Execution Copy
CREDIT AGREEMENT AND GUARANTY
dated as of May 28, 1998
among
HAMPSHIRE GROUP, LIMITED,
as Borrower,
HAMPSHIRE DESIGNERS, INC.,
HAMPSHIRE INVESTMENTS, LIMITED
GLAMOURETTE FASHION ▇▇▇▇▇, INC.,
SAN FRANCISCO KNITWORKS, INC.,
and SEGUE (AMERICA), LIMITED
as
Guarantors
and
THE CHASE MANHATTAN BANK,
REPUBLIC NATIONAL BANK OF NEW YORK
and
NATIONSBANK, N.A.
as Banks,
and
THE CHASE MANHATTAN BANK
as
Agent
ARTICLE I. DEFINITIONS, ACCOUNTING TERMS AND RULES OF CONSTRUCTION 1
Section 1.01 Definitions 1
Section 1.02 Accounting Terms 14
Section 1.03 Computation Of Time Periods 14
Section 1.04 Rules of Construction 14
ARTICLE II. REVOLVING CREDIT LOANS 15
Section 2.01 Revolving Credit 15
Section 2.02 Notice and Manner of Borrowing 15
Section 2.03 Conversions 16
Section 2.04 Non-Receipt of Funds by Agent 16
Section 2.05 Interest 16
Section 2.06 Notes 17
Section 2.07 Optional and Mandatory Prepayments 17
Section 2.08 Method of Payment 18
Section 2.09 Use of Proceeds 18
Section 2.10 Minimum Amounts 18
ARTICLE III. LETTERS OF CREDIT 18
Section 3.01 Trade Letters of Credit 18
Section 3.02 Reimbursement Obligation 19
Section 3.03 Payment of Commissions, Expenses and Interest 19
Section 3.04 Proper Drawing; Chase's Honoring 20
Section 3.05 Standby Letters of Credit 21
Section 3.06 Amendment, Change. Modification; No Waiver 21
Section 3.07 U.C.P.; Agreements and Acknowledgments; Indemnification 21
Section 3.08 Licenses; Insurance; Regulations 23
Section 3.09 Airway and Steamship Guaranties 23
Section 3.10 Additional Security 23
Section 3.11 Continuing Rights and Obligations 23
Section 3.12 Instructions; No Liability 24
Section 3.13 Steamship Guaranty 24
ARTICLE IV. PARTICIPATION 24
Section 4.01 Participating Banks' Pro Rata Shares 24
Section 4.02 Sale and Purchase of Participation 24
Section 4.03 Participation in Fees and Collateral; Relationship 25
Section 4.04 Procedures 25
Section 4.05 Collections and Remittances 25
Section 4.06 Sharing of Setoffs and Collections 26
Section 4.07 Indemnification; Costs and Expense 26
Section 4.08 Administration; Standard of Care 27
Section 4.09 Independent Investigation by the Participating Banks 28
Section 4.10 Participating Banks' Ownership of Interests in the
Participation; Repurchases by Chase 28
ARTICLE V. GUARANTY 29
Section 5.01 Guaranty 29
Section 5.02 Guarantor's Guaranty Obligations Unconditional 29
Section 5.03 Waivers 30
Section 5.04 Subrogation 30
Section 5.05 Limitation of Liability 31
ARTICLE VI. CONDITIONS PRECEDENT 31
Section 6.01 Conditions Precedent to Initial Use of a Credit
Facility on and after the Closing Date 31
Section 6.02 Conditions Precedent to All Credit Facilities 33
Section 6.03 Deemed Representation 34
ARTICLE VII. REPRESENTATIONS AND WARRANTIES 34
Section 7.01 Incorporation. Good Standing and Due Qualification 34
Section 7.02 Corporate Power and Authority; No Conflicts 34
Section 7.03 Legally Enforceable Agreements 35
Section 7.04 Litigation 35
Section 7.05 Financial Statements 35
Section 7.06 Ownership and Liens 36
Section 7.07 Taxes 36
Section 7.08 ERISA 36
Section 7.09 Ownership of Guarantors; Investments 36
Section 7.10 Operation of Business 37
Section 7.11 No Default on Outstanding Judgments or Orders 37
Section 7.12 No Defaults on Other Agreements 37
Section 7.13 Labor Disputes and Acts of God 37
Section 7.14 Governmental Regulation 37
Section 7.15 Partnerships 37
Section 7.16 Environmental Protection 38
Section 7.17 Solvency 38
Section 7.18 Year 2000 38
ARTICLE VIII. AFFIRMATIVE COVENANTS 38
Section 8.01 Maintenance of Existence 38
Section 8.02 Conduct of Business 39
Section 8.03 Maintenance of Properties 39
Section 8.04 Maintenance of Records 39
Section 8.05 Maintenance of Insurance 39
Section 8.06 Compliance with Laws 39
Section 8.07 Right of Inspection 39
Section 8.08 Reporting Requirements 39
Section 8.09 Compliance With Environmental Laws 42
Section 8.10 Additional Guarantor 42
ARTICLE IX. NEGATIVE COVENANTS 42
Section 9.01 Debt 42
Section 9.02 Guaranties 43
Section 9.03 Liens 43
Section 9.04 Sale of Assets 44
Section 9.05 Transactions with Affiliates 46
Section 9.06 Investments 46
Section 9.07 Mergers 47
Section 9.08 Leases 47
Section 9.09 Dividends 47
Section 9.10 Restricted Payments 47
Section 9.11 Fiscal Year 48
Section 9.12 Changes, Amendments or Modification 48
ARTICLE X. FINANCIAL COVENANTS 48
Section 10.01 Consolidated Tangible Net Worth 48
Section 10.02 Consolidated Fixed Charge Coverage Ratio 48
Section 10.03 Consolidated Leverage Ratio 48
Section 10.04 Consolidated Capital Expenditures 48
ARTICLE XI. EVENTS OF DEFAULT 48
Section 11.01 Events of Default 49
Section 11.02 Remedies 51
ARTICLE XII. THE AGENT 51
Section 12.01 Appointment, Powers and Immunities of Agent 51
Section 12.02 Reliance by Agent 52
Section 12.03 Defaults 52
Section 12.04 Rights of Agents as a Bank 52
Section 12.05 Indemnification Of Agent 53
Section 12.06 Documents 53
Section 12.07 Non-Reliance on Agent and Other Banks 53
Section 12.08 Failure of Agent to Act 54
Section 12.09 Resignation or Removal of Agent 54
Section 12.10 Amendments Concerning Agency Function 54
Section 12.11 Liability of Agent 54
Section 12.12 Transfer of Agency Function 55
Section 12.13 Withholding Taxes 55
ARTICLE XIII. YIELD PROTECTION 55
Section l3.01 Additional Costs 55
Section l3.02 Illegality 56
Section l3.03 Certain Compensation 57
ARTICLE XIV. MISCELLANEOUS 57
Section 14.01 Amendments and Waivers 57
Section 14.02 Usury 58
Section 14.03 Expenses; Indemnification 58
Section 14.04 Assignment; Participation; Additional Bank 58
Section 14.05 Notices 59
Section 14.06 Setoff 59
Section 14.07 Jurisdiction; Immunities 59
Section 14.08 Governing Law 60
Section 14.09 Counterparts 60
Section 14.10 Exhibits and Schedules 60
Section 14.11 Table of Contents; Headings 60
Section 14.12 Severability 61
Section 14.13 Integration 61
Section 14.14 Jury Trial Waiver 61
CREDIT AGREEMENT AND GUARANTY dated as of May 28, 1998 among HAMPSHIRE GROUP,
LIMITED, ("Borrower"), HAMPSHIRE DESIGNERS, INC., ("Hampshire"), HAMPSHIRE
INVESTMENTS, LIMITED ("HIL"), GLAMOURETTE FASHION ▇▇▇▇▇, INC., ("Glamourette")
SAN FRANCISCO KNITWORKS, INC. ("Knitworks") and SEGUE (AMERICA), LIMITED
("Segue"), The Chase Manhattan Bank ("Chase"), Republic National Bank of New
York ("Republic") and NationsBank, N.A. ("NationsBank") (Chase, Republic and
NationsBank individually a "Bank" and collectively the "Banks") and The Chase
Manhattan Bank as Agent for the Banks (in such capacity, together with any
successors in such capacity, the "Agent").
The parties hereto agree as follows:
ARTICLE I. DEFINITIONS, ACCOUNTING TERMS AND RULES OF CONSTRUCTION
Section 1.01. Definitions. As used in this Agreement the following terms have
the following meanings (terms defined in the singular to have a correlative
meaning when used in the plural and vice versa):
"Accounts" means all of the accounts receivable as defined in the Borrower
Security Agreement and the Guarantors' Security Agreement of the Borrower and
the Consolidated Subsidiaries.
"Affiliate" means, as to any Person, any other Person: (1) which directly or
indirectly controls, or is controlled by, or is under common control with such
Person; (2) which directly or indirectly beneficially owns or holds five percent
(5%) or more of any class of voting stock of the such Person; or (3) five
percent (5%) or more of the voting stock of which is directly or indirectly
beneficially owned or held by such Person. The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract, or otherwise.
"Agent" means Chase, when acting in its capacity as the Agent under any of the
Loan Documents, and any successor thereto.
"Agent's Office" means the Agent's address as set forth on the signature page of
this Agreement, or such other address as the Agent may designate by written
notice to the Borrower, the Guarantors and the Banks.
"Agreement" means this Credit Agreement and Guaranty.
"Applicable Margin" means with respect to a Eurodollar Loan, one and one-half
percent (1.5%).
"Application" means the application by the Borrower for a Letter of Credit
"Assignee" has the meaning specified in Section 12.01.
"Authorization Letter" means the letter in the form of Exhibit __
"Authorized Person" means any officer or employee, or combination thereof of the
Borrower as authorized pursuant to the terms and conditions of the Authorization
Letter.
"Bank" or "Banks" has the meaning specified in the preamble to this Agreement.
"Bank Parties" means the Agent and each of the Banks.
"Banking Day" means any day on which commercial banks are not authorized or
required to close in London, England, New York City, New York or Anderson, South
Carolina. "Board of Governors" means the Board of Governors of the Federal
Reserve System or any successor.
"Borrower Pledge Agreement" means the Pledge Agreement substantially in the form
of Exhibit A hereto, to be delivered by Borrower under the terms of this
Agreement.
"Borrowing Base" means eighty-five (85%) percent of the Eligible Accounts of the
Borrower and the Consolidated Subsidiaries, plus, from the period March 1
through October 31 of each year, an amount not to exceed the lesser of the
amount below or forty-five (45%) percent of the Eligible Inventory of the
Borrower and Consolidated Subsidiaries valued at the lower of cost or market
value.
From March 1 - May 31 $3,000,000.00
From June 1 - June 30 $6,000,000.00
From July 1 - July 31 $9,000,000.00
From August 1 - October 31 $12,000,000.00
"Borrowing Base Certificate" means the certificate substantially in the form of
Exhibit B annexed hereto.
"Borrower Security Agreement" means the Security Agreement substantially in the
form of Exhibit C-1 hereto, to be delivered by Borrower under the terms of this
Agreement.
"Borrowing Notice" has the meaning specified in Section 2.02.
"Consolidated Capital Expenditures" means the Dollar amount of gross
expenditures (including the principal portion of payments under Capital Leases)
made for real property, fixed assets, property, plant and equipment, and all
renewals, improvements and replacements thereto (including, but not limited to,
maintenance and repairs thereof but only to the extent required to be
capitalized in accordance with GAAP) incurred or paid by the Borrower and the
Consolidated Subsidiaries.
"Capital Lease" means any lease which has been or should be capitalized on the
books of the lessee in accordance with GAAP.
"Cash Collateral' means a deposit by the Borrower, made in immediately available
funds, to a savings, checking or time deposit account at the Agent or the
purchase by Borrower of a certificate of deposit issued by the Agent and the
execution of all documents and the taking of all steps required to give the
Agent a perfected security interest for the benefit of the Banks in such deposit
or certificate of deposit.
"Chase" means The Chase Manhattan Bank.
"Closing Date" means May 28, 1998.
"Code" means the Internal Revenue Code of 1986.
"Collateral" means any and all personal property subject to a Lien granted by
any of the Security Documents and this Agreement.
"Commitment" means, collectively, the Revolving Credit Commitment, the Trade
Letter of Credit Commitment and the Standby Letter of Credit Commitment.
"Consolidated Depreciation" means depreciation of the Borrower and its
Consolidated Subsidiaries, on a consolidated basis, all as determined in
accordance with GAAP. "Consolidated Earnings Before Interest, Taxes,
Depreciation and Amortization" means, for any period, Consolidated Net Income,
plus Consolidated Interest Expense, plus Consolidated Taxes, plus Consolidated
Depreciation, plus Consolidated Principal Amortization, all for such period.
"Consolidated Interest Expense" means, for any period, all interest paid or
required to be paid by Borrower and its Consolidated Subsidiaries on all of
their respective Debt, including the Obligations, during such period.
"Consolidated Inventory" means, at any time, the Inventory of the Borrower and
its Consolidated Subsidiaries on a consolidated basis, all as determined in
accordance with GAAP.
"Consolidated Net Income" means, for any period the net income of the Borrower
and its Consolidated Subsidiaries, on a consolidated basis, all as determined in
accordance with GAAP.
"Consolidated Principal Amortization" means scheduled consolidated principal
payments of all funded debt of Borrower and the Consolidated Subsidiaries.
"Consolidated Subsidiaries" means all existing and future Subsidiaries of the
Borrower, except HIL and any subsidiary of HIL, that should be included in the
Borrower's consolidated financial statements, all as determined in accordance
with GAAP.
"Consolidated Tangible Net Worth" means the sum of (1) Consolidated Total
Tangible Assets less (2) Consolidated Total Liabilities, less (3) the investment
in HIL by Borrower or the Consolidated Subsidiaries including but not limited to
the equity of HIL, any advances to HIL and guaranties by the Borrower or its
Consolidated Subsidiaries of the obligations of HIL.
"Consolidated Taxes" means, for any period, the income and franchise taxes of
the Borrower and its Consolidated subsidiaries, on a consolidated basis, all as
determined in accordance with GAAP.
"Consolidated Total Tangible Assets" means the total assets of the Borrower and
its Consolidated Subsidiaries, on a consolidated basis, minus all intangible
assets (other than deferred taxes), including, but not limited to, non-compete
contracts, employment contracts, deferred or prepaid transactions cost,
capitalized research and development cost, capitalized interest, debt discount
and expenses, goodwill, patents, trademarks, copyrights, franchise, license and
other intangible assets, all as determined in accordance with GAAP.
"Consolidated Total Liabilities" means total liabilities and all mandatory
redeemable preferred stock of the Borrower and its Consolidated Subsidiaries, on
a consolidated basis, all as determined in accordance with GAAP.
"Credit Facilities" means, collectively, the Revolving Credit Loans and the
Letters of Credit.
"Debt" means: (1) indebtedness or liability for borrowed money, or for the
deferred purchase price of property or services (including trade obligations);
(2) the principal portion of obligations as lessee under Capital Leases; (3)
obligations under letters of credit issued for the account of any Person; (4)
all obligations arising under bankers' or trade acceptance facilities of any
Person; (5) all guarantees, endorsements (other than for collection or deposit
in the ordinary course of business), and other contingent obligations to
purchase any of the items included in this definition, to provide funds for
payment, to supply funds to invest in any Person, or otherwise to assure a
creditor against loss; and (6) all obligations secured by any Lien on property
owned by such Person, whether or not the obligations have been assumed. For
purposes of the foregoing, (i) the amount of any Debt described in clause 6
shall be equal to the lesser of the amount of such liability for borrowed money
and the Fair Market Value of the property subject to such Lien and (ii) the
amount of any Debt described in clause 5 shall be equal to the lesser of the
amount of the primary obligation in respect to which such guaranty is issued and
the maximum liability amount under the terms of such guaranty.
"Default" means any event which with the giving of notice or lapse of time, or
both, would become an Event of Default.
"Default Rate" means, with respect to an amount of any Revolving Credit Loan not
paid when due, a rate per annum equal to two percent (2%) above the Interest
Rate then in effect thereon.
"Dollars" and the sign "$" mean lawful money of the United States of America.
"Effective Date" means May 28, 1998.
"Eligible Accounts" means those Accounts of the Borrower and the Consolidated
Subsidiaries, deemed eligible from time to time for lending purposes by the
Agent in the Agent's sole discretion. Agent shall, in general, deem accounts to
be Eligible Accounts if the accounts are: (1) not factored; (2) not disputed; or
(3) no more than the lesser of sixty (60) days past due or one hundred twenty
(120) days past the invoice date; provided however, that such general criteria
may be revised from time to time by Agent in its sole discretion.
"Eligible Inventory" means Consolidated Inventory of the Borrower and the
Consolidated Subsidiaries, and deemed eligible from time to time for lending
purposes by the Agent in the Agent's sole discretion valued at lower of cost or
market.
"Environmental Discharge" means any discharge or release by Borrower or any
Consolidated Subsidiaries of any Hazardous Materials in violation of any
applicable Environmental Law.
"Environmental Law" means any Law relating to pollution or the environment,
including Laws relating to noise or to emissions, discharges, releases or
threatened releases of Hazardous Materials into the workplace, the community or
the environment, or otherwise relating to the generation, manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials.
"Environmental Notice" means any complaint, order, citation, letter, inquiry,
notice or other written communication from any Person (1) affecting or relating
to the Borrower or any Consolidated Subsidiaries' violation of any Environmental
Law in connection with any activity or operations at any time conducted by the
Borrower or such Consolidated Subsidiary, (2) relating to the unpermitted
occurrence or Presence of or exposure to or possible or threatened or alleged
occurrence or presence of or exposure to Environmental Discharges or Hazardous
Materials at any of the Borrower's or any Consolidated Subsidiary's locations or
facilities, including, without limitation: (a) the existence of any
contamination or possible or threatened contamination at any such location or
facility and (b) remediation of any Environmental Discharge or Hazardous
Materials at any such location or facility or any part thereof; and (3) any
violation or alleged violation of any relevant Environmental Law.
"Equity Issuance" means the Borrower's issuance of any capital stock, whether
such issuance is a private placement or a public offering of such capital stock.
"ERISA" means the Employee Retirement Income Security Act of 1974, including any
rules and regulation promulgated thereunder.
"ERISA Affiliate" means any corporation or trade or business which is a member
of the same controlled group of corporations (within the meaning of Section
414(b) of the Code) as the Borrower or any Guarantor or is under common control
(within the meaning of Section 4 14(c) of the Code) with the Borrower or such
Guarantor; provided, however, that for purposes of provisions herein concerning
minimum funding obligations (imposed under Section 412 of the Code or Section
302 of ERISA), the term "ERISA Affiliate" shall also include any entity required
to be aggregated with the Borrower or any Guarantor under Section 4 14(m) or 4
14(o) of the Code.
"Eurodollar Base Rate" means with respect to any Interest Period for a
Eurodollar Loan, the arithmetic mean, as calculated by the Agent, of the
respective rates per annum (rounded upwards, if necessary, to the nearest 1/16
of 1%) quoted at approximately 11:00 A.M. London time by the principal London
branch of the Agent two (2) Banking Days prior to the first day of such Interest
Period for the offering to leading banks in the London interbank market of
Dollar deposits in immediately available funds, for a period, and in an amount,
comparable to the Interest Period and principal amount of the Eurodollar Loan
which shall be made by the Agent and outstanding during such Interest Period.
"Eurodollar Loan" means any Revolving Loan when and to the extent the interest
rate therefor is determined on the basis of the definition "Eurodollar Base
Rate."
"Eurodollar Rate" means, for any Eurodollar Loan for any Interest Period
therefor, a rate per annum (rounded upwards, if necessary to the nearest 1/100
of 1% determined by the Agent to be equal to (a) the quotient of (i) the
Eurodollar Base Rate for such Loan for such Interest Period, divided by (ii) one
minus the Reserve Requirement for such Loan for such Interest Period.
"Exempt Preferred Stock" means not more than 1,000 shares of Preferred Stock,
$200 stated value, of Glamourette, with an annual dividend rate not in excess of
$62 per share.
"Event of Default" has the meaning specified in Section 11.01.
"Fiscal Quarter" means each of the four (4) quarterly periods of the Borrower's
Fiscal Year.
"First Quarterly Date" means the last day of the first Fiscal Quarter of each
Fiscal Year.
"Fiscal Year" means each calendar year ending December 31.
"Fourth Quarterly Date" means the last day of the fourth Fiscal Quarter of each
Fiscal Year.
"GAAP" means generally accepted accounting principles in the United States of
America as in effect on the date hereof, applied on a basis consistent with
those used in the preparation of the financial statements referred to in Section
7.05.
"Good Faith Contest" means the contest of an item if: (1) the item is diligently
contested in good faith by appropriate proceedings timely instituted; (2)
adequate reserves are established in accordance with GAAP; (3) during the period
of such contest, the enforcement of any contested item is effectively stayed;
and (4) the failure to pay or comply with the contested item during the period
of the Good Faith Contest is not likely to result in a Material Adverse Change.
"Governmental Approvals" means any authorization, consent, approval, license,
permit, certification, or exemption of registration or filing with or report or
notice to any Governmental Authority.
"Governmental Authority" means any nation or government, any state or other
political subdivision thereof, and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"Guarantors" means, collectively Hampshire, Glamourette, Knitworks, and Segue
and any future Consolidated Subsidiaries and HIL prior to the termination of
HIL's Guaranty in accordance with the terms thereof. "Guarantor Security
Agreements" means the Security Agreements executed by the Consolidated
Subsidiaries, to secure the Guarantor Obligations as defined in Section 5.01.
"Guaranty" means, collectively, all of the guarantees provided by the Guarantors
pursuant to Section 5.01.
"Guaranty Obligations" has the meaning specified in Section 5.01.
"Hampshire Pledge Agreement" means the Pledge Agreement to be executed by
Hampshire in favor of the Agent.
"Hazardous Materials" means any pollutant, effluents, emissions, contaminants,
toxic or hazardous wastes or substances, as any of those terms are defined from
time to time in or for the purposes of any applicable Environmental Law,
including asbestos fibers and friable asbestos, polychlorinated biphenyl, and
any petroleum or hydrocarbon-based products or derivatives.
"HIL Note" means the $5,000,000.00 note issued by HIL in favor of Borrower as
amended from time to time evidencing any indebtedness from time to time
hereafter due from HIL to Borrower.
"Instructions" means oral or written instructions or instructions transmitted by
teleprocess given on behalf of the Borrower by one or more Authorized Persons.
"Instrument" means with respect to any Letter of Credit or steamship guaranty,
any draft, receipt, acceptance, teletransmission, including, but not limited to,
telex or cable, or other written demand for payment under such Letter of Credit.
"Insurance Companies" shall mean Phoenix Home Life Mutual Insurance Company and
The Ohio National Life Insurance Company.
"Insurance Company Loan Documents" means the agreements and documents among the
Insurance Companies and the Borrower and/or Guarantors providing for the
purchase by the Insurance Companies of Senior Secured Notes of the Borrower in
the amount of $15,000,000 and the giving of security therefor.
"Intercreditor Agreement" means the agreement among the Banks, the Agent and the
Insurance Companies and the Agent for the Insurance Companies.
"Interest Period" means, with respect to any Eurodollar Loan, a period of one,
two, three or six months commencing on the date such Loan is made, converted
from another type of Loan or renewed, as the Borrower may select in accordance
with Section 2.02, provided that each such Interest Period which commences on
the last Banking Day of a calendar month (or on any day for which there is no
numerically corresponding day in the appropriate subsequent calendar month)
shall end on the last Banking Day of the appropriate calendar month.
"Interest Rate" means either a) with respect to a Prime Rate Loan, the Prime
Rate or b) with respect to a Eurodollar Rate Loan, the Eurodollar Rate plus the
Applicable Margin.
"Inventory" shall have the meaning set forth in the Borrower Security Agreement
and Guarantors' Security Agreement.
"Law" means any applicable federal, state or local statute, law, rule,
regulation, ordinance, order, code, policy or rule of common law, now or
hereafter in effect, and any applicable judicial or administrative
interpretation thereof by a Governmental Authority or otherwise, including any
judicial or administrative order, consent decree or judgment.
"Letters of Credit" means Trade Letters of Credit and the Standby Letters of
Credit.
"Letter of Credit Fee" means the Trade Letter of Credit Fee and any fee paid in
connection with any Standby Letter of Credit.
"Letter of Credit Issuing Bank" means Chase.
"Letter of Credit Obligations" means at any time an amount equal to the sum of
(1) the aggregate unused face amount of all outstanding Trade Letters of Credit
and Standby Letters of Credit, (2) the aggregate amount of all unreimbursed
obligations on Trade Letters of Credit and Standby Letters of Credit, (3) the
aggregate amount of all outstanding overdrafts created to satisfy any of the
foregoing obligations, (4) the amount of any outstanding indemnity for existing
Letters of Credit issued by the Letter of Credit Issuing Bank at the Closing in
favor of Fleet Bank, (5) any Letter of Credit Fee due and payable and (6) the
aggregate amount of steamship guaranties.
"Lien" means any mortgage, deed of trust, pledge, security, interest,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), or preference, priority, or other security agreement or preferential
arrangement, charge, or encumbrance of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement under the Uniform
Commercial Code or comparable Law of any jurisdiction to evidence any of the
foregoing).
"Loan Document(s)" means this Agreement, the Notes, the Letters of Credit, the
Security Documents and the Intercreditor Agreement.
"Material Adverse Change" means either (1) a material adverse change in the
status of the business, assets, liabilities, results of operations, condition
(financial or otherwise), property or prospects of the Borrower, and its
Consolidated Subsidiaries taken as a whole, or (2) any event or occurrence of
whatever nature which is likely to have a material adverse effect on the
Borrower's ability to perform its obligations under the Loan Documents to which
it is a party. For the avoidance of doubt, no matter affecting the business,
operations, affairs, financial condition, assets or properties of HIL or any
Subsidiary thereof in and of itself shall be deemed to cause a material adverse
change in the status of the business, assets, liabilities, results of
operations, condition (financial or otherwise), property or prospects of the
Borrower or the Borrower's ability to perform its obligations under any Loan
Document.
"Monthly Date(s)" means the first Banking Day of each calendar month occurring
on or after the Closing Date.
"Multiemployer Plan" means a Plan defined as such in Section 3(37) of ERISA.
"Note(s)" means the Revolving Credit Notes.
"Obligations" shall mean any and all Revolving Credit Loans, Letter of Credit
Obligations and all other indebtedness, liabilities and obligations of every
kind, nature and description owing by Borrower or Guarantors (excluding the
Obligations of HIL other than Obligations arising under its Guaranty) to the
Banks and/or their Affiliates, including principal, interest, charges, fees,
expenses, and foreign exchange obligations, however evidenced, whether as
principal, surety, endorser, guarantor or otherwise, arising under this
Agreement, whether now existing or hereafter arising, whether arising before,
during or after the Termination Date or after the commencement of any case with
respect to Borrower or any Guarantor under the Bankruptcy Code or any similar
statute, whether direct or indirect, absolute or contingent, joint or several,
due or not due, primary or secondary, liquidated or unliquidated, secured or
unsecured, original, renewed or extended and whether arising directly or
howsoever acquired by the Banks including from any other entity outright,
conditionally or as collateral security, by assignment, merger with any other
entity, participations or interests of the Banks in the obligations of Borrowers
or Guarantors to others, assumption, operation of law, subrogation or otherwise
and shall also include all amounts chargeable to Borrower or any Guarantor under
this Agreement or in connection with any of the foregoing, provided, however,
that indebtedness and obligations due to any of the Banks in connection with
transactions between Borrower and any Guarantor and any such Bank separate from
this Agreement shall not be deemed "Obligations."
"Optional Prepayment" has the meaning specified in Section 2.07.
"Outstanding Credit Facilities" means at any time an amount equal to the sum of
(l) the aggregate principal amount of all outstanding Revolving Credit Loans and
(2) the Letter of Credit Obligations.
"Parent" means, with respect to any Bank, any Person controlling such Bank.
"Participating Banks" means each Bank other than Chase.
"Participation" has the meaning set forth in 4.01.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity succeeding
to any or all of its functions under ERISA.
"Permitted Short Term Lenders" means the Lenders described in Schedule 9.01.
"Person" means an individual, partnership, corporation, business trust, joint
stock company, trust, unincorporated association, joint venture, Governmental
Authority or other entity of whatever nature.
"Plan" means any plan, agreement, arrangement or commitment which is an employee
benefit plan, as defined in Section 3(3) of ERISA, maintained by the Borrower,
any Guarantor or any ERISA Affiliate or with respect to which the Borrower, any
Guarantor or any ERISA Affiliate at any relevant time has any liability or
obligation to contribute.
"Presence" when used in connection with any Environmental Discharge or Hazardous
Materials, means and includes presence, generation, manufacture, installation,
treatment, use, storage, handling, repair, encapsulation, disposal,
transportation, spill, discharge and release.
"Prime Rate" means that rate of interest from time to time announced by Chase at
its Principal Office as its prime commercial lending rate.
"Prime Rate Loan" means any Loan when and to the extent the interest rates
therefor is based on the Prime Rate.
"Principal Office" means the principal office of Chase, presently located at ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
"Pro Rata Share" means (1) with respect to each Bank's Revolving Credit
Commitment a fraction, the numerator of which is such Bank's portion of the
Revolving Credit Commitment and the denominator of which is the total of all the
Bank's Revolving Credit Commitments; (2) with respect to each payment on the
Revolving Credit Loans, a fraction, the numerator of which is the outstanding
principal amount of all such Revolving Credit Loans owed to such Bank, and the
denominator of which is the outstanding principal amount of all such Revolving
Credit Loans owed to all Banks; and (3) with respect to Letters of Credit, the
percentages set forth in Section 4.01.
As of the Closing Date the amount of each Bank's Revolving Credit Commitment and
its Pro Rata Share of such Revolving Credit Commitment is as follows: Bank
Commitment Pro Rata Share Chase $18,900,000 45% NationsBank $13,860,000 33%
Republic $ 9,240,000 22%
"Prohibited Transaction" means any transaction prohibited under Section 406 of
ERISA or Section 4975 of the Code.
"Quarterly Date" means the last Banking Day of each March, June, September, and
December.
"Reportable Event" means any of the events set forth in Section 4043(c) of ERISA
or in the regulations thereunder except for any such event for which the 30-day
notice requirement is waived.
"Regulatory Change" means, with respect to any Bank, any change after the date
of this Agreement in the United States federal, state, municipal or foreign laws
or regulations (including without limitation Regulation D) or the adoption or
making after such date of any interpretations, directives or requests applying
to a class of banks including any of the Banks of or under any United States
federal, state, municipal or foreign laws or regulations (whether or not having
the force of law) by any court or governmental or monetary authority charged
with the interpretation or administration thereof.
"Required Banks" means at any time the Banks holding one hundred percent (100%)
of the then aggregate unpaid principal amount of the Outstanding Credit
Facilities or the aggregate Revolving Credit Commitment. In calculating the
Outstanding Credit Facilities and Revolving Credit Commitment of each Bank for
purposes of this definition of "Required Banks", each Bank (other than Chase)
shall be deemed to have a portion of the Letter of Credit Commitment equal to
that Bank's Pro Rata Share of the Letter of Credit Commitment, and Chase shall
be deemed to have a portion of the Letter of Credit Commitment equal to one
hundred percent (100%) minus the sum of the Pro Rata Shares of the other Banks.
"Reserve Requirement" means, for any Interest Period for any Eurodollar Loan for
any Interest Period therefor, the rate at which reserves (including any
marginal, supplemental or emergency reserves) are required to be maintained
during such Interest Period under Regulation D by member banks of the Federal
Reserve System in New York City with deposits exceeding $1,000,000,000 against
in the case of Eurodollar Loans, "Eurocurrency Liabilities" (as such term is
used in Regulation D). Without limiting the effect of the foregoing, the Reserve
Requirement shall reflect any other reserves required to be maintained by such
member banks by reason of any Regulatory Change against (i) any category of
liabilities which includes deposits by reference to which the Eurodollar Base
Rate is to be determined as provided in the definition of "Eurodollar Base Rate"
in this Section 1.01 or (ii) any category of extensions of credit or other
assets which include Eurodollar Loans. The Agent will use its best efforts to
promptly notify Borrower of any change of such Reserve Requirement.
"Revolving Credit Commitment" means the commitment of the Banks to lend,
pursuant to their Pro Rata Share, Forty-Two Million ($42,000,000) Dollars to the
Borrower pursuant to the terms of this Agreement.
"Revolving Credit Loan(s)" has the meaning specified in Section 2.01.
"Revolving Credit Note(s)" has the meaning specified in Section 2.06.
"Revolving Credit Termination Date" means May 26, 1999 unless earlier extended
by Borrower and Banks in accordance with the letter in form of Exhibit D annexed
hereto.
"Second Quarterly Date" means the last day of the second fiscal Quarter of each
Fiscal Year.
"Secured Parties" means the Agent and each of the Banks.
"Security Agreements" means the Borrower Security Agreement, Borrower's Pledge
Agreement and the Guarantors' Security Agreements.
"Security Documents" means the Security Agreements and the Borrower's Pledge
Agreement.
"Solvent" means, when used with respect to any Person, that (1) the fair value
of the property of such Person, on a going concern basis, is greater than the
total amount of liabilities (including, without limitation, contingent
liabilities) of such Person, (2) the present fair salable value of the assets of
such Person, on a going concern basis, is not less than the amount that will be
required to pay the probable liabilities of such Person on its debts as they
become absolute and matured, (3) such Person does not intend to, and does not
believe that it will incur debts or liabilities beyond such Person's ability to
pay as such debts and liabilities mature, and (4) such Person is not engaged in
business or a transaction, and is not about to engage in business or a
transaction, for which such Person's property would constitute unreasonably
small capital after giving due consideration to the prevailing practice in the
industry in which such Person is engaged. Contingent liabilities will be
computed at the amount that, in light of all the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.
"Standby Letter of Credit" means a Standby Letter of Credit issued by Chase for
the account of the Borrower.
"Standby Letter of Credit Commitment" shall have the meaning set forth in
Section 3.05.
"Subsidiary" means, as to any Person, a corporation of which shares of stock
having ordinary voting power (other than stock having such power only by reason
of the happening of a contingency) to elect a majority of the board of directors
or other managers of such corporation are at the time owned, or the management
of which is otherwise controlled, directly, or indirectly through one or more
intermediaries, or both, by such Person.
"Third Quarterly Date" means the last day of the third Fiscal Quarter of each
Fiscal Year.
"Trade Letter of Credit" has the meaning specified in Section 3.01.
"Trade Letter of Credit Commitment" has the meaning specified in Section 3.01.
"Trade Letter of Credit Obligations" means at any time an amount equal to the
sum of (1) the aggregate unused face amount of all outstanding Trade Letters of
Credit, (2) the aggregate amount of all unreimbursed obligations on Trade
Letters of Credit, and (3) the aggregate amount of all outstanding overdrafts
created to satisfy any of the foregoing obligations.
"Uniform Customs and Practices" means, with regard to each Letter of Credit, the
Uniform Customs and Practices for Documentary Letters of Credit (1993
Revisions), International Chamber of Commerce Publication No. 500, and any
subsequent revision thereof adhered to by Chase on the date such Letter of
Credit is issued.
Section 1.02. Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP, and all financial data
required to be delivered hereunder shall be prepared in accordance with GAAP.
Section 1.03. Computation of Time Periods. Except as otherwise provided herein,
in this Agreement, in the computation of periods of time from a specified date
to later specified date, the word "from" means "from and including" and words
"to" and "until" each means "to but excluding".
Section 1.04. Rules of Construction. When used in this Agreement: (1) "or" is
not exclusive; (2) a reference to a law includes any amendment or modification
to such law and any statutory amendments and recodifications; (3) a reference to
a Person includes its permitted successors and permitted assigns; and (4) a
reference to an agreement, instrument or document shall include such agreement,
instrument or document as the same may be amended, modified or supplemented from
time to time in accordance with its terms and as permitted by the Loan
Documents.
ARTICLE II. REVOLVING CREDIT LOANS
Section 2.01. Revolving Credit. Subject to the terms and conditions of this
Agreement, each of the Banks severally agrees to make loans (the "Revolving
Credit Loans") according to each such Bank's Pro Rata Share of the Revolving
Credit Commitment, to Borrower from time to time during the period from the
Closing Date up to but not including the Revolving Credit Termination Date,
provided that the aggregate principal amount of all Revolving Credit Loans
outstanding at any time does not exceed the lesser of a) the Revolving Credit
Commitment minus the Letter of Credit Obligations or b) the Borrowing Base. Each
Revolving Credit Loan which shall not utilize the Revolving Credit Commitment in
full shall be in the minimum amount set forth in Section 2.10. Within the limits
off the Revolving Credit Commitment, the Borrower may borrow, make an optional
Prepayment pursuant to Section 2.07, and reborrow under this Section 2.01.
The failure of any Bank to make any requested Revolving Credit Loan to be made
by it on the date specified for such Revolving Credit Loan shall not relieve any
other Bank of its obligation (if any) to make such Revolving Credit Loan on such
date, but no Bank shall be responsible for the failure of any other Bank to make
such Revolving Credit Loans to be made by such other Bank.
Section 2.02. Notice and Manner of Borrowing. The Borrower shall give the Agent
telephonic notice, to be followed by written or telegraphic or facsimile notice
in the form of Exhibit E hereto (effective upon receipt) of any Revolving Credit
Loan by not later than 11:00 A.M. (New York time) on the date of such Revolving
Credit Loan and whether such Revolving Credit Loan shall be a Prime Rate Loan or
Eurodollar Loan. Each of the foregoing notices (a "Borrowing Notice") must
specify the date and the amount of such Revolving Credit Loan to the Agent and
the Agent will promptly notify each Bank of receipt by the Agent of a Borrowing
Notice and of the contents thereof. In the case of a Eurodollar Loan the
Borrowing Notice shall be received three (3) Banking Days prior to such
Eurodollar Loan and shall specify the Interest Period selected. Not later than
1:00 P.M. (New York time) on the date of a Revolving Credit Loan, each Bank will
cause to be transmitted to the Agent, to the account set forth below, in
immediately available funds such Bank's Pro Rata Share of such Revolving Credit
Loan. After the Agent's receipt of such funds, not later than 3:00 P.M. (New
York time) on the date of a Revolving Credit Loan, and upon fulfillment of the
applicable conditions set forth in Article VI, the Agent will make such
Revolving Credit Loan available to the Borrower in immediately available funds
by crediting the amount thereof to the Borrower's account or the account of a
Consolidated Subsidiary as designated by the Borrower with the Agent.
Chase Account No. 323-0922 17 (Borrower)
Chase Account No. 323-092179 (Hosiery Division of Designers)
Chase Account No. 323-092 144 (Designers)
Chase Account No. 323-092209 (Segue)
Section 2.03. Conversions. The Borrower shall have the right to convert one type
of Revolving Credit Loan into another type of Revolving Credit Loan at any time
or from time to time; provided that: (a) the Borrower shall give the Agent at
least three (3) Banking Days notice of the conversion of a Prime Rate Loan into
a Eurodollar Loan and (b) Eurodollar Loans may be prep aid or converted only on
the last day of an Interest Period for such Loans. Agent shall promptly notify
each Bank of any such conversion.
Section 2.04. Non-Receipt of Funds by Agent. Unless the Agent shall have
received notice from a Bank, prior to the date on which such Bank is to provide
funds to the Agent for a Revolving Credit Loan to be made by such Bank, that
such Bank will not make available to the Agent such funds, the Agent may assume
that such Bank has made such funds available to the Agent on the date of such
Revolving Credit Loan in accordance with Section 2.02 and the Agent, in its sole
discretion, may, but shall not be obligated to, in reliance upon such
assumption, make available to the Borrower on such date a corresponding amount.
If and to the extent such Bank shall not have made such funds available to the
Agent, such Bank agrees to repay the Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the Borrower until the date such amount is
repaid to the Agent, at the customary rate set by the Agent for the correction
of errors among banks for three (3) Banking Days and thereafter at the Prime
Rate. If such Bank shall repay to the Agent such corresponding amount, such
amount so repaid shall constitute such Bank's Revolving Credit Loan for purposes
of this Agreement. If such Bank does not pay such corresponding amount forthwith
upon Agent's demand therefor, the Agent shall promptly notify Borrower, and
Borrower shall immediately pay such corresponding amount to the Agent with the
interest thereon, for each day from the date such amount is made available to
the Borrower until the date such amount is repaid to the Agent, at the rate of
interest applicable at the time to such proposed Revolving Credit Loan. Unless
the Agent shall have received notice from the Borrower prior to the date on
which any payment is due to any Bank hereunder that the Borrower will not make
such payment in full, the Agent may assume that the Borrower has made such
payment in full to the Agent on such date and the Agent, in its sole discretion,
may, but shall not be obligated to, in reliance upon such assumption, cause to
be distributed to each Bank on such due date an amount equal to the amount then
due such Bank. If and to the extent the Borrower shall not have so made such
payment in full to the Agent, each Bank shall repay to the Agent forthwith on
demand such amount distributed to such Bank together with interest thereon, for
each day from the date such amount is distributed to such Bank until the date
such Bank repays such amount to the Agent, at the customary rate set by the
Agent for the correction of errors among banks for three (3) Banking Days and
thereafter at the Prime Rate.
Section 2.05. Interest. The Borrower shall pay interest to the Agent for the
account of the applicable Bank on the outstanding and unpaid principal amount of
the Revolving Credit Loans at a rate per annum equal to the Prime Rate for a
Prime Rate Loan and at the Eurodollar Rate plus the Applicable Margin for a
Eurodollar Loan. Any principal or interest amount not paid when due (at
maturity, by acceleration or otherwise) shall bear interest thereafter, payable
on demand, at the Default Rate.
The interest rate on each Prime Rate Loan shall change when the Prime Rate
changes. Interest on each Revolving Credit Loan shall not exceed the maximum
amount permitted under applicable Law and shall be calculated on the basis of a
year of three hundred sixty (360) days for the actual number of days elapsed.
Accrued interest shall be due and payable (1) in the case of a Prime Rate Loan
(a) in arrears on each Monthly Date, commencing with the first such date after
such Prime Rate Loan, and (b) upon each payment or prepayment of principal on
such Prime Rate Loan and (2) in the case of a Eurodollar Loan, at the end of
each Interest Period, but no less than quarterly.
Section 2.06. Notes. All Revolving Credit Loans made by each Bank under this
Agreement shall be evidenced by, and repaid with interest in accordance with, a
single promissory note of the Borrower in substantially the form of Exhibit A
duly completed, in the principal amount equal to such Bank's Pro Rata Share of
the total Revolving Credit Commitment, dated the date such bank becomes a Bank,
payable to such Bank and maturing as to principal on the Revolving Credit
Termination Date (the "Revolving Credit Notes"). Each Bank is hereby authorized
by the Borrower to endorse on the schedule attached to the Revolving Credit Note
held by it the amount of each Revolving Credit Loan, and each payment of
principal amount received by such Bank on account of the Revolving Credit Loans,
which endorsement shall, in the absence of manifest error, be conclusive as to
the outstanding balance of the Revolving Credit Loans made by such Bank;
provided, however, that the failure to make such notation with respect to any
Revolving Credit Loan or payment shall not limit or otherwise affect the
obligations of the Borrower under this Agreement or the Revolving Credit Note
held by such Bank. Each Bank agrees that prior to any assignment of the
Revolving Credit Note it will endorse the schedule attached to its Revolving
Credit Note.
Section 2.07. Optional and Mandatory Prepayments. The Borrower may prepay a
Prime Rate Loan, in whole or in part with accrued interest to the date of such
prepayment on the amount prepaid, provided that each partial prepayment shall be
in a principal amount of not less than One Hundred Thousand Dollars
($100,000.00) ("Optional Prepayment"). Eurodollar Loans may only be prepaid at
end of any Interest Period.
During the term of this Agreement, Borrower shall make a mandatory prepayment of
all outstanding Revolving Credit Loans and loans or other direct Obligations
(excluding Letter of Credit reimbursement obligations) of Permitted Short Term
Lenders excluding the long term debt in the original amount of $1,000,000.00
secured by the mortgage provided by Merchants National Bank and shall not
reborrow any Revolving Credit Loans or loans from Permitted Short Term Lenders
for a period of no less than forty-five (45) days.
To the extent that the Outstanding Credit Facilities exceed the then effective
Revolving Credit Commitment or the Borrowing Base, the Borrower shall
immediately pay to the Agent for the benefit of the Banks a prepayment of the
Revolving Credit Loans in an amount equal to the excess of such Outstanding
Credit Facilities over the then effective Revolving Credit Commitment or
Borrowing Base.
Section 2.08. Method of Payment. The Borrower shall make each payment under this
Agreement and under the Notes not later than noon (New York time) on the date
when due in Dollars to the Agent at the Agent's Office in immediately available
funds. The Agent will promptly thereafter cause to be distributed to each Bank
(1) such Bank's Pro Rata Share of the payments of principal and interest in like
funds, and (2) fees or sums payable to such Bank in accordance with the terms of
this Agreement, including, but not limited to amounts due in accordance with
Article XIII.
The Borrower hereby authorizes the Agent to charge from time to time against any
account it maintains with the Agent or any Bank any such amount so due to the
Agent and/or the Banks.
Except to the extent provided in this Agreement, whenever any payment to be made
under this Agreement or under the Notes shall be stated to be due on any day
other than a Banking Day, such payment shall be made on the next succeeding
Banking Day, and such extension of time shall in such case be included in the
computation of the payment of interest and other fees, as the case may be.
Section 2.09. Use of Proceeds. On and after the Closing Date, the proceeds of
the Revolving Credit Loans will be used by the Borrower to provide working
capital for Borrower and its Consolidated Subsidiaries, and for other general
corporate purposes and the Trade Letters of Credit will be used for importation
and purchasing of inventory by Borrower and its Consolidated Subsidiaries.
The Borrower will not, directly or indirectly, use any part of such proceeds for
the purpose of purchasing or carrying any margin stock within the meaning of
Regulation U of the Board of Governors or to extend credit to any Person for the
purpose of purchasing or carrying any such margin stock.
Section 2.10. Minimum Amounts. Each Prime Rate Loan shall be in an amount at
least equal to One Hundred Thousand ($100,000) Dollars and each Eurodollar Loan
shall be in an amount at least equal to One Million Two Hundred Thousand
($1,200,000) Dollars.
ARTICLE III. LETTERS OF CREDIT
All references to Chase in this Article shall refer to Chase in its capacity as
the Letter of Credit Issuing Bank.
Section 3.01. Trade Letters of Credit. Chase agrees, on the terms and conditions
hereinafter set forth, to issue trade letters of credit with a maturity date of
up to one hundred eighty (180) days from the date of issuance ("Trade Letters of
Credit") for the account of the Borrower, during the period from the Effective
Date to the Revolving Credit Termination Date provided that at no time will the
outstanding Trade Letter of Credit Obligations exceed the lesser of (1)
Thirty-Five Million Dollars ($35,000,000) less all Standby Letters of Credit, or
(2) the Revolving Credit Commitment less outstanding Revolving Credit Loans and
Standby Letters of Credit (the "Trade Letter of Credit Commitment"); provided
further, that Chase will not be required to issue a Trade Letter of Credit with
a maturity date of more than 90 days after the Revolving Credit Termination
Date, provided however, all of such outstanding Trade Letters of Credit
Obligations, and/or Standby Letters of Credit Obligations as of two days prior
to the Revolving Credit Termination Date are cash collateralized at one hundred
and five (105%) percent of the face value.
Title documents shall be consigned to Chase at Chase's request.
Section 3.02. Reimbursement Obligation. The Borrower will pay Chase, on demand
at Chase's Principal Office, in immediately available funds, the amount required
to reimburse Chase in respect of Chase's payment of each Instrument. Such
reimbursement shall be made with interest at the Default Rate on Revolving
Credit Loans from the date of Chase's demand for reimbursement of such
Instrument to the date of reimbursement. If the Instrument is in foreign
currency, such reimbursement shall be in Dollars at Chase's selling rate for
cable transfers to the place of payment of the Instrument current on the date of
payment or of Chase's settlement of its obligation, as Chase may require. If,
for any cause, on the date of payment or settlement, as the case may be, there
is no selling rate or other rate of exchange generally current in New York for
effecting such transfers, the Borrower will pay Chase on demand an amount in
Dollars equivalent to Chase's actual cost of settlement of its obligation
however or whenever Chase shall make such settlement, with interest at the Prime
Rate for Revolving Credit Loans from the date of settlement to the date of
payment. The Borrower will comply with all governmental exchange regulations now
or hereafter applicable to each Letter of Credit or Instrument or payments
related thereto and will pay Chase, on demand, in Dollars, such amount as Chase
may be or may have been required to expend on account of such regulations. Chase
may debit or direct any other Bank to debit any account or accounts maintained
by the Borrower with any office of Chase or any other Bank or any of their
respective Subsidiaries or Affiliates (now or in the future) and apply the
proceeds to the payment of any and all amounts owed by the Borrower to Chase
hereunder, and such Bank, Subsidiary or Affiliate shall be authorized to act in
accordance herewith and shall treat this authorization as irrevocable.
Section 3.03. Payment of Commissions, Expenses and Interest. The Borrower will
pay Chase, on demand, Chase's commission and all charges, costs, and expenses
paid or incurred by Chase in connection with any Letter of Credit, and interest
where chargeable, including reasonable fees and charges of counsel, or
reasonable costs allocated by Chase's internal legal department in connection
with the enforcement of this Agreement or any Letter of Credit. Unless otherwise
agreed:
(a) commissions payable hereunder shall be at the rate customarily charged
by Chase at the time in like circumstances;
(b) interest payable under this Article III on amounts not paid when due
shall be at the lesser of (A) the maximum rate permissible under applicable
Law or (B) The Default Rate; and
(c) in addition to commissions, fees and amounts otherwise payable with
respect to the issuance of the Letter of Credit, the Borrower shall pay to
Chase on demand such amounts as Chase in its sole discretion determines are
necessary to compensate it for any cost attributable to its issuing or
having outstanding such Letter of Credit resulting from the application of
any Law or regulation applicable to Chase regarding any reserve,
assessment, capital adequacy or similar requirements relating to letters of
credit or the reimbursement agreements with respect thereto or to similar
liabilities or assets of Chase whether existing at the time of issuance of
the Letter of Credit or adopted thereafter including but not limited to
fees and amounts payable with respect to amendments to and increases of a
Letter of Credit. The Borrower acknowledges that there may be various
methods of allocating costs to the Letter of Credit and agrees that Chase's
allocation for purposes of determining the costs referred to above shall be
conclusive and binding upon the Borrower provided such allocation is made
in good faith.
In addition to any and all of Chase's customary issuance fees and other expenses
to be paid by the Borrower with respect to a Trade Letter of Credit, the
Borrower shall pay to Chase under a Trade Letter of Credit a fee for each draw
in the amount of the greater of (a) one-quarter of one percent (25%) of the
amount drawn under such Trade Letter of Credit ("Trade Letter of Credit Fee") or
(b) Chase's minimum fee as provided in a letter agreement between Chase and
Borrower. All such fees shall be due and payable at the time of drawing.
Section 3.04. Proper Drawing; Chase's Honoring. Chase may accept or pay any
Instrument presented to it on or before the expiration date set forth in the
related Application. Except insofar as written instructions may be given by an
Authorized Person expressly to the contrary, and prior to Chase's issuance of a
Letter of Credit:
(a) Chase may honor the related Instrument(s) in an amount or amounts not
exceeding the amount of such Letter of Credit, although shipment(s) in
excess of the quantity called for under such Letter of Credit are made, and
(b) Chase may honor, as complying with the terms of such Letter of Credit
and of the Application relating to it, any Instrument or other document
otherwise in order signed or issued by a person purporting to be an
administrator, executor, trustee in bankruptcy, debtor in possession,
assignee for the benefit of creditors, liquidator, receiver or other legal
representative of the party authorized under such Letter of Credit to draw
or issue such Instruments or other documents.
Section 3.05. Standby Letters of Credit. Chase may open at Borrower's request
Standby Letters of Credit in an aggregate amount not to exceed $750,000.00 (the
"Standby Letter of Credit Commitment"). No Standby Letter of Credit shall have a
stated expiration date later than the Revolving Credit Termination Date, unless
collateralized as provided in Section 3.01. For the purpose of calculating the
Borrowing Base, Standby Letters of Credit shall be deemed Revolving Loans. In
addition to all other fees, commissions and other amounts otherwise payable with
respect to issuance of Letters of Credit, Borrower shall pay to Chase an amount
equal to the greater of a) 1 1/2% of the face amount of each Standby Letter of
Credit payable upon issuance (the "Standby Letter of Credit Fee") or b) Chase's
minimum fee, as provided in a letter agreement between Chase and Borrower.
Section 3.06. Amendment, Change. Modification; No Waiver. In the event of any
amendment, change or modification relating to a Letter of Credit or any
Instruments or documents called for thereunder, including waiver of
noncompliance of any such Instruments or documents with the terms of such Letter
of Credit, this Agreement shall be binding upon the Borrower with regard to such
Letter of Credit as so amended, changed, or modified, and to any act taken by
Chase or any of its correspondents relating thereto. No amendment, change,
waiver, or modification to which Chase has consented shall be deemed to mean
that Chase will consent or has consented to any other or subsequent request to
amend, change, modify or waive a term of such Letter of Credit. Chase shall not
be deemed to have waived any of its rights hereunder, unless Chase or its
authorized agent shall have signed such waiver in writing. No such waiver,
unless expressly stated therein, shall be effective as to any transaction which
occurs subsequent to the date of such waiver, nor as to any continuance of a
breach after such waiver.
Section 3.07. U.C.P.; Agreements and Acknowledgments; Indemnification. The
Uniform Customs and Practice shall be binding on the Borrower and Chase, except
to the extent it is otherwise expressly agreed. It is also agreed that:
(a) user(s) of a Letter of Credit shall not be deemed agents of Chase;
(b) none of Chase, its Affiliates, Subsidiaries, or its correspondents
shall be responsible for
(i) failure of any Instrument to bear any reference to the related
Letter of Credit or inadequate reference in any Instrument to such
Letter of Credit, or failure of any document (other than documents
expressly required to be presented under such Letter of Credit) to
accompany any Instrument at negotiation, or failure of any person to
note the amount of any Instrument on the reverse of a Letter of
Credit, or to surrender or take up a Letter of Credit or to forward
documents apart from Instruments as required by the terms of such
Letter of Credit, each of which provisions, if contained in a Letter
of Credit itself, it is agreed may be waived by Chase; or
(ii) errors, omissions, interruptions or delays in transmission, or
delivery of any message, by mail, telex, cable, telegraph, wireless or
other teletransmission or by oral instructions, whether or not they
may be in cipher;
(c) Chase shall not be responsible for any act, error, neglect or default,
omission, insolvency or failure in business of any of its correspondents;
(d) the Borrower will promptly examine:
(i) any copy of a Letter of Credit (and of any amendments the thereof)
sent to it by Chase; and
(ii) all Instruments and documents delivered to it from time to time,
and, in the event of any claim of non compliance with Borrowers s
instructions or other irregularity, the Borrower will immediately
notify Chase thereof in writing, the Borrower being conclusively
deemed to have waived any such claim against Chase and its
correspondents unless such notice is given as aforesaid;
(e) any action, inaction or omission on the part of Chase or any of its
correspondents, under or in connection with a Letter of Credit or the
related Instruments, documents or property, if in good faith, shall be
binding upon the Borrower and shall not place Chase or any of its
correspondents under any liability to the Borrower; and
(f) in the event that Chase shall preassign a letter of credit number or
numbers to the Borrower, the Borrower shall keep such number(s)
confidential and shall not disclose any such number to any Person until the
Letter of Credit to which such number relates has been approved by Chase.
The Borrower agrees to hold Chase, each Affiliate and Subsidiary of Chase, each
Bank, each Affiliate and Subsidiary of each Bank, each of their officers,
directors, employees and correspondents indemnified and harmless against any and
all claims, loss, liability or damage, including reasonable counsel fees,
howsoever arising from or in connection with any Letter of Credit or any
Application, including, without limitation, any such claim, loss, liability or
damage arising out of any transfer, sale, delivery, surrender or endorsement of
any document at any time(s) held by Chase or any of its Affiliates or
Subsidiaries, or held for the account of any one of them by any correspondent of
any of them, or arising out of any action for injunctive or other judicial or
administrative relief arising out of or in connection with any Letter of Credit
and affecting, directly or indirectly, Chase, or each Affiliate or Subsidiary of
Chase.
Section 3.08. Licenses; Insurance; Regulations. The Borrower will procure
promptly any necessary import, export or other licenses for the import, export
or shipping of the property shipped under or pursuant to or in connection with
each Letter of Credit, and will comply with all foreign and domestic
governmental regulations in regard to the shipment of such property or the
financing thereof, and will furnish such certificates in that respect as Chase
may at any time(s) require, and will keep such property adequately covered by
insurance in amounts, against risks and with companies satisfactory to Chase,
and will assign the policies or certificates of insurance to Chase, or will make
the loss or adjustment, if any, payable to Chase, at Chase's option, and will
furnish Chase, on its demand, with evidence of acceptance by the insurers of
such assignment. Should the insurance upon such property for any reason be
unsatisfactory to Chase, Chase may, at the Borrower's expense, obtain insurance
satisfactory to Chase.
Each Application for a Trade Letter of Credit hereunder shall constitute the
warranty and certification made by Borrower that no shipment or payment to be
made in connection with such Trade Letter of Credit violates or will violate any
Law or any United States export, currency control, or other regulations.
Section 3.09 Airway and Steamship Guaranties. Chase may, in its discretion,
issue a letter of indemnity or such other document requested by the party in
possession of merchandise to enable Borrower to take possession of such
merchandise forthwith without production of the shipping documents (an "Airway
Guaranty" or "Steamship Guaranty" as the case may be). Such Airway Guaranty or
Steamship Guaranty shall be deemed a part of the Letters of Credit Obligations
Section 3.10. Additional Security. If a temporary restraining order or an
injunction (preliminary or permanent) or any similar order is issued in
connection with any Letter of Credit or any Instrument or documents relating
thereto, which order, injunction, or similar order may apply, directly or
indirectly, to Chase, the Borrower shall, on demand, deliver, convey, transfer,
or assign to the Agent additional security of a value and character satisfactory
to Chase, or make such payment as Chase may require.
Section 3.11. Continuing Rights and Obligations. Chase's rights hereunder shall
continue unimpaired, and the Borrower shall be and remain obligated in
accordance with the terms and provisions hereof, notwithstanding the release
and/or substitution of any property which may be held as Collateral at any
time(s), or of any rights or interest therein. No delay, extension of time,
renewal, compromise or other indulgence which may occur or be granted by Chase
shall impair Chase's rights or powers hereunder.
Section 3.12. Instructions; No Liability. Instructions may be honored by Chase
when received from an Authorized Person. The Borrower may furnish Chase with
written confirmation of any such Instruction, but Chase's responsibility with
respect to any Instruction shall not be affected by its failure to receive or
the content of such confirmation. Chase shall have no responsibility to notify
the Borrower of any discrepancies between the Borrower's instructions and its
written confirmation, and in the event of any such discrepancy, the original
Instruction shall govern. Chase shall be fully protected in, and shall incur no
liability to the Borrower for, acting upon any Instructions or any oral,
written, telephone, teleprocess, electronic, or other amendments thereto which
Chase in good faith believes to have been given by any Authorized Person, and in
no event shall Chase be liable for special, consequential, or punitive damages.
Chase may, at its option, use any means of verifying any Instruction received by
it. Chase also may, at its option, refuse to act upon any instruction or other
communication or any part, thereof; without incurring any responsibility for any
loss, liability or expense arising out of such refusal. All such authorizations
and instructions shall continue in full force and effect unless Chase may elect
to act upon additional instructions delivered to it by the Borrower prior to the
issuance of a Letter of Credit in reliance upon the original Instructions.
Section 3.13. Steamship Guaranty. Any Steamship Guaranty which the Issuing Bank
may issue from time to time at its sole discretion will be deemed Trade Letter
of Credit Obligations.
ARTICLE IV. PARTICIPATION
Section 4.01. Participating Banks' Pro Rata Shares. Subject to the terms and
conditions hereinafter set forth in this Article IV, Chase hereby agrees to sell
and each Participating Bank hereby agrees to purchase a risk participation
("Participation") from Chase in each Letter of Credit to the extent of the
percentage set forth below opposite such Bank's name (as such percentage may be
reduced or otherwise modified from time to time in accordance with the terms of
this Article IV):
NationsBank 33%
Republic 22%
Section 4.02. Sale and Purchase of Participation. Each Participating Bank hereby
irrevocably and unconditionally agrees to purchase, and Chase hereby agrees to
sell and transfer to each Participating Bank, an undivided fractional interest
equal to such Participating Bank's Pro Rata Share in each Letter of Credit upon
issuance thereof and each draw thereunder upon such drawing and the obligations
of the Borrower in respect of each such Letter of Credit under this Agreement
and the Letter of Credit (including all related payments and recoveries to which
such Participating Bank is entitled pursuant to Section 4.05 hereof).
Section 4.03. Participation in Fees and Collateral; Relationship.
Chase shall pay each Participating Bank its Pro Rata Share of each Trade Letter
of Credit Fee and Standby Letter of Credit Fee. This fee shall be due and
payable promptly, after such Fee is paid to Chase in arrears on each Quarterly
Date.
The relationship between Chase (in its capacity as seller) of Participation
pursuant to this Article IV) and each Participating Bank (in its capacity as
purchaser of a Participation pursuant to this Article IV) is and shall be that
of a purchaser and seller of a property interest and not a creditor-debtor
relationship or joint venture. Chase (in its capacity as seller of a
Participation pursuant to this Article IV) shall owe each Participating Bank (in
its capacity as purchaser of Participation pursuant to this Article IV) no duty
except as specifically set forth in this Article IV.
Section 4.04. Procedures. Whenever a draw shall be made under a Letter of Credit
and the Borrower shall fail to reimburse Chase therefor in accordance with this
Agreement, Chase will promptly notify each Participating Bank regarding such
draw as follows: (1) the date of such draw, and (2) the amount of such draw or
payment. Although Chase shall be responsible for paying each such draw on each
Letter of Credit, each Participating Bank shall bear its Pro Rata Share of the
credit risk associated with each such draw. Accordingly, in the event that the
amount of any such draw is not paid in full by or on behalf of the Borrower when
required in accordance with the terms of this Agreement, for any reason, Chase
shall give prompt notice by telephone (promptly confirmed in writing) or telex
to each Participating Bank of such event. Upon receipt of such telephone or
telex notice, each Participating Bank shall cause to be transmitted to Chase, to
an account to be specified by Chase, an amount in immediately available funds
equivalent to its Pro Rata Share of such draw or payment in such manner to
ensure that such funds are received by Chase, and available to Chase by 3:00
P.M., New York City time, on the date demand therefor was made by Chase (if
demand was made by 11:00 A.M., New York City time) or by 10:00 A.M., New York
City time, on the Banking Day following the date demand therefore was made (if
demand was made after 11:00 A.M., New York City time) and any such payment by
each Participating Bank shall be deemed a Revolving Loan.
Chase shall advise each Participating Bank quarterly of its Pro Rata Share of
the Letter of Credit Obligations. In addition, Chase shall supply any notices of
reasonable requests in the ordinary course of business.
Section 4.05. Collections and Remittances. Whenever Chase receives any payment,
interest reimbursement, collection, recovery, setoff, counterclaim or banker's
lien on account of a Letter of Credit whether from the Borrower, the Collateral,
or otherwise, it shall allocate such receipt as follows:
(1) First, to the payment of taxes, assessments, insurance premiums, legal
fees, or for similar purposes as required by the Letter of Credit, as the
case may be, or any other Loan Document, and, if previously paid by Chase,
such sums shall be retained by Chase; and
(2) In the event the Borrower fails to reimburse Chase for any draw under a
Letter of Credit, as the case may be, when due and Chase receives a payment
of or on account of such defaulted amount as to which a Participating Bank
has paid Chase the amount of its Pro Rata Share pursuant to Section 4.04,
that portion of the amount received shall be allocated between each such
Participating Bank and Chase pro rata, with each such Participating Bank's
percentage of the principal amount based on its Pro Rata Share and with
each such Participating Bank's portion of the interest and fees on its Pro
Rata Share based upon the amounts set forth above.
If any payment received by Chase and distributed or credited to a Participating
Bank is later rescinded or is otherwise returned by Chase for whatever reason
(including, without limitation, settlement of an alleged claim), each such
Participating Bank, upon demand by Chase, shall immediately pay to Chase, such
Participating Bank's Pro Rata Share of the amount so returned with interest at
the Federal Funds Rate from and after the date of demand. The covenants
contained in this paragraph shall survive the termination of this Agreement.
Section 4.06. Sharing of Setoffs and Collections. Each Participating Bank agrees
that to the extent any payment is received by it on any of the Borrower's
obligations under a Letter of Credit, whether by counterclaim, setoff, banker's
lien, by realizing on collateral or otherwise and such payment results in such
Participating Bank receiving a greater payment than it would have been entitled
to under Section 4.05 had the total amount of such payment been paid directly to
Chase for disbursement according to that Section, then such Participating Bank
shall immediately purchase for cash from Chase an additional Participation and a
participation from the other Participating Banks in such Letter of Credit
(subject to the same terms and conditions provided for herein), sufficient in
amount so that such payment shall effectively be shared pro rata with Chase and
the other Participating Banks in accordance with the amount, and to the extent,
of their respective interests in the Letter of Credit; provided, however, that
if all or any portion of such payment is thereafter recovered from such
Participating Bank at any time, the purchase shall be rescinded and the purchase
price returned to the extent of such recovery upon demand by such Participating
Bank with interest at the Federal Funds Rate from and after the date of demand.
Section 4.07. Indemnification; Costs and Expense. To the extent not reimbursed
by the Borrower, and without limiting the obligation of the Borrower to do so,
each Participating Bank agrees to reimburse Chase for, indemnify Chase against,
and hold Chase harmless from, on demand, to the extent of each such
Participating Bank's Pro Rata Share of any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses, or
disbursements of any kind whatsoever (including, without limitation,
disbursements necessary, in the judgment of Chase, to preserve or protect the
Collateral), that may at any time be imposed on, incurred by, or asserted
against Chase in any way relating to this Agreement, a Letter of Credit, the
Collateral or any other Revolving Credit Loan Document or other instrument
relating to any of the foregoing, or the transactions contemplated thereby and
hereby, or any action taken or omitted by Chase under or in connection with any
of the foregoing; provided, however, that no Participating Bank shall be liable
for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses, or disbursements
resulting from Chase's gross negligence or willful misconduct. The covenants
contained in this Section 4.07 shall survive the termination of this Agreement.
Section 4.08. Administration; Standard of Care. Chase will administer each
Letter of Credit in the ordinary course of business and in accordance with its
usual practices, modified from time to time as it deems appropriate under the
circumstances. Except as expressly set forth in the third paragraph of this
Section 4.08, Chase shall be entitled to use its discretion in taking or
refraining from taking any actions in connection with any of the foregoing as if
it were the sole party involved in any of the foregoing and no Participation
existed.
Each Participating Bank acknowledges that its Participation hereunder is without
recourse to Chase and that each such Participating Bank expressly assumes all
risk of loss in connection with its Participation in the Letters of Credit as if
such Participating Bank had directly provided such Letters of Credit. Chase
shall have no liability express or implied, for any action taken or omitted to
be taken by Chase or for any failure or delay in exercising any right or power
possessed by Chase under any of the Loan Documents except for actual losses, if
any, suffered by any Participating Bank that are proximately caused either by
Chase's gross negligence or by Chase's willful misconduct. Without limiting the
foregoing, Chase (1) may consult with legal counsel, independent public
accountants, appraisers, and other experts, selected by Chase, and shall not be
liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such persons, (2) shall be entitled to rely on,
and shall incur no liability by acting upon, any conversation, notice, consent,
certificate, statement, order, or any document or other writing (including,
without limitation, telegraph, telex, telecopy, TWX, or other telecommunication
device) believed by Chase to be genuine and correct and to have been signed,
sent, or made by the proper person, (3) makes no warranty or representation of
any kind or character relating to the Borrower or the Collateral, and shall not
be responsible for any warranty or representation made in or in connection with
any of the Loan Documents, (4) makes no warranty or representation as to, and
shall not be responsible for the correctness as to form, the due execution,
legality, validity, enforceability, genuineness, sufficiency, or collectability
of any of the Loan Documents, for any failure by the Borrower or any Person to
perform its obligations thereunder, for the Borrower's use of the proceeds
therefrom, or for the preservation of the Collateral or the loss, depreciation,
or release thereof, (5) makes no warranty or representation as to, and assumes
no responsibility for, the authenticity, validity, accuracy, or completeness of
any notice, financial statement, or other document or information received by
Chase or any Participating Bank in connection with, or otherwise referred to in,
any of the Loan Documents, and (6) shall not be required to make any inquiry
concerning the observance or performance of any agreement contained in, or
conditions of, any of the Loan Documents, or to inspect the property, books, or
records of the Borrower or any Person.
Notwithstanding the provisions of the first paragraph of this Section 4.08,
Chase agrees that it will not take any of the following actions without the
written consent of each Participating Bank: (1) waive any default by the
Borrower involving the payment of money to Chase pursuant to any of the Loan
Documents; (2) extend the maturity date of any Letter of Credit beyond ninety
(90) days after the Revolving Credit Termination Date; (3) increase the amount
of the Trade Letter of Credit Commitment or the Standby Letter of Credit
Commitment; (4) reduce the fees charged on the Letters of Credit below the
amount required to be paid to Chase or to the Participating Banks pursuant to
the terms of this Article IV; or (5) release any Collateral, except as otherwise
contemplated in any Loan Documents. Chase shall be fully justified in failing or
refusing to take any action under any of the Loan Documents unless it shall
first receive such advice or concurrence of the Participating Banks.
Chase and the Participating Banks may lend money to, accept deposits from, and
generally engage in any kind of business with the Borrower as freely as though
no Participation had been granted to a Participating Bank.
Section 4.09. Independent Investigation by the Participating Banks. Each
Participating Bank acknowledges (1) that Chase has provided such Participating
Bank with copies of all of the Loan Documents and the Borrower has provided, or
granted such Participating Bank access to certain financial data and other
information pertaining to the Borrower and the Guarantor that such Participating
Bank has requested in order to enable it to make an independent, informed
judgment with respect to the desirability of purchasing Participation in the
Letters of Credit, (2) that Chase has not made any representations or warranties
to such Participating Bank and that no prior or future act by Chase, including,
without limitation, any review of the affairs of the Borrower, shall be deemed
to constitute a representation or warranty of Chase, and (3) that such
Participating Bank has independently, without reliance upon Chase, and based on
such information as such Participating Bank has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial condition, and general credit worthiness of the Borrower, made its own
analysis of the value and Lien status of any Collateral, and made its own
decision to execute this Agreement and thereby purchase Participation in
accordance with this Article IV in the Letters of Credit. Each Participating
Bank agrees that, independently and without reliance upon Chase or any
representations or statements of Chase, and based on such information as such
Participating Bank deems appropriate at the time, it will continue to make and
rely, upon its own credit analysis and decisions in taking or not taking any
action under this Article IV or any of the Loan Documents.
Section 4.10. Participating Banks' Ownership of Interests in the Participation;
Repurchases by Chase.
Each Participating Bank hereby represents and warrants to Chase that the
purchase of its Participation in the Letters of Credit (1) is a legal investment
pursuant to the Law under which such Participating Bank is organized and
operates, (2) has been duly authorized and approved by all necessary action of
the management of such Participating Bank, and (3) is made for such
Participating Bank's own account for the purpose of investment only and with no
present intention of disposing of the same.
Upon the occurrence of an Event of Default and failure to consent to a change in
this Agreement where such Participating Bank's consent is required pursuant to
them as of this Article IV, Chase, or any party designated by it, shall have the
right (but not the obligation) to repurchase such Participating Bank's
Participation in any Letter of Credit for a purchase price equal to any unpaid
amount due the Participating Bank with respect to such Participation. Upon
demand and payment therefor, such Participating Bank shall promptly transfer to
Chase its Participation in any such Letter of Credit by executing and delivering
to Chase an instrument of transfer in form and substance satisfactory to Chase
and such Participating Bank; provided, however, that failure by such
Participating Bank to do so shall not affect Chase's repurchase of such
Participating Bank's Participation in any such Letter of Credit, which
repurchase shall be effective upon payment therefor by Chase to such
Participating Bank. At any time before each payment, Chase may withdraw and
terminate its offer to repurchase such Participating Bank's Participation in any
such Letter of Credit prior to the payment of such price.
ARTICLE V. GUARANTY
Section 5.01. Guaranty. Each Guarantor hereby jointly and severally irrevocably,
absolutely and unconditionally guarantees to each Bank Party and their
successors, endorsees, transferees and assigns the prompt and complete payment
by Borrower, as and when due and payable (whether at stated maturity or by
required prepayment, acceleration, demand or otherwise), of all indebtedness,
obligations and liabilities of the Borrower to each Bank Party now existing or
hereafter incurred under or arising out of or in connection with the Notes, the
Letters of Credit, this Agreement and the other Loan Documents whether for
principal, interest, reimbursement obligations, fees, expenses, or otherwise and
all other obligations of the Borrower to each Bank Party (all such indebtedness,
obligations and liabilities being herein called the "Obligations"); and agrees
to pay on demand any and all expenses, (including counsel fees and expenses)
which may be paid or incurred by any Bank Party in collecting any or all of the
Obligations and/or enforcing any rights under any of the Loan Documents or under
the Obligations (the "Guaranty"). The Guaranty of each Guarantor of the payment
of the Obligations is such Guarantor's "Guaranty Obligation".
Section 5.02. Guarantor's Guaranty Obligations Unconditional. Each Guarantor
hereby guarantees that the Obligations will be paid strictly in accordance with
the terms of the Loan Documents, regardless of any Law now or hereafter in
effect in any jurisdiction affecting any such terms or, the rights of any Bank
Party with respect thereto. The obligations and liabilities of each Guarantor
under this Guaranty shall be to the extent permitted by applicable law absolute
and unconditional irrespective of: (1) any lack of validity or enforceability of
any of the Obligations, any Loan Documents, or any agreement or instrument
relating thereto; (2) any change in the time, manner or place of payment of, or
in any other term in respect of, all or any of the Obligations, or any other
amendment or waiver of or consent to any departure from any Loan Documents or
any other documents or instruments executed in connection with or related to the
Obligations; (3) any exchange or release of, or non-perfection of any Lien on or
in, any Collateral, or any release or amendment or waiver of or consent to any
departure from any other guaranty, for all or any of the Obligations; or (4) any
other circumstances which might otherwise constitute a defense (other than
indefeasible payment in full) available to, or a discharge of, the Borrower or
any other guarantor in respect of the Obligations of any Guarantor in respect of
this Guaranty.
This Guaranty is a continuing guaranty and shall remain in full force and effect
until: (1) the payment in full of all the Obligations and (2) the payment of the
other expenses to be paid by the Guarantors pursuant hereto. This Guaranty shall
continue to be effective or shall be reinstated, as the case may be, if at any
time any payment, or any part thereof, of any of the Obligations is rescinded or
must otherwise be returned by any Bank Party upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Borrower or otherwise, all as
though such payment had not been made.
The obligations and liabilities of each Guarantor under this Guaranty shall not
be conditioned or contingent upon the pursuit by the Agent or any Bank or any
other Person at any time of any right or remedy against the Borrower or any
other Person which may be or become liable in respect of all or any part of the
Obligations or against any Collateral or security or guarantee therefor or right
of setoff with respect thereto.
Each Guarantor hereby consents that, without the necessity of any reservation of
rights against any Guarantor and without notice to or further assent by any
Guarantor, any demand for payment of any of the Obligations made by any Bank
Party may be rescinded by such Bank Party and any of the Obligations continued
after such rescission.
Section 5.03. Waivers. To the extent permitted by applicable law, each Guarantor
hereby waives: (1) promptness and diligence; (2) notice of or proof of reliance
by any Bank Party upon this Guaranty or acceptance of this Guaranty; (3) notice
of the incurrence of any Obligation by the Borrower or the renewal, extension or
accrual of any Obligation; (4) notice of any actions taken by any Bank Party or
the Borrower or any other party under any Loan Document, or any other agreement
or instrument relating to the Obligations; (5) all other notices, demands and
protests, and all other formalities of every kind in connection with the
enforcement of the Obligations or of the obligations of any Guarantor hereunder,
the omission of or delay or which, but for the provisions of this Section 5.03,
might constitute grounds for relieving any Guarantor of its obligations
hereunder; and (6) any requirement that any Bank Party protect, secure, perfect
or insure any Lien on any property subject thereto or exhaust any right or take
any action against the Borrower or any other Person or any Collateral.
Section 5.04. Subrogation. Each Guarantor agrees that it hereby defers any
rights which it may acquire by way of subrogation under this Guaranty, whether
acquired by any payment made hereunder, by any setoff or application of funds of
such Guarantor by any Bank Party or otherwise until the Obligations have been
paid in full.
Section 5.05. Limitation of Liability. The obligations of each Guarantor
hereunder shall be limited to an aggregate amount equal to the largest amount
that would not render its obligations hereunder subject to avoidance under
Section 548 of the United States Bankruptcy Code or any comparable provision of
any applicable state law.
ARTICLE VI. CONDITIONS PRECEDENT
Section 6.01. Conditions Precedent to Initial Use of a Credit Facility on and
after the Closing Date. The obligations of the Banks on or after the Closing
Date to make a Revolving Credit Loan and the obligation of Chase to issue the
initial Letter of Credit is subject to the condition precedent that the Banks
shall have received on or before the Closing Date each of the following
documents, in form and substance satisfactory to the Banks and their counsel,
and each of the following requirements shall have been fulfilled:
(a) Evidence of Due Organization and all Corporate Actions by the Borrower
and each Guarantor. A certificate of the Secretary or Assistant Secretary
of the Borrower and each Guarantor, dated the Closing Date, attesting to
the certificate of incorporation and by-laws of the Borrower and each
Guarantor and all amendments thereto and to all corporate actions taken by
the Borrower and each Guarantor, including resolutions of its board of
directors, authorizing the execution, delivery and performance of the Loan
Documents, and each other document to be delivered pursuant to the Loan
Documents;
(b) Incumbency and Signature Certificates of the Borrower and each
Guarantor. A certificate of the Secretary or Assistant Secretary of the
Borrower and each Corporate Guarantor, dated the Closing Date, certifying
the names and true signatures of the officers of the Borrower and each
Guarantor authorized to sign the Loan Documents to which it is a party, and
the other documents to be delivered pursuant to the Loan Documents;
(c) Good Standing Certificates of the Borrower and each Guarantor. A
Certificate, dated reasonably near the Closing Date, from the Secretary of
State (or other appropriate official) of the jurisdiction of incorporation
of the Borrower and each Guarantor certifying as to the due incorporation
and good standing of the Borrower or such Guarantor and certificates, dated
reasonably near the Closing Date, from the Secretary of State (or other
appropriate official) of each other jurisdiction where the Borrower and
each Guarantor is required to be qualified to conduct business, certifying
that the Borrower or such Guarantor is duly qualified to do such business
and is in good standing in each such state;
(d) Notes. The Revolving Credit Notes;
(e) Borrower Security Agreement. The Borrower Security Agreement duly
executed by Borrower together with (a) duly executed financing statements
(UCC-l) previously filed under the Uniform Commercial Code of all
jurisdictions necessary or, in the opinion of the Agent or any Bank,
desirable to perfect the security interest created by such Security
Agreement; and (b) Uniform Commercial Code searches identifying all of the
financing statements on file with respect to Borrower in all jurisdictions
referred to under (a), including the financing statements filed by the
Agent against such party indicating that no party other than the Agent
claims an interest in any of the Collateral except with respect to
Permitted Liens;
(f) The Guarantor Security Agreements. The Guarantor Security Agreements
duly executed by the Guarantors (other than HIL) together with (a) duly
executed financing statements (UCC-l) previously filed under the Uniform
Commercial Code of all jurisdictions necessary or, in the opinion of the
Agent or any Bank, desirable to perfect the security interest created by
such Security Agreement; and (b) Uniform Commercial Code searches
identifying all of the financing statements on file with respect to the
Subsidiaries in all jurisdictions referred to under (a), including the
financing statements filed by the Agent against such party indicating that
no party other than the Agent claims an interest in any of the Collateral
except with respect to Permitted Liens;
(g) Termination or Assignment of UCC Financing Statements terminating or
assigning Liens other than Permitted Liens;
(h) Borrower Pledge Agreement. The Borrower Pledge Agreement duly executed
by Borrower, together with the certificates representing the shares pledged
pursuant to the Borrower Pledge Agreement and undated stock powers executed
in blank for each such certificate;
(i) Hampshire Pledge Agreement. The Hampshire Pledge Agreement duly
executed by Hampshire, together with the certificates representing the
shares pledged pursuant to the Hampshire Pledge Agreement and undated stock
powers executed in blank for such certificates.
(j) Intercreditor Agreement: The Intercreditor Agreement duly executed by
each of the Insurance Companies and the Banks;
(k) Opinions of Counsel for Borrower. A favorable opinion of ▇▇▇▇▇▇▇ ▇▇▇▇ &
▇▇▇▇▇▇▇▇▇, counsel for the Borrower and each Guarantor, addressed to all
Banks, dated the Closing Date;
(l) Insurance Coverage. A certificate from Borrower's and Guarantors'
insurance carriers evidencing the coverage required by Section 8.05 (which
certificates shall show that the Agent or the Insurance Companies is an
additional insured and loss payee);
(m) Payment of Fees. Payment in full to the Agent of all fees required to
be paid to the Agent pursuant to the terms of the Fee Letter; and payment
in full of all other fees required to be paid in accordance with the Loan
Documents;
(n) Officer's Certificate. The following statements shall be true and the
Agent shall have received a certificate signed by a duly authorized officer
of the Borrower dated the Closing Date stating that:
(i) The representations and warranties contained in this Agreement and
in each of the other Loan Documents are correct on and as of Closing
Date as though made on and as of such date; and
(ii) No Default or Event of Default has occurred and is continuing,
and
(iii) Borrower has evaluated the impact of the year "2000" computer
problem on its business and has determined that such will not have a
material adverse change.
(o) Assignment of HIL Note. An assignment by Borrower of the HIL Note in
form acceptable to the Banks.
(p) Additional Documentation. Such other approvals, opinions or documents
as the Agent or any Bank may reasonably request.
Section 6.02. Conditions Precedent to All Credit Facilities. The obligations of
the Banks or Chase, as the case may be, to provide each Credit Facility, shall
be subject to the further conditions precedent that on the date of providing
such Credit Facility:
(1) The following statements shall be true:
(a) (i) the representations and warranties with a materiality
provision contained in this Agreement and in each of the other Loan
Documents are correct on and as of the date of providing such Credit
Facility as though made on and as of such date and (ii) all the
representations and warranties with no materiality provision contained
in this Agreement and in each of the other Loan Documents are correct
in all material respects on and as of the date of providing such
Credit Facility as though made on and as of such date; and
(b) no Default or Event of Default has occurred and is continuing, or
could result from providing such Credit Facility;
(2) The Agent shall have received such other approvals, opinions or
documents as the Agent or any Bank may reasonably request.
Section 6.03. Deemed Representation. Each request under a Credit Facility and
acceptance by the Borrower of any proceeds of such Revolving Credit Loan or the
issuance of any Letter of Credit, as the case may be, shall constitute (1) for
representations and warranties with a materiality provision, a representation
and warranty that the statements contained in Section 6.02(1) are true and
correct both on the date of such notice and as of the date of the providing of
such Revolving Credit Loan or issuance of such Letter of Credit, as the case may
be, and (2) for representations and warranties with no materiality provision, a
representation and warranty that the statements contained in Section 6.02(1) are
true and correct in all material respects both on the date of such notice and as
of the date of the providing of such Revolving Credit Loan or issuance of such
Letter of Credit, as the case may be.
ARTICLE VII. REPRESENTATIONS AND WARRANTIES
The Borrower and each Guarantor hereby represents and warrants that:
Section 7.01. Incorporation. Good Standing and Due Qualification. The Borrower
and each Guarantor is duly incorporated, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, has the corporate power
and authority to own its assets and to transact the business in which it is now
engaged or proposed to be engaged, and is duly qualified as a foreign
corporation and in good standing under the laws of each other jurisdiction in
which such qualification is required, except to the extent that its failure to
be so qualified could not result in a Material Adverse Change.
Section 7.02. Corporate Power and Authority; No Conflicts. The execution,
delivery and performance by the Borrower and each Guarantor of the Loan
Documents to which it is a party have been duly authorized by all necessary
corporate action and do not and will not: (1) require any consent or approval of
its stockholders which has not been obtained; (2) contravene its certificate of
incorporation or by-laws; (3) violate any provision of, or require any filing
(other than the filing of the financing statements contemplated by the Security
Documents), registration, consent or approval under any Law (including, without
limitation, Regulations T, U and X of the Board of Governors), order, writ,
judgment, injunction, decree, determination or award presently in effect having
applicability to the Borrower or any Guarantor; (4) result in a breach of or
constitute a default under or require any consent under any indenture or loan or
credit agreement or any other agreement, lease or instrument to which the
Borrower or any Guarantor is a party or by which it or its properties may be
bound or affected; (5) result in, or require, the creation or imposition of any
Lien (other than as created under the Security Documents), upon or with respect
to any of the properties now owned or hereafter acquired by the Borrower or any
Guarantor; or (6) cause such corporation to be in default under any such Law,
order, writ, judgment, injunction, decree, determination or award or any such
indenture, agreement, lease or instrument.
Section 7.03. Legally Enforceable Agreements. Each Loan Document to which the
Borrower and each Guarantor is a party is a legal, valid and binding obligation
of the Borrower and each Guarantor, enforceable against the Borrower and each
Guarantor in accordance with its terms, except to the extent that such
enforcement may be limited by applicable bankruptcy, insolvency and other
similar laws affecting creditors' rights generally.
Section 7.04. Litigation. As of the Closing Date, there are no actions, suits or
proceedings (private or governmental) pending or, to the knowledge of the
Borrower or any Consolidated Subsidiary, threatened, against or affecting the
Borrower or any Consolidated Subsidiary before any Governmental Authority or
arbitrator, except as set forth in Schedule 7.04.
Section 7.05. Financial Statements. The combined balance sheets of the Borrower
and its Subsidiaries as of December 31, 1997, the related combined statements of
income and retained earnings, and combined statements of cash flows of the
Borrower and its Subsidiaries for the Fiscal Year, then ended, and the
accompanying footnotes, together, with the opinion thereon, dated February 27,
1998, of Price Waterhouse LLC, independent certified public accountants, copies
of which have been furnished to the Banks, fairly present the financial
condition of the Borrower and its Subsidiaries as at such dates and the results
of the operations of the Borrower and its Subsidiaries for the periods covered
by such statements, all in accordance with GAAP consistently applied.
As of the Closing Date, there has been no Material Adverse Change since December
31, 1997.
As of the Closing Date, there are no liabilities of the Borrower or any of the
Subsidiaries, fixed or contingent, which are material but are not reflected in
the financial statements referred to above or in the notes thereto, other than
liabilities arising in the ordinary course of business since December 31, 1997.
No information, exhibit, or report furnished by the Borrower or any Consolidated
Subsidiaries to the Agent or any Bank in connection with the negotiation of this
Agreement and the other Loan Documents contained any material misstatement of
fact or omitted to state a material fact or any fact necessary to make the
statements contained therein not materially misleading.
Section 7.06. Ownership and Liens. The Borrower and each Consolidated Subsidiary
have title to, or valid leasehold interests in, all of their properties and
assets, real and personal, including the properties and assets, and leasehold
interests reflected in the financial statements referred to in Section 7.05
(other than any properties or assets disposed of in the ordinary course of
business), and none of the properties and assets owned by the Borrower or any
Consolidated Subsidiary and none of their leasehold interests are subject to any
Lien, except as may be permitted under this Agreement.
Section 7.07. Taxes. The Borrower and each Consolidated Subsidiary have filed
all tax returns (federal, state and local) required to be filed and have paid
all taxes, assessments and governmental charges and levies thereon to be due,
including interest and penalties, except to the extent they are the subject of a
Good Faith Contest.
Section 7.08. ERISA. Each Plan is administered in compliance in all material
respects with all applicable provisions of ERISA and the Code except where such
failure would not reasonably be expected to result in a Material Adverse Change.
Neither a Reportable Event nor a Prohibited Transaction has occurred with
respect to any Plan; no notice of intent to terminate a Plan has been filed nor
has any Plan been terminated; no circumstance exists which constitutes grounds
under Section 4042 of ERISA entitling the PBGC to institute proceedings to
terminate, or appoint a trustee to administer, a Plan, nor has the PBGC
instituted any such proceedings; neither the Borrower nor any Guarantor nor any
ERISA Affiliate has completely or partially withdrawn under Section 4201 or 4204
of ERISA from a Multiemployer Plan; and no Plan which is a Multiemployer Plan is
in reorganization (within the meaning of Section 4241 of ERISA), is insolvent
(within the meaning of Section 4245 of ERISA) or is terminating; the Borrower,
each Guarantor and each ERISA Affiliate has met its minimum funding requirements
under ERISA with respect to all of its Plans subject to Title IV of ERISA and
there are no unfunded vested liabilities except as set forth in Schedule 7.08;
and neither the Borrower nor any Guarantor nor any ERISA Affiliate has incurred
any liability to the PBGC under ERISA; and neither the Borrower, any Guarantor,
nor any ERISA Affiliate has liability for retiree medical, life insurance or
other death benefits (contingent or otherwise) other than as a result of a
continuation of medical coverage required under Section 4980B of the Code or as
required pursuant to an employment agreement.
Section 7.09. Ownership of Guarantors; Investments. As of the Closing Date, all
of the outstanding capital stock or other interest of each Guarantor (other than
the Exempt Preferred Stock) is set forth on Schedule 7.09 and has been validly
issued, is fully paid and nonassessable and, is owned free and clear of all
Liens. As of the Closing Date, Schedule 7.09 lists all capital stock and other
equity securities or other debt or equity investments owned or held by the
Borrower or any Consolidated Subsidiary.
Section 7.10. Operation of Business. The Borrower and each Consolidated
Subsidiary possess all licenses, permits, franchises, and trade names, or rights
thereto, to conduct their business substantially as now conducted and as
presently proposed to be conducted, and the Borrower and each Consolidated
Subsidiary are not in violation of any valid rights of others with respect to
any of the foregoing.
Section 7.11. No Default on Outstanding Judgments or Orders. The Borrower and
each Consolidated Subsidiary have satisfied all judgments and the Borrower and
each Consolidated Subsidiary are not in default with respect to any judgment,
writ, injunction, or decree of any court, arbitrator or any rule or regulation
of any federal, state, municipal or other Governmental Authority, commission,
board, bureau, agency or instrumentality, domestic or foreign.
Section 7.12. No Defaults on Other Agreements. Neither the Borrower nor any
Consolidated Subsidiary is a party to any indenture, loan or credit agreement or
any lease or other agreement or instrument or subject to any certificate of
incorporation or corporate restriction which is likely to result in a Material
Adverse Change. Neither the Borrower nor any Consolidated Subsidiary is in
default in any respect in the performance, observance or fulfillment of any of
the obligations, covenants or conditions contained in any agreement or
instrument where such failure to perform, observe or fulfill is likely to result
in a Material Adverse Change. Neither the Borrower nor any Consolidated
Subsidiary is a party to any agreement which restricts or prohibits any
Consolidated Subsidiary from declaring and/or paying dividends to the Borrower
other than as specified in Schedule 7.12.
Section 7.13. Labor Disputes and Acts of God. Neither the business nor the
properties of the Borrower or any Consolidated Subsidiary are affected by any
fire, explosion, accident, strike, lockout or other labor dispute, drought,
storm, hail, earthquake, embargo, act of God or of the public enemy or other
casualty (whether or not covered by insurance), except as specified in Schedule
7.13.
Section 7.14. Governmental Regulation. Neither the Borrower nor any Consolidated
Subsidiary is subject to regulation under the Public Utility Holding Company Act
of 1935, the Investment Company Act of 1940, the Interstate Commerce Act, the
Federal Power Act or any statute or regulation limiting its ability to incur
indebtedness for money borrowed as contemplated hereby.
Section 7.15. Partnerships. Neither the Borrower nor any Consolidated Subsidiary
is a partner in any partnership.
Section 7.16. Environmental Protection. The Borrower and each Consolidated
Subsidiary have obtained all permits, licenses and other authorizations which
are required under all Environmental Laws, except to the extent failure to have
any such permit, license or authorization is not likely to result in a Material
Adverse Change. The Borrower and each Consolidated Subsidiary are in compliance
with all Environmental Laws and the terms and conditions of the required
permits, licenses and authorizations, and is also in compliance with all other
applicable limitations, restrictions, obligations, schedules and timetables
contained in those Laws or contained in any plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated or approved by
a Governmental Authority thereunder, except to the extent failure to comply is
not likely to result in a Material Adverse Change.
The Collateral contains no Hazardous Materials that, under any Environmental Law
then in effect, (1) would impose liability on the Borrower or any Consolidated
Subsidiary that could result in a Material Adverse Change or (2) could result in
the imposition of a Lien on the Collateral or any portion thereof or any other
assets of the Borrower or any Consolidated Subsidiary, in each case if not
properly handled in accordance with applicable Law.
Section 7.17. Solvency. The Borrower and each Guarantor is, and upon
consummation of the transactions contemplated by this Agreement, the other Loan
Documents, and any other documents, instruments or agreements relating thereto,
will be Solvent.
Section 7.18. Year 2000. Any reprogramming required to permit the proper
functioning, in and following the year 2000, of (i) the Borrower's computer
systems and (ii) equipment containing embedded microchips (including systems and
equipment supplied by others or with which Borrower's systems interface) and the
testing of all such systems and equipment, as so reprogrammed, will be completed
by June 1, 1999. The cost to the Borrower of such reprogramming and testing and
of the reasonably foreseeable consequences of year 2000 to the Borrower
(including, without limitation, reprogramming errors and the failure of others'
systems or equipment) will not result in a Material Adverse Change. Except as
such of the reprogramming referred to in the preceding sentence as may be
necessary, the computer and management information systems of the Borrower and
its Subsidiaries are and, with ordinary course upgrading and maintenance, will
continue for the term of this Agreement to be, sufficient to permit the Borrower
to conduct its business without Material Adverse Change.
ARTICLE VIII. AFFIRMATIVE COVENANTS
So long as any of the Notes shall remain unpaid or any Letter of Credit
Obligation shall remain outstanding or any Bank or Chase shall have a Commitment
hereunder, or any other amount is owing by the Borrower to any Bank Party
hereunder or under any other Loan Document, the Borrower and each Guarantor,
except HIL, shall:
Section 8.01. Maintenance of Existence. Preserve and maintain its corporate
existence and good standing in the jurisdiction of its incorporation, and
qualify' and remain qualified as a foreign corporation in each jurisdiction in
which such qualification is required, except to the extent that its failure to
so qualify could not result in a Material Adverse Change.
Section 8.02. Conduct of Business. Continue to operate its business in a manner
consistent with the conduct of it on and prior to the Closing Date.
Section 8.03. Maintenance of Properties. Maintain, keep and preserve all of its
properties, (tangible and intangible) necessary or used in the proper conduct of
its business in good working order and condition, ordinary wear and tear
excepted.
Section 8.04. Maintenance of Records. Keep adequate records and books of
account, in which complete entries will be made in accordance with GAAP,
reflecting all of its financial transactions.
Section 8.05. Maintenance of Insurance. Maintain insurance with financially
sound and reputable insurance companies or associations in such amounts and
covering such risks as are usually carried by companies engaged in the same or a
similar business and similarly situated and such other insurance as reasonably
required by the Banks.
Section 8.06. Compliance with Laws. Comply in all respects with all applicable
Laws, such compliance to include, without limitation, paying before the same
become delinquent all taxes, assessments and governmental charges imposed upon
it or upon its property, except (1) in the case of the failure to pay taxes,
such taxes are the subject of a Good Faith Contest, and (2) to the extent that
its failure to so comply is not likely to result in a Material Adverse Change.
Section 8.07. Right of Inspection. Except upon the occurrence of an Event of
Default and during the continuance thereof, upon prior notice, at any time
during normal business hours, permit the Agent or any Bank or any agent or
representative thereof, to examine and make copies and abstracts from the
records and books of account of, and visit the properties of, the Borrower and
any Consolidated Subsidiary and to discuss the affairs, finances and accounts of
the Borrower and any Consolidated Subsidiary with any of their respective
officers and directors and independent accountants; permit the Agent or any
agent or representative thereof, to examine and audit the inventory and
receivables of the Borrower and each Consolidated Subsidiary, such costs to be
borne by the Banks.
Section 8.08. Reporting Requirements. Furnish directly to each of the Banks: (1)
Borrower's quarterly Financial Statements. As soon as available and in any event
within forty-five (45) days after the end of each of the first three quarters of
each Fiscal Year of the Borrower, the consolidated and consolidating balance
sheets of the Borrower, and (a) its Consolidated Subsidiaries, and (b) all of
its Subsidiaries as of the end of such quarter, consolidated and consolidating
statements of income, statements of stockholders' equity and cash flow
statements of the Borrower and (a) its Consolidated Subsidiaries and (b) all of
its Subsidiaries both for such quarter and for the period commencing at the end
of the previous Fiscal Year and ending with the end of such quarter, all in
reasonable detail and stating in comparative form corresponding unaudited
consolidated figures for the corresponding date and period in the previous
Fiscal Year and all prepared in accordance with GAAP consistently applied and
certified by the chief financial officer of the Borrower (subject to year-end
adjustments);
(2) Borrower's Annual Financial Statements. As soon as available and in any
event within one hundred twenty (120) days after the end of each Fiscal
Year of the Borrower, the consolidated and consolidating balance sheets of
the Borrower and its Subsidiaries, as of the end of such Fiscal Year, the
consolidated and consolidating statements of income, statements of changes
in stockholders' equity and cash flow statements of the Borrower and its
Subsidiaries for such Fiscal Year, all in reasonable detail and stating in
comparative form the respective consolidated figures for the corresponding
date and period in the Fiscal Year and all prepared in accordance with GAAP
consistently applied, which consolidated balance sheets and consolidated
statements of income, statements of changes in stockholders' equity and
cash flow statements of the Borrower and its Subsidiaries, shall be audited
by such independent certified public accountants selected by the Borrower
and acceptable to the Banks and with such consolidating financial
statements also being consolidated to the Borrower and the Consolidated
Subsidiaries and including balance sheets and consolidating statements of
income, statements of changes and stockholders' equity and cash flow
statements prepared in accordance with GAAP consistently applied and
certified by the Chief Financial Officer of the Borrower;
(3) Borrowing Base Certificate. Within twenty-one (21) days after the end
of each month, a Borrowing Base Certificate, in form and substance
satisfactory to the Agent showing compliance with the Borrowing Base and
showing outstanding indebtedness listed in Section 9.0 1(a), (b), (c) and
(d);
(4) Management Letters. Promptly upon receipt thereof, copies of any
reports submitted to the Borrower and any Consolidated Subsidiary by
independent certified public accountants in connection with the examination
of the financial statements of such Borrower and Consolidated Subsidiary
made by such accountants;
(5) Certificate of No Default. Within forty-five (45) days after the end of
each quarter of each Fiscal Year of the Borrower, a certificate of the
chief financial officer of the Borrower (a) certifying that no Default or
Event of Default has occurred and is continuing or, if a Default or Event
of Default has occurred and is continuing, a statement as to the nature
thereof and the action which is proposed to be taken with respect thereto,
and (b) with computations demonstrating compliance with the covenants
contained in Article X, as of the end of that fiscal period.
(6) Notice of Litigation. Promptly after the commencement thereof, notice
of all actions, suits, and proceedings before any Governmental Authority,
affecting the Borrower or any Consolidated Subsidiary which, if determined
adversely to the Borrower or any Consolidated Subsidiary, could result in a
Material Adverse Change;
(7) Notices of Defaults and Events of Default. As soon as possible and in
any event within ten (10) days after the occurrence of each Default or
Event of Default a written notice setting forth the details of such Default
or Event of Default and the action which is proposed to be taken with
respect thereto;
(8) ERISA Reports. As soon as possible and in any event within twenty (20)
days after the Borrower knows or has reason to know that any Reportable
Event or Prohibited Transaction has occurred with respect to any Plan or
that the PBGC or the Borrower has instituted or will institute proceedings
under Title IV of ERISA to terminate any Plan or that the Borrower, or any
ERISA Affiliate has completely or partially withdrawn from a Multiemployer
Plan or that a Plan which is a Multiemployer Plan is in reorganization
(within the meaning of Section 4241 of ERISA), is insolvent (within the
meaning of Section 4245 of ERISA) or is terminating, the Borrower will
deliver to each of the Banks a certificate of the chief financial officer
of the Borrower setting forth details as to such Reportable Event or
Prohibited Transaction or Plan termination or withdrawal or reorganization
or insolvency and the action the Borrower proposes to take with respect
thereto;
(9) Annual Business Plan. As soon as possible and in any event no later
than March 31 in any year, a copy of an annual consolidated business plan
in form and substance acceptable to the Banks with respect to the following
Fiscal Year (consisting of consolidated balance sheets of the Borrower and
its Subsidiaries, and consolidated statements of earnings and cash flow
statements of the Borrower and its Subsidiaries, prepared on a quarterly
basis for such year) for the Borrower and its Subsidiaries approved by the
Borrower's Board of Directors, together with the assumptions and
projections on which the business plan is based. Any material changes made
to the plan during the year will be provided by the Borrower as soon as
possible.
(10) Insurance. Upon the occurrence of any casualty, damage or loss,
whether or not giving rise to a claim under any insurance policy, in an
amount greater than Five Hundred Thousand ($500,000) Dollars, notice
thereof, together with copies of any document relating thereto (including
copies of any such claim) in possession or control of the Borrower and any
Consolidated Subsidiary or any agent of the Borrower and any Consolidated
Subsidiary; and immediately after the occurrence thereof, written notice of
any cancellation of any insurance policy required to be maintained by the
Borrower and any Consolidated Subsidiary pursuant to Section 6.05 hereof.
(11) Material Adverse Change. As soon as possible and in any event within
five (5) days after the occurrence of any event or circumstance which is
likely to result in or has resulted in a Material Adverse Change, written
notice thereof.
(12) Environmental Notices. As soon as possible and in any event within ten
(10) days after receipt by any corporate executive officer, copies of all
Environmental Notices received by the Borrower or any Consolidated
Subsidiary which are not received in and do not relate to the ordinary
course of the Borrower or such Consolidated Subsidiary's business.
(13) General Information. Such other information respecting the conditions
or operations, financial or otherwise, of the Borrower or any Consolidated
Subsidiary as the Agent or any Bank may from time to time reasonably
request.
Section 8.09. Compliance With Environmental Laws. Comply in all respects with
all applicable Environmental Laws where the failure to comply could result in a
Material Adverse Change.
Section 8.10. Additional Guarantor. Borrower shall cause Keynote Services
Limited ("Keynote") to become a Guarantor hereunder at such time as Keynote's
assets (as calculated in accordance with GAAP) equal or exceed One Hundred
Thousand ($100,000.00) Dollars.
ARTICLE IX. NEGATIVE COVENANTS
So long as any of the Notes shall remain unpaid or any Letter of Credit
Obligation shall remain outstanding or any Bank or Chase shall have any
Commitment hereunder or any other amount is owing by the Borrower to any Bank
Party hereunder or under any other Loan Document, the Borrower and each
Guarantor (excluding HIL and its Subsidiaries with respect to this Article IX),
shall not:
Section 9.01. Debt. Create, incur, assume or suffer to exist any Debt, except:
(1) Debt of the Borrower and the Guarantors under this Agreement, the
Notes, or any other Loan Document;
(2) Accounts payable to any Person that supplies goods or services to the
Borrower or any Guarantor, and other current liabilities (other than Debt)
incurred, in the ordinary course of business provided that all such
accounts and liabilities are paid in the ordinary course of business;
(3) Debt of the Borrower under the Insurance Company Loan Documents;
(4) Debt secured by purchase money Liens a) permitted by Section 9.03 and
b) of acquired properties and acquired Persons who become Consolidated
Subsidiaries;
(5) Debt to the parties listed on Schedule 9.01 in the amounts indicated;
provided however, that such Debt shall be limited to:
(a) term indebtedness existing as of December 31, 1997;
(b) a Two Million, Five Hundred Thousand ($2,500,000.00) Dollar
unsecured line of credit provided by Merchants National Bank to the
Borrower plus $465,000.00 in Standby Letters of Credit;
(c) a Two Million ($2,000,000.00) Dollar unsecured line of credit
provided by Banco Popular to Glamourette;
(d) up to an aggregate of Six Million ($6,000,000.00) Dollars in
unsecured lines of credit provided by MTB Bank and Marine Midland Bank
to Segue to be used for trade letters of credit, which may include
loans and advances repayable in ten days or less and in amounts not to
exceed Five Hundred Thousand ($500,000.00) Dollars in the aggregate
and any time outstanding
(e) Renewals and replacements provided by the same or other financial
institutions that do not increase the principal amount of Debt
hereunder or give new security;
(6) Guaranties permitted under Section 9.02.
Section 9.02. Guaranties. Assume, guarantee, endorse or otherwise be or become
directly or contingently responsible or liable (including, but not limited to an
agreement to purchase any obligation, stock, assets, goods or services or to
supply or advance any funds, assets, goods or services, or an agreement to
maintain or cause such Person to maintain a minimum working capital or net worth
or otherwise to assure the creditors of any Person against loss) for the
obligations of any Person, except (1) guaranties by endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business, (2) the Guaranty Obligations, (3) guaranties by the Borrower
or any Guarantor of accounts payable incurred in the ordinary course of business
by the Borrower or any Guarantor, as the case may be, and (4) guaranties by
Borrower and the Guarantors for the benefit of HIL, but not in excess of the
amount provided in Section 9.10, (5) guaranties under Insurance Company Loan
Documents, (6) guaranties up to $100,000.00 of trade obligations of other
Persons provided such guaranties are within the amount of Restricted Payments
and (7) guaranties of Debt described in Section 9.01(5).
Section 9.03. Liens. Create, incur, assume or suffer to exist any Lien, upon or
with respect to any of its real or personal properties (including, without
limitation, leasehold interests, leasehold improvements and any other interest
in real property or fixtures), now owned or hereafter acquired, except the
following ("Permitted Liens"):
(1) Liens granted under and pursuant to the Loan Documents;
(2) Liens granted under and pursuant to the Insurance Company Loan
Documents.
(3) Liens for taxes or assessments or other government charges or levies if
not yet due and payable or if due and payable if they are the subject of a
Good Faith Contest;
(4) Liens imposed by law, such as mechanic's, materialmen's, landlord's,
warehousemen's and carrier's Liens, and other similar Liens, securing
obligations incurred in the ordinary course of business which are not past
due for more than ninety (90) days, or which are the subject of a Good
Faith Contest;
(5) Liens under workmen's compensation, unemployment insurance, social
security or similar legislation (other than ERISA) or to secure letters of
credit obtained in connection therewith;
(6) Liens of BNY Financial Corp. ("BNY") in its capacity as factor for the
Winona Knitting ▇▇▇▇▇, Division of Designers, but the foregoing shall not
be deemed to permit liens to secure loans and advances made by BNY under
the factoring agreement.
(7) Liens, deposits or pledges to secure the performance of bids, tenders,
contracts (other than contracts for the payment of money), leases
(permitted under the terms of this Agreement), public or statutory
obligations, surety, stay, appeal, indemnity, performance or other similar
bonds, or other similar obligations arising in the ordinary course of
business;
(8) judgment and other similar Liens arising in connection with court
proceedings, provided that the execution or other enforcement of such Liens
is effectively stayed and the claims secured thereby are the subject of a
Good Faith Contest;
(9) easements, rights-of-way, restrictions, zoning and other similar
encumbrances which, in the aggregate, do not materially interfere with the
occupation, use and enjoyment by the Borrower or any Guarantor of the
property or assets encumbered thereby in the normal course of its business
or materially impair the value of the property subject thereto;
(10) each of the Liens listed on Schedule 7.03 securing the Debt specified
on such Schedule, including any extension or modification thereof but not
the extension of such Lien to other property in whole or in part;
(11) purchase money Liens on any real property, fixtures or equipment
hereafter .acquired or the assumption of or taking subject to any Lien on
real property, fixtures or equipment existing at the time of such
acquisition, or a Lien incurred in connection with any conditional sale or
other title retention agreement or a Capital Lease; provided that:
(a) any property subject to any of the foregoing is acquired by the
Borrower or any Guarantor in the ordinary course of its business and
the Lien on any such property (if not preexisting) is created
contemporaneously with such acquisition or within 90 days thereof;
(b) the Debt secured by any Lien so created, assumed or existing shall
not exceed one hundred percent (100%) of the lesser of the cost or
fair market value as of the time of acquisition of the property
covered thereby including shipping and installation costs;
(c) each such Lien shall attach only to the property so acquired and
fixed improvements thereon.
Section 9.04. Sale of Assets. Sell, lease, assign, transfer or otherwise dispose
of any of its now owned or hereafter acquired assets, except for (1) inventory
disposed of in the ordinary course of business; (2) the sale or other
disposition of assets no longer necessary for the conduct of its business; (3)
the sale or other dispositions of assets not exceeding One Hundred Thousand
($100,000) Dollars per year; (4) the leasing of assets having an aggregate book
value not exceeding One Hundred Fifty Thousand ($150,000.00) Dollars; and (5)
accounts receivable of the Winona Knitting ▇▇▇▇▇, Division of Designers which
are factored by BNY.
Section 9.05. Transactions with Affiliates. Enter into any transaction,
including, without limitation, the purchase, sale or exchange of property or the
rendering of any service, with any Affiliate other than the Borrower or any
Consolidated Subsidiary or enter into any transaction, including, without
limitation, the purchase, sale or exchange of property or the rendering of any
service, with any such Affiliate, except for transactions among the Borrower and
its Consolidated Subsidiaries or in the ordinary course of and pursuant to the
reasonable requirements of the Borrower's or the Consolidated Subsidiary's
business and upon fair and reasonable terms no less favorable to the Borrower or
Consolidated Subsidiary than it would obtain in a comparable arms' length
transaction with a Person not an Affiliate, provided, however that Borrower and
Consolidated Subsidiaries may make loans, and advances to and investments in HIL
provided that all such loans, advances, investments and guaranties provided in
Section 9.02 hereof do not, in the aggregate, exceed the amount of permitted
Restricted Payments allowed in Section 9.10.
Section 9.06. Investments. Without the written approval of the Banks except as
provided in Section 9.05 and 9.10 of this Agreement, make, any loan or advance
to any Person or purchase or otherwise acquire, any capital stock, assets,
obligations or other securities of, make any capital contribution to, or
otherwise invest in, or acquire any interest in, any Person in excess of
$250,000.00, except: (a) direct obligations of the United States of America or
any agency or instrumentality thereof with maturities of one year or less from
the date of acquisition; (b) commercial paper of a domestic issuer or government
securities rated at least "A-1" by Standard & Poor's Corporation or "P-1" by
▇▇▇▇▇'▇ Investors Service, Inc.; (c) time deposits, demand deposits and
certificates of deposit with maturities of one year or less from the date of
acquisition issued by and commercial bank operating within the United States of
America having capital and surplus in excess of $50,000,000.00; (d) for stock,
obligations or securities received in settlement of debts (created in the
ordinary course of business) owing to the Borrower; (each of (a) (b) (c) and (d)
collectively "Permitted Investments") and (e) any Acquisition as defined herein.
For the purpose hereof, "Acquisition" means any transaction pursuant to which
the Borrower and any of its Consolidated Subsidiaries (i) acquires equity
securities (or warrants, options or other rights to acquire such securities) of
any corporation other than the Borrower or the Consolidated Subsidiaries or any
corporation, pursuant to a solicitation of tenders therefor, or in one or more
negotiated block, market or other transactions not involving a tender offer, or
a combination of any of the foregoing, except in connection with Section 9.06
(iii) or (ii) causes any such corporation to be merged into the Borrower or any
Consolidated Subsidiary, in any case pursuant to a merger, purchase of assets or
any reorganization providing for the delivery or issuance to the holders of such
corporation's then outstanding securities, in exchange for such securities, of
cash or securities of the Borrower, or a combination thereof or (iii) purchases
all or substantially all of the business or assets of any corporation or other
business entity, provided, however, that i) the acquired entity is engaged in
the same line of business as that of the Borrower or the Consolidated
Subsidiary; ii) the purchase price for such Acquisition does not exceed Five
Million ($5,000,000) Dollars of which the cash portion does not exceed Three
Million ($3,000,000) Dollars; and iii) such Acquisition is within the limits of
Restricted Payments set forth in Section 9.10 and unless approved by the Agent
and the Banks, after the exercise of due diligence, the accounts receivable and
inventory so acquired shall not be deemed Eligible Accounts or Eligible
Inventory.
Section 9.07. Mergers. Except as provided in Section 9.06, merge or consolidate
with, or sell, assign, lease or otherwise dispose of (whether in one transaction
or in a series of transactions) all or substantially all of its assets (whether
now owned or hereafter acquired) to any Person, except that the foregoing shall
not prohibit the merger of Consolidated Subsidiaries with and into each other or
into the Borrower, so long as at the time thereof or as a result thereof there
shall be no Default or Event of Default.
Section 9.08. Leases. Create, incur, assume, or suffer to exist any obligation
as lessee for the rental or hire of any real or personal property except: (1)
Capital Leases permitted under Section 9.03(11), (2) each of the retail and
warehouse leases in effect on this date and those retail and warehouse leases
entered into in the future, and (3) leases that do not in the aggregate require
the Borrower and its subsidiaries to make payments (including taxes, insurance,
maintenance, and similar expenses which the Borrower is required to pay under
the terms of the lease but excluding all payments based upon a percentage of
sales or revenues) in any Fiscal Year in excess of One Million Five Hundred
Thousand ($1,500,000) Dollars.
Section 9.09. Dividends. Declare or pay any cash dividends on capital stock of
the Borrower; or purchase, redeem, retire, or otherwise acquire for value any of
the capital stock or securities convertible into capital stock of the Borrower
now or hereafter outstanding or make any distribution of assets to its
stockholders as such whether in cash, assets, or in obligations of the Borrower
or any Consolidated Subsidiary, or allocate or otherwise set apart any sum for
the payment of any dividend or distribution on, or for the purchase, redemption,
or retirement of any shares of its capital stock, except in all cases for
transactions that are (a) made in common stock of the Borrower or (b) otherwise
permitted under Section 9.10.
Section 9.10. Restricted Payments. Notwithstanding anything to the contrary
contained in this ARTICLE IX, Borrower shall not declare or pay any cash
dividend, optional pre-payment of subordinated debt, issue any guaranties
(except as provided in Section 9.02), repurchase any shares of the Borrower or
make any advances or payments to, investments in, or issue guaranties for HIL to
the extent that such transactions exceed in the aggregate Twenty Million
($20,000,000.00) Dollars plus (i) 50% of the Consolidated Net Income of Borrower
and Guarantors (less 100% of the Consolidated Net Losses) earned after December
31, 1997 and (ii) cash proceeds from an Equity Issuance. Notwithstanding the
foregoing limitations, Glamourette may pay cash dividends on its Exempt
Preferred Stock outstanding from time to time and may redeem, retire, purchase
or otherwise acquire shares of its Exempt Preferred Stock from time to time. For
the avoidance of doubt, such payments and transactions relating to Exempt
Preferred Stock shall not constitute "restricted payments" for purposes of this
Agreement and the amounts thereof shall not be included in determining
compliance with the foregoing formula for any purpose.
Section 9.11. Fiscal Year. change its fiscal year to a period other than its
fiscal year in effect on the date hereof.
Section 9.12. Changes. Amendments or Modifications. Change, amend, modify or
supplement any of the following: (1) its certificate of incorporation; or (2)
by-laws.
ARTICLE X. FINANCIAL COVENANTS
So long as any of the Notes shall remain unpaid or any Letter of Credit
obligation shall remain outstanding or any Bank or Chase shall have any
Commitment hereunder or any other amount hereunder is owning by the Borrower to
any Bank party hereunder or under any other Loan Document:
Section 10.01.Consolidated Tangible Net Worth. The Borrower and its Consolidated
Subsidiaries shall maintain at all times a Consolidated Tangible Net Worth of
not less than the amount specified below:
$34,000,000.00 and increasing by fifty (50%) percent of the Consolidated
Net Income (without deduction or offset for net losses), earned after
December 31, 1997.
Section 10.02. Consolidated Fixed Charge Coverage Ratio. The Borrower and its
consolidated subsidiaries will maintain for each twelve (12) month period
calculated on a rolling four (4) quarter basis a ratio of (1) (a) consolidated
Earnings Before Interest, Taxes, Depreciation and Amortization for such period,
less (b) Consolidated Capital Expenditures made by the Borrower or any
Consolidated subsidiary during such period, less (c) Consolidated Taxes to 92)
the sum of (a) Consolidated Interest Expense for such period, plus (b)
Consolidated Principal Amortization of not less than the ratio specified below:
1.5 to 1
Section 10.03. Consolidated Leverage Ratio. The Borrower and its Consolidated
subsidiaries shall maintain at all times a ratio of (1) Consolidated total
Liabilities to (2) Consolidated Tangible Net Worth of not greater than the ratio
specified below:
1.75 to 1
Section 10.04. Consolidated Capital Expenditures. The Borrower and its
Consolidated Subsidiaries shall not make Consolidated Capital Expenditures in
the aggregate amount in any Fiscal Year of $5,000,000.00.
ARTICLE XI. EVENTS OF DEFAULT
Section 11.01. Events of Default. Any of the following events shall be an "Event
of Default":
(1) the Borrower shall: (a) fail to pay the principal of any Note or shall
fail to reimburse any Bank on a Letter of Credit as and when due and
payable; (b) fail to pay interest on any Note within five (5) Banking Days
of when such interest is due and payable; or (c) fail to pay within ten
(10) days after the request for payment is made any fees or expenses
required to be paid under the terms of any of the Loan Documents;
(2) any representation or warranty made or deemed made by the Borrower or
any Guarantor in this Agreement or in any other Loan Document to which it
is a party or which is contained in any certificate, document, opinion,
financial or other statement furnished at any time under or in connection
with any Loan Document shall prove to have been incorrect in any material
respect on or as of the date made or deemed made;
(3) The Borrower or any Guarantor shall fail to perform or observe any
term, covenant or agreement contained in this Agreement or any of the Loan
Documents and such failure shall continue for fifteen (15) days or more
following the earlier of the time (a) an executive officer of Borrower knew
or should have known of such Event of Default; or (b) written notice of
such Event of Default is given to Borrower by the Agent.
(4) The Borrower or any Guarantor shall: (a) fail to pay all or any portion
of a Debt in an amount greater than Two Hundred Fifty Thousand ($250,000)
Dollars (other than the payment obligations described in (1) above), of the
Borrower or any Guarantor when due (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise) after giving effect to any
applicable grace period; (b) fail to perform or observe any term, covenant
or condition on its part to be performed or observed or an event of default
has occurred under any agreement or instrument relating to any such Debt,
including the Insurance Company Debt when required to be performed or
observed, the effect of which is to cause any such Debt to become, or to
permit such Debt to be declared to be, due and payable prior to its
scheduled maturity; or
(5) The Borrower or any Guarantor: (a) shall generally not, or be unable
to, or shall admit in writing its inability to, pay its debts as such debts
become due; or (b) shall make an assignment for the benefit of creditors,
petition or apply to any tribunal for the appointment of a custodian,
receiver or trustee for it or a substantial part of its assets; or (c)
shall commence any proceeding under any bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution or liquidation law or
statute of any jurisdiction, whether now or hereafter in effect; or (d)
shall have had any such petition or application filed or any such
proceeding shall have been commenced, against it, in which an adjudication
or appointment is made or order for relief is entered, or which petition,
application or proceeding remains undismissed or unstayed for a period of
sixty (60) days or more; or shall be the subject of any proceeding under
which its assets may be subject to seizure, forfeiture or divestiture; or
(e) by any act or omission shall indicate its consent to, approval of or
acquiescence in any such petition, application or proceeding or order for
relief or the appointment of a custodian, receiver or trustee for all or
any substantial part of its property; or (f) shall suffer any such
custodianship, receivership or trusteeship to continue undischarged for a
period of thirty (30) days or more;
(6) one or more judgments, decrees or orders for the payment of money in
excess of Two Hundred Fifty Thousand ($250,000.00) Dollars in the aggregate
shall be rendered against the Borrower or any Guarantor, and such
judgments, decrees or orders shall continue unsatisfied and in effect for a
period of thirty (30) consecutive days without being vacated, discharged,
satisfied or stayed or bonded pending appeal;
(7) any of the following events shall occur or exist with respect to the
Borrower or any Guarantor or any ERISA Affiliate: (a) any Prohibited
Transaction involving any Plan; (b) any Reportable Event shall occur with
respect to any Plan; (c) the filing under Section 4041 of ERISA of a notice
of intent to terminate any Plan or the termination of any Plan; (d) any
event or circumstance exists which might constitute grounds entitling the
PBGC to institute proceedings under Section 4042 of ERISA for the
termination of, or for the appointment of a trustee to administer, any
Plan, or the institution by the PBGC of any such proceedings; (e) complete
or partial withdrawal under Section 4201 or 4204 of ERISA from a
Multiemployer Plan or the reorganization, insolvency, or termination of any
Multiemployer Plan; (f) an accumulated funding deficiency (as defined in
Section 302 of ERISA or Section 412 of the Code) exists with respect to a
Plan, whether or not waived; and in each case above, such event or
condition, together with all other events or conditions, if any, would
reasonably be expected to subject the Borrower or any Guarantor or any
ERISA Affiliate to any tax, penalty, or other liability to a Plan,
Multiemployer Plan, the PBGC, or otherwise (or any combination thereof)
which in the aggregate exceeds or may exceed Two Hundred Fifty Thousand
($250,000.00) Dollars.
(8) Article V shall, at any time after the execution and delivery of this
Agreement and for any reason, cease to be in full force and effect or shall
be declared null and void, or the validity or enforceability thereof shall
be contested by any Guarantor or any Guarantor (other than HIL after the
termination of its Guaranty) shall deny it has any further liability or
obligation under or shall fail to perform its obligations under Article V.
Section 11.02. Remedies. If any Event of Default shall occur and be continuing,
the Agent shall, upon request of the Required Banks, by notice to the Borrower,
(1) declare the Revolving Credit Commitment, and the Letter of Credit Commitment
to be terminated, whereupon the same shall forthwith terminate; (2) require the
Borrower to provide cash collateral or the equivalent thereof in an aggregate
amount of one hundred and five percent (105%) of all outstanding Letter of
Credit Obligations; (3) declare the outstanding Notes, all interest thereon, and
all other amounts payable under this Agreement, and any other Loan Documents to
be forthwith due and payable, whereupon the Notes, all such interest, and all
such amounts due under this Agreement, and under any other Loan Document shall
become and be forthwith due and payable, without presentment, demand, protest,
or further notice of any kind, all of which are hereby expressly waived by the
Borrower; (4) exercise any remedies provided in any of the Loan Documents;
and/or (5) exercise any remedies provided by Law; provided, however, that upon
the occurrence of an Event of Default referred to in Section 11.01(5), the
Revolving Credit Commitment and the Letter of Credit Commitment shall
automatically terminate and the outstanding Notes, Letters of Credit, and any
other amounts payable under this Agreement or any of the other Loan Documents,
and all interest on any of the foregoing shall be forthwith due and payable
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by the Borrower,
ARTICLE XII. THE AGENT
Section 12.01. Appointment, Powers and Immunities of Agent. Each Bank hereby
irrevocably appoints and authorizes the Agent to act as its agent hereunder and
under any other Loan Document with such powers as are specifically delegated to
the Agent by the terms of this Agreement and any other Loan Document, together
with such other powers as are reasonably incidental thereto. The Agent shall
have no duties or responsibilities except those expressly set forth in this
Agreement and any other Loan Document, and shall not by reason of this Agreement
be a trustee for any Bank. The Agent shall not be responsible to the Banks for
any recitals, statements, representations or warranties made by the Borrower or
any Guarantor or any officer or official of the Borrower or any Guarantor or
anyone purporting to be an Authorized Person or any other Person contained in
this Agreement or any other Loan Document, or in any certificate or other
document or instrument referred to or provided for in, or received by any of
them under, this Agreement or any other Loan Document, or for the value,
legality, validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement or any other Loan Document or any other document or instrument
referred to or provided for herein or therein, for the perfection or priority of
any Lien securing the Obligations or for any failure by the Borrower or any
Guarantor to perform any of its obligations hereunder or thereunder. The Agent
may employ agents and attorneys-in-fact and shall not be responsible, except as
to money or securities received by it or its authorized agents, for the
negligence or misconduct of any such agents or attorneys-in-fact selected by it
with reasonable care. Neither the Agent nor any of its directors, officers,
employees or agents shall be liable or responsible for any action taken or
omitted to be taken by it or them hereunder or under any other Loan Document or
in connection herewith or therewith, except for its or their own gross
negligence or willful misconduct. The Borrower shall pay any fee agreed to by
the Borrower and the Agent with respect to the Agent's services hereunder at the
Closing Date and each anniversary thereof during the term of this Agreement.
Section 12.02. Reliance by Agent. The Agent shall be entitled to rely upon any
certification, notice or other communication (including any thereof by
telephone, telecopy, telex, telegram or cable) reasonably believed by it to be
genuine and correct and to have been signed or sent by or on behalf of the
proper Person or Persons, and upon advice and statements of legal counsel,
independent accountants and other experts selected by the Agent. The Agent may
deem and treat each Bank as the holder of the Revolving Credit Loans made by it
and Participation purchased by it for all purposes hereof unless and until a
notice of the assignment or transfer thereof satisfactory to the Agent signed by
such Bank shall have been furnished to the Agent but the Agent shall not be
required to deal with any Person who has acquired a participation in any
Revolving Credit Loan or Bank. As to any matters not expressly or any other
Revolving Credit provided for by this Agreement, the Agent shall in all cases be
fully protected in acting, or in refraining from acting, hereunder in accordance
with instructions signed by the Required Banks, and such instructions of the
Required Banks and any action taken or failure to act pursuant thereto shall be
binding on all of the Banks and any other holder of all or any portion of any
Revolving Credit Loan or Participation.
Section 12.03. Defaults. The Agent shall not be deemed to have knowledge of the
occurrence of a Default or Event of Default, other than a payment default,
unless the Agent has received notice from a Bank or the Borrower or any
Guarantor specifying such Default or Event of Default and stating that such
notice is a "Notice of Default." In the event that the Agent receives such a
notice of the occurrence of a Default or Event of Default, the Agent shall give
prompt notice thereof to the Banks. The Agent shall (subject to Section 12.08)
take such action with respect to such Default or Event of Default which is
continuing as shall be directed by the Required Banks; provided that, unless and
until the Agent shall have received such directions, the Agent may take such
action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable in the best interest of the Banks;
and provided further that the Agent shall not be required to take any such
action which it determines to be contrary to Law.
Section 12.04. Rights of Agent as a Bank. With respect to its Commitment and the
Revolving Credit Loans provided by it and the Letters of Credit issued by it,
the Agent in its capacity as a Bank hereunder shall have the same rights and
powers hereunder as any other Bank and may exercise the same as though it were
not acting as the Agent, and the term "Bank" or "Banks" shall, unless the
context otherwise indicates, include the Agent in its capacity as a Bank. The
Agent and its Affiliates may (without having to account therefor to any Bank)
accept deposits from, lend money to (on a secured or unsecured basis), and
generally engage in any kind of banking, trust or other business with the
Borrower or any Guarantor and any of their Affiliates as if it were not acting
as the Agent, and the Agent may accept fees and other consideration from the
Borrower for services in connection with this Agreement or otherwise without
having to account for the same to the Banks.
Section 12.05. Indemnification of Agent. The Banks agree to indemnify the Agent
(to the extent not reimbursed under Section 13.03 or under the applicable
provisions of any other Loan Document, but without limiting the obligations of
the Borrower under Section 13.03 or such provisions), for its Pro Rata Share of
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind and nature
whatsoever which may be imposed on, incurred by or asserted against the Agent in
any way relating to or arising out of this Agreement, any other Loan Document or
any other documents contemplated by or referred to herein or the transactions
contemplated hereby or thereby (including, without limitation, the costs and
expenses which the Borrower or any Guarantor are obligated to pay under Section
13.03) or under the applicable provisions of any other Loan Document or the
enforcement of any of the terms hereof or thereof or of any such other documents
or instruments; provided that no Bank shall be liable for any of the foregoing
to the extent they arise from the gross negligence or willful misconduct of the
Agent.
Section 12.06. Documents. The Agent will forward to each Bank, promptly after
the Agent's receipt thereof, a copy of each report, notice or other document
required by this Agreement or any other Loan Document to be delivered to the
Agent for such Bank.
Section 12.07. Non-Reliance on Agent and Other Banks. Each Bank agrees that it
has, independently and without reliance on the Agent, Chase or any other Bank,
and based on such documents and information as it has deemed appropriate, made
its own credit analysis of the Borrower and each Guarantor and the decision to
enter into this Agreement and that it will, independently and without reliance
upon the Agent, Chase or any other Bank, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
analysis and decisions in taking or not taking action under this Agreement or
any other Loan Document. The Agent shall not be required to keep itself informed
as to the performance or observance by the Borrower or any Guarantor of this
Agreement or any other Loan Document or any other document referred to or
provided for herein or therein or to inspect the properties or books of the
Borrower or any guarantor. Except for notices, reports and other documents and
information expressly required to be furnished to the Banks by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide any
Bank with any credit or other information concerning the affairs, financial
condition or business of the Borrower or any Guarantor (or any of their
Affiliates) which may come into the possession of the Agent or any of its
Affiliates. The Agent shall not be required to file this Agreement, any other
Loan Document or any document or instrument referred to herein or therein, for
record or give notice of this Agreement, any other Loan Document or any document
or instrument referred to herein or therein, to anyone; provided, however, the
Agent shall (1) file the Trademark Assignment with the United States Patent and
Trademark Office, and (2) file financing statements (UCC-1) set forth in Section
6.01 herein in the appropriate jurisdictions.
Section 12.08. Failure of Agent to Act. Except for action expressly required of
the Agent hereunder, the Agent shall in all cases be fully justified in failing
or refusing to act hereunder unless it shall have received further assurances
(which may include cash collateral) of the indemnification obligations of the
Banks under Section 12.05 in respect of any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such action.
Section 12.09. Resignation or Removal of Agent. Subject to the appointment and
acceptance of a successor Agent as provided below, the Agent may resign at any
time by giving written notice thereof to the Banks, the Borrower and each
Guarantor, and the Agent may be removed at any time with or without cause by the
Required Banks; provided that the Borrower, each Guarantor and the other Banks
shall be promptly notified thereof. Upon any such resignation or removal, the
Required Banks shall have the right to appoint a successor Agent, which, unless
an Event of Default shall have occurred and be continuing, shall be reasonably
acceptable to the Borrower. If no successor Agent shall have been so appointed
by the Required Banks and shall have accepted such appointment within thirty
(30) days after the retiring Agent's giving of notice of resignation or the
Required Banks' removal of the retiring Agent, then the retiring Agent may, on
behalf of the Banks, appoint a successor Agent, which shall be a bank which has
an office in New York, New York and assets in an amount not less than One
Billion ($1,000,000,000) Dollars, which, unless an Event of Default shall have
occurred and be continuing, shall be reasonably acceptable to the Borrower. The
Required Banks or the retiring Agent, as the case may be, shall upon the
appointment of a successor Agent promptly so notify the Borrower and the other
Banks. Upon the acceptance of any appointment as Agent hereunder by a successor
Agent, such successor Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations hereunder.
After any retiring Agent's resignation or removal hereunder as Agent, the
provisions of this Article XII shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
the Agent.
Section 12.10. Amendments Concerning Agency Function. The Agent shall not be
bound by any waiver, amendment, supplement or modification of this Agreement or
any other Loan Document which affects its duties hereunder or thereunder unless
it shall have given its prior consent thereto.
Section 12.11. Liability of Agent. The Agent shall not have any liabilities or
responsibilities to the Borrower or any Guarantor on account of the failure of
any Bank to perform its obligations hereunder or to any Bank on account of the
failure of the Borrower or any Guarantor to perform its obligations hereunder or
under any other Loan Document.
Section 12.12. Transfer of Agency Function. Without the consent of the Borrower,
any Guarantor or any Bank, the Agent may at any time or from time to time
transfer its functions as Agent hereunder to any of its offices located in New
York, New York, provided that the Agent shall promptly notify the Borrower and
the Banks thereof
Section 12.13. Withholding Taxes; Each Bank represents that it is entitled to
receive any payments to be made to it hereunder without the withholding of any
tax and will furnish to the Agent such forms, certifications, statements and
other documents as the Agent may request from time to time to evidence such
Bank's exemption from the withholding of any tax imposed by any jurisdiction or
to enable the Agent to comply with any applicable laws or regulations relating
thereto. Without limiting the effect of the foregoing, if any Bank is not
created or organized under the laws of the United States of America or any state
thereof, such Bank will furnish to the Agent Form 4224 or Form 1001 of the
Internal Revenue Service, or such other forms, certifications, statements or
documents, duly executed and completed by such Bank as evidence of such Bank's
complete exemption from the withholding of U.S. tax with respect thereto. The
Agent shall not be obligated to make any payments hereunder to such Bank in
respect of any Revolving Credit Loan or Participation or such Bank's Revolving
Credit Commitment or obligation to purchase Participation until such Bank shall
have furnished to the Agent the requested form, certification, statement or
document.
ARTICLE XIII. YIELD PROTECTION.
Section 13.01. Additional Costs. (a) The Borrower shall pay directly to the
Agent from time to time on demand such amounts as any Bank may reasonably
determine to be necessary to compensate it for any costs which the Bank
determines are attributable to its making or maintaining any Eurodollar Rate
Loans under this Agreement or its obligation to make any such Loans hereunder,
or any reduction in any amount receivable by the Bank hereunder in respect of
any such Loans or such obligation (such increases in costs and reductions in
amounts receivable being herein called "Additional Costs"), resulting from any
Regulatory Change which: (i) changes the basis of taxation of any amounts
payable to the Bank under this Agreement in respect of any of such Loans (other
than taxes imposed on the overall net income of the Bank for any of such Loans
by the jurisdiction in which the Bank has its principal office or is deemed to
hold the Loans); or (ii) imposes or modifies any reserve, special deposit,
deposit insurance or assessment, minimum capital, capital ratio or similar
requirements relating to any extensions of credit or other assets of, or any
deposits with or other liabilities of, the Bank (including any of such Loans or
any deposits referred to in the definition of "Eurodollar Base Rate"; or (iii)
imposes any other condition affecting this Agreement (or any extensions of
credit or liabilities), except to the extent any such Regulatory Change has
previously resulted in a change in the calculation of Eurodollar Rate as a
result of being included in the Reserve Requirement used in calculating such
Eurodollar Rate. The Agent will notify the Borrower of any event occurring after
the date of this Agreement which will entitle the Bank to compensation pursuant
to this Section 13.01(a) as promptly as practicable after it obtains knowledge
thereof and determines to request such compensation.
(b) Without limiting the effect of the foregoing provisions of this Section
13.01, in the event that, by reason of any Regulatory Change, the Bank
either (i) incurs Additional Costs based on or measured by the excess above
a specified level of the amount of a category of deposits or other
liabilities of the Bank which includes deposits by reference to which the
interest rate on Eurodollar Rate Loans is determined as provided in this
Agreement or a category of extensions of credit or other assets of the Bank
which includes Eurodollar Loans or (ii) becomes subject to restrictions on
the amount of such a category of liabilities or assets which it may hold,
then, if the Bank so elects by notice to the Borrower, the obligation of
the Bank to make or renew, and to convert Loans of any other type into,
Loans of such type hereunder shall be suspended until the date such
Regulatory Change ceases to be in effect.
(c) Without limiting the effect of the foregoing provisions of this Section
13.01 (but without dupli- cation), the Borrower shall pay directly to the
Agent from time to time on request such amounts as the Agent may determine
to be necessary to compensate any Bank for any costs which it determines
are attributable to the maintenance by it or any of its affiliates pursuant
to any Regulatory Change of any court or governmental or monetary authority
of capital in respect of its Loans hereunder or its obligation to make
Loans hereunder (such compensation to include, without limitation, an
amount equal to any reduction in return on assets or equity of the Bank to
a level below that which it could have achieved but for such Regulatory
Change), except to the extent the Base Rate has been adjusted to reflect
such costs. The Agent will notify the Borrower if any Bank is entitled to
compensation pursuant to this Section 13.01(c) as promptly as practicable
after it determines to request such compensation.
(d) Determinations and allocations by the Agent or Bank for purposes of
this Section 13.01 of the effect of any Regulatory Change pursuant to
subsections (a) or (b), or of the effect of capital maintained pursuant to
subsection (c), on its costs of making or maintaining Loans or its
obligation to make Loans, or on amounts receivable by, or the rate of
return to, it in respect of Loans or such obligation, and of the additional
amounts required to compensate the Bank under this Section 13.01, shall be
conclusive, provided that such determinations and allocations are made on a
reasonable basis and absent manifest error and having a retroactive effect
of no more than one hundred twenty (120) days.
Section 13.02. Illegality. Notwithstanding any other provision in this
Agreement, in the event that it becomes unlawful for a Bank to (a) honor its
obligation to make or renew Eurodollar Rate Loans hereunder or convert Loans of
any type into Loans of such type, or (b) maintain Eurodollar Rate Loans
hereunder, then the Bank shall promptly notify the Borrower thereof and the
Bank's obligation to make or renew Eurodollar Rate Loans and to convert other
types of Loans into Loans of such type hereunder shall be suspended until such
time as the Bank may again make, renew, or convert and maintain such affected
Loans and the Bank's outstanding Eurodollar Rate Loans shall be converted to
Prime Rate Loans at the end of the then current Interest Period unless earlier
required by law.
Section 13.03. Certain Compensation. The Borrower shall pay to the Agent, upon
the request of the Agent, such amount or amounts as shall be sufficient (in the
reasonable opinion of the Agent) to compensate any Bank for any loss, cost or
expense which the Bank determines is attributable to:
(a) any payment or prepayment of a Eurodollar Rate Loan made by the Bank on
a date other than the last day of an Interest Period for such Loan (whether
by reason of acceleration or otherwise); or
(b) any failure by the Borrower to borrow a Eurodollar Rate Loan to be made
by the Bank on the date specified therefor in the relevant notice.
Without limiting the foregoing, such compensation shall include an amount equal
to the excess, if any, of: (i) the amount of interest which otherwise would have
accrued on the principal amount so paid, prepaid or not borrowed for the period
from and including the date of such payment, prepayment or failure to borrow to
but excluding the last day of the then current Interest Period for such Loan
(or, in the case of a failure to borrow, to but excluding the last day of the
Interest Period for such Loan which would have commenced on the date specified
therefor in the relevant notice) at the applicable rate of interest for such
Loan provided for herein; over (ii) the amount of interest (as reasonably
determined by the Bank) the Bank would have bid in the London interbank market
for Dollar deposits for amounts comparable to such principal amount and
maturities comparable to such period. A determination of the Bank as to the
amounts payable pursuant to this Section 13.03 shall be conclusive absent
manifest error.
ARTICLE XIV. MISCELLANEOUS
Section 14.01. Amendments and Waivers. No amendment or waiver of any provision
of this Agreement or any other Loan Document nor consent to any departure by the
Borrower or any Guarantor therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Agent and the Required Banks and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given; provided, however, that no amendment,
waiver or consent, shall, unless in writing and signed by all Banks do any of
the following: (1) increase the Revolving Credit Commitment or the Trade Letter
of Credit Commitment; (2) reduce the principal of, or interest on, the Notes;
(3) postpone the date fixed for the payment of principal of, or interest on, the
Notes or any other amount due hereunder or under any Loan Document, or waive any
default in the payment of principal, interest or any other amount due hereunder
or under any Loan Document; (4) change the definition of "Required Banks"; (5)
release or subordinate any Collateral (except as contemplated by the Loan
Documents); or (6) amend this Section 14.01 or any other provision requiring the
consent of all Banks. No failure on the part of the Agent or any Bank to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof or preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by Law.
Section 14.02. Usury. Anything herein to the contrary notwithstanding, the
obligations of the Borrower and the Guarantors under this Agreement and the
other Loan Documents shall be subject to the limitation that payments of
interest shall not be required to the extent that receipt thereof would be
contrary to provisions of Law applicable to a Bank limiting rates of interest
which may be charged or collected by such Bank.
Section 14.03. Expenses; Indemnification. The Borrower agrees to reimburse the
Agent and each of the Banks, on demand for all costs, expenses, and charges
(including, without limitation, all reasonable fees and charges of external
legal counsel for the Agent, Chase and each Bank) incurred by the Agent or any
Bank, in connection with the preparation of the Loan Documents. The Borrower
agrees to reimburse the Agent and each of the Banks on demand for all costs,
expenses, and charges (including, without limitation, all fees and charges of
external legal counsel for the Agent and each Bank) incurred by the Agent or any
Bank in connection with the performance, or enforcement of this Agreement, the
Notes, or any other Loan Documents. The Borrower agrees to indemnify the Agent,
Chase and each Bank and their respective directors, officers, employees and
agents (collectively, the "Indemnified Persons"), from, and hold each of them
harmless against, any and all losses, liabilities, claims, damages or expenses
incurred by any of them arising out of or by reason of any investigation or
litigation or other proceedings (including any threatened investigation or
litigation or other proceedings) relating to any actual or proposed use by the
Borrower of the proceeds of the Revolving Credit Loans or the Letters of Credit
or to any violation or alleged violation of any Environmental Law by the
Borrower or any Guarantor, including without limitation, the reasonable fees and
disbursements of counsel incurred in connection with any such investigation or
litigation or other proceedings (but excluding any such losses, liabilities,
claims, damages or expenses incurred by reason of the gross negligence or
willful misconduct of any Indemnified Person or any other Indemnified Person of
which such Indemnified Person is an affiliate or agent).
The obligations of the Borrower under this Section shall survive the repayment
of the Obligations and all amounts due under or in connection with any of the
Loan Documents and the termination of the Commitments.
Section 14.04. Assignment; Participation; Additional Bank. This Agreement shall
be binding upon, and shall inure to the benefit of, the Borrower, the
Guarantors, the Agent, the Banks and their respective successors and permitted
assigns. No Borrower or Guarantor may assign or transfer its rights or
obligations hereunder. Any Bank may at any time grant to one or more banks or
other institutions (each a "Participant") participating interests in its portion
of the Revolving Credit Loans and the Participation. In the event of any such
grant by a Bank of a participating interest to a Participant, whether or not
upon notice to the Borrower and the Agent, such Bank shall remain responsible
for the performance of its obligations hereunder, and the Borrower and the Agent
shall continue to deal solely and directly with such Bank in connection with
such Bank's rights and obligations hereunder. Any agreement pursuant to which
any Bank may grant such a participating interest shall provide that such Bank
shall retain the sole right and responsibility to enforce the obligations of the
Borrower and the Guarantors hereunder and under any other Loan Document
including; without limitation, the right to approve any amendment, modification
or waiver of any provision of this Agreement or any other Loan Document;
provided that such participation agreement may provide that such Bank will not
agree to any modification, amendment or waiver of this Agreement that would
require the consent of all Banks under Section 14.01 (1) through (6) without the
consent of the Participant.
Section 14.05. Notices. Unless the party to be notified otherwise notifies the
other party in writing as provided in this Section, and except as otherwise
provided in this Agreement, notices shall be given to the Agent by telephone,
confirmed by telex, telecopy or other writing, and to the Banks and to the
Borrower by ordinary mail, telecopy or telex addressed to such party at its
address on the signature page of this Agreement. Copies of notices mailed to the
Borrower should also be mailed by ordinary mail to Willkie, ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, counsel to
the Borrower. Notices shall be effective: (1) if given by mail, upon receipt,
and (2) if given by telex, when the telex is transmitted to the telex number as
aforesaid; provided that notices to the Agent and the Banks shall be effective
upon receipt.
Section 14.06. Setoff. The Borrower agrees that, in addition to (and without
limitation of) any right of setoff, bankers' lien or counterclaim a Bank may
otherwise have, each Bank shall be entitled, at its option, to offset balances
(general or special, time or demand, provisional or final) held by it for the
account of the Borrower at any of such Bank's offices, in Dollars or in any
other currency, against any amount payable by the Borrower to such Bank under
this Agreement or such Bank's Note, or any other Loan Document which is not paid
when due (regardless of whether such balances are then due to the Borrower), in
which case it shall promptly notify the Borrower and the Agent thereof; provided
that such Bank's failure to give such notice shall not affect the validity
thereof. Each Bank agrees that to the extent any such payment is received by it
as the result of a set-off or otherwise and such payment results in such Bank
receiving a greater payment than it would have been entitled to, had the total
amount of such payment been paid directly to the Agent for disbursement to the
Banks, then such Bank shall immediately purchase for cash from the other Banks
participations in the loans sufficient in amount so that such payment shall
effectively be shared pro rata with the other Banks in accordance with the
amount, and to the extent, of their respective interests in all the Revolving
Credit Loans; provided, however, that if all or any portion of such payment is
thereafter recovered from such Bank at any time, the purchase shall be rescinded
and the purchase price returned to the extent of such recovery, but without
interest or other return thereof.
Section 14.07. Jurisdiction; Immunities. The Borrower and each Guarantor hereby
irrevocably submit to the jurisdiction of any New York State or United States
Federal court sitting in New York City over any action or proceeding arising out
of or relating to this Agreement, the Notes, the Letters of Credit, or any other
Loan Document, and the Borrower and each Guarantor hereby irrevocably agree that
all claims in respect of such action or proceeding may be heard and determined
in such New York State or Federal court. The Borrower and each Guarantor
irrevocably consent to the service of any and all process in any such action or
proceeding by the mailing of copies of such process to the Borrower and each
Guarantor at their respective addresses specified in Section 14.05. The Borrower
and each Guarantor agree that a final non-appealable judgment in any such action
or proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. The Borrower and
each Guarantor further waive any objection to venue in such State and any
objection to an action or proceeding in such State on the basis of forum non
conveniens. The Borrower and each Guarantor agree that any action or proceeding
brought against the Agent or any Bank shall be brought only in New York State or
United States Federal Court sitting in New York County.
Nothing in this Section 14.07 shall affect the right of the Agent or any Bank to
serve legal process in any other manner permitted by law or affect the right of
the Agent or any Bank to bring any action or proceeding against any of the
Borrower or any Guarantor or their property in the courts of any other
jurisdictions.
To the extent that the Borrower or any Guarantor has or hereafter may acquire
any immunity from jurisdiction of any court or from any legal process (whether
from service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property, the
Borrower and each Guarantor hereby irrevocably waive such immunity in respect of
its obligations under this Agreement, the Notes, and any other Revolving Credit
Loan Document.
Section 14.08. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York applicable to agreements
made and to be performed entirely within such State.
Section 14.09. Counterparts. This agreement may be executed by the parties
hereto in separate counterparts, each of which, when so executed and delivered,
shall be an original, but all such counterparts shall together constitute one
and the same instrument. Each counterpart may consist of a number of copies
hereof, each signed by less than all, but together signed by all of the parties
hereto.
Section 14.10. Exhibits and Schedules. The Exhibits and Schedules are a part of
this Agreement as if fully set forth herein. All references herein to Sections,
Section 14.11. Table of Contents; Headings. The headings in the Table of
Contents and in this Agree- ment are for reference only, and shall not affect
the interpretation or construction of this Agreement.
Section 14.12. Severability. If any word, phrase, sentence, paragraph, provision
or section of this Agreement shall be held, declared, pronounced or rendered
invalid, void, unenforceable or inoperative for any reason by any court of
competent jurisdiction, governmental authority, statute or otherwise, such
holding, declaration, pronouncement or rendering shall not adversely affect any
other word, 'phrase, sentence, paragraph, provision or section of this
Agreement, which shall otherwise remain in full force and effect and be enforced
in accordance with its terms.
Section 14.13. Integration. The Loan Documents set forth the entire agreement
among the parties hereto relating to the transactions contemplated thereby and
supersede any prior oral or written statements or agreements with respect to
such transactions.
Section 14.14. Jury Trial Waiver. The Agent, the Banks, Borrower and its
Consolidated Subsidiaries each waive any right it may have to a jury trial in
any action or proceeding which pertains directly or indirectly to this
Agreement, the Obligations, the Collateral or, in any way, directly or
indirectly, arises out of or relates to the relationship between or among the
Borrower, the Consolidated Subsidiaries, the Agent and the Banks.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
HAMPSHIRE GROUP, LIMITED HAMPSHIRE DESIGNERS, INC.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President Title: Vice President
HAMPSHIRE INVESTMENTS, LIMITED GLAMOURETTE FASHION ▇▇▇▇▇, INC.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President Title: Vice President
Title: Vice President
SAN FRANCISCO KNIT WORKS, INC. SEGUE (AMERICA), LIMITED
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President Title: Vice President
Address for all of the above: ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
REPUBLIC NATIONAL BANK OF NEW YORK
/s/ ▇▇▇▇▇▇ Commander
Title: Senior Vice President
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier No.: 525-5676
NATIONSBANK, N.A.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Sr. Vice President
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No.:
THE CHASE MANHATTAN BANK
As Agent
/s/ ▇▇▇▇ ▇'▇▇▇▇▇
Title: Vice President
THE CHASE MANHATTAN BANK
/s/ ▇▇▇▇ ▇'▇▇▇▇▇
Title: Vice President
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No.:
NATIONSBANK, N.A.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Sr. Vice President
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇