EXHIBIT 10.26
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AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Dated as of March 31, 1998
Among
SUPREME INTERNATIONAL CORPORATION
(the Borrower)
and
NATIONSBANK, N.A., as Agent
(the Agent)
and
THE LENDERS FROM TIME TO
TIME PARTY HERETO
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TABLE OF CONTENTS
PAGE
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ARTICLE 1 - DEFINITIONS
SECTION 1.1 DEFINITIONS......................................................1
SECTION 1.2 OTHER REFERENTIAL POVISIONS.....................................21
SECTION 1.3 EXHIBITS AND SCHEDULES..........................................22
ARTICLE 2 - REVOLVING CREDIT FACILITY
SECTION 2.1 REVOLVING CREDIT LOANS..........................................22
SECTION 2.2 MANNER OF BORROWING REVOLVING CREDIT LOANS......................23
SECTION 2.3 REPAYMENT OF REVOLVING CREDIT LOANS.............................24
SECTION 2.4 REVOLVING CREDIT NOTE...........................................24
SECTION 2.5 EXTENSION OF FACILITY...........................................24
ARTICLE 3 - STANDBY LETTER OF CREDIT
Section 3.1 PARTICIPATIONS..................................................24
Section 3.2 DUTIES OF NATIONSBANK...........................................26
Section 3.3 PAYMENT OF REIMBURSEMENT OBLIGATIONS............................26
Section 3.4 INDEMNIFICATION, EXONERATION....................................27
Section 3.5 SUPPORTING STANDBY LETTER OF CREDIT; CASH COLLATERAL............28
ARTICLE 4 - GENERAL LOAN PROVISIONS
Section 4.1 INTEREST........................................................29
Section 4.2 FEES............................................................32
Section 4.3 MANNER OF PAYMENT...............................................33
Section 4.4 LOAN ACCOUNTS; STATEMENTS OF ACCOUNT............................34
Section 4.5 TERMINATION OF AGREEMENT........................................34
Section 4.6 INCREASED COSTS AND REDUCED RETURNS.............................35
Section 4.7 MAKING OF LOANS.................................................36
Section 4.8 SETTLEMENT AMONG LENDERS........................................38
Section 4.9 PAYMENTS NOT AT END OF INTEREST PERIOD; FAILURE TO BORROW.......42
ARTICLE 5 - CONDITIONS PRECEDENT
Section 5.1 CONDITIONS PRECEDENT TO INITIAL LOAN............................43
Section 5.2 ALL LOANS.......................................................45
ARTICLE 6 - REPRESENTATIONS AND WARRANTIES OF THE BORROWER
Section 6.1 REPRESENTATIONS AND WARRANTIES..................................46
Section 6.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC.................51
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ARTICLE 7 - SECURITY INTEREST
Section 7.1 SECURITY INTEREST...............................................51
Section 7.2 CONTINUED PRIORITY OF SECURITY INTEREST.........................51
ARTICLE 8 - COLLATERAL COVENANTS
Section 8.1 COLLECTION OF RECEIVABLES.......................................52
Section 8.2 VERIFICATION AND NOTIFICATION...................................53
Section 8.3 DISPUTES, RETURNS AND ADJUSTMENTS...............................53
Section 8.4 INVOICES........................................................54
Section 8.5 DELIVERY OF INSTRUMENTS.........................................54
Section 8.6 SALES OF INVENTORY..............................................54
Section 8.7 RETURNED GOODS..................................................54
Section 8.8 OWNERSHIP AND DEFENSE OF TITLE..................................54
Section 8.9 INSURANCE.......................................................55
Section 8.10 LOCATION OF OFFICES AND COLLATERAL.............................55
Section 8.11 RECORDS RELATING TO COLLATERAL.................................56
Section 8.12 INSPECTION.....................................................56
Section 8.13 MAINTENANCE OF EQUIPMENT.......................................57
Section 8.14 INFORMATION AND REPORTS........................................57
Section 8.15 POWER OF ATTORNEY..............................................58
ARTICLE 9 - AFFIRMATIVE COVENANTS
Section 9.1 PRESERVATION OF CORPORATE EXISTENCE AND SIMILAR MATTERS.........58
Section 9.2 COMPLIANCE WITH APPLICABLE LAW..................................59
Section 9.3 CONDUCT OF BUSINESS.............................................59
Section 9.4 PAYMENT OF TAXES AND CLAIMS.....................................59
Section 9.5 ACCOUNTING METHODS AND FINANCIAL RECORDS........................59
Section 9.6 USE OF PROCEEDS.................................................59
Section 9.7 HAZARDOUS WASTE AND SUBSTANCES; ENVIRONMENTAL REQUIREMENTS......59
Section 9.8 ACCURACY OF INFORMATION.........................................60
Section 9.9 REVISIONS OR UPDATES TO SCHEDULES...............................60
ARTICLE 10 - INFORMATION
Section 10.1 FINANCIAL STATEMENTS...........................................61
Section 10.2 ACCOUNTANTS' CERTIFICATE.......................................61
Section 10.3 OFFICER'S CERTIFICATE..........................................61
Section 10.4 COPIES OF OTHER REPORTS........................................62
Section 10.5 NOTICE OF LITIGATION AND OTHER MATTERS.........................62
Section 10.6 ERISA..........................................................63
ARTICLE 11 - NEGATIVE COVENANTS
Section 11.1 FINANCIAL COVENANTS............................................63
Section 11.2 INDEBTEDNESS...................................................64
Section 11.3 GUARANTIES.....................................................64
Section 11.4 INVESTMENTS....................................................64
Section 11.5 CAPITAL EXPENDITURES...........................................64
Section 11.6 RESTRICTED DISTRIBUTIONS AND PAYMENTS, ETC.....................64
Section 11.7 MERGER, CONSOLIDATION AND SALE OF ASSETS.......................64
Section 11.8 TRANSACTIONS WITH AFFILIATES...................................65
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Section 11.9 LIENS..........................................................65
Section 11.10 OPERATING LEASES..............................................65
Section 11.11 BENEFIT PLANS.................................................65
Section 11.12 SALES AND LEASEBACKS..........................................65
Section 11.13 AMENDMENTS OF OTHER AGREEMENTS................................65
Section 11.14 MINIMUM AVAILABILITY..........................................65
ARTICLE 12 - DEFAULT
Section 12.1 EVENTS OF DEFAULT..............................................65
Section 12.2 REMEDIES.......................................................68
Section 12.3 APPLICATION OF PROCEEDS........................................70
Section 12.4 POWER OF ATTORNEY..............................................71
Section 12.5 MISCELLANEOUS PROVISIONS CONCERNING REMEDIES...................71
Section 12.6 TRADEMARK LICENSE..............................................72
ARTICLE 13 - ASSIGNMENTS
Section 13.1. SUCCESSORS AND ASSIGNS; PARTICIPATIONS........................72
Section 13.2. REPRESENTATION OF LENDERS.....................................75
ARTICLE 14 - AGENT
Section 14.1. APPOINTMENT OF AGENT..........................................75
Section 14.2. DELEGATION OF DUTIES..........................................76
Section 14.3. EXCULPATORY PROVISIONS........................................76
Section 14.4. RELIANCE BY AGENT.............................................75
Section 14.5. NOTICE OF DEFAULT.............................................75
Section 14.6. NON-RELIANCE ON AGENT AND OTHER LENDERS.......................76
Section 14.7. INDEMNIFICATION...............................................76
Section 14.8. AGENT IN ITS INDIVIDUAL CAPACITY..............................76
Section 14.9. SUCCESSOR AGENT...............................................77
Section 14.10. NOTICES FROM AGENT TO LENDERS................................77
ARTICLE 15- MISCELLANEOUS
Section 15.1 NOTICES........................................................77
Section 15.2 EXPENSES.......................................................78
Section 15.3 STAMP AND OTHER TAXES..........................................79
Section 15.4 SETOFF.........................................................80
Section 15.5 LITIGATION.....................................................80
Section 15.6 WAIVER OF RIGHTS...............................................81
Section 15.7 REVERSAL OF PAYMENTS...........................................81
Section 15.8 INJUNCTIVE RELIEF..............................................81
Section 15.9 ACCOUNTING MATTERS............................................82
Section 15.10 AMENDMENTS....................................................82
Section 15.11 PERFORMANCE OF BORROWER'S DUTIES..............................83
Section 15.12 INDEMNIFICATION...............................................83
Section 15.13 ALL POWERS COUPLED WITH INTEREST..............................84
Section 15.14 SURVIVAL......................................................84
Section 15.15 SEVERABILITY OF PROVISIONS....................................84
Section 15.16 GOVERNING LAW.................................................84
Section 15.17 COUNTERPARTS..................................................84
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Section 15.18 REPRODUCTION OF DOCUMENTS.....................................84
Section 15.19 CONSENT TO ADVERTISING AND PUBLICITY..........................85
Section 15.20 PRO-RATA PARTICIPATION........................................85
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EXHIBITS AND SCHEDULES
EXHIBIT A FORM OF REVOLVING CREDIT NOTE
EXHIBIT B FORM OF BORROWING BASE CERTIFICATE
EXHIBIT C FORM OF ASSIGNMENT AND ACCEPTANCE
EXHIBIT D FORM OF SETTLEMENT REPORT
SCHEDULE 6.1(a) Jurisdictions in Which Borrower is Qualified as a
Foreign Corporation
SCHEDULE 6.1(b) Borrower's Capital Stock
SCHEDULE 6.1(e) Borrower's Business
SCHEDULE 6.1(f) Exceptions to Governmental Approvals
SCHEDULE 6.1(g) Non Lien Title Exceptions and Defects and Property
Disposed of Out of Ordinary Course of Business
SCHEDULE 6.1(h) Liens
SCHEDULE 6.1(i) Indebtedness for Money Borrowed and Guaranties
SCHEDULE 6.1(j) Litigation
SCHEDULE 6.1(k) Tax Returns and Payments
SCHEDULE 6.1(o) ERISA
SCHEDULE 6.1(t) Location of Chief Executive Office
SCHEDULE 6.1(u) Locations of Inventory
SCHEDULE 6.1(v) Corporate and Fictitious Names
SCHEDULE 6.1(y) Employee Relations
SCHEDULE 6.1(z) Proprietary Rights
SCHEDULE 9.6 Use of Proceeds
// This Table of Contents is included for reference purposes only and does
not constitute part of the Loan and Security Agreement.
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AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Dated as of March 31, 1998
SUPREME INTERNATIONAL CORPORATION, a Florida corporation (the
"Borrower"), the financial institutions party to this Agreement from time to
time (the "Lenders"), and NATIONSBANK, N.A., a national banking association, as
agent for the Lenders (the "Agent"), agree as follows:
RECITALS: NationsBank, N.A., as successor to NationsBank of Georgia,
N.A. ("NationsBank"), and the Borrower are party to that certain Loan and
Security Agreement dated as of October 5, 1994 (as amended, the "Original Loan
Agreement"), pursuant to which NationsBank agreed to make certain revolving
credit loans to the Borrower. Pursuant to that certain Assignment Agreement
dated of even date herewith (the "Assignment of Original Loan Documents"),
NationsBank has assigned to the Lenders and the Agent all of NationsBank's
right, title and interest in and to the Original Loan Agreement, each
instrument, agreement or document executed by the Borrower in connection with
the Original Loan Agreement, and the loans thereunder. The Borrower, the Lenders
and the Agent desire to amend and restate the Original Loan Agreement, as
follows:
ARTICLE 1 - DEFINITIONS
Section 1.1 DEFINITIONS. For the purposes of this Agreement:
"ACCOUNT DEBTOR" means a Person who is obligated on a Receivable.
"ACQUIRE" or "ACQUISITION", as applied to any Business Unit or
Investment, means the acquisition of such Business Unit or Investment by
purchase, exchange, issuance of stock or other securities, or by merger,
reorganization or any other method.
"ADVANCE" means amounts advanced by the Lenders to the Borrower
pursuant to SECTION 2 hereof and shall include Prime Rate Advances and
Eurodollar Rate Advances, as the case may be.
"AFFILIATE" means, with respect to a Person, (a) any officer, director,
employee or managing agent of such Person, (b) any spouse, parents, brothers,
sisters, children and grandchildren of such Person, (c) any association,
partnership, trust, entity or enterprise in which such Person is a director,
officer or general partner, (d) any other Person that, (i) directly or
indirectly, through one or more intermediaries, controls, or is controlled by,
or is under common control with, such given Person, (ii) directly or indirectly
beneficially owns or holds 10% or more of any class of voting stock or
partnership or other interest of such Person or any Subsidiary of such Person,
or (iii) 10% or more of the voting stock or partnership or other
interest of which is directly or indirectly beneficially owned or held by such
Person or a Subsidiary of such Person. The term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through ownership of voting
securities or partnership or other interests, by contract or otherwise.
"AGENCY ACCOUNT" means an account of the Borrower maintained by it with
a Clearing Bank pursuant to an Agency Account Agreement.
"AGENCY ACCOUNT AGREEMENT" means an agreement among the Borrower, the
Agent and a Clearing Bank concerning the collection of payments which represent
the proceeds of Receivables or of any other Collateral.
"AGENT" means NationsBank, N.A., a national banking association, and
any successor agent appointed pursuant to SECTION 14.9 hereof.
"AGENT'S OFFICE" means the office of the Agent specified in or
determined in accordance with the provisions of SECTION 15.1.
"AGREEMENT" means this Amended and Restated Loan and Security
Agreement, including the Exhibits and Schedules hereto, and all amendments,
modifications and supplements hereto and thereto and restatements hereof and
thereof.
"AGREEMENT DATE" means the date as of which this Agreement is dated.
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance in the
form attached hereto as EXHIBIT C assigning all or a portion of a Lender's
interests, rights and obligations under this Agreement pursuant to SECTION 13.1.
"ASSIGNMENT OF FACTORING CREDIT BALANCES" means the assignment to the
Agent, for the benefit of the Lenders, by the Borrower of the Factoring Credit
Balances with the Factor on terms and conditions satisfactory to the Agent.
"ASSIGNMENT OF ORIGINAL LOAN DOCUMENTS" has the meaning set forth in
the Recitals of this Agreement.
"AVAILABILITY" means as of the date of determination, the amount of
Revolving Credit Loans available to be borrowed by the Borrower hereunder in
accordance with SECTION 2.1 less the sum of the outstanding principal balance of
all Revolving Credit Loans hereunder as of such date.
"BENEFIT PLAN" means an employee benefit plan as defined in Section
3(35) of ERISA (other than a Multiemployer Plan) in respect of which a Person or
any Related Company is, or within the immediately preceding 6 years was, an
"employer" as defined in Section 3(5) of ERISA, including such plans as may be
established after the Agreement Date.
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"BORROWER" means Supreme International Corporation, a Florida
corporation, and its successors and assigns.
"BORROWING BASE" means at any time the lesser of (a) the Revolving
Credit Facility minus the Standby Letter of Credit Reserve and (b) an amount
equal to the sum of:
(i) 85% (or such lesser percentage as the Agent may in its sole and
absolute discretion determine from time to time) of the face value of Eligible
Receivables due and owing at such time, PLUS
(ii) THE LESSER OF
(A) 90% (or such lesser percentage as the Agent may in its
sole and absolute discretion determine from time to time) of the
Factoring Credit Balances due and owing at such time, AND
(B) $10,000,000, PLUS
(iii) THE LESSER OF
(A) 50% (or such lesser percentage as the Agent may in its
sole and absolute discretion determine from time to time) of the lesser
of cost (computed on a first-in-first-out basis) and fair market value
of Eligible Inventory at such time, AND
(B) $25,000,000, MINUS
(iv) the Standby Letter of Credit Reserve and such other reserves as
the Agent may determine from time to time in the exercise of its reasonable
credit judgment.
"BORROWING BASE CERTIFICATE" means a certificate in the form of EXHIBIT
B attached hereto, which Borrowing Base Certificate shall specify which
Inventory is License Inventory and which Inventory is Private Label Inventory.
"BUSINESS DAY" means (a) any day other than a Saturday, Sunday or other
day on which banks in Atlanta, Georgia are authorized to close, and (b) in
respect of any determination with respect to a Eurodollar Rate Advance any day
referred to in CLAUSE (A) that is also a day on which tradings are conducted in
the London interbank eurodollar market.
"BUSINESS UNIT" means the assets constituting the business, or a
division or operating unit thereof, of any Person.
"CAPITAL EXPENDITURES" means, with respect to any Person, all
expenditures made and liabilities incurred for the acquisition of assets (other
than assets which constitute a Business Unit) which are not, in accordance with
GAAP, treated as expense items for such Person in the
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year made or incurred or as a prepaid expense applicable to a future year or
years.
"CAPITALIZED LEASE" means a lease that is required to be capitalized
for financial reporting purposes in accordance with GAAP.
"CAPITALIZED LEASE OBLIGATION" means Indebtedness represented by
obligations under a Capitalized Lease, and the amount of such Indebtedness shall
be the capitalized amount of such obligations determined in accordance with
GAAP.
"CLEARING BANK" means NationsBank and any other banking institution
with which an Agency Account has been established pursuant to an Agency Account
Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
"COLLATERAL" means and includes all of the Borrower's right, title and
interest in and to each of the following, wherever located and whether now or
hereafter existing or now owned or hereafter acquired or arising:
(a) all Receivables,
(b) all Inventory,
(c) all Contract Rights,
(d) all General Intangibles,
(e) all Deposit Accounts,
(f) all Factoring Credit Balances,
(g) all goods and other property, whether or not delivered, (i) the
sale or lease of which gives or purports to give rise to any Receivable,
including, but not limited to, all merchandise returned or rejected by or
repossessed from customers, or (ii) securing any Receivable, including, without
limitation, all rights as an unpaid vendor or lienor (including, without
limitation, stoppage in transit, replevin and reclamation) with respect to such
goods and other properties,
(h) all mortgages, deeds to secure debt and deeds of trust on real or
personal property, guaranties, leases, security agreements and other agreements
and property which secure or relate to any Receivable or other Collateral or are
acquired for the purpose of securing and enforcing any item thereof,
(i) all documents of title, policies and certificates of insurance,
securities, chattel paper and other documents and instruments evidencing or
pertaining to any and all items of Col-
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lateral,
(j) all files, correspondence, computer programs, tapes, disks and
related data processing software which contain information identifying or
pertaining to any of the Collateral or any Account Debtor or showing the amounts
thereof or payments thereon or otherwise necessary or helpful in the realization
thereon or the collection thereof,
(k) all cash deposited with the Agent or any Lender or any Affiliate
thereof or which the Agent or any Lender is entitled to retain or otherwise
possess as collateral pursuant to the provisions of this Agreement or any of the
Security Documents, and
(l) any and all products and cash and non-cash proceeds of the
foregoing (including, but not limited to, any claims to any items referred to in
this definition and any claims against third parties for loss of, damage to or
destruction of any or all of the Collateral or for proceeds payable under or
unearned premiums with respect to policies of insurance) in whatever form,
including, but not limited to, cash, negotiable instruments and other
instruments for the payment of money, chattel paper, security agreements and
other documents.
"COMMITMENT" means, as to each Lender, the amount set forth opposite
such Lender's name on the signature pages hereof, representing such Lender's
obligation, upon and subject to the terms and conditions of this Agreement
(including the applicable provisions of SECTION 13.1), to make Revolving Credit
Loans and to purchase participations in the Standby Letter of Credit or, from
and after the date hereof, in the Register (as defined in SECTION 13.1),
representing such Lender's obligation to make Revolving Credit Loans and to
purchase participations in Standby Letter of Credit.
"COMMITMENT PERCENTAGE" means, as to any Lender, the percentage of the
Total Commitment obtained by dividing such Lender's Commitment by the Total
Commitment.
"CONTRACT RIGHTS" means and includes, as to any Person, all of such
Person's then owned or existing and future acquired or arising rights under
contracts not yet earned by performance and not evidenced by an instrument or
chattel paper, to the extent that the same may lawfully be assigned.
"CONTROLLED DISBURSEMENT ACCOUNT" means the account maintained by and
in the name of the Borrower with NationsBank for the purpose of disbursing
Revolving Credit Loan proceeds and amounts credited thereto pursuant to SECTIONS
2.2(B) and 8.1(B)(II).
"DEFAULT" means any of the events specified in SECTION 12.1 that, with
the passage of time or giving of notice or both, would constitute an Event of
Default.
"DEFAULT MARGIN" means 3%.
"DEPOSIT ACCOUNTS" means any demand, time, savings, passbook or like
account
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maintained with a bank, savings and loan association, credit union or like
organization, other than an account evidenced by a certificate of deposit that
is an instrument under the UCC.
"DOLLAR" and "$" means freely transferable United States dollars.
"EBITDAR" means, for any period, the Borrower's Net Income from
recurring operations, excluding extraordinary items, before deduction of
Interest Expense, taxes, depreciation, amortization expense and Operating Lease
Expense.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
in effect from time to time, and any successor statute.
"EFFECTIVE DATE" means the later of (a) the Agreement Date, and (b) the
first date on which all of the conditions set forth in SECTION 5.1 shall have
been fulfilled or waived by the Lenders.
"EFFECTIVE INTEREST RATE" means the rate of interest per annum on the
Loans in effect from time to time pursuant to the provisions of SECTION 4.1.
"ELIGIBLE ASSIGNEE" means (i) a commercial bank, commercial finance
company or other asset based lender, having total assets in excess of
$1,000,000,000; (ii) any Lender listed on the signature page of this Agreement;
and (iii) if an Event of Default exists, any Person; PROVIDED in each case that
the representation contained in SECTION 13.2 hereof shall be applicable with
respect to such institution or Lender.
"ELIGIBLE INVENTORY" means items of Inventory of the Borrower held for
sale in the ordinary course of the business of the Borrower (but not including
packaging or shipping materials or maintenance supplies) which are deemed by the
Agent in the exercise of its sole and absolute discretion to be eligible for
inclusion in the calculation of the Borrowing Base. Unless otherwise approved in
writing by the Agent, no Inventory shall be deemed to be Eligible Inventory
unless it meets all of the following requirements: (a) such Inventory is owned
by the Borrower, is subject to the Security Interest, which is a first priority
perfected Lien as to such Inventory, and which is subject to no other Lien
whatsoever other than a Permitted Lien; (b) such Inventory consists of finished
goods and does not consist of raw materials, work-in-process, supplies or
consigned goods; (c) such Inventory is in good condition and meets all standards
applicable to such goods, their use or sale imposed by any gov ernmental agency,
or department or division thereof, having regulatory authority over such
matters; (d) such Inventory is currently saleable, at prices approximating at
least the cost thereof, in the normal course of the Borrower's business; (e)
such Inventory is not obsolete or repossessed or used goods taken in trade, or
returned goods not suitable for sale as new Inventory; (f) such Inventory is
located at a location listed on SCHEDULE 6.1(U), attached hereto; (g) such
Inventory is in the possession and control of the Borrower and not any third
party and if located in a warehouse or other facility leased by the Borrower,
the lessor has delivered to the Agent a waiver and consent in form and substance
satisfactory to the Agent; (h) if such Inventory is Private Label Inventory, it
comprises less than
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35% of Eligible Inventory; and (i) if such Inventory is License Inventory, it
comprises less than 15% of Eligible Inventory.
"ELIGIBLE RECEIVABLE" means the unpaid portion of a Receivable payable
in Dollars to the Borrower net of any returns, discounts, claims, credits,
charges or other allowances, offsets, deductions, counterclaims, disputes or
other defenses and reduced by the aggregate amount of all reserves, limits and
deductions provided for in this definition and elsewhere in this Agreement which
is deemed by the Agent in the exercise of its sole and absolute discretion to be
eligible for inclusion in the calculation of the Borrowing Base. Unless
otherwise approved in writing by the Agent, no Receivable shall be deemed an
Eligible Receivable unless it meets all of the following requirements: (a) such
Receivable is owned by the Borrower and represents a complete bona fide
transaction which requires no further act under any circumstances on the part of
the Borrower to make such Receivable payable by the Account Debtor; (b) such
Receivable is not unpaid more than 120 days after the date of the original
invoice or past due more than 90 days after its due date, which shall not be
later than 30 days after the invoice date; (c) such Receivable does not arise
out of any transaction with any Subsidiary, Affiliate, creditor, lessor or
supplier of the Borrower; (d) such Receivable is not owing by an Account Debtor
more than 50% of whose then-existing accounts owing to the Borrower do not meet
the requirements set forth in CLAUSE B above; (e) if the Account Debtor with
respect thereto is located outside of the United States of America or Puerto
Rico, the goods which gave rise to such Receivable were shipped after receipt by
the Borrower from the Account Debtor of an irrevocable letter of credit that has
been confirmed by a financial institution acceptable to the Agent and is in form
and substance acceptable to the Agent, payable in the full face amount of the
face value of the Receivable in Dollars at a place of payment located within the
United States and has been duly delivered to the Agent; (f) such Receivable is
not subject to the Assignment of Claims Act of 1940, as amended from time to
time, or any applicable law now or hereafter existing similar in effect thereto,
as determined in the sole discretion of the Agent, or to any provision
prohibiting its assignment or requiring notice of or consent to such assignment;
(g) the Borrower is not in material breach of any express or implied
representation or warranty with respect to the goods the sale of which gave rise
to such Receivable; (h) the Account Debtor with respect to such Receivable is
not insolvent or the subject of any bankruptcy or insolvency proceedings of any
kind or of any other proceeding or action, threatened or pending, which might,
in the Agent's sole judgment, have a Materially Adverse Effect on such Account
Debtor; (i) the goods the sale of which gave rise to such Receivable were
shipped or delivered to the Account Debtor on an absolute sale basis and not on
a bill and hold sale basis, a consignment sale basis, a guaranteed sale basis, a
sale or return basis or on the basis of any other similar understanding, and
such goods have not been returned or rejected; (j) such Receivable, to the
extent that it, when taken together with all other Receivables owing to the
Borrower by such Account Debtor and its Affiliates, causes the total face amount
of all then-existing accounts owing to the Borrower by such Account Debtor and
its Affiliates to exceed in face amount 20% of the Borrower's total Eligible
Receivables; (k) such Receivable is evidenced by an invoice or other
documentation in form acceptable to the Agent containing only terms normally
offered by the Borrower, and dated the date of shipment; (l) such Receivable is
a valid, legally enforceable obligation of the Account Debtor with respect
thereto and is not subject to any present, or contingent (and no facts exist
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which are the basis for any future), offset, deduction or counterclaim, dispute
or other defense on the part of such Account Debtor; (m) such Receivable is not
evidenced by chattel paper or an instrument of any kind; (n) such Receivable
does not arise from the performance of services, including services under or
related to any warranty obligation of the Borrower or out of service charges by
the Borrower or other fees for the time value of money; and (o) such Receivable
is subject to a Security Interest, which is perfected as to such Receivable, and
is subject to no other Lien whatsoever other than a Permitted Lien and the goods
giving rise to such Receivable were not, at the time of the sale thereof,
subject to any Lien other than a Permitted Lien.
"ENVIRONMENTAL LAWS" means all federal, state, local and foreign laws
now or hereafter in effect relating to pollution or protection of the
environment, including laws relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants, chemicals or industrial, toxic
or hazardous substances or wastes into the environment (including, without
limitation, ambient air, surface water, ground water or land) or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, removal, transport or handling of pollutants, contaminants, chemicals
or industrial, toxic or hazardous substances or wastes, and any and all
regulations, notices or demand letters issued, entered, promulgated or approved
thereunder.
"EQUIPMENT" means and includes, as to any Person, all of such Person's
then owned or existing and future acquired or arising machinery, apparatus,
equipment, motor vehicles, tractors, trailers, rolling stock, fittings, and
other tangible personal property (other than Inventory) of every kind and
description used in such Person's business operations or owned by such Person or
in which such Person has an interest and all parts, accessories and special
tools and all increases and accessions thereto and substitutions and
replacements therefor.
"EURODOLLAR RATE" means, with respect to any Eurodollar Rate Advance
for the Interest Period applicable thereto, a simple per annum interest rate
determined pursuant to the following formula:
Eurodollar Rate = INTERBANK OFFERED RATE
------------------------------------------------
1 - Eurodollar Reserve Percentage
The Eurodollar Rate shall be adjusted automatically as of the effective date of
any change in the Eurodollar Reserve Percentage.
"EURODOLLAR RATE ADVANCE" means any Advance which bears interest at the
time in question based on the Eurodollar Rate Basis.
"EURODOLLAR RATE BASIS" means a simple interest rate equal to the sum
of the Eurodollar Rate for the Interest Period plus one and one-quarter percent
(1.25%) per annum.
"EURODOLLAR RESERVE PERCENTAGE" means, for any day, that percentage
(expressed as a decimal) which is in effect from time to time under Regulation D
of the Board of Governors of
8
the Federal Reserve System, as such regulation may be amended from time to time,
or any successor regulation, as the maximum reserve requirement (including,
without limitation, any basic, supplemental, emergency, special, or marginal
reserves) applicable to any member bank with respect to Eurocurrency liabilities
as that term is defined in Regulation D (or against any other category of
liabilities that includes deposits by reference to which the interest rate of
Eurodollar Rate Advances is determined), whether or not the Agent or any Lender
has any Eurocurrency liabilities subject to such reserve requirement at that
time. Eurodollar Rate Advances shall be deemed to constitute Eurocurrency
liabilities and as such shall be deemed subject to reserve requirements without
the benefit of credits for proration, exceptions or offsets that may be
available from time to time to the Agent or any Lender.
"EVENT OF DEFAULT" means any of the events specified in SECTION 12.1.
"FACTOR" means The CIT Group/Commercial Services, Inc. or any
replacement factor acceptable to the Agent and the Required Lenders (it being
acknowledged that Congress Talcott Corporation and Republic Business Credit
Corporation are acceptable).
"FACTORING CREDIT BALANCES" means the aggregate of outstanding
Receivables factored by the Borrower with the Factor at the Factor's credit
risk, less customer disputes, reserves and deductions.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to the weighted
average of the rates on overnight federal funds transactions with members of the
Federal Reserve system arranged by federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of Atlanta, or, if such rate is not so published for
any day which is a Business Day, the average of the quotations for such day on
such transactions received by the Agent from three federal funds brokers of
recognized standing selected by the Agent.
"FINANCING STATEMENTS" means the Uniform Commercial Code financing
statements executed and delivered by the Borrower to the Agent, naming the
Agent, for the benefit of the Lenders, as secured party, and the Borrower as
debtor, in connection with this Agreement.
"FIXED CHARGES" means, for any period, (a) Interest Expense, plus (b)
any provision for income or franchise taxes included in the determination of Net
Income, plus (c) payments of principal which were made or due with respect to
Indebtedness (other than Revolving Credit Loans), including payments with
respect to Capitalized Leases, plus (d) payments which were made or due with
respect to Operating Leases.
"FUNDED INDEBTEDNESS" means, without duplication, (a) all Indebtedness
under this Agreement, (b) the aggregate amount at any time of outstanding
reimbursement obligations with respect to letters of credit (other than the
Standby Letter of Credit) and banker's acceptances issued by Hamilton Bank, N.A.
or any other financial institution which have been drawn upon,
9
(c) the aggregate amount of principal obligations under the SunTrust Lease, and
(d) all other Indebtedness for Money Borrowed.
"GAAP" means generally accepted accounting principles consistently
applied and maintained throughout the period indicated and consistent with the
prior financial practice of the Person referred to.
"GENERAL INTANGIBLES" means, as to any Person, all of such Person's
then owned or existing and future acquired or arising general intangibles,
choses in action and causes of action and all other intangible personal property
of such Person of every kind and nature (other than Receivables), including,
without limitation, Intellectual Property, corporate or other business records,
inventions, designs, blueprints, plans, specifications, trade secrets, goodwill,
computer software, customer lists, registrations, licenses, franchises, tax
refund claims, reversions or any rights thereto and any other amounts payable to
such Person from any Benefit Plan, Multiemployer Plan or other employee benefit
plan, rights and claims against carriers and shippers, rights to
indemnification, business interruption insurance and proceeds thereof, property,
casualty or any similar type of insurance and any proceeds thereof, proceeds of
insurance covering the lives of key employees on which such Person is
beneficiary and any letter of credit, guarantee, claims, security interest or
other security held by or granted to such Person to secure payment by an Account
Debtor of any of the Receivables.
"GOVERNMENTAL APPROVALS" means all authorizations, consents, approvals,
licenses and exemptions of, registrations and filings with, and reports to, all
governmental bodies, whether federal, state, local, foreign national or
provincial, and all agencies thereof.
"GOVERNMENTAL AUTHORITY" means any government or political subdivision
or any agency, authority, bureau, central bank, commission, department or
instrumentality of either, or any court, tribunal, grand jury or arbitrator, in
each case whether foreign or domestic.
"GUARANTY", "GUARANTEED" or to "GUARANTEE," as applied to any
obligation of another Person shall mean and include:
(a) a guaranty (other than by endorsement of negotiable instruments for
collection in the ordinary course of business), directly or indirectly, in any
manner, of any part or all of such obligation of such other Person, and
(b) an agreement, direct or indirect, contingent or otherwise, and
whether or not constituting a guaranty, the practical effect of which is to
assure the payment or performance (or payment of damages in the event of
nonperformance) of any part or all of such obligation of such other Person
whether by (i) the purchase of securities or obligations, (ii) the purchase,
sale or lease (as lessee or lessor) of property or the purchase or sale of
services primarily for the purpose of enabling the obligor with respect to such
obligation to make any payment or performance (or payment of damages in the
event of nonperformance) of or on account of any part or all of such obligation
or to assure the owner of such obligation against loss, (iii) the
10
supplying of funds to, or in any other manner investing in, the obligor with
respect to such obligation, (iv) repayment of amounts drawn down by
beneficiaries of letters of credit, or (v) the supplying of funds to or
investing in a Person on account of all or any part of such Person's obligation
under a guaranty of any obligation or indemnifying or holding harmless, in any
way, such Person against any part or all of such obligation.
"INDEBTEDNESS" of any Person means, without duplication, (a)
Liabilities, (b) all obligations for money borrowed or for the deferred purchase
price of property or services or in respect of reimbursement obligations under
letters of credit, (c) all obligations represented by bonds, debentures, notes
and accepted drafts that represent extensions of credit, (d) Capitalized Lease
Obligations, (e) all obligations (including, during the noncancellable term of
any lease in the nature of a title retention agreement, all future payment
obligations under such lease discounted to their present value in accordance
with GAAP) secured by any Lien to which any property or asset owned or held by
such Person is subject, whether or not the obligation secured thereby shall have
been assumed by such Person, (f) all obligations under synthetic leases,
including all obligations under the SunTrust Lease, (g) all obligations of other
Persons which such Person has Guaranteed, including, but not limited to, all
obligations of such Person consisting of recourse liability with respect to
accounts receivable sold or otherwise disposed of by such Person, and (h) in the
case of the Borrower (without duplication) the Loans.
"INITIAL LOAN" means the Revolving Credit Loan made to the Borrower on
the Effective Date pursuant to the letter referred to in SECTION 5.1(A)(11).
"INTELLECTUAL PROPERTY" means, as to any Person, all of such Person's
then owned existing and future acquired or arising patents, patent rights,
copyrights, works which are the subject of copyrights, trademarks, service
marks, trade names, trade styles, patent, trademark and service mark
applications, and all licenses and rights related to any of the foregoing and
all other rights under any of the foregoing, all extensions, renewals, reissues,
divisions, continuations and continuations-in-part of any of the foregoing and
all rights to sue for past, present and future infringements of any of the
foregoing.
"INTERBANK OFFERED RATE" means, with respect to any Eurodollar Rate
Advance for the Interest Period applicable thereto, the average (rounded upward
to the nearest one-sixteenth (1/16) of one percent) per annum rate of interest
determined by the office of the Agent then determining such rate (each such
determination to be conclusive and binding) as of two Business Days prior to the
first day of such Interest Period, as the effective rate at which deposits in
immediately available funds in Dollars are being, have been, or would be offered
or quoted by the Agent to major banks in the applicable interbank market for
Eurodollar deposits at any time during the Business Day which is the second
Business Day immediately preceding the first day of such Interest Period, for a
term comparable to such Interest Period and in an amount comparable to the
amount of the Eurodollar Rate Advance. If no such offers or quotes are generally
available for such amount, then the Agent shall be entitled to determine the
Eurodollar Rate by estimating in its reasonable judgment the per annum rate (as
described above) that would be applicable if such quotes or offers were
generally available.
11
"INTEREST EXPENSE" means the interest on Indebtedness during the period
for which computation is being made, excluding (a) the amortization of fees and
costs incurred with respect to the closing of loans which have been capitalized
as transaction costs, and (b) interest paid in kind.
"INTEREST PERIOD" means, in connection with any Eurodollar Rate
Advance, the term of such Advance selected by the Borrower or otherwise
determined in accordance with this Agreement, which may have a duration of
thirty (30) days, sixty (60) days, ninety (90) days, one hundred eighty (180)
days or three hundred sixty (360) days. Notwithstanding the foregoing, however,
(i) any applicable Interest Period which would otherwise end on a day which is
not a Business Day shall end on the next succeeding Business Day unless such
Business Day falls in another calendar month, in which case such Interest Period
shall end on the next preceding Business Day, (ii) any applicable Interest
Period which begins on a day for which there is no numerically corresponding day
in the calendar month during which such Interest Period is to end shall (subject
to clause (i) above) end on the last day of such calendar month, and (iii) no
Interest Period shall extend beyond the Termination Date or such earlier date as
would interfere hereunder with the repayment obligations of the Borrower.
"INTEREST RATE PROTECTION AGREEMENT" shall mean an interest rate swap,
cap or collar agreement or similar arrangement between the Borrower and a Lender
or an Affiliate of a Lender providing for the transfer or mitigation of interest
risks either generally or under specific contingencies.
"INVENTORY" means and includes, as to any Person, all of such Person's
then owned or existing and future acquired or arising (a) goods intended for
sale or lease or for display or demonstration, (b) work in process, (c) raw
materials and other materials and supplies of every nature and description used
or which might be used in connection with the manufacture, packing, shipping,
advertising, selling, leasing or furnishing of goods or otherwise used or
consumed in the conduct of business, and (d) documents evidencing and general
intangibles relating to any of the foregoing.
"INVESTMENT" means, with respect to any Person: (a) the direct or
indirect purchase or acquisition of any beneficial interest in, any share of
capital stock of, evidence of Indebtedness of or other security issued by any
other Person, (b) any loan, advance or extension of credit to, or contribution
to the capital of, any other Person, excluding advances to employees in the
ordinary course of business for business expenses, (c) any Guaranty of the
obligations of any other Person, or (d) any commitment or option to take any of
the actions described in CLAUSES (A), (B) or (C) above.
"LENDER" means at any time any financial institution party to this
Agreement at such time, including any such Person becoming a party hereto
pursuant to the provisions of ARTICLE 13, and its successors and assigns, and
"LENDERS" means at any time all of the financial institutions party to this
Agreement at such time, including any such Persons becoming parties hereto
pursuant to the provisions of ARTICLE 13, and their successors and assigns.
12
"LIABILITIES" means all liabilities of a Person determined in
accordance with GAAP and includable on a balance sheet of such Person prepared
in accordance with GAAP.
"LICENSE INVENTORY" means Inventory owned by the Borrower bearing
trademarks used pursuant to license agreements between the Borrower and the
owners of such trademarks.
"LIEN" as applied to the property of any Person means: (a) any
mortgage, deed to secure debt, deed of trust, lien, pledge, charge, lease
constituting a Capitalized Lease Obligation, conditional sale or other title
retention agreement, or other security interest, security title or encumbrance
of any kind in respect of any property of such Person or upon the income or
profits therefrom, (b) any arrangement, express or implied, under which any
property of such Person is transferred, sequestered or otherwise identified for
the purpose of subjecting the same to the payment of Indebtedness or performance
of any other obligation in priority to the payment of the general, unsecured
creditors of such Person, (c) any Indebtedness which is unpaid more than 30 days
after the same shall have become due and payable and which if unpaid might by
law (including, but not limited to, bankruptcy and insolvency laws) or otherwise
be given any priority whatsoever over general unsecured creditors of such
Person, and (d) the filing of, or any agreement to give, any financing statement
under the UCC or its equivalent in any jurisdiction.
"LOAN" means any Revolving Credit Loan.
"LOAN ACCOUNT" and "LOAN ACCOUNTS" shall have the meanings ascribed
thereto in SECTION 4.4.
"LOAN DOCUMENTS" means, collectively, this Agreement, the Note, the
Security Documents and each other instrument, agreement and document executed
and delivered by the Borrower in connection with this Agreement (including any
application, reimbursement agreement and other document executed in connection
with the Standby Letter of Credit) and each other instrument, agreement or
document referred to herein or contemplated hereby.
"LOCKBOX" means the U.S. Post Office Box(es) specified in, or pursuant
to, an Agency Account Agreement.
"MATERIALLY ADVERSE EFFECT" means any act, omission, event or
undertaking which would, singly or in the aggregate, have a materially adverse
effect upon (a) the business, assets, properties, liabilities, condition
(financial or otherwise), results of operations or business prospects of the
Borrower and its Subsidiaries, taken as a whole (b) upon the respective ability
of the Borrower or any of its Subsidiaries to perform any obligations under this
Agreement or any other Loan Document to which it is a party, or (c) the
legality, validity, binding effect, enforceability or admissibility into
evidence of any Loan Document or the ability of the Agent or any Lender to
enforce any rights or remedies under or in connection with any Loan Document; in
any case, whether resulting from any single act, omission, situation, status,
event, or undertaking, together with other such acts, omissions, situations,
statuses, events, or
13
undertakings.
"MINIMUM COMMITMENT" means $5,000,000.
"MONEY BORROWED" means, as applied to Indebtedness, (a) Indebtedness
for money borrowed, (b) Indebtedness, whether or not in any such case the same
was for money borrowed, (i) represented by notes payable, and drafts accepted,
that represent extensions of credit, (ii) constituting obligations evidenced by
bonds, debentures, notes or similar instruments, or (iii) upon which interest
charges are customarily paid or that was issued or assumed as full or partial
payment for property (other than trade credit that is incurred in the ordinary
course of business), (c) Indebtedness that constitutes a Capitalized Lease
Obligation, and (d) Indebtedness that is such by virtue of CLAUSE (G) of the
definition thereof, but only to the extent that the obligations Guaranteed are
obligations that would constitute Indebtedness for Money Borrowed.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA to which the Borrower or a Related Company is required to
contribute or has contributed within the immediately preceding 6 years.
"NATIONSBANK" means NationsBank, N.A., and its successors and assigns.
"NET INCOME" or "NET LOSS" means, as applied to any Person, the net
income (or net loss) of such Person for the period in question after giving
effect to deduction of or provision for all operating expenses, all taxes and
reserves (including reserves for deferred taxes and all other proper
deductions), all determined in accordance with GAAP, provided that there shall
be excluded: (a) the net income (or net loss) of any Person accrued prior to the
date it becomes a Subsidiary of, or is merged into or consolidated with, the
Person whose Net Income is being determined or a Subsidiary of such Person, (b)
the net income (or net loss) of any Person in which the Person whose Net Income
is being determined or any Subsidiary of such Person has an ownership interest,
except, in the case of net income, to the extent that any such income has
actually been received by such Person or such Subsidiary in the form of cash
dividends or similar distributions, (c) any restoration of any contingency
reserve, except to the extent that provision for such reserve was made out of
income during such period, (d) any net gains or losses on the sale or other
disposition, not in the ordinary course of business, of Investments, Business
Units and other capital assets, provided that there shall also be excluded any
related charges for taxes thereon, (e) any net gain arising from the collection
of the proceeds of any insurance policy (other than the proceeds of business
interruption insurance), (f) any write-up of any asset, and (g) any other
extraordinary item.
"NET OUTSTANDINGS" of any Lender means, at any time, the sum of (a) all
amounts paid by such Lender (other than pursuant to SECTION 14.7) to the Agent
in respect of Revolving Credit Loans or otherwise under this Agreement, MINUS
(b) all amounts paid by the Agent to such Lender which are received by the Agent
and which, pursuant to this Agreement, are paid over to such Lender for
application in reduction of the outstanding principal balance of the Revolving
Credit Loans.
14
"NET WORTH" of any Person means the total shareholders' equity
(including capital stock, additional paid-in capital and retained earnings,
after deducting treasury stock) which would appear as such on a balance sheet of
such Person prepared in accordance with GAAP.
"NON-RATABLE LOAN" means a Revolving Credit Loan made by NationsBank in
accordance with the provisions of SECTION 4.8(B).
"NOTE" means any of the Revolving Credit Notes, individually, and
"NOTES" means all of the Revolving Credit Notes, collectively.
"OPERATING LEASE" means any lease (other than a lease constituting a
Capitalized Lease Obligation) of real or personal property, including the
SunTrust Lease.
"OPERATING LEASE EXPENSE" means the aggregate of all rent payments
under Operating Leases, including payments with respect to the SunTrust Lease.
"ORIGINAL LOAN AGREEMENT" has the meaning set forth in the Recitals of
this Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
agency.
"PERMITTED INDEBTEDNESS" means: (a) the Loan, (b) the letter of credit
and steamship guaranty facility in the aggregate amount of up to $45,000,000 at
any time with Hamilton Bank, (c) Indebtedness of up to $14,500,000 arising under
the SunTrust Lease, (d) Permitted Purchase Money Indebtedness, and (e) letter of
credit facilities with other financial institutions.
"PERMITTED INVESTMENTS" means: (a) Investments of the Borrower in: (i)
negotiable certificates of deposit, time deposits and banker's acceptances
issued by any Lender or any Affiliate of a Lender or by any United States bank
or trust company having capital, surplus and undivided profits in excess of
$250,000,000, (ii) any direct obligation of the United States of America or any
agency or instrumentality thereof which has a remaining maturity at the time of
purchase of not more than one year and repurchase agreements relating to the
same, (iii) sales on credit in the ordinary course of business on terms
customary in the industry, and (iv) notes, accepted in the ordinary course of
business, evidencing overdue accounts receivable arising in the ordinary course
of business, (b) other Investments of the Borrower, the net aggregate amount of
which does not at any time exceed $250,000, and (c) the Guaranty of Sunny
Industries obligations permitted under SECTION 11.3.
"PERMITTED LIENS" means: (a) Liens securing taxes, assessments and
other governmental charges or levies (excluding any Lien imposed pursuant to any
of the provisions of ERISA) or the claims of materialmen, mechanics, carriers,
warehousemen or landlords for labor, materials, supplies or rentals incurred in
the ordinary course of business, but in all cases, only if payment shall not at
the time be required to be made in accordance with SECTION 9.4; (b) Liens
consisting of deposits or pledges made in the ordinary course of business in
connection with, or to secure payment of, obligations under workers'
compensation, unemployment insurance or similar
15
legislation or under surety or performance bonds, in each case arising in the
ordinary course of business; (c) Liens constituting encumbrances in the nature
of zoning restrictions, easements and rights or restrictions of record on the
use of the Real Estate, which in the sole judgment of the Agent do not
materially detract from the value of such Real Estate or impair the use thereof
in the business of the Borrower; (d) Purchase Money Liens securing Permitted
Purchase Money Indebtedness; (e) purchase money security interests of Hamilton
Bank in Inventory acquired by the Borrower through letters of credit issued by
Hamilton Bank, but only if such Lien shall at all times be confined solely to
the tangible asset, the purchase price of which was financed by the letter of
credit and the reimbursement obligations relating to which are secured by such
Lien; (f) Liens in favor of SunTrust Bank, Miami, N.A. as security for the
Borrower's obligations arising under the SunTrust Lease, provided such Liens are
subject to a lien subordination agreement acceptable to the Agent and the
Lenders; (g) Liens of the Agent arising under this Agreement and the other Loan
Documents; (h) Liens arising out of or resulting from any judgment or award, the
time for the appeal or petition for rehearing of which shall not have expired,
or in respect of which the Borrower is fully protected by insurance or in
respect of which the Borrower shall at any time in good faith be prosecuting an
appeal or proceeding for a review and in respect of which a stay of execution
pending such appeal or proceeding for review shall have been secured, and as to
which appropriate reserves have been established on the books of the Borrower;
and (i) the interest of the Factor in factored Receivables.
"PERMITTED PURCHASE MONEY INDEBTEDNESS" means Purchase Money
Indebtedness secured only by Purchase Money Liens and Capitalized Lease
Obligations up to an aggregate amount outstanding at any time equal to $150,000.
"PERSON" means an individual, corporation, partnership, association,
trust or unincorporated organization or a government or any agency or political
subdivision thereof.
"PRIME RATE ADVANCE" means an Advance of the Loans which shall bear
interest at the Prime Rate.
"PRIME RATE" means during the period from the Effective Date through
the last day of the month in which the Effective Date falls, the per annum rate
of interest publicly announced by NationsBank at its principal office as its
"prime rate" as in effect on the Effective Date, and thereafter during each
succeeding calendar month, means such "prime rate" as in effect on the last
Business Day of the immediately preceding calendar month. Any change in an
interest rate resulting from a change in the Prime Rate shall become effective
as of 12:01 a.m. on the first day of the month following the month in which such
change was announced. The Prime Rate is a reference used by NationsBank in
determining interest rates on certain loans and is not intended to be the lowest
rate of interest charged on any extension of credit to any debtor.
"PRIME RATE BASIS" means an interest rate per annum equal to the Prime
Rate.
"PRIVATE LABEL INVENTORY" means Inventory owned by the Borrower bearing
private label trademarks pursuant to agreements between the Borrower and the
owners of such private label
16
trademarks.
"PROPORTIONATE SHARE" or "RATABLE", as applied to a Lender, means such
Lender's share of an amount in Dollars or other property at the time of
determination equal to (i) the Commitment Percentage of such Lender, or (ii) if
the Commitments are terminated, the percentage of the total principal amount of
Loans (plus obligations under the Standby Letter of Credit) outstanding at such
time obtained by dividing the principal amount of the Loans (plus obligations
under the Standby Letter of Credit) then owing to such Lender by the total
principal amount of all Loans (plus obligations under the Standby Letter of
Credit) then owing to all Lenders.
"PURCHASE MONEY INDEBTEDNESS" means Indebtedness created to finance the
payment of all or any part of the purchase price (not in excess of the fair
market value thereof) of any tangible asset (other than Inventory) and incurred
at the time of or within 10 days prior to or after the acquisition of such
tangible asset.
"PURCHASE MONEY LIEN" means any Lien securing Purchase Money
Indebtedness, but only if such Lien shall at all times be confined solely to the
tangible asset (other than Inventory) the purchase price of which was financed
through the incurrence of the Purchase Money Indebtedness secured by such Lien.
"REAL ESTATE" means all of the Borrower's now owned or hereafter
acquired estates in real property, including, without limitation, all fees,
leaseholds, future interests and easements, together with all of the Borrower's
now owned or hereafter acquired interests in the improvements thereon, the
fixtures attached thereto and the easements appurtenant thereto.
"RECEIVABLES" means and includes, as to any Person, all of such
Person's then owned or existing and future acquired or arising (a) rights to the
payment of money or other forms of consideration of any kind (whether classified
under the UCC as accounts, contract rights, chattel paper, general intangibles
or otherwise) including, but not limited to, accounts receivable, letters of
credit and the right to receive payment thereunder, chattel paper, tax refunds,
insurance proceeds, Contract Rights, notes, drafts, instruments, documents,
acceptances and all other debts, obligations and liabilities in whatever form
from any Person and guaranties, security and Liens securing payment thereof, (b)
goods, whether now owned or hereafter acquired, and whether sold, delivered,
undelivered, in transit or returned, which may be represented by, or the sale or
lease of which may have given rise to, any such right to payment or other debt,
obligation or liability, and (c) cash and non-cash proceeds of any of the
foregoing.
"RELATED COMPANY" means, as to any Person, any (a) corporation which is
a member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as such Person, (b) partnership or other trade or
business (whether or not incorporated) under common control (within the meaning
of Section 414(c) of the Code) with such Person, or (c) member of the same
affiliated service group (within the meaning of Section 414(m) of the Code) as
such Person or any corporation described in CLAUSE (A) above or any partnership,
trade or
17
business described in CLAUSE (B) above.
"REQUIRED LENDERS" means, at any time, any combination of Lenders whose
Commitment Percentages at such time aggregate in excess of 66.66%; provided,
however, that if any Lender shall have failed to fund its Proportionate Share of
any Loan in accordance with the terms of this Agreement, then, for so long as
such failure continues, the term "Required Lenders" shall mean Lenders
(excluding such Lender whose failure to fund its Proportionate Share of any Loan
has not been cured) whose Commitment Percentages (computed after excluding the
defaulting Lender's Commitment from the Total Commitment) at such time aggregate
in excess of 66.66%; provided further, however, that if the Commitments have
been terminated, the term "Required Lenders" shall mean Lenders (excluding each
Lender whose failure to fund its Proportionate Share of any Loan has not been
cured) holding Loans (plus obligations under the Standby Letter of Credit)
representing in excess of 66.66% of the aggregate principal amount of Loans and
obligations under the Standby Letter of Credit (excluding the Loans and
obligations under the Standby Letter of Credit owing to the defaulting Lender)
outstanding at such time.
"RESTRICTED DISTRIBUTION" by any Person means (a) its retirement,
redemption, purchase, or other acquisition for value of any capital stock or
other equity securities or partnership interests issued by such Person, (b) the
declaration or payment of any dividend or distribution on or with respect to any
such securities or partnership interests, (c) any loan or advance by such Person
to, or other investment by such Person in, the holder of any of such securities
or partnership interests, and (d) any other payment by such Person in respect of
such securities or partnership interests.
"RESTRICTED PAYMENT" means (a) any redemption, repurchase or prepayment
or other retirement, prior to the stated maturity thereof or prior to the due
date of any regularly scheduled installment or amortization payment with respect
thereto, of any Indebtedness of a Person (other than the Secured Obligations and
trade debt), and (b) the payment by any Person of the principal amount of or
interest on any Indebtedness (other than trade debt) owing to an Affiliate of
such Person.
"REVOLVING CREDIT FACILITY" means the facility for the Revolving Credit
Loans in the principal sum of up to $55,000,000 or such lesser or greater amount
as shall be agreed upon from time to time in writing by the Agent, the Lenders
and the Borrower.
"REVOLVING CREDIT LOANS" means loans made to the Borrower pursuant to
SECTION 2.1.
"REVOLVING CREDIT NOTE" means each Revolving Credit Note made by the
Borrower payable to the order of a Lender evidencing the obligation of the
Borrower to pay the aggregate unpaid principal amount of the Revolving Credit
Loans made to it by such Lender (and any promissory note or notes that may be
issued from time to time in substitution, renewal, extension, replacement or
exchange therefor whether payable to such Lender or to a different Lender in
connection with a Person becoming a Lender after the Effective Date or
otherwise) substantially in the form of EXHIBIT A hereto, with all blanks
properly completed, either as
18
originally executed or as the same may from time to time be supplemented,
modified, amended, renewed, extended or refinanced.
"SCHEDULE OF INVENTORY" means a schedule delivered by the Borrower to
the Agent pursuant to the provisions of SECTION 8.14(B).
"SCHEDULE OF RECEIVABLES" means a schedule delivered by the Borrower to
the Agent pursuant to the provisions of SECTION 8.14(A).
"SECURED OBLIGATIONS" means, in each case whether now in existence or
hereafter arising, (a) the principal of, and interest and premium, if any, on,
the Loans, (b) the reimbursement obligations and all other obligations of the
Borrower to NationsBank or any Lender arising in connection with the Standby
Letter of Credit, and (c) all indebtedness, liabilities, obligations, covenants
and duties of the Borrower to the Agent or to the Lenders of every kind, nature
and description arising under or in respect of this Agreement, the Notes or any
of the other Loan Documents, or the Banking Relationship, whether direct or
indirect, absolute or contingent, due or not due, contractual or tortious,
liquidated or unliquidated, and whether or not evidenced by any note, and
whether or not for the payment of money, including without limitation, fees
required to be paid pursuant to ARTICLE 4 and expenses required to be paid or
reimbursed pursuant to SECTION 15.2. As used herein, "Banking Relationship"
means obligations of the Borrower relating to or arising out of (i) checking and
operating account relationships among the Borrower and any Lender (or any
Affiliate of a Lender) in the ordinary course of business and (ii) Interest Rate
Protection Agreements.
"SECURITY DOCUMENTS" means each of (a) the Financing Statements, and
(b) each other writing executed and delivered by any Person securing the Secured
Obligations or evidencing such security.
"SECURITY INTEREST" means the Liens of the Agent, for the benefit of
the Lenders, on and in the Collateral effected hereby or by any of the Security
Documents or pursuant to the terms hereof or thereof.
"SETTLEMENT DATE" means each Business Day after the Effective Date
selected by the Agent in its sole discretion subject to and in accordance with
the provisions of SECTION 4.8(B)(I) as of which a Settlement Report is delivered
by the Agent and on which settlement is to be made among the Lenders in
accordance with the provisions of SECTION 4.8.
"SETTLEMENT REPORT" means each report, substantially in the form
attached hereto as EXHIBIT D, prepared by the Agent and delivered to each Lender
and setting forth, among other things, as of the Settlement Date indicated
thereon and as of the next preceding Settlement Date, the aggregate principal
balance of all Revolving Credit Loans outstanding, each Lender's Commitment
Percentage thereof, each Lender's Net Outstandings and all Non-Ratable Loans
made, and all payments of principal, interest and fees received by the Agent
from the Borrower during the period beginning on such next preceding Settlement
Date and ending on such
19
Settlement Date.
"STANDBY LETTER OF CREDIT" means that certain standby letter of credit
no. 931326 issued by NationsBank, for the account of the Borrower, in favor of
SunTrust Bank, Miami, N.A. in connection with the Borrower's obligations under
the SunTrust Lease, in the face amount of $2,175,000, as amended, modified or
extended from time to time.
"STANDBY LETTER OF CREDIT RESERVE" means, at any time, 100% of the sum
of (i) the aggregate undrawn amount of the Standby Letter of Credit, PLUS (ii)
the aggregate amount of all drawings under the Standby Letter of Credit for
which NationsBank has not been reimbursed.
"SUBORDINATED INDEBTEDNESS" means any Indebtedness for money borrowed
of the Borrower which is subordinated to the Secured Obligations on terms and
conditions acceptable to the Agent and the Lenders in their sole discretion.
"SUBSIDIARY" when used to determine the relationship of a Person to
another Person, means a Person of which an aggregate of 50% or more of the stock
of any class or classes or 50% or more of other ownership interests is owned of
record or beneficially by such other Person or by one or more Subsidiaries of
such other Person or by such other Person and one or more Subsidiaries of such
Person, (i) if the holders of such stock or other ownership interests (A) are
ordinarily, in the absence of contin gencies, entitled to vote for the election
of a majority of the directors (or other individuals performing similar
functions) of such Person, even though the right so to vote has been suspended
by the happening of such a contingency, or (B) are entitled, as such holders, to
vote for the election of a majority of the directors (or individuals performing
similar functions) of such Person, whether or not the right so to vote exists by
reason of the happening of a contingency, or (ii) in the case of such other
ownership interests, if such ownership interests constitute a majority voting
interest.
"SUNTRUST LEASE" means the synthetic lease provided to the Borrower
with respect to its real property located at 3000 Northwest 107th Avenue, Miami,
Florida pursuant to that certain Master Agreement, dated as of August 28, 1997,
among the Borrower, SUP Joint Venture, SouthTrust Bank, National Association,
SunTrust Bank, Miami, N.A., as agent and a lender, Atlantic Financial Managers,
Inc. and Atlantic Financial Group, Ltd.
"TANGIBLE NET WORTH" means, as applied to any Person, the Net Worth of
such Person at the time in question, after deducting therefrom the amount of all
loans and advances to Affiliates and less the amount of all intangible items
reflected therein, including all unamortized debt discount and expense,
unamortized research and development expense, unamortized deferred charges,
goodwill, Intellectual Property, unamortized excess cost of investment in
Subsidiaries over equity at dates of acquisition, and all similar items which
should properly be treated as intangibles in accordance with GAAP.
"TERMINATION DATE" means March 31, 2001 or such later date as to which
the same may be extended pursuant to the provisions of SECTION 2.5, or, if
earlier, such date as the Secured
20
Obligations shall have been accelerated pursuant to the provisions of SECTION
12.2 or such date as all Secured Obligations shall have been irrevocably paid in
full and the Revolving Credit Facility shall have been terminated.
"TERMINATION EVENT" means (a) a "Reportable Event" as defined in
Section 4043(b) of ERISA, but excluding any such event as to which the provision
for 30 days' notice to the PBGC is waived under applicable regulations, (b) the
filing of a notice of intent to terminate a Benefit Plan or the treatment of a
Benefit Plan amendment as a termination under Section 4041 of ERISA, or (c) the
institution of proceedings to terminate a Benefit Plan by the PBGC under Section
4042 of ERISA or the appointment of a trustee to administer any Benefit Plan.
"TOTAL COMMITMENT" means the sum of the Commitments.
"TRADEMARK ASSIGNMENT" means the Amended and Restated Conditional
Assignment and Trademark Security Agreement, dated as of the Agreement Date
between the Borrower and the Agent, for the benefit of the Lenders, as the same
may be amended, modified or supplemented from time to time.
"UCC" means the Uniform Commercial Code as in effect from time to time
in the State of Georgia.
"UNFUNDED CAPITAL EXPENDITURES" means Capital Expenditures which are
paid for by a Person other than with the proceeds of Indebtedness for Money
Borrowed (other than the Loans) incurred to finance such Capital Expenditures
and other than those represented by Capitalized Lease Obligations.
"UNFUNDED VESTED ACCRUED BENEFITS" means, with respect to any Benefit
Plan at any time, the amount (if any) by which (a) the present value of all
vested nonforfeitable benefits under such Benefit Plan exceeds (b) the fair
market value of all Benefit Plan assets allocable to such benefits, as
determined using such reasonable actuarial assumptions and methods as are
specified in the Schedule B (Actuarial Information) to the most recent Annual
Report (Form 5500) filed with respect to such Benefit Plan.
Section 1.2 OTHER REFERENTIAL PROVISIONS.
(a) All terms in this Agreement, the Exhibits and Schedules hereto
shall have the same defined meanings when used in any other Loan Documents,
unless the context shall require otherwise.
(b) Except as otherwise expressly provided herein, all accounting terms
not specifically defined or specified herein shall have the meanings generally
attributed to such terms under GAAP including, without limitation, applicable
statements and interpretations issued by the Financial Accounting Standards
Board and bulletins, opinions, interpretations and statements issued by the
American Institute of Certified Public Accountants or its committees.
21
(c) All personal pronouns used in this Agreement, whether used in the
masculine, feminine or neuter gender, shall include all other genders; the
singular shall include the plural, and the plural shall include the singular.
(d) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provisions of this Agreement.
(e) Titles of Articles and Sections in this Agreement are for
convenience only, do not constitute part of this Agreement and neither limit nor
amplify the provisions of this Agreement, and all references in this Agreement
to Articles, Sections, Subsections, paragraphs, clauses, subclauses, Schedules
or Exhibits shall refer to the corresponding Article, Section, Subsection,
paragraph, clause or subclause of, or Schedule or Exhibit attached to, this
Agreement, unless specific reference is made to the articles, sections or other
subdivisions or divisions of , or to schedules or exhibits to, another document
or instrument.
(f) Each definition of a document in this Agreement shall include such
document as amended, modified, supplemented or restated from time to time in
accordance with the terms of this Agreement.
(g) Except where specifically restricted, reference to a party to a
Loan Document includes that party and its successors and assigns permitted
hereunder or under such Loan Document.
(h) Unless otherwise specifically stated, whenever a time is referred
to in this Agreement or in any other Loan Document, such time shall be the local
time in Atlanta, Georgia.
(i) Whenever the phrase "to the knowledge of the Borrower" or words of
similar import relating to the knowledge of the Borrower are used herein, such
phrase shall mean and refer to (i) the actual knowledge of the President or
chief financial officer or (ii) the knowledge that such officers would have
obtained if they had engaged in good faith in the diligent performance of their
duties, including the making of such reasonable specific inquiries as may be
necessary of the appropriate persons in a good faith attempt to ascertain the
accuracy of the matter to which such phrase relates.
(j) The terms accounts, chattel paper, documents, equipment,
instruments, general intangibles and inventory, as and when used (without being
capitalized) in this Agreement or the Security Documents, shall have the
meanings given those terms in the UCC.
Section 1.3 EXHIBITS AND SCHEDULES. All Exhibits and Schedules attached
hereto are by reference made a part hereof.
ARTICLE 2 - REVOLVING CREDIT FACILITY
22
Section 2.1 REVOLVING CREDIT LOANS. Upon the terms and subject to the
conditions of, and in reliance upon the representations and warranties made
under, this Agreement, each Lender agrees, severally, but not jointly, to make
Revolving Credit Loans to the Borrower from time to time from the Effective Date
to but not including the Termination Date, as requested or deemed requested by
the Borrower in accordance with the terms of SECTION 2.2, in amounts equal to
such Lender's Commitment Percentage of each such Loan requested or deemed
requested hereunder up to an aggregate amount at any one time outstanding equal
to such Lender's Commitment Percentage of the Borrowing Base; provided, however,
that the aggregate principal amount of all outstanding Revolving Credit Loans
(after giving effect to the Loans requested) shall not at any time exceed the
Borrowing Base. It is expressly understood and agreed that the Lenders may and
at present intend to use the Borrowing Base as a maximum ceiling on Revolving
Credit Loans; PROVIDED, HOWEVER, that it is agreed that should Revolving Credit
Loans exceed the ceiling so determined or any other limitation set forth in this
Agreement, such Revolving Credit Loans shall nevertheless constitute Secured
Obligations and, as such, shall be entitled to all benefits thereof and security
therefor. The principal amount of any Revolving Credit Loan which is repaid may
be reborrowed by the Borrower in accordance with the terms of this SECTION 2.1.
The Agent and each Lender are hereby authorized to record each repayment of
principal of the Revolving Credit Loans in their books and records, such books
and records constituting PRIMA FACIE evidence of the accuracy of the information
contained therein, subject to the provisions of SECTION 4.4(C).
Section 2.2 MANNER OF BORROWING REVOLVING CREDIT LOANS. Borrowings of
the Revolving Credit Loans shall be made as follows:
(a) REQUESTS FOR BORROWING. A request for a borrowing shall be made, or
shall be deemed to be made, in the following manner:
(i) with respect to requests for Revolving Credit Loans, the
Borrower shall give the Agent notice of its intention to borrow,
specifying the amount of the Advance, the proposed borrowing date and
whether the Advance shall be a Eurodollar Rate Advance or a Prime Rate
Advance, which notice shall be given in accordance with the provisions
of SECTION 4.1;
(ii) whenever a presentment or request for payment is made
against the Controlled Disbursement Account in an amount greater than
the then available balance in such account, such presentation or
request shall be deemed to be a request for a Prime Rate Advance on the
date of such notice in an amount equal to the excess of such check over
such available balance;
(iii) unless payment is otherwise made by the Borrower, the
maturity of any Secured Obligation required to be paid shall be deemed
to be a request for a Prime Rate Advance on the due date in the amount
required to pay such Secured Obligation; and
(iv) if a drawing is made under the Standby Letter of Credit
and the
23
Borrower fails to reimburse NationsBank and the Lenders therefor, such
failure to reimburse shall be deemed to be a request for a Prime Rate
Advance on the date such notification is received in the amount so
unreimbursed.
Unless the Agent has elected periodic settlements pursuant to SECTION
4.8, the Agent shall promptly notify the Lenders of any notice of borrowing
given or deemed given pursuant to this SECTION 2.2(A) by 12:00 noon (Atlanta
time) on the proposed borrowing date with respect to a Prime Rate Advance or on
the second Business Day prior to the proposed borrowing date with respect to a
Eurodollar Rate Advance. The notice from the Agent to the Lenders shall set
forth the information contained in the Borrower's notice of borrowing. Not later
than 1:30 p.m. (Atlanta time) on the proposed borrowing date, each Lender will
make available to the Agent, for the account of the Borrower, at the Agent's
Office in funds immediately available to the Agent, an amount equal to such
Lender's Commitment Percentage of the Revolving Credit Loans to be made on such
borrowing date.
(b) DISBURSEMENT OF LOANS. The Borrower hereby irrevocably authorizes
the Agent to disburse the proceeds of each borrowing requested, or deemed to be
requested, pursuant to this SECTION 2.2 as follows: (i) the proceeds of each
borrowing requested under SECTION 2.2(A)(I) or (II) shall be disbursed by the
Agent in lawful money of the United States of America in immediately available
funds, (A) in the case of the initial borrowing, in accordance with the terms of
the letter from the Borrower to the Agent referred to in SECTION 5.1(A)(11), and
(B) in the case of each subsequent borrowing, by credit to the Controlled
Disbursement Account or to such other account as may be agreed upon by the
Borrower and the Agent from time to time; and (ii) the proceeds of each
borrowing requested under SECTION 2.2(A)(III) OR (IV) shall be disbursed by the
Agent by way of direct payment of the relevant principal, interest or other
Secured Obligation, as the case may be.
Section 2.3 REPAYMENT OF REVOLVING CREDIT LOANS. The Revolving Credit
Loans will be repaid as follows: (a) whether or not any Default or Event of
Default has occurred, the outstanding principal amount of all the Revolving
Credit Loans is due and payable, and shall be repaid by the Borrower in full
together with accrued and unpaid interest on the amount repaid to the date of
repayment, on the Termination Date; (b) if at any time the aggregate unpaid
principal amount of the Revolving Credit Loans then outstanding exceeds the
Borrowing Base, the Borrower shall repay the Revolving Credit Loans in an amount
sufficient to reduce the aggregate unpaid principal amount of such Loans by an
amount equal to such excess, together with accrued and unpaid interest on the
amount repaid to the date of repayment; and (c) the Borrower hereby instructs
the Agent to repay the Revolving Credit Loans outstanding on any day in an
amount equal to the amount received by the Agent on such day pursuant to SECTION
8.1(B).
Section 2.4 REVOLVING CREDIT NOTES. Each Lender's Revolving Credit
Loans and the obligation of the Borrower to repay such Loans shall also be
evidenced by a Revolving Credit Note payable to the order of such Lender.
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Section 2.5 EXTENSION OF FACILITY. Upon the request of the Borrower,
the Lenders may, in their discretion, agree to extend the Revolving Credit
Facility for a period of time beyond the then effective Termination Date. Each
such extension shall be effected by the Borrower's, the Agent's and the Lenders'
execution and delivery of a written agreement evidencing such extension.
ARTICLE 3
STANDBY LETTER OF CREDIT
Section 3.1. PARTICIPATIONS.
(a) PURCHASE OF PARTICIPATIONS. Each Lender is hereby deemed
to have irrevocably and unconditionally purchased and received, without recourse
or warranty, an undivided interest and participation in the Standby Letter of
Credit, equal to such Lender's Commitment Percentage of the face amount thereof
(including, without limitation, all obligations of the Borrower with respect
thereto, other than amounts owing to NationsBank under SECTION 4.2(B)(II), and
any security therefor or guaranty pertaining thereto).
(b) SHARING OF STANDBY LETTER OF CREDIT PAYMENTS. In the event
that NationsBank makes a payment under the Standby Letter of Credit and
NationsBank shall not have been repaid such amount pursuant to SECTION 3.3, then
NationsBank shall be deemed to have made a Non-Ratable Loan in the amount of
such payment, and notwithstanding the occurrence or continuance of a Default or
Event of Default at the time of such payment, such Non-Ratable Loan shall be
subject to the provisions of SECTION 4.8(B) and the absolute obligations of the
Lenders to pay for their respective participation interests therein.
(c) SHARING OF REIMBURSEMENT OBLIGATION PAYMENTS. Whenever
NationsBank receives a payment from or on behalf of the Borrower on account of a
reimbursement obligation on the Standby Letter of Credit as to which the Agent
has previously received for the account of NationsBank payment from a Lender
pursuant to this SECTION 3.1, NationsBank shall promptly pay to the Agent, for
the benefit of such Lender, such Lender's Commitment Percentage of the amount of
such payment from the Borrower in Dollars. Each such payment shall be made by
NationsBank to the Agent on the Business Day on which NationsBank receives
immediately available funds pursuant to the immediately preceding sentence, if
received prior to 11:00 a.m. (Atlanta time) on such Business Day, and otherwise
on the next succeeding Business Day.
(d) DOCUMENTATION. Upon the request of any Lender, the Agent
shall furnish to such Lender copies of the Standby Letter of Credit and the
application for the Standby Letter of Credit, and such other documentation as
may reasonably be requested by such Lender.
(e) OBLIGATIONS IRREVOCABLE. The obligations of each Lender to
make payments to the Agent with respect to the Standby Letter of Credit and
their participations therein pursuant to the provisions of SECTION 4.8(B) hereof
or otherwise and the obligations of the Borrower to
25
make payments to NationsBank or to the Agent, for the account of Lenders, shall
be irrevocable, shall not be subject to any qualification or exception
whatsoever and shall be made in accordance with the terms and conditions of this
Agreement, including, without limitation, any of the following circumstances:
(i) Any lack of validity or enforceability of this
Agreement or any of the other Loan Documents;
(ii) The existence of any claim, set-off, defense or
other right which the Borrower may have at any time against the
beneficiary named in the Standby Letter of Credit or any transferee of
the Standby Letter of Credit (or any Person for whom any such
transferee may be acting), any Lender, NationsBank or any other Person,
whether in connection with this Agreement, the Standby Letter of
Credit, the transactions contemplated herein or any unrelated
transactions (including any underlying transactions between the
Borrower or any other Person and the beneficiary named in the Standby
Letter of Credit);
(iii) Any draft, certificate or any other document
presented under the Standby Letter of Credit upon which payment has
been made in good faith and according to its terms proving to be
forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect;
(iv) The surrender or impairment of any Collateral or
any other security for the Secured Obligations or the performance or
observance of any of the terms of any of the Loan Documents; or
(v) The occurrence of any Default or Event of
Default.
Section 3.2. DUTIES OF NATIONSBANK. Any action taken or omitted to be
taken by NationsBank under or in connection with the Standby Letter of Credit,
if taken or omitted in the absence of gross negligence or willful misconduct,
shall not result in any liability of NationsBank to any Lender or relieve any
Lender of its obligations hereunder to NationsBank. In determining whether to
pay under the Standby Letter of Credit, NationsBank shall have no obligation to
any Lender other than to confirm that any documents required to be delivered
under the Standby Letter of Credit in connection with such drawing have been
presented and appear on their face to comply with the requirements of the
Standby Letter of Credit.
26
Section 3.3. PAYMENT OF REIMBURSEMENT OBLIGATIONS.
(a) PAYMENT TO ISSUER. Notwithstanding any provisions to the
contrary in any reimbursement agreement, the Borrower agrees to reimburse
NationsBank for any drawings (whether partial or full) under the Standby Letter
of Credit and to pay to NationsBank the amount of all other reimbursement
obligations and other amounts payable to NationsBank under or in connection with
the Standby Letter of Credit immediately when due, irrespective of any claim,
set-off, defense or other right which the Borrower may have at any time against
NationsBank or any other Person.
(b) RECOVERY OR AVOIDANCE OF PAYMENTS. In the event any
payment by or on behalf of the Borrower with respect to the Standby Letter of
Credit (or any reimbursement obligation relating thereto) received by
NationsBank, or by the Agent and distributed by the Agent to the Lenders on
account of their respective participations therein, is thereafter set aside,
avoided or recovered from NationsBank or the Agent in connection with any
receivership, liquidation or bankruptcy proceeding, the Lenders shall, upon
demand by the Agent, pay to the Agent, for the account of the Agent or
NationsBank, their respective Commitment Percentages of such amount set aside,
avoided or recovered together with interest at the rate required to be paid by
the Agent upon the amount required to be repaid by it.
Section 3.4. INDEMNIFICATION, EXONERATION.
(a) INDEMNIFICATION. In addition to amounts payable as
elsewhere provided in this ARTICLE 3, the Borrower agrees to protect, indemnify,
pay and save the Lenders and the Agent harmless from and against any and all
claims, demands, liabilities, damages, losses, costs, charges and expenses
(including reasonable attorneys' fees) which any Lender or the Agent may incur
or be subject to as a consequence, directly or indirectly, of
(i) the issuance of the Standby Letter of Credit,
other than as a result of its gross negligence or willful misconduct,
as determined by a court of competent jurisdiction, or
(ii) the failure of NationsBank to honor a drawing
under the Standby Letter of Credit as a result of any act or omission,
whether rightful or wrongful, of any present or future DE JURE or DE
FACTO governmental authority (all such acts or omissions being
hereinafter referred to collectively as "Government Acts").
(b) ASSUMPTION OF RISK BY THE BORROWER. As among the Borrower,
the Lenders and the Agent, the Borrower assume all risks of the acts and
omissions of, or misuse of the Standby Letter of Credit by, the beneficiary of
the Standby Letter of Credit. In furtherance and not in limitation of the
foregoing, subject to the provisions of the application for the issuance of the
Standby Letter of Credit, the Lenders and the Agent shall not be responsible
for:
27
(i) the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any Person in
connection with the application for and issuance of and presentation of
drafts with respect to the Standby Letter of Credit, even if it should
prove to be in any or all respects invalid, insufficient, inaccurate,
fraudulent or forged;
(ii) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign the
Standby Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason;
(iii) the failure of the beneficiary of the Standby
Letter of Credit to comply duly with conditions required in order to
draw upon the Standby Letter of Credit;
(iv) errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they be in cipher;
(v) errors in interpretation of technical terms;
(vi) any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under the
Standby Letter of Credit or of the proceeds thereof;
(vii) the misapplication by the beneficiary of the
Standby Letter of Credit of the proceeds of any drawing under the
Standby Letter of Credit; or
(viii) any consequences arising from causes beyond
the control of the Lenders or the Agent, including, without limitation,
any Government Acts.
None of the foregoing shall affect, impair or prevent the vesting of
any of the Agent's rights or powers under this SECTION 3.4.
(c) EXONERATION. In furtherance and extension, and not in
limitation, of the specific provisions set forth above, any action taken or
omitted by the Agent, NationsBank or any Lender under or in connection with the
Standby Letter of Credit or any related certificates, if taken or omitted in
good faith, shall not result in any liability of any Lender or the Agent to the
Borrower or relieve the Borrower of any of its obligations hereunder to any such
Person.
Section 3.5. SUPPORTING STANDBY LETTER OF CREDIT; CASH COLLATERAL.
(a) If the Standby Letter of Credit is outstanding on the
Termination Date the Borrower shall, promptly on demand by the Agent, deposit
with the Agent, for the ratable
28
benefit of the Lenders, as the Agent shall specify, either a Supporting Standby
Letter of Credit or Cash Collateral, as set forth in SECTION 3.5(B).
(b) Any Supporting Standby Letter of Credit or Cash Collateral
required pursuant to SECTION 3.5(A) shall, at the Agent's option, take the form
of either (i) a standby letter of credit (a "Supporting Standby Letter of
Credit") in form and substance satisfactory to the Agent, issued by an issuer
reasonably satisfactory to the Agent in an amount equal to 105% of the greatest
amount for which the Standby Letter of Credit may be drawn, under which
Supporting Standby Letter of Credit the Agent is entitled to draw amounts
necessary to reimburse the Agent and the Lenders for payments made by the Agent
and the Lenders under the Standby Letter of Credit or under any reimbursement or
guaranty agreement with respect thereto, or (ii) Cash Collateral in 105% of the
amount necessary to reimburse the Agent and the Lenders for payments made by the
Agent and the Lenders under the Standby Letter of Credit or under any
reimbursement or guaranty agreement with respect thereto. Such Supporting
Standby Letter of Credit or Cash Collateral shall be held by the Agent, for the
benefit of the Lenders, as security for, and to provide for the payment of, the
Borrower's reimbursement obligations with respect to the Standby Letter of
Credit. In addition, the Agent may at any time after the Termination Date apply
any or all of such Cash Collateral to the payment of any or all of the Secured
Obligations then due and payable. At the Borrower's request, but subject to the
Agent's reasonable approval, the Agent shall invest any Cash Collateral
consisting of cash or any proceeds of Cash Collateral consisting of cash in Cash
Equivalents, and any commissions, expenses and penalties incurred by the Agent
in connection with any investment and redemption of such Cash Collateral shall
be Secured Obligations hereunder secured by the Collateral, shall bear interest
at the rates provided herein for the Loans and shall be charged to the
Borrower's Loan Accounts, or, at the Agent's option, shall be paid out of the
proceeds of any earnings received by the Agent from the investment of such Cash
Collateral as provided herein or out of such cash itself. The Agent makes no
representation or warranty as to, and shall not be responsible for, the rate of
return, if any, earned on any Cash Collateral. Any earnings on Cash Collateral
shall be held as additional Cash Collateral on the terms set forth in this
SECTION 3.5. As used herein, "CASH EQUIVALENTS" means (a) marketable direct
obligations issued or unconditionally guaranteed by the United States Government
or issued by any agency thereof and backed by the full faith and credit of the
United States, in each case maturing within one year from the date of
acquisition thereof; (b) commercial paper maturing no more than one year from
the date issued and, at the time of acquisition thereof, having a rating of at
least A-1 from Standard & Poor's Corporation or at least P-1 from Moody's
Investors Service, Inc.; (c) certificates of deposit or bankers' acceptances
issued in Dollar denominations and maturing within one year from the date of
issuance thereof issued by any commercial bank organized under the laws of the
United States of America or any state thereof or the District of Columbia having
combined capital and surplus of not less than $100,000,000 and, unless issued by
the Agent or a Lender, not subject to set-off or offset rights in favor of such
bank arising from any banking relationship with such bank; and (d) repurchase
agreements in form and substance and for amounts satisfactory to the Agent.
ARTICLE 4 - GENERAL LOAN PROVISIONS
29
Section 4.1 INTEREST.
(a) CHOICE OF INTEREST RATE. Each Advance shall, at the option
of the Borrower, be made as a Prime Rate Advance or a Eurodollar Rate Advance.
Eurodollar Rate Advances shall in all cases be subject to SECTION 4.1(C) hereof.
Any notice given to the Agent in connection with a requested Advance hereunder
shall be given prior to 12:00 noon (Atlanta time) in order for such Business Day
to count toward the minimum number of Business Days required. If the Borrower
fails to give the Agent timely notice of its selection of a Eurodollar Rate
Basis, or if for any reason a determination of a Eurodollar Rate Basis for any
Advance is not timely concluded, the Prime Rate Basis shall apply to such
Advance.
(b) PRIME RATE ADVANCES.
(i) INITIAL ADVANCES. The Borrower shall give the
Agent, in the case of Prime Rate Advances, irrevocable notice of its
election by telephone or telecopy confirmed immediately in writing;
provided, however, that the failure by the Borrower to confirm any
notice by telephone or telecopy with a written notice shall not
invalidate any notice so given.
(ii) REPAYMENTS AND REBORROWINGS. The Borrower may
repay a Prime Rate Advance at any time and (A) reborrow all or a
portion of the principal amount thereof as one or more Prime Rate
Advances or Eurodollar Rate Advances, or (B) not reborrow all or any
portion of such Prime Rate Advance.
(iii) PREPAYMENT. The principal amount of any Prime
Rate Advance may be prepaid in full or in part at any time without
penalty.
(c) EURODOLLAR RATE ADVANCES.
(i) INITIAL ADVANCES. The Borrower shall give the
Agent, in the case of Eurodollar Rate Advances, at least two (2)
Business Days irrevocable notice of its election by telephone or
telecopy confirmed immediately in writing; provided, however, that the
failure by the Borrower to confirm any notice by telephone or telecopy
with a written notice shall not invalidate any notice so given. The
Agent, whose determination shall be conclusive, shall determine the
available Eurodollar Rate Basis and shall notify the Borrower of such
Eurodollar Rate Basis.
(ii) REPAYMENTS AND REBORROWINGS. At least two (2)
Business Days prior to the maturity date for a Eurodollar Rate Advance,
the Borrower shall give the Agent notice specifying whether all or a
portion of any Eurodollar Rate Advance outstanding on such maturity
date (A) is to be repaid and then reborrowed in whole or in part as a
Eurodollar Rate Advance, (B) is to be repaid and then reborrowed in
whole or in part as a Prime Rate Advance, or (C) is to be repaid and
not reborrowed. The Borrower's failure to give a proper notice shall be
deemed a request to reborrow the
30
entire maturing amount as a Prime Rate Advance. Upon such maturity date
such Eurodollar Rate Advance will, subject to the provisions hereof, be
so repaid and, as applicable, reborrowed. Each repayment shall be in an
amount not less than $1,000,000.
(iii) LIMITATION ON EURODOLLAR RATE ADVANCES. Each
Eurodollar Rate Advance shall be in an amount of at least $1,000,000 or
an integral multiple thereof. Notwithstanding anything to the contrary
contained herein, no more than ten (10) Eurodollar Rate Advances shall
be outstanding under this Agreement at any one time.
(iv) PREPAYMENT. Eurodollar Rate Advances may be
prepaid prior to the applicable maturity date, upon four (4) Business
Days prior notice to the Agent, provided that the Borrower shall
reimburse the Agent and the Lenders, on the earlier of demand or the
Termination Date, an amount calculated in accordance with SECTION 4.9.
The Agent shall promptly notify the Lenders of any such notice of
prepayment received by the Agent. Any notice of prepayment of a
Eurodollar Rate Advance shall be irrevocable. Each prepayment of any of
the Eurodollar Rate Advances shall be in an amount not less than
$1,000,000.
(v) EURODOLLAR RATE BASIS DETERMINED INADEQUATE OR
UNFAIR. Notwithstanding anything contained herein which may be
construed to the contrary, if with respect to any proposed Eurodollar
Rate Advance for any Interest Period, the Agent determines that
deposits in Dollars (in the applicable amount) are not being offered to
the Agent in the relevant market for such Interest Period on a basis
sufficient to permit a fair establishment of the Eurodollar Rate, the
Agent shall forthwith give notice thereof to the Borrower, whereupon
until the Agent notifies the Borrower that the circumstances giving
rise to such situation no longer exist, the obligations of the Agent
and the Lenders to make such Eurodollar Rate Advances shall be
suspended.
(vi) ILLEGALITY. If any applicable law, rule or
regulation, or any change therein, or any interpretation or change in
interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Agent or any Lender with
any request or directive (whether or not having the force of law) of
any such authority, central bank or comparable agency, shall make it
unlawful or impossible for the Agent or any Lender to make, maintain or
fund its Eurodollar Rate Advances, the Agent shall so notify the
Borrower. Upon receipt of such notice, notwithstanding anything
contained in SECTION 4.1 hereof, the Borrower shall repay in full the
then outstanding principal amount of each affected Eurodollar Rate
Advance, together with accrued interest thereon either (a) on the last
day of the then current Interest Period applicable to such Eurodollar
Rate Advance if the Agent and the Lenders may lawfully continue to
maintain and fund such Eurodollar Rate Advance to such day or (b)
immediately if the Agent and the Lenders may not lawfully continue to
fund and maintain such Eurodollar Rate Advance, whereupon the Borrower
shall borrow a Prime Rate Advance from the Lenders, and the Lenders
shall make such Advance, in the amount of the Eurodollar Rate Advances
to be
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repaid.
(vii) EFFECT ON OTHER ADVANCES. If notice has been
given to Borrower suspending the obligation of the Lenders to make any
Eurodollar Rate Advance, or requiring Eurodollar Rate Advances to be
repaid or prepaid, then, unless and until the Agent notifies the
Borrower that the circumstances giving rise to such repayment no longer
apply, all Advances which would otherwise be made as Eurodollar Rate
Advances shall, at the option of the Borrower, be made instead as Prime
Rate Advances, or, if available, as another type of fixed rate advance.
(d) GENERAL INTEREST PROVISIONS.
(i) The Borrower shall pay interest on the unpaid
principal amount of each Loan for each day from the day such Loan is
made until such Loan is due (whether at maturity, by reason of
acceleration or otherwise) at a rate per annum equal to the Eurodollar
Rate Basis or the Prime Rate Basis, as elected by the Borrower in
accordance with the provisions set forth herein, payable monthly in
arrears on the first day of each calendar month commencing April 1,
1998.
(ii) From and after the occurrence of an Event of
Default, the unpaid principal amount of each Secured Obligation shall,
at the election of the Agent (given in its discretion or at the
direction of the Required Lenders), bear interest until paid in full
(or, if earlier, until such Event of Default is cured or waived in
writing by the Lenders) at a rate per annum equal to the Default Margin
plus the Prime Rate Basis, payable on demand. The interest rate
provided for in this SECTION 4.1(D)(II) shall to the extent permitted
by applicable law apply to and accrue on the amount of any judgment
entered with respect to any Secured Obligation and shall continue to
accrue at such rate during any proceeding described in SECTION 12.1(G)
or (H).
(iii) The interest rates provided for in this SECTION
4.1 shall be computed on the basis of a year of 360 days and the actual
number of days elapsed.
(iv) It is not intended by the Agent or the Lenders,
and nothing contained in this Agreement or any Note shall be deemed, to
establish or require the payment of a rate of interest in excess of the
maximum rate permitted by applicable law (the "Maximum Rate"). If, in
any month, the Effective Interest Rate, absent such limitation, would
have exceeded the Maximum Rate, then the Effective Interest Rate for
that month shall be the Maximum Rate, and if, in future months, the
Effective Interest Rate would otherwise be less than the Maximum Rate,
then the Effective Interest Rate shall remain at the Maximum Rate until
such time as the amount of interest paid hereunder equals the amount of
interest which would have been paid if the same had not been limited by
the Maximum Rate. In this connection, in the event that, upon payment
in full of the Secured Obligations, the total amount of interest paid
or accrued under the terms of this Agreement is less than the total
amount of interest which would have been
32
paid or accrued if the Effective Interest Rate had at all times been in
effect, then the Borrower shall, to the extent permitted by applicable
law, pay to the Agent, for the account of the Lenders, an amount equal
to the difference between (i) the lesser of (A) the amount of interest
which would have been charged if the Maximum Rate had, at all times,
been in effect and (B) the amount of interest which would have accrued
had the Effective Interest Rate, at all times, been in effect, and (ii)
the amount of interest actually paid or accrued under this Agreement.
In the event the Agent or the Lenders receive, collect or apply as
interest any sum in excess of the Maximum Rate, such excess amount
shall be applied to the reduction of the principal balance of the
applicable Secured Obligation, and, if no such principal is then
outstanding, such excess or part thereof remaining shall be paid to the
Borrower.
Section 4.2 FEES.
(a) AGENT'S FEE. For administration and other services performed by the
Agent in connection with its continuing administration of this Agreement, the
Borrower shall pay to the Agent, for its own account, and not for the account of
the Lenders, an annual fee as set forth in the letter dated the Agreement Date
between the Agent and the Borrower.
(b) STANDBY LETTER OF CREDIT FEES.
(i) The Borrower agrees to pay to the Agent, for the ratable
benefit of the Lenders, a fee equal to 1% per annum based on the amount
of the Standby Letter of Credit. Such fee shall be payable to the
Agent, for the ratable benefit of the Lenders, in accordance with their
respective Commitment Percentages on the Effective Date (it being
acknowledged that the Borrower has previously paid such initial fee to
NationsBank) and thereafter on September 1 of each year, and shall be
calculated based on a year of 360 days and the actual number of days
elapsed, PROVIDED that NationsBank shall be entitled to the full amount
of such fee for all periods prior to the Effective Date.
(ii) The Borrower agrees to pay to the Agent, for the account
of NationsBank, the standard fees and charges of NationsBank for
issuing, administering, amending, renewing, paying and canceling the
Standby Letter of Credit, as and when assessed.
(c) COMMITMENT FEE. In connection with and as consideration for the
Lenders' commitments hereunder, subject to the terms hereof, to lend to the
Borrower under the Revolving Credit Facility, the Borrower shall pay a fee to
the Agent, for the ratable benefit of the Lenders based on their respective
Commitment Percentages, from the Effective Date until the Termination Date, in
an amount equal to 3/16% per annum of the average daily unused portion of the
Revolving Credit Facility, payable monthly in arrears on the first day of each
month and on the date of any permanent reduction in the Revolving Credit
Facility.
(d) CLOSING FEE. On the Effective Date, the Borrower shall pay to the
Agent, for the ratable benefit of the Lenders based on their respective
Commitment Percentages, a closing fee
33
in the amount of $137,500 in connection with the establishment of the Revolving
Credit Facility and in consideration of the making of Loans under this Agreement
and in order to compensate the Lenders for the costs associated with
structuring, processing, approving and closing the Revolving Credit Facility and
the Loans, but excluding expenses for which the Borrower has agreed elsewhere in
this Agreement to reimburse the Lenders.
(e) COLLECTION FEE. During the period from and including the Effective
Date to and including the Termination Date, the Borrower will pay to the Agent
for its own account on the first day of each month an amount of interest
computed at the Effective Interest Rate applicable to Prime Rate Advances on
each remittance received by the Agent against Receivables (as contemplated by
SECTION 8.1 hereof) during the preceding month, from the close of business on
the date of receipt of each such remittance until the close of business on the
first Business Day following the receipt of the remittance, as compensation for
delays in the collection and clearance of checks and other remittances.
(f) GENERAL. All fees shall be fully earned by the Agent and the
Lenders when due and payable and, except as otherwise set forth herein, shall
not be subject to refund or rebate. All fees are for compensation for services
and are not, and shall not be deemed to be, interest or a charge for the use of
money.
Section 4.3 MANNER OF PAYMENT. (a) Each payment (including prepayments)
by the Borrower on account of the principal of or interest on the Loans or of
any fee or other amounts payable to the Agent and the Lenders under this
Agreement or the Notes shall be made not later than 1:30 p.m. (Atlanta time) on
the date specified for payment under this Agreement (or if such day is not a
Business Day, the next succeeding Business Day) to the Agent at the Agent's
Office, in Dollars, in immediately available funds and shall be made without any
setoff, counterclaim or deduction whatsoever.
(b) The Borrower hereby irrevocably authorizes each Lender and each
Affiliate of each Lender to charge any account of the Borrower maintained with
such Lender or such Affiliate with such amounts as may be necessary from time to
time to pay any Secured Obligations which are not paid when due.
Section 4.4 LOAN ACCOUNTS; STATEMENTS OF ACCOUNT.
(a) Each Lender shall open and maintain on its books a loan account in
the Borrower's name (each, a "Loan Account" and collectively, the "Loan
Accounts"). Each such Loan Account shall show as debits thereto each Loan made
under this Agreement by such Lender to the Borrower and as credits thereto all
payments received by such Lender and applied to principal of such Loan, so that
the balance of the loan account at all times reflects the principal amount due
such Lender from the Borrower.
(b) The Agent shall maintain on its books a control account for the
Borrower in which shall be recorded (i) the amount of each disbursement made
hereunder, (ii) the amount of any
34
principal or interest due or to become due from the Borrower hereunder, and
(iii) the amount of any sum received by the Agent hereunder from the Borrower
and each Lender's ratable share therein.
(c) The entries made in the accounts pursuant to SUBSECTIONS (A) and
(B) shall be PRIMA FACIE evidence, in the absence of manifest error, of the
existence and amounts of the obligations of the Borrower therein recorded and in
case of discrepancy between such accounts, in the absence of manifest error, the
accounts maintained pursuant to SUBSECTION (B) shall be controlling.
(d) The Agent will account separately to the Borrower within 30 days
after the end of each calendar month with a statement of Loans, charges and
payments made to and by the Borrower pursuant to this Agreement, and such
account rendered by the Agent shall be deemed final, binding and conclusive,
save for manifest error, unless the Agent is notified by the Borrower in writing
to the contrary within 60 days after the date the account to the Borrower was so
rendered. Such notice by the Borrower shall be deemed an objection to only those
items specifically objected to therein. Failure of the Agent to render such
account shall in no way affect the rights of the Agent or of the Lenders
hereunder.
Section 4.5 TERMINATION OF AGREEMENT. On the Termination Date the
Borrower shall pay to the Agent, for the account of the Lenders, in same day
funds, an amount equal to the aggregate amount of all Loans outstanding on such
date, together with accrued interest thereon, all fees payable pursuant to
SECTION 4.2 accrued from the date last paid through the effective date of
termination, any amounts payable to the Agent or any Lender pursuant to the
other provisions of this Agreement, including, without limitation, SECTIONS
12.2, 15.11 and 15.12, any and all other Secured Obligations then outstanding,
and an amount equal to the Standby Letter of Credit Reserve to be held by the
Agent as cash collateral security for the payment of and to be applied to the
payment of any amounts which may thereafter become due with respect to the
Standby Letter of Credit, and provide the Agent and the Lenders with an
indemnification agreement in form and substance satisfactory to the Agent and
the Lenders with respect to returned and dishonored items and such other matters
as the Agent and the Lenders shall require. Upon 60 days prior written notice to
the Agent, the Borrower may terminate this Agreement prior to the Termination
Date in effect at such time, upon payment of an early termination fee of (a)
$150,000 if such termination occurs on or prior to the first anniversary of the
Agreement Date, (b) $100,000 if such termination occurs after the first
anniversary of the Agreement Date but on or prior to the second anniversary of
the Agreement Date, and (c) $50,000 if such termination occurs after the second
anniversary of the Agreement Date but on or prior to the third anniversary of
the Agreement Date; provided however, such early termination fee shall only be
payable if the Loans are repaid from proceeds borrowed from another financial
institution, excluding proceeds from debt or equity placement.
Section 4.6 INCREASED COSTS AND REDUCED RETURNS. The Borrower agrees
that if any law now or hereafter in effect and whether or not presently
applicable to the Agent or any Lender or any request, guideline or directive of
any Governmental Authority (whether or not
35
having the force of law and whether or not failure to comply therewith would be
unlawful) or the interpretation or administration thereof by any Governmental
Authority, shall either (a)(i) impose, affect, modify or deem applicable any
reserve, special deposit, capital maintenance or similar requirement against any
Loan, (ii) impose on the Agent or any Lender any other condition regarding any
Loan, this Agreement, any Note or the facilities provided hereunder, or (iii)
result in any requirement regarding capital adequacy (including any risk-based
capital guidelines) affecting the Agent or any Lender being imposed or modified
or deemed applicable to the Agent or any Lender or (b) subject the Agent or any
Lender to any taxes on the recording, registration, notarization or other
formalization of the Loans or any Note, and the result of any event referred to
in CLAUSE (A) or (B) above shall be to increase the cost to the Agent or any
Lender of making, funding or maintaining any Loan or to reduce the amount of any
sum receivable by the Agent or any Lender or the Agent's or any Lender's rate of
return on capital with respect to any Loan to a level below that which the Agent
or any Lender could have achieved but for such imposition, modification or
deemed applicability (taking into consideration the Agent's or such Lender's
policies with respect to capital adequacy) by an amount deemed by the Agent or
such Lender (in the exercise of its discretion) to be material, then, upon
demand by the Agent or such Lender, the Borrower shall immediately pay to the
Agent or such Lender additional amounts which shall be sufficient to compensate
the Agent or any such Lender for such increased cost, tax or reduced rate of
return. A certificate of the Agent or any such Lender to the Borrower claiming
compensation under this SECTION 4.6 shall be final, conclusive and binding on
all parties for all purposes in the absence of manifest error. Such certificate
shall set forth the nature of the occurrence giving rise to such compensation,
the additional amount or amounts to be paid to it hereunder and the method by
which such amounts were determined. In determining such amount, the Agent or
such Lender may use any reasonable averaging and attribution methods.
Section 4.7. MAKING OF LOANS.
(a) NATURE OF OBLIGATIONS OF LENDERS TO MAKE LOANS. The
obligations of the Lenders under this Agreement to make the Loans are
several and are not joint or joint and several.
(b) ASSUMPTION BY AGENT. Subject to the provisions of SECTION
4.8 and notwithstanding the occurrence or continuance of a Default or
Event of Default or other failure of any condition to the making of
Revolving Credit Loans hereunder subsequent to the Revolving Credit
Loans to be made on the Effective Date, unless the Agent shall have
received notice from the Required Lenders in accordance with the
provisions of SECTION 4.7(C) prior to a proposed borrowing date that
the Lenders will not make available to the Agent their ratable portion
of the amount to be borrowed on such date, the Agent may assume that
the Lenders will make such portion available to the Agent in accordance
with SECTION 2.2(A), and the Agent may, in reliance upon such
assumption, make available to the Borrower on such date a corresponding
amount. If and to the extent any Lender shall not make such ratable
portion available to the Agent, such Lender and the Borrower severally
agree to repay to the Agent forthwith on demand such
36
corresponding amount, together with interest thereon for each day from
the date such amount is made available to the Borrower until the date
such amount is repaid to the Agent at the Effective Interest Rate or,
if lower, subject to SECTION 4.1(D)(IV), the Maximum Rate. If such
Lender shall repay to the Agent such corresponding amount, the amount
so repaid shall constitute such Lender's Commitment Percentage of the
Loan made on such borrowing date for purposes of this Agreement. The
failure of any Lender to make its Commitment Percentage of any Loan
available shall not (without regard to whether the Borrower shall have
returned the amount thereof to the Agent in accordance with this
SECTION 4.7) relieve it or any other Lender of its obligation, if any,
hereunder to make its Commitment Percentage of such Loan available on
such borrowing date, but no Lender shall be responsible for the failure
of any other Lender to make its Commitment Percentage of such Loan
available on the borrowing date.
(c) DELEGATION OF AUTHORITY TO AGENT. Without limiting the
generality of SECTION 14.1, each Lender expressly authorizes the Agent
to determine on behalf of such Lender (i) any reduction or increase of
advance rates applicable to the Borrowing Base, so long as such advance
rates do not at any time exceed the rates set forth in the Borrowing
Base definition, (ii) the creation or elimination of any reserves
(other than the Standby Letter of Credit Reserve) against the Revolving
Credit Facility and the Borrowing Base and (iii) whether or not
Inventory or Receivables shall be deemed to constitute Eligible
Inventory or Eligible Receivables. Such authorization may be withdrawn
by the Required Lenders by giving the Agent written notice of such
withdrawal signed by the Required Lenders; PROVIDED, HOWEVER, that
unless otherwise agreed by the Agent such withdrawal of authorization
shall not become effective until the thirtieth Business Day after
receipt of such notice by the Agent. Thereafter, the Required Lenders
shall jointly instruct the Agent in writing regarding such matters with
such frequency as the Required Lenders shall jointly determine. Unless
and until the Agent shall have received written notice from the
Required Lenders as to the existence of a Default, an Event of Default
or some other circumstance which would relieve the Lenders of their
respective obligations to make Loans hereunder, which notice shall be
in writing and shall be signed by the Required Lenders and shall
expressly state that the Lenders do not intend to make available to the
Agent their ratable share of Loans made after the effective date of
such notice, the Agent shall be entitled to continue to make the
assumptions described in SECTION 4.7(B). The notice described in the
preceding sentence shall become effective on the third Business Day
after receipt of such notice by the Agent unless otherwise agreed by
the Agent. The Agent shall not be required to make any Loan as to which
it shall have received notice by a Lender of such Lender's intention
not to make its ratable portion of such Loan available to the Agent.
Any withdrawal of authorization under this SECTION 4.7(C) shall not
affect the validity of any Loans made prior to the effectiveness
thereof.
(d) OVERADVANCES. Notwithstanding anything to the contrary
contained elsewhere in this SECTION 4.7 or this Agreement or the other
Loan Documents, and whether or not a Default or Event of Default exists
at the time, unless otherwise notified
37
by the Required Lenders in accordance with SECTION 4.7(C), the Agent
may in its discretion require all Lenders to honor requests or deemed
requests by the Borrower for Revolving Credit Loans at a time that an
Overadvance exists or which would result in an Overadvance and each
Lender shall be obligated to continue to make its Proportionate Share
of Revolving Credit Loans, up to a maximum amount outstanding equal to
its Commitment to make Revolving Credit Loans, so long as such
Overadvance is not known by the Agent to exceed $2,000,000 and so long
as such Overadvance is not outstanding for more than 30 consecutive
days. "Overadvance" shall mean, as of any date of determination, the
amount, if any, by which the outstanding principal balance of Revolving
Credit Loans exceeds the sum determined from CLAUSE (B) of the
definition of the Borrowing Base.
(e) REPLACEMENT OF CERTAIN LENDERS. If a Lender (the "Affected
Lender") shall have failed to fund its Proportionate Share of any Loan
requested (or deemed requested) by the Borrower which such Lender is
obligated to fund under the terms of this Agreement and which failure
has not been cured, then, in any such case and in addition to any other
rights and remedies that the Agent, any other Lender or the Borrower
may have against such Affected Lender, the Agent may make written
demand on such Affected Lender (with a copy to the Borrower) for the
Affected Lender to assign, and such Affected Lender shall assign
pursuant to one or more duly executed Assignment and Acceptances within
5 Business Days after the date of such demand, to one or more Lenders
willing to accept such assignment or assignments, or to one or more
Eligible Assignees designated by the Agent, all of such Affected
Lender's rights and obligations under this Agreement (including its
Commitments and all Loans owing to it) in accordance with ARTICLE 13.
The Agent is hereby irrevocably authorized to execute one or more
Assignment and Acceptances as attorney-in-fact for any Affected Lender
which fails or refuses to execute and deliver the same within 5
Business Days after the date of such demand. The Affected Lender shall
be entitled to receive, in cash and concurrently with the execution and
delivery of each such Assignment and Acceptance, all amounts owed to
the Affected Lender hereunder or under any other Loan Document,
including the aggregate outstanding principal amount of the Loans owed
to such Lender, together with accrued interest thereon through the date
of such assignment. Upon the replacement of any Affected Lender
pursuant to this SECTION 4.7(E), such Affected Lender shall cease to
have any participation in, entitlement to, or other right to share in
the Security Interest or any other Lien of the Agent in any Collateral
and such Affected Lender shall have no further liability to the Agent,
any Lender or any other Person under any of the Loan Documents (except
as provided in SECTION 14.7 and elsewhere in this Agreement as to
events or transactions which occur prior to the replacement of such
Affected Lender).
Section 4.8. SETTLEMENT AMONG LENDERS.
(a) REVOLVING CREDIT LOANS. It is agreed that each Lender's
Net Outstandings are intended by the Lenders to be equal at all times
to such Lender's Commitment Percentage of the aggregate principal
amount of all Revolving Credit Loans outstanding.
38
Notwithstanding such agreement, the several and not joint obligation of
each Lender to fund Revolving Credit Loans made in accordance with the
terms of this Agreement ratably in accordance with such Lender's
Commitment Percentage and each Lender's right to receive its ratable
share of principal payments on Revolving Credit Loans in accordance
with its Commitment Percentage, the Lenders agree that in order to
facilitate the administration of this Agreement and the Loan Documents
that settlement among them may take place on a periodic basis in
accordance with the provisions of this SECTION 4.8.
(b) SETTLEMENT PROCEDURES AS TO REVOLVING CREDIT LOANS. To the
extent and in the manner hereinafter provided in this SECTION 4.8,
settlement among the Lenders as to Revolving Credit Loans may occur
periodically on Settlement Dates determined from time to time by the
Agent, which may occur before or after the occurrence or during the
continuance of a Default or Event of Default and whether or not all of
the conditions set forth in SECTION 5.2 have been met. On each
Settlement Date payments shall be made by or to NationsBank and the
other Lenders in the manner provided in this SECTION 4.8 in accordance
with the Settlement Report delivered by the Agent pursuant to the
provisions of this SECTION 4.8 in respect of such Settlement Date so
that as of each Settlement Date, and after giving effect to the
transactions to take place on such Settlement Date, each Lender's Net
Outstandings shall equal such Lender's Commitment Percentage of the
Revolving Credit Loans outstanding.
(i) SELECTION OF SETTLEMENT DATES. If the Agent
elects, in its discretion, but subject to the consent of
NationsBank, to settle accounts among the Lenders with respect
to principal amounts of Revolving Credit Loans less frequently
than each Business Day, then the Agent shall designate
periodic Settlement Dates which may occur on any Business Day
after the Effective Date; PROVIDED, HOWEVER, that the Agent
shall designate as a Settlement Date any Business Day which is
an Interest Payment Date; and PROVIDED FURTHER, that a
Settlement Date shall occur at least once during each
seven-day period. The Agent shall designate a Settlement Date
by delivering to each Lender a Settlement Report not later
than 12:00 noon (Atlanta time) on the proposed Settlement
Date, which Settlement Report will be in the form of EXHIBIT D
hereto and shall be with respect to the period beginning on
the next preceding Settlement Date and ending on such
designated Settlement Date.
(ii) NON-RATABLE LOANS AND PAYMENTS. Between
Settlement Dates, the Agent shall request and NationsBank may
(but shall not be obligated to) advance to the Borrower out of
NationsBank's own funds, the entire principal amount of any
Revolving Credit Loan requested or deemed requested pursuant
to SECTION 2.2(A) (any such Revolving Credit Loan being
referred to as a "Non-Ratable Loan"). The making of each
Non-Ratable Loan by NationsBank shall be deemed to be a
purchase by NationsBank of a 100% participation in each other
Lender's Commitment Percentage of the amount of such
Non-Ratable Loan. All payments
39
of principal, interest and any other amount with respect to
such Non-Ratable Loan shall be payable to and received by the
Agent for the account of NationsBank. Upon demand by
NationsBank, with notice thereof to the Agent, each other
Lender shall pay to NationsBank, as the repurchase of such
participation, an amount equal to 100% of such Lender's
Commitment Percentage of the principal amount of such
Non-Ratable Loan. Any payments received by the Agent between
Settlement Dates which in accordance with the terms of this
Agreement are to be applied to the reduction of the
outstanding principal balance of Revolving Credit Loans, shall
be paid over to and retained by NationsBank for such
application, and such payment to and retention by NationsBank
shall be deemed, to the extent of each other Lender's
Commitment Percentage of such payment, to be a purchase by
each such other Lender of a participation in the Revolving
Credit Loans (including the repurchase of participations in
Non-Ratable Loans) held by NationsBank. Upon demand by another
Lender, with notice thereof to the Agent, NationsBank shall
pay to the Agent, for the account of such other Lender, as a
repurchase of such participation, an amount equal to such
other Lender's Commitment Percentage of any such amounts
(after application thereof to the repurchase of any
participations of NationsBank in such other Lender's
Commitment Percentage of any Non-Ratable Loans) paid only to
NationsBank by the Agent.
(iii) NET DECREASE IN OUTSTANDINGS. If on any
Settlement Date the increase, if any, in the dollar amount of
any Lender's Net Outstandings which is required to comply with
the first sentence of SECTION 4.8(A) is less than such
Lender's Commitment Percentage of amounts received by the
Agent but paid only to NationsBank since the next preceding
Settlement Date, such Lender and the Agent, in their
respective records, shall apply such Lender's Commitment
Percentage of such amounts to the increase in such Lender's
Net Outstandings, and NationsBank shall pay to the Agent, for
the account of such Lender, the excess allocable to such
Lender.
(iv) NET INCREASE IN OUTSTANDINGS. If on any
Settlement Date the increase, if any, in the dollar amount of
any Lender's Net Outstandings which is required to comply with
the first sentence of SECTION 4.8(A) exceeds such Lender's
Commitment Percentage of amounts received by the Agent but
paid only to NationsBank since the next preceding Settlement
Date, such Lender and the Agent, in their respective records,
shall apply such Lender's Commitment Percentage of such
amounts to the increase in such Lender's Net Outstandings, and
such Lender shall pay to the Agent, for the account of
NationsBank, any excess.
(v) NO CHANGE IN OUTSTANDINGS. If a Settlement Report
indicates that no Revolving Credit Loans have been made during
the period since the next preceding Settlement Date, then such
Lender's Commitment Percentage of any
40
amounts received by the Agent but paid only to NationsBank
shall be paid by NationsBank to the Agent, for the account of
such Lender. If a Settlement Report indicates that the
increase in the dollar amount of a Lender's Net Outstandings
which is required to comply with the first sentence of SECTION
4.8(A) is exactly equal to such Lender's Commitment Percentage
of amounts received by the Agent but paid only to NationsBank
since the next preceding Settlement Date, such Lender and the
Agent, in their respective records, shall apply such Lender's
Commitment Percentage of such amounts to the increase in such
Lender's Net Outstandings.
(vi) RETURN OF PAYMENTS. If any amounts received by
NationsBank in respect of the Secured Obligations are later
required to be returned or repaid by NationsBank to the
Borrower or their respective representatives or successors in
interest, whether by court order, settlement or otherwise, in
excess of the NationsBank's Commitment Percentage of all such
amounts required to be returned by all Lenders, each other
Lender shall, upon demand by NationsBank with notice to the
Agent, pay to the Agent for the account of NationsBank, an
amount equal to the excess of such Lender's Commitment
Percentage of all such amounts required to be returned by all
Lenders over the amount, if any, returned directly by such
Lender.
(vii) PAYMENTS TO AGENT, LENDERS.
(A) Payment by any Lender to the Agent shall
be made not later than 1:00 p.m. (Atlanta time) on
the Business Day such payment is due, PROVIDED that
if such payment is due on demand by another Lender,
such demand is made on the paying Lender not later
than 10:00 a.m. (Atlanta time) on such Business Day.
Payment by the Agent to any Lender shall be made by
wire transfer, promptly following the Agent's receipt
of funds for the account of such Lender and in the
type of funds received by the Agent, PROVIDED that if
the Agent receives such funds at or prior to 1:00
p.m. (Atlanta time), the Agent shall pay such funds
to such Lender by 2:00 p.m. (Atlanta time) on such
Business Day. If a demand for payment is made after
the applicable time set forth above, the payment due
shall be made by 2:00 p.m. (Atlanta time) on the
first Business Day following the date of such demand.
(B) If a Lender shall, at any time, fail to
make any payment to the Agent required hereunder, the
Agent may, but shall not be required to, retain
payments that would otherwise be made to such Lender
hereunder and apply such payments to such Lender's
defaulted obligations hereunder, at such time, and in
such order, as the Agent may elect in its discretion.
41
(C) With respect to the payment of any funds
under this SECTION 4.8(B), whether from the Agent to
a Lender or from a Lender to the Agent, the party
failing to make full payment when due pursuant to the
terms hereof shall, upon demand by the other party,
pay such amount together with interest on such amount
at the Federal Funds Effective Rate.
(c) SETTLEMENT OF OTHER SECURED OBLIGATIONS. All other amounts
received by the Agent on account of, or applied by the Agent to the
payment of, any Secured Obligation owed to the Lenders (including,
without limitation, fees payable to the Lenders pursuant to SECTION 4.2
and proceeds from the sale of, or other realization upon, all or any
part of the Collateral following an Event of Default) that are received
by the Agent on or prior to 1:00 p.m. (Atlanta time) on a Business Day
will be paid by the Agent to each Lender on the same Business Day, and
any such amounts that are received by the Agent after 1:00 p.m.
(Atlanta time) will be paid by the Agent to each Lender on the
following Business Day. Unless otherwise stated herein, the Agent shall
distribute fees payable to the Lenders pursuant to SECTION 4.2 ratably
to the Lenders based on each Lender's Commitment Percentage and shall
distribute proceeds from the sale of, or other realization upon, all or
any part of the Collateral following an Event of Default ratably to the
Lenders based on the amount of the Secured Obligations then owing to
each Lender.
(d) ALLOCATION OF PAYMENTS FROM BORROWER. All monies to be
applied to the Secured Obligations, whether such monies represent
voluntary payments by the Borrower or are received pursuant to demand
for payment or realized from any disposition of Collateral, shall be
allocated among the Agent and such of the Lenders and other holders of
the Secured Obligations as are entitled thereto (and, with respect to
monies allocated to the Lenders, on a ratable basis unless otherwise
provided in this SECTION 4.8(D)): (i) first, to NationsBank to pay
principal and accrued interest on any portion of any Non-Ratable Loan
which NationsBank may have advanced on behalf of any Lender (other than
itself) and for which NationsBank has not been reimbursed by such
Lender or the Borrower; (ii) second, to the Agent to pay the amount of
expenses that have not been reimbursed to the Agent by the Borrower or
the Lenders, together with interest accrued thereon; (iii) third, to
the Agent to pay any indemnified amount that has not been paid to the
Agent by the Borrower or the Lenders, together with interest accrued
thereon; (iv) fourth, to the Agent to pay any fees due and payable to
the Agent under this Agreement; (v) fifth, to the Lenders for any
indemnified amount that they have paid to the Agent and for any
expenses that they have reimbursed to the Agent; (vi) sixth, to the
Lenders in payment of the unpaid principal and accrued interest in
respect of the Loans and any other Secured Obligations arising under
this Agreement (or the other Loan Documents) then outstanding and held
by any Lender to be shared among Lenders on a ratable basis, or on such
other basis as may be agreed upon in writing by all of the Lenders
(which agreement or agreements may be entered into without notice to or
the consent or approval of the Borrower), (vii) seventh, to the Lenders
and their Affiliates in payment of the unpaid amount of all Secured
Obligations arising under or in respect of the
42
Banking Relationship to be shared on a pro rata basis, and (viii)
eighth, to the holders of the other Secured Obligations who are not
Lenders on a pro rata basis. The allocations set forth in this SECTION
4.8(D) are solely to determine the rights and priorities of the Agent
and the Lenders as among themselves and may be changed by the Agent and
the Lenders without notice or the consent of approval of the Borrower
or any other Person. Whenever allocation is made pursuant to this
SECTION 4.8(D) to the holder of Secured Obligations in which another
Lender acquires a participation, the monies received by such holder
shall be shared as between such holder and such participants on a
Ratable basis.
Section 4.9 PAYMENTS NOT AT END OF INTEREST PERIOD; FAILURE TO BORROW.
If for any reason any payment of principal with respect to any Eurodollar Rate
Advance is made on any day prior to the last day of the Interest Period
applicable to such Eurodollar Rate Advance or, after having given a notice of
borrowing with respect to any Eurodollar Rate Advance, such Advance is not made
as a Eurodollar Rate Advance due to the Borrower's failure to borrow or to
fulfill the applicable conditions set forth in ARTICLE 5, the Borrower shall pay
to each Lender upon the request of the Agent or such Lender, in addition to any
amounts that may be due under SECTION 4.5, an amount (if a positive number)
computed pursuant to the following formula:
L = (R - T) X P X D
-----------------------
360
L = amount payable
R = interest rate applicable to the Eurodollar
Rate Advance not borrowed, continued or
converted or prepaid
T = effective interest rate per annum at which
any readily marketable bonds or other
obligations of the United States, selected
at the Agent's sole discretion, maturing on
or near the last day of the then applicable
or requested Interest Period for such
Advance and in approximately the same amount
as such Advance, can be purchased by such
Lender on the day of such payment of
principal or failure to borrow, continue or
convert
P = the amount of principal paid or the amount
of the Advance requested or to have been
continued or converted
D = the number of days remaining in the Interest
Period as of the date of such payment or the
number of days in the requested Interest
Period
The Borrower shall pay such amount upon presentation by the Agent (or as to any
Lender, by such Lender) of a statement setting forth the amount and the Agent's
(or such Lender's) calculation thereof pursuant hereto, which statement shall be
deemed true and correct absent manifest error.
43
ARTICLE 5 - CONDITIONS PRECEDENT
Section 5.1 CONDITIONS PRECEDENT TO INITIAL LOAN. Notwithstanding any
other provision of this Agreement, the Lenders' obligation to make the Initial
Loan is subject to the fulfillment of each of the following conditions prior to
or contemporaneously with the making of such Loan:
(a) CLOSING DOCUMENTS. The Agent shall have received each of the
following documents, all of which shall be satisfactory in form and substance to
the Agent and its counsel and to the Lenders:
(1) this Agreement, duly executed and delivered by the
Borrower;
(2) the Notes, dated the Effective Date and duly executed and
delivered by the Borrower;
(3) certified copies of the articles of incorporation and
by-laws of the Borrower as in effect on the Effective Date;
(4) certified copies of all corporate action, including
stockholder approval, if necessary, taken by the Borrower to authorize
the execution, delivery and performance of this Agreement and the other
Loan Documents and the borrowings under this Agreement;
(5) certificates of incumbency and specimen signatures with
respect to each of the officers of the Borrower who is authorized to
execute and deliver this Agreement or any other Loan Document on behalf
of the Borrower or any document, certificate or instrument to be
delivered in connection with this Agreement or the other Loan Documents
and to request borrowings under this Agreement;
(6) a certificate evidencing the good standing of the Borrower
in the jurisdiction of its incorporation and in each other jurisdiction
in which it is qualified as a foreign corporation to transact business;
(7) the Financing Statements duly executed and delivered by
the Borrower, and evidence satisfactory to the Agent that the Financing
Statements have been filed in each jurisdiction where such filing may
be necessary or appropriate to perfect the Security Interest;
(8) a Schedule of Receivables and a Schedule of Inventory,
both prepared as of a recent date;
(9) such Agency Account Agreements as shall be required by the
Agent and the Lenders duly executed by the applicable Clearing Bank and
the Borrower;
44
(10) a Borrowing Base Certificate prepared as of the Effective
Date duly executed and delivered by the chief financial officer of the
Borrower;
(11) a letter from the Borrower to the Agent requesting the
Initial Loan and specifying the method of disbursement;
(12) copies of all the financial statements referred to in
SECTION 6.1(M) and meeting the requirements thereof;
(13) certificates or binders of insurance relating to the
insurance policies required under SECTION 8.8;
(14) forecasted consolidated financial statements consisting
of balance sheets, cash flow statements and income statements of the
Borrower, giving effect to the transactions contemplated by this
Agreement and reflecting projected borrowings hereunder and setting
forth the assumptions on which such forecasted financial statements
were prepared, covering the one-year period commencing on February 1,
1998, and prepared on a quarterly basis; and such other evidence as the
Lenders shall require supporting the representation and warranty of the
Borrower set forth in SECTION 6.1(R);
(15) a certificate of the President or Chief Financial Officer
of the Borrower stating that, to the best of his knowledge and based on
an examination sufficient to enable him to make an informed statement,
(a) all of the representations and warranties made or deemed to be made
under this Agreement are true and correct in all material respects as
of the Effective Date, both with and without giving effect to the Loans
to be made at such time and the application of the proceeds thereof,
and (b) no Default or Event of Default exists;
(16) a signed opinion of counsel for the Borrower, and such
local counsel as the Agent shall deem necessary or desirable, opining
as to such matters in connection with this Agreement as the Agent or
its counsel may reasonably request;
(17) intercreditor agreements with Hamilton Bank and SunTrust
Bank, Miami, N.A.;
(18) the Trademark Assignment, duly executed by the Borrower
and recorded in the United States Patent & Trademark Office;
(19) the Assignment of Factoring Credit Balances;
(20) the Assignment of Original Loan Documents; and
(21) copies of each of the other Loan Documents duly executed
by the parties thereto with evidence satisfactory to the Agent and its
counsel of the due authorization,
45
binding effect and enforceability of each such Loan Document on each
such party and such other documents and instruments as the Agent may
reasonably request.
(b) AVAILABILITY. The Agent shall be provided with evidence
satisfactory to it that, as of the Effective Date, after giving effect to the
Initial Loan, Availability will be not less than $3,000,000.
(c) NO INJUNCTIONS, ETC. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or proposed
before any court, governmental agency or legislative body to enjoin, restrain or
prohibit or to obtain substantial damages in respect of or which is related to
or arises out of this Agreement or the consummation of the transactions
contemplated hereby or which, in the Lenders' sole discretion, would make it
inadvisable to consummate the transactions contemplated by this Agreement.
(d) MATERIAL ADVERSE CHANGE. As of the Effective Date, there shall not
have occurred any change which, in the Lenders' sole discretion, has had or may
have a Materially Adverse Effect as compared to the condition of the Borrower
presented by the most recent unaudited financial statements of the Borrower
described in SECTION 6.1(M).
(e) SOLVENCY. The Lenders shall have received evidence satisfactory to
them that, after giving effect to the Initial Loan (i) the Borrower has assets
(excluding goodwill and other intangible assets not capable of valuation) having
value, both at fair value and at present fair saleable value, greater than the
amount of its liabilities, and (ii) the Borrower's assets are sufficient in
value to provide the Borrower with sufficient working capital to enable it
profitably to operate its business and to meet its obligations as they become
due, and (iii) the Borrower has adequate capital to conduct the business in
which it is and proposes to be engaged.
(f) RELEASE OF SECURITY INTERESTS. The Lenders shall have received
evidence satisfactory to them of the release and termination of all Liens on the
Collateral other than Permitted Liens.
Section 5.2 ALL LOANS. At the time of the making of each Loan,
including the Initial Loan:
(a) all of the representations and warranties made or deemed to be made
under this Agreement shall be true and correct at such time both with and
without giving effect to the Loans to be made at such time and the application
of the proceeds thereof, except that representations and warranties which, by
their terms, are applicable only to the Effective Date shall be required to be
true and correct only as of the Effective Date,
(b) the corporate actions of the Borrower referred to in SECTION
5.1(A)(4) shall remain in full force and effect and the incumbency of officers
shall be as stated in the certificates of incumbency delivered pursuant to
SECTION 5.1(A)(5) or as subsequently modified and reflected in a certificate of
incumbency delivered to the Agent, and
46
(c) the Agent and the Lenders may, without waiving either condition,
consider the conditions specified in SECTIONS 5.2(A) and (B) fulfilled and a
representation by the Borrower to such effect made if no written notice to the
contrary is received by the Agent from the Borrower prior to the making of the
Loans then to be made.
ARTICLE 6 - REPRESENTATIONS AND WARRANTIES OF THE BORROWER
Section 6.1 REPRESENTATIONS AND WARRANTIES. The Borrower represents and
warrants to the Agent and the Lenders as follows:
(a) ORGANIZATION; POWER; QUALIFICATION. The Borrower is a corporation,
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to own
its properties and to carry on its business as now being and hereafter proposed
to be conducted and is duly qualified and authorized to do business in each
jurisdiction in which failure to be so qualified and authorized would have a
Materially Adverse Effect. The jurisdictions in which the Borrower is qualified
to do business as a foreign corporation are listed on SCHEDULE 6.1(A).
(b) SUBSIDIARIES AND OWNERSHIP OF THE BORROWER. The Subsidiaries of the
Borrower are listed on SCHEDULE 6.1(B). The outstanding stock of the Borrower
has been duly and validly issued and is fully paid and nonassessable by the
Borrower and the number and owners of such shares of capital stock of the
Borrower are set forth on SCHEDULE 6.1(B).
(c) AUTHORIZATION OF AGREEMENT, NOTE, LOAN DOCUMENTS AND BORROWING. The
Borrower has the right and power and has taken all necessary action to authorize
it to execute, deliver and perform this Agreement and each of the other Loan
Documents to which it is a party in accordance with their respective terms and
to borrow hereunder. This Agreement and each of the other Loan Documents to
which it is a party have been duly executed and delivered by the duly authorized
officers of the Borrower and each is, or when executed and delivered in
accordance with this Agreement will be, a legal, valid and binding obligation of
the Borrower, enforceable in accordance with its terms, subject to general
principles of equity and insolvency laws applicable to creditors generally.
(d) COMPLIANCE OF AGREEMENT, NOTE, LOAN DOCUMENTS AND BORROWING WITH
LAWS, ETC. The execution, delivery and performance of this Agreement and each of
the other Loan Documents to which the Borrower is a party in accordance with
their respective terms and the borrowings hereunder do not and will not, by the
passage of time, the giving of notice or otherwise,
(i) require any Governmental Approval or violate any
applicable law relating to the Borrower or any of its Affiliates,
(ii) conflict with, result in a breach of or constitute a
default under (A) the articles or certificate of incorporation or
by-laws of the Borrower, (B) any indenture,
47
agreement or other instrument to which the Borrower is a party or by
which any of its property may be bound which would have a Materially
Adverse Effect, or (C) any Governmental Approval relating to the
Borrower, or,
(iii) result in or require the creation or imposition of any
Lien upon or with respect to any property now owned or hereafter
acquired by the Borrower other than the Security Interest.
(e) BUSINESS. The Borrower is engaged principally in the business
described on SCHEDULE 6.1(E).
(f) COMPLIANCE WITH LAW; GOVERNMENTAL APPROVALS. Except as set forth in
SCHEDULE 6.1(F), the Borrower (i) has all material Governmental Approvals,
including permits relating to federal, state and local Environmental Laws,
ordinances and regulations required by any applicable law for it to conduct its
business, each of which is in full force and effect, is final and not subject to
review on appeal and is not the subject of any pending or, to the knowledge of
the Borrower, threatened attack by direct or collateral proceeding, and (ii) is
in compliance with each material Governmental Approval applicable to it and in
compliance with all other applicable laws relating to it, including, without
being limited to, all Environmental Laws and all occupational health and safety
laws applicable to the Borrower or its properties, except for instances of
noncompliance which would not, singly or in the aggregate, cause a Default or
Event of Default or have a Materially Adverse Effect and in respect of which
adequate reserves have been established on the books of the Borrower.
(g) TITLES TO PROPERTIES. Except as set forth in SCHEDULE 6.1(G), the
Borrower has good and marketable title to or a valid leasehold interest in all
its Real Estate and valid and legal title to or a valid leasehold interest in
all personal property and assets used in or necessary to the conduct of the
Borrower's business, including, but not limited to, those reflected on the
balance sheet of the Borrower delivered pursuant to SECTION 6.1(M)(II).
(h) LIENS. Except as set forth in SCHEDULE 6.1(H), none of the
properties and assets of the Borrower is subject to any Lien, except Permitted
Liens. Other than the Financing Statements, no financing statement under the
Uniform Commercial Code of any state which names the Borrower as debtor and
which has not been terminated has been filed in any state or other jurisdiction,
and the Borrower has not signed any such financing statement or any security
agreement authorizing any secured party thereunder to file any such financing
statement, except to perfect those Liens listed in SCHEDULE 6.1(H) and Permitted
Liens.
(i) INDEBTEDNESS AND GUARANTIES. Set forth on SCHEDULE 6.1(I) is a
complete and correct listing of all of the Borrower's (i) Indebtedness and (ii)
Guaranties. The Borrower is not in default of any material provision of any
agreement evidencing or relating to such any such Indebtedness or Guaranty.
(j) LITIGATION. Except as set forth on SCHEDULE 6.1(J), there are no
actions, suits or
48
proceedings pending (nor, to the knowledge of the Borrower, are there any
actions, suits or proceedings threatened, nor is there any basis therefor)
against or in any other way relating adversely to or affecting the Borrower or
any of its property in any court or before any arbitrator of any kind or before
or by any governmental body that would have a Materially Adverse Effect.
(k) TAX RETURNS AND PAYMENTS. Except as set forth on SCHEDULE 6.1(K),
all United States federal, state and local and foreign national, provincial and
local and all other tax returns of the Borrower required by applicable law to be
filed have been duly filed, and all United States federal, state and local and
foreign national, provincial and local and all other taxes, assessments and
other governmental charges or levies upon the Borrower and its property, income,
profits and assets which are due and payable have been paid, except any such
nonpayment which is at the time permitted under SECTION 9.4. The charges,
accruals and reserves on the books of the Borrower in respect of United States
federal, state and local taxes and foreign national, provincial and local taxes
for all fiscal years and portions thereof since the organization of the Borrower
are in the judgment of the Borrower adequate, and the Borrower knows of no
reason to anticipate any additional assessments for any of such years which,
singly or in the aggregate, might have a Materially Adverse Effect.
(l) BURDENSOME PROVISIONS. The Borrower is not a party to any
indenture, agreement, lease or other instrument, or subject to any charter or
corporate restriction, Governmental Approval or applicable law, compliance with
the terms of which might have a Materially Adverse Effect.
(m) FINANCIAL STATEMENTS. The Borrower has furnished to the Lenders a
copy of (i) its audited balance sheet as at January 31, 1997, and the related
statements of income, cash flow and retained earnings for the twelve-month
period then ended and (ii) its unaudited balance sheet as at October 31, 1997,
and the related statement of income for the 9-month period then ended. Such
financial statements are complete and correct and present fairly and in all
material respects in accordance with GAAP, the financial position of the
Borrower as at the dates thereof and the results of operations of the Borrower
for the periods then ended. Except as disclosed or reflected in such financial
statements, the Borrower had no material liabilities, contingent or otherwise,
and there were no material unrealized or anticipated losses of the Borrower.
(n) ADVERSE CHANGE. Since the date of the financial statements
described in CLAUSE (I) of SECTION 6.1(M), (i) no change in the business,
assets, liabilities, condition (financial or otherwise), results of operations
or business prospects of the Borrower has occurred that has had, or may have, a
Materially Adverse Effect, and (ii) no event has occurred or failed to occur
which has had, or may have, a Materially Adverse Effect.
(o) ERISA. Neither the Borrower nor any Related Company maintains or
contributes to any Benefit Plan other than those listed on SCHEDULE 6.1(O). Each
Benefit Plan is in substantial compliance with ERISA, and neither the Borrower
nor any Related Company has received any notice asserting that a Benefit Plan is
not in compliance with ERISA. No material
49
liability to the PBGC or to a Multiemployer Plan has been, or is expected by the
Borrower to be, incurred by the Borrower or any Related Company.
(p) ABSENCE OF DEFAULTS. The Borrower is not in default under its
articles or certificate of incorporation or by-laws, and no event has occurred
which has not been remedied, cured or waived (i) that constitutes a Default or
an Event of Default or (ii) that constitutes or that, with the passage of time
or giving of notice, or both, would constitute a default or event of default by
the Borrower under any material agreement or judgment, decree or order to which
the Borrower is a party or by which the Borrower or any of its properties may be
bound or which would require the Borrower to make any payment thereunder prior
to the scheduled maturity date therefor.
(q) ACCURACY AND COMPLETENESS OF INFORMATION. All written information,
reports and other papers and data produced by or on behalf of the Borrower and
furnished to the Agent or any Lender were, at the time the same were so
furnished, complete and correct in all material respects to the extent necessary
to give the recipient a true and accurate knowledge of the subject matter, no
fact is known to the Borrower which has had, or may in the future have (so far
as the Borrower can foresee), a Materially Adverse Effect which has not been set
forth in the financial statements or disclosure delivered prior to the Effective
Date, in each case referred to in SECTION 6.1(M), or in such written
information, reports or other papers or data or otherwise disclosed in writing
to the Agent and the Lenders prior to the Effective Date. No document furnished
or written statement made to the Agent or any Lender by the Borrower in
connection with the negotiation, preparation or execution of this Agreement or
any of the Loan Documents contains or will contain any untrue statement of a
fact material to the creditworthiness of the Borrower or omits or will omit to
state a material fact necessary in order to make the statements contained
therein not misleading.
(r) SOLVENCY. In each case after giving effect to the Indebtedness
represented by the Loans outstanding and to be incurred and the transactions
contemplated by this Agreement, the Borrower is solvent, having assets of a fair
value which exceeds the amount required to pay its debts (including contingent,
subordinated, unmatured and unliquidated liabilities) as they become absolute
and matured, and the Borrower is able to and anticipates that it will be able to
meet its debts as they mature and has adequate capital to conduct the business
in which it is or proposes to be engaged.
(s) STATUS OF RECEIVABLES. Each Receivable reflected in the
computations included in any Borrowing Base Certificate meets the criteria
enumerated in the definition of Eligible Receivables, except as disclosed in
such Borrowing Base Certificate or as disclosed in a timely manner in a
subsequent Borrowing Base Certificate or otherwise in writing to the Agent.
(t) CHIEF EXECUTIVE OFFICE. The chief executive office of the Borrower
and the books and records relating to the Receivables are located at the address
or addresses set forth on SCHEDULE 6.1(T); except as set forth on SCHEDULE
6.1(T), the Borrower has not maintained its chief executive office or the books
and records relating to any Receivables at any other address
50
at any time during the five years immediately preceding the Agreement Date.
(u) STATUS OF INVENTORY. All Inventory included in any Borrowing Base
Certificate delivered to the Agent pursuant to SECTION 8.14(D) meets the
criteria enumerated in the definition of Eligible Inventory, except as disclosed
in such Borrowing Base Certificate or in a subsequent Borrowing Base Certificate
or as otherwise specifically disclosed in writing to the Agent. All Inventory is
in good condition, meets all standards imposed by any governmental agency or
department or division thereof having regulatory authority over such goods,
their use or sale, and is currently either usable or saleable in the normal
course of the Borrower's business, except to the extent reserved against in the
financial statements delivered pursuant to ARTICLE 10 or as disclosed on a
Schedule of Inventory delivered to the Agent pursuant to SECTION 8.14(B). Set
forth on SCHEDULE 6.1(U) is the (i) address (including street, city, county and
state) of each facility at which Inventory is located, (ii) the approximate
quantity in Dollars of the Inventory customarily located at each such facility,
and (iii) if the facility is leased or is a third party warehouse or processor
location, the name of the landlord or such third party warehouseman or
processor. All Inventory is located on the premises set forth on SCHEDULE 6.1(U)
or is in transit to one of such locations, except as otherwise disclosed in
writing to the Agent; the Borrower has not located Inventory at premises other
than those set forth on SCHEDULE 6.1(U) at any time during the four month
immediately preceding the Agreement Date.
(v) CORPORATE AND FICTITIOUS NAMES; TRADE NAMES. Except as otherwise
disclosed on SCHEDULE 6.1(V), during the one-year period preceding the Agreement
Date, the Borrower has not been known as or used any corporate or fictitious
name other than the corporate name of the Borrower on the Effective Date. All
trade names or styles under which the Borrower sells Inventory or creates
Receivables, or to which instruments in payment of Receivables are made payable,
are listed on SCHEDULE 6.1(V).
(w) FEDERAL REGULATIONS. The Borrower is not engaged, principally or as
one of its important activities, in the business of extending credit for the
purpose of "purchasing" or "carrying" any "margin stock" (as each of the quoted
terms is defined or used in Regulations G and U of the Board of Governors of the
Federal Reserve System).
(x) INVESTMENT COMPANY ACT. The Borrower is not an "investment company"
or a company "controlled" by an "investment company" (as each of the quoted
terms is defined or used in the Investment Company Act of 1940, as amended).
(y) EMPLOYEE RELATIONS. The Borrower is not, except as set forth on
SCHEDULE 6.1(Y), party to any collective bargaining agreement nor has any labor
union been recognized as the representative of the Borrower's employees; the
Borrower knows of no pending, threatened or contemplated strikes, work stoppage
or other labor disputes involving its employees or those of its Subsidiaries.
(z) INTELLECTUAL PROPERTY. The Borrower owns or possesses all
Intellectual Property required to conduct its business as now and presently
planned to be conducted without, to its
51
knowledge, conflict with the rights of others, and SCHEDULE 6.1(Z) lists all
Intellectual Property owned by the Borrower.
Section 6.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC. All
representations and warranties set forth in this ARTICLE 6 and all statements
contained in any certificate, financial statement or other instrument delivered
by or on behalf of the Borrower pursuant to or in connection with this Agreement
or any of the Loan Documents (including, but not limited to, any such
representation, warranty or statement made in or in connection with any
amendment thereto) shall constitute representations and warranties made under
this Agreement. All representations and warranties made under this Agreement
shall be made or deemed to be made at and as of the Agreement Date, at and as of
the Effective Date and at and as of the date of each Loan, except that
representations and warranties which, by their terms are applicable only to one
such date shall be deemed to be made only at and as of such date. All
representations and warranties made or deemed to be made under this Agreement
shall survive and not be waived by the execution and delivery of this Agreement,
any investigation made by or on behalf of the Agent or any Lender, or any
borrowing hereunder.
ARTICLE 7 - SECURITY INTEREST
Section 7.1 SECURITY INTEREST. (a) To secure the payment, observance
and performance of the Secured Obligations, the Borrower hereby mortgages,
pledges and assigns all of the Collateral to the Agent for itself and as agent
for the Lenders and any Affiliate of the Lenders, and grants to the Agent, for
itself and as agent for the Lenders and any Affiliate of the Lenders, a
continuing security interest in, and a continuing Lien upon, all of the
Collateral.
(b) As additional security for all of the Secured Obligations, the
Borrower grants to the Agent, for itself and as agent for the Lenders and any
Affiliate of the Lenders, a security interest in, and assigns to the Agent, for
itself and as agent for the Lenders and any Affiliate of the Lenders, all of the
Borrower's right, title and interest in and to, any deposits or other sums at
any time credited by or due from each Lender and each Affiliate of the Lenders
to the Borrower, with the same rights therein as if the deposits or other sums
were credited by or due from such Lender or Affiliate.
Section 7.2 CONTINUED PRIORITY OF SECURITY INTEREST. (a) The Security
Interest granted by the Borrower shall at all times be valid, perfected and
enforceable against the Borrower and all third parties in accordance with the
terms of this Agreement, as security for the Secured Obligations, and the
Collateral shall not at any time be subject to any Liens that are prior to, on a
parity with or junior to the Security Interest, other than Permitted Liens.
(b) The Borrower shall, at its sole cost and expense, take all action
that may be necessary or desirable, or that the Agent may request, so as at all
times to maintain the validity, perfection, enforceability and rank of the
Security Interest in the Collateral in conformity with the requirements of
SECTION 7.2(A) or to enable the Agent and the Lenders to exercise or enforce
their rights hereunder, including, but not limited to: (i) paying all taxes,
assessments and other
52
claims lawfully levied or assessed on any of the Collateral, except to the
extent that such taxes, assessments and other claims constitute Permitted Liens,
(ii) diligently seeking to obtain, after the Agreement Date, landlords',
mortgagees' or mechanics' releases, subordinations or waivers, (iii) delivering
to the Agent, endorsed or accompanied by such instruments of assignment as the
Agent may specify, and stamping or marking in such manner as the Agent may
specify, any and all chattel paper, instruments, letters and advices of guaranty
and documents evidencing or forming a part of the Collateral, and (iv) executing
and delivering financing statements, pledges, designations, hypothecations,
notices and assignments, in each case in form and substance satisfactory to the
Agent, relating to the creation, validity, perfection, maintenance or
continuation of the Security Interest under the UCC or other applicable law.
(c) The Agent is hereby authorized to file one or more financing or
continuation statements or amendments thereto without the signature of or in the
name of the Borrower for any purpose described in SECTION 7.2(B). A carbon,
photographic or other reproduction of this Agreement or of any of the Security
Documents or of any financing statement filed in connection with this Agreement
is sufficient as a financing statement, to the extent permitted by applicable
law.
(d) The Borrower shall mark its books and records as may be necessary
or appropriate to evidence, protect and perfect the Security Interest and shall
cause its financial statements to reflect the Security Interest.
ARTICLE 8 - COLLATERAL COVENANTS
Until the Revolving Credit Facility has been terminated and all the
Secured Obligations have been indefeasibly paid in full, unless the Required
Lenders shall otherwise consent in the manner provided in SECTION 15.10:
Section 8.1 COLLECTION OF RECEIVABLES. (a) The Borrower will cause all
moneys, checks, notes, drafts and other payments relating to or constituting
proceeds of Receivables, or of any other Collateral, to be forwarded to a
Lockbox for deposit in an Agency Account in accordance with the procedures set
out in the corresponding Agency Account Agreement, and in particular the
Borrower will (i) advise each Account Debtor to address all remittances with
respect to amounts payable on account of any Receivables to a specified Lockbox,
and (ii) stamp all invoices relating to any such amounts with a legend
satisfactory to the Agent indicating that payment is to be made to the Borrower
via a specified Lockbox.
(b) The Borrower and the Agent shall cause all collected balances in
each Agency Account to be transmitted daily by wire transfer or depository
transfer check or Automated Clearing House transfer in accordance with the
procedures set forth in the corresponding Agency Account Agreement to the Agent
at the Agent's Office (i) for application, on account of the Secured
Obligations, as provided in SECTION 2.3(C), 12.2 and 12.3, such credits to be
entered on the day of receipt and to be conditioned upon final payment in cash
or solvent credits of the items giving rise to them, and (ii) with respect to
any balance remaining after such application,
53
so long as no Default or Event of Default has occurred and is continuing, for
transfer to the Controlled Disbursement Account or such other account of the
Borrower as the Borrower and the Agent may agree.
(c) Any moneys, checks, notes, drafts or other payments referred to in
CLAUSE (A) of this SECTION 8.1 which are received by or on behalf of the
Borrower will be held in trust for the Agent and will be delivered to the Agent
at the Agent's Office as promptly as possible in the exact form received,
together with any necessary endorsements.
Section 8.2 VERIFICATION AND NOTIFICATION. The Agent shall have the
right (a) at any time and from time to time, in the name of the Agent or in the
name of the Borrower, to verify the validity, amount or any other matter
relating to any Receivables by mail, telephone, telegraph or otherwise, and (b)
after an Event of Default, to notify the Account Debtors or obligors under any
Receivables of the assignment of such Receivables to the Agent and to direct
such Account Debtor or obligors to make payment of all amounts due or to become
due thereunder directly to the Agent and, upon such notification and at the
expense of the Borrower, to enforce collection of any such Receivables and to
adjust, settle or compromise the amount or payment thereof, in the same manner
and to the same extent as the Borrower might have done.
Section 8.3 DISPUTES, RETURNS AND ADJUSTMENTS. (a) In the event amounts
due and owing under any Receivable in excess of $10,000 are in dispute between
the Account Debtor and the Borrower, the Borrower shall provide the Agent with
prompt written notice thereof.
(b) The Borrower shall notify the Agent promptly of all material
returns and credits in excess of $15,000 in respect of any Receivable, which
notice shall specify the Receivables affected.
(c) The Borrower may, in the ordinary course of business and prior to a
Default or an Event of Default, grant any extension of time for payment of any
Receivable or compromise, compound or settle the same for less than the full
amount thereof or release wholly or partly any Person liable for the payment
thereof or allow any credit or discount whatsoever thereon; PROVIDED that (i) no
such action results in the reduction of more than $10,000 in the amount payable
with respect to any Receivable or of more than $100,000 with respect to all
Receivables in any fiscal year of the Borrower, and (ii) the Agent is promptly
notified of the amount of such adjustments and the Receivable(s) affected
thereby.
Section 8.4 INVOICES. (a) The Borrower will not use any invoices except
invoices in the forms delivered to the Agent prior to the Agreement Date, unless
the Borrower shall have given the Agent 45 days' prior notice of the intended
use of a different form of invoice together with a copy of such different form.
(b) Upon the request of the Agent, the Borrower shall deliver to the
Agent, at the Borrower's expense, copies of customers' invoices or the
equivalent, original shipping and delivery receipts or other proof of delivery,
customers' statements, the original copy of all docu-
54
ments, including, without limitation, repayment histories and present status
reports, relating to Receivables and such other documents and information
relating to the Receivables as the Agent shall specify.
Section 8.5 DELIVERY OF INSTRUMENTS. In the event any Receivable in an
amount in excess of $50,000 is, or Receivables in excess of $150,000 in the
aggregate are, at any time evidenced by a promissory note or notes, trade
acceptance or any other instrument for the payment of money, the Borrower will
immediately thereafter deliver such instruments to the Agent, appropriately
endorsed to the Agent.
Section 8.6 SALES OF INVENTORY. All sales of Inventory will be made in
compliance with all requirements of applicable law.
Section 8.7 RETURNED GOODS. The Security Interest in the Inventory
shall, without further act, attach to the cash and non-cash proceeds resulting
from the sale or other disposition thereof and to all Inventory which is
returned to the Borrower by customers or is otherwise recovered.
Section 8.8 OWNERSHIP AND DEFENSE OF TITLE. (a) Except for Permitted
Liens, the Borrower shall at all times be the sole owner of each and every item
of Collateral and shall not create any Lien on, or sell, lease, exchange,
assign, transfer, pledge, hypothecate, grant a security interest or security
title in or otherwise dispose of, any of the Collateral or any interest therein,
except for sales of Inventory in the ordinary course of business, for cash or on
open account or on terms of payment ordinarily extended to its customers and
except as otherwise expressly contemplated herein. The inclusion of "proceeds"
of the Collateral under the Security Interest shall not be deemed a consent by
the Agent to any other sale or other disposition of any part or all of the
Collateral.
(b) The Borrower shall defend its title in and to the Collateral and
shall defend the Security Interest in the Collateral against the claims and
demands of all Persons.
(c) In addition to, and not in derogation of, the foregoing and the
requirements of any of the Security Documents, the Borrower shall (i) protect
and preserve all properties material to its business, including Intellectual
Property and maintain all tangible property in good and workable condition in
all material respects, with reasonable allowance for wear and tear, and (ii)
from time to time make or cause to be made all needed and appropriate repairs,
renewals, replacements and additions to such properties necessary for the
conduct of its business, so that the business carried on in connection therewith
may be properly and advantageously conducted at all times.
Section 8.9 INSURANCE. (a) The Borrower shall at all times maintain
insurance on the Inventory and Equipment against loss or damage by fire, theft,
burglary, pilferage, loss in transit and such other hazards as the Agent shall
reasonably specify, in amounts and under policies issued by insurers acceptable
to the Agent. All premiums on such insurance shall be paid
55
by the Borrower and copies of the policies delivered to the Agent. The Borrower
will not use or permit the Inventory or Equipment to be used in violation of any
applicable law or in any manner which might render inapplicable any insurance
coverage.
(b) All insurance policies required under SECTION 8.9(A) shall name the
Agent, for the benefit of the Lenders, as an additional named insured and shall
contain "New York standard" loss payable clauses in the form submitted to the
Borrower by the Agent, or otherwise in form and substance satisfactory to the
Agent, naming the Agent, for the benefit of the Lenders, as loss payee as its
interests may appear, and providing that (i) all proceeds thereunder shall be
payable to the Agent, for the benefit of the Lenders, (ii) no such insurance
shall be affected by any act or neglect of the insured or owner of the property
described in such policy, and (iii) such policy and loss payable clauses may not
be cancelled, amended or terminated unless at least ten days' prior written
notice is given to the Agent.
(c) Any proceeds of insurance referred to in this SECTION 8.9 which are
paid to the Agent, for the account of the Lenders, shall be, at the option of
the Required Lenders in their sole discretion, either (i) applied to rebuild,
restore or replace the damaged or destroyed property, or (ii) applied to the
payment or prepayment of the Secured Obligations.
(d) The Borrower shall at all times maintain, in addition to the
insurance required by SECTION 8.9(A) or any of the Security Documents, insurance
with responsible insurance companies against such risks and in such amounts as
is customarily maintained by similar businesses or as may be required by
applicable law, including such public liability, products liability, third party
property damage and business interruption insurance as is consistent with
reasonable business practices, and from time to time deliver to the Agent upon
its request a detailed list of the insurance then in effect, stating the names
of the insurance companies, the amounts and rates of the insurance, the dates of
the expiration thereof and the properties and risks covered thereby.
Section 8.10 LOCATION OF OFFICES AND COLLATERAL. (a) The Borrower will
not change the location of its chief executive office or the place where it
keeps its books and records relating to the Collateral or change its name,
identity or corporate structure without giving the Agent 30 days' prior written
notice thereof.
(b) All Inventory, other than Inventory in transit to any such
location, will at all times be kept by the Borrower at one of the locations set
forth in SCHEDULE 6.1(U) and shall not, without the prior written consent of the
Agent, which consent shall not be unreasonably withheld or delayed, be removed
therefrom except, so long as no Event of Default shall have occurred and be
continuing, for sales of Inventory permitted under SECTION 8.8.
(c) If any Inventory is in the possession or control of any of the
Borrower's agents or processors, the Borrower shall notify such agents or
processors of the Security Interest and, upon the occurrence of an Event of
Default, shall instruct them (and cause them to acknowledge such instruction) to
hold all such Inventory for the account of the Agent, for the benefit of the
56
Lenders, subject to the instructions of the Agent.
Section 8.11 RECORDS RELATING TO COLLATERAL. (a) The Borrower will at
all times (i) keep complete and accurate records of Inventory on a basis
consistent with past practices of the Borrower, itemizing and describing the
kind, type and quantity of Inventory and the Borrower's cost therefor and a
current price list for such Inventory, and specifying which Inventory is License
Inventory and which Inventory is Private Label Inventory, and (ii) keep complete
and accurate records of all other Collateral.
(b) The Borrower will take a physical listing of all material
Inventory, wherever located, at least annually.
Section 8.12 INSPECTION. The Agent and each Lender (by any of their
officers, employees or agents) shall have the right, to the extent that the
exercise of such right shall be within the control of the Borrower, at any time
or times to (a) visit the properties of the Borrower, inspect the Collateral and
the other assets of the Borrower and its Subsidiaries and inspect and make
extracts from the books and records of the Borrower and its Subsidiaries,
including, but not limited to, management letters prepared by independent
accountants, all during customary business hours at such premises, (b) discuss
the Borrower's business, assets, liabilities, financial condition, results of
operations and business prospects, insofar as the same are reasonably related to
the rights of the Agent and the Lenders hereunder or under any of the Loan
Documents, with the Borrower's and its Subsidiaries' (i) principal officers,
(ii) independent accountants and other professionals providing services to the
Borrower, and (iii) any other Person (except that any such discussion with any
third parties shall be conducted only in accordance with the Agent's or such
Lender's standard operating procedures relating to the maintenance of
confidentiality of confidential information of borrowers), and (c) verify the
amount, quantity, value and condition of, or any other matter relating to, any
of the Collateral and in this connection to review, audit and make extracts from
all records and files related to any of the Collateral. The Borrower will
deliver to the Agent, for the benefit of the Lenders, any instrument necessary
to authorize an independent accountant or other professional to have discussions
of the type outlined above with the Agent or any Lender or for the Agent or any
Lender to obtain records from any service bureau maintaining records on behalf
of the Borrower.
Section 8.13 MAINTENANCE OF EQUIPMENT. The Borrower shall maintain all
physical property that constitutes Equipment in good and workable condition in
all material respects, with reasonable allowance for wear and tear, and shall
exercise proper custody over all such property.
Section 8.14 INFORMATION AND REPORTS.
(a) SCHEDULE OF RECEIVABLES. The Borrower shall deliver to the Agent
(i) on or before the Effective Date, a Schedule of Receivables as of a date not
more than three Business Days prior to the Effective Date setting forth a
detailed aged trial balance of all of its then existing Receivables, specifying
the name of and the balance due from (and any rebate due to) each
57
Account Debtor obligated on a Receivable so listed, and (ii) no later than 10
days after the end of each accounting month of the Borrower, a Schedule of
Receivables as of the last Business Day of the Borrower's immediately preceding
accounting month setting forth (A) a detailed aged trial balance of all the
Borrower's then existing Receivables, specifying the name of and the balance due
from (and any rebate due to) each Account Debtor obligated on a Receivable so
listed and (B) a reconciliation to the Schedule of Receivables delivered in
respect of the next preceding accounting month.
(b) SCHEDULE OF INVENTORY. The Borrower shall deliver to the Agent (i)
on or before the Effective Date and no later than the 10th day of each
accounting month of the Borrower thereafter a Schedule of Inventory as of the
last Business Day of the immediately preceding accounting month of the Borrower,
itemizing and describing the kind, type, quantity and location of finished goods
Inventory not in transit and not located at contractor's locations and the cost
thereof and specifying which Inventory is License Inventory and which is Private
Label Inventory, and (ii) on a quarterly basis, within 35 days of the end of
each quarter, a Schedule of Inventory as of the last Business Day of the
immediately preceding quarter of the Borrower, itemizing and describing the
kind, type, quantity and location of all Inventory, including finished goods
Inventory, in-transit Inventory, and Inventory located at contractor's
facilities, and the cost thereof.
(c) BORROWING BASE CERTIFICATE. The Borrower shall deliver to the Agent
and the Lenders not later than the 10th day of each accounting month of the
Borrower a Borrowing Base Certificate prepared as of the close of business on
the last Business Day of the immediately preceding accounting month.
(d) LETTER OF CREDIT/BANKER'S ACCEPTANCES REPORTS. The Borrower shall
deliver to the Agent (i) on or before the Effective Date, a report listing all
letters of credit and banker's acceptances outstanding under its credit facility
with Hamilton Bank, N.A., and the face amount, maturity date and beneficiary
with respect to such letters of credit and banker's acceptances, and (ii) no
later than 10 days after the end of each accounting month of the Borrower, a
report listing all letters of credit and banker's acceptances outstanding under
its credit facility with Hamilton Bank, N.A. as of the last Business Day of the
immediately preceding accounting month of the Borrower, and the face amount,
maturity date and beneficiary with respect to such letters of credit and
banker's acceptances.
(e) FACTORING REPORTS. The Borrower shall deliver to the Agent upon the
Agent's request copies of all reports of the Factor relating to its factoring
arrangement with Borrower.
(f) NOTICE OF DIMINUTION OF VALUE. The Borrower shall give prompt
notice to the Agent of any matter or event which has resulted in, or may result
in, the actual or potential diminution in excess of $50,000 in the value of any
of its Collateral, except for any diminution in the value of any Receivables or
Inventory in the ordinary course of business which has been appropriately
reserved against, as reflected in the financial statements previously delivered
to the Lenders pursuant to ARTICLE 10.
58
(g) CERTIFICATION. Each of the schedules delivered to the Agent and/or
the Lenders pursuant to this SECTION 8.14 shall be certified by the Chief
Financial Officer of the Borrower to be true, correct and complete as of the
date indicated thereon.
(h) OTHER INFORMATION. The Agent may, in its discretion, from time to
time require the Borrower to deliver the schedules described in SECTION 8.14(A),
(B), (C) and (D) more or less often and on different schedules than specified in
such Section, and the Borrower will comply with such requests. The Borrower
shall also furnish to the Agent and each Lender such other information with
respect to the Collateral as the Agent and each Lender may from time to time
reasonably request, including, without limitation, listings of all outstanding
steamship guaranties and letters of credit, specifically identifying those for
which the issuer is not the consignee.
Section 8.15 POWER OF ATTORNEY. The Borrower hereby appoints the Agent
as its attorney, upon the occurrence of an Event of Default, with power (a) to
endorse the name of the Borrower on any checks, notes, acceptances, money
orders, drafts or other forms of payment or security that may come into the
Agent's or any Lender's possession, and (b) to sign the name of the Borrower on
any invoice or bill of lading relating to any Receivables, Inventory or other
Collateral, on any drafts against customers related to letters of credit, on
schedules and assignments of Receivables furnished to the Agent by the Borrower,
on notices of assignment, financing statements and other public records relating
to the perfection or priority of the Security Interest or verifications of
account and on notices to or from customers.
ARTICLE 9 - AFFIRMATIVE COVENANTS
Until the Revolving Credit Facility has been terminated and all the
Secured Obligations have been indefeasibly paid in full, unless the Required
Lenders shall otherwise consent in the manner provided for in SECTION 15.10, the
Borrower will:
Section 9.1 PRESERVATION OF CORPORATE EXISTENCE AND SIMILAR MATTERS.
Preserve and maintain its corporate existence, rights, franchises, licenses and
privileges in the jurisdiction of its incorporation and qualify and remain
qualified as a foreign corporation and authorized to do business in each
jurisdiction in which the character of its properties or the nature of its
business requires such qualification or authorization.
Section 9.2 COMPLIANCE WITH APPLICABLE LAW. Comply with all applicable
laws relating to the Borrower.
Section 9.3 CONDUCT OF BUSINESS. Engage only in businesses in
substantially the same fields as the businesses conducted on the Effective Date.
Section 9.4 PAYMENT OF TAXES AND CLAIMS. Pay or discharge when due (a)
all taxes, assessments and governmental charges or levies imposed upon it or
upon its income or profits or upon any properties belonging to it, and (b) all
lawful claims of materialmen, mechanics, carriers, warehousemen and landlords
for labor, materials, supplies and rentals which, if unpaid,
59
might become a Lien on any properties of the Borrower or such Subsidiary, EXCEPT
that this SECTION 9.4 shall not require the payment or discharge of any such
tax, assessment, charge, levy or claim which is being contested in good faith by
appropriate proceedings and for which adequate reserves have been established on
the appropriate books.
Section 9.5 ACCOUNTING METHODS AND FINANCIAL RECORDS. Maintain a system
of accounting, and keep such books, records and accounts (which shall be true
and complete), as may be required or as may be necessary to permit the
preparation of financial statements in accordance with GAAP consistently
applied.
Section 9.6 USE OF PROCEEDS. (a) Use the proceeds of (i) the Initial
Loans to pay the amounts indicated in SCHEDULE 9.6 to the Persons indicated
therein, and (ii) all subsequent Revolving Credit Loans only for working capital
and general business purposes, and
(b) not use any part of such proceeds to purchase or carry, or to
reduce or retire or refinance any credit incurred to purchase or carry, any
margin stock (within the meaning of Regulation G or U of the Board of Governors
of the Federal Reserve System) or for any other purpose which would involve a
violation of such Regulation G or U or Regulation T or X of such Board of
Governors or for any other purpose prohibited by law or by the terms and
conditions of this Agreement.
Section 9.7 HAZARDOUS WASTE AND SUBSTANCES; ENVIRONMENTAL REQUIREMENTS.
(a) In addition to, and not in derogation of, the requirements of SECTION 9.2
and of the Security Documents, comply with all laws, governmental standards and
regulations applicable to the Borrower or to any of its assets in respect of
occupational health and safety laws, rules and regulations and Environmental
Laws, promptly notify the Agent of its receipt of any notice of a violation of
any such law, rule, standard or regulation and indemnify and hold the Agent and
each Lender harmless from all loss, cost, damage, liability, claim and expense
incurred by or imposed upon the Agent or any Lender on account of the Borrower's
failure to perform its obligations under this SECTION 9.7.
(b) Whenever the Borrower gives notice to the Agent pursuant to this
SECTION 9.7 with respect to a matter that reasonably could be expected to result
in liability to the Borrower in excess of $25,000 in the aggregate, the Borrower
shall, at the Agent's request and the Borrower's expense, (i) cause an
independent environmental engineer acceptable to the Agent to conduct such tests
of the site where the noncompliance or alleged noncompliance with Environmental
Laws has occurred and prepare and deliver to the Agent and the Lenders a report
setting forth the results of such tests, a proposed plan to bring the Borrower
into compliance with such Environmental Laws and an estimate of the costs
thereof, and (ii) provide to the Agent and the Lenders a supplemental report of
such engineer whenever the scope of the noncompliance or the response thereto or
the estimated costs thereof shall materially change.
Section 9.8 ACCURACY OF INFORMATION. All written information, reports,
statements and other papers and data furnished to the Agent or any Lender,
whether pursuant to ARTICLE 10
60
or any other provision of this Agreement or any of the other Loan Documents,
shall be, at the time the same is so furnished, complete and correct in all
material respects to the extent necessary to give the Agent and the Lenders true
and accurate knowledge of the subject matter.
Section 9.9 REVISIONS OR UPDATES TO SCHEDULES. Should any of the
information or disclosures provided on any of the Schedules originally attached
hereto become outdated or incorrect in any material respect, the Borrower shall
provide promptly to the Agent and the Lenders such revisions or updates to such
Schedule(s) as may be necessary or appropriate to update or correct such
Schedule(s); PROVIDED that no such revisions or updates to any Schedule(s) shall
be deemed to have cured any breach of warranty or representation resulting from
the inaccuracy or incompleteness of any such Schedule(s) unless and until the
Required Lenders, in their sole discretion, shall have accepted in writing such
revisions or updates to such Schedule(s).
ARTICLE 10 - INFORMATION
Until the Revolving Credit Facility has been terminated and all the
Secured Obligations have been indefeasibly paid in full, unless the Required
Lenders shall otherwise consent in the manner set forth in SECTION 15.10, the
Borrower will furnish to the Agent and each Lender at the offices designated for
such purpose pursuant to SECTION 14.1:
Section 10.1 FINANCIAL STATEMENTS.
(a) AUDITED YEAR-END STATEMENTS. As soon as available, but in any event
within 95 days after the end of each fiscal year of the Borrower, copies of the
balance sheet of the Borrower as at the end of such fiscal year and the related
statements of income, shareholders' equity and cash flow for such fiscal year,
along with the Borrower's annual 10K, in each case setting forth in comparative
form the figures for the previous year of the Borrower and reported on, without
qualification, by Deloitte & Touche or other independent certified public
accountants selected by the Borrower and reasonably acceptable to the Agent.
(b) QUARTERLY FINANCIAL STATEMENTS. As soon as available, but in any
event within 50 days after the end of each quarter copies of the unaudited
balance sheet of the Borrower as at the end of such quarter and the related
unaudited income statement for the Borrower for such quarter and for the portion
of the fiscal year of the Borrower through such quarter along with the
Borrower's quarterly 10Q, all of which shall be certified by the chief financial
officer of the Borrower to the best of his knowledge as presenting fairly the
financial condition and results of operations of the Borrower as at the date
thereof and for the periods ended on such date, subject to normal year end
adjustments.
All such financial statements shall be complete and correct in all material
respects and prepared in accordance with GAAP (except, with respect to interim
financial statements, for the omission of footnotes) applied consistently
throughout the periods reflected therein.
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Section 10.2 ACCOUNTANTS' CERTIFICATE. Together with each delivery of
financial statements required by SECTION 10.1(A), a certificate of the
accountants who performed the audit in connection with such statements stating
that they have reviewed this Agreement and that, in making the audit necessary
to the issuance of a report on such financial statements, they have obtained no
knowledge of any Default or Event of Default or, if such accountants have
obtained knowledge of a Default or Event of Default, specifying the nature and
period of existence thereof.
The Borrower authorizes the Agent and each Lender to discuss the financial
condition of the Borrower with the Borrower's independent certified public
accountants and agrees that such discussion or communication shall be without
liability to either the Agent or any Lender or the Borrower's independent
certified public accountants. The Borrower shall deliver a letter addressed to
such accountants authorizing them to comply with the provisions of this SECTION
10.2.
Section 10.3 OFFICER'S CERTIFICATE. Together with each delivery of
financial statements required by SECTION 10.1(A) and (B), a certificate of the
Borrower's President or chief financial officer (a) stating that, based on an
examination sufficient to enable him to make an informed statement, no Default
or Event of Default exists or, if such is not the case, specifying such Default
or Event of Default and its nature, when it occurred, whether it is continuing
and the steps being taken by the Borrower with respect to such Default or Event
of Default, and (b) setting forth the calculations necessary to establish
whether or not the Borrower was in compliance with the covenants contained in
SECTIONS 11.1, 11.2, and 11.5 as of the date of such statements.
Section 10.4 COPIES OF OTHER REPORTS. (a) Promptly upon receipt
thereof, copies of all reports, if any, submitted to the Borrower or its Board
of Directors by its independent public accountants, including, without
limitation, all management reports and management letters.
(b) Within 60 days prior to the end of each fiscal year, a projected
balance sheet, income statement and financial covenant compliance of the
Borrower for the upcoming fiscal year.
(c) From time to time and promptly upon each request, such forecasts,
data, certificates, reports, statements, opinions of counsel, documents or
further information regarding the business, assets, liabilities, financial
condition, results of operations or business prospects of the Borrower as the
Agent or any Lender may reasonably request. The rights of the Agent and each
Lender under this SECTION 10.4(C) are in addition to and not in derogation of
its rights under any other provision of this Agreement or any Loan Document.
(d) If requested by the Agent or any Lender, statements in conformity
with the requirements of Federal Reserve Form G-1 or U-1 referred to in
Regulations G and U, respectively, of the Board of Governors of the Federal
Reserve System.
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Section 10.5 NOTICE OF LITIGATION AND OTHER MATTERS. Prompt notice of:
(a) the commencement, to the extent the Borrower is aware of the same,
of all proceedings and investigations by or before any governmental or
nongovernmental body and all actions and proceedings in any court or before any
arbitrator against or in any other way relating adversely to, or adversely
affecting, the Borrower or any Affiliate of the Borrower or any of their
respective property, assets or businesses which might, singly or in the
aggregate, cause a Default or an Event of Default or have a Materially Adverse
Effect,
(b) any amendment of the articles of incorporation or by-laws of the
Borrower,
(c) any change in the business, assets, liabilities, financial
condition, results of operations or business prospects of the Borrower or any
Affiliate of the Borrower which has had or may have any Materially Adverse
Effect and any change in the executive officers of the Borrower, and
(d) any (i) Default or Event of Default, or (ii) event that constitutes
or that, with the passage of time or giving of notice or both, would constitute
a default or event of default by the Borrower under any material agreement
(other than this Agreement) to which the Borrower is a party or by which the
Borrower or any of its property may be bound if the exercise of remedies
thereunder by the other party to such agreement would have, either individually
or in the aggregate, a Materially Adverse Effect.
Section 10.6 ERISA. As soon as possible and in any event within 30 days
after the Borrower knows, or has reason to know, that:
(a) any Termination Event with respect to a Benefit Plan has occurred
or will occur,
(b) the aggregate present value of the Unfunded Vested Accrued Benefits
under all Plans has increased to an amount in excess of $0, or
(c) the Borrower is in "default" (as defined in Section 4219(c)(5) of
ERISA) with respect to payments to a Multiemployer Plan required by reason of
its complete or partial withdrawal (as described in Section 4203 or 4205 of
ERISA) from such Multiemployer Plan,
a certificate of the President or the chief financial officer of the Borrower
setting forth the details of such of the events described in CLAUSES (A) through
(C) as applicable and the action which is proposed to be taken with respect
thereto and, simultaneously with the filing thereof, copies of any notice or
filing which may be required by the PBGC or other agency of the United States
government with respect to such of the events described in CLAUSES (A) through
(C) as applicable.
ARTICLE 11 - NEGATIVE COVENANTS
Until the Revolving Credit Facility has been terminated and all the
Secured Obligations
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have been indefeasibly paid in full, unless the Required Lenders shall otherwise
consent in the manner set forth in SECTION 15.10, the Borrower will not directly
or indirectly:
Section 11.1 FINANCIAL COVENANTS.
(a) MAXIMUM FUNDED INDEBTEDNESS TO EBITDAR RATIO. Permit the ratio of
the Borrower's Funded Indebtedness to its EBITDAR (measured for the preceding
four fiscal quarters) to be greater than:
(i) 4.5 to 1 as of any fiscal quarter end on or prior to
October 31, 1998;
(ii) 4.25 to 1 as of any fiscal quarter end after October 31,
1998 but on or prior to October 31, 1999; or
(iii) 4.0 to 1 as of any fiscal quarter end after October 31,
1999.
(b) MINIMUM CURRENT RATIO. Permit the ratio of the Borrower's current
assets to the Borrower's current Liabilities (in each case determined in
accordance with GAAP, but including in current Liabilities the outstanding
Revolving Credit Loans), to be less than 1.20 to 1 at the end of any fiscal
quarter.
(c) MINIMUM TANGIBLE NET WORTH. Permit the Tangible Net Worth of the
Borrower at any time:
(i) from January 31, 1998 through and including January 30,
1999, to be less than $34,000,000; or
(ii) from January 31, 1999 to and including January 30, 2000,
and from and including the last day of each subsequent fiscal year to
and including the next to last day of the succeeding fiscal year, to be
less than the Tangible Net Worth required for the previous fiscal year
plus the greater of (a) 75% of Net Income of Borrower for such previous
fiscal year, or (b) $1,750,000.
(d) MINIMUM FIXED CHARGE COVERAGE RATIO. Permit the ratio of (i) the
Borrower's EBITDAR less the Unfunded Capital Expenditures divided by (ii) the
Borrower's Fixed Charges, all as of the end of each fiscal quarter of the
Borrower, measured for the immediately preceding four fiscal quarters, to be
less than 1.4 to 1.
Section 11.2 INDEBTEDNESS. Create, assume, or otherwise become or
remain obligated in respect of, or permit or suffer to exist or to be created,
assumed or incurred or to be outstanding any Indebtedness, except for Permitted
Indebtedness for Money Borrowed.
Section 11.3 GUARANTIES. Become or remain liable with respect to any
Guaranty of any obligation of any other Person, excluding the guaranty for Sunny
Industries for $600,000.00.
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Section 11.4 INVESTMENTS. Acquire, after the Agreement Date, any
Business Unit or Investment or, after such date, permit any Investment to be
outstanding, other than Permitted Investments.
Section 11.5 CAPITAL EXPENDITURES. Make or incur any Capital
Expenditures, except that the Borrower may make or incur Capital Expenditures in
an amount not to exceed, in the aggregate, $2,000,000 during any fiscal year.
Section 11.6 RESTRICTED DISTRIBUTIONS AND PAYMENTS, ETC. Declare or
make any Restricted Distribution or Restricted Payment.
Section 11.7 MERGER, CONSOLIDATION AND SALE OF ASSETS. Merge or
consolidate with any other Person or sell, lease or transfer or otherwise
dispose of all or a substantial portion of its assets to any Person.
Section 11.8 TRANSACTIONS WITH AFFILIATES. Effect any transaction with
any Affiliate on a basis less favorable to the Borrower than would be the case
if such transaction had been effected with a Person not an Affiliate.
Section 11.9 LIENS. Create, assume or permit or suffer to exist or to
be created or assumed any Lien on any of the property or assets of the Borrower,
real, personal or mixed, tangible or intangible, except for Permitted Liens.
Section 11.10 OPERATING LEASES. Enter into any lease other than a
Capitalized Lease which would cause the annual payment obligations of the
Borrower under all leases (other than leases of real property, Capitalized
Leases and the SunTrust Lease) to exceed $250,000.00 in the aggregate.
Section 11.11 BENEFIT PLANS. Permit, or take any action which would
result in, the aggregate present value of the Unfunded Vested Accrued Benefits
under all Benefit Plans of the Borrower to exceed $0.
Section 11.12 SALES AND LEASEBACKS. Enter into any arrangement with any
Person providing for the leasing from such Person of real or personal property
which has been or is to be sold or transferred, directly or indirectly, by the
Borrower to such Person.
Section 11.13 AMENDMENTS OF OTHER AGREEMENTS. Amend in any way the
interest rate or principal amount or schedule of payments of principal and
interest with respect to any Indebtedness (other than the Secured Obligations)
other than to reduce the interest rate or extend the schedule of payments with
respect thereto.
Section 11.14 MINIMUM AVAILABILITY. Permit Availability to be less than
$1,000,000 at any time.
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ARTICLE 12 - DEFAULT
Section 12.1 EVENTS OF DEFAULT. Each of the following shall constitute
an Event of Default, whatever the reason for such event and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment or order of any court or any order, rule or regulation of any
governmental or nongovernmental body:
(a) DEFAULT IN PAYMENT OF LOANS. The Borrower shall default in any
payment of principal of, or interest on, any Loan or Note when and as due
(whether at maturity, by reason of acceleration or otherwise).
(b) OTHER PAYMENT DEFAULT. The Borrower shall default in the payment,
as and when due, of principal of or interest on, any other Secured Obligation,
and such default shall continue for 10 days after written notice thereof has
been given to the Borrower by the Agent or any Lender.
(c) MISREPRESENTATION. Any representation or warranty made or deemed to
be made by the Borrower under this Agreement or any other Loan Document or any
amendment hereto or thereto shall at any time prove to have been incorrect or
misleading in any material respect when made.
(d) DEFAULT IN PERFORMANCE. The Borrower shall default in the
performance or observance of any term, covenant, condition or agreement
contained in (i) ARTICLES 7, 8, 9, 10 OR 11; or (ii) this Agreement (other than
as specifically provided for otherwise in this SECTION 12.1) and such default
shall continue for a period of 14 days after written notice thereof has been
given to the Borrower by the Agent or any Lender.
(e) INDEBTEDNESS CROSS-DEFAULT. (i) The Borrower shall fail to pay when
due and payable, after the expiration of any applicable grace period, the
principal of or interest on any Indebtedness (other than the Loans or Note)
where the principal amount of such Indebtedness is in excess of $150,000, or
(ii) the maturity of any such Indebtedness shall have (A) been accelerated in
accordance with the provisions of any indenture, contract or instrument
providing for the creation of or concerning such Indebtedness, or (B) been
required to be prepaid prior to the stated maturity thereof, or (iii) any event
shall have occurred and be continuing which, with or without the passage of time
or the giving of notice, or both, would permit any holder or holders of such
Indebtedness, any trustee or agent acting on behalf of such holder or holders or
any other Person so to accelerate such maturity.
(f) OTHER CROSS-DEFAULTS. The Borrower shall default in the payment
when due or in the performance or observance of any material obligation or
condition of any agreement, contract or lease (other than the Security Documents
or any such agreement, contract or lease relating to Indebtedness), if the
exercise of remedies thereunder by the other party to such agreement could have
a Materially Adverse Effect.
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(g) VOLUNTARY BANKRUPTCY PROCEEDING. The Borrower shall (i) commence a
voluntary case under the federal bankruptcy laws (as now or hereafter in
effect), (ii) commence a proceeding seeking to take advantage of any other laws,
domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding
up or composition for adjustment of debts, (iii) consent to or fail to contest
in a timely and appropriate manner any petition filed against it in an
involuntary case under such bankruptcy laws or other laws, (iv) apply for or
consent to, or fail to contest in a timely and appropriate manner, the
appointment of, or the taking of possession by, a receiver, custodian, trustee
or liquidator of itself or of a substantial part of its property, domestic or
foreign, (v) admit in writing its inability to pay its debts as they become due,
(vi) make a general assignment for the benefit of creditors, or (vii) take any
corporate action for the purpose of authorizing any of the foregoing.
(h) INVOLUNTARY BANKRUPTCY PROCEEDING. A case or other proceeding shall
be commenced against the Borrower in any court of competent jurisdiction seeking
(i) relief under the federal bankruptcy laws (as now or hereafter in effect) or
under any other laws, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, winding up or adjustment of debts, or (ii) the appointment of a
trustee, receiver, custodian, liquidator or the like of the Borrower or of all
or any substantial part of the assets, domestic or foreign, of the Borrower, and
such case or proceeding shall continue undismissed or unstayed for a period of
60 consecutive calendar days, or an order granting the relief requested in such
case or proceeding against the Borrower (including, but not limited to, an order
for relief under such federal bankruptcy laws) shall be entered.
(i) LOAN DOCUMENTS. Any event of default or Event of Default under any
other Loan Document shall occur or the Borrower shall default in the performance
or observance of any material term, covenant, condition or agreement contained
in, or the payment of any other sum covenanted to be paid by the Borrower under,
any such Loan Document or any provision of this Agreement, or of any other Loan
Document after delivery thereof hereunder, shall for any reason cease to be
valid and binding, other than a nonmaterial provision rendered unenforceable by
operation of law, or the Borrower or other party thereto (other than the Agent
or any Lender) shall so state in writing, or this Agreement or any other Loan
Document, after delivery thereof hereunder, shall for any reason (other than any
action taken independently by the Agent or any Lender and except to the extent
permitted by the terms thereof) cease to create a valid, perfected and, except
as otherwise expressly permitted herein, first priority Lien on, or security
interest in, any of the Collateral purported to be covered thereby.
(j) JUDGMENT. A judgment or order for the payment of money which
exceeds $100,000 in amount shall be entered against the Borrower by any court
and such judgment or order shall continue undischarged or unstayed for 30 days.
(k) ATTACHMENT. A warrant or writ of attachment or execution or similar
process which exceeds $100,000 in value shall be issued against any property of
the Borrower and such warrant or process shall continue undischarged or unstayed
for 30 days.
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(l) ERISA. (i) Any Termination Event with respect to a Benefit Plan
shall occur that, after taking into account the excess, if any, of (A) the fair
market value of the assets of any other Benefit Plan with respect to which a
Termination Event occurs on the same day (but only to the extent that such
excess is the property of the Borrower) over (B) the present value on such day
of all vested nonforfeitable benefits under such other Benefit Plan, results in
an Unfunded Vested Accrued Benefit in excess of $0, (ii) any Benefit Plan shall
incur an "accumulated funding deficiency" (as defined in Section 412 of the Code
or Section 302 of ERISA) for which a waiver has not been obtained in accordance
with the applicable provisions of the Code and ERISA, or (iii) the Borrower is
in "default" (as defined in Section 4219(c)(5) of ERISA) with respect to
payments to a Multiemployer Plan resulting from the Borrower's complete or
partial withdrawal (as described in Section 4203 or 4205 of ERISA) from such
Multiemployer Plan.
(m) QUALIFIED AUDITS. The independent certified public accountants
retained by the Borrower shall refuse to deliver an opinion in accordance with
SECTION 10.1(A) with respect to the annual financial statements of the Borrower.
(n) CHANGE IN MANAGEMENT. George Feldenkreis and Oscar Feldenkreis
shall for any reason cease to be officers of the Borrower.
(o) MATERIAL ADVERSE CHANGE. There occurs any act, omission, event,
undertaking or circumstance or series of acts, omissions, events, undertakings
or circumstances which have, or in the sole judgment of the Required Lenders
exercised in good faith would have, either individually or in the aggregate, a
Materially Adverse Effect.
Section 12.2 REMEDIES.
(a) AUTOMATIC ACCELERATION AND TERMINATION OF FACILITIES. Upon the
occurrence of an Event of Default specified in SECTION 12.1(G) or (H), (i) the
principal of and the interest on the Loans and the Notes at the time
outstanding, and all other amounts owed to the Agent and the Lenders under this
Agreement or any of the Loan Documents and all other Secured Obligations, shall
thereupon become due and payable without presentment, demand, protest or other
notice of any kind, all of which are expressly waived, anything in this
Agreement or any of the Loan Documents to the contrary notwithstanding, and (ii)
the Revolving Credit Facility and the commitment of the Lenders to make advances
thereunder or under this Agreement shall immediately terminate.
(b) OTHER REMEDIES. If any Event of Default shall have occurred and be
continuing, the Agent may, and at the direction of the Required Lenders shall,
do any of the following:
(i) declare the principal of and interest on the Loans and the
Notes at the time outstanding, and all other amounts owed to the Agent
and the Lenders under this Agreement or any of the Loan Documents and
all other Secured Obligations, to be forthwith due and payable,
whereupon the same shall immediately become due and payable without
presentment, demand, protest or other notice of any kind, all of which
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are expressly waived, anything in this Agreement or the Loan Documents
to the contrary notwithstanding;
(ii) terminate the Revolving Credit Facility and any
commitment of the Lenders to make advances hereunder;
(iii) notify, or request the Borrower to notify, in writing or
otherwise, any Account Debtor or obligor with respect to any one or
more of the Receivables to make payment to the Agent or any agent or
designee of the Agent, at such address as may be specified by the
Agent, and, if, notwithstanding the giving of any notice, any Account
Debtor or other such obligor shall make payments to the Borrower, the
Borrower shall hold all such payments it receives in trust for the
Agent, without commingling the same with other funds or property of, or
held by, the Borrower and shall deliver the same to the Agent or any
such agent or designee immediately upon receipt by the Borrower in the
identical form received, together with any necessary endorsements;
(iv) settle or adjust disputes and claims directly with
Account Debtors and other obligors on Receivables for amounts and on
terms which the Agent considers advisable and in all such cases only
the net amounts received by the Agent in payment of such amounts, after
deductions of costs and attorneys' fees, shall constitute Collateral,
and the Borrower shall have no further right to make any such
settlements or adjustments or to accept any returns of merchandise;
(v) enter upon any premises on which Inventory may be located
and, without resistance or interference by the Borrower, take physical
possession of any or all thereof and maintain such possession on such
premises or move the same or any part thereof to such other place or
places as the Agent shall choose, without being liable to the Borrower
on account of any loss, damage or depreciation that may occur as a
result thereof, so long as the Agent shall act reasonably and in good
faith
(vi) require the Borrower to and the Borrower shall, without
charge to the Agent or any Lender, assemble the Inventory and maintain
or deliver it into the possession of the Agent or any agent or
representative of the Agent at such place or places as the Agent may
designate;
(vii) at the expense of the Borrower, cause any of the
Inventory to be placed in a public or field warehouse, and neither the
Agent nor any Lender shall be liable to the Borrower on account of any
loss, damage or depreciation that may occur as a result thereof, so
long as the Agent shall act reasonably and in good faith;
(viii) without notice, demand or other process, and without
payment of any rent or any other charge, enter any of the Borrower's
premises and, without breach of the peace, until the Agent completes
the enforcement of its rights in the Collateral, take possession of
such premises or place custodians in exclusive control thereof, remain
on
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such premises and use the same and any of the Borrower's equipment, for
the purpose of (A) completing any work in process, preparing any
Inventory for disposition and disposing thereof, and (B) collecting any
Receivable, and the Agent is hereby granted a license or sublicense and
all other rights as may be necessary, appropriate or desirable to use
the Intellectual Property in connection with the foregoing, and the
rights of the Borrower under all licenses and franchise agreements
shall inure to the Agent's benefit (provided, however, that any use of
any federally registered trademarks as to any goods shall be subject to
the control as to the quality of such goods of the owner of such
trademarks and the goodwill of the business symbolized thereby);
(ix) exercise any and all of its rights under any and all of
the Security Documents;
(x) apply any cash Collateral to the payment of the Secured
Obligations in any order in which the Agent, on behalf of the Lenders
may elect or use such cash in connection with the exercise of any of
its other rights hereunder or under any of the Security Documents;
(xi) establish or cause to be established one or more
Lockboxes or other arrangement for the deposit of proceeds of
Receivables, and, in such case, the Borrower shall cause to be
forwarded to the Agent at the Agent's Office, on a daily basis, copies
of all checks and other items of payment and deposit slips related
thereto deposited in such Lockboxes, together with collection reports
in form and substance satisfactory to the Agent; and
(xii) exercise all of the rights and remedies of a secured
party under the UCC (whether or not the UCC is applicable) and under
any other applicable law, including, without limitation, the right,
without notice except as specified below and with or without taking the
possession thereof, to sell the Collateral or any part thereof in one
or more parcels at public or private sale, at any location chosen by
the Agent, for cash, on credit or for future delivery and at such price
or prices and upon such other terms as the Agent may deem commercially
reasonable. The Borrower agrees that, to the extent notice of sale
shall be required by law, at least 10 days' notice to the Borrower of
the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notice, but
notice given in any other reasonable manner or at any other reasonable
time shall also constitute reasonable notification. The Agent shall not
be obligated to make any sale of 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.
Section 12.3 APPLICATION OF PROCEEDS. All proceeds from each sale of,
or other realization upon, all or any part of the Collateral following an Event
of Default shall be applied or paid over as follows:
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(a) FIRST: to the payment of all costs and expenses incurred in
connection with such sale or other realization, including attorneys' fees,
(b) SECOND: to the payment of the Secured Obligations (with the
Borrower remaining liable for any deficiency) in accordance with SECTION 4.8(D),
(d) THIRD: the balance (if any) of such proceeds shall be paid to the
Borrower or, subject to any duty imposed by law or otherwise, to whomsoever is
entitled thereto.
THE BORROWER SHALL REMAIN LIABLE AND WILL PAY, ON DEMAND, ANY DEFICIENCY
REMAINING IN RESPECT OF THE SECURED OBLIGATIONS, TOGETHER WITH INTEREST THEREON
AT A RATE PER ANNUM EQUAL TO THE HIGHEST RATE THEN PAYABLE HEREUNDER ON SUCH
SECURED OBLIGATIONS, WHICH INTEREST SHALL CONSTITUTE PART OF THE SECURED
OBLIGATIONS.
Section 12.4 POWER OF ATTORNEY. In addition to the authorizations
granted to the Agent under SECTION 8.15 or under any other provision of this
Agreement or any of the Loan Documents, upon and after an Event of Default, the
Borrower hereby irrevocably designates, makes, constitutes and appoints the
Agent (and all Persons designated by the Agent from time to time) as the
Borrower's true and lawful attorney and agent in fact, and the Agent or any
agent of the Agent may, without notice to the Borrower, and at such time or
times as the Agent or any such agent in its sole discretion may determine, in
the name of the Borrower or the Agent,
(a) demand payment of the Receivables, enforce payment thereof by legal
proceedings or otherwise, settle, adjust, compromise, extend or renew any or all
of the Receivables or any legal proceedings brought to collect the Receivables,
discharge and release the Receivables or any of them and exercise all of the
Borrower's rights and remedies with respect to the collection of Receivables,
(b) prepare, file and sign the name of the Borrower on any proof of
claim in bankruptcy or any similar document against any Account Debtor or any
notice of Lien, assignment or satisfaction of Lien or similar document in
connection with any of the Collateral,
(c) endorse the name of the Borrower upon any chattel paper, document,
instrument, notice, freight bill, bill of lading or similar document or
agreement relating to the Receivables or any other Collateral,
(d) use the stationery of the Borrower, open the Borrower's mail,
notify the post office authorities to change the address for delivery of the
Borrower's mail to an address designated by the Agent and sign the name of the
Borrower to verifications of the Receivables and on any notice to the Account
Debtors,
(e) use the information recorded on or contained in any data processing
equipment and computer hardware and software relating to the Receivables,
Inventory, or other Collateral to which the Borrower or any Subsidiary of the
Borrower has access.
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Section 12.5 MISCELLANEOUS PROVISIONS CONCERNING REMEDIES .
(a) RIGHTS CUMULATIVE. The rights and remedies of the Agent and the
Lenders under this Agreement, the Notes and each of the Loan Documents shall be
cumulative and not exclusive of any rights or remedies which it or they would
otherwise have. In exercising such rights and remedies, the Agent and the
Lenders may be selective and no failure or delay by the Agent or any Lender in
exercising any right shall operate as a waiver of such right nor shall any
single or partial exercise of any power or right preclude its other or further
exercise or the exercise of any other power or right.
(b) WAIVER OF MARSHALLING. The Borrower hereby waives any right to
require any marshalling of assets and any similar right.
(c) LIMITATION OF LIABILITY. Nothing contained in this ARTICLE 12 or
elsewhere in this Agreement or in any of the Loan Documents shall be construed
as requiring or obligating the Agent or any Lender or any agent or designee of
the Agent or any Lender to make any demand or to make any inquiry as to the
nature or sufficiency of any payment received by it or to present or file any
claim or notice or take any action with respect to any Receivable or any other
Collateral or the moneys due or to become due thereunder or in connection
therewith or to take any steps necessary to preserve any rights against prior
parties, and neither the Agent nor any Lender nor any of their agents or
designees shall have any liability to the Borrower for actions taken pursuant to
this ARTICLE 12, any other provision of this Agreement or any of the Loan
Documents, so long as the Agent, such Lender or such agent or designee shall act
reasonably and in good faith.
(d) APPOINTMENT OF RECEIVER. In any action under this ARTICLE 12, the
Agent and the Lenders shall be entitled to the appointment of a receiver,
without notice of any kind whatsoever, to take possession of all or any portion
of the Collateral and to exercise such power as the court shall confer upon such
receiver.
Section 12.6 TRADEMARK LICENSE. The Borrower hereby grants to the Agent
the nonexclusive right and license to use any trademark then used by the
Borrower for the purposes set forth in SECTION 12.2(B)(VIII) and for the purpose
of enabling the Agent to realize on the Collateral and to permit any purchaser
of any portion of the Collateral through a foreclosure sale or any other
exercise of the Agent's rights and remedies under the Loan Documents to use,
sell or otherwise dispose of the Collateral bearing any such trademark. Such
right and license is granted free of charge, without the requirement that any
monetary payment whatsoever be made to the Borrower or any other Person by the
Agent or any Lender. The Borrower hereby represents, warrants, covenants and
agrees that it presently has, and shall continue to have, the right, without the
approval or consent of others, to grant the license set forth in this SECTION
12.6.
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ARTICLE 13
ASSIGNMENTS
Section 13.1. SUCCESSORS AND ASSIGNS; PARTICIPATIONS.
(a) This Agreement shall be binding upon and inure to the benefit of
the Borrower, the Lenders, the Agent, all future holders of the Notes, and their
respective successors and assigns, except that the Borrower may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of each Lender.
(b) Each Lender may, with the consent of the Agent (such consent not to
be unreasonably withheld), assign to one or more Eligible Assignees all or a
portion of its interests, rights and obligations under this Agreement
(including, without limitation, all or a portion of the Loans at the time owing
to it and the Note held by it); PROVIDED, HOWEVER, that (i) each such assignment
shall be of a constant, and not a varying, percentage of all the assigning
Lender's rights and obligations under this Agreement, (ii) the amount of the
Commitment of the assigning Lender that is subject to each such assignment
(determined as of the date the Assignment and Acceptance with respect to such
assignment is delivered to the Agent) shall in no event be less than the Minimum
Commitment, (iii) in the case of a partial assignment, the amount of the
Commitment that is retained by the assigning Lender (determined as of the date
the Assignment and Acceptance with respect to such assignment is delivered to
the Agent) shall in no event be less than the Minimum Commitment, (iv) the
parties to each such assignment shall execute and deliver to the Agent, for its
acceptance and recording in the Register (as hereinafter defined) an Assignment
and Acceptance, together with any Note subject to such assignment, (v) such
assignment shall not, without the consent of the Borrower, require the Borrower
to file a registration statement with the Securities and Exchange Commission or
apply to or qualify the Loans or the Notes under the blue sky laws of any state,
(vi) the representation contained in SECTION 13.2 hereof shall be true with
respect to any such proposed assignee, and (vii) the parties to such assignment
shall deliver to the Agent a processing fee of $5,000. Upon such execution,
delivery, acceptance and recording, from and after the effective date specified
in each Assignment and Acceptance, which effective date shall be at least five
Business Days after the execution thereof, (x) the assignee thereunder shall be
a party hereto and, to the extent provided in such Assignment and Acceptance,
have the rights and obligations of a Lender hereunder, and (y) the Lender
assignor thereunder shall, to the extent provided in such assignment, be
released from its obligations under this Agreement.
(c) By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than the
representation and warranty that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse claim, such Lender
assignor makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with this Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this
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Agreement or any other instrument or document furnished pursuant hereto; (ii)
such Lender assignor makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or the
performance or observance by the Borrower of any of its obligations under this
Agreement or any other instrument or document furnished pursuant hereto; (iii)
such assignee confirms that it has received a copy of this Agreement, together
with copies of the financial statements referred to in SECTION 6.1(M) and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance; (iv)
such assignee will, independently and without reliance upon the Agent, such
Lender assignor or any other Lender, and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement; (v) such assignee
confirms that it is an Eligible Assignee; (vi) such assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement and the other Loan Documents as are delegated
to the Agent by the terms hereof and thereof, together with such powers as are
reasonably incidental thereto; and (vii) such assignee agrees that it will
perform in accordance with their terms all of the obligations which by the terms
of this Agreement are required to be performed by it as a Lender.
(d) The Agent shall maintain a copy of each Assignment and Acceptance
delivered to it and a register for the recordation of the names and addresses of
the Lenders and the Commitment Percentage of, and principal amount of the Loans
owing to, each Lender from time to time (the "Register"). The entries in the
Register shall be conclusive, in the absence of manifest error, and the
Borrower, the Agent and the Lenders may treat each person whose name is recorded
in the Register as a Lender hereunder for all purposes of this Agreement. The
Register shall be available for inspection by the Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Eligible Assignee together with any Note subject to such
assignment, the fee described in CLAUSE (VII) of SECTION 13.1(B), and the
written consent to such assignment, the Agent shall, if such Assignment and
Acceptance has been completed and is in the form of EXHIBIT C, (i) accept such
Assignment and Acceptance, (ii) record the information contained therein in the
Register, (iii) give prompt notice thereof to the Lenders and the Borrower, and
(iv) promptly deliver a copy of such Assignment and Acceptance to the Borrower.
Within five Business Days after receipt of notice, the Borrower shall execute
and deliver to the Agent in exchange for the surrendered Note a new Note to the
order of such Eligible Assignee in amounts equal to the Commitment Percentage
assumed by such Eligible Assignee pursuant to such Assignment and Acceptance and
a new Note to the order of the assigning Lender in an amount equal to the
Commitment retained by it hereunder. Such new Note or Notes shall be in an
aggregate principal amount equal to the aggregate principal amount of such
surrendered Note or Notes, shall be dated the effective date of such Assignment
and Acceptance and shall otherwise be in substantially the form of the assigned
Notes delivered to the assignor Lender. Each surrendered Note shall be cancelled
and returned to the Borrower.
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(f) Each Lender may, without the consent of the Borrower, sell
participations to one or more banks or other entities in all or a portion of its
rights and obligations under this Agreement (including, without limitation, all
or a portion of its commitments hereunder and the Loans owing to it and the Note
held by it); PROVIDED, HOWEVER, that (i) each such participation shall be in an
amount not less than the Minimum Commitment, (ii) such Lender's obligations
under this Agreement (including, without limitation, its commitments hereunder)
shall remain unchanged, (iii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, (iv) such Lender
shall remain the holder of the Note held by it for all purposes of this
Agreement, (v) the Borrower, the Agent and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement; PROVIDED, that such Lender may
agree with any participant that such Lender will not, without such participant's
consent, agree to or approve any waivers or amendments which would reduce the
principal of or the interest rate on any Loans, extend the term or increase the
amount of the commitments of such participant, reduce the amount of any fees to
which such participant is entitled, extend any scheduled payment date for
principal or release Collateral securing the Loans (other than Collateral
disposed of in accordance with the terms of this Agreement or the Security
Documents), and (vi) any such disposition shall not, without the consent of the
Borrower, require the Borrower to file a registration statement with the
Securities and Exchange Commission to apply to qualify the Loans or the Notes
under the blue sky law of any state. Any Lender selling a participation to any
bank or other entity that is not an Affiliate of such Lender shall give prompt
notice thereof to the Borrower.
(g) Any Lender may, in connection with any assignment, proposed
assignment, participation or proposed participation pursuant to this SECTION
13.1, disclose to the assignee, participant, proposed assignee or proposed
participant, any information relating to the Borrower and its Subsidiaries
furnished to such Lender by or on behalf of the Borrower; provided that, prior
to any such disclosure, each such assignee, proposed assignee, participant or
proposed participant shall agree with the Borrower or such Lender (which in the
case of an agreement with only such Lender, the Borrower shall be recognized as
a third party beneficiary thereof) to preserve the confidentiality of any
confidential information relating to the Borrower and its Subsidiaries received
from such Lender.
Section 13.2. REPRESENTATION OF LENDERS. Each Lender hereby represents
that it will make each Loan hereunder as a commercial loan for its own account
in the ordinary course of its business; PROVIDED, HOWEVER, that subject to
SECTION 13.1 hereof, the disposition of the Notes or other evidence of the
Secured Obligations held by any Lender shall at all times be within its
exclusive control.
ARTICLE 14 - AGENT
Section 14.1. APPOINTMENT OF AGENT. Each of the Lenders hereby
irrevocably designates and appoints NationsBank, N.A. as the Agent of such
Lender under this Agreement and the other Loan Documents, and each such Lender
irrevocably authorizes the Agent, as the agent for
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such Lender to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to the Agent by the terms of this
Agreement and such other Loan Documents, including, without limitation, to make
determinations as to the eligibility of Inventory and Receivables and to adjust
the advance ratios contained in the definition of "Borrowing Base" (so long as
such advance ratios, as adjusted, do not exceed those set forth in the
definition of "Borrowing Base"), together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Agreement or such other Loan Documents, the Agent shall not
have any duties or responsibilities, except those expressly set forth herein and
therein, or any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or the other Loan Documents or otherwise exist
against the Agent.
Section 14.2. DELEGATION OF DUTIES. The Agent may execute any of its
duties under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
Section 14.3. EXCULPATORY PROVISIONS. Neither the Agent nor any of its
trustees, officers, directors, employees, agents, attorneys-in-fact or
Affiliates shall be (i) liable to any Lender (or any Lender's participants) for
any action lawfully taken or omitted to be taken by it or such Person under or
in connection with this Agreement or the other Loan Documents (except for its or
such Person's own gross negligence or willful misconduct), or (ii) responsible
in any manner to any Lender (or any Lender's participants) for any recitals,
statements, representations or warranties made by the Borrower or any of its
Subsidiaries or any officer thereof contained in this Agreement or the other
Loan Documents or in any certificate, report, statement or other document
referred to or provided for in, or received by the Agent under or in connection
with, this Agreement or the other Loan Documents or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
the other Loan Documents or for any failure of the Borrower or any of its
Subsidiaries to perform its obligations hereunder or thereunder. The Agent shall
not be under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement, or to inspect the properties, books or records of the
Borrower or any of its Subsidiaries.
Section 14.4. RELIANCE BY AGENT. The Agent shall be entitled to rely,
and shall be fully protected in relying, upon any Note, writing, resolution,
notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy,
telex or teletype message, statement, order or other document or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Borrower or any of its
Subsidiaries), independent accountants and other experts selected by the Agent.
The Agent may deem and treat the payee of any Note as the owner thereof for all
purposes unless such Note shall have been transferred
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in accordance with SECTION 14.1. The Agent shall be fully justified in failing
or refusing to take any action under this Agreement and the other Loan Documents
unless it shall first receive such advice or concurrence of the Required Lenders
as it deems appropriate or it shall first be indemnified to its satisfaction by
the Lenders against any and all liability and expense which may be incurred by
it by reason of taking or continuing to take any such action. The Agent shall in
all cases be fully protected in acting, or in refraining from acting, under this
Agreement and the Notes in accordance with a request of the Required Lenders,
and such request and any action taken or failure to act pursuant thereto shall
be binding upon all the Lenders and all future holders of the Notes.
Section 14.5. NOTICE OF DEFAULT. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent has received notice from a Lender or the Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event that the Agent
receives such a notice, the Agent shall promptly give notice thereof to the
Lenders. The Agent shall take such action with respect to such Default or Event
of Default as shall be reasonably directed by the Required Lenders; PROVIDED
that unless and until the Agent shall have received such directions, the Agent
may (but shall not be obligated to) continue making Revolving Credit Loans to
the Borrower on behalf of the Lenders in reliance on the provisions of SECTION
4.7 and take such other action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interests of the Lenders.
Section 14.6. NON-RELIANCE ON AGENT AND OTHER LENDERS. Each Lender
expressly acknowledges that neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates has made any
representations or warranties to it and that no act by the Agent hereinafter
taken, including any review of the affairs of the Borrower and its Subsidiaries,
shall be deemed to constitute any representation or warranty by the Agent to any
Lender. Each Lender represents to the Agent that it has, independently and
without reliance upon the Agent or any other Lender, and based on such documents
and information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Borrower and its Subsidiaries and made its
own decision to make its Loans hereunder and enter into this Agreement. Each
Lender also represents that it will, independently and without reliance upon the
Agent or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigation as it deems necessary
to inform itself as to the business, operations, property, financial and other
condition and creditworthiness of the Borrower and its Subsidiaries. Except for
notices, reports and other documents expressly required to be furnished to the
Lenders by the Agent hereunder or by the other Loan Documents, the Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the business, operations, property, financial and
other condition or creditworthiness of the Borrower and its Subsidiaries which
may come into the possession of the Agent or any of its officers, directors,
employees, agents,
77
attorneys-in-fact or Affiliates.
Section 14.7. INDEMNIFICATION. The Lenders agree to indemnify the Agent
in its capacity as such (to the extent not reimbursed by the Borrower and
without limiting the obligation of the Borrower to do so), ratably according to
their respective Commitment Percentages, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the Notes)
be imposed on, incurred by or asserted against the Agent in any way relating to
or arising out of this Agreement or the other Loan Documents, or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Agent under
or in connection with any of the foregoing; PROVIDED that no Lender shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting solely from the Agent's gross negligence or willful misconduct or
resulting solely from transactions or occurrences that occur at a time after
such Lender has assigned all of its interests, rights and obligations under this
Agreement pursuant to SECTION 13.1 or, in the case of a Lender to which an
assignment is made hereunder pursuant to SECTION 13.1, at a time before such
assignment. The agreements in this subsection shall survive the payment of the
Notes, the Secured Obligations and all other amounts payable hereunder and the
termination of this Agreement.
Section 14.8. AGENT IN ITS INDIVIDUAL CAPACITY. The Agent and its
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Borrower and its Subsidiaries (including the extension
to the Borrower and its Subsidiaries of any credit facility designed to
refinance the Loans and other Secured Obligations hereunder) as if the Agent
were not the Agent hereunder. With respect to its Commitment, the Loans made or
renewed by it and any Note issued to it and any Standby Letter of Credit issued
by it, the Agent shall have and may exercise the same rights and powers under
this Agreement and the other Loan Documents and is subject to the same
obligations and liabilities as and to the extent set forth herein and in the
other Loan Documents for any other Lender. The terms "Lenders" or "Required
Lenders" or any other term shall, unless the context clearly otherwise
indicates, include the Agent in its individual capacity as a Lender or one of
the Required Lenders.
Section 14.9. SUCCESSOR AGENT. The Agent may resign as Agent upon 5
days written notice to the Lenders and the Borrower; provided, however, that
such resignation shall not take effect until a successor agent has been
appointed. If the Agent shall resign as Agent under this Agreement, then the
Required Lenders shall appoint from among the Lenders a successor agent for the
Lenders which successor agent shall be approved by the Borrower (which approval
shall not be unreasonably withheld), whereupon such successor agent shall
succeed to the rights, powers and duties of the Agent, and the term "Agent"
shall mean such successor agent effective upon its appointment, and the former
Agent's rights, powers and duties as Agent shall be terminated, without any
other or further act or deed on the part of such former Agent or any of the
parties to this Agreement or any holders of the Notes. If the Required Lenders
have failed to appoint a successor agent within 30 days after the resignation
notice given by the Agent as
78
provided above, then the Agent shall be entitled to appoint a successor agent
from among the Lenders. After any Agent's resignation hereunder as Agent, the
provisions of ARTICLE 14 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Agent under this Agreement.
Section 14.10. NOTICES FROM AGENT TO LENDERS. The Agent shall forward
to each Lender, promptly after request therefor, copies of any material written
notices, reports or other information supplied to it by the Borrower (but which
the Borrower is not required to supply directly to the Lenders).
ARTICLE 15 - MISCELLANEOUS
Section 15.1 NOTICES.
(a) METHOD OF COMMUNICATION. Except as specifically provided in this
Agreement or in any of the Loan Documents, all notices and the communications
hereunder and thereunder shall be in writing or by telephone subsequently
confirmed in writing. Notices in writing shall be delivered personally or sent
by overnight courier service, by certified or registered mail, postage pre-paid,
or by facsimile transmission and shall be deemed received, in the case of
personal delivery, when delivered, in the case of overnight courier service, on
the next Business Day after delivery to such service, in the case of mailing, on
the third day after mailing (or, if such day is a day on which deliveries of
mail are not made, on the next succeeding day on which deliveries of mail are
made) and, in the case of facsimile transmission, upon transmittal; provided
that in the case of notices to the Agent, the Agent shall be charged with
knowledge of the contents thereof only when such notice is actually received by
the Agent. A telephonic notice to the Agent as understood by the Agent will be
deemed to be the controlling and proper notice in the event of a discrepancy
with or failure to receive a confirming written notice.
(b) ADDRESSES FOR NOTICES. Notices to any party shall be sent to it at
the following addresses, or any other address of which all the other parties are
notified in writing.
If to the Borrower: Supreme International Corporation
3000 N.W. 107th Avenue
Miami, Florida 33172
Attention: Vice-President - Finance
Facsimile No.: (305) 406-0585
With a copy to: Broad and Cassel
201 So. Biscayne Boulevard, Suite 3000
Miami, Florida 33131
Attention: Dale S. Bergman
Facsimile No.: (305) 373-9443
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If to the Agent: NationsBank N.A.
c/o NationsBank Business Credit
600 Peachtree Street, 13th Floor
Atlanta, Georgia 30308
Attention: Stuart Hall, Vice-President
Facsimile No.: (404) 607-6439
If to a Lender: At the address of such Lender set
forth on the signature page hereof or in the
Assignment and Acceptance under which such
Lender becomes a party hereto
(c) AGENT'S OFFICE. The Agent hereby designates its office located at
600 Peachtree Street, 13th Floor, Atlanta, Georgia 30308, or any subsequent
office which shall have been specified for such purpose by written notice to the
Borrower and the Lenders, as the office to which payments due are to be made and
at which Loans will be disbursed.
Section 15.2 EXPENSES. The Borrower agrees to pay or reimburse on
demand all costs and expenses incurred by the Agent, including, without
limitation, the reasonable fees and disbursements of counsel, in connection with
(a) the negotiation, preparation, execution, delivery, administration,
enforcement and termination of this Agreement and each of the other Loan
Documents, whenever the same shall be executed and delivered, including, without
limitation (i) the out-of-pocket costs and expenses incurred in connection with
the administration and interpretation of this Agreement and the other Loan
Documents; (ii) the costs and expenses of appraisals of the Collateral; (iii)
the costs and expenses of lien searches; and (iv) taxes, fees and other charges
for filing the Financing Statements and continuations and the costs and expenses
of taking other actions to perfect, protect, and continue the Security
Interests;
(b) the preparation, execution and delivery of any waiver, amendment,
supplement or consent by the Agent and the Lenders relating to this Agreement or
any of the Loan Documents;
(c) sums paid or incurred to pay any amount or take any action required
of the Borrower under the Loan Documents that the Borrower fails to pay or take;
(d) costs of inspections and verifications of the Collateral,
including, without limitation, standard per diem fees charged by the Agent for
travel, lodging, and meals for inspections of the Collateral and the Borrower'
operations and books and records by the Agent's employees or agents up to four
times per year and whenever an Event of Default exists;
(e) costs and expenses of forwarding loan proceeds, collecting checks
and other items of payment, and establishing and maintaining each Controlled
Disbursement Account, Agency Account and Lockbox;
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(f) costs and expenses of preserving and protecting the Collateral; and
(g) consulting, after the occurrence of a Default, with one or more
Persons, including appraisers, accountants and lawyers, concerning the value of
any Collateral for the Secured Obligations or related to the nature, scope or
value of any right or remedy of the Agent or any Lender hereunder or under any
of the Loan Documents, including any review of factual matters in connection
therewith, which expenses shall include the fees and disbursements of such
Persons.
The Borrower agrees to pay or reimburse on demand all costs and expenses
incurred by the Agent and the Lenders, including, without limitation, the
reasonable fees and disbursements of counsel, experts and other consultants to
the Agent and any Lender, in connection with actions taken with respect to any
Default or Event of Default hereunder or any "workout" of the Loans made
hereunder, to obtain payment of the Secured Obligations, to enforce the Security
Interests, to sell or otherwise realize upon the Collateral, and otherwise to
enforce the provisions of the Loan Documents, or to prosecute or defend any
claim in any way arising out of, related to or connected with, this Agreement or
any of the Loan Documents.
The foregoing shall not be construed to limit any other provisions of the Loan
Documents regarding costs and expenses to be paid by the Borrower. The Borrower
hereby authorizes the Agent and each Lender to debit the Borrower's Loan
Accounts (by increasing the principal amount of the Revolving Credit Loan) in
the amount of any such costs and expenses owed by the Borrower when due.
Section 15.3 STAMP AND OTHER TAXES. The Borrower will pay any and all
stamp, registration, recordation and similar taxes, fees or charges and shall
indemnify the Agent and each Lender against any and all liabilities with respect
to or resulting from any delay in the payment or omission to pay any such taxes,
fees or charges, which may be payable or determined to be payable in connection
with the execution, delivery, performance or enforcement of this Agreement and
any of the Loan Documents or the perfection of any rights or security interest
thereunder.
Section 15.4 SETOFF. In addition to any rights now or hereafter granted
under applicable law, and not by way of limitation of any such rights, upon and
after the occurrence of any Default or Event of Default, each Lender, each
Affiliate of the Lenders, and any participant with any Lender in the Loans are
hereby authorized by the Borrower at any time or from time to time, without
notice to the Borrower or to any other Person, any such notice being hereby
expressly waived, to set off and to appropriate and to apply any and all
deposits (general or special, time or demand, including, but not limited to,
indebtedness evidenced by certificates of deposit, whether matured or unmatured)
and any other indebtedness at any time held or owing by such Lender, Affiliate
or participant to or for the credit or the account of the Borrower against and
on account of the Secured Obligations irrespective or whether or not (a) the
Agent or any Lender shall have made any demand under this Agreement or any of
the Loan Documents, or (b) the Agent or any Lender shall have declared any or
all of the Secured
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Obligations to be due and payable as permitted by SECTION 12.2 and although such
Secured Obligations shall be contingent or unmatured.
Section 15.5 LITIGATION. EACH OF THE AGENT, EACH LENDER AND THE
BORROWER HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY WAIVES TRIAL BY JURY IN
ANY ACTION OR PROCEEDING OF ANY KIND OR NATURE IN ANY COURT IN WHICH AN ACTION
MAY BE COMMENCED BY OR AGAINST THE BORROWER, THE AGENT OR ANY LENDER ARISING OUT
OF THIS AGREEMENT, THE COLLATERAL OR ANY ASSIGNMENT THEREOF OR BY REASON OF ANY
OTHER CAUSE OR DISPUTE WHATSOEVER BETWEEN THE BORROWER, THE AGENT OR ANY LENDER
OF ANY KIND OR NATURE. THE BORROWER, THE AGENT AND EACH LENDER HEREBY AGREE THAT
THE FEDERAL COURT OF THE NORTHERN DISTRICT OF GEORGIA OR, AT THE OPTION OF THE
AGENT OR ANY LENDER, ANY COURT IN WHICH THE AGENT OR ANY LENDER SHALL INITIATE
LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER JURISDICTION OVER
THE MATTER IN CONTROVERSY AND WHICH SITS IN A JURISDICTION IN WHICH THE BORROWER
TRANSACTS BUSINESS SHALL HAVE NON-EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE
ANY CLAIMS OR DISPUTES BETWEEN THE BORROWER, THE AGENT OR ANY LENDER, PERTAINING
DIRECTLY OR INDIRECTLY TO THIS AGREEMENT OR THE LOAN DOCUMENTS OR TO ANY MATTER
ARISING THEREFROM. THE BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO
SUCH JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED IN SUCH COURTS, HEREBY
WAIVING PERSONAL SERVICE OF THE SUMMONS AND COMPLAINT OR OTHER PROCESS OR PAPERS
ISSUED THEREIN AND AGREEING THAT SERVICE OF SUCH SUMMONS AND COMPLAINT OR OTHER
PROCESS OR PAPERS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO THE
BORROWER AND ITS COUNSEL AT THE RESPECTIVE ADDRESSES SET FORTH IN SECTION
15.1(B), WHICH SERVICE SHALL BE DEEMED MADE UPON RECEIPT THEREOF. THE
NON-EXCLUSIVE CHOICE OF FORUM SET FORTH IN THIS SECTION SHALL NOT BE DEEMED TO
PRECLUDE THE ENFORCEMENT OF ANY JUDGMENT OBTAINED IN SUCH FORUM OR THE TAKING OF
ANY ACTION UNDER THIS AGREEMENT TO ENFORCE THE SAME IN ANY APPROPRIATE
JURISDICTION.
Section 15.6 WAIVER OF RIGHTS. THE BORROWER HEREBY KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY WAIVES ALL RIGHTS WHICH THE BORROWER HAS UNDER
CHAPTER 14 OF TITLE 44 OF THE OFFICIAL CODE OF GEORGIA OR UNDER ANY SIMILAR
PROVISION OF APPLICABLE LAW TO NOTCE AND TO A JUDICIAL HEARING PRIOR TO THE
ISSUANCE OF A WRIT OF POSSESSION ENTITLING THE AGENT, ITS SUCCESSORS AND ASSIGNS
TO POSSESSION OF THE COLLATERAL UPON DEFAULT OR EVENT OF DEFAULT. WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING AND WITHOUT LIMITING ANY OTHER RIGHT
WHICH THE AGENT OR ANY LENDER MAY HAVE, THE BORROWER CONSENTS THAT, IF THE AGENT
FILES A PETITION FOR AN
82
IMMEDIATE WRIT OF POSSESSION IN COMPLIANCE WITH SECTIONS 44-14-261 AND 44-14-262
OF THE OFFICIAL CODE OF GEORGIA OR UNDER ANY SIMILAR PROVISION OF APPLICABLE LAW
AND THIS WAIVER OR A COPY HEREOF IS ALLEGED IN SUCH PETITION AND ATTACHED
THERETO, THE COURT BEFORE WHICH SUCH PETITION IS FILED MAY DISPENSE WITH ALL
RIGHTS AND PROCEDURES HEREIN WAIVED AND MAY ISSUE FORTHWITH AN IMMEDIATE WRIT OF
POSSESSION IN ACCORDANCE WITH CHAPTER 14 OF TITLE 44 OF THE OFFICIAL CODE OF
GEORGIA OR IN ACCORDANCE WITH ANY SIMILAR PROVISION OF APPLICABLE LAW, WITHOUT
THE NECESSITY OF AN ACCOMPANYING BOND AS OTHERWISE REQUIRED BY SECTION 44-14-263
OF THE OFFICIAL CODE OF GEORGIA OR IN ACCORDANCE WITH ANY SIMILAR PROVISION OF
APPLICABLE LAW. THE BORROWER HEREBY ACKNOWLEDGES THAT IT HAS READ AND FULLY
UNDERSTANDS THE TERMS OF THIS WAIVER AND THE EFFECT HEREOF.
Section 15.7 REVERSAL OF PAYMENTS. To the extent the Borrower makes a
payment or payments to the Agent or any Lender or the Agent or any Lender
receives any payment or proceeds of the Collateral for the Borrower's benefit,
which payment(s) or proceeds or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any bankruptcy law, state
or federal law, common law or equitable cause, then, the Agent and such Lender
shall have the continuing and exclusive right to apply, reverse and re-apply any
and all payments to any portion of the Secured Obligations, and, to the extent
of such payment or proceeds received, the Secured Obligations or part thereof
intended to be satisfied shall be revived and continued in full force and
effect, as if such payment or proceeds had not been received by the Agent or
such Lender.
Section 15.8 INJUNCTIVE RELIEF. The Borrower recognizes that, in the
event the Borrower fails to perform, observe or discharge any of its obligations
or liabilities under this Agreement, any remedy of law may prove to be
inadequate relief to the Agent and the Lenders; therefore, the Borrower agrees
that the Agent and the Lenders, at their option, shall be entitled to temporary
and permanent injunctive relief in any such case without the necessity of
proving actual damages.
Section 15.9 ACCOUNTING MATTERS. All financial and accounting
calculations, measurements and computations made for any purpose relating to
this Agreement, including, without limitation, all computations utilized by the
Borrower to determine whether it is in compliance with any covenant contained
herein, shall, unless there is an express written direction or consent by the
Required Lenders to the contrary, be performed in accordance with GAAP.
Section 15.10 AMENDMENTS; WAIVERS.
(a) Except as set forth in SUBSECTION (B) below, any term, covenant,
agreement or condition of this Agreement or any of the Loan Documents may be
amended or waived, and any departure therefrom may be consented to by the
Required Lenders, if, but only if, such amendment, waiver or consent is in
writing signed by the Required Lenders and, in the case of
83
an amendment (other than an amendment described in SECTION 15.10(D)), by the
Borrower, and in any such event, the failure to observe, perform or discharge
any such term, covenant, agreement or condition (whether such amendment is
executed or such waiver or consent is given before or after such failure) shall
not be construed as a breach of such term, covenant, agreement or condition or
as a Default or an Event of Default. Unless otherwise specified in such waiver
or consent, a waiver or consent given hereunder shall be effective only in the
specific instance and for the specific purpose for which given. In the event
that any such waiver or amendment is requested by the Borrower, the Agent and
the Lenders may require and charge a fee in connection therewith and
consideration thereof in such amount as shall be determined by the Agent and the
Required Lenders in their discretion.
(b) Except as otherwise set forth in this Agreement, without the prior
unanimous written consent of the Lenders,
(i) no amendment, consent or waiver shall affect the amount or
extend the time of the obligation of the Lenders to make Loans or
extend the originally scheduled time or times of payment of the
principal of any Loan or alter the time or times of payment of interest
on any Loan or the amount of the principal thereof or the rate of
interest thereon or the amount of any commitment fee payable hereunder
or permit any subordination of the principal or interest on such Loan,
permit the subordination of the Security Interests in any material
Collateral or amend the provisions of ARTICLE 13 or of this SECTION
15.10(B),
(ii) no material Collateral shall be released by the Agent
other than as specifically permitted in this Agreement,
(iii) no amendment shall be made to the definitions of
"Commitment", "Commitment Percentage", "Eligible Assignee" or "Secured
Obligations", or, except to the extent expressly provided herein, the
definition of "Borrowing Base" shall not be amended, and,
(iv) neither the Agent nor any Lender shall consent to any
amendment to or waiver of the amortization, deferral or subordination
provisions of any instrument or agreement evidencing or relating to
obligations of the Borrower that are expressly subordinate to any of
the Secured Obligations if such amendment or waiver would be adverse to
the Lenders in their capacities as Lenders hereunder;
PROVIDED, HOWEVER, that anything herein to the contrary notwithstanding, the
Required Lenders shall have the right to waive any Default or Event of Default
and the consequences hereunder of such Default or Event of Default and shall
have the right to enter into an agreement with the Borrower providing for the
forbearance from the exercise of any remedies provided hereunder or under the
other Loan Documents without waiving any Default or Event of Default.
(c) The making of Loans hereunder by the Lenders during the existence
of a Default
84
or Event of Default shall not be deemed to constitute a waiver of such Default
or Event of Default.
(d) Notwithstanding any provision of this Agreement or any other Loan
Document to the contrary, no consent, written or otherwise, of the Borrower
shall be necessary or required in connection with any amendment to ARTICLE 14 or
SECTION 4.7, and any amendment to such provisions shall be effected solely by
and among the Agent and the Lenders, provided that no such amendment shall
impose any obligation on the Borrower.
Section 15.11 PERFORMANCE OF BORROWER'S DUTIES. The Borrower's
obligations under this Agreement and each of the Loan Documents shall be
performed by the Borrower at its sole cost and expense. If the Borrower shall
fail to do any act or thing which it has covenanted to do under this Agreement
or any of the Loan Documents, the Agent may (but shall not be obligated to) do
the same or cause it to be done either in the name of the Agent or in the name
and on behalf of the Borrower, and the Borrower hereby irrevocably authorizes
the Agent so to act.
Section 15.12 INDEMNIFICATION. The Borrower agrees to reimburse the
Agent and each Lender for all reasonable costs and expenses, including counsel
fees and disbursements, incurred and to indemnify and hold the Agent and each
Lender harmless from and against all losses suffered by the Agent or any Lender,
other than losses resulting from the Agent's or such Lender's gross negligence
or willful misconduct, in connection with (a) the exercise by the Agent or any
Lender of any right or remedy granted to it under this Agreement or any of the
Loan Documents, (b) any claim, and the prosecution or defense thereof, arising
out of or in any way connected with this Agreement or any of the Loan Documents,
except in the case of a dispute between the Borrower and the Agent or such
Lender in which the Borrower prevails in a final unappealed or unappealable
judgment, and (c) the collection or enforcement of the Secured Obligations or
any of them.
Section 15.13 ALL POWERS COUPLED WITH INTEREST. All powers of attorney
and other authorizations granted to the Agent or any Lender and any Persons
designated by the Agent or any Lender pursuant to any provisions of this
Agreement or any of the Loan Documents shall be deemed coupled with an interest
and shall be irrevocable so long as any of the Secured Obligations remain unpaid
or unsatisfied or the Revolving Credit Facility has not been terminated.
Section 15.14 SURVIVAL. Notwithstanding any termination of this
Agreement, (a) until all Secured Obligations have been paid in full and the
Revolving Credit Facility terminated, the Agent for the benefit of the Lenders
shall retain its Security Interest and the Agent and the Lenders shall retain
all rights under this Agreement and each of the Security Documents with respect
to the Collateral as fully as though this Agreement had not been terminated, and
(b) the indemnities to which the Agent and each Lender is entitled under the
provisions of this ARTICLE 15 and any other provision of this Agreement and the
Loan Documents shall continue in full force and effect and shall protect the
Agent and each Lender against events arising after
85
such termination as well as before.
Section 15.15 SEVERABILITY OF PROVISIONS. Any provision of this
Agreement or any other Loan Document which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only to the extent
of such prohibition or unenforceability without invalidating the remainder of
such provision or the remaining provisions hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.
Section 15.16 GOVERNING LAW. This Agreement, the Notes and the other
Loan Documents shall be construed in accordance with and governed by the law of
the State of Georgia.
Section 15.17 COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and shall be
binding upon all parties, their successors and assigns, and all of which taken
together shall constitute one and the same agreement.
Section 15.18 REPRODUCTION OF DOCUMENTS. This Agreement, each of the
Loan Documents and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by the Agent or any Lender, and (c) financial
statements, certificates and other information previously or hereafter furnished
to the Agent or any Lender, may be reproduced by the Agent or any Lender by any
photographic, Photostat, microcard, microfilm, miniature photographic or other
similar process, and the Agent or any Lender may destroy any original document
so reproduced. Each party hereto stipulates that, to the extent permitted by
applicable laws any such reproduction shall be as admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not the
original shall be in existence and whether or not such reproduction was made by
the Agent or any Lender in the regular course of business), and any enlargement,
facsimile or further reproduction of such reproduction shall likewise be
admissible in evidence.
Section 15.19. CONSENT TO ADVERTISING AND PUBLICITY. With the prior
written consent of the Borrower, which consent shall not be unreasonably
withheld, the Agent, on behalf of the Lenders, may issue and disseminate to the
public information describing the credit accommodation entered into pursuant to
this Agreement, including the name and address of the Borrower, the amount,
interest rate, maturity, collateral and a general description of the Borrower's
business.
Section 15.20. PRO-RATA PARTICIPATION.
(a) Each Lender agrees that if, as a result of the exercise of a right
of setoff, banker's lien or counterclaim or other similar right or the receipt
of a secured claim it receives any payment in respect of the Secured
Obligations, it shall promptly notify the Agent thereof (and the Agent shall
promptly notify the other Lenders). If, as a result of such payment, such Lender
86
receives a greater percentage of the Secured Obligations owed to it under this
Agreement than the percentage received by any other Lender, such Lender shall
purchase a participation (which it shall be deemed to have purchased
simultaneously upon the receipt of such payment) in the Secured Obligations then
held by such other Lenders so that all such recoveries of principal and interest
with respect to all Secured Obligations owed to each Lender shall be pro rata on
the basis of its respective amount of the Secured Obligations owed to all
Lenders, PROVIDED that if all or part of such proportionately greater payment
received by such purchasing Lender is thereafter recovered by or on behalf of
the Borrower from such Lender, such purchase shall be rescinded and the purchase
price paid for such participation shall be returned to such Lender to the extent
of such recovery, but without interest.
(b) Each Lender which receives such a secured claim shall exercise its
rights in respect of such secured claim in a manner consistent with the rights
of the Lenders entitled under this SECTION 15.20 to share in the benefits of any
recovery on such secured claim.
(c) The Borrower expressly consents to the foregoing arrangements and
agrees that any holder of a participation in any Secured Obligation so purchased
or otherwise acquired may exercise any and all rights of banker's lien, set-off
or counterclaim with respect to any and all monies owing by the Borrower to such
holder as fully as if such holder were a holder of such Secured Obligation in
the amount of the participation held by such holder.
87
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed under seal by their duly authorized officers in several counterparts
all as of the day and year first written above.
BORROWER:
SUPREME INTERNATIONAL
CORPORATION
[CORPORATE SEAL]
By:_____________________________
Name:________________________
Title:_______________________
LENDERS:
Revolving Credit NATIONSBANK, N.A.
Commitment: $32,500,000
By:
Name:
Title:
Address: 600 Peachtree Street, N.E.
13 Plaza
Atlanta, Georgia 30308
Attn.: Business Credit
Facsimile No.: 404-607-6439
Revolving Credit SUNTRUST BANK, MIAMI, N.A.
Commitment: $7,500,000
By:
Name:
Title:
Address: MC1042
777 Brickell Avenue
1
Miami, Florida 33131-2803
Attn: Manuel Perdomo
Facsimile No.: 305-577-5017
Revolving Credit SOUTHTRUST BANK, NATIONAL
Commitment: $7,500,000 ASSOCIATION
By:
Name:
Title:
Address: 420 N. 20th Street, 9th Floor
Birmingham, Alabama 35203
Attn: Steven W. Davis
Facsimile No.: 205-254-4240
Revolving Credit FIRST UNION NATIONAL BANK
Commitment: $7,500,000
By:
Name:
Title:
Address: FL6011
200 Biscayne Boulevard
Miami, Florida 33131
Attn: Charles Klenk
Facsimile No.: 305-789-4902
AGENT:
NATIONSBANK, N.A.
By:
Name:
Title:
Address: 600 Peachtree Street, N.E.
13 Plaza
2
Atlanta, Georgia 30308
Attn.: Business Credit
Facsimile No.: 404-607-6439
3
NOTARY JURAT FOR EXECUTION OF
NOTES AND OTHER
WRITTEN OBLIGATIONS TO PAY MONEY
BY FLORIDA BORROWERS
On this the ____ day of March, 1998, before me, the undersigned, a
Notary Public in and for the State of Georgia, County of Fulton, _______________
personally appeared, personally known to me or proved to me on the basis of
satisfactory evidence to be the ____________________ of SUPREME INTERNATIONAL
CORPORATION, who executed the foregoing Amended and Restated Loan and Security
Agreement on behalf of such corporation and acknowledged to me that such
corporation executed the foregoing pursuant to its by-laws or a resolution of
its board of directors, said execution taking place in the State of Georgia,
County of Fulton.
- ----------------------------------
Notary Signature
My Commission Expires:
- ---------------------------------
[Affix Notarial Seal]
4
EXHIBIT "A"
REVOLVING CREDIT NOTE
$_______________ Date: March __, 1998
FOR VALUE RECEIVED, on the Termination Date (as defined in the
below-described Loan Agreement) the undersigned promises to pay to the order of
____________________ (hereinafter, together with any holder hereof, called
"Holder"), at the office of the Agent (as hereafter defined) (or at such other
place as the Holder may designate in writing to the undersigned) the principal
amount of $_______________ or so much thereof as has been advanced hereunder.
The undersigned shall pay interest as provided in that certain Amended
and Restated Loan and Security Agreement among the undersigned, the Holder and
the other financial institutions from time to time party thereto (the
"Lenders"), and NationsBank, N.A., as agent for the Lenders (the "Agent"), dated
as of March __, 1998 (the "Loan Agreement").
It is contemplated that the principal sum evidenced by this Note may be
reduced from time to time and that additional advances may be made from time to
time, as provided in the Loan Agreement.
This Note is subject to the terms and conditions of the Loan Agreement.
No delay or failure on the part of the Agent or the Holder in the
exercise of any right or remedy hereunder, under the Loan Agreement, the
Security Documents or at law or in equity, shall operate as a waiver thereof,
and no single or partial exercise by the Agent or the Holder of any right or
remedy hereunder, under the Loan Agreement, the Security Documents, or at law or
in equity shall preclude or estop another or further exercise thereof or the
exercise of any other right or remedy.
Principal and interest on this Note shall be payable and paid in lawful
money of the United States of America.
Time is of the essence of this Note and, in case this Note is collected
by law or through an attorney at law, or under advice therefrom, the undersigned
agrees to pay all costs of collection, including reasonable attorneys' fees if
collected by or through an attorney.
The provisions of this Note shall be construed and interpreted and all
rights and obligations
1
of the parties hereunder determined in accordance with the laws of the State of
Georgia.
IN WITNESS WHEREOF, the undersigned has caused this Note to be
executed, sealed and delivered in Atlanta, Georgia, in its corporate name, by
and through its respective duly authorized officers, as of the day and year
first above written.
SUPREME INTERNATIONAL
CORPORATION
By:________________________
(Title)
ATTEST:
By:_________________________
(Title)
[CORPORATE SEAL]
2
NOTARY JURAT FOR EXECUTION OF
NOTES AND OTHER
WRITTEN OBLIGATIONS TO PAY MONEY
BY FLORIDA BORROWERS
On this the ____ day of March, 1998, before me, the undersigned, a
Notary Public in and for the State of Georgia, County of Fulton,________________
personally appeared, personally known to me or proved to me on the basis of
satisfactory evidence to be the ____________________ of SUPREME INTERNATIONAL
CORPORATION, who executed the foregoing Amended and Restated Loan and Security
Agreement on behalf of such corporation and acknowledged to me that such
corporation executed the foregoing pursuant to its by-laws or a resolution of
its board of directors, said execution taking place in the State of Georgia,
County of Fulton.
- ----------------------------------
Notary Signature
My Commission Expires:
- ---------------------------------
[Affix Notarial Seal]
3
EXHIBIT "B"
BORROWING BASE CERTIFICATE
EXHIBIT C
FORM OF ASSIGNMENT AND ACCEPTANCE
___________________, Assignee
Dated: _____________ ____, ______
Reference is made to the Amended and Restated Loan and
Security Agreement dated as of March __, 1998 (as amended to the date hereof,
the "Loan Agreement"), among SUPREME INTERNATIONAL CORPORATION, a Florida
corporation (the "Borrower"), the financial institutions party to the Loan
Agreement from time to time (the "Lenders"), and NationsBank, N.A., a national
banking association, as agent for the Lenders (the "Agent"). Terms used herein
that are defined in the Loan Agreement are used with the meanings therein
ascribed to them.
____________________________ (the "Assignor") and
_________________________________ (the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, without recourse
(except with respect to any representation of the Assignor expressly set forth
herein or in the Loan Agreement), an interest in and to such of the Assignor's
rights and obligations as a Lender under the Loan Agreement as of the Effective
Date (as hereinafter defined) as represent a _____% interest in and to all of
the outstanding rights and obligations of the Lenders thereunder as of the
Effective Date (including, without limitation, such percentage interest in the
Loans owing to the Lenders outstanding on the Effective Date, and such
percentage interest in the Notes). The Assignee shall have no interest in any
interest that is payable with respect to a period prior to the Effective Date.
2. The Assignor (i) represents that as of the date hereof, its
Commitment under the Loan Agreement is $_____________, the outstanding balance
of its Revolving Credit Loans is $_____________, and the aggregate amount of its
interest in the Standby Letter of Credit is $____________ (in each case
unreduced by any assignments thereof which have not yet become effective); (ii)
makes no representation or warranty and assumes no responsibility with respect
to any statements, warranties or representations made in or in connection with
the Loan Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Loan Agreement or any other instrument
or document furnished pursuant thereto, other than that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim, lien or encumbrance; and (iii)
makes no representation or warranty and assumes no responsibility with respect
to the financial condition of the Borrower or any other Person or the
performance or observance by the Borrower or any other Person of any of its
obligations under the Loan Agreement or any other Loan Documents.
1
3. The Assignee (i) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (ii) confirms that it
has received a copy of the Loan Agreement, together with copies of the most
recent financial statements delivered pursuant to SECTION 10.1 thereof and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Assignment and Acceptance; (iii)
agrees that it will, independently and without reliance upon the Agent, the
Assignor or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Loan Agreement; (iv) confirms that it is
an Eligible Assignee; (v) appoints and authorizes the Agent to take such action
as agent on its behalf and to exercise such powers under the Loan Agreement as
are delegated to the Agent by the terms thereof, together with such powers as
are reasonably incidental thereto; (vi) agrees that it will perform in
accordance with their terms all the obligations which by the terms of the Loan
Agreement are required to be performed by it as a Lender; and (vii) specifies as
its address for notices the office set forth beneath its name on the signature
pages hereof.
4. The effective date for this Assignment and Acceptance shall be
__________________, ______ (the "Effective Date"). Following the execution of
this Assignment and Acceptance, it will be delivered to the Agent for acceptance
and recording by the Agent.
5. Upon such acceptance and recording, and the payment to the Agent of
the processing fee described in SECTION 13.1 of the Loan Agreement, from and
after the Effective Date, (i) the Assignee shall be a party to the Loan
Agreement and, to the extent provided in this Assignment and Acceptance, shall
have the rights and obligations of a Lender thereunder, and (ii) the Assignor
shall, to the extent provided in this Assignment and Acceptance, relinquish its
rights and be released form its obligations under the Loan Agreement.
6. Upon such acceptance and recording, from and after the Effective
Date, the Agent shall make all payments in respect of the interest assigned
hereby (including payments of principal, interest, fees and other amounts) to
the Assignee. Assignor and Assignee shall make all appropriate adjustments in
payments for periods prior to the Effective Date by the Agent or with respect to
the making of this Assignment and Acceptance directly between themselves.
2
7. This Assignment and Acceptance shall be governed by, and construed
in accordance with, the laws of the State of Georgia, without reference to any
provision which would render such choice invalid.
ASSIGNOR:
_____________________________________
By:__________________________________
Name:_____________________________
Title:____________________________
ASSIGNEE:
By:__________________________________
Name:_____________________________
Title:____________________________
Address:
__________________________________
__________________________________
Accepted this ____ day of
_______________, 199_.
NationsBank, N.A., as Agent
By:__________________________________
Name:_____________________________
Title:____________________________
3
EXHIBIT D
FORM OF
SETTLEMENT REPORT
Pursuant to SECTION 4.8 of the Amended and Restated Loan and Security
Agreement dated as of March __, 1998, as amended, restated, supplemented or
otherwise modified through and including the date hereof (the "Loan Agreement",
terms defined in the Loan Agreement and not otherwise defined herein being used
herein as therein defined), among SUPREME INTERNATIONAL CORPORATION, a Florida
corporation, the financial institutions party to the Loan Agreement from time to
time (the "Lenders"), and NationsBank, N.A., a national banking association, as
agent for the Lenders (the "Agent"), the Agent hereby delivers this report to
the Lenders for the ____________ ____, [199___/20___] Settlement Date.
1. Principal amount of Revolving Credit
Loans outstanding as of Settlement
Date (before settlement) $______________________
(a) NationsBank, N.A. ` $______________________
(b) [Lender] $______________________
(c) [Lender] $______________________
(d) Total $______________________
2. Principal amount of Revolving Credit Loans outstanding as of next
preceding Settlement Date (after settlement on such date)
(a) NationsBank, N.A. $______________________
(b) [Lender] $______________________
(c) [Lender] $______________________
(d) Total $______________________
1
3. Commitment Amount of each Lender (line 1(d) x Commitment Percentage)
(a) NationsBank, N.A. $______________________
(b) [Lender] $______________________
(c) [Lender] $______________________
4. Excess (shortfall) of each Lender's Commitment Amount over its
outstandings
(a) NationsBank, N.A. (line
3(a) minus line 1(a) $______________________
(b) [Lender] (line
3(b) minus line 1(b))] $______________________
(c) [Lender (line 3(c)
minus line 1(c))] $______________________
5. Each Lender for which an excess (a positive dollar amount) is shown in
item 4 shall pay an amount equal to such excess to the Agent, for
payment by the Agent to each Lender for which a shortfall (a negative
dollar amount) is shown in item 4 to the extent of such shortfall.
NATIONSBANK, N.A., as Agent
By:______________________________
Name:____________________________
Title:___________________________
2