AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
by and among
DELTA APPAREL, INC.
as Borrower
CONGRESS FINANCIAL CORPORATION (SOUTHERN),
as Agent
and
THE FINANCIAL INSTITUTIONS NAMED HEREIN,
as Lenders
Dated: October 3, 2003
SECTION 1. DEFINITIONS...........................................................................2
SECTION 2. CREDIT FACILITIES....................................................................25
2.1 Loans................................................................................25
2.2 Letter of Credit Accommodations......................................................26
2.3 [Intentionally Omitted.].............................................................30
2.4 Commitments..........................................................................30
SECTION 3. INTEREST AND FEES....................................................................30
3.1 Interest.............................................................................30
3.2 Fees.................................................................................31
3.3 Changes in Laws and Increased Costs of Loans.........................................31
3.4 Maximum Interest.....................................................................32
SECTION 4. CONDITIONS PRECEDENT.................................................................34
4.1 Conditions Precedent to Initial Loans and Letter of Credit Accommodations............34
4.2 Conditions Precedent to All Loans and Letter of Credit Accommodations................36
4.3 Conditions Subsequent to to Initial Loans and Letter of Credit Accommodations........36
SECTION 5. GRANT OF SECURITY INTEREST...........................................................37
5.1 Grant of Security Interest...........................................................37
5.2 Perfection of Security Interests.....................................................38
SECTION 6. COLLECTION AND ADMINISTRATION........................................................42
6.1 Borrower's Loan Account..............................................................42
6.2 Statements...........................................................................42
6.3 Collection of Accounts...............................................................42
6.4 Payments.............................................................................43
6.5 Authorization to Make Loans..........................................................44
6.6 Use of Proceeds......................................................................44
6.7 Pro Rata Treatment...................................................................44
6.8 Sharing of Payments, Etc.............................................................45
6.9 Settlement Procedures................................................................46
6.10 Obligations Several; Independent Nature of Lenders' Rights...........................48
SECTION 7. COLLATERAL REPORTING AND COVENANTS...................................................48
7.1 Collateral Reporting.................................................................48
7.2 Accounts Covenants...................................................................49
7.3 Inventory Covenants..................................................................50
7.4 Equipment and Real Property Covenants................................................51
7.5 Power of Attorney....................................................................51
7.6 Right to Cure........................................................................52
7.7 Access to Premises...................................................................52
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7.8 Bills of Lading and Other Documents of Title.........................................53
SECTION 8. REPRESENTATIONS AND WARRANTIES.......................................................53
8.1 Corporate Existence, Power and Authority; Subsidiaries...............................54
8.2 Financial Statements; No Material Adverse Change.....................................54
8.3 Chief Executive Office; Collateral Locations.........................................54
8.4 Priority of Liens; Title to Properties...............................................54
8.5 Tax Returns..........................................................................55
8.6 Litigation...........................................................................55
8.7 Compliance with Other Agreements and Applicable Laws.................................55
8.8 Environmental Compliance.............................................................56
8.9 Employee Benefits....................................................................57
8.10 Bank Accounts........................................................................57
8.11 Intellectual Property................................................................57
8.12 Acquisition of Assets................................................................58
8.13 Solvency.............................................................................58
8.14 Labor Disputes.......................................................................59
8.15 Corporate Name: Prior Transactions...................................................59
8.16 Restrictions on Subsidiaries.........................................................59
8.17 Material Contracts...................................................................59
8.18 Accuracy and Completeness of Information.............................................59
8.19 Survival of Warranties; Cumulative...................................................59
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS...................................................60
9.1 Maintenance of Existence.............................................................60
9.2 New Collateral Locations.............................................................60
9.3 Compliance with Laws, Regulations, Etc...............................................60
9.4 Payment of Taxes and Claims..........................................................61
9.5 Insurance............................................................................62
9.6 Financial Statements and Other Information...........................................62
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc..............................64
9.8 Encumbrances.........................................................................65
9.9 Indebtedness.........................................................................66
9.10 Loans, Investments, Guarantees, Etc..................................................67
9.11 Dividends and Redemptions............................................................69
9.12 Transactions with Affiliates.........................................................70
9.13 Additional Bank Accounts.............................................................71
9.14 Compliance with ERISA................................................................71
9.15 End of Fiscal Years: Fiscal Quarters.................................................71
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9.16 Change in Business...................................................................71
9.17 Limitation of Restrictions Affecting Subsidiaries....................................71
9.18 Existing Real Property; After Acquired Real Property.................................72
9.19 Costs and Expenses...................................................................72
9.20 Further Assurances...................................................................73
9.21 Fixed Charge Coverage Ratio..........................................................73
SECTION 10. EVENTS OF DEFAULT AND REMEDIES.......................................................74
10.1 Events of Default....................................................................74
10.2 Remedies.............................................................................76
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW.........................77
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver................77
11.2 Waiver of Notices....................................................................78
11.3 Amendments and Waivers...............................................................79
11.4 Waiver of Counterclaims..............................................................81
11.5 Indemnification......................................................................81
SECTION 12. the agent............................................................................81
12.1 Appointment, Powers and Immunities...................................................81
12.2 Reliance by Agent....................................................................82
12.3 Events of Default....................................................................82
12.4 Congress in its Individual Capacity..................................................83
12.5 Indemnification......................................................................83
12.6 Non-Reliance on Agent and Other Lenders..............................................83
12.7 Failure to Act.......................................................................84
12.8 Additional Loans.....................................................................84
12.9 Concerning the Collateral and the Related Financing Agreements.......................84
12.10 Field Audit, Examination Reports and other Information; Disclaimer by Lenders........84
12.11 Collateral Matters...................................................................85
12.12 Agency for Perfection................................................................87
12.13 Successor Agent......................................................................87
SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS.....................................................87
13.1 Term.................................................................................87
13.2 Interpretative Provisions............................................................88
13.3 Notices..............................................................................90
13.4 Partial Invalidity...................................................................90
13.5 Successors...........................................................................90
13.6 Assignments; Participations..........................................................90
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13.7 Entire Agreement.....................................................................92
13.8 No Novation; Reaffirmation of Grant of Security Interest.............................93
13.9 Counterparts, Etc....................................................................93
v
INDEX TO
EXHIBITS AND SCHEDULES
Exhibit A......... Assignment and Acceptance
Exhibit B......... Applicable Margins for Interest Rate Calculation
Exhibit C......... Form of Guarantee
Exhibit D......... Information Certificate
Schedule 1.24..... Customs Brokers
Schedule 1.47..... Existing Real Property
Schedule 1.89..... Permitted Holders
Schedule 8.4...... Existing Liens
Schedule 8.7...... Permits
Schedule 8.8...... Environmental Matters
Schedule 8.10..... Bank Accounts
Schedule 8.11..... Licensed Intellectual Property
Schedule 8.14..... Labor Matters
Schedule 8.17..... Material Contracts
Schedule 9.9...... Existing Indebtedness
Schedule 9.10..... Existing Loans, Advances and Guarantees
vi
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
This Amended and Restated Loan and Security Agreement dated October 3,
2003 (this "Agreement"), is entered into by and among DELTA APPAREL, INC., a
Georgia corporation ("Borrower"), the parties hereto from time to time as
Lenders, whether by execution of this Agreement or an Assignment and Acceptance
(each individually, a "Lender" and collectively, "Lenders"), and CONGRESS
FINANCIAL CORPORATION (SOUTHERN), a Georgia corporation, in its capacity as
agent for Agents (in such capacity, "Agent").
W I T N E S S E T H:
WHEREAS, Borrower and Congress Financial Corporation (Southern)
("Congress") are parties to that certain Loan and Security Agreement dated May
16, 2000, as amended by that certain Amendment No. 1 to Loan and Security
Agreement dated as of October 17, 2001, and that certain Amendment No. 2 to Loan
and Security Agreement dated August 23, 2002 (as amended, modified, or
supplemented, from time to time prior to the date hereof, the "Existing Loan
Agreement"); and
WHEREAS, Borrower desires that the Existing Loan Agreement be amended,
modified and restated to, among other things, (a) permit to the creation of a
wholly-owned Subsidiary of Borrower, MJS Acquisition Company ("MJS"), and the
acquisition of ▇. ▇. ▇▇▇▇▇ Co. ("Soffe") by MJS pursuant to the terms of that
certain Amended and Restated Stock Purchase Agreement, dated as of October 3,
2003, among Borrower, MJS and Sellers (the "Soffe Stock Purchase Agreement") and
the documents relating thereto, (b) increase the amount of the revolving loans
available to Borrower by $15,000,000 to $40,000,000, (c) provide for Congress to
act as agent for the Lenders party hereto and (d) amend certain other provisions
of the Loan Agreement; and
WHEREAS, Borrower agrees that the security interests granted to
Congress pursuant to the Existing Loan Agreement and the other Existing
Financing Agreements, shall remain outstanding and in full force and effect in
accordance with the Existing Financing Agreements, in each case, as amended as
of the date hereof and shall continue to secure the Obligations; and
WHEREAS, each of Borrower and Congress acknowledges and agrees that (i)
the Obligations represent, among other things, the amendment, restatement,
renewal, extension, consolidation and modification of the Existing Obligations
arising in connection with the Existing Loan Agreement and the other Existing
Financing Agreements executed in connection therewith; (ii) it intends that the
collateral pledged under the Existing Loan Agreement and the other Existing
Financing Agreements executed in connection therewith shall secure, without
interruption or impairment of any kind, all Existing Obligations under the
Existing Loan Agreement and the other Existing Financing Agreements executed in
connection therewith as amended, restated, renewed, extended, consolidated and
modified hereunder, together with all other Obligations hereunder; and (iii) all
liens evidenced by the Existing Loan Agreement and the other Existing Financing
Agreements executed in connection therewith are hereby ratified, confirmed and
continued; and
WHEREAS, Borrower and Congress intend that (i) the provisions of the
Existing Loan Agreement and the other Existing Financing Agreements executed in
connection therewith, to the extent restated, renewed, extended, consolidated,
amended and modified hereby and by the other Financing Agreements dated as of
the date hereof, be hereby superseded and replaced by the provisions hereof and
of the other Financing Agreements; and (ii) by entering into and performing
their respective obligations hereunder, this transaction shall not constitute a
novation; and
WHEREAS, each Lender is willing to agree (severally and not jointly) to
make such loans and provide such financial accommodations to Borrower on a pro
rata basis according to its Commitment (as defined below) on the terms and
conditions set forth herein and Agent is willing to act as agent for Lenders on
the terms and conditions set forth herein and the other Financing Agreements;
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
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 of a monetary obligation, whether or not earned by performance, which is
not evidenced by chattel paper or an instrument, (a) for property that has been
or is to be sold, leased, licensed, assigned, or otherwise disposed of, (b) for
services rendered or to be rendered, (c) for a secondary obligation incurred or
to be incurred, or (d) arising out of the use of a credit or charge card or
information contained on or for use with the card.
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 five (5%) percent or more of any
class of the Voting Stock or other equity interest of such specified person; or
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(c) of which five (5%) 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 "Agent" shall mean Congress Financial Corporation (Southern), in
its capacity as agent on behalf of Lenders pursuant to the terms hereof and any
replacement or successor agent hereunder.
1.5 "Agent Payment Account" shall have the meaning set forth in Section
6.3(a) hereof.
1.6 "Agreement Date" shall mean October 3, 2003.
1.7 "Alabama Mortgage" shall have the meaning set forth in Section
4.3(a) hereof.
1.8 "Assignment and Acceptance" shall mean an Assignment and Acceptance
substantially in the form of Exhibit A attached hereto (with blanks
appropriately completed) delivered to Agent in connection with an assignment of
a Lender's interest hereunder in accordance with the provisions of Section 13.6
hereof.
1.9 "Average Daily Balance" shall have the meaning set forth in Section
3.2(b) hereof.
1.10 "Blocked Accounts" shall have the meaning set forth in Section
6.3(a) hereof.
1.11 "Borrowing Base" shall mean, at any time, the amount equal to:
(a) the sum of:
(i) eighty-five (85%) percent of the Net Amount
of the Eligible Accounts, plus
(ii) the lesser of:
(1) the Inventory Loan Limit, or
(2) fifty-five (55%) percent of the Value
of Eligible Inventory consisting of
finished goods, raw materials
consisting of raw cotton and yarn for
such finished goods, and finished yarn
categorized as work-in-process; plus
(iii) to the extent greater than zero, the lesser
of:
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(1) (A) the Fixed Asset Loan Limit, minus
(B) the Fixed Asset Loan Amortization
Amount, or
(2) (A) eighty-five percent (85%) of the
appraised Net Orderly Liquidation
Value of Eligible Equipment
determined from time to time by
a qualified appraiser acceptable to
Agent, minus
(B) the Fixed Asset Loan Amortization
Amount, minus
(b) Reserves.
For purposes only of applying the Inventory Loan Limit, Agent may treat
the then undrawn amounts of outstanding Letter of Credit Accommodations for the
purpose of purchasing Eligible Inventory as Loans to the extent Agent 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
Loans and Reserves shall be attributed first to any components of the lending
formulas set forth above that are not subject to such sublimit, before being
attributed to the components of the lending formulas subject to such sublimit.
The amounts of Eligible Inventory shall, at Agent's option, be determined based
on the lesser of the amount of Inventory set forth in the general ledger of
Borrower or the perpetual inventory record maintained by Borrower.
1.12 "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 State of Georgia or the State of North
Carolina, and a day on which the Reference Bank and Agent 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 banks are closed for dealings in dollar deposits in the London
interbank market or other applicable Eurodollar Rate market.
1.13 "Capital Expenditures" shall mean, with respect to any Person, all
expenditures made and liabilities incurred for the acquisition of assets which
are not, in accordance with GAAP, treated as expense items for such Person in
the year made or incurred or as a prepaid expense applicable to a future year or
years.
1.14 "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 reflected as a liability on the balance sheet of such Person.
1.15 "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, or partnership, limited liability company or
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other equity interests at any time outstanding, and any and all rights, warrants
or options exchangeable for or convertible into such capital stock or other
interests (but excluding any debt security that is exchangeable for or
convertible into such capital stock).
1.16 "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 or 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 one hundred
eighty (180) 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 $250,000,000; {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) 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 $250,000,000; (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 of 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.
1.17 "Change of Control" shall mean (a) the transfer (in one
transaction or a series of transactions) of all or substantially all of the
assets of Borrower or any Guarantor to any Person or group (as such term is used
in Section 13(d)(3) of the Exchange Act), other than as permitted in Section 9.7
hereof; (b) the liquidation or dissolution of Borrower or any Guarantor or the
adoption of a plan by the stockholders of Borrower or any Guarantor relating to
the dissolution or liquidation of Borrower or any Guarantor, other than as
permitted in Section 9.7 hereof; (c) the acquisition by any Person or group (as
such term is used in Section 13(d)(3) of the Exchange Act), except for one or
more Permitted Holders, of beneficial ownership, directly or indirectly, of a
majority of the voting power of the total outstanding Voting Stock of Borrower
or any Guarantor or the Board of Directors of Borrower or any Guarantor; or (d)
during any period of two (2) consecutive years, individuals who at the beginning
of such period constituted the Board of Directors of Borrower or any Guarantor
(together with any new directors who have been appointed by any Permitted
Holder, or whose nomination for election by the stockholders of Borrower or such
Guarantor, as the case may be, was approved by a vote of at least sixty-six and
two-thirds (66 2/3%) percent of the directors then still in office who were
either directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of Borrower then still in office.
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1.18 "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.
1.19 "Collateral" shall have the meaning set forth in Section 5.1
hereof.
1.20 "Collateral Access Agreement" shall mean an agreement in writing,
in form and substance satisfactory to Agent, 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 Agent 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 Agent access to, and the right to remain on, the premises of
such lessor, consignee or other person so as to exercise Agent's rights and
remedies and otherwise deal with such Collateral and in the case of any
consignee or other person who at any time has custody, control or possession of
any Collateral, acknowledges that it holds and will hold possession of the
Collateral for the benefit of Agent and Lenders and agrees to follow all
instructions of Agent with respect thereto.
1.21 "Commitment" shall mean, at any time, as to each Lender, the
principal amount set forth below such Lender's signature on the signatures pages
hereto designated as the Commitment or on Schedule 1 to the Assignment and
Acceptance Agreement pursuant to which such Lender became a Lender hereunder in
accordance with the provisions of Section 13.6 hereof, as the same may be
adjusted from time to time in accordance with the terms hereof; sometimes being
collectively referred to herein as "Commitments".
1.22 "Congress" shall mean Congress Financial Corporation (Southern), a
Georgia corporation, in its individual capacity, and its successors and assigns.
1.23 "Credit Facility" shall mean the Loans and Letter of Credit
Accommodations provided to or for the benefit of Borrower pursuant to Sections
2.1 and 2.2 hereof.
1.24 "Customs Brokers" shall mean the persons listed on Schedule 1.24
hereto or such other person as may be selected by Borrower after the date hereof
and after written notice by Borrower to Agent who is reasonably acceptable to
Agent, provided, that, as to each such person (including those listed on such
Schedule), Borrower has used reasonable efforts to obtain a Collateral Access
Agreement duly authorized, executed and delivered by such person.
1.25 "Default" shall mean an act, condition or event which with notice
or passage of time or both would constitute an Event of Default.
1.26 "Defaulting Lender" shall have the meaning set forth in Section
6.9(d) hereof.
1.27 "Deposit Account Control Agreement" shall mean an agreement in
writing, in form and substance satisfactory to Agent, by and among Agent,
Borrower with a deposit account at any bank and the bank at which such deposit
account is at any time maintained which provides that such bank will comply with
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instructions originated by Agent directing disposition of the funds in the
deposit account without further consent by Borrower and such other terms and
conditions as Agent may require, including as to any such agreement with respect
to any Blocked Account, providing that all items received or deposited in the
Blocked Accounts are the property of Agent, that the 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 bank
will wire, or otherwise transfer, in immediately available funds, on a daily
basis to the Agent Payment Account all funds received or deposited into the
Blocked Accounts.
1.28 "Distribution Agreements" shall mean, individually and
collectively, (a) the Distribution Agreement, dated as of March 15, 2000 by and
among ▇▇▇▇▇▇▇▇, ▇▇ Apparel Company, Inc. and Borrower (the "DWI Distribution
Agreement") and (b) Deed, dated as of the date hereof, from Delta ▇▇▇▇▇, Inc. to
Borrower, with respect to the real property located in Edgefield, South
Carolina, the ▇▇▇▇ of Sale, Assignment and Assumption Agreement, dated the date
hereof, made by Delta ▇▇▇▇▇, Inc., as Seller and Borrower, as Purchaser, and the
Agreement for the Purchase and Sale of Property dated April 1, 2000, by and
between Delta ▇▇▇▇▇, Inc., as Seller and Borrower, as Buyer, and (c) all bills
of sale, quitclaim deeds, assignment and assumption agreements and such other
instruments of transfer as are referred to in the agreements described in clause
(a) and (b) above and all side letters with respect thereto, and all agreements,
documents and instruments executed and/or delivered in connection therewith, as
all of the foregoing now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced; provided, that, the term
"Distribution Agreements" as used herein shall not include any of the "Financing
Agreements" as such term is defined herein.
1.29 "EBITDA" shall mean, as to Borrower, with respect to any period,
an amount equal to: (a) the Net Income of Borrower and its Subsidiaries for such
period on a consolidated basis determined in accordance with GAAP, plus (b) to
the extent deducted in the computation of Net Income, (i) depreciation,
amortization and other non-cash charges (including, but not limited to, imputed
interest and deferred compensation) for such period, all in accordance with
GAAP, plus (ii) the Interest Expense for such period, plus (iii) charges for
Federal, Provincial, State, district, municipal, local and foreign income taxes;
provided that, for purposes of determining EBITDA, Subsidiaries of Borrower
shall not include MJS or the Subsidiaries of MJS.
1.30 "Eligible Accounts" shall mean Accounts created by Borrower which
are and continue to be acceptable to Agent 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 delivery
of goods by Borrower or rendition of services by Borrower in the ordinary course
of its business which 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 or for them (ii) one hundred twenty (120)
days after the date of the original invoice for them (or one hundred fifty (150)
days after the date of the original invoice for them for certain account debtors
of Borrower which are pre-approved by Agent, on terms and conditions acceptable
to Agent);
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(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 Agent'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 Agent to perfect the security interests of
Agent 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 Agent may request to enable Agent as secured party with respect
thereto to collect such Accounts under the applicable Federal or Provincial laws
of Canada) or, at Agent'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 Agent 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 Agent and if required by Agent, the original of
such letter of credit has been delivered to Agent or Agent's agent and Borrower
has complied with the terms of Section 5.2(h) hereof with respect to the
assignment of the proceeds of such letter of credit to Agent or naming Agent as
transferee beneficiary thereunder, as Agent may specify, or (ii) such Account is
subject to credit insurance payable to Agent issued by an insurer and on terms
and in an amount acceptable to Agent, or (iii) such Account is otherwise
acceptable in all respects to Agent (subject to such lending formula with
respect thereto as Agent may determine);
(f) such Accounts do not consist of progress ▇▇▇▇▇▇▇▇ (such that the
obligation of the account debtors with respect to such Accounts is conditioned
upon Borrower's satisfactory completion of any further performance under the
agreement giving rise thereto), ▇▇▇▇ and hold invoices or retainage invoices,
except as to ▇▇▇▇ and hold invoices, if Agent shall have received an agreement
in writing from the account debtor, in form and substance satisfactory to Agent,
confirming the unconditional obligation of the account debtor to take the goods
related thereto and pay such invoice;
(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 or recoupment 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 Accounts);
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(h) there are no facts, events or occurrences which would impair the
validity, enforceability or collectability of such Accounts or reduce the amount
payable or delay payment thereunder;
(i) such Accounts are subject to the first priority, valid and
perfected security interest of Agent 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, agent or
other Affiliate of Borrower;
(k) the account debtors with respect to such Accounts are not any
foreign government, the United States of America, 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 Agent'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 Agent;
(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 of a single account debtor or its affiliates do not
constitute more than fifteen (l5%) percent of all otherwise Eligible Accounts
(but the portion of the Accounts not in excess of such percentage may be deemed
Eligible Accounts);
(n) such Accounts are not owed by an account debtor who has Accounts
unpaid more than the earlier of (i) sixty (60) days after the original due date
or for them (ii) one hundred twenty (120) days after the original invoice date
for them (or one hundred fifty (150) days after the date of the original invoice
for them for certain account debtors of Borrower which are pre-approved by
Agent, on terms and conditions acceptable to Agent) which constitute more than
fifty (50%) percent of the total Accounts of such account debtor;
(o) the account debtor is not located in a state requiring the filing
of a Notice of Business Activities Report or similar report in order to permit
Borrower to seek judicial enforcement in such State of payment of such Account,
unless Borrower has qualified to do business in such state or has filed a Notice
of Business Activities Report or equivalent report for the then current year or
such failure to file and inability to seek judicial enforcement is capable of
being remedied without any material delay or material cost;
(p) such Accounts are owed by account debtors whose total indebtedness
to Borrower does not exceed the credit limit with respect to such account
debtors (as determined by Borrower from time to time substantially consistent
with its current practices as of the date hereof) by more than twenty (20%)
percent and as is reasonably acceptable to Agent (but the portion of the
Accounts not in excess of such credit limit may be deemed Eligible Accounts);
and
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(q) such Accounts are owed by account debtors deemed creditworthy at
all times by Borrower consistent with its current practice and who are
reasonably acceptable to Agent.
General criteria for Eligible Accounts may be established and revised from time
to time by Agent in good faith based on an event, condition or other
circumstance arising after the date hereof, or existing on the date hereof to
the extent Agent has no written notice thereof from Borrower, which adversely
affects or could reasonably be expected to adversely affect the Accounts in the
good faith determination of Agent. Any Accounts which are not Eligible Accounts
shall nevertheless be part of the Collateral.
1.31 "Eligible Equipment" shall mean Equipment owned or operated in the
ordinary course of the business of Borrower, in each case which is acceptable to
Agent based on the criteria set forth below. In general, Eligible Equipment
shall not include (a) components which are not part of operating Equipment; (b)
Equipment which is uninsured, damaged, obsolete, in disrepair or under repair;
(c) spare parts for Equipment; (d) Equipment at premises other than those owned
and controlled by Borrower, except any Equipment which would otherwise be deemed
Eligible Equipment that is not located at premises owned and operated by
Borrower may nevertheless be considered Eligible Equipment: (i) as to locations
which are leased by Borrower if Agent shall have received a Collateral Access
Agreement from the owner and lessor of such location, duly authorized, executed
and delivered by such owner and lessor or if Agent shall not have received a
Collateral Access Agreement (in a form reasonably acceptable to Agent), Agent
may, at its option, nevertheless consider Equipment at such location to be
Eligible Equipment to the extent Agent shall have established such Reserves in
respect of amounts at any time payable by Borrower to the owner and lessor
thereof as Agent shall determine, and (ii) as to locations owned and operated by
a third person, (A) if Agent shall have received a Collateral Access Agreement
from such owner and operator with respect to such location, duly authorized,
executed and delivered by such owner and operator or if Agent shall not have
received a Collateral Access Agreement (in a form reasonably acceptable to
Agent), Agent may, at its option, nevertheless consider Equipment at such
location to be Eligible Equipment to the extent Agent shall have established
such Reserves in respect of amounts at any time payable by Borrower to the owner
and operator thereof as Agent shall determine, and (B) in addition, as to
locations owned and operated by a third person, Agent shall have received, if
required by Agent: (1) UCC-1 financing statements between the owner and
operator, as consignee or bailee and Borrower, as consignor or ▇▇▇▇▇▇, in form
and substance satisfactory to Agent, which are duly assigned to Agent and (2) a
written notice to any lender to the owner and operator of the first priority
security interest in such Equipment of Agent; (e) Equipment subject to a
security interest or lien in favor of any Person other than Agent except those
permitted in this Agreement (but without limiting the right of Agent to
establish any Reserves with respect to amounts secured by such security interest
or lien in favor of any Person even if permitted herein); (f) Equipment which is
not subject to the first priority, valid and perfected security interest of
Agent; (g) Equipment which has become part of, or affixed to, any Real Property
and (h) Equipment located outside the United States of America. The criteria for
Eligible Equipment set forth above may only be changed and any new criteria for
Eligible Equipment may only be established by Agent in good faith based on
either: (i) an event, condition or other circumstance arising after the date
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hereof; or (ii) an event, condition or other circumstance existing on the date
hereof to the extent Agent has no written notice thereof from Borrower prior to
the date hereof, in either case under clause (i) or (ii) which adversely affects
or could reasonably be expected to adversely affect the Equipment in the good
faith determination of Agent. Any Equipment which is not Eligible Equipment
shall nevertheless be part of the Collateral.
1.32 "Eligible Inventory" shall mean Inventory consisting of finished
goods held for resale in the ordinary course of the business of Borrower, raw
materials for such Finished goods and finished yarn categorized as
work-in-process, which are acceptable to Agent based on the criteria set forth
below. In general, Eligible Inventory shall not include (a) work-in-process
(other than Finished yarn); (b) raw materials other than yarn and raw cotton;
(c) spare parts for equipment; (d) packaging and shipping materials; (e)
supplies used or consumed in Borrower's business; (f) Inventory at premises
other than those owned and controlled by Borrower, except any Inventory which
would otherwise be deemed Eligible Inventory at locations in the United States
of America which are not owned and operated by Borrower may nevertheless be
considered Eligible Inventory: (i) as to locations which are leased by Borrower
if Agent shall have received a Collateral Access Agreement from the owner and
lessor of such location, duly authorized, executed and delivered by such owner
and lessor, except that notwithstanding that Agent shall not have received such
an agreement for a particular leased location, Agent may consider Inventory at
such leased location which would otherwise be Eligible Inventory to be Eligible
Inventory and in such event, Agent may at any time establish such Reserves as
Agent may determine in respect of amounts at any time payable by Borrower to the
owner or lessor of such location, without limiting any other rights and remedies
of Agent under this Agreement or under the other Financing Agreements with
respect to the establishment of Reserves or otherwise and (ii) as to premises of
third parties (including consignees and processors), Agent shall have received a
Collateral Access Agreement duly authorized, executed and delivered by the owner
and operator of such premises (except that notwithstanding that Agent shall not
have received such an agreement as to a particular third party location, Agent
may consider Inventory at such location which would otherwise be Eligible
Inventory to be Eligible Inventory and in such event, Agent may at any time
establish such Reserves as Agent may determine in respect of amounts at any time
payable by Borrower to such third party, without limiting any other rights or
remedies of Agent under this Agreement or under the other Financing Agreements
with respect to the establishment of Reserves or otherwise), and in addition, if
required by Agent, as to premises of third parties where assets of Borrower are
located: (A) the owner and operator executes appropriate UCC-l financing
statements in favor of Borrower, which are duly assigned to Agent and (B) any
secured Agent to the owner and operator is properly notified of the first
priority lien on such Inventory of Agent; (g) Inventory located outside the
United States of America shall only be Eligible Inventory if (i) it is in
transit to either the premises of a Customs Broker in the United States or
premises of Borrower in the United States and as to premises of a Customs Broker
or premises which are not owned and controlled by Borrower only if Agent has
received a Collateral Access Agreement duly authorized, executed and delivered
by such Customs Broker or the owner, lessor and operator of such other premises,
as the case may be, (ii) Agent has a first priority perfected security interest
in and control and possession of all originals of documents of title with
respect to such Inventory, (iii) Agent has received a Collateral Access
Agreement from the Customs Broker dealing with such Inventory, duly authorized,
executed and delivered by such person, and such agreement is in full force and
effect, binding upon such person and such person has complied with the terms
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thereof, (iv) Agent has received (A) a copy of the certificate of marine cargo
insurance in connection therewith in which it has been named as an additional
insured and loss payee in a manner acceptable to Agent and (B) a copy of the
invoice and manifest with respect thereto, and (v) such Inventory is not subject
to any Letter of Credit Accommodation; (h) Inventory subject to a security
interest or lien in favor of any person other than Agent, except those permitted
in this Agreement; (i) ▇▇▇▇ and hold goods; (j) Inventory which is not subject
to the first priority, valid and perfected security interest of Agent; (k)
damaged and/or defective Inventory which is unsaleable or which any Borrower has
not marked down to its realizable value; (1) Inventory purchased or sold on
consignment; (m) samples; and (n) Inventory to be returned to vendors. General
criteria for Eligible Inventory play be established and revised from time to
time by Agent in good faith based on an event, condition or other circumstance
arising after the date hereof, or existing on the date hereof to the extent
Agent has no written notice thereof from Borrower, which adversely affects or
could reasonably be expected to adversely affect the Inventory in the good faith
determination of Agent. Any Inventory which is not Eligible Inventory shall
nevertheless be part of the Collateral.
1.33 "Eligible Transferee" shall mean (a) any Lender; (b) the parent
company of any Lender and/or any Affiliate of such Lender which is at least
fifty (50%) percent owned by such Lender or its parent company; (c) any person
(whether a corporation, partnership, trust or otherwise) that is engaged in the
business of making, purchasing, holding or otherwise investing in bank loans and
similar extensions of credit in the ordinary course of its business and is
administered or managed by a Lender or with respect to any Lender that is a fund
which invests in bank loans and similar extensions of credit, any other fund
that invests in bank loans and similar extensions of credit and is managed by
the same investment advisor as such Lender or by an institutional Affiliate of
such investment advisor, and in each case is approved by Agent; and (d) any
other commercial bank, financial institution or institutional "accredited
investor" (as defined in Regulation D under the Securities Act of 1993) approved
by Agent; provided, that, neither Borrower nor any Guarantor nor any Affiliate
of Borrower or any Guarantor shall qualify as an Eligible Transferee and (ii) no
Person to whom any Indebtedness which is in any way subordinated in right of
payment to any other Indebtedness of Borrower or any Guarantor shall qualify as
an Eligible Transferee, except as Agent may otherwise specifically agree
1.34 "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 and any
Governmental Authority, (a) 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, (b) relating to the exposure to, or the use, storage,
recycling, treatment, generation, manufacture, processing, distribution,
transportation, handling, labeling, production, release or disposal, or
threatened release, of Hazardous Materials, or (c) relating to all laws with
regard to recordkeeping, notification, disclosure and reporting requirements
respecting Hazardous Materials. 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
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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.
1.35 "Equipment" shall mean all of Borrower's now owned and hereafter
acquired equipment, wherever located, including machinery, data processing and
computer equipment and computer hardware and software (whether owned or
licensed, and including embedded software), 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.
1.36 "ERISA" shall mean the United States Employee Retirement Income
Security Act of 1974, together with all rules, regulations and interpretations
thereunder or related thereto.
1.37 "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.
1.38 "ERISA Event" shall mean (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder, with respect to a
Plan; (b) the adoption of any amendment to a Plan that would require the
provision of security pursuant to Section 401(a)(29) of the Code or Section 307
of ERISA; (c) the existence with respect to any Plan of an "accumulated funding
deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA),
whether or not waived; (d) the filing pursuant to Section 412 of the Code or
Section 303(d) of ERISA of an application for a waiver of the minimum funding
standard with respect to any Plan; (e) the occurrence of a "prohibited
transaction" with respect to which Borrower or any of its Subsidiaries is a
"disqualified person" (within the meaning of Section 4975 of the Code) or with
respect to which Borrower or any of its Subsidiaries could otherwise be liable;
(f) a complete or partial withdrawal by Borrower or any ERISA Affiliate from a
Multiemployer Plan or a cessation of operations which is treated as such a
withdrawal or notification that a Multiemployer Plan is in reorganization; (g)
the filing of a notice of intent to terminate, the treatment of a Plan amendment
as a termination under Section 4041 or 4041A of ERISA, or the commencement of
proceedings by the Pension Benefit Guaranty Corporation to terminate a Plan or
Multiemployer Plan; (h) an event or condition which might reasonably be expected
to constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan or Multiemployer Plan; (i) the
imposition of any liability under Title IV of ERISA, other than the Pension
Benefit Guaranty Corporation premiums due but not delinquent under Section 4007
of ERISA, upon Borrower or any ERISA Affiliate; and 0) any other event or
condition with respect to a Plan or Multiemployer Plan or any Plan subject to
Title IV of ERISA maintained, or contributed to, by any ERISA Affiliate that
could reasonably be expected to result in liability of Borrower.
1.39 "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 Agent) 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
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accordance with this Agreement, with a maturity of comparable duration to the
Interest Period selected by Borrower.
1.40 "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.
1.41 "Event of Default" shall mean the occurrence or existence of any
event or condition described in Section 10.1 hereof.
1.42 "Excess Availability" shall mean the amount, as determined by
Agent, calculated at any time, equal to: (a) the lesser of: (i) the Borrowing
Base and (ii) the Maximum Credit, minus (b) the sum of: (i) the amount of all
then outstanding and unpaid Obligations, 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 and other obligations
which are more than sixty (60) days past due as of such time, but not yet sent.
1.43 "Exchange Act" shall mean the Securities Exchange Act of 1934,
together with all rules, regulations and interpretations thereunder or related
thereto.
1.44 "Existing Loan Agreement" shall have the meaning set forth in the
recitals of this Agreement.
1.45 "Existing Financing Agreements" shall mean Financing Agreements as
defined in the Existing Loan Agreement.
1.46 "Existing Obligations" shall mean Obligations as defined in the
Existing Loan Agreement.
1.47 "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 1.47 hereto but not including the Real Property subject to the
Mortgages.
1.48 "Financing Agreements" shall mean, collectively, this Agreement,
the Intercreditor Agreement, the Subordination Agreement, the Guarantees, the
Mortgages 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.
1.49 "Fixed Asset Loan Amortization Amount" shall mean an amount equal
to (a) from and after November 1, 2003 through November 30, 2003, $166,666.67,
plus (b) from and after the first day of each month commencing December 1, 2003
and through the last day of each such month, the product of: (i) $166,666.67
multiplied by (ii) the cumulative number of months that have elapsed since
November 1, 2003.
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1.50 "Fixed Asset Loan Limit" shall mean $10,000,000.
1.51 "Fixed Charge Coverage Ratio" shall mean, with respect to Borrower
and its Subsidiaries, on a consolidated basis, for any period of determination,
the ratio of (a) EBITDA of Borrower during such period to (b) Fixed Charges of
Borrower and its Subsidiaries for the same period; provided that, for purposes
of calculating the Fixed Charge Coverage Ratio, Subsidiaries of Borrower shall
not include MJS or the Subsidiaries of MJS.
1.52 "Fixed Charges" for any Person any period shall mean the sum of,
without duplication, (a) all Interest Expense, (b) all Capital Expenditures, and
(c) all regularly scheduled (as determined at the beginning of the respective
period) principal payments of Indebtedness for borrowed money and Indebtedness
with respect to Capital Leases (and without duplicating in items (a) and (c) of
this definition, the interest component with respect to Indebtedness under
Capital Leases) and (d) an amount equal to the product of: (i) $166,666.67
multiplied by (ii) the cumulative number of months that elapsed during such
period of determination.
1.53 "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, except that,
for purposes of Section 9.21 hereof and for purposes of calculating "Net Income"
as defined in this Agreement, until such time as Borrower notifies Agent of a
change in GAAP that would have a material effect on the calculation of Net
Income or the covenant set forth in Section 9.21 and Borrower and Agent mutually
agree on the treatment of such change or the recalculation of such covenant,
GAAP shall be determined on the basis of such principles in effect on the date
hereof and consistent with those used in the preparation of the most recent
audited financial statements delivered to Agent prior to the date hereof.
1.54 "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.
1.55 "Guarantee" shall mean, individually, any guarantee executed by a
Guarantor substantially in the form of Exhibit C attached hereto, and
"Guarantees" shall collectively refer to all such guarantees, as each may be
amended, modified, supplemented, extended or restated from time to time.
1.56 "Guarantors" shall mean, collectively, each of (a) MJS and (b)
SAIM, together with their successors and assigns.
1.57 "Hazardous Materials" shall mean any hazardous, toxic or dangerous
substances, materials and wastes, including hydrocarbons (including naturally
occurring or man-made petroleum and hydrocarbons), flammable explosives,
asbestos, urea formaldehyde insulation, radioactive materials, biological
substances, polychlorinated biphenyls, pesticides, herbicides and any other kind
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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).
1.58 "Hedging Obligations" shall mean, with respect to any Person, the
obligations and liabilities of such Person under any of the following agreements
or arrangements to the extent that the primary purpose thereof is the reduction
of risk for fluctuations in interest rates or currency values relating to its
customary business and not for speculative purposes: (a) interest rate swap
agreements, interest rate cap agreements and interest rate collar agreements and
(b) other agreements or arrangements designed to protect such person against
fluctuations in interest rates or currency values.
1.59 "Honduras Subsidiary" shall mean each of Delta Apparel Honduras,
S.A. and Delta ▇▇▇▇▇▇, ▇.▇.
1.60 "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) Hedging Obligations.
1.61 "Information Certificate" shall mean the Information Certificate
of Borrower constituting Exhibit D hereto containing material information with
respect to Borrower, its business and assets provided by or on behalf of
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Borrower to Agent in connection with the preparation of this Agreement and the
other Financing Agreements and the financing arrangements provided for herein.
1.62 "Intellectual Property" shall mean Borrower's now owned and
hereafter arising or acquired: patents, patent rights, patent applications,
copyrights, works which are the subject matter of copyrights, copyright
registrations, trademarks, trade names, trade styles, trademark and service ▇▇▇▇
applications, and licenses and rights to use any of the foregoing; all
extensions, renewals, reissues, divisions, continuations, and
continuations-in-part of any of the foregoing; all rights to ▇▇▇ for past,
present and future infringement of any of the foregoing; inventions, trade
secrets, formulae, processes, compounds, drawings, designs, blueprints, surveys,
reports, manuals, and operating standards; goodwill (including any goodwill
associated with any trademark or the license of any trademark); customer and
other lists in whatever form maintained; and trade secret rights, copyright
rights, rights in works of authorship, domain names and domain name
registrations; software and contract rights relating to computer software
programs, in whatever form created or maintained.
1.63 "Intercreditor Agreement" shall mean that certain Intercreditor
Agreement dated as of October 3, 2003, between Agent and Subsidiary Agent, as
amended, modified, supplemented, extended or restated from time to time.
1.64 "Interest Expense" shall mean, for any period, as to any Person,
all of the following as determined in accordance with GAAP: (a) total interest
expense, whether paid or accrued during such period (including the interest
component of Capital Leases for such period), including, without limitation, all
bank fees, commissions, discounts and other fees and charges owed with respect
to letters of credit (but excluding amortization of discount and amortization of
deferred financing fees paid in cash in connection with the transactions
contemplated hereby, interest paid in property other than cash and any other
interest expense not payable in cash), minus (b) any net payments received
during such period as interest income received in respect of its investments in
cash.
1.65 "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.
1.66 "Interest Rate" shall mean:
(a) Subject to clauses (b) and (c) of this definition below: as to
Prime Rate Loans, the Prime Rate and, as to Eurodollar Rate Loans, a rate of two
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 two (2) Business Days after the date of receipt by Agent 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 rate previously quoted to
Borrower);
(b) Subject to clause (c) below, effective as of the first day of the
month after Agent's receipt of the financial statements required to be delivered
to Agent pursuant to Section 9.6(a)(ii) hereof in respect of the fiscal quarter
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ending June 30, 2000, the Interest Rate payable by Borrower shall be increased
or decreased, as the case may be, to the rate equal to the applicable margin set
forth in Exhibit B hereto, on a per annum basis, in excess of the Prime Rate as
to Prime Rate Loans, and in excess of the Adjusted Eurodollar Rate as to
Eurodollar Rate Loans, in each case, based on either (i) the quarterly average
of the Excess Availability of Borrower for the immediately preceding full fiscal
quarter or (ii) Borrower's Fixed Charge Coverage Ratio, calculated on a
quarterly basis, for the immediately preceding four (4) consecutive fiscal
quarters of Borrower, ending June 30, 2000 (except that for purposes of
calculating the Fixed Charge Coverage Ratio for the period ending June 30, 2000:
(A) the Fixed Charge Coverage Ratio shall be calculated on a fiscal year to date
basis as of July l, 1999, and (B) the Interest Expense paid to Agent in respect
of the Obligations from the date of closing to June 30, 2000 shall be calculated
on an annualized basis) as calculated by Agent in good faith.
(c) Notwithstanding anything to the contrary contained in clauses (a)
and (b) above, the applicable margin otherwise used to calculate the Interest
Rate shall be the highest percentage set forth on Exhibit B hereto for each
category of Loans (without regard to the amount of Excess Availability or Fixed
Charge Coverage Ratio) plus two (2%) percent per annum, at Agent's option,
without notice, (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 and satisfied 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 Agent and (ii) on the Loans at
any time outstanding in excess of the amounts available to Borrower under
Section 2 (whether or not such excesses) arise or are made with or without
Agent's knowledge or consent and whether made before or after an Event of
Default).
1.67 "Inventory" shall mean all of Borrower's now owned and hereafter
existing or acquired goods, wherever located, which (a) are leased by Borrower
as lessor; (b) are held by Borrower for sale or lease or to be furnished under a
contract of service; (c) are furnished by Borrower under a contract of service;
or (d) consist of raw materials, work in process, finished goods or materials
used or consumed in its business.
1.68 "Inventory Loan Limit" shall mean $20,000,000.
1.69 "Investment Property Control Agreement" shall mean an agreement in
writing, in form and substance satisfactory to Agent, by and among Agent,
Borrower and any securities intermediary, commodity intermediary or other person
who has custody, control or possession of any investment property of Borrower
acknowledging that such securities intermediary, commodity intermediary or other
person has custody, control or possession of such investment property on behalf
of Agent, that it will comply with entitlement orders originated by Agent with
respect to such investment property, or other instructions of Agent, or (as the
case may be) apply any value distributed on account of any commodity contract as
directed by Agent, in each case, without the further consent of Borrower and
including such other terms and conditions as Agent may require.
1.70 "Lenders" shall mean the financial institutions who are
signatories hereto as Lenders and other persons made a party to this Agreement
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as a Lender in accordance with Section 13.6 hereof, and their respective
successors and assigns; each sometimes being referred to herein individually as
a "Lender".
1.71 "Letter of Credit Accommodations" shall mean the letters of
credit, merchandise purchase or other guaranties which are from time to time
either (a) issued or opened by Agent for the account of Borrower or any Obligor
(excluding such items issued or opened for MJS or its Subsidiaries under the
Subsidiary Loan Agreement) or (b) with respect to which Agent has agreed to
indemnify the issuer or guaranteed to the issuer the performance by Borrower of
its obligations to such issuer.
1.72 "Loans" shall mean the loans now or hereafter made by or on behalf
of any Lender or by Agent for the benefit of Borrower on a revolving basis
(involving advances, repayments and readvances) as set forth in Section 2.1
hereof.
1.73 "Material Contract" shall mean (a) any contract or other agreement
(other than the Financing Agreements), written or oral, of Borrower involving
monetary liability of or to any Person in an amount in excess of $1,000,000 in
any fiscal year and (b) any other contract or other agreement (other than the
Financing Agreements), whether written or oral, to which Borrower is a party as
to which the breach, nonperformance, cancellation or failure to renew by any
party thereto would have a material adverse effect on the business, assets,
condition (financial or otherwise) or results of operations or prospects of
Borrower and its Subsidiaries taken as a whole or the validity or enforceability
of this Agreement, any of the other Financing Agreements, or any of the rights
and remedies of Agent hereunder or thereunder.
1.74 "Maximum Credit" shall mean the amount of $40,000,000.
1.75 "Maximum Interest Rate" shall mean the maximum non-usurious rate
of interest under applicable Federal or State law as in effect from time to time
that may be contracted for, taken, reserved, charged or received in respect of
the indebtedness of Borrower to Agent and Lenders, or to the extent that at any
time such applicable law may thereafter permit a higher maximum non-usurious
rate of interest, then such higher rate. Notwithstanding any other provision
hereof, the Maximum Interest Rate shall be calculated on a daily basis (computed
on the actual number of days elapsed over a year of three hundred sixty-five
(365) or three hundred sixty-six (366) days, as the case may be).
1.76 "Mexican Subsidiary" shall mean Delta Campeche, S.A. de C.V., a
company organized under the laws of Mexico.
1.77 "MJS" shall have the meaning set forth in the recitals of this
Agreement
1.78 "Monthly Average Excess Availability" shall mean, at any time, the
average of the amount of the Excess Availability for the immediately preceding
thirty (30) days as calculated by Agent based on the amount of the Excess
Availability on each date during such period.
1.79 "Mortgages" shall mean, individually and collectively, each of the
following, as each may be amended, modified, supplemented, extended or restated
from time to time: (a) the Deed of Trust and Security Agreement, dated May 16,
2000, by Borrower in favor of Agent with respect to the Real Property and
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related assets of Borrower located in Maiden, North Carolina; (b) the Deed of
Trust and Security Agreement, dated May 16, 2000, by Borrower in favor of Agent
with respect to the Real Property and related assets of Borrower located in
Knoxville, Tennessee; (c) the Open-End Mortgage and Security Agreement, dated
May 16, 2000, by Borrower in favor of Agent with respect to the Real Property
and related assets of Borrower located in Edgefield, South Carolina; and (d) the
Mortgage, Assignment of Rents and Leases and Security Agreement dated as of
October 3, 2003, with respect to the Real Property and related assets of
Borrower located in Fayette County, Alabama.
1.80 "Multiemployer Plan" shall mean a "multi-employer plan" as defined
in Section 4001(a)(3) of ERISA which is or was at any time during the current
year or the immediately preceding six (6) years contributed to by Borrower or
any ERISA Affiliate.
1.81 "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.
1.82 "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, one-time or non-recurring gains) after
deducting all charges which should be deducted before arriving at the net income
(loss) for such period and after 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 such Person 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 such
Person or to any other wholly-owned subsidiary of such Person is not at the time
permitted by operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to
such wholly-owned Subsidiary shall be excluded. For the purpose of this
definition, net income excludes any gain (but not loss) together with any
related Provision for Taxes for such gain (but not loss) 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 and any net income realized as a result of changes in accounting
principles or the application thereof to such Person; provided, the Honduras
Subsidiaries and the Mexican Subsidiary shall be considered to be wholly-owned
Subsidiaries of Borrower for purposes of the calculation of Net Income hereunder
so long as Borrower owns at least 97% of the Capital Stock of each such
Subsidiaries.
1.83 "Net Orderly Liquidation Value" shall mean with respect to
Borrower's Equipment, the value that is estimated to be recoverable in an
orderly liquidation of such Equipment net of estimated liquidation expenses as
determined from time to time by a qualified appraisal company selected by Agent.
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1.84 "Net Proceeds" shall mean the aggregate cash proceeds received by
Borrower, or any of its 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 Borrower or any Subsidiary of
Borrower to cash.
1.85 "Obligations" shall mean (a) any and all Loans, Letter of Credit
Accommodations and all other obligations, liabilities and indebtedness of every
kind, nature and description owing by Borrower to Agent or any Lender or any of
their 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 Agent or Lenders and (b) for purposes only of Sections 5 and
6.4 hereof, any and all Hedging Obligations owing by Borrower to Agent or any
Affiliate of Agent.
1.86 "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.
1.87 "Participant" shall mean any financial institution that acquires
and holds a participation in the interest of any Lender in any of the Loans and
Letter of Credit Accommodations in conformity with the provisions of Section
13.6 of this Agreement governing participations.
1.88 "Permits" shall have the meaning set forth in Section 8.7(b)
hereof.
1.89 "Permitted Holders" shall mean the persons listed on Schedule 1.89
hereto and their respective successors and assigns.
1.90 "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.
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1.91 "Plan" shall mean an employee benefit plan (as defined in Section
3(3) of ERISA) which Borrower sponsors, maintains, or to which it makes, is
making, or is obligated to make contributions, or in the case of a Multiemployer
Plan has made contributions at any time during the immediately preceding six (6)
plan years.
1.92 "Pledge Agreement" shall mean that certain Stock Pledge Agreement
by Borrower and MJS in favor of Congress, in its capacity as Agent and in its
capacity as Subsidiary Agent, dated as of the Agreement Date, as the same may be
amended, restated, supplemented or otherwise modified from time to time.
1.93 "Prime Rate" shall mean the rate from time to time publicly
announced by Wachovia Bank, National Association, or its successors, as its
prime rate, whether or not such announced rate is the best rate available at
such bank.
1.94 "Prime Rate Loans" shall mean any Loans or portion thereof on
which interest is payable based on the Prime Rate in accordance with the terms
thereof.
1.95 "Pro Rata Share" shall mean as to any Lender, the fraction
(expressed as a percentage) the numerator of which is such Lender's Commitment
and the denominator of which is the aggregate amount of all of the Commitments
of Lenders, as adjusted from time to time in accordance with the provisions of
Section 13.6 hereof; provided, that, if the Commitments have been terminated,
the numerator shall be the unpaid amount of such Lender's Loans and its interest
in the Letter of Credit Accommodations and the denominator shall be the
aggregate amount of all unpaid Loans and Letter of Credit Accommodations
1.96 "Provision for Taxes" shall mean an amount equal to all taxes
imposed on or measured by net income, whether Federal, State, Provincial,
municipal or local, and whether foreign or domestic, that are paid or payable by
any Person in respect of any period in accordance with GAAP.
1.97 "Purchase Agreements" shall mean, individually and collectively,
the Stock Purchase Agreement, the Seller Note, and the Related Agreements (as
defined in the Stock Purchase Agreement), as all of the foregoing now exist and
as amended to the extent permitted herein or in the Subsidiary Loan Agreement.
1.98 "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.
1.99 "Receivables" shall mean all of the following now owned or
hereafter arising or acquired property of Borrower: (a) all Accounts; (b) all
amounts at any time payable to Borrower in respect of the sale or other
disposition by Borrower of any Account or other obligation for the payment of
money; (c) all interest, fees, late charges, penalties, collection fees and
other amounts due or to become due or otherwise payable in connection with any
Account; (d) all payment intangibles of Borrower, letters of credit,
indemnities, guarantees, security or other deposits and proceeds thereof issued
payable to Borrower or otherwise in favor of or delivered to Borrower in
connection with any Account; or (e) all other accounts, contract rights, chattel
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paper, instruments, notes, general intangibles and other forms of obligations
owing to Borrower, whether from the sale and lease of goods or other property,
licensing of any property (including Intellectual Property or other general
intangibles), rendition of services or from loans or advances by Borrower or to
or for the benefit of any third person (including loans or advances to any
Affiliates or Subsidiaries of Borrower) or otherwise associated with any
Accounts, Inventory or general intangibles of Borrower (including, without
limitation, choses in action, causes of action, tax refunds, tax refund claims,
any funds which may become payable to Borrower in connection with the
termination of any Plan or other employee benefit plan and any other amounts
payable to Borrower from any Plan or other employee benefit plan, rights and
claims against carriers and shippers, rights to indemnification, business
interruption insurance and proceeds thereof, casualty or any similar types of
insurance and any proceeds thereof and proceeds of insurance covering the lives
of employees on which Borrower is a beneficiary).
1.100 "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).
1.101 "Reference Bank" shall mean Wachovia Bank, National Association,
or such other bank as Agent may from time to time designate.
1.102 "Register" shall have the meaning set forth in Section 13.6(b)
hereof.
1.103 "Renewal Date" shall the meaning set forth in Section 13.1(a)
hereof.
1.104 "Required Lenders" shall mean, at any time, those Lenders whose
Pro Rata Shares aggregate sixty-six and two-thirds (66 2/3%) percent or more of
the aggregate of the Commitments of all Lenders, or if the Commitments shall
have been terminated, Lenders to whom at least sixty-six and two-thirds (66
2/3%) percent of the then outstanding Obligations are owing.
1.105 "Reserves" shall mean as of any date of determination, such
amounts as Agent may from time to time establish and revise in good faith
reducing the amount of Loans and Letter of Credit Accommodations which would
otherwise be available to Borrower under the lending formula(s) provided for
herein: (a) to reflect events, conditions, contingencies or risks arising after
the date of this Agreement or of which Agent had no actual knowledge as of such
date, which, as determined by Agent in good faith, adversely affect, or would
have a reasonable likelihood of adversely affecting, either (i) the Collateral
or any other property which is security for the Obligations or its value, (ii)
the assets, business or financial condition of Borrower or any Obligor or (iii)
the security interests and other rights of Agent or any Lender in the Collateral
(including the enforceability, perfection and priority thereof); or (b) to
reflect Agent's good faith belief that any collateral report or financial
information furnished by or on behalf of Borrower or any Obligor to Agent is or
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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) $255,000 in respect of deferred compensation
liabilities of Borrower for its employees and those of any member of the Delta
Apparel Employee Group (as such term is defined in the DWI Distribution
Agreement) such reserve to terminate upon Agent's receipt of evidence, in form
and substance satisfactory to it that the option provided to members of the
Delta Apparel Employee Group to receive a distribution of deferred compensation
benefits in connection with the transactions contemplated by the Distribution
Agreement has expired; or (e) in the amount of any Hedging Obligations of
Borrower owed to Agent or any Affiliate of Agent or (f) in respect of any state
of facts which Agent determines in good faith constitutes an Event of Default or
may, with notice or passage of time or both, constitute an Event of Default. To
the extent Agent may revise the lending formulas used to determine the Borrowing
Base or establish new criteria or revise existing criteria for Eligible Accounts
or Eligible Inventory so as to address any circumstances, condition, event or
contingency in an manner satisfactory to Agent, Agent shall not establish a
Reserve for the same purpose. The amount of any Reserve established by Agent
shall have a reasonable relationship to the event, condition or other matter
which is the basis For such reserve as determined by Agent in good faith.
1.106 "SAIM" shall mean SAIM, LLC, a North Carolina limited liability
company.
1.107 "Seller Note" means that certain Promissory Note dated as of the
date hereof in the original principal amount of $8,000,000 executed and
delivered by MJS in favor of Sellers in effect on the date hereof and as amended
in compliance with the terms of the Subsidiary Loan Agreement.
1.108 "Sellers" shall mean, collectively, ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇
and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, and their respective heirs, executors, successors and
assigns.
1.109 "Soffe" shall have the meaning set forth in the recitals of this
Agreement.
1.110 "Soffe Lenders" shall mean, collectively, those financial
institutions party to the Subsidiary Loan Agreement from time to time.
1.111 "Soffe Stock Purchase Agreement" shall have the meaning set forth
in the recitals of this Agreement.
1.112 "Solvent" shall mean, at any time with respect to any Person,
that at such time such Person (a) is able to pay its debts as they mature and
has (and has a reasonable basis to believe it will continue to have) sufficient
capital (and not unreasonably small capital) to carry on its business consistent
with its practices as of the date hereof, and (b) the assets and properties of
such Person at a fair valuation (and including as assets for this purpose at a
fair valuation all rights of subrogation, contribution or indemnification
arising pursuant to any guarantees given by such Person) are greater than the
Indebtedness of such Person, and including subordinated and contingent
liabilities computed at the amount which, such person has a reasonable basis to
believe, represents an amount which can reasonably be expected to become an
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actual or matured liability (and including as to contingent liabilities arising
pursuant to any guarantee the face amount of such liability as reduced to
reflect the probability of it becoming a matured liability).
1.113 "Subordination Agreement" shall mean that certain Subordination
Agreement, dated as of the date hereof, among Congress, in its capacity as Agent
and in its capacity as Subsidiary Agent, Borrower, MJS and Sellers, as the same
may be amended, restated, supplemented or otherwise modified from time to time.
1.114 "Subsidiary" or "subsidiary" shall mean, with respect to any
Person, any corporation, limited liability company, limited liability
partnership or other limited or general partnership, trust, association or other
business entity of which an aggregate of 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.
1.115 "Subsidiary Agent" shall mean Congress Financial Corporation
(Southern), as agent for Soffe Lenders under the Subsidiary Loan Agreement, and
its successors and assigns.
1.116 "Subsidiary Loan Agreement" shall mean that certain Loan and
Security Agreement, dated as of the Agreement Date, by and among MJS, Subsidiary
Agent and Soffe Lenders, as amended, modified, supplemented, extended or
restated from time to time.
1.117 "UCC" shall mean the Uniform Commercial Code as in effect in the
State of Georgia, and any successor statute, as in effect from time to time
(except that terms used herein which are defined in the Uniform Commercial Code
as in effect in the State of Georgia on the date hereof shall continue to have
the same meaning notwithstanding any replacement or amendment of such statute
except as Agent may otherwise determine).
1.118 "Value" shall mean, as determined by Agent in good faith, with
respect to Inventory, the lower of (a) cost computed on a first-in, first-out
basis in accordance with GAAP or (b) market value.
1.119 "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 described in clause (a) of this definition.
1.120 "Woodside" shall mean Delta Woodside Industries, Inc., a South
Carolina corporation, and its successors and assigns.
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SECTION 2. CREDIT FACILITIES
2.1 Loans.
(a) Subject to and upon the terms and conditions contained herein, each
Lender severally (and not jointly) agrees to fund its Pro Rata Share of Loans to
Borrower from time to time in amounts requested by Borrower up to the amount
outstanding at any time equal to the lesser of: (i) the Borrowing Base or (ii)
the Maximum Credit at such time. Except as otherwise provided herein or
permitted hereunder, (x) the aggregate principal amount of the sum of the Loans
and Letter of Credit Accommodations outstanding at any time to Borrower shall
not exceed the lesser of the Borrowing Base or the Maximum Credit, and (y) the
aggregate principal amount of the Loans outstanding at any time to Borrower
based on the Eligible Inventory of Borrower shall not exceed the Inventory Loan
Limit.
(b) Agent may, in its discretion, from time to time, upon not less than
five (5) days' prior notice to Borrower, (i) reduce the lending formula with
respect to Eligible Accounts to the extent that Agent determines in good faith
that (A) the dilution with respect to the Accounts for any period (based on the
ratio of (1) the aggregate amount of reductions in Accounts other than as a
result of payments in cash to (2) the aggregate amount of total sales) has
increased in any material respect or may be reasonably anticipated to increase
in any material respect above historical levels, or (B) the general
creditworthiness of account debtors has materially declined or (ii) reduce the
lending formula(s) with respect to Eligible Inventory to the extent that Agent
determines that: (A) the number of days of the turnover of the Inventory for any
period has changed 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 materially deteriorated. The amount of any decrease in the lending
formulas shall have a reasonable relationship to the event, condition or
circumstance which is the basis for such decrease as determined by Agent in good
faith. In determining whether to reduce the lending formula(s), Agent may
consider events, conditions, contingencies or risks which are also considered in
determining Eligible Accounts, Eligible Inventory or in establishing Reserves.
(c) Except in Agent's discretion, (i) the aggregate amount of the Loans
outstanding at any time shall not exceed the Maximum Credit, (ii) the aggregate
amount of Loans and Letter of Credit Accommodations based on Eligible Inventory
consisting of yarn classified as work-in-process outstanding at any time shall
not exceed $1,000,000 at any time and (iii) the aggregate amount of the Loans
and the Letter of Credit Accommodations outstanding at any lime shall not exceed
the Maximum Credit. 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, the
sublimits for Letter of Credit Accommodations set forth in Section 2.2(e), the
Inventory Loan Limit or the Maximum Credit, as applicable, such event shall not
limit, waive or otherwise affect any rights of Agent or Lenders in that
circumstance or on any future occasions and Borrower shall, upon demand by
Agent, which may be made at any time or from time to time, immediately repay to
Agent the entire amount of any such excess(es) for which payment is demanded.
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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, Agent agrees, for the ratable risk of each Lender
according to its Pro Rata Share, to provide or arrange for Letter of Credit
Accommodations for the account of Borrower containing terms and conditions
acceptable to Agent and the issuer thereof. Any payments made by Agent to any
issuer thereof and/or related parties in connection with the Letter of Credit
Accommodations shall constitute additional Loans to Borrower pursuant to this
Section 2. All Letter of Credit Accommodations (as defined in the Existing Loan
Agreement) outstanding on the Agreement Date shall be deemed to be Letter of
Credit Accommodations hereunder.
(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 Agent, for the benefit of Lenders, 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 Agent may, and upon the written direction of Required Lenders shall,
require Borrower to pay to Agent for the ratable benefit of Lenders such letter
of credit fee, 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 Agent and Lenders have 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 Agent. 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) Borrower shall give Agent two (2) Business Days' prior written
notice of Borrower's request for the issuance of a Letter of Credit
Accommodation. Such notice shall be irrevocable and shall specify the original
face amount of the Letter of Credit Accommodation requested, the effective date
(which date shall be a Business Day) of issuance of such requested Letter of
Credit Accommodation, whether such Letter of Credit Accommodations may be drawn
in a single or in partial draws, the date on which such requested Letter of
Credit Accommodation is to expire (which date shall be a Business Day), the
purpose for which such Letter of Credit Accommodation is to be issued, and the
beneficiary of the requested Letter of Credit Accommodation. Borrower shall
attach to such notice the proposed form of the Letter of Credit Accommodation.
(d) In addition to being subject to the satisfaction of the applicable
conditions precedent contained in Section 4 hereof and the other terms and
conditions contained herein, no Letter of Credit Accommodations shall be
available unless each of the following conditions precedent have been satisfied
in a manner satisfactory to Agent: (i) Borrower shall have delivered to the
proposed issuer of such Letter of Credit Accommodation at such times and in such
manner as such proposed issuer may require, an application in form and substance
satisfactory to such proposed issuer and Agent for the issuance of the Letter of
Credit Accommodation and such other documents as may be required pursuant to the
terms thereof, and the form and terms of the proposed Letter of Credit
Accommodation shall be satisfactory to Agent and such proposed issuer, (ii) as
of the date of issuance, no order of any court, arbitrator or other Governmental
Authority shall purport by its terms to enjoin or restrain money center banks
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generally from issuing letters of credit of the type and in the amount of the
proposed Letter of Credit Accommodation, and no law, rule or regulation
applicable to money center banks generally and no request or directive (whether
or not having the force of law) from any Governmental Authority with
jurisdiction over money center banks generally shall prohibit, or request that
the proposed issuer of such Letter of Credit Accommodation refrain from, the
issuance of letters of credit generally or the issuance of such Letters of
Credit Accommodation; and (iii) the Excess Availability, prior to giving effect
to any Reserves with respect to such Letter of Credit Accommodations, on the
date of the proposed issuance of any Letter of Credit Accommodations shall be
equal to or greater than: (A) if the proposed Letter of Credit Accommodation is
for the purpose of purchasing Eligible Inventory, the sum of (1) forty-five
(45%) percent multiplied by the Value of such Eligible Inventory, plus (2)
freight, taxes, duty and other amounts which Agent estimates must be paid by
Borrower 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 (B) 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 Agent with
respect thereto. Effective on the issuance of each Letter of Credit
Accommodation, a Reserve shall be established in the applicable amount set forth
in Section 2.2(d)(iii)(A) or Section 2.2(d)(iii)(B).
(e) Except in Agent's discretion, with the consent of all Lenders, the
amount of all outstanding Letter of Credit Accommodations and all other
commitments and obligations made or incurred by Agent in connection therewith
shall not at any time exceed $10,000,000. At any time an Event of Default exists
or has occurred and is continuing, upon Agent'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 Agent for the Letter of Credit Accommodations.
(f) Borrower shall indemnify and hold Agent and Lenders harmless from
and against any and all losses, claims, damages, liabilities, costs and expenses
which Agent or any 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. 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 Agent and Lenders
harmless from and against any acts, waivers, errors, delays or omissions,
whether caused by Borrower, by any issuer or correspondent or otherwise with
respect to or relating to any Letter of Credit Accommodation, except for the
gross negligence or willful misconduct of Agent or any Lender as determined
pursuant to a final, non-appealable order of a court of competent jurisdiction.
The provisions of this Section 2.2(f) shall survive the payment of Obligations
and the termination or non-renewal of this Agreement.
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(g) In connection with Inventory purchased pursuant to Letter of Credit
Accommodations, Borrower will, at Agent's request, instruct all suppliers,
carriers, forwarders, Customs Brokers, warehouses or others receiving or holding
cash, checks, Inventory, documents or instruments in which Agent holds a
security interest to deliver them to Agent and/or subject to Agent's order, and
if they shall come into Borrower's possession, to deliver them, upon Agent's
request, to Agent in their original form. Borrower shall also, at Agent's
request, designate Agent as the consignee on all bills of lading and other
negotiable and non-negotiable documents.
(h) Borrower hereby irrevocably authorizes and directs any issuer of a
Letter of Credit Accommodation to name Borrower as the account party therein and
to deliver to Agent all instruments, documents and other writings and property
received by issuer pursuant to the Letter of Credit Accommodations and to accept
and rely upon Agent's instructions and agreements with respect to all matters
arising in connection with the Letter of Credit Accommodations or the
applications therefor. Nothing contained herein shall be deemed or construed to
grant Borrower any right or authority to pledge the credit of Agent or any
Lender in any manner. Agent and Lenders shall have no liability of any kind with
respect to any Letter of Credit Accommodation provided by an issuer other than
Agent or any Lender unless Agent 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 Agent, 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. Agent 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 or any letters of credit included in the Collateral.
Agent may take such actions either in its own name or in Borrower's name.
(i) 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 Agent for the ratable benefit of
Lenders. Any duties or obligations undertaken by Agent to any issuer or
correspondent in any application for any Letter of Credit Accommodation, or any
other agreement by Agent in favor of any issuer or correspondent to the extent
relating to any Letter of Credit Accommodation, shall be deemed to have been
undertaken by Borrower to Agent for the ratable benefit of Lenders and to apply
in all respects to Borrower.
(j) Immediately upon the issuance or amendment of any Letter of Credit
Accommodation, each Lender shall be deemed to have irrevocably and
unconditionally purchased and received, without recourse or warranty, an
undivided interest and participation to the extent of such Lender's Pro Rata
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Share of the liability with respect to such Letter of Credit Accommodation
(including, without limitation, all Obligations with respect thereto).
(k) Borrower is irrevocably and unconditionally obligated, without
presentment, demand or protest, to pay to Agent any amounts paid by an issuer of
a Letter of Credit Accommodation with respect to such Letter of Credit
Accommodation (whether through the borrowing of Loans in accordance with Section
2.2(a) or otherwise). In the event that Borrower fails to pay Agent on the date
of any payment under a Letter of Credit Accommodation in an amount equal to the
amount of such payment, Agent (to the extent it has actual notice thereof) shall
promptly notify each Lender of the unreimbursed amount of such payment and each
Lender agrees, upon one (1) Business Day's notice, to fund to Agent the purchase
of its participation in such Letter of Credit Accommodation in an amount equal
to its Pro Rata Share of the unpaid amount. The obligation of each Lender to
deliver to Agent an amount equal to its respective participation pursuant to the
foregoing sentence is absolute and unconditional and such remittance shall be
made notwithstanding the occurrence or continuance of any Event of Default, the
failure to satisfy any other condition set forth in Section 4 or any other event
or circumstance. If such amount is not made available by a Lender when due,
Agent shall be entitled to recover such amount on demand from such Lender with
interest thereon, for each day from the date such amount was due until the date
such amount is paid to Agent at the interest rate then payable by Borrower in
respect of Loans that are Prime Rate Loans as set forth in Section 3.1(a)
hereof.
2.3 [Intentionally Omitted.]
2.4 Commitments. The aggregate amount of each Lender's Pro Rata Share
of the Loans and Letter of Credit Accommodations shall not exceed the amount of
such Lender's Commitment, as the same may from time to time be amended in
accordance with the provisions hereof
SECTION 3. INTEREST AND FEES
3.1 Interest.
(a) Borrower shall pay to Agent, for the benefit of Lenders, interest
on the outstanding principal amount of the Loans at the Interest Rate. All
interest accruing hereunder on and after the date of any Event of Default or
termination or non-renewal hereof or on the principal amount of 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 with or without Agent's
knowledge or consent and whether made before or after an Event of Default) shall
be payable ON DEMAND.
(b) Borrower may from time to time request Eurodollar Rate Loans or
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 Eurodollar Rate Loan or the amount
of the Prime Rate Loans to be converted to Eurodollar Rate Loans or the amount
of the Eurodollar Rate Loan to be continued (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, two (2) Business Days
after receipt by Agent 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 act,
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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
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 Agent and specified by Agent to Borrower from time to time
for requests by Borrower for Eurodollar Rate Loans, (iv) no more than four (4)
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 $3,000,000 or an
integral multiple of $1,000,000 in excess thereof, and (vi) Agent and each
Lender shall have determined that the Interest Period or Adjusted Eurodollar
Rate is available to Agent and such Lender and can be readily determined as of
the date of the request for such Eurodollar Rate Loan by Borrower. Any request
by Borrower for a Eurodollar Rate Loan or 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, Agent
and Lenders 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 Agent and Lenders 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 Agent has
received and approved a request to continue such Eurodollar Rate Loan at least
two (2) Business Days prior to such last day in accordance with the terms
hereof. Any Eurodollar Rate Loans shall, at Agent's option, upon notice by Agent
to convert to Prime Rate Loans in the event that this Agreement shall terminate
or not be renewed. Borrower shall pay to Agent, for the benefit of Lenders, upon
demand by Agent (or Agent may, at its option, charge any loan account of
Borrower) any amounts required to compensate any Lender or participant with
Lender 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 Agent, for the account of
Lenders, 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. Borrower acknowledges and understands that the calculation
of interest on the basis of the actual days elapsed over the period of a three
hundred sixty (360) day year as opposed to a year of three hundred sixty-five
(365) or three hundred sixty-six (366) days results in a higher effective rate
of interest. 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.
3.2 Fees. Borrower agrees to pay to Agent the following non-refundable
fees as follows:
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(a) the fees set forth in that certain fee letter agreement dated as of
the date hereof between Borrower and Agent; and
(b) on the first day of each month in arrears for the benefit of
Lenders, an unused line fee at a rate equal to one quarter of one percent
(0.250%) per annum calculated upon the amount by which $30,000,000 exceeds the
average daily principal balance of the outstanding Loans and Letter of Credit
Accommodations during the immediately preceding month (or part thereof) (the
"Average Daily Balance") 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 and shall be fully earned when due;
provided, however, that from and after the date that (i) the difference of (A)
the Average Daily Balance minus (B) the amount of availability generated by
clause (a)(iii) of the Borrowing Base, exceeds (ii) $30,000,000, such fee shall
be calculated upon the amount by which the Maximum Credit exceeds the Average
Daily Balance.
3.3 Changes in Laws and Increased Costs of Loans.
(a) Notwithstanding anything to the contrary contained herein, all
Eurodollar Rate Loans shall, upon notice by Agent 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 any Lender, Reference Bank or any participant with any Lender 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 any Lender, Reference Bank or any participant of making or maintaining any
Eurodollar Rate Loans by an amount deemed by Agent to be material, or (C) reduce
the amounts received or receivable by any Lender in respect thereof by an amount
deemed by Agent to be material or (ii) the cost to any Lender, Reference Bank or
any participant of making or maintaining any Eurodollar Rate Loans shall
otherwise increase by an amount deemed by Agent to be material. Borrower shall
pay to such Lender or the Reference Bank, upon demand by such Lender any amounts
required to compensate such Lender, the Reference Bank or any participant with
such Lender for any loss (including loss of anticipated profits), 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 such
Lender setting forth the basis for the determination of such amount necessary to
compensate such 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 Agent 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 Agent upon demand by Agent (or Agent may, at its option, charge any loan
account of Borrower) any amounts required to compensate any Lender, the
Reference Bank or any participant with any 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
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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.
3.4 Maximum Interest.
(a) Notwithstanding anything to the contrary contained in this
Agreement or any of the other Financing Agreements, in no event whatsoever shall
the aggregate of all amounts that are contracted for, charged or received by
Lenders pursuant to the terms of this Agreement or any of the other Financing
Agreements and that are deemed interest under applicable law exceed the Maximum
Interest Rate (including, to the extent applicable, the provisions of Section
5197 of the Revised Statutes of the United States of America as amended, 12
U.S.C. Section 85, as amended). No agreements, conditions, provisions or
stipulations contained in this Agreement or any of the other Financing
Agreements, or any Event of Default, or the exercise by Lenders of the right to
accelerate the payment or the maturity of all or any portion of the Obligations,
or the exercise of any option whatsoever contained in this Agreement or any of
the other Financing Agreements, or the prepayment by Borrower of any of the
Obligations, or the occurrence of any event or contingency whatsoever shall
entitle Agent or Lenders to contract for, charge or receive in any event,
interest or any charges, amounts, premiums or fees deemed interest by applicable
law in excess of the Maximum Interest Rate. In no event shall Borrower be
obligated to pay interest or such amounts as may be deemed interest under
applicable law in amounts which exceed the Maximum Interest Rate. All
agreements, conditions or stipulations, if any, which may in any event or
contingency whatsoever operate to bind, obligate or compel Borrower to pay
interest or such amounts which are deemed to constitute interest in amounts
which exceed the Maximum Interest Rate shall be without binding force or effect,
at law or in equity, to the extent of the excess of interest or such amounts
which are deemed to constitute interest over such Maximum Interest Rate.
(b) In the event any Interest is charged or received in excess of the
Maximum Interest Rate ("Excess"), Borrower acknowledges and stipulates that any
such charge or receipt shall be the result of an accident and bona fide error,
and that any Excess received by Agent and Lenders shall be applied first, to the
payment of the then outstanding and unpaid principal hereunder; second to the
payment of the other Obligations then outstanding and unpaid; and third,
returned to Borrower, it being the intent of the parties hereto not to enter
into a usurious or otherwise illegal relationship. The right to accelerate the
maturity of any of the Obligations does not include the right to accelerate any
interest that has not otherwise accrued on the date of such acceleration, and
Agent and Lenders does not intend to collect any unearned interest in the event
of any such acceleration. Borrower recognizes that, with fluctuations in the
rates of interest set forth in Section 3.1 of this Agreement and the Maximum
Interest Rate, such an unintentional result could inadvertently occur. All
monies paid to Agent or Lenders hereunder or under any of the other Financing
Agreements, whether at maturity or by prepayment, shall be subject to any rebate
of unearned interest as and to the extent required by applicable law.
(c) By the execution of this Agreement, Borrower agrees that (A) the
credit or return of any Excess shall constitute the acceptance by Borrower of
such Excess, and (B) Borrower shall not seek or pursue any other remedy, legal
or equitable, against Agent and Lenders, based in whole or in part upon
contracting for, charging or receiving any interest or such amounts which are
deemed to constitute interest in excess of the Maximum Interest Rate. For the
purpose of determining whether or not any Excess has been contracted for,
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charged or received by Agent and Lenders, all interest at any time contracted
for, charged or received from Borrower in connection with this Agreement or any
of the other Financing Agreements shall, to the extent permitted by applicable
law, be amortized, prorated, allocated and spread during the entire term of this
Agreement in accordance with the amounts outstanding from time to time hereunder
and the Maximum Interest Rate from time to time in effect in order to lawfully
charge the maximum amount of interest permitted under applicable laws.
(d) Borrower, Agent and Lenders shall, to the maximum extent permitted
under applicable law, (i) characterize any non-principal payment as an expense,
fee or premium rather than as interest and (ii) exclude voluntary prepayments
and the effects thereof.
(e) The provisions of this Section 3.4 shall be deemed to be
incorporated into each of the other Financing Agreements (whether or not any
provision of this Section is referred to therein). Each of the Financing
Agreements and communications relating to any interest owed by Borrower and all
figures set forth therein shall, for the sole purpose of computing the extent of
the Obligations, be automatically recomputed by Borrower, and by any court
considering the same, to give effect to the adjustments or credits required by
this Section.
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 Agent and
Lenders making the initial Loans and providing the initial Letter of Credit
Accommodations hereunder:
(a) all requisite corporate action and proceedings in connection with
the transactions contemplated by this Agreement and the other Financing
Agreements shall be satisfactory in form and substance to Agent, and Agent shall
have received all information and copies of all documents, including records of
requisite corporate action and proceedings which Agent may have requested in
connection therewith, such documents where requested by Agent or its counsel to
be certified by appropriate corporate officers or Governmental Authorities;
(b) no material adverse change shall have occurred in the assets,
business or financial condition of Borrower and its Subsidiaries, taken as a
whole, since the date of Agent'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 Agent to enforce the Obligations or realize upon
the Collateral;
(c) Agent shall have completed a field review of the Records and such
other information with respect to the Collateral as Agent may require to
determine the amount of 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 Agent, together with such supporting documentation as may
be necessary or appropriate, and other documents and information that will
enable Agent to accurately identify and verify the Collateral), the results of
which in each case shall be satisfactory to Agent, not more than three (3)
Business Days prior to the date hereof;
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(d) Agent shall have received, in form and substance satisfactory to
Agent, all consents, waivers, acknowledgments and other agreements from third
persons which Agent 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;
(e) The Subsidiary Loan Agreement and the Financing Agreements (as
defined therein) shall have been duly executed and delivered by MJS and the
other parties thereto;
(f) the Excess Availability as determined by Agent, as of the date
hereof, shall be not less than $5,000,000 after giving effect to the Purchase
Agreements and the transactions contemplated thereunder;
(g) Agent shall have received, in form and substance satisfactory to
Agent, Deposit Account Control Agreements by and among Agent, Borrower and each
bank where Borrower has a deposit account, in each case, duly authorized,
executed and delivered by such bank and Borrower (or Agent shall be the bank's
customer with respect to such deposit account as Agent may specify);
(h) Agent shall have received and reviewed UCC search results for all
jurisdictions in the United States and Canada which assets of Borrower and
Guarantors are located, which search results shall be in form and substance
satisfactory to Agent;
(i) Agent shall have received, in form and substance satisfactory to
Agent, the Subordination Agreement and the Intercreditor Agreement duly executed
and delivered by the parties thereto;
(j) Agent shall have received, in form and substance satisfactory to
Agent, a Uniform Commercial Code filing authorization letter, duly executed and
delivered by Borrower and the domestic Subsidiaries of Borrower, together with
appropriate financing statements on Form UCC-1 or Form UCC-3, as applicable,
duly filed in such office or offices as may be necessary or, in the opinion of
Agent, desirable to perfect Agent's liens in and to the collateral of such
domestic Subsidiaries of Borrower, and Agent shall have received confirmation of
the filing of all such financing statements;
(k) Agent shall have received, in form and substance satisfactory to
Agent, Appraisals of the Equipment of Borrower located in Fayette County,
Alabama;
(l) Agent shall have received, in form and substance satisfactory to
Agent, such opinion letters of counsel to Borrower and Guarantors with respect
to this Agreement, the other Financing Agreements and the security interests and
liens of Agent and Lenders with respect to the Collateral and such other matters
as Agent may request;
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(m) Agent shall have received, in form and substance satisfactory to
Agent, evidence that all conditions precedent to the Subsidiary Loan Agreement
shall have been satisfied;
(n) Agent shall have received, in form and substance satisfactory to
Agent, evidence that Agent has a valid perfected first priority security
interest in all of the Collateral (including, without limitation, all assets of
MJS and SAIM upon consummation of the Merger (as defined in the Subsidiary Loan
Agreement) but subject to the prior lien of the Subsidiary Agent), other than
liens permitted under the Subsidiary Loan Agreement or this Agreement;
(o) Agent shall have received evidence of insurance and loss payee
endorsements required hereunder and under the other Financing Agreements, in
form and substance satisfactory to Agent, and certificates of insurance policies
and/or endorsements naming Agent as loss payee; and
(p) the other Financing Agreements and all instruments and documents
hereunder and thereunder shall have been duly executed and delivered to Agent,
in form and substance satisfactory to Agent.
4.2 Conditions Precedent to All Loans and Letter of Credit
Accommodations. Each of the following is an additional condition precedent to
Agent and Lenders 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, 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 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) purports to enjoin, prohibit, restrain or
otherwise affect (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 and its Subsidiaries, taken as whole, or would
impair the ability of Borrower to perform its obligations hereunder or under any
of the other Financing Agreements or of Agent to enforce any Obligations or
realize upon any of the Collateral; and
(c) no Default or 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.
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4.3 Conditions Subsequent to to Initial Loans and Letter of Credit
Accommodations. The obligation of Agent and Lenders to continue to make Loans
and/or provide Letter of Credit Accommodations to Borrower is subject to the
fulfillment, on or before the date applicable thereto, of each of the conditions
subsequent set forth below (the failure by Borrower to so perform or cause to be
performed constituting an Event of Default):
(a) within 14 days of the Agreement Date (or such longer period as
Agent approves in writing), Borrower shall deliver to Agent, in form and
substance satisfactory to Agent, (i) a valid and effective mortgagee's title
insurance policy issued by a company and agent acceptable to Agent with respect
to the Mortgage covering Real Property located in Fayette, Alabama (the "Alabama
Mortgage") (A) insuring the priority, amount and sufficiency of the Alabama
Mortgage, (B) insuring against matters that would be disclosed by surveys and
(C) containing any endorsements, assurances or affirmative coverage requested by
Agent for protection of its interests and (ii) an opinion of local counsel with
respect to the enforceability of the Alabama Mortgage and otherwise acceptable
to Agent;
(b) within 45 days of the Agreement Date (or such longer period as
Agent approves in writing), Borrower shall deliver to Agent a survey with
respect to the Real Property subject to the Alabama Mortgage, and such survey
shall be satisfactory in form and substance to Agent;
(c) within 30 days of the Agreement Date (or such longer period as
Agent approves in writing), Borrower shall deliver to Agent, in form and
substance satisfactory to Agent, (i) valid and effective "date-down
certificates" for each mortgagee's title insurance policy previously delivered
in favor of Agent in connection with the Mortgages delivered under with the
Existing Loan Agreement, as amended or restated as of the date hereof, and (ii)
such other agreements, opinions of counsel, documents and instruments as Agent
may reasonably require in connection therewith; and
(d) within 60 days of the Agreement Date (or such longer period as
Agent approves in writing), Borrower shall deliver to Agent certificates (and
related powers) evidencing 65% of the Capital Stock of each Honduras Subsidiary
and the Mexican Subsidiary owned by Borrower.
SECTION 5. GRANT OF SECURITY INTEREST
5.1 Grant of Security Interest. To secure payment and performance of
all Obligations, Borrower hereby grants to Agent, a continuing security interest
in, a lien upon, and a right of set off against, and hereby assigns to Agent,
for itself and the ratable benefit of Lenders, as security, all personal and
real property and fixtures and interests in property and fixtures of Borrower,
whether now owned or hereafter acquired or existing, and wherever located
(together with all other collateral security for the Obligations at any time
granted to or held or acquired by Agent or any Lender, collectively, the
"Collateral") including:
(a) all Accounts;
(b) all general intangibles, including, without limitation, all
Intellectual Property;
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(c) all goods, including, without limitation, Inventory and Equipment;
(d) all Real Property and fixtures;
(e) all chattel paper including, without limitation, all tangible and
electronic chattel paper;
(f) all instruments including, without limitation, all promissory
notes;
(g) all documents;
(h) all deposit accounts;
(i) all letters of credit, banker's acceptances and similar instruments
and including all letter-of-credit rights;
(j) all supporting obligations and all present and future liens,
security interests, rights, remedies, title and interest in, to and in respect
of Receivables and other Collateral, including (i) rights and remedies under or
relating to guaranties, contracts of suretyship, letters of credit and credit
and other insurance related to the Collateral, (ii) rights of stoppage in
transit, replevin, repossession, reclamation and other rights and remedies of an
unpaid vendor, lienor or secured party, (iii) goods described in invoices,
documents, contracts or instruments with respect to, or otherwise representing
or evidencing, Receivables or other Collateral, including returned, repossessed
and reclaimed goods, and (iv) deposits by and property of account debtors or
other persons securing the obligations of account debtors;
(k) all (i) investment property (including securities, whether
certificated or uncertificated, securities accounts, security entitlements,
commodity contracts or commodity accounts) and (ii) monies, credit balances,
deposits and other property of Borrower now or hereafter held or received by or
in transit to Agent, any 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;
(l) all commercial tort claims, including, without limitation, those
identified in the Information Certificate;
(m) to the extent not otherwise described above, all Receivables;
(n) all Records; and
(o) 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 or other involuntary conversion of any kind or nature of any or
all of the other Collateral.
Subject to the restrictions on the incurrence of purchase money
Indebtedness in Section 9.9(b) hereof but notwithstanding anything to the
contrary contained in clause (c) above, the types or items of Collateral
described in such clause shall not include any Equipment purchased with the
proceeds of such purchase money Indebtedness which is, or at the time of
Borrower's acquisition thereof shall be, subject to a purchase money lien or
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security interest (including capitalized or finance leases) permitted under
Section 9.8 hereof if: (a) the valid grant of a security interest or lien to
Agent, for itself and the ratable benefit of Lenders, in such item of Equipment
is prohibited by the terms of the agreement between Borrower and the holder of
such purchase money lien or security interest and the consent of such holder to
Agent's lien has not been or is not waived, or the consent of such holder has
not been or is not otherwise obtained, or under applicable law such prohibition
cannot be waived and (b) the purchase money lien on such item of Equipment is or
shall become and remain valid and perfected.
5.2 Perfection of Security Interests.
(a) Borrower irrevocably and unconditionally authorizes Agent (or its
agent) to file at any time and from time to time such financing statements with
respect to the Collateral naming Agent or its designee as the secured party and
Borrower as debtor, as Agent may require, and including any other information
with respect to Borrower or otherwise required by part 5 of Article 9 of the
Uniform Commercial Code of such jurisdiction as Agent may determine, together
with any amendment and continuations with respect thereto, which authorization
shall apply to all financing statements filed on, prior to or after the date
hereof. Borrower hereby ratifies and approves all financing statements naming
Agent or its designee as secured party and Borrower as debtor with respect to
the Collateral (and any amendments with respect to such financing statements)
filed by or on behalf of Agent prior to the date hereof and ratifies and
confirms the authorization of Agent to file such financing statements (and
amendments, if any). Borrower hereby authorizes Agent to adopt on behalf of
Borrower any symbol required for authenticating any electronic filing. In the
event that the description of the collateral in any financing statement naming
Agent or its designee as the secured party and Borrower as debtor includes
assets and properties of Borrower that do not at any time constitute Collateral,
whether hereunder, under any of the other Financing Agreements or otherwise, the
filing of such financing statement shall nonetheless be deemed authorized by
Borrower to the extent of the Collateral included in such description and it
shall not render the financing statement ineffective as to any of the Collateral
or otherwise affect the financing statement as it applies to any of the
Collateral. In no event shall Borrower at any time file, or permit or cause to
be filed, any correction statement or termination statement with respect to any
financing statement (or amendment or continuation with respect thereto) naming
Agent or its designee as secured party and Borrower as debtor.
(b) Borrower does not have any chattel paper (whether tangible or
electronic) or instruments as of the date hereof, except as set forth in the
Information Certificate. In the event that Borrower shall be entitled to or
shall receive any chattel paper or instrument after the date hereof, Borrower
shall promptly notify Agent thereof in writing. Promptly upon the receipt
thereof by or on behalf of Borrower (including by any agent or representative),
Borrower shall deliver, or cause to be delivered to Agent, all tangible chattel
paper and instruments that Borrower has or may at any time acquire, accompanied
by such instruments of transfer or assignment duly executed in blank as Agent
may from time to time specify, in each case except as Agent may otherwise agree.
At Agent's option, Borrower shall, or Agent may at any time on behalf of
Borrower, cause the original of any such instrument or chattel paper to be
conspicuously marked in a form and manner acceptable to Agent with the following
legend referring to chattel paper or instruments as applicable: "This [chattel
paper][instrument] is subject to the security interest of Congress Financial
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Corporation (Southern), as Agent and any sale, transfer, assignment or
encumbrance of this [chattel paper][instrument] violates the rights of such
secured party."
(c) In the event that Borrower shall at any time hold or acquire an
interest in any electronic chattel paper or any "transferable record" (as such
term is defined in Section 201 of the Federal Electronic Signatures in Global
and National Commerce Act or in Section 16 of the Uniform Electronic
Transactions Act as in effect in any relevant jurisdiction) Borrower shall
promptly notify Agent thereof in writing. Promptly upon Agent's request,
Borrower shall take, or cause to be taken, such actions as Agent may request to
give Agent control of such electronic chattel paper under Section 9-105 of the
UCC and control of such transferable record under Section 201 of the Federal
Electronic Signatures in Global and National Commerce Act or, as the case may
be, Section 16 of the Uniform Electronic Transactions Act, as in effect in such
jurisdiction.
(d) Borrower does not have any deposit accounts as of the date hereof,
except as set forth in the Information Certificate. Borrower shall not, directly
or indirectly, after the date hereof open, establish or maintain any deposit
account unless each of the following conditions is satisfied: (i) Agent shall
have received not less than five (5) Business Days prior written notice of the
intention of Borrower to open or establish such account which notice shall
specify in reasonable detail and specificity acceptable to Agent the name of the
account, the owner of the account, the name and address of the bank at which
such account is to be opened or established, the individual at such bank with
whom Borrower is dealing and the purpose of the account, (ii) the bank where
such account is opened or maintained shall be acceptable to Agent, and (iii) on
or before the opening of such deposit account, Borrower shall as Agent may
specify either (A) deliver to Agent a Deposit Account Control Agreement with
respect to such deposit account duly authorized, executed and delivered by
Borrower and the bank at which such deposit account is opened and maintained or
(B) arrange for Agent to become the customer of the bank with respect to the
deposit account on terms and conditions acceptable to Agent. The terms of this
subsection (d) shall not apply to deposit accounts specifically and exclusively
used for payroll, payroll taxes and other employee wage and benefit payments to
or for the benefit of Borrower's salaried employees.
(e) Borrower does not own or hold, directly or indirectly, beneficially
or as record owner or both, any investment property, as of the date hereof, or
have any investment account, securities account, commodity account or other
similar account with any bank or other financial institution or other securities
intermediary or commodity intermediary as of the date hereof, in each case
except as set forth in the Information Certificate.
(f) In the event that Borrower shall be entitled to or shall at any
time after the date hereof hold or acquire any certificated securities, Borrower
shall promptly endorse, assign and deliver the same to Agent, accompanied by
such instruments of transfer or assignment duly executed in blank as Agent may
from time to time specify. If any securities, now or hereafter acquired by
Borrower are uncertificated and are issued to Borrower its nominee directly by
the issuer thereof, Borrower shall immediately notify Agent thereof and shall as
Agent may specify, either (A) cause the issuer to agree to comply with
instructions from Agent as to such securities, without further consent of
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Borrower or such nominee, or (B) arrange for Agent to become the registered
owner of the securities.
(g) Borrower shall not, directly or indirectly, after the date hereof
open, establish or maintain any investment account, securities account,
commodity account or any other similar account (other than a deposit account)
with any securities intermediary or commodity intermediary unless each of the
following conditions is satisfied: (A) Agent shall have received not less than
five (5) Business Days prior written notice of the intention of Borrower to open
or establish such account which notice shall specify in reasonable detail and
specificity reasonably acceptable to Agent the name of the account, the owner of
the account, the name and address of the securities intermediary or commodity
intermediary at which such account is to be opened or established, the
individual at such intermediary with whom Borrower is dealing and the purpose of
the account, (B) the securities intermediary or commodity intermediary (as the
case may be) where such account is opened or maintained shall be acceptable to
Agent, and (C) on or before the opening of such investment account, securities
account or other similar account with a securities intermediary or commodity
intermediary, Borrower shall as Agent may specify either (1) execute and
deliver, and cause to be executed and delivered to Agent, an Investment Property
Control Agreement with respect thereto duly authorized, executed and delivered
by Borrower and such securities intermediary or commodity intermediary or (2)
arrange for Agent to become the entitlement holder with respect to such
investment property on terms and conditions acceptable to Agent.
(h) Borrower is not the beneficiary or otherwise entitled to any right
to payment under any letter of credit, banker's acceptance or similar instrument
as of the date hereof, except as set forth in the Information Certificate. In
the event that Borrower shall be entitled to or shall receive any right to
payment under any letter of credit, banker's acceptance or any similar
instrument, whether as beneficiary thereof or otherwise after the date hereof,
Borrower shall promptly notify Agent thereof in writing. Borrower shall
immediately, as Agent may specify, either (i) deliver, or cause to be delivered
to Agent, with respect to any such letter of credit, banker's acceptance or
similar instrument, the written agreement of the issuer and any other nominated
person obligated to make any payment in respect thereof (including any
confirming or negotiating bank), in form and substance satisfactory to Agent,
consenting to the assignment of the proceeds of the letter of credit to Agent by
Borrower and agreeing to make all payments thereon directly to Agent or as Agent
may otherwise direct or (ii) cause Agent to become, at Borrower's expense, the
transferee beneficiary of the letter of credit, banker's acceptance or similar
instrument (as the case may be).
(i) Borrower has no commercial tort claims as of the date hereof,
except as set forth in the Information Certificate. In the event that Borrower
shall at any time after the date hereof have any commercial tort claims,
Borrower shall promptly notify Agent thereof in writing, which notice shall (i)
set forth in reasonable detail the basis for and nature of such commercial tort
claim and (ii) include the express grant by Borrower to Agent of a security
interest in such commercial tort claim (and the proceeds thereof). In the event
that such notice does not include such grant of a security interest, the sending
thereof by Borrower to Agent shall be deemed to constitute such grant to Agent.
Upon the sending of such notice, any commercial tort claim described therein
shall constitute part of the Collateral and shall be deemed included therein.
Without limiting the authorization of Agent provided in Section 5.2(a) hereof or
otherwise arising by the execution by Borrower of this Agreement or any of the
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other Financing Agreements, Agent is hereby irrevocably authorized from time to
time and at any time to file such financing statements naming Agent or its
designee as secured party and Borrower as debtor, or any amendments to any
financing statements, covering any such commercial tort claim as Collateral. In
addition, Borrower shall promptly upon Agent's request, execute and deliver, or
cause to be executed and delivered, to Agent such other agreements, documents
and instruments as Agent may require in connection with such commercial tort
claim.
(j) Borrower does not have any goods, documents of title or other
Collateral in the custody, control or possession of a third party as of the date
hereof, except as set forth in the Information Certificate and except for goods
located in the United States in transit to a location of Borrower permitted
herein in the ordinary course of business of Borrower in the possession of the
carrier transporting such goods. In the event that any goods, documents of title
or other Collateral are at any time after the date hereof in the custody,
control or possession of any other person not referred to in the Information
Certificate or such carriers, Borrower shall promptly notify Agent thereof in
writing. Promptly upon Agent's request, Borrower shall deliver to Agent a
Collateral Access Agreement duly authorized, executed and delivered by such
person and Borrower.
(k) Borrower shall take any other actions reasonably requested by Agent
from time to time to cause the attachment, perfection and first priority of, and
the ability of Agent to enforce, the security interest of Agent in any and all
of the Collateral, including, without limitation, (i) executing, delivering and,
where appropriate, filing financing statements and amendments relating thereto
under the UCC or other applicable law, to the extent, if any, that Borrower's
signature thereon is required therefor, (ii) causing Agent's name to be noted as
secured party on any certificate of title for a titled good if such notation is
a condition to attachment, perfection or priority of, or ability of Agent to
enforce, the security interest of Agent in such Collateral, (iii) complying with
any provision of any statute, regulation or treaty of the United States as to
any Collateral if compliance with such provision is a condition to attachment,
perfection or priority of, or ability of Agent to enforce, the security interest
of Agent in such Collateral, (iv) obtaining the consents and approvals of any
Governmental Authority or third party, including, without limitation, any
consent of any licensor, lessor or other person obligated on Collateral, and
taking all actions required by any earlier versions of the UCC or by other law,
as applicable in any relevant jurisdiction.
SECTION 6. COLLECTION AND ADMINISTRATION
6.1 Borrower's Loan Account. Agent 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 Agent's customary practices as in effect from time to time.
6.2 Statements. Agent shall render to Borrower each month a statement
setting forth the balance in Borrower's loan account(s) maintained by Agent for
Borrower pursuant to the provisions of this Agreement, including principal,
interest, fees, costs and expenses. Each such statement shall be subject to
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subsequent adjustment by Agent 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 Agent receives a
written notice from Borrower of any specific exceptions of Borrower thereto
within thirty (30) days after the date such statement has been mailed by Agent.
Until such time as Agent 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 Agent and Lenders 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 Agent may specify, with such banks as are acceptable to Agent
into which Borrower shall promptly deposit and direct its account debtors to
directly remit all payments on Receivables 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 satisfactory to Agent, providing that all items received or deposited
in the Blocked Accounts are the property of Agent, 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 Agent as Agent may from time to time
designate for such purpose ("Agent Payment Account"). Agent shall instruct the
depository banks at which the Blocked Accounts are maintained to transfer the
funds on deposit in the Blocked Accounts to such operating bank account of
Borrower as Borrower may specify in writing to Agent until such time as Agent
shall notify the depository bank otherwise. Agent may notify the depository
banks at which the Blocked Accounts are maintained that the Blocked Account
Agreements are effective and may instruct such banks to transfer all funds
received or deposited into the Blocked Accounts to the Agent Payment Account at
any time that either: (i) 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, or (ii) Monthly Average Excess Availability shall
at any time be less than $7,500,000. Borrower agrees that all payments made to
such Blocked Accounts or other funds received and collected by Agent or any
Lender, whether in respect of the Receivables, as proceeds of Inventory or other
Collateral or otherwise shall be treated as payments to Agent and Lenders in
respect of the Obligations and therefore shall constitute the property of Agent
and Lenders to the extent of the then outstanding Obligations.
(b) Borrower and all of shareholders, directors, employees, agents,
Subsidiaries or other Affiliates shall, acting as trustee for Agent, receive, as
the property of Agent, 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 immediately 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 Agent. In no event
shall the same be commingled with Borrower's own funds. Borrower agrees to
reimburse Agent 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 Agent's
payments to or indemnification of such bank or person. The obligation of
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Borrower to reimburse Agent 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 Agent Payment
Account as provided in Section 6.3 or such other place as Agent may designate
from time to time. Agent shall 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) as follows: first, to pay any
fees, indemnities or expense reimbursements then due to Agent from Borrower;
second, to pay any fees, indemnities or expense reimbursements then due to
Lenders from Borrower; third, to pay interest due in respect of any Loans (and
including any Special Agent Advances); fourth, to pay or prepay principal in
respect of Special Agent Advances; fifth, to pay principal due in respect of the
Loans; sixth, to pay or prepay any other Obligations whether or not then due, in
such order and manner as Agent determines. Notwithstanding anything to the
contrary contained in this Agreement, unless so directed by Borrower, or unless
an Event of Default shall exist or have occurred and be continuing. Agent shall
not apply any payments which it receives to any Eurodollar Rate Loans, except
(a) on the expiration date of the Interest Period applicable to any such
Eurodollar Rate Loans, or (b) in the event that there are no outstanding Prime
Rate Loans. At Agent'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 Agent and Lenders 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. If after receipt of any
payment of, or proceeds of Collateral applied to the payment of, any of the
Obligations, Agent or any 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 Agent or such Lender. Borrower shall be liable to pay
to Agent, and does hereby indemnify and hold Agent and Lenders 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
Agent or any 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. Agent 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 Agent, 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 advance
is to be made or Letter of Credit Accommodations established (which day shall be
a Business Day) and the amount of the requested Loan. Requests received after
11:00 a.m. (Atlanta, Georgia) 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
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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. All Loans made or Letter of Credit Accommodations
provided by Agent or Lenders to Borrower pursuant to the provisions hereof shall
be used by Borrower only for (a) payments to each of the persons listed in the
disbursement direction letter furnished by Borrower to Agent on or about the
date hereof; (b) costs, expenses and fees in connection with the preparation,
negotiation, execution and delivery of this Agreement and the other Financing
Agreements; and (c) general operating, working capital and other proper
corporate purposes of Borrower not otherwise prohibited by the terms hereof;
provided, however, that (a) up to $21,000,000 of the Loans may be used by
Borrower to make a capital contribution to MJS to be used by MJS to consummate
the Purchase Agreements and pay transaction expenses arising in connection
therewith and (b) the proceeds of the initial Loans hereunder shall be used, in
part, to repay in full all outstanding principal of and interest on the Term
Loan (as defined in the Existing Loan Agreement). 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.
6.7 Pro Rata Treatment. Except to the extent otherwise provided in this
Agreement: (a) the making and conversion of Loans shall be made among the
Lenders based on their respective Pro Rata Shares as to the Loans and (b) each
payment on account of any Obligations to or for the account of one or more of
Lenders in respect of any Obligations due on a particular day shall be allocated
among the Lenders entitled to such payments based on their respective Pro Rata
Shares and shall be distributed accordingly.
6.8 Sharing of Payments, Etc.
(a) Borrower agrees that, in addition to (and without limitation of)
any right of setoff, banker's lien or counterclaim Agent or any Lender may
otherwise have, each Lender shall be entitled, at its option (but subject, as
among Agent and Lenders, to the provisions of Section 12.3(b) hereof), to offset
balances held by it for the account of Borrower at any of its offices, in
dollars or in any other currency, against any principal of or interest on any
Loans owed to such Lender or any other amount payable to such Lender hereunder,
that is not paid when due (regardless of whether such balances are then due to
Borrower), in which case it shall promptly notify Borrower and Agent thereof;
provided, that, such Lender's failure to give such notice shall not affect the
validity thereof.
(b) If any Lender (including Agent) shall obtain from Borrower payment
of any principal of or interest on any Loan owing to it or payment of any other
amount under this Agreement or any of the other Financing Agreements through the
exercise of any right of setoff, banker's lien or counterclaim or similar right
or otherwise (other than from Agent as provided herein), and, as a result of
such payment, such Lender shall have received more than its Pro Rata Share of
the principal of the Loans or more than its share of such other amounts then due
hereunder or thereunder by Borrower to such Lender than the percentage thereof
received by any other Lender, it shall promptly pay to Agent, for the benefit of
Lenders, the amount of such excess and simultaneously purchase from such other
Lenders a participation in the Loans or such other amounts, respectively, owing
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to such other Lenders (or such interest due thereon, as the case may be) in such
amounts, and make such other adjustments from time to time as shall be
equitable, to the end that all Lenders shall share the benefit of such excess
payment (net of any expenses that may be incurred by such Lender in obtaining or
preserving such excess payment) in accordance with their respective Pro Rata
Shares or as otherwise agreed by Lenders. To such end all Lenders shall make
appropriate adjustments among themselves (by the resale of participation sold or
otherwise) if such payment is rescinded or must otherwise be restored.
(c) Borrower agrees that any Lender purchasing a participation (or
direct interest) as provided in this Section may exercise, in a manner
consistent with this Section, all rights of setoff, banker's lien, counterclaim
or similar rights with respect to such participation as fully as if such Lender
were a direct holder of Loans or other amounts (as the case may be) owing to
such Lender in the amount of such participation.
(d) Nothing contained herein shall require any Lender to exercise any
right of setoff, banker's lien, counterclaims or similar rights or shall affect
the right of any Lender to exercise, and retain the benefits of exercising, any
such right with respect to any other Indebtedness or obligation of Borrower. If,
under any applicable bankruptcy, insolvency or other similar law, any Lender
receives a secured claim in lieu of a setoff to which this Section applies, such
Lender shall, to the extent practicable, assign such rights to Agent for the
benefit of Lenders and, in any event, exercise its rights in respect of such
secured claim in a manner consistent with the rights of Lenders entitled under
this Section to share in the benefits of any recovery on such secured claim.
6.9 Settlement Procedures.
(a) In order to administer the Credit Facility in an efficient manner
and to minimize the transfer of funds between Agent and Lenders, Agent may, at
its option, subject to the terms of this Section, make available, on behalf of
Lenders, the full amount of the Loans requested or charged to Borrower's loan
account(s) or otherwise to be advanced by Lenders pursuant to the terms hereof,
without requirement of prior notice to Lenders of the proposed Loans.
(b) With respect to all Loans made by Agent on behalf of Lenders as
provided in this Section, the amount of each Lender's Pro Rata Share of the
outstanding Loans shall be computed weekly, and shall be adjusted upward or
downward on the basis of the amount of the outstanding Loans as of 5:00 p.m.
(Atlanta, Georgia time) on the Business Day immediately preceding the date of
each settlement computation; provided, that, Agent retains the absolute right at
any time or from time to time to make the above described adjustments at
intervals more frequent than weekly, but in no event more than twice in any
week. Agent shall deliver to each of the Lenders after the end of each week, or
at such lesser period or periods as Agent shall determine, a summary statement
of the amount of outstanding Loans for such period (such week or lesser period
or periods being hereinafter referred to as a "Settlement Period"). If the
summary statement is sent by Agent and received by a Lender prior to 12:00 p.m.
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(Atlanta, Georgia time), then such Lender shall make the settlement transfer
described in this Section by no later than 3:00 p.m. (Atlanta, Georgia time) on
the same Business Day and if received by a Lender after such time, then such
Lender shall make the settlement transfer by not later than 3:00 p.m. (Atlanta,
Georgia time) on the next Business Day following the date of receipt. If, as of
the end of any Settlement Period, the amount of a Lender's Pro Rata Share of the
outstanding Loans is more than such Lender's Pro Rata Share of the outstanding
Loans as of the end of the previous Settlement Period, then such Lender shall
forthwith (but in no event later than the time set forth in the preceding
sentence) transfer to Agent by wire transfer in immediately available funds the
amount of the increase. Alternatively, if the amount of a Lender's Pro Rata
Share of the outstanding Loans in any Settlement Period is less than the amount
of such Lender's Pro Rata Share of the outstanding Loans for the previous
Settlement Period, Agent shall forthwith transfer to such Lender by wire
transfer in immediately available funds the amount of the decrease. The
obligation of each of the Lenders to transfer such funds and effect such
settlement shall be irrevocable and unconditional and without recourse to or
warranty by Agent. Agent and each Lender agrees to ▇▇▇▇ its books and records at
the end of each Settlement Period to show at all times the dollar amount of its
Pro Rata Share of the outstanding Loans and Letter of Credit Accommodations.
Each Lender shall only be entitled to receive interest on its Pro Rata Share of
the Loans to the extent such Loans have been funded by such Lender. Because
Agent on behalf of Lenders may be advancing and/or may be repaid Loans prior to
the time when Lenders will actually advance and/or be repaid such Loans,
interest with respect to Loans shall be allocated by Agent in accordance with
the amount of Loans actually advanced by and repaid to each Lender and Agent and
shall accrue from and including the date such Loans are so advanced to but
excluding the date such Loans are either repaid by Borrower or actually settled
with the applicable Lender as described in this Section.
(c) To the extent that Agent has made any such amounts available and
the settlement described above shall not yet have occurred, upon repayment of
any Loans by Borrower, Agent may apply such amounts repaid directly to any
amounts made available by Agent pursuant to this Section. In lieu of weekly or
more frequent settlements, Agent may, at its option, at any time require each
Lender to provide Agent with immediately available funds representing its Pro
Rata Share of each Loan, prior to Agent's disbursement of such Loan to Borrower.
In such event, all Loans under this Agreement shall be made by the Lenders
simultaneously and proportionately to their Pro Rata Shares. No Lender shall be
responsible for any default by any other Lender in the other Lender's obligation
to make a Loan requested hereunder nor shall the Commitment of any Lender be
increased or decreased as a result of the default by any other Lender in the
other Lender's obligation to make a Loan hereunder.
(d) If Agent is funding a particular Loan to Borrower pursuant to this
Section above on any day, Agent may assume that each Lender will make available
to Agent such Lender's Pro Rata Share of the Loan requested or otherwise made on
such day and Agent may, in its discretion, but shall not be obligated to, cause
a corresponding amount to be made available to or for the benefit of Borrower on
such day. If Agent makes such corresponding amount available to Borrower and
such corresponding amount is not in fact made available to Agent by such Lender,
Agent shall be entitled to recover such corresponding amount on demand from such
Lender together with interest thereon for each day from the date such payment
was due until the date such amount is paid to Agent at the Federal Funds Rate
for each day during such period (as published by the Federal Reserve Bank of
Atlanta or at Agent's option based on the arithmetic mean determined by Agent of
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the rates for the last transaction in overnight Federal funds arranged prior to
9:00 a.m. (Atlanta, Georgia time) on that day by each of the three leading
brokers of Federal funds transactions in New York City selected by Agent) and if
such amounts are not paid within three (3) days of Agent's demand, at the
highest Interest Rate provided for in Section 3.1 hereof applicable to Prime
Rate Loans. During the period in which such Lender has not paid such
corresponding amount to Agent, notwithstanding anything to the contrary
contained in this Agreement or any of the other Financing Agreements, the amount
so advanced by Agent to or for the benefit of Borrower shall, for all purposes
hereof, be a Loan made by Agent for its own account. Upon any such failure by a
Lender to pay Agent, Agent shall promptly thereafter notify Borrower of such
failure and Borrower shall pay such corresponding amount to Agent for its own
account within five (5) Business Days of Borrower's receipt of such notice. A
Lender who fails to pay Agent its Pro Rata Share of any Loans made available by
Agent on such Lender's behalf, or any Lender who fails to pay any other amount
owing by it to Agent, is a "Defaulting Lender". Agent shall not be obligated to
transfer to a Defaulting Lender any payments received by Agent for the
Defaulting Lender's benefit, nor shall a Defaulting Lender be entitled to the
sharing of any payments hereunder (including any principal, interest or fees).
Amounts payable to a Defaulting Lender shall instead be paid to or retained by
Agent. Agent may hold and, in its discretion, re-lend to Borrower the amount of
all such payments received or retained by it for the account of such Defaulting
Lender. For purposes of voting or consenting to matters with respect to this
Agreement and the other Financing Agreements and determining Pro Rata Shares,
such Defaulting Lender shall be deemed not to be a "Lender" and such Lender's
Commitment shall be deemed to be zero (0). This Section shall remain effective
with respect to a Defaulting Lender until such default is cured. The operation
of this Section shall not be construed to increase or otherwise affect the
Commitment of any Lender, or relieve or excuse the performance by Borrower or
any Obligor of their duties and obligations hereunder.
(e) Nothing in this Section or elsewhere in this Agreement or the other
Financing Agreements shall be deemed to require Agent to advance funds on behalf
of any Lender or to relieve Lender from its obligation to fulfill its Commitment
hereunder or to prejudice any rights that Borrower may have against any Lender
as a result of any default by any Lender hereunder in fulfilling its Commitment.
6.10 Obligations Several; Independent Nature of Lenders' Rights. The
obligation of each Lender hereunder is several, and no Lender shall be
responsible for the obligation or commitment of any other Lender hereunder.
Nothing contained in this Agreement or any of the other Financing Agreements and
no action taken by the Lenders pursuant hereto or thereto shall be deemed to
constitute the Lenders to be a partnership, an association, a joint venture or
any other kind of entity. The amounts payable at any time hereunder to each
Lender shall be a separate and independent debt, and subject to Section 12.3
hereof, each Lender shall be entitled to protect and enforce its rights arising
out of this Agreement and it shall not be necessary for any other Lender to be
joined as an additional party in any proceeding for such purpose.
SECTION 7. COLLATERAL REPORTING AND COVENANTS
Borrower hereby covenants and agrees, on behalf of itself and its
Subsidiaries, as applicable below, as follows (provided, however, that so long
as the Subsidiary Loan Agreement has not been terminated and Congress is the
agent thereunder, the provisions of this Section shall not apply to MJS or its
Subsidiaries):
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7.1 Collateral Reporting.
(a) Borrower shall provide Agent with the following documents in a form
satisfactory to Agent:
(i) on a weekly basis or more frequently as required by
Lender, (A) a schedule of sales made, credits issued and cash received,
(B) agings of accounts payable (and including information indicating
the status of payments to owners and lessors of the leased premises of
Borrower) and (C) agings of accounts receivable (together with a
reconciliation to the previous month's aging and general ledger);
(ii) on a monthly basis or more frequently as Lender may
request, (A) perpetual inventory reports, (B) inventory reports by
location and category and (C) an inventory mix report;
(iii) upon Agent'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;
(iv) reports detailing any sales or transfers of Equipment or
Real Property during the prior month; and
(v) such other reports as to the Collateral as Agent shall
request from time to time.
(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 Agent and to
follow Agent'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 Agent promptly of: (i) any material delay in
Borrower's performance of any of its obligations to any account debtor involving
an Account exceeding $100,000 or the assertion of any claims, offsets, defenses
or counterclaims by any account debtor involving an amount exceeding $100,000,
or any disputes with account debtors, or any settlement, adjustment or
compromise thereof involving an amount exceeding $100,000, (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 would cause
Agent 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 Agent's consent,
except in the ordinary course of Borrower's business in accordance with
practices and policies previously disclosed in writing to Agent. 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
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is continuing, Agent 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 Agent, Borrower shall promptly report to Agent 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 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
Agent's request, (i) hold the returned Inventory in trust for Agent, (ii)
segregate all returned Inventory from all of its other property, (iii) dispose
of the returned Inventory solely according to Agent's instructions, and (iv) not
issue any credits, discounts or allowances with respect thereto without Agent's
prior written consent.
(c) With respect to each Account: (i) the amounts shown on any invoice
delivered to Agent or schedule thereof delivered to Agent shall be true and
complete, (ii) no payments shall be made thereon except payments immediately
delivered to Agent 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 Agent 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
practices and policies previously disclosed to Agent, (iv) there shall be no
setoffs, deductions, contras, defenses, counterclaims or disputes existing or
asserted with respect thereto except as reported to Agent 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) Agent shall have the right at any time or times, in Agent's name or
in the name of a nominee bf Agent, 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 Agent, 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 Agent may otherwise
agree.
(f) Agent 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 Agent and that Agent has a security interest
therein and Agent may direct any or all accounts debtors to make payment of
Accounts directly to Agent, (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 Agent shall not be
liable for its failure to collect or enforce the payment thereof nor for the
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negligence of its agents or attorneys with respect thereto and (iv) take
whatever other action Agent may deem necessary or desirable for the protection
of its interests. At any time that an Event of Default exists or has occurred
and is continuing, at Agent's request, all invoices and statements sent to any
account debtor shall state that the Accounts and such other obligations have
been assigned to Agent and are payable directly and only to Agent and Borrower
shall deliver to Agent such originals of documents evidencing the sale and
delivery of goods or the performance of services giving rise to any Accounts as
Agent may require.
7.3 Inventory Covenants. With respect to the Inventory: (a) Borrower
shall at all times maintain inventory records reasonably satisfactory to Agent,
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 Agent may request on or after an Event of Default, and promptly
following such physical inventory shall supply Agent with a report in the form
and with such specificity as may be reasonably satisfactory to Agent 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
Agent, 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 Agent's request, Borrower shall, at its
expense, once in any twelve (12) month period, but at any time or times as Agent
may request on or after an Event of Default, deliver or cause to be delivered to
Agent written reports or appraisals as to the Inventory in form, scope and
methodology acceptable to Agent and by an appraiser acceptable to Agent,
addressed to Agent and Lenders and upon which Agent and Lenders are 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 right of return given to customers of Borrower consistent with its
current policies 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 Agent, 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 Agent's request, Borrower shall, at its
expense, no more than one (1) time in any twelve (12) month period, but at any
time or times as Agent may request on or after an Event of Default, deliver or
cause to be delivered to Agent 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) Borrower shall use the Equipment and Real Property with all
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reasonable care and caution 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 except for the movement of motor vehicles used by or for
the benefit of Borrower in the ordinary course of business and Borrower shall
not remove any Equipment currently located in the United States to any location
outside of the United States except for the excess sewing equipment currently
located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇; (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 so as to become
a fixture or an accession to real property unless it is attached to the Real
Property subject to the Mortgage; and (g) Borrower assumes all responsibility
and liability arising from the use of the Equipment and Real Property.
7.5 Power of Attorney. Borrower hereby irrevocably designates and
appoints Agent (and all persons designated by Agent) as Borrower's true and
lawful attorney-in-fact, and authorizes Agent, in Borrower's or Agent's name,
to: (a) at any time a Default or an Event of Default exists or has occurred and
is continuing (i) demand payment on Receivables or other Collateral, (ii)
enforce payment of Receivables by legal proceedings or otherwise, (iii) exercise
all of Borrower's rights and remedies to collect any Receivable or other
Collateral, (iv) sell or assign any Receivable upon such terms, for such amount
and at such time or times as Agent deems advisable, (v) settle, adjust,
compromise, extend or renew an Account, (vi) discharge and release any
Receivable, (vii) prepare, file and sign Borrower's name on any proof of claim
in bankruptcy or other similar document against an account debtor or other
obligor in respect of any Receivables or other Collateral, (viii) notify the
post office authorities to change the address for delivery of remittances from
account debtors or other obligors in respect of Receivables or other proceeds of
Collateral to an address designated by Agent, and open and dispose of all mail
addressed to Borrower and handle and store all mail relating to the Collateral;
and (ix) do all acts and things which are necessary, in Agent'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 in respect of Receivables or constituting Collateral or otherwise
received in or for deposit in the Blocked Accounts or otherwise received by
Agent or any Lender, (ii) have access to any lockbox or postal box into which
remittances from account debtors or other obligors in respect of Receivables or
other proceeds of Collateral are sent or received, (iii) endorse Borrower's name
upon any items of payment in respect of Receivables or constituting Collateral
or otherwise received by Agent and any Lender and deposit the same in Agent'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 Receivable or any goods pertaining thereto or any
other Collateral, including any warehouse or other receipts, or bills of lading
and other negotiable or non-negotiable documents, (v) clear Inventory the
purchase of which was financed with Letter of Credit Accommodations through U.S.
Customs in Borrower's name, Agent's name or the name of Agent's designee, and to
sign and deliver to customs officials powers of attorney in Borrower's name for
such purpose, and to complete in Borrower's or Agent's name, any order, sale or
transaction, obtain the necessary documents in connection therewith and collect
the proceeds thereof, (vi) sign Borrower's name on any verification of
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Receivables and notices thereof to account debtors or other obligors in respect
thereof and (vii) execute in Borrower's name and file any UCC financing
statements or amendments thereto. Borrower hereby releases Agent and Lenders and
their respective 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 Agent's or any Lender's
own gross negligence or willful misconduct as determined pursuant to a final
non-appealable order of a court of competent jurisdiction.
7.6 Right to Cure. Agent 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 Agent to
collect, sell or otherwise dispose of the Collateral or the rights and remedies
of Agent therein or the ability of Borrower to perform its obligations hereunder
or 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 Agent's judgment, is necessary or appropriate to preserve, protect, insure or
maintain the Collateral and the rights of Agent and Lenders with respect
thereto. Agent may add any amounts so expended to the Obligations and charge
Borrower's account therefor, such amounts to be repayable by Borrower on demand.
Agent and Lenders 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 Agent or any
Lender under this Section shall be without prejudice to any right to assert an
Event of Default hereunder and to proceed accordingly.
7.7 Access to Premises. From time to time as requested by Agent, at the
cost and expense of Borrower, (a) Agent or its designee shall have complete
access to all of Borrower's premises during normal business hours and after
notice to Borrower, or at any time 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
Agent such copies of such books and records or extracts therefrom as Agent may
request, and (c) Agent or any Lender or Agent's designee may use during normal
business hours such of Borrower's personnel, equipment, supplies and premises as
may be reasonably necessary for the foregoing (provided, that, Borrower shall
make such personnel, equipment, supplies and premises available to Agent or its
designee in such manner so as to minimize any interference with the operations
of Borrower and so as to enable Agent or its designee to comply with applicable
health and safety procedures and regulations) and if an Event of Default exists
or has occurred and is continuing for the collection of Accounts and realization
of other Collateral.
7.8 Bills of Lading and Other Documents of Title. In the event that any
Inventory which would otherwise be Eligible Inventory located outside the United
States of America which is in transit to premises of a Customs Broker in the
United States or premises of Borrower as described in the definition of Eligible
Inventory, constitutes Eligible Inventory then (a) 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 in the United States to name
Borrower as consignee, unless and until Agent may direct otherwise; (b) at such
time and from time to time as Agent may direct, Borrower shall cause Agent or
such financial institution or other person as Agent may specify to be named as
consignee; (c) without limiting any other rights of Agent hereunder, Agent 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
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goods naming Borrower as consignee to Agent; (d) there shall be three (3)
originals of each of such ▇▇▇▇ of lading or other document of title which unless
and until Agent shall direct otherwise shall be delivered as follows: (i) one
(1) original to such Customs Broker as Borrower may specify (so long as Agent
has received a Collateral Access Agreement duly authorized, executed and
delivered by such Customs Broker), and (ii) two (2) originals to Agent or to
such other person as Agent may designate for such purpose; (e) Borrower shall
obtain a copy (but not the originals) of such ▇▇▇▇ of lading or other documents
from the Customs Broker; and (f) 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 or the
premises of a Customs Broker in the United States to be issued in a form so as
to constitute negotiable documents as such term is defined in the UCC.
SECTION 8. REPRESENTATIONS AND WARRANTIES
Borrower hereby represents and warrants to Agent and Lenders 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 to Borrower (provided,
however, that so long as the Subsidiary Loan Agreement has not been terminated
and Congress is the agent thereunder, the provisions of this Section (except
Section 8.2) shall not apply to MJS or its Subsidiaries):
8.1 Corporate Existence, Power and Authority; Subsidiaries. Borrower 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 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 the financial condition,
results of operation or business of Borrower and its Subsidiaries, taken as
whole, or the rights of Agent 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 Borrower's
corporate powers, have been duly authorized and are not in contravention of law
or the terms of Borrower's certificate of incorporation, by-laws, or other
organizational documentation, or any indenture, agreement or undertaking to
which Borrower is a party or by which Borrower or its property are bound. This
Agreement and the other Financing Agreements constitute legal, valid and binding
obligations of Borrower enforceable in accordance with their respective terms.
Borrower does not have any Subsidiaries except as set forth on the Information
Certificate.
8.2 Financial Statements; No Material Adverse Change. (a) All financial
statements relating to Borrower which have been or may hereafter be delivered by
Borrower to Agent and Lenders have been prepared in accordance with GAAP and
fairly present the financial condition and the results of operation of Borrower
as at the dates and for the periods set forth therein. Except as disclosed in
any interim financial statements furnished by Borrower to Agent prior to the
date of this Agreement, there has been no material adverse change in the assets,
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liabilities, properties and condition, financial or otherwise, of Borrower and
its Subsidiaries taken as a whole, since the date of the most recent audited
financial statements furnished by Borrower to Agent prior to the date of this
Agreement.
(b) The pro forma balance sheets and future cash flow projections for
Borrower and its Subsidiaries (together with the summaries of assumptions and
projected assumptions, based on historical performance with respect thereto)
furnished by Borrower to Agent prior to the date of this Agreement represent the
reasonable, good faith opinion of Borrower and its management as to the subject
matter thereof.
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 on the signature page hereto, 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 Agent 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 other than
Collateral located in Borrower's locations outside of the United States as set
forth in item 9 of the Information Certificate. 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 Agent and such others as are specifically listed on Schedule 8.4
hereto or permitted under Section 9.8 hereof.
8.5 Tax Returns. Borrower 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. All information in such tax returns, reports and declarations is complete
and accurate in all material respects. Borrower 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 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 the Information Certificate,
there is no present investigation by any Governmental Authority pending, or to
the best of Borrower's knowledge threatened, against or affecting Borrower, its
assets or business and there is no action, suit, proceeding or claim by any
Person pending, or to the best of Borrower's knowledge threatened, against
Borrower or its assets or goodwill, or against or affecting any transactions
contemplated by this Agreement, which if adversely determined against Borrower
would result in any material adverse change in the assets, business or prospects
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of Borrower and its Subsidiaries, taken as a whole, or would impair the ability
of Borrower to perform its obligations hereunder or under any of the other
Financing Agreements to which it is a party or of Agent to enforce any
Obligations or realize upon any Collateral.
8.7 Compliance with Other Agreements and Applicable Laws.
(a) Borrower is not 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. Borrower is in compliance in all
material respects with the requirements of all applicable laws, rules,
regulations and orders of any Governmental Authority relating to its business,
including, without limitation, those set forth in or promulgated pursuant to the
Occupational Safety and Health Act of 1970, as amended, the Fair Labor Standards
Act of 1938, as amended, ERISA, the Code, as amended, and the rules and
regulations thereunder, all Federal, State and local statutes, regulations,
rules and orders relating to consumer credit (including, without limitation, as
each has been amended, the Truth-in-Lending Act, the Fair Credit Billing Act,
the Equal Credit Opportunity Act and the Fair Credit Reporting Act, and
regulations, rules and orders promulgated thereunder), all Federal, State and
local states, regulations, rules and orders pertaining to sales of consumer
goods (including, without limitation, the Consumer Products Safety Act of 1972,
as amended, and the Federal Trade Commission Act of 1914, as amended, and all
regulations, piles and orders promulgated thereunder).
(b) Borrower has obtained all material permits, licenses, approvals,
consents, certificates, orders or authorizations of any governmental agency
required for the lawful conduct of its business. Schedule 8.7 hereto sets forth
all material permits, licenses, approvals, consents, certificates, orders or
authorizations (the "Permits") issued to or held by Borrower as of the date
hereof by any Federal, State or local governmental agency and any applications
pending by Borrower with such federal, state or local governmental agency. The
Permits constitute all permits, licenses, approvals, consents, certificates,
orders or authorizations necessary for Borrower to own and operate its business
as presently conducted or proposed to be conducted where the failure to have
such Permits would have a material adverse effect on the business, performance;
operations or properties of Borrower or the legality, validity or enforceability
of this Agreement or the other Financing Agreements or the ability of Borrower
and its Subsidiaries, taken as a whole, to perform its obligations under the
Agreement or any of the other Financing Agreements or the rights and remedies of
Agent under this Agreement or any of the other Financing Agreements. All of the
Permits are valid and subsisting and in full force and effect. There are no
actions, claims or proceedings pending or threatened that seek the revocation,
cancellation, suspension or modification of any of the Permits.
8.8 Environmental Compliance.
(a) Except as set forth on Schedule 8.8 hereto, Borrower and any
Subsidiary have not 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 Borrower and any
Subsidiary complies in all material respects with all Environmental Laws and all
licenses, permits, certificates, approvals and similar authorizations
thereunder.
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(b) Except as set forth on Schedule 8.8 hereto, 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 of Borrower's knowledge threatened, with respect to any
non-compliance with or violation of the requirements of any Environmental Law by
Borrower and any Subsidiary 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 or its business, operations or assets or any properties at which
Borrower has transported, stored or disposed of any Hazardous Materials.
(c) Borrower and its Subsidiaries have no material liability
(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) Borrower and its Subsidiaries have all licenses, permits,
certificates, approvals or similar authorizations required to be obtained or
filed in connection with the operations of Borrower 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) Each Plan is in material compliance with the applicable provisions
of ERISA, the Code and other federal or state law. Each Plan which is intended
to qualify under Section 401 (a) of the Code has received a favorable
determination letter from the Internal Revenue Service and to the best knowledge
of Borrower, nothing has occurred which would cause the loss of such
qualification. Borrower and its ERISA Affiliates have made all required
contributions to any Plan subject to Section 412 of the Code, and no application
for a funding waiver or an extension of any amortization period pursuant to
Section 412 of the Code has been made with respect to any Plan.
(b) There are no pending or to the best knowledge of Borrower,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan. There has been no prohibited transaction or violation
of the fiduciary responsibility rules with respect to any Plan that has not been
fully cured by reversal of the transaction or otherwise, including payment in
full of any applicable fees or penalties.
(c) (i) No ERISA Event has occurred or is reasonably expected to occur;
(ii) the current value of each Plan's assets (determined in accordance with the
assumptions used for funding such Plan pursuant to Section 412 of the Code) do
not exceed such Plan's liabilities under Section 4001(a)(16) of ERISA; (iii)
Borrower and its ERISA Affiliates have not incurred and do not reasonably expect
to incur, any liability under Title IV of ERISA with respect to any Plan (other
than premiums due and not delinquent under Section 4007 of ERISA); (iv) Borrower
and its ERISA Affiliates have not incurred and do not reasonably expect to
incur, any liability (and no event has occurred which, with the giving of notice
under Section 4219 of ERISA, would result in such liability), under Section 4201
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or 4243 of ERISA with respect to a Multiemployer Plan; and (v) Borrower and its
ERISA Affiliates have not engaged in a transaction that could be subject to
Section 4069 or 4212(c) of ERISA.
8.10 Bank Accounts. All of the deposit accounts, investment accounts or
other accounts in the name of or used by Borrower 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 Intellectual Property. Borrower owns or licenses or otherwise has
the right to use all Intellectual Property necessary for the operation of its
business as presently conducted or proposed to be conducted. As of the date
hereof, Borrower does not have any Intellectual Property registered, or subject
to pending applications, in the United States Patent and Trademark Office or any
similar office or agency in the United States, any State thereof, any political
subdivision thereof or in any other country, other than those described in
Schedule 8.11 hereto and has not granted any licenses with respect thereto other
than as set forth in Schedule 8.11 hereto. No event has occurred which permits
or would permit after notice or passage of time or both, the revocation,
suspension or termination of such rights. To the best of the knowledge of
Borrower, no slogan or other advertising device, product, process, method,
substance or other Intellectual Property or goods bearing or using any
Intellectual Property presently contemplated to be sold by or employed by
Borrower infringes any patent, trademark, servicemark, tradename, copyright,
license or other Intellectual Property owned by any other Person presently and
no claim or litigation is pending or threatened against or affecting Borrower
contesting its right to sell or use any such Intellectual Property. Schedule
8.11 sets forth all of the agreements or other arrangements of Borrower pursuant
to which Borrower has a license or other right to use any trademarks, logos,
designs, representations or other Intellectual Property owned by another person
as in effect on the date hereof and the dates of the expiration of such
agreements or other arrangements of Borrower as in effect on the date hereof. No
trademark, servicemark or other Intellectual Property at any time used by
Borrower which is owned by another person, or owned by Borrower subject to any
security interest, lien, collateral assignment, pledge or other encumbrance in
favor of any person other than Agent, is affixed to any Eligible Inventory,
except to the extent permitted under the term of the license agreements listed
on Schedule 8.11 hereto.
8.12 Acquisition of Assets.
(a) The Distribution Agreements and the transactions contemplated
thereunder have been duly executed, delivered and performed in accordance with
their terms by the respective parties thereto in all material respects,
including the fulfillment of all conditions precedent set forth therein and
giving effect to the terms of the Distribution Agreements and the assignments to
be executed and delivered by Woodside (or any of its affiliates or subsidiaries)
thereunder, Borrower has acquired and has good and marketable title to the
assets of the Delta Apparel division of Woodside, free and clear of all claims,
liens, pledges and encumbrances of any kind, except as permitted hereunder.
Borrower has acquired all of the assets consisting of the Delta Apparel Company
division of all of the various subsidiaries of Woodside.
(b) All actions and proceedings, required by the Distribution
Agreements in respect of the Intercompany Reorganization (as such term is
defined in the DWI Distribution Agreement), applicable law or regulation
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(including, but not limited to, compliance with the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Anti-Trust
Improvements Act of 1976, as amended if applicable) to be taken have been taken
and the transactions required thereunder have been duly and validly taken and
consummated hereof (except for those provisions thereof that are solely for the
benefit of Woodside and not for Borrower and which do not otherwise affect or
relate to Borrower).
(c) No court of competent jurisdiction has issued any injunction,
restraining order or other order which prohibits consummation of the
transactions described, in the Distribution Agreements and no governmental or
other action or proceeding has been threatened or commenced, seeking any
injunction, restraining order or other order which seeks to void or otherwise
modify the transactions described in the Distribution Agreements.
(d) Borrower has delivered, or caused to be delivered, to Agent, true,
correct and complete copies of the Distribution Agreements.
8.13 Solvency. Borrower is Solvent and will continue to be Solvent
after the creation of the Obligations, the security interests of Agent and the
other transaction contemplated hereunder.
8.14 Labor Disputes.
(a) Set forth on Schedule 8.14 hereto is a list (including dates of
termination) of all collective bargaining or similar agreements between or
applicable to Borrower and any union, labor organization or other bargaining
agent in respect of the employees of Borrower on the date hereof.
(b) There is (i) no significant unfair labor practice complaint pending
against Borrower or, to the best of the knowledge of Borrower, threatened
against it, before the National Labor Relations Board, and no significant
grievance or significant arbitration proceeding arising out of or under any
collective bargaining agreement is pending on the date hereof against Borrower
or, to best of the knowledge of Borrower, threatened against it, and (ii) no
significant strike, labor dispute, slowdown or stoppage is pending against
Borrower or, to the best of the knowledge of Borrower, threatened against
Borrower.
8.15 Corporate Name: Prior Transactions. Borrower has not, during the
past five years, been known by or used by any other corporate or fictitious name
or been a party to any merger or consolidation, or acquired all or substantially
all of the assets of any Person, or acquired any of its property or assets out
of the ordinary course of business, except as set forth in the Information
Certificate.
8.16 Restrictions on Subsidiaries. Except for restrictions contained in
this Agreement or any other agreement with respect to Indebtedness of Borrower
permitted hereunder as in effect on the date hereof, there are no contractual or
consensual restrictions on Borrower or any of its Subsidiaries which prohibit or
otherwise restrict (a) the transfer of cash or other assets (i) between Borrower
and any of its Subsidiaries or (ii) between any Subsidiaries of Borrower or (b)
the ability of Borrower or any of its Subsidiaries to incur Indebtedness or
grant security interests to Agent or any Lender in the Collateral.
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8.17 Material Contracts. Schedule 8.17 hereto sets forth all Material
Contracts to which Borrower is a party or is bound as of the date hereof.
Borrower has delivered true, correct and complete copies of such Material
Contracts to Agent on or before the date hereof. Borrower is not in breach of or
in default under any Material Contract and has not received any notice of the
intention of any other party thereto to terminate any Material Contract.
8.18 Accuracy and Completeness of Information. All information
furnished by or on behalf of Borrower in writing to Agent or any 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 affect on the business, assets or prospects of
Borrower and its Subsidiaries, taken as a whole, which has not been fully and
accurately disclosed to Agent in writing.
8.19 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 Agent and Lenders on the date of each additional
loan, advance or letter of credit accommodation hereunder and shall be
conclusively presumed to have been relied on by Agent and Lenders regardless of
any investigation made or information possessed by Agent or any 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 Agent or any Lender.
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
Borrower hereby covenants and agrees, on behalf of itself and its
Subsidiaries, as applicable below, as follows (provided, however, that so long
as the Subsidiary Loan Agreement has not been terminated and Congress is the
agent thereunder, the provisions of this Section (except Section 9.6) shall not
apply to MJS or its Subsidiaries):
9.1 Maintenance of Existence. Borrower shall at all times preserve,
renew and keep in full, force and effect its corporate existence and rights and
franchises with respect thereto and maintain in full force and effect all
permits, licenses, trademarks, tradenames, approvals, authorizations, leases and
contracts necessary to carry on the business as presently or proposed to be
conducted. Borrower shall give Agent thirty (30) 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 Agent a copy of the amendment to the
Certificate of Incorporation of Borrower providing for the name change certified
by the Secretary of State of the jurisdiction of incorporation of Borrower as
soon as it is available.
9.2 New Collateral Locations. Borrower may open any new location within
the continental United States provided Borrower (a) gives Agent fifteen (15)
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 Agent such
agreements, documents, and instruments as Agent may deem reasonably necessary or
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desirable to protect its interests in the Collateral at such location, including
UCC financing statements.
9.3 Compliance with Laws, Regulations, Etc.
(a) Borrower shall, and shall cause any Subsidiary 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 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) At the reasonable request of Agent and in any event, to the extent
required by applicable law, Borrower shall establish and maintain, at its
expense, a system to assure and monitor its continued compliance with all
Environmental Laws in all of its operations, which system shall include annual
reviews of such compliance by employees or agents of Borrower who are familiar
with the requirements of the Environmental Laws. 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 Agent. Borrower shall take prompt and appropriate action to respond
to any non-compliance with any of the Environmental Laws and shall regularly
report to Agent on such response.
(c) Borrower shall give both oral and written notice to Agent
immediately upon Borrower's receipt of any notice of, or Borrower's otherwise
obtaining knowledge of, (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 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 or its business, operations or assets or any properties
at which Borrower transported, stored or disposed of any Hazardous Materials.
(d) Without limiting the generality of the foregoing, whenever Agent
reasonably determines that there is non-compliance, or any condition which
requires any action by or on behalf of Borrower in order to avoid any material
non-compliance, with any Environmental Law, Borrower shall, at Agent's request
and Borrower's expense: (i) cause an independent environmental engineer
acceptable to Agent to conduct such tests of the site where Borrower's
non-compliance or alleged non-compliance with such Environmental Laws has
occurred as to such non-compliance and prepare and deliver to Agent a report as
to such non-compliance setting forth the results of such tests, a proposed plan
for responding to any environmental problems described therein, and an estimate
of the costs thereof and (ii) provide to Agent a supplemental report of such
engineer whenever the scope of such non-compliance, or Borrower's response
thereto or the estimated costs thereof, shall change in any material respect.
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(e) Borrower shall indemnify and hold harmless Agent, its directors,
officers, employees, agents, invitees, representatives, successors and assigns,
from and against any and all losses, claims, damages, liabilities, costs, and
expenses (including reasonable attorneys' fees actually incurred 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 and the preparation and implementation of
any closure, remedial or other required plans. 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 shall, and shall cause any
Subsidiary 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 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. Borrower shall be liable for any tax or penalties imposed on Agent
or any Lender as a result of the financing arrangements provided for herein and
Borrower agrees to indemnify and hold Agent and Lenders harmless with respect to
the foregoing, and to repay to Agent or such 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 or franchise taxes attributable to the income
of Agent or Lenders from any amounts charged or paid hereunder to such Agent or
Lenders. The foregoing indemnity shall survive the payment of the Obligations
and the termination or non-renewal of this Agreement.
9.5 Insurance. Borrower shall, and shall cause any Subsidiary 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 satisfactory to Agent as
to form, amount and insurer. Borrower shall furnish certificates, policies or
endorsements to Agent as Agent shall require as proof of such insurance, and, if
Borrower fails to do so, Agent 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 Agent of any cancellation or reduction
of coverage and that Agent may act as attorney for Borrower 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
Agent 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 satisfactory to Agent. Such lender's loss payable
endorsements shall specify that the proceeds of such insurance shall be payable
to Agent as its interests may appear and further specify that Agent and Lenders
shall be paid regardless of any act or omission by Borrower or any of its
Affiliates. At its option, Agent may apply any insurance proceeds received by
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Agent 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 Agent may determine or hold such proceeds as cash collateral for the
Obligations.
9.6 Financial Statements and Other Information.
(a) Borrower shall, and shall cause any Subsidiary 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 business of
Borrower and its Subsidiaries in accordance with GAAP. Borrower shall promptly
furnish to Agent and Lenders all such financial and other information as Agent
shall reasonably request relating to the Collateral and the assets, business and
operations of Borrower, and to notify the auditors and accountants of Borrower
that Agent is authorized to obtain such information directly from them. Without
limiting the foregoing, Borrower shall furnish or cause to be furnished to
Agent, the following: (i) within thirty (30) days after the end of each fiscal
month (other than at the end of a fiscal quarter), monthly unaudited
consolidated 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 Borrower and its Subsidiaries as
of the end of and through such fiscal month, certified to be correct by the
chief financial officer of Borrower, subject to normal year-end adjustments,
(ii) within forty-five (45) days after the end of each fiscal quarter (other
than at the end of the fiscal year), unaudited consolidated financial statements
(including in each case balance sheets, statements of income and loss,
statements of cash flow, and statements of shareholders' equity) and (iii)
within ninety (90) days after the end of each fiscal year, audited consolidated
financial statements (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 Borrower
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 Borrower and
reasonably acceptable to Agent, that such financial statements have been
prepared in accordance with GAAP, and present fairly the results of operations
and financial condition of Borrower and its Subsidiaries as of the end of and
for the fiscal year then ended.
(b) Borrower shall promptly notify Agent 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 would result in any material adverse change in the business, properties,
assets, goodwill or condition, financial or otherwise, of Borrower and its
Subsidiaries taken as a whole, (ii) any Material Contract of Borrower being
terminated or amended or any new Material Contract entered into (in which event
Borrower shall provide Agent with a copy of such Material Contract), (iii) any
order, judgment or decree in excess of $500,000 shall have been entered against
Borrower or any of its properties or assets, (iv) any notification of violation
of laws or regulations received by Borrower, (v) any ERISA Event, and (vi) the
occurrence of any Default or Event of Default.
(c) Borrower shall promptly after the sending or filing thereof furnish
or cause to be furnished to Agent copies of all reports which Borrower sends to
its stockholders generally and copies of all reports and registration statements
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which Borrower files with the Securities and Exchange Commission, any national
securities exchange or the National Association of Securities Dealers, Inc.
(d) Borrower shall deliver, or cause to be delivered, to Agent, within
ninety (90) days from the date hereof, an opening unaudited consolidated balance
sheet of Borrower and its Subsidiaries after giving effect to the transactions
contemplated by this Agreement and the Purchase Agreements, which present fairly
the financial condition of Borrower as of such date.
(e) Borrower shall furnish or cause to be furnished to Agent such
budgets, forecasts, projections and other information respecting the Collateral
and the business of Borrower, as Agent may, from time to time, reasonably
request. Agent is hereby authorized to deliver a copy of any financial statement
or any other information relating to the business of Borrower to any Court or
other Government Authority to the extent required by statute, rule, regulation,
subpoena or court order, or to any Affiliate of any Agent or Lender or to any
participant or assignee or prospective participant or assignee. Borrower hereby
irrevocably authorizes and directs all accountants or auditors to deliver to
Agent, at Borrower's expense, copies of the financial statements of Borrower and
any reports or management letters prepared by such accountants or auditors on
behalf of Borrower and to disclose to Agent and Lenders such information as they
may have regarding the business of Borrower. Any documents, schedules, invoices
or other papers delivered to Agent or any Lender may be destroyed or otherwise
disposed of by Agent or such Lender one (1) year after the same are delivered to
Agent or such Lender, except as otherwise designated by Borrower to Agent or
such Lender in writing.
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc. Borrower
shall not, and shall not permit any Subsidiary 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 Soffe
may merge into MJS; or
(b) sell, assign, lease, transfer, abandon or otherwise dispose of any
Capital Stock or Indebtedness to any other Person or any of its assets 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 so long
as (A) any proceeds are paid to Agent and (B) such sales 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;
(iii) the issuance and sale by Borrower of Capital Stock of
Borrower after the date hereof; provided, that, (A) Agent shall have
received not less than ten (10) Business Days prior written notice of
such issuance and sale by Borrower, which notice shall specify the
parties to whom such shares are to be sold, the terms of such sale, the
total amount which it is anticipated will be realized from the issuance
and sale of such stock and the net cash proceeds which it is
anticipated will be received by Borrower from such sale, (B) Borrower
shall not be required to pay any cash dividends or repurchase or redeem
such Capital Stock or make any other payments in respect thereof except
as permitted in Section 9.11 hereof, (C) the terms of such Capital
Stock, and the terms and conditions of the purchase and sale thereof,
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shall not 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 to amend or modify any of the terms and
conditions of this Agreement or any of the other Financing Agreements
or otherwise in any way relate to or affect the arrangements of
Borrower with Agent or Lenders or are more restrictive or burdensome to
Borrower than the terms of any Capital Stock in effect on the date
hereof, and (D) as of the date of such issuance and sale and after
giving effect thereto, no Default or Event of Default shall exist or
have occurred;
(iv) the issuance of Capital Stock of Borrower consisting, of
common stock pursuant to a stock option plan, 401(k) plan, or incentive
stock award plan of Borrower for the benefit of its employees,
directors and consultants, provided, that, in no event shall Borrower
be required to issue, or shall Borrower issue, Capital Stock pursuant
to such stock option plan, 401(k) plan, or incentive stock award plan
which would result in an Event of Default;
(v) sales of Existing Real Property (other than Existing Real
Property covered by a Mortgage pursuant to Section 9.18 hereof) and
related assets, provided, that, as to each and all of such sales (A)
Agent shall have received not less than ten (10) days' prior written
notice of such sale, which notice shall set forth in reasonable detail
satisfactory to Agent, the parties to such sale, the Existing Real
Property to be sold, the purchase price and the manner of payment
thereof and such other information with respect thereto as Agent may
request, (B) such sale shall be on commercially reasonable terms in a
bona fide arm's-length transaction with a non-affiliated person, (C)
all of the Net Proceeds of any such sale shall be paid either (i)
directly to Agent or (ii) to Borrower, provided, that, the entire
amount of the Net Proceeds are used to repay the outstanding amount of
Loans which amounts may be reborrowed, (D) Borrower shall not incur any
liabilities in connection with such sales except as permitted herein,
and (E) as of the date of such sale and after giving effect thereto, no
Default or Event of Default shall exist or have occurred and be
continuing; and
(vi) dispositions of investments permitted under Section
9.10(b) to the extent the proceeds thereof are used to acquire
additional investments permitted under Section 9.10(b).
(c) form or acquire any Subsidiaries other than those listed on the
Information Certificate and as permitted in accordance with Section 9.10 hereof,
except that Borrower may form MJS and MJS may acquire Soffe and its
Subsidiaries;
(d) wind up, liquidate or dissolve; or
(e) agree to do any of the foregoing.
9.8 Encumbrances. Borrower shall not, and shall permit any Subsidiary
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:
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(a) (i) the security interests and liens of Agent for itself and the
benefit of Lenders, (ii) the security interests and liens of Sellers on the
Capital Stock of MJS pledged by Borrower securing Borrower's obligations under
that certain Guaranty, dated as of the Agreement Date in favor of Sellers, so
long as such security interest and liens are subject to the Subordination
Agreement, and (iii) the security interests and liens of the Subsidiary Agent to
the extent such security interests and liens secure Borrower's guaranty of
Indebtedness under the Subsidiary Loan Agreement and are subject to the
Intercreditor Agreement;
(b) liens securing the payment of taxes, assessments or other
government charges or levies, 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 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 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 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) to secure Indebtedness permitted under Section 9.9(b) hereof;
(f) liens specified in any title insurance policy delivered to and
accepted by Agent in connection with any Mortgage; and
(g) the security interests and liens set forth on Schedule 8.4 hereto.
9.9 Indebtedness. Borrower 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) (i) the Obligations, (ii) Borrower's guaranty of the Obligations
(as defined in the Subsidiary Loan Agreement), and (iii) guarantees permitted by
Section 9.10(d) hereof;
(b) purchase money Indebtedness (including Capital Leases) to the
extent secured by purchase money security interests in Equipment (including
Capital Leases) not to exceed $1,000,000 in the aggregate at any time
outstanding so long as such security interests do not apply to any property of
Borrower other than the Equipment so acquired, and the Indebtedness secured
thereby does not exceed the cost of the Equipment so acquired;
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(c) Indebtedness of Borrower under 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; 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;
(d) Hedging Obligations of Borrower entered into by Borrower in the
ordinary course of the businesses of Borrower consistent with the current
practices of Borrower as of the date hereof; provided, that, such arrangements
are with banks or other financial institutions that have combined capital and
surplus and undivided profits of not less than $250,000,000, and, in each case,
such Indebtedness shall be unsecured (except that Hedging Obligations owing to
Agent or any Affiliate of Agent may be secured by the Collateral);
(e) Indebtedness in favor of MJS to the extent such loan by MJS to
Borrower is permitted under the Subsidiary Loan Agreement; and
(f) the Indebtedness set forth on Schedule 9.9 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 except,
that, Borrower may, after prior written notice to Agent, 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) 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 Agent 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.
9.10 Loans, Investments, Guarantees, Etc. Borrower shall not, and shall
not permit any Subsidiary 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 form
or acquire any Subsidiaries, 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, (i) no
Loans are then outstanding and (ii) as to any of the foregoing, unless waived in
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writing by Agent, Borrower shall take such actions as are deemed necessary by
Agent to perfect the security interest of Agent in such investments;
(c) the existing equity investments of Borrower as of the date hereof
in its Subsidiaries, 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;
(d) (i) guarantees by any Subsidiaries of Borrower of the Obligations
in favor of Agent, (ii) guarantees by Borrower and SAIM of the Obligations (as
defined in the Subsidiary Loan Agreement) in favor of Subsidiary Agent and (iii)
Borrower's guaranty in favor of Sellers with respect to the Seller Note,
Additional Consideration and Buyers' Closing Certificate (as defined in the
Stock Purchase Agreement);
(e) 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 Agent, upon Agent's
request, together with such stock power, assignment or endorsement by Borrower
as Agent may request;
(f) obligations of account debtors to Borrower arising from Accounts
which are past due evidenced by a promissory note made by such account debtor
payable to Borrower; provided, that, promptly upon the receipt of the original
of any such promissory note by Borrower, such promissory note shall be endorsed
to the order of Agent by Borrower and promptly delivered to Agent as so
endorsed;
(g) the loans, advances and guarantees set forth on Schedule 9.10
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 except, that, Borrower may, after prior written notice to Agent,
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) 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 Agent 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;
(h) loans by Borrower to a Guarantor after the date hereof, provided,
that, (i) as to all of such loans, (A) within thirty (30) days after the end of
each fiscal month, Borrower shall provide to Agent a report in form and
substance satisfactory to Agent of the outstanding amount of such loans as of
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the last day of the immediately preceding month and indicating any loans made
and payments received during the immediately preceding month, (B) the
Indebtedness arising pursuant to any such loan shall not be evidenced by a
promissory note or other instrument, unless the single original of such note or
other instrument is promptly delivered to Agent upon its request to hold as part
of the Collateral, with such endorsement and/or assignment by the payee of such
note or other instrument as Agent may require, (C) as of the date of any such
loan and after giving effect thereto, Borrower shall be Solvent, (D) as of the
date of any such loan and after giving effect thereto, (1) no Default or Event
of Default shall exist or have occurred and be continuing, and (2) Borrower
shall have Excess Availability of not less than $5,000,000; (E) the Indebtedness
arising pursuant to such loan shall be subject to, and subordinate in right of
payment to, the right of Lenders to receive the prior final payment and
satisfaction in full of all of the Obligations on terms and conditions
acceptable to Agent, (F) promptly upon Agent's request, Agent shall have
received a subordination agreement, in form and substance satisfactory to
Lender, providing for the terms of the subordination in right of payment of such
Indebtedness of Borrower to the prior final payment and satisfaction in full of
all of the Obligations, duly authorized, executed and delivered by any Guarantor
and Borrower, and (G) Borrower shall not, directly or indirectly make, or be
required to make, any payments in respect of such Indebtedness prior to the end
of the then current term of this Agreement; and (H) as of the date of any such
loan and after giving effect thereto, the aggregate amount of all such loans
shall not exceed $5,000,000 in the aggregate with respect to all intercompany
loans among Borrower and its Affiliates;
(i) the formation by Borrower of MJS and the capital contribution by
Borrower to MJS in an amount up to $21,000,000 to be used by MJS to consummate
the transactions under the Purchase Documents; and
(j) the purchase by MJS of Soffe and its Subsidiaries in accordance
with the Purchase Documents.
9.11 Dividends and Redemptions. Borrower shall, not, directly or
indirectly, declare or pay any dividends on account of any shares of class of
Capital Stock of Borrower 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) any Subsidiary of Borrower may pay dividends to Borrower;
(b) Borrower may pay cash dividends or distributions from legally
available funds therefor, to its shareholders from time to time in amounts such
that the aggregate amount paid to shareholders since the effective date of the
Existing Loan Agreement does not exceed twenty-five (25%) percent of its
cumulative Net Income (calculated from the effective date of the Existing Loan
Agreement to date of determination), provided, that, (i) Agent shall have
received ten (10) days prior to any payment thereof, a certificate signed by
Borrower's chief financial officer (A) setting forth Borrower's Cumulative Net
Income with respect to which the dividend or distribution is to be made and
providing full information and computations with respect thereto and (B) such
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dividend or distribution is not in violation of applicable law or any other
agreement to which Borrower is a party or by which it is bound, (ii) as of the
date of any such payment and after giving effect thereto, the Excess
Availability shall be not less than $6,000,000, and (iii) as of the date of any
such payment and after giving effect thereto, no Default or Event of Default
shall exist or have occurred;
(c) Borrower may repurchase its Capital Stock consisting of common
stock, provided, that, as to (i) any such repurchase, each of the following
conditions is satisfied: (A) as of the date of the payment for such repurchase
and after giving effect thereto, no Default or Event of Default shall exist or
have occurred and be continuing, (B) such repurchase shall be paid with funds
legally available therefor, (C)such repurchase shall not violate any law or
regulation or the terms of any indenture, agreement or undertaking to which
Borrower is a party or by which Borrower or its property is bound, (D) as of the
date of any such payment for such repurchase and after giving effect thereto,
the Excess Availability shall be not less than $3,000,000, and (E) the aggregate
amount of all payments for such repurchases since the effective date of the
Existing Loan Agreement shall not exceed $23,000,000.
9.12 Transactions with Affiliates. Borrower shall not, and shall not
permit any Subsidiary 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, except in the ordinary course of and pursuant to the reasonable
requirements of Borrower's business and upon fair and reasonable terms no less
favorable to 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,
(i) reasonable compensation to officers, employees and
directors for services rendered to Borrower in the ordinary course of
business;
(ii) dividends permitted under Section 9.11(b) above;
(iii) payments by Borrower to the Honduras Subsidiaries for
(A) actual and necessary reasonable out-of-pocket administrative,
operating and capital expenditures of the Honduras Subsidiaries for the
business of Borrower as presently conducted in the ordinary course of
business (including lease payments, payroll, insurance, franchise taxes
and similar items), provided, that, the amount of all such payments
permitted under this Section 9.12(b)(iii)(A) in respect of capital
expenditures shall not exceed $500,000 in the aggregate in any fiscal
year of Borrower, and (B) actual and necessary reasonable out-of-pocket
legal, accounting, insurance (including premiums for such insurance),
marketing, payroll and similar types of services paid for by such
Honduras Subsidiary in the ordinary course of its business as conducted
as of the date hereof or as the same may be directly attributable to
Borrower; provided, that, (1) such expenses are in the ordinary course
of and pursuant to the reasonable requirements of Borrower's business
as conducted on the date hereof, and (2) to the extent such expenses
are payable to a Honduras Subsidiary, such expenses shall be payable
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upon terms no less favorable to Borrower, than Borrower, could obtain
in a comparable arm's length transaction with a person who is not an
Affiliate; and
(iv) payments by Borrower to Mexican Subsidiary for (A) actual
and necessary reasonable out-of-pocket administrative, operating and
capital expenses of Mexican Subsidiary for the business of Borrower as
presently conducted in the ordinary course of business (including lease
payments, payroll, insurance, franchise taxes and similar items),
provided, that, the amount of all such payments permitted under Section
9.12(b)(iv)(A) in respect of capital expenditures shall not exceed
$750,000 in the aggregate in any fiscal year of Borrower and (B) actual
and necessary reasonable out-of-pocket legal, accounting, insurance
(including premiums for such insurance), marketing, payroll and similar
types of services paid for by Mexican Subsidiary in the ordinary course
of its business as conducted as of the date hereof or as the same may
be directly attributable to Borrower; provided, that, (1) such expenses
are in the ordinary course of and pursuant to the reasonable
requirements of Borrower's business as conducted on the date hereof,
and (2) to the extent such expenses are payable to Mexican Subsidiary,
such expenses shall be payable upon terms no less favorable to
Borrower, than Borrower, could obtain in a comparable arm's length
transaction with a person who is not an Affiliate.
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 Agent and subject to such conditions thereto as Agent
may establish 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 Agent.
9.14 Compliance with ERISA. Borrower shall and shall cause each of its
ERISA Affiliates to: (a) maintain each Plan in compliance in all material
respects with the applicable provisions of ERISA, the Code and other Federal and
State law; (b) cause each Plan which is qualified under Section 401 (a) of the
Code to maintain such qualification; (c) not terminate any of such Plans so as
to incur any liability to the Pension Benefit Guaranty Corporation; (d) not
allow or suffer to exist any prohibited transaction involving any of such 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; (e) make all required
contributions to any Plan which it is obligated to pay under Section 302 of
ERISA, Section 412 of the Code or the terms of such Plan; (f) not allow or
suffer to exist any accumulated funding deficiency, whether or not waived, with
respect to any such Plan; or (g) 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 Plan that
is a single employer plan, which termination could result in any liability to
the Pension Benefit Guaranty Corporation.
9.15 End of Fiscal Years: Fiscal Quarters. Borrower shall, for
financial reporting purposes, cause its, and each of its Subsidiaries' (a)
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fiscal years to end the Saturday closest to June 30 of each year and (b) fiscal
quarters to end on the last day of the thirteenth (13th) week following the end
of the immediately preceding fiscal quarter, provided, that, the end of the
fourth fiscal quarter shall be on the last day of the fourteenth (14th) week
following the end of the third fiscal quarter whenever necessary to have the
fourth fiscal quarter end on the Saturday closest to June 30.
9.16 Change in Business. Borrower shall not engage in any business
other than the business of Borrower on the date hereof and any business
reasonably related, ancillary or complimentary to the business in which Borrower
is engaged on the date hereof.
9.17 Limitation of Restrictions Affecting Subsidiaries. Borrower shall
not, directly, or indirectly, create or otherwise cause or suffer to exist any
encumbrance or restriction which prohibits or limits the ability of any
Subsidiary of Borrower to (a) pay dividends or make other distributions or pay
any Indebtedness owed to Borrower or any Subsidiary of Borrower; (b) make loans
or advances to Borrower or any Subsidiary of Borrower, (c) transfer any of its
properties or assets to Borrower or any Subsidiary of Borrower; or (d) create,
incur, assume or suffer to exist any lien upon any of its property, assets or
revenues, whether now owned or hereafter acquired, other than encumbrances and
restrictions arising under (i) applicable law, (ii) this Agreement and the
Subsidiary Loan Agreement, (iii) customary provisions restricting subletting or
assignment of any lease governing a leasehold interest of Borrower or any of its
Subsidiaries, (iv) customary restrictions on dispositions of real property
interests found in reciprocal easement agreements of Borrower or its Subsidiary,
(v) any agreement relating to permitted Indebtedness or permitted liens or
encumbrances incurred by a Subsidiary of Borrower prior to the date on which
such Subsidiary was acquired by Borrower and outstanding on such acquisition
date, and (vi) the extension or continuation of contractual obligations in
existence on the date hereof; provided, that, any such encumbrances or
restrictions contained in such extension or continuation are no less favorable
to Agent and Lenders than those encumbrances and restrictions under or pursuant
to the contractual obligations so extended or continued.
9.18 Existing Real Property; After Acquired Real Property. (a) In the
event that Agent determines that (i) the average daily Excess Availability of
Borrower shall have been less than $3,000,000 during any consecutive thirty (30)
day period, or (ii) a Default or Event of Default exists, without limiting any
other rights of Agent, or duties or obligations of Borrower, upon Agent's
request, Borrower shall promptly, execute and deliver to Agent (A) a mortgage,
deed of trust or deed to secure debt, as Agent may determine, in form and
substance substantially similar to the Mortgages in respect of any or all of the
Existing Real Property (as Agent shall determine in its sole discretion,
exercised in good faith), and as to any provisions relating to specific state
laws satisfactory to Agent and in form appropriate for recording in the real
estate records of the jurisdiction in which such Existing Real Property is
located granting to Agent a first and only lien and mortgage on and security
interest in such Existing Real Property, fixtures or other property located
thereon, and (B) such other agreements, surveys, title insurance policies,
documents and instruments as Agent 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 $500,000 (or if a Default or Event
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of Default exists, then regardless of the fair market value of such assets),
without limiting any other rights of Agent or any Lender, or duties or
obligations of Borrower, upon Agent's request, Borrower shall execute and
deliver to Agent a mortgage, deed of trust or deed to secure debt, as Agent may
determine, in form and substance substantially similar to the Mortgages and as
to any provisions relating to specific state laws satisfactory to Agent 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 Agent 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 Agent) and such other agreements, documents and instruments as Agent may
require in connection therewith.
9.19 Costs and Expenses. Borrower shall pay to Agent and Lenders 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, Agent'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 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 Agent'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 Agent, 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 Agent or any
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 Agent 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 Agent's examiners in the field and office; and (g) the
reasonable fees actually incurred and disbursements of counsel (including legal
assistants) to Agent in connection with any of the foregoing.
9.20 Further Assurances. At the request of Agent at any time and from
time to time, Borrower 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 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. Agent 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
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event of such request by Agent, Agent and Lenders may, at Agent's option, cease
to make any further Loans or provide any further Letter of Credit Accommodations
until Agent has received such certificate and, in addition, Agent has determined
that such conditions are satisfied. Where permitted by law, Borrower hereby
authorizes Agent to execute and file one or more UCC financing statements signed
only by Agent.
9.21 Fixed Charge Coverage Ratio. If at any time during any month,
Excess Availability as determined by Agent is less than $5,000,000, Borrower
shall not, as of the end of such month, permit the Fixed Charge Coverage Ratio
for the twelve (12) month period most recently ending to be less than 1.50 to
1.0; provided, however, that Borrower shall not, as of December 31, 2003 and
January 31, 2004, permit the Fixed Charge Coverage Ratio for the twelve (12)
month period most recently ending to be less than 1.25 to 1.0
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 fails to pay any of the Obligations within three (3)
Business Days after the same becomes due and payable or (ii) Borrower or any
Obligor fails to perform any of the covenants contained in Sections 9.3, 9.4,
9.6, 9.13, 9.14, 9.16, or 9.21 of this Agreement 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 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 a six (6) month period or (B) an intentional
breach of Borrower or any Obligor of any such covenant or (iii) Borrower fails
to perform any of the terms, covenants, conditions or provisions contained in
this Agreement or any of the other Financing Agreements other than those
described in Sections 10.1(a)(i) and 10.1(a)(ii) above;
(b) any representation, warranty or statement of fact made by Borrower
to Agent 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;
(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 Agent;
(d) 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 $2,000,000
in the aggregate and shall remain undischarged or unvacated for a period in
excess of thirty (30) days or execution shall at any time not be effectively
stayed, or 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 having a value in excess of $500,000 in the aggregate;
(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
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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; or
(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 a 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 Agent, in any case
in an amount in excess of $500,000, which default continues for more than the
applicable cure period, if any, with respect thereto, or any material default
under any of the Distribution Agreements by Borrower, ▇▇▇▇▇▇▇▇, ▇▇ Apparel
Company, Inc. or any other party thereto or under any other material contract,
lease, license or other obligation to any person other than Agent, which default
continues for more than the applicable cure period, if any, with respect
thereto;
(j) an ERISA Event shall occur which results in or could reasonably be
expected to result in liability of Borrower in an aggregate amount in excess of
$500,000;
(k) any Change of Control shall occur;
(l) the indictment by any Governmental Authority, or as Agent may
reasonably and in good faith determine, the threatened indictment by any
Governmental Authority of Borrower of which Borrower or Agent receives notice,
in either case, as to which there is a reasonable possibility of an adverse
determination, in the good faith determination of Agent, under any criminal
statute, or commencement or threatened commencement of criminal or civil
proceedings against Borrower, pursuant to which statute or proceedings the
penalties or remedies sought or available include forfeiture of (i) any of the
Collateral with an aggregate value in excess of $500,000 or more, or (ii) any
other property of Borrower which is necessary or material to the conduct of its
business;
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(m) there shall be a material adverse change in the business, assets or
prospects of Borrower and its Subsidiaries, taken as a whole, after the date
hereof;
(n) there shall be an event of default under any of the other Financing
Agreements; or
(o) there shall be (i) a default or event of default under any of the
Seller Note, the Stock Purchase Agreement or any other guaranty, security
agreement, mortgage or similar agreement executed by Borrower or any Guarantor
in connection therewith, or (ii) an event of default under the Subsidiary Loan
Agreement which has not been waived by the requisite lenders thereunder prior to
the exercise of remedies hereunder, or (iii) any default by Sellers under the
Subordination Agreement.
10.2 Remedies.
(a) At any time an Event of Default exists or has occurred and is
continuing, Agent and Lenders shall have all rights and remedies provided in
this Agreement, the other Financing Agreements, the UCC 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 Agent and Lenders hereunder, under any of the
other Financing Agreements, the UCC or other applicable law, are cumulative, not
exclusive and enforceable, in Agent'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. Subject to Section 12 hereof, Agent may, at any
time or times, proceed directly against Borrower or any Obligor to collect the
principal balance of the Obligations and all interest accrued thereon 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, Agent may, in its discretion and
without limitation, (i) accelerate the payment of the principal balance of the
Obligations and all interest accrued thereon and demand immediate payment
thereof to Agent for itself and the ratable benefit of Lenders (provided, that,
upon the occurrence of any Event of Default described in Sections 10.1(g) and
10.1(h), the principal balance of the Obligations and all interest accrued
thereon shall automatically become immediately due and payable) and (ii)
terminate the Commitments and this Agreement (provided, that, upon the
occurrence of any Event of Default described in Sections 10.1(g) and 10.1(h),
the Commitments and any other obligation of Agent or a Lender hereunder shall
automatically terminate).
(c) Without limiting the foregoing, at any time an Event of Default
exists or has occurred and is continuing, Agent may, in its discretion, and upon
the direction of the Required Lenders, shall (i) 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, (ii) require Borrower, at Borrower's expense, to assemble and make
available to Agent any part or all of the Collateral at any place and time
designated by Agent, (iii) collect, foreclose, receive, appropriate, setoff and
realize upon any and all Collateral, (iv) remove any or all of the Collateral
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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, (v) sell, lease, transfer, assign, deliver or otherwise dispose of any
and all Collateral (including, without limitation, entering into contracts with
respect thereto, public or private sales at any exchange, broker's board, at any
office of Agent or elsewhere) at such prices or terms as Agent may deem
reasonable, for cash, upon credit or for future delivery, with Agent 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 (vi) terminate this Agreement. If any of the
Collateral is sold or leased by Agent upon credit terms or for future delivery,
the Obligations shall not be reduced as a result thereof until payment therefor
is finally collected by Agent. If notice of disposition of Collateral is
required by law, five (5) days prior notice by Agent 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
Agent 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.
(d) For the purpose of enabling Agent to exercise the rights and
remedies hereunder, Borrower hereby grants to Agent, to the extent assignable,
an irrevocable, non exclusive license (exercisable without payment of royalty or
other compensation to Borrower) to use, assign, license or sublicense any of the
trademarks, service-marks, trade names, business names, trade styles, designs,
logos and other source of business identifiers and other Intellectual Property
and general intangibles now owned or hereafter acquired by Borrower, wherever
the same maybe located, including in such license reasonable access to all media
in which any of the licensed items may be recorded or stored and to all computer
programs used for the compilation or printout thereof.
(e) Agent may apply the cash proceeds of Collateral actually received
by Agent 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 Agent may elect, whether or not then due. Borrower shall remain liable to
Agent and Lenders for the payment of any deficiency with interest at the highest
rate provided for herein and all costs and expenses of collection or
enforcement, including reasonable attorneys' fees actually incurred and legal
expenses.
(f) Without limiting the foregoing, upon the occurrence of an Event of
Default or an event which with notice or passage of time or both would
constitute an Event of Default, Agent and Lenders may, at Agent's option, and
upon the occurrence of an Event of Default at the direction of the Required
Lenders, Agent and Lenders shall, without notice, (i) cease making 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 Agent and Lenders 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 Georgia (without giving
effect to principles of conflicts of law).
(b) Borrower, Agent and Lenders irrevocably consent and submit to the
non-exclusive jurisdiction of the Superior Court of ▇▇▇▇▇▇ County, Georgia and
the United States District Court for the Northern District of Georgia 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 Agent and Lenders shall
have the right to bring any action or proceeding against Borrower or its
property in the courts of any other jurisdiction which Agent deems necessary or
appropriate in order to realize on the Collateral or to otherwise enforce its
rights against Borrower or its property).
(c) Borrower 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 Agent's
option, by service upon Borrower in any other manner provided under the rules of
any such courts. Within thirty (30) days after such service, Borrower shall
appear in answer to such process, failing which Borrower shall be deemed in
default and judgment may be entered by Agent against Borrower for the amount of
the claim and other relief requested.
(d) TO THE EXTENT PERMITTED BY APPLICABLE LAW, BORROWER, AGENT AND
LENDERS 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 EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT,
EQUITY OR OTHERWISE. BORROWER, AGENT AND LENDERS 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, AGENT OR ANY LENDER MAY FILE AN ORIGINAL
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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) Agent and Lenders shall not have any liability to Borrower (whether
in tort, contract, equity or otherwise) for losses suffered by Borrower 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 Agent and such Lender, that
the losses were the result of its acts or omissions constituting gross
negligence or willful misconduct. In any such litigation, Agent and each 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 chattel 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 Agent or any Lender may elect to give shall
entitle Borrower to any other or further notice or demand in the same, similar
or other circumstances. Without limiting the generality of the foregoing,
Borrower waives (i) notice prior to Agent's taking possession or control of any
of the Collateral or any bond or security which might be required by any court
prior to allowing Agent to exercise any of Agent's remedies, including the
issuance of an immediate writ of possession and (ii) the benefit of all
valuation, appraisement and exemption laws.
11.3 Amendments and Waivers.
(a) Neither this Agreement nor any other Financing Agreement nor any
terms hereof or thereof may be amended, waived, discharged or terminated unless
such amendment, waiver, discharge or termination is in writing signed by Agent
and the Required Lenders or, at Agent's option, by Agent with the authorization
of the Required Lenders, and in addition, with respect to any amendments (other
than with respect to any provision of Section 12 hereof), by Borrower; except,
that, no such amendment, waiver, discharge or termination shall:
(i) reduce the interest rate or any fees or extend the time of
payment of principal, interest or any fees or reduce the principal
amount of any Loan or Letter of Credit Accommodations, in each case
without the consent of each Lender directly affected thereby,
(ii) increase the Commitment of any Lender over the amount
thereof then in effect or provided hereunder, in each case without the
consent of the Lender directly affected thereby,
(iii) release any Collateral (except as expressly provided
hereunder or under any of the other Financing Agreements or applicable
law and except as permitted under Section 12.11(b) hereof), without the
consent of Agent and all of Lenders,
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(iv) reduce any percentage specified in the definition of
Required Lenders, without the consent of Agent and all of Lenders,
(v) consent to the assignment or transfer by Borrower or any
Guarantor of any of their rights and obligations under this Agreement,
without the consent of Agent and all of Lenders,
(vi) amend, modify or waive any terms of this Section 11.3 or
Section 12.8 hereof, without the consent of Agent and all of Lenders,
or
(vii) increase the advance rates constituting part of the
Borrowing Base, without the consent of Agent and all of Lenders.
(b) Agent and Lenders shall not, by any act, delay, omission or
otherwise be deemed to have expressly or impliedly waived any of its or their
rights, powers and/or remedies unless such waiver shall be in writing and signed
as provided herein. Any such waiver shall be enforceable only to the extent
specifically set forth therein. A waiver by Agent or any 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 Agent or any Lender would
otherwise have on any future occasion, whether similar in kind or otherwise.
(c) Notwithstanding anything to the contrary contained in Section
11.3(a) above, in the event that Borrower or any Guarantor requests that this
Agreement or any other Financing Agreements be amended or otherwise modified in
a manner which would require the unanimous consent of all of the Lenders and
such amendment or other modification is agreed to by the Required Lenders, then,
with the consent of Borrower, Agent and the Required Lenders, Borrower, Agent
and the Required Lenders may amend this Agreement without the consent of the
Lenders that did not agree to such amendment or other modification
(collectively, the "Minority Lenders") to provide for (i) the termination of the
Commitment of each of the Minority Lenders, (ii) the addition to this Agreement
of one or more other Lenders, or an increase in the Commitment of one or more of
the Required Lenders, so that the Commitments, after giving effect to such
amendment, shall be in the same aggregate amount as the Commitments immediately
before giving effect to such amendment, (iii) if any Loans are outstanding at
the time of such amendment, the making of such additional Loans by such new
Lenders or Required Lenders, as the case may be, as may be necessary to repay in
full the outstanding Loans of the Minority Lenders immediately before giving
effect to such amendment and (iv) the payment of all interest, fees and other
Obligations payable or accrued in favor of the Minority Lenders and such other
modifications to this Agreement as Borrower and the Required Lenders may
determine to be appropriate.
(d) Notwithstanding anything to the contrary contained in Section
11.3(a) above, in connection with any amendment, waiver, discharge or
termination, in the event that any Lender whose consent thereto is required
shall fail to consent or fail to consent in a timely manner (such Lender being
referred to herein as a "Non-Consenting Lender"), but the consent of any other
Lenders to such amendment, waiver, discharge or termination that is required are
obtained, if any, then Congress shall have the right, but not the obligation, at
any time thereafter, and upon the exercise by Congress of such right, such
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Non-Consenting Lender shall have the obligation, to sell, assign and transfer to
Congress or such Eligible Transferee as Congress may specify, the Commitment of
such Non-Consenting Lender and all rights and interests of such Non-Consenting
Lender pursuant thereto. Congress shall provide the Non-Consenting Lender with
prior written notice of its intent to exercise its right under this Section,
which notice shall specify on date on which such purchase and sale shall occur.
Such purchase and sale shall be pursuant to the terms of an Assignment and
Acceptance (whether or not executed by the Non-Consenting Lender), except that
on the date of such purchase and sale, Congress, or such Eligible Transferee
specified by Congress, shall pay to the Non-Consenting Lender (except as
Congress and such Non-Consenting Lender may otherwise agree) the amount equal
to: (i) the principal balance of the Loans held by the Non-Consenting Lender
outstanding as of the close of business on the business day immediately
preceding the effective date of such purchase and sale, plus (ii) amounts
accrued and unpaid in respect of interest and fees payable to the Non-Consenting
Lender to the effective date of the purchase (but in no event shall the
Non-Consenting Lender be deemed entitled to any early termination fee), minus
(iii) the amount of the closing fee received by the Non-Consenting Lender
pursuant to the terms hereof or of any of the other Financing Agreements
multiplied by the fraction, the numerator of which is the number of months
remaining in the then current term of the Credit Facility and the denominator of
which is the number of months in the then current term thereof. Such purchase
and sale shall be effective on the date of the payment of such amount to the
Non-Consenting Lender and the Commitment of the Non-Consenting Lender shall
terminate on such date.
(e) The consent of Agent shall be required for any amendment, waiver or
consent affecting the rights or duties of Agent hereunder or under any of the
other Financing Agreements, in addition to the consent of the Lenders otherwise
required by this Section.
11.4 Waiver of Counterclaims. Borrower 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.
11.5 Indemnification. Borrower shall indemnify and hold Agent and each
Lender, and its officers, directors, agents, employees, advisors and counsel and
their respective Affiliates (each such person being an "Indemnitee"), harmless
from and against any and all losses, claims, damages, liabilities, costs or
expenses (including reasonable attorneys' fees and 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 amounts paid in settlement, court costs, and the reasonable fees and
expenses of counsel, except, as to any indemnified party, for such losses,
claims, damages, liabilities, costs or expenses resulting from gross negligence
or willful misconduct of such party, its directors, agents, employees or counsel
as determined pursuant to a final, non-appealable order of a court of competent
jurisdiction. 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 Agent and Lenders in satisfaction of
indemnified matters under this Section.
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SECTION 12. THE AGENT
12.1 Appointment, Powers and Immunities. Each Lender irrevocably
designates, appoints and authorizes Congress to act as Agent hereunder and under
the other Financing Agreements with such powers as are specifically delegated to
Agent by the terms of this Agreement and of the other Financing Agreements,
together with such other powers as are incidental thereto. Agent (a) shall have
no duties or responsibilities except those expressly set forth in this Agreement
and in the other Financing Agreements, and shall not by reason of this Agreement
or any other Financing Agreement be a trustee or fiduciary for any Lender; (b)
shall not be responsible to Lenders for any recitals, statements,
representations or warranties contained in this Agreement or in any of the other
Financing Agreements, or in any certificate or other document referred to or
provided for in, or received by any of them under, this Agreement or any other
Financing Agreement, or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Financing Agreement
or any other document referred to or provided for herein or therein or for any
failure by Borrower or any Obligor or any other Person to perform any of its
obligations hereunder or thereunder; and (c) shall not be responsible to Lenders
for any action taken or omitted to be taken by it hereunder or under any other
Financing Agreement or under any other document or instrument referred to or
provided for herein or therein or in connection herewith or therewith, except
for its own gross negligence or willful misconduct as determined by a final
non-appealable judgment of a court of competent jurisdiction. Agent may employ
agents and attorneys-in-fact and shall not be responsible for the negligence or
misconduct of any such agents or attorneys-in-fact selected by it in good faith.
Agent may deem and treat the payee of any note as the holder thereof for all
purposes hereof unless and until the assignment thereof pursuant to an agreement
(if and to the extent permitted herein) in form and substance satisfactory to
Agent shall have been delivered to and acknowledged by Agent.
12.2 Reliance by Agent. Agent shall be entitled to rely upon any
certification, notice or other communication (including any thereof by
telephone, telecopy, telex, telegram or cable) believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the proper Person or
Persons, and upon advice and statements of legal counsel, independent
accountants and other experts selected by Agent. As to any matters not expressly
provided for by this Agreement or any other Financing Agreement, Agent shall in
all cases be fully protected in acting, or in refraining from acting, hereunder
or thereunder in accordance with instructions given by the Required Lenders or
all of Lenders as is required in such circumstance, and such instructions of
such Agents and any action taken or failure to act pursuant thereto shall be
binding on all Lenders.
12.3 Events of Default.
(a) Agent shall not be deemed to have knowledge or notice of the
occurrence of an Event of Default or other failure of a condition precedent to
the Loans and Letter of Credit Accommodations hereunder, unless and until Agent
has received written notice from a Lender, or Borrower specifying such Event of
Default or any unfulfilled condition precedent, and stating that such notice is
a "Notice of Default or Failure of Condition". In the event that Agent receives
such a Notice of Default or Failure of Condition, Agent shall give prompt notice
thereof to the Lenders. Agent shall (subject to Section 12.7) take such action
with respect to any such Event of Default or failure of condition precedent as
shall be directed by the Required Lenders; provided, that, unless and until
Agent shall have received such directions, Agent may (but shall not be obligated
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to) take such action, or refrain from taking such action, with respect to or by
reason of such Event of Default or failure of condition precedent, as it shall
deem advisable in the best interest of Lenders. Without limiting the foregoing,
and notwithstanding the existence or occurrence and continuance of an Event of
Default or any other failure to satisfy any of the conditions precedent set
forth in Section 4 of this Agreement to the contrary, Agent may, but shall have
no obligation to, continue to make Loans and issue or cause to be issued Letter
of Credit Accommodations for the ratable account and risk of Lenders from time
to time if Agent believes making such Loans or issuing or causing to be issued
such Letter of Credit Accommodations is in the best interests of Lenders.
(b) Except with the prior written consent of Agent, no Lender may
assert or exercise any enforcement right or remedy in respect of the Loans,
Letter of Credit Accommodations or other Obligations, as against Borrower or
Obligor or any of the Collateral or other property of Borrower or Obligor.
12.4 Congress in its Individual Capacity. With respect to its
Commitment and the Loans made and Letter of Credit Accommodations issued or
caused to be issued by it (and any successor acting as Agent), so long as
Congress shall be a Lender hereunder, it shall have the same rights and powers
hereunder as any other Lender and may exercise the same as though it were not
acting as Agent, and the term "Lender" or "Lenders" shall, unless the context
otherwise indicates, include Congress in its individual capacity as Lender
hereunder. Congress (and any successor acting as Agent) and its Affiliates may
(without having to account therefor to any Lender) lend money to, make
investments in and generally engage in any kind of business with Borrower (and
any of its Subsidiaries or Affiliates) as if it were not acting as Agent, and
Congress and its Affiliates may accept fees and other consideration from
Borrower or any Obligor and any of its Subsidiaries and Affiliates for services
in connection with this Agreement or otherwise without having to account for the
same to Lenders.
12.5 Indemnification. Lenders agree to indemnify Agent (to the extent
not reimbursed by Borrower hereunder and without limiting any obligations of
Borrower hereunder) ratably, in accordance with their Pro Rata Shares, for any
and all claims of any kind and nature whatsoever that may be imposed on,
incurred by or asserted against Agent (including by any Lender) arising out of
or by reason of any investigation in or in any way relating to or arising out of
this Agreement or any other Financing Agreement or any other documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby (including the costs and expenses that Agent is
obligated to pay hereunder) or the enforcement of any of the terms hereof or
thereof or of any such other documents, provided, that, no Lender shall be
liable for any of the foregoing to the extent it arises from the gross
negligence or willful misconduct of the party to be indemnified as determined by
a final non-appealable judgment of a court of competent jurisdiction. The
foregoing indemnity shall survive the payment of the Obligations and the
termination or non-renewal of this Agreement.
12.6 Non-Reliance on Agent and Other Lenders. Each Lender agrees that
it has, independently and without reliance on Agent or other Lender, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis of Borrower and Obligors and has made its own decision to enter
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into this Agreement and that it will, independently and without reliance upon
Agent or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own analysis and
decisions in taking or not taking action under this Agreement or any of the
other Financing Agreements. Agent shall not be required to keep itself informed
as to the performance or observance by Borrower or any Obligor of any term or
provision of this Agreement or any of the other Financing Agreements or any
other document referred to or provided for herein or therein or to inspect the
properties or books of Borrower or any Obligor. Agent will use reasonable
efforts to provide Lenders with any information received by Agent from Borrower
or any Obligor which is required to be provided to Lenders or deemed to be
requested by Lenders hereunder and with a copy of any Notice of Default or
Failure of Condition received by Agent from Borrower or any Lender; provided,
that, Agent shall not be liable to any Lender for any failure to do so, except
to the extent that such failure is attributable to Agent's own gross negligence
or willful misconduct as determined by a final non-appealable judgment of a
court of competent jurisdiction. Except for notices, reports and other documents
expressly required to be furnished to Lenders by Agent hereunder, Agent shall
not have any duty or responsibility to provide any Lender with any other credit
or other information concerning the affairs, financial condition or business of
Borrower or Obligor that may come into the possession of Agent.
12.7 Failure to Act. Except for action expressly required of Agent
hereunder and under the other Financing Agreements, Agent shall in all cases be
fully justified in failing or refusing to act hereunder and thereunder unless it
shall receive further assurances to its satisfaction from Lenders of their
indemnification obligations under Section 12.5 hereof against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such action.
12.8 Additional Loans. Agent shall not make any Loans or provide any
Letter of Credit Accommodations to Borrower on behalf of Lenders intentionally
and with actual knowledge that such Loans or Letter of Credit Accommodations
would cause the aggregate amount of the total outstanding Loans and Letter of
Credit Accommodations to Borrower to exceed the Borrowing Base, without the
prior consent of all Lenders, except, that, Agent may make such additional Loans
or provide such additional Letter of Credit Accommodations on behalf of Lenders,
intentionally and with actual knowledge that such Loans or Letter of Credit
Accommodations will cause the total outstanding Loans and Letter of Credit
Accommodations to Borrower to exceed the Borrowing Base, as Agent may deem
necessary or advisable in its discretion, provided, that: (a) the total
principal amount of the additional Loans or additional Letter of Credit
Accommodations to Borrower which Agent may make or provide after obtaining such
actual knowledge that the aggregate principal amount of the Loans equal or
exceed the Borrowing Base shall not exceed the aggregate amount equal to
$5,000,000 outstanding at any time and shall not cause the total principal
amount of the Loans and Letter of Credit Accommodations to exceed the Maximum
Credit and (b) no such additional Loan or Letter of Credit Accommodation shall
be outstanding more than ninety (90) days after the date such additional Loan or
Letter of Credit Accommodation is made or issued (as the case may be), except as
the Required Lenders may otherwise agree. Each Lender shall be obligated to pay
Agent the amount of its Pro Rata Share of any such additional Loans or Letter of
Credit Accommodations provided that Agent is acting in accordance with the terms
of this Section 12.8.
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12.9 Concerning the Collateral and the Related Financing Agreements.
Each Lender authorizes and directs Agent to enter into this Agreement and the
other Financing Agreements. Each Lender agrees that any action taken by Agent or
Required Lenders in accordance with the terms of this Agreement or the other
Financing Agreements and the exercise by Agent or Required Lenders of their
respective powers set forth therein or herein, together with such other powers
that are incidental thereto, shall be binding upon all of the Lenders.
12.10 Field Audit, Examination Reports and other Information;
Disclaimer by Lenders. By signing this Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such Lender,
promptly after it becomes available, a copy of each field audit or examination
report and a monthly report with respect to the Borrowing Base prepared by Agent
(each field audit or examination report and monthly report with respect to the
Borrowing Base being referred to herein as a "Report" and collectively,
"Reports"), appraisal and financial statements;
(b) expressly agrees and acknowledges that Agent (A) does not make any
representation or warranty as to the accuracy of any Report, appraisal or
financial statement or (B) shall not be liable for any information contained in
any Report, appraisal or financial statement;
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or any other party performing
any audit or examination will inspect only specific information regarding
Borrower and any Obligor and will rely significantly upon Borrower's and any
Obligor's books and records, as well as on representations of Borrower's and any
Obligor's personnel; and
(d) agrees to keep all Reports confidential and strictly for its
internal use in accordance with the terms of Section 13.5 hereof, and not to
distribute or use any Report in any other manner.
12.11 Collateral Matters.
(a) Agent may, at its option, from time to time, at any time on or
after an Event of Default and for so long as the same is continuing or upon any
other failure of a condition precedent to the Loans and Letter of Credit
Accommodations hereunder, make such disbursements and advances ("Special Agent
Advances") which Agent, in its sole discretion, deems necessary or desirable
either (i) to preserve or protect the Collateral or any portion thereof or (ii)
to enhance the likelihood or maximize the amount of repayment by Borrower of the
Loans and other Obligations, provided, that, the aggregate principal amount of
the Special Agent Advances pursuant to this clause (ii), plus the ten
outstanding principal amount of the additional Loans and Letter of Credit
Accommodations which Agent may make or provide as set forth in Section 12.8
hereof, shall not exceed the aggregate amount of ten (10%) percent of the
Maximum Credit or (iii) to pay any other amount chargeable to Borrower pursuant
to the terms of this Agreement or any of the other Financing Agreements
consisting of costs, fees and expenses and payments to any issuer of Letter of
Credit Accommodations. Special Agent Advances shall be repayable on demand and
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be secured by the Collateral. Special Agent Advances shall not constitute Loans
but shall otherwise constitute Obligations hereunder. Interest on Special
Advances shall be payable at the Interest Rate then applicable to Prime Rate
Loans. Agent shall notify each Lender and Borrower in writing of each such
Special Agent Advance, which notice shall include a description of the purpose
of such Special Agent Advance. Without limitation of its obligations pursuant to
Section 6.9, each Lender agrees that it shall make available to Agent, upon
Agent's demand, in immediately available funds, the amount equal to such
Lender's Pro Rata Share of each such Special Agent Advance. If such funds are
not made available to Agent by such Lender, Agent shall be entitled to recover
such funds, on demand from such Lender together with interest thereon for each
day from the date such payment was due until the date such amount is paid to
Agent at the Federal Funds Rate for each day during such period (as published by
the Federal Reserve Bank of Atlanta or at Agent's option based on the arithmetic
mean determined by Agent of the rates for the last transaction in overnight
Federal funds arranged prior to 9:00 a.m. (Atlanta, Georgia time) on that day by
each of the three leading brokers of Federal funds transactions in New York City
selected by Agent) and if such amounts are not paid within three (3) days of
Agent's demand, at the highest Interest Rate provided for in Section 3.1 hereof
applicable to Prime Rate Loans.
(b) Lenders hereby irrevocably authorize Agent, at its option and in
its discretion to release any security interest in, mortgage or lien upon, any
of the Collateral (i) upon termination of the Commitments and payment and
satisfaction of all of the Obligations and delivery of cash collateral to the
extent required under Section 13.1 below, or (ii) constituting property being
sold or disposed of if Borrower certifies to Agent that the sale or disposition
is made in compliance with Section 9.7 hereof (and Agent may rely conclusively
on any such certificate, without further inquiry), or (iii) constituting
property in which Borrower or any Obligor did not own an interest at the time
the security interest, mortgage or lien was granted or at any time thereafter,
or (iv) having a value in the aggregate in any fiscal quarter period of less
than $500,000, and to the extent Agent may release its security interest in and
lien upon any such Collateral pursuant to the sale or other disposition thereof,
such sale or other disposition shall be deemed consented to by Lenders, or (v)
if required or permitted under the terms of any of the other Financing
Agreements, including any intercreditor agreement, or (vi) approved, authorized
or ratified in writing by all of Lenders. Except as provided above, Agent will
not release any security interest in, mortgage or lien upon, any of the
Collateral without the prior written authorization of all of Lenders. Upon
request by Agent at any time, Lenders will promptly confirm in writing Agent's
authority to release particular types or items of Collateral pursuant to this
Section.
(c) Without any manner limiting Agent's authority to act without any
specific or further authorization or consent by the Required Lenders, each
Lender agrees to confirm in writing, upon request by Agent, the authority to
release Collateral conferred upon Agent under this Section. Agent shall (and is
hereby irrevocably authorized by Lenders to) execute such documents as may be
necessary to evidence the release of the security interest, mortgage or liens
granted to Agent upon any Collateral to the extent set forth above; provided,
that, (i) Agent shall not be required to execute any such document on terms
which, in Agent's opinion, would expose Agent to liability or create any
obligations or entail any consequence other than the release of such security
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interest, mortgage or liens without recourse or warranty and (ii) such release
shall not in any manner discharge, affect or impair the Obligations or any
security interest, mortgage or lien upon (or obligations of Borrower or any
Obligor in respect of) the Collateral retained by Borrower or any Obligor.
(d) Agent shall have no obligation whatsoever to any Lender or any
other Person to investigate, confirm or assure that the Collateral exists or is
owned by Borrower or any Obligor or is cared for, protected or insured or has
been encumbered, or that any particular items of Collateral meet the eligibility
criteria applicable in respect of the Loans or Letter of Credit Accommodations
hereunder, or whether any particular reserves are appropriate, or that the liens
and security interests granted to Agent pursuant hereto or any of the Financing
Agreements or otherwise have been properly or sufficiently or lawfully created,
perfected, protected or enforced or are entitled to any particular priority, or
to exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to Agent in this Agreement or in any
of the other Financing Agreements, it being understood and agreed that in
respect of the Collateral, or any act, omission or event related thereto, Agent
may act in any manner it may deem appropriate, in its discretion, given Agent's
own interest in the Collateral as a Lender and that Agent shall have no duty or
liability whatsoever to any other Lender.
12.12 Agency for Perfection. Each Lender hereby appoints Agent and each
other Lender as agent and bailee for the purpose of perfecting the security
interests in and liens upon the Collateral of Agent in assets which, in
accordance with Article 9 of the UCC can be perfected only by possession (or
where the security interest of a secured party with possession has priority over
the security interest of another secured party) and Agent and each Lender hereby
acknowledges that it holds possession of any such Collateral for the benefit of
Agent as secured party. Should any Lender obtain possession of any such
Collateral, such Lender shall notify Agent thereof, and, promptly upon Agent's
request therefor shall deliver such Collateral to Agent or in accordance with
Agent's instructions.
12.13 Successor Agent. Agent may resign as Agent upon thirty (30) days'
notice to Lenders and Borrower. If Agent resigns under this Agreement, the
Required Lenders shall appoint from among the Lenders a successor agent for
Lenders. If no successor agent is appointed prior to the effective date of the
resignation of Agent, Agent may appoint, after consulting with Lenders and
Borrower, a successor agent from among Lenders. Upon the acceptance by the
Lender so selected of its appointment as successor agent hereunder, such
successor agent shall succeed to all of the rights, powers and duties of the
retiring Agent and the term "Agent" as used herein and in the other Financing
Agreements shall mean such successor agent and the retiring Agent's appointment,
powers and duties as Agent shall be terminated. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Section 12 shall inure to
its benefit as to any actions taken or omitted by it while it was Agent under
this Agreement. If no successor agent has accepted appointment as Agent by the
date which is thirty (30) days after the date of a retiring Agent's notice of
resignation, the retiring Agent's resignation shall nonetheless thereupon become
effective and Lenders shall perform all of the duties of Agent hereunder until
such time, if any, as the Required Lenders appoint a successor agent as provided
for above.
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SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS
13.1 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 October 3, 2006 (the "Renewal
Date"), and from year to year thereafter, unless sooner terminated pursuant to
the terms hereof. Agent may, at its option (or shall at the direction of any
Lender in writing received in writing by Agent at least sixty (60) days prior to
the Renewal Date or the anniversary of any Renewal Date, as the case may be),
terminate this Agreement and the other Financing Agreements, or Borrower may
terminate this Agreement and the other Financing Agreements, in each case,
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 Agent, in full, all
outstanding and unpaid Obligations and shall furnish cash collateral to Agent in
such amounts as Agent determines are reasonably necessary to secure Agent and
Lenders from loss, cost, damage or expense, including reasonable attorneys' fees
actually incurred 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 Agent or any 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 Agent, as
Agent 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 Agent are received in such
bank account later than 12:00 noon, Atlanta, Georgia time.
(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 Agent's
continuing security interest in the Collateral and the rights and remedies of
Agent and Lenders 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 Agent's lost
profits as a result thereof, Borrower agrees to pay to Agent, upon the effective
date of such termination, an early termination fee in the amount equal to one
(1%) percent of the Maximum Credit plus $75,000. Such early termination fee
shall be presumed to be the amount of damages sustained by Agent and Lenders as
a result of such early termination and Borrower agrees that it is reasonable
under the circumstances currently existing. In addition, Agent and Lenders 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 Agent and
Lenders do not exercise the right to terminate this Agreement, but elect, at
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their 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 13.1 shall be deemed included in the Obligations.
(d) Notwithstanding anything to the contrary contained in Section
13.1(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 Agent of cash collateral
all as provided in Section 13.1(a) above, Borrower shall only be required to pay
to Agent and Lenders an early termination fee of $75,000 if such payments are
made to Agent with the initial proceeds of a financing transaction provided or
underwritten by Wachovia Bank, National Association to Borrower.
13.2 Interpretative Provisions.
(a) All terms used herein which are defined in Article 1, Article 8 or
Article 9 of the UCC shall have the meanings given therein unless otherwise
defined in this Agreement.
(b) 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.
(c) All references to Borrower, any Obligor, Agent and Lenders pursuant
to the definitions set forth in the recitals hereto, or to any other person
herein, shall include their respective successors and assigns.
(d) 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.
(e) The word "including" when used in this Agreement shall mean
"including, without limitation".
(f) 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 Agent, if such Event of Default is capable of being
cured as determined by Agent.
(g) Any accounting term used in this Agreement shall have, unless
otherwise specifically provided herein, the meaning customarily given in
accordance with GAAP, and all financial computations hereunder shall be computed
unless otherwise specifically provided herein, in accordance with GAAP as
consistently applied and using the same method for inventory valuation as used
in the preparation of the financial statements of Borrower most recently
received by Agent prior to the date hereof.
(h) In the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including", the words "to
and "until" each mean "to but excluding" and the word "through" means "to and
including".
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(i) Unless otherwise expressly provided herein, (i) references herein
to any agreement, document or instrument shall be deemed to include all
subsequent amendments, modifications, supplements, extensions, renewals,
restatements or replacements with respect thereto, but only to the extent the
same are not prohibited by the terms hereof or of any other Financing Agreement,
and iii) references to any statute or regulation are to be construed as
including all statutory and regulatory provisions consolidating, amending,
replacing, recodifying, supplementing or interpreting the statute or regulation.
(j) The captions and headings of this Agreement are for convenience of
reference only and shall not affect the interpretation of this Agreement.
(k) This Agreement and other Financing Agreements may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and shall
each be performed in accordance with their terms.
(l) This Agreement and the other Financing Agreements are the result of
negotiations among and have been reviewed by counsel to Agent and the other
parties, and are the products of all parties. Accordingly, this Agreement and
the other Financing Agreements shall not be construed against Agent merely
because of Agent's involvement in their preparation.
13.3 Notices. All notices, requests and demands hereunder shall be in
writing and (a) made to Agent at its address set forth below and to Borrower at
its chief executive office set forth below, or to such other address as either
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.
13.4 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.
13.5 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 Agent, Lenders, Borrower and their
respective successors and assigns, except that Borrower may not 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
Agent. No Lender may assign its rights and obligations under this Agreement
without the prior written consent of Agent, except as provided in Section 13.6
below. The terms and provisions of this Agreement and the other Financing
Agreements are for the purpose of defining the relative rights and obligations
of Borrower, Agent and Lenders with respect to the transactions contemplated
hereby and there shall be no third party beneficiaries of any of the terms and
provisions of this Agreement or any of the other Financing Agreements.
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13.6 Assignments; Participations.
(a) Each Lender may assign all or, if less than all, a portion equal to
at least $5,000,000 in the aggregate for the assigning Lender, of such rights
and obligations under this Agreement to one or more Eligible Transferees (but
not including for this purpose any assignments in the form of a participation),
each of which assignees shall become a party to this Agreement as a Lender by
execution of an Assignment and Acceptance; provided, that, (i) if such Eligible
Transferee is not a bank, Agent shall receive a representation in writing by
such Eligible Transferee that no part of its acquisition of its Loans is made
out of assets of any employee benefit plan, (ii) such transfer or assignment
will not be effective until recorded by Agent on the Register and (iii) Agent
shall have received for its sole account payment of a processing fee from the
assigning Lender or the assignee in the amount of $5,000. As used in this
Section, the term "employee benefit plan" shall have the meaning assigned to it
in Title I of ERISA and shall also include a "plan" as defined in Section
4975(e)(1) of the Code.
(b) Agent shall maintain a register of the names and addresses of
Lenders, their Commitments and the principal amount of their Loans (the
"Register"). Agent shall also maintain a copy of each Assignment and Acceptance
delivered to and accepted by it and shall modify the Register to give effect to
each Assignment and Acceptance. The entries in the Register shall be conclusive
and binding for all purposes, absent manifest error, and Borrower, Obligors,
Agent and Lenders may treat each Person whose name is recorded in the Register
as a Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by Borrower and any Lender at any reasonable time and
from time to time upon reasonable prior notice.
(c) Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in each Assignment and Acceptance, (i) the
assignee thereunder shall be a party hereto and to the other Financing
Agreements and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, have the rights and
obligations (including, without limitation, the obligation to participate in
Letter of Credit Accommodations) of a Lender hereunder and thereunder and (ii)
the assigning Lender shall, to the extent that rights and obligations hereunder
have been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights and be released from its obligations under this Agreement.
(d) By execution and delivery of an Assignment and Acceptance, the
assignor and assignee thereunder confirm to and agree with each other and the
other parties hereto as follows: (i) other than as provided in such Assignment
and Acceptance, the assigning Lender makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or any of the other
Financing Agreements or the execution, legality, enforceability, genuineness,
sufficiency or value of this Agreement or any of the other Financing Agreements
furnished pursuant hereto, (ii) the assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of Borrower, any Obligor or any of their Subsidiaries or the performance or
observance by Borrower or any Obligor of any of the Obligations; (iii) such
assignee confirms that it has received a copy of this Agreement and the other
Financing Agreements, together with such other documents and information it has
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deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance, (iv) such assignee will, independently and
without reliance upon the assigning Lender, Agent and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement and the
other Financing Agreements, (v) such assignee appoints and authorizes Agent to
take such action as agent on its behalf and to exercise such powers under this
Agreement and the other Financing Agreements as are delegated to Agent by the
terms hereof and thereof, together with such powers as are incidental thereto,
and (vi) such assignee agrees that it will perform in accordance with their
terms all of the obligations which by the terms of this Agreement and the other
Financing Agreements are required to be performed by it as a Lender. Agent and
Lenders may furnish any information concerning Borrower or any Obligor in the
possession of Agent or any Lender from time to time to assignees and
Participants.
(e) Each Lender may sell participations to one or more banks or other
entities in or to all or a portion of its rights and obligations under this
Agreement and the other Financing Agreements (including, without limitation, all
or a portion of its Commitments and the Loans owing to it and its participation
in the Letter of Credit Accommodations, without the consent of Agent or the
other Lenders); provided, that, (i) such Lender's obligations under this
Agreement (including, without limitation, its Commitment hereunder) and the
other Financing Agreements shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, and Borrower, Obligors and Agent shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Financing Agreements, (iii) the
Participant shall not have any rights under this Agreement or any of the other
Financing Agreements (the Participant's rights against such Lender in respect of
such participation to be those set forth in the agreement executed by such
Lender in favor of the Participant relating thereto) and all amounts payable by
Borrower or any Obligor hereunder shall be determined as if such Lender had not
sold such participation, and (iv) if such Participant is not a bank, represent
that no part of its acquisition of its participation is made out of assets of
any employee benefit plan. As used in this Section, the term "employee benefit
plan" shall have the meaning assigned to it in Title I of ERISA and shall also
include a "plan" as defined in Section 4975(e)(1) of the Code.
(f) Nothing in this Agreement shall prevent or prohibit any Lender from
pledging its Loans hereunder to a Federal Reserve Bank in support of borrowings
made by such Lenders from such Federal Reserve Bank; provided, that, no such
pledge shall release such Lender from any of its obligations hereunder or
substitute any such pledgee for such Lender as a party hereto.
(g) Borrower shall assist Agent or any Lender permitted to sell
assignments or participations under this Section 13.6 in whatever manner
necessary in order to enable or effect any such assignment or participation,
including (but not limited to) the execution and delivery of any and all
agreements, notes and other documents and instruments as shall be requested and
the delivery of informational materials, appraisals or other documents for, and
the participation of relevant management in meetings and conference calls with,
potential Lenders or Participants. Borrower shall certify the correctness and
accuracy of all descriptions of Borrower and its affairs provided, prepared or
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reviewed by Borrower that are contained in any selling materials prepared for
potential Lenders in connection with the initial syndication of the Loans and
all other information provided by it and included in such materials.
(h) Each Lender organized under the laws of a jurisdiction outside the
United States shall, on or prior to the date of its execution and delivery of
this Agreement in the case of each Lender which is a party hereto at the date
hereof, or on or prior to the date of the Assignment and Acceptance pursuant to
which it becomes a Lender in the case of each other Lender, and from time to
time thereafter as reasonably requested in writing by Borrower (but only so long
thereafter as such Lender remains lawfully able to do so), provide Agent and
Borrower with two original U.S. Internal Revenue Service Forms W-8BEN or W-8ECI,
or any successor or other form prescribed by the U.S. Internal Revenue Service,
certifying that such Lender is exempt from or entitled to a reduced rate of
United States withholding tax on payments pursuant to this Agreement.
13.7 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.
13.8 No Novation; Reaffirmation of Grant of Security Interest.
(a) Borrower agrees that the security interests granted to Congress
pursuant to the Existing Credit Agreement and the Existing Financing Agreements
(as defined in the Existing Loan Agreement), shall remain outstanding and in
full force and effect in accordance with the Existing Financing Agreements, in
each case, as amended as of the date hereof and shall continue to secure the
Obligations.
(b) Borrower, Agent and Lenders acknowledge and agree that (i) the
Obligations represent, among other things, the amendment, restatement, renewal,
extension, consolidation and modification of the Obligations (as defined in the
Existing Loan Agreement) arising in connection with the Existing Loan Agreement
and the other Existing Financing Agreements executed in connection therewith;
(ii) Borrower, Agent and Lender intend that the collateral pledged under the
Existing Loan Agreement and the Existing Financing Agreements executed in
connection therewith shall secure, without interruption or impairment of any
kind, all existing Obligations (as defined in the Existing Loan Agreement) under
the Existing Loan Agreement and the Existing Financing Agreements executed in
connection therewith as amended, restated, renewed, extended, consolidated and
modified hereunder, together with all other Obligations hereunder; and (iii) all
liens evidenced by the Existing Loan Agreement and the Existing Financing
Agreements executed in connection therewith are hereby ratified, confirmed and
continued.
(c) Borrower, Agent and Lenders intend that by entering into and
performing their respective obligations hereunder, this transaction shall not
constitute a novation.
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13.9 Counterparts, Etc. This Agreement or any of the other Financing
Agreements may be executed in any number of counterparts, each of which shall be
an original, but all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of this Agreement or any of the
other Financing Agreements by telefacsimile shall have the same force and effect
as the delivery of an original executed counterpart of this Agreement or any of
such other Financing Agreements. Any party delivering an executed counterpart of
any such agreement by telefacsimile shall also deliver an original executed
counterpart, but the failure to do so shall not affect the validity,
enforceability or binding effect of such agreement.
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IN WITNESS WHEREOF, Agent, Borrower and Guarantors have caused these
presents to be duty executed as of the day and year first above written.
AGENT AND BORROWER:
LENDER: --------
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CONGRESS FINANCIAL CORPORATION (SOUTHERN) DELTA APPAREL, INC.,
a Georgia corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: First Vice President Title: President and CEO
Address: Chief Executive Office:
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▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
GUARANTORS:
MJS ACQUISITION COMPANY, a North Carolina corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------
Title: President and CEO
SAIM, LLC, a North Carolina limited liability company
By: MJS Acquisition Company, its sole member
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------
Title: President and CEO