Exhibit 99.1
LADD FURNITURE, INC.
_________________
AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of October 19, 1994
_____________________
NATIONSBANK OF NORTH CAROLINA, N.A.
as Agent
TABLE OF CONTENTS
Page
Section 1 Definitions and Accounting Matters . . . . . . . -2-
1.02 Accounting Terms and Determinations . . . . . . -18-
Section 2 Loans and Commitments . . . . . . . . . . . . . -19-
2.01 Revolving Credit Commitment . . . . . . . . . . -19-
(a) Revolving Credit Loans . . . . . . . . . . -19-
(b) Competitive Bid Loans Subfacility . . . . -19-
(c) Method of Borrowing for Revolving Credit
Loans . . . . . . . . . . . . . . . . . . -22-
(d) Funding of Revolving Loans . . . . . . . . -23-
2.02 Term Loan . . . . . . . . . . . . . . . . . . . -23-
(a) The Term Loan . . . . . . . . . . . . . . -23-
(b) Method of Choosing Interest Rate under the
Term Loan . . . . . . . . . . . . . . . . -23-
2.03 Reductions of Revolving Credit Commitment . . . -24-
2.04 Commitment Fees . . . . . . . . . . . . . . . . -24-
2.05 Lending Offices . . . . . . . . . . . . . . . . -25-
2.06 Several Obligations; Remedies Independent . . . -25-
2.07 Notes . . . . . . . . . . . . . . . . . . . . . -25-
(a) Revolving Notes . . . . . . . . . . . . . -25-
(b) Term Notes . . . . . . . . . . . . . . . . -26-
(c) Competitive Bid Notes . . . . . . . . . . -26-
(d) Exchange of Notes . . . . . . . . . . . . -26-
2.08 Prepayments . . . . . . . . . . . . . . . . . . -26-
(a) Voluntary Prepayments . . . . . . . . . . -26-
(b) Mandatory Prepayments . . . . . . . . . . -27-
Section 3 Payments of Principal and Interest . . . . . . -28-
3.01 Repayment of Loans . . . . . . . . . . . . . . -28-
(a) Revolving Loans and Competitive Bid Loans -28-
(b) Term Loan . . . . . . . . . . . . . . . . -28-
3.02 Interest . . . . . . . . . . . . . . . . . . . -28-
(a) Interest Payments . . . . . . . . . . . . -28-
(b) Interest Payment Dates . . . . . . . . . . -29-
Section 4 Payments; Pro Rata Treatment; Computations;
Etc. . . . . . . . . . . . . . . . . . . . . . -29-
4.01 Payments . . . . . . . . . . . . . . . . . . . -29-
4.02 Pro Rata Treatment . . . . . . . . . . . . . . -30-
4.03 Computations . . . . . . . . . . . . . . . . . -30-
4.04 Minimum Amounts . . . . . . . . . . . . . . . . -31-
4.05 Non-Receipt of Funds by the Agent . . . . . . . -31-
4.06 Sharing of Payments, Etc. . . . . . . . . . . . -32-
4.07 Tax Liabilities . . . . . . . . . . . . . . . . -33-
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Section 5 Yield Protection and Illegality . . . . . . . . -33-
5.01 Additional Costs . . . . . . . . . . . . . . . -33-
5.02 Limitation on Types of Loans . . . . . . . . . -36-
5.03 Illegality . . . . . . . . . . . . . . . . . . -36-
5.04 Treatment of Affected Loans . . . . . . . . . . -36-
5.05 Compensation . . . . . . . . . . . . . . . . . -37-
5.06 Replacement of Bank in Event of Adverse
Condition . . . . . . . . . . . . . . . . . . . -38-
Section 6 Conditions Precedent . . . . . . . . . . . . . -39-
6.01 Conditions to Making Initial Loans . . . . . . -39-
(a) Corporate Action . . . . . . . . . . . . . -39-
(b) Good Standing . . . . . . . . . . . . . . -39-
(c) Officer's Certificate . . . . . . . . . . -39-
(d) Opinion of Counsel to the Obligers . . . . -39-
(e) This Agreement . . . . . . . . . . . . . . -39-
(f) Notes . . . . . . . . . . . . . . . . . . -39-
(g) Pledge Agreements . . . . . . . . . . . . -39-
(h) Pledged Stock . . . . . . . . . . . . . . -39-
(i) Fees . . . . . . . . . . . . . . . . . . . -40-
(j) Expenses . . . . . . . . . . . . . . . . . -40-
(k) Use of Proceeds . . . . . . . . . . . . . -40-
(l) Existing Credit Agreement Indebtedness;
Releases . . . . . . . . . . . . . . . . . -40-
(m) Financial Information and Due Diligence . -40-
(n) No Material Adverse Change . . . . . . . . -41-
(o) Financial and Capital Markets . . . . . . -41-
(p) Insurance . . . . . . . . . . . . . . . . -41-
(q) Other Documents . . . . . . . . . . . . . -41-
6.02 Initial and Subsequent Loans . . . . . . . . . -41-
Section 7 Representations and Warranties . . . . . . . . -41-
7.01 Corporate Existence . . . . . . . . . . . . . . -41-
7.02 Financial Condition . . . . . . . . . . . . . . -42-
7.03 Litigation . . . . . . . . . . . . . . . . . . -42-
7.04 No Breach . . . . . . . . . . . . . . . . . . . -42-
7.05 Corporate Action . . . . . . . . . . . . . . . -43-
7.06 Approvals . . . . . . . . . . . . . . . . . . . -43-
7.07 Use of Loans . . . . . . . . . . . . . . . . . -43-
7.08 ERISA . . . . . . . . . . . . . . . . . . . . . -43-
7.09 Taxes . . . . . . . . . . . . . . . . . . . . . -43-
7.10 Investment Company Act . . . . . . . . . . . . -44-
7.11 Public Utility Holding Company Act . . . . . . -44-
7.12 Credit Agreements . . . . . . . . . . . . . . . -44-
7.13 Hazardous Materials . . . . . . . . . . . . . . -44-
7.14 Subsidiaries, Etc. . . . . . . . . . . . . . . -46-
Section 8 Covenants of the Company . . . . . . . . . . . -47-
8.01 Financial Statements . . . . . . . . . . . . . -47-
8.02 Litigation . . . . . . . . . . . . . . . . . . -50-
8.03 Corporate Existence, Etc. . . . . . . . . . . . -50-
8.04 Insurance . . . . . . . . . . . . . . . . . . . -51-
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8.05 Prohibition of Fundamental Changes . . . . . . -51-
8.06 Limitation on Liens . . . . . . . . . . . . . . -52-
8.07 Indebtedness . . . . . . . . . . . . . . . . . -54-
8.08 Investments . . . . . . . . . . . . . . . . . . -55-
8.09 Dividend Payments . . . . . . . . . . . . . . . -55-
8.10 Leverage Ratio . . . . . . . . . . . . . . . . -55-
8.11 Consolidated Net Worth . . . . . . . . . . . . -55-
8.12 Debt Service Coverage Ratio . . . . . . . . . . -55-
8.13 Lines of Business . . . . . . . . . . . . . . . -56-
8.14 Transactions with Affiliates . . . . . . . . . -56-
8.15 Use of Proceeds . . . . . . . . . . . . . . . . -56-
8.16 New Guarantors . . . . . . . . . . . . . . . . -56-
Section 9 Events of Default . . . . . . . . . . . . . . . -57-
Section 10 The Agent . . . . . . . . . . . . . . . . . . . -60-
10.01 Appointment, Powers and Immunities . . . . . . -60-
10.02 Reliance by Agent . . . . . . . . . . . . . . . -61-
10.03 Defaults . . . . . . . . . . . . . . . . . . . -61-
10.04 Rights as a Bank . . . . . . . . . . . . . . . -61-
10.05 Indemnification . . . . . . . . . . . . . . . . -61-
10.06 Non-Reliance on Agent and other Banks . . . . . -62-
10.07 Failure to Act . . . . . . . . . . . . . . . . -62-
10.08 Resignation or Removal of Agent . . . . . . . . -62-
10.09 Agency Fee . . . . . . . . . . . . . . . . . . -63-
Section 11 The Guarantee . . . . . . . . . . . . . . . . . -63-
11.01 Guarantee . . . . . . . . . . . . . . . . . . . -63-
11.02 Obligations Unconditional . . . . . . . . . . . -64-
11.03 Reinstatement . . . . . . . . . . . . . . . . . -65-
11.04 Primary Liability of Guarantors; Subrogation . -65-
11.05 Remedies . . . . . . . . . . . . . . . . . . . -65-
11.06 Continuing Guarantee . . . . . . . . . . . . . -66-
11.07 Limitation on Guarantee . . . . . . . . . . . . -66-
Section 12 Miscellaneous . . . . . . . . . . . . . . . . . -67-
12.01 Waiver . . . . . . . . . . . . . . . . . . . . -67-
12.02 Notices . . . . . . . . . . . . . . . . . . . . -67-
12.03 Expenses, Indemnification Etc. . . . . . . . . -67-
12.04 Amendments, Etc. . . . . . . . . . . . . . . . -68-
12.05 Successors and Assigns . . . . . . . . . . . . -68-
12.06 Assignments and Participations . . . . . . . . -68-
12.07 Survival . . . . . . . . . . . . . . . . . . . -71-
12.08 Captions . . . . . . . . . . . . . . . . . . . -71-
12.09 Counterparts . . . . . . . . . . . . . . . . . -71-
12.10 Governing Law; Submission to Jurisdiction . . . -71-
12.11 Waiver of Jury Trial . . . . . . . . . . . . . -71-
12.12 Confidentiality . . . . . . . . . . . . . . . . -71-
12.13 Severability . . . . . . . . . . . . . . . . . -72-
12.14 Entirety . . . . . . . . . . . . . . . . . . . -72-
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EXHIBITS
Exhibit A-1 - Form of Revolving Credit Loan Note
Exhibit A-2 - Form of Term Loan Note
Exhibit A-3 - Form of Competitive Bid Loan Note
Exhibit B - Form of Opinion of Obligors' Counsel
Exhibit C - Form of Compliance Certificate
Exhibit D - Form of Confidentiality Agreement
Exhibit E - Form of Pledge Agreement
Exhibit F - Form of Assignment Agreement
SCHEDULES
Schedule 1.01 - Commitment Allocations
Schedule 7.03 - Litigation
Schedule 7.12 - Indebtedness and Liens
Schedule 7.13 - Environmental Matters
Schedule 7.14 - Subsidiaries
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AMENDED AND RESTATED CREDIT AGREEMENT
AMENDED AND RESTATED CREDIT AGREEMENT dated as of October
19, 1994 (this "Agreement") among LADD FURNITURE, INC., a
corporation duly organized and validly existing under the laws of
the State of North Carolina (the "Company"); each of the
companies listed on the signature pages under the heading
"Guarantors" and any other Guarantor that shall become a party
hereto pursuant to Section 8.16 hereof (the "Guarantors", and
collectively with the Company, the "Obligors"); each of the banks
that is a signatory hereto or that may become a party hereto
after the date hereof pursuant to Section 12.06(b) hereof
(individually, a "Bank" and, collectively, the "Banks"); and
NATIONSBANK OF NORTH CAROLINA, N.A., as agent for the Banks (in
such capacity, together with its successors in such capacity, the
"Agent").
RECITALS
The Company and the Guarantors are engaged as an integrated
group in the business of manufacturing, distributing and selling
furniture and related products, and in related businesses, and in
furnishing the required supplies, services, equipment, credit and
other facilities for such integrated operation. The integrated
operation requires financing on such a basis that credit supplied
to the Company be made available from time to time to the
Guarantors, as required for the continued successful operation of
the Obligors, separately, and the integrated operation as a
whole. The Obligors entered into a Credit Agreement dated as of
January 15, 1993 with The Chase Manhattan Bank (National
Association) as Agent and certain banks party thereto in which
they were provided a credit facility in an amount of $130,000,000
(as amended, the "Prior Credit Agreement"). The Obligors have
additional needs that require a larger credit facility and have
requested current and new lenders to amend and restate the Prior
Credit Agreement to provide for an extension of credit to the
Company (to be made available by the Company to the Guarantors),
in an aggregate principal amount not exceeding $190,000,000, to
finance the operations of the Obligors, to refinance certain
existing indebtedness of the Obligors and for general corporate
purposes.
To induce the Banks to extend such credit, the Obligors have
requested that the Banks and the Agent enter into this Agreement
pursuant to which the Banks will make loans to the Company and
each Guarantor will guarantee the credit so extended to the
Company. Each of the Obligors expects to derive benefit,
directly or indirectly, from the credit so extended to the
Company, both in its separate capacity and as a member of the
integrated group, since the successful operation of each of the
Obligors is dependent on
the continued successful performance of
the functions of the integrated group as a whole.
Accordingly, the parties hereto agree as follows:
Section 1
Definitions and Accounting Matters
1.01 Certain Defined Terms. As used herein, the following
terms shall have the following meanings (all terms defined in
this Section 1.01 or in other provisions of this Agreement in the
singular to have the same meanings when used in the plural and
vice versa):
"Acquisition" shall mean any transaction, or any series of
related transactions, consummated after the date of this
Agreement, by which the Company and/or any of its Subsidiaries
(in one transaction or as the most recent transaction in a series
of transactions) (i) acquires any going business or all or
substantially all of the assets of any firm, corporation or
division thereof, whether through purchase of assets, merger or
otherwise, (ii) directly or indirectly acquires control of at
least a majority (in number of votes) of the securities of a
corporation which have ordinary voting power for the election of
directors or (iii) directly or indirectly acquires control of a
majority ownership interest in any partnership or joint venture.
"Advance Request" shall mean a request by the Company for a
Revolving Credit Loan in a form agreed to between the Company and
the Agent.
"Affiliate" shall mean, as to any Person, any other Person
which directly or indirectly controls, or is under common control
with, or is controlled by, such Person and, if such Person is an
individual, any member of the immediate family (including
parents, spouse and children) of such individual and any trust
whose principal beneficiary is such individual or one or more
members of such immediate family and any Person who is controlled
by any such member or trust. As used in this definition,
"control" (including, with its correlative meanings, "controlled
by" and "under common control with") shall mean possession,
directly or indirectly, of power to direct or cause the direction
of management or policies (whether through ownership of
securities or partnership or other ownership interests, by
contract or otherwise), provided that, in any event, any Person
which owns directly or indirectly 20% or more of the securities
having ordinary voting power for the election of directors or
other governing body of a corporation or 20% or more of the
partnership or other ownership interests of any other Person
(other than as a limited partner of such other Person) will be
deemed to control such corporation or other Person.
Notwithstanding the foregoing, no individual shall be deemed to
be an Affiliate of a corporation solely by reason of his or her
being
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an officer or director of such corporation and a Person and
its Subsidiaries shall not be deemed to be Affiliates of each
other.
"Agent" means NationsBank of North Carolina, N.A.
"Applicable Lending Office" shall mean, for each Bank and
for each type of Loan, the lending office of such Bank (or of an
affiliate of such Bank) designated for such type of Loan on the
signature pages hereof or such other office of such Bank (or of
an Affiliate of such Bank) as such Bank may from time to time
specify to the Agent and the Company as the office by which its
Loans of such type are to be made and maintained.
"Applicable Margin" shall mean .875% per annum; provided,
however, that (A) if on any Quarterly Date (i) the Leverage Ratio
is less than 35% or (ii) the Company has attained a long term
credit rating of Baa3 or better from Moody's Investors Services,
Inc. or BBB- or better from Standard and Poor's Corporation, then
the "Applicable Margin" shall be reduced, beginning with the next
Eurodollar Loan made after the Applicable Margin Change Date
(whether as a new advance or the conversion or continuation of a
currently existing Loan into a Eurodollar Loan), or with respect
to an existing Eurodollar Loan on the next Interest Payment Date
with respect thereto, to .625% per annum until the next
Applicable Margin Change Date (at which time a new determination
shall be made as to whether the Company meets the requirements of
(i) or (ii) above and, thus, whether it is necessary to adjust
the Applicable Margin, which such adjustment shall be effective
with the next Eurodollar Loan made after the Applicable Margin
Change Date (whether as a new advance or the conversion or
continuation of a currently existing Loan into a Eurodollar
Loan), or with respect to an existing Eurodollar Loan on the next
Interest Payment Date with respect thereto), and (B)
notwithstanding whether the Company meets the requirements of
A(i) or A(ii) above, if on any Quarterly Date subsequent to the
Quarterly Date nearest March, 1997, the ratio of Senior Debt at
such time to Capital at such time is greater than 45%, then the
Applicable Margin shall be increased, beginning with the next
Eurodollar Loan made after the Applicable Margin Change Date
(whether as a new advance or the conversion or continuation of a
currently existing Loan into a Eurodollar Loan), or with respect
to an existing Eurodollar Loan on the next Interest Payment Date
with respect thereto, to 1.125% until the next Applicable Margin
Change Date (at which time a new determination shall be made as
to the Applicable Margin for such period).
"Applicable Margin Change Date" shall mean, for each
Quarterly Period, the date of delivery by the Borrower of the
quarterly compliance certificate required by Section 8.01 hereof;
provided, that if the Applicable Margin is to change because the
Company has obtained (or failed to maintain) the long term credit
rating set forth in (A)(ii) of the definition of Applicable
Margin, then
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Applicable Margin Change Date shall mean the
Quarterly Date which begins such Quarterly Period.
Notwithstanding the foregoing, if a Default or Event of Default
shall have occurred and be continuing, the "Applicable Margin"
shall be .875% or 1.125%, as applicable, (regardless of whether
the Company meets the requirements of (A)(i) or (A)(ii) above)
for the period from the occurrence of such Default or Event of
Default and so long as the same shall be continuing.
"Base Rate" shall mean, with respect to any Base Rate Loan,
for any day, the higher of (a) the Federal Funds Rate for such
day, plus .5% per annum or (b) the Prime Rate for such day;
provided that if in the reasonable judgment of the Agent the
Federal Funds Rate cannot be determined then the Base Rate shall
mean the Prime Rate. Each change in any interest rate provided
for herein based upon the Base Rate resulting from a change in
the Base Rate shall take effect at the time of such change in the
Base Rate.
"Base Rate Loans" shall mean Revolving Credit Loans accruing
interest at the Base Rate and that portion of the Term Loan which
bears interest at the Base Rate.
"Base Rate Revolving Loan" shall mean a Revolving Credit
Loan accruing interest at the Base Rate.
"Basic Documents" shall mean, collectively, this Agreement,
the Notes and the Pledge Agreements.
"Business Day" shall mean any day on which commercial banks
are not authorized or required to close in New York City or
Charlotte, North Carolina and, if such day relates to a borrowing
of, a payment or prepayment of principal of or interest on, or a
conversion of or into, or an Interest Period for, a Eurodollar
Loan or a notice by the Company with respect to any such
borrowing, payment, prepayment, conversion or Interest Period,
then a day which is also a day on which dealings in Dollar
deposits are carried out in the London interbank market.
"Capital" shall mean, as at any date for the Company and the
Consolidated Subsidiaries on a consolidated basis in accordance
with GAAP, the difference of (i) total assets as at such date
minus (ii) total current liabilities as at such date plus (iii)
any portion of long-term debt included in current liabilities as
at such date plus (iv) Indebtedness that is classified in
accordance with GAAP as other short-term borrowings as at such
date.
"Capital Lease Obligations" shall mean, as to any Person,
the obligations of such Person to pay rent or other amounts under
a lease of (or other agreement conveying the right to use) real
and/or personal property which obligations are required to be
classified and accounted for as a capital lease on a balance
sheet
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of such Person under GAAP (including Statement of Financial
Accounting Standards No. 13 of the Financial Accounting Standards
Board) and, for purposes of this Agreement, the amount of such
obligations shall be the capitalized amount thereof, determined
in accordance with GAAP (including such Statement No. 13).
"Change in Control" of the Company shall be deemed to have
occurred if, after the date hereof, any Person or related group
of Persons (other than Senior Managers employed on the date
hereof, in respect of voting securities acquired while they are
Senior Managers) shall come into possession of, directly or
indirectly, the power to direct or cause the direction of or the
power to veto (or shall in fact exercise any such power) the
management and policies of the Company through the ownership or
control of more than 50% of the voting securities of the Company
(whether through ownership of said securities or partnership or
other ownership interests, by contract or otherwise).
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Commitment" shall mean, collectively, the Revolving Credit
Commitment and the Term Loan Commitment.
"Competitive Bid" shall mean an offer by a Bank to make a
Competitive Bid Loan pursuant to the terms of Section 2.01(b).
"Competitive Bid Loan" shall mean a loan made by a Bank in
its discretion pursuant to the provisions of Section 2.01(b).
"Competitive Bid Loan Note" shall have the meaning ascribed
thereto in Section 2.07(c) hereof.
"Competitive Bid Rate" shall mean as to any Competitive Bid
made by a Bank in accordance with the provisions of Section
2.01(b), the fixed rate of interest offered by the Bank making
the Competitive Bid.
"Competitive Bid Request" shall mean a request by the
Company for Competitive Bids in a form agreed to between the
Company and the Agent.
"Competitive Bid Request Fee" shall have the meaning agreed
to between the Company and the Agent.
"Consolidated Net Worth" shall mean, at any date, the sum,
for the Company and its Consolidated Subsidiaries on a
consolidated basis in accordance with GAAP, of the following:
consolidated net worth minus, if and to the extent included in
consolidated net worth, the amount of any preferred stock with
mandatory redemption requirements then outstanding which must be
funded prior to the
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later of (i) the Term Loan Maturity Date and
(ii) the Revolving Credit Commitment Termination Date.
"Consolidated Subsidiary" shall mean, as to the Company,
each Subsidiary of the Company (whether now existing or hereafter
created or acquired) the financial statements of which shall be
(or should have been) consolidated with the financial statements
of the Company in accordance with GAAP.
"Debt Issuance" shall mean the incurrence of Indebtedness by
the Company or its Consolidated Subsidiaries with a maturity date
of greater than one year other than Indebtedness permitted
hereunder in connection with an industrial revenue bond.
"Debt Service Coverage Ratio" shall mean, for any period,
the ratio of (i) EBIT for such period to (ii) the sum of (A)
Interest Expense for such period plus (B) scheduled maturities of
long term debt for such period (other than scheduled principal
payments under the Term Loan and principal payments made with
respect to the term loan under the Existing Loan Agreement).
"Default" shall mean an event which with notice or lapse of
time or both would become an Event of Default.
"Disposition" shall mean any sale, lease, transfer or other
disposition by the Company or any of its Material Subsidiaries of
any of its assets other than in the ordinary course of its
business.
"Dividend Payment" shall mean dividends (in cash, property
or obligations) on, or other payments or distributions on account
of, or the setting apart of money for a sinking or other
analogous fund for, the purchase, redemption, retirement or other
acquisition of, any shares of common stock of the Company, but
excluding dividends payable solely in shares of the common stock
of the Company.
"Dollars" and "$" shall mean lawful money of the United
States of America.
"EBIT" shall mean, for any period, for the Company and its
Consolidated Subsidiaries on a consolidated basis operating
income computed in accordance with GAAP; that is, the difference
between (i) net sales minus (ii) the sum of (a) the total costs
of sales, (b) selling, general and administrative expenses and
(c) all other costs or charges attributable to operating
activities of the Company and such Subsidiaries.
"Effective Date" shall mean the date on which all of the
conditions precedent set forth in Section 6 hereof shall have
been met and the Term Loan is made hereunder.
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"Environmental Laws" shall mean any and all Federal, state,
local and foreign statutes, laws, regulations, ordinances, rules,
judgments, orders, decrees, permits, concessions, grants,
franchises, licenses, agreements or other governmental
restrictions relating to the environment or to emissions,
discharges, releases or threatened releases of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes into the environment including, without
limitation, ambient air, surface water, ground water, or land, or
otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, chemicals, or industrial, toxic or
hazardous substances or wastes.
"Equity Issuance" shall mean (a) any issuance or sale by the
Company or any of its Subsidiaries after the Effective Date of
(i) any capital stock, (ii) any warrants or options exercisable
in respect of capital stock (other than any warrants or options
issued to directors, officers or employees of the Company or any
of its Subsidiaries and any capital stock of the Company issued
upon the exercise of such warrants) or (iii) any other security
or instrument representing an equity interest (or the right to
obtain any equity interest) in the issuing or selling Person or
(b) the receipt by the Company or any of its Subsidiaries after
the Effective Date of any capital contribution received (whether
or not evidenced by any equity security issued by the recipient
of such contribution); provided that Equity Issuance shall not
include (x) any such issuance or sale by any Subsidiary of the
Company to the Company or any Subsidiary of the Company or (y)
any capital contribution by the Company or any Subsidiary of the
Company to any Subsidiary of the Company.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended from time to time.
"ERISA Affiliate" shall mean any corporation or trade or
business which is a member of the same controlled group of
corporations (within the meaning of Section 414(b) of the Code)
as the Company or is under common control (within the meaning of
Section 414(c) of the Code) with the Company.
"Eurodollar Loans" shall mean Loans the interest rates on
which are determined on the basis of rates referred to in the
definition of "Fixed Base Rate" in this Section 1.01.
"Eurodollar Rate" shall mean the Fixed Rate plus the
Applicable Margin then in effect.
"Eurodollar Revolving Loan" shall mean a Revolving Credit
Loan accruing interest at the Eurodollar Rate.
"Event of Default" shall have the meaning assigned to such
term in Section 9 hereof.
-7-
"Existing Credit Agreement" shall mean that certain Amended
and Restated Credit Agreement dated as of January 15, 1993 among
the Company, the banks party thereto, the guarantors party
thereto and The Chase Manhattan Bank (National Association), as
agent thereunder, as modified, supplemented and in effect on the
Effective Date.
"Federal Funds Rate" shall mean, for any day, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
equal to the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next
succeeding such day, provided that (i) if the day for which such
rate is to be determined is not a Business Day, the Federal Funds
Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next
succeeding Business Day, and (ii) if such rate is not so
published for any day, the Federal Funds Rate for such day shall
be the average rate charged to the Agent on such day on such
transactions as determined by the Agent.
"Fiscal Year" shall mean, for the Company and its
Subsidiaries for any year, the period from and including the
first day after the Quarterly Date falling on or nearest to
December 31 in any year to and including the Quarterly Date
falling on or nearest to December 31 in the next succeeding year;
and the reference to any specific Fiscal Year shall be to the
Fiscal Year ending on the Quarterly Date falling on or nearest to
December 31 of such year.
"Fixed Base Rate" shall mean, for the applicable Interest
Period, a rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) determined by the Agent on the basis of the
offered rates for deposits in Dollars (for a period of time
corresponding to such Interest Period and commencing on the first
day of such Interest Period) which appear on Telerate Page 3750
as of 11:00 a.m. (London time) two Business Days before the first
day of such Interest Period (provided that if at least two such
offered rates appear on Telerate Page 3750 the rate in respect of
such Interest Period will be the arithmetic mean of such offered
rates). If for any reason the foregoing rates are unavailable
from the Telerate service then a market rate as determined by the
Agent.
"Fixed Rate" shall mean, for any Eurodollar Loan for any
Interest Period therefor, a rate per annum (rounded upwards if
necessary to the nearest 1/100 of 1%) obtained by dividing (a)
the Fixed Base Rate for such Interest Period by (b) 1 minus the
Reserve Requirement for such Loan for such Interest Period.
"Funded Debt" shall mean, as to the Company and its
Consolidated Subsidiaries on a consolidated basis, all
Indebtedness and in any event includes (A) any portion of long-
term Indebtedness
-8-
included in current liabilities, (B) any other
short term borrowings or any Indebtedness outstanding under a
revolving credit or similar agreement providing for borrowings
(and renewals and extensions thereof) over a period of more than
one year notwithstanding that any such Indebtedness may be
payable on demand or within one year after the creation thereof,
(C) any long term debt, (D) any Indebtedness that is renewable or
extendable at the option of the Obligor to a date more than one
year after the creation of such Indebtedness and (E) Capital
Lease Obligations; provided that Funded Debt does not include the
face amount of any standby or trade letters of credit in respect
of which the Company or any of its Subsidiaries shall be the
account party.
"GAAP" shall mean generally accepted accounting principles
applied on a basis consistent with those which, in accordance
with Section 1.02(a) hereof, are to be used in making the
calculations for purposes of determining compliance with the
terms of this Agreement.
"Guarantee" shall mean a guarantee, an endorsement, a
contingent agreement to purchase or to furnish funds for the
payment or maintenance of, or otherwise to be or become
contingently liable under or with respect to, the Indebtedness,
or other obligations, net worth, working capital or earnings of
any Person, or a guarantee of the payment of dividends or other
distributions upon the stock of any corporation, or an agreement
to purchase, sell or lease (as lessee or lessor) property,
products, materials, supplies or services primarily for the
purpose of enabling a debtor to make payment of his, her or its
obligations or an agreement to assure a creditor against loss,
and including without limitation, causing a bank to open a letter
of credit for the benefit of another Person, but excluding
endorsements for collection or deposit in the ordinary course of
business. The terms "Guarantee" and "Guaranteed" used as a verb
shall have a correlative meaning.
"Guarantee Obligations" shall have the meaning assigned to
such term in Section 11.01 hereof.
"Indebtedness" shall mean, as to any Person: (a)
indebtedness created, issued or incurred by such Person for
borrowed money (whether by loan or the issuance and sale of debt
securities); (b) indebtedness of others secured by a Lien on the
property of such Person, whether or not the respective
indebtedness so secured has been assumed by such Person; (c)
obligations of such Person in respect of letters of credit or
similar instruments issued or accepted by banks and other
financial institutions for the account of such Person; (d)
Capital Lease Obligations of such Person; (e) Indebtedness of
others Guaranteed by such Person other than obligations incurred
as a result of Guaranteeing obligations owed to (i) Enterprise
Funding or a similar entity in connection with the purchase of
receivables on a basis consistent with the current
-9-
relationship with Enterprise Funding, (ii) Wachovia Leasing not to
exceed $10,000,000 at any one time, (iii) Commonwealth Bank or a
similar entity in connection with the purchase of dealer notes from
Pennsylvania House, Inc. not to exceed $20,000,000 at any one
time and (iv) trade vendors in the ordinary course; and (f)
obligations of such Person to pay the deferred purchase or
acquisition price of property or services, other than trade
accounts payable (other than for borrowed money) arising, and
accrued expenses incurred, in the ordinary course of business.
"Initial Commitment" shall mean the total dollar amount that
each Bank was originally willing to make available to the Company
as communicated to the Agent.
"Interest Expense" shall mean, for any period, the sum, for
the Company and its Consolidated Subsidiaries on a consolidated
basis in accordance with GAAP, of all interest in respect of
Indebtedness.
"Interest Payment Date" shall have the meaning set forth in
Section 3.02(b) hereof.
"Interest Period" means, with respect to (i) Eurodollar
Loans, a period of one, two, three or six month's duration, as
the Company may elect from time to time, commencing in each case,
on the date of the borrowing, conversion or continuation (or
election of the interest rate with respect to the Term Loan) and
(ii) Competitive Bid Loans, a period beginning on the date of the
advance and ending on the date specified in the respective
Competitive Bid whereby the offer to make such Competitive Bid
Loan was extended, which shall not be of less than seven days nor
more than 180 days duration; provided, however, (A) if any
Interest Period would end on a day which is not a Business Day,
such Interest Period shall be extended to the next succeeding
Business Day (except that where the next succeeding Business Day
falls in the next succeeding calendar month, then on the next
preceding Business Day), (B) no Interest Period shall extend
beyond the Revolving Credit Commitment Termination Date or the
Term Loan Maturity Date, as the case may be, (C) no Interest
Period with respect to a portion of the Term Loan shall extend
beyond a Principal Payment Date unless (1) the amount of the Term
Loan accruing interest at the Base Rate plus (2) the amount of
the Term Loan accruing interest at the Eurodollar Rate with an
Interest Period ending prior to such Principal Payment Date is
equal to or greater than the principal payment required on such
Principal Payment Date and (D) where an Interest Period begins on
a day for which there is no numerically corresponding day in the
calendar month in which the Interest Period is to end, such
Interest Period shall end on the last day of such calendar month,
subject to subparagraph (A) above.
"Investment" in any Person shall mean: (a) the acquisition
(whether for cash, property, services, securities or otherwise)
of
-10-
capital stock, bonds, notes, debentures, partnership or other
ownership interests or other securities of such Person; and (b)
any deposit with, or advance, loan or other extension of credit
to, such Person (other than any such advance, loan or extension
of credit representing the purchase price of inventory or
supplies purchased in the ordinary course of business) or
Guarantee of, or other contingent obligation with respect to,
Indebtedness or other liability of such Person and (without
duplication) any amount committed to be advanced, lent or
extended to such Person.
"Leasehold Interests" shall mean the interests of the
Company or any Subsidiary in leases with customers entered into
in the ordinary course of business.
"Leverage Ratio" shall mean, at any time, the ratio
(expressed as a percentage) of (i) Funded Debt at such time to
(ii) Capital at such time.
"Lien" shall mean, with respect to any asset, any mortgage,
lien, pledge, charge, security interest or encumbrance of any
kind in respect of such asset. For purposes of this Agreement,
the Company or any of its Subsidiaries shall be deemed to own
subject to a Lien any asset which it has acquired or holds
subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title
retention agreement relating to such asset.
"Loans" shall mean the loans provided for by Section 2.01
hereof and shall include Revolving Credit Loans, the Term Loan
and Competitive Bid Loans.
"Majority Banks" shall mean Banks holding more than 50% of
the aggregate amount of the Commitment; provided that, if the
Revolving Credit Commitment shall have terminated, Majority Banks
shall mean Banks holding more than 50% of the aggregate unpaid
principal amount of the Loans.
"Margin Stock" shall mean margin stock within the meaning of
Regulations G, U and X.
"Material Subsidiary" shall mean, as at any date of
determination thereof, any Subsidiary of the Company whose net
sales (for the rolling four Quarterly Periods ending on the
Quarterly Date falling on or immediately preceding such date of
determination) exceed $20,000,000 or whose assets exceed
$15,000,000 as at such date; provided that each of Cherry Grove,
Inc. and LFI Capital Management Inc. shall not be deemed to be a
Material Subsidiary; and provided further that, notwithstanding
the foregoing, each Guarantor (as of the date hereof) shall be
deemed to be a "Material Subsidiary" and once a Subsidiary
becomes a Guarantor it shall remain a Guarantor regardless if it
still meets the definition of a Material Subsidiary.
-11-
"Multiemployer Plan" shall mean a multiemployer plan defined
as such in Section 3(37) of ERISA to which contributions have
been made by the Company or any ERISA Affiliate and which is
covered by Title IV of ERISA.
"Net Proceeds" shall mean, for any Disposition, Equity
Issuance or Debt Issuance, the sum of (i) all cash amounts
received in respect of such Disposition, Equity Issuance or Debt
Issuance and (ii) an amount equal to the fair market value of any
and all notes, evidences of debt or other property received in
respect of such Disposition, Equity Issuance or Debt Issuance;
provided, that:
(I) in the case of any Disposition, (a) Net
Proceeds shall be net of (i) the amount of any legal, title
and recording tax expenses, commissions and other fees and
expenses paid by the Company and its Subsidiaries in
connection with such Disposition and (ii) any Federal, state
and local income or other taxes estimated in good faith to
be payable by the Company and its Subsidiaries as a result
of such Disposition and (b) Net Proceeds shall be net of any
repayments by the Company or any of its Subsidiaries of
Indebtedness to the extent that (i) such Indebtedness is
secured by a Lien on the property that is the subject of
such Disposition and (ii) the transferee of (or holder of
Lien on) such property requires that such Indebtedness be
repaid as a condition to the purchase of such property; and
(II) in the case of any Equity Issuance, the Net
Proceeds in respect thereof shall, in any event, be equal to
the increase in stockholder's equity for the Company or the
relevant Subsidiary effecting such Equity Issuance resulting
from such issuance.
For the purposes of this definition, "fair market value" means
(A) if the respective notes, evidences of debt or other property
are securities quoted on a nationally recognized securities
exchange, then the closing price on the day such securities are
received or, if there are no sales reported on that day, the
reported closing bid price on that day, (B) if the respective
notes, evidences of debt or other property are not so quoted and
are, within 30 days of such Disposition, negotiated or otherwise
sold for cash, the amount of cash received therefor, (C) in the
case of notes or other evidences of indebtedness to which clauses
(A) or (B) above are not applicable, the principal amount thereof
and (D) in all other cases, a price determined by a nationally
recognized investment banking house or a commercial bank selected
by the Company and approved by the Majority Banks, such price to
be determined as of the date of receipt of such notes, evidences
of debt or other property.
"Non Senior Debt" shall mean Indebtedness of the Company and
its Consolidated Subsidiaries which is specifically subordinated
in
-12-
writing in all respects (including, without limitation, the
subordination of any payments of principal) to the obligations of
the Company under this Agreement.
"Notes" shall mean the promissory notes provided for by
Sections 2.07(a), (b) and (c) hereof.
"NPAT" shall mean, for any period, the consolidated net
earnings of the Company and the Consolidated Subsidiaries
determined on a consolidated basis in accordance with GAAP;
provided that, solely for the purposes of Section 8.11 hereof, if
for any Quarterly Period such consolidated net earnings shall be
negative (i.e., a loss), "NPAT" for such Quarterly Period shall
be deemed to be zero.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
or any entity succeeding to any or all of its functions under
ERISA.
"Person" shall mean any individual, corporation, company,
voluntary association, partnership, joint venture, trust,
unincorporated organization or government (or any agency,
instrumentality or political subdivision thereof).
"Plan" shall mean an employee benefit or other plan
established or maintained by the Company or any ERISA Affiliate
and which is covered by Title IV of ERISA, other than a
Multiemployer Plan.
"Pledge Agreement" shall mean, for any Pledgor, the Pledge
Agreement dated as of the date hereof between the Agent and such
Pledgor, substantially in the form attached as Exhibit E hereto.
"Pledged Stock" shall have the meaning assigned to such term
in the Pledge Agreements.
"Pledgor" shall mean each holder of outstanding shares of
capital stock of any Special Subsidiary.
"Post-Default Rate" shall mean, in respect of any principal
of or interest on any Loan or any other amount payable by the
Company under any Basic Document that is not paid when due
(whether at stated maturity, by acceleration or otherwise), a
rate per annum, during the period from and including the due date
to but excluding the date on which such amount is paid in full,
equal to 2% above the rate then applicable to such Loan (or, in
the case of other amounts due hereunder, 2% above the Base Rate).
"Prime Rate" shall mean, for any day, the fluctuating rate
of interest from time to time publicly announced by the Agent as
its "prime rate" or "reference rate", which is not necessarily
the best or lowest rate offered by the Agent.
-13-
"Principal Payment Date" shall mean, for the Term Loan, each
date identified in the payment schedule in Section 3.01(b) hereof
or if such day is not a Business Day, the next preceding Business
Day.
"Pro Forma Basis" shall mean, with respect to the making of
any Investment, Acquisition or Dividend Payment, or the
incurrence, creation or sufferance to exist of any Indebtedness
reflecting the making of such Investment, Acquisition or Dividend
Payment, or the incurrence, creation or sufferance to exist of
such Indebtedness, on the financial statements of the Company at
the fiscal quarter most recently ended (whether or not delivered
pursuant to Section 8.01(a) or (b) hereof); and at any time a
test of whether the making of such Investment, Acquisition or
Dividend Payment or the incurrence, creation or sufferance to
exist of such Indebtedness, would constitute a violation of any
financial covenant herein (for the purposes of such test, the
term "Quarterly Date" as used in Section 8 hereof shall be deemed
to be the date of such pro forma financial statements).
"Quarterly Dates" shall mean the Saturday on or nearest to
the last calendar day of each March, June, September and December
in each year, the first of which shall be the first such day
after the date of this Agreement.
"Quarterly Period" shall mean the quarterly fiscal period of
the Company ending on each Quarterly Date.
"Receivables Sale" shall mean any sale or assignment by the
Company or any Subsidiary of any of their respective trade
receivables, lease receivables or note receivables if such sale
or assignment is made according to ordinary business terms for
adequate consideration.
"Regulations A, D, G, U and X" shall mean, respectively,
Regulations A, D, G, U and X of the Board of Governors of the
Federal Reserve System (or any successor), as the same may be
amended or supplemented from time to time.
"Regulatory Change" shall mean, with respect to any Bank,
any change after the date of this Agreement in United States
Federal, state or foreign law or regulations (including, without
limitation, Regulation D) or the adoption or making after such
date of any interpretation, directive or request applying to a
class of banks including such Bank of or under any United States
Federal, state or foreign law 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.
"Reserve Requirement" shall mean, for any Interest Period
for any Eurodollar Loan, the average maximum rate at which
reserves (including any marginal, supplemental or emergency
reserves) are
-14-
required to be maintained during such Interest
Period under Regulation D by member banks of the Federal Reserve
System in New York City with deposits exceeding one billion
Dollars against, in the case of Eurodollar Loans, "Eurocurrency
liabilities" (as such term is used in Regulation D). Without
limiting the effect of the foregoing, the Reserve Requirement
shall include 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 Fixed Base Rate for Eurodollar Loans is to be
determined as provided in the definition of "Fixed Base Rate" in
this Section 1.01 or (ii) any category of extensions of credit or
other assets which includes Eurodollar Loans.
"Revolving Credit Commitment" shall mean One Hundred Fifteen
Million Dollars ($115,000,000) as it may be amended from time to
time pursuant to the terms hereof.
"Revolving Credit Commitment Percentage" shall mean, as to
each Bank, the obligation of such Bank to make Revolving Credit
Loans in an aggregate amount at any one time outstanding up to
but not exceeding the amount set opposite such Bank's name on
Schedule 1.01 hereto under the caption "Revolving Credit Loan
Commitment Percentage" (as the same may be amended from time to
time pursuant to the terms hereof).
"Revolving Credit Commitment Termination Date" shall mean
October 19, 1999; provided that if such date is not a Business
Day, the Revolving Credit Commitment Termination Date shall be
the next succeeding Business Day.
"Revolving Credit Loans" shall mean the loans provided for
by Section 2.01(a) hereof.
"Revolving Credit Loan Note" shall have the meaning ascribed
thereto in Section 2.07(a) hereof.
"Senior Debt" shall mean all Funded Debt less any
Indebtedness of the Company and its Consolidated Subsidiaries
which is Non-Senior Debt.
"Senior Managers" shall mean the top four executive officers
of the Company, the directors of the Board of Directors of the
Company and the Presidents of each operating Subsidiary or
division of the Company.
"Special Subsidiary" shall mean each of Cherry Grove, Inc.,
a Delaware corporation and LFI Capital Management, Inc., a
Delaware corporation.
"Special Subsidiary Events of Default" shall mean the
occurrence of any of the following:
-15-
(a) Prohibition of Fundamental Change;
Capitalization. Any Special Subsidiary enters into any
transaction of merger or consolidation or amalgamation, or
liquidates, winds up or dissolves itself (or suffers any
liquidation or dissolution); or any Special Subsidiary
acquires any business or assets from, or acquires capital
stock of, or is a party to any acquisition of, any Person;
or any Special Subsidiary conveys, sells, leases, transfers
or otherwise disposes of, in one transaction or a series of
transactions, all or any material part of its business or
assets, whether now owned or hereafter acquired; or any
Special Subsidiary authorizes any equity capital; or any
Special Subsidiary or the issuer of the Pledged Stock fails
to note on its record books the beneficial ownership
interest of the Pledgors and, as collateral assignee of the
Pledgors, the Agent in its capital stock; provided however,
that the foregoing shall not include any acquisition by
Cherry Grove, Inc. of intellectual property assets from any
Obligor or any issuance of equity securities in connection
therewith or any acquisition by LFI Capital Management, Inc.
of the Indebtedness of any Obligor or any other Subsidiary
of the Company.
(b) Limitation on Liens. Any Special Subsidiary
creates, incurs, assumes or suffers to exist any Lien upon
any of its property, assets or revenues, whether now owned
or hereafter acquired, except Liens imposed by any
governmental authority for taxes, assessments or charges not
yet due or which are being contested in good faith and by
appropriate proceedings if adequate reserves with respect
thereto are maintained on the books of such Special
Subsidiary in accordance with GAAP.
(c) Indebtedness. Any Special Subsidiary creates,
incurs or suffers to exist any Indebtedness except for
Indebtedness owing to any other Special Subsidiary.
(d) Investments. Subject to the proviso in respect
of LFI Capital Management, Inc. contained in clause (a)
above, any Special Subsidiary makes or permits to remain
outstanding any Investments other than short term
Investments of excess working capital.
(e) Capital Expenditures. Any Special Subsidiary
makes any capital expenditures in excess of $10,000 (in the
aggregate) during any fiscal year of such Special
Subsidiary.
(f) Lines of Business. Any Special Subsidiary
engages in any line or lines of business activity other than
the business of (i) in the case of Cherry Grove, Inc.,
owning and licensing intellectual property and (ii) in the
case of LFI Capital Management, Inc., holding Indebtedness
of the Obligors or any other Subsidiary of the Company.
-16-
(g) Business Operations. Any Special Subsidiary:
(i) pays any salary or any other form of
compensation for services to any Person, except (I)
as necessary in the ordinary course of conducting its
business, (II) the reasonable fees and expenses of
its outside counsel and auditors, and (III) payments
to members of its board of directors not exceeding
customary levels of similarly situated companies;
(ii) incurs any obligation, contractually or
otherwise, to any Person other than as is related or
incidental to the activities contemplated by clauses
(a) and (f) above; or
(iii) creates or maintains any Plan, is or
becomes a participant in any Multiemployer Plan or
incurs any liability to the PBGC.
(h) Capital Stock. All of the issued and
outstanding capital stock of any Special Subsidiary is not
owned by the Pledgors executing the Pledge Agreement or is
not subject to a first priority and perfected security
interest in favor of the Agent or is subject to a Lien other
than a Lien under the Pledge Agreement.
"Subsidiary" shall mean any Person that the Company or one
or more of the Subsidiaries (or the Company and one or more of
the Subsidiaries) controls, directly or indirectly, by either
shares of stock having by the terms thereof ordinary voting power
to elect a majority of the board of directors of such corporation
(irrespective of whether or not at the time stock of any other
class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency) or
(ii) possessing, directly or indirectly, power to direct or cause
the direction of securities or partnership or other ownership
interests, by contract or otherwise.
"Term Loan" shall mean the loan provided for by Section 2.02
hereof.
"Term Loan Commitment" shall mean Seventy Five Million
Dollars ($75,000,000).
"Term Loan Commitment Percentage" shall mean, as to each
Bank, the amount equal to the amount set opposite such Bank's
name on Schedule 1.01 hereto under the caption "Term Loan
Commitment Percentage" (as the same may be amended from time to
time pursuant to Section 12.06(b) hereof).
-17-
"Term Loan Interest Rate Request" shall mean a request by
the Company to choose an interest rate option for all or part of
the Term Loan in a form agreed to between the Company and the
Agent.
"Term Loan Maturity Date" shall mean October 19, 1999.
"Term Loan Note" shall have the meaning ascribed thereto in
Section 2.07(b) hereof.
"Total Tangible Assets" shall mean, as at any date for the
Company and its Consolidated Subsidiaries on a consolidated basis
in accordance with GAAP, the differences of (i) total assets as
at such date minus (ii) the sum of the following: (a) cost of
treasury shares and (b) the book value of all assets which should
be classified as intangibles (without duplication of deductions
in respect of items already deducted in arriving at surplus and
retained earnings) but in any event including goodwill, minority
interests, trademarks, trade names, copyrights, patents and
franchises, and unamortized debt discount expense, in each case
as at such date.
1.02 Accounting Terms and Determinations.
(a) Except as otherwise expressly provided herein, all
accounting terms used herein shall be interpreted, and all
financial statements and certificates and reports as to financial
matters required to be delivered to the Banks hereunder shall
(unless otherwise disclosed to the Banks in writing at the time
of delivery thereof in the manner described in subsection (b)
below) be prepared, in accordance with generally accepted
accounting principles applied on a basis consistent with those
used in the preparation of the latest financial statements
furnished to the Banks hereunder after the date hereof. All
calculations made for the purposes of determining compliance with
the terms of this Agreement shall (except as otherwise expressly
provided herein) be made by application of generally accepted
accounting principles applied on a basis consistent with those
used in the preparation of the annual or quarterly financial
statements furnished to the Banks pursuant to Section 8.01
hereof, unless (i) the Company shall have objected to determining
such compliance on such basis at the time of delivery of such
financial statements or (ii) the Majority Banks shall so object
in writing within 30 days after delivery of such financial
statements, in either of which events such calculations shall be
made on a basis consistent with those used in the preparation of
the latest financial statements as to which such objection shall
not have been made (which, if objection is made in respect of the
first financial statements delivered under Section 8.01 hereof,
shall mean the financial statements referred to in Section 7.02
hereof).
(b) The Company shall deliver to the Banks at the same
time as the delivery of any annual or quarterly financial
statements
-18-
under Section 8.01 hereof a description in reasonable
detail of any material variation between the application of
accounting principles employed in the preparation of such
statement and the application of accounting principles employed
in the preparation of the next preceding annual or quarterly
financial statements as to which no objection has been made in
accordance with the last sentence of subsection (a) above, and
reasonable estimates of the difference between such statements
arising as a consequence thereof, where practicable.
(c) To enable the ready and consistent determination of
compliance with the covenants set forth in Section 8 hereof, the
Company will not change the last day of its fiscal year from the
Saturday closest to December 31 or the last days of the first
three fiscal quarters in each of its fiscal years from the
Saturday nearest to the last calendar day falling in March, June,
and September, respectively.
(d) For the purposes of Sections 8.05(c), 8.07, 8.08 and
8.09 hereof, the basis for testing whether a Default shall have
occurred by virtue of the making of any Investment, Acquisition
or Dividend Payment, or the incurrence, creation or sufferance to
exist of any Indebtedness, shall be tested on a Pro Forma Basis.
Section 2
Loans and Commitments
2.01 Revolving Credit Commitment.
(a) Revolving Credit Loans. Each Bank severally agrees,
on the terms of this Agreement, to make revolving loans to the
Company in Dollars, at any time and from time to time during the
period from and including the Effective Date to but not including
the Revolving Credit Commitment Termination Date (each a
"Revolving Loan and collectively the "Revolving Loans");
provided, however, that (i) the sum of the aggregate amount of
Revolving Loans outstanding plus the aggregate amount of
Competitive Bid Loans outstanding shall not exceed the Revolving
Credit Commitment and (ii) with respect to each individual Bank,
the Bank's pro rata share of outstanding Revolving Loans shall
not exceed such Bank's Revolving Credit Commitment Percentage of
the Revolving Credit Commitment. Subject to the terms of this
Agreement, the Company may borrow, repay and reborrow the amount
of the Revolving Credit Commitment.
(b) Competitive Bid Loans Subfacility.
(i) Competitive Bid Loans. Subject to the terms and
conditions hereof, the Company may, from time to time during
the period from and including the Effective Date to but not
including the Revolving Credit Commitment Termination Date,
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request and each Bank may, in its sole discretion, agree to
make Competitive Bid Loans to the Company; provided,
however, that (x) the sum of the aggregate amount of
Revolving Credit Loans outstanding plus the aggregate amount
of Competitive Bid Loans outstanding shall not exceed the
Revolving Credit Commitment and (y) if a Bank does make a
Competitive Bid Loan it shall not reduce such Bank's
obligation to make its pro rata share of any Revolving
Credit Loan.
(ii) Competitive Bid Requests. The Company may
solicit Competitive Bids by delivery of a Competitive Bid
Request to the Agent by 12:00 noon (Charlotte, North
Carolina time) on a Business Day not less than three (3) nor
more than ten (10) Business Days prior to the date of a
requested Competitive Bid Loan advance. A Competitive Bid
Request shall specify (x) the date of the requested
Competitive Bid Loan advance (which shall be a Business
Day), (y) the amount of the requested Competitive Bid Loan
advance and (z) the applicable Interest Periods requested
and shall be accompanied by payment of the Competitive Bid
Request Fee. The Agent shall notify the Banks of its
receipt of a Competitive Bid Request and the contents
thereof and invite the Banks to submit Competitive Bids in
response thereto. The Company may not request a Competitive
Bid for more than three different Interest Periods at a time
and Competitive Bid Requests may be made no more frequently
than once every ten Business Days.
(iii) Competitive Bid Procedure. Each Bank may, in
its sole discretion, make one or more Competitive Bids to
the Company in response to a Competitive Bid Request. Each
Competitive Bid must be received by the Agent not later than
10:00 a.m. (Charlotte, North Carolina time) on the proposed
date of a Competitive Bid Loan advance; provided, however,
that should the Agent, in its capacity as a Bank, desire to
submit a Competitive Bid it shall notify the Company of its
Competitive Bid and the terms thereof not later than 9:30
a.m. (Charlotte, North Carolina time) on the proposed date
of a Competitive Bid Loan advance. A Bank may offer to make
all or part of the requested Competitive Bid Loan advance
and may submit multiple Competitive Bids in response to a
Competitive Bid Request. The Competitive Bid shall specify
(1) the particular Competitive Bid Request as to which the
Competitive Bid is submitted, (2) the minimum (which shall
be not less than $1,000,000 and integral multiples of
$500,000 in excess thereof) and maximum principal amounts of
the requested Competitive Bid Loan or Loans as to which the
Bank is willing to make and (3) the applicable interest rate
or rates and Interest Period or Periods therefor. A
Competitive Bid submitted by a Bank in accordance with the
provisions hereof shall be irrevocable. The Agent shall
promptly notify the Company of all Competitive Bids made and
the terms thereof.
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The Agent shall send a copy of each of the Competitive Bids
to the Company for its records as soon as practicable.
(iv) Acceptance of Competitive Bids. The Company
may, in its sole and absolute discretion, subject only to
the provisions of this subsection (iv), accept or refuse any
Competitive Bid offered to it. To accept a Competitive Bid,
the Company shall give oral notification of its acceptance
of any or all such Competitive Bids to the Agent by 11:00
a.m. (Charlotte, North Carolina time) on the proposed date
of a Competitive Bid Loan advance which shall be confirmed
in writing by the Company by the end of the day; provided,
however, (1) the failure by the Company to give timely
notice of its acceptance of a Competitive Bid shall be
deemed to be a refusal thereof, (2) to the extent
Competitive Bids are for comparable Interest Periods, the
Company may accept Competitive Bids only in ascending order
of rates, (3) the aggregate amount of Competitive Bids
accepted by the Company shall not exceed the principal
amount specified in the Competitive Bid Request, (4) if the
Company shall accept a bid or bids made at a particular
Competitive Bid Rate, but the amount of such bid or bids
shall cause the total amount of bids to be accepted by the
Company to be in excess of the amount specified in the
Competitive Bid Request, then the Company shall accept a
portion of such bid or bids in an amount equal to the amount
specified in the Competitive Bid Request less the amount of
all other Competitive Bids accepted with respect to such
Competitive Bid Request, which acceptance in the case of
multiple bids at such Competitive Bid Rate, shall be made
pro rata in accordance with the amount of each such bid at
such Competitive Bid Rate and (5) no bid shall be accepted
for a Competitive Bid Loan unless such Competitive Bid Loan
is in a minimum principal amount of $1,000,000 and integral
multiples of $500,000 in excess thereof, except that where a
portion of a Competitive Bid is accepted in accordance with
the provisions of subsection (4) hereof, then in a minimum
principal amount of $100,000 and integral multiples thereof
(but not in any event less than the minimum amount specified
in the Competitive Bid), and in calculating the pro rata
allocation of acceptances of portions of multiple bids at a
particular Competitive Bid Rate pursuant to subsection (4)
hereof, the amounts shall be rounded to integral multiples
of $100,000 in a manner which shall be in the discretion of
the Company. A notice of acceptance of a Competitive Bid
given by the Company in accordance with the provisions
hereof shall be irrevocable. The Agent shall, not later
than 1:00 p.m. (Charlotte, North Carolina time) on the
proposed date of a Competitive Bid Loan advance, notify each
bidding Bank whether or not its Competitive Bid has been
accepted (and if so, in what amount and at what Competitive
Bid Rate), and each successful bidder will thereupon become
bound, subject to the
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other applicable conditions hereof, to make the Competitive
Bid Loan in respect of which its bid has been accepted.
(v) Funding of Competitive Bid Loans. Each Bank
which is to make a Competitive Bid Loan shall make its
Competitive Bid Loan advance available to the Agent by 3:00
P.M. (Charlotte, North Carolina time) on the date specified
in the Competitive Bid Request by deposit in Dollars of
immediately available funds at the office of the Agent in
Charlotte, North Carolina, or at such other address as the
Agent may designate in writing. The Agent will, upon
receipt, make the proceeds of such Competitive Bid Loans
available to the Company.
(vi) Maturity of Competitive Bid Loans. Each
Competitive Bid Loan shall mature and be due and payable in
full on the last day of the Interest Period applicable
thereto. Unless the Company shall give notice to the Agent
otherwise, or a Default or Event of Default exists and is
continuing, the Company shall be deemed to have requested a
Revolving Credit Loan advance in the amount of the maturing
Competitive Bid Loan, accruing interest at the Base Rate,
the proceeds of which will be used to repay such Competitive
Bid Loan.
(c) Method of Borrowing for Revolving Credit Loans.
(i) Base Rate Revolving Loans. By no later than
11:00 a.m., Charlotte, North Carolina time, on the date of
the request for the advance, the Company shall submit an
Advance Request to the Agent setting forth the amount
requested, the desire to have such Revolving Credit Loan
accrue interest at the Base Rate and complying in all
respects with Section 6 hereof.
(ii) Eurodollar Revolving Loans. By no later than
11:00 a.m., Charlotte, North Carolina time, three Business
Days prior to the date of the request for the advance, the
Company shall submit an Advance Request to the Agent setting
forth the amount thereof, the desire to have such Revolving
Credit Loan accrue interest at the Eurodollar Rate, the
Interest Period applicable thereto and complying in all
respects with Section 6 hereof.
(iii) Conversion and Continuation. The Company
shall have the option, on any Business Day, to continue an
existing Eurodollar Revolving Loan into a subsequent
Interest Period, to convert a Base Rate Revolving Loan into
a Eurodollar Revolving Loan or to convert a Eurodollar
Revolving Loan into a Base Rate Revolving Loan; provided,
however, that (i) except as provided in Section 5.03,
Eurodollar Revolving Loans may be converted into Base Rate
Loans only on the last day of an Interest Period applicable
thereto; (ii) Eurodollar Revolving
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Loans may be continued and Base Rate Loans may be converted into
Eurodollar Revolving Loans only if no Default or Event of Default
is in existence on the date of extension or conversion; (iii) any
continuation or conversion must comply with all requirements
of this Agreement including, without limitation, the timely
delivery of an Advance Request duly completed; (iv) no more
than ten different Eurodollar Loans may be outstanding under
this Agreement at any one time; and (v) failure by the
Company to properly continue a Eurodollar Revolving Loan at
the end of an Interest Period shall be deemed a conversion
to a Base Rate Revolving Loan.
(d) Funding of Revolving Loans. Upon receipt of an
Advance Request for a Revolving Credit Loan, the Agent shall
promptly inform the Banks as to the terms thereof. Each Bank
will make its pro rata share of each Revolving Credit Loan
available to the Agent by 1:00 p.m. Charlotte, North Carolina
time, on the date specified in the Advance Request by deposit (in
Dollars) of immediately available funds at the offices of the
Agent at its principal office in Charlotte, North Carolina, or at
such other address as the Agent may designate in writing. All
Revolving Credit Loans shall be made by the Banks pro rata on the
basis of each Bank's Revolving Credit Commitment Percentage.
2.02 Term Loan.
(a) The Term Loan. Each Bank severally agrees, on
the terms and conditions of this Agreement, to make a single
term loan to the Company in Dollars on the Effective Date in
an amount equal to (but not exceeding) the amount of such
Bank's Term Loan Commitment Percentage of the Term Loan
Commitment.
(b) Method of Choosing Interest Rate under the Term
Loan.
(i) Base Rate. By no later than 11:00 a.m.,
Charlotte, North Carolina time, on the date of the
request, the Company shall provide to the Agent a
Term Loan Interest Rate Request setting forth the
amount of the Term Loan that it wishes to have accrue
interest at the Base Rate. From that date forward,
interest shall accrue on that portion of the Term
Loan as set forth in the Term Loan Interest Rate
Request until requested otherwise by the Company.
(ii) Eurodollar Rate. By no later than
11:00 a.m., Charlotte, North Carolina time, three
Business Days prior to when the Company wishes to
have all or a portion of the Term Loan accrue
interest at the Eurodollar Rate, the Company shall
provide to the Agent a Term Loan Interest Rate
Request setting forth
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the amount of the Term Loan it
wishes to have accrue interest at the Eurodollar
Rate, and the Interest Period for which such rate
shall be applicable; provided, however, that (A) the
Company may not request all or part of the Term Loan
to accrue interest at the Eurodollar Rate during the
existence and continuation of a Default or Event of
Default and (B) no more than ten different Eurodollar
Loans may be outstanding under this Agreement at any
one time. From the date three Business Days after
such Term Loan Interest Rate Request is received and
approved, interest shall accrue on that portion of
the Term Loan for the Interest Period specified as
set forth in the Term Loan Interest Rate Request.
(iii) Failure to Submit a Term Loan Interest Rate
Request. If the Company fails to timely submit a Term
Loan Interest Rate Request stating a desire to have
all or a portion of the Term Loan accrue interest at
the Eurodollar Rate (whether on the Effective Date or
at the end of an Interest Period applicable thereto)
or if the Company submits an improper Term Loan
Interest Rate Request, then the Term Loan (or such
portion thereof) shall accrue interest at the Base
Rate until the Agent receives a proper request from
the Company.
2.03 Reductions of Revolving Credit Commitment.
Upon at least three Business Days notice, the Company shall
have the right to permanently terminate or reduce the aggregate
unused amount of the Revolving Credit Commitment at any time or
from time to time; provided that (i) each partial reduction
shall be in an aggregate amount at least equal to $10,000,000 and
in integral multiples of $1,000,000 above such amount and (ii) no
reduction shall be made which would reduce the Revolving Credit
Commitment to an amount less than the sum of (1) the then
outstanding Revolving Credit Loans plus (2) the then outstanding
Competitive Bid Loans. The Revolving Credit Commitment shall
also be reduced as provided in Section 2.08(b) hereof. Any
reduction in (or termination of) the Revolving Credit Commitment
shall be permanent and may not be reinstated.
2.04 Commitment Fees. The Company shall pay to the Agent
for account of each Bank a commitment fee (the "Commitment Fee")
on the daily average unused amount of the Revolving Credit
Commitment, for the period from and including the Effective Date
to but not including the Revolving Credit Commitment Termination
Date, at a rate per annum equal to (A) .25% or (B) if on any
Quarterly Date the Company has (1) a Leverage Ratio less than 35%
or (2) attained a long term credit rating of Baa3 or better from
Moody's Investors Services, Inc. or BBB- or better from Standard
and Poor's Corporation, then .20% or (C) notwithstanding whether
the Company
-24-
has met the requirements of (B)(1) or (B)(2) above,
if on any Quarterly Date subsequent to the Quarterly Date nearest
March, 1997, the ratio of Senior Debt at such time to Capital at
such time is greater than 45%, then .375%. For the purpose of
calculating the Commitment Fee, the amount outstanding as
Competitive Bid Loans shall not be included in the amount used
under the Revolving Credit Commitment (notwithstanding the fact
that the amount of Competitive Bid Loans outstanding reduces
availability under the Revolving Credit Commitment). The
applicable Commitment Fee percentage shall be determined on each
Quarterly Payment Date for the preceding Quarterly Period. The
Commitment Fee shall be payable in arrears on each Quarterly
Payment Date, on the date of any reduction in the Revolving
Credit Commitment and on the Revolving Credit Commitment
Termination Date.
2.05 Lending Offices. The Loans of each type made by each
Bank shall be made and maintained at such Bank's Applicable
Lending Office for Loans of such type.
2.06 Several Obligations; Remedies Independent. The
failure of any Bank to make any Loan to be made by it on the date
specified therefor shall not relieve any other Bank of its
obligation to make its Loan on such date, but neither any Bank
nor the Agent shall be responsible for the failure of any other
Bank to make a Loan to be made by such other Bank. The amounts
payable by the Company at any time hereunder and under the Notes
to each Bank shall be a separate and independent debt and,
subject to the terms of this Agreement, each Bank shall be
entitled to protect and enforce its rights arising out of this
Agreement and the Notes, and it shall not be necessary for any
other Bank or the Agent to consent to, or be joined as an
additional party in, any proceedings for such purposes.
2.07 Notes.
(a) Revolving Notes. The Revolving Credit Loans made by
the Banks shall be evidenced by a single promissory note of the
Company to each Bank in substantially the form of Exhibit A-1
hereto (the "Revolving Credit Loan Note"), dated the Effective
Date, payable to such Bank in a principal amount equal to the
amount of its Revolving Credit Commitment as originally in
effect. The date, amount, type, interest rate and duration of
Interest Period (if applicable) of each Revolving Credit Loan
made by each Bank to the Company, and each payment made on
account of the principal thereof, shall be recorded by such Bank
on its books and, prior to any transfer of the Revolving Credit
Loan Note held by it, endorsed by such Bank on the schedule
attached to such Note or any continuation thereof; provided that
the failure of such Bank to make any such recordation or
endorsement shall not affect the obligations of the Company to
make a payment when due of any amount owing hereunder or under
such Note in respect of the Loans to be evidenced by such
-25-
Note, and each such recordation or endorsement shall be conclusive
and binding absent manifest error.
(b) Term Notes. The Term Loan made by the Banks shall be
evidenced by a single promissory note of the Company to each Bank
in substantially the form of Exhibit A-2 hereto (the "Term Loan
Note"), dated the Effective Date, payable to such Bank in a
principal amount equal to the amount of its Term Loan Commitment
and otherwise duly completed. The amount, type, interest rate
and duration of Interest Period (if applicable) of the portion of
the Term Loan made by each Bank to the Company, and each payment
made on account of the principal thereof, shall be recorded by
such Bank on its books and, prior to any transfer of the Term
Loan Note held by it, endorsed by such Bank on the schedule
attached to such Note or any continuation thereof; provided that
the failure of such Bank to make any such recordation or
endorsement shall not affect the obligations of the Company to
make a payment when due of any amount owing hereunder or under
such Note in respect of the Loan to be evidenced by such Note,
and each such recordation or endorsement shall be conclusive and
binding absent manifest error.
(c) Competitive Bid Notes. The Competitive Bid Loans made
by a Bank shall be evidenced by a single promissory note of the
Company to each Bank in substantially the form of Exhibit A-3
hereto (the "Competitive Bid Loan Note"), dated the Effective
Date, payable to such Bank in a principal amount equal to the
amount of the Revolving Credit Commitment and otherwise duly
completed. The amount, type, interest rate and duration of
Interest Period of each Competitive Bid Loan made by each Bank to
the Company, and each payment made on account of the principal
thereof, shall be recorded by such Bank on its books and, prior
to any transfer of the Competitive Bid Loan Note held by it,
endorsed by such Bank on the schedule attached to such Note or
any continuation thereof; provided that the failure of such Bank
to make any such recordation or endorsement shall not affect the
obligations of the Company to make a payment when due of any
amount owing hereunder or under such Note in respect of the Loans
to be evidenced by such Note, and each such recordation or
endorsement shall be conclusive and binding absent manifest
error.
(d) Exchange of Notes. No Bank shall be entitled to have
any of its Notes subdivided, by exchange for promissory notes of
lesser denominations or otherwise, except in connection with a
permitted assignment of all or any portion of such Bank's
Commitment, Loans and Notes pursuant to Section 12.06(b) hereof.
2.08 Prepayments.
(a) Voluntary Prepayments. Subject to Section 4.04 hereof,
and upon at least three Business Days notice, the Company shall
have the right to prepay Loans; provided that Eurodollar Loans
may be prepaid only on the last day of an Interest Period for
such
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Loans. Voluntary prepayments of the Loans shall be applied
as the Company shall direct; provided that prepayments of the
Term Loans shall be applied pro rata in accordance with the then
outstanding principal amount (i.e. applied pro-rata to the
remaining installments including the final installment due on the
Term Loan Maturity Date).
(b) Mandatory Prepayments.
(i) Recapture. Forty five days after each Quarterly
Date, the Company shall prepay the principal amount of the
Loans in an amount equal to (A) all cash Net Proceeds
received by the Company on or after January 2, 1994 from an
Equity Issuance or a Debt Issuance that are not otherwise
paid to the Banks pursuant to Section 2.08(b)(iii) plus (B)
all Net Proceeds received by the Company from Dispositions
made on or after January 2, 1994 but prior to 180 days from
the most recent preceding Quarterly Date minus (C) all
amounts reinvested by the Company on or after January 2,
1994 in either Acquisitions or capital expenditures plus (D)
all Dividend Payments made by the Company on or after
January 2, 1994 to the extent any such Dividend Payments are
either a special or non recurring Dividend Payment or exceed
by 50% the Company's regularly scheduled Dividend Payment as
at the most recent preceding scheduled dividend payment date
(a "Special Dividend Payment") minus (E) 15% of Total
Tangible Assets as at the most recent preceding Quarterly
Date minus (F) all amounts previously paid to the Banks
pursuant to this Section 2.08(b)(i); provided, that any
amount less than $2,000,000 need not be paid at that time.
(ii) Overadvance. If, at any time, the sum of
Revolving Credit Loans outstanding plus Competitive Bid
Loans outstanding exceeds the Revolving Credit Commitment,
then the Company shall immediately make a payment in the
amount of the deficiency.
(iii) Senior Debt to Capital. If, at the end of any
month, the ratio of Senior Debt at such time to Capital at
such time is greater than 45%, all cash Net Proceeds from
(A) an Equity Issuance or (B) a Debt Issuance by the Company
shall be paid by the Company to the Banks to the extent
necessary to reduce the ratio of Senior Debt at such time to
Capital at such time to 45%.
Mandatory prepayments shall be applied: first, (A)
if pursuant to subsection (i) above, pro rata to the
remaining installments of the Term Loan on the basis
provided in Section 2.08(a) hereof, or (B) if pursuant to
Subsection (iii) above, to the remaining installments of the
Term Loan in the inverse order of maturity; second, to the
Revolving Credit Loans; provided that, upon any such
prepayment of the Revolving
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Credit Loans under Subsection (i) or (iii) above, the
Revolving Credit Commitment shall
automatically be reduced on such date by the amount of such
prepayment and, if the amount available for prepayment as
aforesaid exceeds the amount of Revolving Credit Loans
outstanding on such date, the Revolving Credit Commitment
shall be further reduced on such date by such excess amount;
and third, if the Term Loan is paid in full and the
Revolving Credit Commitment has been reduced to zero, to the
Competitive Bid Loans on a pro rata basis to each Bank
holding Competitive Bid Loans.
Section 3
Payments of Principal and Interest
3.01 Repayment of Loans.
(a) Revolving Loans and Competitive Bid Loans. On
the Revolving Credit Commitment Termination Date, the entire
outstanding principal balance of Revolving Loans and
Competitive Bid Loans, together with accrued but unpaid
interest and all other sums owing thereon, shall be due and
payable in full.
(b) Term Loan. Principal outstanding under the Term
Loan shall be paid in equal quarterly installments of
$3,750,000 each, the first such payment being due and
payable on the Quarterly Date nearest March 1997 and
continuing on each Quarterly Date thereafter until the Term
Loan Maturity Date. On the Term Loan Maturity Date, all
remaining outstanding principal under the Term Loan, plus
accrued but unpaid interest and all other sums owing
thereon, shall be due and payable in full.
3.02 Interest.
(a) Interest Payments. The Company will pay to the
Agent, for the account of each Bank, interest on the unpaid
principal amount of each Loan for the period from and
including the date of such Loan to but excluding the date
such Loan shall be paid in full, at the following rates per
annum:
(i) Base Rate Loans. All Base Rate Loans shall
accrue interest at the Base Rate (as in effect from
time to time);
(ii) Eurodollar Loans. All Eurodollar Loans
shall accrue interest at the Eurodollar Rate for the
applicable Interest Period; and
(iii) Competitive Bid Loans. All Competitive
Bid Loans shall accrue interest at the applicable
-28-
Competitive Bid Rate with respect to each Competitive
Bid Loan.
Notwithstanding the foregoing, the Company will pay
to the Agent, for the account of each Bank, interest at the
applicable Post-Default Rate on any principal of any Loan
made by such Bank, and (to the fullest extent permitted by
law) on any other amount payable by the Company hereunder or
under the Notes held by such Bank to or for account of such
Bank, which shall not be paid in full when due (whether at
stated maturity, by acceleration or otherwise), for the
period from and including the due date thereof to but
excluding the date the same is paid in full.
Promptly after the determination of any interest rate
provided for herein or any change therein, the Agent shall
give notice thereof to the Banks to which such interest is
payable and to the Company. Anything in this Agreement to
the contrary notwithstanding, the rate of interest on any
Loan or on the Loans shall not exceed the maximum rate
permitted by applicable law.
(b) Interest Payment Dates. Accrued interest on
each Loan shall be payable (each referred to herein as an
"Interest Payment Date") (i) in the case of a Base Rate
Loan, quarterly on the first Business Day following each
Quarterly Date, (ii) in the case of a Eurodollar Loan, on
the last day of each Interest Period therefor and, if such
Interest Period is longer than three months, at three-month
intervals, following the first day of such Interest Period,
(iii) in the case of a Competitive Bid Loan, on the last day
of the Interest Period for such Competitive Bid Loan and
(iv) in the case of any Loan, upon the payment or prepayment
thereof or the conversion of such Loan to a Loan of another
type (but only on the principal amount so paid, prepaid or
converted), except that (A) interest payable at the Post-
Default Rate shall be payable from time to time on demand
and (B) interest on any Eurodollar Loan that is converted
into a Base Rate Loan pursuant to Section 5.04 hereof shall
be payable on the date of conversion (but only to the extent
so converted).
Section 4
Payments; Pro Rata Treatment; Computations; Etc.
4.01 Payments.
(a) Except to the extent otherwise provided herein, all
payments of principal, interest and other amounts to be made by
the Company under this Agreement and the Notes shall be made in
Dollars, in immediately available funds, without deduction, set-
off or counterclaim, to the Agent not later than 11:00 a.m.
Charlotte, North Carolina time on the date on which such payment
shall become
-29-
due (each such payment made after such time on such
due date to be deemed to have been made on the next succeeding
Business Day).
(b) Unless this Agreement specifies otherwise, the Company
shall, at the time of making each payment under this Agreement or
any Note, specify to the Agent the Loans or other amounts payable
by the Company hereunder to which such payment is to be applied
(and in the event that it fails to so specify, or if an Event of
Default has occurred and is continuing, the Agent may distribute
such payment to the Banks in such manner as it or the Majority
Banks may determine to be appropriate, subject to Section 4.02
hereof).
(c) Each payment received by the Agent under this Agreement
or any Note for account of a Bank shall be paid promptly (and if
received by the time set forth in (a) above on the same Business
Day) to such Bank, in immediately available funds, for account of
such Bank's Applicable Lending Office for the Loan in respect of
which such payment is made.
(d) If the due date of any payment under this Agreement or
any Note would otherwise fall on a day which is not a Business
Day such date shall be extended to the next succeeding Business
Day and interest shall be payable for any principal so extended
for the period of such extension (except that in the case of a
payment where the next succeeding Business Day falls in the next
succeeding calendar month, then on the next preceding day).
4.02 Pro Rata Treatment. (a) each borrowing from the Banks
under Sections 2.01(a) and 2.02(a) hereof shall be made pro rata
from the Banks, each payment of Commitment Fees under Section
2.04 hereof shall be made pro rata for the account of the Banks,
and each termination or reduction of the amount of the Revolving
Credit Commitment under Sections 2.03 or 2.08(b) hereof shall be
applied to the Revolving Credit Commitment pro rata according to
the Revolving Credit Commitment Percentages of each Bank; (b) the
making, conversion and continuation of Revolving Credit Loans and
the making of the Term Loan and the allocation of interest rate
options thereunder (other than as provided for by Section 5.04
hereof) shall be made pro rata among the Banks according to the
amounts of their respective Revolving and Term Commitment
Percentages; (c) each payment or prepayment of principal of
Revolving Credit Loans and the Term Loan by the Company shall be
made for the account of the Banks pro rata in accordance with the
respective unpaid principal amounts of such Loans held by the
Banks; and (d) each payment of interest on Revolving Credit Loans
and the Term Loan by the Company shall be made for the account of
the Banks pro rata in accordance with the amounts of interest due
and payable on such Loans to the respective Banks.
4.03 Computations. (a) Interest on Eurodollar Loans,
Competitive Bid Loans, the Commitment Fee and on all other
amounts
-30-
owing by the Company (other than Base Rate Loans) shall
be computed on the basis of a year of 360 days and actual days
elapsed (including the first day but excluding the last day)
occurring in the period for which payable and (b) interest on
Base Rate Loans shall be computed on the basis of a year of 365
or 366 days, as the case may be, and actual days elapsed
(including the first day but excluding the last day) occurring in
the period for which payable.
4.04 Minimum Amounts. Except for conversions or
prepayments made pursuant to Section 5.04 hereof, each borrowing,
conversion or prepayment of principal of Loans shall be in an
amount equal to at least (a) in the case of Base Rate Loans,
$250,000, (b) in the case of Eurodollar Loans, $5,000,000 (or, in
the case of any prepayment, $1,000,000; provided that any
prepayment of a Eurodollar Loan is subject to Section 5.05) and
in integral multiples of $1,000,000 in excess of such amounts and
(c) in the case of Competitive Bid Loans, $5,000,000 (in the
aggregate per Competitive Bid Request) and in integral multiples
of $1,000,000 in excess of such amount. Each borrowing,
prepayment or conversion of or into Loans of different types or,
if applicable, having different Interest Periods, shall be deemed
to be different borrowings, prepayments or conversions for the
purposes of the foregoing.
Anything in this Agreement to the contrary notwithstanding,
the aggregate principal amount of Eurodollar Loans having the
same Interest Period shall be at least equal to $5,000,000 and,
if any Eurodollar Loans would otherwise be in a lesser principal
amount for any period, such Loans shall be Base Rate Loans during
such period.
4.05 Non-Receipt of Funds by the Agent. Unless the Agent
shall have been notified by a Bank or the Company (the "Payor")
prior to the date on which the Payor is scheduled to make payment
to the Agent of (in the case of a Bank) the proceeds of a Loan to
be made by it hereunder or (in the case of the Company) a payment
to the Agent for account of one or more of the Banks hereunder
(such payment being herein called the "Required Payment"), which
notice shall be effective upon receipt, that the Payor does not
intend to make the Required Payment to the Agent, the Agent may
assume that the Required Payment has been made and may, in
reliance upon such assumption (but shall not be required to),
make the amount thereof available to the intended recipient(s) on
such date and, if the Payor has not in fact made the Required
Payment to the Agent, the recipient(s) of such payment shall, on
demand, repay to the Agent the amount so made available together
with interest thereon in respect of each day during the period
commencing on the date such amount was so made available by the
Agent until the date the Agent recovers such amount at a rate per
annum equal to the Federal Funds Rate for such day and, if such
recipient(s) shall fail promptly to make such payment, the Agent
shall be entitled to recover such amount, on demand, from the
Payor, together with interest as aforesaid.
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4.06 Sharing of Payments, Etc..
(a) Each Obligor agrees that, in addition to (and without
limitation of) any right of set-off, bankers' lien or
counterclaim a Bank may otherwise have, each Bank shall be
entitled, at its option, to offset balances held by it for
account of such Obligor at any of its offices, in Dollars or in
any other currency, against any principal of or interest on any
Loans, or any other amount payable to such Bank hereunder, which
is not paid when due (regardless of whether such balances are
then due to such Obligor), in which case it shall promptly notify
the Company, such Obligor and the Agent thereof; provided that
such Bank's failure to give such notice shall not affect the
validity thereof.
(b) If any Bank shall obtain payment of any principal of or
interest on any Loan through the exercise of any right of set-
off, banker's lien or counterclaim or similar right or otherwise,
and, as a result of such payment, such Bank shall have received a
greater percentage of the principal or interest then due
hereunder to such Bank on such Loans than the percentage received
by any other Banks, it shall promptly purchase from such other
Banks participations in (or, if and to the extent specified by
such Bank, direct interests in) the Loans made by such other
Banks (or in interest due thereon, as the case may be) in such
amounts, and make such other adjustments from time to time as
shall be equitable, to the end that all the Banks shall share the
benefit of such excess payment (net of any expenses which may be
incurred by such Bank in obtaining or preserving such excess
payment) pro rata in accordance with the unpaid principal and/or
interest on the Loans held by each of the Banks. To such end all
the Banks shall make appropriate adjustments among themselves (by
the resale of participations sold or otherwise) if such payment
is rescinded or must otherwise be restored.
(c) Each Obligor agrees that any Bank so purchasing a
participation (or direct interest) in the Loans made by other
Banks (or in interest due thereon, as the case may be) may
exercise all rights of set-off, bankers' lien, counterclaim or
similar rights with respect to such participation as fully as if
such Bank were a direct holder of Loans in the amount of such
participation.
(d) Nothing contained herein shall require any Bank to
exercise any such right or shall affect the right of any Bank to
exercise, and retain the benefits of exercising, any such right
with respect to any other indebtedness or obligation of any
Obligor. If, under any applicable bankruptcy, insolvency or
other similar law, any Bank receives a secured claim in lieu of a
set-off to which this Section 4.06 applies, such Bank shall, to
the extent practicable, exercise its rights in respect of such
secured claim in a manner consistent with the rights of the Banks
entitled under this Section 4.06 to share in the benefits of any
recovery on such secured claim.
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4.07 Tax Liabilities.
(a) Any and all payments by the Company hereunder or under
any of the Basic Documents shall be made, in accordance with the
terms hereof and thereof, free and clear of and without deduction
for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with
respect thereto ("Taxes"). If the Company shall be required by
law to deduct any Taxes from or in respect of any sum payable
hereunder to any Bank, (i) the sum payable shall be increased as
may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under
this Section 4.07) such Bank receives an amount equal to the sum
it would have received had no such deductions been made, (ii) the
Company shall make such deductions, (iii) the Company shall pay
the full amount deducted to the relevant Governmental Authority
in accordance with applicable law, and (iv) the Company shall
deliver to such Bank evidence of such payment to the relevant
taxation authority or other authority.
(b) In addition, the Company agrees to pay, upon notice
from a Bank and prior to the date when penalties attach thereto,
all present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies of the United
States or any state or political subdivision thereof or any
applicable foreign jurisdiction that arise from any payment made
hereunder or from the execution, delivery or registration of, or
otherwise with respect to, this Agreement.
Section 5
Yield Protection and Illegality
5.01 Additional Costs.
(a) The Company shall pay directly to each Bank from time
to time such amounts as such Bank may determine to be necessary
to compensate it for any costs which such Bank determines are
attributable to its making of or maintaining any Eurodollar Loans
or its obligation to make any Eurodollar Loans hereunder, or any
reduction in any amount receivable by such Bank hereunder in
respect of any of such Loans or such obligation (such increases
in costs and reductions in amounts receivable being herein called
"Additional Costs"), resulting from any Regulatory Change which:
(i) changes the basis of taxation of any amounts
payable to such Bank under this Agreement or its Notes in
respect of any of such Loans (other than taxes imposed on or
measured by the overall net income of such Bank or of its
Applicable Lending Office for any of such Loans by the
jurisdiction in which such Bank has its principal office or
such Applicable Lending Office); or
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(ii) imposes or modifies any reserve, special
deposit or similar requirements (other than the Reserve
Requirement utilized in the determination of the Fixed Rate
for such Loan) relating to any extensions of credit or other
assets of, or any deposits with or other liabilities of,
such Bank (including any of such Loans or any deposits
referred to in the definition of "Fixed Base Rate" in
Section 1.01 hereof), or any commitment of such Bank
hereunder; or
(iii) imposes any other condition affecting this
Agreement or its Notes (or any of such extensions of credit
or liabilities) or the Commitment.
If any Bank requests compensation from the Company under this
Section 5.01(a), the Company may, by notice to such Bank (with a
copy to the Agent), suspend the obligation of such Bank to make
or continue Loans of the type with respect to which such
compensation is requested, or to convert Loans of any other type
into Loans of such type, until the Regulatory Change giving rise
to such request ceases to be in effect (in which case the
provisions of Section 5.04 hereof shall be applicable).
(b) Without limiting the effect of the provisions of
Section 5.01(a) hereof, in the event that, by reason of any
Regulatory Change, any Bank 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 such
Bank which includes deposits by reference to which the interest
rate on Eurodollar Loans is determined as provided in this
Agreement or a category of extensions of credit or other assets
of such Bank which includes Eurodollar Loans or (ii) becomes
subject to restrictions on the amount of such a category of
liabilities or assets which it may hold, then, if such Bank so
elects by notice to the Company (with a copy to the Agent), the
obligation of such Bank to make or continue, or to convert Loans
of any other type into, Loans of such type hereunder shall be
suspended until such Regulatory Change ceases to be in effect (in
which case the provisions of Section 5.04 hereof shall be
applicable).
(c) Without limiting the effect of the foregoing provisions
of this Section 5.01 (but without duplication), the Company shall
pay directly to each Bank from time to time on request such
amounts as such Bank may determine to be necessary to compensate
such Bank for any costs which it determines are attributable to
the maintenance by such Bank (or any Applicable Lending Office),
pursuant to any law or regulation or any interpretation,
directive or request (whether or not having the force of law) of
any court or governmental or monetary authority following any
Regulatory Change, or pursuant to any risk-based capital
guideline or other requirement (whether or not having the force
of law and whether or not the failure to comply therewith would
be unlawful) heretofore or hereafter issued by any government or
governmental or
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supervisory authority, including any implementing
at the national level of the Basle Accord, including, without
limitation, (i) the Final Risk-Based Capital Guidelines of the
Board of Governors of the Federal Reserve System (12 CFR Part
208, Appendix A; 12 CFR Part 225, Appendix A), (ii) the Final
Risk-Based Capital Guidelines of the Office of the Comptroller of
the Currency (12 CFR Part 3, Appendix A) and (iii) the Final
Risk-Based Capital Guidelines of the Federal Deposit Insurance
Corporation (12 CFR Part 325)), of capital in respect of its
Commitments or Loans (such compensation to include, without
limitation, an amount equal to any reduction of the rate of
return on assets or equity of such Bank (or any Applicable
Lending Office) to a level below that which such Bank (or any
Applicable Lending office) could have achieved but for such law,
regulation, interpretation, directive or request). For purposes
of this Section 5.01(c), "Basle Accord" shall mean the proposals
for risk-based capital framework described by the Basle Committee
on Banking Regulations and Supervisory Practices in its paper
entitled "International Convergence of Capital Measurement and
Capital Standards" dated July 1988, as amended, modified and
supplemented and in effect from time to time or any replacement
thereof.
(d) Each Bank will notify the Company (with a copy to the
Agent) of any event occurring after the date of this Agreement
that will entitle such Bank to compensation under paragraph (a)
or (c) of this Section 5.01 as promptly as practicable, but in
any event within 60 days, after such Bank obtains actual
knowledge thereof; provided that if any Bank fails to give such
notice within 60 days after it obtains actual knowledge of such
an event, such Bank shall, with respect to compensation payable
pursuant to this Section 5.01 in respect of any costs resulting
from such event, only be entitled to payment under this Section
5.01 for costs incurred from and after the date 60 days prior to
the date that such Bank does give such notice; and provided,
further, that each Bank will designate a different Applicable
Lending Office for the Loans of such Bank affected by such event
if such designation will avoid the need for, or reduce the amount
of, such compensation and will not, in the sole opinion of such
Bank, be disadvantageous to such Bank, except that such Bank
shall have no obligation to designate an Applicable Lending
Office located in the United States of America. Each Bank will
furnish to the Company a certificate setting forth the basis and
amount of each request by such Bank for compensation under
paragraph (a) or (c) of this Section 5.01. Determinations and
allocations by any Bank for purposes of this Section 5.01 of the
effect of any Regulatory Change pursuant to Section 5.01(a) or
(b) hereof, or of the effect of capital maintained pursuant to
Section 5.01(c) hereof, on its costs or rate of return of
maintaining Loans or its obligation to make Loans, or on amounts
receivable by it in respect of Loans, and of the amounts required
to compensate such Bank under this Section 5.01, shall be
conclusive, provided that such determinations and allocations are
made on a reasonable basis.
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5.02 Limitation on Types of Loans. Anything herein to the
contrary notwithstanding, if, on or prior to the determination of
any Fixed Base Rate for any Interest Period:
(a) the Agent determines (which determination shall
be conclusive) that quotations of interest rates for the
relevant deposits referred to in the definition of "Fixed
Base Rate" in Section 1.01 hereof are not being provided in
the relevant amounts or for the relevant maturities for
purposes of determining rates of interest for Eurodollar
Loans as provided herein; or
(b) the Majority Banks determine (which
determination shall be conclusive) and notify the Agent that
the relevant rates of interest referred to in the definition
of "Fixed Base Rate" in Section 1.01 hereof upon the basis
of which the rate of interest for Eurodollar Loans for such
Interest Period is to be determined are not likely
adequately to cover the cost to such Banks of making or
maintaining such type of Loans for such Interest Period;
then the Agent shall give the Company and each Bank prompt notice
thereof, and so long as such condition remains in effect, the
Banks shall be under no obligation to make additional Loans of
such type, to continue Loans of such type or to convert Loans of
any other type into Loans of such type and the Company shall, on
the last day(s) of the then current Interest Period(s) for the
outstanding Loans of such type, either prepay such Loans or
convert such Loans into Base Rate Loans.
5.03 Illegality. Notwithstanding any other provision of
this Agreement, in the event that it becomes unlawful for any
Bank or its Applicable Lending Office to honor its obligation to
make or maintain Eurodollar Loans hereunder, then such Bank shall
promptly notify the Company thereof (with a copy to the Agent)
and such Bank's obligation to make or continue, or to convert
Loans of any other type into, Eurodollar Loans shall be suspended
until such time as such Bank may again make and maintain
Eurodollar Loans (in which case the provisions of Section 5.04
hereof shall be applicable).
5.04 Treatment of Affected Loans. If the obligation of any
Bank to make or continue, or to convert Loans of any other type
into, Loans of a particular type is suspended pursuant to Section
5.01 or 5.03 hereof (Loans of such type being herein called
"Affected Loans" and such type being herein called the "Affected
Type"), such Bank's Affected Loans shall be automatically
converted into Base Rate Loans on the last day(s) of the then
current Interest Period(s) for the Affected Loans (or, in the
case of a conversion required by Section 5.01(b) or 5.03 hereof,
on such earlier date as such Bank may specify to the Company with
a copy to the Agent) and, unless and until such Bank gives notice
as provided
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below that the circumstances specified in Section 5.01 or 5.03
hereof which gave rise to such conversion no longer exist:
(a) to the extent that such Bank's Affected Loans
have been so converted, all payments and prepayments of
principal which would otherwise be applied to such Bank's
Affected Loans shall be applied instead to its Base Rate
Loans; and
(b) all Loans which would otherwise be made or
continued by such Bank as Loans of the Affected Type shall
be made or continued instead as Base Rate Loans and all
Loans of such Bank which would otherwise be converted into
Loans of the Affected Type shall be converted instead into
(or shall remain as) Base Rate Loans.
If such Bank gives notice to the Company (with a copy to the
Agent) that the circumstances specified in Section 5.01 or 5.03
hereof which gave rise to the conversion of such Bank's Affected
Loans pursuant to this Section 5.04 no longer exist (which such
Bank agrees to do promptly upon such circumstances ceasing to
exist) at a time when Loans of the Affected Type are outstanding,
such Bank's Base Rate Loans shall be automatically converted, on
the first day(s) of the next succeeding Interest Period(s) for
such outstanding Loans of the Affected Type, to the extent
necessary so that, after giving effect thereto, all Loans held by
the Banks holding Loans of the Affected Type and by such Bank are
held pro rata (as to principal amounts, types and Interest
Periods) in accordance with their respective commitments.
5.05 Compensation. The Company shall pay to the Agent for
account of each Bank, upon the request of such Bank through the
Agent, such amount or amounts as shall be sufficient (in the
reasonable opinion of such Bank) to compensate it for any loss,
cost or expense which such Bank determines are attributable to:
(a) any payment, prepayment or conversion of a
Eurodollar Loan made by such Bank for any reason (including,
without limitation, any mandatory prepayment pursuant to
Section 2.08 hereof or the acceleration of the Loans
pursuant to Section 9 hereof) on a date other than the last
day of the Interest Period for such Loan; or
(b) any failure by the Company for any reason
(including, without limitation, the failure of any of the
conditions precedent specified in Section 6 hereof to be
satisfied) to borrow a Eurodollar Loan from such Bank, or
make a conversion into a Eurodollar Loan of such Bank on the
date for such borrowing or conversion specified in the
relevant notice of borrowing or conversion given pursuant to
Section 2.01 or 2.02 hereof, as the case may be.
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Without limiting the effect of the preceding sentence, such
compensation shall include an amount equal to the excess, if any,
of (i) the amount of interest which otherwise 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, conversion or failure to borrow to the last day of
the then current Interest Period for such Loan (or, in the case
of a failure to borrow, the Interest Period for such Loan which
would have commenced on the date specified for such borrowing) at
the applicable rate of interest for such Loan provided for herein
over (ii) the interest component of the amount such Bank would
have bid in the London interbank market for Dollar deposits of
leading banks in amounts comparable to such principal amount and
with maturities comparable to such period (as reasonably
determined by such Bank).
5.06 Replacement of Bank in Event of Adverse Condition. In
the event the Company becomes obligated to pay additional amounts
to any Bank pursuant to Section 5.01 hereof as a result of any
condition described in such Section or in the event that any Bank
gives notice of an election to suspend its obligation to make
Eurodollar Loans pursuant to Section 5.01 or 5.03 hereof, then,
unless a Default or Event of Default shall have occurred and be
continuing or such Bank has theretofore taken steps to remove or
cure, and has removed or cured, the conditions creating the cause
for such obligation to pay such additional amounts, or has
revoked such election, as the case may be, the Company may
designate another bank (such bank being herein called a
"Replacement Bank") acceptable to the Agent (which acceptance
will not be unreasonably withheld) to assume such Bank's
Commitments hereunder and to purchase the Loans and Notes of such
Bank and such Bank's rights hereunder, without recourse to or
representation or warranty (except for its own acts) by, or
expense to, such Bank for a purchase price equal to the
outstanding principal amount of the Loans and Notes payable to
such Bank plus any accrued but unpaid interest on such Loans and
Notes and accrued but unpaid Commitment Fees in respect of such
Bank's Commitment Percentages, and upon such assumption and
purchase and subject to the execution and delivery to the Agent
by the Replacement Bank of documentation satisfactory to the
Agent (pursuant to which such Replacement Bank shall assume the
obligations of such original Bank under this Agreement), the
Replacement Bank shall succeed to the rights and obligations of
such Bank hereunder and such Bank shall no longer be a party
hereto or have any rights hereunder (provided that the
obligations of the Company under Section 5.01 accrued prior to
such replacement and under Section 12.03 hereof shall survive
such replacement).
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Section 6
Conditions Precedent
6.01 Conditions to Making Initial Loans. The obligation of
any Bank to make its initial Loans hereunder is subject to the
satisfaction of each of the following conditions (including,
without limitation, that each document to be delivered under this
Section 6.01 shall be in form and substance satisfactory to the
Banks):
(a) Corporate Action. The Agent shall have received
certified copies of the charter and by-laws of each Obligor
and of all corporate action taken by each Obligor approving
each of the Basic Documents to which such Obligor is a party
and approving borrowings by the Company hereunder
(including, without limitation, a certificate setting forth
the resolutions of the Board of Directors of each Obligor
adopted in respect of the transactions contemplated by such
Basic Documents).
(b) Good Standing. The Agent shall have received
copies of certificates of good standing, existence or its
equivalent with respect to each Obligor as of recent date by
the appropriate government authorities of the state of
incorporation of each Obligor.
(c) Officer's Certificate. The Agent shall have
received a certificate, dated the Effective Date, of a
senior officer of the Company to the effect set forth in the
first sentence of Section 6.02 hereof.
(d) Opinion of Counsel to the Obligers. The Agent
shall have received an opinion of Petree Stockton, L.L.P.
counsel to the Obligors, substantially in the form of
Exhibit B hereto.
(e) This Agreement. The Agent shall have received
copies of this Agreement duly executed by each of the
parties hereto and dated the Effective Date.
(f) Notes. The Agent shall have received the Notes
for each Bank, duly completed, executed and dated the
Effective Date.
(g) Pledge Agreements. The Agent shall have
received each of the Pledge Agreements, duly executed and
dated as of the Effective Date.
(h) Pledged Stock. The Agent shall have received
from each Pledgor the certificates evidencing the Pledged
Stock identified on Schedule 1 to each of the Pledge
Agreements,
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together with stock powers from each Pledgor, undated and
duly executed in blank in respect of such Pledged Stock.
(i) Fees. The Agent shall have received (i) for
each Bank, a closing fee equal to (A) for Banks whose
Initial Commitment is $25,000,000 or more, .15% of the
amount of such Bank's aggregate commitment hereunder (B) for
Banks whose Initial Commitment is less than $25,000,000,
.075% of the amount of such Bank's aggregate commitment
hereunder and (ii) for the Agent, a structuring fee as
agreed to between the Company and Agent.
(j) Expenses. The Agent shall have received
evidence (including, without limitation, payment
instructions given by the Company) satisfactory to it that
the fees and expenses referred to in Section 12.03 hereof
(including, without limitation, the fees and expenses of
counsel to the Agent), to the extent due and payable on the
Effective Date, have been paid in full.
(k) Use of Proceeds. The Agent shall receive
evidence that proceeds from the Term Loan and from any
borrowing of a Revolving Credit Loan or a Competitive Bid
Loan will be used to pay in full all amounts owing (i) under
the Existing Credit Agreement, (ii) by the Company to PNC
Bank, National Association, (iii) by the Company to The
Chase Manhattan Bank (National Association) and (iv) by the
Company to ABN AMRO Bank N.V.
(l) Existing Credit Agreement Indebtedness;
Releases. The Chase Manhattan Bank (National Association),
as agent under the Existing Credit Agreement, shall have
received (i) the aggregate principal amount of all
"Revolving Credit Loans" and the "Term Loans" outstanding
under the Existing Credit Agreement, (ii) all unpaid and
accrued interest thereon and (iii) all other fees and
amounts, if any, owing under the Existing Credit Agreement.
The Chase Manhattan Bank (National Association) shall have
tendered for delivery to the Company all instruments and
certificates pledged to it securing such Indebtedness. The
Banks, to the extent they are a party to the Existing Credit
Agreement, hereby authorize and direct The Chase Manhattan
Bank (National Association) to execute and deliver to the
Company take the action described in this clause (l).
(m) Financial Information and Due Diligence. The Agent
shall have received and reviewed to its satisfaction all
financial information delivered by the Company to the Agent
and completed such other due diligence regarding the Company
and the other Obligors as deemed necessary by the Agent.
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(n) No Material Adverse Change. No material adverse
change shall have occurred in the business or financial
condition of the Company or the other Obligors since the
audited consolidated financial statements dated January 1,
1994 and the unaudited financial statements dated July 2,
1994.
(o) Financial and Capital Markets. There shall have
occurred no material changes, as determined by the Agent in
its sole discretion, in the financial or capital markets.
(p) Insurance. The Company shall have provided
evidence of insurance coverage as required by Section 8.04
hereof.
(q) Other Documents. The Agent shall have received
such other documents relating to the transactions
contemplated hereby as the Agent or any Bank or counsel to
the Agent may reasonably request.
6.02 Initial and Subsequent Loans. The obligation of the
Banks to make any Loan to the Company upon the occasion of each
borrowing hereunder (including the initial borrowing) is subject
to the further conditions precedent that, (a) both immediately
prior to such Loan and also after giving effect thereto no
Default or Event of Default shall have occurred and be continuing
(b) the Company shall have complied with all of the terms of this
Agreement including, but not limited to, Sections 2.01, 2.02 and
4.04 hereof and (c) the representations and warranties made by
the Company and each Obligor in Sections 7.01 through 7.11,
inclusive shall be true and complete on and as of the date of the
making of such Loan with the same force and effect as if made on
and as of such date. Each request for a borrowing by the Company
hereunder shall constitute a certification by the Company to the
effect set forth in the preceding sentence (both as of the date
of such notice and, unless the Company otherwise notifies the
Agent prior to the date of such borrowing, as of the date of such
borrowing).
Section 7
Representations and Warranties
The Company and the Guarantors each jointly and severally
represents and warrants to the Banks that:
7.01 Corporate Existence. The Company and each other
Obligor: (a) is a corporation duly organized and validly existing
under the laws of the jurisdiction of its incorporation; (b) has
all requisite corporate power, and has all material governmental
licenses, authorizations, consents and approvals necessary to own
its assets and carry on its business as now being or as proposed
to be conducted; and (c) is qualified to do business in all
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jurisdictions in which the nature of the business conducted by it
makes such qualification necessary and where failure so to
qualify would have a material adverse effect on the consolidated
financial condition, operations, business or prospects taken as a
whole of the Company and its Consolidated Subsidiaries.
7.02 Financial Condition. The consolidated balance sheet
of the Company and its Consolidated Subsidiaries as at January 1,
1994 and the related consolidated statements of operations,
shareholders' equity and cash flows, of the Company and its
Consolidated Subsidiaries for the fiscal year ended on said date,
with the independent auditor's report thereon of KPMG Peat
Marwick, and the unaudited consolidated balance sheet of the
Company and the Consolidated Subsidiaries as at July 2, 1994 and
the related consolidated statements of operations, shareholders'
equity and cash flows of the Company and its Consolidated
Subsidiaries for the six-month period ended on such date,
heretofore furnished to each of the Banks, are complete and
correct and fairly present the consolidated financial condition
of the Company and its Consolidated Subsidiaries as at said dates
and the consolidated results of their operations for the fiscal
year and six-month period ended on said dates (subject, in the
case of such financial statements as at July 2, 1994, to normal
year-end audit adjustments), all in accordance with GAAP applied
on a consistent basis. Neither the Company nor any of its
Subsidiaries had on said dates (except as previously disclosed to
the Banks in writing) any material contingent liabilities,
liabilities for taxes, unusual forward or long-term commitments
or unrealized or anticipated losses from any unfavorable
commitments, except as referred to or reflected or provided for
in said consolidated financial statements at said dates. Since
July 2, 1994, there has been no material adverse change (except
as previously disclosed to the Banks in writing) in the
consolidated financial condition, operations, business or
prospects taken as a whole of the Company and its Consolidated
Subsidiaries from that set forth in said consolidated financial
statements as at said date.
7.03 Litigation. Except as set forth on Schedule 7.03
attached hereto, there are no legal or arbitral proceedings or
any proceedings by or before any governmental or regulatory
authority or agency, now pending or (to the knowledge of the
Company) threatened against the Company or any of its
Subsidiaries which, if adversely determined, could have a
material adverse effect on the consolidated financial condition,
operations, business or prospects taken as a whole of the Company
and its Consolidated Subsidiaries.
7.04 No Breach. None of the execution and delivery of this
Agreement and the Notes, the consummation of the transactions
contemplated herein and compliance with the terms and provisions
hereof will conflict with or result in a breach of, or require
any consent under, the charter or by-laws of any Obligor, or any
applicable law or regulation, or any order, writ, injunction or
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decree of any court or governmental authority or agency, or any
agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which any of them is bound or to
which any of them is subject, or constitute a default under any
such agreement or instrument, or result in the creation or
imposition of any Lien upon any of the revenues or assets of the
Company or any of its Subsidiaries pursuant to the terms of any
such agreement or instrument.
7.05 Corporate Action. Each Obligor has all necessary
corporate power and authority to execute, deliver and perform its
obligations under each of the Basic Documents to which it is a
party; the execution, delivery and performance by each Obligor of
each of the Basic Documents to which it is a party have been duly
authorized by all necessary corporate action on its part; and
this Agreement has been duly and validly executed and delivered
by each Obligor and constitutes, and each of the other Basic
Documents to which any Obligor is a party when executed and
delivered by such Obligor (in the case of the Notes, for value)
will constitute, its legal, valid and binding obligation,
enforceable in accordance with its terms.
7.06 Approvals. All authorizations, approvals or consents
of, and filings or registrations with, any governmental or
regulatory authority or agency necessary for the execution,
delivery or performance by any Obligor of the Basic Documents to
which such Obligor is a party (or for the validity or
enforceability thereof) have been or, prior to the Effective Date
will have been, obtained and remain in effect, and all applicable
waiting periods have or, prior to the Effective Date will have,
expired.
7.07 Use of Loans. Neither the Company nor any of its
subsidiaries is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose,
whether immediate, incidental or ultimate, of buying or carrying
Margin Stock and no part of the proceeds of any Loan hereunder
will be used to buy or carry any Margin Stock in violation of
Regulations G, U or X.
7.08 ERISA. The Company and the ERISA Affiliates have
fulfilled their respective obligations under the minimum funding
standards of ERISA and the Code with respect to each Plan and are
in compliance in all material respects with the presently
applicable provisions of ERISA and the Code, and have not
incurred any liability to the PBGC or any Plan or Multiemployer
Plan (other than to make contributions in the ordinary course of
business).
7.09 Taxes. United States Federal income tax returns of
the Company and the Subsidiaries have been examined and closed
through the fiscal year of the Company ended December 28, 1991.
The Company and its Subsidiaries have filed all United States
Federal
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income tax returns and all other material tax returns
which are required to be filed by them and have paid all taxes
due pursuant to such returns or pursuant to any assessment
received by the Company or any of its Subsidiaries except to the
extent that failure to file or pay would not have a material
adverse effect on the consolidated financial condition of the
Company and except for any tax which is being contested in good
faith and by proper proceedings and against which adequate
reserves are being maintained. The charges, accruals and
reserves on the books of the Company and its Subsidiaries in
respect of taxes and other governmental charges are, in the
opinion of the Company, adequate.
7.10 Investment Company Act. Neither the Company nor any
other Obligor is an "investment company", or a company
"controlled" by an "investment company", within the meaning of
the Investment Company Act of 1940, as amended.
7.11 Public Utility Holding Company Act. Neither the
Company nor any other Obligor is a "holding company", or an
"affiliate" of a "holding company" or a "subsidiary company" of a
"holding company", within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
7.12 Credit Agreements. Schedule 7.12 attached hereto is a
complete and correct list, as of the date of this Agreement, of
each credit agreement, loan agreement, indenture, purchase
agreement, guarantee or other arrangement (whether in writing or
otherwise) providing for or otherwise relating to any
Indebtedness or any extension of credit (or commitment for any
extension of credit) to, or guarantee by, the Company or any of
its Material Subsidiaries, (i) the aggregate principal or face
amount of which equals or exceeds (or may equal or exceed)
$1,000,000 and the aggregate principal or face amount outstanding
or which may become outstanding under, and (ii) the nature of any
Lien, if any, securing, each such arrangement is correctly
described in said Schedule 7.12. The Company has furnished to
each Bank a copy of any agreement listed on such Schedule 7.12
which agreement was heretofore requested by such Bank.
7.13 Hazardous Materials. The Company and each of its
Subsidiaries have obtained all permits, licenses and other
authorizations which are required under all Environmental Laws,
except to the extent failure to have any such permit, license or
authorization would not have a material adverse effect on the
consolidated financial condition, operations, business or
prospects of the Company and its Consolidated Subsidiaries taken
as a whole. The Company and each of its Subsidiaries are in
compliance with the terms and conditions of all such permits,
licenses and authorizations, and are also in compliance with all
other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables
contained in any applicable Environmental Law or in any
regulation, code, plan,
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order, decree, judgment, injunction, notice or demand letter
issued, entered, promulgated or approved thereunder, except to the
extent failure to comply would not have a material adverse
effect on the consolidated financial condition, operations,
business or prospects of the Company and its Consolidated
Subsidiaries taken as a whole.
In addition, to the best of the Company's knowledge after
due inquiry and after exercising reasonable care in respect
thereof and except as set forth in Schedule 7.13 attached hereto:
Except to the extent that any of the following does
not have, and may not reasonably be expected to have, a
material adverse effect on the value of the assets,
prospects, financial condition, liabilities or
capitalization of the Company and its Consolidated
Subsidiaries taken as a whole:
(a) No notice, notification, demand, request for
information, citation, summons or order has been issued, no
complaint has been filed, no penalty has been assessed and
no investigation or review is pending or threatened by any
governmental or other entity with respect to any alleged
failure by the Company or any of its Subsidiaries to have
any permit, license or authorization required in connection
with the conduct of the business of the Company or any of
its Subsidiaries or with respect to any generation,
treatment, storage, recycling, transportation, release or
disposal, or any release as defined in 42 U.S.C.
(Section Mark) 9601(22) ("Release"), of any substance regulated
under Environmental Laws ("Hazardous Materials") generated by
the Company or any of its Subsidiaries.
(b) Neither the Company nor any of its Subsidiaries
has handled any Hazardous Material, other than as a
generator, on any property now or previously owned or leased
by the Company or any of its Subsidiaries; and
(i) no PCB is or has been present at any
property now or previously owned or leased by the
Company or any of its Subsidiaries;
(ii) no friable asbestos is or has been present
at any property now or previously owned or leased by
the Company or any of its Subsidiaries;
(iii) there are no underground storage tanks
for Hazardous Materials, active or abandoned, at any
property now or previously owned or leased by the
Company or any of its Subsidiaries;
(iv) no Hazardous Materials have been Released,
in a reportable quantity, where such a quantity has
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been established by statute, ordinance, rule,
regulation or order, at, on or under any property now
or previously owned by the Company or any of its
Subsidiaries; and
(v) except to the extent that the following
does not have, and may not reasonably be expected to
have, a material adverse effect on the value of the
assets, prospects, financial condition, liabilities
or capitalization of the Company and its Consolidated
Subsidiaries, no Hazardous Materials have been
otherwise Released at, on or under any property now
or previously owned or leased by the Company or any
of its Subsidiaries.
(c) Neither the Company nor any of its Subsidiaries
has transported or arranged for the transportation of any
Hazardous Material to any location which is listed on the
National Priorities List under the Comprehensive
Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA"), listed for possible inclusion
on the National Priorities List by the Environmental
Protection Agency in CERCLA or on any similar state list or
which is the subject of Federal, state or local enforcement
actions or other investigations which may lead to claims
against the Company or any of its Subsidiaries for clean-up
costs, remedial work, damages to natural resources or for
personal injury claims, including, but not limited to,
claims under CERCLA.
(d) No oral or written notification of a Release of
a Hazardous Material has been filed by or on behalf of the
Company or any of its Subsidiaries and no property now or
previously owned or leased by the Company or any of its
Subsidiaries is listed or proposed for listing on the
National Priority List promulgated pursuant to CERCLA, on
CERCLIS or on any similar state list of sites requiring
investigation or clean-up.
(e) There are no Liens arising under or pursuant to
any Environmental Laws on any of the real property or
properties owned or leased by the Company or any of its
subsidiaries, and no government actions have been taken or
are in process which could subject any of such properties to
such Liens and neither the Company nor any of its
Subsidiaries would be required to place any notice or
restriction relating to the presence of Hazardous Materials
at any property owned by it in any deed to such property.
7.14 Subsidiaries, Etc. Set forth in Schedule 7.14
attached hereto is a complete and correct list, as of the date of
this Agreement, of all Subsidiaries of the Company (and the
respective jurisdiction of incorporation of each such Subsidiary)
and of all
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Investments held by the Company or any of its Subsidiaries
in any joint venture or other Person. Except as disclosed
in Schedule 7.14, the Company owns, free and clear of Liens,
all outstanding shares of such Subsidiaries (and each such
Subsidiary owns, free and clear of Liens, all outstanding shares
of its Subsidiaries) and all such shares are validly issued,
fully paid and non-assessable and the Company (or the respective
Subsidiary) also owns, free and clear of Liens, all such
Investments.
Section 8
Covenants of the Company
The Company agrees that, so long as the Revolving Loan
Commitment is in effect and until payment in full of all Loans
hereunder, all interest thereon and all other amounts payable by
the Company hereunder:
8.01 Financial Statements. The Company shall deliver to
each of the Banks:
(a) as soon as available and in any event within 45
days after the end of the first three Quarterly Periods of
each Fiscal Year, and as soon as available and in any event
within 90 days after the end of the fourth Quarterly Period
of each Fiscal Year, consolidated statements of operations,
shareholders' equity and cash flows of the Company and its
Consolidated Subsidiaries, and the related consolidated
balance sheet as at the end of such period, in each case
covering such periods and setting forth such comparisons as
provided in the related Form 10-Q quarterly report of the
Company, accompanied by a certificate of a senior financial
officer of the Company, which certificate shall state that
said financial statements fairly present the consolidated
financial condition and results of operations, as the case
may be, of the Company and its Consolidated Subsidiaries, in
each case in accordance with generally accepted accounting
principles, consistently applied (except as otherwise
disclosed), as at the end of, and for, such period (subject
to normal year-end audit adjustments);
(b) as soon as available and in any event within 90
days after the end of each Fiscal Year, consolidated and
consolidating statements of operations and balance sheets
and, in the case of the consolidated statements only,
shareholders' equity and cash flows, of the Company and its
Consolidated Subsidiaries for such year and the related
consolidated and consolidating balance sheets as at the end
of such year, setting forth in each case in comparative form
the corresponding consolidated and consolidating figures for
the preceding Fiscal Year and accompanied (i) in the case of
said consolidated statements and balance sheet of the
Company, by
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an opinion thereon of independent certified public
accountants of recognized national standing, which
report shall state that said consolidated financial
statements fairly present the consolidated financial
condition and results of operations of the Company and its
Consolidated Subsidiaries as at the end of, and for, such
Fiscal Year in accordance with generally accepted accounting
principles, and a certificate of such accountants stating
that, in making the audit necessary for their opinion, they
obtained no knowledge, except as specifically stated, of any
Default, and (ii) in the case of said consolidating
statements of operations and balance sheets, by a
certificate of a senior financial officer of the Company,
which certificate shall state that said consolidating
financial statements fairly present the respective
individual unconsolidated financial condition and results of
operations of the Company and of each of its Consolidated
Subsidiaries, in each case in accordance with generally
accepted accounting principles, consistently applied (except
as otherwise disclosed), as at the end of, and for, such
Fiscal Year;
(c) promptly upon their becoming available, copies
of all registration statements and regular periodic reports,
if any, which the Company shall have filed with the
Securities and Exchange Commission (or any governmental
agency substituted therefor) or any national securities
exchange;
(d) promptly upon the mailing thereof to the
shareholders of the Company generally, copies of all
financial statements, reports and proxy statements so
mailed;
(e) as soon as possible, and in any event within ten
days after the Company knows or has reason to know that any
of the events or conditions specified below with respect to
any Plan or Multiemployer Plan have occurred or exist, a
statement signed by a senior financial officer of the
Company setting forth details respecting such event or
condition and the action, if any, which the Company or its
ERISA Affiliate proposes to take with respect thereto (and a
copy of any report or notice required to be filed with or
given to PBGC by the Company or an ERISA Affiliate with
respect to such event or condition):
(i) any reportable event, as defined in Section
4043(b) of ERISA and the regulations issued
thereunder, with respect to a Plan, as to which PBGC
has not by regulation waived the requirement of
Section 4043(a) of ERISA that it be notified within
30 days of the occurrence of such event (provided
that a failure to meet the minimum funding standard
of Section 412 of the Code or Section 302 of ERISA
shall be a reportable event regardless of the
issuance of any waivers in accordance with Section
412(d) of the Code);
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(ii) the filing under Section 4041 of ERISA of
a notice of intent to terminate any Plan or the
termination of any Plan;
(iii) the institution by PBGC of proceedings
under Section 4042 of ERISA for the termination of,
or the appointment of a trustee to administer, any
Plan, or the receipt by the Company or any ERISA
Affiliate of a notice from a Multiemployer Plan that
such action has been taken by PBGC with respect to
such Multiemployer Plan;
(iv) the complete or partial withdrawal by the
Company or any ERISA Affiliate under Section 4201 or
4204 of ERISA from a Multiemployer Plan, or the
receipt by the Company or any ERISA Affiliate of
notice from a Multiemployer Plan that it is in
reorganization or insolvency pursuant to Section 4241
or 4245 of ERISA or that it intends to terminate or
has terminated under Section 4041A of ERISA; and
(v) the institution of a proceeding by a
fiduciary of any Multiemployer Plan against the
Company or any ERISA Affiliate to enforce Section 515
of ERISA, which proceeding is not dismissed within 30
days;
(f) promptly after the Company knows or has reason
to know that any Default or Event of Default has occurred, a
notice of such Default or Event of Default describing the
same in reasonable detail and, together with such notice or
as soon thereafter as possible, a description of the action
that the Company has taken and proposes to take with respect
thereto;
(g) not later than February 10 of each year (x)
commencing in Fiscal Year 1996, financial forecasts of the
Company (including consolidated statements of operations and
cash flows and the related consolidated balance sheet) for
the Fiscal Year ending on the Quarterly Date falling on or
closest to December 31 of such year, in form and substance
satisfactory to the Agent and (y) commencing in Fiscal Year
1995, a report prepared by a senior financial officer of the
Company estimating the Company's Fiscal Year-end results for
the Fiscal Year most recently ended (including consolidated
statements of operations and cash flows and the related
balance sheet) and substantially in the form required
pursuant to clause (a) above;
(h) from time to time such other information
regarding the business, affairs or financial condition of
the Company or any of its Subsidiaries (including, without
limitation, any Plan or Multiemployer Plan and any reports
or other
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information required to be filed under ERISA) as
any Bank or the Agent may reasonably request; and
(i) promptly after the Company receives a notice
that a receivables purchase program has been terminated, a
copy of such notice.
The Company will furnish to each Bank, at the time it furnishes
each set of financial statements pursuant to paragraphs (a) and
(b) above, a certificate (substantially in the form of Exhibit C
hereto) of a senior financial officer of the Company (i) to the
effect that no Default or Event of Default has occurred and is
continuing (or, if any Default or Event of Default has occurred
and is continuing, describing the same in reasonable detail and
describing the action that the Company has taken and proposes to
take with respect thereto) and (ii) setting forth in reasonable
detail the computations necessary to determine whether the
Company is in compliance with Sections 8.05(d), 8.06(h) and (n),
8.10, 8.11 and 8.12 hereof as at the date of such financial
statements. In addition, the Company will furnish to each Bank,
at the time it furnishes each set of financial statements
pursuant to paragraph (b) above, (1) a statement of earnings for
each of the Company's business units (as now or hereafter
structured) (2) a statement that there has been no violation of
Environmental Laws which has or could have a material adverse
effect on the business or financial condition of the Company or
any of the Obligors taken as a whole and (3) an updated Schedule
7.14, if applicable.
8.02 Litigation. The Company will promptly give to each
Bank notice of all legal or arbitral proceedings, and of all
proceedings by or before any governmental or regulatory authority
or agency, and any material development in respect of such legal
or other proceedings, affecting the Company or any of its
Subsidiaries, except proceedings which, if adversely determined,
would not have a material adverse effect on the consolidated
financial condition, operations, business or prospects taken as a
whole of the Company and its Consolidated Subsidiaries.
8.03 Corporate Existence, Etc. The Company will, and will
cause each of its Subsidiaries to: preserve and maintain its
corporate existence and all of its material rights, privileges
and franchises (provided that nothing in this Section 8.03 shall
prohibit any transaction expressly permitted under Section 8.05
hereof); comply with the requirements of all applicable laws,
rules, regulations and orders of governmental or regulatory
authorities if failure to comply with such requirements would
materially and adversely affect the consolidated financial
condition, operations, business or prospects taken as a whole of
the Company and its Consolidated Subsidiaries; pay and discharge
all taxes, assessments and governmental charges or levies imposed
on it or on its income or profits or on any of its property prior
to the date on which penalties attach thereto, except for any
such
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tax, assessment, charge or levy the payment of which is
being contested in good faith and by proper proceedings and
against which adequate reserves are being maintained; maintain
all of its properties used or useful in its business in good
working order and condition, ordinary wear and tear excepted; and
permit representatives of the Agent (or, during the continuance
of an Event of Default, any Bank), during normal business hours,
to examine, copy and make extracts from its books and records and
to inspect its properties, and permit any Bank or the Agent to
discuss its business and affairs with its officers, all to the
extent reasonably requested by such Bank or the Agent (as the
case may be).
8.04 Insurance. The Company will, and will cause each of
its Subsidiaries to, keep insured by financially sound and
reputable insurers all property of a character usually insured by
corporations engaged in the same or similar business similarly
situated against loss or damage of the kinds and in the amounts
customarily insured against by such corporations and carry such
other insurance as is usually carried by such corporations. Such
insurance shall be written by financially responsible companies
selected by the Company.
8.05 Prohibition of Fundamental Changes. Except as
permitted herein, the Company will not, nor will it permit any of
its Subsidiaries to, enter into any transaction of merger or
consolidation or amalgamation, or liquidate, wind up or dissolve
itself (or suffer any liquidation or dissolution). The Company
will not, and will not permit any of its Subsidiaries to, convey,
sell, lease, transfer or otherwise dispose of, in one transaction
or a series of transactions, all or any part of its business or
assets, whether now owned or hereafter acquired (including,
without limitation, receivables and leasehold interests, but
excluding (i) any inventory, Investments or other assets sold or
disposed of in the ordinary course of business, including idle
manufacturing facilities, (ii) obsolete, idle or worn-out
property, tools or equipment no longer used or useful in its
business, (iii) any asset sold or assigned pursuant to a
Receivables Sale (iv) any sale of Leasehold Interests, or (v) a
sale/leaseback of assets not exceeding $25,000,000 (book value),
in the aggregate, during the term of this Agreement.
Notwithstanding the foregoing provisions of this Section
8.05:
(a) any Subsidiary of the Company may be merged or
consolidated with or into the Company or any other such
Subsidiary; provided that (x) if such transaction shall be
between the Company and a Subsidiary, the Company shall be
the continuing or surviving corporation and (y) if any such
transaction shall be between a Subsidiary and a Material
Subsidiary, the Material Subsidiary shall be the continuing
or surviving corporation; and provided further that if any
such
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transaction shall be between a Guarantor and a
Subsidiary not a Guarantor, and such Guarantor is not the
continuing or surviving corporation, then the continuing or
surviving corporation shall have assumed all of the
obligations of such Guarantor hereunder (and shall become a
Guarantor as provided in Section 8.16 hereof);
(b) the Company or any Subsidiary may sell, lease,
transfer or otherwise dispose of any or all of its assets
(upon voluntary liquidation or otherwise) to the Company or
a Subsidiary of the Company, as the case may be;
(c) any Subsidiary of the Company may merge or
consolidate with any other Person (other than the Company)
if (i) the surviving corporation is a Material Subsidiary of
the Company and (ii) after giving effect thereto no Default
or Event of Default would exist hereunder;
(d) the Company and any Subsidiary may make any
Disposition only if such Disposition is for the fair market
value of the assets being so disposed and the Company
otherwise complies with Section 2.08 hereof; and
(e) the Company may merge or consolidate with any
other Person (other than a Subsidiary) if either (x) the
Company shall be the continuing or surviving corporation or
(y) the Company shall not be the continuing or surviving
corporation and the corporation so continuing or surviving
(the "Surviving Corporation") (i) is a corporation organized
and duly existing under the law of the United States or any
state or territory thereof and (ii) executes and delivers to
the Agent and the Banks an instrument in form and substance
satisfactory to the Majority Banks pursuant to which it
expressly assumes the Loans and all of the other obligations
of the Company under the Basic Documents and procures for
the Agent and each Bank an opinion in form and substance
satisfactory to the Majority Banks from counsel satisfactory
to the Majority Banks in respect of the due authorization,
execution, delivery and enforceability of such instrument
and covering such other matters as the Majority Banks may
reasonably request, and in case of either clause (x) or (y)
above, after giving effect thereto, no Default or Event of
Default shall have occurred hereunder (including, without
limitation, any Change of Control).
8.06 Limitation on Liens. The Company will not, nor will
it permit any of its Subsidiaries to, create, incur, assume or
suffer to exist any Lien upon any of its property, assets or
revenues, whether now owned or hereafter acquired, except:
(a) Liens existing on the date hereof specified on
Schedule 7.12 hereof;
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(b) Liens imposed by any governmental authority for
taxes, assessments or charges not yet due or which are being
contested in good faith and by appropriate proceedings if
adequate reserves with respect thereto are maintained on the
books of the Company or any of its Subsidiaries, as the case
may be, in accordance with GAAP;
(c) carriers', warehousemen's, mechanics',
materialmen's, repairmen's or other like Liens arising in
the ordinary course of business which are not overdue for a
period of more than 30 days or which are being contested in
good faith and by appropriate proceedings;
(d) pledges or deposits under worker's compensation,
unemployment insurance and other social security
legislation;
(e) deposits to secure the performance of bids,
trade contracts (other than for borrowed money), leases,
statutory obligations, surety and appeal bonds, performance
bonds, stand-by letters of credit and other obligations of a
like nature incurred in the ordinary course of business;
(f) easements, rights-of-way, restrictions and other
similar encumbrances incurred in the ordinary course of
business and encumbrances consisting of zoning restrictions,
easements, licenses, restrictions on the use of property or
minor imperfections in title thereto which, in the
aggregate, are not material in amount, and which do not in
any case materially detract from the value of the property
subject thereto or interfere with the ordinary conduct of
the business of the Company or any of its Subsidiaries;
(g) Liens securing Indebtedness arising in
connection with the issuance of Industrial Revenue Bonds and
purchase money Liens, in either case, on assets of
corporations which become Subsidiaries of the Company after
the date of this Agreement, provided that such Liens are in
existence at the time the respective corporations become
Subsidiaries of the Company and were not created in
anticipation thereof;
(h) Liens upon real and/or tangible personal
property (other than Inventory) acquired after the date
hereof (by purchase, construction or otherwise) by the
Company or any of the Subsidiaries, each of which Liens
either (A) existed on such property before the time of its
acquisition and was not created in anticipation thereof, or
(B) was created solely for the purpose of securing
Indebtedness (including Indebtedness of the Company arising
in connection with the issuance of Industrial Revenue Bonds)
representing, or incurred to finance, refinance or refund,
the cost (including the cost of construction) of the
respective property; provided that no such Lien shall extend
to or cover any property of the Company
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or such Subsidiary other than the respective property so
acquired and improvements thereon; provided further that the
principal amount of Indebtedness secured by any such Lien
shall at no time exceed 90% of the fair market value (as
determined in good faith by a senior financial officer of the
Company) of the respective property at the time it was acquired
(by purchase, construction or otherwise); and provided finally
that the aggregate principal amount of Indebtedness securing
all such Liens covered by this clause (h) shall not at any
time exceed, as at any date of determination, 10% of the
Consolidated Net Worth as at such date;
(i) Liens specifically related to the funding of
nonqualified benefit or retirement plans established for
employees (including officers) of the Company and its
Subsidiary;
(j) Liens arising under the Pledge Agreements;
(k) Liens on the residual interest of receivables
that are sold as permitted hereunder;
(l) Liens on note receivables to Pennsylvania House,
Inc. not to exceed $20,000,000;
(m) Liens in favor of Wachovia Leasing not to exceed
$10,000,000;
(n) Liens in addition to those specified above
created after the date hereof, provided that the aggregate
Indebtedness secured thereby and incurred on and after the
date hereof shall not at any time exceed in the aggregate as
at any date of determination 10% of the Consolidated Net
Worth as at such date; and
(o) any extension, renewal or replacement of the
foregoing, provided, however, that the Liens permitted
hereunder shall not be spread to cover any additional
Indebtedness or property (other than a substitution of like
property).
8.07 Indebtedness. The Company will not, and will not
permit any of its Subsidiaries to, create, incur or suffer to
exist any Indebtedness except:
(a) Indebtedness to the Banks hereunder;
(b) Indebtedness outstanding on the date hereof;
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(c) unsecured Indebtedness of Subsidiaries of the
Company to the Company or to other Subsidiaries of the
Company;
(d) Indebtedness of the Company and its Subsidiaries
secured by Liens permitted under Section 8.06(h), (i) and
(n) hereof;
(e) trade letters of credit not exceeding, in the
aggregate, a face amount of $15,000,000 and stand-by letters
of credit not exceeding, in the aggregate, a face amount of
$20,000,000; and
(f) other unsecured Indebtedness incurred by the
Company in the ordinary course of business or for general
corporate purposes (including the assumption of debt or the
issuance of installment notes in connection with an
Acquisition).
provided that, in respect of Indebtedness described in the
preceding clauses (c), (d), (e) and (f), the same may not be so
created, incurred or otherwise suffered to exist if (I) on the
date thereof or after giving effect thereto any Default or Event
of Default shall have occurred and be continuing or (II) the
contractual terms evidencing such Indebtedness has financial
covenants more restrictive than the financial covenants contained
in this Agreement.
8.08 Investments. The Company may, and may permit any of
its Subsidiaries to, make any Investment or Acquisition so long
as at the time of the making thereof and after the giving of
effect thereto no Default or Event of Default shall have occurred
and be continuing.
8.09 Dividend Payments. The Company may declare or make
any Dividend Payment at any time, if, on the date of such
Dividend Payment and after giving effect thereto, no Default or
Event of Default shall have occurred and be continuing.
8.10 Leverage Ratio. The Company will not permit the
Leverage Ratio to exceed 55% on any Quarterly Date.
8.11 Consolidated Net Worth. The Company will not permit
Consolidated Net Worth to be on any Quarterly Date less than the
sum of (x) $140,000,000 plus (y) 50% of the aggregate amount of
NPAT for each Quarterly Period occurring after July 2, 1994 and
ending on such Quarterly Date plus (z) 50% of the aggregate net
proceeds of all Equity Issuances from and after the date hereof.
8.12 Debt Service Coverage Ratio. The Company will not
permit the Debt Service Coverage Ratio to be less than (a) for
the rolling four Quarterly Periods ending on the Quarterly Date
nearest
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December 1994 and nearest March 1995, 1.75 to 1, and (b)
for each rolling four Quarterly Periods ending on any Quarterly
Date thereafter, 2.0 to 1.
8.13 Lines of Business. Neither the Company nor any of its
Subsidiaries shall engage to any substantial extent in any line
or lines of business activity other than the business of
manufacturing, distributing and selling furniture, furnishings
and related products (or any similar business engaged in on the
date hereof).
8.14 Transactions with Affiliates. Except as expressly
permitted by this Agreement, the Company will not, nor will it
permit any of its Subsidiaries to, directly or indirectly: (a)
make any Investment in an Affiliate; (b) transfer, sell, lease,
assign or otherwise dispose of any assets to an Affiliate; (c)
merge into or consolidate with or purchase or acquire assets from
an Affiliate; or (d) enter into any other transaction directly or
indirectly with or for the benefit of an Affiliate (including,
without limitation, guarantees and assumptions of obligations of
an Affiliate); provided that (x) any Affiliate who is an
individual may serve as a director, officer or employee of the
Company or its Subsidiaries and receive reasonable compensation
for his or her services in such capacity and (y) the Company and
its Subsidiaries may enter into transactions (other than
extensions of credit by the Company or any of its Subsidiaries to
an Affiliate) providing for the leasing of property, the
rendering or receipt of services or the purchase or sale of
inventory and other assets in the ordinary course of business if
the monetary or business consideration arising therefrom would be
substantially as advantageous to the Company and its Subsidiaries
as the monetary or business consideration which would obtain in a
comparable transaction with a Person not an Affiliate.
8.15 Use of Proceeds. The Company will use the proceeds of
the Loans hereunder solely (i) to provide working capital for the
Company and its Subsidiaries, (ii) for general corporate purposes
for the Company and its Subsidiaries (including the making of
Acquisitions) and (iii) to refinance the Indebtedness outstanding
(1) under the Existing Credit Agreement, (2) to PNC Bank,
National Association, (3) to The Chase Manhattan (National
Association) and (4) to ABN AMRO Bank N.V. (in each case in
compliance with all applicable legal and regulatory requirements,
including, without limitation, Regulations G, U and X and the
Securities Act of 1933 and the Securities Exchange Act of 1934
(in each case, as amended) and the regulations thereunder);
provided, that neither the Agent nor any Bank shall have any
responsibility as to the use of any of such proceeds.
8.16 New Guarantors. In the event that there shall, after
the date hereof, be or become (by Acquisition or otherwise) a
Material Subsidiary that is not a party hereto as a Guarantor,
the
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Company will notify the Agent promptly of such event and
shall proceed in good faith to cause such Material Subsidiary (a
"New Guarantor") to become a party to this Agreement as a
Guarantor, as soon as reasonably possible, pursuant to an
instrument in form and substance satisfactory to the Majority
Banks (the "New Guarantor Instrument") and the New Guarantor
shall deliver such proof of corporate action, incumbency of
officers, opinions of counsel and other documents as is
consistent with those delivered by each Obligor originally a
party hereto pursuant to Section 6.01 hereof (or as any Bank or
the Agent shall have requested). Upon and after the execution
and delivery by any New Guarantor of its New Guarantor
Instrument, such New Guarantor shall, for all purposes of this
Agreement, be a "Guarantor" and "Obligor" hereunder.
Section 9
Events of Default
If one or more of the following events (herein called
"Events of Default") shall occur and be continuing:
(a) The Company shall default in the payment when
due of any principal of or interest on any Loan or any other
amount payable by it hereunder; or
(b) The Company or any of its Material Subsidiaries
or Special Subsidiaries shall default in the payment when
due of any principal of or interest on any of its other
Indebtedness aggregating $5,000,000 or more; or any event
specified in any note, agreement, indenture or other
document evidencing or relating to any such Indebtedness
shall occur if the effect of such event is (i) to cause, or
(ii) (with the giving of any notice or the lapse of time or
both) to permit the holder or holders of such Indebtedness
(or a trustee or agent on behalf of such holder or holders)
to cause, such Indebtedness to become due, or to be prepaid
in full (whether by redemption, purchase or otherwise),
prior to its stated maturity; or
(c) Any representation, warranty or certification
made or deemed made in any Basic Document (or in any
modification or supplement thereto) by any Obligor, or any
certificate furnished to any Bank or the Agent pursuant to
the provisions thereof, shall prove to have been false or
misleading as of the time made or furnished in any material
respect; or
(d) The Company shall default in the performance of
any of its obligations under clause (f) of Section 8.01 or
Sections 8.05 through 8.14 hereof, inclusive; or
(e) Any Obligor shall default in the performance of
any of its obligations in this Agreement or any other Basic
Document (other than as set forth in (a), (c) and (d) above)
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and such default shall continue unremedied for a period of
thirty days after notice thereof given to the Company by the
Agent or any Bank (through the Agent); or
(f) The Company or any of its Material Subsidiaries
or Special Subsidiaries shall admit in writing its inability
to, or be generally unable to, pay its debts as such debts
become due; or
(g) The Company or any of its Material Subsidiaries
or Special Subsidiaries shall (i) apply for or consent to
the appointment of, or the taking of possession by, a
receiver, custodian, trustee or liquidator of itself or of
all or a substantial part of its property, (ii) make a
general assignment for the benefit of its creditors, (iii)
commence a voluntary case under the United States Bankruptcy
Code (as now or hereafter in effect), (iv) file a petition
seeking to take advantage of any other law relating to
bankruptcy, insolvency, reorganization, winding-up, or
composition or readjustment of debts, (v) fail to have
dismissed within 90 days of filing any petition filed
against it in an involuntary case under the United States
Bankruptcy Code, or (vi) take any corporate action for the
purpose of effecting any of the foregoing; or
(h) A proceeding or case shall be commenced, without
the application or consent of the Company or any of its
Material Subsidiaries or Special Subsidiaries, in any court
of competent jurisdiction, seeking (i) its liquidation,
reorganization, dissolution or winding-up, or the
composition or readjustment of its debts, (ii) the
appointment of a trustee, receiver, custodian, liquidator or
the like of the Company or such Subsidiary or of all or any
substantial part of its assets, or (iii) similar relief in
respect of the Company or such Subsidiary under any law
relating to bankruptcy, insolvency, reorganization, winding-
up, or composition or adjustment of debts, and such
proceeding or case shall continue undismissed, or an order,
judgment or decree approving or ordering any of the
foregoing shall be entered and continue unstayed and in
effect, for a period of 60 or more days; or an order for
relief against the Company or such Subsidiary shall be
entered in an involuntary case under the Bankruptcy Code; or
(i) A final judgment or judgments for the payment of
money in excess of $7,500,000 in the aggregate (exclusive of
judgment amounts fully covered by either (i) insurance where
the insurer has admitted liability in respect of such
judgment or (ii) any indemnity where the indemnifying party
has admitted liability in respect of such judgment, so long
as such indemnifying party is either Maytag Corporation or
any other Person the creditworthiness of which is reasonably
satisfactory to the Majority Banks) or in excess of
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$15,000,000 in the aggregate (regardless of insurance
coverage) shall be rendered by a court or courts against the
Company and/or any of its Material Subsidiaries or Special
Subsidiaries and the same shall not be discharged (or
provision shall not be made for such discharge), or a stay
of execution thereof shall not be procured, within 30 days
from the date of entry thereof and the Company or the
relevant Subsidiary shall not, within said period of 30
days, or such longer period during which execution of the
same shall have been stayed, appeal therefrom and cause the
execution thereof to be stayed during such appeal; or
(j) An event or condition specified in Section
8.01(e) hereof shall occur or exist with respect to any Plan
or Multiemployer Plan and, as a result of such event or
condition, together with all other such events or
conditions, the Company or any ERISA Affiliate shall incur
or in the opinion of the Majority Banks shall be reasonably
likely to incur a liability to a Plan, a Multiemployer Plan
or PBGC (or any combination of the foregoing) which is, in
the determination of the Majority Banks, material in
relation to the consolidated financial condition,
operations, business or prospects taken as a whole of the
Company and its Consolidated Subsidiaries; or
(k) A Change of Control shall have occurred; or
(l) Any Guarantor shall assert that its obligations
hereunder are invalid or unenforceable or shall otherwise
disavow such obligations; or
(m) A Special Subsidiary Event of Default shall have
occurred and be continuing;
THEREUPON: (i) in the case of an Event of Default other than one
referred to in clause (f), (g) or (h) of this Section 9 with
respect to any Obligor, the Agent (with the consent of the
Majority Banks) may and, upon written request of the Majority
Banks, shall, by notice to the Company (together with
simultaneous notice to the Banks), cancel the Revolving Credit
Commitment and/or declare the principal amount then outstanding
of, and the accrued interest on, the Loans and all other amounts
payable by the Obligors hereunder and under the Notes (including,
without limitation, any amounts payable under Section 5.05
hereof) to be forthwith due and payable, whereupon such amounts
shall be immediately due and payable without presentment, demand,
protest or other formalities of any kind, all of which are hereby
expressly waived by each Obligor; and (ii) in the case of the
occurrence of an Event of Default referred to in clause (f), (g)
or (h) of this Section 9 with respect to any Obligor, the
Revolving Credit Commitment shall automatically be canceled and
the principal amount then outstanding of, and the accrued
interest on, the Loans and all other amounts payable by the
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Obligors hereunder and under the Notes (including, without
limitation, any amounts payable under Section 5.05 hereof) shall
automatically become immediately due and payable without
presentment, demand, protest or other formalities of any kind,
all of which are hereby expressly waived by each Obligor.
Subsequent to an Event of Default, the Agent (with the consent of
the Majority Banks) may and, upon the request of the Majority
Banks, shall have the right to exercise any remedies it may have
under the Basic Documents, including, without limitation, the
Pledge Agreements and under all applicable law.
Section 10
The Agent
10.01 Appointment, Powers and Immunities. Each Bank hereby
irrevocably appoints and authorizes the Agent to act as its agent
hereunder with such powers as are specifically delegated to the
Agent by the terms of this Agreement, together with such other
powers as are reasonably incidental thereto. The Agent (which
term as used in this sentence and in Section 10.05 and the first
sentence of Section 10.06 hereof shall include reference to its
affiliates and its own and its affiliates' officers, directors,
employees and agents): (a) shall have no duties or
responsibilities except those expressly set forth in this
Agreement, and shall not by reason of this Agreement be a trustee
for any Bank; (b) shall not be responsible to the Banks for any
recitals, statements, representations or warranties contained in
this Agreement, or in any certificate or other document referred
to or provided for in, or received by any of them under, this
Agreement, or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or
any other Basic Document or any other document referred to or
provided for herein or therein or for any failure by the Company
or any other Person to perform any of its obligations hereunder
or thereunder; (c) shall not be required to initiate or conduct
any litigation or collection proceedings hereunder or under any
other Basic Document; and (d) shall not be responsible for any
action taken or omitted to be taken by it hereunder or under any
other Basic Document or under any other document or instrument
referred to or provided for herein or therein or in connection
herewith or therewith, except for its own gross negligence or
willful misconduct. The Agent may employ agents and attorneys-
in-fact and shall not be responsible for the negligence or
misconduct of any such agents or attorneys-in-fact selected by it
in good faith. The Agent may deem and treat the payee of any
Note as the holder thereof for all purposes hereof unless and
until a written notice of the assignment or transfer thereof
shall have been filed with the Agent, together with the written
consent of the Company to such assignment or transfer, and the
Agent shall have consented to such assignment or transfer.
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10.02 Reliance by Agent. The Agent shall be entitled to
rely upon any certification, notice or other communication
(including any thereof by telephone, telecopy, telex, telegram or
cable) believed by it to be genuine and correct and to have been
signed or sent by or on behalf of the proper Person or Persons,
and upon advice and statements of legal counsel, independent
accountants and other experts selected by the Agent with
reasonable care. As to any matters not expressly provided for by
this Agreement or any other Basic Document, the Agent shall in
all cases be fully protected in acting, or in refraining from
acting, hereunder and thereunder in accordance with instructions
signed by the Majority Banks, and such instructions of the
Majority Banks and any action taken or failure to act pursuant
thereto shall be binding on all of the Banks.
10.03 Defaults. The Agent shall not be deemed to have
knowledge or notice of the occurrence of a Default or Event of
Default (other than the non-payment of principal of or interest
on Loans or of Commitment Fees) unless the Agent has received
notice from Bank or the Company specifying 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 of the
occurrence of a Default or Event of Default, the Agent shall give
prompt notice thereof to the Banks (and shall give each Bank
prompt notice of each such non-payment). The Agent shall
(subject to Section 10.07 hereof) take such action with respect
to such Default or Event of Default as shall be directed by the
Majority Banks; provided that, unless and until the Agent shall
have received such directions, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such
action, with respect to such Default or Event of Default as it
shall deem advisable in the best interest of the Banks.
10.04 Rights as a Bank. NationsBank of North Carolina,
N.A. (and any successor acting as Agent), in its capacity as a
Bank hereunder, shall have the same rights and powers hereunder
as any other Bank and may exercise the same as though it were not
acting as the Agent, and the term "Bank" or "Banks" shall, unless
the context otherwise indicates, include the Agent in its
individual capacity. NationsBank of North Carolina, N.A. (and
any successor acting as Agent) and its affiliates may (without
having to account therefor to any Bank) accept deposits from,
lend money to and generally engage in any kind of banking, trust
or other business with the Obligors (and any of their affiliates)
as if it were not acting as the Agent, and NationsBank of North
Carolina, N.A. and its affiliates may accept fees and other
consideration from the Obligors for services in connection with
this Agreement or otherwise without having to account for the
same to the Banks.
10.05 Indemnification. The Banks agree to indemnify the
Agent (to the extent not reimbursed under Section 12.03 hereof,
but without limiting the obligations of the Company under said Section
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12.03), pro rata in accordance with each Bank's pro rata
share of the total Commitment, for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind and nature
whatsoever which may be imposed on, incurred by or asserted
against the Agent in any way relating to or arising out of this
Agreement or any other Basic Document or any other documents
contemplated by or referred to herein or therein or the
transactions contemplated hereby (including, without limitation,
the costs and expenses which the Company is obligated to pay
under Section 12.03 hereof, but excluding, unless a Default or
Event of Default has occurred and is continuing, normal
administrative costs and expenses incident to the performance of
its agency duties hereunder) or the enforcement of any of the
terms hereof or thereof or of any such other documents; provided
that no Bank shall be liable for any of the foregoing to the
extent they arise from the gross negligence or willful misconduct
of the party to be indemnified.
10.06 Non-Reliance on Agent and other Banks. Each Bank
agrees that it has, independently and without reliance on the
Agent or any other Bank, and based on such documents and
information as it has deemed appropriate, made its own credit
analysis of the Company and its Subsidiaries and decision to
enter into this Agreement and that it will, independently and
without reliance upon the Agent or any other Bank, and based on
such documents and information as it shall deem appropriate at
the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement or any of the
other Basic Documents. The Agent shall not be required to keep
itself informed as to the performance or observance by any
Obligor of this Agreement or any of the other Basic Documents or
any other document referred to or provided for herein or therein
or to inspect the properties or books of the Company or any of
its Subsidiaries. Except for notices, reports and other
documents and information expressly required to be furnished to
the Banks by the Agent hereunder, the Agent shall not have any
duty or responsibility to provide any Bank with any credit or
other information concerning the affairs, financial condition or
business of the Company or any of its Subsidiaries (or any of
their affiliates) which may come into the possession of the Agent
or any of its affiliates.
10.07 Failure to Act. Except for action expressly required
of the Agent hereunder and under the other Basic Documents, the
Agent shall in all cases be fully justified in failing or
refusing to act hereunder and thereunder unless it shall receive
further assurances to its satisfaction from the Banks of their
indemnification obligations under Section 10.05 hereof against
any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action.
10.08 Resignation or Removal of Agent. Subject to the
appointment and acceptance of a successor Agent as provided below,
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the Agent may resign at any time by giving notice thereof
to the Banks and the Company, and the Agent may be removed at any
time with cause by the Majority Banks. Upon any such resignation
or removal, the Majority Banks shall have the right to appoint a
successor Agent. If no successor Agent shall have been so
appointed by the Majority Banks and shall have accepted such
appointment within 30 days after the retiring Agent's giving of
notice of resignation or the Majority Banks' removal of the
retiring Agent, then the retiring Agent may, on behalf of the
Banks, appoint a successor Agent, which shall be a bank which has
a combined capital and surplus of at least $500,000,000. Upon
the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and
duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder. After any
retiring Agent's resignation or removal hereunder as Agent, the
provisions of this Section 10 shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by
it while it was acting as the Agent. Notwithstanding the
foregoing, the removal of any Bank as "Agent" pursuant to this
Section 10.08 shall not affect such Bank's obligations as a
"Bank" hereunder.
10.09 Agency Fee. Until the Revolving Loan Commitment has
been terminated and payment in full of the principal of and
interest on the Loans and all other amounts payable by the
Company hereunder has occurred, the Company will pay to the Agent
an agency fee as agreed to between the Company and the Agent,
which fee shall be payable annually in advance first on the
Effective Date and thereafter on each anniversary date of the
Effective Date. Such fee, once paid, shall be non-refundable.
Section 11
The Guarantee
11.01 Guarantee. Subject to the limitation set forth in
Section 11.07 hereof, the Guarantors hereby jointly and
severally, unconditionally guarantee to each Bank and the Agent
and their respective successors and assigns the prompt payment in
full when due (whether at stated maturity, by acceleration or
otherwise) of the principal of and interest on the Loans made by
the Banks to, and the Note(s) held by each Bank of, the Company
and all other amounts (including, without limitation, attorneys'
fees and other expenses payable by the Company hereunder) from
time to time owing to the Banks or the Agent by the Company under
this Agreement and under the Notes and interest thereon, in each
case strictly in accordance with the terms hereof and thereof
(such obligations being herein collectively called the
"Guaranteed Obligations"). The Guarantors hereby further jointly
and severally agree that, subject to the limitation set forth in
Section 11.07 hereof, if the Company shall fail to pay in full
when due (whether at stated
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maturity, by acceleration or otherwise) any of the Guaranteed
Obligations, the Guarantors will promptly pay the same, without
any demand or notice whatsoever and without any set-off or
counterclaim whatsoever, and that in the case of any extension of
time of payment or renewal of any of the Guaranteed Obligations,
the same will be promptly paid in full when due (whether at
extended maturity, by acceleration or otherwise) in accordance with
the terms of such extension or renewal.
11.02 Obligations Unconditional. Subject to the limitation
set forth in Section 11.07 hereof, the obligations of the
Guarantors under Section 11.01 hereof are absolute and
unconditional, irrespective of the value, genuineness, validity,
regularity or enforceability of this Agreement, the Notes or any
other agreement or instrument referred to herein or therein, or
any substitution, release or exchange of any other guarantee of
or security for any of the Guaranteed Obligations, and, to the
fullest extent permitted by applicable law, irrespective of any
other circumstance whatsoever which might otherwise constitute a
legal or equitable discharge or defense of a surety or guarantor,
it being the intent of this Section 11.02 that the obligations of
the Guarantors hereunder shall be absolute and unconditional
under any and all circumstances. Without limiting the generality
of the foregoing, it is agreed that the occurrence of any one or
more of the following shall not affect the liability of the
Guarantors hereunder:
(i) at any time or from time to time, without notice
to the Guarantors, the time for any performance of or
compliance with any of the Guaranteed Obligations shall be
extended, or such performance or compliance shall be waived;
(ii) any of the acts mentioned in any of the
provisions of this Agreement or the Notes or any other
agreement or instrument referred to herein or therein shall
be done or omitted;
(iii) the maturity of any of the Guaranteed
Obligations shall be accelerated, or any of the Guaranteed
Obligations shall be modified, supplemented or amended in
any respect, or any right under this Agreement or the Notes
or any other agreement or instrument referred to herein or
therein shall be waived or any other guarantee of any of the
Guaranteed Obligations or any security or collateral
therefor shall be released or exchanged in whole or in part
or otherwise dealt with; or
(iv) any lien or security interest granted to, or in
favor of, the Agent or any Bank or Banks as security for any
of the Guaranteed Obligations shall fail to be perfected.
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The Guarantors hereby expressly waive diligence, presentment,
demand of payment, protest and all notices whatsoever, and any
requirement that the Agent or any Bank exhaust any right, power
or remedy or proceed against the Company under this Agreement or
the Notes or any other agreement or instrument referred to herein
or therein, or against any other Person under any other guarantee
of, or security for, any of the Guaranteed Obligations; it being
expressly understood that this is a guaranty of payment not a
guaranty of collection.
11.03 Reinstatement. The obligations of the Guarantors
under this Section 11 shall be automatically reinstated if and to
the extent that for any reason any payment by or on behalf of the
company in respect of the Guaranteed Obligations is rescinded or
must be otherwise restored by any holder of any of the Guaranteed
Obligations, whether as a result of any proceedings in bankruptcy
or reorganization or otherwise and the Guarantors agree that they
will indemnify the Agent and each Bank on demand for all
reasonable costs and expenses (including, without limitation,
fees of counsel) incurred by the Agent or such Bank in connection
with such rescission or restoration.
11.04 Primary Liability of Guarantors; Subrogation. Each
Guarantor agrees that this Section 11 may be enforced by the
Agent or the Banks without the necessity at any time of resorting
to or exhausting any other security or collateral and without the
necessity at any time of having recourse to the Notes or any
other of the Basic Documents or any collateral, if any, hereafter
securing the Guaranteed Obligations or otherwise and each
Guarantor hereby waives the right to require the Agent or the
Banks to proceed against the Company or any other Person
(including a co-guarantor) or to require the Agent or the Banks
to pursue any other remedy or enforce any other right. Without
limiting the generality of the foregoing, each Guarantor hereby
specifically waives the benefits of N.C. Gen. Stat. Section 26-7
through 26-9, inclusive and Section 26-12. Each Guarantor hereby
waives all rights of subrogation or contribution, whether arising
by contract or operation of law (including, without limitation,
any such right arising under the United States Bankruptcy Code)
or otherwise by reason of any payment by it pursuant to the
provisions of this Section 11 and further agrees with the Company
for the benefit of each of its creditors (including, without
limitation, each Bank and the Agent) that any such payment by it
shall constitute a contribution of capital by such Guarantor to
the Company.
11.05 Remedies. Each Guarantor agrees that, as between
such Guarantor and the Banks, the obligations of the Company
hereunder and under the Notes may be declared to be forthwith due
and payable as provided in Section 9 hereof (and shall be deemed
to have become automatically due and payable in the circumstances
provided in Section 9 hereof) for purposes of Section 11.01
hereof notwithstanding any stay, injunction or other prohibition
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preventing such declaration (or such obligations from becoming
automatically due and payable) as against the Company and that,
in the event of such declaration (or such obligations being
deemed to have become automatically due and payable), such
obligations (whether or not due and payable by the Company) shall
forthwith become due and payable by such Guarantor for purposes
of said Section 11.01.
11.06 Continuing Guarantee. The guarantee in this Section
11 is a continuing guarantee, and shall apply to all Guaranteed
Obligations whenever arising.
11.07 Limitation on Guarantee. Notwithstanding anything in
this Section 11 to the contrary, the liability of any Guarantor
with respect to the Guaranteed Obligations guaranteed hereunder
shall not exceed the Maximum Guaranteed Amount (as defined below)
as determined at the earlier of the date of the commencement of
a case under the United States Bankruptcy Code in which such
Guarantor is a debtor or the date enforcement of this Section 11
is sought against such Guarantor.
For the purposes hereof, "Maximum Guaranteed Amount", for
each individual Guarantor, means the sum of (a) with respect to
each Loan (or portion thereof) the proceeds of which are
transferred to the Guarantor, the amount of such proceeds that
are transferred to the Guarantor plus (b) with respect to each
Loan (or portion thereof) the proceeds of which are not
transferred to the Guarantor, the lesser of (i) the outstanding
amount of such Loan as of such date or (ii) the greater of (A)
95% of the Adjusted Net Worth (as defined below) of such
Guarantor as of the date of such Loan or (B) 95% of the Adjusted
Net Worth of such Guarantor as determined as of the earliest of
(1) such date, (2) the date of commencement of a case under the
United States Bankruptcy Code in which such Guarantor is a debtor
or (3) the date enforcement is sought against such Guarantor.
For the purposes hereof, "Adjusted Net Worth" means, as of
any date of determination, with respect to a Guarantor, the
excess of (a) the amount of the "present fair saleable value" of
the assets of such Guarantor as of such date of determination
less (b) the amount of all "liabilities, contingent or
otherwise", of such Guarantor as of such date of determination.
The quoted terms above shall be determined in accordance with
applicable federal and state laws governing the insolvency of
debtors. In determining the Adjusted Net Worth of a Guarantor
for purposes of calculating the Maximum Guaranteed Amount in
respect of any Loan, the liabilities of such Guarantor to be used
in such determination pursuant to clause (b) above shall include
the liabilities of such Guarantor in respect of all Loans other
than the Loan in respect of which such calculation is being made.
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Section 12
Miscellaneous
12.01 Waiver. No failure on the part of the Agent or any
Bank to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power or privilege under this
Agreement or any Note shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or
privilege under this Agreement or any Note preclude any other or
further exercise thereof or the exercise of any other right,
power or privilege. The remedies provided herein are cumulative
and not exclusive of any remedies provided by law.
12.02 Notices. All notices and other communications
provided for herein (including, without limitation, any
modifications of, or waivers or consents under, this Agreement)
shall be given or made by telex, telecopy, telegraph, cable or in
writing and telexed, telecopied, telegraphed, cabled, mailed or
delivered to the intended recipient at the "Address for Notices"
specified below its name on the signature pages hereof (or in the
case of any Guarantor, in care of the Company at the Company's
address for notices); or, as to any party, at such other address
as shall be designated by such party in a written notice to each
other party. Except as otherwise provided in this Agreement, all
such communications shall be deemed to have been duly given when
transmitted by telex or telecopier, delivered to the telegraph or
cable office or personally delivered or, in the case of a mailed
notice, upon receipt, in each case given or addressed as
aforesaid; provided, however, that if any notice is received on a
date other than a Business Day then such notice shall not be
deemed to have been delivered until the next Business Day.
12.03 Expenses, Indemnification Etc..
(a) The Company agrees to pay or reimburse each of
the Banks and the Agent for paying: (i) all reasonable out-
of-pocket costs and expenses of the Agent (including,
without limitation, the reasonable fees and expenses of
counsel to the Agent), in connection with (1) the
negotiation, preparation, execution and delivery of this
Agreement and the other Basic Documents and the making of
the Loans hereunder and (2) any amendment, modification or
waiver of any of the terms of this Agreement or any of the
other Basic Documents; (ii) all reasonable costs and
expenses of the Banks and the Agent (including reasonable
counsels' fees) in connection with any Default or Event of
Default and any enforcement or collection proceedings
resulting therefrom; and (iii) all transfer, stamp,
documentary or other similar taxes, assessments or charges
levied by any governmental or revenue authority in respect
of this Agreement or any of the other Basic Documents or any
other document referred to herein or therein.
-67-
(b) The Company hereby agrees to indemnify the Agent
and each Bank and their respective directors, officers,
employees and agents from, and hold each of them harmless
against, any and all losses, liabilities, claims, damages or
expenses incurred by any of them arising out of or by reason
of any investigation or litigation or other proceedings
(including any threatened investigation or litigation or
other proceedings) relating to any actual or proposed use by
the Company or any of its Subsidiaries of the proceeds of
any of the Loans, including, without limitation, the
reasonable fees and disbursements of counsel incurred in
connection with any such investigation or litigation or
other proceedings (but excluding any such losses,
liabilities, claims, damages or expenses incurred by reason
of the gross negligence or willful misconduct of the Person
to be indemnified).
12.04 Amendments, Etc.. Except as otherwise expressly
provided in this Agreement, any provision of this Agreement may
be amended or modified only by an instrument in writing signed by
the Company, the Agent and the Majority Banks, or by the Company
and the Agent acting with the consent of the Majority Banks, and
any provision of this Agreement may be waived by the Majority
Banks or by the Agent acting with the consent of the Majority
Banks; provided that no amendment, modification or waiver shall,
unless by an instrument signed by all of the Banks or by the
Agent acting with the consent of all of the Banks: (i) increase
or extend the term of, or extend the time or waive any
requirement for the reduction or termination of, the Commitments,
(ii) extend the date fixed for the payment of principal of or
interest on any Loan, (iii) reduce the amount of any payment of
principal thereof or the rate at which interest is payable
thereon or any fee is payable hereunder, (iv) alter the terms of
this Section 12.04, (v) amend the definition of the term
"Majority Banks", (vi) amend, modify or waive any of the
conditions precedent set forth in Section 6 hereof; or (vii)
release the Company or any Guarantor (which is a Material
Subsidiary) from its obligations hereunder; and provided,
further, that any amendment of Section 10 hereof, or which
increases the obligations of the Agent hereunder, shall require
the consent of the Agent.
12.05 Successors and Assigns. Subject to Section 12.06,
this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted
assigns.
12.06 Assignments and Participations.
(a) The Company may not assign its rights or
obligations hereunder or under the Notes without the prior
consent of all of the Banks and the Agent.
-68-
(b) No Bank may assign to any Person (an "Assignee")
any of its Loans, its Notes, its Revolving Credit Commitment
Percentage or its Term Loan Commitment Percentage without
the prior consent of the Company and the Agent (which shall
not be unreasonably withheld); provided, (i) without the
consent of the Company or the Agent, any Bank may (subject
to the further clauses below and subject to prior written
notice to the Agent) assign to an Affiliate thereof or to
another Bank (or an Affiliate of such other Bank) all or any
portion of its aggregate commitment hereunder, (ii) any such
partial assignment shall be at least $14,000,000 (unless
such partial assignment is to a Bank and then at least
$10,000,000) and in incremental multiples of $1,000,000 in
excess thereof; (iii) such assigning Bank shall also
simultaneously assign to such assignee the same proportion
of each of its Loans, Revolving Credit Commitment Percentage
and Term Loan Commitment Percentage then outstanding
(together with the same proportion of its Note or Notes then
outstanding); (iv) so long as no Default or Event of Default
shall have occurred and be continuing, no Bank may make an
assignment if, after giving effect thereto, the remaining
aggregate amount of its commitment hereunder is less than
$12,000,000; and (v) such assignment shall be in
substantially the form of the Assignment Agreement attached
hereto as Exhibit F. Upon written notice to the Company and
the Agent of an assignment permitted by the preceding
sentence (which notice shall identify the Assignee and the
amount of the assigning Bank's Loans, Revolving Credit
Commitment Percentage and Term Loan Commitment Percentage
assigned in detail reasonably satisfactory to the Agent) and
upon the effectiveness of any assignment consented to by the
Company and the Agent, the assignee shall have, to the
extent of such assignment (unless otherwise provided in such
assignment with the consent of the Company and the Agent),
the obligations, rights and benefits of a Bank hereunder
holding the Revolving Credit Commitment Percentage, the Term
Loan Commitment Percentage and Loans (or portions thereof)
assigned to it (in addition to the Revolving Credit
Commitment Percentage, the Term Loan Commitment Percentage
and Loans, if any, theretofore held by such assignee) and
the assigning Bank shall, to the extent of such assignment,
be released from the Revolving Credit Commitment Percentage
and Term Loan Commitment Percentage (or portions thereof) so
assigned. The provision of clauses (ii) and (iv) of this
Section 12.06(b) shall not be applicable to any assignment
effected pursuant to Section 5.06 hereof. The assigning
Bank shall pay the Agent an assignment fee of $2500 upon the
effectiveness of any assignment permitted by this Section
12.06(b). No Bank may assign any of its Loans, Notes,
Revolving Credit Commitment Percentage or Term Loan
Commitment Percentage to any Obligor or any Affiliate
thereof.
-69-
(c) A Bank may sell or agree to sell to one or more
other Persons a participation in all or any part of any Loan
held by it or Loans made or to be made by it, in which event
each such participant shall be entitled to the rights and
benefits of the provisions of Section 8.01(h) hereof with
respect to its participation in such Loan as if (and the
Company shall be directly obligated to such participant
under such provisions as if) such participant were a "Bank"
for purposes of said Section, but shall not have any other
rights or benefits under this Agreement or any Note (the
participant's rights against such Bank in respect of such
participation to be those set forth in the agreement (the
"Participation Agreement") executed by such Bank in favor of
the participant). All amounts payable by the Company to any
Bank under Section 5 hereof shall be determined as if such
Bank had not sold or agreed to sell any participations in
such Loan and as if such Bank were funding all of such Loan
in the same way that it is funding the portion of such Loan
in which no participations have been sold. In no event
shall a Bank that sells a participation be obligated to the
participant under the Participation Agreement to take or
refrain from taking any action hereunder or under such
Bank's Notes except that such Bank may agree in the
Participation Agreement that it will not, without the
consent of the participant, agree to (i) the increase or
extension of the term, or the extension of the time or
waiver of any requirement for the reduction or termination,
of such Bank's Commitments, (ii) the extension of any date
fixed for the payment of principal of or interest on the
related Loan or Loans or any portion of any fees payable to
the participant, (iii) the reduction of any payment of
principal thereof or (iv) the reduction of the rate at which
either interest is payable thereon or (if the participant is
entitled to any part thereof) commitment fee is payable
hereunder to a level below the rate at which the participant
is entitled to receive interest or commitment fee (as the
case may be) in respect of such participation.
(d) A Bank may furnish any information concerning
the Company or any of its Subsidiaries in the possession of
such Bank from time to time to assignees and participants
(including prospective assignees and participants), subject,
however, to the provisions of Section 12.12 hereof.
(e) Anything in this Section 12.06 to the contrary
notwithstanding, any Bank may assign and pledge all or any
portion of its Loans and its Notes to any Federal Reserve
Bank (and its transferees) as collateral security pursuant
to Regulation A and any Operating Circular issued by such
Federal Reserve Bank. No such assignment shall release the
assigning Bank from its obligations hereunder.
-70-
12.07 Survival. The obligations of the Company under
Sections 5.01, 5.05 and 12.03 hereof, the Guaranteed Obligations
of the Guarantors in respect of such Sections, and the provisions
of Section 11.03 hereof in respect of any Guarantor, shall
survive the repayment of the Loans and the termination of the
Commitments.
12.08 Captions. The table of contents and captions and
section headings appearing herein are included solely for
convenience of reference and are not intended to affect the
interpretation of any provision of this Agreement.
12.09 Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall
constitute one and the same instrument and any of the parties
hereto may execute this Agreement by signing any such
counterpart.
12.10 Governing Law; Submission to Jurisdiction. THIS
AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NORTH CAROLINA. THE
COMPANY AND EACH GUARANTOR HEREBY SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE WESTERN
DISTRICT OF NORTH CAROLINA AND OF ANY NORTH CAROLINA STATE COURT
SITTING IN MECKLENBURG COUNTY, NORTH CAROLINA FOR THE PURPOSES OF
ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. THE COMPANY
AND EACH GUARANTOR IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN
SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN
SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
12.11 Waiver of Jury Trial. EACH OF THE COMPANY, THE
GUARANTORS, THE AGENT AND THE BANKS HEREBY IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL
BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
12.12 Confidentiality. Each Bank and the Agent agrees (on
behalf of itself and each of its affiliates, directors, officers,
employees and representatives) to use reasonable precautions to
keep confidential, in accordance with their customary procedures
for handling confidential information of this nature and in
accordance with safe and sound banking practices, any non-public
information supplied to it by the Company pursuant to this
Agreement which is identified by the Company as being
confidential at the time the same is delivered to the Banks or
the Agent, provided that nothing herein shall limit the
disclosure of any such information (i) to the extent required by
statute, rule, regulation or judicial process, (ii) to counsel
for any of the Banks or the Agent, (iii) to bank examiners,
auditors or accountants or other professional advisors involved
in the administration of the transactions contemplated hereby or
any Affiliate of the disclosing
-71-
party, (iv) to the Agent or any other Bank, (v) in connection with
any litigation or dispute to which any one or more of the Banks is a
party, (vi) to any assignee or participant (or prospective assignee
or participant) so long as such assignee or participant (or
prospective assignee or participant) first executes and delivers to
the respective Bank a Confidentiality Agreement in substantially the
form of Exhibit D hereto or (vii) to the extent such information has
been received from any Person not bound by a duty of confidentiality;
provided, further, that, unless specifically prohibited by
applicable law or court order, each Bank shall, prior to
disclosure thereof, notify the Company of any request for
disclosure of any such non-public information (x) by any
governmental agency or representative thereof (other than any
such request in connection with an examination of the financial
condition of such Bank by such governmental agency) or (y)
pursuant to legal process; and provided finally that in no event
shall any Bank or the Agent be obligated or required to return
any materials furnished by the Company. The obligations of each
Bank under this Section 12.12 shall supersede and replace the
obligations of such Bank under any confidentiality letter in
respect of this financing signed and delivered by such Bank to
the Company prior to the date hereof.
12.13 Severability. If any provision of any of the Basic
Documents is determined to be illegal, invalid or unenforceable,
such provision shall be fully severable and the remaining
provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or
unenforceable provisions.
12.14 Entirety. This Agreement, together with the other
Basic Documents, represents the entire agreement of the parties
hereto and supersede all prior agreements and understandings,
oral or written, if any, between the parties.
-72-
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed under seal as of the day and year
first above written.
ATTEST: LADD FURNITURE, INC.
By:_____________ By:
Secretary William S. Creekmuir
Senior Vice President and Chief
(corporate seal) Financial Officer
Notices
One Plaza Center
Box HP-3
101 South Main Street
High Point, NC 27261-1500
Attn: Mr. William S. Creekmuir
Senior Vice President and
Chief Financial Officer
Telecopier No.: (910) 888-6344
Telephone No.: (910) 888-6326
THE GUARANTORS
ATTEST: PENNSYLVANIA HOUSE, INC.
By:_____________ By:
Secretary William S. Creekmuir
Vice President
(corporate seal)
ATTEST: BROWN JORDAN COMPANY
By:_____________ By:
Secretary William S. Creekmuir
Vice President
(corporate seal)
ATTEST: CLAYTON-MARCUS COMPANY, INC.
By:______________ By:
Secretary William S. Creekmuir
Vice President
(corporate seal)
ATTEST: LADD CONTRACT SALES CORPORATION
By:___________ By:
Secretary William S. Creekmuir
Vice President
(corporate seal)
ATTEST: FOURNIER FURNITURE, INC.
By:______________ By:
Secretary William S. Creekmuir
Vice President
(corporate seal)
ATTEST: BARCLAY FURNITURE CO.
By:________________ By:
Secretary William S. Creekmuir
Vice President
(corporate seal)
ATTEST: AMERICAN FURNITURE COMPANY,
INCORPORATED
By:_________________ By:
Secretary William S. Creekmuir
Vice President
(corporate seal)
ATTEST: PILLIOD FURNITURE, INC.
By:________________ By:
Secretary William S. Creekmuir
Vice President
(corporate seal)
ATTEST: LEA INDUSTRIES, INC. (a North
Carolina corporation)
By:_______________ By:
Secretary William S. Creekmuir
Vice President
(corporate seal)
NATIONSBANK OF NORTH CAROLINA, N.A.,
individually as a Bank and as the Agent
By:
Name: __________________________
Title: _________________________
Lending Office for All Loans:
NationsBank of North Carolina, N.A.
NationsBank Corporate Center
100 North Tryon Street
Charlotte, NC 28255
Address for Notices:
NationsBank of North Carolina, N.A.
NationsBank Corporate Center
100 North Tryon Street
8th Floor
Charlotte, NC 28255
Attn: Greg Powell
Telecopier No.: (704) 386-1270
Telephone No.: (704) 386-1826
CIBC INC.
By:
E. Roger Colden
Vice President
Lending Office for All
Loans:
CIBC Inc.
Two Paces West
2727 Paces Ferry Rd.
Suite 1200
Atlanta, GA 30339
Attn: E. Roger Colden
Address for Notices:
CIBC Inc.
Two Paces West
2727 Paces Ferry Rd.
Suite 1200
Atlanta, GA 30339
Attn: Miriam McCart
Telex No.: 542413 CanBank Atl
Telecopier No.: (404) 319-4954
Telephone No.: (404) 319-4902
Creditanstalt Corporate
Finance, Inc.
By:
Robert M. Biringer
Senior Vice President
By:
Daniel D. Lensgraf
Senior Associate
Lending Office for All Loans:
Creditanstalt Corporate Finance,
Inc.
Two Ravinia Drive
Suite 1680
Atlanta, GA 30346
Address for Notices:
Creditanstalt Corporate Finance,
Inc.
245 Park Avenue
New York, NY 10167
Attention: Mr. Dennis O'Dowd
Telex: 424700
Telecopier: (212) 856-1234
Telephone No: (212) 856-1000
WACHOVIA BANK OF NORTH
CAROLINA, N.A.
By:
Pete T. Callahan
Vice President
Lending Office for All
Loans:
Wachovia Bank of North
Carolina, N.A.
200 North Main Street
High Point, NC 27260
Attn: Pete T. Callahan
Address for Notices:
Wachovia Bank of North
Carolina, N.A.
200 North Main Street
High Point, NC 27260
Attn: Pete T. Callahan
Telecopier No.: (919) 887-1962
Telephone No.: (919) 887-7642
ABN AMRO BANK N.V.
By:
Patrick A. Thom
Assistant Vice President
Lending Office for All
Loans:
ABN AMRO Bank N.V.
One Ravinia Drive, Suite 1200
Atlanta, GA 30346
Attn: Patrick A. Thom
Address for Notices:
ABN AMRO Bank N.V.
One Ravinia Drive, Suite 1200
Atlanta, GA 30346
Attn: Patrick A. Thom
Telecopier No.: (404) 395-9188
Telephone No.: (404) 399-7381
Branch Banking and Trust Company
By:
Hoyt W. Almond
Sr. Vice President
Lending Office for All
Loans:
Branch Banking and Trust Company
645 N. Main, 2nd Floor
High Point, NC 27262
Attn: Hoyt W. Almond
Address for Notices:
Branch Banking and Trust Company
645 N. Main, 2nd Floor
High Point, NC 27262
Attn: Hoyt W. Almond
Telecopier No.: (910) 841-8455
Telephone No.: (910) 889-1130
Commonwealth Bank, a division
of Meridian Bank
By:
Ross M. Chrisman
Lending Office for All
Loans:
Commonwealth Bank, a division
of Meridian Bank
239 Market Street
Lewisburg, PA 17837
Attn: Ross M. Chrisman
Address for Notices:
Commonwealth Bank, a division
of Meridian Bank
239 Market Street
Lewisburg, PA 17837
Attn: Ross M. Chrisman
Telecopier No.: (717) 524-2258
Telephone No.: (717) 524-4539
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
By:
Kent Phillips
Lending Office for All
Loans:
First Union National Bank of
North Carolina
300 North Greene Street, 5th Floor
Greensboro, NC 27420
Attn: Kent Phillips
Address for Notices:
First Union National Bank of
North Carolina
300 North Greene Street, 5th Floor
Greensboro, NC 27420
Attn: Kent Phillips
Telecopier No.: (910) 378-4043
Telephone No.: (910) 378-4080
PNC Bank, National Association
By:
Jim Fink
Vice President, SE Group
Lending Office for All
Loans:
PNC Bank, National Association
Fifth Avenue & Wood Street
Pittsburgh, PA 15265
Attn: Jim Fink
Address for Notices:
PNC Bank, National Association
Fifth Avenue & Wood Street
Pittsburgh, PA 15265
Attn: Jim Fink
Telecopier No.: (412) 762-6484
Telephone No.: (412) 762-8746
NBD Bank, N.A.
By:
James D. Heinz
Second Vice President
Lending Office for All
Loans:
NBD Bank, N.A.
611 Woodward
Detroit, MI 48226
Attn: James D. Heinz
Address for Notices:
NBD Bank, N.A.
611 Woodward
Detroit, MI 48226
Attn: James D. Heinz
Telecopier No.: (313) 225-2649
Telephone No.: (313) 225-4227
EXHIBIT A-1
[Form of Revolving Credit Loan Note]
PROMISSORY NOTE
$ October 19, 1994
Charlotte, North Carolina
FOR VALUE RECEIVED, LADD FURNITURE, INC., a North Carolina
corporation (the "Company"), hereby promises to pay to the order
of __________________________ (the "Bank"), for the account of
its respective Applicable Lending Offices provided for by the
Credit Agreement referred to below, at the principal office of
NationsBank of North Carolina, N.A., 100 North Tryon, Charlotte,
NC 28255, the principal sum of _________________ Dollars (or such
lesser amount as shall equal the aggregate unpaid principal
amount of the Revolving Credit Loans made by the Bank to the
Company under the Credit Agreement), in lawful money of the
United States of America and in immediately available funds, on
the dates and in the principal amounts provided in the Credit
Agreement, and to pay interest on the unpaid principal amount of
each such Revolving Credit Loan, at such office, in like money
and funds, for the period commencing on the date of such
Revolving Credit Loan until such Revolving Credit Loan shall be
paid in full, at the rates per annum and on the dates provided in
the Credit Agreement.
The date made, continued or converted, amount, type,
interest rate and duration of Interest Period (if applicable) of
each Revolving Credit Loan made by the Bank to the Company, and
each payment made on account of the principal thereof, shall be
recorded by the Bank on its books and, prior to any transfer of
this Revolving Credit Loan Note, endorsed by the Bank on the
schedule attached hereto or any continuation thereof; provided
that the failure of the Bank to make any such recordation or
endorsement shall not effect the obligations of the Company
hereunder or under the Credit Agreement.
This Note is one of the Revolving Credit Loan Notes referred
to in the Credit Agreement (as modified and supplemented and in
effect from time to time, the "Credit Agreement") dated as of
_____________, 1994 between the Company, the Guarantors named
therein, the Banks named therein (including the Bank) and
NationsBank of North Carolina, N.A., as Agent, and evidences
Revolving Credit Loans made by the Bank thereunder. Capitalized
terms used in this Revolving Credit Loan Note have the respective
meanings assigned to them in the Credit Agreement and the terms
and conditions of the Credit Agreement are expressly incorporated
herein and made a part hereof.
The Credit Agreement provides for the acceleration of the
maturity of the Revolving Credit Loans evidenced by this
Revolving Credit Loan Note upon the occurrence of certain events
(and for payment of collection costs in connection therewith) and
for prepayments of Revolving Credit Loans upon the terms and
conditions specified therein.
Except as permitted by Section 12.06(b) of the Credit
Agreement, this Revolving Credit Loan Note may not be assigned by
the Bank to any other Person.
THIS REVOLVING CREDIT LOAN NOTE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NORTH
CAROLINA.
IN WITNESS WHEREOF, the Company has caused this Note to be
executed under seal as of the date first above written.
LADD FURNITURE, INC.
By:
Name:
Title:
ATTEST:
By:_____________ Secretary
(corporate seal)
SCHEDULE OF LOANS
This Note evidences Revolving Credit Loans made, continued
or converted under the Credit Agreement to the Company, on the
dates, in the principal amounts, of the types, bearing interest
at the rates and having Interest Periods (if applicable) of the
duration set forth below, subject to the payments, prepayments,
continuations and conversions of principal set forth below:
Amount
Date Paid,
Made, Principal Duration Prepaid,
Continued Amount Type of Continued Unpaid
or of of Interest Interest or Principal Notation
Converted Loan Loan Rate Period Converted Amount Made By
EXHIBIT A-2
[Form of Term Loan Note]
PROMISSORY NOTE
$ October 19, 1994
Charlotte, North Carolina
FOR VALUE RECEIVED, LADD FURNITURE, INC., a North Carolina
corporation (the "Company") hereby promises to pay to the order
of ________________________________________ (the "Bank"), for
account of its respective Applicable Lending Offices provided for
by the Credit Agreement referred to below, at the principal
office of NationsBank of North Carolina, N.A., 100 North Tryon,
Charlotte, NC 28255, the principal sum of ________________
Dollars (or such lesser amount as shall equal the aggregate
unpaid principal amount of the Term Loan made by the Bank to the
Company under the Credit Agreement), in lawful money of the
United States of America and in immediately available funds, on
the dates and in the principal amounts provided in the Credit
Agreement, and to pay interest on the unpaid principal amount of
the Term Loan, at such office, in like money and funds, for the
period commencing on the date of such Term Loan until such Term
Loan shall be paid in full, at the rates per annum and on the
dates provided in the Credit Agreement.
The date made, continued or converted, amount, type,
interest rate and duration of Interest Period (if applicable) of
the Term Loan (or any portion thereof) made by the Bank to the
Company, and each payment made on account of the principal
thereof, shall be recorded by the Bank on its books and, prior to
any transfer of this Term Loan Note, endorsed by the Bank on the
schedule attached hereto or any continuation thereof; provided
that the failure of the Bank to make any such recordation or
endorsement shall not effect the obligations of the Company
hereunder or under the Credit Agreement.
This Note is one of the Term Loan Notes referred to in the
Credit Agreement (as modified and supplemented and in effect from
time to time, the "Credit Agreement") dated as of ______________,
1994 between the Company, the Guarantors named therein, the Banks
named therein (including the Bank) and NationsBank of North
Carolina, N.A., as Agent, and evidences the Term Loan made by the
Bank thereunder. Capitalized terms used in this Term Loan Note
have the respective meanings assigned to them in the Credit
Agreement, and the terms and conditions of the Credit Agreement
are expressly incorporated herein and made a part hereof.
The Credit Agreement provides for the acceleration of the
maturity of the Term Loan evidenced by this Term Loan Note upon
the occurrence of certain events (and for payment of collection
costs in connection therewith) and for prepayments of such Term
Loan upon the terms and conditions specified therein.
Except as permitted by Section 12.06(b) of the Credit
Agreement, this Term Loan Note may not be assigned by the Bank to
any other Person.
THIS TERM LOAN NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NORTH CAROLINA.
IN WITNESS WHEREOF, the Company has caused this Note to be
executed under seal as of the date first above written.
LADD FURNITURE, INC.
By:
Title:
ATTEST:
By:_____________ Secretary
(corporate seal)
SCHEDULE OF LOANS
This Note evidences the Term Loan made, continued or
converted under the Credit Agreement to the Company, on the
dates, in the principal amounts, of the types, bearing interest
at the rates and having Interest Periods (if applicable) of the
duration set forth below, subject to the payments, prepayments,
continuations and conversions of principal set forth below:
Amount
Date Paid,
Made, Principal Duration Prepaid,
Continued Amount Type of Continued Unpaid
or of of Interest Interest or Principal Notation
Converted Loan Loan Rate Period Converted Amount Made By
EXHIBIT A-3
[Form of Competitive Bid Loan Note]
PROMISSORY NOTE
$115,000,000 October 19, 1994
Charlotte, North Carolina
FOR VALUE RECEIVED, LADD FURNITURE, INC., a North Carolina
corporation (the "Company"), hereby promises to pay to the order
of __________________________ (the "Bank"), for the account of
its respective Applicable Lending Offices provided for by the
Credit Agreement referred to below, at the principal office of
NationsBank of North Carolina, N.A., 100 North Tryon, Charlotte,
NC 28255, the principal sum of ONE HUNDRED FIFTEEN MILLION
DOLLARS (or such lesser amount as shall equal the aggregate
unpaid principal amount of the Competitive Bid Loans made by the
Bank to the Company under the Credit Agreement), in lawful money
of the United States of America and in immediately available
funds, on the dates and in the principal amounts provided in the
Credit Agreement, 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 provided in
the Credit Agreement.
The date made, amount, interest rate and duration of
Interest Period of each Competitive Bid Loan made by the Bank to
the Company, and each payment made on account of the principal
thereof, shall be recorded by the Bank on its books and, prior to
any transfer of this Competitive Bid Loan Note, endorsed by the
Bank on the schedule attached hereto or any continuation thereof;
provided that the failure of the Bank to make any such
recordation or endorsement shall not effect the obligations of
the Company hereunder or under the Credit Agreement.
This Note is one of the Competitive Bid Loan Notes referred
to in the Credit Agreement (as modified and supplemented and in
effect from time to time, the "Credit Agreement") dated as of
_____________, 1994 between the Company, the Guarantors named
therein, the Banks named therein (including the Bank) and
NationsBank of North Carolina, N.A., as Agent, and evidences
Competitive Bid Loans made by the Bank thereunder. Capitalized
terms used in this Competitive Bid Loan Note have the respective
meanings assigned to them in the Credit Agreement and the terms
and conditions of the Credit Agreement are expressly incorporated
herein and made a part hereof.
The Credit Agreement provides for the acceleration of the
maturity of the Competitive Bid Loans evidenced by this
Competitive Bid Loan Note upon the occurrence of certain events
(and for payment of collection costs in connection therewith) and
for prepayments of Competitive Bid Loans upon the terms and
conditions specified therein.
Except as permitted by Section 12.06(b) of the Credit
Agreement, this Competitive Bid Loan Note may not be assigned by
the Bank to any other Person.
THIS COMPETITIVE BID LOAN NOTE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NORTH
CAROLINA.
IN WITNESS WHEREOF, the Company has caused this Note to be
executed under seal as of the date first above written.
LADD FURNITURE, INC.
By:
Name:
Title:
ATTEST:
By:_____________ Secretary
(corporate seal)
SCHEDULE OF LOANS
This Note evidences Competitive Bid Loans made under the
Credit Agreement to the Company, on the dates, in the principal
amounts, bearing interest at the rates and having Interest
Periods of the duration set forth below, subject to the payments
and prepayments of principal set forth below:
Duration Amount
of Paid Unpaid
Date Principal Interest Interest or Principal Notation
Made Amount of Loan Rate Period Prepaid Amount Made By
EXHIBIT B
[FORM OF OPINION OF OBLIGORS' COUNSEL]
[EFFECTIVE DATE]
Each of the Banks party to
the Credit Agreement
referred to below
NationsBank of North Carolina, N.A., as Agent
NationsBank Corporate Center
100 N. Tryon Street
Charlotte, NC 28255
Ladies and Gentlemen:
We have acted as counsel to LADD Furniture, Inc., a
corporation organized under the laws of North Carolina (the
"Company"), and to Pennsylvania House, Inc., Brown Jordan
Company, Clayton-Marcus Company, Inc., LADD Contract Sales
Corporation, Fournies Furniture, Inc., Barclay Furniture Co.,
American Furniture Company, Incorporated, Pilliod Furniture, Inc.
and Lea Industries, Inc. (together with the Company,
collectively, the "Obligors" and, individually, an "Obligor"), in
connection with the Credit Agreement dated as of ______________,
1994 (the "Credit Agreement") among the Company, the other
Obligors, the banks party thereto (the "Banks") and NationsBank
of North Carolina, N.A., in its capacity as agent for said Banks
(the "Agent"). All capitalized terms used but not defined herein
have the respective meanings given to such terms in the Credit
Agreement.
In rendering the opinions expressed below, we have examined:
(i) the Credit Agreement;
(ii) the Notes;
(iii) the Pledge Agreement; and
(iv) such corporate records of the Obligors
and such other documents as we have deemed necessary as
a basis for the opinions expressed below.
In our examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as
originals and the conformity with authentic original documents of
all documents submitted to us as copies. When relevant facts
were
not independently established, we have relied upon
statements of governmental officials and upon representations
made in or pursuant to the Basic Documents and certificates of
appropriate representatives of the Obligors.
In rendering the opinions expressed below, we have assumed,
with respect to all of the documents referred to in this opinion,
that (except, to the extent set forth in the opinions expressed
below, as to the Obligors):
(i) such documents have been duly authorized by,
have been duly executed and delivered by, and constitute
legal, valid, binding and enforceable obligations of, all of
the parties to such documents;
(ii) all signatories to such documents have been
duly authorized; and
(iii) all of the parties to such documents are duly
organized and validly existing and have the power and
authority (corporate or other) to execute, deliver and
perform such documents.
Based upon and subject to the foregoing and subject also to
the comments and qualifications set forth below, and having
considered such questions of law as we have deemed necessary as a
basis for the opinions expressed below, we are of the opinion
that:
1. Each Obligor is a corporation duly organized,
validly existing and in good standing under the laws of (i)
in the case of the Company, North Carolina and (ii) in the
case of each other Obligor, the jurisdiction of its
incorporation.
2. Each Obligor has all requisite corporate power to
execute and deliver, and to perform its obligations under,
each Basic Document to which it is a party. The Company has
all requisite corporate power to borrow under the Credit
Agreement.
3. The execution, delivery and performance by each
Obligor of each Basic Document to which such Obligor is a
party, and the borrowings by the Company under the Credit
Agreement, have been duly authorized by all necessary
corporate action on the part of such Obligor.
4. Each Basic Document has been duly executed and
delivered by each Obligor party thereto.
5. Each Basic Document constitutes the legal, valid
and binding obligation of each Obligor party thereto,
enforceable against each Obligor party thereto in accordance
with its terms, except as may be limited by bankruptcy,
insolvency,
reorganization, moratorium or other similar laws
relating to or affecting the rights of creditors generally
and except as the enforceability of the Basic Documents is
subject to the application of general principles of equity
(regardless of whether considered in a proceeding in equity
or at law), including, without limitation, (a) the possible
unavailability of specific performance, injunctive relief or
any other equitable remedy and (b) concepts of materiality,
reasonableness, good faith and fair dealing.
6. Each Pledge Agreement creates a valid security
interest in favor of the Agent, for the benefit of the
Banks, under the Uniform Commercial Code as in effect in the
State of North Carolina (the "Uniform Commercial Code") in
all of the right, title and interest of each Pledgor in and
to the Pledged Collateral (as defined in the Pledge
Agreements) as collateral security for the payment of the
Secured Obligations (as defined in the Pledge Agreements),
except that (a) such security interest would continue in the
Pledged Collateral after its sale, exchange or other
disposition only to the extent provided in Sections 9-306
and 9-307 of the Uniform Commercial Code and (b) the
security interest in Pledged Collateral in which a Pledgor
acquires rights after the commencement of a case under the
Bankruptcy Code in respect of such Pledgor may be limited by
Section 552 of the Bankruptcy Code.
7. The security interest referred to in paragraph 6
above will be perfected as described below:
(a) the delivery to the Agent of actual physical
possession of the certificates evidencing the Pledged Stock,
and thereafter retention of such certificates by the Agent,
will perfect the security interest in that portion of the
Pledged Collateral consisting of Pledged Stock;
(b) to the extent not expressly covered by paragraph
(a) above, such security interest in that portion of the
Pledged Collateral consisting of "proceeds" (as defined in
the Uniform Commercial Code) may be perfected as and to the
extent provided in Section 9-306 of the Uniform Commercial
Code.
8. The Pledged Collateral consists entirely of
property a security interest in which may be perfected by
the means described in paragraph 7 above.
9. The aggregate issued and outstanding shares of
capital stock of each Special Subsidiary consists of the
type and number of shares described in Schedule 1 to the
Pledge Agreement, and there exists no other issued capital
stock. All of said shares have been duly and validly issued
and are fully paid and nonassessable. Assuming that the
Agent (or any
custodian, other than the Pledgors, acting on
the Agent's behalf) obtains, and thereafter maintains,
possession of the portion of the Pledged Collateral
consisting of the certificates representing any Pledged
Stock in good faith and without notice of any adverse claim
(as defined in Section 8-301(1) of the Uniform Commercial
Code) and in bearer form or in registered form issued to the
Agent or endorsed to the Agent or in blank, any perfected
security interest therein will have priority over all other
security interests theretofore or thereafter created under
the Uniform Commercial Code.
10. No authorization, approval or consent of, and no
filing or registration with, any governmental or regulatory
authority or agency of the United States of America or the
State of North Carolina is required on the part of any
Obligor for the execution, delivery or performance by any
Obligor of the Basic Documents to which such Obligor is a
party or for any borrowings by the Company under the Credit
Agreement.
11. The execution, delivery and performance by each
Obligor of, and the consummation by each Obligor of the
transactions contemplated by, the Basic Documents to which
such Obligor is a party do not and will not (a) violate any
provision of the charter or by-laws of such Obligor, (b)
violate any applicable law, rule or regulation, (c) violate
any order, writ, injunction or decree of any court or
governmental authority or agency or any arbitral award
applicable to the Company or any of its Subsidiaries of
which we have knowledge or (d) result in a breach of,
constitute a default under, require any consent under, or
result in the acceleration or required prepayment of any
Indebtedness pursuant to the terms of, any agreement or
instrument listed in Schedule 7.12 of the Credit Agreement,
or result in the creation or imposition of any Lien upon any
property of the Company or any of its Subsidiaries pursuant
to the terms of any such agreement of instrument.
12. Other than as previously disclosed in writing to
the Banks or contained in Schedule 7.03 of the Credit
Agreement, we have no knowledge of any legal or arbitral
proceedings, or any proceedings by or before any
governmental or regulatory authority or agency, now pending
or overtly threatened in writing against the Company or any
of its Subsidiaries or any of their respective properties
that, if adversely determined, could have a material adverse
effect on (i) the property, business, operations, financial
condition, prospects, liabilities or capitalization of the
Company and its Subsidiaries taken as a whole, (ii) the
ability of any Obligor to perform its obligations under any
of the Basic Documents to which it is a party, (iii) the
validity or enforceability of any of the Basic Documents,
(iv) the rights and remedies of
the Banks and the Agent under any of the Basic Documents or
(v) the timely payment of the principal of or interest on
the Loans or other amounts payable in connection therewith.
The foregoing opinions are subject to the following
comments and qualifications:
A. The enforceability of Section 12.03 of the Credit
Agreement may be limited by laws rendering unenforceable
indemnification contrary to Federal or state securities laws
and public policy.
B. The enforceability of provisions in the Basic
Documents to the effect that terms may not be waived or
modified except in writing may be limited under certain
circumstances.
C. We express no opinion as to (i) the effect of the
laws of any jurisdiction in which any Bank is located (other
than North Carolina) that limit the interest, fees or other
charges such Bank may impose and (ii) the enforceability of
Section 4.06(c) of the Credit Agreement.
D. We express no opinion as to the effect or
applicability to the obligations (or the enforceability of
such obligations) of any of the Guarantors under the Credit
Agreement of Section 548 of the Bankruptcy Code or any other
provision of law relating to fraudulent conveyances,
transfers or obligations.
E. We express no opinion as to any provision of the
Basic Documents which provide that acceptance of late
payment or other late performance shall not be deemed a
waiver of the default generated thereby. The North Carolina
Court of Appeals has held that when a holder of a note
regularly accepts late payment, it is deemed to waive its
right to accelerate the debt because of the late payments
until it notifies the maker that prompt payments are again
required. Consequently, the principal may be extended to
other late performances under the Basic Documents.
F. We express no opinion as to the enforceability of
any provisions of the Basic Documents which may be
unenforceable or limited by the provisions of N.C. Gen.
Stat. Section 6-21.2 relating to the allowance of attorneys
fees.
G. The provisions of Section 11 of the Credit
Agreement may be limited by the requirements of N.C. Gen.
Stat. Section 26-7 through Section 26-9 inclusive, and
Section 26-12.
H. The obligations of the Obligors under the Basic
Documents may be subject to possible limitations upon the
exercise of remedial or procedural provisions contained in
the Basic Documents (including limitations on waiver of
certain notices), provided that such limitations do not, in
our opinion, make the remedies and procedures that will be
afforded to the Agent and the Banks inadequate for the
practical realization of the substantive benefits pruported
to be provided to the Agent and the Banks by the Basic
Documents.
I. We express no opinion as to the enforceability of
any provisions in the Basic Documents granting the Agent the
right to act as an agent or attorney-in-fact for the
Obligors, or limiting any fiduciary duty of the Agent to the
Obligors in such capacity.
J. We express no opinion with respect to the
enforceability of Section 12.11 of the Credit Agreement and
Section 10(f) of the Pledge Agreement with respect to waiver
of the right to trial by jury by the Obligors due to the
application of N.C. Gen. Stat. (Section Mark) 22B-10.
K. We express no opinion as to the provisions in the
Pledge Agreement with respect to the right of the Agent to
bid or become a purchaser at any private sale or disposition
of the Pledged Collateral.
The foregoing opinions are limited to matters involving the
Federal laws of the United States and the law of the State of
North Carolina, and we do not express any opinion as to the laws
of any other jurisdiction.
At the request of our clients, this opinion is, pursuant, to
Section 6.01(d) of the Credit Agreement, provided to you by us in
our capacity as counsel to the Obligors and may not be relied
upon by any Person for any purpose other than in connection with
the transactions contemplated by the Credit Agreement without, in
each instance, our prior written consent.
Very truly yours,
EXHIBIT C
[FORM OF COMPLIANCE CERTIFICATE]
LADD FURNITURE, INC.
COMPLIANCE CERTIFICATE
To: NationsBank of North Carolina, N.A., as Agent
This Compliance Certificate is prepared pursuant to the Credit
Agreement (the "Credit Agreement") dated as of October 19, 1994
among the Company, the Guarantors named therein, the Banks named
therein and NationsBank of North Carolina as Agent. Terms
defined in the Credit Agreement are used herein as therein
defined. The undersigned hereby certifies that the following
amounts and calculations were true and correct as of [Date]:
1. Senior Debt to Capital mandatory prepayment calculation
(Section 2.08(b)(iii))
(a) % of Senior Debt to Capital
as of Quarterly Period end ______%
(b) $ amount required to reduce % of
Senior Debt to Capital to 45% $______
(c) cash Net Proceeds from issuance of
Senior Debt (excluding advances under
the Credit Agreement) with a maturity
> 1 year during Quarterly Period $______
(d) cash Net Proceeds from Equity Issuance
during Quarterly Period $_____
(e) cash Net Proceeds from issuance of Non
Senior Debt with a maturity > 1 year
during Quarterly Period $_____
(f) all cash Net Proceeds from Equity
Issuance plus issuance of Non Senior
Debt with a maturity of > 1 year
(sum of (d) + (e) but not to exceed (b)) $_____
(g) cash Net Proceeds subject to
2.08(b)(iii) mandatory prepayment
[sum of (c) + (f)] $_____
(h) Term Loan Prepayments = (g), but not
to exceed balance of Term Loans or
(b) above $_____
(i) Revolving Credit Prepayment
[(g) less (h) if greater than $0] $_____
2. Dispositions, Equity Issuances and Debt
Issuances (Sections 2.08(b)(i) and 8.05(d))
(a) cash Net Proceeds from Equity
Issuances made on or after January 2, 1994
plus cash Net Proceeds from Debt
Issuances (other than the initial funding
under the Credit Agreement) made on or
after January 2, 1994 less cumulative
repayments of Term Loans and Revolving
Credit Loans pursuant to
Section 2.08(b)(iii) $_____
(b) Net Proceeds from Dispositions during
Quarterly Period
(i) Month end 1 $_____
(ii) Month end 2 $_____
(iii) Month end 3 $_____
Total $_____
(c) aggregate Net Proceeds from all
Dispositions made on or after
January 2, 1994 and prior to 180
days from current Quarterly Date $_____
(d) total source of funds [sum of
(a)+(c)] $_____
(e) amount reinvested on or after
January 2, 1994 [sum of (i)+(ii)
+(iii)+(iv)]
itemized:
(i) Acquisitions during Quarterly
Period $_____
(ii) other Acquisitions on or
after January 2, 1994 $_____
(iii) capital expenditures during
Quarterly Period $_____
(iv) other capital expenditures
on or after January 2, 1994 $_____
Total $_____
(f) total source of funds less
reinvestments on or after January 2,
1994 [(d)-(e)], but not less than $0 $_____
(g) Special Dividend Payments $_____
(h) funds subject to recapture
[(f)+(g)] $_____
(i) 15% of Total Tangible Assets at
Quarterly Date $_____
(j) Disposition proceeds subject to
2.08(b)(i) prepayment - the amount by
which (h) exceeds (i) $_____
(k) Amount of Disposition proceeds
previously used to prepay Term
Loan or Revolving Credit Loans $_____
(l) Term Loan Prepayments = (j) less
(k), but not to exceed balance
of Term Loans [ignore if
<$2,000,000] $_____
(m) Revolving Credit Loan Prepayment
[(j) less (k) less (l) if greater
than $0] $_____
3. Section 8.06(h) Liens
(a) Fair market value ("FMV") of property secured by
purchase money liens: $____________
(b) Indebtedness secured by property
in (a): $_________________
(c) Maximum permitted Indebtedness
under 8.06(h) as a percentage of
FMV: 90%
(d) Maximum permitted Indebtedness under Section
8.06(h): 10% of Consolidated Net Worth: $__________
4. Section 8.06(j) (Additional Liens)
(a) Maximum Liens permitted under 8.06(j): 10% of
Consolidated Net Worth: $_______________
(b) Actual Liens: $___________
5. Section 1.01 (Applicable Margin), Section 2.04 (Commitment
Fees), Section 8.10 (Leverage Ratio)
(a) Maximum permitted Leverage Ratio: 55%
(b) Funded Debt: $
(c) Capital: (i) minus (ii) plus
(iii) plus (iv) $____________
(i) Total Assets $___________
(ii) Current Liabilities $___________
(iii) Current portion LTD $___________
(iv) Short term Debt $___________
(d) Actual Leverage Ratio ((b) divided by (c)): ____%
6. Section 1.01 (Applicable Margin), Section 2.04 (Commitment
Fees)
(a) Senior Debt: $
(b) Capital: $
[from 5(c) above]
(c) Ratio of Senior Debt to Capital ((b) divided by
(c): ______%
7. Section 8.11 (Consolidated Net Worth)
(a) $ 140,000,000
(b) 50% of aggregate NPAT for each Quarterly
Period since July 2, 1994: $__________
(c) 50% of aggregate Equity Issuances: $__________
(d) Minimum required Consolidated
Net Worth ((a) + (b) + (c)): $_________
(e) Actual Consolidated Net Worth: $________
8. Section 8.12 (Debt Service Coverage Ratio)
(a) For each Rolling Four Quarterly Periods:
Current Q + Q-1 + Q-2 + Q-3 = Sum
(i) EBIT __________ ____ ____ ___ ____
(ii) Interest Expense
_________ ____ ___ ___ ____
(iii) Scheduled Maturities
of Long Term Debt
(other than scheduled principal
payments under the Term Loan)
_________ ____ ___ ___ ____
(iv) Debt Service Coverage Ratio
((i) divided by the sum of (ii) plus (iii)): = ___:___
(b) Minimum required Debt Service Coverage Ratio:
Rolling Four Quarterly Period ending Fourth
Quarter Period in 1994 and First Quarterly
Period in 1995: 1.75:1
each Rolling Four Quarterly Period thereafter: 2.00:1
The undersigned hereby certifies that (a) the above sets forth in
reasonable detail the computations necessary to determine whether
the Company is in compliance with the covenants specified in of
the Credit Agreement, (b) the Company is in compliance with the
covenants contained in such Credit Agreement and (c) no Default
or Event of Default has occurred and is continuing under such
Credit Agreement.
LADD FURNITURE, INC.
By:
Title:
EXHIBIT D
[Form of Confidentiality Agreement]
CONFIDENTIALITY AGREEMENT
[Date]
[Insert Name and
Address of Prospective
Participant or Assignee]
Re: Credit Agreement dated as of ______________, 1994 among LADD
Furniture, Inc. (the "Company"), the Guarantors named therein,
the Banks party thereto, and NationsBank of North Carolina, N.A.,
as Agent.
Dear _____________:
As a Bank party to the above-referenced Credit Agreement
(the "Credit Agreement"), we have agreed with LADD Furniture,
Inc. pursuant to Section 12.12 of the Credit Agreement to use
reasonable precautions to keep confidential, except as otherwise
provided therein, all non-public information identified by the
Company as being confidential at the time the same is delivered
to us pursuant to the Credit Agreement.
As provided in said Section 12.12, we are permitted to provide
you, as a prospective [holder of a participation in the Loans (as
defined in the Credit Agreement)] (assignee Bank), with certain
of such non-public information subject to the execution and
delivery by you, prior to receiving such non-public information,
of a Confidentiality Agreement in this form. Such information
will not be made available to you until your execution and return
to us of this Confidentiality Agreement.
Accordingly, in consideration of the foregoing, you agree (on
behalf of yourself and each of your affiliates, directors,
officers, employees and representatives) that (A) such
information will not be used by you except in connection with the
proposed [participation] [assignment] mentioned above and (B) you
shall use reasonable precautions, in accordance with your
customary procedures for handling confidential information and
in accordance with safe and sound banking practices, to keep such
information confidential, provided that nothing herein shall
limit the disclosure of any such information (i) to the extent
required by
statute, rule, regulation or judicial process, (ii) to your counsel
or to counsel for any of the Banks or the Agent, (iii) to bank
examiners, auditors or accountants, (iv) to the Agent or any
other Bank or (v) in connection with any litigation to which you
or any one or more of the Banks is a party; and provided finally that
in no event shall you be obligated to return any materials furnished
to you pursuant to this Confidentiality Agreement.
Would you please indicate your agreement to the foregoing by
signing at the place provided below the enclosed copy of this
Confidentiality Agreement.
Very truly yours,
[Insert Name of Bank]
By:
Title:
The foregoing is agreed to as of the date of this letter.
[Insert name of prospective participant or assignee]
By:___________________
Title:
EXHIBIT E
[Form of Pledge Agreement]
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT is entered into as of ____________,
1994 (this "Pledge Agreement") between
_________________________________ ([collectively,] the "Pledgor")
and NATIONSBANK OF NORTH CAROLINA, N.A., as Agent (together with
its successors in such capacity, the "Agent") for the Banks (as
defined below).
The Pledgor (as Borrower), the Agent, the Guarantors named
therein and certain Banks party thereto (the "Banks") entered
into that certain Credit Agreement dated as of
_____________________, 1994 (as modified and supplemented from
time to time, the "Credit Agreement"), which provides for,
subject to the terms and conditions thereof, an extension of
credit to be made by the Banks to the Pledgor in an aggregate
principal amount not to exceed $190,000,000.
The Pledgor is the beneficial and record owner of the issued
and outstanding shares of the capital stock specified on Schedule
1 hereto of [LFI Capital Management, Inc. and Cherry Grove,
Inc.,] a Delaware corporation (the "Special Subsidiary").
As a condition precedent to the Banks entering into the
Credit Agreement, the Pledgor has agreed to pledge its shares of
capital stock in the Special Subsidiary as security for the
performance by the Pledgor of its obligations under the Credit
Agreement (including, if applicable, Section 11 thereof).
Accordingly, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
Section 1. Definitions. Terms defined in the Credit
Agreement are used herein as defined therein. In addition, as
used herein:
"Pledged Collateral" shall have the meaning ascribed
thereto in Section 2 hereof.
"Pledged Stock" shall have the meaning ascribed thereto
in Section 2(a) hereof.
"Secured Obligations" shall mean all obligations of the
Pledgor under the Credit Agreement and the other Basic
Documents, including, without limitation, the obligation of
the Pledgor to make payments of principal and interest in full
when due (whether at stated maturity, by acceleration or
otherwise) or, if applicable, to perform its obligations under
Section 11 of the Credit Agreement.
"Uniform Commercial Code" shall mean the Uniform
Commercial Code as in effect from time to time in the State
of North Carolina.
Section 2. Pledge. As collateral security for the Secured
Obligations, the Pledgor hereby pledges, hypothecates, assigns,
transfers, sets over, delivers and grants to the Agent, for the
benefit of the Banks, a security interest in all of the Pledgor's
right, title and interest in and to the following property,
whether now owned by the Pledgor or hereafter acquired and
whether now existing or hereafter coming into existence (all
being collectively referred to herein as the "Pledged
Collateral"):
(a) All of the shares of stock of the Special
Subsidiary identified on, and evidenced by the certificates
specified in, Schedule 1 hereto and all other shares of
capital stock of whatever class of the Special Subsidiary,
now or hereafter owned by the Pledgor, in each case together
with the certificates evidencing the same (collectively, the
"Pledged Stock);
(b) All shares or securities representing a dividend
on any of the Pledged Stock, or representing a distribution
or return of capital upon or in respect of the Pledged
Stock, or resulting from a split-up, revision,
reclassification or other like change of the Pledged Stock
or otherwise received in exchange therefor, and any
subscription warrants, rights or options issued to the
holders of, or otherwise in respect of, the Pledged Stock;
(c) Without affecting the obligations of the Pledgor
under any provision prohibiting such action hereunder, in
the event of any consolidation or merger in which a Special
Subsidiary is not the surviving corporation, all shares of
each class of the capital stock of the successor corporation
formed by or resulting from such consolidation or merger;
and
(d) All proceeds in respect of the foregoing.
Section 3. Delivery of the Pledged Collateral.
(a) Delivery of Certificates. All certificates
representing the Pledged Shares shall be delivered to the
Agent simultaneously with or prior to the execution and
delivery of this Pledge Agreement. All other certificates
and instruments constituting Pledged Collateral shall be
delivered to the Agent promptly upon the receipt thereof by
or on behalf of the Pledgor. Prior to delivery to the
Agent, all such
certificates and instruments shall be held by or on behalf of
the Agent pursuant hereto. All such certificates shall be
delivered in suitable form for transfer by delivery or
shall be accompanied by duly executed updated instruments
of transfer or assignment in blank, all in form and substance
satisfactory to the Agent.
(b) Additional Securities. If the Pledgor shall
receive by virtue of its being or having been the owner of
any Pledged Collateral, any (i) stock certificate, including
without limitation, any certificate representing a stock
dividend or distribution in connection with any increase or
reduction of capital, reclassification, merger,
consolidation, sale of assets, combination of shares, stock
splits, spin-off or split-off; (ii) option or right, whether
as an addition to, substitution for, or an exchange for, any
Pledged Collateral or otherwise; (iii) dividends payable in
securities; or (iv) distributions of securities in
connection with a partial or total liquidation, dissolution
or reduction of capital, capital surplus or paid-in surplus,
then the Pledgor shall receive such stock certificate,
instrument, option, right or distribution in trust for the
benefit of the Agent, shall segregate it from the Pledgor's
other property and shall deliver it forthwith to the Agent
in the exact form received together with any necessary
endorsement and/or appropriate updated stock power duly
executed in blank, to be held by the Agent as Pledged
Collateral and as further collateral security for the
Secured Obligations.
Section 4. Pledgor's Representations and Warranties. The
Pledgor represents and warrants the following:
(a) Authorization of Pledged Shares. The Pledged
Stock is duly authorized and validly issued, is fully paid
and nonassessable, is not subject to the preemptive rights
of others, constitutes the stated percentage of the issued
and outstanding shares of the capital stock of the Special
Subsidiary as set forth on Schedule 1, and constitutes all
of the Pledged Stock owned by the Pledgor as of the date
hereof. All other shares of stock constituting Pledged
Collateral will be duly authorized and validly issued, fully
paid and nonassessable, and not subject to the preemptive
rights of any person.
(b) Title. The Pledgor has good and indefeasible
title to the Pledged Collateral and will at all times be the
legal and beneficial owner of the Pledged Collateral free
and clear of any Lien, adverse claim, security interest or
other charge or encumbrance except for the security interest
created by this Pledge Agreement. The Pledgor is the
registered owner of all of the Pledged Stock.
(c) Exercising of Rights. The exercise by the Agent
or the Banks of their rights and remedies hereunder will not
contravene any law or governmental regulation or any
contractual restriction binding on or affecting the Pledgor
or any of its property and will not result in or require the
creation of any Lien, security interest or other charge or
encumbrance upon or with respect to any of its property.
(d) Pledgor's Authority. No authorization, approval
or action by, and no notice or filing with any governmental
authority or regulatory body is required either (i) for the
pledge made by the Pledgor or for the granting of the
security interest by the Pledgor pursuant to this Pledge
Agreement; or (ii) for the exercise by the Agent or the
Banks of their rights and remedies hereunder (except as may
be required by laws affecting the offering and sale of
securities).
(e) Valid Security Interest. This Pledge Agreement
creates a valid security interest in favor of the Agent on
behalf of the Banks in the Pledged Collateral which security
interest constitutes a first priority perfected security
interest in and to all of the Pledged Collateral.
(f) Litigation. No litigation or governmental
proceeding is pending or threatened against Pledgor or any
of its assets which if adversely determined would have a
material adverse effect on the Pledged Collateral or the
Pledgor's performance under this Pledge Agreement.
(g) Chief Executive Office. Each Pledgor's chief
executive office is located in the jurisdiction set forth on
Schedule 2 attached hereto and will remain there unless
prior written notice is provided to the Agent to the
contrary.
Section 5. Further Assurances. The Pledgor shall, at its
expense, promptly execute and deliver all further instruments and
documents and take all further action that may be necessary,
desirable or that the Agent may request in order to (i) perfect
and protect this security interest created or purported to be
created hereby; (ii) enable the Agent to exercise and enforce its
rights and remedies hereunder in respect of the Pledged
Collateral; and (iii) otherwise effect the purposes of the Pledge
Agreement, including, without limitation and if requested by the
Agent, subsequent to the occurrence and continuation of an Event
of Default delivering to the Agent irrevocable proxies in respect
of the Pledged Collateral. The Pledgor shall mark its books and
records to reflect the security interest granted to the Agent, on
behalf of the Banks, and shall cause the issuer of the Pledged
Stock to mark its books and records to reflect such security
interest and shall have the issuer acknowledge same to the Agent.
Section 6. Rights of the Agent.
(a) Power of Attorney. The Pledgor hereby irrevocably
appoints the Agent and any officer or agent thereof the
Pledgor's attorney-in-fact and proxy, with full power of
substitution for and on behalf and in the name of the
Pledgor or otherwise, during the existence of an Event of
Default (as defined herein), in the Agent's discretion, to
take any action and to execute any instrument which the
Agent may deem necessary or advisable to accomplish the
purpose of this Pledge Agreement, including, without
limitation, the right to demand, sue for, collect or receive
in the name of the Agent or in its own name, any money or
property at any time payable or receivable on account of, or
in exchange for, any of the Pledged Collateral.
This power of attorney is a power coupled with an interest
and shall be irrevocable. The Agent shall be under no duty
to exercise or withhold the exercise of any of the rights,
powers, privileges and options expressly or implicitly
granted to the Agent in this Pledge Agreement, and shall not
be liable for any failure to do so or any delay in doing so.
The Agent shall not be liable for any act or omission or for
any error of judgment or any mistake of fact or law in its
individual capacity or its capacity as attorney-in-fact
except acts or omissions resulting from its gross negligence
or willful misconduct. This power of attorney is conferred
on the Agent solely to protect, preserve and realize upon
its security interest in the Pledged Collateral.
(b) Performance by the Agent of Pledgor's Obligations.
If the Pledgor fails to perform any agreement or obligation
contained herein, the Agent itself may perform, or cause
performance of, such agreement or obligation, and the
expenses of the Agent incurred in connection therewith shall
be payable by the Pledgor pursuant to Section 9 hereof.
(c) Assignment by the Agent. The Agent may from time
to time assign the Secured Obligations and any portion
thereof and/or the Pledged Collateral and any portion
thereof, and the assignee shall be entitled to all of the
rights and remedies of the Agent under this Pledge Agreement
in relation thereto.
(d) The Agent's Duty of Care. Other than the exercise
of reasonable care to assure the safe custody of the Pledged
Collateral while being held by the Agent hereunder, the
Agent shall have no duty or liability to preserve rights
pertaining thereto, it being understood and agreed that the
Pledgor shall be responsible for preservation of all rights
in the Pledged Collateral, and the Agent shall be relieved
of all responsibility for the Pledged Collateral upon
surrendering it or tendering the surrender of it to the
Pledgor.
(e) Voting Rights in Respect of the Pledged
Collateral.
(i) So long as no Event of Default (as defined
herein) shall have occurred and be continuing, the
Pledgor may exercise any and all voting and other
consensual rights pertaining to the Pledged Collateral
or any part thereof for any purpose not inconsistent
with the terms of this Pledge Agreement or the
Agreement; and
(ii) Upon the occurrence and during the
continuance of an Event of Default, all rights of the
Pledgor to exercise the voting and other consensual
rights which it would otherwise be entitled to exercise
pursuant to paragraph (i) of this Section shall cease
and all such rights shall thereupon become vested in
the Agent which shall thereupon have the sole right to
exercise such voting and other consensual rights.
(f) Dividend Rights in Respect of the Pledged
Collateral.
(i) So long as no Event of Default (as defined
herein) shall have occurred and be continuing, the
Pledgor shall be entitled to receive and retain all
dividends paid in cash or property out of earned
surplus on the Pledged Collateral.
(ii) Upon the occurrence and during the
continuance of an Event of Default, any and all
dividends and distributions paid or payable in respect
of any Pledged Collateral shall be, and shall forthwith
be delivered to the Agent and shall, if received by the
Pledgor, be received in trust for the benefit of the
Agent, shall be segregated from the other property of
the Pledgor, and shall be forthwith delivered to the
Agent in the exact form received with, if appropriate,
any necessary endorsement and/or appropriate updated
stock powers duly executed in blank, to be (i) if
cash, applied against amounts owing by Pledgor under
the Credit Agreement and (ii) if not cash held by the
Agent as Pledged Collateral; provided that if such
Event of Default is cured, any such dividend or
distribution theretofore paid to the Agent shall, upon
request of the Pledgor (except to the extent
theretofore applied to the Secured Obligations), be
returned by the Agent to the Pledgor.
(g) Release of Collateral. The Agent may release any
of the Pledged Collateral from this Pledge Agreement without
altering, varying or diminishing in any way the force,
effect, lien, pledge or security interest of this
Pledge Agreement as to the Pledged Collateral not expressly
released, and this Pledge Agreement shall continue as a
first priority lien, security interest, pledge and charge on
all Pledged Collateral not expressly released when any of
the Secured Obligations remain outstanding with respect to
the Agents.
Section 7. Events of Default.
The occurrence of any of the following shall be an Event of
Default hereunder ("Event of Default"):
(a) Credit Agreement. An event which under the Credit
Agreement would constitute an Event of Default; or
(b) Performance by Pledgor. Failure on the part of
the Pledgor in the timely performance or observance of any
covenant, obligation or liability contained herein; or
(c) Representation and Warranties. Proof that any
warranty, representation or statement made or furnished to
the Agent by or on behalf of the Pledgor herein was false in
any material respect when made or furnished.
Section 8. Remedies Upon Default.
If any Event of Default shall have occurred and be
continuing:
(a) Rights and Remedies. The Agent may exercise in
respect of the Pledged Collateral, in addition to other
rights and remedies provided for herein or otherwise
available to it, all rights and remedies of a secured party
under the Uniform Commercial Code or any other applicable
law.
(b) Sale of Pledged Collateral. Without limiting the
generality of this Section and without notice except as
specified below, the Agent may, in its sole discretion, sell
or otherwise dispose of or realize upon the Pledged
Collateral, or any part thereof, in one or more parcels, at
public or private sale, at any exchange or broker's board or
elsewhere, at such price or prices and on such other terms
as the Agent may deem commercially reasonable, for cash,
credit or for future delivery or otherwise in accordance
with applicable law. The Agent may, in such event, bid for
the purchase of such securities. The Pledgor agrees that,
to the extent notice of sale shall be required by law, at
least 10 days notice to the Pledgor of the time and place of
any public sale or the time after which any private sale is
to be made shall constitute reasonable notification. The
Agent shall not be obligated to make any sale of Pledged
Collateral regardless of notice of sale having been given.
The Agent may adjourn any public or private sale from time
to time by announcement at the time and place fixed
therefor, and such sale may,
without further notice, be made at the time and place to which
it was so adjourned.
(c) Private Sale. Pledgor recognizes that the Agent
may deem it impracticable to effect a public sale of all or
any part of the Pledged Shares or any of the securities
constituting Pledged Collateral and that the Agent may,
therefore, determine to make one or more private sales of
any such securities to a restricted group of purchasers who
will be obligated to agree, among other things, to acquire
such securities for their own account, for investment and
not with a view to the distribution or resale thereof. The
Pledgor acknowledges that any such private sale may be at
prices and on terms less favorable to the seller than the
prices and other terms which might have been obtained at a
public sale and, notwithstanding the foregoing, agrees that
such private sale shall be deemed to have been made in a
commercially reasonable manner and that the Agent shall have
no obligation to delay sale of any such securities for the
period of time necessary to permit the issuer of such
securities to register such securities for public sale under
the Securities Act of 1933. The Pledgor further
acknowledges and agrees that any offer to sell such
securities which has been (i) publicly advertised on a bona
fide basis in a newspaper or other publication of general
circulation in the financial community of New York, New York
(to the extent that such offer may be advertised without
prior registration under the Securities Act of 1933), or
(ii) made privately in the manner described above shall be
deemed to involve a "public sale" under the Uniform
Commercial Code, notwithstanding that such sale may not
constitute a "public offering" under the Securities Act of
1933, and the Agent may, in such event, bid for the purchase
of such securities.
(d) Application of Proceeds. All cash proceeds
received by the Agent in respect to any sale, collection
from, or other realization upon, all or any part of the
Pledged Collateral shall be applied as follows:
(i) First, to repayment of the reasonable costs
and expenses, including reasonable attorneys fees and
legal fees, incurred by the Agent in connection with
(A) the custody, preservation, use or operation of, or
the sale of, collection from, or the other realization
upon any Pledged Collateral, (B) the exercise or
enforcement of any of the rights of the Agent
hereunder, and (C) the failure of the Pledgor to
perform or observe any of the provisions hereof;
(ii) Second, at the option of the Agent, to the
payment or other satisfaction of any Liens and other
encumbrances upon any of the Pledged Collateral;
(iii) Third, to the reimbursement of the Agent for
the amount of any obligations of the Pledgor paid or
discharged by the Agent pursuant to the provisions of
this Pledge Agreement or the Credit Agreement;
(iv) Fourth, to the satisfaction of the Secured
Obligations;
(v) Fifth, to the satisfaction of any other
obligations owing from Pledgor to the Agent; and
(vi) Sixth, the surplus proceeds, if any, to the
Pledgor or to whomsoever shall be lawfully entitled to
receive the same or as a court of competent
jurisdiction shall direct.
Section 9. Indemnity and Expenses.
(a) Indemnity. The Pledgor agrees to indemnify the
Agent from and against any and all claims, losses and
liabilities growing out of or resulting from this Pledge
Agreement, including without limitation, enforcement of this
Pledge Agreement, except claims, losses and liabilities
resulting from the Agent's gross negligence or willful
misconduct, as determined by a court of appropriate
jurisdiction in a final judgment not subject to appeal or
review.
(b) Expenses. The Pledgor will, upon demand, pay to
the Agent the amount of any and all costs and expenses,
including the reasonable fees and disbursements of the
Agent's counsel, and of any experts and agents, which the
Agent may incur in connection with (i) the administration of
this Pledge Agreement; (ii) the custody, use or operation
of, or the sale of, collection from, or other realization
upon any Pledged Collateral; (iii) the exercise or
enforcement of any of the rights of the Agent hereunder; or
(iv) the failure by the Pledgor to perform or observe any of
the provisions hereof, except expenses resulting from the
Agent's gross negligence or willful misconduct, as
determined by a court of appropriate jurisdiction in a final
judgement not subject to appeal or review.
Section 10. Notices.
All notices and other communications provided for hereunder
shall be deemed effective if in writing and delivered in
conformance with Section 12.02 of the Credit Agreement.
Section 11. Miscellaneous.
(a) Amendments; Continuation of Security Interests.
No amendment of any provision of this Pledge Agreement shall
be effective unless it is in writing and signed by the
Pledgor and the Agent, and no waiver of any provision of
this Pledge Agreement, and no consent to any departure by
the Pledgor therefrom, shall be effective unless it is in
writing and signed by the Agent, and then such waiver or
consent will be effective only in the instance and for the
specific purpose for which given.
(b) No Waivers; Cumulative Remedies. No failure on
the part of the Agent to exercise, and no delay in
exercising any right hereunder or under the Credit Agreement
shall operate as a waiver thereof; nor shall any single or
partial exercise and any such right preclude any other or
further exercise thereof or the exercise of any other right.
The rights and remedies of the Agent provided herein and in
the Credit Agreement are cumulative and are in addition to,
and not exclusive of, any rights or remedies provided by
law.
(c) Severability. Any provision of this Pledge
Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or invalidity without
invalidating the remaining portions hereof or thereof or
effecting the validity or enforceability of such provision
in any other jurisdiction.
(d) Agreement in Full Force; Successors and Assigns.
This Pledge Agreement shall create a continuing security
interest in the Pledged Collateral and shall (i) remain in
full force and effect until payment in full or release of
the Obligations; and (ii) be binding on the Pledgor and
permitted assigns and shall inure, together with all rights
and remedies of the Agent hereunder to the benefit of the
Agent and its successors, transferees and assigns. Without
limiting the generality of the foregoing, the Agent may
assign or otherwise transfer the Pledge Agreement held by it
to any other person, and such other person shall thereupon
become vested with all of the benefits and respect thereof
granted to the Agent herein or otherwise. None of the
rights or obligations of the Pledgor hereunder may be
assigned or otherwise transferred without prior written
consent of the Agent.
(e) Governing Law; Venue. THIS PLEDGE AGREEMENT AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NORTH CAROLINA. THE PLEDGOR HEREBY
SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED
STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF NORTH
CAROLINA AND
OF ANY NORTH CAROLINA STATE COURT SITTING IN MECKLENBURG
COUNTY, NORTH CAROLINA FOR THE PURPOSES OF ALL LEGAL
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. THE
PLEDGOR IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO
THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN
SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT
IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(f) Waiver of Jury Trial. EACH OF THE PARTIES TO THIS
PLEDGE AGREEMENT HEREBY IRREVOCABLE WAIVES ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS PLEDGE AGREEMENT, ANY OF
THE OTHER BASIC DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
(g) Return of Collateral. When all Secured
Obligations shall have been paid in full and the Commitments
of the Banks under the Credit Agreement shall have expired
or been terminated, this Pledge Agreement shall terminate,
and the Agent shall forthwith cause to be assigned,
transferred and delivered, against receipt but without any
recourse, warranty or representation whatsoever, any
remaining Pledged Collateral and money received in respect
thereof, to or on the order of the Pledgor. The Agent shall
also execute and deliver to the Pledgor upon such
termination such Uniform Commercial Code termination
statements and such other documentation as shall be
reasonably requested by the Pledgor to effect the
termination and release of the Liens on the Pledged
Collateral.
IN WITNESS WHEREOF, the parties hereto have caused this
Pledge Agreement to be duly executed and delivered as of the day
and year first above written.
ATTEST: ____________ LADD FURNITURE, INC.
Secretary
(corporate seal) By________________________________
William S. Creekmuir
Senior Vice President
Chief Financial Officer
NATIONSBANK OF NORTH CAROLINA,N.A.,
as Agent
By_______________________________
Name:___________________________
Title:__________________________
SCHEDULE 1
to
PLEDGE AGREEMENT
LFI CAPITAL MANAGEMENT, INC.
Certificate Percentage of
No. Shareholder No. of Shares Outstanding
1 LADD Furniture, Inc. 100 100%
SCHEDULE 1
to
PLEDGE AGREEMENT
CHERRY GROVE, INC.
Certificate Percentage of
No. Shareholder No. of Shares Outstanding
1 American Furniture
Company, Incorporated 9.9 8.383
2 Barclay Furniture Co. 6.2 5.250
3 Brown Jordan
Company 13.8 11.685
4 Clayton-Marcus 9.7 8.213
Company, Inc.
5 Fournier Furniture,
Inc. 8.2 6.943
6 LADD Furniture, Inc. 32.9 27.858
7 Pennsylvania House,
Inc. 19.3 16.342
8 Pilliod Furniture, Inc. 18.1 15.326
100.00%
SCHEDULE 2
to
PLEDGE AGREEMENT
Pledgor Jurisdiction
American Furniture Company,
Incorporated Martinsville
(Smyth County), VA
Barclay Furniture Co. Pontotoc County, MS
Union County, MS
Brown Jordan Company ElMonte, CA
Clayton-Marcus Company, Inc. Alexander County, NC
Fournier Furniture, Inc. St. Paul (Russell
County), VA
LADD Furniture, Inc. Guilford County, NC
Pennsylvania House, Inc. Lewisburg (Union
County), PA
Pilliod Furniture, Inc. Guilford County, NC
EXHIBIT F
[Form of Assignment Agreement]
ASSIGNMENT AGREEMENT
Reference is made to that certain Credit Agreement dated as
of October 19, 1994 (as it may be modified and/or amended from
time to time, the "Agreement") among LADD Furniture, Inc., the
Guarantors named therein, the Banks party thereto, and
NationsBank of North Carolina, N.A., as Agent. Terms defined in
the Agreement are used herein with the same meanings.
1. The Assignor hereby sells and assigns, without
recourse, to the Assignee, and the Assignee hereby purchases and
assumes, without recourse, from the Assignor, effective as of the
Effective Date set forth below, the interests set forth below
(the "Assigned Interest") in the Assignor's rights and
obligations under the Agreement, including, without limitation,
the interests set forth below in the Commitment Percentages of
the Assignor on the effective date of the assignment designated
below (the "Effective Date") and the Loans owing to the Assignor
which are outstanding on the Effective Date, together with unpaid
interest accrued on the assigned Loans to the Effective Date and
the amount, if any, set forth below of the Fees accrued to the
Effective Date for the account of the Assignor. From and after
the Effective Date (i) the Assignee, if it is not already a Bank
under the Agreement, shall become a "Bank" for all purposes of
the Agreement and the other Loan Documents and, to the extent of
such assignment, the assigning Bank shall be relieved of its
obligations under the Agreement.
2. If the Assignee is not already a Bank under the
Agreement, this Assignment shall be effective upon consent of the
Borrower and the Agent and delivery to the Agent of written
notice together with the transfer fees set forth in Section 12.06
of the Agreement.
3. If the Assignee is not already a Bank under the
agreement, this Assignment shall be governed by and construed in
accordance with the laws of the State of North Carolina.
4. Terms of Assignment
(a) Date of Assignment:
(b) Legal Name of Assignor:
(c) Legal Name of Assignee:
(d) Effective Date of Assignment:
(e) Revolving Loan Commitment
Percentage Assigned ______________%
(f) Revolving Loan Commitment
Percentage of Assignor after
Assignment ______________%
(g) Total Revolving Loans outstanding
as of Effective Date $_______________
(h) Principal Amount of Revolving
Loans assigned on Effective
Date (the amount set forth
in (g) multiplied by the
percentage set forth in (e)) $________________
(i) Percentage of Term Loan
Assigned ______________%
(j) Percentage of total Term Loan
retained by Assignor ______________%
(k) Total Principal Balance outstanding
under Term Loan on Effective
Date $_______________
(l) Principal Amount of Term Loan assigned
on Effective Date (the amount set forth
in (k) multiplied by the percentage set
forth in (i)) $_______________
The terms set forth above
are hereby agreed to:
______________________________, as Assignor
By:________________________________________
Title:_____________________________________
_____________________________, as Assignee
By:________________________________________
Title:_____________________________________
CONSENTED TO (if applicable):
LADD Furniture, Inc.
By:______________________________________
Name:____________________________________
Title:___________________________________
NationsBank of North Carolina, N.A.
By:_______________________________________
Name:_____________________________________
Title:____________________________________
Schedule 1.01(a)
Commitment Percentages
Principal
Amount of Revolving Principal Amount
Commitment for Loan of Term Loan
Revolving Commitment Commitment for Commitment
Name of Lender Loans Percentage Term Loan Percentage
NationsBank of North Carolina, $ 17,552,631.58 15.263157895% $ 11,447,368.42 15.263157895%
N.A.
Wachovia Bank of North 16,644,736.84 14.473684211% 10,855,263.16 14.473684211%
Carolina, N.A.
CIBC Inc. 13,618,421.06 11.842105263% 8,881,578.94 11.842105263%
NBD Bank, N.A. 12,105,263.16 10.526315789% 7,894,736.84 10.526315789%
Creditanstalt Corporate 10,592,105.26 9.210526315% 6,907,894.74 9.210526315%
Finance, Inc.
PNC Bank, National Association 10,592,105.26 9.210526315% 6,907,894.74 9.210526315%
ABN AMRO Bank N.V. 8,473,684.21 7.368421053% 5,526,315.79 7.368421053%
Branch Banking and Trust 8,473,684.21 7.368421053% 5,526,315.79 7.368421053%
Company
Commonwealth Bank, a division 8,473,684.21 7.368421053% 5,526,315.79 7.368421053%
of Meridian Bank
First Union National Bank of North 8,473,684.21 7.368421053% 5,526,315.79 7.368421053%
Carolina
____________ __________ ______________ _________
TOTAL $ 115,000,000 100% $ 75,000,000.00 100%
Schedule 7.03
Litigation
NONE
Schedule 7.12
Indebtedness and Liens
Schedule 7.13
Environmental Matters
NONE
Schedule 7.14
Subsidiaries