders; and
(g) any surplus remaining after application as provided
for herein, to the Borrowers or otherwise as may be required by
applicable law.
ARTICLE IX
THE AGENT
9.01 APPOINTMENT. Each Lender hereby irrevocably designates and
appoints NationsBank as the Agent of the Lenders under this Agreement, and,
subject to Section 12.06 hereof, each of the Lenders hereby irrevocably
authorizes NationsBank as the 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 as are expressly delegated to the Agent by the terms of
this Agreement, together with such other powers as are reasonably incidental
thereto. The Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any of the
Lenders, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or otherwise exist
against the Agent.
9.02 ATTORNEYS-IN-FACT. The Agent may execute any of its duties under
this Agreement by or through agents or attorneys-in-fact and shall be entitled
to advice of counsel concerning all matters pertaining to such duties. The Agent
shall not be responsible to the Lenders for the negligence, gross negligence or
willful misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
9.03 LIMITATION ON LIABILITY. Neither the Agent nor any of its
officers, directors, employees, agents or attorneys-in- fact shall be liable to
the Lenders for any action lawfully taken or omitted to be taken by it or them
under or in connection with this Agreement except for its or their own gross
negligence or willful misconduct. Neither the Agent nor any of its affiliates
shall be responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by the Borrower or any of its
Subsidiaries, or any officer or representative thereof contained in this
Agreement or in any of the other Loan Documents, or in any certificate, report,
statement or other document referred to or provided for in or received by the
Agent under or in connection with this Agreement, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any of the other Loan Documents, or for any failure of
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the Borrower to perform its obligations thereunder, or for any recitals,
statements, representations or warranties made, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of any collateral. The
Agent shall not be under any obligation to any of the Lenders to ascertain or to
inquire as to the observance or performance of any of the terms, covenants or
conditions of this Agreement or any of the other Loan Documents on the part of
the Borrower or to inspect the properties, books or records of the Borrower or
its Subsidiaries.
9.04 RELIANCE. The 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 or telex 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 or upon advice and statements of legal counsel (including, without
limitation, counsel to the Borrower), independent accountants and other experts
selected by the Agent. The Agent may deem and treat the payee of any Note as the
owner thereof for all purposes unless an Assignment and Acceptance shall have
been filed with and accepted by the Agent. The Agent shall be fully justified in
failing or refusing to take any action under this Agreement unless it shall
first receive advice or concurrence of the Lenders or the Required Lenders as
provided in this Agreement and it shall first be indemnified to its satisfaction
by the Lenders against any and all liability and expense which may be incurred
by it by reason of taking or continuing to take any such action. The Agent shall
in all cases be fully protected in acting, or in refraining from acting, under
this Agreement in accordance with a request of the Required Lenders, and such
request and any action taken or failure to act pursuant thereto shall be binding
upon all the Lenders and all present and future holders of the Notes.
9.05 NOTICE OF DEFAULT. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default hereunder unless
the Agent has received notice from a Lender, the Authorized Representative 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 receives such a notice, the Agent 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 Event of Default as it shall deem
advisable in the best interests of the Lenders.
9.06 NO REPRESENTATIONS. Each Lender expressly acknowledges that
neither the Agent nor any of its affiliates has made any representations or
warranties to it and that no act by the Agent
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hereafter taken, including any review of the affairs of the Borrower or any of
its Subsidiaries, shall be deemed to constitute any representation or warranty
by the Agent to any Lender. Each Lender represents to the Agent that it has,
independently and without reliance upon the 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 financial condition, creditworthiness,
affairs, status and nature of the Borrower and its Subsidiaries and made its own
decision to enter into this Agreement. Each Lender also represents that it will,
independently and without reliance upon the 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 to make such investigation as it
deems necessary to inform itself as to the status and affairs, financial or
otherwise, of the Borrower and its Subsidiaries. Except for notices, reports and
other documents expressly required to be furnished to the Lenders by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the affairs, financial
condition or business of the Borrower or any of its Subsidiaries which may come
into the possession of the Agent or any of its affiliates.
9.07 INDEMNIFICATION. The Lenders agree to indemnify the Agent in its
capacity as such (to the extent not reimbursed by the Borrower and without
limiting any obligations of the Borrower or any Subsidiary so to do), including
its employees, directors, officers and agents, ratably according to the
respective principal amount of the Notes and Participations held by them (or, if
no Notes or Participations are outstanding, ratably in accordance with their
respective Applicable Commitment Percentages as then in effect) from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever which may at any time (including, without limitation at any time
following the payment of the Notes) be imposed on, incurred by or asserted
against the Agent, including its employees, directors, officers and agents, in
any way relating to or arising out of this Agreement or any other document
contemplated by or referred to herein or the transactions contemplated hereby or
any action taken or omitted by the 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 from the Agent's
gross negligence or willful misconduct. The agreements in this Section 9.07
shall survive the final payment in full of the Obligations and the termination
of this Agreement.
9.08 LENDER. NationsBank and its affiliates may make loans to, accept
deposits from and generally engage in any kind of
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business with the Borrower and its Subsidiaries as though it were not the Agent
hereunder. With respect to its Loans made or renewed by it and any Note issued
to it, NationsBank shall have the same rights and powers under this Agreement as
any Lender and may exercise the same as though it were not the Agent, and the
terms "Lender" and "Lenders" shall, unless the context otherwise indicates,
include NationsBank in its individual capacity.
9.09 RESIGNATION. If the Agent shall resign as Agent under this
Agreement, then the Required Lenders may appoint, with the consent, so long as
there shall not have occurred and be continuing a Default or Event of Default,
of the Borrower, which consent shall not be unreasonably withheld, a successor
Agent for the Lenders, which successor Agent shall be a commercial bank
organized under the laws of the United States or any state thereof, having a
combined surplus and capital of not less than $250,000,000, whereupon such
successor Agent shall succeed to the rights, powers and duties of the former
Agent and the obligations of the former Agent shall be terminated and cancelled,
without any other or further act or deed on the part of such former Agent or any
of the parties to this Agreement; provided, however, that the former Agent's
resignation shall not become effective until such successor Agent has been
appointed and has succeeded of record to all right, title and interest in any
collateral held by the Agent; provided, further, that if the Required Lenders
and, if applicable, the Borrower cannot agree as to a successor Agent within
ninety (90) days after such resignation, the Agent shall appoint a successor
Agent which satisfies the criteria set forth above in this Section 9.09 for a
successor Agent and the parties hereto agree to execute whatever documents are
necessary to effect such action under this Agreement or any other document
executed pursuant to this Agreement; provided, however, that in such event all
provisions of this Agreement and the Loan Documents shall remain in full force
and effect. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Article IX shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement.
9.10 SHARING OF PAYMENTS, ETC. Each Lender agrees that if it shall,
through the exercise of a right of banker's lien, set-off, counterclaim or
otherwise, obtain payment with respect to its Obligations (other than pursuant
to Article III) which results in its receiving more than its pro rata share of
the aggregate payments with respect to all of the Obligations (other than any
payment pursuant to Article III), then (A) such Lender shall be deemed to have
simultaneously purchased from the other Lenders a share in their Obligations so
that the amount of the Obligations held by each of the Lenders shall be pro rata
and (B) such other adjustments shall be made from time to time as shall be
equitable to insure that the Lenders share such payments ratably; provided,
however, that for purposes of this Section 9.10 the term "pro rata" shall be
determined with respect to the Revolving Credit Commitment of each Lender and to
the Total Revolving Credit Commitment after
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subtraction in each case of amounts, if any, by which any such Lender has not
funded its share of the outstanding Revolving Credit Loans or the Term Loan. If
all or any portion of any such excess payment is thereafter recovered from the
Lender which received the same, the purchase provided in this Section 9.10 shall
be rescinded to the extent of such recovery, without interest. The Borrower
expressly consents to the foregoing arrangements and agrees that each Lender so
purchasing a portion of the other Lenders' Obligations may exercise all rights
of payment (including, without limitation, all rights of set-off, banker's lien
or counterclaim) with respect to such portion as fully as if such Lender were
the direct holder of such portion.
ARTICLE X
MISCELLANEOUS
10.01 ASSIGNMENTS AND PARTICIPATIONS.
(a) At any time after the Closing Date each Lender may, with the prior
consent of the Agent and the Borrower, which consents shall not be unreasonably
withheld, assign to one or more banks or financial institutions all or a portion
of its rights and obligations under this Agreement (including, without
limitation, all or a portion of any Note payable to its order); provided, that
(i) each such assignment shall be of a constant, and not a varying, percentage
of all of the assigning Lender's rights and obligations (including Revolving
Credit Loans, the Term Loan and Competitive Bid Loans) under this Agreement,
(ii) for each assignment involving the issuance and transfer of a Note, the
assigning Lender shall execute an Assignment and Acceptance and the Borrower
hereby consents to execute a replacement Note or Notes to give effect to the
assignment, (iii) the minimum Revolving Credit Commitment which shall be
assigned is $5,000,000; provided, however, any assignment of a percentage of a
Lender's Revolving Credit Commitment shall be accompanied by an assignment to
such assignee of an equal percentage of such Lender's Revolving Credit
Commitment (as defined in the $60,000,000 Credit Facility Documents) with
respect to the $60,000,000 Credit Facility; (iv) such assignee shall have an
office located in the United States and (v) no consent of the Borrower or Agent
shall be required in connection with any assignment by a Lender to an affiliate
thereof or to another Lender. Upon such execution, delivery, approval and
acceptance, from and after the effective date specified in each Assignment and
Acceptance, (A) the assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder or under such Note have been
assigned or negotiated to it pursuant to such Assignment and Acceptance, have
the rights and obligations of a Lender hereunder and a holder of such Notes and
(B) the assignor thereunder shall, to the extent that rights and obligations
hereunder or under such Notes have been assigned or negotiated by it pursuant to
such Assignment and Acceptance, relinquish its rights and be released from that
portion of its obligations under
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this Agreement applicable to the rights so assigned. No assignee shall have the
right to assign further its rights and obligations pursuant to this Section
10.01. Any Lender who makes an assignment shall pay to the Agent a one-time
administrative fee of $2,500.
(b) By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) the assignment made
under such Assignment and Acceptance is made under such Assignment and
Acceptance without recourse; (ii) such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to the financial
condition of the Borrower or any Subsidiary or the performance or observance by
the Borrower or any Subsidiary of any of its obligations under any Loan Document
or any other instrument or document furnished pursuant hereto; (iii) such
assignee confirms that it has received a copy of this Agreement, together with
copies of the financial statements most recently delivered pursuant to Section
5.01(f) or Section 6.01, as the case may be, and such other Loan Documents and
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance; (iv)
such assignee will, independently and without reliance upon the Agent, such
assigning Lender or any other Lender and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement; (v) such assignee
appoints and authorizes the Agent to take such action as Agent on its behalf and
to exercise such powers under this Agreement, the Notes and the other Loan
Documents as are delegated to the Agent by the terms hereof and thereof,
together with such powers as are reasonably incidental thereto; and (vi) such
assignee agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender and a holder of such Notes.
(c) The Agent shall maintain at its address referred to herein a copy
of each Assignment and Acceptance delivered to and accepted by it.
(d) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender, the Agent shall give prompt notice thereof to Borrower.
(e) Nothing herein shall prohibit any Lender from pledging or assigning
any Note to any Federal Reserve Bank in accordance with applicable law.
(f) If, pursuant to this Section 10.01, any interest in this Agreement
or any Note is transferred to any assignee Lender which is organized under the
laws of any jurisdiction other than the United States or any state thereof, the
assigning Lender shall cause such assignee Lender, concurrently with the
effectiveness of
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such transfer, (i) to represent to the assigning Lender (for the benefit of the
assigning Lender, the Agent and the Borrower) that under applicable law and
treaties no taxes will be required to be withheld by the Agent, the Borrower or
the assigning Lender with respect to any payments to be made to such assignee
Lender in respect of the Loans and (ii) to furnish to the assigning Lender, the
Agent and the Borrower such certificates, documents and other evidence as
required to comply with the penultimate paragraph of Section 3.06 hereof, and
the assignee Lender shall comply from time to time with all applicable United
States laws and regulations with regard to such withholding tax exemption.
(g) Each Lender may sell participations at its expense to one or more
banks or other entities as to all or a portion of its rights and obligations
under this Agreement; provided, that (i) such Lender's obligations under this
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) such Lender shall remain the holder of any Notes issued to it for the
purpose of this Agreement, (iv) such participations shall be in a minimum amount
of $1,000,000; provided, however, any such participation shall be conditioned
upon such Lender's sale to such Person of a pro rata participation in the
$60,000,000 Credit Facility, and (v) 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 and with regard to any
and all payments to be made under this Agreement; provided, that the
participation agreement between a Lender and its participants may provide that
such Lender will obtain the approval of such participant prior to such Lender's
agreeing to any amendment or waiver of any provisions of this Agreement which
would (A) extend the maturity of any Note, (B) reduce the interest rate
hereunder, or (C) increase the Revolving Credit Commitment of the Lender
granting the participation therein other than as permitted by Section 2.11, and
(vi) the sale of any such participations which require Borrower to file a
registration statement with the United States Securities and Exchange Commission
or under the securities regulations or laws of any state shall not be permitted.
10.02 NOTICES. All notices shall be in writing, except as to telephonic
notices expressly permitted or required herein, and written notices shall be
delivered by hand delivery, telefacsimile, overnight courier or certified or
registered mail. Any notice shall be conclusively deemed to have been received
by any party hereto and be effective on the day on which delivered to such party
(against (except as to telephonic or telefacsimile notice) receipt therefor or,
in the case of telex, verification by return) at the address set forth below or
such other address as such party shall specify to the other parties in writing,
or if sent prepaid by certified or registered mail return receipt requested on
the third Business Day after the day on which mailed, addressed to such party at
said address:
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(a) if to the Borrower:
Hanover Direct, Inc.
1500 Harbor Boulevard
Weehawken, New Jersey 07087
Attention: Michael P. Sherman,
Executive Vice President
and General Counsel
Telephone: (201) 319-3403
Telefacsimile: (201) 319-3404
with copies to:
Whitman, Breed, Abbott & Morgan
200 Park Avenue
New York, New York 10166
Attention: Monte E. Wetzler, Esq.
Telephone: (212) 351-3204
Telefacsimile: (212) 351-3131
(b) if to the Agent:
NationsBank of North Carolina, National Association
NationsBank Plaza, NC 1002-06-19
6th Floor
Charlotte, North Carolina 28255
Attention: Ms. Joyce Ruppe, Agency Services
Telephone: (704) 386-2006
Telefacsimile: (704) 386-9923
with a copy to:
NationsBank of North Carolina, National Association
Corporate Banking
767 Fifth Avenue, 5th Floor
New York, New York 10153-0083
Attention: Mr. Christopher C. Browder, Vice President
Telephone: (212) 407-5332
Telefacsimile: (212) 751-6909
(c) if to the Lenders:
At the addresses set forth on the signature pages
hereof and on the signature page of each Assignment
and Acceptance.
10.03 SETOFF. The Borrower agrees that the Agent and each Lender shall
have a lien for all the Obligations of the Borrower upon all deposits or deposit
accounts, of any kind, or any interest in any deposits or deposit accounts
thereof, now or hereafter pledged, mortgaged, transferred or assigned to the
Agent or such Lender or otherwise in the possession or control of the Agent or
such Lender (other than for safekeeping) for any purpose for the account or
benefit of the Borrower and including any balance of any deposit account or of
any credit of the Borrower with the Agent or
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such Lender, whether now existing or hereafter established, hereby authorizing
the Agent and each Lender at any time or times with or without prior notice to
apply such balances or any part thereof to such of the Obligations of the
Borrower to the Lenders then past due and in such amounts as they may elect, and
whether or not the collateral or the responsibility of other Persons primarily,
secondarily or otherwise liable may be deemed adequate. For the purposes of this
paragraph, all remittances and property shall be deemed to be in the possession
of the Agent or such Lender as soon as the same may be put in transit to it by
mail or carrier or by other bailee.
10.04 SURVIVAL. All covenants, agreements, representations and
warranties made herein shall survive the making by the Lenders of the Loans and
the execution and delivery to the Lenders of this Agreement and the Notes and
shall continue in full force and effect so long as any of the Obligations remain
outstanding or any Lender has any commitment hereunder. Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and permitted assigns of such party and all
covenants, provisions and agreements by or on behalf of the Borrower which are
contained in this Agreement, the Notes and the other Loan Documents shall inure
to the benefit of the successors and permitted assigns of the Lenders or any of
them.
10.05 EXPENSES. The Borrower agrees (a) to pay or reimburse the Agent
for all its out-of-pocket costs and expenses incurred in connection with the
preparation, negotiation and execution of, and any amendment, supplement or
modification to, this Agreement or any of the other Loan Documents, and the
consummation of the transactions contemplated hereby and thereby, including,
without limitation, the reasonable fees and disbursements of counsel to the
Agent, (b) to pay or reimburse the Agent and the Lenders for all their
reasonable costs and expenses incurred in connection with the enforcement or
preservation of any rights under this Agreement and the other Loan Documents,
including without limitation, the reasonable fees and disbursements of their
counsel and any payments in indemnification or otherwise payable by the Lenders
to the Agent pursuant to the Loan Documents and (c) to pay, indemnify and hold
the Agent and the Lenders harmless from any and all recording and filing fees
and any and all liabilities with respect to, or resulting from any failure to
pay or delay in paying, documentary, stamp, excise and other similar taxes, if
any, which may be payable or determined to be payable in connection with the
execution and delivery of this Agreement or any other Loan Documents, or
consummation of any amendment, supplement or modification of, or any waiver or
consent under or in respect of, this Agreement or any other Loan Documents.
10.06 AMENDMENTS. No amendment, modification or waiver of any provision
of this Agreement or any of the Loan Documents and no consent by the Lenders to
any departure therefrom by the Borrower shall be effective unless such
amendment, modification, waiver or
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consent shall be in writing and signed by the Borrower and the Agent, but only
upon having received the prior written consent of the Required Lenders, and the
same shall then be effective only for the period and on the conditions and for
the specific instances and purposes specified in such writing; provided,
however, that, no such amendment, modification, waiver or consent that:
(i) changes, extends or waives any provision of Section 9.10 or
this Section 10.06, the amount of or the due date of any scheduled
installment of or the rate of interest or determination of any fee
payable on or in connection with any Obligation, changes the definition
of Required Lenders, which permits an assignment by Borrower of its
Obligations hereunder, which reduces the required consent of Lenders
provided hereunder, which increases, decreases or extends the Revolving
Credit Termination Date, the Term Loan Termination Date or the
Revolving Credit Commitment of any Lender or which waives any condition
to the making of any Loan shall be effective unless in writing and
signed by each of the Lenders; provided, however, the Required Lenders
may in their sole discretion waive any Default or Event of Default
(other than any Event of Default under Section 8.01(g) or (h)); or
(ii) affects the rights, privileges, immunities or indemnities
of the Agent shall be effective unless in writing and signed by the
Agent.
No notice to or demand on the Borrower in any case shall entitle the Borrower to
any other or further notice or demand in similar or other circumstances, except
as otherwise expressly provided herein. No delay or omission on any Lender's or
the Agent's part in exercising any right, remedy or option shall operate as a
waiver of such or any other right, remedy or option or of any Default or Event
of Default.
10.07 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such fully-executed counterpart.
10.08 TERMINATION. The termination of this Agreement shall not affect
any rights of the Borrower, the Lenders or the Agent or any obligation of the
Borrower, the Lenders or the Agent, arising prior to the effective date of such
termination, and the provisions hereof shall continue to be fully operative
until all transactions entered into or rights created or obligations incurred
prior to such termination have been fully disposed of, concluded or liquidated
and the Obligations arising prior to or after such termination have been
irrevocably and finally paid in full. The rights granted to the Agent for the
benefit of the Lenders hereunder and under the other Loan Documents shall
continue in full force and effect, notwithstanding the termination of this
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Agreement, until all of the Obligations have been paid in full after the
termination hereof or the Borrower has furnished the Lenders and the Agent with
an indemnification satisfactory to the Agent and each Lender with respect
thereto. All representations, warranties, covenants, waivers and agreements
contained herein shall survive termination hereof until payment in full of the
Obligations unless otherwise provided herein. Notwithstanding the foregoing, if
after receipt of any payment pursuant to the Loan Documents of all or any part
of the Obligations, any Lender is for any reason compelled to surrender such
payment to any Person because such payment is determined to be void or voidable
as a preference, impermissible setoff, a diversion of trust funds or for any
other reason, this Agreement shall continue in full force and the Borrower shall
be liable to, and shall indemnify and hold such Lender harmless for, the amount
of such payment surrendered until such Lender shall have been finally and
irrevocably paid in full. The provisions of the foregoing sentence shall be and
remain effective notwithstanding any contrary action which may have been taken
by the Lenders in reliance upon such payment, and any such contrary action so
taken shall be without prejudice to the Lenders' rights under this Agreement and
shall be deemed to have been conditioned upon such payment having become final
and irrevocable.
10.09 GOVERNING LAW. ALL DOCUMENTS EXECUTED PURSUANT TO THE
TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING, WITHOUT LIMITATION, THIS AGREEMENT
AND EACH OF THE LOAN DOCUMENTS SHALL BE DEEMED TO BE CONTRACTS MADE UNDER, AND
FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS AND
JUDICIAL DECISIONS OF THE STATE OF NEW YORK. THE BORROWER HEREBY SUBMITS TO THE
JURISDICTION AND VENUE OF THE STATE AND FEDERAL COURTS OF NEW YORK FOR THE
PURPOSES OF RESOLVING DISPUTES HEREUNDER OR FOR THE PURPOSES OF COLLECTION.
10.10 INDEMNIFICATION. In consideration of the execution and delivery
of this Agreement by the Agent and each Lender and the extension of the
Revolving Credit Commitments, the Borrower hereby indemnifies, exonerates and
holds the Agent and each Lender and each of their respective officers,
directors, employees and agents (collectively, the "Indemnified Parties") free
and harmless from and against any and all actions, causes of action, suits,
losses, costs, liabilities and damages, and expenses incurred in connection
therewith (irrespective of whether any such Indemnified Party is a party to the
action for which indemnification hereunder is sought), including reasonable
attorneys' fees and disbursements (collectively, the "Indemnified Liabilities"),
incurred by the Indemnified Parties or any of them as a result of, or arising
out of, or relating to any transaction financed or to be financed in whole or in
part, directly or indirectly, with the proceeds of any Loan, except for any such
Indemnified Liabilities arising for the account of a particular Indemnified
Party by reason of the gross negligence or willful misconduct of such
Indemnified Party, and if and to the extent that the foregoing undertaking may
be unenforceable for any reason, the Borrower hereby agrees to make
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the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law.
10.11 HEADINGS AND REFERENCES. The headings of the Articles and
Sections of this Agreement are inserted for convenience of reference only and
are not intended to be a part of, or to affect the meaning or interpretation of
this Agreement. Words such as "hereof", "hereunder", "herein" and words of
similar import shall refer to this Agreement in its entirety and not to any
particular Section or provisions hereof, unless so expressly specified. As used
herein, the singular shall include the plural, and the masculine shall include
the feminine or a neutral gender, and vice versa, whenever the context requires.
10.12 SEVERABILITY. If any provision of this Agreement or the other
Loan Documents shall be determined to be illegal or invalid as to one or more of
the parties hereto, then such provision shall remain in effect with respect to
all parties, if any, as to whom such provision is neither illegal nor invalid,
and in any event all other provisions hereof shall remain effective and binding
on the parties hereto.
10.13 ENTIRE AGREEMENT. This Agreement, together with the other Loan
Documents, constitutes the entire agreement between the parties with respect to
the subject matter hereof and supersedes all previous proposals, negotiations,
representations, commitments and other communications between or among the
parties, both oral and written, with respect thereto.
10.14 AGREEMENT CONTROLS. In the event that any term of any of the Loan
Documents other than this Agreement conflicts with any term of this Agreement,
the terms and provisions of this Agreement shall control.
10.15 USURY SAVINGS CLAUSE. Notwithstanding any other provision herein,
the aggregate interest rate charged under any of the Notes, including all
charges or fees in connection therewith deemed in the nature of interest under
New York law, shall not exceed the Highest Lawful Rate (as such term is defined
below). If the rate of interest (determined without regard to the preceding
sentence) under this Agreement at any time exceeds the Highest Lawful Rate (as
defined below), the outstanding amount of the Loans made hereunder shall bear
interest at the Highest Lawful Rate until the total amount of interest due
hereunder equals the amount of interest which would have been due hereunder if
the stated rates of interest set forth in this Agreement had at all times been
in effect. In addition, if and when the Loans made hereunder are repaid in full
the total interest due hereunder (taking into account the limitation provided
for above) is less than the total amount of interest which would have been due
hereunder if the stated rates of interest set forth in this Agreement had at all
times been in effect, then to the extent permitted by law, the
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Borrower shall pay to the Agent an amount equal to the difference between the
amount of interest paid and the amount of interest which would have been paid if
the Highest Lawful Rate had at all times been in effect. Notwithstanding the
foregoing, it is the intention of the Lenders and the Borrower to conform
strictly to any applicable usury laws. Accordingly, if any Lender contracts for,
charges, or receives any consideration which constitutes interest in excess of
the Highest Lawful Rate, then any such excess shall be canceled automatically
and, if previously paid, shall at such Lender's option be applied to the
outstanding amount of the Loans made hereunder or be refunded to the Borrower.
As used in this paragraph, the term "Highest Lawful Rate" means the maximum
lawful interest rate, if any, that at any time or from time to time may be
contracted for, charged, or received under the laws applicable to such Lender
which are presently in effect or, to the extent allowed by law, under such
applicable laws which may hereafter be in effect and which allow a higher
maximum non-usurious interest rate than applicable laws now allow.
10.16 WAIVER OF JURY TRIAL. EXCEPT AS PROHIBITED BY LAW, EACH PARTY
HERETO HEREBY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT OR ANY OF THE LOAN DOCUMENTS.
[Signatures on following pages.]
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be made, executed and delivered by their duly authorized officers as of the day
and year first above written.
HANOVER DIRECT, INC.
By:/s/ WAYNE GARTEN
------------------------------
Name: Wayne Garten
Title: Executive Vice President
NATIONSBANK OF NORTH CAROLINA,
NATIONAL ASSOCIATION, as Agent for
the Lenders
By:/s/ CHRISTOPHER C. BROWDER
------------------------------
Name: Christopher C. Browder
Title: Vice President
Signature Page 1 of 6
91
NATIONSBANK OF NORTH CAROLINA,
NATIONAL ASSOCIATION
By:/s/ CHRISTOPHER C. BROWDER
-----------------------------------------
Name: Christopher C. Browder
Title: Vice President
Lending Office:
NationsBank of North Carolina,
National Association
NationsBank Plaza
101 South Tryon Street
NC1002-17-12
Charlotte, North Carolina 28255
Attention: Ms. Joyce Ruppe,
Agency Services
Telephone: (704) 386-2006
Telefacsimile: (704) 386-9923
Wire Transfer Instructions:
NationsBank of North Carolina,
National Association
Charlotte, North Carolina 28255
ABA No.: 053000196
Reference: Hanover Direct, Inc.
Account No.: 03662122506
Attention: Commercial Loan
Operations
Signature Page 2 of 6
92
CHEMICAL BANK NEW JERSEY, NATIONAL
ASSOCIATION
By: /s/ JAMES H. RAMAGE
------------------------------------
Name: James H. Ramage
Title: Vice President
Lending Office:
Chemical Bank New Jersey
East 36 Midland Avenue
Paramus, New Jersey 07652
Attention: Craig W. Trautwein
Telephone: (201) 599-6813
Telefacsimile: (201) 599-6755
Wire Transfer Instructions:
Chemical Bank New Jersey
East Brunswick, New Jersey 08816
ABA No.: 021202337
Reference: Hanover Direct, Inc.
Account No.: 0110632650
Attention: Tammie Putnam
Signature Page 3 of 6
93
THE FIRST NATIONAL BANK OF MARYLAND
By: /s/ GARTH C. HARDING
------------------------------------
Name: Garth C. Harding
Title: Vice President
Lending Office:
First National Bank of Maryland
96 South George Street
York, Pennsylvania 17401
Attention: Garth C. Harding
Telephone: (717) 771-4900
Telefacsimile: (717) 845-3026
Wire Transfer Instructions:
First National Bank of Maryland
York, Pennsylvania 17401
ABA No.: 0520-00113
Reference: Hanover Direct, Inc.
Account No.: 000-0541-4
Attention: Marty Wolfe
Signature Page 4 of 6
94
FLEET BANK
By: /s/ PETER C. HALL
--------------------------------
Name: Peter C. Hall
Title: Vice President
Lending Office:
Fleet Bank
56 East 42nd Street
New York, New York 10017-5496
Attention: Peter C. Hall
Telephone: (212) 907-5118
Telefacsimile: (212) 907-5614
Wire Transfer Instructions:
Fleet Bank
New York, New York 10017-5496
ABA No.: 021-300-019
Reference: Hanover Direct, Inc.
Account No.: _____________________
Attention: Brian Brady
Signature Page 5 of 6
95
THE BANK OF TOKYO TRUST COMPANY
By: /s/ DAVID J. VIGGIANO
--------------------------------
Name: David J. Viggiano
Title: Vice President
Lending Office:
The Bank of Tokyo Trust Company
1251 Avenue of the Americas
New York, New York 10166
Attention: David J. Viggiano
Telephone: (212) 782-4274
Telefacsimile: (212) 782-6402
Wire Transfer Instructions:
Bank of Tokyo
New York, New York 10166
ABA No.: 0260-8968-7
Reference: Hanover Direct, Inc.
Account No.: CIF 97770477
Attention: Loan Administration
Department
Signature Page 6 of 6
96
EXHIBIT A
REVOLVING CREDIT COMMITMENTS
Revolving
Credit
Lender Commitment
------ ------------
NationsBank of North Carolina,
National Association $ 6,250,000
Chemical Bank New Jersey, National Association $ 3,750,000
The First National Bank of Maryland $ 2,500,000
Fleet Bank $ 3,750,000
The Bank of Tokyo Trust Company $ 3,750,000
===========
Total Revolving Credit Commitment $20,000,000
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EXHIBIT B
FORM OF ASSIGNMENT AND ACCEPTANCE
DATED _________________, 19___
Reference is made to the Revolving Credit and Term Loan Agreement dated
as of October 12, 1994 (the "Agreement") among Hanover Direct, Inc. (the
"Borrower"), the Lenders (as defined in the Agreement), and NationsBank of North
Carolina, National Association, as Agent for the Lenders ("Agent"). Unless
otherwise defined herein, terms defined in the Agreement are used herein with
the same meanings.
_____________________________ (the "Assignor") and _________________________
________________(the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, WITHOUT RECOURSE, a
_______% (1) interest in and to all of the Assignor's rights and obligations
under the Agreement as of the Effective Date (as defined below), including,
without limitation, such percentage interest in the Loans owing to, and
Participations held by, the Assignor on the Effective Date, and the Notes held
by the Assignor.
2. The Assignor (i) represents and warrants that, as of the date
hereof, the aggregate outstanding principal amounts of the Loans owing to it
(without giving effect to assignments thereof which have not yet become
effective) are as follows: $_____________ of Revolving Credit Loans, $__________
of the Term Loan and $_________ of Competitive Bid Loans; (ii) represents and
warrants that it is the legal and beneficial owner of the interests being
assigned by it hereunder and that such interests are free and clear of any
adverse claim; (iii) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Agreement or any of the Loan Documents or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Agreement or any of the Loan Documents or any other instrument or
document furnished pursuant thereto; (iv) makes no representation or warranty
and assumes no responsibility with respect to the financial condition of the
Borrower or the performance or observance by the Borrower of any of its
obligations under the Agreement or any of the Loan Documents or any other
instrument or document furnished pursuant thereto and (v) attaches the Notes
referred to in paragraph 1 above and requests that the Agent exchange such Notes
for (A) new Revolving Credit Notes dated _____________, 19__ as follows: a
Revolving Credit Note in the
___________________________
(1) Specify percentage in not less than 9 decimal points.
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principal amount of $________________ payable to the order of the Assignor, and
a Revolving Credit Note in the principal amount of $________________ payable to
the order of the Assignee; (B) new Term Notes dated __________, 19__ as follows:
a Term Note in the principal amount of $__________ payable to the order of
Assignor, and a Term Note in the principal amount of $__________ payable to the
order of the Assignee; and (C) new Competitive Bid Notes dated ________, 19__ as
follows: a Competitive Bid Note in the principal amount of $__________ payable
to the order of the Assignor, and a Competitive Bid Note in the principal amount
of $__________ payable to the order of the Assignee.
3. The Assignee (i) confirms that it has received a copy of the
Agreement, together with copies of the financial statements referred to in
Sections 5.01(f) and 6.01 thereof, and such other ---------------- ----
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Acceptance; (ii) agrees
that it will, independently and without reliance upon the Agent, the Assignor,
or any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Agreement; (iii) appoints and authorizes the Agent
to take such actions on its behalf and to exercise such powers under the Loan
Documents as are delegated to the Agent by the terms thereof, together with such
powers as are reasonably incidental thereto; (iv) agrees that it will perform in
accordance with their terms all of the obligations which by the terms of the
Agreement are required to be performed by the Lender; and (v) specifies as its
address for notices the office set forth beneath its name on the signature pages
hereof.
4. The effective date for this Assignment and Acceptance shall be
_____________________________ (the "Effective Date"). Following the execution of
this Assignment and Acceptance, it will be delivered to the Agent for acceptance
and recording by the Agent.
5. Upon such acceptance and recording, as of the Effective Date, (i)
the Assignee shall be a party to the Agreement and, to the extent provided in
this Assignment and Acceptance, have the rights and obligations of a Lender
thereunder and under the Loan Documents and (ii) the Assignor shall, to the
extent provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Agreement.
6. Upon such acceptance and recording, from and after the Effective
Date, the Agent shall make all payments under the Agreement and Notes in respect
of the interest assigned hereby (including, without limitation, all payments of
principal, interest, commitment fees and letter of credit fees with respect
thereto) to the Assignee. The Assignor and Assignee shall make all appropriate
adjustments in payments under the Agreement and the
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Notes for periods prior to the Effective Date directly between themselves.
7. This Assignment and Acceptance shall be governed by and construed
in accordance with, the laws of the State of New York.
[NAME OF ASSIGNOR]
By:__________________________________
Name:
Title:
Notice Address:______________________
______________________
______________________
After the Effective Date:
Outstanding Revolving Credit Loans: $_______
Outstanding Competitive Bid Loans: $_______
Outstanding Principal Amount of
Term Note: $_______
[NAME OF ASSIGNEE]
By:__________________________________
Name:
Title:
Notice Address/Lending Office
________________________________
________________________________
________________________________
Wire transfer Instructions:
________________________________
________________________________
________________________________
After the Effective Date:
Outstanding Revolving Credit Loans: $_______
Outstanding Competitive Bid Loans: $_______
Outstanding Principal Amount of
Term Note: $_______
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100
Accepted this ____ day of _______, 19___
NATIONSBANK OF NORTH CAROLINA, NATIONAL
ASSOCIATION, as Agent
By:_____________________________________
Name:_______________________________
Title:______________________________
Consented to:
HANOVER DIRECT, INC.
By:_____________________________________
Name:_______________________________
Title:______________________________
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EXHIBIT C
NOTICE OF APPOINTMENT (OR REVOCATION) OF AUTHORIZED
REPRESENTATIVE
Reference is hereby made to the Revolving Credit and Term Loan
Agreement dated as of October 12, 1994 (the "Agreement") among Hanover Direct,
Inc. (the "Borrower"), the Lenders (as defined in the Agreement), and
NationsBank of North Carolina, National Association, as Agent for the Lenders
("Agent"). Capitalized terms used but not defined herein shall have the
respective meanings therefor set forth in the Agreement.
Appointment. The Borrower hereby nominates, constitutes and appoints
each individual named below as an Authorized Representative under the Loan
Documents, and hereby represents and warrants that (i) set forth opposite each
such individual's name is a true and correct statement of such individual's
office (to which such individual has been duly elected or appointed), a genuine
specimen signature of such individual and an address for the giving of notice,
and (ii) each such individual has been duly authorized by each Borrower to act
as Authorized Representative under the Loan Documents:
Name and Address Office Specimen Signature
________________ __________________________ __________________________
________________
________________
________________ __________________________ __________________________
________________
________________
________________ __________________________ __________________________
________________
________________
Revocation. Borrower hereby revokes (effective upon receipt hereof by
the Agent) the prior appointment of ________________ as an Authorized
Representative.
This the ___ day of __________________, 19__.
HANOVER DIRECT, INC.
By:__________________________
Name:________________________
Title:_______________________
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EXHIBIT D
FORM OF BORROWING NOTICE--REVOLVING CREDIT LOANS
To: NationsBank of North Carolina, National Association,
as Agent
NationsBank Plaza, NC 1002-06-19
6th Floor
Charlotte, North Carolina 28255
Telefacsimile: (704) 386-9923
Attention: Ms. Joyce Ruppe, Agency Services
Reference is hereby made to the Revolving Credit and Term Loan
Agreement dated as of October 12, 1994 (the "Agreement") among Hanover Direct,
Inc. (the "Borrower"), the Lenders (as defined in the Agreement), and
NationsBank of North Carolina, National Association, as Agent for the Lenders
("Agent"). Capitalized terms used but not defined herein shall have the
respective meanings therefor set forth in the Agreement.
The Borrower through its Authorized Representative hereby confirms its
prior notice of borrowing given to the Agent by telephone at __________ __.m. on
____________, 19__ to the effect that Revolving Credit Loans of the type and
amount set forth below be made on the date indicated:
Type of Loan Interest Aggregate Date of
(check one) Period(1) Amount(2) Loan(3)
------------ --------- --------- -------
Base Rate
Loan _____
LIBOR Loan _____
(1) For any LIBOR Loan, one, two, three or six months.
(2) Must be $5,000,000 or a multiple of $1,000,000 in excess thereof for
Revolving Credit Loans.
(3) At least three (3) LIBOR Business Days later if a LIBOR Loan; may be
same Business Day in case of a Base Rate Loan.
The Borrower hereby requests that the proceeds of Revolving Credit
Loans or Swing Line Loans described in this Borrowing Notice be made available
to the Borrowers as follows: [INSERT TRANSMITTAL INSTRUCTIONS].
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The undersigned hereby certifies that:
1. No Default or Event of Default exists either now or after
giving effect to the borrowing described herein; and
2. All the representations and warranties set forth in Article VI
of the Agreement and in the Loan Documents (other than those expressly stated
to refer to a particular date) are true and correct as of the date hereof
except that (a) the representations and warranties set forth in Section 5.01(d)
and (e) of the Agreement shall be deemed to include and take into account any
merger or consolidation permitted under Section 7.06 of the Agreement and
references therein to Schedules 5.01(d) and 5.01(e) shall be deemed to refer to
such Schedules as amended by Supplemental Schedules 5.01(d) and 5.01(e),
respectively, attached hereto, and (b) the reference to the financial
statements in Section 5.01(f)(i) of the Agreement are to those financial
statements most recently delivered to you pursuant to Section 6.01 of the
Agreement;
3. The proceeds of such Advance shall be used as set forth
in Section 2.15 of the Agreement; and
4. After giving effect to Loans requested hereby, the sum of
all Outstandings will not exceed the Total Revolving Credit
Commitment.
HANOVER DIRECT, INC.
BY: ___________________________________
Authorized Representative
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Supplemental Schedule 5.01(d)
Subsidiaries
Schedule 5.01(d) of the Agreement shall be amended hereby as follows
(if no amendment of Schedule 5.01(d) is necessary, indicate "Not Applicable"):
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105
Supplemental Schedule 5.01(e)
Investments in Other Persons
Schedule 5.01(e) of the Agreement shall be amended hereby as follows
(if no amendment of Schedule 5.01(e) is necessary, indicate "Not Applicable"):
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EXHIBIT E
FORM OF COMPETITIVE BID NOTE
PROMISSORY NOTE
(Competitive Bid)
__________, __________
October 12, 1994
FOR VALUE RECEIVED, HANOVER DIRECT, INC., a Delaware corporation having
its principal place of business located in Weehawken, New Jersey (the
"Borrower"), hereby promises to pay to the order of
____________________________________________________(1) (the "Lender"), in its
individual capacity, at the office of NationsBank of North Carolina, National
Association, as agent for the Lender (the "Agent"), located at NationsBank
Plaza, 101 South Tryon Street, Charlotte, North Carolina 28255 (or at such other
place or places as the Agent may designate) at the times set forth in the
Revolving Credit and Term Loan Agreement dated of even date herewith among the
Borrower, the financial institutions party thereto (collectively, the "Lenders")
and the Agent (as amended and supplemented and in effect from time to time, the
"Credit Agreement"; all capitalized terms not otherwise defined herein shall
have the respective meanings set forth in the Credit Agreement), in lawful money
of the United States of America and in immediately available funds, the
aggregate unpaid principal amount of all Competitive Bid Loans made by the
Lender to the Borrower, if any, on the dates and in the principal amounts set
forth in the Lender's Competitive Bid Quote and accepted by the Borrower, and to
pay interest on the unpaid principal amount of each such Competitive Bid Loan,
at such office, in like money and funds, for the period commencing on the date
of such Competitive Bid Loan until such Competitive Bid Loan shall be paid in
full, at the rates per annum and on the dates set forth in the Lender's
Competitive Bid Quote and accepted by the Borrower.
The date, amount, interest rate and maturity date of each Competitive
Bid Loan made by the Lender to the Borrower, and each payment made on account of
the principal thereof, shall be recorded by the Lender on its books and, prior
to any transfer of this Note, endorsed by the Lender on the schedule attached
hereto or any continuation thereof, provided that the failure of the Lender to
make any such recordation or endorsement shall not affect the obligations of the
Borrower to make payment when due of any amount owing under the Credit Agreement
or hereunder in respect of the Competitive Bid Loans made by the Lender.
________
(1) Insert name of Lender
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This Note is one of the Competitive Bid Notes referred to in the Credit
Agreement and is issued pursuant to and entitled to the benefits and security of
the Credit Agreement to which reference is hereby made for a more complete
statement of the terms and conditions upon which the Competitive Bid Loans
evidenced hereby were made or are made and are to be repaid. This Note is
subject to certain restrictions on transfer or assignment as provided in the
Credit Agreement.
Except as permitted by Section 10.01 of the Credit Agreement, this Note
may not be assigned by the Lender to any other Person.
If payment of all sums due hereunder is accelerated under the terms of
the Credit Agreement or under the terms of the other Loan Documents executed in
connection with the Credit Agreement, the then remaining principal amount and
accrued but unpaid interest shall bear interest which shall be payable on demand
at the rates per annum set forth in Article II of the Credit Agreement, or the
maximum rate permitted under applicable law, if lower, until such principal and
interest have been paid in full. Further, in the event of such acceleration,
this Note, and all other indebtedness of the Borrower to the Lender shall become
immediately due and payable, without presentation, demand, protest or notice of
any kind, all of which are hereby waived by the Borrower.
In the event this Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees, and
interest thereon at the rates set forth above.
Interest hereunder shall be computed on the basis of a 360-day year for
the actual number of days in the interest period.
The Credit Agreement provides for the acceleration of the maturity of
this Note upon the occurrence of certain events and for prepayments of
Competitive Bid Loans upon the terms and conditions specified therein.
This Note shall be governed by, and construed in accordance with, the
law of the State of New York.
All Persons bound on this obligation, whether primarily or secondarily
liable as principals, sureties, guarantors, endorsers or otherwise, hereby waive
to the full extent permitted by law the benefits of all provisions of law for
stay or delay of execution or sale of property or other satisfaction of judgment
against any of them on account of liability hereon until judgment be obtained
and execution issues against any other of them and returned satisfied or until
it can be shown that the maker or any other party hereto had no property
available for the satisfaction of the debt evidenced by this instrument, or
until any other proceedings can be had against any of them, and also their
right, if any, to require
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the holder hereof to hold as security for this Note any collateral deposited by
any of said Persons as security. Protest, notice of protest, notice of dishonor,
dishonor, demand or any other formality are hereby waived by all parties bound
hereon.
IN WITNESS WHEREOF, the Borrower has caused this Note to be made,
executed and delivered by its duly authorized representative as of the date and
year first above written, all pursuant to authority duly granted.
HANOVER DIRECT, INC.
ATTEST: By:____________________________
Name:__________________________
By:____________________________ Title:_________________________
____________ Secretary
[SEAL]
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SCHEDULE OF COMPETITIVE BID LOANS
This Note evidences Competitive Bid Loans made under the
within-described Credit Agreement to the Borrower, on the dates, in the
principal amounts, of the types, bearing interest at the rates and maturing on
the dates set forth below, subject to the payments and prepayments of principal
set forth below:
Principal Maturity Amount Unpaid
Date Amount Interest Date Paid or Principal Notation
of Loan of Loan Type of Loan Rate of Loan Prepaid Amount Made By
------- ---------- ------------ -------- -------- -------- --------- --------
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EXHIBIT F
FORM OF REVOLVING CREDIT NOTE
PROMISSORY NOTE
(Revolving Credit Note)
_______________(1) __________, __________
October 12, 1994
FOR VALUE RECEIVED, HANOVER DIRECT, INC., a Delaware corporation having
its principal place of business located in Weehawken, New Jersey (the
"Borrower"), hereby promises to pay to the order of
___________________________________________________(2) (the "Lender"), in its
individual capacity, at the office of NationsBank of North Carolina, National
Association, as agent for the Lenders (the "Agent"), located at NationsBank
Plaza, 101 South Tryon Street, Charlotte, North Carolina 28255 (or at such other
place or places as the Agent may designate) at the times set forth in the
Revolving Credit and Term Loan Agreement dated of even date herewith among the
Borrower, the financial institutions party thereto (collectively, the "Lenders")
and the Agent (as amended and supplemented and in effect from time to time, the
"Credit Agreement"; all capitalized terms not otherwise defined herein shall
have the respective meanings set forth in the Credit Agreement), in lawful money
of the United States of America, in immediately available funds, the principal
amount of [______________________________________________](3) DOLLARS
($__________)(1) or, if less than such principal amount, the aggregate unpaid
principal amount of all Revolving Credit Loans made by the Lender to the
Borrower pursuant to the Credit Agreement on the Revolving Credit Termination
Date or such earlier date as may be required pursuant to the terms of the Credit
Agreement, and to pay interest from the date hereof on the unpaid principal
amount hereof, in like money, at said office, on the dates and at the rates
provided in Article II of the Credit Agreement. All or any portion of the
principal amount of such Loans may be prepaid as provided in the Credit
Agreement.
-------------------------------
(1) Insert Lender's Revolving Credit Commitment in Arabic numerals.
(2) Insert name of Lender in capital letters.
(3) Insert Lender's Revolving Credit Commitment in words.
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This Note is one of the Revolving Credit Notes in the aggregate
principal amount of $20,000,000 referred to in the Credit Agreement and is
issued pursuant to and entitled to the benefits and security of the Credit
Agreement to which reference is hereby made for a more complete statement of the
terms and conditions upon which the Loans evidenced hereby were or are made and
are to be repaid. This Note is subject to certain restrictions on transfer or
assignment as provided in the Credit Agreement.
The Credit Agreement provides for the acceleration of the maturity of
this Note upon the occurrence of certain events and for prepayments of Revolving
Credit Loans upon the terms and conditions specified therein.
If payment of all sums due hereunder is accelerated under the terms of
the Credit Agreement or under the terms of the other Loan Documents executed in
connection with the Credit Agreement, the then remaining principal amount and
accrued but unpaid interest shall bear interest which shall be payable on demand
at the rates per annum set forth in Article II of the Credit Agreement, or the
maximum rate permitted under applicable law, if lower, until such principal and
interest have been paid in full. Further, in the event of such acceleration,
this Note, and all other indebtedness of the Borrower to the Lender shall become
immediately due and payable, without presentation, demand, protest or notice of
any kind, all of which are hereby waived by the Borrower.
In the event this Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees, and
interest thereon at the rates set forth above.
Interest hereunder shall be computed on the basis of a 360-day year for
the actual number of days in the interest period.
Except as permitted by Section 10.01 of the Credit Agreement, this Note
may not be assigned by the Lender to any other Person.
This Note shall be governed by, and construed in accordance with, the
law of the State of New York.
All Persons bound on this obligation, whether primarily or secondarily
liable as principals, sureties, guarantors, endorsers or otherwise, hereby waive
to the full extent permitted by law the benefits of all provisions of law for
stay or delay of execution or sale of property or other satisfaction of judgment
against any of them on account of liability hereon until judgment be obtained
and execution issues against any other of them and returned satisfied or until
it can be shown that the maker or any other party hereto had no property
available for the satisfaction of the debt evidenced by this instrument, or
until any other proceedings can be had against any of them, and also their
right, if any, to require
F-2
112
the holder hereof to hold as security for this Note any collateral deposited by
any of said Persons as security. Protest, notice of protest, notice of dishonor,
dishonor, demand or any other formality are hereby waived by all parties bound
hereon.
IN WITNESS WHEREOF, the Borrower has caused this Note to be made,
executed and delivered by its duly authorized representative as of the date and
year first above written, all pursuant to authority duly granted.
HANOVER DIRECT, INC.
ATTEST:
______________________ By: _________________________________
___________ Secretary Name: _______________________________
Title: ______________________________
[SEAL]
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EXHIBIT G
FORM OF TERM NOTE
PROMISSORY NOTE
(Term Note)
_______________(1) __________, __________
September __, 19__
FOR VALUE RECEIVED, HANOVER DIRECT, INC., a Delaware corporation having
its principal place of business located in Weehawken, New Jersey (the
"Borrower"), hereby promises to pay to the order of
___________________________________________________(2) (the "Lender"), in its
individual capacity, at the office of NationsBank of North Carolina, National
Association, as agent for the Lenders (the "Agent"), located at NationsBank
Plaza, 101 South Tryon Street, Charlotte, North Carolina 28255 (or at such other
place or places as the Agent may designate) at the times set forth in the
Revolving Credit and Term Loan Agreement dated of even date herewith among the
Borrower, the financial institutions party thereto (collectively, the "Lenders")
and the Agent (as amended and supplemented and in effect from time to time, the
"Credit Agreement"; all capitalized terms not otherwise defined herein shall
have the respective meanings set forth in the Credit Agreement), in lawful money
of the United States of America, in immediately available funds, the principal
amount of [______________________________________________](3) DOLLARS
($__________)1 payable in equal quarterly installments of principal on the last
Business Day of each December, March and June, beginning September ___(4) and
quarterly thereafter until the Term Loan Termination Date, when the entire
unpaid principal balance, including any accrued and unpaid interest, shall be
due and payable; and to pay interest from the date hereof on the unpaid
principal amount hereof, in like money, at said office, on the dates and at the
rates provided in Article II of the Credit Agreement. All or any portion of the
principal amount of the Term Loan evidenced hereby may be prepaid as provided in
the Credit Agreement.
-------------------------------
(1) Insert, in Arabic numerals, Lender's Applicable Commitment Percentage
of all applicable Revolving Credit Outstandings, plus all accrued and
unpaid interest with respect thereto, as of the Revolving Credit
Termination Date.
(2) Insert name of Lender in capital letters.
(3) Insert amount in item 1 above in words.
(4) Insert year in which this Note is executed.
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This Note is one of the Term Notes in the aggregate principal amount of
______________________________ referred to in the Credit Agreement and is issued
pursuant to and entitled to the benefits and security of the Credit Agreement to
which reference is hereby made for a more complete statement of the terms and
conditions upon which the Loans evidenced hereby were made and are to be repaid.
This Note is subject to certain restrictions on transfer or assignment as
provided in the Credit Agreement.
The Credit Agreement provides for the acceleration of the maturity of
this Note upon the occurrence of certain events and for prepayments of Loans
upon the terms and conditions specified therein.
If payment of all sums due hereunder is accelerated under the terms of
the Credit Agreement or under the terms of the other Loan Documents executed in
connection with the Credit Agreement, the then remaining principal amount and
accrued but unpaid interest shall bear interest which shall be payable on demand
at the rates per annum set forth in Article II of the Credit Agreement, or the
maximum rate permitted under applicable law, if lower, until such principal and
interest have been paid in full. Further, in the event of such acceleration,
this Note, and all other indebtedness of the Borrower to the Lender shall become
immediately due and payable, without presentation, demand, protest or notice of
any kind, all of which are hereby waived by the Borrower.
In the event this Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees, and
interest thereon at the rates set forth above.
Interest hereunder shall be computed on the basis of a 360-day year for
the actual number of days in the interest period.
Except as permitted by Section 10.01 of the Credit Agreement, this Note
may not be assigned by the Lender to any other Person.
This Note shall be governed by, and construed in accordance with, the
law of the State of New York.
All Persons bound on this obligation, whether primarily or secondarily
liable as principals, sureties, guarantors, endorsers or otherwise, hereby waive
to the full extent permitted by law the benefits of all provisions of law for
stay or delay of execution or sale of property or other satisfaction of judgment
against any of them on account of liability hereon until judgment be obtained
and execution issues against any other of them and returned satisfied or until
it can be shown that the maker or any other party hereto had no property
available for the satisfaction of the debt evidenced by this instrument, or
until any other proceedings can be had against any of them, and also their
right, if any, to require
G-2
115
the holder hereof to hold as security for this Note any collateral deposited by
any of said Persons as security. Protest, notice of protest, notice of dishonor,
dishonor, demand or any other formality are hereby waived by all parties bound
hereon.
IN WITNESS WHEREOF, the Borrower has caused this Note to be made,
executed and delivered by its duly authorized representative as of the date and
year first above written, all pursuant to authority duly granted.
HANOVER DIRECT, INC.
ATTEST:
______________________ By: _________________________________
___________ Secretary Name: _______________________________
Title: ______________________________
[SEAL]
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EXHIBIT H
INTEREST RATE SELECTION NOTICE
To: NationsBank of North Carolina, National Association,
as Agent
NationsBank Plaza, NC 1002-06-19
6th Floor
Charlotte, North Carolina 28255
Telefacsimile: (704) 386-9923
Attention: Ms. Joyce Ruppe, Agency Services
Reference is hereby made to the Revolving Credit and Term Loan
Agreement dated as of October 12, 1994 (the "Credit Agreement") among Hanover
Direct, Inc. (the "Borrower"), the Lenders (as defined in the Credit Agreement),
and NationsBank of North Carolina, National Association, as Agent for the
Lenders ("Agent"). Capitalized terms used but not defined herein shall have the
respective meanings therefor set forth in the Credit Agreement.
The Borrower through its Authorized Representative hereby confirms its
prior notice of a selection of a type of Loan and Interest Period given to the
Agent by telephone at __________ __.m. on _________________, 199__ to the
following effect in respect of Revolving Credit Loans or Term Loan Segments:
Type of Loan Interest Effective
(Check One) Period(1) Amount(2) Date(3)
------------ --------- --------- ---------
LIBOR Loan _____
Base Rate _____
(1) For any LIBOR Loan, one, two, three or six months
(2) Must be $5,000,000 or a multiple of $1,000,000 in excess thereof.
(3) At least three (3) LIBOR Business Days after date of telephone notice
of a LIBOR Loan; may be same Business Day in case of Base Rate Loan.
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The undersigned hereby certifies that:
1. No Default or Event of Default exists either now or after
giving effect to the borrowing described herein; and
2. All the representations and warranties set forth in Article
VI of the Agreement and in the Loan Documents (other than those expressly
stated to refer to a particular date) are true and correct as of the date
hereof except that (a) the representations and warranties set forth in Section
5.01(d) and (e) of the Agreement shall be deemed to include and take into
account any merger or consolidation permitted under Section 7.06 of the
Agreement and references therein to Schedules 5.01(d) and 5.01(e) shall be
deemed to refer to such Schedules as amended by Supplemental Schedules 5.01(d)
and 5.01(e) attached hereto, and (b) the reference to the financial statements
in Section 5.01(f)(i) of the Agreement are to those financial statements most
recently delivered to you pursuant to Section 6.01 of the Agreement;
3. The proceeds of such Advance shall be used as set forth in
Section 2.15 of the Agreement; and
4. After giving effect to Loans requested hereby, the sum of
all Outstandings will not exceed the Total Revolving Credit
Commitment.
HANOVER DIRECT, INC.
BY: ___________________________________
Authorized Representative
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Supplemental Schedule 5.01(d)
Subsidiaries
Schedule 5.01(d) of the Agreement shall be amended hereby as follows
(if no amendment of Schedule 5.01(d) is necessary, indicate Not Applicable):
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Supplemental Schedule 5.01(e)
Investments in Other Persons
Schedule 5.01(e) of the Agreement shall be amended hereby as follows
(if no amendment of Schedule 5.01(e) is necessary, indicate "Not Applicable"):
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EXHIBIT I
FORM OF COMPETITIVE BID QUOTE REQUEST
[Date]
To: NationsBank of North Carolina, National Association,
as Agent
Attention: Ms. Joyce Ruppe, Agency Services
Re: Competitive Bid Quote Request
Pursuant to Section 2.02 of the Revolving Credit and Term Loan
Agreement dated as of October 12, 1994 (as modified and supplemented and in
effect from time to time, the "Credit Agreement") among Hanover Direct, Inc.,
the Lenders named therein and NationsBank of North Carolina, National
Association, as agent, we hereby give notice that we request Competitive Bid
Quotes for the following proposed Competitive Bid Borrowing(s):
Borrowing Quotation Interest
Date Date (1) Amount (2) Period (3)
--------- --------- ---------- ----------
-----------------------------------------
(1) Business Day immediately preceding Borrowing Date.
(2) Each amount must be $5,000,000 or a multiple of $1,000,000 in
excess thereof.
(3) A period of no less than 7 nor more than 180 days after the making
of such Competitive Bid Loan and ending on a Business Day.
Terms used herein have the meanings assigned to them in the Credit
Agreement.
Hanover Direct, Inc.
By:___________________________
Name: ________________________
Title: _______________________
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EXHIBIT J
FORM OF COMPETITIVE BID QUOTE
To: NationsBank of North Carolina, National Association,
as Agent
Attention: Ms. Joyce Ruppe, Agency Services
Re: Competitive Bid Quote to Hanover Direct, Inc. (the
"Borrower")
The Competitive Bid Quote is given in accordance with Section 2.02 of
the Revolving Credit and Term Loan Agreement dated as of October 12, 1994 (as
modified and supplemented and in effect from time to time, the "Credit
Agreement") among Hanover Direct, Inc., the lenders named therein and
NationsBank of North Carolina, National Association, as agent. Terms defined in
the Credit Agreement are used herein as defined therein.
In response to the Borrower's Competitive Bid Quote Request dated
______________, 199__, we hereby make the following Competitive Bid Quote(s) on
the following terms:
1. Quoting Bank:
2. Person to contact at Quoting Bank:
3. We hereby offer to make Competitive Bid Loan(s) in
the following principal amount(s), for the following interest Period(s)
and at the following rate(s):
Borrowing Quotation Interest
Date (1) Date (1) Amount (2) Period (3) Rate (4)
---------- --------- ---------- ---------- --------
(1) As specified in the related Competitive Bid Quote Request
(2) The principal amount bid for each Interest Period may not exceed
the principal amount requested. Bids must be made for at least $1,000,000 or a
multiple of $100,000 in excess thereof.
(3) A period of not less than 7 nor more than 180 days after the
making of such Competitive Bid Loan and ending on a Business Day, as specified
in the related Competitive Bid Quote Request.
(4) Specify rate of interest per annum (rounded to the nearest 1/100
of 1%).
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We understand and agree that the offer(s) set forth above, subject to
the satisfaction of the applicable conditions set forth in the Credit Agreement,
irrevocably obligate(s) us to make the Competitive Bid Loan(s) for which any
offer(s) (is/are) accepted, in whole or in part.
Dated: ______________, 199_
Very truly yours,
[NAME OF LENDER]
By:_______________________________
Authorized Representative
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EXHIBIT K
FORM OF OPINION OF COUNSEL TO THE BORROWER
AND THE GUARANTORS
[Copy of Opinion delivered at Closing is attached]
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EXHIBIT L
FORM OF COMPLIANCE CERTIFICATE
As of __________, 19__
NationsBank of North Carolina, National Association,
as Agent
NationsBank Plaza, NC1002-06-19
101 South Tryon Street, 6th Floor
Charlotte, North Carolina 28255
Telefacsimile: (704) 386-9923
Attention: Ms. Joyce Ruppe, Agency Services
Reference is hereby made to the Credit Facilities and Reimbursement
Agreement dated as of October 12, 1994 and the Revolving Credit and Term Loan
Agreement dated as of October 12, 1994 (collectively the "Credit Agreements")
among Hanover Direct, Inc. (the "Borrower"), the Lenders (as defined in the
Credit Agreements) and NationsBank of North Carolina, National Association, as
Agent for the Lenders ("Agent") under each Credit Agreement. Capitalized terms
used but not defined herein shall have the respective meanings therefor set
forth in the Credit Agreements. The undersigned, a duly authorized and acting
Authorized Representative, hereby certifies to you as of the date set forth
above as follows:
1. Calculations:
A. Compliance with Section 9.01 of the Credit
Facilities and Reimbursement Agreement and
Section 7.01 of the Revolving Credit and Term
Loan Agreement: Consolidated Fixed Charge
Ratio
1. Consolidated EBITDA (sum of a, b, c, d
and e): $_________
a. Consolidated Net Income $_________
b. Consolidated Interest Expense $_________
c. Tax Expense $_________
d. Depreciation and amortization $_________
e. To the extent deducted in
a, b, or c above, lease,
rental and all other payments
made in respect of or in
connection with operating
leases $_________
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125
2. Capital Expenditures $__________
3. Difference of Item 1 less Item 2 $__________
4. Consolidated Fixed Charges
(sum of a, b, c and d) $__________
a. Consolidated Interest Expense $_________
b. Principal amount of Consoli-
dated Funded Indebtedness
due and payable during
period $_________
c. Dividends and distributions
paid during such period $_________
d. Repurchases and redemptions
of stock during such period $_________
5. Ratio of Item 3 to Item 4 ____ to 1.00
REQUIRED: AT ANY TIME DURING ANY FOUR-QUARTER PERIOD ENDING DURING THE
PERIODS FORTH BELOW, THE CONSOLIDATED FIXED CHARGE RATIO SHALL NOT BE
EQUAL TO OR LESS THAN THE RATIO SET FORTH OPPOSITE SUCH PERIOD:
PERIOD RATIO
------ -----
FOUR-QUARTER PERIOD ENDING
JULY 1, 1995 1.25 TO 1.00
FOUR-QUARTER PERIOD ENDING
[JUNE 29], 1996 1.50 TO 1.00
FOUR-QUARTER PERIOD ENDING
[JUNE 28], 1997 AND THEREAFTER 2.00 TO 1.00
B. Compliance with Section 9.02 of the Credit
Facilities and Reimbursement Agreement and
Section 7.02 of the Revolving Credit and Term
Loan Agreement: Consolidated Funded
Indebtedness to Consolidated EBITDA
1. Consolidated Funded Indebtedness $__________
2. Consolidated EBITDA (sum of a, b, c
and d): $__________
a. Consolidated Net Income $________
b. Consolidated Interest Expense $________
c. Tax Expense $________
d. Depreciation and amortization $________
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126
3. Ratio of Item 1 to Item 2 ____ to 1.00
REQUIRED: AT ANY TIME DURING ANY FOUR-QUARTER PERIOD ENDING DURING THE
PERIODS SET FORTH BELOW, THE RATIO OF CONSOLIDATED FUNDED INDEBTEDNESS
TO CONSOLIDATED EBITDA FOR SUCH FOUR-QUARTER PERIOD SHALL NOT BE EQUAL
TO OR GREATER THAN THE RATIO SET FORTH OPPOSITE SUCH PERIOD:
PERIOD RATIO
------ -----
FOUR-QUARTER PERIOD ENDING
APRIL 1, 1995 3.50 TO 1.00
FOUR-QUARTER PERIOD ENDING
JULY 1, 1995 3.00 TO 1.00
FOUR-QUARTER PERIOD ENDING
[JUNE 29], 1996 AND THEREAFTER 2.75 TO 1.00
FOUR-QUARTER PERIOD ENDING
[JUNE 28], 1997 AND THEREAFTER 2.25 TO 1.00
C. Determination of Applicable Margin:
1. Consolidated Funded Indebtedness $__________
2. Consolidated EBITDA (sum of a, b, c
and d): $__________
a. Consolidated Net Income $__________
b. Consolidated Interest Expense $__________
c. Tax Expense $__________
d. Depreciation and amortization $__________
3. Ratio of Item 1 to Item 2 ____ to 1.00
2. No Default
A. To the best knowledge of the undersigned, during the fiscal
quarter ended as of the date set forth above, (a) no Default
or Event of Default specified in Article X of the Credit
Facilities and Reimbursement Agreement or Article VIII of the
Revolving Credit and Term Loan Agreement has occurred or (b)
the following Default or Event of Default has occurred:_______
______________________________________________________________
______________________________________________________________
______________________________________________________________
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127
B. The Borrower proposes to take the following action with
respect to any such Default or Event of Default described
above:________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
(Note, if no Default or Event of Default has
occurred, insert "Not Applicable").
The undersigned Authorized Officer hereby certifies that the
information set forth above is true, correct and complete as of the date hereof.
IN WITNESS WHEREOF, I have executed this Certificate this _____ day of
__________, 19___.
HANOVER DIRECT, INC.
------------------------------
Authorized Officer
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EXHIBIT M
FORM OF GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT (the "Guaranty Agreement" or the "Guaranty"),
dated as of October 12, 1994, is made by each of the undersigned (each a
"Guarantor" and collectively the "Guarantors") to NATIONSBANK OF NORTH CAROLINA,
NATIONAL ASSOCIATION, a national banking association, as Agent (the "Agent") for
each of the lenders now or hereafter party to the Credit Agreements (as defined
below) (each a "Lender" and collectively the "Lenders"). All capitalized terms
not otherwise defined herein shall have the meanings assigned thereto in the
Credit Agreements.
W I T N E S S E T H:
WHEREAS, the Agent and the Lenders have agreed, pursuant to the terms
of a Credit Facilities and Reimbursement Agreement (the "Credit Facilities and
Reimbursement Agreement") of even date herewith among the Agent, the Lenders and
Hanover Direct, Inc. (the "Borrower"), to make available to the Borrower a
revolving credit facility in the maximum aggregate principal amount at any time
outstanding of $60,000,000, which will include (i) a standby letter of credit
facility of up to $35,000,000, (ii) a swing line facility of up to $5,000,000,
and (iii) a competitive bid facility, as such revolving credit facility is
evidenced by the promissory notes of the Borrower of even date herewith payable
to the respective Lenders, as the same may be amended, supplemented or replaced
(collectively the "Credit Facilities and Reimbursement Notes");
WHEREAS, the Agent and the Lenders have agreed, pursuant to the terms
of a Revolving Credit and Term Loan Agreement (the "Revolving Credit and Term
Loan Agreement" and collectively with the Credit Facilities and Reimbursement
Agreement, the "Credit Agreements") of even date herewith among the Agent, the
Lenders and the Borrower, to make available to the Borrower a revolving credit
facility in the maximum aggregate principal amount at any time outstanding of
$20,000,000, which will include a competitive bid facility, as such revolving
credit facility is evidenced by the promissory notes of the Borrower of even
date herewith payable to the respective Lenders, as the same may be amended,
supplemented or replaced (collectively the "Revolving Credit and Term Loan
Notes" and collectively with the Credit Facilities and Reimbursement Notes, the
"Notes");
WHEREAS, each Guarantor is a direct or indirect wholly-owned
Subsidiary of the Borrower;
WHEREAS, the Agent and the Lenders are unwilling to enter into the
Credit Agreements and to make any loans or advances or to issue letters of
credit thereunder unless each Guarantor guarantees to the Lenders payment of the
Borrower's Liabilities (as hereinafter defined);
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129
WHEREAS, each Guarantor will materially benefit from the loans and
advances to be made, and the letters of credit to be issued, under the Credit
Agreements, and each Guarantor is willing to enter into this Guaranty to provide
an inducement for the Lenders and the Agent to enter into the Credit Agreements
and for the Lenders to make loans and advances, and to issue letters of credit,
thereunder.
NOW, THEREFORE, in order to induce the Lenders and the Agent to enter
into the Credit Agreements and to make loans and advances to the Borrower, and
to issue letters of credit for the account of the Borrower, thereunder, each
Guarantor agrees as follows:
1. GUARANTY. For all purposes of this Guaranty Agreement, "Borrower's
Liabilities" means: (a) the Borrower's prompt payment in full, when due or
declared due and at all such times, of all amounts pursuant to the terms of the
Credit Agreements, the Notes, and all other Loan Documents executed in
connection with the Credit Agreements heretofore, now or at any time or times
hereafter owing, arising, due or payable from the Borrower to the Lenders,
including without limitation principal, interest, premium or fee (including, but
not limited to, loan fees and attorneys' fees and expenses); and (b) the
Borrower's prompt, full and faithful performance, observance and discharge of
each and every agreement, undertaking, covenant and provision to be performed,
observed or discharged by the Borrower under the Credit Agreements and all other
Loan Documents executed in connection therewith. Each Guarantor hereby jointly
and severally, unconditionally, absolutely, continually and irrevocably
guarantees to the Agent and the Lenders the Borrower's Liabilities. Each
Guarantor's obligations to the Agent and the Lenders under this Guaranty
Agreement are hereinafter collectively referred to as the "Guarantor's
Obligations"; provided, however, that the liability of each Guarantor with
respect to the Guarantor's Obligations shall not exceed at any time the Maximum
Amount (as hereinafter defined). The "Maximum Amount" means 95% of (i) the fair
salable value of the assets of a Guarantor as of the date hereof minus (ii) the
total liabilities of such Guarantor (including contingent liabilities, but
excluding liabilities of such Guarantor under this Guaranty and any other Loan
Documents executed by such Guarantor) as of the date hereof; provided further,
however, that if the calculation of the Maximum Amount in the manner provided
above as of the date payment is required of such Guarantor pursuant to this
Guaranty would result in a greater positive number, then the Maximum Amount
shall be deemed to be such greater positive number.
Each Guarantor agrees that it is jointly and severally, directly and
primarily liable for the Borrower's Liabilities.
2. PAYMENT. If the Borrower shall default in payment or performance of
any Borrower's Liabilities, whether principal, interest, premium, fee
(including, but not limited to, loan fees and attorneys' fees and expenses), or
otherwise, when and as the same shall become due, whether according to the terms
of the Credit
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Agreements, by acceleration, or otherwise, or upon the occurrence of any other
Event of Default under either Credit Agreement that has not been cured or
waived, then each Guarantor, upon demand thereof by the Agent or its successors
or assigns, will AS OF THE DATE OF THE AGENT'S DEMAND fully pay to the Agent,
for the benefit of the Agent and the Lenders, subject to any restriction set
forth in Section 1 hereof, an amount equal to all Guarantor's Obligations then
due and owing.
3. UNCONDITIONAL OBLIGATIONS. This is a guaranty of payment and not of
collection. The Guarantor's Obligations under this Guaranty Agreement shall be
joint and several, absolute and unconditional irrespective of the validity,
legality or enforceability of the Credit Agreements, the Notes or any other Loan
Document or any other guaranty of the Borrower's Liabilities, and shall not be
affected by any action taken under the Credit Agreements, the Notes or any other
Loan Document, any other guaranty of the Borrower's Liabilities, or any other
agreement between the Agent or the Lenders and the Borrower or any other person,
in the exercise of any right or power therein conferred, or by any failure or
omission to enforce any right conferred thereby, or by any waiver of any
covenant or condition therein provided, or by any acceleration of the maturity
of any of the Borrower's Liabilities, or by the release or other disposal of any
security for any of the Borrower's Liabilities, or by the dissolution of the
Borrower or the combination or consolidation of the Borrower into or with
another entity or any transfer or disposition of any assets of the Borrower or
by any extension or renewal of either Credit Agreement, any of the Notes or any
other Loan Document, in whole or in part, or by any modification, alteration,
amendment or addition of or to either Credit Agreement, any of the Notes or any
other Loan Document, any other guaranty of the Borrower's Liabilities, or any
other agreement between the Agent or the Lenders and the Borrower or any other
Person, or by any other circumstance whatsoever (with or without notice to or
knowledge of any Guarantor) which may or might in any manner or to any extent
vary the risks of any Guarantor, or might otherwise constitute a legal or
equitable discharge of a surety or guarantor; it being the purpose and intent of
the parties hereto that this Guaranty Agreement and the Guarantor's Obligations
hereunder shall be absolute and unconditional under any and all circumstances
and shall not be discharged except by payment as herein provided.
4. CURRENCY AND FUNDS OF PAYMENT. Each Guarantor hereby guarantees that
the Guarantor's Obligations will be paid in lawful currency of the United States
of America and in immediately available funds, regardless of any law, regulation
or decree now or hereafter in effect that might in any manner affect the
Borrower's Liabilities, or the rights of the Agent or any Lender with respect
thereto as against the Borrower, or cause or permit to be invoked any alteration
in the time, amount or manner of payment by the Borrower of any or all of the
Borrower's Liabilities.
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5. EVENTS OF DEFAULT. In the event that (i) any Guarantor shall file a
petition to take advantage of any insolvency statute; (ii) any Guarantor shall
commence a proceeding for the appointment of a receiver, trustee, liquidator or
conservator of itself or of the whole or substantially all of its property;
(iii) any Guarantor shall file a petition or answer seeking reorganization or
arrangement or similar relief under the Federal bankruptcy laws or any other
applicable law or statute of the United States of America or any state or
similar law of any other country; (iv) a court of competent jurisdiction shall
enter an order, judgment or decree appointing a custodian, receiver, trustee,
liquidator or conservator of any Guarantor or of the whole or substantially all
of its properties, or approve a petition filed against any Guarantor seeking
reorganization or arrangement or similar relief under the Federal bankruptcy
laws or any other applicable law or statute of the United States of America or
any state or similar law of any other country, or if, under the provisions of
any other law for the relief or aid of debtors, a court of competent
jurisdiction shall assume custody or control of any Guarantor or of the whole or
substantially all of its properties and such order, judgment, decree, approval
or assumption remains unstayed or undismissed for a period of sixty (60)
consecutive days; (v) there is commenced against any Guarantor any proceeding or
petition seeking reorganization, arrangement or similar relief under the Federal
bankruptcy laws or any other applicable law or statute of the United States of
America or any state, which proceeding or petition remains unstayed or
undismissed for a period of sixty (60) consecutive days; or (vi) there shall
occur an Event of Default under either Credit Agreement (each of the foregoing
an "Event of Default"), then notwithstanding any collateral that the Lenders may
possess from Borrower or any other guarantor of the Borrower's Liabilities, or
any other party, at the Agent's election and without notice thereof or demand
therefor, so long as such Event of Default shall be continuing, the Guarantor's
Obligations shall immediately become due and payable.
6. SUITS. Each Guarantor from time to time shall pay to the Agent for
the benefit of the Lenders, on demand, at the Agent's place of business set
forth in the Credit Agreements, the Guarantor's Obligations as they become or
are declared due, and in the event such payment is not made forthwith, the Agent
or the Lenders or any of them may proceed to suit against any one or more or all
of the Guarantors. At the Agent's election, one or more and successive or
concurrent suits may be brought hereon by the Agent against any one or more or
all of the Guarantors, whether or not suit has been commenced against the
Borrower, any other guarantor of the Borrower's Liabilities, or any other Person
and whether or not the Agent or any Lender has taken or failed to take any other
action to collect all or any portion of the Borrower's Liabilities.
7. SET-OFF AND WAIVER. Each Guarantor waives any right to assert
against the Agent and the Lenders as a defense, counterclaim, set-off, or cross
claim, any defense (legal or equitable), or other claim which such Guarantor may
now or at any time or times hereafter
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have against the Borrower, without waiving any additional defenses, set-offs,
counterclaims or other claims otherwise available to such Guarantor. If at any
time or times hereafter the Agent or any Lender employs counsel for advice or
other representation to enforce the Guarantor's Obligations that arise out of a
default hereunder or an Event of Default, then, in any of the foregoing events,
all of the reasonable attorneys' fees arising from such services and all
expenses, costs and charges in any way or respect arising in connection
therewith or relating thereto shall be jointly and severally paid by the
Guarantors to the Agent, on demand.
8. WAIVER; SUBROGATION.
(a) Each Guarantor hereby waives notice of the following events or
occurrences: (i) the Agent's acceptance of this Guaranty Agreement; (ii) the
Lenders' heretofore, now or from time to time hereafter loaning monies or giving
or extending credit to or for the benefit of the Borrower, whether pursuant to
the Credit Agreements or the Notes or any amendments, modifications, or
additions thereto, or alterations, substitutions, refinancings or extensions
thereof; (iii) the Agent, the Lenders or the Borrower heretofore, now or at any
time or times hereafter, obtaining, amending, substituting for, releasing,
waiving or modifying the Credit Agreements, the Notes or any other Loan
Documents; (iv) presentment, demand, notices of default, non-payment, partial
payment and protest; (v) the Agent or the Lenders heretofore, now or at any time
or times hereafter granting to the Borrower (or any other party liable to the
Lenders on account of the Borrower's Liabilities) any indulgence or extensions
of time of payment of the Borrower's Liabilities; and (vi) the Agent or the
Lenders heretofore, now or at any time or times hereafter accepting from the
Borrower or any other person, any partial payment or payments on account of the
Borrower's Liabilities or any collateral securing the payment thereof or the
Agent settling, subordinating, compromising, discharging or releasing the same.
Each Guarantor agrees that the Agent and each Lender may heretofore, now or at
any time or times hereafter do any or all of the foregoing events or occurrences
in such manner, upon such terms and at such times as the Agent and each Lender,
in its sole and absolute discretion, deems advisable, without in any way or
respect impairing, affecting, reducing or releasing such Guarantor from the
Guarantor's Obligations, and each Guarantor hereby consents to each and all of
the foregoing events or occurrences.
(b) Each Guarantor hereby agrees that payment or performance by such
Guarantor of the Guarantor's Obligations under this Guaranty Agreement may be
enforced by the Agent on behalf of the Lenders upon demand by the Agent to such
Guarantor without the Agent being required, each Guarantor expressly waiving any
right it may have to require the Agent, to (i) prosecute collection or seek to
enforce or resort to any remedies against the Borrower or any other guarantor of
the Borrower's Liabilities, IT BEING EXPRESSLY UNDERSTOOD, ACKNOWLEDGED AND
AGREED TO BY EACH GUARANTOR THAT DEMAND UNDER THIS GUARANTY AGREEMENT MAY BE
MADE BY THE AGENT, AND THE PROVISIONS
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HEREOF ENFORCED BY THE AGENT, EFFECTIVE AS OF THE FIRST DATE ANY EVENT OF
DEFAULT OCCURS AND IS CONTINUING UNDER EITHER CREDIT AGREEMENT, or (ii) seek to
enforce or resort to any remedies with respect to any security interests, Liens
or encumbrances granted to the Agent by the Borrower or any other Person on
account of the Borrower's Liabilities or any guaranty thereof. Neither the Agent
nor any Lender shall have any obligation to protect, secure or insure any of the
foregoing security interests, Liens or encumbrances on the properties or
interests in properties subject thereto. The Guaran- tor's Obligations shall in
no way be impaired, affected, reduced, or released by reason of the Agent's or
any Lender's failure or delay to do or take any of the acts, actions or things
described in this Guaranty Agreement including, without limiting the generality
of the foregoing, those acts, actions and things described in this Section 8.
(c) Each Guarantor further agrees with respect to this Guaranty
Agreement that such Guarantor shall have no right of subrogation, reimbursement
or indemnity whatsoever, nor any right of recourse to security for the
Borrower's Liabilities. In addition, each Guarantor hereby waives and renounces
any and all rights it has or may have for subrogation, indemnity, reimbursement
or contribution against the Borrower for amounts paid under this Guaranty
Agreement. This waiver is expressly intended to prevent the existence of any
claim in respect to such reimbursement by any Guarantor against the estate of
the Borrower within the meaning of Section 101 of the United States Bankruptcy
Code, and to prevent each Guarantor from constituting a creditor of the Borrower
in respect of such reimbursement within the meaning of Section 547(b) of the
United States Bankruptcy Code in the event of a subsequent case involving the
Borrower.
9. EFFECTIVENESS; ENFORCEABILITY. This Guaranty Agreement shall be
effective as of the date of the initial Advance under either Credit Agreement,
whichever shall be the earlier to occur, and shall continue in full force and
effect until the Borrower's Liabilities are finally and fully paid, performed
and discharged, the Lenders are no longer committed to make additional loans and
advances to the Borrower or to issue letters of credit on behalf of the Borrower
under the Credit Agreements, and the Agent gives each Guarantor written notice
of that fact at each Guarantor's address on the signature pages hereto. This
Guaranty Agreement shall be binding upon and inure to the benefit of each
Guarantor, the Agent and the Lenders and their respective successors and assigns
and heirs. Notwithstanding the foregoing, no Guarantor may, without the prior
written consent of the Agent, assign any rights, powers, duties or obligations
hereunder. Any claim or claims that the Agent and the Lenders may at any time or
times hereafter have against any Guarantor under this Guaranty Agreement may be
asserted by the Agent or any Lender by written notice directed to any one or
more or all of the Guarantors at the address specified below. Each Guarantor
warrants and represents to the Agent for the benefit of the Agent and the
Lenders that it is duly authorized to execute, deliver and perform
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this Guaranty Agreement, that this Guaranty Agreement is legal, valid, binding
and enforceable against such Guarantor in accordance with its terms except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles; and that such Guarantor's
execution, delivery and performance of this Guaranty Agreement do not violate or
constitute a breach of any documents of corporate governance or agreement to
which such Guarantor is a party, or any applicable laws in each case, which
violation or breach could reasonably be expected to have a Material Adverse
Effect.
10. EXPENSES. Each Guarantor agrees to be liable for the payment of all
reasonable fees and expenses, including attorney's fees, incurred by the Agent
in connection with the negotiation, preparation or enforcement of this Guaranty
Agreement.
11. REINSTATEMENT. Each Guarantor agrees that this Guaranty Agreement
shall continue to be effective or be reinstated, as the case may be, at any time
payment received by the Agent under either Credit Agreement or this Guaranty
Agreement is rescinded or must be restored for any reason.
12. GOVERNING LAW.. THIS GUARANTY AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
13. COUNTERPARTS. This Guaranty Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall constitute one and
the same instrument.
14. RELIANCE. Each Guarantor represents and warrants to the Agent, for
the benefit of the Agent and the Lenders, that: (a) such Guarantor has adequate
means to obtain from Borrower, on a continuing basis, information concerning
Borrower and Borrower's financial condition and affairs and has full and
complete access to Borrower's books and records; (b) such Guarantor is not
relying on the Agent or any Lender, its or their employees, agents or other
representatives, to provide such information, now or in the future; (c) such
Guarantor is executing this Guaranty Agreement freely and deliberately, and
understands the obligations and financial risk undertaken by providing this
Guaranty; (d) such Guarantor has relied solely on the Guarantor's own
independent investigation, appraisal and analysis of Borrower and Borrower's
financial condition and affairs in deciding to provide this Guaranty and is
fully aware of the same; and (e) such Guarantor has not depended or relied on
the Agent or any Lender, its or their employees, agents or representatives, for
any information whatsoever concerning Borrower or Borrower's financial condition
and affairs or other matters material to such Guarantor's decision to provide
this Guaranty or for any counselling, guidance, or special consideration or any
promise therefor with respect to such decision. Each Guarantor agrees that
neither the Agent nor any Lender has any
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duty or responsibility whatsoever, now or in the future, to provide to any
Guarantor any information concerning Borrower or Borrower's financial condition
and affairs and that, if such Guarantor receives any such information from the
Agent or any Lender, its or their employees, agents or other representatives,
such Guarantor will independently verify the information and will not rely on
the Agent or any Lender, its or their employees, agents or other
representatives, with respect to such information.
15. CONSENT TO JURISDICTION AND VENUE; WAIVER OF JURY TRIAL AND CERTAIN
DAMAGES.
(a) IN THE EVENT THAT ANY ACTION, SUIT OR OTHER PROCEEDING IS BROUGHT
AGAINST ANY GUARANTOR BY OR ON BEHALF OF THE LENDERS TO ENFORCE THE OBSERVANCE
OR PERFORMANCE OF ANY OF THE PROVISIONS OF THIS GUARANTY AGREEMENT, INCLUDING
WITHOUT LIMITATION THE COLLECTION OF ANY AMOUNTS OWING HEREUNDER, EACH SUCH
GUARANTOR HEREBY IRREVOCABLY (I) CONSENTS TO THE EXERCISE OF JURISDICTION OVER
SUCH GUARANTOR AND ITS PROPERTY BY THE UNITED STATES DISTRICT COURT AND THE
COURTS OF THE STATE OF NEW YORK, AND (II) WAIVES ANY OBJECTION SUCH GUARANTOR
MIGHT NOW OR HEREAFTER HAVE OR ASSERT TO THE VENUE OF ANY SUCH PROCEEDING IN ANY
COURT DESCRIBED IN CLAUSE (I) ABOVE.
(b) EXCEPT AS PROHIBITED BY LAW, EACH PARTY HERETO HEREBY WAIVES ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS GUARANTY AGREEMENT
OR ANY OF THE OTHER LOAN DOCUMENTS.
(c) EXCEPT AS PROHIBITED BY LAW, EACH PARTY HERETO HEREBY WAIVES ANY
RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION REFERRED TO IN PARAGRAPH
(A) OF THIS SECTION 15 ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES
OR ANY OTHER DAMAGES THAN, OR IN ADDITION TO, ACTUAL DAMAGES.
[SIGNATURES ON FOLLOWING PAGE.]
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IN WITNESS WHEREOF, the parties have duly executed this Agreement on
the day and year first written above.
GUARANTORS:
BRAWN OF CALIFORNIA, INC.
COMPANY STORE HOLDINGS, INC.
D. M. ADVERTISING, INC.
GUMP'S HOLDINGS, INC.
HANOVER CATALOG HOLDINGS, INC.
HANOVER DIRECT PENNSYLVANIA, INC.
HANOVER DIRECT VIRGINIA, INC.
HANOVER FULFILLMENT OF VIRGINIA,
INC.
HANOVER HOLDINGS INC.
HANOVER REALTY INC.
HANOVER VENTURES, INC.
HENRE, INC.
TW ACQUISITIONS INC.
AMERICAN DOWN & TEXTILE COMPANY
THE COMPANY FACTORY, INC.
THE COMPANY OFFICE, INC.
THE COMPANY STORE, INC.
SCANDIA DOWN CORPORATION
SKANDIA DOWN SALES, INC.
SOUTHERN CALIFORNIA COMFORT
CORPORATION
GUMP'S BY MAIL, INC.
GUMP'S CORP.
HANOVER DIRECT MAIL MARKETING, INC.
HANOVER FINANCE CORPORATION
HANOVER LIST MANAGEMENT, INC.
YORK FULFILLMENT COMPANY, INC.
TWEEDS, INC.
TWEEDS OF VERMONT, INC.
H.H.B.K., INC.
BC CORPORATION OF TENNESSEE, INC.
H & H 1600 BROADWAY CORP.
By: _____________________________
Name:_____________________
Title:____________________
Address:__________________
__________________________
__________________________
__________________________
SIGNATURE PAGE 1 OF 2
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AGENT:
NATIONSBANK OF NORTH CAROLINA,
NATIONAL ASSOCIATION,as Agent for
the Lenders
By: _________________________________
Name:____________________________
Title:___________________________
Address:
NationsBank of North Carolina,
National Association
NationsBank Plaza, NC 1002-06-19
6th Floor
Charlotte, North Carolina 28255
Attention: Ms. Joyce Ruppe,
Agency Services
With a copy to:
NationsBank of North Carolina,
National Association
Corporate Banking
767 Fifth Avenue, 5th Floor
New York, New York 10153-0083
Attention: Mr. Christopher
C. Browder, Vice
President
SIGNATURE PAGE 2 OF 2
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EXHIBIT N
FORM OF SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT is made as of October 12, 1994 by and
among NATIONSBANK OF NORTH CAROLINA, NATIONAL ASSOCIATION, a national banking
association, as Agent (the "Agent") for each of the lenders (the "Lenders") now
or hereafter party to the Credit Agreements (as defined below) (the Agent and
the Lenders, together with their transferees, successors and assigns,
collectively referred to herein as the "Senior Creditors"), SUN LIFE INSURANCE
COMPANY OF AMERICA, a Maryland insurance corporation (together with its
transferees, successors and assigns, "Sun Life", and together with the Indenture
Trustee (as defined below), individually and collectively, the "Junior
Creditor"), HANOVER DIRECT, INC., a Delaware corporation ("Hanover"), and each
of the direct and indirect subsidiaries of Hanover executing a signature page
hereto. The Senior Creditors and Junior Creditor are sometimes collectively
referred to herein as "Creditors" and individually a "Creditor."
W I T N E S S E T H:
WHEREAS, Hanover (as successor to The Hanover Companies) has entered
into certain debt financing arrangements, pursuant to which Hanover has issued
and Junior Creditor has purchased from Hanover an aggregate of $20,000,000 in
principal amount of 9.25% Senior Subordinated Notes due August 1, 1998 (as the
same now exist or may hereafter be amended, modified, supplemented, extended,
renewed, exchanged, restated or replaced, the "Notes"); and
WHEREAS, payment of the obligations of Hanover to Junior Creditor under
the Notes has been guaranteed by the direct and indirect subsidiaries of Hanover
listed on Exhibit A annexed hereto (the "Subsidiary Guarantors") (such
guarantees of the Notes, collectively, the "Guarantees"); and
WHEREAS, the Agent and the Lenders have agreed, pursuant to the terms
of a Credit Facilities and Reimbursement Agreement of even date herewith among
the Agent, the Lenders and Hanover, to make available to Hanover a revolving
credit facility in the maximum principal amount at any time outstanding of
$60,000,000 (together with all schedules and exhibits thereto and as the same
may be amended, supplemented or restated from time to time, the "Credit
Facilities and Reimbursement Agreement," and collectively with all documents now
or hereafter delivered to the Agent by or on behalf of Hanover in connection
therewith, as the same may be amended, supplemented or restated from time to
time, the "Credit Facilities and Reimbursement Documents"); and
WHEREAS, the Agent and the Lenders have agreed, pursuant to the terms
of a Revolving Credit and Term Loan Agreement of even date herewith among the
Agent, the Lenders and Hanover, to make available to Hanover a revolving credit
facility in the maximum principal
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amount at any time outstanding of $20,000,000 (together with all schedules and
exhibits thereto and as the same may be amended, supplemented or restated from
time to time, the "Revolving Credit and Term Loan Agreement," and collectively
with all documents now or hereafter delivered to the Agent by or on behalf of
Hanover in connection therewith, as the same may be amended, supplemented or
restated from time to time, the "Revolving Credit and Term Loan Documents") (the
Credit Facilities and Reimbursement Documents and the Revolving Credit and Term
Loan Documents collectively referred to herein as the "Loan Documents"); and
WHEREAS, the Senior Creditors are unwilling to enter into the Loan
Documents and to make loans or advances or to issue letters of credit thereunder
unless the Junior Creditor enters into this Agreement to provide for the terms
and conditions of the subordination in favor of the Senior Creditors of the
obligations of Hanover to Junior Creditor in respect of the Junior Debt (as
defined below), and of any other persons now or hereafter obligated, as
borrower, guarantor or otherwise, in respect of all or any part of the Junior
Debt (Hanover and the Subsidiary Guarantors, together with any other persons so
obligated to Junior Creditor in respect of all or any part of the Junior Debt
and also obligated to Senior Creditor, as borrower, guarantor or otherwise, in
respect of all or any part of the obligations under the Loan Documents,
individually, an "Obligor" and, collectively, "Obligors") and related matters;
NOW THEREFORE, in consideration of the mutual benefits accruing to the
Creditors hereunder and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. DEFINITIONS
As used in this Subordination Agreement, the following terms shall have
the meanings ascribed to them below:
1.1 "Affiliate" shall have the meaning ascribed to such term in the
Credit Agreements.
1.2 "Agent" has the meaning specified in the preamble to this Agreement
and shall include any successor thereto or substitute therefor from time to time
acting in such capacity under the Credit Agreements or if there is no agent for
the Lenders thereunder, the holder or holders of a majority in aggregate
principal amount of indebtedness outstanding under the Credit Agreements.
1.3 "Borrowers" shall have the meaning ascribed to such term in the
Credit Agreements.
1.4 "Credit Agreements" means collectively the Credit Facilities and
Reimbursement Agreement and the Revolving Credit and Term Loan Agreement.
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1.5 "Indenture" shall mean that certain Indenture dated as of August
17, 1993, among The Horn & Hardart Company ("H&H"), Hanover, the Subsidiary
Guarantors and the Indenture Trustee, as the same now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced.
1.6 "Indenture Trustee" shall mean First Trust National Association, as
Trustee under the Indenture, any successor Trustee, and their respective
successors and assigns.
1.7 "Junior Creditor Agreements" shall mean, collectively, the Notes
(including any notes exchanged therefor), the Purchase Agreement dated on or
about the date hereof among H&H, Hanover, the Subsidiary Guarantors and Sun
Life, the Indenture, and all other agreements, documents and instruments now or
at any time hereafter executed and/or delivered by H&H, Hanover, the Subsidiary
Guarantors or any other person to, with or in favor of Junior Creditor in
connection therewith or related thereto, as all of the foregoing now exist or
may hereafter be amended, modified, supplemented, extended, renewed, exchanged,
restated or replaced.
1.8 "Junior Creditor Representative" shall mean the Indenture Trustee.
1.9 "Junior Debt" shall mean all of the following evidenced by or
arising under or in connection with the Notes or the other Junior Creditor
Agreements to the extent relating to the Notes or the debt evidenced thereby:
all loans, obligations, liabilities, letters of credit, credit facilities and
other indebtedness of any kind, nature and description owing by any Obligor to
Junior Creditor, including principal, interest, charges, fees, premiums,
indemnities and expenses, whether as principal, surety, endorser, guarantor or
otherwise, whether now existing or hereafter arising, whether arising after the
commencement of any case with respect to any Obligor under the U.S. Bankruptcy
Code or any similar statute, whether direct or indirect, absolute or contingent,
joint or several, due or not due, primary or secondary, liquidated or
unliquidated, secured or unsecured, original, renewed or extended, and whether
arising directly or howsoever acquired by Junior Creditor including from any
other person outright, conditionally or as collateral security, by assignment,
merger with any other person, participations or interests of Junior Creditor in
the obligations of any Obligor to others, or by assumption or operation of law,
or by way of a claim or right of contribution, exoneration, reimbursement,
indemnification, subrogation or otherwise, however evidenced, and shall also
include all amounts chargeable to any Obligor under the Junior Creditor
Agreements or in connection with any of the foregoing. Notwithstanding the
foregoing, the obligations, liabilities and indebtedness to Junior Creditor in
respect of the Notes owed by any person not an Obligor as defined herein, shall
not be part of the Junior Debt for purposes hereof.
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1.10 "Lien" shall mean any pledge, hypothecation, assignment, deposit
arrangement, right of setoff, security interest, encumbrance, mortgage, deed of
trust (including, but not limited to, easements, rights of way and the like),
lien (statutory or other), security agreement or transfer intended as security,
including, without limitation, any conditional sale or other title retention
agreement, the interest of a lessor under a capital lease or any financing lease
having substantially the same economic effect as any of the foregoing.
1.11 "Payment Block Notice" shall have the meaning set forth in Section
3.2 hereof.
1.12 "Person" or "person" shall mean an individual, a partnership, a
corporation (including a business trust), a joint stock company, a trust, an
unincorporated association, a joint venture, or other entity or a government or
any agency, instrumentality or political subdivision thereof.
1.13 "Required Lenders" shall have the meaning assigned thereto in each
of the Credit Agreements.
1.14 "Senior Debt" shall mean any and all loans, obligations,
liabilities, letters of credit, credit facilities and indebtedness of every
kind, nature and description owing by any Obligor to Senior Creditors or their
participants, including principal, interest, charges, fees, premiums,
indemnities and expenses, however evidenced, whether as principal, surety,
endorser, guarantor or otherwise, in each case arising under the Loan Documents,
whether now existing or hereafter arising, whether arising before, during or
after the initial or any renewal term of the Loan Documents, whether direct or
indirect, absolute or contingent, joint or several, due or not due, primary or
secondary, liquidated or unliquidated, secured or unsecured, original, renewed
or extended and whether arising directly or howsoever acquired by Senior
Creditors under the Loan Documents or by assumption or operation of law, or by
way of any claim or right of contribution, indemnification, exoneration,
reimbursement, subrogation or otherwise and shall also include all amounts
chargeable to any Obligor under the Loan Documents or in connection with any of
the foregoing.
1.15 "Standstill Period" shall mean the period beginning on the earlier
of the date that Junior Creditor has received a Payment Block Notice or the date
that Junior Creditor has given written notice to Senior Creditor that an event
of default under the Junior Creditor Agreements has occurred and specifying such
event of default and ending 180 days after such date; provided, however, that
the aggregate number of days that any one or more Standstill Periods shall be in
effect may not exceed 180 days in any consecutive 365 day period; and provided,
further, that no event of default under the Loan Documents which (i) is
specified in the written notice under this Section commencing a Standstill
Period and (ii) is subsequently waived by the Required Lenders shall be or be
made the basis for the
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commencement of a subsequent Standstill Period unless such event of default
shall be waived by the Required Lenders as to the specific circumstances giving
rise to such event of default for a period of not less than 365 days following
the occurrence of such event of default.
1.16 "Triggering Default" shall mean the occurrence or existence of any
event of default in respect of the Junior Debt under the Junior Creditor
Agreements, which remains uncured or unwaived and continues beyond the
expiration of the Standstill Period hereunder with respect to such event of
default.
1.17 References. All terms defined in the Uniform Commercial Code as in
effect in the State of New York, unless otherwise defined herein, shall have the
meanings set forth therein. All references to any term in the plural shall
include the singular and all references to any term in the singular shall
include the plural. Use of the term "or" shall mean "and/or" unless the context
otherwise clearly requires. Unless the context otherwise clearly requires,
references to "herein" or "hereunder" shall mean this entire Subordination
Agreement, not only the particular provision in which such reference appears.
2. RESTRICTIONS OF JUNIOR CREDITOR RIGHTS. Notwithstanding any right or
remedy available to Junior Creditor under any of the Junior Creditor Agreements,
applicable law or otherwise, Junior Creditor may accelerate the Junior Debt, but
shall not, subject to Section 3.5, directly or indirectly take any of the
following actions until all of the Senior Debt has been indefeasibly paid and
satisfied:
(a) unless and until a Triggering Default has occurred, exercise
any of its rights or remedies (other than acceleration of the Junior Debt as
aforesaid) as against any Obligor or its property upon an event of default by
any Obligor under the Junior Creditor Agreements or otherwise, including,
without limitation, the termination of the Junior Creditor Agreements or the
commencement of suit for the enforcement of any provisions of the Junior
Creditor Agreements or for collection of the Junior Debt as against or from any
Obligor or its property;
(b) hold, seek to obtain or enforce any Lien in or upon any
collateral or any other property of any Obligor, except after a Triggering
Default has occurred; or
(c) unless and until a Triggering Default has occurred, commence,
any administrative, legal or equitable action or proceeding against any Obligor
or its properties seeking any reorganization, arrangement, composition,
readjustment, liquidation, bankruptcy or any other action involving the
readjustment of all or any part of any Obligor's obligations, or other similar
relief under the U.S. Bankruptcy Code or any present or future statute, law or
regulation relative to any Obligor or its properties or any proceedings for
voluntary liquidation, dissolution or other winding
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up of any Obligor's businesses or the appointment of any trustee, receiver or
liquidator for any Obligor or any part of its properties or any assignment for
the benefit of creditors or any marshalling of assets of any Obligor.
3. SUBORDINATION OF JUNIOR DEBT
3.1 Subordination. Except as specifically set forth below, Junior
Creditor hereby subordinates its right to payment and satisfaction of the Junior
Debt, and the payment thereof, directly or indirectly, by any means whatsoever,
is deferred and subordinated, to the prior indefeasible payment and satisfaction
in full of all Senior Debt.
3.2 Permitted Payments.
(a) Subject to all the other terms and conditions of this
Subordination Agreement, Senior Creditors hereby agree that, unless and until
the Agent has notified the Junior Creditor Representative of the occurrence of a
default or an event of default or the occurrence of an event or existence of a
condition which does, or would, with notice or lapse of time or both constitute
an event of default under the Loan Documents, and in each case specifying such
event (such notice a "Payment Block Notice"), Hanover may make and Junior
Creditor may receive and retain from Hanover (i) payments of interest when due
as regularly scheduled, (ii) payment of principal when due at scheduled maturity
on August 1, 1998 (or later), in each case under clauses (i) and (ii) in
accordance with the terms of the Notes and the Indenture as in effect on the
date hereof (but not any other prepayment of principal or interest or other
payment of principal or any payment pursuant to acceleration or claims of breach
or any payment to acquire any Junior Debt or otherwise), and (iii) reimbursement
to Junior Creditor, prior to an event of default under any Junior Debt, for
out-of-pocket expenses payable by Hanover pursuant to the Junior Creditor
Agreements. After a Payment Block Notice is given, no payment otherwise
permitted to be made to or received in respect of the Junior Debt may be made to
or received by Junior Creditor until the expiration of the Standstill Period
hereunder.
(b) No event of default which existed or was continuing under the
Loan Documents on the date any Payment Block Notice is given, and which is
subsequently waived by the Agent, shall be or be made the basis for the giving
of a subsequent Payment Block Notice, unless such event of default shall be
waived by the Agent as to the specific circumstances giving rise to such event
of default for a period of not less than 365 days following the occurrence of
such event of default.
(c) The Agent may give any number of Payment Block Notices
hereunder, provided that the aggregate number of days that any one or more
Standstill Period(s) hereunder shall be in effect shall not exceed 180 days
during any 365 consecutive days, irrespective of the
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number of defaults with respect to the Loan Documents; and provided further
that, upon expiration or rescission of such Standstill Period, Junior Creditor
must receive payment of all regularly scheduled payments of interest and, if
applicable, principal payments described in clause (ii) of Section 3.2(a) which
have become due (on an unaccelerated basis, whether or not there has been an
acceleration of any Junior Debt), plus interest on such overdue payments as
provided in the Indenture, before a subsequent Payment Block Notice may be
given.
3.3 Distributions. In the event of any distribution, division, or
application, partial or complete, voluntary or involuntary, by operation of law
or otherwise, of all or any part of the assets of any Obligor or the proceeds
thereof to the creditors of any Obligor or readjustment of the obligations and
indebtedness of any Obligor, whether by reason of liquidation, bankruptcy,
arrangement, receivership, assignment for the benefit of creditors, marshalling
of assets of any Obligor or any other action or proceeding involving the
readjustment of all or any part of the obligations of any Obligor or the
application of the assets of any Obligor to the payment or liquidation thereof,
or upon the dissolution or other winding up of any Obligor's business, or upon
the sale of all or substantially all of the assets of any Obligor then, and in
any such event, Junior Creditor agrees that:
(a) Senior Creditors shall first receive indefeasible payment in
full in cash of all of the Senior Debt prior to the payment of all or any part
of the Junior Debt, and
(b) Until the Senior Debt is paid in full as provided in clause
(a) above, Senior Creditors shall be entitled to receive any payment or
distribution of any kind or character, whether in cash, securities or other
property which may be payable or deliverable in respect of any or all of the
Junior Debt; provided, however, that notwithstanding clauses (a) and (b) of this
Section 3.3, Junior Creditor may receive shares of stock and/or debt securities
issued by an Obligor in connection with any liquidation, dissolution or
bankruptcy case or proceeding that are subordinated to the remaining Senior Debt
and any stock or debt securities issued to Senior Creditors at least to the same
extent and pursuant to the same or more stringent terms as is the Junior Debt,
as evidenced by a supplement hereto, executed by the Senior Creditors and the
Junior Creditor representative.
3.4 Payments Received by Junior Creditor. Except for permitted
payments received by Junior Creditor as provided in Section 3.2 or through
permitted enforcement of the Junior Debt as provided in Sections 2 and 3.5
hereof, or distributions permitted under Section 3.3 hereof, if any payment or
distribution or security or instrument or proceeds thereof is received by the
Junior Creditor in respect of the Junior Debt, or if any sums are recovered in
respect of the Junior Debt upon enforcement not permitted pursuant to Sections 2
and 3.5 hereof, Junior Creditor shall receive and hold the
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same in trust, as trustee, for the benefit of Senior Creditors. Junior Creditor
shall segregate each such payment, distribution or recovery from all other funds
and property of Junior Creditor and shall forthwith deliver such payment,
distribution or recovery to the Agent for the benefit of Senior Creditors
(together with any endorsement or assignment of Junior Creditor where
necessary), for application to any of the Senior Debt. In the event of the
failure of the Junior Creditor to make any such endorsement or assignment to the
Agent, the Agent, or any of its officers or employees, is hereby irrevocably
authorized on behalf of Junior Creditor to make the same.
3.5 Permitted Enforcement. If any event of default under the Junior
Creditor Agreements has occurred and is continuing, Junior Creditor may (i)
accelerate such portion of the Junior Debt as is in default or any other amounts
as may otherwise be accelerated pursuant to the terms of the Junior Creditor
Agreements, and/or (ii) upon the expiration of any Standstill Period arising
with respect to such event of default, commence and prosecute judicial
enforcement of the Junior Creditor Agreements and collection of the Junior Debt
as against any Obligor or take other actions otherwise prohibited under Section
2(a), (b) or (c). Upon the expiration of such Standstill Period, Junior Creditor
may receive and retain any payments owing (by acceleration or otherwise) to
Junior Creditor.
3.6 Instrument Legend and Notation.
(a) Each of the Notes and any other instruments at any time
evidencing any Junior Debt, or any portion thereof, shall be permanently marked
on its face with a legend conspicuously indicating that payment thereof is
subordinated in right of payment to the Senior Debt and is subject to the terms
and conditions of this Subordination Agreement; and after being so marked
certified copies thereof shall be delivered to the Agent.
(b) In the event any legend or endorsement is omitted, the
Agent or any of its officers or employees, are hereby irrevocably authorized on
behalf of Junior Creditor to make the same. No specific legend, further
assignment or endorsement or delivery of notes, guarantees or instruments shall
be necessary to subject any Junior Debt to the subordination thereof contained
in this Subordination Agreement.
4. COVENANTS, REPRESENTATIONS AND WARRANTIES
4.1 Additional Covenants. Junior Creditor agrees in favor of Senior
Creditors that until all Senior Debt has been indefeasibly paid and satisfied in
full:
(a) except as specifically set forth in Sections 3.2, 3.3 and
3.5 above, Junior Creditor shall not, directly or indirectly, accept or receive
any payment of principal or interest or expenses or any prepayment or other
payment of principal or any payment
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pursuant to acceleration or claims of breach or any payment to acquire Junior
Debt or otherwise in respect of any Junior Debt; and
(b) Junior Creditor shall not, directly or indirectly, accept
or receive from any Obligor any loan, gift or, except as permitted herein,
distribution of assets to Junior Creditor, and Junior Creditor shall not accept
or hold any guaranties for the Junior Debt except the Guarantees of the
Subsidiary Guarantors whether now existing or as contemplated by the Junior
Creditor Agreements as in effect on the date hereof, and shall not hold or
acquire any Lien upon the assets of any Obligor, except any Lien held and
obtained to the extent permitted under the exception contained in Section 2(b)
and subject to the enforcement restrictions of Section 2(b).
4.2 Additional Representations and Warranties. Junior Creditor
represents and warrants to Senior Creditors that:
(a) as of the date hereof, the total indebtedness owing by
Hanover to Junior Creditor in respect of the debt evidenced by the Notes and by
the Subsidiary Guarantors as guarantors thereof, is in the aggregate principal
amount of TWENTY MILLION ($20,000,000) DOLLARS, all of which is presently
unsecured.
(b) as of the date hereof, no default or event of default, or
event or condition which with notice or passage of time or both would constitute
a default or an event of default, exists or has occurred under the Junior
Creditor Agreements;
(c) Junior Creditor is the exclusive legal and beneficial
owner of all of the Junior Debt;
(d) none of the rights of Junior Creditor in and to the Junior
Debt are subject to any lien, security interest, financing statements,
subordination, assignment or other claim, except in favor of Senior Creditors;
(e) true, correct and complete copies of all Junior Creditor
Agreements in effect as of the date hereof have been furnished to the Agent;
(f) the execution, delivery and performance of this Agreement
is within the corporate powers of Junior Creditor, has been duly authorized by
all necessary corporate action of Junior Creditor, and does not contravene any
law, any provision of the certificate of incorporation or other charter document
or the by-laws of Junior Creditor or any agreement to which Junior Creditor is a
party or by which it or its properties are bound; and
(g) this Agreement constitutes the legal, valid and binding
obligations of Junior Creditor, enforceable in accordance with its terms.
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4.3 Waivers. Notice of acceptance hereof, the making of loans, advances
and extensions of credit or other financial accommodations to, and the incurring
of any expenses by or in respect of, any Obligor or any other subordinate
creditor, by Senior Creditors, and presentment, demand, protest, notice of
protest, notice of nonpayment or default and all other notices to which Junior
Creditor and any Obligor are or may be entitled are hereby waived (except to the
extent, if any, expressly provided for herein). Junior Creditor also waives
notice of (a) any amendment, modification, supplement, renewal, restatement or
extensions of the Loan Documents or any collateral, or of the time of payment
of, or increase or decrease in the amount of, any of the Senior Debt, (b) the
taking, exchange, surrender and releasing of collateral or guarantees now or at
any time held by or available to Senior Creditors for the Senior Debt or any
other person at any time liable for or in respect of the Senior Debt, (c) the
exercise of, or refraining from the exercise of any right against any Obligor or
any collateral, (d) the settlement, compromise or release of, or the waiver of
any default with respect to, any of the Senior Debt, and/or (e) Senior
Creditors' election, in any proceeding instituted under the U.S. Bankruptcy Code
of the application of Section 1111(b)(2) of the U.S. Bankruptcy Code. None of
the foregoing shall, in any manner, affect the terms hereof or impair the
obligations of Junior Creditor hereunder or give rise to any claim by Junior
Creditor against Senior Creditors, whether or not any of the foregoing are or
purport to be restricted in any manner under the terms of the Junior Creditor
Agreements. All of the Senior Debt shall be deemed to have been made or incurred
in reliance upon this Subordination Agreement. Junior Creditor hereby agrees
that all payments received by Senior Creditors may be applied, reversed, and
reapplied, in whole or in part, to any of the Senior Debt, as Senior Creditors,
in their discretion, deem appropriate.
4.4 Subrogation. After the full and indefeasible payment and
satisfaction of all Senior Debt, and after all of the Loan Documents have been
terminated, Junior Creditor shall be subrogated to the rights of the holders of
Senior Debt to receive distributions applicable to the Senior Debt to the extent
that distributions otherwise payable to Junior Creditor have been applied to
payment of Senior Debt, and any such distributions otherwise payable to Junior
Creditor and applied to Senior Debt shall not, as between Hanover and Junior
Creditor, constitute a payment by Hanover of Senior Debt.
4.5 Information Concerning Obligors.
(a) Junior Creditor hereby assumes sole responsibility for keeping
itself informed of the financial condition of Hanover, any and all endorsers and
any and all guarantors of the Junior Debt and any other Obligor, and of all
other circumstances bearing upon the risk of nonpayment of the Senior Debt
and/or the Junior Debt that diligent inquiry would reveal, and Junior Creditor
hereby agrees that Senior Creditors shall have no duty to advise Junior Creditor
of
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information known to Senior Creditors regarding such condition or any such
circumstances.
(b) In the event Senior Creditors, in their discretion, undertake,
at any time or from time to time, to provide any such information to Junior
Creditor, Senior Creditors shall be under no obligation (i) to provide any such
information to the Junior Creditor on any subsequent occasion or (ii) to
undertake any investigation and shall be under no obligation to disclose any
information obtained in any investigation, routine or otherwise.
5. MISCELLANEOUS
5.1 Amendments. Any waiver, permit, consent or approval by a Creditor
of or under any provision, condition or covenant to this Subordination Agreement
must be in writing executed by such Creditor, or its successors and assigns, and
shall be effective only to the extent it is set forth in such signed writing and
as to the specific facts or circumstances covered thereby. Any amendment of this
Subordination Agreement must be in writing and signed by each of the parties to
be bound thereby. Execution of any amendment by the Junior Creditor
Representative shall bind the Junior Creditor and its successors and assigns,
and shall be effective for any Junior Creditor.
5.2 Successors and Assigns.
(a) This Subordination Agreement shall be binding upon the parties
hereto and their respective successors and assigns and shall inure to the
benefit of each of the Creditors and its respective successors, participants and
assigns.
(b) Senior Creditors reserve the right to grant participations in,
or otherwise sell, assign, transfer or negotiate all or any part of, or any
interest in, the Senior Debt and any collateral from time to time securing same.
5.3 Insolvency. This Subordination Agreement shall be applicable both
before and after the filing of any petition by or against any Obligor under the
U.S. Bankruptcy Code and all converted or succeeding cases in respect thereof,
and all references herein to any Obligor shall be deemed to apply to a trustee
for any Obligor as debtor and debtor-in-possession. The relative rights of
Senior Creditors and Junior Creditor to payment of the Senior Debt and the
Junior Debt, respectively, and in or to any distributions from or in respect of
any Obligor or any collateral or proceeds of collateral, shall continue after
the filing thereof on the same basis as prior to the date of the petition.
5.4 Notices.
(a) All notices, requests and demands to or upon the respective
parties hereto shall be deemed duly given, made or
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received if in writing and: if by hand, immediately upon sending; if by Federal
Express, Express Mail or any other overnight delivery service, one (1) day after
dispatch; and if mailed by certified mail, return receipt requested, five (5)
days after mailing to the parties at their addresses set forth below (or to such
other addresses as the parties may designate in accordance with the provisions
of this Section 5.4:
To the Senior
Creditors: NationsBank of North Carolina, National
Association, as Agent
NationsBank Plaza, NC 1002-06-19
6th Floor
Charlotte, North Carolina 28255
Attention: Ms. Joyce Ruppe,
Agency Services
with a copy to: NationsBank of North Carolina, National
Association, as Agent
Corporate Banking
767 Fifth Avenue, 5th Floor
New York, New York 10153-0083
Attention: Mr. Christopher C. Browder,
Vice President
To any Junior
Creditor or to
the Junior
Creditor
Representative: First Trust National Association
180 East Fifth Street
P.O. Box 64111
St. Paul, Minnesota 55164
Attention: Mr. Frank P. Leslie, III
(b) A Creditor may change the address(es) to which all notices,
requests and other communications are to be sent by giving ten (10) days written
notice of such address change to the other Creditor in conformity with this
Section 5.4, but such change shall not be effective until notice of such change
has been received by the other Creditor.
5.5 Counterparts. This Subordination Agreement may be executed in any
number of counterparts, each of which shall be an original with the same force
and effect as if the signatures thereto and hereto were upon the same
instrument.
5.6 Governing Law. The validity, construction and effect of this
Subordination Agreement shall be governed by the laws of the
State of New York.
5.7 Consent to Jurisdiction; Waiver of Jury Trial. Each of Junior
Creditor and Senior Creditors hereby irrevocably consents to
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the non-exclusive jurisdiction of the Supreme Court of the State of New York and
the United States District Court for the Southern District of New York and
waives trial by jury in any action or proceeding with respect to this
Subordination Agreement or any matter directly or indirectly arising out of or
relating to their financing arrangements with any Obligor.
5.8 Complete Agreement. This written Subordination Agreement is
intended by the parties as a final expression of their agreement and is intended
as a complete statement of the terms and conditions of their agreement.
5.9 No Third Parties Benefitted. This Subordination Agreement is
solely for the benefit of the Creditors and their respective successors,
participants and assigns, and no other person, including any other creditor or
creditor's representative of any Obligor shall have any right, benefit, priority
or interest under, or because of the existence of, this Subordination Agreement.
5.10 Disclosures, Non-Reliance. Each Creditor has the means to, and
shall in the future remain, fully informed as to the financial condition and
other affairs of each Obligor, and neither Creditor shall have any obligation or
duty to disclose any such information to the other Creditor. Except as expressly
set forth in this Subordination Agreement, the parties hereto have not otherwise
made to each other nor do they hereby make to each other any warranties, express
or implied, nor do they assume any liability to each other with respect to: (a)
the enforceability, validity, value or collectibility of any of the Junior Debt
or Senior Debt or any guarantee or security which may have been granted to any
of them in connection therewith, or (b) any other matter except as expressly set
forth in this Subordination Agreement.
5.11 Term. This Subordination Agreement is a continuing agreement and
shall remain in full force and effect until the indefeasible satisfaction in
full of all Senior Debt and the termination of the Loan Documents.
5.12 Severability. If any provision of this Subordination Agreement is
held to be invalid or unenforceable, such invalidity or unenforceability shall
not invalidate this Subordination Agreement as a whole but this Subordination
Agreement shall be construed as though it did not contain the particular
provision or provisions held to be invalid or unenforceable and the rights and
obligations of the parties shall be construed and enforced only to such extent
as shall be permitted by law.
5.13 Senior Creditors' Rights under Indenture. The rights and benefits
afforded the Senior Creditors under this Subordination Agreement shall be in
addition to any and all rights and benefits which the Senior Creditors may have
under the terms of the Indenture. The terms and provisions of the Indenture
shall in no way limit or impair the rights and benefits of the Senior Creditors
hereunder or
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limit or otherwise modify the obligations of, or restrictions upon, Junior
Creditor hereunder.
5.14 Indenture Trustee's Compensation Not Prejudiced. Nothing in this
Subordination Agreement shall restrict the rights of the Indenture Trustee to
sue upon its claims for compensation under the Indenture.
5.15 No Fiduciary Duty to Senior Creditors. Indenture Trustee, by its
execution of the Acknowledgment and Agreement hereto, undertakes to perform or
observe and be bound by only the terms and provisions hereof applicable to it or
applicable to the holders of Junior Debt on whose behalf the Indenture Trustee
is acting in that capacity under the Indenture. The Indenture Trustee shall not
be deemed to owe any fiduciary duty to Senior Creditors.
5.16 Application of Monies Deposited with Trustee. Nothing in this
Subordination Agreement shall (i) prevent the application by the Indenture
Trustee or any paying agent of any monies or the proceeds of U.S. government
obligations received from Hanover at a time when such payment and receipt
thereof by Junior Creditor would not have been prohibited hereunder, or (ii)
prevent the application by the Indenture Trustee or any paying agent of any
monies or the proceeds of any U.S. government obligations deposited by Hanover
under the Indenture to the payment of or on account of the principal of or
interest on the Notes if, at the time of such deposit, payment of such amounts
by Hanover under the Notes, and the receipt thereof by Junior Creditor, would
not have been prohibited by this Subordination Agreement.
5.17 Headings. The headings used herein are for convenience only and do
not constitute matters to be considered in interpreting this Subordination
Agreement.
5.18 Execution by Subsidiaries. By its execution hereby, each of the
undersigned Subsidiaries acknowledges and agrees to be bound by the terms and
provisions hereof.
[Signatures on following pages]
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IN WITNESS WHEREOF, the parties have caused this Subordination
Agreement to be duly executed as of the day and year first above written.
Junior Creditor:
SUN LIFE INSURANCE COMPANY OF AMERICA
By:_______________________________
Name:_________________________
Title:________________________
Senior Creditors:
NATIONSBANK OF NORTH CAROLINA,
NATIONAL ASSOCIATION, as Agent for
the Lenders
By: ______________________________
Name:________________________
Title:_______________________
Signature Page 1 of 2
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HANOVER DIRECT,INC.
By:______________________________
Name: _______________________
Title: _______________________
Subsidiary Guarantors:
BRAWN OF CALIFORNIA, INC.
COMPANY STORE HOLDINGS, INC.
D. M. ADVERTISING, INC.
GUMP'S HOLDINGS, INC.
HANOVER CATALOG HOLDINGS, INC.
HANOVER DIRECT NEW JERSEY, INC.
HANOVER DIRECT PENNSYLVANIA, INC.
HANOVER DIRECT VIRGINIA, INC.
HANOVER FULFILLMENT OF VIRGINIA,
INC.
HANOVER HOLDINGS INC.
HANOVER REALTY INC.
HANOVER VENTURES, INC.
HENRE, INC.
TW ACQUISITIONS INC.
AMERICAN DOWN & TEXTILE COMPANY
THE COMPANY FACTORY, INC.
THE COMPANY OFFICE, INC.
THE COMPANY STORE, INC.
SCANDIA DOWN CORPORATION
SKANDIA DOWN SALES, INC.
SOUTHERN CALIFORNIA COMFORT
CORPORATION
GUMP'S BY MAIL, INC.
GUMP'S CORP.
HANOVER DIRECT MAIL MARKETING, INC.
HANOVER FINANCE CORPORATION
HANOVER FINANCING COMPANY, INC.
HANOVER LIST MANAGEMENT, INC.
YORK FULFILLMENT COMPANY, INC.
TWEEDS, INC.
TWEEDS OF VERMONT, INC.
H.H.B.K., INC.
BC CORPORATION OF TENNESSEE, INC.
H&H 1600 BROADWAY CORP.
HANOVER SYNDICATION CORP.
By:______________________________
Name:________________________
Title:_______________________
Signature page 2 of 2
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ACKNOWLEDGMENT AND AGREEMENT BY INDENTURE TRUSTEE
The undersigned Trustee under the Indenture referred to in the
foregoing Subordination Agreement hereby acknowledges and consents to the
foregoing Subordination Agreement to the extent its consent is or may be
required. The undersigned agrees that it will be bound by the provisions of the
Subordination Agreement as applicable to the undersigned as a Junior Creditor
(as defined in the Subordination Agreement) in its capacity as Trustee under the
Indenture.
FIRST TRUST NATIONAL ASSOCIATION,
as Indenture Trustee
By:______________________________
Name: ________________________
Title: ______________________
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EXHIBIT A
TO
SUBORDINATION AGREEMENT
Subsidiary Guarantors
Hanover Direct Fulfillment, Inc.
Brawn of California, Inc.
Gump's By Mail, Inc.
Leavitt Advertising Agency, Inc.
D.M. Advertising, inc.
Hanover Syndication Corp.
Hanover Direct Mail Marketing, Inc.
Hanover List Management, Inc.
York Fulfillment Company, Inc.
H.I.M. Inc.
Gump's Holdings, Inc.
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EXHIBIT O
UPFRONT FEES
The Upfront Fee payable by the Borrower on the Closing Date to the
Agent for the benefit of each Lender shall be equal to the sum of a percentage
of each Lender's Revolving Credit Commitment as in effect on the Closing Date as
follows:
Upfront Fee
Revolving Credit Commitment Percentage
--------------------------- ----------
less than $3,750,000 .100%
equal to or greater than .150%
$3,750,000 but less than $5,000,000
equal to or greater than $5,000,000 .200%
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Schedule 5.01(c)
Guarantors excluded from
Solvency Representation and Warranty
158
Schedule 5.01(d)
Subsidiaries
159
Schedule 5.01(e)
Investments in Other Persons
160
Schedule 5.01(f)
Contingent Liabilities
161
Schedule 5.01(g)
Liens
162
Schedule 5.01(h)
Tax Matters
163
Schedule 5.01(j)
Litigation
164
Schedule 5.01(m)
Patents
165
Schedule 5.01(o)
Consents
166
Schedule 5.01(r)
Hazardous Materials
167
Schedule 6.05
Insurance
168
Schedule 7.03(i)
Existing Indebtedness
169
Schedule 7.03(xi)
Capital Leases