EXHIBIT 4.8
LOAN AND SECURITY AGREEMENT
by and among
CONGRESS FINANCIAL CORPORATION
as Lender
and
ANVIL KNITWEAR, INC.
as Borrower
ANVIL HOLDINGS, INC.
and
COTTONTOPS, INC.
as Guarantors
Dated: March 11, 1999
TABLE OF CONTENTS
Page
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SECTION 1. DEFINITIONS......................................................................................... 1
SECTION 2. CREDIT FACILITIES................................................................................... 21
2.1 Revolving Loans............................................................................... 21
2.2 Letter of Credit Accommodations............................................................... 23
2.3 Availability Reserves......................................................................... 25
SECTION 3. INTEREST AND FEES................................................................................... 26
3.1 Interest...................................................................................... 26
3.2 Closing Fee................................................................................... 27
3.3 Servicing Fee................................................................................. 27
3.4 Unused Line Fee............................................................................... 27
3.5 Changes in Laws and Increased Costs of Loans.................................................. 28
SECTION 4. CONDITIONS PRECEDENT................................................................................ 28
4.1 Conditions Precedent to Initial Loans and Letter of Credit Accommodations..................... 28
4.2 Conditions Precedent to All Loans and Letter of Credit Accommodations......................... 30
SECTION 5. GRANT OF SECURITY INTEREST.......................................................................... 31
SECTION 6. COLLECTION AND ADMINISTRATION....................................................................... 33
6.1 Borrower's Loan Account....................................................................... 33
6.2 Statements.................................................................................... 33
6.3 Collection of Accounts........................................................................ 33
6.4 Payments...................................................................................... 34
6.5 Authorization to Make Loans................................................................... 35
6.6 Use of Proceeds............................................................................... 35
SECTION 7. COLLATERAL REPORTING AND COVENANTS.................................................................. 36
7.1 Collateral Reporting.......................................................................... 36
7.2 Accounts Covenants............................................................................ 36
7.3 Inventory Covenants........................................................................... 38
7.4 Equipment and Real Property Covenants......................................................... 39
7.5 Bills of Lading and Other Documents of Title.................................................. 39
7.6 Power of Attorney............................................................................. 40
7.7 Right to Cure................................................................................. 41
7.8 Access to Premises............................................................................ 41
(1)
SECTION 8. REPRESENTATIONS AND WARRANTIES...................................................................... 41
8.1 Corporate Existence, Power and Authority; Subsidiaries........................................ 41
8.2 Financial Statements; No Material Adverse Change.............................................. 42
8.3 Chief Executive Office; Collateral Locations.................................................. 42
8.4 Priority of Liens; Title to Properties........................................................ 42
8.5 Tax Returns................................................................................... 43
8.6 Litigation.................................................................................... 43
8.7 Compliance with Other Agreements and Applicable Laws.......................................... 43
8.8 Environmental Compliance...................................................................... 44
8.9 Employee Benefits............................................................................. 45
8.10 Bank Accounts................................................................................. 45
8.11 Accuracy and Completeness of Information...................................................... 45
8.12 Senior Note Indenture......................................................................... 46
8.13 Survival of Warranties; Cumulative............................................................ 46
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS.................................................................. 46
9.1 Maintenance of Existence...................................................................... 46
9.2 New Collateral Locations...................................................................... 46
9.3 Compliance with Laws, Regulations, Etc........................................................ 47
9.4 Payment of Taxes and Claims................................................................... 48
9.5 Insurance..................................................................................... 48
9.6 Financial Statements and Other Information.................................................... 50
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc....................................... 51
9.8 Encumbrances.................................................................................. 54
9.9 Indebtedness.................................................................................. 56
9.10 Loans, Investments, Guarantees, Etc........................................................... 60
9.11 Dividends and Redemptions..................................................................... 61
9.12 Transactions with Affiliates.................................................................. 61
9.13 Additional Bank Accounts...................................................................... 62
9.14 Compliance with ERISA......................................................................... 62
9.15 Existing Real Property; After Acquired Real Property.......................................... 63
9.16 Costs and Expenses............................................................................ 64
9.17 Changes in Business........................................................................... 64
9.18 Exchange Debentures........................................................................... 65
9.19 Further Assurances............................................................................ 65
SECTION 10. EVENTS OF DEFAULT AND REMEDIES.................................................................... 65
10.1 Events of Default............................................................................. 65
10.2 Remedies...................................................................................... 67
(2)
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW ...................................... 69
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver......................... 69
11.2 Waiver of Notices............................................................................. 70
11.3 Amendments and Waivers........................................................................ 71
11.4 Waiver of Counterclaims....................................................................... 71
11.5 Indemnification............................................................................... 71
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS................................................................... 71
12.1 Term.......................................................................................... 71
12.2 Notices....................................................................................... 73
12.3 Partial Invalidity............................................................................ 73
12.4 Successors.................................................................................... 74
12.5 Confidentiality............................................................................... 74
12.6 Entire Agreement.............................................................................. 75
(3)
INDEX TO
EXHIBITS AND SCHEDULES
Exhibit A Information Certificate
Schedule 1.38 Existing Lenders
Schedule 1.39 Existing Letters of Credit
Schedule 1.40 Existing Real Property
Schedule 8.1 Subsidiaries
Schedule 8.4 Existing Liens
Schedule 8.6 Litigation
Schedule 8.8 Environmental Compliance
Schedule 8.10 Bank Accounts
Schedule 9.7 Real Property
Schedule 9.9(h) Existing Indebtedness
Schedule 9.9(k) Parent Subordinated Debt
Schedule 9.10 Existing Loans, Advances and Guarantees
(1)
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement dated March 11, 1999 is entered into
by and among Congress Financial Corporation, a Delaware corporation ("Lender"),
Anvil Knitwear, Inc., a Delaware corporation ("Borrower"), Anvil Holdings, Inc.,
a Delaware corporation ("Holdings") and Cottontops, Inc., a Delaware corporation
("Cottontops"; together with Holdings, each individually a "Guarantor" and
collectively "Guarantors").
W I T N E S S E T H:
WHEREAS, Borrower and Guarantors have requested that Lender enter into
certain financing arrangements with Borrower pursuant to which Lender may make
loans and provide other financial accommodations to Borrower; and
WHEREAS, Lender is willing to make such loans and provide such
financial accommodations on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. DEFINITIONS
All terms used herein which are defined in Article 1 or Article 9 of
the Uniform Commercial Code shall have the meanings given therein unless
otherwise defined in this Agreement. All references to the plural herein shall
also mean the singular and to the singular shall also mean the plural unless the
context otherwise requires. All references to Borrower and Lender pursuant to
the definitions set forth in the recitals hereto, or to any other person herein,
shall include their respective successors and assigns. The words "hereof",
"herein", "hereunder", "this Agreement" and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not any particular
provision of this Agreement and as this Agreement now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced. The
word "including" when used in this Agreement shall mean "including, without
limitation". An Event of Default shall exist or continue or be continuing until
such Event of Default is waived in accordance with Section 11.3 or is cured in a
manner satisfactory to Lender, if such Event of Default is capable of being
cured as determined by Lender. Any accounting term used herein unless otherwise
defined in this Agreement shall have the meanings customarily given to such term
in accordance with GAAP; PROVIDED, THAT, if Borrower notifies Lender that
Borrower wishes to amend any covenant contained in Section 9 or any related
definition to
eliminate the effect of any change in GAAP occurring after the date of this
Agreement or to reflect the application of Accounting Principles Board Opinions
16 and 17 on the operation of such covenant (or if the Lender notifies Borrower
that Lender wishes to amend Section 9 or any related definition for each such
purpose), then Borrower's compliance with such covenant shall be determined on
the basis of GAAP in effect immediately before the relevant change in GAAP
became effective, or without the application of Accounting Principles Board
Opinions 16 and 17, as applicable, until either such notice is withdrawn or such
covenant is amended in a manner satisfactory to Borrower and Lender. For
purposes of this Agreement, the following terms shall have the respective
meanings given to them below:
1.1 "Accounts" shall mean all present and future rights of Borrower to
payment for goods sold or leased or for services rendered, which are not
evidenced by instruments or chattel paper, and whether or not earned by
performance and, including, without limitation, Credit Card Receivables.
1.2 "Adjusted Eurodollar Rate" shall mean, with respect to each
Interest Period for any Eurodollar Rate Loan, the rate per annum (rounded
upwards, if necessary, to the next one-sixteenth (1/16) of one (1%) percent)
determined by dividing (a) the Eurodollar Rate for such Interest Period by (b) a
percentage equal to: (i) one (1) minus (ii) the Reserve Percentage. For purposes
hereof, "Reserve Percentage" shall mean the reserve percentage, expressed as a
decimal, prescribed by any United States or foreign banking authority for
determining the reserve requirement which is or would be applicable to deposits
of United States dollars in a non-United States or an international banking
office of Reference Bank used to fund a Eurodollar Rate Loan or any Eurodollar
Rate Loan made with the proceeds of such deposit, whether or not the Reference
Bank actually holds or has made any such deposits or loans. The Adjusted
Eurodollar Rate shall be adjusted on and as of the effective day of any change
in the Reserve Percentage.
1.3 "Affiliate" shall mean, with respect to a specified Person, any
other Person (a) which directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, such specified
person; (b) which beneficially owns or holds ten (10%) percent or more of any
class of the Voting Stock or other equity interest of such specified person; or
(c) of which ten (10%) percent or more of the Voting Stock or other equity
interest is beneficially owned or held by such specified person or a Subsidiary
of such specified person. For purposes of this definition, "control" (including,
with correlative meanings, the terms "controlling", "controlled by" and "under
common control with") when used with respect to any specified person shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person, whether through the
ownership of Voting Stock, by agreement or otherwise.
1.4 "Availability Reserves" shall mean, as of any date of
determination, such amounts as Lender may from time to time establish and revise
in good faith (without duplication) reducing the amount of Revolving Loans and
Letter of Credit Accommodations which would otherwise be
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available to Borrower under the lending formula(s) provided for herein: (a) to
reflect events, conditions, contingencies or risks which, as determined by
Lender in good faith, do or may adversely affect either (i) the Collateral or
any other property which is security for the Obligations or its value, (ii) the
assets, business or prospects of Borrower or any Obligor or (iii) the security
interests and other rights of Lender in the Collateral (including the
enforceability, perfection and priority thereof) or (b) to reflect Lender's good
faith belief that any collateral report or financial information furnished by or
on behalf of Borrower or any Obligor to Lender is or may have been incomplete,
inaccurate or misleading in any material respect or (c) to reflect outstanding
Letter of Credit Accommodations as provided in Section 2.2 hereof or (d) subject
to Section 2.4(b) to reflect the Term Loan Reduction Amount, if any, or (e)
$140,000, to reflect the fact that the Equipment described at Item No. 128 of
the Equipment Appraisal is subject to the lien of ▇▇▇▇▇ Corporation ("▇▇▇▇▇");
such reserve shall remain in effect until such time as Borrower provides Lender
with (i) evidence that Borrower has paid ▇▇▇▇▇ in full with respect to such
Equipment and (ii) UCC-3 Termination Statements for all UCC financing statements
previously filed by ▇▇▇▇▇, as secured party and Borrower, as debtor, or (f) in
respect of any state of facts which Lender determines in good faith constitutes
an Event of Default or is, with notice or passage of time or both, reasonably
likely, in good faith determination of Lender, to constitute an Event of
Default. To the extent Lender may revise the lending formulas set forth in
Section 2 hereof, or establish new criteria or revise existing criteria for
Eligible Accounts, Eligible Equipment, or Eligible Inventory so as to address
any event, condition, contingency or risk in a manner satisfactory to Lender in
good faith, Lender shall not establish an Availability Reserve for the same
purpose.
1.5 "▇▇▇▇ and Hold Accounts" shall mean all Accounts arising pursuant
to purchase orders, confirmations received or invoices issued by Borrower which
identify the terms of the arrangements with the account debtor for such Account
as being on a ▇▇▇▇ and hold basis by being marked "hold stock" or for "storage"
or "▇▇▇▇ and hold" or any words of similar import and which Accounts are
specifically identified in any report of Accounts provided by Borrower to Lender
in a format and with such detail as Lender may reasonably require.
1.6 "Blocked Accounts" shall have the meaning set forth in Section
6.3 hereof.
1.7 "BRS" shall mean ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ & Co., L.P., a Delaware
limited partnership and its Affiliates (including for this purpose, all of their
respective employees, partners, officers and directors and family members and
relatives of such Persons) and any trusts established for the benefit of the
foregoing persons, PROVIDED, THAT, such trusts are controlled by BRS or its
Affiliates.
1.8 "Business Day" shall mean any day other than a Saturday, Sunday, or
other day on which commercial banks are authorized or required to close under
the laws of the State of New York or the Commonwealth of Pennsylvania, and a day
on which the Reference Bank and Lender are open for the transaction of business,
except that if a determination of a Business Day shall relate to any Eurodollar
Rate Loans, the term Business Day shall also exclude any day on which
3
banks are closed for dealings in dollar deposits in the London interbank market
or other applicable Eurodollar Rate market.
1.9 "Capital Leases" shall mean, as applied to any Person, any lease of
(or any agreement conveying the right to use) any property (whether real,
personal or mixed) by such Person as lessee which in accordance with GAAP, is
required to be capitalized as Indebtedness on the balance sheet of such Person.
1.10 "Capital Stock" shall mean, with respect to any Person, any and
all shares, interests, participations or other equivalents (however designated)
of such Person's capital stock, partnership interests or limited liability
company interests at any time outstanding, and any and all rights, warrants or
options exchangeable for or convertible into such capital stock or other
interests.
1.11 "Cash Equivalents" shall mean, at any time, (a) any evidence of
Indebtedness with a maturity date of one hundred eighty (180) days or less
issued or directly and fully guaranteed or insured by the United States of
America of any agency or instrumentality thereof; PROVIDED, THAT, the full faith
and credit of the United States of America is pledged in support thereof; (b)
certificates of deposit or bankers' acceptances with a maturity of three hundred
sixty (360) days or less of any financial institution that is a member of the
Federal Reserve System having combined capital and surplus and undivided profits
of not less than $100,000,000; (c) commercial paper (including variable rate
demand notes) with a maturity of one hundred eighty (180) days or less issued by
a corporation (except an Affiliate of Borrower other than Citigroup, Inc.)
organized under the laws of any State of the United States of America or the
District of Columbia and rated at least A-1 by Standard & Poor's Ratings
Service, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. or at least P-1 by
▇▇▇▇▇'▇ Investors Service, Inc.; (d) repurchase obligations with a term of not
more than thirty (30) days for underlying securities of the types described in
clause (a) above entered into with any financial institution having combined
capital and surplus and undivided profits of not less than $100,000,000; (e)
repurchase agreements and reverse repurchase agreements relating to marketable
direct obligations issued or unconditionally guaranteed by the United States of
America or issued by any governmental agency thereof and backed by the full
faith and credit to the United States of America, in each case maturing within
one hundred eighty (180) days or less from the date of acquisition; PROVIDED,
THAT, the terms of such agreements comply with the guidelines set forth in the
Federal Financial Agreements of Depository Institutions with Securities Dealers
and Others, as adopted by the Comptroller of the Currency on October 31, 1985;
and (f) investments in money market funds and mutual funds which invest
substantially all of their assets in securities of the types described in
clauses (a) through (e) above.
1.12 "Casualty Event" shall mean with respect to any Equipment or
improvements located on the Real Property of Borrower, any Guarantor or any of
their respective Subsidiaries, any physical loss, damage or destruction to, or
any condemnation or other taking of such property, for which Borrower, any
Guarantor or any of their respective Subsidiaries receives
4
insurance proceeds, proceeds of a condemnation award or other similar
compensation from a non-affiliated third party.
1.13 "Certificate of Designation" shall mean the Certificate of
Designation of the Powers, Preferences and Relative, Participating, Optional and
Other Special Rights of 13.00% Senior Exchangeable Preferred Stock and
Qualifications, Limitations and Restrictions thereof, dated as of March 14, 1997
and executed by Holdings, as the same now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced.
1.14 "Change of Control" means any of the following events:
(i) Holdings shall cease to own and control, beneficially and of
record, one hundred (100%) percent of the issued and outstanding shares
of Capital Stock of Borrower consisting of common stock;
(ii) Borrower shall cease to own and control, beneficially and of
record, one hundred (100%) percent of the issued and outstanding shares
of Capital Stock of Cottontops (except in each case, as the result of
the merger or consolidation of any such persons to the extent permitted
under Section 9.7 hereof);
(iii) prior to a Qualified Public Offering, (a) the failure of
the Investors to beneficially own, directly or indirectly, at least
51%, in the aggregate, of the Voting Stock of Holdings (or in the case
of a merger or consolidation between Holdings and Borrower, as
permitted herein, then of the survivor of such merger or consolidation)
or (b) the failure of the Investors, collectively, to retain and
exercise the unconditional right to elect a majority of the Board of
Directors of Holdings (or in the case of a merger or consolidation
between Holdings and Borrower, as permitted herein, then of the
survivor of such merger or consolidation); or
(iv) after a Qualified Public Offering, (a) the failure of the
Investors to beneficially own, directly or indirectly, at least
33 1/3%, in the aggregate, of the Voting Stock of Holdings (or in the
case of a merger or consolidation between Holdings and the Borrower,
then of the survivor of such merger or consolidation) or (b) a person
or group (as such term is defined in Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended) other than the Investors shall
beneficially own, directly or indirectly, in the aggregate, a greater
percentage of the Voting Stock of Holdings (or in the case of a merger
or consolidation between Holdings and the Borrower, then of the
survivor of such merger or consolidation) than the percentage of such
Voting Stock owned by the Investors;
1.15 "Code" shall mean the Internal Revenue Code of 1986, as the same
now exists or may from time to time hereafter be amended, modified, recodified
or supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.
5
1.16 "Collateral" shall have the meaning set forth in Section 5 hereof.
1.17 "Collateral Access Agreement" shall mean an agreement in writing,
in form and substance reasonably satisfactory to Lender, from any lessor of
premises to Borrower, or any other person to whom any Collateral (including
Inventory, Equipment, bills of lading or other documents of title) is consigned
or who has custody, control or possession of any such Collateral or is otherwise
the owner or operator of any premises on which any of such Collateral is
located, pursuant to which such lessor, consignee or other person, INTER ALIA,
acknowledges the first priority security interest of Lender in such Collateral,
agrees to waive any and all claims such lessor, consignee or other person may,
at any time, have against such Collateral, whether for processing, storage or
otherwise, and agrees to permit Lender access to, and the right to remain on,
the premises of such lessor, consignee or other person so as to exercise
Lender's rights and remedies and otherwise deal with such Collateral and in the
case of any person who at any time has custody, control or possession of any
bills of lading or other documents of title, agrees to hold such bills of lading
or other documents as bailee for Lender and to follow all instructions of Lender
with respect thereto.
1.18 "Cost" shall mean, as to the Inventory as of any date, the cost of
such Inventory as of such date, determined using the first-in-first-out method
in accordance with GAAP.
1.19 "Cottontops" shall mean Cottontops, Inc., a Delaware corporation,
and its successors and assigns.
1.20 "Credit Card Receivables " shall mean all present and future
rights to payment of Borrower arising pursuant to the sale of Inventory to
customers who have purchased such goods using a credit card or debit card.
1.21 "Customs Broker" shall mean MSAS, Inc. or such other persons as
may be selected by Borrower after the date hereof and after written notice by
Borrower to Lender to perform port of entry services to process Inventory
imported by Borrower from outside the United States of America and to supply
facilities, labor and materials to Borrower in connection therewith, PROVIDED,
THAT, as to each such person as Lender may require (a) Lender shall have
received a Collateral Access Agreement duly authorized, executed and delivered
by such person and (b) such agreement is in full force and effect.
1.22 "Eligible Accounts" shall mean Accounts created by Borrower which
are and continue to be acceptable to Lender based on the criteria set forth
below. In general, Accounts shall be Eligible Accounts if:
(a) such Accounts arise from the actual and BONA FIDE sale and
shipment of goods by Borrower or rendition of services by Borrower in the
ordinary course of its business which
6
transactions are completed in accordance with the terms and provisions contained
in any documents related thereto;
(b) such Accounts are not unpaid more than the earlier of: (i)
sixty (60) days after the original due date for them or (ii) one hundred fifty
(150) days after the date of the original invoice for them;
(c) such Accounts comply with the terms and conditions contained
in Section 7.2(c) of this Agreement;
(d) such Accounts do not arise from sales on consignment,
guaranteed sale, sale and return, sale on approval, or other terms under which
payment by the account debtor may be conditional or contingent;
(e) the chief executive office of the account debtor with respect
to such Accounts is located in the United States of America or Canada (PROVIDED,
THAT, at any time promptly upon Lender's request, Borrower shall execute and
deliver, or cause to be executed and delivered, such other agreements, documents
and instruments as may be required by Lender to perfect the security interests
of Lender in those Accounts of an account debtor with its chief executive office
or principal place of business in Canada in accordance with the applicable laws
of the Province of Canada in which such chief executive office or principal
place of business is located and take or cause to be taken such other and
further actions as Lender may request to enable Lender as secured party with
respect thereto to collect such Accounts under the applicable Federal or
Provincial laws of Canada) or, at Lender's option, if the chief executive office
and principal place of business of the account debtor with respect to such
Accounts is located other than in the United States of America or Canada, then
if either: (i) the account debtor has delivered to Borrower an irrevocable
letter of credit issued or confirmed by a bank satisfactory to Lender and
payable only in the United States of America and in U.S. dollars, sufficient to
cover such Account, in form and substance satisfactory to Lender and if required
by Lender, the original of such letter of credit has been delivered to Lender or
Lender's agent and the issuer thereof notified of the assignment of the proceeds
of such letter of credit to Lender, or (ii) such Account is subject to credit
insurance payable to Lender issued by an insurer and on terms and in an amount
acceptable to Lender, or (iii) such Account is otherwise acceptable in all
respects to Lender (subject to lending formula with respect thereto as Lender
may determine);
(f) such Accounts do not consist of progress ▇▇▇▇▇▇▇▇ or
retainage invoices;
(g) the account debtor with respect to such Accounts has not
asserted a counterclaim, defense or dispute and does not have, and does not
engage in transactions which may give rise to, any right of setoff against such
Accounts (but the portion of the Accounts of such account debtor in excess of
the amount at any time and from time to time owed by Borrower to such account
debtor or claimed owed by such account debtor may be deemed Eligible
7
Accounts);
(h) there are no facts, events or occurrences which would impair
the validity, enforceability or collectability of such Accounts or materially
reduce the amount payable or delay payment thereunder;
(i) such Accounts are subject to the first priority, valid and
perfected security interest of Lender and any goods giving rise thereto are not,
and were not at the time of the sale thereof, subject to any liens except those
permitted in this Agreement;
(j) neither the account debtor nor any officer or employee of the
account debtor with respect to such Accounts is an officer, employee or agent of
or affiliated with Borrower directly or indirectly by virtue of family
membership, ownership, control, management or otherwise;
(k) the account debtors with respect to such Accounts are not any
foreign government, the United States of America, or any State, political
subdivision, department, agency or instrumentality thereof, unless, if the
account debtor is the United States of America, any State, political
subdivision, department, agency or instrumentality thereof, upon Lender's
request, the Federal Assignment of Claims Act of 1940, as amended or any similar
State or local law, if applicable, has been complied with in a manner
satisfactory to Lender;
(l) there are no proceedings or actions which are threatened or
pending against the account debtors with respect to such Accounts which might
result in any material adverse change in any such account debtor's financial
condition;
(m) such Accounts in respect of which any of San Mar Corporation,
Alpha Shirt Co., Inc. or Broder Bros. Co., Inc. or any of their respective
Affiliates are account debtors but which do not, in respect of each such account
debtor, constitute more than twenty (20%) percent of all otherwise Eligible
Accounts (but the portion of the Accounts not in excess of such percentage may
be deemed Eligible Accounts); and such other percentage limitation with respect
to any other account debtors of Borrower as Lender may determine from time to
time;
(n) such Accounts are not owed by an account debtor who has
Accounts unpaid more than the earlier of sixty (60) days after the original due
date for such Accounts or one hundred fifty (150) days after the original
invoice date for them which constitute more than fifty (50%) percent of the
total Accounts of such account debtor;
(o) such Accounts do not consist of Credit Card Receivables or
▇▇▇▇ and Hold Accounts; and
(p) such Accounts are owed by account debtors deemed creditworthy
at all times by
8
Lender, as determined in good faith by Lender.
General criteria for Eligible Accounts may be established and revised from time
to time by Lender in good faith. Any Accounts which are not Eligible Accounts
shall nevertheless be part of the Collateral. In the event that Lender shall
establish new criteria or revise the existing criteria for Eligible Accounts in
any respect, Lender shall notify Borrower and upon Borrower's request, Lender
shall inform Borrower of the basis for the establishment of such new criteria or
such revision of the existing criteria, as the case may be.
1.23 "Eligible ▇▇▇▇ and Hold Accounts" shall mean all ▇▇▇▇ and Hold
Accounts (i) which meet the criteria for Eligible Accounts set forth in Section
1.21 hereof except for the criteria set forth at Section 1.22(o) hereof and (ii)
in respect of which the goods subject thereto have not been stored at the
premises of Borrower (whether leased or owned) more than sixty (60) days after
the invoice date thereof.
1.24 "Eligible Equipment" shall mean, manufacturing Equipment owned by
Borrower as of the date hereof and, included in the appraisal of Equipment by
▇▇▇▇▇-▇▇▇▇▇▇ Corp. dated February, 1999 (the "Equipment Appraisal") and which is
addressed to Lender and upon which Lender is expressly permitted to rely, and
which is in good order, repair, running and marketable condition, located at
such Borrower's premises and acceptable to Lender in all respects. In general,
Eligible Equipment shall not include, unless otherwise approved by Lender: (a)
Equipment at premises other than those owned or leased and controlled by
Borrower, except as to premises that are leased by Borrower, only if Lender
shall have received a Collateral Access Agreement from the person in possession
of such Equipment and/or the owner or operator of such premises in form and
substance satisfactory to Lender; (b) Equipment subject to a security interest
or lien in favor of any person other than Lender except those permitted in this
Agreement; (c) Equipment which is not located in the continental United States
of America; (d) Equipment which is not subject to the first priority, valid and
perfected security interest of Lender; or (e) worn-out, obsolete, damaged or
defective Equipment or Equipment not used or usable in the ordinary course of
Borrower's business as presently conducted. Any Equipment which is not Eligible
Equipment shall nevertheless be part of the Collateral. In the event that Lender
shall establish new criteria or revise the existing criteria for Eligible
Accounts in any respect, Lender shall notify Borrower and upon Borrower's
request, Lender shall inform Borrower of the basis for the establishment of such
new criteria or such revision of the existing criteria, as the case may be.
1.25 "Eligible Inventory" shall mean Inventory consisting of finished
goods held for resale in the ordinary course of the business of Borrower and raw
materials (including, uncut dyed or greigh cloth) for such finished goods which
are acceptable to Lender based on the criteria set forth below. In general,
Eligible Inventory shall not include (a) work-in-process; (b) components which
are not part of finished goods; (c) spare parts for equipment; (d) packaging and
shipping materials; (e) supplies used or consumed in Borrower's business; (f)
Inventory at premises other
9
than those owned and controlled by Borrower, EXCEPT Inventory at premises in the
United States of America leased by Borrower if Lender has received a Collateral
Access Agreement from the owner, lessor and operator of such premises duly
authorized, executed and delivered by such owner, lessor and operator; (g)
Inventory subject to a security interest or lien in favor of any person other
than Lender except those permitted in this Agreement; (h) ▇▇▇▇ and hold goods;
(i) unserviceable or obsolete Inventory; (j) Inventory which is not subject to
the first priority, valid and perfected security interest of Lender; (k)
returned (except to the extent such returned Inventory remains resalable),
damaged and/or defective Inventory; and (l) Inventory purchased or sold on
consignment. General criteria for Eligible Inventory may be established and
revised from time to time by Lender in good faith. Any Inventory which is not
Eligible Inventory shall nevertheless be part of the Collateral. In the event
that Lender shall establish new criteria or revise the existing criteria for
Eligible Accounts in any respect, Lender shall notify Borrower and upon
Borrower's request, Lender shall inform Borrower of the basis for the
establishment of such new criteria or such revision of the existing criteria, as
the case may be.
1.26 "Environmental Laws" shall mean all foreign, Federal, State and
local laws (including common law), legislation, rules, codes, licenses, permits
(including any conditions imposed therein), authorizations, judicial or
administrative decisions, injunctions or agreements between Borrower, any
Guarantor or any of their Subsidiaries and any Governmental Authority, relating
to pollution and the protection, preservation or restoration of the environment
(including air, water vapor, surface water, ground water, drinking water,
drinking water supply, surface land, subsurface land, plant and animal life or
any other natural resource), or to human health or safety. The term
"Environmental Laws" includes (i) the Federal Comprehensive Environmental
Response, Compensation and Liability Act of 1980, the Federal Superfund
Amendments and Reauthorization Act, the Federal Water Pollution Control Act of
1972, the Federal Clean Water Act, the Federal Clean Air Act, the Federal
Resource Conservation and Recovery Act of 1976 (including the Hazardous and
Solid Waste Amendments thereto), the Federal Solid Waste Disposal and the
Federal Toxic Substances Control Act, the Federal Insecticide, Fungicide and
Rodenticide Act, and the Federal Safe Drinking Water Act of 1974, (ii)
applicable state counterparts to such laws, and (iii) any common law or
equitable doctrine that may impose liability or obligations for injuries or
damages due to, or threatened as a result of, the presence of or exposure to any
Hazardous Materials, in each case, as the same may be amended, supplemented or
otherwise modified from time to time.
1.27 "Equipment" shall mean all of Borrower's now owned and hereafter
acquired equipment, machinery, computers and computer hardware and software
(whether owned or licensed), vehicles, tools, furniture, fixtures, all
attachments, accessions and property now or hereafter affixed thereto or used in
connection therewith, and substitutions and replacements thereof, wherever
located.
1.28 "ERISA" shall mean the United States Employee Retirement Income
Security Act of 1974, as the same now exists or may hereafter from time to time
be amended, modified, recodified
10
or supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.
1.29 "ERISA Affiliate" shall mean any person required to be aggregated
with Borrower or any of its Subsidiaries under Sections 414(b), 414(c), 414(m)
or 414(o) of the Code.
1.30 "Eurodollar Rate" shall mean with respect to the Interest Period
for a Eurodollar Rate Loan, the interest rate per annum equal to the arithmetic
average of the rates of interest per annum (rounded upwards, if necessary, to
the next one-sixteenth (1/16) of one (1%) percent) at which Reference Bank is
offered deposits of United States dollars in the London interbank market (or
other Eurodollar Rate market selected by Borrower and approved by Lender) on or
about 9:00 a.m. (New York time) two (2) Business Days prior to the commencement
of such Interest Period in amounts substantially equal to the principal amount
of the Eurodollar Rate Loans requested by and available to Borrower in
accordance with this Agreement, with a maturity of comparable duration to the
Interest Period selected by Borrower.
1.31 "Eurodollar Rate Loans" shall mean any Loans or portion thereof on
which interest is payable based on the Adjusted Eurodollar Rate in accordance
with the terms hereof.
1.32 "Event of Default" shall mean the occurrence or existence of any
event or condition described in Section 10.1 hereof.
1.33 "Excess Availability" shall mean the amount, as determined by
Lender in good faith, calculated at any time, equal to: (a) the lesser of: (i)
the amount of the Revolving Loans available to Borrower as of such time based on
the applicable lending formulas set forth in Section 2.1 hereof as determined by
Lender, and subject to the sublimits and Availability Reserves from time to time
established by Lender hereunder, and (ii) the Revolving Loan Sublimit, MINUS (b)
the sum of: (i) the amount of all then outstanding and unpaid Obligations (but
not including for this purpose the then outstanding principal amount of the Term
Loan), plus (ii) the aggregate amount of all then outstanding and unpaid trade
payables and other obligations of Borrower which are more than sixty (60) days
past due as of such time, plus (iii) the amount of checks issued by Borrower to
pay trade payables (which trade payables are more than sixty (60) days past due
as of such time), but not yet sent.
1.34 "Exchange Debentures" shall mean, collectively, the 13.00%
Subordinated Exchange Debentures due 2009, issued by Holdings at its option, if
ever, in exchange for Senior Preferred Stock as contemplated by, and to the
extent permitted by, Section "g" of the Certificate of Designation, in each case
as the same now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
1.35 "Exchange Debenture Indenture" shall mean the Indenture, dated as
of March 14, 1997, by and among Holdings and United States Trust Company of New
York, as trustee for the
11
Exchange Debentureholders, as the same now exists or may hereafter be amended,
modified, supplemented, extended, renewed or replaced.
1.36 "Exchange Debentureholder" shall mean, in the event that the
Senior Preferred Stock is exchanges for the Exchange Debentures, any one of the
holders from time to time of the Exchange Debentures.
1.37 "Excluded Taxes" shall mean franchise taxes and taxes based on net
income imposed on Lender by the United States or the jurisdiction in which
Lender has its principal office and any interest, penalties and other additions
with respect thereto.
1.38 "Existing Lenders" shall mean the existing lenders to Borrower
listed on Schedule 1.38 hereto.
1.39 "Existing Letters of Credit" shall mean, collectively, the letters
of credit issued for the account of Borrower or for which Borrower is otherwise
liable listed on Schedule 1.39 hereto, as the same now exist or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced.
1.40 "Existing Real Property" shall mean all now owned real property of
Borrower, including leasehold interests, together with the buildings, structures
and other improvements located thereon, and all licenses, easements and
appurtenances relating thereto, wherever located, as more particularly described
on Schedule 1.40 hereto but not including the Real Property subject to the
Mortgages.
1.41 "Financing Agreements" shall mean, collectively, this Agreement
and all notes, guarantees, security agreements and other agreements, documents
and instruments now or at any time hereafter executed and/or delivered by
Borrower or any Obligor in connection with this Agreement, as the same now exist
or may hereafter be amended, modified, supplemented, extended, renewed, restated
or replaced.
1.42 "GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Board which are applicable to the
circumstances as of the date of determination consistently applied.
1.43 "Governmental Authority" shall mean any nation or government, any
state, province, or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
12
1.44 "Guarantors" shall mean Holdings and Cottontops.
1.45 "Hazardous Materials" shall mean any hazardous, toxic or dangerous
substances, materials and wastes, including hydrocarbons (including naturally
occurring or man-made petroleum and hydrocarbons), explosives, asbestos, urea
formaldehyde insulation, radioactive materials, biological substances,
polychlorinated biphenyls, pesticides, herbicides and any other kind and/or type
of pollutants or contaminants (including materials which include hazardous
constituents), sewage, sludge, industrial slag, solvents and/or any other
similar substances, materials, or wastes and including any other substances,
materials or wastes that are or become regulated under any Environmental Law
(including any that are or become classified as hazardous or toxic under any
Environmental Law).
1.46 "Holdings" shall mean Anvil Holdings, Inc., a Delaware
corporation, and its successors and assigns.
1.47 "Indebtedness" shall mean, with respect to any Person, any
liability, whether or not contingent, (a) in respect of borrowed money (whether
or not the recourse of the lender is to the whole of the assets of such Person
or only to a portion thereof) or evidenced by bonds, notes, debentures or
similar instruments; (b) representing the balance deferred and unpaid of the
purchase price of any property or services (except any such balance that
constitutes an account payable to a trade creditor (whether or not an Affiliate)
created, incurred, assumed or guaranteed by such Person in the ordinary course
of business of such Person in connection with obtaining goods, materials or
services that is not overdue by more than ninety (90) days, unless the trade
payable is being contested in good faith); (c) all obligations as lessee under
leases which have been, or should be, in accordance with GAAP recorded as
Capital Leases; (d) any contractual obligation, contingent or otherwise, of such
Person to pay or be liable for the payment of any indebtedness described in this
definition of another Person, including, without limitation, any such
indebtedness, directly or indirectly guaranteed, or any agreement to purchase,
repurchase, or otherwise acquire such indebtedness, obligation or liability or
any security therefor, or to provide funds for the payment or discharge thereof,
or to maintain solvency, assets, level of income, or other financial condition;
(e) all obligations with respect to redeemable stock and redemption or
repurchase obligations under any Capital Stock or other equity securities issued
by such Person; (f) all reimbursement obligations and other liabilities of such
Person with respect to surety bonds (whether bid, performance or otherwise),
letters of credit, banker's acceptances or similar documents or instruments
issued for such Person's account; (g) all indebtedness of such Person in respect
of indebtedness of another Person for borrowed money or indebtedness of another
Person otherwise described in this definition which is secured by any consensual
lien, security interest, collateral assignment, conditional sale, mortgage, deed
of trust, or other encumbrance on any asset of such Person, whether or not such
obligations, liabilities or indebtedness are assumed by or are a personal
liability of such Person, all as of such time; and (h) all obligations,
liabilities and indebtedness of such Person (marked to market) in respect of
interest rate exchange contracts and
13
foreign currency exchange agreements..
1.48 "Information Certificate" shall mean the Information Certificate
of Borrower constituting Exhibit A hereto containing material information with
respect to Borrower, its business and assets provided by or on behalf of
Borrower to Lender in connection with the preparation of this Agreement and the
other Financing Agreements and the financing arrangements provided for herein.
1.49 "Interest Period" shall mean for any Eurodollar Rate Loan, a
period of approximately one (1), two (2), or three (3) months duration as
Borrower may elect, the exact duration to be determined in accordance with the
customary practice in the applicable Eurodollar Rate market; PROVIDED, THAT,
Borrower may not elect an Interest Period which will end after the last day of
the then-current term of this Agreement.
1.50 "Interest Rate" shall mean, as to Prime Rate Loans, a rate of
one-half (1/2%) percent per annum in excess of the Prime Rate and, as to
Eurodollar Rate Loans, a rate of two and one-half (2 1/2%) percent per annum in
excess of the Adjusted Eurodollar Rate (based on the Eurodollar Rate applicable
for the Interest Period selected by Borrower as in effect three (3) Business
Days after the date of receipt by Lender of the request of Borrower for such
Eurodollar Rate Loans in accordance with the terms hereof, whether such rate is
higher or lower than any Eurodollar Rate previously quoted to Borrower);
PROVIDED, THAT:
(a) the Interest Rate applicable to Eurodollar Rate Loans and
Prime Rate Loans shall be reduced, one time only, by one-quarter of one (1/4%)
percent, effective as of the first day of the month after each of the following
conditions is satisfied as determined by Lender in good faith: (i) the Pre-Tax
Net Income of Borrower for the immediately preceding fiscal year (commencing
with the fiscal year ending on January 29, 2000), as set forth in the audited
consolidated financial statements of Holdings and its Subsidiaries for such
fiscal year delivered to Lender, together with the unqualified opinion of the
independent certified accountants, in accordance with Section 9.6 hereof, shall
equal or exceed $2,000,000 and (ii) no Event of Default or act, condition or
event which with notice or passage of time would constitute an Event of Default
shall exist or have occurred and be continuing; and
(b) notwithstanding anything to the contrary contained herein,
the Interest Rate shall mean the rate of two and one-half (2 1/2%) percent per
annum in excess of the Prime Rate as to Prime Rate Loans and the rate of four
and one-half (4 1/2%) percent per annum in excess of the Adjusted Eurodollar
Rate as to Eurodollar Rate Loans, at Lender's option, upon written notice to
Borrower, (i) either (A) for the period on and after the date of termination or
non-renewal hereof until such time as all Obligations are indefeasibly paid in
full, or (B) for the period from and after the date of the occurrence of any
Event of Default, and for so long as such Event of Default is continuing as
determined by Lender and (ii) on the Loans at any time outstanding in excess of
the amounts available to Borrower under Section 2 (whether or not such
excess(es) arise or are made
14
with or without Lender's knowledge or consent and whether made before or after
the occurrence and continuance of an Event of Default).
1.51 "Inventory" shall mean all of Borrower's now owned and hereafter
existing or acquired raw materials, work in process, finished goods and all
other inventory of whatsoever kind or nature, wherever located.
1.52 "Investors" shall mean, collectively, (i) BRS, (ii) Venture
Partners, (iii) all of the members of the Management Group and (iv) in the case
of any individual included in clauses (i)-(iii) above, any family member or
relative of such individual.
1.53 "Letter of Credit Accommodations" shall mean the letters of credit
(whether standby or documentary), merchandise purchase or other guaranties which
are from time to time either (a) issued or opened by Lender for the account of
Borrower or any Obligor or (b) with respect to which Lender has agreed to
indemnify the issuer or guaranteed to the issuer the performance by Borrower of
its obligations to such issuer (including, without limitation, the Existing
Letters of Credit).
1.54 "Loans" shall mean the Revolving Loans and the Term Loan.
1.55 "Management Group" shall mean any director, officer or employee of
any of Borrower, Holdings or Cottontops and any trusts established for the
benefit of the foregoing persons, PROVIDED, that, such trusts are controlled by
such director, officer or employee, or his or her heirs, executors or
administrators or any spouse, siblings and descendants (whether natural or
adopted) thereof, as the case may be.
1.56 "Material Adverse Effect" shall mean a material adverse effect on
(a) the condition (financial or otherwise), business, performance, operations or
properties of Borrower and Guarantors (taken as a whole); (b) the legality,
validity or enforceability of this Agreement or any of the other Financing
Agreements; (c) the legality, validity, enforceability, perfection or priority
of the security interests and liens of Lender upon the Collateral or any other
property which is security for the Obligations; (d) the Collateral or any other
property which is security for the Obligations, or the value of the Collateral
or such other property; (e) the ability of Borrower or any Guarantor to repay
the Obligations or of Borrower or any Guarantor to perform its Obligations under
this Agreement or any of the other Financing Agreements; or (f) the ability of
Lender to enforce the Obligations or realize upon the Collateral or otherwise
with respect to the rights and remedies of Lender under this Agreement or any of
the other Financing Agreements.
1.57 "Maximum Credit" shall mean the amount of $60,000,000.
1.58 "Mortgages" shall mean, collectively, the following (as the same
now exist or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced): (a) the
15
Mortgage and Security dated of even date herewith, by Borrower in favor of
Lender with respect to the Real Property and related assets of Borrower located
in Dillon, South Carolina and (b) the Deed of Trust and Security Agreement,
dated of even date herewith, by Borrower in favor of Lender with respect to the
Real Property and related assets of Borrower located in Kings Mountain, North
Carolina.
1.59 "Net Amount of Eligible Accounts" shall mean the gross amount of
Eligible Accounts less (a) sales, excise or similar taxes included in the amount
thereof and (b) returns, discounts, claims, credits and allowances of any nature
at any time issued, owing, granted, outstanding, available or claimed with
respect thereto (to the extent not already deducted for purposes of determining
whether such Account is an Eligible Account).
1.60 "Net Proceeds" shall mean the aggregate cash proceeds received by
any of Borrower, Guarantors or any of their Subsidiaries in respect of any asset
sale permitted under Section 9.7 hereof, net of the direct costs relating to
such asset sale (including, without limitation, legal, accounting and investment
banking fees, and sales commissions) and any relocation expenses incurred as a
result thereof, taxes paid or payable as a result thereof (after taking into
account any available tax credits or deductions and any tax sharing
arrangements), amounts applied to the repayment of indebtedness secured by a
lien on the asset or assets that are the subject of such asset sale and any
other indebtedness required to be repaid in connection with such transaction and
any reserve for adjustment in respect of the sale price of such asset or assets.
Net Proceeds shall exclude any non-cash proceeds received from any asset sale,
but shall include such proceeds when and as converted by the any Borrower,
Guarantor or any Subsidiary of Borrower or Guarantor to cash.
1.61 "Obligations" shall mean any and all Revolving Loans, Letter of
Credit Accommodations, the Term Loan and all other obligations, liabilities and
indebtedness of every kind, nature and description owing by Borrower to Lender
and/or its Affiliates, including principal, interest, charges, fees, costs and
expenses, however evidenced, whether as principal, surety, endorser, guarantor
or otherwise, whether arising under this Agreement or otherwise, whether now
existing or hereafter arising, whether arising before, during or after the
initial or any renewal term of this Agreement or after the commencement of any
case with respect to Borrower under the United States Bankruptcy Code or any
similar statute (including the payment of interest and other amounts which would
accrue and become due but for the commencement of such case, whether or not such
amounts are allowed or allowable in whole or in part in such case), whether
direct or indirect, absolute or contingent, joint or several, due or not due,
primary or secondary, liquidated or unliquidated, secured or unsecured, and
however acquired by Lender.
1.62 "Obligor" shall mean any guarantor, endorser, acceptor, surety or
other person liable on or with respect to the Obligations or who is the owner of
any property which is security for the Obligations (including, without
limitation, Guarantors), other than Borrower.
16
1.63 "Parent Subordinated Debt" means (a) upon the issuance thereof in
accordance with Section 9.18, the Exchange Debentures and (b) other Indebtedness
of Holdings (1) incurred in connection with the repurchase by Holdings of its
capital stock from any member of the Management Group and (2) which by its terms
is subject to, and subordinate in right of payment to, the right of Lender to
receive the prior indefeasible payment and satisfaction in full of all of the
Obligations on terms and conditions reasonably acceptable to Lender.
1.64 "Payment Account" shall have the meaning set forth in Section 6.3
hereof.
1.65 "Person" or "person" shall mean any individual, sole
proprietorship, partnership, corporation (including any corporation which elects
subchapter S status under the Code), limited liability company, limited
liability partnership, business trust, unincorporated association, joint stock
corporation, trust, joint venture or other entity or any government or any
agency or instrumentality or political subdivision thereof.
1.66 "Pre-Tax Net Income" shall mean, with respect to any Person, for
any period, the aggregate of the net income (loss) of such Person and its
Subsidiaries, on a consolidated basis, for such period (excluding to the extent
included therein any extraordinary or one-time gains and non-cash losses) after
deducting all charges which should be deducted before arriving at the net income
(loss) for such period and before deducting the Provision for Taxes for such
period, all as determined in accordance with GAAP, PROVIDED, THAT, (a) the net
income of any Person that is not a wholly-owned Subsidiary or that is accounted
for by the equity method of accounting shall be included only to the extent of
the amount of dividends or distributions paid or payable to Borrower or a
wholly-owned Subsidiary of such person; (b) the effect of any change in
accounting principles adopted by such Person or its Subsidiaries after the date
hereof shall be excluded; and (c) the net income (if positive) of any
wholly-owned Subsidiary to the extent that the declaration or payment of
dividends or similar distributions by such wholly-owned Subsidiary to Borrower
or to any other wholly-owned Subsidiary of Borrower is not at the time permitted
by operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule of government regulation applicable to such
wholly-owned Subsidiary shall be excluded. For the purpose of this definition,
net income excludes any gains (but not losses, other than non-cash losses),
together with any related Provision of Taxes for such gains (but not losses,
other than non-cash losses) realized upon the sale or other disposition of any
assets that are not sold in the ordinary course of business (including, without
limitation, dispositions pursuant to sale and leaseback transactions), or of any
Capital Stock of such Person or a Subsidiary of such Person.
1.67 "Prime Rate" shall mean the rate from time to time publicly
announced by First Union National Bank, or its successors, as its prime rate,
whether or not such announced rate is the best rate available at such bank.
1.68 "Prime Rate Loans" shall mean any Loans or portion thereof on
which interest is
17
payable based on the Prime Rate in accordance with the terms thereof.
1.69 "Provision for Taxes" shall mean an amount equal to all taxes
imposed on or measured by net income, whether Federal, State or local, and
whether foreign or domestic, that are paid or payable by any Person and its
Subsidiaries in respect of such fiscal year on a consolidated basis in
accordance with GAAP.
1.70 "Qualified Public Offering" shall mean any BONA FIDE, firm
commitment, underwritten offering to the public by Holdings of its Capital Stock
pursuant to an effective registration statement under the Securities Act of
1933, as then in effect, or any comparable statement under any similar federal
statute then in force.
1.71 "Real Property" shall mean all now owned and hereafter acquired
real property of Borrower, including leasehold interests, together with all
buildings, structures, and other improvements located thereon and all licenses,
easements and appurtenances relating thereto, wherever located, including the
real property and related assets more particularly described in the Mortgages.
1.72 "Recapitalization Agreement" shall mean the Recapitalization
Agreement, dated as of February 12, 1997, by and among Holdings, Anvil VT, Inc.,
Vestar Equity Partners, L.P., Venture Partners, certain members of the
Management Group party thereto, BRS and the other existing stockholders of
Holdings, as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed or replaced.
1.73 "Recapitalization Documents" shall mean the Recapitalization
Agreement, the Senior Note Purchase Agreement, the Senior Note Indenture, the
Units Purchase Agreement, the Certificate of Designation, the Units Registration
Rights Agreement, the Units Stockholders Agreement and, if the Exchange
Debentures are issued, the Exchange Debenture Indenture.
1.74 "Records" shall mean all of Borrower's present and future books of
account of every kind or nature, purchase and sale agreements, invoices, ledger
cards, bills of lading and other shipping evidence, statements, correspondence,
memoranda, credit files and other data relating to the Collateral or any account
debtor, together with the tapes, disks, diskettes and other data and software
storage media and devices, file cabinets or containers in or on which the
foregoing are stored (including any rights of Borrower with respect to the
foregoing maintained with or by any other person).
1.75 "Reference Bank" shall mean First Union National Bank, or such
other bank as Lender may from time to time designate.
1.76 "Registration Rights Agreement" shall mean the Registration Rights
Agreement, dated as of March 14, 1997, by and among Venture Partners, BRS,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
18
Securities Corporation and certain members of the Management Group party
thereto, as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed or replaced.
1.77 "Renewal Date" shall the meaning set forth in Section 12.1 hereof.
1.78 "Revolving Loan Limit" shall mean $48,275,000.
1.79 "Revolving Loans" shall mean the loans now or hereafter made by
Lender to or for the benefit of Borrower on a revolving basis (involving
advances, repayments and readvances) as set forth in Section 2.1 hereof.
1.80 "Senior Note Indebtedness" shall mean all Indebtedness of Borrower
arising under the Senior Note Indenture.
1.81 "Senior Note Indenture" shall mean the Indenture, dated as of
March 14, 1997, among Borrower, Holdings, Cottontops and United States Trust
Company of New York, as Trustee in respect of the holders of Borrower's 10 7/8%
Series A Senior Notes due 2007 and the 10 7/8% Series B Senior Notes due 2007,
as the same now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
1.82 "Senior Note Indenture Maximum Credit" shall mean the maximum
dollar amount of Indebtedness which Borrower may incur to Lender under this
Agreement and the other Financing Agreements under the terms of the Senior Note
Indenture such that the liens and security interests granted by Borrower and
Obligors in favor of the Lender on the Collateral are deemed Permitted Liens (as
such term is defined in the Senior Note Indenture) under the Senior Note
Indenture.
1.83 "Senior Note Purchase Agreement" shall mean the Purchase
Agreement, dated as of March 14, 1997, by and among the Borrower and each of the
initial purchasers of the Senior Notes, as the same now exists or may hereafter
be amended, modified, supplemented, extended, renewed, restated or replaced.
1.84 "Senior Preferred Stock" shall mean, collectively, (a) up to
1,400,000 shares of senior preferred capital stock of Holdings issued in
connection with Units Offering and the Recapitalization and (b) up to 500,000
additional shares of senior preferred capital stock of Holdings which are
authorized, but not issued, as of March 14, 1997.
1.85 "Stockholders Agreement" means that certain Stockholders
Agreement, dated as of March 14, 1997, by and among Holdings, Venture Partners,
BRS and certain members of the Management Group party thereto, as amended,
modified, extended or replaced from time to time.
1.86 "Subsidiary" or "subsidiary" shall mean, with respect to any
Person, any corporation, limited or general partnership, trust, association or
other business entity of which an aggregate of
19
at least a majority of the outstanding Capital Stock or other interests entitled
to vote in the election of the board of directors of such corporation
(irrespective of whether, at the time, Capital Stock of any other class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency), managers, trustees or other controlling
persons, or an equivalent controlling interest therein, of such Person is, at
the time, directly or indirectly, owned by such Person and/or one or more
subsidiaries of such Person.
1.87 "Term Loan" shall mean the term loan made by Lender to Borrower as
provided for in Section 2.4 hereof.
1.88 "Term Loan Limit" shall mean, on any date of determination by
Lender, the sum of (a) fifty (50%) percent of the fair market value of the Real
Property subject to the Mortgages, (b) eighty (80%) percent of the orderly
liquidation value of Eligible Equipment (excluding Eligible Equipment designated
as "surplus equipment" in the Equipment Appraisal) and (c) forty-three and two
tenths (43.2%) percent of the auction value of Eligible Equipment designated as
"surplus equipment" in the Equipment Appraisal; in each case, as set forth in
the most recent appraisals acceptable to Lender.
1.89 "Units Offering" shall mean the issuance and sale by Holdings on
March 14, 1997 of up to 1,400,000 shares of Senior Preferred Stock and up to
390,000 shares of Class B Common Stock pursuant to the Units Purchase Agreement.
1.90 "Units Purchase Agreement" shall mean the Purchase Agreement,
dated as of March 14, 1997, by and among Holdings and the initial purchasers
named therein, as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
1.91 "Units Registration Rights Agreement" shall mean the Registration
Rights Agreement, dated as of March 14, 1997, by and among Holdings, Borrower
and ▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ Securities Corporation, as the same now exists
or may hereafter be amended, modified, supplemented, extended, renewed, restated
or replaced.
1.92 "Units Stockholders Agreement" shall mean the Registration Rights
and Securityholders Agreement, dated as of March 14, 1997, by and among
Holdings, Venture Partners, BRS and the initial purchasers party to the Units
Purchase Agreement, as the same now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced.
1.93 "Value" shall mean, as determined by Lender in good faith, with
respect to Inventory, the lower of (a) Cost or (b) market value.
1.94 "Venture Partners" shall mean 399 Venture Partners, Inc., a
Delaware corporation, and its Affiliates (including for this purpose, all of
their respective employees, partners, officers
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and directors and family members and relatives of such Persons) and any trusts
established for the benefit of the foregoing persons, PROVIDED, THAT, such
trusts are controlled by 399 Venture Partners, Inc. or its Affiliates.
1.95 "Voting Stock" shall mean with respect to any Person, (a) one (1)
or more classes of Capital Stock of such Person having general voting powers to
elect at least a majority of the board of directors, managers or trustees of
such Person, irrespective of whether at the time Capital Stock of any other
class or classes have or might have voting power by reason of the happening of
any contingency, and (b) any Capital Stock of such Person convertible or
exchangeable without restriction at the option of the holder thereof into
Capital Stock of such Person as described in clause (a) of this definition.
1.96 "Weighted Average Life to Maturity" shall mean, when applied to
any Indebtedness at any date, the number of years obtained by dividing (a) the
then outstanding principal amount of such Indebtedness into (b) the total of the
product obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment.
SECTION 2. CREDIT FACILITIES
2.1 REVOLVING LOANS.
(a) Subject to and upon the terms and conditions contained
herein, Lender agrees to make Revolving Loans to Borrower from time to time in
amounts requested by Borrower up to the amount equal to the sum of:
(i) eighty-five (85%) percent of the Net Amount of Eligible
Accounts, PLUS
(ii) the lesser of: (A) the sum of (1) fifty (50%) percent
of the Value of Eligible Inventory consisting of finished goods and (2)
sixty (60%) percent of the Value of Eligible Inventory consisting of
raw materials for such finished goods or (B) $25,000,000, PLUS
(iii) the lesser of (A) forty (40%) percent of the gross
amount of Eligible ▇▇▇▇ and Hold Accounts and (B) $1,000,000, LESS
(iv) any Availability Reserves.
(b) Lender may, in its discretion, from time to time, upon not
less than five (5) days
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prior notice to Borrower, (i) reduce the lending formula with respect to
Eligible Accounts to the extent that Lender determines in good faith that the
general creditworthiness of Borrower's account debtors as a whole has declined
or (ii) reduce the lending formula(s) with respect to Eligible Inventory to the
extent that Lender determines in good faith that: (A) the number of days of the
turnover of the Inventory for any period has negatively changed in any material
respect or (B) the liquidation value of the Eligible Inventory, or any category
thereof, has decreased, or (C) the nature, quality or mix of the Inventory has
deteriorated. In determining whether to reduce the lending formula(s), Lender
may consider, in good faith, events, conditions, contingencies or risks which
are also considered in determining Eligible Accounts, Eligible Inventory or in
establishing Availability Reserves.
(c) Except in Lender's discretion, (i) the aggregate amount of
the Loans and the Letter of Credit Accommodations outstanding at any time shall
not exceed the lesser of (A) the Maximum Credit or (B) the Senior Note Indenture
Maximum Credit and (ii) the aggregate amount of the Revolving Loans and the
Letter of Credit Accommodations outstanding at any time shall not exceed the
Revolving Loan Limit. In the event that the outstanding amount of any component
of the Loans, or the aggregate amount of the outstanding Loans and Letter of
Credit Accommodations, exceed the amounts available under the lending formulas
set forth in Section 2, the sublimits for Letter of Credit Accommodations set
forth in Sections 2.2(c) and 2.2(d), the Maximum Credit or the Senior Note
Indenture Maximum Credit, as applicable, such event shall not limit, waive or
otherwise affect any rights of Lender in that circumstance or on any future
occasions and Borrower shall, upon demand by Lender, which may be made at any
time or from time to time, immediately repay to Lender within five (5) Business
Days the entire amount of any such excess(es) for which payment is demanded.
(d) For purposes only of applying the sublimit on Revolving Loans
based on Eligible Inventory pursuant to Section 2.1(a)(ii)(B), Lender may treat
the then undrawn amounts of outstanding Letter of Credit Accommodations for the
purpose of purchasing Eligible Inventory as Revolving Loans to the extent Lender
is in effect basing the issuance of the Letter of Credit Accommodations on the
Value of the Eligible Inventory being purchased with such Letter of Credit
Accommodations. In determining the actual amounts of such Letter of Credit
Accommodations to be so treated for purposes of the sublimit, the outstanding
Revolving Loans and Availability Reserves shall be attributed first to any
components of the lending formulas in Section 2.1(a) that are not subject to
such sublimit, before being attributed to the components of the lending formulas
subject to such sublimit.
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2.2 LETTER OF CREDIT ACCOMMODATIONS.
(a) Subject to and upon the terms and conditions contained
herein, at the request of Borrower, Lender agrees to provide or arrange for
Letter of Credit Accommodations for the account of Borrower containing terms and
conditions acceptable to Lender and the issuer thereof. Any payments made by
Lender to any issuer thereof and/or related parties in connection with the
Letter of Credit Accommodations shall constitute additional Revolving Loans to
Borrower pursuant to this Section 2.
(b) In addition to any charges, fees or expenses charged by
any bank or issuer in connection with the Letter of Credit Accommodations,
Borrower shall pay to Lender a letter of credit fee at a rate equal to one and
one-half (1 1/2%) percent per annum on the daily outstanding balance of the
Letter of Credit Accommodations for the immediately preceding month (or part
thereof), payable in arrears as of the first day of each succeeding month,
except that Borrower shall pay to Lender such letter of credit fee, at Lender's
option, with notice, at a rate equal to three and one-half (3 1/2%) percent per
annum on such daily outstanding balance for: (i) the period from and after the
date of termination or non-renewal hereof until Lender has received full and
final payment of all Obligations (notwithstanding entry of a judgment against
Borrower) and (ii) the period from and after the date of the occurrence of an
Event of Default for so long as such Event of Default is continuing as
determined by Lender. Such letter of credit fee shall be calculated on the basis
of a three hundred sixty (360) day year and actual days elapsed and the
obligation of Borrower to pay such fee shall survive the termination or
non-renewal of this Agreement.
(c) No Letter of Credit Accommodations shall be available
unless on the date of the proposed issuance of any Letter of Credit
Accommodations, the Revolving Loans available to Borrower (subject to the
Maximum Credit, the Senior Note Indenture Maximum Credit and any Availability
Reserves) are equal to or greater than: (i) if the proposed Letter of Credit
Accommodation is for the purpose of purchasing Eligible Inventory multiplied by
the Value of such Eligible Inventory, the sum of (A) the percentage equal to one
hundred (100%) percent minus the then applicable percentage set forth in Section
2.1(a)(ii)(A) above of the Value of such Eligible Inventory, plus (B) freight,
taxes, duty and other amounts which Lender estimates must be paid in connection
with such Inventory upon arrival and for delivery to one of Borrower's locations
for Eligible Inventory within the United States of America and (ii) if the
proposed Letter of Credit Accommodation is for any other purpose, an amount
equal to one hundred (100%) percent of the face amount thereof and all other
commitments and obligations made or incurred by Lender with respect thereto.
Effective on the issuance of each Letter of Credit Accommodation, an
Availability Reserve shall be established by Lender in the applicable amount set
forth in Section 2.2(c)(i) or Section 2.2(c)(ii).
(d) Except in Lender's discretion, the amount of all
outstanding Letter of Credit Accommodations and all other commitments and
obligations made or incurred by Lender in
23
connection therewith shall not at any time exceed $10,000,000 in the aggregate.
At any time an Event of Default exists or has occurred and is continuing, upon
Lender's request, Borrower will either furnish cash collateral to secure the
reimbursement obligations to the issuer in connection with any Letter of Credit
Accommodations or furnish cash collateral to Lender for the Letter of Credit
Accommodations, and in either case, the Revolving Loans otherwise available to
Borrower shall not be reduced as provided in Section 2.2(c) to the extent of
such cash collateral.
(e) Borrower shall indemnify and hold Lender harmless from
and against any and all losses, claims, damages, liabilities, costs and expenses
which Lender may suffer or incur in connection with any Letter of Credit
Accommodations and any documents, drafts or acceptances relating thereto,
including any losses, claims, damages, liabilities, costs and expenses due to
any action taken by any issuer or correspondent with respect to any Letter of
Credit Accommodation other than as a result of the gross negligence or willful
misconduct of Lender as determined by a final, non-appealable order of a court
of competent jurisdiction. Borrower assumes all risks with respect to the acts
or omissions of the drawer under or beneficiary of any Letter of Credit
Accommodation and for such purposes the drawer or beneficiary shall be deemed
Borrower's agent. Borrower assumes all risks for, and agrees to pay, all
foreign, Federal, State and local taxes, duties and levies relating to any goods
subject to any Letter of Credit Accommodations or any documents, drafts or
acceptances thereunder. Borrower hereby releases and holds Lender harmless from
and against any acts, waivers, errors, delays or omissions, whether caused by
Borrower, by any issuer or correspondent of a Letter of Credit Accommodation or
otherwise with respect to or relating to any Letter of Credit Accommodation. The
provisions of this Section 2.2(e) shall survive the payment of Obligations and
the termination or non-renewal of this Agreement.
(f) Nothing contained herein shall be deemed or construed to
grant Borrower any right or authority to pledge the credit of Lender in any
manner. Lender shall have no liability of any kind with respect to any Letter of
Credit Accommodation provided by an issuer other than Lender unless Lender has
duly executed and delivered to such issuer the application or a guarantee or
indemnification in writing with respect to such Letter of Credit Accommodation.
Borrower shall be bound by any interpretation made in good faith by Lender, or
any other issuer or correspondent under or in connection with any Letter of
Credit Accommodation or any documents, drafts or acceptances thereunder,
notwithstanding that such interpretation may be inconsistent with any
instructions of Borrower. Lender shall have the sole and exclusive right and
authority to, and Borrower shall not: (i) at any time an Event of Default exists
or has occurred and is continuing, (A) approve or resolve any questions of
non-compliance of documents, (B) give any instructions as to acceptance or
rejection of any documents or goods or (C) execute any and all applications for
steamship or airway guaranties, indemnities or delivery orders, and (ii) at all
times, (A) grant any extensions of the maturity of, time of payment for, or time
of presentation of, any drafts, acceptances, or documents, and (B) agree to any
amendments, renewals, extensions, modifications, changes or cancellations of any
of the terms or conditions of any of the applications, Letter of Credit
Accommodations, or documents, drafts or acceptances thereunder
24
or any letters of credit included in the Collateral. Lender may take such
actions either in its own name or in Borrower's name.
(g) Any rights, remedies, duties or obligations granted or
undertaken by Borrower to any issuer or correspondent in any application for any
Letter of Credit Accommodation, or any other agreement in favor of any issuer or
correspondent relating to any Letter of Credit Accommodation, shall be deemed to
have been granted or undertaken by Borrower to Lender. Any duties or obligations
undertaken by Lender to any issuer or correspondent in any application for any
Letter of Credit Accommodation, or any other agreement by Lender in favor of any
issuer or correspondent relating to any Letter of Credit Accommodation, shall be
deemed to have been undertaken by Borrower to Lender and to apply in all
respects to Borrower.
2.3 AVAILABILITY RESERVES. All Revolving Loans otherwise
available to Borrower pursuant to the lending formulas and subject to the
Maximum Credit, the Senior Indenture Maximum Credit and other applicable limits
hereunder shall be subject to Lender's continuing right to establish and revise
in good faith Availability Reserves in a manner consistent with the terms set
forth in the definition of such term.
2.4 TERM LOAN. (a) Lender is making a Term Loan to Borrower in
the original principal amount of $11,725,000. The Term Loan is (i) evidenced by
a Term Promissory Note in such original principal amount duly executed and
delivered by Borrower to Lender concurrently herewith; (ii) to be repaid,
together with interest and other amounts, in accordance with this Agreement, the
Term Promissory Note, and the other Financing Agreements and (iii) secured by
all of the Collateral.
(b) Notwithstanding anything to the contrary set forth herein
or in any of the other Financing Agreements, in the event that the outstanding
principal amount of the Term Loan at any time exceeds the Term Loan Limit, as
determined by Lender from the most recent acceptable appraisals of the Eligible
Equipment and the Real Property subject to Mortgages delivered to Lender
pursuant to Section 7.4 hereof, at Lender's option, either (i) the entire amount
by which the then outstanding principal amount of the Term Loan exceeds the Term
Loan Limit (the amount of each such excess being referred to herein as the "Term
Loan Reduction Amount"), shall become immediately due and payable, at Lender's
demand or (ii) Lender shall establish or increase the Availability Reserves
hereunder in an amount equal to the Term Loan Reduction Amount then due or any
part thereof.
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SECTION 3. INTEREST AND FEES
3.1 INTEREST.
(a) Borrower shall pay to Lender interest on the outstanding
principal amount of the non-contingent Obligations at the Interest Rate. All
interest accruing hereunder on and after the date of the occurrence and
continuance of any Event of Default or termination or non-renewal hereof shall
be payable to Lender on demand.
(b) Borrower may from time to time request that Prime Rate
Loans be converted to Eurodollar Rate Loans or that any existing Eurodollar Rate
Loans continue for an additional Interest Period. Such request from Borrower
shall specify the amount of the Prime Rate Loans which will constitute
Eurodollar Rate Loans (subject to the limits set forth below) and the Interest
Period to be applicable to such Eurodollar Rate Loans. Subject to the terms and
conditions contained herein, three (3) Business Days after receipt by Lender of
such a request from Borrower, such Prime Rate Loans shall be converted to
Eurodollar Rate Loans or such Eurodollar Rate Loans shall continue, as the case
may be, PROVIDED, THAT, (i) no Event of Default, or acts, condition or event
which with notice or passage of time or both would constitute an Event of
Default exists or has occurred and is continuing, (ii) no party hereto shall
have sent any notice of termination or non-renewal of this Agreement, (iii)
Borrower shall have complied with such customary procedures as are established
by Lender and specified by Lender to Borrower from time to time for requests by
Borrower for Eurodollar Rate Loans, (iv) no more than six (6) Interest Periods
may be in effect at any one time, (v) the aggregate amount of the Eurodollar
Rate Loans must be in an amount not less than $1,000,000 or an integral multiple
of $500,000 in excess thereof, (vi) the maximum amount of the Eurodollar Rate
Loans at any time requested by Borrower shall not exceed the amount equal to
eighty-five (85%) percent of the principal amount of Revolving Loans then
available to Borrower under Section 2 hereof, as determined by Lender (but with
no obligation of Lender to make such Revolving Loans) and (vii) Lender shall
have determined that the Interest Period or Adjusted Eurodollar Rate is
available to Lender through the Reference Bank and can be readily determined as
of the date of the request for such Eurodollar Rate Loan by Borrower. Any
request by Borrower to convert Prime Rate Loans to Eurodollar Rate Loans or to
continue any existing Eurodollar Rate Loans shall be irrevocable.
Notwithstanding anything to the contrary contained herein, Lender and Reference
Bank shall not be required to purchase United States Dollar deposits in the
London interbank market or other applicable Eurodollar Rate market to fund any
Eurodollar Rate Loans, but the provisions hereof shall be deemed to apply as if
Lender and Reference Bank had purchased such deposits to fund the Eurodollar
Rate Loans.
(c) Any Eurodollar Rate Loans shall automatically convert to
Prime Rate Loans upon the last day of the applicable Interest Period, unless
Lender has received and approved a request to continue such Eurodollar Rate Loan
at least three (3) Business Days prior to such last day in accordance with the
terms hereof. Any Eurodollar Rate Loans shall, at Lender's option,
26
upon notice by Lender to Borrower, convert to Prime Rate Loans in the event that
(i) an Event of Default shall exist or have occurred and be continuing, (ii)
this Agreement shall terminate or not be renewed, or (iii) the aggregate
principal amount of the Prime Rate Loans which have previously been converted to
Eurodollar Rate Loans or existing Eurodollar Rate Loans continued, as the case
may be, at the beginning of an Interest Period shall at any time during such
Interest Period exceed either (A) the aggregate principal amount of the Loans
then outstanding, or (B) the sum of the then outstanding principal amount of the
Term Loan plus the principal amount of Revolving Loans then available to
Borrower under Section 2 hereof. Borrower shall pay to Lender, upon demand by
Lender (or Lender may, at its option, charge any loan account of Borrower) any
amounts required to compensate Lender, the Reference Bank or any participant
with Lender in making the Loans hereunder for any loss (including loss of
anticipated profits), cost or expense incurred by such person, as a result of
the conversion of Eurodollar Rate Loans to Prime Rate Loans pursuant to any of
the foregoing.
(d) Interest shall be payable by Borrower to Lender monthly in
arrears not later than the first day of each calendar month and shall be
calculated on the basis of a three hundred sixty (360) day year and actual days
elapsed. The interest rate on non-contingent Obligations (other than Eurodollar
Rate Loans) shall increase or decrease by an amount equal to each increase or
decrease in the Prime Rate effective on the first day of the month after any
change in such Prime Rate is announced based on the Prime Rate in effect on the
last day of the month in which any such change occurs. In no event shall charges
constituting interest payable by Borrower to Lender exceed the maximum amount or
the rate permitted under any applicable law or regulation, and if any such part
or provision of this Agreement is in contravention of any such law or
regulation, such part or provision shall be deemed amended to conform thereto.
3.2 CLOSING FEE. Borrower shall pay to Lender as a closing fee
the amount of $450,000, which shall be fully earned as of the date hereof, and
which shall be payable on the date hereof.
3.3 SERVICING FEE. Borrower shall pay to Lender monthly a
servicing fee in an amount equal to $4,000 in respect of Lender's services for
each month (or part thereof) while this Agreement remains in effect and for so
long thereafter as any of the Obligations are outstanding, which fee shall be
fully earned as of and payable in advance on the date hereof and on the first
day of each month hereafter.
3.4 UNUSED LINE FEE. Borrower shall pay to Lender monthly an
unused line fee at a rate equal to three-eighths of one (3/8%) percent per annum
calculated upon the amount by which $34,000,000 exceeds the average daily
principal balance of the outstanding Loans and Letter of Credit Accommodations
during the immediately preceding month (or part thereof) while this Agreement is
in effect and for so long thereafter as any of the Obligations are outstanding,
which fee shall be payable on the first day of each month in arrears.
3.5 CHANGES IN LAWS AND INCREASED COSTS OF LOANS.
27
(a) Notwithstanding anything to the contrary contained
herein, all Eurodollar Rate Loans shall, upon notice by Lender to Borrower,
convert to Prime Rate Loans in the event that (i) any change in applicable law
or regulation (or the interpretation or administration thereof) shall either (A)
make it unlawful for Lender, Reference Bank or any participant to make or
maintain Eurodollar Rate Loans or to comply with the terms hereof in connection
with the Eurodollar Rate Loans, or (B) shall result in the increase in the costs
to Lender, Reference Bank or any participant of making or maintaining any
Eurodollar Rate Loans by an amount deemed by Lender to be material, or (C)
reduce the amounts received or receivable by Lender in respect thereof, by an
amount deemed by Lender to be material or (ii) the cost to Lender, Reference
Bank or any participant of making or maintaining any Eurodollar Rate Loans shall
otherwise increase by an amount deemed by Lender to be material. Borrower shall
pay to Lender, upon demand by Lender (or Lender may, at its option, charge any
loan account of Borrower) any amounts required to compensate Lender, the
Reference Bank or any participant with Lender for any loss, cost or expense
incurred by such person as a result of the foregoing, including, without
limitation, any such loss, cost or expense incurred by reason of the liquidation
or reemployment of deposits or other funds acquired by such person to make or
maintain the Eurodollar Rate Loans or any portion thereof. A certificate of
Lender setting forth the basis for the determination of such amount necessary to
compensate Lender as aforesaid shall be delivered to Borrower and shall be
conclusive, absent manifest error.
(b) If any payments or prepayments in respect of the
Eurodollar Rate Loans are received by Lender other than on the last day of the
applicable Interest Period (whether pursuant to acceleration, upon maturity or
otherwise), including any payments pursuant to the application of collections
under Section 6.3 or any other payments made with the proceeds of Collateral,
Borrower shall pay to Lender upon demand by Lender (or Lender may, at its
option, charge any loan account of Borrower) any amounts required to compensate
Lender, the Reference Bank or any participant with Lender for any additional
loss (including loss of anticipated profits), cost or expense incurred by such
person as a result of such prepayment or payment, including, without limitation,
any loss, cost or expense incurred by reason of the liquidation or reemployment
of deposits or other funds acquired by such person to make or maintain such
Eurodollar Rate Loans or any portion thereof.
SECTION 4. CONDITIONS PRECEDENT
4.1 CONDITIONS PRECEDENT TO INITIAL LOANS AND LETTER OF CREDIT
ACCOMMODATIONS. Each of the following is a condition precedent to Lender making
the initial Loans and providing the initial Letter of Credit Accommodations
hereunder:
(a) Lender shall have received, in form and substance
satisfactory to Lender, all releases, terminations and such other documents as
Lender may request to evidence and effectuate
28
the termination by the Existing Lenders to Borrower of their respective
financing arrangements with Borrower and the termination and release by it or
them, as the case may be, of any interest in and to any assets and properties of
Borrower and each Obligor, duly authorized, executed and delivered by it or each
of them, including, but not limited to, (i) UCC termination statements for all
UCC financing statements previously filed by it or any of them or their
predecessors, as secured party and Borrower or any Obligor, as debtor and (ii)
satisfactions and discharges of any mortgages, deeds of trust or deeds to secure
debt by Borrower or any Obligor in favor of such Existing Lender or Lenders, in
form acceptable for recording in the appropriate government office;
(b) all requisite corporate action and proceedings in
connection with this Agreement and the other Financing Agreements shall be in
form and substance reasonably satisfactory to Lender, and Lender shall have
received all information and copies of all documents, including records of
requisite corporate action and proceedings which Lender may have reasonably
requested in connection therewith, such documents where requested by Lender or
its counsel to be certified by appropriate corporate officers or governmental
authorities;
(c) no material adverse change shall have occurred in the
assets, business or prospects of Borrower since February 18, 1999, the date of
Lender's latest field examination and no change or event shall have occurred
which would impair the ability of Borrower or any Obligor to perform its
obligations hereunder or under any of the other Financing Agreements to which it
is a party or of Lender to enforce the Obligations or realize upon the
Collateral;
(d) Lender shall have completed a field review of the Records
and such other information with respect to the Collateral as Lender may require
to determine the amount of Revolving Loans available to Borrower (including,
without limitation, current perpetual inventory records and/or roll-forwards of
Accounts and Inventory through the date of closing and test counts of the
Inventory in a manner satisfactory to Lender, together with such supporting
documentation as may be necessary or appropriate, and other documents and
information that will enable Lender to accurately identify and verify the
Collateral), the results of which each case shall be satisfactory to Lender, not
more than three (3) Business Days prior to the date hereof;
(e) Lender shall have received, in form and substance
satisfactory to Lender, all consents, waivers, acknowledgments and other
agreements from third persons which Lender may deem necessary or desirable in
order to permit, protect and perfect its security interests in and liens upon
the Collateral or to effectuate the provisions or purposes of this Agreement and
the other Financing Agreements, including, without limitation, Collateral Access
Agreements by owners and lessors of leased premises of Borrower and by
warehouses at which Collateral is located;
(f) Lender shall have received, in form and substance
satisfactory to Lender, all necessary agreements with the depository banks and
Borrower with respect to the Blocked
29
Accounts as Lender may require pursuant to Section 6.3 hereof, duly authorized,
executed and delivered by such depository banks and Borrower;
(g) the Excess Availability as determined by Lender in good
faith, as of the date hereof, shall be not less than $10,000,000 after giving
effect to the initial Loans made or to be made hereunder and Letter of Credit
Accommodations issued or to be issued in connection with the initial
transactions hereunder;
(h) Lender shall have received evidence of insurance and loss
payee endorsements required hereunder and under the other Financing Agreements,
in form and substance satisfactory to Lender, and certificates of insurance
policies and/or endorsements naming Lender as loss payee;
(i) Lender shall have received environmental audits of
Borrower's Real Property covered by the Mortgages conducted by an independent
environmental engineering firm acceptable to Lender, and in form, scope and
methodology satisfactory to Lender, confirming (i) Borrower is in compliance
with all material applicable Environmental Laws and (ii) the absence of any
material environmental problems;
(j) Lender shall have received, in form and substance
reasonably satisfactory to Lender, a valid and effective title insurance policy
issued by a company and agent acceptable to Lender (i) insuring the priority,
amount and sufficiency of the Mortgages, (ii) insuring against matters that
would be disclosed by surveys and (iii) containing any legally available
endorsements, assurances or affirmative coverage reasonably requested by Lender
for protection of its interests;
(k) Lender shall have received, in form and substance
satisfactory to Lender, such opinion letters of counsel to Borrower, Holdings
and Cottontops with respect to the Financing Agreements and such other matters
as Lender may request; and
(l) the other Financing Agreements and all instruments and
documents hereunder and thereunder shall have been duly executed and delivered
to Lender, in form and substance satisfactory to Lender.
4.2 CONDITIONS PRECEDENT TO ALL LOANS AND LETTER OF CREDIT
ACCOMMODATIONS. Each of the following is an additional condition precedent to
Lender making Loans and/or providing Letter of Credit Accommodations to
Borrower, including the initial Loans and Letter of Credit Accommodations and
any future Loans and Letter of Credit Accommodations:
(a) all representations and warranties contained herein and
in the other Financing Agreements shall be true and correct in all material
respects with the same effect as though such representations and warranties had
been made on and as of the date of the making of each such Loan or providing
each such Letter of Credit Accommodation and after giving effect thereto,
30
except to the extent that such representations and warranties expressly relate
solely to an earlier date (in which case such representations and warranties
shall have been true and accurate in all material respects on and as of such
earlier date);
(b) no law, regulation, order, judgment or decree of any
Governmental Authority shall exist, and no action, suit, investigation,
litigation or proceeding shall be pending or threatened in any court or before
any arbitrator or Governmental Authority, which (i) has a reasonable likelihood
of enjoining, prohibiting, restraining or otherwise affecting (A) the making of
the Loans or providing the Letter of Credit Accommodations, or (B) the
consummation of the transactions contemplated pursuant to the terms hereof or
the other Financing Agreements or (ii) has or could reasonably be expected to
have a material adverse effect on the assets, business or prospects of Borrower
or would impair the ability of Borrower to perform its obligations hereunder or
under any of the other Financing Agreements or of Lender to enforce any
Obligations or realize upon any of the Collateral; and
(c) no Event of Default and no act, condition or event which,
with notice or passage of time or both, would constitute an Event of Default,
shall exist or have occurred and be continuing on and as of the date of the
making of such Loan or providing each such Letter of Credit Accommodation and
after giving effect thereto.
SECTION 5. GRANT OF SECURITY INTEREST
To secure payment and performance of all Obligations, Borrower hereby
grants to Lender a continuing security interest in, a lien upon, and a right of
set off against, and hereby assigns to Lender as security, the following
property and interests in property of Borrower, whether now owned or hereafter
acquired or existing, and wherever located (collectively, the "Collateral"):
5.1 Accounts;
5.2 all present and future contract rights, general intangibles
(including tax and duty refunds, registered and unregistered patents,
trademarks, service marks, copyrights, trade names, applications for the
foregoing, trade secrets, goodwill, processes, drawings, blueprints, customer
lists, licenses, whether as licensor or licensee, choses in action and other
claims and existing and future leasehold interests in equipment, real estate and
fixtures), chattel paper, documents, instruments, investment property, letters
of credit, bankers' acceptances and guaranties;
5.3 all present and future monies, securities and other
investment property, credit balances, deposits, deposit accounts and other
property of Borrower now or hereafter held or received by or in transit to
Lender or its Affiliates or at any other depository or other institution from or
for the account of Borrower, whether for safekeeping, pledge, custody,
transmission, collection or otherwise, and all present and future liens,
security interests, rights, remedies, title
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and interest in, to and in respect of Accounts and other Collateral, including
(a) rights and remedies under or relating to guaranties, contracts of
suretyship, letters of credit and credit and other insurance related to the
Collateral, (b) rights of stoppage in transit, replevin, repossession,
reclamation and other rights and remedies of an unpaid vendor, lienor or secured
party, (c) goods described in invoices, documents, contracts or instruments with
respect to, or otherwise representing or evidencing, Accounts or other
Collateral, including returned, repossessed and reclaimed goods, and (d)
deposits by and property of account debtors or other persons securing the
obligations of account debtors;
5.4 Inventory;
5.5 Equipment;
5.6 Real Property covered by the Mortgages;
5.7 Records; and
5.8 all products and proceeds of the foregoing, in any form,
including insurance proceeds and all claims against third parties for loss or
damage to or destruction of any or all of the foregoing.
5.9 Notwithstanding anything to the contrary provided herein,
(a) in no event shall any Subsidiary that is not incorporated or organized in
the United States, any State or territory thereof or the District of Columbia (a
"Foreign Subsidiary") of Holdings (and, in effect, Borrower) guarantee or act as
a guarantor for any Obligations, and (b) Borrower and Guarantors may pledge
their assets with respect to any Obligations, PROVIDED, THAT, they shall not
pledge more than 66% of their voting stock in any Foreign Subsidiary unless, and
until as a result of a change in law, Borrower and or Guarantors, as the case
may be, shall not have any additional tax liability pursuant to Section 956 or
any other applicable Section of the Code as a direct result of making such a
guarantee or pledging more than 66% of the voting stock in any Foreign
Subsidiary, as the case may be.
SECTION 6. COLLECTION AND ADMINISTRATION
6.1 BORROWER'S LOAN ACCOUNT. Lender shall maintain one or more
loan account(s) on its books in which shall be recorded (a) all Loans, Letter of
Credit Accommodations and other Obligations and the Collateral, (b) all payments
made by or on behalf of Borrower and (c) all other appropriate debits and
credits as provided in this Agreement, including fees, charges, costs, expenses
and interest. All entries in the loan account(s) shall be made in accordance
with Lender's customary practices as in effect from time to time.
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6.2 STATEMENTS. Lender shall render to Borrower each month a
statement setting forth the balance in the Borrower's loan account(s) maintained
by Lender for Borrower pursuant to the provisions of this Agreement, including
principal, interest, fees, costs and expenses. Each such statement shall be
subject to subsequent adjustment by Lender but shall, absent manifest errors or
omissions, be considered correct and deemed accepted by Borrower and
conclusively binding upon Borrower as an account stated except to the extent
that Lender receives a written notice from Borrower of any specific exceptions
of Borrower thereto within forty-five (45) days after the date such statement
has been mailed to Borrower by Lender. Until such time as Lender shall have
rendered to Borrower a written statement as provided above, the balance in
Borrower's loan account(s) shall be presumptive evidence of the amounts due and
owing to Lender by Borrower.
6.3 COLLECTION OF ACCOUNTS.
(a) Borrower shall establish and maintain, at its expense,
blocked accounts or lockboxes and related blocked accounts (in either case,
"Blocked Accounts"), as Lender may specify, with such banks as are reasonably
acceptable to Lender into which Borrower shall promptly deposit and direct its
account debtors to directly remit all payments on Accounts and all payments
constituting proceeds of Inventory or other Collateral in the identical form in
which such payments are made, whether by cash, check or other manner. The banks
at which the Blocked Accounts are established shall enter into an agreement, in
form and substance reasonably satisfactory to Lender, providing that all items
received or deposited in the Blocked Accounts are the property of Lender, that
the depository bank has no lien upon, or right to setoff against, the Blocked
Accounts, the items received for deposit therein, or the funds from time to time
on deposit therein and that the depository bank will wire, or otherwise
transfer, in immediately available funds, on a daily basis, all funds received
or deposited into the Blocked Accounts to such bank account of Lender as Lender
may from time to time designate for such purpose ("Payment Account"). Borrower
agrees that all payments made to such Blocked Accounts or other funds received
and collected by Lender, whether on the Accounts or as proceeds of Inventory or
other Collateral or otherwise shall be the property of Lender.
(b) For purposes of calculating the amount of the Loans
available to Borrower, such payments will be applied (conditional upon final
collection) to the Obligations on the Business Day of receipt by Lender of
immediately available funds in the Payment Account provided such payments and
notice thereof are received in accordance with Lender's usual and customary
practices as in effect from time to time and within sufficient time to credit
Borrower's loan account on such day, and if not, then on the next Business Day.
For the purposes of calculating interest on the Obligations, such payments or
other funds received will be applied (conditional upon final collection) to the
Obligations one (1) Business Day following the date of receipt of immediately
available funds by Lender in the Payment Account provided such payments or other
funds and notice thereof are received in accordance with Lender's usual and
customary practices as in effect from time to time and within sufficient time to
credit Borrower's loan account on such day, and if not, then on the next
Business Day.
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(c) Borrower and all of its shareholders, directors,
employees, agents, Subsidiaries or other Affiliates shall, acting as trustee for
Lender, receive, as the property of Lender, any monies, checks, notes, drafts or
any other payment relating to and/or proceeds of Accounts or other Collateral
which come into their possession or under their control and promptly upon
receipt thereof, shall deposit or cause the same to be deposited in the Blocked
Accounts, or remit the same or cause the same to be remitted, in kind, to
Lender. In no event shall the same be commingled with Borrower's own funds.
Borrower agrees to reimburse Lender on demand for any amounts owed or paid to
any bank at which a Blocked Account is established or any other bank or person
involved in the transfer of funds to or from the Blocked Accounts arising out of
Lender's payments to or indemnification of such bank or person. The obligation
of Borrower to reimburse Lender for such amounts pursuant to this Section 6.3
shall survive the termination or non-renewal of this Agreement.
6.4 PAYMENTS. All Obligations shall be payable to the Payment
Account as provided in Section 6.3 or such other place as Lender may designate
in writing from time to time. Lender may apply payments received or collected
from Borrower or for the account of Borrower (including the monetary proceeds of
collections or of realization upon any Collateral) to such of the Obligations,
whether or not then due, in such order and manner as Lender determines. At
Lender's option, all principal, interest, fees, costs, expenses and other
charges provided for in this Agreement or the other Financing Agreements may be
charged directly to the loan account(s) of Borrower. Borrower shall make all
payments to Lender on the Obligations free and clear of, and without deduction
or withholding for or on account of, any setoff, counterclaim, defense, duties,
taxes, levies, imposts, fees, deductions, withholding, restrictions or
conditions of any kind other than any Excluded Taxes that Borrower is required
to withhold under applicable law, PROVIDED, THAT, to the extent Borrower is
required by law to deduct such Excluded Taxes Borrower shall pay to Lender such
additional amounts as may be necessary in order that the net amount received by
Lender after such withholding or deduction shall equal the amount Lender would
have received had no deduction or withholding been made. If after receipt of any
payment of, or proceeds of Collateral applied to the payment of, any of the
Obligations, Lender is required to surrender or return such payment or proceeds
to any Person for any reason, then the Obligations intended to be satisfied by
such payment or proceeds shall be reinstated and continue and this Agreement
shall continue in full force and effect as if such payment or proceeds had not
been received by Lender. Borrower shall be liable to pay to Lender, and does
hereby indemnify and hold Lender harmless for the amount of any payments or
proceeds surrendered or returned. This Section 6.4 shall remain effective
notwithstanding any contrary action which may be taken by Lender in reliance
upon such payment or proceeds. This Section 6.4 shall survive the payment of the
Obligations and the termination or non-renewal of this Agreement.
6.5 AUTHORIZATION TO MAKE LOANS. Lender is authorized to make the
Loans and provide the Letter of Credit Accommodations based upon telephonic or
other instructions received from anyone purporting to be an officer of Borrower
or other authorized person or, at the discretion of
34
Lender, if such Loans are necessary to satisfy any Obligations. All requests for
Loans or Letter of Credit Accommodations hereunder shall specify the date on
which the requested Loan is to be made or Letter of Credit Accommodations
established (which day shall be a Business Day) and the amount of the requested
Loan or Letter of Credit Accommodations. Requests received after 11:00 a.m. New
York City time on any day shall be deemed to have been made as of the opening of
business on the immediately following Business Day. All Loans and Letter of
Credit Accommodations under this Agreement shall be conclusively presumed to
have been made to, and at the request of and for the benefit of, Borrower when
deposited to the credit of Borrower or otherwise disbursed or established in
accordance with the instructions of Borrower or in accordance with the terms and
conditions of this Agreement.
6.6 USE OF PROCEEDS. Borrower shall use the initial proceeds of
the Loans provided by Lender to Borrower hereunder only for: (a) payments to
each of the persons listed in the disbursement direction letter furnished by
Borrower to Lender on or about the date hereof and (b) costs, expenses and fees
in connection with the preparation, negotiation, execution and delivery of this
Agreement and the other Financing Agreements. All other Loans made or Letter of
Credit Accommodations provided by Lender to Borrower pursuant to the provisions
hereof shall be used by Borrower only for general operating, working capital and
other proper corporate purposes of Borrower not otherwise prohibited by the
terms hereof. None of the proceeds will be used, directly or indirectly, for the
purpose of purchasing or carrying any margin security or for the purposes of
reducing or retiring any indebtedness which was originally incurred to purchase
or carry any margin security or for any other purpose which might cause any of
the Loans to be considered a "purpose credit" within the meaning of Regulation U
of the Board of Governors of the Federal Reserve System, as amended.
SECTION 7. COLLATERAL REPORTING AND COVENANTS
7.1 COLLATERAL REPORTING.
(a) Borrower shall provide Lender with the following
documents in a form satisfactory to Lender:
(i) on a weekly basis or more frequently as Lender may
request, a schedule of sales made (and indicating which are ▇▇▇▇ and Hold
Accounts), credits issued and cash received;
(ii) on a weekly basis or more frequently as Lender may
request perpetual inventory reports, by category and location;
(iii) on a monthly basis or more frequently as Lender
may request (A) agings of accounts receivable, by account (including ▇▇▇▇ and
Hold Accounts), (B) a schedule of accounts payable (and at the request of
Lender, an aging of accounts payable)
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and (C) a markdown of Inventory report;
(iv) on a monthly basis or more frequently as Lender may
request, a report detailing (A) sales of Equipment, if any, and (B) transfers of
Equipment out of the continental United States;
(v) upon Lender's request, (A) copies of customer
statements and credit memos, remittance advices and reports, and copies of
deposit slips and bank statements, (B) copies of shipping and delivery
documents, and (C) copies of purchase orders, invoices and delivery documents
for Inventory and Equipment acquired by Borrower;
(vi) such other reports as to the Collateral as Lender
shall request from time to time; and
(b) If any of Borrower's records or reports of the Collateral
are prepared or maintained by an accounting service, contractor, shipper or
other agent, Borrower hereby irrevocably authorizes such service, contractor,
shipper or agent to deliver such records, reports, and related documents to
Lender and to follow Lender's instructions with respect to further services at
any time that an Event of Default exists or has occurred and is continuing.
7.2 ACCOUNTS COVENANTS.
(a) Borrower shall notify Lender promptly of: (i) any
material delay in Borrower's performance of any of its material obligations to
any account debtor or the assertion of any material claims, offsets, defenses or
counterclaims by any account debtor known to Borrower, or any material disputes
with account debtors, or any settlement, adjustment or compromise thereof, (ii)
all material adverse information relating to the financial condition of any
account debtor and (iii) any event or circumstance which, to Borrower's
knowledge and good faith belief would cause Lender to consider any then existing
Accounts as no longer constituting Eligible Accounts. No credit, discount,
allowance or extension or agreement for any of the foregoing shall be granted to
any account debtor without Lender's consent, except in the ordinary course of
Borrower's business in accordance with current practices. So long as no Event of
Default exists or has occurred and is continuing, Borrower shall settle, adjust
or compromise any claim, offset, counterclaim or dispute with any account
debtor. At any time that an Event of Default exists or has occurred and is
continuing, Lender shall, at its option, have the exclusive right to settle,
adjust or compromise any claim, offset, counterclaim or dispute with account
debtors or grant any credits, discounts or allowances.
(b) Without limiting the obligation of Borrower to deliver
any other information to Lender, Borrower shall promptly report to Lender any
return of Inventory by any one account debtor if the Inventory so returned in
such case has a value in excess of $50,000. At any time that Inventory is
returned, reclaimed or repossessed, the Account (or portion thereof) which arose
36
from the sale of such returned, reclaimed or repossessed Inventory shall not be
deemed an Eligible Account. In the event any account debtor returns Inventory
when an Event of Default exists or has occurred and is continuing, Borrower
shall, upon Lender's request, (i) hold the returned Inventory in trust for
Lender, (ii) segregate all returned Inventory from all of its other property,
(iii) dispose of the returned Inventory solely according to Lender's
instructions, and (iv) not issue any credits, discounts or allowances with
respect thereto without Lender's prior written consent.
(c) With respect to each Account: (i) the amounts shown on
any invoice delivered to Lender or schedule thereof delivered to Lender shall be
true and complete, (ii) no payments shall be made thereon except payments
immediately delivered to Lender pursuant to the terms of this Agreement, (iii)
no credit, discount, allowance or extension or agreement for any of the
foregoing shall be granted to any account debtor except as reported to Lender in
accordance with this Agreement and except for credits, discounts, allowances or
extensions made or given in the ordinary course of Borrower's business in
accordance with current practices, (iv) there shall be no setoffs, deductions,
contras, defenses, counterclaims or disputes existing or asserted with respect
thereto except as reported to Lender in accordance with the terms of this
Agreement, (v) none of the transactions giving rise thereto will violate any
applicable State or Federal laws or regulations, all documentation relating
thereto will be legally sufficient under such laws and regulations and all such
documentation will be legally enforceable in accordance with its terms.
(d) Lender shall have the right at any time or times, in
Lender's name or in the name of a nominee of Lender, to verify the validity,
amount or any other matter relating to any Account or other Collateral, by mail,
telephone, facsimile transmission or otherwise.
(e) Borrower shall deliver or cause to be delivered to
Lender, with appropriate endorsement and assignment, with full recourse to
Borrower, all chattel paper and instruments which Borrower now owns or may at
any time acquire immediately upon Borrower's receipt thereof, except as Lender
may otherwise agree.
(f) Lender may, at any time or times that an Event of Default
exists or has occurred and is continuing, (i) notify any or all account debtors
that the Accounts have been assigned to Lender and that Lender has a security
interest therein and Lender may direct any or all accounts debtors to make
payment of Accounts directly to Lender, (ii) extend the time of payment of,
compromise, settle or adjust for cash, credit, return of merchandise or
otherwise, and upon any terms or conditions, any and all Accounts or other
obligations included in the Collateral and thereby discharge or release the
account debtor or any other party or parties in any way liable for payment
thereof without affecting any of the Obligations, (iii) demand, collect or
enforce payment of any Accounts or such other obligations, but without any duty
to do so, and Lender shall not be liable for its failure to collect or enforce
the payment thereof nor for the negligence of its agents or attorneys with
respect thereto and (iv) take whatever other action Lender may deem necessary or
desirable for the protection of its interests and in accordance with applicable
law. At any time that an Event of Default exists or has occurred and is
continuing, at Lender's request, all invoices
37
and statements sent to any account debtor shall state that the Accounts and such
other obligations have been assigned to Lender and are payable directly and only
to Lender and Borrower shall deliver to Lender such originals of documents
evidencing the sale and delivery of goods or the performance of services giving
rise to any Accounts as Lender may require.
7.3 INVENTORY COVENANTS. With respect to the Inventory:
(a) Borrower shall at all times maintain inventory records reasonably
satisfactory to Lender, keeping correct and accurate records itemizing and
describing the kind, type, quality and quantity of Inventory, Borrower's cost
therefor and daily withdrawals therefrom and additions thereto; (b) Borrower
shall conduct a physical count of the Inventory at least once each year, but at
any time or times as Lender may request on or after an Event of Default, and
promptly following such physical inventory shall supply Lender with a report in
the form and with such specificity as may be reasonably satisfactory to Lender
concerning such physical count; (c) Borrower shall not remove any Inventory from
the locations set forth or permitted herein, without the prior written consent
of Lender, except for sales of Inventory in the ordinary course of Borrower's
business and except to move Inventory directly from one location set forth or
permitted herein to another such location and except for Inventory shipped from
the manufacturer thereof to Borrower which is in transit to the locations set
forth or permitted herein; (d) upon Lender's request, Borrower shall, at its
expense, no more than once in any twelve (12) month period, but at any time or
times as Lender may request on or after and during the continuance of an Event
of Default, deliver or cause to be delivered to Lender written reports or
appraisals as to the Inventory in form, scope and methodology acceptable to
Lender and by an appraiser acceptable to Lender, addressed to Lender and upon
which Lender is expressly permitted to rely; (e) Borrower shall produce, use,
store and maintain the Inventory with all reasonable care and caution and in
accordance with applicable standards of any insurance and in conformity with
applicable laws (including the requirements of the Federal Fair Labor Standards
Act of 1938, as amended and all rules, regulations and orders related thereto);
(f) Borrower assumes all responsibility and liability arising from or relating
to the production, use, sale or other disposition of the Inventory; (g) Borrower
shall not sell Inventory to any customer on approval, or any other basis which
entitles the customer to return or may obligate Borrower to repurchase such
Inventory except for the rights of return given to customers of Borrower in
accordance with current practices as of the date hereof; (h) Borrower shall keep
the Inventory in good and marketable condition; and (i) Borrower shall not,
without prior written notice to Lender, acquire or accept any Inventory on
consignment or approval.
7.4 EQUIPMENT AND REAL PROPERTY COVENANTS. With respect to the
Equipment and Real Property: (a) upon Lender's request, Borrower shall, at its
expense, no more than once in any twelve (12) month period, but at any time or
times as Lender may request, at Lender's expense, or at Borrower's expense, on
or after an Event of Default, deliver or cause to be delivered to Lender written
reports or appraisals as to the Equipment and/or the Real Property in form,
scope and methodology acceptable to Lender and by an appraiser acceptable to
Lender, addressed to Lender and upon which Lender is expressly permitted to
rely; (b) Borrower shall keep the Equipment in good order, repair, running and
marketable condition (ordinary wear and tear excepted); (c)
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Borrower shall use the Equipment and Real Property with all reasonable care and
caution customary for corporations of established reputation engaged in similar
businesses of similarly situated and in accordance with applicable standards of
any insurance and in conformity with all applicable laws; (d) the Equipment is
and shall be used in Borrower's business and not for personal, family, household
or farming use; (e) Borrower shall not remove any Equipment from the locations
set forth or permitted herein, except to the extent necessary to have any
Equipment repaired or maintained in the ordinary course of the business of
Borrower or to move Equipment directly from one location set forth or permitted
herein to another such location and except for the movement of motor vehicles
used by or for the benefit of Borrower in the ordinary course of business; (f)
the Equipment is now and shall remain personal property and Borrower shall not
permit any of the Equipment to be or become a part of or affixed to real
property; and (g) Borrower assumes all responsibility and liability arising from
the use of the Equipment and Real Property.
7.5 BILLS OF LADING AND OTHER DOCUMENTS OF TITLE. Borrower shall
cause all bills of lading and other documents of title relating to goods being
purchased by Borrower which are outside the United States and in transit to the
premises of Borrower or the premises of a Customs Broker to name Borrower as
consignee, unless and until Lender may direct otherwise. At such time and from
time to time as Lender may direct, Borrower shall cause Lender or such other
financial institution or other person as Lender may specify to be named as
consignee. Without limiting any other rights of Lender hereunder, Lender shall
have the right to endorse and negotiate on behalf of, and as attorney-in-fact
for, Borrower any ▇▇▇▇ of lading or other document of title with respect to such
goods naming Borrower as consignee to Lender. There shall be three (3) originals
of each of such ▇▇▇▇ of lading or other document of title, which unless and
until Lender shall direct otherwise shall be delivered as follows: (a) one (1)
original to such Customs Broker as Borrower may specify (so long as Lender shall
have received a Collateral Access Agreement duly authorized, executed and
delivered by such Customs Broker) and (b) at Lender's request, two (2) originals
of which shall be delivered to Lender or to such other person as Lender may
designate for such purpose. At Lender's request, Borrower shall instruct all
suppliers, carriers, forwarders, warehouses or others receiving or holding
Inventory, documents, or instruments in which Lender holds a security interest
to deliver them to Lender and/or subject to Lender's request and if they shall
come into Borrower's possession, to deliver them, upon request, to Lender in
their original form. Borrower shall cause all bills of lading or other documents
of title relating to goods purchased by Borrower which are outside the United
States and in transit to the premises of Borrower to be issued in a form so as
to constitute negotiable documents as such term is defined in the Uniform
Commercial Code.
7.6 POWER OF ATTORNEY. Borrower hereby irrevocably designates and
appoints Lender (and all persons designated by Lender) as Borrower's true and
lawful attorney-in-fact, and authorizes Lender, in Borrower's or Lender's name,
to: (a) at any time an Event of Default or act, condition or event which with
notice or passage of time or both would constitute an Event of Default exists or
has occurred and is continuing (i) demand payment on Accounts or other
39
proceeds of Inventory or other Collateral, (ii) enforce payment of Accounts by
legal proceedings or otherwise, (iii) exercise all of Borrower's rights and
remedies to collect any Account or other Collateral, (iv) sell or assign any
Account upon such terms, for such amount and at such time or times as the
Lender, in good faith, deems advisable, (v) settle, adjust, compromise, extend
or renew an Account, (vi) discharge and release any Account, (vii) prepare, file
and sign Borrower's name on any proof of claim in bankruptcy or other similar
document against an account debtor, (viii) notify the post office authorities to
change the address for delivery of Borrower's mail to an address designated by
Lender, and open and dispose of all mail addressed to Borrower, and (ix) do all
acts and things which are necessary, in Lender's determination, to fulfill
Borrower's obligations under this Agreement and the other Financing Agreements
and (b) at any time to (i) take control in any manner of any item of payment or
proceeds thereof received in or for deposit in the Blocked Accounts or otherwise
received by Lender, (ii) have access to any lockbox or postal box into which
Borrower's mail is deposited, (iii) endorse Borrower's name upon any items of
payment or proceeds thereof and deposit the same in the Lender's account for
application to the Obligations, (iv) endorse Borrower's name upon any chattel
paper, document, instrument, invoice, or similar document or agreement relating
to any Account or any goods pertaining thereto or any other Collateral, (v) sign
Borrower's name on any verification of Accounts and notices thereof to account
debtors and (vi) execute in Borrower's name and file any UCC financing
statements or amendments thereto. Borrower hereby releases Lender and its
officers, employees and designees from any liabilities arising from any act or
acts under this power of attorney and in furtherance thereof, whether of
omission or commission, except as a result of Lender's own gross negligence or
wilful misconduct as determined pursuant to a final non-appealable order of a
court of competent jurisdiction.
7.7 RIGHT TO CURE. Lender may, at its option, (a) upon notice to
Borrower, cure any default by Borrower under any material agreement with a third
party which affects the Collateral, its value or the ability of Lender to
collect, sell or otherwise dispose of the Collateral or the rights and remedies
of Lender therein or the ability of Borrower to perform its obligations under
the other Financing Agreements, (b) pay or bond on appeal any judgment entered
against Borrower, (c) discharge taxes, liens, security interests or other
encumbrances at any time levied on or existing with respect to the Collateral
and (d) pay any amount, incur any expense or perform any act which, in Lender's
good faith judgment, is necessary or appropriate to preserve, protect, insure or
maintain the Collateral and the rights of Lender with respect thereto. Lender
may add any amounts so expended to the Obligations and charge Borrower's account
therefor, such amounts to be repayable by Borrower on demand. Lender shall be
under no obligation to effect such cure, payment or bonding and shall not, by
doing so, be deemed to have assumed any obligation or liability of Borrower. Any
payment made or other action taken by Lender under this Section shall be without
prejudice to any right to assert an Event of Default hereunder and to proceed
accordingly.
7.8 ACCESS TO PREMISES. From time to time as requested in good
faith by Lender, at the cost and expense of Borrower, (a) Lender or its designee
shall have complete access to all of
40
Borrower's premises during normal business hours and after notice to Borrower,
but in no event, more than once per calendar month so long as no Event of
Default has occurred and is continuing or at any time and as frequently as
Lender determines is necessary and without notice to Borrower if an Event of
Default exists or has occurred and is continuing, for the purposes of
inspecting, verifying and auditing the Collateral and all of Borrower's books
and records, including the Records, and (b) Borrower shall promptly furnish to
Lender such copies of such books and records or extracts therefrom as Lender may
request in good faith, and (c) Lender or its designee may use during normal
business hours such of Borrower's personnel, equipment, supplies and premises as
may be reasonably necessary for the foregoing and if an Event of Default exists
or has occurred and is continuing for the collection of Accounts and realization
of other Collateral; PROVIDED, THAT, Borrower shall make such personnel and
premises available to Lender in such manner so as to minimize any interference
with the operations of Borrower.
SECTION 8. REPRESENTATIONS AND WARRANTIES
Borrower and Guarantors hereby jointly and severally represent and
warrant to Lender the following (which shall survive the execution and delivery
of this Agreement), the truth and accuracy of which are a continuing condition
of the making of Loans and providing Letter of Credit Accommodations by Lender
to Borrower:
8.1 CORPORATE EXISTENCE, POWER AND AUTHORITY; SUBSIDIARIES. Each
of Borrower, Guarantors and their respective Subsidiaries is a corporation duly
organized and in good standing under the laws of its state of incorporation and
is duly qualified as a foreign corporation and in good standing in all states or
other jurisdictions (where such concept is recognized) where the nature and
extent of the business transacted by it or the ownership of assets makes such
qualification necessary, except for those jurisdictions in which the failure to
so qualify would not have a material adverse effect on Borrower's financial
condition, results of operation or business or the rights of Lender in or to any
of the Collateral. The execution, delivery and performance of this Agreement,
the other Financing Agreements and the transactions contemplated hereunder and
thereunder are all within the corporate powers of Borrower, each Guarantor and
their Subsidiaries, have been duly authorized and are not in contravention of
applicable law or the terms of Borrower's or any Guarantor's certificate of
incorporation, by-laws, or other organizational documentation, or any indenture,
agreement or undertaking to which Borrower, any Guarantor or any of their
respective Subsidiaries is a party or by which Borrower, Guarantors or any of
their respective Subsidiaries or their property are bound. This Agreement and
the other Financing Agreements constitute legal, valid and binding obligations
of Borrower and each Guarantor enforceable in accordance with their respective
terms. Borrower and Guarantors do not have any Subsidiaries except as set forth
on Schedule 8.1.
8.2 FINANCIAL STATEMENTS; NO MATERIAL ADVERSE CHANGE. All
financial statements relating to Borrower, Guarantors and their Subsidiaries
which have been or may hereafter be delivered by
41
Borrower to Lender have been prepared in accordance with GAAP and fairly present
the financial condition and the results of operation of Borrower, Guarantors and
their respective Subsidiaries as at the dates and for the periods set forth
therein. Except as disclosed in any interim financial statements furnished by
Borrower to Lender prior to the date of this Agreement, there has been no
material adverse change in the assets, liabilities, properties and condition,
financial or otherwise, of Borrower, Guarantors and their Subsidiaries, since
the date of the most recent audited financial statements furnished by Borrower
to Lender prior to the date of this Agreement.
8.3 CHIEF EXECUTIVE OFFICE; COLLATERAL LOCATIONS. The chief
executive office of Borrower and Borrower's Records concerning Accounts are
located only at the address set forth below and its only other places of
business and the only other locations of Collateral, if any, are the addresses
set forth in the Information Certificate, subject to the right of Borrower to
establish new locations in accordance with Section 9.2 below. The Information
Certificate correctly identifies any of such locations which are not owned by
Borrower and sets forth the owners and/or operators thereof and to the best of
Borrower's knowledge, the holders of any mortgages on such locations.
8.4 PRIORITY OF LIENS; TITLE TO PROPERTIES. The security
interests and liens granted to Lender under this Agreement and the other
Financing Agreements constitute valid and perfected first priority liens and
security interests in and upon the Collateral subject only to the liens
indicated on Schedule 8.4 hereto and the other liens permitted under Section 9.8
hereof. Borrower has good and marketable title to all of its properties and
assets subject to no liens, mortgages, pledges, security interests, encumbrances
or charges of any kind, except those granted to Lender and such others as are
specifically listed on Schedule 8.4 hereto or permitted under Section 9.8
hereof.
8.5 TAX RETURNS. Borrower, each Guarantor and their Subsidiaries
has filed, or caused to be filed, in a timely manner all tax returns, reports
and declarations which are required to be filed by it (without requests for
extension except as previously disclosed in writing to Lender). All information
in such tax returns, reports and declarations is complete and accurate in all
material respects. Borrower, each Guarantor and their Subsidiaries, as the case
may be, has paid or caused to be paid all taxes due and payable or claimed due
and payable in any assessment received by it, except taxes the validity of which
are being contested in good faith by appropriate proceedings diligently pursued
and available to Borrower, each Guarantor and their Subsidiaries, as the case
may be, and with respect to which adequate reserves have been set aside on its
books. Adequate provision has been made for the payment of all accrued and
unpaid Federal, State, county, local, foreign and other taxes whether or not yet
due and payable and whether or not disputed.
8.6 LITIGATION. Except as set forth on Schedule 8.6, there is no
present investigation by any Governmental Authority pending, or to the best of
the knowledge of Borrower or Guarantors or any of their Subsidiaries threatened,
against or affecting Borrower or Guarantors or their assets or business and
there is no action, suit, proceeding or claim by any Person pending, or to the
best knowledge of Borrower, Guarantors or any of their Subsidiaries threatened,
against Borrower,
42
any of Guarantors or any of their Subsidiaries or their assets or goodwill, or
against or affecting any transactions contemplated by this Agreement, which if
adversely determined against them would result in any material adverse change in
the assets, business or prospects of Borrower. Guarantor or any of their
Subsidiaries or would impair the ability of Borrower, any Guarantor or any of
their Subsidiaries to perform their obligations hereunder or under any of the
other Financing Agreements to which it is a party, as the case may be, or of
Lender to enforce any Obligations or realize upon any Collateral.
8.7 COMPLIANCE WITH OTHER AGREEMENTS AND APPLICABLE LAWS. None of
Borrower, Guarantors or any of their Subsidiaries is in default in any material
respect under, or in violation in any material respect of any of the terms of,
any agreement, contract, instrument, lease or other commitment to which it is a
party or by which it or any of its assets are bound and each of Borrower,
Guarantors and their Subsidiaries is in compliance in all material respects with
all applicable provisions of laws, rules, regulations, licenses, permits,
approvals and orders of any foreign, Federal, State or local Governmental
Authority.
8.8 ENVIRONMENTAL COMPLIANCE.
(a) Except as set forth on Schedule 8.8 hereto or as would
not have a Material Adverse Effect, none of Borrower, Guarantors or their
Subsidiaries have generated, used, stored, treated, transported, manufactured,
handled, produced or disposed of any Hazardous Materials, on or off its premises
(whether or not owned by it) in any manner which at any time violates any
applicable Environmental Law or any license, permit, certificate, approval or
similar authorization thereunder and the operations of each of Borrower,
Guarantors and their Subsidiaries complies in all material respects with all
Environmental Laws and all licenses, permits, certificates, approvals and
similar authorizations thereunder.
(b) Except as set forth on Schedule 8.8 hereto or as would
not have a Material Adverse Effect, there has been no investigation, proceeding,
complaint, order, directive, claim, citation or notice by any governmental
authority or any other person nor is any pending or to the best knowledge of
Borrower, each Guarantor and their Subsidiaries threatened, with respect to any
non-compliance with or violation of the requirements of any Environmental Law by
Borrower, Guarantors and their Subsidiaries or the release, spill or discharge,
threatened or actual, of any Hazardous Material or the generation, use, storage,
treatment, transportation, manufacture, handling, production or disposal of any
Hazardous Materials or any other environmental, health or safety matter, which
affects Borrower, Guarantors, their Subsidiaries or their respective businesses,
operations or assets or any properties at which Borrower, any Guarantor or any
of their Subsidiaries has transported, stored or disposed of any Hazardous
Materials.
(c) Except as set forth on Schedule 8.8 hereto or as would
not have a Material Adverse Effect, none of Borrower, Guarantors or any of their
Subsidiaries has any liability
43
(contingent or otherwise) in connection with a release, spill or discharge,
threatened or actual, of any Hazardous Materials or the generation, use,
storage, treatment, transportation, manufacture, handling, production or
disposal of any Hazardous Materials.
(d) Except as set forth on Schedule 8.8 hereto or as would
not have a Material Adverse Effect, each of Borrower, Guarantors and their
Subsidiaries has all licenses, permits, certificates, approvals or similar
authorizations required to be obtained or filed in connection with the
operations of Borrower, Holdings and their Subsidiaries under any Environmental
Law and all of such licenses, permits, certificates, approvals or similar
authorizations are valid and in full force and effect.
8.9 EMPLOYEE BENEFITS.
(a) None of Borrower, Guarantors or any of their Subsidiaries
has engaged in any transaction in connection with which Borrower, Guarantors or
any of their ERISA Affiliates could be subject to either a civil penalty
assessed pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of
the Code.
(b) No liability to the Pension Benefit Guaranty Corporation
(other than payments of premiums) has been or is expected by Borrower or any
Guarantor to be incurred with respect to any employee benefit plan of Borrower,
any Guarantor or any of their respective ERISA Affiliates. There has been no
reportable event (within the meaning of Section 4043 of ERISA) or any other
event or condition with respect to any employee pension benefit plan of
Borrower, any Guarantor or any of their respective ERISA Affiliates which
presents a risk of termination of any such plan by the Pension Benefit Guaranty
Corporation.
(c) Full payment has been made of all amounts which Borrower,
Guarantors or any of their ERISA Affiliates is required under Section 302 of
ERISA and Section 412 of the Code to have paid under the terms of each employee
benefit plan as contributions to such plan as of the last day of the most recent
fiscal year of such plan ended prior to the date hereof, and no accumulated
funding deficiency (as defined in Section 302 of ERISA and Section 412 of the
Code), whether or not waived, exists with respect to any employee benefit plan.
(d) The current value of all vested accrued benefits under
all employee benefit plans maintained by Borrower, Guarantors or any of their
Subsidiaries that are subject to Title IV of ERISA does not exceed the current
value of the assets of such plans allocable to such vested accrued benefits. The
terms "current value" and "accrued benefit" have the meanings specified in
ERISA.
(e) None of Borrower, Guarantors or any of their ERISA
Affiliates is or has ever been obligated to contribute to any "multiemployer
plan" (as such term is defined in Section 4001(a)(3) of ERISA) that is subject
to Title IV of ERISA.
44
8.10 BANK ACCOUNTS. All of the deposit accounts, investment
accounts or other accounts in the name of or used by Borrower and Guarantors
maintained at any bank or other financial institution are set forth on Schedule
8.10 hereto, subject to the right of Borrower to establish new accounts in
accordance with Section 9.13 below.
8.11 ACCURACY AND COMPLETENESS OF INFORMATION. All information
furnished by or on behalf of Borrower, Guarantors and their Subsidiaries in
writing to Lender in connection with this Agreement or any of the other
Financing Agreements or any transaction contemplated hereby or thereby,
including all information on the Information Certificate is true and correct in
all material respects on the date as of which such information is dated or
certified and does not omit any material fact necessary in order to make such
information not misleading. No event or circumstance has occurred which has had
or could reasonably be expected to have a Material Adverse Effect which has not
been fully and accurately disclosed to Lender in writing.
8.12 SENIOR NOTE INDENTURE. Assuming that Borrower has obtained
Loans from Lender up to the Maximum Credit on the date hereof: (i) there will be
no "Default" or "Event of Default" under the Senior Note Indenture after giving
effect to such borrowings, and (ii) the amount of the Maximum Credit when taken
together with all other outstanding "Indebtedness" permitted under Section 4.10
of the Senior Note Indenture, would still permit Borrower to incur approximately
an additional $9,000,000 of "Indebtedness" under the second paragraph of Section
4.10 at clause (viii) of the Senior Note Indenture. All quoted terms used in
this Section shall have the meanings ascribed to such terms in the Senior Note
Indenture.
8.13 SURVIVAL OF WARRANTIES; CUMULATIVE. All representations and
warranties contained in this Agreement or any of the other Financing Agreements
shall survive the execution and delivery of this Agreement and shall be deemed
to have been made again to Lender on the date of each additional borrowing or
other credit accommodation hereunder and shall be conclusively presumed to have
been relied on by Lender regardless of any investigation made or information
possessed by Lender. The representations and warranties set forth herein shall
be cumulative and in addition to any other representations or warranties which
Borrower shall now or hereafter give, or cause to be given, to Lender.
45
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
9.1 MAINTENANCE OF EXISTENCE. Borrower and each Guarantor shall, and
shall cause its Subsidiaries to at all times preserve, renew and keep in full,
force and effect its corporate existence and material rights and franchises with
respect thereto and maintain in full force and effect all material permits,
licenses, trademarks, tradenames, approvals, authorizations, leases and
contracts necessary to carry on the business as presently or proposed to be
conducted. Borrower and each Guarantor shall, and shall cause its Subsidiaries
to give Lender twenty (20) days prior written notice of any proposed change in
its corporate name, which notice shall set forth the new name and Borrower shall
deliver to Lender a copy of the amendment to the Certificate of Incorporation of
Borrower, such Guarantor or such Subsidiary, as the case may be, providing for
the name change certified by the Secretary of State of the jurisdiction of
incorporation of Borrower, Guarantors or such Subsidiary as soon as it is
available.
9.2 NEW COLLATERAL LOCATIONS. Borrower and each Guarantor may open any
new location within the continental United States provided Borrower or such
Guarantor (a) gives Lender twenty (20) days prior written notice of the intended
opening of any such new location and (b) executes and delivers, or causes to be
executed and delivered, to Lender such agreements, documents, and instruments as
Lender may deem reasonably necessary or desirable to protect its interests in
the Collateral at such location, including UCC financing statements.
9.3 COMPLIANCE WITH LAWS, REGULATIONS, ETC.
(a) Borrower and each Guarantor shall, and shall cause its
Subsidiaries to, at all times, comply in all material respects with all laws,
rules, regulations, licenses, permits, approvals and orders applicable to it and
duly observe in all material respects all requirements of any Federal, State or
local Governmental Authority, including ERISA, the Code, the Occupational Safety
and Health Act of 1970, as amended, the Fair Labor Standards Act of 1938, as
amended, and all statutes, rules, regulations, orders, permits and stipulations
relating to environmental pollution and employee health and safety, including
all of the Environmental Laws.
(b) Borrower and each Guarantor shall establish and maintain, at
its expense, a system to assure and monitor its and its Subsidiaries continued
compliance with all Environmental Laws in all of its operations. At the request
of Lender, copies of all environmental surveys, audits, assessments, feasibility
studies and results of remedial investigations shall be promptly furnished, or
caused to be furnished, by Borrower to Lender. Borrower and Guarantors shall
take prompt and appropriate action to respond to any non-compliance with any of
the Environmental Laws which would have a reasonable likelihood of having a
Material Adverse Effect and shall regularly report to Lender on such response.
(c) Borrower and Guarantors shall give both oral and written
notice to Lender immediately upon receipt by Borrower or any Guarantor of any
notice of, or Borrower or any
46
Guarantor otherwise obtaining knowledge of any of the following that could
reasonably be expected to have a Material Adverse Effect: (i) the occurrence of
any event involving the release, spill or discharge, threatened or actual, of
any Hazardous Material or (ii) any investigation, proceeding, complaint, order,
directive, claims, citation or notice with respect to: (A) any non-compliance
with or violation of any Environmental Law by Borrower, Guarantors or any of
their Subsidiaries or (B) the release, spill or discharge, threatened or actual,
of any Hazardous Material or (C) the generation, use, storage, treatment,
transportation, manufacture, handling, production or disposal of any Hazardous
Materials or (D) any other environmental, health or safety matter, which affects
Borrower, any Guarantor or any of their Subsidiaries or its business, operations
or assets or any properties at which Borrower, Guarantors or any of their
Subsidiaries if transported, stored or disposed of any Hazardous Materials.
(d) Without limiting the generality of the foregoing, whenever
Lender reasonably determines that there is non-compliance, or any condition
which requires any action by or on behalf of Borrower or any Guarantor in order
to avoid any material non-compliance, with any Environmental Law, Borrower and
Guarantors shall, at Lender's request and Borrower's expense: (i) cause an
independent environmental engineer reasonably acceptable to Lender to conduct
such examination of the site where Borrower's or any Guarantor's non-compliance
or alleged non-compliance with such Environmental Laws has occurred as to such
non-compliance and prepare and deliver to Lender a report as to such
non-compliance setting forth the results of such examination, a proposed plan
for responding to any environmental problems described therein, and an estimate
of the costs thereof and (ii) provide to Lender a supplemental report of such
engineer whenever the scope of such non-compliance, or Borrower's or any
Guarantor's, as the case may be, response thereto or the estimated costs
thereof, shall change in any material respect.
(e) Borrower and Guarantors shall, jointly and severally,
indemnify and hold harmless Lender, its directors, officers, employees, agents,
invitees, representatives, successors and assigns, from and against any and all
losses, claims, damages, liabilities, costs, and expenses (including attorneys'
fees and legal expenses) directly or indirectly arising out of or attributable
to the use, generation, manufacture, reproduction, storage, release, threatened
release, spill, discharge, disposal or presence of a Hazardous Material,
including the costs of any required or necessary repair, cleanup or other
remedial work with respect to any property of Borrower or of any Guarantor and
the preparation and implementation of any closure, remedial or other required
plans except to the extent that such losses, damages, liabilities and costs are
a result of the gross negligence or willful misconduct of Lender as determined
by a final, non-appealable order of a court of competent jurisdiction. All
representations, warranties, covenants and indemnifications in this Section 9.3
shall survive the payment of the Obligations and the termination or non-renewal
of this Agreement.
9.4 PAYMENT OF TAXES AND CLAIMS. Borrower and each Guarantor shall, and
shall cause their Subsidiaries to, duly pay and discharge all taxes,
assessments, contributions and governmental charges upon or against it or its
properties or assets, except for taxes the validity of
47
which are being contested in good faith by appropriate proceedings diligently
pursued and available to Borrower, such Guarantor or such Subsidiary, as the
case may be, and with respect to which adequate reserves have been set aside
on its books. Borrower shall be liable for any material tax or penalties
imposed on Lender as a result of the financing arrangements provided for
herein and Borrower agrees to indemnify and hold Lender harmless with respect
to the foregoing, and to repay to Lender on demand the amount thereof, and
until paid by Borrower such amount shall be added and deemed part of the
Loans, PROVIDED, THAT, nothing contained herein shall be construed to require
Borrower to pay any income, franchise or similar taxes attributable to the
income of Lender from any amounts charged or paid hereunder to Lender. The
foregoing indemnity shall survive the payment of the Obligations and the
termination or non-renewal of this Agreement.
9.5 INSURANCE.
(a) Borrower and each Guarantor shall, and shall cause their
Subsidiaries to, at all times, maintain with financially sound and reputable
insurers insurance with respect to the Collateral against loss or damage and all
other insurance of the kinds and in the amounts customarily insured against or
carried by corporations of established reputation engaged in the same or similar
businesses and similarly situated. Said policies of insurance shall be
reasonably satisfactory to Lender as to form, amount and insurer. Borrower shall
furnish certificates, policies or endorsements to Lender as Lender shall require
as proof of such insurance, and, if Borrower or any Guarantor fails to do so
within fifteen (15) days of such request, Lender is authorized, but not
required, to obtain such insurance at the expense of Borrower. All policies
shall provide for at least thirty (30) days prior written notice to Lender of
any cancellation or reduction of coverage and that Lender may act as attorney
for Borrower or any Guarantor, as the case may be, in obtaining, and at any time
an Event of Default exists or has occurred and is continuing, adjusting,
settling, amending and canceling such insurance. Borrower shall cause Lender to
be named as a loss payee and an additional insured (but without any liability
for any premiums) under such insurance policies and Borrower shall obtain
non-contributory lender's loss payable endorsements to all insurance policies in
form and substance reasonably satisfactory to Lender. Such lender's loss payable
endorsements shall specify that the proceeds of such insurance shall be payable
to Lender as its interests may appear and further specify that Lender shall be
paid regardless of any act or omission by Borrower, Guarantors or their
Subsidiaries.
(b) At its option, Lender may apply any insurance proceeds
received by Lender at any time to the cost of repairs or replacement of
Collateral and/or to payment of the Obligations, whether or not then due, in any
order and in such manner as Lender may determine or hold such proceeds as cash
collateral for the Obligations on terms and conditions acceptable to Lender,
EXCEPT, THAT, notwithstanding anything to the contrary contained herein, upon
the occurrence of a Casualty Event, Lender shall release the Net Proceeds
received by Lender pursuant to this Section 9.5 as a result thereof to Borrower,
any Guarantor or Subsidiary which was the owner of the property subject to such
Casualty Event (which release shall not be deemed Loans hereunder) to
48
the extent necessary to repair, refurbish or replace the property which was the
subject of such Casualty Event, PROVIDED, THAT, all of the following conditions
are satisfied: (i) no Event of Default or act, condition or event which with
notice or passage of time or both would constitute an Event of Default shall
exist or have occurred and be continuing, (ii) no Event of Default or act,
condition or event which with notice or passage of time or both would constitute
an Event of Default shall occur during the course of such repair, refurbishing
or replacement, (iii) the amount of the insurance proceeds are sufficient, in
Lender's good faith determination, to effect such repair, refurbishing or
replacement in a satisfactory manner, (iv) such proceeds shall be used solely to
repair, refurbish or replace the property subject to the Casualty Event (free
and clear of any liens), (v) the insurance carrier shall have waived any right
of subrogation against Borrower, Guarantors and their Subsidiaries under its
policy, (vi) the proceeds from insurance or otherwise payable in respect of such
Casualty Event shall not exceed $1,000,000, (vii) the repair, refurbishing or
replacement of the property subject to the Casualty Event shall be commenced as
soon as reasonably practicable and shall be diligently pursued to satisfactory
completion, (viii) the proceeds shall be released by Lender to Borrower, such
Guarantor or Subsidiary from time to time as needed and/or, at Lender's option,
released by Lender directly to the contractor, subcontractor, materialmen,
laborers, engineers, architects and other persons rendering services or
materials to repair, refurbish or replace the property subject to the Casualty
Event, (ix) the property subject to the Casualty Event shall be repaired,
refurbished or replaced so as to be of at least equal value and substantially
the same character as prior to such Casualty Event and (x) such repair,
refurbishing or replacement can, in the good faith estimate of Lender, be
completed prior to the end of the then current term of this Agreement. Upon
completion of the work and payment in full therefor, or upon the failure to
commence, or diligently to continue the work, Lender may, at Lender's option,
either apply the amount of any such proceeds then or thereafter in the
possession of Lender to the payment of the Obligations or hold such proceeds as
cash collateral for the Obligations on terms and conditions acceptable to
Lender. Nothing contained herein shall limit the right of Lender to apply any or
all of such proceeds to the Obligations at any time an Event of Default or act,
condition or event which with notice or passage of time or both would constitute
an Event of Default shall exist or have occurred and be continuing.
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9.6 FINANCIAL STATEMENTS AND OTHER INFORMATION.
(a) Borrower and each Guarantor shall, and shall cause their
Subsidiaries to, keep proper books and records in which true and complete
entries shall be made of all dealings or transactions of or in relation to the
Collateral and the businesses of Borrower, Guarantors and their Subsidiaries in
accordance with GAAP and Borrower shall furnish or cause to be furnished to
Lender: (i) within forty-five (45) days after the end of each fiscal month,
monthly unaudited consolidated financial statements, and unaudited consolidating
financial statements (including in each case balance sheets, statements of
income and loss, statements of cash flow, and statements of shareholders'
equity), all in reasonable detail, fairly presenting the financial position and
the results of the operations of Holdings and its Subsidiaries as of the end of
and through such fiscal month (except for the last month of each fiscal year)
and (ii) within ninety (90) days after the end of each fiscal year, audited
consolidated financial statements and audited consolidating financial statements
of Holdings and its Subsidiaries (including in each case balance sheets,
statements of income and loss, statements of cash flow and statements of
shareholders' equity), and the accompanying notes thereto, all in reasonable
detail, fairly presenting the financial position and the results of the
operations of Holdings and its Subsidiaries as of the end of and for such fiscal
year, together with the unqualified opinion of independent certified public
accountants, which accountants shall be an independent accounting firm selected
by Holdings and reasonably acceptable to Lender, that such financial statements
have been prepared in accordance with GAAP, and present fairly the results of
operations and financial condition of Holdings and its Subsidiaries as of the
end of and for the fiscal year then ended.
(b) Borrower and Guarantors shall promptly notify Lender in
writing of the details of (i) any loss, damage, investigation, action, suit,
proceeding or claim relating to the Collateral or any other property which is
security for the Obligations or which is reasonably likely to result in any
material adverse change in Borrower's or any Guarantor's business, properties,
assets, goodwill or condition, financial or otherwise and (ii) the occurrence of
any Event of Default or event which, with the passage of time or giving of
notice or both, would constitute an Event of Default.
(c) Borrower and Guarantors shall promptly after the sending or
filing thereof furnish or cause to be furnished to Lender copies of all reports
which Borrower or any Guarantor sends to its stockholders generally and copies
of all reports and registration statements which Borrower or any Guarantor files
with the Securities and Exchange Commission, any national securities exchange or
the National Association of Securities Dealers, Inc.
(d) Borrower shall furnish to Lender, as soon as available and in
any event no later than thirty (30) days after the end of each fiscal year, a
copy of a detailed annual budget or plan for the next fiscal year, in form and
detail reasonably acceptable to Lender, together with a summary of material
assumptions made in preparation of the budget or plan.
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(e) Borrower shall furnish or cause to be furnished to Lender
such budgets, forecasts, projections and other information respecting the
Collateral and the business of Borrower, Guarantors and their Subsidiaries, as
Lender may, from time to time, reasonably request. Lender is hereby authorized
to deliver a copy of any financial statement or any other information relating
to the business of Borrower, Guarantors or their Subsidiaries to any court or
other government agency or to any participant or assignee or prospective
participant or assignee. Borrower and Guarantors hereby irrevocably authorizes
and directs all accountants or auditors to deliver to Lender, at Borrower's
expense, copies of the financial statements of Holdings and its Subsidiaries and
any reports or management letters prepared by such accountants or auditors on
behalf of Borrower, any Guarantor or any of their Subsidiaries and to disclose
to Lender such information as they may have regarding the business of Borrower,
Guarantors and their Subsidiaries. Any documents, schedules, invoices or other
papers delivered to Lender may be destroyed or otherwise disposed of by Lender
one (1) year after the same are delivered to Lender, except as otherwise
designated by Borrower to Lender in writing.
9.7 SALE OF ASSETS, CONSOLIDATION, MERGER, DISSOLUTION, ETC. Borrower
and each Guarantor shall not, and shall not permit their Subsidiaries to,
directly or indirectly,
(a) merge into or with or consolidate with any other Person or
permit any other Person to merge into or with or consolidate with it EXCEPT,
THAT,
(i) any Subsidiary of Borrower or any Subsidiary of any
Guarantor may merge into or with or consolidate into Borrower, PROVIDED, THAT,
each of the following conditions is satisfied as determined by Lender: (A)
Lender shall have received not less than thirty (30) days prior written notice
of the intention of the parties, to so merge and such information with respect
thereto as Lender may reasonably request, (B) as of the effective date of the
merger and after giving effect thereto, no Event of Default or act, condition or
event which with notice of passage of time or both would constitute an Event of
Default, shall exist or have occurred and be continuing, (C) Lender shall have
received true, correct and complete copies of all agreements, documents and
instruments relating to such merger, including but not limited to, the
certificate or certificates of merger as filed with each appropriate Secretary
of State, (D) Borrower shall be the surviving entity of such consolidation or
merger; (E) Borrower shall, immediately before and immediately after giving
effect to such transaction or series of transactions have a net worth
(including, without limitation, any Indebtedness incurred or anticipated to be
incurred in connection with or in respect of such transaction or series of
transactions) equal to or greater than the net worth it had immediately prior to
such transaction or series of transactions, and (F) Borrower shall not become
obligated with respect to any Indebtedness, nor any of its property become
subject to any lien, pursuant to such merger or consolidation unless Borrower
could incur such Indebtedness or create such lien hereunder or under the other
Financing Agreements;
(ii) any Subsidiary of Cottontops or any Subsidiary of
Borrower may merge into
51
or with or consolidate into Cottontops, PROVIDED, THAT, (A) Lender shall have
received not less than thirty (30) days prior written notice of the intention of
the parties, to so merge and such information with respect thereto as Lender may
reasonably request, (B) as of the effective date of the merger and after giving
effect thereto, no Event of Default or act, condition or event which with notice
of passage of time or both would constitute an Event of Default, shall exist or
have occurred and be continuing, (C) Lender shall have received true, correct
and complete copies of all agreements, documents and instruments relating to
such merger, including but not limited to, the certificate or certificates of
merger as filed with each appropriate Secretary of State, (D) Cottontops shall
be the surviving entity of such consolidation or merger; (E) Borrower shall,
immediately before and immediately after giving effect to such transaction or
series of transactions have a net worth (including, without limitation, any
Indebtedness incurred or anticipated to be incurred in connection with or in
respect of such transaction or series of transactions) equal to or greater than
the net worth it had immediately prior to such transaction or series of
transactions, and (F) Borrower shall not become obligated with respect to any
Indebtedness, nor any of its property become subject to any lien, pursuant to
such merger or consolidation unless Borrower could incur such Indebtedness or
create such lien hereunder or under the other Financing Agreements;
(iii) Borrower may merge with Holdings in connection with a
Qualified Public Offering PROVIDED, THAT, (A) Lender shall have received not
less than thirty (30) days prior written notice of the intention to so merge and
such information with respect thereto as Lender may reasonably request, (B) as
of the effective date of the merger and after giving effect thereto, no Event of
Default or act, condition or event which with notice of passage of time or both
would constitute an Event of Default, shall exist or have occurred and be
continuing, (C) Lender shall have received true, correct and complete copies of
all agreements, documents and instruments relating to such merger, including but
not limited to, the certificate or certificates of merger as filed with each
appropriate Secretary of State, (D) Borrower shall be the surviving entity of
such merger; (E) Borrower shall, immediately before and immediately after giving
effect to such transaction or series of transactions have a net worth
(including, without limitation, any Indebtedness incurred or anticipated to be
incurred in connection with or in respect of such transaction or series of
transactions) equal to or greater than the net worth it had immediately prior to
such transaction or series of transactions, and (F) Borrower shall not become
obligated with respect to any Indebtedness, nor any of its property become
subject to any Lien, pursuant to such merger unless Borrower could incur such
Indebtedness or create such Lien hereunder or under the other Financing
Agreements; and
(iv) any Subsidiary of Borrower or any Subsidiary of any
Guarantor (other than Borrower or Cottontops) may merge into or with or
consolidate into any other Subsidiary of Borrower or any Guarantor (other than
mergers or consolidations involving Borrower or Cottontops), PROVIDED, THAT,
each of the following conditions is satisfied as determined by Lender in good
faith: (A) Lender shall have received not less than thirty (30) days prior
written notice of the intention of the parties, to so merge and such information
with respect thereto as Lender may
52
reasonably request, (B) as of the effective date of the merger and after giving
effect thereto, no Event of Default or act, condition or event which with notice
of passage of time or both is reasonably likely in the good faith judgment of
Lender to constitute an Event of Default, shall exist or have occurred and be
continuing, and (C) Lender shall have received true, correct and complete copies
of all agreements, documents and instruments relating to such merger, including
but not limited to, the certificate or certificates of merger as filed with each
appropriate Secretary of State;
(b) sell, assign, lease, transfer, abandon or otherwise dispose
of any Capital Stock or Indebtedness to any other Person or any of its assets
(including, without limitation, any Real Property) to any other Person, except
for:
(i) sales of Inventory in the ordinary course of business,
(ii) the disposition of worn-out or obsolete Equipment or
Equipment no longer used in the business so long as (A) any proceeds are paid to
Lender, and (B) no Event of Default or act or condition which with notice, lapse
of time or both is reasonably likely in the good faith judgment of Lender to
constitute an Event of Default shall exist or have occurred and be continuing
and (C) such sales, transfers or other dispositions do not involve Equipment
having an aggregate fair market value in excess of $100,000 for all such
Equipment disposed of in any fiscal year of Borrower, EXCEPT, THAT, Borrower
shall have the ability, upon two (2) days prior written notice to Lender, to
sell, transfer or otherwise dispose of the Equipment referred to in the
Equipment Appraisal as "surplus machinery and equipment" with an auction value
of $375,000, PROVIDED, THAT, immediately prior to such sale, transfer or other
disposition and after giving effect thereto, no Event of Default or act or
condition which with notice, lapse of time or both is reasonably likely in the
good faith judgment of Lender to constitute an Event of Default shall exist or
have occurred and be continuing;
(iii) investments referred to in Section 9.10(b) and (c)
hereof;
(iv) sales of the Real Property (other than Real Property
covered by the Mortgages) and related assets described on Schedule 9.7 hereto,
PROVIDED, THAT, as to each and all of such sales (1) Lender shall have received
not less than five (5) days prior written notice of such sale, which notice
shall set forth in reasonable detail satisfactory to Lender, the parties to such
sale, the Real Property and related assets to be sold, the purchase price and
the manner of payment thereof and such other information with respect thereto as
Lender may request, (2) such sale shall be on commercially reasonable terms in a
BONA FIDE arm's-length transaction with a non-affiliated person, (3) all of the
Net Proceeds of any such sale shall be paid either (A) directly to Lender or (B)
to Borrower, PROVIDED, THAT, the entire amount of the Net Proceeds are used to
repay the outstanding amount of Revolving Loans which amounts may be reborrowed,
(4) Borrower shall not incur any liabilities in connection with such sales
except as permitted herein, (5) as of the date of such sale and after giving
effect thereto, no Event of Default, or act,
53
condition or event which with notice or passage of time or both would constitute
an Event of Default shall exist or have occurred and be continuing.
(c) wind up, liquidate or dissolve EXCEPT, THAT, Anvil
(Czech), Inc. may be dissolved at any time; or
(d) form or acquire any Subsidiaries other than those listed on
Schedule 8.1 hereof without the prior written consent of Lender; or
(e) agree to do any of the foregoing.
9.8 ENCUMBRANCES. Borrower and each Guarantor shall not, and shall not
permit their Subsidiaries to, create, incur, assume or suffer to exist any
security interest, mortgage, pledge, lien, charge or other encumbrance of any
nature whatsoever on any of its assets or properties, including the Collateral,
EXCEPT:
(a) liens and security interests of Lender;
(b) liens securing the payment of taxes, either not yet overdue
or the validity of which are being contested in good faith by appropriate
proceedings diligently pursued and available to Borrower or such Subsidiary, as
the case may be and with respect to which adequate reserves have been set aside
on its books;
(c) non-consensual statutory liens (other than liens securing the
payment of taxes) arising in the ordinary course of Borrower's, such Guarantor's
or such Subsidiary's business to the extent: (i) such liens secure Indebtedness
which is not overdue or (ii) such liens secure Indebtedness relating to claims
or liabilities which are fully insured and being defended at the sole cost and
expense and at the sole risk of the insurer or being contested in good faith by
appropriate proceedings diligently pursued and available to Borrower, such
Guarantor or such Subsidiary, in each case prior to the commencement of
foreclosure or other similar proceedings and with respect to which adequate
reserves have been set aside on its books;
(d) zoning restrictions, easements, licenses, covenants and other
restrictions affecting the use of real property which do not interfere in any
material respect with the use of such real property or ordinary conduct of the
business of Borrower, such Guarantor or such Subsidiary as presently conducted
thereon or materially impair the value of the real property which may be subject
thereto;
(e) purchase money security interests in Equipment (including
Capital Leases) and purchase money mortgages on real estate not to exceed
$1,000,000 in the aggregate at any time outstanding so long as such security
interests and mortgages do not apply to any property of Borrower other than the
Equipment or real estate so acquired, and the Indebtedness secured
54
thereby does not exceed the cost of the Equipment or real estate so acquired, as
the case may be;
(f) the security interests and liens set forth on Schedule 8.4
hereto;
(g) pledges and deposits of cash by any Borrower or Guarantor
after the date hereof in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of social security
benefits consistent with the current practices of Borrowers and Guarantors as of
the date hereof;
(h) pledges and deposits of cash by any Borrower or Guarantor
after the date hereof to secure the performance of tenders, bids, leases, trade
contracts (other than for the repayment of Indebtedness), statutory obligations
and other similar obligations in each case in the ordinary course of business
consistent with the current practices of Borrowers and Guarantors as of the date
hereof; PROVIDED, THAT, in connection with any performance bonds issued by a
surety or other person, the issuer of such bond shall have waived in writing any
rights in or to, or other interest in, any of the Collateral in an agreement, in
form and substance satisfactory to Lender;
(i) liens arising from leases permitted hereunder and the
precautionary Uniform Commercial Code financing statement filings in respect
thereof; and
(j) liens on assets of Borrower, Guarantors or their Subsidiaries
(other than Collateral) not otherwise permitted above, that secure obligations
otherwise permitted hereunder not in excess of $100,000 in the aggregate.
9.9 INDEBTEDNESS. Borrower and Guarantors shall not, and shall not
permit any Subsidiary to, incur, create, assume, become or be liable in any
manner with respect to, or permit to exist, any Indebtedness, EXCEPT:
(a) the Obligations;
(b) purchase money Indebtedness (including Capital Leases) to the
extent not incurred or secured by liens (including Capital Leases) in violation
of any other provision of this Agreement;
(c) Indebtedness of Borrower or any Subsidiary permitted under
Section 9.10 hereof;
(d) Indebtedness arising under the Senior Note Indenture,
PROVIDED, THAT:
(i) the principal amount of such Indebtedness shall not exceed
$130,000,000 less the aggregate amount of all repayments, repurchases or
redemptions, whether optional or mandatory in respect thereof, plus interest
thereon at the rate provided for in the Senior Note
55
Indenture as in effect on the date hereof,
(ii) Borrower shall not, directly or indirectly make any
payments in respect of such indebtedness, EXCEPT, THAT, Borrower may make
regularly scheduled payments of interest in respect of the Senior Note
Indebtedness as provided for in the Senior Note Indenture, PROVIDED, THAT, on
the date of any such payment and after giving effect thereto, no Event of
Default, or act, condition or event which with notice or passage of time or both
would constitute an Event of Default, shall exist or have occurred and be
continuing,
(iii) such Indebtedness is and shall be unsecured,
(iv) Borrower shall not, directly or indirectly, (A) amend,
modify, alter or change the terms of such Indebtedness or any agreement,
document or instrument related thereto, EXCEPT, THAT, Borrower may, after prior
written notice to Lender, amend, modify, alter or change the terms thereof so as
to extend the maturity thereof, or defer the timing of any payments in respect
thereof, or to forgive or cancel any portion of such Indebtedness (other than
pursuant to payments thereof), or to reduce the interest rate or any fees in
connection therewith, or (B) make any principal payments in respect of, redeem,
retire, defease, purchase or otherwise acquire such Indebtedness (except
pursuant to regularly scheduled payments of interest permitted herein), or set
aside or otherwise deposit or invest any sums for such purpose (any such payment
of principal, purchase, redemption, defeasance or other acquisition of Senior
Indebtedness is referred to herein as a "Senior Note Payment") unless each of
the following conditions is satisfied: (1) Lender shall have received thirty
(30) days prior written notice of the intention of Borrower to make such Senior
Note Payment, (2) as of the date of any such Senior Note Payment and after
giving effect thereto, the daily average of the Excess Availability for the
immediately preceding thirty (30) consecutive day period shall be not less than
$10,000,000 and as of the date of any such payment and after giving effect
thereto, the Excess Availability shall be not less than $10,000,000, and (3) as
of the date of any such Senior Note Payment and after giving effect thereto, no
Event of Default, or act, condition or event which with notice or passage of
time or both would constitute an Event of Default, shall exist or have occurred,
and
(v) Borrower shall furnish to Lender all notices or demands
in connection with such Indebtedness either received by Borrower or on its
behalf promptly after the receipt thereof, or sent by Borrower or on its behalf
concurrently with the sending thereof, as the case may be;
(e) Indebtedness of Borrower existing as of the date hereof
consisting of contingent reimbursement obligations to the Existing Lenders in
the event of a draw on any of the Existing Letters of Credit;
(f) unsecured Indebtedness of Borrower to any of its Subsidiaries
after the date hereof pursuant to loans by such Subsidiaries to Borrower,
PROVIDED, THAT, (i) such Indebtedness is subject to, and subordinate in right of
payment to, the right of Lender to receive the prior
56
indefeasible payment and satisfaction in full of all of the Obligations on terms
and conditions acceptable to Lender, (ii) Lender shall have received, in form
and substance satisfactory to Lender, a subordination agreement providing for
the terms of the subordination in right of payment of such Indebtedness of
Borrower to the prior indefeasible payment and satisfaction in full of all of
the Obligations, duly authorized, executed and delivered by such Subsidiaries
and Borrower, (iii) Borrower shall not, directly or indirectly make, or be
required to make, any payments in respect of such Indebtedness so long as any of
the Obligations are outstanding and unpaid, (iv) Borrower shall not, directly or
indirectly, (A) amend, modify, alter or change any terms of such Indebtedness or
any agreement, document or instrument related thereto, or (B) redeem, retire,
defease, purchase or otherwise acquire such Indebtedness, or set aside or
otherwise deposit or invest any sums for such purpose, and (v) Borrower shall
furnish to Lender all notices and demands in connection with such Indebtedness
either received by Borrower or on its behalf promptly after receipt thereof, or
sent by Borrower or on its behalf concurrently with the sending thereof, as the
case may be;
(g) Indebtedness of Borrower under (i) interest swap agreements,
interest rate cap agreements, interest rate collar agreements, interest rate
exchange agreements and similar contractual agreements entered into for the
purpose of protecting a Person against fluctuations in interest rates and (ii)
foreign currency exchange agreements; PROVIDED, THAT, such arrangements are with
banks or other financial institutions that have combined capital and surplus and
undivided profits of not less than $100,000,000 and are not for speculative
purposes and such Indebtedness shall be unsecured;
(h) the Indebtedness set forth on Schedule 9.9(h) hereto;
PROVIDED, THAT, (i) Borrower may only make regularly scheduled payments of
principal and interest in respect of such Indebtedness in accordance with the
terms of the agreement or instrument evidencing or giving rise to such
Indebtedness as in effect on the date hereof, (ii) Borrower shall not, directly
or indirectly, (A) amend, modify, alter or change the terms of such Indebtedness
or any agreement, document or instrument related thereto as in effect on the
date hereof, or (B) redeem, retire, defease, purchase or otherwise acquire such
Indebtedness, or set aside or otherwise deposit or invest any sums for such
purpose, and (iii) Borrower shall furnish to Lender all notices or demands in
connection with such Indebtedness either received by Borrower or on its behalf,
promptly after the receipt thereof, or sent by Borrower or on its behalf,
concurrently with the sending thereof, as the case may be;
(i) unsecured Indebtedness of Borrower, Guarantor or any of their
respective Subsidiaries arising after the date hereof owing to any Person (other
than any other Borrower, Guarantor, or any other Affiliate of any of them);
PROVIDED, THAT, as to any such Indebtedness, each of the following conditions is
satisfied as determined by Lender: (i) Lender shall have received not less than
ten (10) Business Days prior written notice of the intention to incur such
Indebtedness, which notice shall set forth in reasonable detail satisfactory to
Lender, the amount of such Indebtedness, the person to whom such Indebtedness
will be owed, the interest rate and
57
fees, the schedule of repayments and maturity date with respect thereto and such
other information with respect thereto as Lender may request, (ii) Lender shall
have received true, correct and complete copies of all agreements, documents and
instruments evidencing or otherwise related to such Indebtedness, as duly
authorized, executed and delivered by the parties thereof, (iii) such
Indebtedness shall be incurred by Borrower, any Guarantor or any Subsidiary at
commercially reasonable rates and terms in a BONA FIDE arm's length transaction,
(iv) as of the date of incurring such Indebtedness, and after giving effect
thereto, no Event of Default or act, condition or event which with notice or
passage of time or both would constitute an Event of Default, shall exist or
have occurred and be continuing, (v) the aggregate principal amount of all such
Indebtedness outstanding at any time shall not exceed $1,000,000, (vi) such
Indebtedness shall not at any time include any terms that include any limitation
on the right of Borrower to request or receive Loans or Letter of Credit
Accommodations or the right of Borrower or Guarantors to amend, modify,
supplement, replace, renew or extend any of the terms or conditions of this
Agreement or any of the other Financing Agreements or otherwise in any way
relate to or adversely affect the arrangements of Borrower and Guarantors with
Lender, (vii) Borrower or such Guarantor may only make regularly scheduled
payments of principal and interest in respect of such Indebtedness, (viii)
Borrower or such Guarantor shall not, directly or indirectly, (A) amend, modify,
alter or change the terms of the agreements with respect to such Indebtedness,
or (B) redeem, retire, defease, purchase or otherwise acquire such Indebtedness,
or set aside or otherwise deposit or invest any sums for such purpose, and (ix)
Borrowers and Guarantors shall furnish to Lender all notices or demands in
connection with such Indebtedness received by Borrower or any Guarantor or on
its behalf promptly after the receipt thereof, or sent by Borrower and any
Guarantor or on its behalf concurrently with the sending thereof, as the case
may be;
(j) Indebtedness issued in exchange for, or the proceeds of which
are used to extend, refinance, replace, substitute or refund Indebtedness
referred to in Sections 9.9(f) and 9.9(h) hereof (the "Refinancing
Indebtedness"); PROVIDED, THAT, (i) the principal amount of such Refinancing
Indebtedness shall not exceed the principal amount of the Indebtedness so
extended, refinanced, replaced, substituted or refunded (plus the amount of
reasonable refinancing fees and expenses incurred in connection therewith), (ii)
the Refinancing Indebtedness shall have a Weighted Average Life to Maturity and
a final maturity equal to or greater than the Weighted Average Life to Maturity
and the final maturity, respectively, of the Indebtedness being extended,
refinanced, replaced, substituted or refunded, (iii) the Refinancing
Indebtedness shall rank in the right of payment no more senior than, and be at
least as subordinated (if subordinated) to, the Obligations as the Indebtedness
being extended, refinanced, replaced, substituted or refunded, (iv) the
Refinancing Indebtedness shall be secured by the same assets that secure the
Indebtedness so extended, refinanced, replaced, substituted or replaced,
PROVIDED, THAT, such security interest with respect to the Refinancing
Indebtedness shall have a priority no more senior than, and be at least as
subordinated (on terms and conditions acceptable to Lender) as the security
interest with respect to the Indebtedness so extended, refinanced, replaced,
substituted or refunded, (v) promptly upon Lender's request, Lender shall have
received true, correct and complete copies of
58
all agreements, documents and instruments evidencing or otherwise related to
such Indebtedness, as duly authorized, executed and delivered by the parties
thereto, and (vi) as of the date of incurring such Indebtedness and after giving
effect thereto, no Event of Default, or act, condition or event which with
notice or passage of time or both would constitute an Event of Default, shall
exist or have occurred and be continuing; and
(k) Parent Subordinated Debt as set forth on Schedule 9.9(k)
hereto; PROVIDED, THAT, (i) such Indebtedness is subject to, and subordinate in
right of payment to, the right of Lender to receive the prior indefeasible
payment and satisfaction in full of all of the Obligations on terms and
conditions acceptable to Lender, (ii) Lender shall have received, in form and
substance satisfactory to Lender, a subordination agreement or other instrument
providing for the terms of the subordination in right of payment of such
Indebtedness of Borrower to the prior indefeasible payment and satisfaction in
full of all of the Obligations, duly executed and delivered by the holder of
such Indebtedness, (iii) Holdings shall not, directly or indirectly make, or be
required to make, any payments in cash in respect of such Indebtedness so long
as any of the Obligations are outstanding and unpaid, (iv) Holdings shall not,
directly or indirectly, (A) amend, modify, alter or change any terms of such
Indebtedness or any agreement, document or instrument related thereto, or (B)
redeem, retire, defease, purchase or otherwise acquire such Indebtedness, or set
aside or otherwise deposit or invest any sums for such purpose except as
permitted herein, (v) Holdings shall furnish to Lender all notices and demands
in connection with such Indebtedness either received by Holdings or on its
behalf promptly after receipt thereof, or sent by Holdings or on its behalf
concurrently with the sending thereof, as the case may be, and (vi) Borrower or
any other Subsidiary of Holdings does not or shall not have any liability,
contingent or otherwise, in respect of such Parent Subordinated Debt.
9.10 LOANS, INVESTMENTS, GUARANTEES, ETC. Borrower and Guarantors shall
not, and shall not permit any of their Subsidiaries to, directly or indirectly,
make any loans or advance money or property to any person, or invest in (by
capital contribution, dividend or otherwise) or purchase or repurchase the
Capital Stock or Indebtedness or all or a substantial part of the assets or
property of any person, or guarantee, assume, endorse, or otherwise become
responsible for (directly or indirectly) the Indebtedness, performance,
obligations or dividends of any Person or agree to do any of the foregoing,
EXCEPT:
(a) the endorsement of instruments for collection or deposit
in the ordinary course of business;
(b) investments in cash or Cash Equivalents, PROVIDED, THAT, no
Loans are outstanding and as to any of the foregoing, unless waived in writing
by Lender, Borrower shall take such actions as are deemed necessary by Lender to
perfect the security interest of Lender in such investments;
(c) guarantees by Holdings and Subsidiaries of Borrower of the
Obligations in favor
59
of Lender;
(d) the existing equity investment of Borrower as of the date
hereof in its Subsidiaries as of the date hereof, PROVIDED, THAT, Borrower shall
have no obligation to make any other investment in, or loans to, or other
payments in respect of, any such Subsidiaries;
(e) loans by any Subsidiary of Borrower to Borrower to the extent
the Indebtedness arising from such loans is permitted under Section 9.9 above;
(f) stock or obligations issued to Borrower by any Person (or the
representative of such Person) in respect of Indebtedness of such Person owing
to Borrower in connection with the insolvency, bankruptcy, receivership or
reorganization of such Person or a composition or readjustment of the debts of
such Person; PROVIDED, THAT, the original of any such stock or instrument
evidencing such obligations shall be promptly delivered to Lender, upon Lender's
request, together with such stock power, assignment or endorsement by Borrower
as Lender may request; and
(g) the loans, advances and guarantees set forth on Schedule 9.10
hereto; PROVIDED, THAT, as to such loans, advances and guarantees, (i) Borrower
and Guarantors shall not, directly or indirectly, (A) amend, modify, alter or
change the terms of such loans, advances or guarantees or any agreement,
document or instrument related thereto, if such amendment, modification,
alteration, or change would cause the terms of such loans, advances, or
guarantees or of any agreement, document or instrument related thereto to be
more favorable to the counterparty of such loans, advances and guarantees, or
(B) as to such guarantees, redeem, retire, defease, purchase or otherwise
acquire the obligations arising pursuant to such guarantees, or set aside or
otherwise deposit or invest any sums for such purpose, and (ii) Borrower and
Guarantors shall furnish to Lender all notices or demands in connection with
such loans, advances or guarantees or other Indebtedness subject to such
guarantees either received by Borrower or on its behalf, promptly after the
receipt thereof, or sent by Borrower or on its behalf, concurrently with the
sending thereof, as the case may be;
9.11 DIVIDENDS AND REDEMPTIONS. Borrower, and Guarantors, shall not,
and shall not permit any of their Subsidiaries to, directly or indirectly,
declare or pay any dividends on account of any shares of class of capital stock
of Borrower, Guarantor or any of their Subsidiaries now or hereafter
outstanding, or set aside or otherwise deposit or invest any sums for such
purpose, or redeem, retire, defease, purchase or otherwise acquire any shares of
any class of capital stock (or set aside or otherwise deposit or invest any sums
for such purpose) for any consideration other than common stock or apply or set
apart any sum, or make any other distribution (by reduction of capital or
otherwise) in respect of any such shares or agree to do any of the foregoing
EXCEPT, THAT, (a) Subsidiaries of Borrower may make payments of cash dividends
or distributions from legally available funds therefor to Borrower and (b)
Borrower may pay cash dividends or distributions from legally available funds
therefor to Holdings to the extent permitted to make the
60
payments described in Section 9.12(b) hereof, PROVIDED, THAT, on the date of the
payments of any such cash dividends or distributions and after giving effect
thereto, no Event of Default, or act, condition or event which with notice,
lapse of time or both is reasonably likely, in the good faith determination of
Lender, to constitute an Event of Default, shall exist or have occurred.
9.12 TRANSACTIONS WITH AFFILIATES. Borrower and each Guarantor shall
not and shall not permit its Subsidiaries to, directly or indirectly, (a)
purchase, acquire or lease any property from, or sell, transfer or lease any
property to, any officer, director, agent or other person affiliated with
Borrower, Guarantors or their Subsidiaries, except in the ordinary course of and
pursuant to the reasonable requirements of Borrower's and Guarantors' business
and upon fair and reasonable terms no less favorable to the Borrower than
Borrower would obtain in a comparable arm's length transaction with an
unaffiliated person or (b) make any payments of management, consulting or other
fees for management or similar services, or of any Indebtedness owing to any
officer, employee, shareholder, director or other Affiliate of Borrower EXCEPT,
THAT, Borrower may pay cash dividends or make payments or other distributions:
(i) to Holdings pursuant to an intercompany tax sharing
arrangement among Borrower, Guarantors and their Subsidiaries (as in effect on
the date hereof), PROVIDED, THAT, (A) Borrower, Guarantors and Subsidiaries are
included in the consolidated federal tax return filed by Holdings as to which
Borrower, Guarantor or such Subsidiary is making such payments, (B) the payments
in any year shall not exceed the federal income tax liability that Borrower,
such Guarantor or Subsidiary would have been liable for if such Person were not
part of such consolidated federal income tax return filed by Holdings, (C) such
payments shall be made by Borrower or any Subsidiary of Borrower no earlier than
ten (10) days prior to the date on which Holdings is required to make its
payments and (D) in the event Borrower or any Subsidiary of Borrower also joins
with Holdings in filing any combined or consolidated state or local income tax
returns, then payments to Holdings shall be allowed in a manner as similar as
possible to that provided herein with respect to federal income taxes,
(ii) to enable Holdings to pay ordinary and necessary expenses
associated with the activities of Holdings permitted in accordance with Section
9.17 hereof, including, without limitation, reasonable accounting and
professional expenses to third parties and director's fees and reasonable
expenses which director's fees (A) in the case of directors which are Investors
or officers, directors or employees of an Investor, director's fees shall not
exceed $50,000 in the aggregate in any single calendar year; and (B) in the case
of directors which are not Investors or officers, directors or employees of an
Investor, directors' fees shall not be in excess of amounts which would be
reasonable and customary for outside directors of similarly situated companies,
(iii) to Holdings to redeem or otherwise purchase Capital Stock
of Holdings held by members of the Management Group pursuant to the Stockholders
Agreement, the Registration Rights Agreement, the Units Registration Rights
Agreement or the Units Stockholders Agreement, in an amount not to exceed
$500,000 in the aggregate, during any fiscal year of
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Borrower but not to exceed $1,000,000 during the term of this Loan Agreement,
and
(iv) pay to BRS and Venture Partners a management fee in an
amount not to exceed $500,000 in the aggregate during any fiscal year;
the payments referred to in clauses (b)(i) through (iv) of this Section 9.12,
may be made, PROVIDED, THAT, on the date of any such payment, distribution, or
dividend, as the case may be, and after giving effect thereto, no Event of
Default, or act, condition or event which with notice or passage of time or both
is reasonably likely, in the good faith determination of Lender, to constitute
an Event of Default, shall exist or have occurred.
9.13 ADDITIONAL BANK ACCOUNTS. Borrower shall not, directly or
indirectly, open, establish or maintain any deposit account, investment account
or any other account with any bank or other financial institution, other than
the Blocked Accounts and the accounts set forth in Schedule 8.10 hereto, except:
(a) as to any new or additional Blocked Accounts and other such new or
additional accounts which contain any Collateral or proceeds thereof, with the
prior written consent of Lender and subject to such conditions thereto as Lender
may establish in good faith and (b) as to any accounts used by Borrower to make
payments of payroll, taxes or other obligations to third parties, after prior
written notice to Lender.
9.14 COMPLIANCE WITH ERISA.
(a) Borrower and each Guarantor shall not and shall not permit
their Subsidiaries to, with respect to any "employee benefit plans" maintained
by Borrower, any Guarantor or any of its ERISA Affiliates: (i) terminate any of
such employee benefit plans so as to incur any liability to the Pension Benefit
Guaranty Corporation established pursuant to ERISA, (ii) allow or suffer to
exist any prohibited transaction involving any of such employee benefit plans or
any trust created thereunder which would subject Borrower or such ERISA
Affiliate to a tax or penalty or other liability on prohibited transactions
imposed under Section 4975 of the Code or ERISA, (iii) fail to pay to any such
employee benefit plan any contribution which it is obligated to pay under
Section 302 of ERISA, Section 412 of the Code or the terms of such plan, (iv)
allow or suffer to exist any accumulated funding deficiency, whether or not
waived, with respect to any such employee benefit plan, (v) allow or suffer to
exist any occurrence of a reportable event or any other event or condition which
presents a material risk of termination by the Pension Benefit Guaranty
Corporation of any such employee benefit plan that is a single employer plan,
which termination could result in any liability to the Pension Benefit Guaranty
Corporation or (vi) incur any withdrawal liability with respect to any
multiemployer pension plan.
(b) As used in this Section 9.14, the terms "employee benefit
plans", "accumulated funding deficiency" and "reportable event" shall have the
respective meanings assigned to them in ERISA, and the term "prohibited
transaction" shall have the meaning assigned to it in Section 4975 of the Code
and ERISA.
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9.15 EXISTING REAL PROPERTY; AFTER ACQUIRED REAL PROPERTY.
(a) In the event that Lender determines that (i) Excess
Availability of the Borrower shall have been less than $5,000,000 for each day
during any five (5) consecutive day period or (ii) an Event of Default, or act,
condition or event which with notice or passage of time or both would constitute
an Event of Default exists, without limiting any other rights of Lender, or
duties or obligations of Borrower, upon Lender's request, Borrower shall
promptly, execute and deliver to Lender a mortgage, deed of trust or deed to
secure debt, as Lender may determine, in form and substance substantially
similar to the Mortgages in respect of any or all of the Existing Real Property
(as Lender shall determine in its sole discretion, exercised in good faith), and
as to any provisions relating to specific state laws satisfactory to Lender and
in form appropriate for recording in the real estate records of the jurisdiction
in which such Existing Real Property or other property is located granting to
Lender a first and only lien and mortgage on and security interest in such
Existing Real Property, fixtures or other property (except as Borrower would
otherwise be permitted to incur hereunder or under the Mortgages or as otherwise
consented to in writing by Lender) and such other agreements, surveys, title
insurance policies, documents and instruments as Lender may require in
connection therewith.
(b) If Borrower hereafter acquires any Real Property, fixtures or
any other property that is of the kind or nature described in the Mortgages and
such Real Property, fixtures or other property at any one location has a fair
market value in an amount equal to or greater than $1,000,000 (or if an Event of
Default, or act, condition or event which with notice or passage of time or both
would constitute an Event of Default exists and is continuing, then regardless
of the fair market value of such assets), without limiting any other rights of
Lender, or duties or obligations of Borrower, upon Lender's request, Borrower
shall execute and deliver to Lender a mortgage, deed of trust or deed to secure
debt, as Lender may determine, in form and substance substantially similar to
the Mortgage and as to any provisions relating to specific state laws
satisfactory to Lender and in form appropriate for recording in the real estate
records of the jurisdiction in which such Real Property or other property is
located granting to Lender a first and only lien and mortgage on and security
interest in such Real Property, fixtures or other property (except as Borrower
would otherwise be permitted to incur hereunder or under the Mortgages or as
otherwise consented to in writing by Lender) and such other agreements,
documents and instruments as Lender may require in connection therewith.
9.16 COSTS AND EXPENSES. Borrower shall pay to Lender on demand all
costs, expenses, filing fees and taxes paid or payable in connection with the
preparation, negotiation, execution, delivery, recording, administration,
collection, liquidation, enforcement and defense of the Obligations, Lender's
rights in the Collateral, this Agreement, the other Financing Agreements and all
other documents related hereto or thereto, including any amendments, supplements
or consents which may hereafter be contemplated (whether or not executed) or
entered into in respect hereof and thereof, including: (a) all costs and
expenses of filing or recording (including Uniform
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Commercial Code financing statement filing taxes and fees, documentary taxes,
intangibles taxes and mortgage recording taxes and fees, if applicable); (b)
costs and expenses and fees for insurance premiums, environmental audits,
surveys, assessments, engineering reports and inspections, appraisal fees and
search fees, costs and expenses of remitting loan proceeds, collecting checks
and other items of payment, and establishing and maintaining the Blocked
Accounts, together with Lender's customary charges and fees with respect
thereto; (c) charges, fees or expenses charged by any bank or issuer in
connection with the Letter of Credit Accommodations; (d) costs and expenses of
preserving and protecting the Collateral; (e) costs and expenses paid or
incurred in connection with obtaining payment of the Obligations, enforcing the
security interests and liens of Lender, selling or otherwise realizing upon the
Collateral, and otherwise enforcing the provisions of this Agreement and the
other Financing Agreements or defending any claims made or threatened against
Lender arising out of the transactions contemplated hereby and thereby
(including preparations for and consultations concerning any such matters); (f)
all out-of-pocket expenses and costs heretofore and from time to time hereafter
incurred by Lender during the course of periodic field examinations of the
Collateral and Borrower's operations, plus a per diem charge at the rate of $650
per person per day for Lender's examiners in the field and office; and (g) the
reasonable fees and disbursements of counsel (including legal assistants) to
Lender in connection with any of the foregoing.
9.17 CHANGES IN BUSINESS.
(a) Borrower and its Subsidiaries shall not engage in any
business other than the businesses of Borrower and its Subsidiaries on the date
hereof and any businesses reasonably related, ancillary or complimentary to the
businesses in which Borrower and its Subsidiaries are engaged on the date
hereof.
(b) Holdings shall not engage in any business other than its
ownership of the Capital Stock of Borrower and any Subsidiaries established or
acquired by it after the date hereof to the extent permitted hereunder,
PROVIDED, THAT, any Subsidiaries of Holdings shall be engaged solely in the
businesses of Borrower and its Subsidiaries on the date hereof and any
businesses reasonably related, ancillary or complimentary to the businesses in
which Borrower and its Subsidiaries are engaged on the date hereof. Holdings
shall have no significant assets other than its ownership interests as described
in the immediately preceding sentence and shall act as a holding company which
shall not directly engage in any business.
9.18 EXCHANGE DEBENTURES. So long as no Event of Default or act,
condition or event which with notice or passage of time or both would constitute
an Event of Default shall exist or
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have occurred and be continuing, Borrower or Guarantors may permit the Senior
Preferred Stock to be exchanged for Exchange Debentures.
9.19 FURTHER ASSURANCES. At the request of Lender at any time and from
time to time, Borrower and Guarantors shall, at its expense, duly execute and
deliver, or cause to be duly executed and delivered, such further agreements,
documents and instruments, and do or cause to be done such further acts as may
be reasonably necessary or proper to evidence, perfect, maintain and enforce the
security interests and the priority thereof in the Collateral and to otherwise
effectuate the provisions or purposes of this Agreement or any of the other
Financing Agreements. Lender may at any time and from time to time request a
certificate from an officer of Borrower representing that all conditions
precedent to the making of Loans and providing Letter of Credit Accommodations
contained herein are satisfied. In the event of such request by Lender, Lender
may, at its option, if Lender has not received such certificate within three (3)
Business Days of such request, cease to make any further Loans or provide any
further Letter of Credit Accommodations until Lender has received such
certificate and, in addition, Lender has determined that such conditions are
satisfied. Where permitted by law, Borrower hereby authorizes Lender to execute
and file one or more UCC financing statements signed only by Lender.
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
10.1 EVENTS OF DEFAULT. The occurrence or existence of any one or more
of the following events are referred to herein individually as an "Event of
Default", and collectively as "Events of Default":
(a) (i) Borrower or any Guarantor fails to pay when due any of
the Obligations or (ii) Borrower or any Guarantor fails to perform any of the
covenants contained in Section 9.2, 9.3, 9.4, 9.13, 9.14, and 9.16 hereof, and
such failure shall continue for ten (10) days, PROVIDED, THAT, such ten (10) day
period shall not apply in the case of: (A) any failure to observe any such
covenant or agreement which is not capable of being cured at all or within such
ten (10) day period or which has been the subject of a prior failure within the
immediately preceding six (6) months or (B) an intentional breach by Borrower or
any Guarantor of any such covenant or agreement or (iii) Borrower or any
Guarantor fails to perform any of the terms, covenants, conditions or provisions
contained in this Agreement or any of the other Financing Agreements to which it
is a party other than those described in Sections 10.1(a)(i) or 10.1(a)(ii);
(b) any representation, warranty or statement of fact made by
Borrower to Lender in this Agreement, the other Financing Agreements or any
other agreement, schedule, confirmatory assignment or otherwise shall when made
or deemed made be false or misleading in any material respect;
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(c) any Obligor revokes, terminates or fails to perform any of
the terms, covenants, conditions or provisions of any guarantee, endorsement or
other agreement of such party in favor of Lender;
(d) (i) any judgment for the payment of money is rendered against
Borrower or any Obligor in excess of $500,000 in any one case or in excess of
$500,000 in the aggregate, in each case, to the extent not paid or covered by
insurance provided by a carrier who has not denied coverage, and shall remain
undischarged or unvacated for a period in excess of forty-five (45) days or
execution shall at any time not be effectively stayed, or (ii) any judgment
other than for the payment of money, or injunction, attachment, garnishment or
execution is rendered against Borrower or any Obligor or any of their assets has
a Material Adverse Effect;
(e) any Obligor (being a natural person or a general partner of
an Obligor which is a partnership) dies or Borrower or any Obligor, which is a
partnership, limited liability company, limited liability partnership or a
corporation, dissolves or suspends or discontinues doing business;
(f) Borrower or any Obligor becomes insolvent (however defined or
evidenced), makes an assignment for the benefit of creditors, makes or sends
notice of a bulk transfer or calls a meeting of its creditors or principal
creditors;
(g) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at law or
in equity) is filed against Borrower or any Obligor or all or any part of its
properties and such petition or application is not dismissed within forty-five
(45) days after the date of its filing or Borrower or any Obligor shall file any
answer admitting or not contesting such petition or application or indicates its
consent to, acquiescence in or approval of, any such action or proceeding or the
relief requested is granted sooner;
(h) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at a law
or equity) is filed by Borrower or any Obligor or for all or any part of its
property;
(i) any default by Borrower or any Obligor under any agreement,
document or instrument relating to any Indebtedness for borrowed money owing to
any person other than Lender, or any capitalized lease obligations, contingent
Indebtedness in connection with any guarantee, letter of credit, indemnity or
similar type of instrument in favor of any person other than Lender, in any case
in an amount in excess of $1,000,000, which default continues for more than the
applicable cure period, if any, with respect thereto, or any default by Borrower
or any Obligor under any material contract, lease, license or other obligation
to any person other than
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Lender, which default continues for more than the applicable cure period, if
any, with respect thereto;
(j) any Change of Control;
(k) the indictment or threatened indictment of Borrower or any
Obligor under any criminal statute, or commencement or threatened commencement
of criminal or civil proceedings against Borrower or any Obligor, pursuant to
which statute or proceedings the penalties or remedies sought or available
include forfeiture of any of the property of Borrower or such Obligor;
(l) there shall be an act, condition or event which has a
Material Adverse Effect;
(m) there shall be an Event of Default under any of the other
Financing Agreements; or
(n) there shall occur and be continuing any Event of Default
under and as defined in any Recapitalization Document.
10.2 REMEDIES.
(a) At any time an Event of Default exists or has occurred and is
continuing, Lender shall have all rights and remedies provided in this
Agreement, the other Financing Agreements, the Uniform Commercial Code and other
applicable law, all of which rights and remedies may be exercised without notice
to or consent by Borrower or any Obligor, except as such notice or consent is
expressly provided for hereunder or required by applicable law. All rights,
remedies and powers granted to Lender hereunder, under any of the other
Financing Agreements, the Uniform Commercial Code or other applicable law, are
cumulative, not exclusive and enforceable, in Lender's discretion,
alternatively, successively, or concurrently on any one or more occasions, and
shall include, without limitation, the right to apply to a court of equity for
an injunction to restrain a breach or threatened breach by Borrower of this
Agreement or any of the other Financing Agreements. Lender may, at any time or
times, proceed directly against Borrower or any Obligor to collect the
Obligations without prior recourse to the Collateral.
(b) Without limiting the foregoing, at any time an Event of
Default exists or has occurred and is continuing, Lender may, in its discretion
and without limitation, (i) accelerate the payment of all Obligations and demand
immediate payment thereof to Lender (PROVIDED, THAT, upon the occurrence of any
Event of Default described in Sections 10.1(g) and 10.1(h), all Obligations
shall automatically become immediately due and payable), (ii) with or without
judicial process or the aid or assistance of others, enter upon any premises on
or in which any of the Collateral may be located and take possession of the
Collateral or complete processing, manufacturing and repair of all or any
portion of the Collateral, (iii) require Borrower, at
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Borrower's expense, to assemble and make available to Lender any part or all of
the Collateral at any place and time designated by Lender, (iv) collect,
foreclose, receive, appropriate, setoff and realize upon any and all Collateral,
(v) remove any or all of the Collateral from any premises on or in which the
same may be located for the purpose of effecting the sale, foreclosure or other
disposition thereof or for any other purpose, (vi) sell, lease, transfer,
assign, deliver or otherwise dispose of any and all Collateral (including
entering into contracts with respect thereto, public or private sales at any
exchange, broker's board, at any office of Lender or elsewhere) at such prices
or terms as Lender may deem reasonable, for cash, upon credit or for future
delivery, with the Lender having the right to purchase the whole or any part of
the Collateral at any such public sale, all of the foregoing being free from any
right or equity of redemption of Borrower, which right or equity of redemption
is hereby expressly waived and released by Borrower and/or (vii) terminate this
Agreement. If any of the Collateral is sold or leased by Lender upon credit
terms or for future delivery, the Obligations shall not be reduced as a result
thereof until payment therefor is finally collected by Lender. If notice of
disposition of Collateral is required by law, five (5) days prior notice by
Lender to Borrower designating the time and place of any public sale or the time
after which any private sale or other intended disposition of Collateral is to
be made, shall be deemed to be reasonable notice thereof and Borrower waives any
other notice. In the event Lender institutes an action to recover any Collateral
or seeks recovery of any Collateral by way of prejudgment remedy, Borrower
waives the posting of any bond which might otherwise be required.
(c) Lender may apply the cash proceeds of Collateral actually
received by Lender from any sale, lease, foreclosure or other disposition of the
Collateral to payment of the Obligations, in whole or in part and in such order
as Lender may elect, whether or not then due. Borrower shall remain liable to
Lender for the payment of any deficiency with interest at the highest rate
provided for herein and all reasonable costs and expenses of collection or
enforcement, including reasonable attorneys' fees and legal expenses.
(d) Without limiting the foregoing, upon the occurrence and
continuance of an Event of Default or an event which with notice or passage of
time or both is reasonably likely in the good faith judgment of Lender to
constitute an Event of Default, Lender may, at its option, without notice, (i)
cease making Revolving Loans or arranging for Letter of Credit Accommodations or
reduce the lending formulas or amounts of Loans and Letter of Credit
Accommodations available to Borrower and/or (ii) terminate any provision of this
Agreement providing for any future Loans or Letter of Credit Accommodations to
be made by Lender to Borrower.
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SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS
AND CONSENTS; GOVERNING LAW
11.1 GOVERNING LAW; CHOICE OF FORUM; SERVICE OF PROCESS; JURY TRIAL
WAIVER.
(a) The validity, interpretation and enforcement of this
Agreement and the other Financing Agreements and any dispute arising out of the
relationship between the parties hereto, whether in contract, tort, equity or
otherwise, shall be governed by the internal laws of the State of New York
(without giving effect to principles of conflicts of law).
(b) Borrower, Guarantors and Lender irrevocably consent and
submit to the non-exclusive jurisdiction of the Supreme Court of the State of
New York in New York County and the United States District Court for the
Southern District of New York and waive any objection based on venue or FORUM
NON CONVENIENS with respect to any action instituted therein arising under this
Agreement or any of the other Financing Agreements or in any way connected with
or related or incidental to the dealings of the parties hereto in respect of
this Agreement or any of the other Financing Agreements or the transactions
related hereto or thereto, in each case whether now existing or hereafter
arising, and whether in contract, tort, equity or otherwise, and agree that any
dispute with respect to any such matters shall be heard only in the courts
described above (except that Lender shall have the right to bring any action or
proceeding against Borrower, Guarantors or their property in the courts of any
other jurisdiction which Lender deems necessary or appropriate in order to
realize on the Collateral or to otherwise enforce its rights against Borrower,
Guarantors or their property).
(c) Borrower and each Guarantor hereby waives personal service of
any and all process upon it and consents that all such service of process may be
made by certified mail (return receipt requested) directed to its address set
forth on the signature pages hereof and service so made shall be deemed to be
completed five (5) days after the same shall have been so deposited in the U.S.
mails, or, at Lender's option, by service upon Borrower or Guarantors, as the
case may be, in any other manner provided under the rules of any such courts.
Within thirty (30) days after such service, Borrower or Guarantors, as the case
may be, shall appear in answer to such process, failing which Borrower or any
Guarantor, as the case may be, shall be deemed in default and judgment may be
entered by Lender against Borrower for the amount of the claim and other relief
requested.
(d) BORROWER, EACH GUARANTOR AND LENDER EACH HEREBY WAIVES ANY
RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i)
ARISING UNDER THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR (ii) IN
ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES
HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR
THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW
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EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR
OTHERWISE. BORROWER, EACH GUARANTOR AND LENDER EACH HEREBY AGREES AND CONSENTS
THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY AND THAT BORROWER, GUARANTORS OR LENDER MAY FILE AN
ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.
(e) Lender shall not have any liability to Borrower or any
Guarantor (whether in tort, contract, equity or otherwise) for losses suffered
by Borrower or any Guarantor, as the case may be, in connection with, arising
out of, or in any way related to the transactions or relationships contemplated
by this Agreement, or any act, omission or event occurring in connection
herewith, unless it is determined by a final and non-appealable judgment or
court order binding on Lender, that the losses were the result of acts or
omissions constituting gross negligence or willful misconduct. In any such
litigation, Lender shall be entitled to the benefit of the rebuttable
presumption that it acted in good faith and with the exercise of ordinary care
in the performance by it of the terms of this Agreement.
11.2 WAIVER OF NOTICES. Borrower hereby expressly waives demand,
presentment, protest and notice of protest and notice of dishonor with respect
to any and all instruments and commercial paper, included in or evidencing any
of the Obligations or the Collateral, and any and all other demands and notices
of any kind or nature whatsoever with respect to the Obligations, the Collateral
and this Agreement, except such as are expressly provided for herein. No notice
to or demand on Borrower which Lender may elect to give shall entitle Borrower
to any other or further notice or demand in the same, similar or other
circumstances.
11.3 AMENDMENTS AND WAIVERS. Neither this Agreement nor any provision
hereof shall be amended, modified, waived or discharged orally or by course of
conduct, but only by a written agreement signed by an authorized officer of
Lender, and as to amendments, as also signed by an authorized officer of
Borrower. Lender shall not, by any act, delay, omission or otherwise be deemed
to have expressly or impliedly waived any of its rights, powers and/or remedies
unless such waiver shall be in writing and signed by an authorized officer of
Lender. Any such waiver shall be enforceable only to the extent specifically set
forth therein. A waiver by Lender of any right, power and/or remedy on any one
occasion shall not be construed as a bar to or waiver of any such right, power
and/or remedy which Lender would otherwise have on any future occasion, whether
similar in kind or otherwise.
11.4 WAIVER OF COUNTERCLAIMS. Borrower and each Guarantor waives all
rights to interpose any claims, deductions, setoffs or counterclaims of any
nature (other then compulsory counterclaims) in any action or proceeding with
respect to this Agreement, the Obligations, the Collateral or any matter arising
therefrom or relating hereto or thereto.
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11.5 INDEMNIFICATION. Borrower shall indemnify and hold Lender, and its
directors, agents, employees and counsel, harmless from and against any and all
losses, claims, damages, liabilities, costs or expenses imposed on, incurred by
or asserted against any of them in connection with any litigation,
investigation, claim or proceeding commenced or threatened related to the
negotiation, preparation, execution, delivery, enforcement, performance or
administration of this Agreement, any other Financing Agreements, or any
undertaking or proceeding related to any of the transactions contemplated hereby
or any act, omission, event or transaction related or attendant thereto,
including, without limitation, any and all losses, claims, damages, liabilities,
costs or expenses caused by negligence (but not the gross negligence or willful
misconduct) of Lender and Lender's directors, agents, employees and counsel and
further including, without limitation, amounts paid in settlement, court costs,
and the fees and expenses of counsel. To the extent that the undertaking to
indemnify, pay and hold harmless set forth in this Section may be unenforceable
because it violates any law or public policy, Borrower shall pay the maximum
portion which it is permitted to pay under applicable law to Lender in
satisfaction of indemnified matters under this Section. The foregoing indemnity
shall survive the payment of the Obligations and the termination or non-renewal
of this Agreement.
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS
12.1 TERM.
(a) This Agreement and the other Financing Agreements shall
become effective as of the date set forth on the first page hereof and shall
continue in full force and effect for a term ending on the date three (3) years
from the date hereof (the "Renewal Date"), and from year to year thereafter,
unless sooner terminated pursuant to the terms hereof. Lender or Borrower may
terminate this Agreement and the other Financing Agreements effective on the
Renewal Date or on the anniversary of the Renewal Date in any year by giving to
the other party at least sixty (60) days prior written notice; PROVIDED, THAT,
this Agreement and all other Financing Agreements must be terminated
simultaneously. Upon the effective date of termination or non-renewal of the
Financing Agreements, Borrower shall pay to Lender, in full, all outstanding and
unpaid Obligations and shall furnish cash collateral to Lender in such amounts
as Lender determines are reasonably necessary to secure Lender from loss, cost,
damage or expense, including attorneys' fees and legal expenses, in connection
with any contingent Obligations, including issued and outstanding Letter of
Credit Accommodations and checks or other payments provisionally credited to the
Obligations and/or as to which Lender has not yet received final and
indefeasible payment. Such payments in respect of the Obligations and cash
collateral shall be remitted by wire transfer in Federal funds to such bank
account of Lender, as Lender may, in its discretion, designate in writing to
Borrower for such purpose. Interest shall be due until and including the next
business day, if the amounts so paid by Borrower to the bank account designated
by Lender are received in such bank account later than 12:00 noon, New York City
time.
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(b) No termination of this Agreement or the other Financing
Agreements shall relieve or discharge Borrower of its respective duties,
obligations and covenants under this Agreement or the other Financing Agreements
until all Obligations have been fully and finally discharged and paid, and
Lender's continuing security interest in the Collateral and the rights and
remedies of Lender hereunder, under the other Financing Agreements and
applicable law, shall remain in effect until all such Obligations have been
fully and finally discharged and paid.
(c) If for any reason this Agreement is terminated prior to the
end of the then current term or renewal term of this Agreement, in view of the
impracticality and extreme difficulty of ascertaining actual damages and by
mutual agreement of the parties as to a reasonable calculation of Lender's lost
profits as a result thereof, Borrower agrees to pay to Lender, upon the
effective date of such termination, an early termination fee in the amount set
forth below if such termination is effective in the period indicated:
AMOUNT PERIOD
--------------------------- ------------------------------------- --------------------------------------------------
(i) one (1%) percent of the Maximum From the date hereof to and including March 11,
Credit 2000
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(ii) One (1%) percent of the Maximum From March 12, 2000 to and including March 11,
Credit 2001
--------------------------- ------------------------------------- --------------------------------------------------
(iii) One-half of one (1/2%) percent of From March 12, 2001 to and including September
the Maximum Credit 10, 2001
--------------------------- ------------------------------------- --------------------------------------------------
--------------------------- ------------------------------------- --------------------------------------------------
Such early termination fee shall be presumed to be the amount of damages
sustained by Lender as a result of such early termination and Borrower agrees
that it is reasonable under the circumstances currently existing. In addition,
Lender shall be entitled to such early termination fee upon the occurrence of
any Event of Default described in Sections 10.1(g) and 10.1(h) hereof, even if
Lender does not exercise its right to terminate this Agreement, but elects, at
its option, to provide financing to Borrower or permit the use of cash
collateral under the United States Bankruptcy Code. The early termination fee
provided for in this Section 12.1 shall be deemed included in the Obligations.
(d) Notwithstanding anything to the contrary contained in Section
12.1(c) above, in the event of the termination of this Agreement at the request
of Borrower prior to the end of the term of this Agreement and the full and
final repayment of all Obligations and the receipt by Lender of cash collateral
all as provided in Section 12.1(a) above, Borrower shall (i) not be required to
pay to Lender an early termination fee if such payments are made to Lender with
the initial proceeds of a financing transaction provided or underwritten by
First Union National Bank and/or one of its Affiliates to Borrower, including,
without limitation, a replacement credit
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facility, a high-yield debt offering, an equity offering through Wheat First
Securities, a merger or acquisition transaction through ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
or any combination thereof and (ii) only be required to pay fifty (50%) percent
of the early termination fee that would otherwise be payable in accordance with
Section 12.1(c) above if each of the following conditions is satisfied: (A) no
Event of Default (or act, condition or event which with notice, lapse of time or
both is reasonably likely, in the good faith determination of Lender, to
constitute an Event of Default) shall exist or have occurred and be continuing,
(B) Lender shall have received not less than sixty (60) days prior written
notice of the intention of Borrower to terminate this Agreement and the other
Financing Agreements, and (C) the full repayment of the Obligations and receipt
of cash collateral all as provided in Section 12.1(a) above is received upon the
consummation of the sale by Borrower of all of its assets or the sale by the
owners of Borrower of all of the Capital Stock of Borrower, in any case, in a
BONA FIDE arm's length transaction and on commercially reasonable prices and
terms with a person other than an Affiliate.
12.2 NOTICES. All notices, requests and demands hereunder shall be in
writing and (a) made to Lender at its address set forth below and to Borrower
and Guarantors at its chief executive office set forth below, or to such other
address as such party may designate by written notice to the other in accordance
with this provision, and (b) deemed to have been given or made: if delivered in
person, immediately upon delivery; if by telex, telegram or facsimile
transmission, immediately upon sending and upon confirmation of receipt; if by
nationally recognized overnight courier service with instructions to deliver the
next Business Day, one (1) Business Day after sending; and if by certified mail,
return receipt requested, five (5) days after mailing.
12.3 PARTIAL INVALIDITY. If any provision of this Agreement is held to
be invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
12.4 SUCCESSORS. This Agreement, the other Financing Agreements and any
other document referred to herein or therein shall be binding upon and inure to
the benefit of and be enforceable by Lender, Borrower, Guarantors and their
respective successors and assigns, except that neither Borrower nor any
Guarantor may assign its rights under this Agreement, the other Financing
Agreements and any other document referred to herein or therein without the
prior written consent of Lender. Lender may, after notice to Borrower, assign
its rights and delegate its obligations under this Agreement and the other
Financing Agreements and further may assign, or sell participations in, all or
any part of the Loans, the Letter of Credit Accommodations or any other interest
herein to another financial institution or other person, in which event, the
assignee or participant shall have, to the extent of such assignment or
participation, the same rights and benefits as it would have if it were the
Lender hereunder, except as otherwise provided by the terms of such assignment
or participation; PROVIDED, THAT, notwithstanding anything to the contrary
herein, Borrower and Guarantors shall not, at any time, be obligated to pay
under
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Sections 3.5 and 9.4 (regarding indemnity claims by Lender) to any lender that
obtains a participation from Lender (directly or through an intermediate lender)
any sum in excess of the sum which Borrower or Guarantors would have been
obligated to pay to Lender had such participation not been effected.
12.5 CONFIDENTIALITY.
(a) Lender shall use all reasonable efforts to keep confidential,
in accordance with its customary procedures for handling confidential
information and safe and sound lending practices, any non-public information
supplied to it by Borrower pursuant to this Agreement at the time such
information is furnished by Borrower to Lender, PROVIDED, THAT, nothing
contained herein shall limit the disclosure of any such information: (i) to the
extent required by statute, rule, regulation, subpoena or court order, (ii) to
bank examiners and other regulators, auditors and/or accountants, (iii) in
connection with any litigation to which Lender is a party, (iv) to any assignee
or participant (or prospective assignee or participant) so long as such assignee
or participant (or prospective assignee or participant) shall have first agreed
in writing to treat such information as confidential in accordance with this
Section 12.5, or (v) to counsel for Lender or any participant or assignee (or
prospective participant or assignee).
(b) In no event shall this Section 12.5 or any other provision of
this Agreement or applicable law be deemed: (i) to apply to or restrict
disclosure of information that has been or is made public by Borrower or any
third party without breach of this Section 12.5 or otherwise become generally
available to the public other than as a result of a disclosure in violation
hereof, (ii) to apply to or restrict disclosure of information that was or
becomes available to Lender on a non-confidential basis from a person other than
Borrower, (iii) require Lender to return any materials furnished by Borrower to
Lender or (iv) prevent Lender from responding to routine informational requests
in accordance with the CODE OF ETHICS FOR THE EXCHANGE OF CREDIT INFORMATION
promulgated by The ▇▇▇▇▇▇ ▇▇▇▇▇▇ Associates or other applicable industry
standards relating to the exchange of credit information. The obligations of
Lender under this Section 12.5 shall supersede and replace the obligations of
Lender under any confidentiality letter signed prior to the date hereof.
12.6 ENTIRE AGREEMENT. This Agreement, the other Financing Agreements,
any supplements hereto or thereto, and any instruments or documents delivered or
to be delivered in connection herewith or therewith represents the entire
agreement and understanding concerning the subject matter hereof and thereof
between the parties hereto, and supersede all other prior agreements,
understandings, negotiations and discussions, representations, warranties,
commitments, proposals, offers and contracts concerning the subject matter
hereof, whether oral or written. In the event of any inconsistency between the
terms of this Agreement and any schedule or exhibit hereto, the terms of this
Agreement shall govern.
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IN WITNESS WHEREOF, Lender, Borrower and each Guarantor have caused
these presents to be duly executed as of the day and year first above written.
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LENDER BORROWER
CONGRESS FINANCIAL CORPORATION ANVIL KNITWEAR, INC.
By: By:
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Title: Title:
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ADDRESS: CHIEF EXECUTIVE OFFICE:
1133 Avenue of the Americas ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
GUARANTORS
ANVIL HOLDINGS, INC.
By:
--------------------------------
Title:
-----------------------------
CHIEF EXECUTIVE OFFICE:
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
COTTONTOPS, INC.
By:
--------------------------------
Title:
-----------------------------
CHIEF EXECUTIVE OFFICE:
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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