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EXHIBIT 10.5
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▇▇▇▇▇▇▇▇'▇ INC.
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SECOND AMENDED AND RESTATED LOAN AGREEMENT
Dated: As of July 14, 1997
$45,000,000
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NATIONSBANK, N.A.
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TABLE OF CONTENTS
SECTION 1. GENERAL DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.3 Other Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.4 Certain Matters of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2. CREDIT FACILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.1 Borrowing and Disbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.2 Loan Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3. INTEREST, FEES, TERM AND REPAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.1 Interest, Fees and Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.2 Unused Line Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.3 Loan Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.4 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.5 Term of Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.6 Application of Payments and Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.7 Statements of Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.8 Funding Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 4. COLLATERAL: GENERAL TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.1 Security Interest in Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.2 Representations, Warranties and Covenants -- Collateral . . . . . . . . . . . . . . . . . . . . . . 18
4.3 Lien Perfection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.4 Location of Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.5 Insurance of Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.6 Protection of Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 5. PROVISIONS RELATING TO ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.1 Representations, Warranties and Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.2 Notice of Security Interest and Schedules of Accounts . . . . . . . . . . . . . . . . . . . . . . . 21
5.3 Administration of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.4 Collection of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 6. PROVISIONS RELATING TO INVENTORY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.1 Representations, Warranties and Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.2 Location of Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.3 Ownership of Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.4 Status of Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 7. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
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7.1 General Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.2 Reaffirmation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.3 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.1 Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.2 Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.3 Specific Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 9. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.1 Documentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.2 Other Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.3 Conditions Precedent to Subsequent Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.4 Request for Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 10. EVENTS OF DEFAULT: RIGHTS AND REMEDIES ON DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.2 Acceleration of the Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.3 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.4 Remedies Cumulative; No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.1 Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.2 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
11.3 Modification of Agreement; Sale of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
11.4 Reimbursement of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
11.5 Indulgences Not Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
11.6 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
11.7 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
11.8 Cumulative Effect; Conflict of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
11.9 Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
11.10 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
11.11 Lender's Right to Set-Off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
11.12 Demand Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
11.13 Time of Essence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
11.14 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
11.15 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
11.16 Governing Law; Consent to Forum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
11.17 General Waivers by Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
11.18 Security and Intercreditor Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
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EXHIBITS
Exhibit
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A Borrowing Base Report [Definitions]
B Note [Definitions]
B-1 Permitted Indebtedness [Definitions]
C Places of Business [Definitions]
D Security Agreement [Definitions]
E States in Which Qualified to do Business [7.1(A)]
F Fictitious Names during the Past Seven Years [7.1(B)]
G Capital Structure [7.1(H)]
H Contracts or Agreements Restricting Borrower's Right to Incur Debt [7.1(J)]
I Actions, Suits, Proceedings, or Investigations [7.1(K)]
J Pension Plans [7.1(O)]
K Compliance Certificate [8.1(Q)]
K-1 Permitted Loans [8.2(C)]
K-2 Affiliate Transactions [8.2 (D)]
L Permitted Liens [8.2(H)]
M Legal Opinion (Borrower's General Counsel) [9.1(C)]
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SECOND AMENDED AND RESTATED LOAN AGREEMENT
THIS SECOND AMENDED AND RESTATED LOAN AGREEMENT is made as of July
14, 1997, by and between NATIONSBANK, N.A. (formerly known as NATIONSBANK OF
GEORGIA, N.A.) ("Lender"), a national banking association with an office at ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, and ▇▇▇▇▇▇▇▇'▇ INC.
("Borrower"), a Delaware business corporation, with its chief executive office
and principal place of business at ▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇.
SECTION 1. GENERAL DEFINITIONS
1.1 Defined Terms. When used herein, the following terms shall
have the meanings set forth below (terms defined in the singular to have the
same meaning when used in the plural and vice versa):
ABN - means ABN AMRO Bank N.V., New York Branch.
ABN Loan Agreement - the loan agreement, dated as of even
date, between ABN and the Borrower.
Account Debtor - any Person who is or may become obligated
under or on an Account.
Accounts - all accounts, contract rights, chattel paper,
instruments and documents, whether now owned or hereafter created or
acquired by Borrower or in which Borrower now has or hereafter
acquires any interest; and all documents evidencing choses in action,
causes of action, books and records, computer equipment, and customer
lists relating to any of the foregoing.
Advance - an advance to Borrower of the Loan proceeds pursuant
to a Request For Advance.
Affiliate - a Person: (i) which directly or indirectly through
one or more intermediaries controls, or is controlled by, or is under
common control with, Borrower; (ii) which beneficially owns or holds
five percent (5.0%) or more of the equity interest of Borrower. For
purposes hereof, "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
an equity interest, voting Stock, by contract or otherwise. In
addition, for purposes hereof, Affiliate shall include specifically
MS Jewelers Limited Partnership, MS Jewelers Corporation, Crescent
Jewelers, ▇▇▇▇▇▇▇▇'▇ Jewelers, Inc., ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, and ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇, but shall not include any of the other limited partners
of MS Jewelers Limited Partnership.
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Agreement - this Second Amended and Restated Loan Agreement.
Borrower - ▇▇▇▇▇▇▇▇'▇ Inc. or, for accounting purposes, any
predecessor including MS Jewelers Limited Partnership which
transferred to Borrower substantially all of its assets and
liabilities.
Borrower's Account - Borrower's deposit account maintained
with Lender.
Borrowing Base - as at any date of determination thereof, an
amount equal to the lesser of (a) the Maximum Loan Commitment and (b)
the sum of (i) 75% of Eligible Accounts, plus (ii) 50% of Eligible
Inventory, less (iii) the maximum lending commitment of First Union
under the First Union Credit Agreement, less (iv) the maximum lending
commitment of ABN under the ABN Loan Agreement, and subtracting from
(a) or (b) the Reserve Amount on such date.
Borrowing Base Report - the certificate in the form of Exhibit
"A" attached hereto and incorporated by reference herein signed by an
authorized officer of Borrower showing a calculation of the Borrowing
Base, and the components comprising said Borrowing Base, as of the
end of the preceding fiscal quarter, listing the amounts of Eligible
Accounts and updating the amount of Eligible Inventory.
Business Day - any day on which banking institutions in
Atlanta, Georgia are open for the transaction of banking business,
and in the case of LIBO Rate Loans, any day on which banking
institutions in London are open for the transaction of banking
business.
Capital Lease - shall mean any lease or similar arrangement
which is required to be capitalized for financial reporting purposes
in accordance with GAAP.
Closing Date - the date on which all of the conditions
precedent in Section 9 are satisfied and the initial Loan is made
hereunder.
Code - the Uniform Commercial Code as adopted and in force in
the State of Georgia, as from time to time in effect.
Collateral - all of the Property and interests in Property
described in Section 4 hereof, and all other Property and interests
in Property that now or hereafter secure the payment and performance
of any of the Obligations pursuant to any of the Security Documents
or otherwise.
Consolidated - the consolidation in accordance with GAAP of
the accounts or other items as to which such term applies.
Debt - the aggregate amount of all items categorized as
liabilities on the balance sheet of Borrower prepared in accordance
with GAAP.
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Default - an event or condition the occurrence of which would,
with the lapse of time or the giving of notice, or both, become an
Event of Default.
Default Rate - as defined in Section 3.1(B) of this Agreement.
Dollars - and the sign "$" shall refer to currency of the
United States of America.
Draw Down Date - the date on which any Loan is made or is to
be made and the date on which any Loan is repaid or reborrowed in
accordance with Section 2.1 herein.
EBITDAR - shall mean, for any period of calculation, the
Borrower's (i) Net Income for such period, plus (ii) Interest Expense
during such period, plus (iii) income tax expense during such period,
plus (iv) amortization and depreciation expense deducted during such
period in calculating Net Income, plus (v) Rental Expense during such
period, plus (vi) the actual principal amount forgiven under the
Long-Term Incentive Programs during such period, plus (vii) other
non-cash-non-recurring charges deducted during the period in
determining Net Income.
Eligible Account - an Account arising in the ordinary course
of Borrower's business from the sale of goods or rendition of
services which Lender deems to be an Eligible Account, and as to
which Borrower has furnished reasonably detailed information to
Lender in a Borrowing Base Report. Without limiting the generality
of the foregoing, Eligible Account shall mean the aggregate of the
gross amount of Borrower's Accounts, less the amount of the then
existing unearned finance charges, unearned insurance premiums,
returns, discounts, credits, or offsets of any nature, of the
Accounts owing to Borrower by the Borrower's customers under consumer
sales contracts, which contain credit terms not exceeding twenty-four
(24) months, except that up to a maximum amount equal to one percent
(1.0%) of the aggregate amount of all such Accounts (under consumer
credit contracts) may contain credit terms exceeding twenty-four (24)
months but not exceeding forty-eight (48) months; provided, however,
that Eligible Accounts also shall not include any of the following:
(i) any Account of an Account Debtor for whom an Account is
outstanding which is past due more than fifty-nine (59) days; (ii)
any Account which represents an obligation owed to Borrower by an
Account Debtor located in a foreign country; (iii) any Account which
represents an obligation of a director or officer of the Borrower or
any of its Affiliates; (iv) any Account deemed ineligible by the
Lender when the Lender, in its reasonable discretion, deems the
creditworthiness or financial condition of the Account Debtor
unsatisfactory; (v) any Account against which the Account Debtor or
any other Person obligated to make payment thereon asserts any
defense, offset, counterclaim, or other right to avoid or reduce the
liability represented by such Account; (vi) any Account as to which
the Account Debtor or other Person obligated to make payment thereon
is insolvent, subject to bankruptcy or receivership proceedings, or
has made an assignment for the benefit of creditors or whose credit
standing is unacceptable to Lender and Lender has so notified
Borrower; (vii) any Account for any Account Debtor who comprises five
percent (5.0%) or more of Borrower's total Accounts;
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(viii) any Account of any governmental agency; (ix) any Account in
which Lender does not have a valid and perfected first priority Lien
(subject only to the Lien in favor of (a) First Union granted
pursuant to the First Union Credit Agreement and (b) ABN granted
pursuant to the ABN Loan Agreement); and (x) any Account which Lender
in its reasonable discretion shall deem not to qualify as an Eligible
Account.
Eligible Inventory - all Inventory as to which Borrower has
furnished reasonably detailed information to Lender in a Borrowing
Base Report and such Inventory of Borrower (other than documents
evidencing choses in action, causes of action, books and records, all
rights to indemnification, licenses, and customer lists) which Lender
deems to be Eligible Inventory. Without limiting the generality of
the foregoing, no Inventory shall be Eligible Inventory unless, in
Lender's opinion, it (i) is in good, new and saleable condition, (ii)
is not consigned, obsolete or unmerchantable, (iii) meets all
standards imposed by any governmental agency or authority, (iv) is at
all times subject to Lender's duly perfected, first priority security
interest and no other Lien except a Permitted Lien, (v) is situated
at a location in compliance with Section 6.1 hereof or is in transit
between Places of Business and is not otherwise in transit, (vi) is
accounted for on Borrower's books and records in accordance with GAAP
and in detail satisfactory to Lender, in its sole discretion, and
(vii) is in excess of a minimum reserve as determined by Borrower (or
such greater amount as Lender in its reasonable discretion may
determine) for slow moving Inventory.
Environmental Laws - all federal, state and local laws, rules,
regulations, ordinances, programs, permits, guidances, orders and
consent decrees relating to health, safety and environmental matters,
including, but not limited to, the Resource Conservation and Recovery
Act; the Comprehensive Environmental Response, Compensation and
Liability Act of 1980; the Toxic Substances Control Act; the Clean
Water Act; the Clean Air Act; the River and Harbor Act; the Water
Pollution Control Act; the Marine Protection Research and Sanctuaries
Act; the Deep-Water Port Act; the Safe Drinking Water Act; the
Superfund Amendments and Reauthorization Act of 1986; the Federal
Insecticide, Fungicide and Rodenticide Act; the Mineral Lands and
Leasing Act; the Surface Mining Control and Reclamation Act; the Oil
Pollution Act of 1990; state and federal superlien and environmental
cleanup programs and laws; and U.S. Department of Transportation
regulations.
ERISA - the Employee Retirement Income Security Act of 1974
and all rules and regulations promulgated thereunder.
Event of Default - as defined in Section 10.1 of this
Agreement.
First Union - First Union, N.A. (formerly known as First Union
of Georgia, N.A.)
First Union Credit Agreement - the Second Amended and Restated
Loan Agreement, dated as of even date herewith, between First Union
and the Borrower.
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Fixed Charge Coverage Ratio - as of any date of determination,
the ratio of the Borrower's (a) EBITDAR for the immediately preceding
four (4) fiscal quarters, to (b) total Fixed Charges for such period.
Fixed Charges - for any period, sum of the Borrower's (i)
total principal payments with respect to all Indebtedness for Money
Borrowed (including the principal portion of payments under Capital
Leases and Subordinated Debt during such period), plus (ii) Interest
Expense during such period plus (iii) Rental Expense during such
period plus (iv) income tax expense during such period.
Funded Debt - as of any date of determination, (i) all
Indebtedness for Money Borrowed, including the principal portion of
all Capital Lease obligations and all Subordinated Debt plus (ii) all
Rental Expense paid during the immediately preceding four (4) fiscal
quarters multiplied by 6.
GAAP - generally accepted accounting principles in the United
States of America in effect from time to time.
General Intangibles - all general intangibles of Borrower
whether now owned or hereafter created or acquired by Borrower
relating or pertaining to Inventory or pertaining to Accounts.
Indebtedness - as applied to a Person means, without
duplication (i) all items which in accordance with GAAP would be
included in determining total liabilities as shown on the liability
side of a balance sheet of such Person as at the date as of which
Indebtedness is to be determined, including, without limitation,
capitalized lease obligations, (ii) all obligations of other Persons
which such Person has guaranteed and (iii) in the case of Borrower
(without duplication), the Obligations.
Intercreditor Agreement - the Second Amended and Restated
Intercreditor and Security Agreement, dated of even date herewith,
among Lender (in its capacity as "collateral agent" thereunder and in
its capacity as a lender hereunder), ABN, First Union and Borrower, as
amended, modified, supplemented or restated from time to time.
Interest Expense - shall mean, for any period of calculation,
the aggregate of all interest paid or accrued by the Borrower during
such period, as determined in accordance with GAAP.
Interest Period - with respect to each Loan (a) initially, the
period commencing on the Draw Down Date of such Loan and ending on
the last day of one of the periods set forth below, as selected by
the Borrower in a loan request, which shall be (i) for any Offered
Rate Loan, the date set by Lender as the last day as to which such
Offered Rate shall apply; provided, no such Interest Period for
Offered Rate Loans shall extend beyond the last day of any month; and
(ii) for any LIBO Rate Loan, 1, 2, 3 or 6 months; and (b)
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thereafter, each period commencing on the first day after the last
day of the last preceding Interest Period applicable to such Loan and
ending on the last day of one of the periods set forth above, as
selected by the Borrower; provided that all of the foregoing
provisions relating to Interest Periods are subject to the following:
if any Interest Period with respect to a Loan would end on a day that
is not a Business Day, that Interest Period shall end on the next
succeeding Business Day; and any Interest Period that would otherwise
extend through the Maturity Date shall end on the Maturity Date.
Inventory - all of Borrower's inventory, whether now owned or
hereafter acquired by Borrower and wherever located, including, but
not limited to, all goods intended for sale or lease by Borrower, or
for display or demonstration including, without limitation, all gold
and other precious metal and precious stones and gems (including,
without limitation, diamonds) in whatever form and all products in
which any such gold, precious metal and precious stones and gems are
incorporated or into which such gold, precious metal and precious
stones and gems are processed or converted, including without
limitation, bullion, alloys or wire; all work in process; all raw
materials and other materials and supplies of every nature and
description used or which might be used in connection with the
manufacture of such goods or otherwise used or consumed in Borrower's
business; and all documents evidencing choses in action, causes of
action, books and records, all rights to indemnification, licenses,
and customer lists relating to any of the foregoing.
IRC - the Internal Revenue Code of 1986, as amended.
LIBO Rate - means a rate per annum for U.S. dollar deposits
for a one-month maturity as reported on Telerate page 3750 as of
11:00 a.m., London time, on the second London business day before the
relevant Interest Period begins (or if not so reported, then as
determined by the Lender from another recognized source or interbank
quotation), adjusted for reserves by dividing that rate by 1.00 minus
the Reserve Requirement. LIBOR shall be rounded to the next higher
1/100 of 1%.
LIBO Rate Advance - an advance on a LIBO Rate Loan.
LIBO Rate Basis - a simple rate per annum equal to the sum of
(a) the LIBO Rate and (b) seven-eighths of one percent (0.875%).
LIBO Rate Loan - any Advance made hereunder bearing interest
calculated by reference to the LIBO Rate.
Lien - any interest in Property securing an obligation owed
to, or a claim by, a Person other than the owner of the Property,
whether such interest is based on the common law, statute or
contract, and including, but not limited to, the security interest,
security title or lien arising from a security agreement, mortgage,
deed of trust, deed to secure debt, encumbrance, pledge, conditional
sale or trust receipt or a lease, consignment or
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bailment for security purposes. The term "Lien" shall include
reservations, exceptions, encroachments, easements, rights-of-way,
covenants, conditions, restrictions, leases and other title
exceptions and encumbrances affecting Property. For the purpose of
this Agreement, Borrower shall be deemed to be the owner of any
Property which it has acquired or holds subject to a conditional sale
agreement or other arrangement pursuant to which title to the
Property has been retained by or vested in some other Person for
security purposes.
Loan Account - the loan account established on the books of
Lender pursuant to Section 2.2 hereof.
Loan Documents - this Agreement, the Other Agreements and the
Security Documents.
Loans - all loans and Advances made by Lender pursuant to this
Agreement.
Long-Term Incentive Programs - shall mean (i) the Loan
Agreement, dated November 17, 1994, between Borrower and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇, and the promissory note, dated November 17, 1994, from ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇ to Borrower, in the original principal amount of $1,500,000,
each as amended through the date hereof, a true and correct copy of
each of which is attached hereto as Exhibit O-1, and (ii) the Loan
Agreement, dated November 17, 1994, between Borrower and ▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, and the promissory note, dated November 17, 1994, from
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ to Borrower, in the original principal amount of
$1,500,000, each as amended through the date hereof, a true and
correct copy of each of which is attached hereto as Exhibit O-2.
Maturity Date - the earlier of April 30, 1999 or such earlier
date as payment of the Loans shall be due (whether by acceleration or
otherwise).
Maximum Loan Commitment - shall mean $45,000,000.
Money Borrowed - as applied to Indebtedness, means (i)
Indebtedness for borrowed money; (ii) Indebtedness, whether or not in
any such case the same was for borrowed money, (A) which is
represented by notes payable or drafts accepted that evidence
extensions of credit, (B) which constitutes obligations evidenced by
bonds, debentures, notes or similar instruments, or (C) upon which
interest charges are customarily paid (other than accounts payable)
or that was issued or assumed as full or partial payment for
Property; (iii) Indebtedness that constitutes a capitalized lease
obligation; (iv) Indebtedness under any agreement or obligation to
reimburse the issuer of any letter of credit for amounts paid by the
issuer on account of such letter of credit; and (v) Indebtedness
under any guaranty of obligations that would constitute Indebtedness
for Money Borrowed under clauses (i) through (iii) hereof.
Multiemployer Plan - has the meaning set forth in Section
4001(a)(3) of ERISA.
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Net Income - shall mean, for any period of calculation, the
Borrower's consolidated net income (loss) after taxes, calculated in
accordance with GAAP.
Net Worth - shall mean, as of any date of calculation, the
Borrower's consolidated shareholders' equity (including capital
stock, additional paid in capital and retained earnings, after
deductiong treasury stock), as it would appear on Borrower's balance
sheet prepared in accordance with GAAP.
Non-subordinated Debt - indebtedness of Borrower that is not
subordinated to the Obligations.
Note - the Promissory Note, dated of even date herewith, made
by Borrower to the order of Lender in the stated principal amount of
$45,000,000 in substantially the form of Exhibit "B" attached hereto,
as hereafter amended, modified, restated or extended.
Obligations - all Loans and all other advances, debts,
liabilities, obligations, covenants and duties owing, arising, due or
payable from Borrower to Lender of any kind or nature, present or
future, whether or not evidenced by any note, guaranty or other
instrument, whether arising under this Agreement or any of the other
Loan Documents or otherwise, whether direct or indirect (including
those acquired by assignment), absolute or contingent, primary or
secondary, due or to become due, now existing or hereafter arising
and however evidenced or acquired. The term includes, without
limitation, all interest, charges, expenses, fees, reasonable
attorneys' fees and any other sums chargeable to Borrower under any
of the Loan Documents and all rights Lender may at any time or times
have to reimbursement in connection with any letter of credit or
guaranty issued for Borrower's benefit.
Offered Rate - shall mean, for any applicable Interest Period
(but not to exceed 29 calendar days or to extend beyond the end of
any calendar month), the rate of interest offered by Lender to
Borrower on a designated portion of the Loans.
Offered Rate Advance - an Advance on a Offered Rate Loan.
Offered Rate Basis - a simple rate per annum equal to the sum
of (a) the Offered Rate and (b) the seven-eighths of one percent
(0.875%).
Offered Rate Loan - any Advance made hereunder bearing
interest calculated by reference to the Offered Rate.
OSHA - the Occupational Safety and Health Act and all rules
and regulations from time to time promulgated thereunder.
Other Agreements - any and all agreements, instruments and
documents (other than this Agreement and the Security Documents),
heretofore, now or hereafter executed, by
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Borrower and delivered to Lender in respect to the transactions
contemplated by this Agreement, including, without limitation, the
Note.
Overadvance - an Advance made by Lender when an Overadvance
Condition exists or would result from the making of such Advance.
Overadvance Condition - at any date, a condition such that the
outstanding principal amount of the Loans on such date exceeds the
Borrowing Base an such date.
Payment Date - with respect to the payment of interest accrued
during any Interest Period (i) for LIBO Rate Loans, the last day of
such Interest Period; provided, for any 6 month LIBO Rate Loan, the
"Payment Date" shall be the 90th day of such Interest Period and the
last day of such Interest Period; and (ii) for Offered Rate Loans,
the last day of each calendar month.
Permitted Indebtedness - means (i) the Indebtedness to First
Union pursuant to the First Union Credit Agreement as in effect on
the date hereof, (ii) the Indebtedness to ABN pursuant to the ABN
Loan Agreement as in effect on the date hereof, (iii) other
Indebtedness in an amount outstanding not in excess of $2,500,000 in
principal each fiscal year, (iv) any Indebtedness described in
Exhibit "B-1" hereto, (v) trade payables and accrued expenses
incurred in the ordinary course of business and (vi) the Obligations.
Permitted Liens - any Lien of a kind specified in
subparagraphs (i) through (xi) of section 8.2(H) of this Agreement.
Permitted Loan and Guarantee Amount - the maximum amount of
Loans or other advances of money (other than for salary, travel
advances, advances against commission, other similar advances in the
ordinary course of business, and Loans to officers to exercise stock
options) plus guarantees, assumptions, and endorsements (except
endorsements of instruments or items of payment for deposit or
collection) which Borrower may make hereunder; which amount in the
aggregate shall be limited to $2,500,000.00.
Person - an individual, partnership, corporation, joint
venture, joint stock company, land trust, business trust or
unincorporated organization, or a government or agency or political
subdivision thereof.
Place of Business - a location at which Borrower conducts its
business and at which Borrower's Property is located, including,
without limitation, those existing locations identified on Exhibit
"C" attached hereto and incorporated herein by this reference and
those future locations of which Borrower is obligated to notify
Lender pursuant to the terms of Section 8.2(I) hereof.
Plan - an employee benefit plan now or hereafter maintained
for employees of Borrower that is covered by Title IV of ERISA.
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Prohibited Transaction - any transaction set forth in Section
406 of ERISA or Section 4975 of the Internal Revenue Code of 1986.
Property - any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
Purchase Money Lien - a Lien upon fixed assets which secures
purchase money indebtedness, but only if such Lien shall at all times
be confined solely to the fixed assets the purchase price of which
was financed through the incurrence of the purchase money
indebtedness secured by such Lien.
Rental Expense - shall mean, for any period of calculation,
all rental payments made by the Borrower during the period, as
determined in accordance with GAAP.
Reportable Event - any of the events set forth in Section
4043(b) of ERISA.
Request For Advance - a request for an Advance pursuant to
Section 9.4 hereof.
Reserve Amount - at any date, an amount equal to the face
amount of all letters of credit issued by Lender for the account of
the Borrower outstanding on such date.
Reserve Requirement - shall mean the maximum reserve
requirement percentage (rounded to the next higher 1/100th of 1% and
expressed as a decimal) in effect for any day during the applicable
Interest Period, under the Federal Reserve Board's Regulation D for
"Eurocurrency Liabilities" (as defined in such Regulation D).
Restricted Investment - any investment in cash or by delivery
of Property to any Person, whether by acquisition of stock,
Indebtedness, or other obligation or Security, or by loan, advance,
or capital contribution, or otherwise, or in any Property except the
following: (i) investments in one or more Subsidiaries of Borrower;
(ii) Property to be used in the ordinary course of business; (iii)
Current Assets arising from the sale of goods and services in the
ordinary course of business of Borrower and its Subsidiaries; (iv)
investments in direct obligations of the United States of America, or
any agency thereof or obligations guaranteed by the United States of
America, provided that such obligations mature within one year from
the date of acquisition thereof; (v) investments in certificates of
deposit maturing within one year from the date of acquisition issued
by a bank or trust company organized under the laws of the United
States or any state thereof having capital surplus and undivided
profits aggregating at least $100,000,000 or issued by Lender; (vi)
investments in commercial paper given a rating by a national credit
rating agency of A-1 or greater and maturing not more than two
hundred seventy (270) days from the date of creation thereof; (vii)
any investment or investments which in the aggregate do not exceed
$2,000,000; and (viii) "Dutch-Auction" tender securities of any
Person, provided such securities are given an investment grade rating
by a national credit rating agency.
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Schedule of Accounts - a sales and collections report for the
preceding month and a detailed aged trial balance of all Accounts
existing as of the last day of the preceding month, specifying the
names, addresses, face value, dates of invoices and due dates for
each Account Debtor obligated on an Account so listed.
Security - shall have the same meaning as in Section 2(1) of
the Securities Act of 1933, as amended.
Security Agreement - the Amended and Restated Security
Agreement dated December 14, 1995 substantially in the form of
Exhibit "D" attached hereto and incorporated by reference herein.
Security Documents - the Security Agreement, the Intercreditor
Agreement and all other instruments and agreements now or at any time
hereafter securing the whole or any part of the obligations.
Solvent - as to any Person, such Person (i) owns Property
whose fair value of which is greater than the amount required to pay
all of such Person's Indebtedness (including contingent debts), (ii)
owns Property the present fair salable value of which is greater than
the amount that will be required to pay the probable liability of
such Person on its existing Indebtedness as such become absolute and
matured, (iii) is able to pay all of its Indebtedness as such
Indebtedness matures, and (iv) has capital sufficient to carry on its
business and transactions and all business and transactions in which
it is about to engage.
Subordinated Debt - Indebtedness of Borrower that is expressly
subordinated to the Obligations.
Subsidiary - any corporation of which a Person owns, directly
or indirectly through one or more intermediaries, more than fifty
percent (50%) of the Voting Stock at the time of determination.
Voting Stock - Securities of any class or classes of a
corporation the holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the corporate
directors (or Persons performing similar functions).
1.2 Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP consistent with that
applied in preparation of the financial statements referred to in Section
8.1(I), and all financial data pursuant to this Agreement shall be prepared in
accordance with such principles.
1.3 Other Terms. All other terms contained in this Agreement
shall have, when the context so indicates, the meanings provided for by the
Code to the extent the same are used or defined therein.
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1.4 Certain Matters of Construction. The terms "herein," "hereof"
and "hereunder" and other words of similar import refer to this Agreement as a
whole and not to any particular section, paragraph or subdivision. Any pronoun
used shall be deemed to cover all genders. The section titles, table of
contents and list of exhibits appear as a matter of convenience only and shall
not affect the interpretation of this Agreement. All references to statutes
and related regulations shall include any amendments of same and any successor
statutes and regulations. All references to any instruments or agreements,
including, without limitation, references to any of the Loan Documents, shall
include any and all modifications or amendments thereto and any and all
extensions or renewals thereof. To the extent any of the terms or provisions
of the Other Documents or the Security Documents conflict with the provisions
of this Agreement, this Agreement shall control.
SECTION 2. CREDIT FACILITY
Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in, this Agreement and the other Loan
Documents, Lender agrees to make a total credit facility of up to FORTY-FIVE
MILLION AND NO/100 DOLLARS ($45,000,000) available upon Borrower's request
therefor, as follows:
2.1 Borrowing and Disbursement.
(A) Loan Advances. Lender shall make Advances to Borrower
from time to time in accordance with and subject to the terms hereof, up to a
maximum principal amount at any time outstanding equal to the Borrowing Base at
such time. It is expressly understood and agreed that Lender may use the
Borrowing Base as a maximum ceiling on any Advance to Borrower at any time. If
the unpaid balance of the Loan should exceed the Borrowing Base or any other
limitation set forth in this Agreement, such Loan shall nevertheless constitute
Obligations that are secured by the Collateral and entitled to all benefits
thereof. The Loan shall be evidenced by the Note.
(B) Overadvances. Insofar as Borrower may request and Lender
may be willing, in its sole and absolute discretion, to make Overadvances,
Lender shall enter such Overadvances as debits in the Loan Account. All
Overadvances shall be payable on demand, shall be secured by the Collateral and
shall bear interest as provided in this Agreement.
(C) Use of Proceeds. The Loan shall be used solely for
Borrower's general operating capital needs and store expansion to the extent
not inconsistent with the provisions of this Agreement.
(D) Choice of Interest Rates. Any Advance shall, at the
option of the Borrower, be made as an Offered Rate Advance or a LIBO Rate
Advance. Any notice given to the Lender in connection with a requested Advance
hereunder shall be given to the Lender prior to 11:00 A.M. Eastern time in
order for such Business Day to count toward the minimum number of Business Days
required.
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(E) Offered Rate Advances.
(i) Initial Advances. The Borrower shall give Lender in
the case of Offered Rate Advances at least one (1) Business Day's irrevocable
written notice in the form of a Request for Advance, or notice by telecopy
followed immediately by a Request for Advance; provided, however, that the
failure by the Borrower to confirm any notice by telecopy with a Request for
Advance shall not invalidate any notice so given.
(ii) Repayments and Reborrowings. Upon at least one (1)
Business Day's irrevocable prior written notice, the Borrower may repay or
prepay an Offered Rate Advance without regard to its Payment Date and (a)
reborrow all or a portion of the principal amount thereof as one or more
Offered Rate Advances, (b) reborrow all or a portion of the principal thereof
as one or more LIBO Rate Advances, or (c) not reborrow all or any portion of
such Offered Rate Advance. On the date indicated by the Borrower, such Offered
Rate Advance shall be so repaid and, as applicable, reborrowed.
(F) LIBO Rate Advances.
(i) Initial Advances. The Borrower shall give Lender in
the case of LIBO Rate Advances at least three (3) Business Days' irrevocable
written notice in the form of a Request for Advance, or notice by telecopy
followed immediately by a Request for Advance; provided, however, that the
failure by the Borrower to confirm any notice by telecopy with a Request for
Advance shall not invalidate any notice so given. The Lender, whose
determination shall be conclusive, shall determine the available LIBO Rate
Basis and shall notify the Borrower of such LIBO Rate Basis. The Borrower
shall promptly notify the Lender by telecopy or by telephone, and shall
immediately confirm any such telephonic notice in writing, of its selection of
a LIBO Rate Basis and Interest Period for such Advance.
(ii) Repayments and Reborrowings. At least three (3)
Business Days prior to the last day of the Interest Period with respect to each
LIBO Rate Advance, the Borrower shall give Lender written notice specifying
whether all or a portion of any LIBO Rate Advance outstanding on such date (a)
is to be repaid and then reborrowed in whole or in part as a LIBO Rate Advance,
(b) is to be repaid and then reborrowed in whole or in part as an Offered Rate
Advance, (c) is to be repaid and not reborrowed. Upon the last day of the
Interest Period with respect to each LIBO Rate Advance, such LIBO Rate Advance
will, subject to the provisions hereof, be so repaid and, as applicable,
reborrowed. The Borrower shall not be permitted to pay all or any portion of a
LIBO Rate Advance prior to the last day of the Interest Period therefor.
(G) Disbursement. Prior to Lender's close of business on the
date of an Advance hereunder, Lender shall, subject to the satisfaction of the
conditions set forth in this Section 2 and in Section 9, disburse the funds by
(i) transferring the amounts by wire transfer pursuant to the instructions of
Borrower, or (ii) in the absence of such instructions, crediting the amounts so
made available to the Loan Account.
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2.2 Loan Account. Lender shall enter all Advances as debits to
the Loan Account and shall also record in the Loan Account all payments made by
Borrower on the Loan and all proceeds of Collateral which are finally paid to
Lender, and may record therein, in accordance with customary accounting
practice, all charges and expenses properly chargeable to Borrower hereunder.
SECTION 3. INTEREST, FEES, TERM AND REPAYMENT
3.1 Interest, Fees and Charges.
(A) Interest.
(i) On Offered Rate Advances. Interest on each Offered
Rate Advance shall be computed on the basis of a year of 360 days for the
actual number of days elapsed and shall be payable at the Offered Rate Basis
for such Advance in arrears on each Payment Date. Interest on Offered Rate
Advances then outstanding shall also be due and payable on the Maturity Date.
(ii) On LIBO Rate Advances. Interest on each LIBO Rate
Advance shall be computed on the basis of a 360-day year for the actual number
of days elapsed and shall be payable at the LIBO Rate Basis for such Advance in
arrears on the applicable Payment Date. Interest on LIBO Rate Advances then
outstanding shall also be due and payable on the Maturity Date.
(iii) If No Notice of Selection of Interest Rate Basis.
If the Borrower fails to give Lender timely notice of its selection of a LIBO
Rate Basis, or if for any reason a determination of LIBO Rate Basis for any
Advance is not timely concluded, the Offered Rate Basis shall apply to such
Advance, and if the Borrower shall fail to elect to reborrow any LIBO Rate
Advance then outstanding prior to the last day of the applicable Interest
Period by the notice period required in Section 2.1(F), the Offered Rate Basis
shall apply to such Advance commencing on and after such date, with each such
Offered Rate Advance having an Interest Period of one Business Day.
(B) Default Rate of Interest. Upon and after the occurrence
of an Event of Default and the acceleration of the Obligations as permitted in
Section 10.2 hereof, the principal amount of the Obligations shall
automatically (without notice to or demand upon Borrower) bear interest,
calculated daily (computed on the actual days elapsed over a year of 360 days),
at a fluctuating rate per annum equal to two percent (2.0%) above the then
applicable rate as specified in the Note (the "Default Rate"). Borrower
acknowledges that the cost and expenses to Lender attendant upon the occurrence
of an Event of Default are difficult to ascertain or estimate and that the
Default Rate is a fair and reasonable estimate to compensate Lender for such
added cost and expense.
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(C) Maximum Interest. In no contingency or event whatsoever
shall the aggregate of all amounts deemed interest hereunder or under the Note
and charged or collected pursuant to the terms of this Agreement or pursuant to
the Note exceed the highest rate permissible under any law (including, to the
extent applicable, the provisions of Section 5197 of the Revised Statutes of
the United States of America, as amended, 12 U.S.C. Section 85, as amended)
which a court of competent jurisdiction shall, in a final determination, deem
applicable hereto. In the event that such a court determines that Lender has
charged or received interest hereunder in excess of the highest applicable
rate, the rate in effect hereunder shall automatically be reduced to the
maximum rate permitted by applicable law and Lender shall promptly refund to
Borrower any interest received by Lender in excess of the maximum lawful rate
or, if so requested by Borrower, shall apply such excess to the principal
balance of the Obligations. It is the intent hereof that Borrower not pay or
contract to pay, and that Lender not receive or contract to receive, directly
or indirectly in any manner whatsoever, interest in excess of that which may be
paid by Borrower under applicable law.
3.2 Unused Line Fee. The Borrower shall pay to the Lender an
unused line fee equal to one-eighth of one percent (.125%) per annum of the
average daily unused amount of the maximum Loan commitment, payable on the
first day of each calendar quarter for the previous calendar quarter and on the
Maturity Date.
3.3 Loan Fees. At the closing of the Loan facility provided
herein, the Borrower shall pay to Lender a loan fee equal to $37,500, which fee
has been fully earned by Lender and is non-refundable in its entirety. In
addition, Borrower shall pay to Lender an annual collateral agent's fee in
connection with its duties under the Intercreditor Agreement in an amount equal
to $5,000 per year, which fee shall be payable annually in advance, commencing
on the date hereof, and on each July 1 hereafter.
3.4 Payments. All payments shall be made by Borrower in U.S.
currency and without any defenses, offset or counterclaim of any kind. Except
where evidenced by notes or other instruments issued or made by Borrower to
Lender specifically containing payment provisions which are in conflict with
paragraphs (A) through (C) of this Section 3.4 (in which event the conflicting
provisions of said notes or other instruments shall govern and control), the
obligations (in addition to any other Obligation) consisting of:
(A) Principal shall be paid by Borrower to Lender immediately
upon the earliest of (i) April 30, 1999, or (ii) the occurrence of an Event of
Default and election by Lender to accelerate the maturity and payment of such
Loans; provided, however, that if the principal balance of the Loan outstanding
at any time shall exceed the Borrowing Base at such time, Borrower shall, on
demand, repay the Loan in an amount sufficient to reduce the aggregate unpaid
principal amount of such Loan by an amount equal to such excess;
(B) Interest accrued on the Loan shall be paid on the
earliest of (i) each Payment Date, or (ii) the occurrence of an Event of
Default and election by Lender to accelerate the maturity and payment of the
Obligations; provided, however, that Borrower hereby irrevocably
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authorizes Lender, in Lender's sole discretion, to advance to Borrower, and to
charge to Borrower's Loan Account hereunder a sum sufficient each quarter to
pay all interest accrued on the Obligations during the immediately preceding
quarter and a sum sufficient to pay costs, fees and expenses payable pursuant
to this Agreement;
(C) The balance of the obligations requiring the payment of
money, if any, shall be paid by Borrower to Lender as and when provided in this
Agreement, the Other Agreements or the Security Documents.
3.5 Term of Loan. Subject to Lender's right to cease making Loans
or Advances to Borrower at any time upon the occurrence of a Default or Event
of Default, Borrower may request Lender to make Advances in accordance with the
terms of this Agreement from the date hereof through the Maturity Date.
3.6 Application of Payments and Collections. Borrower irrevocably
waives the right to direct the application of any and all payments and
collections at any time or times hereafter received by Lender from or on behalf
of Borrower, and Borrower does hereby irrevocably agree that Lender shall have
the continuing exclusive right to apply and reapply any and all such payments
and collections received at any time or times hereafter by Lender or its agent
against the Obligations, in such manner as Lender may deem advisable,
notwithstanding any entry by Lender upon any of its books and records. If as
the result of collections of Accounts as authorized by Section 5.4 hereof a
credit balance exists in the Loan Account, such credit balance shall not accrue
interest in favor of Borrower, but shall be available to Borrower at any time
or times for so long as no Default or Event of Default exists.
3.7 Statements of Account. Lender will account to Borrower
monthly with a statement of Loans, charges and payments made pursuant to this
Agreement, and such account rendered by Lender shall be deemed final, binding
and conclusive upon Borrower unless Lender is notified by Borrower in writing
to the contrary within thirty (30) days after the date each account is mailed
to Borrower. Such notice shall only be deemed an objection to those items
specifically objected to therein.
3.8 Funding Indemnity. If the Lender shall incur any actual loss,
cost or expense (including any loss, cost or expense incurred by reason of the
liquidation or re-employment of deposits or other funds acquired by the Lender
to fund or maintain any Advance or the relending or reinvesting of such
deposits or amounts paid or prepaid to the Lender, but excludingany loss of
profits) as a result of: (a) any payment, prepayment or conversion of an
Advance on a date other than the last day of its Interest Period, (b) any
failure by the Borrower to borrow on the date specified in a notice given
pursuant to Section 2.1, or (c) any acceleration of the maturity of an Advance
as a result of the occurrence of any Event of Default hereunder.
Then, upon the demand of the Lender, the Borrower shall pay to
the Lender such amount as will reimburse the Lender for such loss, cost or
expense. If the Lender makes such a claim for compensation, it shall provide
the Borrower a certificate executed by an officer of the
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Lender setting forth the amount of such loss, cost or expense in reasonable
detail (including an explanation of the basis for the computation of such loss,
cost or expense) and the amounts and components of such calculation shown on
such certificate if reasonably calculated shall be conclusive.
SECTION 4. COLLATERAL: GENERAL TERMS
4.1 Security Interest in Collateral. To secure the prompt payment
and performance to Lender of the Obligations, Borrower hereby grants to Lender
a continuing security interest in, security title to and Lien upon all the
following Property and interests in Property of Borrower, whether now owned or
existing or hereafter created, acquired or arising and wheresoever located:
(A) All Accounts;
(B) All Inventory;
(C) All monies and other Property of any kind, now or at any
time or times hereafter, in the possession or under the control of Lender or a
bailee of Lender;
(D) All accessions to, substitutions for and all
replacements, products and cash and non-cash proceeds of (A), (B), and (C)
above, including, without limitation, proceeds of and unearned premiums with
respect to insurance policies insuring any of the Collateral; and
(E) All books and records (including, without limitation,
customer lists, credit files, computer programs, printouts, and other computer
materials and records) of Borrower pertaining to any of (A), (B), (C) or (D)
above and all chattel paper pertaining to any of (A), (B), (C) or (D) above.
4.2 Representations, Warranties and Covenants -- Collateral . To
induce Lender to enter into this Agreement, Borrower represents, warrants, and
covenants to Lender that:
(A) The Collateral is now and will continue to be owned
solely by Borrower. No other Person has or will have any right, title,
interest, claim, or Lien therein, thereon or thereto other than a Permitted
Lien.
(B) Except as specifically consented to in writing by Lender,
the Liens granted to Lender shall be first and prior on the Collateral and as
to the Accounts and proceeds, including insurance proceeds, resulting from the
sale, disposition, or loss thereof (other than (i) the pari passu Lien granted
by Borrower to First Union under the First Union Credit Agreement and (ii) the
pari passu Lien granted by Borrower to ABN under the ABN Loan Agreement). No
further action need be taken to perfect the Liens granted to Lender, other than
the filing of continuation statements under the Code or other applicable law.
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(C) All goods evidenced by the Collateral constituting
chattel paper, documents or instruments are owned by Borrower and the same are
free and clear of any prior Lien (other than (i) the pari passu Lien granted by
Borrower to First Union under the First Union Credit Agreement and (ii) the
pari passu Lien granted by Borrower to ABN under the ABN Loan Agreement).
Borrower further warrants and guarantees the value, quantities, sound
condition, grades and qualities of the goods and services described therein.
Borrower shall pay and discharge when due all taxes, levies, and other charges
upon said Collateral and upon the goods evidenced by any documents constituting
Collateral and shall defend Lender against and save it harmless from all claims
of any Person with respect to the Collateral. This indemnity shall include
reasonable attorneys' fees and legal expenses.
4.3 Lien Perfection. Borrower agrees to execute the UCC-1
financing statements provided for by the Code, or other applicable law,
together with any and all other instruments, assignments or documents and shall
take such other action as may be required to perfect or to continue the
perfection of Lender's security interest in the Collateral. Unless prohibited
by applicable law, Borrower hereby authorizes Lender to execute and file any
such financing statement on Borrower's behalf. The parties agree that a
carbon, photographic or other reproduction of this Agreement shall be
sufficient as a financing statement and may be filed in any appropriate office
in lieu thereof.
4.4 Location of Collateral. All Collateral, other than Inventory
in transit, will at all times be kept by Borrower at one or more of the
business locations set forth in Exhibit "C" and shall not, without the prior
written approval of Lender, be moved therefrom except for transfers between
Places of Business and, prior to an Event of Default, for sales of Inventory in
the ordinary course of business.
4.5 Insurance of Collateral. Borrower agrees to maintain and pay
for insurance upon all Collateral wherever located, in storage or in transit in
vehicles, including goods evidenced by documents, covering casualty, hazard,
public liability and such other risks and in such amounts and with such
insurance companies as shall be reasonably satisfactory to Lender to insure
Lender's interest in the Collateral. Borrower shall deliver the originals of
such policies to Lender with satisfactory lender's loss payable endorsements
naming loss payee. Each policy of insurance or endorsements shall contain a
clause requiring the insurer to give not less than thirty (30) days' prior
written notice to Lender in the event of cancellation of the policy for any
reason whatsoever and a clause that the interest of Lender shall not be
impaired or invalidated by any act or neglect of Borrower or owner of the
Property nor by the occupation of the premises for purposes more hazardous than
are permitted by said policy. If Borrower fails to provide and pay for such
insurance, Lender may, at Borrower's expense, procure the same, but shall not
be required to do so. Borrower agrees to deliver to Lender, promptly as
rendered, true copies of all reports made in any reporting forms to insurance
companies. Borrower will maintain, with financially sound and reputable
insurers, insurance with respect to its Properties and business against such
casualties and contingencies of such type (including public liability,
larceny, embezzlement, or other criminal misappropriation insurance) and in
such amounts as is customary in the business or as otherwise required by
Lender.
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4.6 Protection of Collateral. All insurance expenses and all
expenses of protecting, storing, warehousing, insuring, handling, maintaining
and shipping the Collateral (including, without limitation, all rent payable by
Borrower to any landlord of any premises where any of the Collateral may be
located), and, any and all excise, property, sales, and use taxes imposed by
any state, federal, or local authority on any of the Collateral or in respect
of the sale thereof, shall be borne and paid by Borrower. If Borrower fails to
promptly pay any portion thereof when due, Lender may, at its option, but shall
not be required to, pay the same and charge the Loan Account therefor.
Borrower agrees to reimburse Lender promptly therefor with interest accruing
thereon daily at the Default Rate provided in this Agreement. All sums so paid
or incurred by Lender for any of the foregoing and all costs and expenses
(including reasonable attorneys' fees, necessary legal expenses, and court
costs) which Lender may incur in enforcing or protecting its Lien on or rights
and interest in the Collateral or any of its rights or remedies under this or
any other agreement between the parties hereto or in respect of any of the
transactions to be had hereunder until paid by Borrower to Lender with interest
at the Default Rate, shall be considered Obligations owing by Borrower to
Lender hereunder. Such Obligations shall be secured by all Collateral and by
any and all other collateral, security, assets, reserves, or funds of Borrower
in or coming into the hands or inuring to the benefit of Lender. Lender shall
not be liable or responsible in any way for the safekeeping of any of the
Collateral or for any loss or damage thereto (except for reasonable care in the
custody thereof while any Collateral is in Lender's actual possession) or for
any diminution in the value thereof, or for any act or default of any
warehouseman, carrier, forwarding agency, or other person whomsoever, but the
same shall be at Borrower's sole risk.
SECTION 5. PROVISIONS RELATING TO ACCOUNTS
5.1 Representations, Warranties and Covenants. With respect to
all Accounts, Borrower represents and warrants to Lender that Lender may rely,
in determining which Accounts are Eligible Accounts, on all statements and
representations made by Borrower with respect to any Account or Accounts,
(including, without limitation, the Borrowing Base Report) and, unless
otherwise indicated in writing to Lender, that with respect to each Account:
(A) It is genuine and in all respects what it purports to be,
and it is not evidenced by a judgment;
(B) It arises out of a completed, bona fide sale and delivery
of goods or rendition of services by Borrower in the ordinary course of its
business and in accordance with the terms and conditions of all purchase
orders, contracts or other documents relating thereto and forming a part of the
contract between Borrower and the Account Debtor;
(C) It is for a liquidated amount maturing as stated in the
duplicate invoice or chattel paper covering such sale or rendition of services,
a copy of which has been furnished or is available to Lender;
(D) Such Account, and Lender's security interest therein, is
not, and will not be in the future, subject to any offset, Lien (other than (i)
the pari passu Lien granted in favor of
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First Union pursuant to the First Union Credit Agreement and (ii) the pari
passu Lien granted in favor of ABN pursuant to the ABN Loan Agreement),
deduction, defense, dispute, counterclaim or any other adverse condition except
for disputes resulting in returned goods where the amount in controversy is
deemed by Lender to be immaterial, and each such Account is absolutely owing to
Borrower and is not contingent in any respect or for any reason;
(E) Borrower has made no agreement with any Account Debtor
thereunder for any deduction therefrom, except discounts or allowances which
are granted by Borrower in the ordinary course of its business for prompt
payment and which are reflected in the calculation of the net amount of each
respective invoice related thereto;
(F) There are no facts, events or occurrences which in any
way impair the validity or enforceability thereof or tend to reduce the amount
payable thereunder from the face amount of the invoice and statements delivered
to Lender with respect thereto;
(G) To the best of Borrower's knowledge, the Account Debtor
thereunder (i) had the capacity to contract at the time any contract or other
document giving rise to the Account was executed and (ii) such Account Debtor
is Solvent; and
(H) Borrower has no knowledge of any fact or circumstance
which would impair the validity or collectibility of the Account, and to the
best of Borrower's knowledge there are no proceedings or actions which are
threatened or pending against any Account Debtor thereunder which might result
in any material adverse change in such Account Debtor's financial condition or
the collectibility of such Account.
5.2 Notice of Security Interest and Schedules of Accounts. Within
thirty (30) days from the date hereof, Borrower shall enter a notation on each
Account by the execution on the face of each written contract document,
instrument, or security agreement, the following notice or such other notice as
may be approved in writing by the Lender:
This chattel paper and the obligations owing to and rights of
▇▇▇▇▇▇▇▇'▇ Inc. hereunder are subject to pari passu security
interests in favor of NationsBank, N.A., as Collateral Agent for
NationsBank, N.A., ABN AMRO Bank N.V. and First Union National Bank.
; provided, the reference to "First Union National Bank" and to "ABN AMRO Bank
N.V." shall be deleted therefrom in the event of the termination of the First
Union Credit Agreement and the ABN Loan Agreement, as applicable.
Similar language shall be entered on future Accounts or preprinted
language included in all written contracts, documents, and instruments or
security agreements as and when each Account is created. Each Account shall
contain language acceptable to Lender whereby the Account Debtor agrees not to
assert any claim or defenses against Lender as assignee, which such Account
Debtor may have against Borrower. Borrower shall keep accurate and complete
records
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of its Accounts and all payments and collections thereon and shall submit to
Lender at Lender's request, on or before the fifteenth day of each month from
and after the date of such request, a schedule of Accounts, and, upon Lender's
request therefor, copies of proof of delivery and the original copy of all
documents, including, without limitation, repayment histories and present
status reports relating to the Accounts so scheduled and such other matters and
information relating to the status of then existing Accounts as Lender shall
reasonably request.
5.3 Administration of Accounts.
(A) Upon and after the occurrence of an Event of Default and
acceleration of the Obligations as permitted in Section 10.2 hereof, Lender
shall have the right to collect and settle or adjust all disputes and claims
directly with the Account Debtor and to compromise the amount or extend the
time for payment of the Accounts upon such terms and conditions as Lender may
deem advisable, and to charge the deficiencies, costs and expenses thereof,
including reasonable attorney's fees, to Borrower.
(B) If an Account includes a charge for any tax payable to
any governmental taxing authority, Lender is authorized, in its sole
discretion, to pay the amount thereof to the proper taxing authority for the
account of Borrower and to charge the Loan Account therefor. Borrower shall
notify Lender if any Account includes any tax due to any governmental taxing
authority and, in the absence of such notice, Lender shall have the right to
retain the full proceeds of the Account and shall not be liable for any taxes
to any governmental taxing authority that may be due by Borrower by reason of
the sale and delivery creating the Account.
(C) Whether or not a Default or an Event of Default has
occurred, any of Lender's officers, employees or agents shall have the right,
at any time or times hereafter, in the name of Lender, or any designee of
Lender or Borrower, to verify the validity, amount or any other matter relating
to any Accounts by mail, telephone, telegraph or otherwise. Borrower shall
cooperate fully with Lender in an effort to facilitate and promptly conclude
any such verification process.
5.4 Collection of Accounts. To expedite collection, Borrower
shall endeavor in the first instance to make collection of its Accounts for
Lender. All remittances received by Borrower on account of Accounts shall be
held as Lender's property by Borrower as trustee of an express trust for
Lender's benefit. Lender retains the right after an Event of Default and
acceleration of the Obligations as permitted in Section 10.2 hereof to notify
Account Debtors that Accounts have been assigned to Lender and to collect
Accounts directly in its own name and to charge the collection costs and
expenses, including reasonable attorneys' fees to Borrower. The Borrower
shall, following the occurrence and during the continuance of an Event of
Default and, at request of Lender, (a) notify the Account Debtors of the
security interest of Lender in any Account and that payment thereof or
thereunder is to be made directly to Lender, and (b) furnish to Lender upon
request additional statements of any Accounts, together with all notes or other
papers evidencing the same and any guaranty, securities or other documents or
information relating thereto. Lender has no duty to protect, insure, collect
or realize upon the Accounts or preserve
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rights in them. For the purpose of computing interest hereunder, all items of
payment received by Lender shall be deemed applied by Lender on account of the
Obligations (subject to final payment of such items) on the second Business Day
after receipt by Lender of such items of payment in Atlanta, Georgia. Such
credits shall be conditional upon final payment in cash or cash equivalents of
the items giving rise to them. If any item is not so paid, the Lender, in its
discretion, whether or not the item is returned, may reverse any credit given
for the item.
SECTION 6. PROVISIONS RELATING TO INVENTORY
6.1 Representations, Warranties and Covenants. With respect to
Inventory, Borrower represents and warrants to Lender that:
(A) All Inventory is presently and will continue to be
located at Borrower's places of business listed on Exhibit "C" and will not be
removed therefrom except as authorized by Section 4.4 of this Agreement.
(B) No Inventory is now, nor shall any Inventory at any time
or times hereafter be, stored with a bailee, warehouseman or similar party
without Lender's prior written consent.
(C) No Inventory is or will be consigned to any Person
without Lender's prior written consent.
(D) No Inventory is or will be produced in violation of the
Fair Labor Standards Act.
6.2 Location of Inventory. Contemporaneously herewith Borrower
has given Lender a list of all locations where Borrower has a Place of Business
(in the form of Exhibit "C" attached hereto), and thereafter shall give 30 days
written notice prior to any change in, each warehouse location at which
Inventory is or will be kept and each office of Borrower at which the records
of Borrower pertaining to Inventory, are kept. All Eligible Inventory is and
shall be kept, and all records pertaining to Eligible Inventory are and shall
be kept, only at locations of which the Lender has been given notice as
provided for herein or at locations notice of which shall be given to Lender
within thirty (30) days of the end of the next quarter.
6.3 Ownership of Inventories. Borrower is, and as to Eligible
Inventory to be acquired after the date hereof, and to be included in the
Borrowing Base shall be, the owner of all Eligible Inventory to be included in
the Borrowing Base and (except for carrier, warehouse, customs and similar
statutory liens arising in the ordinary course of business) shall neither
create or suffer to exist any Lien (other than (i) the pari passu Lien granted
to First Union under the First Union Credit Agreement and (ii) the pari passu
Lien granted to ABN under the ABN Loan Agreement) nor sell, assign, transfer or
create or suffer to exist any Lien (other than (i) the pari passu Lien granted
to First Union under the First Union Credit Agreement and (ii) the pari passu
Lien granted to ABN under the ABN Loan Agreement) in any account or contract
right relating to the Eligible Inventory to or in favor of any Person other
than Lender.
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6.4 Status of Inventory. Borrower shall notify Lender on Friday
of each week of any of the following events of which Borrower becomes aware
during such week: any material loss or depreciation in value of Eligible
Inventory and the amount of the loss or depreciation; damage to any such goods;
and any other event which materially affects Eligible Inventory, or the value
or amount thereof.
SECTION 7. REPRESENTATIONS AND WARRANTIES
7.1 General Representations and Warranties. To induce Lender to
enter into this Agreement and to make advances hereunder, Borrower warrants,
represents and covenants to Lender that:
(A) Organization and Qualification. Borrower is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Borrower has duly qualified and is authorized
to do business and is in good standing in each state or jurisdiction listed on
Exhibit "E" attached hereto and made a part hereof and in all other states and
jurisdictions where the character of its Properties or the nature of its
activities make such qualification necessary and in which the failure to be so
qualified would have a material adverse effect on Borrower.
(B) Borrower's Names. During the preceding seven (7) years,
Borrower has not been known as or used any fictitious or trade or other names
except as disclosed on Exhibit "F" attached hereto and made a part hereof.
Except as set forth on Exhibit "F", Borrower has not, during the preceding
seven (7) years, acquired all or substantially all of the assets of any Person.
(C) Power and Authority. Borrower has the right and power
and is duly authorized and empowered to enter into, execute, deliver and
perform this Agreement and each of the other Loan Documents to which it is a
party. The execution, delivery and performance of this Agreement and each of
the other Loan Documents have been duly authorized by all necessary corporate
action and do not and will not (i) require any consent or approval from any
Person; (ii) contravene Borrower's Articles of Incorporation or Bylaws; (iii)
violate, or cause Borrower to be in default under, any provision of any law,
rule, regulation, order, writ, judgment, injunction, decree, determination or
award in effect having applicability to Borrower; (iv) result in a breach of or
constitute a default under any indenture or loan or credit agreement or any
other agreement, lease or instrument to which Borrower is a party or by which
it or its Properties may be bound or affected; or (v) result in, or require,
the creation or imposition of any Lien (other than Permitted Liens) upon or
with respect to any of the Properties now owned or hereafter acquired by
Borrower.
(D) Legally Enforceable Agreements. This Agreement is, and
each of the other Loan Documents when delivered under this Agreement will be, a
legal, valid and binding obligation of Borrower enforceable against it in
accordance with their respective terms, except to the extent that such
enforcement may be limited by applicable bankruptcy, insolvency and other
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similar laws affecting creditors' rights generally or by principles of equity
pertaining to the availability of equitable remedies.
(E) Use of Proceeds. Borrower's uses of the proceeds of the
Loan pursuant to this Agreement are, and will continue to be, legal and proper
uses, duly authorized by its directors, and such uses will not violate any
applicable laws, including, without limitation, the Foreign Assets Control
Regulations, the Foreign Funds Control Regulations and the Transaction Control
Regulations of the United States Treasury Department (31 CFR, Subtitle B,
Chapter V, as amended).
(F) Margin Stock. Borrower is not engaged principally, or as
one of its important activities, in the business of purchasing or carrying
"margin stock" (within the meaning of Regulation G or U of the Board of
Governors of the Federal Reserve System), and no part of the proceeds of the
Loan to Borrower will be used to purchase or carry any margin stock or to
extend credit to others for the purpose of purchasing or carrying any margin
stock or be used for any purpose which violates or is inconsistent with the
provisions of Regulation X of said Board of Governors.
(G) Governmental Consents. Borrower has, and is in good
standing with respect to, all governmental consents, approvals, authorizations,
permits, certificates, inspections, and franchises necessary to continue to
conduct its business as heretofore or proposed to be conducted by it and to own
or lease and operate its Properties as now owned or leased by it.
(H) Capital Structure. Exhibit "G" attached hereto and made
a part hereof states (a) the correct name of Borrower, the jurisdiction of
organization, (b) the name of each of Borrower's directors, (c) the name of
each of Borrower's partnership or joint venture Affiliates, if any, and the
nature of the affiliation, and (d) a description of Borrower's Subordinated
Debt.
(I) Solvent Financial Condition. Borrower is now and, after
giving effect to the Loan to be made hereunder, at all times will be, Solvent.
(J) Restrictions. Borrower is not a party or subject to any
contract, agreement, or charter or other corporate restriction, which
materially and adversely affects its business or the use or ownership of any of
its Properties. Borrower is not a party or subject to any contract or
agreement which restricts its right or ability to incur Indebtedness, other
than as set forth on Exhibit "H" attached hereto, none of which prohibit the
execution of or compliance with this Agreement by Borrower. Borrower has not
agreed or consented to cause or permit in the future (upon the happening of a
contingency or otherwise) any of its Property, whether now owned or hereafter
acquired, to be subject to a Lien that is not a Permitted Lien.
(K) Litigation. Except as set forth on Exhibit "I" attached
hereto and made a part hereof, as of the date hereof, there are no actions,
suits, proceedings or investigations pending, or to the knowledge of Borrower,
threatened, against or affecting Borrower, or the business, operations,
Properties, prospects, profits or condition of Borrower, in any court or
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before any governmental authority or arbitration board or tribunal, and no
action, suit, proceeding or investigation shown on Exhibit "I" involves the
possibility of materially and adversely affecting the Properties, business,
prospects, profits or condition (financial or otherwise) of Borrower or the
ability of Borrower to perform this Agreement. Borrower is not in default with
respect to any order, writ, injunction, judgement, decree or rule of any court,
governmental authority or arbitration board or tribunal.
(L) Title to Properties. Borrower has good, indefeasible and
marketable title to and fee simple ownership of, or valid and subsisting
leasehold interests in, all of its real Property, and good title to all of its
other Property, in each case, free and clear of all Liens except Permitted
Liens.
(M) Financial Statements: Fiscal Year. The balance sheets of
Borrower dated as of September 30, 1996 and March 31, 1997, and the related
statements of income, changes in shareholder's equity and cash flow for the
periods ended on such dates, have been prepared on a basis consistent with
Borrower's historical accounting practices (except for changes in application
in which Borrower's independent certified public accountants concur), and
present fairly the financial position of Borrower at such dates and the results
of Borrower's operations for such periods. As of the date hereof, since May
31, 1997, there has been no material change in the condition, financial or
otherwise, of Borrower except changes in the ordinary course of business, none
of which individually or in the aggregate has been materially adverse. The
fiscal year of Borrower ends on September 30 of each year.
(N) Full Disclosure. The financial statements referred to in
Section 7.1(M) above, do not, nor does this Agreement or any other written
statement of Borrower to Lender (including, without limitation, Borrower's
filings, if any, with the Securities and Exchange Commission), contain any
untrue statement of a material fact or omit a material fact necessary to make
the statements contained therein or herein not misleading. There is no fact
which Borrower has failed to disclose to Lender in writing which materially
affects adversely or, so far as Borrower can now foresee, will materially
affect adversely the Properties, business, prospects, profits, or condition
(financial or otherwise) of Borrower or the ability of Borrower to perform this
Agreement.
(O) Pension Plans. Except as disclosed on Exhibit "J"
attached hereto and made a part hereof, Borrower has no Plan. Borrower has not
received any notice to the effect that it is not in full compliance with any of
the requirements of ERISA and the regulations promulgated thereunder. No fact
or situation that could result in a material adverse change in the financial
condition of Borrower, including, but not limited to, any Reportable Event, or
Prohibited Transaction, exists in connection with any Plan. Borrower has no
withdrawal liability in connection with a Multiemployer Plan.
(P) Taxes. Borrower's federal tax identification number is
▇▇-▇▇▇▇▇▇▇. Borrower has filed all federal, state and local tax returns and
other reports it is required by law to file and has paid, or made provision for
the payment of, all taxes, assessments, fees and other
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governmental charges that are due and payable. The provision for taxes on the
books of Borrower are adequate for all years not closed by applicable statutes,
and for its current fiscal year.
(Q) Compliance With Laws. Borrower has duly complied with,
and its Properties, business operations and leaseholds are in compliance in all
material respects with, the provisions of all federal, state and local laws,
rules and regulations applicable to Borrower, its Properties or the conduct of
its business, including, without limitation, the federal Truth-In-Lending Act
and applicable state consumer lending laws, OSHA and all Environmental Laws,
and there have been no citations, notices or orders of noncompliance issued to
Borrower under any such law, rule or regulation.
(R) No Defaults. No event has occurred and no condition
exists which would, upon the execution and delivery of this Agreement or
Borrower's performance hereunder, constitute a Default or an Event of Default.
Borrower is not in default, and no event has occurred and no condition exists
which constitutes, or which with the passage of time or the giving of notice or
both would constitute, a default in the payment of any Indebtedness to any
Person for Money Borrowed.
7.2 Reaffirmation. Each request for an Advance made by Borrower
pursuant to this Agreement or any of the other Loan Documents shall constitute
(i) an automatic representation and warranty by Borrower to Lender that there
does not then exist any Default or Event of Default and (ii) a reaffirmation as
of the date of said request that all of the representations and warranties of
Borrower contained in this Agreement (other than the first sentence of Section
7.1(K) and the second sentence of Section 7.1(M) hereof) and the other Loan
Documents are true in all material respects except for (x) any changes in the
nature of Borrower's business or operations that would render the information
contained in any exhibit, attached hereto either inaccurate or incomplete, so
long as Lender has consented to such changes or such changes are expressly
permitted by this Agreement and (y) such changes to the facts and/or
circumstances that are the subject of such representations and warranties, so
long as such changes are not materially adverse to the condition of the
Borrower (financially or otherwise) either individually or in the aggregate.
7.3 Survival of Representations and Warranties. Borrower
covenants, warrants and represents to Lender that all representations and
warranties of Borrower contained in this Agreement or any of the other Loan
Documents shall be true at the time of Borrower's execution of this Agreement
and the other Loan Documents, and shall survive the execution, delivery and
acceptance hereof by Lender and the closing of the transactions described
herein or related hereto.
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS
8.1 Affirmative Covenants. During the term of this Agreement, and
thereafter for so long as there are any obligations to Lender, Borrower
covenants that, unless otherwise consented to by Lender in writing, it shall:
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(A) Taxes and Liens. Pay and discharge all taxes,
assessments and governmental charges upon it, its income and Properties as and
when such taxes, assessments and charges are due and payable, (i) except and to
the extent only that such taxes, assessments and charges are being actively
contested in good faith and by appropriate proceedings, Borrower promptly
notifies Lender in writing of such contest, Borrower maintains adequate
reserves on its books therefor and the nonpayment of such taxes, assessments
and charges does not result in a Lien upon any Properties of Borrower other
than a Permitted Lien and (ii) except such taxes, assessments and governmental
changes that do not exceed, in the aggregate, $250,000 at any time. Borrower
shall also pay and discharge any lawful claims which, if unpaid, might become a
Lien against any of Borrower's Properties except for Permitted Liens.
(B) Tax Returns. Timely, file all federal, state and local
tax returns and other reports Borrower is required by law to file and maintain
adequate reserves for the payment of all taxes, assessments, governmental
charges, and levies imposed upon it, its income, or its profits, or upon any
Property belonging to it.
(C) Payment of Bank Charges. Pay to Lender, when due, any
and all fees, costs or expenses which Lender pays to a bank or other similar
institution arising out of or in connection with (i) the forwarding to Borrower
or any other Person on behalf of Borrower, by Lender, proceeds of loans made by
Lender to Borrower pursuant to this Agreement and (ii) the depositing for
collection, by Lender, of any check or item of payment received or delivered to
Lender on account of the obligations.
(D) Business and Existence. Preserve and maintain its
existence and all rights, privileges, and franchises in its qualification and
good standing in all states in which such qualification is necessary.
(E) Maintain Properties. Maintain its Properties in good
condition and make, all necessary renewals, repairs, replacements, additions
and improvements thereto.
(F) Compliance with Laws. Comply with all laws, ordinances,
governmental rules and regulations to which it is subject, including, without
limitation, all laws, statutes, regulations and ordinances regarding the
collection, payment and deposit of employees, income, unemployment and Social
Security taxes and sales and excise taxes, ERISA and Environmental Laws, and
obtain and keep in force any and all licenses, permits, franchises, or other
governmental authorizations necessary to the ownership of its Properties or to
the conduct of its business, which violation or failure to obtain would be
reasonably likely to materially and adversely affect the business, prospects,
profits, Properties, or condition (financial or otherwise) of Borrower.
(G) Business Records. Keep adequate records and books of
account with respect to its business activities in which proper entries are
made in accordance with GAAP reflecting all its financial transactions.
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(H) Visits, Inspections and Audits. Permit representatives
of Lender, from time to time, as often as may be reasonably requested, but only
during normal business hours, to visit, inspect and audit the Properties of
Borrower, inspect and make extracts from its books and records, and discuss
with its officers, its employees and its independent accountants, Borrower's
business, assets, liabilities, financial condition, business prospects and
results of operations and to pay in full the cost of one audit by Lender of the
Collateral each year (provided, however, that Borrower shall not be required to
pay more than $10,000 with respect to any such audit).
(I) Financial Statements. Cause to be prepared and furnished
to Lender the following (all to be kept and prepared in accordance with GAAP
applied on a consistent basis, unless Borrower's certified public accountants
concur in any change therein and such change is disclosed to Lender and is
consistent with GAAP):
(i) as soon as possible, but not later than one hundred
twenty (120) days after the close of each fiscal year of Borrower, unqualified
audited financial statements of Borrower as of the end of such year, certified
by a firm of independent certified public accountants of recognized national
standing or otherwise acceptable to Lender (except for a qualification for a
change in accounting principles with which the independent public accountant
concurs);
(ii) as soon as possible, but not later than the earlier
of sixty (60) days after the end of each quarter hereafter or the date on which
the same shall be required to be filed with the Securities Exchange Commission,
unaudited interim consolidated financial statements of Borrower, and of the
portion of Borrower's fiscal year then elapsed, including without limitation,
upon reasonable request of Lender, Accounts receivables aging, and Accounts
payable aging as of the end of such quarter, on a consolidated and
consolidating basis, certified by the principal financial officer of Borrower
as fairly presenting the consolidated financial position and results of
operations of Borrower for such month and period subject only to changes from
audit and year-end adjustments and except that such statements need not contain
notes; and
(iii) such other data and information (financial and
otherwise) as Lender, from time to time, may reasonably request, bearing upon
or related to the Collateral, Borrower's financial condition or results of
operations, including, without limitation, federal income tax returns of
Borrower, accounts payable ledgers, and bank statements.
(J) Notices to Lender. Notify Lender in writing: (i)
promptly after Borrower's learning thereof, of the commencement of any
litigation materially affecting Borrower or any of its Properties, whether or
not the claim is considered by Borrower to be covered by insurance, and of the
institution of any administrative proceeding which may materially and adversely
affect Borrower's operations, financial condition, Properties at business or
Lender's Lien upon any of the Collateral; (ii) within forty-five (45) days
after each quarter for the preceding quarter, of Borrower's opening of any new
office or Place of Business in a state in which Borrower previously has had no
Place of Business or within forty-five (45) days of the end of each quarter of
Borrower's opening of a new office or new Place of Business in a state where
Borrower has
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a prior office or Place of Business; (iii) within forty-five (45) days after
each quarter for the preceding quarter, of the closing of any existing office
or Place of Business; (iv) promptly after Borrower's learning thereof, of any
default by Borrower under any note, indenture, loan agreement, mortgage, lease,
deed, guaranty or other similar agreement relating to any Indebtedness of
Borrower in excess of $250,000; (v) promptly after the occurrence thereof, of
any Default or Event of Default; (vi) promptly after the rendition thereof, of
any judgment rendered against Borrower; and (vii) concurrently with the filing
thereof with the Securities and Exchange Commission ("SEC"), any filings with
the SEC by providing to Lender a copy of such filings.
(K) Landlord and Storage Agreements. Provide Lender at
Lender's request with copies of all agreements between Borrower and any
landlord or warehouseman which owns any premises at which any Inventory or
other Collateral may, from time to time, be kept.
(L) Further Assurances. At Lender's request, promptly
execute or cause to be executed and deliver to Lender any and all documents,
instruments and agreements deemed necessary by Lender to give effect to or
carry out the terms or intent of this Agreement or any of the other Loan
Documents.
(M) Communications with Lender. Borrower hereby irrevocably
authorizes Lender to communicate directly with any of the following Persons
concerning Borrower, its business, the Collateral and the Loans: (a) any
service bureau, warehousing service, freight forwarder, trade creditor,
consignee, bailee, customer or other similar services; (b) any Person employed
by Borrower; and (c) Borrower's present and future independent public
accountants, each of whom is authorized by Borrower to communicate with Lender
and to disclose to Lender any and all matters relating to Borrower, its
financial condition and prospects, and the Collateral.
(N) Borrowing Base Report. For the purposes of computing the
Borrowing Base, Borrower shall furnish to Lender on the forty-fifth (45th) day
after the end of each calendar quarter, a Borrowing Base Report as of the last
day of the immediately preceding calendar quarter containing information
adequate to identify Eligible Inventory and Eligible Accounts, signed by an
authorized officer of Borrower showing a calculation of the Borrowing Base as
of the end of the preceding week, listing the amount of Eligible Accounts and
updating the amount of Eligible Inventory. If on the date any such report is
delivered, the sum of the aggregate principal amount of the Loan shall exceed
the Borrowing Base as set forth in the Borrowing Base Report, Borrower will
immediately pay to Lender the amount of such excess. Borrower shall also, if
the Lender so requests, accompany such information with pledges or designations
of Eligible Inventory or assignments of Eligible Accounts in form and substance
satisfactory to Lender which assignments shall give Lender full power to
collect, compromise or otherwise deal with the assigned Accounts as the sole
owner thereof.
(O) Inspection; Further Assurances. Borrower shall at all
reasonable times and from time to time allow Lender by or through any of its
authorized officers, agents, attorneys or accountants, to examine, inspect or
make extracts from Borrower's books and records, and to arrange for
verification of Eligible Accounts and Eligible Inventory under reasonable
procedures
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on a "blind basis," directly with account debtors or factors or by other
methods; and shall do, make, execute and deliver all such additional and
further acts, things, deeds, assurances, and instruments as Lender may require
more completely to vest in and assure to Lender its rights hereunder or in any
Collateral and to carry into effect the provisions and intent of this
Agreement.
(P) Borrower's Account. At all times during the term of this
Agreement maintain Borrower's Account so long as the terms thereof are as
favorable to Borrower as those generally available for similar customers with
comparable accounts.
(Q) Compliance Certificate. Within ninety (90) days after
the fiscal year end and forty-five (45) days after the end of each calendar
quarter, or more frequently if requested by Lender, cause the chief financial
officer of Borrower to prepare and deliver to Lender a compliance certificate
in the form of Exhibit "K" attached hereto, with appropriate insertions.
8.2 Negative Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Lender, Borrower
covenants that, unless Lender has first consented thereto in writing, it will
not:
(A) Indebtedness. Incur, assume or suffer to exist any
Indebtedness except for Permitted Indebtedness.
(B) Mergers; Consolidations: Acquisitions. Acquire all or
any substantial part of the Properties of any Person if the consideration paid
as part of any such transaction in cash or other property (other than stock of
Borrower) exceeds $5,000,000, nor merge or consolidate with any Person.
(C) Loans. Except as set forth on Exhibit K-1, make any
Loans or other advances of money in the aggregate in excess of the Permitted
Loan and Guarantee Amount (other than for salary, travel advances, advances
against commissions and other similar advances in the ordinary course of
business and Loans to officers to exercise stock options) to any Person,
including, without limitation, any of Borrower's Affiliates, officers or
employees.
(D) Affiliate Transactions. Enter into, or be a party to,
any transaction with any Affiliate or stockholder, except (i) transactions in
the ordinary course of and pursuant to the reasonable requirements of
Borrower's business and upon fair and reasonable terms which are fully
disclosed to Lender and are no less favorable to Borrower than would obtain in
a comparable arm's length transaction with a Person not an Affiliate of
Borrower; (ii) an agreement with ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co., Inc. for management
services, with the total consideration thereunder not to exceed $500,000
annually; (iii) bonuses to the chairman, president and chief executive officer
of the Borrower, provided, no Default or Event of Default under Section 10.1(A)
hereof then exists or would be caused by the payment of such bonus; (iv) the
Long-Term Incentive Programs; (v) insurance programs with Cougar Reinsurance
Company, Ltd., as described in Exhibit K-2; and (vi) loans and other
indebtedness evidenced by the agreements listed on Exhibit K-1.
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(E) Partnerships or Joint Ventures. Become or agree to
become a general or limited partner in any general or limited partnership or a
joint venturer in any joint venture.
(F) Adverse Transactions. Enter into any transaction, which
materially and adversely affects or may materially and adversely affect the
Collateral or Borrower's ability to repay the Obligations or permit or agree to
any material extension, compromise or settlement or make any change or
modification of any kind or nature with respect to any Account, including any
of the terms relating thereto, other than discounts and allowances in the
ordinary course of business, all of which shall be reflected in the Schedules
of Accounts submitted to Lender pursuant to Section 5.2 of this Agreement.
(G) Guaranties. Guarantee, assume, endorse or otherwise, in
any way, become directly or contingently liable with respect to the
Indebtedness of any Person if the aggregate amount of the same exceeds the
Permitted Loan and Guarantee Amount except by endorsement of instruments or
items of payment for deposit or collection.
(H) Limitation on Liens. Create or suffer to exist any Lien
upon any of its Property, income or profits, whether now owned or hereafter
acquired, except: (i) Liens at any time granted in favor of Lender; (ii) Liens
for taxes (excluding any Lien imposed pursuant to any of the provisions of
ERISA) not yet due or being contested as permitted by Section 8.1(A) hereof,
but only if in Lender's judgment such Lien does not affect adversely Lender's
rights or the priority of Lender's Lien in the Collateral; (iii) Liens securing
the claims or demands of materialmen, mechanics, carriers, warehousemen,
landlords and other like Persons for labor, materials, supplies or rentals
incurred in the ordinary course of Borrower's business, but only if the payment
thereof is not at the time required and only if such Liens are junior in
priority to the Liens in favor of Lender; (iv) Liens resulting from deposits
made in the ordinary course of business in connection with workmen's
compensation, unemployment insurance, social security and other like laws; (v)
attachment, judgment and other similar non-tax Liens arising in connection with
court proceedings, but only if and for so long as the execution or other
enforcement of such Liens is and continues to be effectively stayed and bonded
on appeal in a manner satisfactory to Lender for the full amount thereof, the
validity and amount of the claims secured thereby are being actively contested
in good faith and by appropriate lawful proceedings, such Liens do not, in the
aggregate, materially detract from the value of the Property of Borrower or
materially impair the use thereof in the operation of Borrower's business and
such Liens are and remain junior in priority to the Liens in favor of Lender;
(vi) Purchase Money Liens securing purchase money indebtedness which is not
incurred in violation of Section 8.3(C) of this Agreement; (vii) reservations,
exceptions, easements, rights-of-way, and other similar encumbrances affecting
real Property, provided that, in Lender's sole judgment, they do not in the
aggregate materially detract from the value of said Properties or materially
interfere with their use in the ordinary conduct of Borrower's business and, if
said real Property constitutes Collateral, Lender has consented thereto; (viii)
such other Liens as appear an Exhibit "L" attached hereto; (ix) the pari passu
Lien granted in favor of First Union pursuant to the First Union Credit
Agreement; (x) the pari passu Lien granted in favor of ABN pursuant to the ABN
Loan Agreement; and (xi) such other Liens as Lender may hereafter approve in
writing.
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(I) Business Locations. Transfer its principal place of
business or chief executive office, or maintain warehouses or records with
respect to Accounts or Inventory, to or at any locations other than those at
which the same are presently kept or maintained, as set forth on Exhibit "C"
hereto, except upon at least thirty (30) days' prior written notice to Lender
and after the delivery to Lender of financing statements, if required by
Lender, in form satisfactory to Lender to perfect or continue the perfection of
Lender's Lien and security interest hereunder.
(J) Change of Business. Enter into any new type of business
or make any material change in any of Borrower's business objectives, purposes
and operations; provided, however, Borrower shall be permitted to engage in any
retail business incidental or related to Borrower's business conducted on the
date hereof.
(K) Disposition of Assets. Sell, lease or otherwise dispose
of any of its Properties, including any disposition of Property as part of a
sale and leaseback transaction, to or in favor of any Person, except (i) sales
of Inventory in the ordinary course of Borrower's business for so long as no
Event of Default exists hereunder, (ii) dispositions expressly authorized by
this Agreement, or (iii) dispositions of Properties other than Inventory for
not less than the reasonable value of the Properties which have been disposed.
(L) Name of Borrower. Use any corporate name (other than its
own) or any fictitious name, tradestyle or "d/b/a" except for the names
disclosed on Exhibit "F" attached hereto, unless Borrower has provided such
name to Lender and executed such Uniform Commercial Code statements as Lender
shall require.
(M) ▇▇▇▇-and-Hold Sales, Etc. Except in the ordinary course
of business, make a sale to any customer on a ▇▇▇▇-and-hold, guaranteed sale,
sale and return, sale on approval or consignment basis, or any sale on a
repurchase or return basis.
(N) Margin Securities. Own, purchase or acquire (or enter
into any contract to purchase or acquire) any "margin security" as defined by
any regulation of the Federal Reserve Board as now in effect or as the same may
hereafter be in effect unless, prior to any such purchase or acquisition or
entering into any such contract, Lender shall have received an opinion of
counsel satisfactory to Lender to the effect that such purchase or acquisition
will not cause this Agreement to violate Regulations G or U or any other
regulation of the Federal Reserve Board then in effect.
(O) Fiscal Year. Change its fiscal year without the prior
written consent of Lender, which consent shall not be unreasonably withheld.
(P) Distributions to Affiliates. Make any distributions,
dividends or payments to Affiliates (including any permitted payments under
section 8.2(D)(ii) and (iii) in excess of $1,500,000 during any calendar year
without the prior written consent of Lender, except Borrower may redeem its
Class B shares from time to time if no Default or Event of Default then exists
or would be caused by such redemption.
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8.3 Specific Financial Covenants. During the term of this
Agreement and thereafter for so long as there are any Obligations to Lender,
Borrower covenants that, unless otherwise consented to by Lender in writing, it
shall:
(A) Minimum Net Worth. Maintain at all times a Net Worth of
at least $140,000,000, plus 50% of the net proceeds of any equity offering
after September 30, 1996; in addition, effective as of the start of each fiscal
year, commencing with the fiscal year beginning on October 1, 1997, such Net
Worth requirement shall be increased by 50% of the Borrower's Net Income after
distributions to shareholders during the immediately preceding fiscal year.
(B) Fixed Charge Coverage Ratio. Maintain, as of the end of
each fiscal quarter, a Fixed Charge Coverage Ratio of not less than 1.5:1.
(C) Debt Ratio. Not permit, as of the end of any fiscal
quarter, the ratio of the Borrower's Funded Debt as of such date to its EBITDAR
for the four immediately preceding fiscal quarters to exceed 3:1.
SECTION 9. CONDITIONS PRECEDENT
Notwithstanding any other provision of this Agreement or any of the
other Loan Documents, and without affecting in any manner the rights of Lender
under the other Sections of this Agreement, it is understood and agreed that
the obligation of Lender to make the initial Advance is subject to the
conditions precedent that Lender shall have received, in form and substance
satisfactory to it, each of the following documents and that each of the
conditions described herein is fulfilled to the satisfaction of Lender:
9.1 Documentation. Lender shall have received the following
documents, each to be in form and substance satisfactory to Lender and its
counsel:
(A) The Note duly executed by Borrower;
(B) The Security Agreement and any other Security Documents
duly executed by Borrower;
(C) A legal opinion of ▇▇▇▇▇▇ & Bird, counsel to Borrower,
substantially in the form of Exhibit "M" attached hereto and incorporated by
reference herein;
(D) A Compliance Certificate in the form of Exhibit "K"
attached hereto and incorporated by reference herein duly executed by an
officer of Borrower;
(E) Certificates or policies of insurance evidencing
compliance with the applicable provisions of this Agreement;
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(F) A request for Advance pursuant to Section 9.4 hereof and
a Borrowing Base Report;
(G) Certified copies of Borrower's casualty insurance
policies, together with loss payable endorsements on Lender's standard form of
Loss Payee Endorsement naming Lender as loss payee, and certified copies of
Borrower's liability insurance policies, together with endorsements naming
Lender as a co-insured;
(H) Copies of all filing receipts or acknowledgments issued
by any governmental authority to evidence any filing or recordation necessary
to perfect the Liens of Lender in the Collateral and evidence in a form
acceptable to Lender that such Liens constitute valid and perfected security
interests and Liens, having the Lien priority specified in Section 4.2(B)
hereof;
(I) A copy of the Articles or Certificate of Incorporation of
Borrower, and all amendments thereto, and a copy of the Bylaws of Borrower,
each certified by the secretary of Borrower;
(J) Good standing certificates for Borrower, issued by the
Secretary of State or other appropriate official of the jurisdiction of
incorporation;
(K) Certificate as to qualification to transact business as a
foreign corporation in each state, other than its state of incorporation, in
which Borrower transacts business provided, however, so long as the
representation in Section 7.1(A) is true and correct, Borrower may provide such
certificates within 30 days of the date hereof;
(L) A copy of the Intercreditor Agreement, duly executed and
delivered by First Union, ABN and Borrower.
(M) Such other documents, instruments and agreements as
Lender shall reasonably request in connection with the foregoing matters.
9.2 Other Conditions. The following conditions have been and
shall continue to be satisfied, in the reasonable discretion of Lender:
(A) No Default or Event of Default shall exist;
(B) Each of the conditions precedent set forth in the other
Loan Documents shall have been satisfied;
(C) Since September 30, 1996, except for changes which are
reflected on the unaudited May 31, 1997 financial statements (excluding
footnotes) submitted to Lender, there shall not have occurred any material
adverse change in the business, financial condition or results of operations of
Borrower, or the existence or value of any Collateral, or any event, condition
or
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state of facts which would reasonably be expected materially and adversely to
affect the business, financial condition or results of operations of Borrower;
(D) No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any
court, governmental agency or legislative body to enjoin, restrain or prohibit,
or to obtain damages from any Person in respect of, the consummation of the
transactions contemplated hereby or which, in Lender's sole discretion, would
make it inadvisable to consummate the transactions contemplated by this
Agreement or any of the other Loan Documents; and
(E) The Borrower shall have paid in full the Loan commitment
fee and the collateral agent fee described in Section 3.3 hereof.
9.3 Conditions Precedent to Subsequent Advances. The obligation
of Lender to make subsequent Advances is subject to the conditions precedent
that Lender shall have received, in form and substance satisfactory to it, each
of the following documents and that each of the conditions described below is
fulfilled to the satisfaction of Lender:
(A) A request for Advance pursuant to Section 9.4 hereof;
(B) The representation and warranties contained herein and in
each of the other Loan Documents shall be correct on and as of the date of the
request for the Advance and the date of the Advance, with the same effect as
though made on and as of those dates, except to the extent that such
representations and warranties relate solely to an earlier date, and on each of
such dates, no event, act, or condition shall have occurred or be continuing,
or would result from the Advance requested, which constitutes a Default or
Event of Default. The submission by Borrower of a written request for an
Advance shall constitute a representation and warranty as to the correctness of
the above facts, and if requested by Lender with respect to the Advance
requested, Borrower shall furnish to Lender a written certificate of an officer
of the Borrower, satisfactory in form and substance to Lender, as to the
correctness of the above facts as a condition precedent to such Advance; and
(C) A Compliance Certificate in the form of Exhibit "L"
attached hereto and incorporated by reference herein duly executed by an
officer of Borrower.
9.4 Request for Advances. Borrower shall request each Advance of
Loan proceeds (including requests by telephonic communication) no later than
11:00 A.M. (Atlanta time) of the day on which the Advance is requested to be
made. Each request for Advance shall specify the proposed date of the Advance
and the amount thereof and shall be effective upon receipt by Lender and shall
be irrevocable. Not later than close of business (Atlanta time) on the day on
which the request for Advance is received by Lender and upon fulfillment of the
applicable conditions set forth herein, as applicable, Lender will make each
requested Advance in the amount requested, or in a lesser amount as determined
by the Borrowing Base, to the Borrower in immediately available funds by
deposit into Borrower's Account as of the proposed date. The
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persons authorized to request Advances hereunder shall be those individuals
designated in writing by Borrower to Lender. In the case of a request for
Advance made by telephonic communication, the action taken by Lender in good
faith upon such notice shall be deemed to be the action authorized by Borrower
pursuant to such request for Advance.
SECTION 10. EVENTS OF DEFAULT: RIGHTS AND REMEDIES ON DEFAULT
10.1 Events of Default. The occurrence of any one or more of the
following events or conditions shall constitute an "Event of Default":
(A) Payment of Note. Borrower shall fail to pay any
installment of principal, interest or premium, if any, owing on the Note on the
due date of such installment and shall fail to cure the same within five (5)
days of notice thereof from Lender.
(B) Payment of Other Obligations. Borrower shall fail to
pay any of the Obligations that are not evidenced by the Note on the due date
thereof (whether due at stated maturity, on demand, upon acceleration or
otherwise).
(C) Misrepresentations. Any warranty, representation, or
other statement made or furnished to Lender by or on behalf of Borrower or in
any instrument, certificate or financial statement furnished in compliance with
or in reference to this Agreement or any of the other Loan Documents proves to
have been false or misleading in any material respect when made or furnished.
(D) Breach of Covenants. Breach of any covenant
contained herein or any covenant contained in any other Loan Document (other
than a covenant or default in the performance) if the breach of such other
covenant is not cured to Lender's satisfaction within ten (10) days after the
sooner to occur of Borrower's receipt of notice of such breach from Lender or
the date on which such failure or neglect first becomes known to any officer of
Borrower.
(E) Default Under Other Agreements. Any event of default
shall occur under, or Borrower shall default in the performance or observance
of any term, covenant, condition or agreement contained in, any of the Other
Agreements or other instrument, contract, or document evidencing any existing
or future indebtedness of Borrower to Lender and such default shall continue
beyond any applicable period of grace.
(F) Default Under Security Documents. Any event of
default shall occur under, or Borrower shall default in the performance or
observance of any term, covenant, condition or agreement contained in, any of
the Security Documents and such default shall continue beyond any applicable
period of grace.
(G) Other Defaults. There shall occur any default or
event of default on the part of Borrower (including specifically, but without
limitation, due to non-payment) under any agreement, document or instrument to
which Borrower is a party (including, without limitation,
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the First Union Credit Agreement and the ABN Loan Agreement) or by which
Borrower or any of its Property is bound, creating or relating to any
indebtedness (other than the Obligations) if the payment or maturity of such
Indebtedness is accelerated in consequence of such event of default or demand
for payment of such Indebtedness is made.
(H) Uninsured Losses; Unauthorized Dispositions. Any
material loss, theft, damage or destruction not fully covered by insurance (as
required by this Agreement and subject to such deductibles as Lender shall have
agreed to in writing), or sale, lease or encumbrance of any of the Collateral
or the making of any levy, seizure, or attachment thereof or thereon except in
all cases as may be specifically permitted by other provisions of this
Agreement.
(I) Insolvency, etc. Borrower shall cease to be Solvent
or shall suffer the appointment of a receiver, trustee, custodian or similar
fiduciary, or shall make an assignment for the benefit of creditors, or any
petition for an order for relief shall be filed by or against Borrower under
the Bankruptcy Code (if against Borrower, the continuation of such proceeding
for more than thirty (30) days), or Borrower shall make any offer of
settlement, extension or composition to their respective unsecured creditors
generally, or any motion, complaint or other pleading is filed in any
bankruptcy case of any Person other than Borrower and such motion, complaint or
pleading seeks the consolidation of Borrower's assets and liabilities with the
assets and liabilities of such Persons.
(J) Business Disruptions; Condemnation. There shall
occur a cessation of a substantial part of the business of Borrower for a
period which significantly affects Borrower's capacity to continue its
business, on a profitable basis; or Borrower shall suffer the loss or
revocation of any license or permit now held or hereafter acquired by Borrower
which is necessary to the continued or lawful operation of all or any material
part of its business; or Borrower shall be enjoined, restrained or in any way
prevented by court, governmental or administrative order from conducting all or
any material part of its business affairs; or any material lease or agreement
pursuant to which Borrower leases, uses or occupies any Property shall be
cancelled or terminated prior to the expiration of its stated term; or any part
of the Collateral shall be taken through condemnation or the value of such
Property shall be impaired through condemnation.
(K) ERISA. A Reportable Event shall occur which Lender,
in its reasonable discretion, shall determine in good faith constitutes grounds
for the termination by the Pension Benefit Guaranty Corporation of any Plan or
for the appointment by the appropriate United States district court of a
trustee for any Plan, or if any Plan shall be terminated or any such trustee
shall be requested or appointed, or if Borrower is in "default" (as defined in
Section 4219 (c)(5) of ERISA) with respect to payments to a Multiemployer Plan
resulting from Borrower's complete or partial withdrawal from such Plan.
(L) Litigation. Borrower, or any Affiliate, shall
challenge or contest in any action, suit or proceeding the validity or
enforceability of this Agreement or any of the other Loan Documents, the
legality or enforceability of any of the Obligations or the perfection or
priority of any Lien granted to Lender.
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(M) Criminal Forfeiture. Borrower shall be criminally
indicted or convicted under any law that could lead to a forfeiture of any
Property of Borrower.
(N) Judgments. Borrower shall suffer any money
judgments, or suffer any writs, warrants of attachment or similar processes
which give rise to a Lien, other than a Permitted Lien, which individually or
in the aggregate involve an amount in excess of $500,000 over the amount
covered in full, subject to customary and reasonable deductibles, by insurance
or a surety bond, and shall not discharge, vacate, bond or stay the same within
a period of sixty (60) consecutive days.
10.2 Acceleration of the Obligations. Without in any way limiting
the right of Lender to demand payment of any portion of the obligations payable
on demand in accordance with Section 3.2 hereof, upon or at any time after the
occurrence of an Event of Default, all or any portion of the Obligations due or
to become due from Borrower to Lender, whether under this Agreement or any of
the other Loan Documents or otherwise, shall, at the option of Lender and
without notice or demand by Lender, become at once due and payable and Borrower
shall forthwith pay to Lender, in addition to any and all sums and charges due,
the entire principal of and accrued and unpaid interest on the obligations plus
reasonable attorneys' fees not to exceed fifteen percent (15.0%) of the
Obligations if the same are collected by or through an attorney at law.
10.3 Remedies. Upon or at any time after the occurrence of an
Event of Default, Lender shall have and may exercise from time to time the
following rights and remedies:
(A) All of the rights and remedies of a secured party
under the Code or under other applicable law, and all other legal and equitable
rights to which Lender may be entitled, all of which rights and remedies shall
be cumulative, and none of which shall be exclusive, and shall be in addition
to any other rights or remedies contained in this Agreement or any of the other
Loan Documents.
(B) The right to notify Account Debtors to make
remittances to Lender of all sums due on Accounts and to collect the Accounts
directly from the Account Debtors.
(C) The right to take immediate possession of the
Collateral, and (i) to require Borrower to assemble the Collateral, at
Borrower's expense, and make it available to Lender at a place designated by
Lender which is reasonably convenient to both parties, and (ii) to enter any of
the premises of Borrower or wherever any of the Collateral shall be located,
and to keep and store the same on said premises until sold (and if said
premises be the Property of Borrower, Borrower agrees not to charge Lender for
storage thereof).
(D) The right to sell or otherwise dispose of all or any
of the Collateral in its then condition, or after any further manufacturing or
processing thereof, at public or private sale or sales, with such notice as may
be required by law, in lots or in bulk, for cash or on credit, all as Lender,
in its sole discretion, may deem advisable. Borrower agrees that ten (10)
days' written
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notice to Borrower of any public or private sale or other disposition of any
Collateral shall be reasonable notice thereof; provided, however, that no
notice of Lender's intended disposition of Collateral shall be required with
respect to any portion of the Collateral that is perishable, threatens to
decline speedily in value or is of a type customarily sold on a recognized
market, nor shall any such notice be required hereunder if not otherwise
required under applicable law. Lender shall have the right to conduct such
sales an Borrower's premises, without charge therefor, and such sales may be
adjourned from time to time in accordance with applicable law. Lender shall
have the right to sell, lease, or otherwise dispose of any Collateral, or any
part thereof, for cash, credit or any combination thereof, and Lender may
purchase all or any part of any Collateral at public or, if permitted by law,
private sale and, in lieu of actual payment of such purchase price, may set off
the amount of such price against the obligations.
(E) Lender is hereby granted a license or other right to
use, without charge, Borrower's labels, patents, copyrights, rights of use of
any name, trade secrets, trade names, trademarks and advertising matter, or any
Property of a similar nature as it pertains to the Collateral, in advertising
for sale and selling any Collateral and Borrower's rights under all licenses
and all franchise agreements shall inure to Lender's benefit.
(F) The proceeds realized from the sale of any Collateral
may be applied, after allowing two (2) Business Days for collection, first to
the costs, expenses and reasonable attorneys' fees incurred by Lender in
collecting the obligations, in enforcing the rights of Lender under the Loan
Documents and in, collecting, retaking, completing, protecting, removing,
storing, advertising for sale, selling and delivering any of the Collateral;
secondly, to interest due upon any of the Obligations; and thirdly, to the
principal of the Obligations. If any deficiency shall arise, Borrower shall
remain jointly and severally liable to Lender therefor.
10.4 Remedies Cumulative; No Waiver. All covenants, conditions,
provisions, warranties, guaranties, indemnities, and other undertakings of
Borrower contained in this Agreement and the other Loan Documents, or in any
document referred to herein or contained in any agreement supplementary hereto
or in any schedule given to Lender or contained in any other agreement between
Lender and Borrower, heretofore, concurrently, or hereafter entered into, shall
be deemed cumulative to and not in derogation or substitution of any of the
terms, covenants, conditions, or agreements of Borrower herein contained. The
failure or delay of Lender to exercise or enforce any rights, Liens, powers, or
remedies hereunder or under any of the other Loan Documents shall not operate
as a waiver of any of such Liens, rights, powers or remedies, but all such
Liens, rights, powers, and remedies shall continue in full force and effect
until all Loans and all other Obligations owing or to become owing from
Borrower to Lender shall have been indefeasibly paid in full, and all Liens,
rights, powers, and remedies provided herein and the other Loan Documents are
cumulative and none are exclusive.
SECTION 11. MISCELLANEOUS
11.1 Power of Attorney. Borrower hereby irrevocably designates,
makes, constitutes and appoints Lender (and all Persons designated by Lender)
as Borrower's true and lawful
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attorney (and agent-in-fact) and Lender, or Lender's agent may, without notice
to Borrower and in either Borrower's or Lender's name, but at the cost and
expense of Borrower:
(A) At such time or times hereafter as Lender or said
agent, in its sole discretion, may determine, endorse Borrower's name on any
checks, notes, acceptances, drafts, money orders or any other evidence of
payment or proceeds of the Collateral which come into the possession of Lender
or under Lender's control; and
(B) At such time or times upon or after the occurrence of
an Event of Default as Lender or its agent in its sole discretion may
determine: (i) demand payment of the Accounts from the Account Debtors, enforce
payment of the Accounts by legal proceedings or otherwise, and generally
exercise all of Borrower's rights and remedies with respect to the collection
of the Accounts; (ii) settle, adjust, compromise, discharge or release any of
the Accounts or other Collateral or any legal proceedings brought to collect
any of the Accounts or other Collateral; (iii) sell or assign any of the
Accounts and other Collateral upon such terms, for such amounts and at such
time or times as Lender deems advisable; (iv) take control, in any manner, of
any item of payment or proceeds relating to any Collateral; (v) prepare, file
and sign Borrower's name to a proof of claim in bankruptcy, or similar document
against any Account Debtor or to any notice of lien, assignment or satisfaction
of lien or similar document in connection with any of the Collateral; (vi)
receive, open and dispose of all mail addressed to Borrower and to notify
postal authorities to change the address for delivery thereof to such address
as Lender may designate; (vii) endorse the name of Borrower upon any of the
items of payment or proceeds relating to any Collateral and deposit the same to
the account of Lender on account of the obligations; (viii) endorse the name of
Borrower upon any chattel paper, document, instrument, invoice, freight ▇▇▇▇,
▇▇▇▇ of lading or similar document or agreement relating to the Accounts,
Inventory and any other Collateral; (ix) use Borrower's stationery and sign the
name of Borrower to verifications of the Accounts and notices thereof to
Account Debtors; (x) use the information recorded on or contained in any data
processing equipment and computer hardware and software relating to the
Accounts, Inventory, Equipment and any other Collateral and to which Borrower
has access; (xi) make and adjust claims under policies of insurance; and (xii)
do all other acts and things necessary, in Lender's determination, to fulfill
Borrower's obligations under this Agreement.
11.2 Indemnity. Borrower hereby agrees to and hereby does
indemnify Lender and hold Lender harmless from and against any liability, loss,
damage, suit, action or proceeding ever suffered or incurred by Lender as the
result of Borrower's failure to observe, perform or discharge Borrower's duties
hereunder; provided, however, that Borrower shall have no liability under this
Section 11.2 resulting from Lender's gross negligence or wilful misconduct.
Without limiting the generality of the foregoing, this indemnity shall extend
to any claims asserted against Lender by any Person under any Environmental
Laws. Notwithstanding any contrary provision of this Agreement, the obligation
of Borrower under this Section 11.2 shall survive the payment in full of the
Obligations and the termination of this Agreement.
11.3 Modification of Agreement; Sale of Interest. This Agreement
may not be modified, altered or amended, except by an agreement in writing
signed by Borrower and Lender. Borrower
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may not sell, assign or transfer any interest in this Agreement or any of the
other Loan Documents, or any portion thereof, including, without limitation,
Borrower's rights, title, interests, remedies, powers, and duties hereunder or
thereunder. Borrower hereby consents to Lender's participation, sale,
assignment, transfer or other disposition, at any time or times hereafter, of
this Agreement, any of the other Loan Documents or any of the Obligations, or
of any portion hereof or thereof to any Affiliate of Lender, and Lender's
participation thereof with any Person if the amount so participated is less
than a fifty percent (50%) interest and Lender remains as the servicing agent
for this Agreement, including, without limitation, Lender's rights, title,
interests, remedies, powers, and duties hereunder or thereunder. In the event
of any such participation, sale, assignment, transfer or other disposition,
Lender shall be authorized to provide to each participating lender, assignee or
transferee all information in Lender's possession regarding Borrower and the
Collateral, including, without limitation, information required to be disclosed
pursuant to Banking Circular 181 (Rev. Aug. 2, 1984), issued by the Comptroller
of the Currency. In the case of an assignment, the assignee shall have, to the
extent of such assignment, the same rights, benefits and obligations as it
would if it were "Lender" hereunder and Lender shall be relieved immediately
(and without the necessity of the execution of further documentation by
Borrower or any other Person) of all obligations hereunder upon any such
assignment.
11.4 Reimbursement of Expenses. If, at any time or times prior or
subsequent to the date hereof, regardless of whether or not an Event of Default
then exists or any of the transactions contemplated hereunder are concluded,
Lender employs counsel for advice or other representation, or incurs legal
expenses or other costs or out-of-pocket expenses in connection with: (A) the
negotiation and preparation of this Agreement or any of the other Loan
Documents, any amendment of or modification of this Agreement or any of the
other Loan Documents; (B) periodic audits and appraisals (but no more than one
(1) annually) performed by Lender; (C) any litigation, contest, dispute, suit,
proceeding or action (whether instituted by Lender, Borrower or any other
Person) in any way relating to the Collateral, this Agreement or any of the
other Loan Documents or Borrower's affairs; (D) any attempt to enforce any
rights or remedies of Lender against Borrower or any other Person which may be
obligated to Lender by virtue of this Agreement or any of the other Loan
Documents, including, without limitation, the Account Debtors; or (E) any
attempt to inspect, verify, protect, preserve, restore, collect, sell,
liquidate or otherwise dispose of or realize upon the Collateral; then, in any
such event, the reasonable attorneys' fees arising from such services and all
reasonable expenses, costs, charges and other fees of such counsel or of Lender
or relating to any of the events or actions described in this Section shall be
payable when incurred by Borrower to Lender, as the case may be, and shall be
additional Obligations hereunder secured by the Collateral.
11.5 Indulgences Not Waivers. Lender's failure, at any time or
times hereafter, to require strict performance by Borrower of any provision of
this Agreement shall not waive, affect or diminish any right of Lender
thereafter to demand strict compliance and performance therewith. Any
suspension or waiver by Lender of an Event of Default by Borrower under this
Agreement or any of the other Loan Documents shall not suspend, waive or affect
any other Event of Default by Borrower under this Agreement or any of the other
Loan Documents, whether the same is prior or subsequent thereto and whether of
the same or of a different type. None of the undertakings,
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agreements, warranties, covenants and representations of Borrower contained in
this Agreement or any of the other Loan Documents and no Event of Default by
Borrower under this Agreement or any of the other Loan Documents shall be
deemed to have been suspended or waived by Lender, unless such suspension or
waiver is by an instrument in writing specifying such suspension or waiver and
is signed by a duly authorized representative of Lender and directed to
Borrower.
11.6 Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.
11.7 Successors and Assigns. This Agreement, the Other Agreements
and the Security Documents shall be binding upon and inure to the benefit of
the successors and assigns of Borrower and Lender. This provision, however,
shall not he deemed to modify Section 11.3 hereof.
11.8 Cumulative Effect; Conflict of Terms. The provisions of the
Other Agreements and the Security Documents are hereby made cumulative with the
provisions of this Agreement. Except as otherwise provided in Section 3.2 of
this Agreement and except as otherwise provided in any of the other Loan
Documents by specific reference to the applicable provision of this Agreement,
if any provision contained in this Agreement is in direct conflict with, or
inconsistent with, any provision in any of the other Loan Documents, the
provision contained in this Agreement shall govern and control.
11.9 Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to
be an original and all of which counterparts taken together shall constitute
but one and the same instrument. In proving this Agreement in any judicial
proceeding, it shall not be necessary to produce or account for more one such
counterpart signed by the party against whom such enforcement is sought.
11.10 Notice. Except as otherwise provided herein, all notices,
requests and demands to or upon a party hereto shall be in writing and shall be
sent by certified or registered mail, return receipt requested, personal
delivery against receipt or by telecopier or other facsimile transmission and,
unless otherwise expressly provided herein, shall be deemed to have been
validly served, given or delivered when delivered against receipt or one
Business Day after deposit in the mail, postage prepaid, or, in the case of
facsimile transmission, when received at the office of the noticed party,
addressed as follows:
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(A) If to Lender: (B) If to Borrower:
NationsBank, ▇.▇. ▇▇▇▇▇▇▇▇'▇ Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇ ▇▇▇▇ ▇▇▇▇▇ Street
19th Floor Savannah, Georgia 31401
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Attn: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
or to such other address as each party may designate for itself by like notice
given in accordance with this Section 11.10; provided, however, that any
notice, request or demand to or upon Lender shall not be effective until
received by Lender. Any written notice that is not sent in conformity with the
provisions hereof shall nevertheless be effective on the date that such notice
is actually received by the noticed party.
11.11 Lender's Right to Set-Off. Upon the occurrence of an Event of
Default and acceleration of the Obligations as permitted in Section 10.2
hereof, Lender, without notice or demand of any kind, may hold and set-off
against such of the Obligations (whether matured or unmatured) as Lender may
elect, any balance or amount to the credit of Borrowers in any deposit, agency,
reserve, holdback or other account of any nature whatsoever (other than any
account specifically identified as a payroll account for employees of
Borrower), maintained by or on behalf of Borrowers with Lender at its offices,
regardless of whether such accounts are general or special and regardless of
whether such accounts are individual or joint.
11.12 Demand Obligations. Nothing in this Agreement shall affect or
abrogate the demand nature of any portion of the Obligations expressly made
payable on demand by this Agreement or by any instrument evidencing or securing
same, and the occurrence of an Event of Default shall not be a prerequisite for
Lender's requiring payment of such Obligations.
11.13 Time of Essence. Time is of the essence in the payment and
performance of this Agreement, the Other Agreements and the Security Documents.
11.14 Entire Agreement. This Agreement and the other Loan
Documents, together with all other instruments, agreements and certificates
executed by the parties in connection therewith or with reference thereto,
embody the entire understanding and agreement between the parties hereto and
thereto with respect to the subject matter hereof and thereof and supersede all
prior agreements, understandings and inducements, whether express or implied,
oral or written.
11.15 Interpretation. No provision of this Agreement or any of the
other Loan Documents shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other governmental or judicial
authority by reason of such party's having or being deemed to have structured
or dictated such provision.
11.16 Governing Law; Consent to Forum. THIS AGREEMENT HAS BEEN
NEGOTIATED, EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO HAVE
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BEEN MADE IN ATLANTA, GEORGIA. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF GEORGIA;
PROVIDED, HOWEVER, THAT IF ANY OF THE COLLATERAL SHALL BE LOCATED IN ANY
JURISDICTION OTHER THAN GEORGIA, THE LAWS OF SUCH JURISDICTION SHALL GOVERN THE
METHOD, MANNER AND PROCEDURE FOR FORECLOSURE OF LENDER'S LIEN UPON SUCH
COLLATERAL AND THE ENFORCEMENT OF LENDER'S OTHER REMEDIES IN RESPECT OF SUCH
COLLATERAL TO THE EXTENT THAT THE LAWS OF SUCH JURISDICTION ARE DIFFERENT FROM
OR INCONSISTENT WITH THE LAWS OF GEORGIA. AS PART OF THE CONSIDERATION FOR NEW
VALUE RECEIVED, AND REGARDLESS OF ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL
PLACE OF BUSINESS OF BORROWER OR LENDER, BORROWER HEREBY CONSENTS AND AGREES
THAT THE SUPERIOR COURT OF ▇▇▇▇▇▇ COUNTY, GEORGIA, OR, AT LENDER'S OPTION, THE
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA, ATLANTA
DIVISION, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR
DISPUTES BETWEEN BORROWER AND LENDER PERTAINING TO THIS AGREEMENT OR TO ANY
MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT; PROVIDED, HOWEVER, LENDER
MAY, AT ITS OPTION, COMMENCE ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER
APPROPRIATE FORUM OR JURISDICTION TO OBTAIN POSSESSION OF OR FORECLOSURE UPON
ANY COLLATERAL, TO OBTAIN EQUITABLE RELIEF OR TO ENFORCE ANY JUDGMENT OR ORDER
OBTAINED BY LENDER AGAINST BORROWER OR WITH RESPECT TO ANY COLLATERAL OR TO
OBTAIN ANY OTHER RELIEF DEEMED APPROPRIATE BY LENDER. BORROWER EXPRESSLY
SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT
COMMENCED IN ANY SUCH COURT, AND BORROWER HEREBY WAIVES ANY OBJECTION WHICH
BORROWER MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR
FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING FOR SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. BORROWER HEREBY
WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN
ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND
OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER
AT THE ADDRESS SET FORTH IN THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE
DEEMED COMPLETED UPON THE EARLIER OF BORROWER'S ACTUAL RECEIPT THEREOF OR THREE
(3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID. NOTHING IN
THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO AFFECT THE RIGHT OF LENDER TO
SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
11.17 General Waivers by Borrower. BORROWER WAIVES (i) PRESENTMENT,
DEMAND AND PROTEST AND NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON PAYMENT,
MATURITY, RELEASE, COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL
COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS,
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DOCUMENTS, INSTRUMENTS, CHATTEL PAPER AND GUARANTIES AT ANY TIME HELD BY LENDER
ON WHICH BORROWER MAY IN ANY WAY BE LIABLE AND HEREBY RATIFIES AND CONFIRMS
WHATEVER LENDER MAY DO IN THIS REGARD; (ii) NOTICE PRIOR TO LENDER'S TAKING
POSSESSION OR CONTROL OF ANY OF THE COLLATERAL OR ANY BOND OR SECURITY WHICH
MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING LENDER TO EXERCISE ANY OF
LENDER'S REMEDIES, INCLUDING THE ISSUANCE OF AN IMMEDIATE WRIT OF POSSESSION;
(iii) THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION LAWS; (iv) ANY
RIGHT BORROWER MAY HAVE UPON PAYMENT IN FULL OF THE OBLIGATIONS TO REQUIRE
LENDER TO TERMINATE ITS SECURITY INTEREST IN THE COLLATERAL OR IN ANY OTHER
PROPERTY OF BORROWER UNTIL TERMINATION OF THIS AGREEMENT IN ACCORDANCE WITH ITS
TERMS AND THE EXECUTION BY BORROWER, AND BY ANY PERSON WHOSE LOANS TO BORROWER
ARE USED IN WHOLE OR IN PART TO SATISFY THE OBLIGATIONS, OF AN AGREEMENT
INDEMNIFYING LENDER FROM ANY LOSS OR DAMAGE LENDER MAY INCUR AS THE RESULT OF
DISHONORED CHECKS OR OTHER ITEMS OF PAYMENT RECEIVED BY LENDER FROM BORROWER OR
ANY ACCOUNT DEBTOR AND APPLIED TO THE OBLIGATIONS; AND (v) NOTICE OF ACCEPTANCE
HEREOF.
11.18 Security and Intercreditor Agreement. The relative rights and
obligations of Borrower and Lender hereunder and under the Other Agreements are
subject to the terms and provisions of the Intercreditor Agreement (so long
as it is in effect). To the extent there is any conflict with respect to the
Lender's rights of the Borrower's obligations hereuner or under the Other
Agreements, on the one hand, and the Intercreditor Agreement on the other hand,
the Intercreditor Agreement shall control.
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IN WITNESS WHEREOF, this Agreement has been duly executed in
Atlanta, Georgia on the day and year specified at the beginning hereof.
BORROWER:
▇▇▇▇▇▇▇▇'▇ INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Chairman and Chief
Executive Officer
[CORPORATE SEAL]
LENDER:
NATIONSBANK
By: /s/
-------------------------------------
Title: Senior Vice President
----------------------------------
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