SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 12, 1999
Commission file numbers 333-42411 and 333-42411-01
GLENOIT CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 13-3862561
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
GLENOIT ASSET CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 51-0343206
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
111 West 40th Street
New York, New York 10018
Telephone: (212) 391-3915
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
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Item 2. Acquisition or Disposition of Assets
On February 12, 1999, Glenoit Corporation (the "Company") acquired all
outstanding shares of capital stock of Ex-Cell Home Fashions, Inc.. ("Ex-Cell")
in a single transaction for approximately $43.2 million, subject to post-closing
adjustment. In addition, approximately $6.9 million of debt of Ex-Cell was
extinguished in connection therewith. This acquisition was pursuant to the
Ex-Cell Acquisition Agreement between the Company and Arnold Angerman, Irving
Angerman, Samuel Samelson and two trusts (the "Sellers") dated February 12,
1999.
The consideration paid in the acquisition was determined through
arms-length negotiations between the Company and the Sellers. The purchase price
was financed through borrowings under the Company's existing credit facility, as
amended, with Banque Nationale de Paris, as agent.
Ex-Cell is engaged in the design, manufacture, importation and
distribution of shower curtains, table linens, decorative pillows and other home
furnishing products. The Company intends for Ex-Cell to continue in its current
line of operations and has no plans at this time to devote Ex-Cell's assets to
any other purpose.
Item 7. Financial Statements and Exhibits
(a)and (b) The financial statements of the business acquired and the
pro forma financial information relative to such acquisition are
not included in this Report on Form 8-K and will be filed by
amendment no later than April 27, 1999 (which is 60 days after the
date that the initital Report on Form 8-K with respect to such
acquisition was required to be filed).
(c) The exhibits furnished in connection with this Report are as
follows:
Exhibit Number Description
2.1 Stock Purchase Agreement, dated February 12, 1999,
among Glenoit Corporation, Ex-Cell Home Fashions,
Inc., Arnold Angerman, Irving Angerman, Samuel
Samelson and two trusts.
4.1 Third Amendment and Waiver to the Credit Agreement,
dated February 12, 1999, among Glenoit Corporation,
the banks, financial institutions and other
institutional lenders parties to the Credit Agreement
and Banque Nationale de Paris, as Agent.
99.1 Company Press Release dated February 12, 1999.
The Registrant hereby undertakes to furnish supplementally a copy of any
schedule or exhibit to the Stock Purchase Agreement omitted herefrom, as
permitted by Item 601(b)(2) of Regulation S-K, to the Commission upon request.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Date February 26, 1999
GLENOIT CORPORATION
By /S/ LESTER D. SEARS
------------------------------------
Lester D. Sears
Executive Vice President and
Chief Financial Officer
(On behalf of the Registrant
and as Principal Financial
and Accounting Officer)
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Dated: February 26, 1999
GLENOIT ASSET CORPORATION
By /S/ LESTER D. SEARS
------------------------------------
Lester D. Sears
Executive Vice President and
Chief Financial Officer
(On behalf of the Registrant
and as Principal Financial
and Accounting Officer)
STOCK PURCHASE AGREEMENT
among
ARNOLD ANGERMAN,
IRVING ANGERMAN,
SAMUEL SAMELSON,
TRUST F/B/O ARNOLD C. ANGERMAN U/T/A DATED NOVEMBER 10, 1998
AND
TRUST F/B/O SANDRA E. KOCH U/T/A DATED NOVEMBER 10, 1998
as Sellers,
and
GLENOIT CORPORATION
as Buyer
February 12, 1999
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TABLE OF CONTENTS
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SECTION IDEFINITIONS AND CONSTRUCTION.............................................................................1
1.1 Certain Definitions.............................................................................1
1.2 Accounting Principles...........................................................................7
1.3 Interpretation..................................................................................8
SECTION IIACQUISITION OF CAPITAL STOCK AND PURCHASE PRICE.........................................................8
2.1 Purchase of Stock...............................................................................8
2.2 Purchase Price..................................................................................8
2.3 Purchase Price Adjustment.......................................................................9
2.4 Closing........................................................................................10
SECTION IIIREPRESENTATIONS AND WARRANTIES OF THE SELLERS.........................................................10
3.1 Organization and Qualification.................................................................10
3.2 Validity and Execution of Agreement............................................................10
3.3 No Conflict....................................................................................10
3.4 Capitalization of the Company and its Subsidiaries.............................................11
3.5 Books and Records..............................................................................11
3.6 Financial Statements...........................................................................11
3.7 Undisclosed Liabilities........................................................................12
3.8 No Material Adverse Change.....................................................................12
3.9 Tax Matters....................................................................................13
3.10 Litigation.....................................................................................14
3.11 Contracts and Other Agreements.................................................................14
3.12 Real Estate....................................................................................16
3.13 Transactions with Affiliates...................................................................17
3.14 Accounts Receivable and Inventory..............................................................17
3.15 Compensation Arrangements......................................................................18
3.16 Operations.....................................................................................18
3.17 Intellectual Property..........................................................................20
3.18 Employees......................................................................................21
3.19 Employee Benefits..............................................................................22
3.20 Environmental and Safety Matters...............................................................23
3.21 Insurance......................................................................................24
3.22 Title and Sufficiency of Assets................................................................24
3.23 Compliance with Laws...........................................................................25
3.24 Substantial Customers and Suppliers............................................................25
3.25 Banks and Proxies..............................................................................25
3.26 Brokers........................................................................................25
3.27 Disclosure.....................................................................................26
SECTION IVREPRESENTATIONS AND WARRANTIES OF THE BUYER............................................................26
4.1 Organization and Capitalization................................................................26
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4.2 Validity and Execution of Agreement............................................................26
4.3 No Conflict....................................................................................26
4.4 Brokers........................................................................................26
4.5 Disclosure.....................................................................................27
SECTION VPRE-CLOSING COVENANTS...................................................................................27
5.1 Corporate Examinations and Investigations......................................................27
5.2 Conduct of Business............................................................................27
5.3 Notice of Events...............................................................................27
5.4 Exclusivity....................................................................................27
5.5 Mutual Assistance..............................................................................28
5.6 Public Announcements...........................................................................28
5.7 Ansam Transfer.................................................................................28
SECTION VICONDITIONS PRECEDENT TO THE CLOSING....................................................................28
6.1 Conditions Precedent to the Obligations of the Buyer...........................................28
6.2 Conditions Precedent to the Obligations of the Sellers.........................................30
SECTION VIIPOST-CLOSING COVENANTS................................................................................31
7.1 Further Information............................................................................31
7.2 Record Retention...............................................................................31
7.3 Post-Closing Assistance........................................................................32
7.4 Confidentiality................................................................................32
7.5 Certain Other Matters..........................................................................33
7.6 Further Assurances.............................................................................33
7.7 Tax Matters....................................................................................33
7.8 Purchase of Life Insurance; Split Dollar Loan Receivable.......................................34
SECTION VIIISURVIVAL; INDEMNIFICATION............................................................................34
8.1 Survival of Representations, Warranties, Covenants and Agreements..............................34
8.2 Indemnification of the Buyer...................................................................34
8.3 Indemnification of the Sellers.................................................................34
8.4 Limitations on Indemnification.................................................................34
SECTION IXTERMINATION OF AGREEMENT...............................................................................36
9.1 Termination....................................................................................36
9.2 Survival.......................................................................................36
9.3 Expenses.......................................................................................36
9.4 Notices........................................................................................37
9.5 Entire Agreement...............................................................................38
9.6 Waivers and Amendments.........................................................................38
9.7 Governing Law..................................................................................39
9.8 Binding Effect; No Assignment..................................................................39
9.9 Severability of Provisions.....................................................................39
9.10 Counterparts...................................................................................39
9.11 Specific Performance...........................................................................39
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9.12 Remedies Cumulative............................................................................40
9.13 Waiver of Jury Trial...........................................................................40
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STOCK PURCHASE AGREEMENT
This Agreement is dated as of February 12, 1999, and made
between Arnold Angerman, Irving Angerman, Samuel Samelson, Trust F/B/O Arnold C.
Angerman u/t/a dated November 10, 1998, and Trust F/B/O Sandra E. Koch u/t/a
dated November 10, 1998 (each a "Seller", together, the "Sellers") and Glenoit
Corporation, a Delaware corporation (the "Buyer").
RECITALS:
WHEREAS, Ex-Cell Home Fashions, Inc., a New York corporation
(the "Company") and its Subsidiaries (as defined below), including the factory,
office and warehouse space used by the Company and owned by Ansam Realty
Company, LLC, a North Carolina limited liability company ("Ansam") (Ansam, the
Company, and its Subsidiaries, collectively the "Company Group"), are engaged in
the business of the import, manufacture, and distribution of home furnishings
(the "Business");
WHEREAS, the Sellers wish to sell, and the Buyer wishes to
acquire the Business by purchasing 100% of the outstanding capital stock of the
Company upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual terms,
conditions and other agreements set forth herein the Buyer and the Sellers
hereby agree as follows:
SECTION I
DEFINITIONS AND CONSTRUCTIONSECTION
I.1 Certain Definitions. As used in this Agreement, the
following terms have the following meanings unless the context otherwise
requires:
"Accounts Receivable" means all trade accounts receivable and
all notes, bonds and other evidences of indebtedness of and rights to receive
payments arising out of sales occurring in the conduct of the Business and any
security agreements related thereto, including any rights of the Company with
respect to any third party collection proceedings or any other Actions which
have been commenced in connection therewith.
"Action" means any action, suit, proceeding or arbitration by
any Person or any investigation or audit by any Governmental Body.
"Affiliate" of any Person means (i) any other Person directly
or indirectly, through one or more intermediaries, controlling, controlled by or
under common control with such first Person and includes (a) any partner,
shareholder, member, officer or director of a particular Person, and (b) any
individual related by blood, marriage or adoption to a Person or any partner,
shareholder, member, officer, director or employee of a particular Person, (ii)
any Person in which any of the foregoing owns a beneficial interest or (iii) any
corporation or other business organization of which such Person is an officer or
partner or is the beneficial owner, directly or indirectly, of 10% or more
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of any class of equity securities, any trust or estate in which such Person has
a substantial beneficial interest or as to which such Person serves as a trustee
or in a similar capacity and any relative or spouse of such Person, or any
relative of such spouse, who has the same home as such Person or any child or
sibling of such Person or such Person's spouse. For purposes of this definition,
the term "control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "controlled" and "controlling" have meanings correlative thereto.
"AKAB Debt" means the amount due Swedbank as of the date
hereof pursuant to the Note of Indebtedness dated August 22, 1996, issued by the
Company in connection with the purchase of equipment from AKAB of Sweden AB,
Boras.
"Ansam Real Property Interests" means all of Ansam's interest
in those certain parcels of real property the legal descriptions of which are
set forth on Part II of Schedule 3.12(a), together with all Improvements thereon
and all easements, licenses, interests and all of the rights arising out of
ownership thereof or appurtenant thereto.
"Ansam Transfer" means the contribution by Irving Angerman and
Samuel Samelson to the Company immediately prior to the Closing, of 100% of the
membership interests of Ansam in exchange for Capital Stock and the subsequent
conveyance by Ansam to the Company by full warranty deeds and other transfer
documentation acceptable to the Buyer pursuant to a liquidation of Ansam, of all
of the Ansam Real Property Interests.
"Base Rate" means the rate of interest announced from time to
time by FUNB as at its prime commercial lending rate in the United States.
"Books and Records" of any Person means all files, documents,
instruments, papers, books and records relating to the business, operations,
conditions of (financial or other), results of operations and assets and
properties of such Person, including without limitation financial statements,
Tax Returns and related work papers and management letters from accountants,
budgets, pricing guidelines, ledgers, journals, deeds, title policies, minute
books, stock certificates and books, stock transfer ledgers, Contracts, customer
and supplier lists, employee information, computer files and programs, retrieval
programs, operating data and plans and environmental studies and plans.
"Business Day" means any day other than a Saturday, Sunday or
day on which commercial banks are authorized or required by law to close in New
York.
"Buyer's Accountant" means PriceWaterhouseCoopers.
"Capital Stock" means the 820 outstanding shares of the
Company's common stock, no par value, with voting rights, the 4,100 outstanding
shares of the Company's common stock, no par value without voting rights, the
1,071 outstanding shares of the Company's preferred stock, par value $100 per
share and the 336 shares of common stock, no par value with voting rights issued
in connection with the Ansam Transfer.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.
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"Closing" has the meaning specified in Section 2.4.
"Closing Balance Sheet" has the meaning specified in Section
2.3(a).
"Closing Date" has the meaning specified in Section 2.4.
"COBRA" means the requirements set forth in Section 4980B of
the Code and Sections 601 et. seq. of ERISA.
"Code" means the Internal Revenue Code of 1986, as amended.
"Consolidated Net Asset Value" means the excess of total
assets over total liabilities as shown on the Closing Balance Sheet.
"Contracts" means all executory contracts, agreements,
understandings, indentures, notes, bonds, loans, instruments, leases, mortgages,
franchises, plans, licenses, commitments or other legally binding arrangements
(whether written or oral, express or implied).
"Documents" means any document, agreement, instrument,
certificate, notice, consent, affidavit, letter, telegram, telex, statement,
Schedule (including any Schedule to this Agreement) or exhibit (including any
Exhibit to this Agreement).
"Environmental Lien" shall mean a Lien, either recorded or
unrecorded, in favor of any Governmental Body, relating to any Liability of any
entity of the Company Group arising under Environmental and Safety Requirements.
"Environmental and Safety Requirements" shall mean all
federal, state, local and foreign statutes, regulations, ordinances and similar
provisions having the force or effect of Law, all judicial and administrative
orders and determinations, all contractual obligations and all common law
concerning public health or safety, workplace health or safety or pollution or
protection of the environment, including without limitation all those relating
to the presence, use, production, generation, handling, transport, treatment,
storage, disposal, distribution, labeling, testing, processing, discharge,
Release, threatened Release, control, or cleanup of any pollutants,
contaminants, hazardous materials, substances or wastes.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Escrow Agreement" means the Escrow Agreement in the Form
annexed as Exhibit A, pursuant to which a portion of the purchase price will be
held in escrow until March 31, 2000.
"Factoring Agreement" means the Factoring Agreement dated
October 16, 1990, between Capital Factors, Inc., and the Company, as amended,
the letter of credit/banker's acceptance letter and all collateral documents
related thereto.
"Factoring Debt" means $11,659,000.
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"Financial Statements" means the financial statements
delivered pursuant to Section 3.6.
"FUNB" means First Union National Bank, its Subsidiaries and
Affiliates.
"FUNB Loan Documents" means all of the documents executed by
the Sellers and the Company Group in connection with the loans made by FUNB to
the Company Group on September 3, 1997, as amended, and the International Swap
Dealers Association, Inc. Master Agreements dated September 18, 1997, between
FUNB and each of the Company, Ansam, and I&S of Goldsboro, LLC.
"GAAP" means generally accepted accounting principles applied
on a consistent basis.
"Governmental Body" means any court, tribunal, arbitrator or
any government or political subdivision thereof, whether federal, state, county,
local or foreign, or any agency, authority, official or instrumentality of any
such government or political subdivision or any entity exercising executive
legislative, judicial, regulatory or administrative function of government.
"HH&Co. means Hertz, Herson & Company, LLP, certified public
accountants.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
"Improvements" means all buildings, structures, facilities,
fixtures and other improvements.
"Indebtedness" means the sum of the following types of
liabilities of the Company Group on the Closing Date determined in accordance
with GAAP and without duplication: (a) amounts due pursuant to the FUNB Loan
Documents, (b) amounts due pursuant to the IRB and the AKAB Debt, (c) any other
long-term debt, including current portions thereof, other than the debt due Tang
Jun Feng pursuant to the Agreement dated July 16, 1998, between Ex-Cell Home
Fashions (China) Limited and Tang Jun Feng and (d) capitalized lease obligations
other than the capitalized lease obligation relating to the IRB.
"Intellectual Property" means all patents and patent
applications together with any reissue, continuation, continuation-in-part,
division, revision, extension or reexamination thereof; all patent disclosures
and inventions (whether or not patentable and whether or not reduced to
practice); all trademarks, service marks, logos, slogans, trade dress, trade
names, domain names and corporate names and all goodwill associated therewith;
all copyrights; all registrations, applications and renewals for any of the
foregoing; all product formulations, trade secrets, confidential information,
research information, technical and computer data, documentation and software,
financial, business and marketing plans, customer and supplier lists, training
materials (including films, brochures and printed materials, catalogs and other
advertising and promotional material) and related information and all other
proprietary rights; and all copies and tangible embodiments of the
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foregoing, along with all income, royalties, damages and payments due or payable
as of the Closing Date or thereafter (including damages and payments for past,
present or future infringements or misappropriations thereof), the right to sue
and recover for past infringements and misappropriations thereof, and any and
all corresponding rights that, now or hereafter, may be secured throughout the
world, in each case together with all books, records, drawings or other indicia
thereof.
"Inventory" means raw materials, work-in-process, finished
goods, samples, significant display equipment which the Company provides to its
customers, packaging materials and other accessories related thereto which are
held at, or are in transit from or to, the locations at which the Business is
conducted, or located at suppliers' premises, in each case, which are used or
held for use in the conduct of the Business.
"IRB" means the Industrial Revenue Bonds issued in 1985 by the
Wayne County Industrial Facilities and Pollution Control Financing Authority in
the original principal amount of $3,350,000, which amount was loaned to Ansam
and guaranteed by the Company.
"IRS" means the Internal Revenue Service.
"Law" means any law, statute, rule, regulation, ordinance,
judgment and other pronouncement having the effect of law of the United States,
any foreign country or any domestic or foreign state, county, city or other
political subdivision or of any Governmental Body.
"Latest Balance Sheets" has the meaning specified in Section
3.6.
"Leased Real Property" has the meaning specified in Section
3.12(b).
"Liability" has the meaning set forth in Section 3.7.
"Lien" means any lien, pledge, hypothecation, mortgage,
security interest, claim, lease, charge, option, right of first refusal,
easement, servitude, transfer restriction under any stockholder or similar
agreement, encroachment, encumbrance or any other restriction, limitation or
defect in title whatsoever.
"Losses" means all losses, liabilities (including punitive or
exemplary damages and fines or penalties and any interest thereon), expenses
(including fees and disbursements of counsel and expenses of investigation and
defense), claims, liens or other obligations of any nature whatsoever.
"Material Adverse Effect" means, in the case of any Person,
any change or changes or effect or effects that individually or in the aggregate
are or may reasonably be expected to be materially adverse to (i) the business,
assets, properties, operations, income, prospects, condition (financial or
otherwise) or customer, employee, distributor or supplier relations of such
Person or the transactions contemplated by this Agreement or (ii) the ability of
such Person to perform its obligations under this Agreement.
"Operating Group" means the Company Group, excluding Ansam.
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"Order" means any writ, judgment, decree, injunction or
similar order of any Governmental Body, in each case whether preliminary or
final.
"Owned Property" has the meaning specified in Section 3.12(a).
"Permits" means all licenses, permits, franchises, approvals,
authorizations, orders, registrations, certificates, variances, consents and
similar rights (including applications therefor), utilized in the conduct of the
Business and the rights to all data and records held by any Governmental Body or
other agency with respect thereto.
"Permitted Liens" means (i) purchase money security interests
in supplies and equipment, (ii) precautionary liens filed by lessors with
respect to leased equipment, (iii) encumbrances which are not substantial in
amount, do not materially detract from the value or marketability of the
property subject thereto and do not materially impair the use of the property
subject thereto or the operation of the Business, (iv) Liens granted pursuant to
the FUNB Loan Documents, (v) Liens granted pursuant to the Factoring Agreement,
(vi) Liens granted pursuant to the IRB, and (vii) Liens granted as security for
the AKAB Debt.
"Person" means any individual, corporation, partnership, firm,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization, Governmental Body or other entity.
"Plan" means any employee benefit plan (as defined in Section
3(3) of ERISA), whether or not funded or terminated, and any other benefit plan,
program or arrangement, including any stock bonus, deferred compensation,
pension, severance, bonus, incentive and health, life, disability or other
welfare plan.
"Property Plans" means all site plans, surveys, soil
substratus studies, architectural drawings, plans and specifications,
engineering, electrical and mechanical plans and studies, floor plans, landscape
plans, appraisals, feasibility studies, and other plans and studies of any kind
if existing and in the possession or control of the Company Group relating to
the Real Estate.
"Purchase Price" has the meaning specified in Section 2.2.
"Purchase Price Adjustment" has the meaning specified in
Section 2.3(b).
"RCRA" means the Federal Resource Conservation and Recovery
Act, as amended.
"Real Estate" has the meaning specified in Section 3.12(b).
"Real Property Leases" means all leases and subleases,
including all amendments, extensions and other modifications thereto, of real
property as to which any entity of the Company Group is, or will be on the
Closing Date, the lessee or sublessee, together with any options to purchase the
underlying property and leasehold improvements thereon set forth on Schedule
3.12(b)
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hereto, and in each case all other rights, subleases, licenses, permits,
deposits and profits appurtenant to or related to such leases and subleases.
"Release" shall have the meaning set forth in CERCLA.
"Securities Act" means the Securities Act of 1933, as amended.
"Subsidiary" means with respect to any Person, a Person of
which (i) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a partnership,
association or other business entity, a majority of the partnership, membership
or other similar ownership interests thereof is at the time owned or controlled,
directly or indirectly, by any Person or one or more Subsidiaries of that Person
or a combination thereof; provided, that Captive Vinyl, LLC shall not be
considered a Subsidiary of any member of the Company Group. For purposes hereof,
a Person or Persons shall be deemed to have a majority ownership interest in
another Person if such Person or Persons shall be allocated a majority of the
gains or losses of or shall be or control the managing director or a general
partner of such other Person.
"Tax" and "Taxes" means all taxes, charges, fees, levies or
other assessments imposed by any federal, state, local or foreign Governmental
Body, whether disputed or not, including, without limitation, income, gains,
capital, gross receipts, estimated, excise, property, sales, use, transfer,
license, withholding, employment, payroll, social security, and franchise taxes
and such terms shall include any interest, penalties or additions attributable
to or imposed on or with respect to such assessments whether or not disputed.
"Tax Return" means any return, report, information return,
claim for refund or other document (including any related or supporting
information) filed or required to be filed with any federal, state, local, or
foreign Governmental Body or other authority in connection with the
determination, assessment or collection of Taxes with respect to any entity or
group of entities in the Company Group or the administration of any laws,
regulations or administrative requirements relating to Taxes.
I.2 Accounting Principles. Each accounting term used herein
shall have the meaning that is applied thereto in accordance with GAAP and each
account included in the Closing Balance Sheet shall be calculated in accordance
with GAAP and shall be consistent with the books and records of the Operating
Group (which books and records shall be correct and complete in all material
respects); provided, that all errors and adjustments when discovered are taken
into account in the calculation of each account set forth above, regardless of
their materiality in accordance with GAAP and consistent with the Operating
Group's past practices and the Ansam Transfer shall be recorded at [its net
asset value as determined by the Buyer]. With respect to the calculation of the
levels of the accounts set forth in Section 2, no change in accounting
principles shall be made from those utilized in preparing the Latest Balance
Sheets except that the Closing Balance Sheet shall be prepared in accordance
with GAAP (and the Ansam Statements were not) (without regard to materiality),
including, without limitation, with respect to the nature or classification of
accounts,
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closing proceedings, levels of reserves or levels of accruals other than as a
result of objective changes in the underlying business. For purposes of the
preceding sentence, "changes in accounting principles" includes all changes in
accounting principles, policies, practices, procedures or methodologies with
respect to financial statements, their classification or their display, as well
as all changes in practices, methods, conventions or assumptions utilized in
making accounting estimates.
I.3 Interpretation. The headings in this Agreement are for
reference only and shall not affect its interpretation. Pronouns and variations
thereof refer to masculine, feminine or neuter and singular or plural, as the
context may require. References to statutes and agreements include all
amendments, extensions, restatements and waivers thereof. The Exhibits and
Schedules are a part of this Agreement. Any item disclosed on any Schedule to
this Agreement shall only be deemed to be disclosed in connection with (a) the
specific representation and warranty to which such Schedule is referred to and
(b) any specific representation and warranty in which any other Schedule to this
Agreement is expressly referenced if such other Schedule expressly refers to
such Schedule.
SECTION II
ACQUISITION OF CAPITAL STOCK AND PURCHASE PRICE
II.1 Purchase of Stock. On the terms and subject to the
conditions set forth in this Agreement, on the Closing Date, the Sellers agree
to sell, transfer, assign, convey and deliver to the Buyer, and the Buyer agrees
to purchase, acquire and accept from the Sellers, all of the right, title and
interest as of the Closing Date of the Sellers in and to the Capital Stock.
II.2 Purchase Price. Subject to adjustment pursuant to Section
2.3 the aggregate purchase price (the "Purchase Price") for the Capital Stock
shall be:
$62,750,000 less the following items:
(i) Indebtedness as at the Closing Date and any expenses
incurred in connection with terminating any and all
agreements relating to Indebtedness;
(ii) Factoring Debt of $11, 659,000;
(iii) the balance of any letters of credit of the Company
Group outstanding as at the Closing Date;
(iv) the deferred income tax liability of the Company
Group and the liability of the Company Group for
deferred compensation, in each case as at the Closing
Date; and
(v) amounts owing pursuant to Sections 9.3(c) and (d).
Sellers shall deliver to the Buyer a certificate signed by the Chief Operating
Officer of the Company, dated the Closing Date, containing a good faith estimate
of the amounts described in Sections 2.2
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(i), (iii), (iv) and (v) and in form and substance reasonably satisfactory to
the Buyer (the "Estimate Certificate"). The Purchase Price less the $2,500,000
to be deposited in escrow pursuant to the Escrow Agreement shall be paid on the
Closing Date by wire transfer of immediately available funds to the account of
the Seller's legal counsel, Tannenbaum, Dubin & Robinson, LLP designated by the
Sellers prior to Closing.
II.3 Purchase Price Adjustment. (a) As promptly as
practicable, but in any event not later than 90 days after the Closing, the
Buyer shall cause to be prepared and delivered to the Sellers, an audited,
consolidated balance sheet for the Business as of the Closing Date but
immediately prior to the Closing prepared by the Buyer's Accountant (the
"Closing Balance Sheet"). The Closing Balance Sheet shall be prepared in
accordance with Section 1.2.
(b) Subject to subsection (c) below, within 15 days after
delivery to the Sellers of the Closing Balance Sheet pursuant to subsection (a)
above, (i) the Sellers agree to pay to the Buyer (A) the amount, if any, by
which the Consolidated Net Asset Value is less than $12,297,499, plus (B) the
amount by which the amounts on the Closing Balance Sheet corresponding to the
items described in Sections 2.2 (i), (iii), (iv) and (v) exceed the amounts
listed on the Estimate Certificate, or minus (C) the amount (if any) by which
the amounts on the Closing Balance Sheet corresponding to the items described in
Sections 2.2 (i), (iii), (iv) and (v) are less than the amounts listed on the
Estimate Certificate, or (ii) the Buyer will pay to the Sellers the amount by
which the items described in Sections 2.2 (i), (iii), (iv) and (v) as disclosed
on the Closing Balance Sheet are less in aggregate than the aggregate amount of
those items as set forth in the Estimate Certificate. Any party obligated to pay
any amount to the other pursuant to this Section 2.3(b) shall also pay interest
on the aggregate amount payable pursuant to clauses (i) or (ii) above at the
Base Rate for the period from the Closing Date to the date of payment in full of
such amount. Payments, if any, by the Sellers pursuant to the preceding sentence
shall be made first out of the amounts deposited in escrow pursuant to and in
accordance with the terms and conditions of the Escrow Agreement and, in the
event that such payments due exceed the amounts deposited in escrow, by wire
transfer of immediately available funds to an account or accounts designated by
the Buyer. The parties shall treat any payment made pursuant to this Section
2.3(b) as an adjustment to the Purchase Price for all purposes (the "Purchase
Price Adjustment").
(c) If the Sellers in good faith disagree with the Closing
Balance Sheet, then the Sellers shall notify the Buyer in writing (the "Notice
of Disagreement") of such disagreement within 20 days after delivery of the
Closing Balance Sheet to the Sellers. Thereafter, the Buyer and the Sellers
shall attempt in good faith to resolve and finally determine the Consolidated
Net Asset Value. If the Buyer and the Sellers are unable to resolve the
disagreement within 20 days after delivery of the Notice of Disagreement, then
the Buyer and the Sellers shall select a mutually acceptable, nationally
recognized independent accounting firm (such accounting firm being hereinafter
referred to as the "Independent Accountant") to resolve the disputed items and
make a determination with respect thereto. Such determination will be made, and
written notice thereof given to the Buyer and the Sellers, within 30 days after
such selection. The determination by the Independent Accountant shall be final,
binding and conclusive upon the parties hereto. The scope of such firm's
engagement shall be limited to the resolution of the items contained in the
Notice of Disagreement, and the recalculation, if any, of the Consolidated Net
Asset Value and amounts on the Estimate Certificate in light of such resolution
and shall be conducted in accordance with the provisions of this
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Agreement and will use the definitions contained herein. The fees, costs and
expenses of the Independent Accountant, if any, in connection with the
preparation of the Closing Balance Sheet shall be shared equally by the Buyer,
on the one hand, and the Sellers, on the other hand. Within 10 days of delivery
of a notice of determination by the Independent Accountant as described above,
any adjustment shall be paid as provided in Section 2.3(b). Any portion of the
Purchase Price Adjustment not in dispute shall be paid when due.
II.4 Closing. The consummation of the transactions
contemplated hereby (the "Closing") shall be held at 10:00 a.m. (E.S.T.) on the
first Business Day after all conditions to respective obligations of the parties
have been satisfied or waived or at such other time and date as shall be
mutually agreed to by the parties (such date and time of the Closing being
herein referred to as the "Closing Date") at the offices of Kirkland & Ellis,
153 East 53rd Street, New York, NY 10022.
SECTION III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each Seller, jointly and severally, represents and warrants to
the Buyer as follows. The representations and warranties set forth below shall
be repeated as of the Closing Date by reference to facts and circumstances then
existing except for representations and warranties indicated to have been
specifically made at an earlier date.
III.1 Organization and Qualification. Each of the Company and
its Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority to (i) own, lease and operate its
properties and assets as they are now owned, leased and operated and (ii) carry
on its business as now presently conducted and as presently contemplated to be
conducted. Each of the Company and its Subsidiaries is duly qualified to do
business in each jurisdiction in which the nature of its business or properties
makes such qualification necessary, except where the failure to do so would not
have a Material Adverse Effect on the Company Group. The jurisdictions in which
the Company and its Subsidiaries are so qualified are set forth on Schedule 3.1.
III.2 Validity and Execution of Agreement. Each of the
Sellers have the full legal right, capacity and power required to enter into,
execute and deliver this Agreement and to perform fully its obligations
hereunder and to transfer the full legal and beneficial ownership of and title
to the Capital Stock free and clear in accordance herewith. This Agreement has
been duly executed and delivered by each of the Sellers and constitutes the
valid and binding obligation of each of the Sellers enforceable against each of
them in accordance with its terms.
III.3 No Conflict. Except as set forth on Schedule 3.3,
neither the execution, delivery nor performance by any or all of the Sellers of
this Agreement nor the transactions contemplated hereby, including the Ansam
Transfer, will: (a) violate or conflict with any of the provisions of the
Certificate of Incorporation or By-Laws (or similar governing documents) of any
entity of the Company Group; (b) violate, conflict with, result in the
acceleration of, or entitle any party to accelerate the maturity or the
cancellation of the performance of any obligation under, or
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result in the creation or imposition of any Lien in or upon any of the
properties or assets of any entity of the Company Group or constitute a default
(or an event which might, with the passage of time or the giving of notice, or
both, constitute a default) under any deed of trust, Contract or other Document
to which any entity of the Company Group is a party or by which it or any of its
properties or assets may be bound or affected; or (c) violate or conflict with
any provision of any Law applicable to any entity of the Company Group, or
require any consent or approval of or filing or notice with any Governmental
Body.
III.4 Capitalization of the Company and its Subsidiaries.
(a) The Company's authorized capital stock consists of 2,500 shares of common
stock, no par value, with voting rights, 10,000 shares of common stock, no par
value without voting rights, and 2,000 shares of preferred stock, par value $100
per share, of which 820 shares of common stock, no par value, with voting
rights, 4,100 shares of common stock, no par value without voting rights, 1,071
shares of preferred stock, par value $100 per share and the 336 shares of voting
common stock issued in connection with the Ansam Transfer are issued and
outstanding and held of record by the persons and in the amounts set forth on
Schedule 3.4(a). Except as set forth on Schedule 3.4(a), (i) neither the Company
nor any of its Subsidiaries has any (a) shares of common stock or preferred
stock reserved for issuance or (b) any outstanding or authorized option,
warrant, right, call or commitment relating to its capital stock or any
outstanding securities or obligations convertible into or exchangeable for, or
giving any Person any right to subscribe for or acquire from it, any shares of
its capital stock, (ii) there are no (a) outstanding obligations of the Company
or any of its Subsidiaries to repurchase, redeem or otherwise acquire any
securities described in the preceding sentence, (b) stock appreciation, phantom
stock, profit participation or similar rights with respect to the Company or any
of its Subsidiaries, (c) preemptive or other subscription rights with respect to
any shares of the Company's or any of its Subsidiaries' capital stock, or (d)
voting trusts, proxies or any other agreements or understandings with respect to
the voting of the capital stock of the Company or any of its Subsidiaries, and
(iii) all of the issued and outstanding shares of capital stock of the Company
and each of its Subsidiaries have been duly authorized, validly issued, are
fully paid and are nonassessable.
(b) All Subsidiaries of the Company are listed on Schedule
3.1. Except as otherwise disclosed on Schedule 3.4(b), neither the Company nor
any of its Subsidiaries own any shares of stock of any corporation or any equity
interest in a partnership, joint venture or other business entity, and neither
the Company nor any of its Subsidiaries controls any other corporation,
partnership, limited liability company, joint venture or other business entity
by means of ownership, management Contract or otherwise. All of the outstanding
capital stock of, or other ownership interests in, each Subsidiary of the
Company is owned beneficially and of record (except for qualifying shares held
pursuant to applicable local laws) by the Company, directly or indirectly as set
forth on Schedule 3.1, is validly issued, fully paid and nonassessable and free
and clear of any preemptive rights, restrictions on transfer or Taxes, except as
provided under the Securities Act or state securities laws.
III.5 Books and Records. Each entity of the Company Group has
made and kept Books and Records and collectively such Books and Records of each
such entity, in reasonable detail, accurately and fairly reflect the activities
of such entity. The Sellers have heretofore delivered to the Buyer true, correct
and complete copies of the Company's and each Subsidiary's Certificate of
Incorporation (certified by the Secretary of State of the jurisdiction of its
incorporation) and By-
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Laws (certified by the secretary of the Company or such relevant Subsidiary) and
Ansam's Articles of Organization as in full force and effect on the date hereof.
III.6 Financial Statements. The consolidated balance sheets of
the Operating Group as at June 30, 1997 and June 30, 1998 and the related
consolidated statements of income, shareholders' equity and cash flows for the
years then ended, including the footnotes thereto, certified by HH&Co.
("Operating Group Statements"), the statements of assets, liabilities and
members' equity--federal income tax basis of Ansam as at December 31, 1996 and
December 31, 1997 and the related statements of changes in members' equity, and
revenue and expenses, and cash flows--federal income tax basis, for the years
then ended, including the footnotes thereto, which has been audited by HH&Co.
("Ansam Year End Statements"), the statements of assets, liabilities and
members' equity--federal income tax basis of Ansam as at June 30, 1998 and the
related statements of changes in members' equity, and revenue and expenses, and
cash flows--federal income tax basis, for the 6 month period then ended,
including the footnotes thereto, which have been reviewed by HH&Co. ("Ansam Six
Month Statements") (the Operating Group Statements, the Ansam Year End
Statements, and the Ansam Six Month Statements collectively "Financial
Statements"), true and complete copies of which are attached as Schedule 3.6,
have been prepared from, and are in accordance with, the Books and Records of
the Company Group and are correct and complete. The Operating Group Statements
present fairly, in all material respects, the consolidated financial position of
the Operating Group as at June 30, 1998, and 1997, and the consolidated results
of the Operating Group's operations and their cash flows for the years then
ended in accordance with GAAP consistently applied except as set forth on
Schedule 3.6. The Ansam Year End Statements and the Ansam Six Month Statements
present fairly, in all material respects, the assets, liabilities, and members'
equity as at the period to which they relate, and the changes in members' equity
accounts and revenue and expenses and cash flows for the periods then ending in
accordance with the accrual basis of accounting that Ansam uses for federal
income tax purposes consistently applied for the periods covered thereby.
Included in the Financial Statements are the audited consolidated balance sheet
of the Operating Group as at June 30, 1998, and the reviewed statements of
assets, liabilities, and members' equity of Ansam as at June 30, 1998, which are
hereinafter referred to as the "Latest Balance Sheets".
III.7 Undisclosed Liabilities. Except as set forth on Schedule
3.7, no entity of the Company Group has any direct or indirect indebtedness,
liability, claim, loss, damage, deficiency, obligation or responsibility, fixed
or unfixed, choate or inchoate, liquidated or unliquidated, secured or
unsecured, accrued, absolute, contingent or otherwise (all of the foregoing
being collectively referred to as "Liabilities" and individually as a
"Liability") in excess of $100,000 in the aggregate, whether or not of a kind
required by GAAP to be set forth on a financial statement, that is not fully and
adequately reflected or reserved against on the face of (as opposed to in the
notes to) the Financial Statements for the Business, other than Liabilities
incurred since the date of the Latest Balance Sheets in the ordinary course of
business (none of which is a Liability resulting from, arising out of, relating
to, in the nature of or caused by any breach of Contract, breach of warranty,
tort, infringement, claim or lawsuit) without violation of Sections 3.16 and
5.2, and fully reflected as Liabilities on the Company Group's Books and Records
and none of which individually or in the aggregate, is material to the business,
operations, income, condition (financial or otherwise), assets or properties of
the Company Group.
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III.8 No Material Adverse Change. Except as set forth on
Schedule 3.8, since the date of the Latest Balance Sheets there has been no
material adverse change in the assets, properties, business, operations, income
or condition (financial or otherwise) of any entity of the Company Group nor is
any such change threatened, nor has there been any damage, destruction or loss
to any of the assets of the Company Group which could have a Material Adverse
Effect on the Company Group, whether or not covered by insurance.
III.9 Tax Matters.
(a) The Operating Group is an affiliated group (within the
meaning of Section 1504 of the Code) of which the Company is the common parent
(within the meaning of Section 1504 of the Code), but the Operating Group has
not filed consolidated federal income tax returns since January 1, 1994.
(b) No entity of the Company Group has agreed to make, or is
required to make, any adjustment under Section 481(a) of the Code.
(c) No entity of the Company Group has participated in or
cooperated with an international boycott within the meaning of Section 999 of
the Code since January 1, 1994.
(d) The federal income tax returns of the Company Group filed
by each of them since January 1, 1994 have not been audited by the IRS, except
as described on Schedule 3.9(d), provided that Ex-Cell Home Fashions (H.K.),
Limited, Ex-Cell Home Fashions (Far East), Ltd., and Ex-Cell Home Fashions
(China), Ltd. do not file federal income Tax Returns but file information
returns with the Company's federal income Tax Returns.
(e) The Sellers have provided to the Buyer or its
representatives access to (i) complete and correct copies of the federal income
Tax Returns of each entity of the Company Group for the taxable periods since
January 1, 1994 and (ii) complete and correct copies of the state and local
income Tax Returns of each entity of the Company Group required to file the same
since January 1, 1994. The Sellers have indicated on Schedule 3.9(d) those Tax
Returns which have been audited and those which are currently the subject of
audit.
(f) No power of attorney has been granted with respect to any
matter relating to Taxes of any entity of the Company Group which is currently
in force except for a power of attorney in favor of HH&Co. relating to the
examination of the 1996 Company New York City Tax Return
(g) No entity of the Company Group, is or has been a United
States real property holding corporation within the meaning of Section 897(c)(2)
of the Code during the period specified in Section 897(c)(1)(A)(ii) of the Code.
(h) Since January 1, 1994 each entity of the Company Group has
timely filed all Tax Returns required to be filed by it within the time periods
allowed by Law to make such filings, which Tax Returns are true, correct and
complete in all material respects. Except as set forth on Schedule 3.9(h), since
January 1, 1994 each entity of the Company Group has timely paid all Taxes due
or claimed to be due from it by any Governmental Body, provided that the Tax
Returns have not
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been audited except as set forth on Schedule 3.9, Taxes in respect of income for
calendar 1998 have been paid on an estimated basis inasmuch as Tax Returns for
calendar 1998 are not yet due, Taxes in respect of income of Subsidiaries having
a June 30 tax year end for the tax year ending June 30, 1999, have been paid on
an estimated basis inasmuch as Tax Returns of such Subsidiaries for such tax
year are not yet due, and the Company paid certain tax liabilities arising out
of its overseas Subsidiaries' income on or before December 31, 1998. There are
no liens for Taxes upon the assets, tangible or intangible, of any entity of the
Company Group, including the Business, except that no representation is made
with respect to real estate Taxes which, in accordance with local laws, may
become liens prior to the due date of the Tax shown to be due on bills therefor.
Since January 1, 1994 each entity of the Company Group has timely and properly
withheld and paid to the appropriate Governmental Body all Taxes required to
have been withheld and paid in connection with amounts paid or owing to any
Seller, any employee, independent contractor, creditor, or other third party.
The reserves for Tax liability (and any reserve for deferred taxes established
to reflect timing differences between book and Tax income) shown on the face of
the Latest Balance Sheets for the Business (rather than in any notes thereto)
have been established in good faith and are believed to be sufficient for
payment of all unpaid Taxes (whether or not currently disputed) incurred with
respect to the period ended June 30, 1998, and for all periods ended prior
thereto with respect to the Company Group. With respect to periods commencing
after June 30, 1998, no entity of the Company Group has incurred any liability
for Taxes other than in the ordinary and regular course of business and adequate
reserves have been established therefore. Except as set forth on Schedule 3.9,
there is no assessment, examination or proceeding outstanding, pending or
threatened by any authority or agency relating to the assessment or collection
of, or any delinquencies in filing relating to, any Taxes from any entity of the
Company Group. Except as set forth on Schedule 3.9, (i) no entity of the Company
Group has executed or filed any request for extension of time within which to
file any Tax Returns which has not been subsequently timely filed or any consent
or agreement to extend the period of assessment or collection of any Taxes, and
no such extension has otherwise occurred and (ii) no entity of the Company Group
is a party to or otherwise bound by any Tax allocation or sharing agreement or
has any liability for or measured by Taxes of any other person, whether by
Contract, as transferee or successor or otherwise. No entity of the Company
Group has filed a consent under Code Section 341(f) concerning collapsible
corporations. No entity of the Company Group has made any material payments, is
obligated to make any material payments, or is a party to any agreement that
under certain circumstances could obligate it to make any material payments that
will not be deductible under Code Section 280G. Since January 1, 1994 no entity
of the Company Group (i) has been a member of an affiliated group filing a
consolidated U.S. federal income Tax Return or (ii) has any liability for the
Taxes of any Person under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local, or foreign law).
III.10 Litigation. Except as set forth on Schedule 3.10,
there are no outstanding Orders by which any of the entities of the Company
Group or any of their respective securities, assets, properties or businesses,
including the Business, are bound. Except as set forth on Schedule 3.10, there
is no Action pending or threatened (whether or not the defense thereof or
liabilities in respect thereof are covered by insurance) against or affecting
any of the entities of the Company Group or any of their respective assets,
properties or businesses, nor are there any facts which at the time at which
this representation is made, would be likely to give rise to any such Action
which if adversely decided, could have a Material Adverse Effect on the Company
Group.
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III.11 Contracts and Other Agreements. Schedule 3.11 sets
forth all of the following types of Contracts to which each of the entities of
the Company Group is a party and which is still in effect or by or to which each
of the entities of the Company Group, or their respective assets, properties or
businesses, including the Business, is bound or subject (collectively, the
"Material Contracts"):
(a) all employment agreements and commitments, all consulting
or severance agreements or arrangements and all other Contracts, including
indemnification agreements, with any current or former officer, director,
employee, consultant, agent, other representative of any entity of the Company
Group or with any Affiliate of any entity of the Company Group.
(b) Contracts with any labor union or association representing
any employee;
(c) Contracts out of the ordinary course of business for the
sale of any of its assets or properties or for the grant to any Person of any
preferential rights to purchase any of its assets or properties, in each case in
an amount exceeding $50,000;
(d) joint venture and partnership Contracts and other
Contracts relating to the acquisition by any entity of the Company Group of any
operating business or the capital stock of any other Person;
(e) all capitalized leases, pledges, conditional sale or title
retention agreements involving the payment of more than $100,000 in a fiscal
year;
(f) any take or pay or requirements Contracts or any other
Contracts requiring any entity of the Company Group to pay regardless of whether
products or services are received;
(g) Contracts out of the ordinary course of business not
cancelable without penalty by any entity of the Company Group party thereto on
60 or fewer days' notice calling for an aggregate purchase price or payments to
or from any entity of the Company Group, as the case may be, in any one year of
more than $50,000 in any one case (or in the aggregate, in the case of any
related series of Contracts);
(h) Contracts with clients, customers or any other Person for
the sharing of fees, the rebating of charges or purchase price or other similar
arrangements;
(i) Contracts containing covenants pertaining to the right to
compete or not compete in any line of business or similarly restricting the
ability of any entity of the Company Group to conduct business with any Person
or in any geographical area;
(j) all agreements relating to the consignment or lease of
personal property (whether the relevant entity of the Company Group is lessee,
sublessee, lessor, or sublessor), other than such agreements that provide for
annual payments of less than $50,000;
(k) all licenses and franchise agreements involving an amount
in excess of $50,000 in any fiscal year;
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(l) all mortgages, indentures, notes, bonds, letter of credit
and other agreements relating to the borrowing of money, creation of Liens, any
indemnity, or the guarantee of the payment of liabilities or performance of
obligations to or by any entity of the Company Group, to or by any other Person;
(m) any stockholder agreement, registration rights agreement
or any arrangement relating to or affecting the ownership of the common stock or
other equity interests of any entity of the Company Group; and
(n) any other Contract made outside the ordinary course of
business relating to any entity of the Company Group and involving an amount in
excess of $50,000.
True and complete copies of all of the Material Contracts,
which are in writing, have been delivered to the Buyer. Except as disclosed on
Schedule 3.11, all of the Material Contracts are valid, subsisting, in full
force and effect and binding upon the parties thereto in accordance with their
terms and each entity of the Company Group has satisfied in full or provided for
all of its liabilities and obligations thereunder requiring performance prior to
the date hereof in all material respects, is not in default under any such
Material Contract, nor does any condition exist that with notice or lapse of
time or both would constitute such a default. No other party to any such
Material Contract is in default thereunder, nor does any condition exist that
with notice or lapse of time or both would constitute such a default. None of
the other parties to any such Material Contracts has given notice to the
relevant entity of the Company Group that it intends to terminate or materially
alter the provisions of such Material Contract. Except as separately identified
on Schedule 3.11, no approval or consent of any Person is needed for all of the
Material Contracts to continue to be in full force and effect.
III.12 Real Estate.
(a) Set forth on Schedule 3.12(a) is a complete and correct
legal description of each parcel of real property which the Company or another
entity of the Company Group currently owns or will own as of the Closing Date
(the "Owned Property"). Either the Company or another entity of the Operating
Group, as the case may be, has, or will have on the Closing Date, good record
and marketable title to each parcel of Owned Property. Except as set forth on
Schedule 3.12(a), none of the Owned Property is subject to any Lien.
(b) Set forth on Schedule 3.12(b) is a list of all leases,
subleases and other occupancy agreements, including all amendments, extensions
and other modifications (the Real Property Leases") for real property (the
"Leased Real Property"; the Owned Property and the Leased Real Property
collectively the "Real Estate") to which the Company or another entity of the
Company Group is, or will be on the Closing Date, the tenant, subtenant or other
lessee party. A true and correct copy of each Real Property Lease as currently
in effect has been delivered by the Sellers to the Buyer. Except as set forth on
Schedule 3.12(b), either the Company or another entity of the Operating Group,
as the case may be, has, or will have on the Closing Date, good, valid and
enforceable leasehold interests in and to all of the Leased Real Property, free
and clear of all Liens. There exists no default (nor any condition or event
which with notice, lapse of time, or both could constitute a default) with
respect to any such Real Property Lease by any party thereto. Each such
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Real Property Lease is in full force and effect and is enforceable in accordance
with its terms. Except as set forth on Schedule 3.12(b), no consent, waiver,
approval or authorization is required from the landlord under any Real Property
Lease as the result of the execution of this Agreement of the consummation or
the transactions contemplated hereby.
(c) The Real Estate constitutes all of the real property
owned, leased, occupied or otherwise utilized in connection with the Business.
Except as set forth on Schedule 3.12(c), other than the entities of the Company
Group, there are no parties in possession or parties having any current or
future right to occupy any of the Real Estate. The Real Estate is in good
condition and repair and is sufficient for the conduct of the Business. The Real
Estate and all plants, buildings and Improvements located thereon conform in all
material respects to all applicable building, zoning and other laws, ordinances,
rules and regulations. All Permits necessary to the current occupancy and use of
the Real Estate have been obtained, are in full force and effect, have not been
violated, and the Business is conducted in conformity therewith. There exists no
violation of any covenant, condition, restriction, easement, agreement or order
affecting any portion of the Real Estate. All Improvements located on the Real
Estate have access to a public road either directly or through adjoining Owned
Property. No such Improvements or access ways encroach on land not included in
the Real Estate and no such Improvement is dependent for its access, operation
or utility on any land, building or other improvement not included in the Real
Estate except as set forth on Schedule 3.12(c). There is no pending or
threatened, condemnation proceeding affecting any portion of the Real Estate.
There are no outstanding options or rights of first refusal with respect to the
purchase or use of any Real Estate, any portion thereof or interest therein. No
entity of the Company Group is obligated to purchase or enter into a lease of
any real property.
(d) The Sellers have delivered or made available to the Buyer
true, correct and complete copies of all existing title insurance policies
currently in force, commitments to issue title insurance policies and surveys
relating to the Real Estate which are in the possession of Ansam, the Sellers or
any of their respective agents. No entity of the Company Group has given or
received any citation, subpoena, summons or other notice alleging a violation of
any applicable Laws with respect to the Real Estate or the Improvements or the
use or condition thereof. No entity of the Company Group is in default under,
and no condition exists which with the giving of notice or the passage of time
or both would constitute a default under, any licenses, permits, certificates,
authorizations, contracts or other agreements listed or described on Schedules
3.12(a) and (b) and, except as separately identified on Schedules 3.12(a) and
(b), no approval or consent of any Person is needed for any of the foregoing to
continue to be in full force and effect, and such documents will not become
unenforceable by any entity of the Company Group following the consummation of
the transactions contemplated by this Agreement.
III.13 Transactions with Affiliates. Except as set forth on
Schedule 3.13, since June 30, 1998, neither the Sellers nor any entity of the
Company Group nor any director, officer or Affiliate of the Company Group has:
(a) borrowed money from or loaned money to any entity of the Company Group which
remains outstanding after the Closing; (b) had any contractual or other claim,
express or implied, of any kind whatsoever against any entity of the Company
Group which remains in effect after Closing (other than compensation); (c) owned
any interest in any property or assets (tangible or intangible) used or useful
by any entity of the Company Group in the Business; (d) engaged in any other
transaction with any entity of the Company Group or (e) owned, directly
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or indirectly, any interest in (except not more than two percent (2%)
stockholdings for investment purposes in securities of publicly held and traded
companies), or served as an officer, director, employee or consultant of or
otherwise receives remuneration from, any Person which is, or has engaged in
business as, a competitor, lessor, lessee, customer or supplier of any entity of
the Company Group. Each Contract set forth on Schedule 3.13 is on terms no less
favorable to the Seller party thereto than would otherwise be available in an
arm's length transaction with an unaffiliated third party.
III.14 Accounts Receivable and Inventory. All Accounts
Receivable reflected on the Latest Balance Sheets, and all Accounts Receivable
arising subsequent to the date of the Latest Balance Sheets, have arisen from
bona fide sales transactions in the ordinary course of business of the Company
or any other entity of the Company Group on trade terms consistent with past
practices. If such Accounts Receivable have been sold pursuant to the Factoring
Agreement then the terms and provisions of the Factoring Agreement applies and
such amounts are therefore considered by the Company to be payable to it
pursuant to the Factoring Agreement (and are no longer considered Accounts
Receivable of the Company Group) (net of reserves established therefor by the
Company Group). All Account Receivable (net of reserves established therefor by
the Company Group), (a) represent valid and binding obligations due to the
Company or any other entity of the Company Group, enforceable in accordance with
their terms, and (b) (with respect to Accounts Receivable other than those
factored pursuant to the Factoring Agreement) have been collected or are
collectible in the ordinary course of business of the Company or any other
entity of the Company Group in the aggregate recorded amounts thereof in
accordance with their terms without valid set-off or counterclaim. Schedule 3.14
lists all of the Accounts Receivable which are owned by the Company at December
31, 1998. All the Inventory acquired since January 1, 1999, consists of a
quality and quantity usable and salable in the ordinary course of business
consistent with past practice, subject to normal and customary Company Group
policies for spoilage, damage and outdated items. All items included in the
Inventory are the property of the Company or any other entity of the Company
Group, and except for the Permitted Liens, mechanics, warehouse, materialmen,
and similar liens, are free and clear of any Lien, have not been pledged as
collateral, are not held by the Company or any other entity of the Company Group
on consignment from others and conform in all material respects to all standards
applicable to such Inventory which is finished goods inventory or its use or
sale imposed by any Law.
III.15 Compensation Arrangements. Schedule 3.15 sets forth
the name and current annual salary, including any bonus or commitment to pay any
other amount or benefit in connection with a termination of employment, if
applicable, of all present officers, directors and employees of each entity of
the Company Group whose current annual salary, including any promised, expected
or customary bonus or such other amount or benefit, equals or exceeds $75,000.
No entity of the Company Group has made a commitment or agreement (verbally or
in writing) to increase the compensation or to modify the conditions or terms of
employment of any Person listed on Schedule 3.15 or of any other Person if the
increase would cause such Person to be required to be listed on Schedule 3.15,
other than in the ordinary course of business consistent with past practices.
None of such Persons has made a threat or otherwise indicated any intent to the
Sellers or to any of the officers or directors of any entity of the Company
Group to cancel or otherwise terminate such Person's relationship with the
Company Group.
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III.16 Operations. Except as disclosed on Schedule 3.16 or
expressly authorized by this Agreement, from the date of the Latest Balance
Sheets through the date hereof, no entity of the Company Group has:
(a) amended its Certificate of Incorporation or By-Laws or
comparable instruments or merged with or into or consolidated with any other
Person, or changed or agreed to rearrange in any manner the character of its
business;
(b) issued, sold or purchased options or rights to subscribe
to, or entered into any Contracts to issue, sell or purchase, any shares of its
capital stock or other equity interests;
(c) entered into, amended or terminated any (i) employment
agreement or collective bargaining agreement, (ii) adopted, entered into or
amended any arrangement which is, or would be, a Plan or (iii) made any change
in any actuarial methods or assumptions used in funding any Plan or in the
assumptions or factors used in determining benefit equivalences thereunder;
(d) issued, incurred or assumed any indebtedness or other
absolute or contingent obligation except for borrowings under existing lines of
credit in the ordinary course of business consistent with past custom and
practice;
(e) declared, set aside or paid any dividends or declared or
made any other distributions of any kind to any Seller other than distributions
consistent with past custom and practice in an aggregate amount of $1,823,000;
(f) knowingly waived any right of material value to the
Business;
(g) made any change in its accounting methods or practices or
made any changes in depreciation or amortization policies or rates adopted by it
or made any write-down of Inventory (other than those agreed with the Buyer as
at December 31, 1998) or material write-off as uncollectible of Accounts
Receivable;
(h) other than increases in salary to Irving Angerman and
Samuel Samelson in an aggregate annual amount of $150,000, paid or made payable
or to become payable any wage or salary increase, bonus, or increase in any
other direct or indirect compensation, for or to any of its officers, directors,
employees, consultants, agents or other representatives, or made any accrual for
or commitment or agreement to make or pay the same, other than increases made or
bonuses paid in the ordinary course of business consistent with past custom and
practice; provided, that no such payments have been made since December 31,
1998;
(i) entered into any transactions with any of its Affiliates,
any Seller, officers, directors, employees, consultants, agents or other
representatives (other than employment arrangements made in the ordinary course
of business consistent with past practice), or any Affiliate of any Seller,
officer, director, consultant, employee, agent or other representative;
(j) made any payment or commitment to pay any severance or
termination pay to any Person or any of its officers, directors, employees,
consultants, agents or other representatives,
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other than payments or commitments to pay such Persons or its officers,
directors, employees in the ordinary course of business consistent with past
custom and practice other than as disclosed on Schedule 3.15;
(k) (i) entered into any lease, sublease or other occupancy
agreement (as lessor or lessee), (ii) sold, abandoned or made any other
disposition of any of its assets or properties other than in the ordinary course
of business consistent with past practice; (iii) granted or suffered any Lien on
any of its assets or properties; or (iv) entered into or amended any Contract to
which it is a party, or by or to which it or its assets or properties are bound
or subject, or pursuant to which it agrees to indemnify any Person or to refrain
from competing with any Person, in each case or type required to be disclosed
pursuant to Section 3.11 hereof;
(l) except for Inventory or equipment acquired in the ordinary
course of business, made any acquisition of all or any part of the assets,
properties, capital stock or business of any other Person;
(m) paid, directly or indirectly, any of its liabilities
before the same became due in accordance with its terms or otherwise than in the
ordinary course of business consistent with past custom and practice, except to
obtain the benefit of discounts available for early payment and except as
disclosed in Section 3.9;
(n) created, incurred or assumed any indebtedness for borrowed
money, or guaranteed any indebtedness for borrowed money or any capitalized
lease obligation, in each case in excess of $25,000 individually or in the
aggregate other than in the ordinary course pursuant to any Contract identified
on Schedule 3.11(l);
(o) made any capital expenditures or commitments for capital
expenditures other than in the ordinary course of business consistent with past
custom and practice; or
(p) except in the ordinary course of business consistent with
past custom and practice, terminated, failed to renew, amended or entered into
any Contract of a type required to be disclosed pursuant to Section 3.11.
(q) except in the ordinary course of business consistent with
past custom and practice, failed to renew or maintain, abandoned or canceled any
Intellectual Property.
III.17 Intellectual Property.
(a) Set forth on Schedule 3.17 is a list of all (i) patented
and registered Intellectual Property and pending patent applications and
applications for the registration of Intellectual Property, in each case owned
or used by any entity of the Company Group; (ii) trade or corporate names used
by any entity of the Company Group; (iii) computer software and databases
created or used by any entity of the Company Group (other than mass-marketed
software with a license fee of less than $1,000); (iv) material unregistered
trademarks and copyrights owned or used any entity of the Company Group; and (v)
licenses and other rights granted by any entity of the
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Company Group to any third party or by any third party to any entity of the
Company Group, in each case with respect to Intellectual Property.
(b) The Company Group owns or has a valid and enforceable
license to use all Intellectual Property necessary for the operation of the
Business as currently conducted free and clear of any Liens or adverse claims.
No claim by any third party contesting the validity, enforceability, ownership
or use of any of the Intellectual Property owned or used by any entity of the
Company Group has been made, is currently outstanding or is threatened, and,
there are no grounds for the same. No loss or expiration of any individual
Intellectual Property right or related group of Intellectual Property rights
owned or used by any entity of the Company Group is threatened, pending or,
reasonably foreseeable except as set forth on Schedule 3.17. No entity of the
Company Group has received any notice of, nor is any Seller or the Company Group
aware of any facts which indicate a likelihood of any infringement or
misappropriation by any third party with respect to the Intellectual Property
owned or used by any entity of the Company Group except as set forth on Schedule
3.17. No entity of the Company Group has infringed or misappropriated any
Intellectual Property of any third party, and neither the Company Group nor any
Seller is aware of any infringement or misappropriation which will occur as a
result of the continued operation of the Business as currently conducted or as
currently proposed to be conducted. Each entity of Company Group has taken all
necessary action to maintain and protect all material Intellectual Property
owned or used by it. All Intellectual Property owned or used by any entity of
the Company Group immediately prior to the Closing will be owned or available
for use by such entity of the Company Group on identical terms and conditions
immediately subsequent to the Closing.
(c) Except as set forth on Schedule 3.17, the computer
software, firmware and hardware and other similar or related items of automated,
computerized or software systems owned or used by any entity of the Company
Group is Year 2000 compliant. Year 2000 compliant shall mean the ability to
provide the following functions:
(1) consistently handle data information before, during
and after January 1, 2000, including accepting date
input, providing date output and performing
calculations on dates or portions of dates;
(2) function in accordance with the relevant
documentation before, during and after January 1,
2000, without any change in operations associated
with the advent of the new century;
(3) respond to two digit year date input in a way that
resolves the ambiguity as to century in a disclosed,
defined, and predetermined manner; and
(4) store and provide output of date information in ways
that are unambiguous as to century.
III.18 Employees.
(a) Since January 1, 1996, no group of employees of any entity
of the Company Group relating to the business has terminated, or plans to
terminate, employment with the any entity
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of the Company Group. No entity of the Company Group is a party to or bound by
any collective bargaining agreement, nor has it experienced any strike, union
grievance, claim of unfair labor practice or other collective bargaining dispute
relating to the Business. There is no organizational effort being made or
threatened by or on behalf of any labor union with respect to employees of any
entity of the Company Group relating to the Business and there is no other
question concerning representation of any entity of the Company Group. No entity
of the Company Group has committed any unfair labor practice or violated any
federal, state or local law or regulation regulating employers or the terms and
conditions of its employees' employment, including laws regulating employee
wages and hours, employment discrimination, employee civil rights, equal
employment opportunity and employment of foreign nationals other than such
practice or violations which would not cause a Material Adverse Effect on the
Company Group.
(b) Any notice required under any law or collective bargaining
agreement has been given, and all bargaining obligations with any employee
representative have been satisfied. No entity of the Company Group has
implemented any "plant closing" or "mass layoff" of employees as those terms are
defined in the Worker Adjustment Retraining and Notification ("WARN") Act of
1988, as amended, or any similar state or local law or regulation, and no
layoffs that could implicate such laws or regulations will be implemented before
Closing without advance notification to the Buyer.
III.19 Employee Benefits.
(a) Set forth on Schedule 3.19 is a list of all Plans
contributed to, maintained or sponsored by any entity of the Company Group, to
which any entity of the Company Group is obligated to contribute or with respect
to which any entity of the Company Group has any liability or potential
liability, including all Plans contributed to, maintained or sponsored by a
member of a controlled group of entities, within the meaning of Section 414 of
the Code (or with respect to which any such controlled group member has any
direct or indirect liability or potential liability), of which any entity of the
Company Group is or was a member, to the extent any entity of the Company Group
has any liability or potential liability with respect to such Plan. Each such
Plan listed on Schedule 3.19 is referred to herein as a "Company Plan."
(b) Each Company Plan and all related trusts, insurance
Contracts and funds have been maintained, funded, and administered in accordance
with their terms and in compliance in all material respects with all applicable
laws and regulations, including ERISA and the Code. Each entity of the Company
Group has complied in all material respects with all applicable reporting and
disclosure requirements with respect to each Plan. No entity of the Company
Group nor any trustee or administrator of any Company Plan or other Person has
engaged in any transaction with respect to any Company Plan which could subject
the Buyer or any trustee or administrator of such Company Plan, or any party
dealing with such Plan, to any material Tax, fine, penalty or other liability
(civil or otherwise) imposed by ERISA or the Code. No material actions, suits,
investigations or claims with respect to any Plan (other than routine claims for
benefits) or with respect to any fiduciary or other person dealing with any Plan
are pending or threatened and there are no facts which could give rise to or be
expected to give rise to any such actions, suits, investigations or claims. Each
entity of the Company Group has complied in all material respects with the
requirements of COBRA.
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(c No Company Plan is subject to the minimum funding
requirements of Section 412 of the Code or Section 302 of ERISA. None of the
assets of any entity of the Company Group is subject to any Lien arising under
ERISA or the Code, and there are no facts which could be expected to give rise
to such a Lien. Except as set forth on Schedule 3.19, the assets of each Company
Plan that is an employee pension benefit plan (as defined in Section 3(2) of
ERISA) exceed the benefit liabilities thereunder (as determined on a plan
termination basis). No entity of the Company Group has actual or potential
liabilities under Title IV of ERISA with respect to any Plan other than for the
payment of PBGC premiums not yet due.
(d The Company's 401(k) plan is the only Plan that is intended
to be qualified under Section 401(a) of the Code, and each trust (if any)
forming a part thereof, has received a favorable determination letter from the
IRS as to the qualification under the Code of such Company Plan and the tax
exempt status of such related trust, and nothing has occurred since the date of
such determination letter that could have an adverse effect on the qualification
of such Plan or the tax-exempt status of such related trust.
(e No entity of the Company Group maintains, contributes to,
or has any obligation or liability under (or with respect to) any "multiemployer
plan" (as defined in Section 3(37) of ERISA) including, but not limited to, any
current or potential withdrawal liability (as determined under ERISA).
(f Except as set forth on Schedule 3.19, no entity of the
Company Group maintains, contributes to, or has any obligation or liability
under (or with respect to) any plan or arrangement which provides medical or
life insurance or other welfare-type benefits to any current or future retired
or terminated employee, except as required to be provided under COBRA or
applicable State law.
(g With respect to each Company Plan, the Sellers have
provided the Buyer with copies, to the extent applicable, of all documents
pursuant to which the Plans are maintained, funded and administered, the most
recent annual report (Form 5500 series) filed with the IRS (with attachments),
the most recent financial statement, actuarial report and all governmental
rulings, determinations and opinions (including the most recent IRS favorable
determination letter) (and pending requests for governmental rulings,
determinations and opinions).
III.20 Environmental and Safety Matters.
(a Except as set forth on Schedule 3.20, no entity of the
Company Group has violated any Environmental and Safety Requirements in the
operation of the Business since January 1, 1996.
(b Since January 1, 1996, each entity of the Company Group has
obtained and complied with, and is in compliance with, all Permits, licenses or
other authorizations that may be required pursuant to Environmental and Safety
Requirements for the occupation of its facilities and the operation of the
Business.
(c Except as set forth on Schedule 3.20 since January 1, 1996,
no entity of the Company Group has received any claim, complaint, citation,
report or other written or oral notice
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regarding any liabilities, including any investigatory, remedial or corrective
obligations, arising under Environmental and Safety Requirements.
(d Except as set forth on Schedule 3.20, none of the following
exists at any property owned or occupied by any entity of the Company Group:
(i0 Underground storage tanks or surface
impoundments;
(ii0 Asbestos-containing material in any form or
condition;
(iii0 Materials or equipment containing
polychlorinated biphenyls; or
(iv0 Landfills or other waste disposal areas;
(e No Environmental Lien has attached to any property owned,
leased or operated by any entity of the Company Group since January 1, 1996.
(f Neither this Agreement nor the consummation of the
transactions contemplated hereby will result in any obligations for site
investigation or cleanup, or notification to or consent of government agencies
or third parties, pursuant to any of the so-called "transaction-triggered" or
"responsible property transfer" Environmental and Safety Requirements.
(g No entity of the Company Group has, either expressly or by
operation of law, assumed or undertaken any liability, including without
limitation any obligation for corrective or remedial action, of any other person
relating to Environmental and Safety Requirements.
(h No entity of the Company Group has (i) treated, stored,
disposed of, arranged for or permitted the disposal of, transported, handled, or
released any substance, including without limitation any hazardous substance,
and no Owned Property or Leased Real Property is contaminated by any such
substance, or (ii) owned or operated the Owned Property, Leased Real Property or
any other facility or property, in a manner that has given or would give rise to
liabilities, including any liability for response costs, corrective action
costs, personal injury, property damage, natural resources damages or attorney
fees, or any investigative, corrective or remedial obligations, pursuant to the
CERCLA or the Solid Waste Disposal Act, as amended, or any other Environmental
and Safety Requirements.
III.21 Insurance. Schedule 3.21 sets forth a schedule of
policies and binders of insurance held by or on behalf of each entity of the
Company Group. Such policies and binders are valid and enforceable in accordance
with their terms in all material respects, are in full force and effect, and
insure against risks and liabilities to the extent and in respect of amounts,
types and risks insured, as are customary in the industries in which each entity
of the Company Group operates. No entity of the Company Group is in default with
respect to any material provision contained in any such policy or binder or has
failed to give any notice or present any claim under any such policy or binder
in due and timely fashion except for claims not deemed to be material. Except
for claims disclosed on Schedule 3.21, there are no outstanding unpaid claims
under any such policy or binder which have gone unpaid for more than 45 days or
as to which the carrier has disclaimed liability.
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All known claims or circumstances likely to give rise to any claims except for
claims not deemed to be material, if any, made against any entity of the Company
Group have been disclosed and tendered to the appropriate insurance companies
and are being defended by such appropriate insurance companies in accordance
with the policy terms and limits. No Seller nor any entity of the Company Group
has received any notice of cancellation or non-renewal of any such policy or
binder or any notice from any of its insurance carriers that any insurance
premiums will be materially increased in the future or that any insurance
coverage listed on Schedule 3.21 will not be available in the future on
substantially the same terms as now in effect. Except as separately disclosed on
Schedule 3.21, all of such policies or binders in the name of any entity of the
Company Group shall be in full force and effect and enforceable by the relevant
entity of the Company Group following the consummation of the transactions
contemplated by this Agreement.
III.22 Title and Sufficiency of Assets. The Company Group owns
outright and has good and marketable title to or a valid lease, license or right
to use, or on the Closing Date will own outright and have good and marketable
title to or a valid lease, license or right to use all of the assets and
properties (tangible and intangible) that are necessary to conduct the Business
in the ordinary course consistent with past custom and practice, including,
without limitation, all of the assets and properties reflected on the Latest
Balance Sheets (except as disposed of in the ordinary course of business), and,
immediately following the Closing, the Operating Group will have good and
marketable title to or a valid lease, license or right to use all such assets
and properties, in each case free and clear of any Lien, except for Permitted
Liens and Liens set forth on Schedule 3.22.
III.23 Compliance with Laws. Except as set forth on Schedule
3.23, each entity of the Company Group (a) is in compliance with all, and not in
violation of any, and has not received any claim or notice that it is not in
compliance in any material respect with, or that it is in violation in any
material respect of, any Law to which any entity of the Company Group or any of
their respective businesses, operations, assets or properties, including the
Business (including the use and occupancy thereof) are subject and (b) no entity
of the Company Group has failed to obtain or to adhere to the requirements of
any governmental permit, license, registration and other governmental consent or
authorization necessary in connection with its assets, properties or business,
which failure could have a Material Adverse Effect on the Company Group. The
Sellers have advised the Buyer in writing of any proposed Environmental and
Safety Requirements or other law, rule or regulation which could reasonably be
expected to have a Material Adverse Effect on the Company Group, or which could
reasonably be expected to require substantial new capital investments by the
Buyer in the Business.
III.24 Substantial Customers and Suppliers. Schedule 3.24
lists the 15 largest customers of the Company Group, on the basis of revenues
for goods sold or services provided for the most recently completed fiscal year
and indicates which of such customers is largest on the basis of revenues for
goods sold or services provided (i) for the most recently completed fiscal year
and (ii) as budgeted through the 1999 fiscal year. Schedule 3.24 lists the 10
largest suppliers of the Company Group, on the basis of cost of goods or
services purchased for the most recently-completed fiscal year. Except as
disclosed on Schedule 3.24, no such customer or supplier has ceased or
materially reduced its purchases from, use of the services of, sales to or
provision of services to any entity of the Company Group since the Latest
Balance Sheets date, or to has threatened to cease or materially reduce such
purchases, use, sales or provision of services after the date hereof.
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III.25 Banks and Proxies. Schedule 3.25 sets forth (a) the
name of each bank, trust company, securities or other broker or other financial
institution with which each entity of the Company Group has an account, credit
line or safe deposit box or vault, or otherwise maintains relations; (b) the
name of each person authorized by each entity of the Company Group to draw
thereon or to have access to any safe deposit box or vault; (c) the purpose of
each such account, safe deposit box or vault; and (d) the names of all persons
authorized by proxies, powers of attorney or other instruments to act on behalf
of each entity of the Company Group in matters concerning its business or
affairs. All such accounts, credit lines, safe deposit boxes and vaults are
maintained by each entity of the Company Group for normal business purposes, and
no such proxies, powers of attorney or other like instruments are irrevocable.
III.26 Brokers. All negotiations relative to this Agreement
and the transactions contemplated hereby have been carried out by the Sellers
directly with the Buyer without the intervention of any Person on behalf of the
Sellers in such manner as to give rise to any valid claim by any Person against
any entity of the Company Group or the Buyer for a finder's fee, brokerage
commission or similar payment other than to Prudential Securities Incorporated
the payment for which the Sellers are solely liable.
III.27 Disclosure. Neither this Agreement, nor any Schedule or
Exhibit to this Agreement, contains an untrue statement of a material fact or
omits a material fact necessary to make the statements contained herein or
therein not misleading. All information provided to the Buyer and its agents by
any Seller or its Affiliates or agents is true, complete and correct in all
material respects.
SECTION IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Sellers as follows.
The representations and warranties set forth below shall be repeated as of the
Closing Date by reference to facts and circumstances then existing.
IV.1 Organization and Capitalization. The Buyer is a
corporation duly formed and validly existing and in good standing under the laws
of the State of Delaware and has all requisite power and lawful authority to (a)
enter into this Agreement and to perform its obligations hereunder, (b) own,
lease and operate its properties and assets as they are now owned, leased and
operated and (c) carry on its business as now conducted and presently proposed
to be conducted. The Buyer is duly qualified to transact business in the State
of New York.
IV.2 Validity and Execution of Agreement. The Buyer has the
full legal right and power and all authority and approval required to enter
into, execute and deliver this Agreement and to perform fully its obligations
hereunder. This Agreement has been duly executed and delivered by the Buyer and
constitutes the valid and binding obligation of the Buyer enforceable against
the Buyer in accordance with its terms.
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IV.3 No Conflict. Neither the execution and delivery of this
Agreement by the Buyer nor the performance by the Buyer of the transactions
contemplated hereby will: (a) violate or conflict with any of the provisions of
the Certificate of Incorporation or By-Laws of the Buyer; (b) violate or
conflict with any provisions of any Law applicable to the Buyer; (c) conflict
with, or result in a default (or would constitute a default but for a
requirement of notice or lapse of time or both) under any document, agreement or
other instrument to which Buyer is a party or by which it is bound, or result in
the creation or imposition of any Lien on any of Buyer's properties pursuant to
any Law or Order except for liens to be incurred in connection with Buyer's
financing of the Purchase Price; or (d) require any consent or approval by or
filing or notice with any Governmental Body except for filings under federal or
state securities or "blue sky" laws (which have been or will be made).
IV.4 Brokers. All negotiations relative to this Agreement and
the transactions contemplated hereby have been carried out by the Buyer directly
with the Sellers without the intervention of any Person on behalf of the Buyer
in such manner as to give rise to any valid claim by any Person against the
Sellers for a finder's fee, brokerage commission or similar payment except for a
commission owing to Prudential Securities Incorporated, which Sellers shall be
obligated to pay.
IV.5 Disclosure. None of the representations, warranties or
covenants contained in this Agreement, nor in any Schedule or Exhibit hereto
made by the Buyer, contains any untrue statement of material fact or omits a
material fact necessary to make the statements contained herein or therein not
misleading.
SECTION V
PRE-CLOSING COVENANTS
V.1 Corporate Examinations and Investigations. From the date
hereof to the Closing Date, the Buyer and its financing sources shall be
entitled, through their respective representatives and agents, to make such
investigation of the assets, properties, business and operations of the Business
and such examination of the books, records, Tax Returns, financial condition and
operations of the Business as the Buyer or its lenders may wish. Any such
investigation and examination shall be conducted at reasonable times and under
reasonable circumstances and the Sellers and the Company Group shall cooperate
fully therein. No investigation by the Buyer shall diminish or obviate any of
the representations, warranties, covenants or agreements of the Sellers under
this Agreement.
V.2 Conduct of Business. From the date hereof through the
Closing Date, each entity of the Company Group shall (a) conduct its business in
the ordinary course consistent with past custom and practice in the same manner
as it was being conducted prior to the date of the Latest Balance Sheets, (b)
without the prior written consent of the Buyer, not undertake any of the actions
specified in Section 3.16 hereof or incur any Taxes except as allowed by Section
3.9 and (c) use its best efforts to (i) preserve intact its business and assets,
(ii) keep available the services of its present officers, employees, consultants
and agents, and (iii) maintain its present suppliers and customers
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and otherwise preserve its goodwill. Notwithstanding the foregoing, at the
Closing each Seller may purchase the life insurance policies owned by the
Company Group on his life for a purchase price equal to its cash surrender value
net of any loans and with respect to the split dollar life insurance policies on
the life of Irving Angerman which are not owned by the Company, such Seller may
acquire the loan receivable owing to the Company for a purchase price equal to
the face amount thereof.
V.3 Notice of Events. Each Seller with knowledge thereof
shall promptly notify the Buyer of (a) any event, condition or circumstance
occurring from the date hereof through the Closing Date that would constitute a
violation or breach of this Agreement or (b) any event, occurrence, transaction
or other item which would have been required to have been disclosed on any
Schedule or statement delivered hereunder had such event, occurrence,
transaction or item existed on the date hereof, other than items arising in the
ordinary course of business which would not render any representation or
warranty of the Sellers materially misleading.
V.4 Exclusivity. Until the earlier occurs of the Closing or
the termination of this Agreement, the Sellers shall not, and shall cause any of
their respective subsidiaries, representatives, officers, directors, agents,
stockholders or affiliates (all such persons and entities, the "Seller Group")
not to initiate, solicit, entertain, negotiate, accept, or discuss, directly or
indirectly, any proposal or offer (an "Acquisition Proposal") to acquire all or
any significant part of the Business, whether by merger, purchase of stock,
purchase of assets, tender offer or otherwise, or provide any non-public
information to any third party in connection with an Acquisition Proposal or
enter into any agreement, arrangement or understanding requiring them to
abandon, terminate, or fail to consummate the transactions contemplated by this
Agreement. Each member of the Seller Group agrees to (i) immediately notify the
Buyer if any member of the Seller Group receives any indications of interest,
requests for information, or offers in respect of an Acquisition Proposal, and
(ii) inform the Persons sending such indications, requests, or offers that the
Sellers are bound by an exclusivity arrangement (without any reference to the
Buyer, its potential financing sources, or Affiliates). Each member of the
Seller Group represents that no member of the Seller Group is party to or bound
by any agreement with respect to an Acquisition Proposal other than under this
Agreement.
V.5 Mutual Assistance. The Sellers and the Buyer agree that
they will mutually cooperate in the expeditious filing of all notices, reports
and other filings with any Governmental Body required to be submitted jointly by
the Sellers and the Buyer in connection with the execution and delivery of this
Agreement, the other Documents contemplated hereby and the consummation of the
transactions contemplated hereby or thereby, including any such filing required
under the HSR Act.
V.6 Public Announcements. Prior to the Closing Date, neither
the Sellers nor the Buyer shall make, nor permit any agent or Affiliate to make,
any public statements, including, without limitation, any press releases, with
respect to this Agreement and the transactions contemplated hereby without the
prior written consent of the other, except any public disclosure which either
party in good faith believes is required by Law (in which case the disclosing
party will consult with the other party prior to making such disclosure).
Without the prior written consent of the other party, until the Closing Date,
neither party shall disclose the existence of this Agreement or its financial
terms, except as may be necessary in order to perform each party's
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obligations pursuant to this Agreement (including the obtaining of any required
consents or financing), to enforce its provisions, or as may be required by Law,
and except that Sellers may disclose any such information to any employees of
the Company Group.
V.7 Ansam Transfer. The Sellers shall consummate the Ansam
Transfer on or prior to the Closing Date and shall issue Capital Stock in
respect thereof (when valued at the amount of the Purchase Price allocable to
such Capital Stock) equal to the fair market value of the Ansam Real Property
Interests.
SECTION VI
CONDITIONS PRECEDENT TO THE CLOSING
VI.1 Conditions Precedent to the Obligations of the Buyer. The
obligations of the Buyer to enter into and complete the Closing are subject to
the fulfillment on the Closing Date of the following conditions, any one or more
of which may be waived by the Buyer:
(a Representations, Warranties and Covenants. The
representations and warranties of the Sellers contained in this Agreement shall
be true, complete and correct in all material respects on and as of the Closing
Date with the same force and effect as though made on and as of the Closing
Date. The Sellers shall have performed and complied in all material respects
with all covenants and agreements required by this Agreement to be performed or
complied with by them on or prior to the Closing Date.
(b Consents, Waivers, Licenses, Filings, etc. The consents,
approvals, authorizations, licenses, registrations, declarations or filings
required to be listed on Schedule 3.3 and Schedule 3.12(b) hereto shall have
been obtained or made, as the case may be.
(c Injunction, etc. At the Closing, there shall not be any
Order outstanding against any party hereto or Law promulgated that restrains,
prohibits, invalidates or otherwise prevents consummation of the transactions
contemplated by, or seeks damages as a result of or otherwise interferes with
this Agreement or any of the conditions to the consummation of the transactions
contemplated by this Agreement or would be likely to have any Material Adverse
Effect on the Company Group.
(d Opinion of Counsel to the Sellers. The Buyer shall have
received the opinion of Tannenbaum Dubin & Robinson, LLP, counsel to the
Sellers, substantially in the form of Exhibit B hereto.
(e Estimate Certificate of the Sellers. The Sellers shall have
delivered to the Buyer the Estimate Certificate, as described in Section 2.2
hereof.
(f Other Agreements. Samuel Samelson shall have entered into
an employment agreement with the Buyer substantially in the form of Exhibit C.
Irving Angerman and Samuel
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Samelson shall have entered into non-compete and non-solicitation agreements
with the Buyer substantially in the form of Exhibit D.
(g Conveyancing Documents. The Sellers shall have executed and
delivered to the Buyer such further instruments and documents as may be
reasonably requested by the Buyer in order to complete the sale of the Capital
Stock.
(h Title Insurance. A title insurance company selected by the
Buyer (the "Title Company") shall be willing to insure at standard rates the
marketable title in and to the Owned Property in fee simple of each applicable
entity of the Company Group, the leasehold estate in any financeable Leased Real
Property (a "Financeable Leasehold") of each applicable entity of the Company
Group, and the Buyer's lender's (the "Lender") mortgage lien on the Owned
Property and each Financeable Leasehold, in each case, free and clear of all
Liens (other than as described on Schedule 3.12(a) and Schedule 3.12(b)) and
with such endorsements and affirmative coverages as the Buyer and Lender shall
reasonably require (including without limitation non-imputation endorsements).
Sellers shall and shall cause Ansam to provide all such affidavits and
indemnities as the Title Company reasonably shall require in order to afford
such coverages. Buyer agrees to promptly arrange for such title insurance
immediately following the execution of this Agreement.
(i Surveys. The Buyer shall have received a survey of each
Owned Property and each Leased Real Property to which any entity of the Company
Group holds a Financeable Leasehold, in each case, conforming to the Minimum
Standard Detail Requirements jointly established and approved in 1992 by ALTA
and ACSM, certified to the applicable Company Group entity, the Buyer, the
Lender and the Title Company, and showing no Liens or other survey defects other
than the matters disclosed on Schedules 3.12(a) and (b). Buyer agrees to
promptly arrange for such surveys immediately following the execution of this
Agreement.
(j Real Estate. All Real Estate shall be in substantially the
same condition and repair as that on the date of this Agreement, reasonable wear
and tear excepted.
(k Real Property Leases. The Buyer shall have received a
consent from each landlord under a Real Property Lease identified in Schedule
3.12(b) as to which a consent is required. Lender shall have received from the
landlord under each Real Property Lease designated by the Lender a waiver of
such landlord's lien against personal property on the applicable premises and
such other matters as the Lender reasonably requires.
(l FIRPTA Affidavits. The Buyer shall have received from each
entity of the Company Group and from each Seller an affidavit (i) stating that
such Person is not a "foreign person", as defined in Section 1445(f)(3) of the
Internal Revenue Code, (ii) setting forth the taxpayer identification number of
such Person, (iii) stating that such Person intends to file a U.S. income tax
return with respect to the sale of such Owned Property, and (iv) granting the
Buyer permission to furnish a copy of such affidavit to the Internal Revenue
Service.
(m HSR Clearance. The applicable waiting period imposed by the
HSR Act shall have expired or been terminated.
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(n Financing. The Buyer shall have received cash proceeds from
its financing sources in an amount sufficient to consummate the transactions
contemplated by this Agreement and to pay all fees and expenses in connection
therewith and to provide for the ongoing working capital needs of the Business,
all on terms and conditions satisfactory to the Buyer, in its sole discretion.
(o Escrow Agreement. The Sellers and the Buyer shall have
executed the Escrow Agreement.
(p Ansam Transfer. The Ansam Transfer shall have been
consummated in accordance with Section 5.7, all consents required in connection
therewith shall have been obtained, all Taxes relating thereto shall have been
paid, and Sellers shall have provided such documentation as Buyer shall have
reasonably requested evidencing the same.
(q Intellectual Property. Each item of Intellectual Property
registered in the name of a Seller and used by any entity of the Company Group
shall have been assigned to an entity of the Operating Group in a form
acceptable to the Buyer and such assignment recorded in the United States Patent
and Trademark Office or with another applicable national or international body.
VI.2 Conditions Precedent to the Obligations of the Sellers.
The obligation of the Sellers to enter into and complete the Closing is subject
to the fulfillment on or prior to the Closing Date, of the following conditions,
any one or more of which may be waived by the Sellers.
(a Representations, Warranties and Covenants. The
representations, warranties and covenants of the Buyer shall be true, complete
and correct in all material respects as of the Closing Date with the same force
and effect as though made on and as of the Closing Date. The Buyer shall have
performed and complied in all material respects with all covenants and
agreements required by this Agreement to be performed or complied with by the
Buyer on or prior to the Closing Date.
(b Injunction, etc. At the Closing, there shall not be any
Order outstanding against any party hereto or Law promulgated that restrains,
prohibits, invalidates or otherwise prevents consummation of the transactions
contemplated by, or seeks damages as a result of or otherwise interferes with
this Agreement or any of the conditions to the consummation of the transactions
contemplated by this Agreement or would be likely to have any Material Adverse
Effect on the Company Group.
(c Delivery of Consideration. The Buyer shall have tendered to
the Sellers the Purchase Price in accordance with Section 2.2 hereof.
(d HSR Clearance. The applicable waiting period imposed by the
HSR Act shall have expired or been terminated.
(e Opinion of Counsel to the Buyer. The Sellers shall have
received the opinion of Kirkland & Ellis, counsel to the Buyer, substantially in
the form of Exhibit E hereto.
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(f Releases. Each of Irving Angerman and Samuel Samelson shall
have received a written release of liability, in form reasonably satisfactory to
their counsel, for the obligations of the Company Group pursuant to the IRB,
FUNB Loan Documents, and the Factoring Agreement. Each Seller , Dorothy Angerman
and Marvin S. Robinson and each entity of the Company Group shall have mutually
released each other from all liability that each such Person may have to the
other which accrued prior to the Closing Date.
SECTION VII
POST-CLOSING COVENANTS
VII.1 Further Information. Following the Closing, each party
will afford to the other party, its counsel and its accountants, during normal
business hours, reasonable access to the books, records and other data of the
Company Group or relating to the Business in its possession with respect to
periods prior to the Closing and the right to make copies and extracts
therefrom, to the extent that such access may be reasonably required by the
requesting party (a) to facilitate the investigation, litigation and final
disposition of any claims which may have been or may be made against any party
or its Affiliates and (b) for any other reasonable business purpose, including
preparation of Tax Returns.
VII.2 Record Retention. Each party agrees that for a period
of not less than 7 years following the Closing Date, it shall not destroy or
otherwise dispose of any of the Books and Records relating to the Business in
its possession with respect to periods prior to the Closing. Each party shall
have the right to destroy all or part of such Books and Records after the
seventh anniversary of the Closing Date without notice to any party or, at an
earlier time by giving each other party hereto 30 days prior written notice of
such intended disposition and by offering to deliver to the other party, at the
other party's expense, custody of such Books and Records as such party may
intend to destroy.
VII.3 Post-Closing Assistance. (a) The Sellers, on the one
hand, and the Buyer, on the other hand, will provide each other with such
assistance as may reasonably be requested in connection with the preparation of
any Tax Return, any audit or other examination by any taxing authority, or any
judicial or administrative proceedings relating to liability for Taxes, and each
will retain and provide the requesting party with any records or information
that may be reasonably relevant to such return, audit or examination,
proceedings or determination. The party requesting assistance shall reimburse
the other party for reasonable out-of-pocket expenses (other than salaries or
wages of any employees of the party or its Affiliates) incurred in providing
such assistance. Any information obtained pursuant to this Section 7.3 or
pursuant to any other Section hereof providing for the sharing of information or
the review of any Tax Return or other Schedule relating to Taxes shall be kept
confidential by the parties hereto. The Sellers shall prepare and file, or cause
to be prepared and filed, in a timely manner, all applicable Tax Returns of
Ansam through the Closing Date. Buyer shall cause every other entity of the
Company Group to prepare and file, or cause to be prepared and filed, in a
timely manner, all applicable Tax Returns for taxable periods ending on or prior
to the Closing Date, which have not been filed as of the Closing Date. Such Tax
Returns shall be prepared on a basis consistent with those prepared for prior
taxable periods unless a different treatment of any item is required by law or
regulation. Each of the Sellers and the Buyer shall have
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the right to receive no less than 30 days prior to the due date thereof, and
review prior to filing, any such Tax Return which a party is required to prepare
and no such Tax Return shall be filed without the prior consent of the other
party , which shall not be unreasonably or untimely withheld. The Buyer shall
promptly notify the Sellers in writing of the commencement of any claim, audit,
examination, or other proposed change or adjustment of which it or any of its
Affiliates has been informed by any taxing authority which may affect the
liability of Sellers under Section VII or VIII with respect to Taxes. Failure by
the Buyer so to notify the Sellers shall relieve the Sellers of their
indemnification obligations with respect to such liability only in the event and
to the extent that the Sellers were prejudiced as a result of such failure. Such
notice shall describe the claim, audit, examination or other proposed change or
adjustment in reasonable detail and shall include copies of any notices and
other documents received from any taxing authority in respect of same. The
Sellers shall have the right to participate in any audits of or administrative
or court proceedings relating to taxable periods of any entity of the Company
Group ending on or prior to the Closing Date and to employ counsel or other
representatives of their choice.
VII.4 Confidentiality. Each Seller shall keep secret and
retain in strictest confidence, and shall not use for the benefit of himself or
others or to the detriment of Buyer and its Subsidiaries all confidential
information with respect to the Company Group and the Business, or learned by
such Seller heretofore or hereafter directly or indirectly, including, without
limitation, information with respect to (a) prospective products and facilities,
(b) sales figures, (c) profit or loss figures, (d) customers, clients,
suppliers, sources of supply and customer lists (the "Confidential Company
Information"), and shall not disclose such Confidential Information to anyone
outside of the Buyer and its Affiliates except with the Buyer's express written
consent except that the foregoing restriction shall terminate in the event that
this Agreement is terminated. Further, each Seller covenants not to obtain or
use or permit any of his Affiliates to obtain or use any information concerning
the Buyer and its Subsidiaries (including, without limitation, the Company)
known or made available by Samuel Samelson or other employees of any entity of
the Company Group on or after the Closing Date. This provision does not prohibit
disclosure or use of any confidential information which becomes publicly known
through no wrongful act of either the Buyer or any Seller or any disclosure or
use required by law or in order to enable a party to perform its obligations
hereunder.
VII.5 Certain Other Matters. [INTENTIONALLY OMITTED]
VII.6 Further Assurances. From and after the Closing, each of
the Buyer and the Sellers will, and will cause their respective Affiliates to,
execute and deliver such further instruments of sale, conveyance, transfer,
assignment and delivery and such consents, assurances, powers of attorney and
other instruments and take such other action as reasonably may be necessary in
order to put the Buyer in actual possession and control of the Company Group and
the Business and to otherwise fully effectuate and carry out the transactions
contemplated by this Agreement. The parties shall use all reasonable commercial
efforts to fulfill or obtain the fulfillment of the conditions to the Closing,
including, without limitation, the execution and delivery of any Document, the
execution and delivery of which are conditions precedent to the Closing.
VII.7 Tax Matters.
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(a The Sellers shall be liable for and shall indemnify the
Buyer, the Buyer's consolidated group and each entity of the Company Group
against Taxes imposed on any such entity for (i) any taxable year or period that
ends on or before December 31, 1998 or (ii) with respect to any taxable year or
period beginning on or before and ending after December 31, 1998, the portion of
such taxable year or period ending on and including December 31, 1998.
(b The Buyer shall be liable for and shall indemnify the
Sellers against Taxes of any entity of the Company Group for any taxable year or
period that begins after December 31, 1998 and, with respect to any taxable year
or period beginning on or before and ending after December 31, 1998, the portion
of such taxable year or period beginning on the day after December 31, 1998.
(c The Sellers and the Buyer shall close the taxable period of
each entity of the Company Group as of the close of business on the Closing
Date, unless such action is prohibited by Law. In any case where the taxable
year of an entity of the Company Group does not end on December 31, 1998, then
for the purposes of Section 7.7(a) and (b), the determination of the Taxes of
such entity for the portions of the year or period ending on December 31, 1998
shall be determined on the basis of an interim closing of the books as of the
close of business on December 31, 1998, except that Taxes based on capital or
the value of any asset, as well as exemptions, allowances or deductions that are
calculated on an annual basis, shall be apportioned between the Buyer and the
Sellers ratably on a daily basis. The Buyer shall reimburse to the Sellers any
savings to the Company Group in any period ending after December 31, 1998 by
reason of any matter which obligates the Seller to pay Taxes pursuant to this
Section 7.7 in a prior period as and when such savings are made.
VII.8 Purchase of Life Insurance; Split Dollar Loan
Receivable. Within 90 days after the Closing Date, (a) the Buyer shall cause the
Company if requested by Irving Angerman or Samuel Samelson to transfer the life
insurance policies owned by the Company on the life of each of Irving Angerman
and Samuel Samelson for a purchase price equal to the cash surrender value
thereof at the date of transfer net of any loans thereon ("Book Value"). The
Buyer shall cause the Company to pay all premiums necessary to keep the
above-mentioned policies in force and to not grant a security interest in such
policies or their proceeds except for loans to pay premiums on such policies for
the 90 day period following the Closing Date. The Buyer shall cause the Company,
in the event of the death of Irving Angerman or Samuel Samelson during that
period, to pay the excess of the Company's post-tax receipts of the relevant
policy over the Book Value thereof, as directed by the relevant named insured or
his estate.
SECTION VIII
SURVIVAL; INDEMNIFICATION
VIII.1 Survival of Representations, Warranties, Covenants and
Agreements. The representations, warranties, covenants and agreements of the
Sellers and the Buyer contained in this Agreement will survive the Closing (a)
60 days after the expiration of all applicable statutes of limitation (including
all periods of extension, whether automatic or permissive) with respect to any
covenant or agreement contained in this Agreement or the matters covered by the
representations and
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warranties contained in Sections 3.1, 3.2, 3.4, 3.9, 3.13, 3.20, 3.26 and 7.7,
or (b) until March 31, 2000.
VIII.2 Indemnification of the Buyer. Subject to the
limitations contained in this Section VIII, each Seller, jointly and severally,
agrees to indemnify, defend and hold harmless the Buyer, its Affiliates, and
their respective directors, officers, partners, employees, successors and
assigns, from and against (i) any and all Losses which directly or indirectly
result from any inaccuracy in or any breach of any representation and warranty,
or any breach of any covenant or agreement, of the Sellers contained in this
Agreement or in any Document delivered pursuant to this Agreement and (ii) 50%
of any severance payment due by the Company to John Fraley pursuant to the
Agreement dated April 20, 1998, as amended February 11, 1999, by reason of the
change in control of the Company contemplated by this Agreement.
VIII.3 Indemnification of the Sellers. Subject to the
limitations contained in this Section VIII, the Buyer agrees to indemnify,
defend and hold harmless the Sellers and their Affiliates and their respective
directors, officers, partners, employees, successors and assigns, from and
against any and all Losses which, directly or indirectly result from any
inaccuracy in or any breach of any representation and warranty, or any breach of
any covenant or agreement, of the Buyer contained in this Agreement.
VIII.4 Limitations on Indemnification. The Sellers shall have
no liability, nor be subject to any claim, under Section 8.2 in respect of any
inaccuracy in or any breach of any representation and warranty of the Sellers
contained in this Agreement, other than the representations and warranties
contained in Sections 3.4, 3.9, 3.13, 3.16(e), (h), (i), (j) and 3.26, unless
and until the amount of Losses thereunder exceeds $500,000 in the aggregate, and
then only to the extent of Losses in excess of such amount. The Sellers shall
have no liability, nor be subject to any claim, under Section 8.2 in respect of
the representations and warranties contained in Section 3.9 or the covenant
contained in Section 7.7, unless and until the amount of Losses thereunder in
the aggregate, exceeds $250,000 plus the amount of any overpayment of Taxes by
the Company Group with respect to any period prior to December 31, 1998 and then
only to the extent of Losses in excess of such amount.
VIII.5 Method of Asserting Claims. The party making a claim
under this Section VIII is referred to as the "Indemnified Party" and the party
against whom such claims are asserted under this Section VIII is referred to as
the "Indemnifying Party". All claims by any Indemnified Party under this Section
VIII shall be asserted and resolved as follows:
(a In the event that any claim or demand for which an
Indemnifying Party would be liable to an Indemnified Party hereunder is asserted
against or sought to be collected from such Indemnified Party by a third party
or in the event of any investigation, examination or audit by a taxing authority
is commenced relating to any period or activity prior to December 31, 1998, said
Indemnified Party shall with reasonable promptness notify in writing the
Indemnifying Party of such claim or demand (the "Claim Notice"); provided,
however, that any failure to give such Claim Notice will not be deemed a waiver
of any rights of the Indemnified Party except to the extent the rights of the
Indemnifying Party are actually prejudiced by such failure. The Indemnifying
Party, upon request of the Indemnified Party, shall retain counsel (who shall be
reasonably acceptable to the Indemnified Party) to represent the Indemnified
Party and shall pay the reasonable fees and disbursements of such
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counsel with regard thereto; provided, however, that (i) the Indemnified Party
is hereby authorized prior to the date on which it receives written notice from
the Indemnifying Party designating such counsel, to retain counsel, whose fees
and expenses shall be at the expense of the Indemnifying Party, to file any
motion, answer or other pleading and take such other action which it reasonably
shall deem necessary to protect its interests or those of the Indemnifying Party
until the date on which the Indemnified Party receives such notice from the
Indemnifying Party, (ii) if the Indemnifying Party is the Sellers, the Sellers
shall have the right to decline to defend a claim or claims by giving notice of
the same to the Indemnified Party and in such event all expenses incurred by the
Indemnified Party shall accrue and be for the account of the Sellers and be
applied to the relevant deductible referred to in Section 8.4, and (iii) in the
event that the Sellers have declined to defend as set forth in the preceding
subsection, the Sellers shall have the right at anytime thereafter to take up
the defense of the claim on notice to the Indemnified Party. After the
Indemnifying Party shall retain such counsel, the Indemnified Party shall have
the right to retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party unless (x) the Indemnifying
Party and the Indemnified Party shall have mutually agreed to the retention of
such counsel or (y) the named parties in any such proceeding (including any
impleaded parties) include both the Indemnifying Party and the Indemnified Party
and representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them. The Indemnifying
Party shall not, in connection with any proceedings or related proceedings in
the same jurisdiction, be liable for the fees and expenses of more than one such
firm for the Indemnified Party (except to the extent the Indemnified Party
retained counsel to protect its (or the Indemnifying Party's) rights prior to
the selection of counsel by the Indemnifying Party). If requested by the
Indemnifying Party, the Indemnified Party agrees to cooperate with the
Indemnifying Party and its counsel in contesting any claim or demand which the
Indemnifying Party defends. A claim or demand may not be settled by the
Indemnifying Party without the prior written consent of the Indemnified Party
(which consent will not be unreasonably withheld) unless, as part of such
settlement, the Indemnified Party shall receive a full and unconditional release
reasonably satisfactory to the Indemnified Party.
(b In the event any Indemnified Party shall have a claim
against any Indemnifying Party hereunder which does not involve a claim or
demand being asserted against or sought to be collected from it by a third
party, the Indemnified Party shall send a Claim Notice with respect to such
claim to the Indemnifying Party.
(c After delivery of a Claim Notice, so long as any right to
indemnification exists pursuant to this Section VIII, the affected parties each
agree to retain all Books and Records related to such Claim Notice. In each
instance, the Indemnified Party, or the Sellers if the Sellers have declined to
defend in accordance with Section 8.5(a)(ii), shall have the right to be kept
fully informed by the other party and its legal counsel with respect to any
legal proceedings. Any information or documents made available to any party
hereunder and designated as confidential by the party providing such information
or documents and which is not otherwise generally available to the public and
not already within the knowledge of the party to whom the information is
provided (unless otherwise covered by the confidentiality provisions of any
other agreement among the parties hereto, or any of them), and except as may be
required by applicable law or pursuant to subpoena, shall not be disclosed to
any third Person (except for the representatives of the party being provided
with the information, in which event the party being provided with the
information shall request its
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representatives not to disclose any such information which it is otherwise
required hereunder to be kept confidential).
SECTION IX
TERMINATION OF AGREEMENT
IX.1 Termination. This Agreement may be terminated at any time
prior to the Closing by the Buyer, on the one hand, or by the Sellers, on the
other hand, by written notice to the other party hereto, in the event that the
Closing shall not have occurred on or prior to the close of business on March
31, 1999 unless the failure to close has been caused by a breach of this
Agreement by the party seeking such termination.
IX.2 Survival. In the event this Agreement is terminated
pursuant to Section 9.1, (i) this Agreement shall become null and void and of no
further force and effect, except for the provisions of Section 5.l, relating to
the obligation to keep confidential certain information, 5.4 and this Section
9.2 and (ii) there shall be no liability on the part of the Sellers or the
Buyer, their Affiliates or their respective partners, officers, directors,
employees or agents, provided, however, that if such termination shall result
from the breach by a party of the provisions contained in this Agreement, such
party shall be fully liable for any and all damages, costs and expenses
sustained or incurred as a result of such breach by the other parties hereto.
IX.3 Expenses.
(a) Each of the parties hereto shall pay its own expenses
(including, without limitation, attorneys' and accountants' fees and
out-of-pocket expenses) incident to this Agreement and the transactions
contemplated hereby, including the Ansam Transfer.
(b) The fees incurred in connection with any filing required
by the HSR Act shall be shared equally among the Sellers and the Buyer.
(c) The Sellers shall pay all sales, use, transfer, real
property transfer, recording, stamp, gains, stock transfer and other similar
taxes and fees ("Transfer Taxes") arising out of or in connection with the Ansam
Transfer and indemnify and hold harmless the Buyer with respect to such Transfer
Taxes.
(d) The Buyer will in no event have any liability for the
costs or fees of any advisors, investments bankers or brokers engaged by the
Sellers or the Business in connection with this Agreement and the transactions
contemplated hereby or any legal, accounting and similar expenses incurred by
the Business in connection with the transactions contemplated hereby since
October 1, 1998.
IX.4 Notices. All notices, requests, demands and other
communications required or permitted to be given hereunder shall be in writing
and shall be given personally, sent by facsimile transmission or sent by prepaid
overnight air courier. Any such notice shall be deemed to have been
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given (a) when received, if delivered in person, (b) the Business Day after a
confirmation has been generated, if sent by facsimile transmission, and (c) 2
Business Days after dispatch, if sent by prepaid overnight air courier, in each
case if delivered, sent or addressed as follows (or to such other address or
addresses or facsimile number as a party may have advised the other in the
manner provided in this Section 9.4):
If to any Seller prior to the Closing:
Ex-Cell Home Fashions, Inc.
295 Fifth Avenue
New York , New York 10016
Attn: Irving Angerman and Samuel Samelson
Fax: (212) 447-5881
If to any Seller after Closing:
Irving Angerman
The Cobblefield
16 Easthaven Lane
White Plains, New York 10605
Arnold Angerman
229 East 79th Street, Apt. 14C
New York, New York 10021
Samuel Samelson
300 East 56th Street
Apartment 18G
New York, New York 10022
Trust F/B/O Arnold C. Angerman
u/t/a dated November 10, 1998
and
Trust F/B/O Sandra E. Koch
u/t/a dated November 10, 1998
each
c/o Tannenbaum, Dubin & Robinson, LLP
1140 Avenue of the Americas
New York, New York 10036
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With a copy to (which shall not constitute notice):
Tannenbaum, Dubin & Robinson, LLP
1140 Avenue of the Americas
New York, New York 10036
Attn: Marvin S. Robinson, Esq.
Fax: (212) 302-2906
If to the Buyer:
Glenoit Corporation
111 West 40th Street
New York, New York 10018
Attn.: Mr. Thomas J. O'Gorman
Fax: (212) 840-9126
With a copy to (which shall not constitute notice):
Kirkland & Ellis
153 East 53rd Street, 39th Floor
New York, NY 10022
Attn.: Kirk A. Radke, Esq.
Fax: (212) 446-4900
IX.5 Entire Agreement. This Agreement (including the Exhibits
and Schedules) and the agreements, certificates and other documents delivered on
the Closing Date in connection with this Agreement (including the funds flow
memorandum) contain as at the date hereof the entire agreement among the parties
with respect to the transactions described herein, and supersede all prior
agreements, written or oral, with respect thereto (including the "letter of
intent" among Glenoit Corporation, the Sellers and Prudential Securities
Incorporated dated November 12, 1998 and the confidentiality agreement among the
Company and Glenoit Mills, Inc., dated May 26, 1998).
IX.6 Waivers and Amendments. This Agreement may be amended,
superseded, canceled, renewed or extended, and the terms hereof may be waived,
only by a written instrument signed by the parties or, in the case of a waiver,
by the party waiving compliance. No delay on the part of any party in exercising
any right, power or privilege hereunder shall operate as a waiver thereof. The
rights and remedies of any parties based upon, arising out of or otherwise in
respect of any inaccuracy in or breach of any representation, warranty, covenant
or agreement contained in this Agreement shall in no way be limited by the fact
that the act, omission, occurrence or other state of facts upon which any claim
of any such inaccuracy or breach is based may also be the subject matter of any
other representation, warranty, covenant or agreement contained in this
Agreement (or in any other agreement between the parties as to which there is no
inaccuracy or breach).
IX.7 Governing Law. All questions concerning the construction,
validity and interpretation of this Agreement hereto shall be governed by and
construed in accordance with the
-39-
<PAGE>
internal laws of the State of New York, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of New York or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of New York.
IX.8 Binding Effect; No Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and permitted assigns. This Agreement is not assignable by any party
hereto without the prior written consent of the other party hereto except by
operation of law after the Closing Date and any other purported assignment shall
be null and void; provided, however, that each Seller may assign this Agreement
in connection with any transfer by him of his Capital Stock or Membership
Interest which is made to any member of his family or to a trust to any member
of his family or which is made pursuant to his last will and testament, and the
Buyer may assign this Agreement without the consent of the Sellers at or after
the Closing to any lenders to the Buyer or any subsequent purchaser of all or
substantially all of the Business.
IX.9 Severability of Provisions. If any provision or any
portion of any provision of this Agreement or the application of such provision
or any portion thereof to any Person or circumstance shall be held invalid or
unenforceable, the remaining portion of such provision and the remaining
provisions of this Agreement, or the application of such provision or portion of
such provision as is held invalid or unenforceable to persons or circumstances
other than those as to which it is held invalid or unenforceable, shall not be
affected thereby.
IX.10 Counterparts. This Agreement may be executed by the
parties hereto in one or more counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument. Each counterpart may consist of a number
of copies hereof each signed by less than all, but together signed by all of the
parties hereto.
IX.11 Specific Performance. Sellers agree that Sellers failure
to sell their Capital Stock in accordance with this Agreement would cause
irreparable injury to the Company for which the remedy at law would be
inadequate and the Buyer shall be entitled to specific performance and
injunctive relief as remedies for any such breach (without any requirement of
posting a bond). The parties agree that a violation by the other party of
Sections 5.6 and 7.4 would cause irreparable injury to the party affected and in
the case of a violation by Buyer, to the Company Group as well, for which the
remedy at law would be inadequate and the party affected and if applicable, any
entity of the Company Group affected, shall be entitled in any court of law or
equity to preliminary, permanent, and other injunctive relief against any breach
of the provisions contained in such sections.
IX.12 Remedies Cumulative. Except as otherwise provided
herein, the remedies provided herein shall be cumulative and shall not preclude
the assertion by any party hereto of any other rights or the seeking of any
other remedies against any other party hereto.
-40-
<PAGE>
IX.13 Waiver of Jury Trial. Each of the parties hereto waives
to the fullest extent permitted by law any right it may have to trial by jury in
respect of any claim, demand, action or cause of action based on, or arising out
of, under or in connection with this Agreement, or any course of conduct, course
of dealing, verbal or written statement or action of any party hereto, in each
case whether now existing or hereafter arising, and whether in contract, tort,
equity or otherwise. The parties to this Agreement each hereby agrees that any
such claim, demand, action or cause of action shall be decided by court trial
without a jury and that the parties to this Agreement may file an original
counterpart of a copy of this Agreement with any court as evidence of the
consent of the parties hereto to the waiver of their right to trial by jury.
* * * * *
-41-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed on the date and year first above written.
GLENOIT CORPORATION
By: /s/ Thomas J. O'Gorman
--------------------------------
Its: CEO and President
/s/ Arnold Angerman
------------------------------------
ARNOLD ANGERMAN
/s/ Irving Angerman
------------------------------------
IRVING ANGERMAN
/s/ Samuel Samelson
------------------------------------
SAMUEL SAMELSON
Trust F/B/O Arnold C. Angerman
By: /s/ Marvin Robinson
---------------------------------
Its Trustee
By: /s/ Dorothy Angerman
---------------------------------
Its Trustee
Trust F/B/O Sandra E. Koch
By: /s/ Marvin Robinson
---------------------------------
Its Trustee
By: /s/ Dorothy Angerman
---------------------------------
Its Trustee
$200,000,000
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of February 12, 1999
Among
GLENOIT CORPORATION
as Borrower,
and
THE RESTATEMENT LENDERS
NAMED HEREIN
and
BANQUE NATIONALE DE PARIS,
as Agent, Arranger, Issuing Bank and Swing Line Bank
and
FLEET NATIONAL BANK,
as Syndication Agent
and
LASALLE NATIONAL BANK,
as Documentation Agent
<PAGE>
T A B L E O F C O N T E N T S
SECTION PAGE
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS
1.01. Certain Defined Terms..................................................2
1.02. Computation of Time Periods; Other Definitional Provisions............40
1.03. Accounting Terms......................................................40
ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES AND THE
LETTERS OF CREDIT
2.01. The Advances..........................................................40
2.02. Making the Advances...................................................42
2.03. Issuance of and Drawings and Reimbursement Under Letters of Credit....44
2.04. Repayment of Advances.................................................46
2.05. Termination or Reduction of the Commitments...........................49
2.06. Prepayments...........................................................50
2.07. Interest..............................................................52
2.08. Fees..................................................................53
2.09. Conversion of Advances................................................54
2.10. Increased Costs, Etc..................................................55
2.11. Payments and Computations.............................................57
2.12. Taxes.................................................................58
2.13. Sharing of Payments, Etc..............................................60
2.14. Use of Proceeds.......................................................61
2.15. Evidence of Debt......................................................62
ARTICLE III CONDITIONS OF LENDING
3.01. Conditions Precedent to the Third Restatement Date....................63
3.02. Conditions Precedent to Each Borrowing, Swing Line
Advance and Issuance........................................72
3.03. Determinations Under Section 3.01.....................................73
ARTICLE IV REPRESENTATIONS AND WARRANTIES
4.01. Representations and Warranties of the Loan Parties....................73
ARTICLE V COVENANTS OF THE BORROWER
5.01. Affirmative Covenants.................................................83
5.02. Negative Covenants....................................................88
5.03. Reporting Requirements................................................97
5.04. Financial Covenants..................................................101
ARTICLE VI EVENTS OF DEFAULT
6.01. Events of Default....................................................104
6.02. Actions in Respect of the Letters of Credit upon Default.............107
ARTICLE VII THE AGENT
7.01. Authorization and Action.............................................108
7.02. Agent's Reliance, Etc................................................108
<PAGE>
7.03. BNP and Affiliates...................................................109
7.04. Lender Party Credit Decision.........................................109
7.05. Indemnification......................................................109
7.06. Successor Agents.....................................................111
7.07 Agents................................................................111
ARTICLE VIII MISCELLANEOUS
8.01. Amendments, Etc......................................................111
8.02. Notices, Etc.........................................................112
8.03. No Waiver; Remedies..................................................113
8.04. Costs and Expenses...................................................113
8.05. Right of Set-off.....................................................114
8.06. Binding Effect.......................................................115
8.07. Assignments and Participations.......................................115
8.08. Execution in Counterparts............................................118
8.09. No Liability of the Issuing Bank.....................................118
8.10. Confidentiality......................................................118
8.11. Jurisdiction, Etc....................................................119
8.12. Final Agreement......................................................119
8.13. Governing Law........................................................119
8.14. Waiver of Jury Trial.................................................119
<PAGE>
iii
SCHEDULES
Schedule I - Commitments and Applicable Lending Offices
Schedule II - EBITDA
Schedule 3.01(h)(i) - Existing Debt
Schedule 3.01(h)(ii) - Surviving Debt
Schedule 4.01(a) - Share Ownership and Investor Group
Schedule 4.01(b) - Subsidiaries
Schedule 4.01(d) - Authorizations, Approvals, Actions, Notices and Filings
Schedule 4.01(m) - Plans, Multiemployer Plans and Welfare Plans
Schedule 4.01(u) - Environmental Items
Schedule 4.01(aa) - Open Years
Schedule 4.01(bb) - Tax Liabilities
Schedule 4.01(gg) - Owned Real Property
Schedule 4.01(hh) - Leased Real Property
Schedule 4.01(ii) - Investments
Schedule 4.01(jj) - Intellectual Property
Schedule 5.02(a)(iii) - Existing Liens
<PAGE>
iv
EXHIBITS
Exhibit A-1 - Form of Term A Note
Exhibit A-2 - Form of Term B Note
Exhibit A-3 - Form of Working Capital Note
Exhibit B - Form of Notice of Borrowing
Exhibit C - Form of Assignment and Acceptance
Exhibit D-1 - Form of Amended and Restated Security Agreement
Exhibit D-2 - Form of Deed of Charge
Exhibit E-1 - Form of Modification and Extension Agreement
Exhibit E-2 - Form of Deed of Trust
Exhibit F-1 - Form of Parent Guarantee
Exhibit F-2 - Form of U.S. Subsidiary Guarantee
Exhibit G - Form of Intercompany Subordination Agreement
Exhibit H - Form of Solvency Certificate
Exhibit I - Form of Borrowing Base Certificate
Exhibit J - Form of Opinion of Special Counsel to the Loan Parties
Exhibit K - Form of Third Restatement Assignment Agreement
Exhibit L - Form of Opinion of North Carolina Counsel to the Loan Parties
Exhibit M - Form of Opinion of Arkansas Counsel to the Loan Parties
Exhibit N - Form of Glenoit of Canada Consent
Exhibit O - Form of Junior Noteholders Undertaking
<PAGE>
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
THIRD AMENDED AND RESTATED CREDIT AGREEMENT dated as of
February 12, 1999 among Glenoit Corporation, a Delaware corporation (the
"BORROWER"), the banks, financial institutions and other institutional lenders
listed on the signature pages hereof as the Restatement Lenders (the
"RESTATEMENT LENDERS"), the bank listed on the signature pages hereof as the
Issuing Bank (the "ISSUING BANK"), Banque Nationale de Paris ("BNP"), as the
swing line bank (the "SWING LINE BANK") and as administrative agent (together
with any successor appointed pursuant to Article VII, the "AGENT") for the
Lender Parties (as hereinafter defined) and arranger (the "ARRANGER"), Fleet
National Bank as syndication agent (the "SYNDICATION AGENT"), and LaSalle
National Bank, as documentation agent (the "DOCUMENTATION AGENT"; and, together
with the Agent and the Syndication Agent, the "AGENTS").
PRELIMINARY STATEMENTS:
(1) The Borrower and Glenoit Mills, Inc. ("MILLS") entered
into a Second Amended and Restated Credit Agreement dated as of April 1, 1997
with the "Restatement Lenders" (as defined therein) and the "Initial Issuing
Bank" (as defined therein; together with such "Restatement Lenders", the
"EXISTING LENDERS") named therein and the Agent, as amended by Amendment No. 1
dated as of April 27, 1997, the First Amendment and Waiver dated as of July 10,
1997, the Second Amendment and Waiver dated as of October 2, 1998 and the Third
Amendment and Waiver dated as of October 30, 1998 (as so amended, the "EXISTING
CREDIT AGREEMENT").
(2) The Existing Lenders and the Borrower have agreed further
to amend and restate the Existing Credit Agreement in order to allow the
Existing Lenders to assign their "Commitments" (as defined in the Existing
Credit Agreement) to the Restatement Lenders hereunder, and to modify such
"Commitments" (as defined in the Existing Credit Agreement) in order to (i) pay
transaction fees and expenses in connection with the transactions contemplated
hereunder, (ii) finance the acquisition of Ex-Cell Home Fashions, Inc., a New
York corporation ("EX-CELL", and, together with each of its Subsidiaries, the
"EX-CELL GROUP") by the Borrower, pursuant to the Stock Purchase Agreement (as
amended, supplemented or otherwise modified from time to time in accordance with
its terms, the "PURCHASE Agreement"; such acquisition and the transactions
related thereto and contemplated thereunder, including, without limitation, the
acquisition (the "ANSAM ASSET ACQUISITION") by Ex-Cell of the membership
interests of Ansam Realty Company, LLC, a North Carolina limited liability
company ("ANSAM") prior to the Borrower's acquisition of Ex-Cell, being the
"TRANSACTION") dated as of February 12, 1999 among the Borrower, as purchaser,
and Arnold Angerman, Irving Angerman, Samuel Samelson, Trust F/B/O Arnold C.
Angerman U/T/A dated November 10, 1998 and Trust F/B/O/ Sandra E. Koch U/T/A
dated November 10, 1998, as sellers (each a "SELLER", and, collectively, the
"SELLERS"), (iii) finance the working capital of the Borrower and its
Subsidiaries and (iv) provide funds for other general corporate purposes
permitted hereunder. The Restatement Lenders have
<PAGE>
2
indicated their willingness to agree further to amend and restate the Existing
Credit Agreement and to lend such amounts on the terms and conditions of this
Agreement.
(3) Simultaneously with the execution hereof, the Existing
Lenders have entered into an Assignment Agreement in the form of Exhibit K
attached hereto dated as of the date hereof (the "THIRD RESTATEMENT ASSIGNMENT
AGREEMENT"), with the Restatement Lenders pursuant to which such Existing
Lenders have agreed to sell and assign to the Restatement Lenders, and the
Restatement Lenders have agreed to purchase and assume, as of the Third
Restatement Date (as defined below), all of such Existing Lenders' rights and
obligations under the Existing Credit Agreement on the terms set forth in the
Third Restatement Assignment Agreement. After giving effect to such sale and
assignment as of the Third Restatement Date, the Commitments of and the amount
of Advances owing to each of the Restatement Lenders will be as set forth on
Schedule I.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements contained herein, the parties hereto hereby
agree that, subject to the satisfaction of the conditions set forth in Section
3.01, the Existing Credit Agreement is amended and restated in its entirety to
read as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings (such meanings
to be equally applicable to both the singular and plural forms of the terms
defined):
"ACCOUNTS RECEIVABLE MANAGEMENT AGREEMENT" means the Accounts
Receivable Management Agreement dated as of December 14, 1995 by and
between the Borrower (as the successor of Mills) and BNY Financial
Corporation, as amended, supplemented or otherwise modified from time
to time in accordance with its terms.
"ADJUSTED EBITDA" means, for any Rolling Period, Consolidated
EBITDA of the Borrower and its Subsidiaries plus with respect to any
Investment which constitutes an acquisition of a Related Textile
Business, EBITDA of such Related Textile Business for such Rolling
Period or such shorter period, as appropriate, ending on the last day
of the Fiscal Month immediately preceding the date of such Related
Textile Investment if the Lender Parties shall have received financial
information of such Related Textile Business acceptable to the Agent.
<PAGE>
3
"ADVANCE" means a Term A Advance, a Term B Advance, a Working
Capital Advance, a Swing Line Advance or a Letter of Credit Advance.
"AFFILIATE" means, as to any Person, any other Person that,
directly or indirectly, controls, is controlled by or is under common
control with such Person or is a director or officer of such Person.
For purposes of this definition, the term "control" (including the
terms "controlling", "controlled by" and "under common control with")
of a Person means the possession, direct or indirect, of the power to
vote 5% or more of the Voting Interests of such Person or to direct or
cause the direction of the management and policies of such Person,
whether through the ownership of Voting Interests, by contract or
otherwise.
"AGENT" has the meaning specified in the recital of parties to
this Agreement.
"AGENT'S ACCOUNT" means the account of the Agent maintained by
the Agent at the Federal Reserve Bank of New York, 33 Liberty Street,
New York, New York 10048, ABA No. 026007689, for further credit to
Account No. 750420-701-03 or such other account maintained by the Agent
and designated by the Agent in a written notice to the Lender Parties
and the Borrower.
"AGREEMENT VALUE" means, for each Hedge Agreement, on any date
of determination, an amount determined by the Agent equal to: (a) in
the case of a Hedge Agreement documented pursuant to the Master
Agreement (Multicurrency-Cross Border) published by the International
Swap and Derivatives Association, Inc. (the "MASTER AGREEMENT"), the
amount, if any, that would be payable by any Loan Party or any of its
Subsidiaries to its counterparty to such Hedge Agreement, as if (i)
such Hedge Agreement was being terminated early on such date of
determination, (ii) such Loan Party or Subsidiary was the sole
"Affected Party", and (iii) the Agent was the sole party determining
such payment amount (with the Agent making such determination pursuant
to the provisions of the form of Master Agreement); or (b) in the case
of a Hedge Agreement traded on an exchange, the mark-to-market value of
such Hedge Agreement, which will be the unrealized loss on such Hedge
Agreement to the Loan Party or Subsidiary of a Loan Party party to such
Hedge Agreement determined by the Agent based on the settlement price
of such Hedge Agreement on such date of determination, or (c) in all
other cases, the mark-to-market value of such Hedge Agreement, which
will be the unrealized loss on such Hedge Agreement to the Loan Party
or Subsidiary of a Loan Party party to such Hedge Agreement determined
by the Agent as the amount, if any, by which (i) the present value of
the future cash flows to be paid by such Loan Party or Subsidiary
exceeds (ii) the present value of the future cash flows to be received
by such Loan Party or Subsidiary pursuant to such Hedge Agreement;
capitalized terms used and not otherwise defined in this definition
shall have the respective meanings set forth in the above described
Master Agreement.
<PAGE>
4
"AMPAC" means American Pacific Enterprises, Inc., an Ohio
corporation and a directly, wholly owned Subsidiary of the Borrower.
"AMPAC DEFERRED ACQUISITION EXPENSE" means the earn-out
payments, whether paid or accrued, payable by the Borrower pursuant to,
and in accordance with, Article III of the AmPac Stock Purchase
Agreement.
"AMPAC STOCK PURCHASE AGREEMENT" means the Stock Purchase
Agreement dated as of October 2, 1998 by and among the Borrower, AmPac,
Steven J. Block, Jeffrey J. Block, Gregory D. Block, the Jeffrey J. and
Karen Block Revocable Trust and the Block/Lautenbach Revocable Trust,
as amended, supplemented or otherwise modified from time to time.
"ANNUALIZATION FACTOR" means a fraction, the numerator of
which is the number 12 and the denominator of which is the number of
months elapsed since the first day of the month immediately preceding
the Third Restatement Date.
"ANSAM" has the meaning specified in the Preliminary
Statements to this Agreement.
"ANSAM ASSET ACQUISITION" has the meaning specified in the
Preliminary Statements to this Agreement.
"APPLICABLE LENDING OFFICE" means, with respect to each Lender
Party, such Lender Party's Domestic Lending Office in the case of a
Base Rate Advance and such Lender Party's Eurodollar Lending Office in
the case of a Eurodollar Rate Advance.
"APPLICABLE MARGIN" means (a) with respect to Advances
outstanding under the Term A Facility or the Working Capital Facility,
a percentage per annum determined as set forth below:
<TABLE>
<CAPTION>
FACILITY BASE RATE ADVANCES EURODOLLAR RATE ADVANCES
<S> <C> <C>
Term A Facility 1.75% 3.00%
Working Capital Facility 1.75% 3.00%
</TABLE>
provided, however, that the Applicable Margin for the Term A Facility
and the Working Capital Facility shall be, as of any date following the
date on which the financial information for the Rolling Period ended
July 31, 1999 is required to be delivered pursuant to Section 5.03(b),
a percentage per annum determined by reference to the Total
<PAGE>
5
Leverage Ratio for the Rolling Period ended on or most recently prior
to such date as set forth below:
<TABLE>
<CAPTION>
Total Leverage Ratio Base Rate Eurodollar
Advances Rate Advances
----------------------------------------------------------------------------------
<S> <C> <C>
Level I
less than 3.5 to 1.00 1.25% 2.50%
----------------------------------------------------------------------------------
Level II
less than 4.5 to 1.00 but greater than or
equal to 3.5 to 1.00 1.50% 2.75%
----------------------------------------------------------------------------------
Level III
greater than or equal to 4.5 to 1.00 1.75% 3.00%
----------------------------------------------------------------------------------
</TABLE>
The Applicable Margin for each Term A Advance and Working Capital
Advance shall be determined by reference to the Total Leverage Ratio in
effect from time to time; provided, however, that (i) no change in such
Applicable Margin shall be effective until three Business Days after
the date on which the Agent receives the financial information required
to be delivered pursuant to Section 5.03(b) and (ii) such Applicable
Margin shall be at Level III for so long as the Borrower has not
submitted to the Agent the information described in clause (i) of this
proviso as and when required under Section 5.03(b), and
(b) with respect to Advances outstanding under the Term B
Facility, 2.50% per annum for Base Rate Advances and 3.75% per annum
for Eurodollar Rate Advances.
"APPROPRIATE LENDER" means, at any time, with respect to (a)
any of the Term A, Term B or Working Capital Facilities, a Lender that
has a Commitment with respect to such Facility at such time, (b) the
Letter of Credit Facility, (i) the Issuing Bank and (ii) if the other
Working Capital Lenders have made Letter of Credit Advances pursuant to
Section 2.03(c) that are outstanding at such time, each such other
Working Capital Lender and (c) the Swing Line Facility, (i) the Swing
Line Bank and (ii) if the other Working Capital Lenders have made Swing
Line Advances pursuant to Section 2.02(b) that are outstanding at such
time, each such other Working Capital Lender.
<PAGE>
6
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance
entered into by a Lender Party and an Eligible Assignee, and accepted
by the Agent, in accordance with Section 8.07 and in substantially the
form of Exhibit C hereto.
"AVAILABLE AMOUNT" of any Letter of Credit means, at any time,
the maximum amount available to be drawn under such Letter of Credit at
such time (assuming compliance at such time with all conditions to
drawing).
"BASE RATE" means a fluctuating interest rate per annum in
effect from time to time, which rate per annum shall at all times be
equal to the higher of:
(a) the rate of interest announced publicly by BNP in
New York, New York, from time to time, as its prime rate (and
such term shall not be construed to be its best or most
favorable rate); and
(b) 1/2 of one percent per annum above the Federal
Funds Rate.
"BASE RATE ADVANCE" means an Advance that bears interest as
provided in Section 2.07(a)(i).
"BNP" has the meaning specified in the recital of parties to
this Agreement.
"BORROWER" has the meaning specified in the recital of parties
to this Agreement.
"BORROWER INFORMATION" means any and all of the written
information provided by or on behalf of the Borrower to the Agent in
connection with the syndication of this Agreement (including any
written materials, financial statements and financial projections and
any amendments, supplements, schedules and exhibits thereto).
"BORROWER'S ACCOUNT" means the account of the Borrower
maintained by the Borrower with BNP at its office at 499 Park Avenue,
New York, New York 10022, Account No. 20041000123, or such other
account as the Borrower and the Agent may from time to time designate
as the "Borrower's Account".
"BORROWING" means a Term A Borrowing, a Term B Borrowing, a
Swing Line Borrowing or a Working Capital Borrowing.
"BORROWING BASE CERTIFICATE" means a certificate in
substantially the form of Exhibit J hereto, duly certified by the chief
financial officer of the Borrower.
"BUSINESS DAY" means a day of the year on which banks are not
required or authorized by law to close in New York City and, if the
applicable Business Day relates
<PAGE>
7
to any Eurodollar Rate Advances, on which dealings are carried on in
the London interbank market.
"CANADIAN SUBSIDIARY" means any Subsidiary organized under the
laws of any province of Canada or the federal laws of Canada.
"CAPITAL EXPENDITURES" means, for any Person for any period,
the sum of, without duplication, (a) all cash expenditures made,
directly or indirectly, by such Person or any of its Subsidiaries
during such period for equipment, fixed assets, real property or
improvements, or for replacements or substitutions therefor or
additions thereto, that have been, in accordance with GAAP, reflected
as additions to property, plant or equipment on a Consolidated balance
sheet of such Person plus (b) the aggregate principal amount of all
Debt (including Obligations under Capitalized Leases) assumed or
incurred in connection with any such expenditures. For purposes of this
definition, the purchase price of equipment that is purchased
simultaneously with the trade-in of existing equipment or with
insurance proceeds shall be included in Capital Expenditures only to
the extent of the gross amount of such purchase price less the credit
granted by the seller of such equipment for the equipment being traded
in at such time or the amount of such proceeds, as the case may be.
"CAPITALIZED LEASES" means all leases that have been or should
be, in accordance with GAAP, recorded as capitalized leases.
"CARRY OVER AMOUNT" has the meaning specified in Section
5.04(c).
"CASH COLLATERAL ACCOUNT" has the meaning specified in Section
2.06(b)(vi).
"CASH EQUIVALENTS" means any of the following, to the extent
owned by the Borrower free and clear of all Liens other than Liens
created under the Collateral Documents and having a maturity of not
greater than 180 days from the date of acquisition thereof: (a) readily
marketable direct obligations of the Government of the United States or
any agency or instrumentality thereof or obligations unconditionally
guaranteed by the full faith and credit of the Government of the United
States, (b) insured certificates of deposit of or time deposits with
any commercial bank that is a Lender Party or a member of the Federal
Reserve System, issues (or the parent of which issues) commercial paper
rated as described in clause (c), is organized under the laws of the
United States or any State thereof and has combined capital and surplus
of at least $500,000,000, (c) commercial paper in an aggregate amount
of no more than $250,000 per issuer outstanding at any time, issued by
any corporation organized under the laws of any State of the United
States and rated at least "Prime-1" (or the then equivalent grade) by
Moody's Investors Service, Inc. or "A-1" (or the then equivalent grade)
by Standard & Poor's Ratings Group, a division of the McGraw-Hill
Companies, Inc., (d) repurchase
<PAGE>
8
agreements with a term of not more than seven days for underlying
securities of the types described in clauses (a) and (b) above entered
into with any bank meeting the qualifications specified in clause (b)
above or with securities dealers of recognized national standing,
provided that the terms of such agreements comply with the guidelines
set forth in the Federal Financial Institutions Examination Council
Supervisory Policy Repurchase Agreements of Depositary Institutions
With Securities Dealers and Others as adopted by the comptroller of the
Currency on October 31, 1985 (the "SUPERVISORY POLICY"), and provided
further that possession or control of the underlying securities is
established as provided in the Supervisory Policy, or (e) Investments
in money market or mutual funds that invest in Cash Equivalents of the
types described in clause (a), (b) or (c) above.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to time.
"CERCLIS" means the Comprehensive Environmental Response,
Compensation and Liability Information System maintained by the U.S.
Environmental Protection Agency.
"COLLATERAL" means all "Collateral" referred to in the
Collateral Documents and all other property that is or is intended to
be subject to any Lien in favor of the Agent for the benefit of the
Secured Parties.
"COLLATERAL DOCUMENTS" means the Third Amended and Restated
Security Agreement, the Glenoit of Canada Collateral Documents, any
Deed of Charge, and any other agreement that creates or purports to
create a Lien in favor of the Agent for the benefit of the Secured
Parties.
"COMMITMENT" means a Term A Commitment, a Term B Commitment, a
Working Capital Commitment, a Swing Line Commitment or a Letter of
Credit Commitment.
"CONFIDENTIAL INFORMATION" means information that the Loan
Parties and their Subsidiaries furnish to the Agent or any Lender Party
on a confidential basis, but does not include any such information that
is or becomes generally available to the public or that is or becomes
available to the Agent or such Lender from a source other than any Loan
Party or any of their Subsidiaries.
"CONSOLIDATED" refers, with respect to any Person, to the
consolidation of accounts of such Person and its Subsidiaries in
accordance with GAAP.
<PAGE>
9
"CONTINGENT OBLIGATION" means, with respect to any Person, any
Obligation or arrangement of such Person to guarantee or intended to
guarantee any Debt, leases, dividends or other payment Obligations
("PRIMARY OBLIGATIONS") of any other Person (the "PRIMARY OBLIGOR") in
any manner, whether directly or indirectly, including, without
limitation, (a) the direct or indirect guarantee, endorsement (other
than for collection or deposit in the ordinary course of business),
co-making, discounting with recourse or sale with recourse by such
Person of the Obligation of a primary obligor, (b) the Obligation to
make take-or-pay or similar payments, if required, regardless of
nonperformance by any other party or parties to an agreement or (c) any
Obligation of such Person, whether or not contingent, (i) to purchase
any such primary obligation or any property constituting direct or
indirect security therefor, (ii) to advance or supply funds (A) for the
purchase or payment of any such primary obligation or (B) to maintain
working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, assets, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary
obligation or (iv) otherwise to assure or hold harmless the holder of
such primary obligation against loss in respect thereof. The amount of
any Contingent Obligation shall be deemed to be an amount equal to the
stated or determinable amount of the primary obligation in respect of
which such Contingent Obligation is made (or, if less, the maximum
amount of such primary obligation for which such Person may be liable
pursuant to the terms of the instrument evidencing such Contingent
Obligation) or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof (assuming such Person is
required to perform thereunder), as determined by such Person in good
faith.
"CONVERSION", "CONVERT" and "CONVERTED" each refer to a
conversion of Advances of one Type into Advances of the other Type
pursuant to Section 2.09 or 2.10.
"CURRENT ASSETS" of any Person means all assets of such Person
that would, in accordance with GAAP, be classified as current assets of
a company conducting a business the same as or similar to that of such
Person, after deducting adequate reserves in each case in which a
reserve is proper in accordance with GAAP.
"CURRENT LIABILITIES" of any Person means (a) all Debt of such
Person that by its terms is payable on demand or matures within one
year after the date of determination excluding Funded Debt and (b) all
other items (including, without limitation, taxes accrued as estimated)
that in accordance with GAAP would be classified as current liabilities
of such Person.
"CVC" means Citicorp Venture Capital, Ltd., a New York
corporation.
<PAGE>
10
"DEBT" of any Person means, without duplication, (a) all
indebtedness of such Person for borrowed money, (b) all Obligations of
such Person for the deferred purchase price of property or services
(other than trade payables not overdue by more than 60 days incurred in
the ordinary course of such Person's business), (c) all Obligations of
such Person evidenced by notes, bonds, debentures or other similar
instruments, (d) all Obligations of such Person created or arising
under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the event of
default are limited to repossession or sale of such property), (e) all
Obligations of such Person as lessee under Capitalized Leases, (f) all
Obligations of such Person under acceptance, letter of credit or
similar facilities, (g) all Obligations of such Person to purchase,
redeem, retire, defease or otherwise make any payment in respect of any
Equity Interests in such Person or any other Person or any warrants,
rights or options to acquire such capital stock, valued, in the case of
Redeemable Preferred Stock, at the greater of its voluntary or
involuntary liquidation preference PLUS accrued and unpaid dividends,
(h) all Obligations of such Person in respect of Hedge Agreements
valued at the Agreement Value thereof, (i) all Contingent Obligations
of such Person and (j) all Debt referred to in clauses (a) through (i)
above and other payment obligations of any Person secured by (or for
which the holder of such Debt has an existing right, contingent or
otherwise, to be secured by) any Lien on property (including, without
limitation, accounts and contract rights) owned by such Person, even
though such Person has not assumed or become liable for the payment of
such Debt.
"DECLINING LENDER" has the meaning specified in Section
2.06(c).
"DEED OF CHARGE" has the meaning specified in Section
30.1(i)(xxv).
"DEED OF TRUST" has the meaning specified in Section
3.01(i)(xi).
"DEED OF TRUST POLICIES" has the meaning specified in Section
3.01(i)(x)(B).
"DEFAULT" means any Event of Default or any event that would
constitute an Event of Default but for the requirement that notice be
given or time elapse or both.
"DOMESTIC LENDING OFFICE" means, with respect to any Lender
Party, the office of such Lender Party specified as its "Domestic
Lending Office" opposite its name on Schedule I hereto or in the
Assignment and Acceptance pursuant to which it became a Lender Party,
as the case may be, or such other office of such Lender Party as such
Lender Party may from time to time specify to the Borrower and the
Agent.
"EBITDA" means, for any period, the sum (without duplication)
determined on a Consolidated basis of (a) net income (or net loss),
plus (b) the sum of (i) Interest Expense,
<PAGE>
11
(ii) income tax expense, (iii) depreciation expense, (iv) amortization
expense, (v) extraordinary or unusual losses deducted in calculating
net income (or net loss), (vi) non-cash expenses or charges, including,
without limitation, any accrual necessary for purposes of conforming
with Financial Accounting Standards Board Statement Number 106 and 112
(as defined by generally accepted accounting principles) to the extent
that the accrued portion thereof constitutes a non-cash expense or
charge, any cost of sales arising from a step-up of inventory values as
a result of applying purchase accounting and any non-cash compensation
expense or charge for the Borrower determined in accordance with GAAP
for each such period, and (vii) AmPac Deferred Acquisition Expense,
less (c) the sum of (i) extraordinary or unusual gains added in
calculating net income (or net loss) and (ii) all dividends made
pursuant to Section 5.02(g)(iii)(B), in each case determined in
accordance with GAAP for such period; provided that, for each Fiscal
Month ended prior to the Third Restatement Date, "EBITDA" for each such
Fiscal Month shall be the amount as set forth on Schedule II.
"ELIGIBLE ASSIGNEE" means (a) with respect to any Facility
(other than the Letter of Credit Facility): (i) a Lender; (ii) an
Affiliate of a Lender; (iii) a commercial bank organized under the laws
of the United States, or any State thereof, and having a combined
capital and surplus of at least $500,000,000; (iv) a savings and loan
association or savings bank organized under the laws of the United
States, or any State thereof, and having a combined capital and surplus
of at least $500,000,000; (v) a commercial bank organized under the
laws of any other country that is a member of the OECD or has concluded
special lending arrangements with the International Monetary Fund
associated with its General Arrangements to Borrow or a political
subdivision of any such country, and having a combined capital and
surplus of at least $500,000,000, so long as such bank is acting
through a branch or agency located in the United States; (vi) a finance
company, insurance company or other financial institution or fund
(whether a corporation, partnership, trust or other entity) that is
engaged in making, purchasing or otherwise investing in commercial
loans in the ordinary course of its business and having a combined
capital and surplus of at least $250,000,000; and (vii) any other
Person approved by the Agent, so long as no Default has occurred and is
continuing at the time any assignment is effected pursuant to Section
8.07, the Borrower and, with respect to any eligible Assignee that
becomes a Working Capital Lender, the Issuing Bank, any such approval
in either case not to be unreasonably withheld or delayed, and (b) with
respect to the Letter of Credit Facility, a Person that is an Eligible
Assignee under clause (iii), (iv) or (v) of clause (a) of this
definition and is approved by the Agent and, unless a Default has
occurred and is continuing at the time any assignment is effected
pursuant to Section 8.07, the Borrower, such approval not to be
unreasonably withheld or delayed; provided, however, that neither any
Loan Party nor any Affiliate of a Loan Party shall qualify as an
Eligible Assignee under this definition.
<PAGE>
12
"ELIGIBLE COLLATERAL" means, collectively, Eligible Inventory
and Eligible Receivables.
"ELIGIBLE INVENTORY" means any Inventory owned by the Borrower
and its Subsidiaries free and clear of all Liens (other than Permitted
Liens and Liens in favor of the Secured Parties securing the Secured
Obligations) other than the following:
(a) Inventory located on leaseholds as to which the
lessor has not entered into a consent and agreement providing
the Agent with the right to receive notice of default, the
right to repossess such Inventory at any time and such other
rights as may be acceptable to the Agent;
(b) Inventory that is obsolete, unusable or otherwise
unavailable for sale or that consists of goods related or
giving rise to an Ex-Cell Program Receivable whether or not
such goods have been returned or rejected;
(c) Inventory with respect to which the
representations and warranties set forth Section 8 of the
Third Amended and Restated Security Agreement applicable to
Inventory are not true and correct;
(d) Inventory consisting of promotional, marketing,
packaging or shipping materials and supplies;
(e) Inventory that fails to meet all standards
imposed by any governmental agency, or department or division
thereof, having regulatory authority over such Inventory or
its use or sale;
(f) Inventory that is subject to any licensing,
patent, royalty, trademark, trade name or copyright agreement
with any third party from whom the Borrower or any of its
Subsidiaries has received written notice of a dispute in
respect of any such agreement;
(g) Inventory located outside the United States or
Canada other than Inventory in transit to the Borrower by
common carrier in the ordinary course of business and insured
under policies of insurance acceptable to the Agent;
(h) Inventory that is not in the possession of or
under the sole control of the Borrower or any of its
Subsidiaries unless the Agent shall have approved a Landlord
Consent or other arrangement acceptable to it or such
Inventory is Off-Site Inventory;
(i) Inventory consisting of work in progress; and
<PAGE>
13
(j) Inventory in respect of which the Collateral
Documents, after giving effect to the related filings of
financing statements that have then been made, if any, does
not or has ceased to create a valid and perfected first
priority lien or security interest in favor of the Secured
Parties securing the Secured Obligations or as to which other
Liens exist, other than Permitted Liens.
The value of such Eligible Inventory shall be its book value determined
in accordance with the "first-in, first-out" method of accounting for
inventory and in accordance with GAAP unless the Agent determines, in
its reasonable discretion (taking into consideration, among other
factors, cost and liquidation value), that such Eligible Inventory
shall be valued at a lower value.
"ELIGIBLE RECEIVABLES" means any Receivables owned by the
Borrower and its Subsidiaries free and clear of all Liens (other than
Permitted Liens and Liens in favor of the Secured Parties securing the
Secured Obligations) other than the following:
(a) Receivables that do not arise out of sales of
goods or rendering of services in the ordinary course of the
Borrower's and its Subsidiaries' business (other than such
Receivables arising out of the Accounts Receivable Management
Agreement);
(b) Receivables on terms other than those in the
ordinary course of the Borrower's and its Subsidiaries'
business;
(c) Receivables owing from any Person that is an
Affiliate of the Borrower or its Subsidiaries;
(d) Receivables more than 210 days past original
invoice date or more than 60 days past the date due;
(e) Receivables owing from any Person from which an
aggregate amount of more than 25% of the Receivables owing is
more than 60 days past due;
(f) Receivables owing from any Person (i) that has
disputed liability for any Receivable owing from such Person
or (ii) that has otherwise asserted any claim, demand or
liability, whether by action, suit, counterclaim or otherwise;
provided, however, that if such disputed Receivables
constitute 25% or less of the Receivables owing from such
Person, Receivables owing from such Person shall be excluded
from the definition of "Eligible Receivables" by this clause
(f) only to the extent of such disputed Receivables;
<PAGE>
14
(g) Receivables owing from any Person that shall take
or be the subject of any action or proceeding of a type
described in Section 6.01(g), except for Receivables due from
a Person which is a debtor-in-possession under and as defined
in Chapter 11 of the U.S. Bankruptcy Code that has received
post-petition financing pursuant to a working capital facility
which has a maturity date no earlier than 120 days following
the invoice date of such Receivable;
(h) Receivables (i) owing from any Person that is
also a supplier to or creditor of the Borrower or its
Subsidiaries unless such Person has waived any right of
set-off in a manner acceptable to the Agent or (ii)
representing any manufacturer's or supplier's credits,
discounts, incentive plans or similar arrangements entitling
the Borrower or its Subsidiaries to discounts on future
purchase therefrom;
(i) Receivables arising out of sales to account
debtors outside the United States or Canada, unless backed by
a letter of credit issued by (A) a bank organized under the
laws of the United States, or any State thereof, and having a
combined capital and surplus of at least $500,000,000 or (B) a
Lender Party or any other financial institution acceptable to
the Agent;
(j) Receivables arising out of sales on a
bill-and-hold, guaranteed sale, sale-or-return, sale on
approval or consignment basis or subject to any right of
return, set-off or charge-back, except for Receivables, in a
maximum amount not to exceed $2,000,000 at any time
outstanding, arising out of sales on a bill and hold basis
pursuant to the terms of agreements and arrangements in
existence or on substantially the same terms as those in
existence on the Third Restatement Date;
(k) Receivables owing from an account debtor that is
an agency, department or instrumentality of the United States
or any State thereof, except for such Receivables in a maximum
amount not to exceed $1,000,000 at any time outstanding;
(l) Receivables in respect of which the Third Amended
and Restated Security Agreement, after giving effect to the
related filings of financing statements that have then been
made, if any, does not or has ceased to create a valid and
perfected first priority lien or security interest in favor of
the Agent for the benefit of the Secured Parties securing the
Secured Obligations and as to which no other Liens exist,
other than Permitted Liens; and
<PAGE>
15
(m) Receivables that are Ex-Cell Program Receivables
and not otherwise excluded pursuant to this definition.
The value of such Eligible Receivables shall be their book value
determined in accordance with GAAP unless the Agent determines, in its
reasonable discretion, that such Eligible Receivables shall be valued
at a lower value.
"ENVIRONMENTAL ACTION" means any action, suit, demand, demand
letter, claim, notice of non-compliance or violation, notice of
liability or potential liability, investigation, proceeding, consent
order or consent agreement relating in any way to any Environmental
Law, any Environmental Permit or Hazardous Material or arising from
alleged injury or threat to health, safety or the environment,
including, without limitation, (a) by any governmental or regulatory
authority for enforcement, cleanup, removal, response, remedial or
other actions or damages arising under Environmental Laws and (b) by
any governmental or regulatory authority or third party for damages,
contribution, indemnification, cost recovery, compensation or
injunctive relief arising under Environmental Laws.
"ENVIRONMENTAL LAW" means any federal, state, local or foreign
statute, law, ordinance, rule, regulation, code, order, writ, judgment,
injunction, or decree or any judicial or agency interpretation, policy
or guidance having the force and effect of law, relating to pollution
or protection of the environment, health, safety or natural resources,
including, without limitation, those relating to the use, handling,
transportation, treatment, storage, disposal, release or discharge of
Hazardous Materials.
"ENVIRONMENTAL PERMIT" means any permit, approval,
identification number, license or other authorization required under
any Environmental Law.
"EQUITY INTERESTS" means, with respect to any Person, shares
of capital stock of (or other ownership or profit interests in) such
Person, warrants, options or other rights for the purchase or other
acquisition from such Person of shares of capital stock of (or other
ownership or profit interests in) such Person, securities convertible
into or exchangeable for shares of capital stock of (or other ownership
or profit interests in) such Person or warrants, rights or options for
the purchase or other acquisition from such Person of such shares (or
such other interests), and other ownership or profit interests in such
Person (including, without limitation, partnership, member or trust
interests therein), whether voting or nonvoting, and whether or not
such shares, warrants, options, rights or other interests are
authorized or otherwise existing on any date of determination.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder.
<PAGE>
16
"ERISA AFFILIATE" means any Person that for purposes of Title
IV of ERISA is a member of the controlled group of any Loan Party, or
under common control with any Loan Party, within the meaning of Section
414 of the Internal Revenue Code.
"ERISA EVENT" means (a) (i) the occurrence of a reportable
event, within the meaning of Section 4043 of ERISA, with respect to any
Plan unless the 30-day notice requirement with respect to such event
has been waived by the PBGC; or (ii) the requirements of subsection (1)
of Section 4043(b) of ERISA (without regard to subsection (2) of such
Section) are met with a contributing sponsor, as defined in Section
4001(a)(13) of ERISA, of a Plan, and an event described in paragraph
(9), (10), (11), (12) or (13) of Section 4043(c) of ERISA is reasonably
expected to occur with respect to such Plan within the following 30
days; (b) the application for a minimum funding waiver with respect to
a Plan; (c) the provision by the administrator of any Plan of a notice
of intent to terminate such Plan, pursuant to Section 4041(a)(2) of
ERISA (including any such notice with respect to a plan amendment
referred to in Section 4041(e) of ERISA); (d) the cessation of
operations at a facility of any Loan Party or any ERISA Affiliate in
the circumstances described in Section 4062(e) of ERISA; (e) the
withdrawal by any Loan Party or any ERISA Affiliate from a Multiple
Employer Plan during a plan year for which it was a substantial
employer, as defined in Section 4001(a)(2) of ERISA; (f) the conditions
for imposition of a lien under Section 302(f) of ERISA shall have been
met with respect to any Plan; (g) the adoption of an amendment to a
Plan requiring the provision of security to such Plan, pursuant to
Section 307 of ERISA; or (h) the institution by the PBGC of proceedings
to terminate a Plan pursuant to Section 4042 of ERISA, or the
occurrence of any event or condition described in Section 4042 of ERISA
that could constitute grounds for the termination of, or the
appointment of a trustee to administer, such Plan.
"EUROCURRENCY LIABILITIES" has the meaning specified in
Regulation D of the Board of Governors of the Federal Reserve System,
as in effect from time to time.
"EURODOLLAR LENDING OFFICE" means, with respect to any Lender
Party, the office of such Lender Party specified as its "Eurodollar
Lending Office" opposite its name on Schedule I hereto or in the
Assignment and Acceptance pursuant to which it became a Lender Party
(or, if no such office is specified, its Domestic Lending Office), or
such other office of such Lender Party as such Lender Party may from
time to time specify to the Borrower and the Agent.
"EURODOLLAR RATE" means, for any Interest Period for all
Eurodollar Rate Advances comprising part of the same Borrowing, an
interest rate per annum equal to the rate per annum obtained by
dividing (a) the average of the respective rates per annum (rounded
upward to the next whole multiple of 1/16th of 1%) posted by each of
the
<PAGE>
17
principal London offices of banks posting rates as displayed on the
Dow Jones Markets screen, page 3750 or such other page as may replace
such page on such service for the purpose of displaying the London
interbank offered rate of major banks for deposits in U.S. Dollars, at
approximately 11:00 A.M. (London time) two Business Days before the
first day of such Interest Period in an amount substantially equal to
BNP's Eurodollar Rate Advance comprising part of such Borrowing to be
outstanding during such Interest Period (or, if BNP shall not have such
a Eurodollar Rate Advance, $1,000,000) and for a period equal to such
Interest Period by (b) a percentage equal to 100% minus the Eurodollar
Rate Reserve Percentage for such Interest Period.
"EURODOLLAR RATE ADVANCE" means an Advance that bears interest
as provided in Section 2.07(a)(ii).
"EURODOLLAR RATE RESERVE PERCENTAGE" for any Interest Period
for all Eurodollar Rate Advances comprising part of the same Borrowing
means the reserve percentage applicable two Business Days before the
first day of such Interest Period under regulations issued from time to
time by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement (including,
without limitation, any emergency, supplemental or other marginal
reserve requirement) for a member bank of the Federal Reserve System in
New York City with respect to liabilities or assets consisting of or
including Eurocurrency Liabilities (or with respect to any other
category of liabilities that includes deposits by reference to which
the interest rate on Eurodollar Rate Advances is determined) having a
term equal to such Interest Period.
"EVENTS OF DEFAULT" has the meaning specified in Section 6.01.
"EX-CELL" has the meaning specified in the Preliminary
Statements to this Agreement.
"EX-CELL BENTONVILLE" means Ex-Cell of Bentonville, Inc., an
Arkansas corporation and a directly or indirectly wholly owned
Subsidiary of Ex-Cell.
"EX-CELL (CHINA)" means Ex-Cell Home Fashions (China), Ltd., a
corporation organized under the laws of Hong Kong and an indirectly,
wholly owned Subsidiary of the Borrower.
"EX-CELL FACTORING PROGRAM" means the factoring arrangement
between Ex-Cell, as seller, and Capital Factors, Inc., as factor,
pursuant to the Factoring Agreement dated as of October 16, 1990 as
amended by the amendments dated as of February 10, 1995 and February
12, 1999 (as such agreement may be further amended, supplemented or
modified from time to time solely in accordance with the terms and
conditions hereof and upon the Agent's prior written consent, the
"EX-CELL PROGRAM AGREEMENT").
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18
"EX-CELL (FAR EAST)" means Ex-Cell Home Fashions (Far East),
Ltd., a corporation organized under the laws of Hong Kong and an
indirectly, wholly owned Subsidiary of the Borrower.
"EX-CELL GROUP" has the meaning specified in the Preliminary
Statements to this Agreement.
"EX-CELL (H.K.)" means Ex-Cell Home Fashions (H.K.), Limited,
a corporation organized under the laws of Hong Kong and an indirectly,
wholly owned Subsidiary of the Borrower.
"EX-CELL PROGRAM PURCHASER" means a "Factor" as defined in the
Ex-Cell Program Agreement.
"EX-CELL PROGRAM RECEIVABLE" means any Receivable (a) owned by
Ex-Cell immediately prior to such Receivable being purchased under the
Ex-Cell Factoring Program or (b) owned by Ex-Cell and eligible to be
purchased under the Ex-Cell Factoring Program or (c) owned by Ex-Cell
and subject to a Lien in favor of an Ex-Cell Program Purchaser.
"EXCESS CASH FLOW" means, for any period, the sum of (a)
Consolidated pretax income (or pretax loss) of the Borrower and its
Subsidiaries for such period less (b) Consolidated income tax expense
of the Borrower and its Subsidiaries for such period plus (c) an amount
equal to the aggregate amount of all noncash charges and deferred taxes
deducted in arriving at Consolidated net income (or loss) for each such
period plus (d) an amount (whether positive or negative) equal to the
change in Consolidated Current Liabilities of the Borrower and its
Subsidiaries during such period less (e) an amount equal to the
aggregate amount of all noncash credits and deferred taxes included in
arriving at such Consolidated net income (or net loss) less (f) an
amount (whether positive or negative) equal to the change in
Consolidated Current Assets (excluding cash and Cash Equivalents) of
the Borrower and its Subsidiaries during such period less (g) an amount
equal to the amount of all Capital Expenditures of the Borrower and its
Subsidiaries paid in cash during such period to the extent permitted by
this Agreement less (h) an amount equal to the aggregate amount of all
regularly scheduled principal payments of Funded Debt made during such
period, together with any optional prepayments of Term Advances made
during such period in accordance with Section 2.06(a) less (i) the
amount (without duplication) of cash dividends paid by the Borrower
during such period pursuant to Section 5.02(g) less (j) an amount equal
to the change, if any, during such period in the aggregate amount of
the refundable advances and deposits referred to in Section 5.02(f)(v)
less (k) the amount of any mandatory prepayments of any Advances made
during such period pursuant to Section 2.06(b)(ii)(A) to the extent
included in pretax income for such period less (l) less the amount of
any
<PAGE>
19
mandatory prepayment of any Advances made during such period pursuant
to Section 2.06(b)(ii)(D) to the extent such mandatory prepayment has
been included in any of clauses (a) through (k) above less (m) the
Carry Over Amount for such period plus (n) the Carry Over Amount for
the prior period not spent in such period.
"EXISTING CREDIT AGREEMENT" has the meaning specified in the
Preliminary Statements to this Agreement.
"EXISTING DEBT" means Debt of the Loan Parties outstanding
immediately before the effectiveness of the Third Amended and Restated
Credit Agreement and identified on Schedule 3.01(h)(i).
"EXISTING DEED OF TRUST" has the meaning specified in Section
3.01(i)(x).
"EXISTING LENDER" means lenders party to the Existing Credit
Agreement.
"EXTRAORDINARY RECEIPT" means any cash received by or paid to
or for the account of any Person not in the ordinary course of
business, including, without limitation, tax refunds, pension plan
reversions, proceeds of insurance (other than proceeds of business
interruption insurance to the extent such proceeds constitute
compensation for lost earnings), condemnation awards (and payments in
lieu thereof), indemnity payments, judgments, payments made in
connection with the settlement of litigation or the release of any
claim, Purchase Price Adjustments (as defined in the Purchase Agreement
or comparable payments in any other purchase and sale agreement) (other
than any Purchase Price Adjustment due to changes in working capital);
provided, however, that an Extraordinary Receipt shall not include (a)
cash receipts received from proceeds of insurance to the extent that
such proceeds in respect of loss or damage to equipment, fixed assets
or real property are applied (or in respect of which expenditures were
previously incurred) to replace or repair the equipment, fixed assets
or real property in respect of which such proceeds were received or to
purchase like equipment, fixed assets or real property, as the case may
be, in each case in accordance with the terms of the Loan Documents, so
long as (i) such Person shall have entered into binding commitments for
the acquisition of such equipment, fixed assets or real property on or
prior to the 120th day after receipt of such Extraordinary Receipt and
(ii) such application is made by such Person within twelve or six
months after the occurrence of such damage or loss, in the case of real
property and any other type of property, respectively, or (b) 50% of
any tax refund for Fiscal Year 1999 and thereafter or any pension plan
reversion.
"FACILITY" means the Term A Facility, the Term B Facility, the
Working Capital Facility, the Swing Line Facility or the Letter of
Credit Facility.
<PAGE>
20
"FEDERAL FUNDS RATE" means, for any period, a fluctuating
interest rate per annum equal for each day during such period (i) to
the rate published by the Dow Jones Markets service on page five of its
daily report as the "ASK" as of 10:00 A.M. (New York City time) for
such day (or, if such day is not a Business Day, for the immediately
preceding Business Day) or (ii) if the Dow Jones Markets service shall
cease to publish or otherwise shall not publish such rates for any day
that is a Business Day, to the weighted average of the rates on
overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding
Business Day) by the Federal Reserve Bank of New York, or, if such rate
is not so published for any day that is a Business Day, the average of
the quotations for such day for such transactions received by the Agent
from three Federal funds brokers of recognized standing selected by it.
"FEE LETTERS" means each agreement, as amended, amended and
restated, supplemented or otherwise modified from time to time entered
into between any Loan Party and the Agent or the Issuing Bank with
respect to the payment of fees or other amounts relating to the
Facilities.
"FISCAL MONTH" means each of the first four calendar weeks,
the next successive period of four calendar weeks and the last five
calendar weeks in each Fiscal Quarter.
"FISCAL QUARTER" means, with respect to any Person, (a) with
respect to the first Fiscal Quarter of any Fiscal Year, the first 13
calendar weeks of such Fiscal Year, (b) with respect to the second
Fiscal Quarter of any Fiscal Year, the next successive period of 13
calendar weeks in such Fiscal Year, (c) with respect to the third
Fiscal Quarter of any Fiscal Year, the next successive period of 13
calendar weeks in such Fiscal Year, and (d) with respect to the last
Fiscal Quarter of any Fiscal Year, the period of time after the first
three Fiscal Quarters of such Fiscal Year through the last day of such
Fiscal Year.
"FISCAL YEAR" means, with respect to any Person, a year of 52
or 53 weeks, as the case may be, ending on the Saturday closest to the
first day of January in any calendar year, and such Fiscal Year, when
referred to from time to time herein by reference to a calendar year
shall be the Fiscal Year which includes January 30th of such calendar
year.
"FIXED CHARGE COVERAGE RATIO" means, with respect to the
Borrower and its Subsidiaries for any period, the ratio of (a) Adjusted
EBITDA for such period less the sum of (i) Capital Expenditures of the
Borrower and its Subsidiaries for such period and (ii) income taxes of
the Borrower and its Subsidiaries that have been paid in cash during
such period to (b) the sum of (i) Consolidated Interest Expense for
such period (other than amortization of original issue discount and
paid-in-kind interest), (ii) regularly scheduled principal payments of
Consolidated Funded Debt made during such period
<PAGE>
21
(other than any such payments of "Advances" under the Existing Credit
Agreement), (iii) the aggregate amount of cash dividends paid during
such period by the Borrower to Universal pursuant to Sections
5.02(g)(iii)(A); provided, however, that with respect to each
calculation made prior to one year following the Third Restatement
Date, amounts determined with respect to clause (b)(i) above shall be
calculated by multiplying such amount from and after the Fiscal Month
commencing in February, 1999 by the Annualization Factor; provided
further that for purposes of calculating the Fixed Charge Coverage
Ratio for each Fiscal Quarter ending in Fiscal Year 1999, the term
"Capital Expenditures" shall not include up to $1,500,000 of
expenditures made, or Debt assumed or incurred, during such period in
connection with the upgrade of management information systems of the
Borrower and its Subsidiaries or Capital Expenditures made prior to
February 2, 1999.
"FOREIGN SUBSIDIARY" means a Subsidiary organized under the
laws of a jurisdiction other than the United States or any State
thereof.
"FUNDED DEBT" of any Person means Debt of such Person (other
than Debt described in clauses (f), (h), (i) and (j) of the definition
thereof) that by its terms matures more than one year after the date of
creation or matures within one year from such date but is renewable or
extendible, at the option of such Person, to a date more than one year
after such date or arises under a revolving credit or similar agreement
that obligates the lender or lenders to extend credit during a period
of more than one year after such date, including, without limitation,
all amounts of Funded Debt of such Person required to be paid or
prepaid within one year after the date of determination; provided,
however, that the definition of "Funded Debt" shall not include any
Debt arising pursuant to the terms of the Accounts Receivable
Management Agreement.
"GAAP" has the meaning specified in Section 1.03.
"GLENOIT ASSETS CORP." means Glenoit Assets Corp., a Delaware
corporation and a direct, wholly owned Subsidiary of the Borrower.
"GLENOIT OF CANADA" means Glenoit Corporation of Canada, Inc.,
a corporation incorporated under the federal laws of Canada and a
directly, wholly owned Subsidiary of the Borrower.
"GLENOIT OF CANADA ASSET PURCHASE AGREEMENT" means the Asset
Purchase Agreement made September 15, 1997 between Collins & Aikman
Canada Inc., as vendor, and Glenoit of Canada, as purchaser.
"GLENOIT OF CANADA COLLATERAL DOCUMENTS" means each of (i) the
Guarantee dated as of September 12, 1997 made by Glenoit of Canada in
favor of the Secured
<PAGE>
22
Parties referred to therein and the Agent, (ii) the Assignment of
Material Agreement dated September 15 made among Glenoit of Canada,
Collins & Aikman Canada, Inc., and the Agent, (iii) the Assignment of
Insurance dated as of September 12, 1997 made by Glenoit of Canada to
and in favor of the Agent, (iv) the Demand Debenture dated as of
September 12, 1997 made by Glenoit of Canada and the Agent, as holder,
(v) the Debenture Pledge Agreement dated as of September 12, 1997 made
by Glenoit of Canada to and in favor of the Agent, (vi) the
Charge/Mortgage of Land made by Glenoit of Canada, as chargor, and the
Agent, as chargee, and (iv) the securities registrations made in
connection therewith.
"GLENOIT OF CANADA CONSENT" has the meaning specified in
Section 3.01(i)(ix).
"GRAND AVENUE" means Grand Avenue Corp., a Delaware
corporation and a directly or indirectly, wholly owned Subsidiary of
the Borrower.
"GUARANTEES" has the meaning specified in Section
3.01(i)(xii).
"HAZARDOUS MATERIALS" means (a) petroleum or petroleum
products, by-products or breakdown products, radioactive materials,
asbestos-containing materials, polychlorinated biphenyls and radon gas
and (b) any other chemicals, materials or substances designated,
classified or regulated as hazardous or toxic or as a pollutant or
contaminant under any Environmental Law.
"HEDGE AGREEMENTS" means interest rate swap, cap or collar
agreements, interest rate future or option contracts, currency swap
agreements, currency future or option contracts and other hedging
agreements.
"HEDGE BANK" means any Lender Party or any of its Affiliates
in its capacity as a party to a Secured Hedge Agreement.
"INDEMNIFIED COST" has the meaning specified in Section 7.05.
"INDEMNIFIED PARTY" has the meaning specified in Section
8.04(b).
"INTERCOMPANY SUBORDINATION AGREEMENT" has the meaning
specified in Section 5.02(b)(ii)(B).
"INTEREST COVERAGE RATIO" means, with respect to the Borrower
and its Subsidiaries for any period, the ratio of (a) Adjusted EBITDA
for such period to (b) the sum of (i) Consolidated Interest Expense for
such period (other than amortization of original issue discount and
paid-in-kind interest) and (ii) the aggregate amount of cash dividends
paid during such period by the Borrower to Universal pursuant to
Section 5.02(g)(ii); provided, however, that with respect to each
calculation made prior to one year following the Third Restatement
Date, Consolidated Interest Expense shall be
<PAGE>
23
calculated by multiplying Interest Expense from and after February 2,
1999 by the Annualization Factor.
"INTEREST EXPENSE" means, with respect to any Person for any
period, the amount by which (i) interest expense (including the
interest component on obligations under Capitalized Leases), whether
paid or accrued, on all Debt of such Person and its Subsidiaries for
such period, including, without limitation and without duplication, (a)
interest expense in respect of Debt resulting from Advances, (b)
commissions, discounts and other fees and charges payable in connection
with letters of credit (including, without limitation, any Letters of
Credit) and (c) any net payment payable in connection with Hedge
Agreements less any net credits received in connection with Hedge
Agreements exceeds (ii) interest income, whether paid or accrued, of
such Person for such period.
"INTEREST PERIOD" means, for each Eurodollar Rate Advance
comprising part of the same Borrowing, the period commencing on the
date of such Eurodollar Rate Advance or the date of the Conversion of
any Base Rate Advance into such Eurodollar Rate Advance, and ending on
the last day of the period selected by the Borrower pursuant to the
provisions below and, thereafter, each subsequent period commencing on
the last day of the immediately preceding Interest Period and ending on
the last day of the period selected by the Borrower pursuant to the
provisions below. The duration of each such Interest Period shall be
one, two, three or six months, as the Borrower may, upon notice
received by the Agent not later than 11:00 A.M. (New York City time) on
the third Business Day prior to the first day of such Interest Period,
select; provided, however, that:
(a) the Borrower may not select any Interest Period
with respect to any Eurodollar Rate Advance under a Facility
that ends after any principal repayment installment date for
such Facility unless, after giving effect to such selection,
the aggregate principal amount of Base Rate Advances and of
Eurodollar Rate Advances having Interest Periods that end on
or prior to such principal repayment installment date for such
Facility shall be at least equal to the aggregate principal
amount of Advances under such Facility due and payable on or
prior to such date;
(b) Interest Periods commencing on the same date for
Eurodollar Rate Advances comprising part of the same Borrowing
shall be of the same duration;
(c) whenever the last day of any Interest Period
would otherwise occur on a day other than a Business Day, the
last day of such Interest Period shall be extended to occur on
the next succeeding Business Day, provided, however, that, if
such extension would cause the last day of such Interest
Period to occur in the next following calendar month, the last
day of such Interest Period shall occur on the immediately
preceding Business Day; and
<PAGE>
24
(d) whenever the first day of any Interest Period
occurs on a day of an initial calendar month for which there
is no numerically corresponding day in the calendar month that
succeeds such initial calendar month by the number of months
equal to the number of months in such Interest Period, such
Interest Period shall end on the last Business Day of such
succeeding calendar month.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of
1986, as amended from time to time, and the regulations promulgated and
rulings issued thereunder.
"INVENTORY" means all Inventory referred to in Section 1(b) of
the Third Amended and Restated Security Agreement.
"INVESTMENT" in any Person means any loan or advance to such
Person, any purchase or other acquisition of any Equity Interests or
Debt or the assets comprising a division or business unit or a
substantial part or all of the business of such Person, any capital
contribution to such Person or any other direct or indirect investment
in such Person, including, without limitation, any acquisition by way
of a merger or consolidation and arrangement pursuant to which the
investor incurs Debt of the types referred to in clause (i) or (j) of
the definition of "Debt" in respect of such Person and any transfer or
redeployment of equipment from any other Person to such Person.
"INVESTOR GROUP" means CVC, the employees of CVC, CCT Partners
II, L.P., a Delaware limited partnership, Mr. John M. O'Mara, an
individual residing in Darien, Connecticut, Soannes and Mr. Thomas
O'Gorman, an individual residing in New York, New York.
"IRIS" means Iris Holdings, Inc., a Delaware corporation.
"ISSUING BANK" means BNP and each Eligible Assignee to which a
Letter of Credit Commitment hereunder has been assigned pursuant to
Section 8.07.
"JUNIOR NOTEHOLDERS UNDERTAKING" has the meaning specified in
Section 3.01(i)(xxiv).
"JUNIOR NOTES" means (i) the Junior PIK Subordinated Note due
December 14, 2005, issued by Universal to CVC in an aggregate principal
amount of $12,000,000, (ii) the Junior PIK Subordinated Note due
December 14, 2005, issued by Universal to Soannes in an aggregate
principal amount of $800,000, (iii) the Junior PIK Subordinated Note
due December 14, 2005, issued by Universal to Soannes in an aggregate
principal amount of $800,000 and assigned by Soannes to Mr. Thomas
O'Gorman, an individual residing in New York, New York, and (iv) notes
evidencing paid-in-kind interest issued pursuant to the foregoing.
<PAGE>
25
"KEY EMPLOYEE EMPLOYMENT AGREEMENT" means each of (i) the
employment agreement dated as of December 14, 1995 between Universal
and Mr. Thomas O'Gorman, an individual residing in New York, New York,
(ii) the employment agreement dated as of February 12, 1999 between
Ex-Cell and Mr. Samuel Samelson, an individual residing in New York,
New York, and (iii) the employment agreements between AmPac and each of
Mr. Steven Block, an individual residing in San Francisco, California,
Mr. Jeffrey Block, an individual residing in San Francisco, California,
and Mr. Gregory Block, an individual residing in San Francisco,
California, each dated as of October 2, 1998, in each case as in effect
on the Third Restatement Date and as amended, supplemented or otherwise
modified from time to time in accordance with their terms,
respectively.
"LANDLORD CONSENT" has the meaning specified in the Security
Agreement.
"L/C CASH COLLATERAL ACCOUNT" has the meaning specified in the
Third Amended and Restated Security Agreement.
"L/C RELATED DOCUMENTS" has the meaning specified in Section
2.04(c)(ii).
"LENDER PARTY" means any Lender, the Swing Line Bank or the
Issuing Bank and "LENDER PARTIES" means, collectively, the Lenders, the
Swing Line Bank and the Issuing Bank.
"LENDERS" means the Restatement Lenders and each Person that
shall become a Lender hereunder pursuant to Section 8.07 for so long as
such Restatement Lender or Person shall be a party to this Agreement.
"LETTER OF CREDIT ADVANCE" means an advance made by the
Issuing Bank or any Working Capital Lender pursuant to Section 2.03(c).
"LETTER OF CREDIT AGREEMENT" has the meaning specified in
Section 2.03(a).
"LETTER OF CREDIT COMMITMENT" means, with respect to the
Issuing Bank at any time, the amount set forth opposite the Issuing
Bank's name on Schedule I hereto under the caption "Letter of Credit
Commitment" or, if the Issuing Bank has entered into an Assignment and
Acceptance, the amount set forth for such Issuing Bank in the Register
maintained by the Agent pursuant to Section 8.07(e) as such Issuing
Bank's "Letter of Credit Commitment", as such amount may be reduced at
or prior to such time pursuant to Section 2.05.
"LETTER OF CREDIT FACILITY" means, at any time, the amount of
the Issuing Bank's Letter of Credit Commitment at such time.
<PAGE>
26
"LETTERS OF CREDIT" has the meaning specified in Section
2.01(c).
"LEVERAGE RATIOS" means the Total Leverage Ratio and the
Senior Leverage Ratio.
"LIEN" means any lien, security interest or other charge or
encumbrance of any kind, or any other type of preferential arrangement,
including, without limitation, the lien or retained security title of a
conditional vendor and any easement, right of way or other encumbrance
on title to real property.
"LINDE" means Ex-Cell Linde of Carolina, Inc., a North
Carolina corporation and a directly or indirectly, wholly owned
Subsidiary of Ex-Cell.
"LOAN DOCUMENTS" means (i) for the purposes of this Agreement
and the Notes and any amendment, supplement or modification hereof or
thereof, (a) this Agreement, (b) the Notes, (c) the Collateral
Documents, (d) each Letter of Credit Agreement, (e) the Guarantees, and
(f) the Fee Letters, and (ii) for purposes of the Guarantees and the
Collateral Documents and for all other purposes other than for purposes
of this Agreement and the Notes, (a) this Agreement, (b) the Notes, (c)
the Collateral Documents, (d) each Letter of Credit, (e) the
Guarantees, (f) each Secured Hedge Agreement, (g) the Fee Letters and
(h) any other agreement, document or instrument issued pursuant to or
in connection with any of the foregoing, and in each case as amended,
amended and restated, supplemented or otherwise modified from time to
time.
"LOAN PARTIES" means the Borrower, Universal, Glenoit of
Canada and each Subsidiary Guarantor.
"LOAN VALUE" means an amount equal to the sum of the
percentage of the value of each item of Eligible Collateral of up to
the following amounts, in each case as determined by reference to the
Borrowing Base Certificate most recently delivered by the Borrower
pursuant to Section 5.03(p):
(a) with respect to Eligible Inventory; up to
50% of the value of such Inventory, and
(b) with respect to Eligible Receivables, up to
85% of the value of such Receivables;
provided, however, that the Agent may, in its reasonable discretion,
following an audit field examination and based on its analysis of
changes in the Borrower's or any of its Subsidiaries' operations or
credit and collection experience arising after the Third
<PAGE>
27
Restatement Date that may dilute the value of Eligible Collateral,
revise from time to time the percentage of the value of any individual
item of Eligible Collateral that shall be used in determining Loan
Value.
"MANAGEMENT STOCK OPTION PLAN AGREEMENT" means the Glenoit
Universal, Ltd. Stock Option Plan dated as of April 1, 1997.
"MARGIN STOCK" has the meaning specified in Regulation U.
"MATERIAL ADVERSE CHANGE" means any material adverse change in
the business, condition (financial or otherwise), operations,
performance, properties or prospects of the Borrower and its
Subsidiaries taken as a whole or the Loan Parties and their
Subsidiaries, taken as a whole.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on
(a) the business, condition (financial or otherwise), operations,
performance, properties or prospects of the Borrower and its
Subsidiaries taken as a whole or the Loan Parties and their
Subsidiaries, taken as a whole, (b) the rights and remedies of the
Agent or any Lender Party under any Loan Document or Related Document
or (c) the ability of any Loan Party to perform its Obligations under
any Loan Document or Related Document to which it is or is to be a
party.
"MILLS" has the meaning specified in the Preliminary
Statements to this Agreement.
"MODIFICATION AND EXTENSION AGREEMENT" has the meaning
specified in Section 3.01(i)(x).
"MONTHLY AVERAGE WORKING CAPITAL ADVANCES" means, for any
period, the sum of (a) outstanding Working Capital Advances as of the
end of each Fiscal Month in such Rolling Period, including the current
Fiscal Month, divided by (b) the number 12; provided, however, that for
each such Rolling Period ended prior to the first anniversary of the
Third Restatement Date, "MONTHLY AVERAGE WORKING CAPITAL ADVANCES"
shall mean (i) the sum of outstanding Working Capital Advances as of
the end of each Fiscal Month elapsed since the Third Restatement Date
including the last such Fiscal Month, divided by (ii) the number of
Fiscal Months elapsed since the Third Restatement Date.
"MULTIEMPLOYER PLAN" means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which any Loan Party or any ERISA
Affiliate is making or accruing an obligation to make contributions, or
has within any of the preceding five plan years made or accrued an
obligation to make contributions.
<PAGE>
28
"MULTIPLE EMPLOYER PLAN" means a single employer plan, as
defined in Section 4001(a)(15) of ERISA, that (a) is maintained for
employees of any Loan Party or any ERISA Affiliate and at least one
Person other than the Loan Parties and the ERISA Affiliates or (b) was
so maintained and in respect of which any Loan Party or any ERISA
Affiliate could have liability under Section 4064 or 4069 of ERISA in
the event such plan has been or were to be terminated.
"NET CASH PROCEEDS" means, with respect to any sale, lease,
transfer or other disposition of any asset or the incurrence or
issuance of any Debt or capital stock or other ownership or profit
interest, any securities convertible into or exchangeable for capital
stock or other ownership or profit interest or any warrants, rights,
options or other securities to acquire capital stock or other ownership
or profit interest by any Person, or any Extraordinary Receipt received
by or paid to or for the account of any Person, the aggregate amount of
cash received from time to time (whether as initial consideration or
through payment or disposition of deferred consideration) by or on
behalf of such Person in connection with such transaction after
deducting therefrom only (without duplication) (a) brokerage
commissions, underwriting fees and discounts, legal fees, finder's fees
and other similar fees and commissions, (b) the amount of taxes payable
in connection with or as a result of such transaction and (c) the
amount of any Debt secured by a Lien on such asset that, by the terms
of the agreement or instrument governing such Debt, is required to be
repaid upon such disposition, in each case to the extent, but only to
the extent, that the amounts so deducted are properly attributable to
such transaction or to the asset that is the subject thereof and are,
in the case of clauses (a) and (c), at the time of receipt of such
cash, actually paid to a Person that is not an Affiliate of such Person
or any Loan Party or any Affiliate of any Loan Party and, in the case
of clause (b), on the earlier of the dates on which the tax return
covering such taxes is filed or required to be filed, or actually paid
to a Person that is not an Affiliate of such Person or any Loan Party
or any Affiliate of any Loan Party, provided that if the amount
deducted pursuant to clause (b) above is greater than the amount
actually so paid, the amount of such excess shall constitute "Net Cash
Proceeds" as of the time the applicable tax return is filed or required
to be filed.
"NOTE" means a Term A Note, Term B Note or a Working Capital
Note, in each case to the extent required to be issued pursuant to
Section 2.15.
"NOTICE OF BORROWING" has the meaning specified in Section
2.02(a).
"NOTICE OF ISSUANCE" has the meaning specified in Section
2.03(a).
"NPL" means the National Priorities List under CERCLA.
"OBLIGATION" means, with respect to any Person, any payment,
performance or other obligation of such Person of any kind, including,
without limitation, any liability of
<PAGE>
29
such Person on any claim, whether or not the right of any creditor to
payment in respect of such claim is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, disputed, undisputed, legal,
equitable, secured or unsecured, and whether or not such claim is
discharged, stayed or otherwise affected by any proceeding referred to
in Section 6.01(g). Without limiting the generality of the foregoing,
the Obligations of the Loan Parties under the Loan Documents include
(a) the obligation to pay principal, interest, Letter of Credit
commissions, charges, expenses, fees, attorneys' fees and
disbursements, indemnities and other amounts payable by such Loan Party
under any Loan Document and (b) the obligation of such Loan Party to
reimburse any amount in respect of any of the foregoing that any Lender
Party, in its sole discretion, may elect to pay or advance on behalf of
such Loan Party.
"OECD" means the Organization for Economic Cooperation and
Development.
"OFF-SITE INVENTORY" means Inventory purchased by a Loan Party
on a bill and hold basis or sold by a Loan Party on a consignment basis
in an aggregate amount not to exceed $1,000,000.
"OPEN YEAR" has the meaning specified in Section 4.01(aa).
"OTHER TAXES" has the meaning specified in Section 2.12(b).
"PARENT GUARANTEE" has the meaning specified in Section
3.01(i)(xii) of this Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor thereto.
"PERMITTED ENCUMBRANCES" has the meaning, in respect of any
property subject to an Existing Deed of Trust or a Deed of Trust,
specified in such Existing Deed of Trust or such Deed of Trust.
"PERMITTED LIENS" means such of the following as to which no
enforcement, collection, execution, levy or foreclosure proceeding
shall have been commenced: (a) Liens for taxes, assessments and
governmental charges or levies to the extent not required to be paid
under Section 5.01(b) hereof; (b) Liens imposed by law, such as
materialmen's, mechanics', carriers', workmen's and repairmen's Liens
and other similar Liens arising in the ordinary course of business
securing obligations that (i) are not overdue for a period of more than
30 days or being contested in good faith and (ii) either individually
or when aggregated with all other Permitted Liens outstanding on any
date of determination, do not materially affect the use or value of the
property to which they relate; (c) pledges or deposits to secure
obligations under workers' compensation laws or
<PAGE>
30
similar legislation or to secure public or statutory obligations; and
(d) zoning restrictions, easements, rights of way and other
encumbrances on title to real property that do not render title to the
property encumbered thereby unmarketable or materially adversely affect
the use of such property for its present purposes.
"PERSON" means an individual, partnership, corporation
(including a business trust), limited liability company, joint stock
company, trust, unincorporated association, joint venture or other
entity, or a government or any political subdivision or agency thereof.
"PIK INTEREST NOTE" means any payment-in-kind subordinated
note of Universal (substantially in the form of Exhibit I to Exhibit
A-2 of the Redemption Agreement) issued pursuant to Section 2 of the
PIK Note, or any note which could be issued in substitution for any
such PIK Interest Note.
"PIK NOTE" means the PIK Subordinated Note due December 14,
2004, issued by Universal to Stirling pursuant to the Redemption
Agreement in an aggregate principal amount of $1,008,884.01.
"PLAN" means a Single Employer Plan or a Multiple Employer
Plan.
"PREFERRED INTERESTS" means, with respect to any Person,
Equity Interests issued by such Person that are entitled to a
preference or priority over any other Equity Interests issued by such
Person upon any distribution of such Person's property and assets,
whether by dividend or upon liquidation.
"PREPAYMENT AMOUNT" has the meaning specified in Section
5.03(a).
"PREPAYMENT DATE" has the meaning specified in Section
5.03(a).
"PREPAYMENT NOTICE" has the meaning specified in Section
5.03(a).
"PRO RATA SHARE" of any amount means, with respect to any
Working Capital Lender at any time, the product of such amount times a
fraction the numerator of which is the amount of such Lender's Working
Capital Commitment at such time (or, if the Commitments shall have been
terminated, the Working Capital Commitments as in effect immediately
prior to such termination) and the denominator of which is the Working
Capital Facility at such time (or, if the Commitments shall have been
terminated, the Working Capital Facility as in effect immediately prior
to such termination).
"PURCHASE AGREEMENT" has the meaning specified in the
Preliminary Statements to this Agreement.
<PAGE>
31
"RECEIVABLES" means all Receivables referred to in Section
1(c) of the Third Amended and Restated Security Agreement.
"REDEEMABLE" means, with respect to any Equity Interest, any
Debt or any other right or Obligation, any such Equity Interest, Debt,
right or Obligation that (a) the issuer has undertaken to redeem at a
fixed or determinable date or dates, whether by operation of a sinking
fund or otherwise, or upon the occurrence of a condition not solely
within the control of the issuer or (b) is redeemable at the option of
the holder.
"REDEMPTION AGREEMENT" means the Redemption Agreement dated
October 23, 1995, between Universal and Stirling as in effect on the
Third Restatement Date.
"REDUCTION AMOUNT" has the meaning specified in Section
2.06(b)(v).
"REGISTER" has the meaning specified in Section 8.07(e).
"REGULATION U" means Regulation U of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
"RELATED DOCUMENTS" means the Transaction Documents, the
Subordinated Debt Documents, the Junior Notes, the Stockholders
Agreement, the Tax Sharing Agreement, the Royalty Agreement, the AmPac
Stock Purchase Agreement, the Glenoit of Canada Asset Purchase
Agreement and the Ex-Cell Program Agreement.
"RELATED TEXTILE BUSINESS" means any business engaged in the
manufacturing of home textiles and specialty textiles and other
activities incidental thereto.
"REQUIRED LENDERS" means, at any time, Lenders owed or holding
at least 51% of the sum of (a) the aggregate principal amount of the
Advances outstanding at such time, (b) the aggregate Available Amount
of all Letters of Credit outstanding at such time, (c) the aggregate
unused Commitments under the Term A and Term B Facilities at such time
and (d) the aggregate Unused Working Capital Commitments at such time.
For purposes of this definition, the aggregate principal amount of
Swing Line Advances owing to the Swing Line Bank and of Letter of
Credit Advances owing to the Issuing Bank and the Available Amount of
each Letter of Credit shall be considered to be owed to the Working
Capital Lenders ratably in accordance with their respective Working
Capital Commitments.
"RESPONSIBLE OFFICER" means any executive officer of any Loan
Party or any of its Subsidiaries.
"RESTATEMENT LENDERS" has the meaning specified in the recital
of the parties to this Agreement.
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"ROLLING PERIOD" means, with respect to any Fiscal Month, the
consecutive twelve-Fiscal Month period ending on the last day of such
Fiscal Month.
"ROYALTY AGREEMENT" means the License Royalty Agreement dated
as of November 21, 1988, as amended as of January 1, 1992, between the
Borrower (as the successor of Mills) and Barth & Dreyfuss of
California, Inc., a California corporation, as amended, supplemented or
otherwise modified in accordance with its terms and the terms hereof.
"SECURED HEDGE AGREEMENT" means any Hedge Agreement required
or permitted under Article V that is entered into by and between any
Loan Party and any Hedge Bank.
"SECURED OBLIGATIONS" has the meaning specified in the Third
Amended and Restated Security Agreement.
"SECURED PARTIES" means the Agent, the Lender Parties, the
Hedge Banks and the other Persons the Obligations owing to whom are or
are purported to be secured by the Collateral under the terms of the
Collateral Documents.
"SELLER" and "SELLERS" each has the meaning specified in
respect thereto in the Preliminary Statements to this Agreement.
"SENIOR LEVERAGE RATIO" means, with respect to the Borrower
and its Subsidiaries for any period, the ratio of (a) the sum of (i)
Consolidated Funded Debt (other than the aggregate amount of Working
Capital Advances and the Subordinated Notes) as of the end of such
period and (ii) the Monthly Average Working Capital Advances as of the
end of such period to (b) Consolidated Adjusted EBITDA for such period.
"SINGLE EMPLOYER PLAN" means a single employer plan, as
defined in Section 4001(a)(15) of ERISA, that (a) is maintained for
employees of any Loan Party or any ERISA Affiliate and no Person other
than the Loan Parties and the ERISA Affiliates or (b) was so maintained
and in respect of which any Loan Party or any ERISA Affiliate could
have liability under Section 4069 of ERISA in the event such plan has
been or were to be terminated.
"SOANNES" means Soannes Investment Corp., a corporation
organized under the laws of the British Virgin Islands.
"SOLVENT" and "SOLVENCY" mean, with respect to any Person on a
particular date, that on such date (a) the fair value of the property
of such Person is greater than the total amount of liabilities,
including, without limitation, contingent liabilities, of such Person,
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33
(b) the present fair salable value of the assets of such Person is not
less than the amount that will be required to pay the probable
liability of such Person on its debts as they become absolute and
matured, (c) such Person does not intend to, and does not believe that
it will, incur debts or liabilities beyond such Person's ability to pay
such debts and liabilities as they mature and (d) such Person is not
engaged in business or a transaction, and is not about to engage in
business or a transaction, for which such Person's property would
constitute an unreasonably small capital. The amount of contingent
liabilities at any time shall be computed as the amount that, in the
light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an
actual or matured liability.
"SPLIT-PAY NOTES" means (i) the Split-Pay Subordinated Note
due December 14, 2004, issued by Universal to Stirling pursuant to the
Redemption Agreement, in an aggregate principal amount of
$2,888,930.82, and (ii) the Split-Pay Subordinated Note due December
14, 2004, issued by Holding to Iris pursuant to the Redemption
Agreement, in an aggregate principal amount of $5,682,497.75.
"STANDBY LETTER OF CREDIT" means any Letter of Credit issued
under the Letter of Credit Facility, other than a Trade Letter of
Credit.
"STIRLING" means Stirling Investment Holdings, Inc., a British
Virgin Islands corporation.
"STIRLING NOTES" means the Split-Pay Notes, the PIK Note and
the PIK Interest Notes.
"STOCKHOLDERS AGREEMENT" means the Stockholders Agreement
dated as of December 14, 1995 by and among Universal, CVC, Stirling,
and the other parties thereto, as amended, supplemented or otherwise
modified from time to time in accordance with its terms and the terms
hereof.
"SUBORDINATED DEBT" means the Subordinated Notes, the Junior
Notes, the Stirling Notes and the Debt of the Borrower to its
Subsidiaries permitted by Section 5.02(b)(ii)(B).
"SUBORDINATED DEBT DOCUMENTS" means the Indenture dated as of
April 1, 1997 among the Borrower, certain of its Subsidiaries signatory
thereto and the United States Trust Company of New York, the
Subordinated Notes, all agreements, indentures and instruments pursuant
to which the Subordinated Debt is issued and any agreements, indentures
and instruments pursuant to which Subordinated Debt permitted by
Section 5.02(b)(ii)(B) is issued from time to time.
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34
"SUBORDINATED NOTES" means the 11% Senior Subordinated Notes
due 2007 issued by the Borrower in the aggregate amount of $95,000,000.
"SUBSIDIARY" of any Person means any corporation, partnership,
joint venture, limited liability company, trust or estate of which (or
in which) more than 50% of (a) the issued and outstanding capital stock
having ordinary voting power to elect a majority of the Board of
Directors of such corporation (irrespective of whether at the time
capital stock of any other class or classes of such corporation shall
or might have voting power upon the occurrence of any contingency), (b)
the interest in the capital or profits of such limited liability
company, partnership or joint venture or (c) the beneficial interest in
such trust or estate is at the time directly or indirectly owned or
controlled by such Person, by such Person and one or more of its other
Subsidiaries or by one or more of such Person's other Subsidiaries.
"SUBSIDIARY GUARANTOR" means each of AmPac, Ex-Cell, Ex-Cell
Bentonville, Glenoit Assets Corp., Grand Avenue and Linde and each
other Subsidiary of the Borrower that shall be required to execute and
deliver a guarantee pursuant to Section 5.01(o).
"SUBSIDIARY GUARANTEE" has the meaning specified in Section
3.01(g)(xi) of this Agreement.
"SURVIVING DEBT" has the meaning specified in Section 3.01(h).
"SWING LINE ADVANCE" means an advance made by (a) the Swing
Line Bank pursuant to Section 2.01(d) or 2.02(b) or (b) any Working
Capital Lender pursuant to Section 2.02(c).
"SWING LINE BANK" means BNP.
"SWING LINE BORROWING" means a borrowing consisting of a Swing
Line Advance made by the Swing Line Bank pursuant to Section 2.01(d) or
the Working Capital Lenders pursuant to Section 2.06(b).
"SWING LINE COMMITMENT" means, with respect to the Swing Line
Bank at any time, the amount set forth opposite the Swing Line Bank's
name on Schedule I hereto under the caption "Swing Line Commitment" or,
if the Swing Line Bank has entered into an Assignment and Acceptance,
set forth for the Swing Line Bank in the Register maintained by the
Agent pursuant to Section 9.07(d) as the Swing Line Bank's "Swing Line
Commitment", as such amount may be reduced at or prior to such time
pursuant to Section 2.05.
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35
"SWING LINE FACILITY" has the meaning specified in Section
2.01(d).
"TAX SHARING AGREEMENT" means the Tax Sharing Agreement dated
as of December 14, 1995 by and among the Borrower, Universal and all of
their Subsidiaries, as amended, supplemented or otherwise modified from
time to time in accordance with its terms and the terms hereof.
"TAXES" has the definition specified in Section 2.12(a).
"TERM A ADVANCE" has the meaning specified in Section 2.01(a).
"TERM A BORROWING" means a borrowing consisting of
simultaneous Term A Advances of the same Type made by the Term A
Lenders.
"TERM A COMMITMENT" means, with respect to any Term A Lender
at any time, the amount set forth opposite such Lender's name on
Schedule I hereto under the caption "Term A Commitment" or, if such
Lender has entered into one or more Assignment and Acceptances, the
aggregate amount set forth for such Lender in the Register maintained
by the Agent pursuant to Section 9.07(d) as such Lender's "Term A
Commitment".
"TERM A FACILITY" means, at any time, the aggregate amount of
the Term A Lenders' Term A Commitments at such time.
"TERM A LENDER" means any Lender that has a Term A Commitment.
"TERM A NOTE" means a promissory note of the Borrower payable
to the order of any Term A Lender, in substantially the form of Exhibit
A-1 hereto, evidencing the indebtedness of the Borrower to such Lender
resulting from the Term A Advances made by such Lender to the extent
required to be issued pursuant to Section 2.15.
"TERM ADVANCE" means a Term A Advance or a Term B Advance.
"TERM B ADVANCE" has the meaning specified in Section 2.01(b).
"TERM B BORROWING" means a borrowing consisting of
simultaneous Term B Advances of the same Type made by the Term B
Lenders.
"TERM B COMMITMENT" means, with respect to any Term B Lender,
the amount set forth opposite such Lender's name on Schedule I hereto
under the caption "Term B Commitment" or, if such Lender has entered
into one or more Assignment and Acceptances, the aggregate amount set
forth for such Lender in the Register maintained by the Agent pursuant
to Section 9.07(d) as such Lender's "Term B Commitment".
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36
"TERM B FACILITY" means, at any time, the aggregate amount of
the Term B Lenders' Term B Commitments at such time.
"TERM B LENDER" means any Lender that has a Term B Commitment.
"TERM B NOTE" means a promissory note of the Borrower payable
to the order of any Term B Lender, in substantially the form of Exhibit
A-2 hereto, evidencing the indebtedness of the Borrower to such Lender
resulting from the Term B Advances made by such Lender to the extent
required to be issued pursuant to Section 2.15.
"TERM BORROWING" means a Term A Borrowing or a Term B
Borrowing.
"TERM COMMITMENT" means a Term A Commitment or a Term B
Commitment.
"TERM LENDER" means a Term A Lender or a Term B Lender.
"TERMINATION DATE" means (a) for purposes of the Working
Capital Facility, the Swing Line Facility and the Letter of Credit
Facility, the earlier of (x) December 31, 2003 and (y) the date of
termination in whole of the Term Commitments, the Swing Line
Commitment, the Letter of Credit Commitment and the Working Capital
Commitments pursuant to Section 2.05 or 6.01 (the "COMMITMENT
TERMINATION DATE"), and (b) for purposes of the Term A Facility, the
earlier of (x) December 31, 2003 and (y) the Commitment Termination
Date, and (c) for purposes of the Term B Facility, the earlier of (x)
June 30, 2004, and (y) the Commitment Termination Date.
"THIRD AMENDED AND RESTATED SECURITY AGREEMENT" has the
meaning specified in Section 3.01(i)(viii).
"THIRD RESTATEMENT ASSIGNMENT AGREEMENT" has the meaning
specified in the Preliminary Statements to this Agreement.
"THIRD RESTATEMENT DATE" has the meaning specified in Section
3.01.
"TOTAL LEVERAGE RATIO" means, with respect to the Borrower and
its Subsidiaries for any period, the ratio of (a) the sum of (i)
Consolidated Funded Debt (other than the aggregate amount of Working
Capital Advances) as of the end of such period and (ii) the Monthly
Average Working Capital Advances as of the end of such period to (b)
Consolidated Adjusted EBITDA for such period.
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37
"TRADE LETTER OF CREDIT" means any Letter of Credit that is
issued under the Letter of Credit Facility for the benefit of a
supplier of Inventory to the Borrower or any of its Subsidiaries to
effect payment for such Inventory.
"TRANSACTION" has the meaning specified in the Preliminary
Statements to this Agreement.
"TRANSACTION DOCUMENTS" means the Purchase Agreement, the
Escrow Agreement, and any other agreement or document executed pursuant
to or in connection with the Purchase Agreement.
"TYPE" refers to the distinction between Advances bearing
interest at the Base Rate and Advances bearing interest at the
Eurodollar Rate.
"UNIVERSAL" means Glenoit Universal, Ltd., a Delaware
corporation.
"UNUSED WORKING CAPITAL COMMITMENT" means, with respect to any
Working Capital Lender at any time, (a) such Lender's Working Capital
Commitment at such time minus (b) the sum of (i) the aggregate
principal amount of all Working Capital Advances, Swing Line Advances
and Letter of Credit Advances made by such Lender (in its capacity as a
Lender) and outstanding at such time, plus (ii) such Lender's Pro Rata
Share of (A) the aggregate Available Amount of all Letters of Credit
outstanding at such time, (B) the aggregate principal amount of all
Letter of Credit Advances made by the Issuing Bank pursuant to Section
2.03(c) and outstanding at such time and (C) the aggregate principal
amount of all Swing Line Advances made by the Swing Line Bank pursuant
to Section 2.01(d) and outstanding at such time.
"U.S. SUBSIDIARY" means any Subsidiary organized under the
laws of any State of the United States.
"U.S. SUBSIDIARY GUARANTOR" means Glenoit Assets, AmPac, Grand
Avenue, Ex-Cell, Ex-Cell Bentonville, Linde and each other U.S.
Subsidiary that may become a guarantor or a collateral guarantor
pursuant to Section 5.01(m) or Section 5.01(o).
"VOTING INTERESTS" means shares of capital stock issued by a
corporation, or equivalent Equity Interests in any other Person, the
holders of which are ordinarily, in the absence of contingencies,
entitled to vote for the election of directors (or persons performing
similar functions) of such Person, even if the right so to vote has
been suspended by the happening of such a contingency.
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"WELFARE PLAN" means a welfare plan, as defined in Section
3(1) of ERISA, that is maintained for employees of any Loan Party or in
respect of which any Loan Party could have a liability.
"WITHDRAWAL LIABILITY" has the meaning specified in Part I of
Subtitle E of Title IV of ERISA.
"WORKING CAPITAL ADVANCE" has the meaning specified in Section
2.01(c).
"WORKING CAPITAL BORROWING" means a borrowing consisting of
simultaneous Working Capital Advances of the same Type made by the
Working Capital Lenders.
"WORKING CAPITAL COMMITMENT" means, with respect to any
Working Capital Lender at any time, the amount set forth opposite such
Lender's name on Schedule I hereto under the caption "Working Capital
Commitment" or, if such Lender has entered into one or more Assignment
and Acceptances, set forth for such Lender in the Register maintained
by the Agent pursuant to Section 9.07(d) as such Lender's "Working
Capital Commitment", as such amount may be reduced at or prior to such
time pursuant to Section 2.05.
"WORKING CAPITAL FACILITY" means, at any time, the aggregate
amount of the Working Capital Lenders' Working Capital Commitments at
such time.
"WORKING CAPITAL LENDER" means any Lender that has a Working
Capital Commitment.
"WORKING CAPITAL NOTE" means a promissory note of the Borrower
payable to the order of any Working Capital Lender, in substantially
the form of Exhibit A-3 hereto, evidencing the aggregate indebtedness
of the Borrower to such Lender resulting from the Working Capital
Advances made by such Lender to the extent required to be issued
pursuant to Section 2.15.
SECTION 1.02. Computation of Time Periods; Other Definitional
Provisions. In this Agreement and the other Loan Documents in the computation of
periods of time from a specified date to a later specified date, the word "from"
means "from and including" and the words "to" and "until" each mean "to but
excluding". References in the Loan Documents to any agreement or contract "as
amended" shall mean and be a reference to such agreement or contract as amended,
amended and restated, supplemented or otherwise modified from time to time in
accordance with its terms.
SECTION 1.03. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles
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39
consistent with those applied in the preparation of the financial statements
referred to in Section 4.01(f) ("GAAP").
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
AND THE LETTERS OF CREDIT
SECTION 2.01. The Advances. (a) The Term A Advances. Each Term
A Lender severally agrees, on the terms and conditions hereinafter set forth, to
make a single advance (a "TERM A ADVANCE") to the Borrower on any Business Day
during the period from the date hereof until February 12, 1999 in an amount not
to exceed such Lender's Term A Commitment at such time. The Term A Borrowing
shall consist of Term A Advances made simultaneously by the Term A Lenders
ratably according to their Term A Commitments. Amounts borrowed under this
Section 2.01(a) and repaid or prepaid may not be reborrowed.
(b) The Term B Advances. Each Term B Lender severally agrees,
on the terms and conditions hereinafter set forth, to make a single advance (a
"TERM B ADVANCE") to the Borrower on any Business Day that the Term A Advances
shall be made in an amount not to exceed such Lender's Term B Commitment at such
time. The Term B Borrowing shall consist of Term B Advances made simultaneously
by the Term B Lenders ratably according to their Term B Commitments. Amounts
borrowed under this Section 2.01(b) and repaid or prepaid may not be reborrowed.
(c) The Working Capital Advances. Each Working Capital Lender
severally agrees, on the terms and conditions hereinafter set forth, to make
advances (each, a "WORKING CAPITAL ADVANCE") to the Borrower from time to time
on any Business Day during the period from the date hereof until the Termination
Date in an amount for each such Advance not to exceed such Lender's Unused
Working Capital Commitment at such time. Each Working Capital Borrowing shall be
in an aggregate amount of $1,000,000 or an integral multiple of $250,000 in
excess thereof (other than a Borrowing the proceeds of which shall be used
solely to repay or prepay in full outstanding Letter of Credit Advances made by
the Issuing Bank) and shall consist of Working Capital Advances made
simultaneously by the Working Capital Lenders ratably according to their Working
Capital Commitments. Within the limits of each Working Capital Lender's Unused
Working Capital Commitment in effect from time to time, the Borrower may borrow
under this Section 2.01(c), prepay pursuant to Section 2.06(a) and reborrow
under this Section 2.01(c).
(d) The Swing Line Advances. The Borrower may request the
Swing Line Bank to make, and the Swing Line Bank agrees, on the terms and
conditions hereinafter set forth, to make advances to the Borrower (each, a
"SWING LINE ADVANCE") from time to time on any
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Business Day during the period from the date hereof until the Termination Date
(i) in an aggregate amount not to exceed at any time outstanding $2,500,000 (the
"SWING LINE Facility") and (ii) in an amount for each such Swing Line Borrowing
not to exceed the aggregate of the Unused Working Capital Commitments of the
Working Capital Lenders at such time. No Swing Line Advance shall be used for
the purpose of funding the payment of principal of any other Swing Line Advance.
Each Swing Line Borrowing shall be in an amount of $250,000 or an integral
multiple of $100,000 in excess thereof and shall be made as a Base Rate Advance.
Within the limits of the Swing Line Facility and within the limits referred to
in clause (ii) above, so long as the Swing Line Bank makes Swing Line Advances,
the Borrower may borrow under this Section 2.01(d), repay pursuant to Section
2.04(d) or prepay pursuant to Section 2.06(a) and reborrow under this Section
2.01(d).
(e) Letters of Credit. The Issuing Bank agrees, on the terms
and conditions hereinafter set forth, to issue letters of credit (the "LETTERS
OF CREDIT") for the account of the Borrower from time to time on any Business
Day during the period from the Third Restatement Date until 30 days before the
Termination Date in an aggregate Available Amount (i) for all Letters of Credit
not to exceed at any time the lesser of (x) the Letter of Credit Facility at
such time and (y) the Issuing Bank's Letter of Credit Commitment at such time
and (ii) for each such Letter of Credit not to exceed Unused Working Capital
Commitments of the Working Capital Lenders at such time. No Letter of Credit
shall have an expiration date (including all rights of the Borrower or the
beneficiary to require renewal) later than the earlier of 30 days before the
Termination Date and (A) in the case of a Standby Letter of Credit, one year
after the date of issuance thereof and (B) in the case of a Trade Letter of
Credit, 180 days after the date of issuance thereof. Within the limits of the
Letter of Credit Facility, and subject to the limits referred to above, the
Borrower may request the issuance of Letters of Credit under this Section
2.01(e), repay any Letter of Credit Advances resulting from drawings thereunder
pursuant to Section 2.03(c) and request the issuance of additional Letters of
Credit under this Section 2.01(e).
SECTION 2.02. Making the Advances. (a) Except as otherwise
provided in Sections 2.02(b) and 2.03, each Borrowing shall be made on notice,
given not later than 11:00 A.M. (New York City time) on the third Business Day
prior to the date of the proposed Borrowing in the case of a Borrowing
consisting of Eurodollar Rate Advances, or the first Business Day prior to the
date of the proposed Borrowing in the case of a Borrowing consisting of Base
Rate Advances, by the Borrower to the Agent, which shall give to each
Appropriate Lender prompt notice thereof by telex or telecopier. Each such
notice of a Borrowing (a "NOTICE OF BORROWING") shall be in writing, or telex or
telecopier, in substantially the form of Exhibit B hereto, specifying therein
the requested (i) date of such Borrowing, (ii) Facility under which such
Borrowing is to be made, (iii) Type of Advances comprising such Borrowing, (iv)
aggregate amount of such Borrowing and (v) in the case of a Borrowing consisting
of Eurodollar Rate Advances, initial Interest Period for each such Advance. Each
Appropriate Lender shall, before 11:00 A.M. (New York City time) on the date of
such Borrowing, make available for the account
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of its Applicable Lending Office to the Agent at the Agent's Account, in same
day funds, such Lender's ratable portion of such Borrowing in accordance with
the respective Commitments under the applicable Facility of such Lender and the
other Appropriate Lenders. After the Agent's receipt of such funds and upon
fulfillment of the applicable conditions set forth in Article III, the Agent
will make such funds available to the Borrower by crediting the Borrower's
Account; provided, however, that, in the case of any Working Capital Borrowing,
the Agent shall first make a portion of such funds equal to the aggregate
principal amount of any Swing Line Advances and Letter of Credit Advances made
by the Swing Line Bank or the Issuing Bank, as the case may be, and by any other
Working Capital Lender and outstanding on the date of such Working Capital
Borrowing, plus interest accrued and unpaid thereon to and as of such date,
available to the Swing Line Bank and the Issuing Bank and such other Working
Capital Lenders for repayment of such Swing Line Advances and Letter of Credit
Advances.
(b) Each Swing Line Borrowing shall be made on notice, given
not later than 11:00 A.M. (New York City time) on the date of the proposed Swing
Line Borrowing, by the Borrower to the Swing Line Bank and the Agent. Each such
notice, which shall be delivered by a Notice of Borrowing, shall be in writing,
by telex or telecopier, in substantially the form of Exhibit B hereto,
specifying therein the requested (i) date of such Borrowing (which shall be a
Business Day), (ii) amount of such Borrowing and (iii) maturity of such
Borrowing (which maturity shall be no later than the seventh day after the
requested date of such Borrowing). The Swing Line Bank will make the amount
thereof available to the Agent at the Agent's Account, in same day funds. After
the Agent's receipt of such funds and upon fulfillment of the applicable
conditions set forth in Article III, the Agent will make such funds available to
the Borrower by crediting the Borrower's Account. Upon written demand by the
Swing Line Bank with a copy of such demand to the Agent, each other Working
Capital Lender shall purchase from the Swing Line Bank, and the Swing Line Bank
shall sell and assign to each such other Working Capital Lender, such other
Lender's Pro Rata Share of such outstanding Swing Line Advance as of the date of
such demand, by making available for the account of its Applicable Lending
Office to the Agent for the account of the Swing Line Bank, by deposit to the
Agent's Account, in same day funds, an amount equal to the portion of the
outstanding principal amount of such Swing Line Advance to be purchased by such
Lender. The Borrower hereby agrees to each such sale and assignment. Each
Working Capital Lender agrees to purchase its Pro Rata Share of an outstanding
Swing Line Advance on (i) the Business Day on which demand therefor is made by
the Swing Line Bank, provided that notice of such demand is given not later than
11:00 (New York City time) on such Business Day or (ii) the first Business Day
next succeeding such demand if notice of such demand is given after such time.
Upon any such assignment by the Swing Line Bank to any other Working Capital
Lender of a portion of a Swing Line Advance, the Swing Line Bank represents and
warrants to such other Lender that the Swing Line Bank is the legal and
beneficial owner of such interest being assigned by it, but makes no other
representation or warranty and assumes no responsibility with respect to such
Swing Line Advance, the Loan Documents or any Loan Party. If and to the extent
that any Working Capital Lender shall not have so made the amount of such Swing
Line Advance available to the Agent,
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such Working Capital Lender agrees to pay to the Agent forthwith on demand such
amount together with interest thereon, for each day from the date of demand by
the Swing Line Bank until the date such amount is paid to the Agent, at the
Federal Funds Rate. If such Lender shall pay to the Agent such amount for the
account of the Swing Line Bank on any Business Day, such amount so paid in
respect of principal shall constitute a Swing Line Advance made by such Lender
on such Business Day for purposes of this Agreement, and the outstanding
principal amount of the Swing Line Advance made by the Swing Line Bank shall be
reduced by such amount on such Business Day.
(c) Anything in subsection (a) above to the contrary
notwithstanding, (i) the Borrower may not select Eurodollar Rate Advances (other
than for interest periods of one month commenced prior to the date on which the
Agent completes syndication of the Facilities, subject to the provisions of
Section 8.04) for the initial Borrowing hereunder and for the period from the
date of such initial Borrowing to the earlier of (x) three months from such date
and (y) the completion of syndication of the Facilities (as shall be specified
by the Agent in a written notice to the Borrower) or for any Borrowing if the
aggregate amount of such Borrowing is less than $1,000,000 or if the obligation
of the Appropriate Lenders to make Eurodollar Rate Advances shall then be
suspended pursuant to Section 2.07(d)(ii), 2.09 or 2.10 and (ii) with respect to
Borrowings consisting of Eurodollar Rate Advances, the Term A Advances, the Term
B Advances and the Working Capital Advances may not be outstanding as part of
more than six separate Borrowings in the aggregate.
(d) Each Notice of Borrowing shall be irrevocable and binding
on the Borrower. In the case of any Borrowing that the related Notice of
Borrowing specifies is to be comprised of Eurodollar Rate Advances, the Borrower
shall indemnify each Appropriate Lender against any loss, cost or expense
incurred by such Lender as a result of any failure to fulfill on or before the
date specified in such Notice of Borrowing for such Borrowing the applicable
conditions set forth in Article III, including, without limitation, any loss
(including loss of anticipated profits), cost or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by such
Lender to fund the Advance to be made by such Lender as part of such Borrowing
when such Advance, as a result of such failure, is not made on such date.
(e) Unless the Agent shall have received notice from an
Appropriate Lender prior to the date of any Borrowing under a Facility under
which such Lender has a Commitment that such Lender will not make available to
the Agent such Lender's ratable portion of such Borrowing, the Agent may assume
that such Lender has made such portion available to the Agent on the date of
such Borrowing in accordance with subsection (a) or (b) of this Section 2.02 and
the Agent may, in reliance upon such assumption, make available to the Borrower
on such date a corresponding amount. If and to the extent that such Lender shall
not have so made such ratable portion available to the Agent, such Lender and
the Borrower severally agree to repay or pay to the Agent forthwith on demand
such corresponding amount and to pay interest thereon, for each
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43
day from the date such amount is made available to the Borrower until the date
such amount is repaid or paid to the Agent, at (i) in the case of the Borrower,
the interest rate applicable at such time under Section 2.07 to Advances
comprising such Borrowing and (ii) in the case of such Lender, the Federal Funds
Rate. If such Lender shall pay to the Agent such corresponding amount, such
amount so paid in respect of principal shall constitute such Lender's Advance as
part of such Borrowing for all purposes.
(f) The failure of any Lender to make the Advance to be made
by it as part of any Borrowing shall not relieve any other Lender of its
obligation, if any, hereunder to make its Advance on the date of such Borrowing,
but no Lender shall be responsible for the failure of any other Lender to make
the Advance to be made by such other Lender on the date of any Borrowing.
SECTION 2.03. Issuance of and Drawings and Reimbursement Under
Letters of Credit. (a) Request for Issuance. Each Letter of Credit shall be
issued upon notice, given not later than 11:00 A.M. (New York City time) on the
third Business Day prior to the date of the proposed issuance of such Letter of
Credit, by the Borrower to the Issuing Bank, which shall give to the Agent
prompt notice thereof by telex or telecopier. Each such notice of issuance of a
Letter of Credit (a "NOTICE OF ISSUANCE") shall be by telex or telecopier,
specifying therein the requested (A) date of such issuance (which shall be a
Business Day), (B) Available Amount of such Letter of Credit, (C) expiration
date of such Letter of Credit, (D) name and address of the beneficiary of such
Letter of Credit and (E) form of such Letter of Credit, and shall be accompanied
by such application and agreement for letter of credit as the Issuing Bank may
specify to the Borrower for use in connection with such requested Letter of
Credit (a "LETTER OF CREDIT AGREEMENT"). If the requested form of such Letter of
Credit is acceptable to the Issuing Bank in its sole discretion, the Issuing
Bank will, upon fulfillment of the applicable conditions set forth in Article
III, make such Letter of Credit available to the Borrower at its office referred
to in Section 9.02 or as otherwise agreed with the Borrower in connection with
such issuance. In the event and to the extent that the provisions of any Letter
of Credit Agreement shall conflict with this Agreement, the provisions of this
Agreement shall govern.
(b) Letter of Credit Reports. The Issuing Bank shall furnish
(A) to the Agent on the first Business Day of each week a written report
summarizing issuance and expiration dates of Letters of Credit issued during the
previous week and drawings during such week under all Letters of Credit, (B) to
each Working Capital Lender on the first Business Day of each calendar quarter a
written report summarizing issuance and expiration dates of Letters of Credit
issued during the preceding calendar quarter and drawings during such calendar
quarter under all Letters of Credit and (C) to the Agent and each Working
Capital Lender on the first Business Day of each calendar quarter a written
report setting forth the average daily aggregate Available Amount during the
preceding calendar quarter of all Letters of Credit.
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44
(c) Drawing and Reimbursement. The payment by the Issuing Bank
of a draft drawn under any Letter of Credit shall constitute for all purposes of
this Agreement the making by the Issuing Bank of a Letter of Credit Advance,
which shall be a Base Rate Advance, in the amount of such draft. In the event of
any drawing under a Letter of Credit, the Issuing Bank shall promptly notify the
Agent, and the Agent shall promptly notify each Working Capital Lender and each
Working Capital Lender shall purchase from the Issuing Bank, and the Issuing
Bank shall sell and assign to each such Working Capital Lender, such Lender's
Pro Rata Share of such outstanding Letter of Credit Advance as of the date of
such purchase, by making available for the account of its Applicable Lending
Office to the Agent for the account of the Issuing Bank, by deposit to the
Agent's Account, in same day funds, an amount equal to the portion of the
outstanding principal amount of such Letter of Credit Advance to be purchased by
such Lender. Promptly after receipt thereof, the Agent shall transfer such funds
to the Issuing Bank. The Borrower hereby agrees to each such sale and
assignment. Each Working Capital Lender agrees to purchase its Pro Rata Share of
an outstanding Letter of Credit Advance on (i) the Business Day on which notice
of the drawing under the related Letter of Credit is given by the Issuing Bank,
provided such notice is given not later than 1:00 P.M. (New York City time) on
such Business Day or (ii) the first Business Day next succeeding such demand if
such notice is given after such time. Upon any such assignment by the Issuing
Bank to any other Working Capital Lender of a portion of a Letter of Credit
Advance, the Issuing Bank represents and warrants to such other Lender that the
Issuing Bank is the legal and beneficial owner of such interest being assigned
by it, free and clear of any liens, but makes no other representation or
warranty and assumes no responsibility with respect to such Letter of Credit
Advance, the Loan Documents or any Loan Party. If and to the extent that any
Working Capital Lender shall not have so made the amount of such Letter of
Credit Advance available to the Agent, such Working Capital Lender agrees to pay
to the Agent forthwith on demand such amount together with interest thereon, for
each day from the date of demand by the Issuing Bank until the date such amount
is paid to the Agent, at the Federal Funds Rate for its account or the account
of the Issuing Bank, as applicable. If such Lender shall pay to the Agent such
amount for the account of the Issuing Bank on any Business Day, such amount so
paid in respect of principal shall constitute a Letter of Credit Advance made by
such Lender on such Business Day for purposes of this Agreement, and the
outstanding principal amount of the Letter of Credit Advance made by the Issuing
Bank shall be reduced by such amount on such Business Day.
(d) Failure to Make Letter of Credit Advances. The failure of
any Lender to make the Letter of Credit Advance to be made by it on the date
specified in Section 2.03(c) shall not relieve any other Lender of its
obligation hereunder to make its Letter of Credit Advance on such date, but no
Lender shall be responsible for the failure of any other Lender to make the
Letter of Credit Advance to be made by such other Lender on such date.
SECTION 2.04. Repayment of Advances. (a) Term Advances. The
Borrower shall repay to the Agent for the ratable account of the Term A Lenders
and Term B Lenders the aggregate outstanding principal amount of the Term A
Advances and Term B Advances,
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45
respectively, on the following dates in the amounts indicated (which amounts
shall be reduced as a result of the application of prepayments in accordance
with the order of priority set forth in Section 2.06):
Amount
------------------------------------------
Fiscal Quarter
Ending on or About Term A Facility Term B Facility
------------------ --------------- ---------------
September 30, 1999 $1,500,000 $175,000
December 31,1999 $1,500,000 $175,000
March 31, 2000 $1,500,000 $175,000
June 30, 2000 $1,500,000 $175,000
September 30, 2000 $1,500,000 $175,000
December 31, 2000 $1,500,000 $175,000
March 31, 2001 $1,750,000 $175,000
June 30, 2001 $1,750,000 $175,000
September 30, 2001 $1,750,000 $175,000
December 31, 2001 $1,750,000 $175,000
March 31, 2002 $2,250,000 $175,000
June 30, 2002 $2,250,000 $175,000
September 30, 2002 $2,250,000 $175,000
December 31, 2002 $2,250,000 $175,000
March 31, 2003 $3,750,000 $175,000
June 30, 2003 $3,750,000 $175,000
September 30, 2003 $3,750,000 $175,000
December 31, 2003 $3,750,000 $175,000
March 31, 2004 ----- $3,750,000
June 30, 2004 ----- $63,100,000
provided, however, that the final principal installment of the Term A Facility
and the Term B Facility, respectively, shall in any event and in each case be in
an amount equal to the aggregate principal amount of the Term A Advances and
Term B Advances, respectively then outstanding.
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46
(b) Working Capital Advances. The Borrower shall repay to the
Agent for the ratable account of the Working Capital Lenders on the Termination
Date the aggregate outstanding principal amount of the Working Capital Advances
then outstanding.
(c) Swing Line Advances. The Borrower shall repay to the Agent
for the account of the Swing Line Bank and each other Working Capital Lender
that has made a Swing Line Advance the outstanding principal amount of each
Swing Line Advance made by each of them on the earlier of the maturity date
specified in the applicable Notice of Swing Line Borrowing (which maturity shall
be no later than the seventh day after the requested date of such Borrowing) and
the Termination Date.
(d) Letter of Credit Advances. (i) The Borrower shall repay to
the Agent for the account of the Issuing Bank and each other Working Capital
Lender that has made a Letter of Credit Advance on the earlier of demand by the
Agent and the Termination Date the outstanding principal amount of each Letter
of Credit Advance made by each of them.
(ii) The Obligations of the Borrower under this Agreement, any
Letter of Credit Agreement and any other agreement or instrument relating to any
Letter of Credit shall be unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement, such Letter of Credit
Agreement and such other agreement or instrument under all circumstances,
including, without limitation, the following circumstances:
(A) any lack of validity or enforceability of any Loan
Document, any Letter of Credit Agreement, any Letter of Credit or any
other agreement or instrument relating thereto (all of the foregoing
being, collectively, the "L/C RELATED DOCUMENTS");
(B) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations of the Borrower in
respect of any L/C Related Document or any other amendment or waiver of
or any consent to departure from all or any of the L/C Related
Documents;
(C) the existence of any claim, set-off, defense or other
right that the Borrower may have at any time against any beneficiary or
any transferee of a Letter of Credit (or any Persons for whom any such
beneficiary or any such transferee may be acting), the Issuing Bank or
any other Person, whether in connection with the transactions
contemplated by the L/C Related Documents or any unrelated transaction;
(D) any statement or any other document presented under a
Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
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47
(E) payment by the Issuing Bank under a Letter of Credit
against presentation of a draft or certificate that does not strictly
comply with the terms of such Letter of Credit;
(F) any exchange, release or non-perfection of any Collateral
or other collateral, or any release or amendment or waiver of or
consent to departure from any guarantee, for all or any of the
Obligations of the Borrower in respect of the L/C Related Documents; or
(G) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing, including, without limitation, any
other circumstance that might otherwise constitute a defense available
to, or a discharge of, the Borrower or a guarantor.
SECTION 2.05. Termination or Reduction of the Commitments. (a)
Optional. The Borrower may, upon at least three Business Days' notice to the
Agent, terminate in whole or reduce in part the unused portions of the Term A
Commitments, the Term B Commitments, the Swing Line Commitment, the Letter of
Credit Facility and the Unused Working Capital Commitments, as the case may be;
provided, however, that each partial reduction of a Facility (i) shall be in an
aggregate amount of $1,000,000 or an integral multiple of $250,000 in excess
thereof, (ii) shall be made ratably among the Appropriate Lenders in accordance
with their Commitments with respect to such Facility and (iii) shall, with
respect to any reduction of the Term A Facility or Term B Facility, be made
ratably between such Facilities.
(b) Mandatory. (i) On the date of the Term A Borrowing, after
giving effect to such Term A Borrowing, and from time to time thereafter upon
each repayment or prepayment of the Term A Advances, the aggregate Term A
Commitments of the Term A Lenders shall be automatically and permanently
reduced, on a pro rata basis, by an amount equal to the amount by which the
aggregate Term A Commitments immediately prior to such reduction exceed the
aggregate unpaid principal amount of the Term A Advances then outstanding.
(ii) On the date of the Term B Borrowing, after giving effect
to such Term B Borrowing, and from time to time thereafter upon each repayment
or prepayment of the Term B Advances, the aggregate Term B Commitments of the
Term B Lenders shall be automatically and permanently reduced, on a pro rata
basis, by an amount equal to the amount by which the aggregate Term B
Commitments immediately prior to such reduction exceed the aggregate unpaid
principal amount of the Term B Advances then outstanding.
(iii) The Working Capital Facility shall be automatically and
permanently reduced on the date on which any prepayment of the Working Capital
Facility is required to be made pursuant to Section 2.06(b)(i) or 2.06(b)(ii) by
an amount equal to the applicable Reduction Amount, provided that each such
reduction of the Working Capital Facility shall be made ratably among the
Working Capital Lenders in accordance with their Working Capital Commitments.
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48
(iv) The Swing Line Facility and the Letter of Credit Facility
shall each be automatically and permanently reduced from time to time on the
date of each reduction in the Working Capital Facility by the amount, if any, by
which each such Facility exceeds the Working Capital Facility after giving
effect to such reduction of the Working Capital Facility.
SECTION 2.06. Prepayments. (a) Optional. The Borrower may,
without any premium or penalty other than pursuant to Section 8.04(c), upon at
least one Business Day's notice in the case of Base Rate Advances and three
Business Days' notice in the case of Eurodollar Rate Advances, in each case to
the Agent (received not later than 1:00 P.M. (New York City time) stating the
proposed date and aggregate principal amount of the prepayment, and if such
notice is given the Borrower shall, prepay the outstanding aggregate principal
amount of the Advances comprising part of the same Borrowing in whole or ratably
in part, together with accrued interest to the date of such prepayment on the
aggregate principal amount prepaid unless such prepayment is with respect to a
Swing Line Advance or a Working Capital Advance which is a Base Rate Advance;
provided, however, that (x) each partial prepayment (other than prepayments of
Swing Line Advances) shall be in an aggregate principal amount of $500,000 or an
integral multiple of $250,000 in excess thereof and (y) if any prepayment of a
Eurodollar Rate Advance shall be made other than on the last day of an Interest
Period therefor, the Borrower shall also pay any amounts owing pursuant to
Section 8.04(c). Each such prepayment which is made with respect to any Term
Advances shall be applied, subject to Section 2.06(c), ratably to the Term
Facilities and ratably to the remaining principal installments thereof.
(b) Mandatory. (i) Commencing for the 1999 Fiscal Year, the
Borrower shall, no later than the 30th day following the date on which it
delivers the financial statements referred to in Section 5.03(c) (but in any
event within 120 days after the end of each Fiscal Year), prepay an aggregate
principal amount of the Advances comprising part of the same Borrowings equal to
50% of the amount of Excess Cash Flow for such Fiscal Year. Each such prepayment
of any Advances shall be applied as set forth in Section 2.06(b)(ii).
(ii) The Borrower shall, on the date of receipt of the Net
Cash Proceeds by any Loan Party or any of their Subsidiaries from (A) the sale,
lease, transfer or other disposition of any assets of such Loan Party or any of
its Subsidiaries (other than any sale, lease, transfer or other disposition of
assets pursuant to Section 5.02(e)), (B) the incurrence or issuance by such Loan
Party or any of its Subsidiaries of any Debt (other than Debt issued or incurred
pursuant to Section 5.02(b)), (C) the sale or issuance by such Loan Party or any
of its Subsidiaries of any capital stock or other ownership or profit interest,
any securities convertible into or exchangeable for capital stock or other
ownership or profit interest or any warrants, rights or options to acquire
capital stock or other ownership or profit interest (other than any issuance by
Universal pursuant to Section 5.02(g)(iv)), or (D) any Extraordinary Receipt
received by or paid to or for the account of such Loan Party or any of its
Subsidiaries and not otherwise included in clause (A), (B) or (C) above, prepay
an aggregate principal amount of the Advances comprising part of the same
<PAGE>
49
Borrowings equal to the amount of such Net Cash Proceeds. Each such prepayment
of any Advances shall be applied as follows:
first, subject to Section 2.06(c), ratably to the Term
Facilities and ratably to the remaining principal installments thereof,
and
second, to the extent that no Term Advances remain
outstanding, permanently to reduce the Working Capital Facility as set
forth in clause (v) below.
(iii) The Borrower shall, on each Business Day, prepay an
aggregate principal amount of the Working Capital Advances comprising part of
the same Borrowings, the Swing Line Advances and the Letter of Credit Advances
equal to the amount by which (A) the sum of the aggregate principal amount of
(x) the Working Capital Advances, (y) the Swing Line Advances and (z) the Letter
of Credit Advances then outstanding plus the aggregate Available Amount of all
Letters of Credit then outstanding exceeds (B) the lesser of the Working Capital
Facility and the Loan Value of Eligible Collateral on such Business Day (as
determined based on the most recent Borrowing Base Certificate delivered to the
Lender Parties hereunder).
(iv) The Borrower shall, on each Business Day, pay to the
Agent for deposit in the L/C Cash Collateral Account an amount sufficient to
cause the aggregate amount on deposit in such Account to equal the amount by
which the aggregate Available Amount of all Letters of Credit then outstanding
exceeds the Letter of Credit Facility on such Business Day.
(v) Prepayments of the Working Capital Facility made pursuant
to clause (i), (ii) or (iii) of this Section 2.06(b) shall be applied first to
prepay Swing Line Advances and Letter of Credit Advances then outstanding until
such Advances are paid in full, and second to prepay Working Capital Advances
then outstanding comprising part of the same Borrowings until such Advances are
paid in full and third deposited in the L/C Cash Collateral Account to cash
collateralize 100% of the Available Amount of the Letters of Credit then
outstanding; and, in the case of prepayments of the Working Capital Facility
required pursuant to clause (i) or (ii) above, the amount remaining (if any)
after the prepayment in full of the Working Capital Advances then outstanding
and the cash collateralization of the aggregate Available Amount of Letters of
Credit then outstanding (the sum of such prepayment amounts, cash
collateralization amounts and remaining amount being referred to herein as the
"REDUCTION AMOUNT") may be retained by the Borrower. Upon the drawing of any
Letter of Credit for which funds are on deposit in the L/C Cash Collateral
Account, such funds shall be applied to reimburse the Issuing Bank or Working
Capital Lenders, as applicable.
(vi) Notwithstanding any of the other provisions of this
Section 2.06(b), so long as no Default shall have occurred and be continuing, if
any prepayment of Eurodollar Rate Advances is required to be made under clauses
(i), (ii) or (iii) of this Section 2.06(b) on any day other than on the last day
of the Interest Period therefor, the Borrower may in its sole discretion
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50
(but shall not be required to), deposit the amount of any such prepayment
otherwise required to be made hereunder in a cash collateral account (the "CASH
COLLATERAL ACCOUNT") of the Borrower maintained with the Agent, until the last
day of such Interest Period, at which time the Agent shall be authorized
(without any further action by the Borrower) to apply such prepayment as set
forth in such relevant clauses (i), (ii) or (iii) of this Section 2.06(b).
(vii) All prepayments under this Section 2.06(b) shall be made
together with accrued interest to the date of such prepayment on the principal
amount prepaid. In the case of any prepayment of Eurodollar Rate Advances
required to be made under this Section 2.06(b) and not provided for in clause
(vi) above, the Borrower shall also pay any amounts owing in respect of such
Eurodollar Rate Advances pursuant to Section 8.04(c).
(c) Term B Opt-Out. With respect to any prepayment of the Term
Advances, the Agent shall ratably pay the Term A Lenders and the Term B Lenders;
provided, however, that any Term B Lender, at its option, to the extent that any
Term Advances are then outstanding, may elect not to accept such prepayment
(such Lender being a "DECLINING LENDER"), in which event the provisions of the
next sentence shall apply. Any Term B Lender may elect not to accept its ratable
share of the prepayment referred to in any Prepayment Notice by giving written
notice to the Agent not later than 11:00 A.M. (New York City time) on the
Business Day immediately preceding the scheduled Prepayment Date. On the
Prepayment Date, an amount equal to that portion of the Prepayment Amount
available to prepay Term B Lenders (less any amounts that would otherwise be
payable to Declining Lenders) shall be shall be applied to prepay Term B
Advances owing to Term B Lenders other than Declining Lenders and any amounts
that would otherwise have been applied to prepay Term B Advances owing to
Declining Lenders shall instead be applied ratably to prepay the remaining Term
Advances as provided in Sections 2.06(a) and (b); provided further that on
prepayment in full of Term Advances owing to Term Lenders other than Declining
Lenders, the remainder of any Prepayment Amount shall be applied ratably to
prepay Term B Advances owing to Declining Lenders.
SECTION 2.07. Interest. (a) Scheduled Interest. The Borrower
shall pay interest on the unpaid principal amount of each Advance made to the
Borrower from the date of such Advance until such principal amount shall be paid
in full, at the following rates per annum:
(i) Base Rate Advances. During such periods as such Advance is
a Base Rate Advance, a rate per annum equal at all times to the sum of
(A) the Base Rate in effect from time to time plus (B) the Applicable
Margin, payable in arrears quarterly on the last day of each March,
June, September and December, commencing March 31, 1999, on the date of
any prepayment thereof to the extent required under Section 2.06 and on
the Termination Date.
(ii) Eurodollar Rate Advances. During such periods as such
Advance is a Eurodollar Rate Advance, a rate per annum equal at all
times during each Interest Period
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for such Advance to the sum of (A) the Eurodollar Rate for such
Interest Period for such Advance plus (B) the Applicable Margin,
payable in arrears on the last day of such Interest Period and, if such
Interest Period has a duration of more than three months, on each day
that occurs during such Interest Period every three months from the
first day of such Interest Period and on the date such Eurodollar Rate
Advance shall be Converted or paid in full.
(b) Default Interest. Upon the occurrence and during the
continuance of an Event of Default under Section 6.01(c) with respect to any
covenant contained in Section 5.04 or under Section 6.01(a), the Agent may, and
upon the request of the Required Lenders shall, require that the Borrower shall
pay interest on (i) the unpaid principal amount of each Advance owing to each
Lender, payable in arrears on the dates referred to in clause (a)(i) or (a)(ii)
above and on demand, at a rate per annum equal at all times to 2% per annum
above the rate per annum required to be paid on such Advance pursuant to clause
(a)(i) or (a)(ii) above and (ii) to the fullest extent permitted by law, the
amount of any interest, fee or other amount payable under the Loan Documents
that is not paid when due, from the date such amount shall be due until such
amount shall be paid in full, payable in arrears on the date such amount shall
be paid in full and on demand, at a rate per annum equal at all times to 2% per
annum above the rate per annum required to be paid, in the case of interest, on
the Type of Advance on which such interest has accrued pursuant to clause (a)(i)
or (a)(ii) above and, in all other cases, on Base Rate Advances pursuant to
clause (a)(i) above; provided, however, that following acceleration of the
Advances pursuant to Section 6.01, interest shall accrue and be payable at the
rate required by this Section 2.07(b), whether or not requested by the Agent or
the Required Lenders. In addition, following a final judgment with respect to
any Obligation of the Loan Parties under the Loan Documents, interest shall
accrue at the higher of the statutory judgment rate or the rate specified in the
preceding sentence, payable on demand.
(c) Notice of Interest Rate. Promptly after receipt of a
Notice of Borrowing pursuant to Section 2.02(a), the Agent shall give notice to
the Borrower and each Appropriate Lender of the applicable interest rate
determined by the Agent for purposes of clause (a)(i) or (ii).
SECTION 2.08. Fees. (a) Commitment Fee. The Borrower shall pay
to the Agent for the account of the Lenders a commitment fee, from the Third
Restatement Date in the case of each Restatement Lender and from the effective
date specified in the Assignment and Acceptance pursuant to which it became a
Lender in the case of each other Lender until the Termination Date, payable in
arrears quarterly on the last day of each March, June, September and December,
commencing March 31, 1999, and on the Termination Date, at the rate of 1/2 of 1%
per annum on the average daily unused portion of each Appropriate Lender's Term
Commitment and on the average daily Unused Working Capital Commitment of such
Lender.
(b) Letter of Credit Fees, Etc. (i) The Borrower shall pay to
the Agent for the account of each Working Capital Lender a commission, payable
in arrears quarterly on the last
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52
day of each March, June, September and December, commencing March 31, 1999, and
on the Termination Date, on such Lender's Pro Rata Share of the average daily
aggregate Available Amount during such quarter of all Letters of Credit
outstanding from time to time at a rate per annum equal to the Applicable Margin
then applicable to Eurodollar Rate Advances under the Working Capital Facility.
(ii) The Borrower shall pay to the Issuing Bank, for its own
account, such commissions, issuance fees, fronting fees, transfer fees and other
fees and charges in connection with the issuance or administration of each
Letter of Credit as the Borrower and the Issuing Bank shall agree.
(c) Agent's Fees. The Borrower shall pay to the Agent for its
own account such fees as may from time to time be agreed between the Borrower
and the Agent.
SECTION 2.09. Conversion of Advances. (a) Optional. The
Borrower may on any Business Day, upon notice given to the Agent not later than
11:00 A.M. (New York City time) on the third Business Day prior to the date of
the proposed Conversion and subject to the provisions of Sections 2.07 and 2.10,
Convert all or any portion of the Advances made to the Borrower of one Type
comprising the same Borrowing into Advances of the other Type; provided,
however, that if any Conversion of Eurodollar Rate Advances into Base Rate
Advances is made other than on the last day of an Interest Period for such
Eurodollar Rate Advances the Borrower shall also pay any amounts owing pursuant
to Section 8.04(c), any Conversion of Base Rate Advances into Eurodollar Rate
Advances shall be in an amount not less than the minimum amount specified in
Section 2.02(b), no Conversion of any Advances shall result in more separate
Borrowings than permitted under Section 2.02(b) and each Conversion of Advances
comprising part of the same Borrowing under any Facility shall be made ratably
among the Appropriate Lenders in accordance with their Commitments under such
Facility. Each such notice of Conversion shall, within the restrictions
specified above, specify (i) the date of such Conversion, (ii) the Advances to
be Converted and (iii) if such Conversion is into Eurodollar Rate Advances, the
duration of the initial Interest Period for such Advances. Each notice of
Conversion shall be irrevocable and binding on the Borrower requesting such
Conversion.
(b) Mandatory. (i) On the date on which the aggregate unpaid
principal amount of Eurodollar Rate Advances comprising any Borrowing shall be
reduced, by payment or prepayment or otherwise, to less than $1,000,000, such
Advances shall automatically Convert into Base Rate Advances.
(ii) If the Borrower shall fail to select the duration of any
Interest Period for any Eurodollar Rate Advances in accordance with the
provisions contained in the definition of "Interest Period" in Section 1.01, the
Agent will forthwith so notify the Borrower and the Appropriate Lenders,
whereupon each such Eurodollar Rate Advance will automatically, on the last day
of the then existing Interest Period therefor, Convert into a Base Rate Advance.
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53
(iii) Upon the occurrence and during the continuance of any
Event of Default and upon notice from the Agent to the Borrower, (x) each
Eurodollar Rate Advance will automatically, on the last day of the then existing
Interest Period therefor, Convert into a Base Rate Advance and (y) the
obligation of the Lenders to make, or to Convert Advances into, Eurodollar Rate
Advances shall be suspended.
SECTION 2.10. Increased Costs, Etc. (a) If, due to either (i)
the introduction of or any change in or in the interpretation of any law or
regulation or (ii) the compliance with any guideline or request from any central
bank or other governmental authority (whether or not having the force of law),
there shall be any increase in the cost to any Lender Party of agreeing to make
or of making, funding or maintaining Eurodollar Rate Advances or of agreeing to
issue or of issuing or maintaining Letters of Credit or of agreeing to make or
of making or maintaining Letter of Credit Advances, then the Borrower shall from
time to time, upon demand by such Lender Party (with a copy of such demand to
the Agent), pay to the Agent for the account of such Lender Party additional
amounts sufficient to compensate such Lender Party for such increased cost. A
certificate as to the amount of such increased cost, submitted to the Borrower
by such Lender Party, shall be conclusive and binding for all purposes, absent
manifest error.
(b) If any Lender Party determines that compliance with any
law or regulation or any guideline or request from any central bank or other
governmental authority (whether or not having the force of law) affects or would
affect the amount of capital required or expected to be maintained by such
Lender Party or any corporation controlling such Lender Party and that the
amount of such capital is increased by or based upon the existence of such
Lender Party's commitment to lend or to issue Letters of Credit hereunder and
other commitments of such type or the issuance or maintenance of the Letters of
Credit (or similar contingent obligations), then, upon demand by such Lender
Party (with a copy of such demand to the Agent), the Borrower shall pay to the
Agent for the account of such Lender Party, from time to time as specified by
such Lender Party, additional amounts sufficient to compensate such Lender Party
in the light of such circumstances, to the extent that such Lender Party
reasonably determines such increase in capital to be allocable to the existence
of such Lender Party's commitment to lend or to issue Letters of Credit
hereunder or to the issuance or maintenance of any Letters of Credit. A
certificate as to such amounts submitted to the Borrower by such Lender Party
shall be conclusive and binding for all purposes, absent manifest error.
(c) If, with respect to any Eurodollar Rate Advances under any
Facility, Lenders owed at least 50% of the then aggregate unpaid principal
amount thereof notify the Agent that the Eurodollar Rate for any Interest Period
for such Advances will not adequately reflect the cost to such Lenders of
making, funding or maintaining their Eurodollar Rate Advances for such Interest
Period, the Agent shall forthwith so notify the Borrower and the Appropriate
Lenders, whereupon (i) each such Eurodollar Rate Advance under any Facility will
automatically, on the last day of the then existing Interest Period therefor,
Convert into a Base
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54
Rate Advance and (ii) the obligation of the Appropriate Lenders to make, or to
Convert Advances into, Eurodollar Rate Advances shall be suspended until the
Agent shall notify the Borrower that such Lenders have determined that the
circumstances causing such suspension no longer exist.
(d) Notwithstanding any other provision of this Agreement, if
the introduction of or any change in or in the interpretation of any law or
regulation shall make it unlawful, or any central bank or other governmental
authority shall assert that it is unlawful, for any Lender or its Eurodollar
Lending Office to perform its obligations hereunder to make Eurodollar Rate
Advances or to continue to fund or maintain Eurodollar Rate Advances hereunder,
then, on notice thereof and demand therefor by such Lender to the Borrower
through the Agent, (i) each Eurodollar Rate Advance under each Facility under
which such Lender has a Commitment will automatically, upon such demand, Convert
into a Base Rate Advance and (ii) the obligation of the Appropriate Lenders to
make, or to Convert Advances into, Eurodollar Rate Advances shall be suspended
until the Agent shall notify the Borrower that such Lender has determined that
the circumstances causing such suspension no longer exist.
(e) Each Lender Party agrees that, upon the occurrence of any
circumstances entitling such Lender Party to additional compensation (or to
deliver a demand therefor) or to suspend its obligation to make Eurodollar Rate
Advances under any of the foregoing provisions of this Section 2.10, such Lender
Party shall use reasonable efforts (consistent with its internal policy and with
applicable legal and regulatory restrictions) to designate a different
Applicable Lending Office for any Advances affected by such circumstances if the
making of such designation, in the case of Section 2.10(a) or 2.10(b), would
avoid the need for, or reduce the amount of, such additional compensation or, in
the case of Section 2.10(c) or 2.10(d), would allow the Lenders to continue to
perform their obligations to make Eurodollar Rate Advances and, in any such
case, would not, in the reasonable judgment of such Lender Party, be otherwise
disadvantageous to such Lender Party. Nothing in this Section 2.10(f) shall
affect or postpone any of the rights of any Lender Party or any of the
obligations of the Borrower under any of the foregoing provisions of this
Section 2.10 in any manner.
SECTION 2.11. Payments and Computations. (a) The Borrower
shall make each payment hereunder and under the Notes, irrespective of any right
of counterclaim or set-off, not later than 11:00 A.M. (New York City time) on
the day when due in U.S. dollars to the Agent at the Agent's Account in same day
funds. The Agent will promptly thereafter cause like funds to be distributed (i)
if such payment by the Borrower is in respect of principal, interest, commitment
fees or any other Obligation then payable hereunder and under the Notes to more
than one Lender Party, to such Lender Parties for the account of their
respective Applicable Lending Offices ratably in accordance with the amounts of
such respective Obligations then payable to such Lender Parties and (ii) if such
payment by the Borrower is in respect of any Obligation then payable hereunder
to one Lender Party, to such Lender Party for the account of its Applicable
Lending Office, in each case to be applied in accordance with the terms of this
Agreement. Upon
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55
its acceptance of an Assignment and Acceptance and recording of the information
contained therein in the Register pursuant to Section 8.07(e), from and after
the effective date of such Assignment and Acceptance, the Agent shall make all
payments hereunder and under the Notes in respect of the interest assigned
thereby to the Lender Party assignee thereunder, and the parties to such
Assignment and Acceptance shall make all appropriate adjustments in such
payments for periods prior to such effective date directly between themselves.
(b) If the Agent receives funds for application to the
Obligations under the Loan Documents under circumstances for which the Loan
Documents do not specify the Advances or the Facility to which, or the manner in
which, such funds are to be applied, the Agent may, but shall not be obligated
to, elect to distribute such funds to each Lender Party ratably in accordance
with such Lender Party's proportionate share of the principal amount of all
outstanding Advances and the Available Amount of all Letters of Credit then
outstanding, in repayment or prepayment of such of the outstanding Advances or
other Obligations owed to such Lender Party, and for application to such
principal installments, as the Agent shall direct.
(c) The Borrower hereby authorizes each Lender Party, if and
to the extent payment owed to such Lender Party is not made when due hereunder
or, in the case of a Lender, under the Note held by such Lender, to charge from
time to time against any or all of the Borrower's accounts with such Lender
Party any amount so due.
(d) All computations of interest, fees and Letter of Credit
commissions shall be made by the Agent on the basis of a year of 360 days, in
each case for the actual number of days (including the first day but excluding
the last day) occurring in the period for which such interest, fees or
commissions are payable. Each determination by the Agent of an interest rate,
fee or commission hereunder shall be conclusive and binding for all purposes,
absent manifest error.
(e) Whenever any payment hereunder or under the Notes shall be
stated to be due on a day other than a Business Day, such payment shall be made
on the next succeeding Business Day, and such extension of time shall in such
case be included in the computation of payment of interest or commitment fee, as
the case may be; provided, however, that, if such extension would cause payment
of interest on or principal of Eurodollar Rate Advances to be made in the next
following calendar month, such payment shall be made on the next preceding
Business Day.
(f) Unless the Agent shall have received notice from the
Borrower prior to the date on which any payment is due to any Lender Party
hereunder that the Borrower will not make such payment in full, the Agent may
assume that the Borrower has made such payment in full to the Agent on such date
and the Agent may, in reliance upon such assumption, cause to be distributed to
each such Lender Party on such due date an amount equal to the amount then due
such Lender Party. If and to the extent the Borrower shall not have so made such
payment in full
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56
to the Agent, each such Lender Party shall repay to the Agent forthwith on
demand such amount distributed to such Lender Party together with interest
thereon, for each day from the date such amount is distributed to such Lender
Party until the date such Lender Party repays such amount to the Agent, at the
Federal Funds Rate.
SECTION 2.12. Taxes. (a) Any and all payments by the Borrower
hereunder or under the Notes shall be made, in accordance with Section 2.11,
free and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding, in the case of each Lender Party and the Agent,
taxes that are imposed on its overall net income by the United States and taxes
that are imposed on its overall net income (and franchise taxes in lieu thereof)
that are imposed on such Lender Party or the Agent by the state or foreign
jurisdiction under the laws of which such Lender Party or the Agent (as the case
may be) is organized or any political subdivision thereof and, in the case of
each Lender Party, taxes that are imposed on its overall net income (and
franchise taxes in lieu thereof) that are imposed on such Lender Party by the
state or foreign jurisdiction of such Lender Party's Applicable Lending Office
or any political subdivision thereof (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being hereinafter
referred to as "TAXES"). If the Borrower shall be required by law to deduct any
Taxes from or in respect of any sum payable hereunder or under any Note to any
Lender Party or the Agent, (i) the sum payable by the Borrower shall be
increased as may be necessary so that after the Borrower and the Agent have made
all required deductions (including deductions applicable to additional sums
payable under this Section 2.12) such Lender Party or the Agent (as the case may
be) receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions and (iii) the
Borrower shall pay the full amount deducted to the relevant taxation authority
or other governmental authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any present or future
stamp, documentary, excise, property or similar taxes, charges or levies that
arise from any payment made hereunder or under the Notes or from the execution,
delivery or registration of, performance under, or otherwise with respect to,
this Agreement or the Notes (hereinafter referred to as "OTHER TAXES").
(c) The Borrower shall indemnify each Lender Party and the
Agent for and hold it harmless against the full amount of Taxes and Other Taxes,
and for the full amount of taxes of any kind imposed by any jurisdiction on
amounts payable under this Section 2.12, paid by such Lender Party or the Agent
(as the case may be) and any liability (including penalties, additions to tax,
interest and expenses) arising therefrom or with respect thereto. This
indemnification shall be made within 30 days from the date such Lender Party or
the Agent (as the case may be) makes written demand therefor.
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57
(d) Within 30 days after the date of any payment of Taxes, the
Borrower shall furnish to the Agent, at its address referred to in Section 8.02,
the original receipt of payment thereof or a certified copy of such receipt. In
the case of any payment hereunder or under the Notes by or on behalf of the
Borrower through an account or branch outside the United States or on behalf of
the Borrower by a payor that is not a United States person, if the Borrower
determines that no Taxes are payable in respect thereof, the Borrower shall
furnish, or shall cause such payor to furnish, to the Agent, at such address, an
opinion of counsel acceptable to the Agent stating that such payment is exempt
from Taxes. For purposes of this subsection (d) and subsection (e), the terms
"UNITED STATES" and "UNITED STATES PERSON" shall have the meanings specified in
Section 7701 of the Internal Revenue Code.
(e) Each Lender Party organized under the laws of a
jurisdiction outside the United States shall, on or prior to the date of its
execution and delivery of this Agreement in the case of each Restatement Lender
or the Issuing Bank, as the case may be, and on the date of the Assignment and
Acceptance pursuant to which it became a Lender Party in the case of each other
Lender Party, and from time to time thereafter upon expiration of such forms or
if requested in writing by the Borrower or the Agent (but only so long
thereafter as such Lender Party remains lawfully able to do so), provide the
Agent and the Borrower with Internal Revenue Service forms 1001 and W-8 or forms
W-9 and 4224 or (in the case of a Lender Party that has certified in writing to
the Agent that it is not a "bank" as defined in Section 881(c)(3)(A) of the
Internal Revenue Code) form W-8 (and, if such Lender Party delivers a form W-8,
a certificate representing that such Lender Party is not a "bank" for purposes
of Section 881(c) of the Internal Revenue Code, is not a 10-percent shareholder
(within the meaning of Section 871(h)(3)(B) of the Internal Revenue Code) of the
Borrower and is not a controlled foreign corporation related to the Borrower
(within the meaning of Section 864(d)(4) of the Internal Revenue Code)), as
appropriate, or any successor form prescribed by the Internal Revenue Service,
certifying that such Lender Party is exempt from or is entitled to a reduced
rate of United States withholding tax on payments under this Agreement or the
Notes or, in the case of a Lender Party providing a form W-8, certifying that
such Lender Party is a foreign corporation, partnership, estate or trust. If the
forms provided by a Lender Party at the time such Lender Party first becomes a
party to this Agreement indicate a United States withholding tax rate in excess
of zero, withholding tax at such rate shall be considered excluded from Taxes
for periods governed by such forms; provided, however, that if, at the effective
date of the Assignment and Acceptance pursuant to which a Lender Party becomes a
party to this Agreement, the Lender Party assignor was entitled to payments
under subsection (a) of this Section 2.12 in respect of United States
withholding tax with respect to interest paid at such date, then, to such
extent, the term Taxes shall include (in addition to withholding taxes that may
be imposed in the future or other amounts otherwise includable in Taxes) United
States withholding tax, if any, applicable with respect to the Lender Party
assignee on such date. If any form or document referred to in this subsection
(e) requires the disclosure of information, other than information necessary to
compute the tax payable and information required on the Third Restatement Date
by Internal Revenue Service form 1001, 4224, W-8 (or the related certificate
described above) or W-9, that the Lender Party reasonably
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58
considers to be confidential, the Lender Party shall give notice thereof to the
Borrower and shall not be obligated to include in such form or document such
confidential information.
(f) For any period with respect to which a Lender Party has
failed to provide the Borrower with the appropriate form described in subsection
(e) above (other than if such failure is due to a change in law occurring after
the date on which a form originally was required to be provided or if such form
otherwise is not required under subsection (e)), such Lender Party shall not be
entitled to gross-up under subsection (a) above or indemnification under
subsection (a) or (c) of this Section 2.12 with respect to Taxes imposed by the
United States; provided, however, that should a Lender Party become subject to
Taxes because of its failure to deliver a form required hereunder, the Borrower
shall take such steps as such Lender Party shall reasonably request to assist
such Lender Party to recover such Taxes.
SECTION 2.13. Sharing of Payments, Etc. If any Lender Party
shall obtain at any time any payment (whether voluntary, involuntary, through
the exercise of any right of set-off, or otherwise) (a) on account of
Obligations due and payable to such Lender Party hereunder and under the Notes
at such time in excess of its ratable share (according to the proportion of (i)
the amount of such Obligations due and payable to such Lender Party at such time
to (ii) the aggregate amount of the Obligations due and payable to all Lender
Parties hereunder and under the Notes at such time) of payments on account of
the Obligations due and payable to all Lender Parties hereunder and under the
Notes at such time obtained by all the Lender Parties at such time or (b) on
account of Obligations owing (but not due and payable) to such Lender Party
hereunder and under the Notes at such time in excess of its ratable share
(according to the proportion of (i) the amount of such Obligations owing to such
Lender Party at such time to (ii) the aggregate amount of the Obligations owing
(but not due and payable) to all Lender Parties hereunder and under the Notes at
such time) of payments on account of the Obligations owing (but not due and
payable) to all Lender Parties hereunder and under the Notes at such time
obtained by all of the Lender Parties at such time, such Lender Party shall
forthwith purchase from the other Lender Parties such participations in the
Obligations due and payable or owing to them, as the case may be, as shall be
necessary to cause such purchasing Lender Party to share the excess payment
ratably with each of them; provided, however, that if all or any portion of such
excess payment is thereafter recovered from such purchasing Lender Party, such
purchase from each other Lender Party shall be rescinded and such other Lender
Party shall repay to the purchasing Lender Party the purchase price to the
extent of such Lender Party's ratable share (according to the proportion of (i)
the purchase price paid to such Lender Party to (ii) the aggregate purchase
price paid to all Lender Parties) of such recovery together with an amount equal
to such Lender Party's ratable share (according to the proportion of (i) the
amount of such other Lender Party's required repayment to (ii) the total amount
so recovered from the purchasing Lender Party) of any interest or other amount
paid or payable by the purchasing Lender Party in respect of the total amount so
recovered. The Borrower agrees that any Lender Party so purchasing a
participation from another Lender Party pursuant to this Section 2.13 may, to
the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off)
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59
with respect to such participation as fully as if such Lender Party were the
direct creditor of the Borrower in the amount of such participation.
SECTION 2.14. Use of Proceeds. (a) The proceeds of the Term
Advances shall be available (and the Borrower agrees that it shall use such
proceeds) to pay consideration in order to consummate the Transaction in
accordance with the terms of the Purchase Agreement and the other transactions
contemplated hereby and transaction fees and expenses in connection therewith.
(b) The proceeds of the Working Capital Advances and issuances
of Letters of Credit shall be available (and the Borrower agrees that it shall
use such proceeds and Letters of Credit) solely, (i) to pay transaction fees and
expenses in connection with the transactions contemplated hereby and (ii) to
provide working capital from time to time for, and for the general corporate
purposes of, the Borrower and its Subsidiaries.
SECTION 2.15. Evidence of Debt. (a) Each Lender shall maintain
in accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower to such Lender resulting from each Advance owing to
such Lender from time to time, including the amounts of principal and interest
payable and paid to such Lender from time to time hereunder. The Borrower agrees
that upon notice by any Lender Party to the Borrower (with a copy of such notice
to the Agent) to the effect that a Note is required or appropriate in order for
such Lender to evidence (whether for purposes of pledge, enforcement or
otherwise) the Advances owing to, or to be made by, such Lender Party, the
Borrower shall promptly execute and deliver to such Lender a Term A Note, a Term
B Note and a Working Capital Note, as applicable, payable to the order of such
Lender Party in a principal amount equal to the Term A Commitment, Term B
Commitment or Revolving Credit Commitment, respectively, of such Lender Party.
All references to Notes in the Loan Documents shall mean Notes, if any, to the
extent issued hereunder.
(b) The Register maintained by the Agent pursuant to Section
8.07(d) shall include a control account, and a subsidiary account for each
Lender, in which accounts (taken together) shall be recorded (i) the date and
amount of each Borrowing made hereunder, the Type of Advances comprising such
Borrowing and, if appropriate, the Interest Period applicable thereto, (ii) the
terms of each Assignment and Acceptance delivered to and accepted by it, (iii)
the amount of any principal or interest due and payable or to become due and
payable from the Borrower to each Lender Party hereunder, and (iv) the amount of
any sum received by the Agent from the Borrower hereunder and each Lender
Party's share thereof.
(c) Entries made in good faith by the Agent in the Register
pursuant to subsection (b) above, and by each Lender Party in its account or
accounts pursuant to subsection (a) above, shall be prima facie evidence of the
amount of principal and interest due and payable or to become due and payable
from the Borrower to, in the case of the Register, each Lender
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60
Party and, in the case of such account or accounts, such Lender Party, under
this Agreement, absent manifest error; provided, however, that the failure of
the Agent or such Lender Party to make an entry, or any finding that an entry is
incorrect, in the Register or such account or accounts shall not limit or
otherwise affect the obligations of the Borrower under this Agreement.
(d) References herein to Notes shall mean and be references to Term A
Notes, the Term B Notes and the Working Capital Notes, unless otherwise
specifically indicated, in each case to the extent issued hereunder.
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Conditions Precedent to the Third Restatement
Date. The amendment and restatement of the Existing Credit Agreement pursuant
hereto shall become effective on and as of the date (the "THIRD RESTATEMENT
Date"), which shall occur on or prior to February 12, 1999, on which each of the
following conditions precedent shall have been satisfied:
(a) The Third Restatement Assignment Agreement shall be in
full force and effect and shall not have been terminated and, pursuant
thereto, the Commitments and Advances (as defined in the Existing
Credit Agreement) of each Existing Lender shall have been sold and
assigned to the Restatement Lenders hereunder on the terms and in the
amounts set forth in the Third Restatement Assignment Agreement or
shall have been terminated in accordance with the terms of the Existing
Credit Agreement and all accrued interest and fees relating to the
Existing Credit Agreement shall have been paid to the Existing Lenders.
(b) The Lender Parties shall be satisfied with:
(i) the corporate and legal structure and
capitalization of each of the Loan Parties, both before and
after giving effect to the Transaction, including the terms
and conditions of the charter, bylaws and each class of
capital stock of each of the Loan Parties and of each
agreement or instrument relating to such structure or
capitalization and (ii) the terms and conditions of the
Transaction and the other transactions contemplated thereby or
a condition thereto (including, without limitation, all legal,
tax and financial aspects thereof); and
(ii) the terms and conditions of each of the
Transaction Documents and each of the other Related Documents.
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61
(c) Each of the Transaction Documents shall be in full force
and effect and the Transaction, including, without limitation, the
Ansam Asset Acquisition, shall be consummated strictly in accordance
with the terms of such agreements, without any waiver or amendment not
consented to by the Lender Parties of any term, provision or condition
set forth therein, and in compliance with all applicable laws, and the
Lender Parties shall be satisfied that the assets and earnings of the
Borrower are sufficient to support the Obligations of the Borrowers
under this Agreement and the timely amortization of all Debt and other
Obligations of the Borrower.
(d) (i) In the case of each of the Loan Parties, other than
the Ex-Cell Group and Ansam, no Material Adverse Change shall have
occurred since January 4, 1998; (ii) in the case of the Ex-Cell Group,
no material adverse change in the business, condition (financial or
otherwise), operations, performance, properties or prospects of the
Ex-Cell Group shall have occurred since June 30, 1998; and (iii) in the
case of Ansam, no material adverse change in the business, condition
(financial or otherwise), operations, performance, properties or
prospects of Ansam shall have occurred since December 31, 1997.
(e) There shall exist no action, suit, investigation,
litigation or proceeding affecting the Ex-Cell Group, Ansam, any Loan
Party or any of their properties, including any Environmental Action,
pending, or to the best of the Borrower's knowledge threatened, before
any court, governmental agency or arbitrator that (i) could reasonably
be expected to have a Material Adverse Effect, or (ii) purports to
affect the legality, validity or enforceability of this Agreement, any
Note, any other Loan Document, any Related Document or the consummation
of the Transaction and the other transactions contemplated hereby and
thereby.
(f) The Borrower shall have paid to the Agent (i) all fees and
expenses accrued under the Existing Agreement through the Third
Restatement Date and (ii) all fees required under the Fee Letter and
all reasonable fees and expenses of counsel to the Agent.
(g) All governmental and third party consents and approvals
necessary in connection with this Agreement and the Transaction and the
transactions contemplated thereby shall have been obtained (without the
imposition of any conditions other than those that are reasonably
acceptable to the Agent) and shall remain in effect, and all applicable
waiting periods shall have expired without any action being taken by
any competent authority and no law or regulation shall be applicable,
in the reasonable judgment of the Agent, that restrains, prevents or
imposes adverse conditions upon this Agreement or any related
transactions.
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62
(h) All Existing Debt, other than the Debt identified on
Schedule 3.01(h)(ii) (the "SURVIVING DEBT"), has been prepaid, redeemed
or defeased in full or otherwise satisfied and extinguished and all
such Surviving Debt is on terms and conditions satisfactory to the
Lender Parties.
(i) The Agent shall have received on or before the Third
Restatement Date the following, each dated the Third Restatement Date
(unless otherwise specified), in form and substance reasonably
satisfactory to the Agent (unless otherwise specified) and (except for
the Notes) in sufficient copies for each Lender:
(i) The Notes payable to the order of the Restatement
Lenders to the extent requested by any Lender pursuant to
Section 2.15.
(ii) Certified copies of the resolutions of the Board
of Directors of the Borrower, each other Loan Party, each of
the Ex-Cell Group, and Ansam approving this Agreement, the
Notes, each other Loan Document and each Related Document to
which it is or is to be a party, and of all documents
evidencing other necessary corporate action and governmental
and other third party approvals and consents, if any, with
respect to this Agreement, the Notes, each other Loan Document
and each Related Document to which it is or is to be a party.
(iii) A copy of the charter or articles (or other
similar organizational document) of the Borrower, each other
Loan Party, each of the Ex-Cell Group, and Ansam and each
amendment thereto, certified (as of a date reasonably near the
Third Restatement Date) by the Secretary of State of the State
of such Loan Party's state of incorporation or organization as
being a true and correct copy thereof.
(iv) A copy of a certificate of the Secretary of
State of the state of incorporation or organization of each
Loan Party, each of the Ex-Cell Group and Ansam reasonably
near the Third Restatement Date, listing the charter or other
organizational documents of such Loan Party and each amendment
thereto on file in his office and certifying that (A) such
amendments are the only amendments to such Loan Party's
charter or other organizational documents on file in his
office, (B) such Loan Party has paid all franchise taxes to
the date of such certificate and (C) such Loan Party is duly
incorporated or organized and in good standing under the laws
of the State of its state of incorporation or organization.
(v) Copies of certificates of the Secretary of State
of each jurisdiction in which each Loan Party, each of the
Ex-Cell Group and Ansam is qualified or licensed as a foreign
corporation in the United States, dated reasonably near the
Third Restatement Date, in each case stating that such Person
is duly qualified and
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63
in good standing as a foreign corporation in such jurisdiction
and has filed all annual reports required to be filed to the
date of such certificate.
(vi) A certificate of each Loan Party and each of the
Ex-Cell Group (other than Ex-Cell's Foreign Subsidiaries),
signed on behalf of such Loan Party, Ex-Cell, Ex-Cell
Bentonville and Linde, as the case may be by its President or
a Vice President and its Secretary or an Assistant Secretary,
dated the Third Restatement Date (the statements made in which
certificate shall be true on and as of the Third Restatement
Date), certifying as to:
(A) the absence of any amendments to the
charter or articles (or other similar organizational
document) of such Loan Party, Ex-Cell, Ex-Cell
Bentonville and Linde, as the case may be, since the
date of the Secretary of State's certificate referred
to in Section 3.01(i)(iv);
(B) the accuracy and completeness of the
bylaws (or other similar organizational document) of
such Loan Party, Ex-Cell, Ex-Cell Bentonville and
Linde, as the case may be, as in effect on the Third
Restatement Date (a copy of which was attached to
such certificate);
(C) the due incorporation and good standing
of such Loan Party, Ex-Cell, Ex-Cell Bentonville and
Linde, as the case may be, as a corporation organized
under the laws of the jurisdiction of its
incorporation, and the absence of any proceeding for
the dissolution or liquidation of such Loan Party;
(D) the accuracy of the representations and
warranties set forth in the Loan Documents to which
such Loan Party, Ex-Cell, Ex-Cell Bentonville and
Linde, as the case may be, is or is to be a party as
though made on and as of the Third Restatement Date,
before and after giving effect to the extension of
credit on the Third Restatement Date and to the
application of proceeds therefrom; and
(E) the absence of any event occurring and
continuing, or resulting from the Third Restatement
Date, or the application of proceeds therefrom, that
constitutes a Default.
(vii) A certificate of the Secretary or an Assistant
Secretary of each Loan Party and each of the Ex-Cell Group
(other than Ex-Cell's Foreign Subsidiaries) certifying the
names and true signatures of the officers of such Loan Party
authorized to sign this Agreement, the Notes, each other Loan
Document
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64
and each Related Document to which it is or is to be a party
and the other agreements, instruments and documents to be
delivered hereunder and thereunder.
(viii) A third amended and restated security
agreement in substantially the form of Exhibit D-1 hereto
(together with each other security agreement delivered
pursuant to Section 5.01(m) or 5.01(o), in each case as
amended, supplemented or otherwise modified from time to time
in accordance with its terms, the "THIRD AMENDED AND RESTATED
SECURITY AGREEMENT"), duly executed by each of the Loan
Parties and each of the Ex-Cell Group (other than Ex-Cell's
Foreign Subsidiaries), together with:
(A) certificates representing the Pledged
Shares, if any not previously delivered to the Agent,
and accompanied by undated stock powers executed in
blank, and instruments evidencing the Pledged Debt,
if any, not previously delivered to the Agent and
referred to in the Third Amended and Restated
Security Agreement, duly endorsed in blank;
(B) duly executed financing statements (Form
UCC-1 or Form UCC-3 or comparable forms), which are
required to be filed as at the Third Restatement Date
under the Uniform Commercial Code of the States of
all jurisdictions that the Agent may have deemed
necessary or desirable in order to maintain the
perfection and priority of the Liens created under
the Collateral Documents, covering the Collateral
described in the Second Amended and Restated Security
Agreement;
(C) evidence of the maintenance of the
insurance required by the terms of the Third Amended
and Restated Security Agreement;
(D) copies of the Assigned Agreements, if
any not previously delivered to the Agent and
referred to in the Third Amended and Restated
Security Agreement, together with any required
consent to such assignment, in substantially a form
satisfactory to the Agent, duly executed by each
party to such Assigned Agreements other than the Loan
Parties;
(E) confirmation, to the extent required by
the Agent, of each of the Blocked Account Letters
referred to therein, duly executed by the relevant
Loan Party, as the case may be, and the bank referred
to in the Third Amended and Restated Security
Agreement;
(F) evidence that all other actions
(including, without limitation, the completion of all
other recordings and filings of or with respect to
the Third Amended and Restated Security Agreement)
that may
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65
be deemed necessary or that the Agent may deem
desirable in order to maintain the perfection and to
protect the first priority liens and security
interests created and maintained under the Security
Agreement, as amended and restated by the Third
Amended and Restated Security Agreement, had been
taken or would be taken in accordance with the terms
of the Loan Documents.
(ix) A consent (the "GLENOIT OF CANADA CONSENT") in
substantially the form of Exhibit N hereto, duly executed by
Glenoit of Canada.
(x) A modification and extension agreement in
substantially the form of Exhibit E-1 hereto (the
"MODIFICATION AND EXTENSION AGREEMENT"), to the deed of trust,
trust deed and mortgage covering the properties (other than
the property located at 1003 Vance Drive, Tarboro, North
Carolina) specified in Part I of Schedule 4.01(gg) (as
amended, supplemented or otherwise modified from time to time
in accordance with its terms, the "EXISTING DEED OF TRUST"),
duly executed by the Borrower, together with:
(A) evidence that counterparts of the
Modification and Extension Agreement to the Existing
Deed of Trust has been duly delivered to Stewart
Title Guaranty Company on or before the Third
Restatement Date and in all filing or recording
offices that the Agent deemed necessary or desirable
in order to maintain a valid first and subsisting
Lien on the property described in such Existing Deed
of Trust in favor of the Agent and the Restatement
Lenders and that all filing and recording taxes and
fees have been paid,
(B) confirmation of fully paid Stewart Title
Guaranty Company title insurance policies or
commitments to issue such title insurance policies
(in each case, the "DEED OF TRUST POLICIES") in form
and substance, with endorsements and in amounts
reasonably acceptable to the Agent, issued, coinsured
and reinsured, if appropriate, by title insurers
acceptable to the Agent, insuring the Existing Deed
of Trust to be a valid first and subsisting Lien on
the property described therein, free and clear of all
defects (including, without limitation, mechanics'
and materialmen's Liens) and encumbrances, excepting
only Permitted Encumbrances, and providing for such
other affirmative insurance (including endorsements
for future advances under the Loan Documents and for
mechanics' and materialmen's Liens) and such
coinsurance and direct access reinsurance as the
Agent deemed necessary or desirable,
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66
(C) evidence of the insurance required by
the terms of the Existing Deed of Trusts, and
(D) evidence that all other action that the
Agent may deem necessary or desirable in order to
maintain the perfection and to protect the valid
first and subsisting Liens on the property described
in the Existing Deed of Trust has been taken.
(xi) A deed of trust, trust deed and mortgage, in
substantially the form of Exhibit E-2 hereto, covering each of
the properties specified in Part II of Schedule 4.01(gg) (each
as amended, supplemented or otherwise modified from time to
time in accordance with its terms, a "DEED OF Trust"), duly
executed by the Borrower, together with:
(A) evidence that counterparts of each Deed
of Trust have been duly delivered to Stewart Title
Guaranty Company on or before the Third Restatement
Date in all filing or recording offices that the
Agent deems necessary or desirable in order to create
a valid first and subsisting Lien on the property
described therein in favor of the Agent and the
Lenders and that all filing and recording taxes and
fees have been paid,
(B) fully paid Deed of Trust Policies in
form and substance, with endorsements and in amounts
reasonably acceptable to the Agent, issued, coinsured
and reinsured by title insurers acceptable to the
Agent, insuring each Deed of Trust to be a valid
first and subsisting Lien on the property described
therein, free and clear of all defects (including,
without limitation, mechanics' and materialmen's
Liens) and encumbrances, excepting only Permitted
Encumbrances, and providing for such other
affirmative insurance (including endorsements for
future advances under the Loan Documents and for
mechanics' and materialmen's Liens) and such
coinsurance and direct access reinsurance as the
Agent deems necessary or desirable,
(C) evidence of the insurance required by
the terms of each Deed of Trust, and
(D) evidence that all other action that the
Agent deems necessary or desirable in order to create
valid first and subsisting Liens on the property
described in each Deed of Trust has been taken.
(xii) A third amended and restated parent guarantee
(the "PARENT GUARANTEE") in substantially the form of Exhibit
F-1 hereto and, a third amended
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67
and restated subsidiary guarantee (the "U.S. SUBSIDIARY
GUARANTEE") in substantially the form of Exhibit F-2 hereto
(together with each other guarantee delivered pursuant to
Section 5.01(m) and Section 5.01(o), in each case as amended,
supplemented or otherwise modified from time to time in
accordance with its terms, the "GUARANTEES"), duly executed by
Universal and each Subsidiary Guarantor, respectively.
(xiii) Certified copies of each of the Related
Documents as in effect on the Third Restatement Date and the
Key Employee Employment Agreements, duly executed by the
parties thereto and in form and substance satisfactory to the
Restatement Lenders, together with all agreements, instruments
and other documents delivered in connection therewith.
(xiv) Such financial, business and other information
regarding the Ex-Cell Group, Ansam and each Loan Party and its
Subsidiaries as the Lender Parties have requested, including,
without limitation, information as to possible contingent
liabilities, tax matters, environmental matters, obligations
under Plans, Multiemployer Plans and Welfare Plans, collective
bargaining agreements and other arrangements with employee,
audited financial statements of the Ex-Cell Group dated June
30, 1997 and June 30, 1998 and of Ansam dated December 31,
1997, the "Ansam Six Month Statements" (as defined in the
Purchase Agreement), the pro forma Consolidated combined
balance sheet as to the Loan Parties, the Ex-Cell Group and
Ansam dated as of January 2, 1999, Consolidated income
statements for each of the Loan Parties, the Ex-Cell Group and
Ansam, and the Consolidated statement of cash flow for the
Loan Parties for the 12 months ended January 2, 1999 and
forecasts prepared by management, in form and substance
satisfactory to the Lender Parties, of balance sheets, income
statements and cash flow statements on a monthly basis for
Fiscal Years 1999 and 2000 and on an annual basis for each
Fiscal Year thereafter until the Termination Date.
(xv) All consents and agreements requested by the
Agent executed by the lessors of the leaseholds, respectively,
on which Collateral owned by Ex-Cell or any of its U.S.
Subsidiaries or any Loan Party, as applicable, is located,
which provides, among other things, that such lessor waives
any lien it may now or hereafter have on any such Collateral
located on the premises thereof and that, in the case of all
such leaseholds, the Agent has the right to receive notice of
any default by Ex-Cell and its Subsidiaries and such Loan
Party, as the case may be, under such lease and to repossess
any such Collateral located thereon upon the occurrence and
during the continuance of an Event of Default, and such other
rights as may be reasonably requested by the Agent in any such
consent and agreement.
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68
(xvi) A certificate, signed by the chief financial
officer of each of the Borrower and Universal, in
substantially the form of Exhibit I hereto, attesting to the
Solvency of the Borrower and its Subsidiaries taken as a whole
and Universal and its Subsidiaries taken as a whole,
respectively, after giving effect to the transactions
contemplated hereby.
(xvii) Evidence as at the Third Restatement Date of
insurance, naming the Agent as additional insured and loss
payee with such responsible and reputable insurance companies
or associations, and in such amounts and covering such risks,
as were deemed satisfactory to the Lender Parties, including,
but not limited to, product liability, title, business
interruption, physical damage to property or equipment in form
and substance satisfactory to the Agent.
(xviii) Environmental assessment reports, delivered
to the Borrower by the Sellers pursuant to the terms of the
Purchase Agreement, as to any hazards, costs or liabilities
under Environmental Laws to which Ex-Cell or any of its
Subsidiaries may be subject, the amount and nature of which
and the Borrower's plans with respect to which shall be
acceptable to the Lender Parties.
(xix) A letter, in form and substance satisfactory to
the Agent, from the Borrower to PriceWaterhouse Coopers, its
independent certified public accountants as of the Third
Restatement Date, advising such accountants that the Agent and
the Lender Parties were authorized to exercise all rights of
the Borrower to require such accountants to disclose any and
all financial statements and any other information of any kind
that they may have with respect to each of the Loan Parties
and directing such accountants to comply with any reasonable
request of the Agent or any Lender Party for such information
and acknowledging that the Lender Parties have relied and will
rely upon the financial statements of the Borrower examined
by, and the related reports of, such accountants in
determining whether to enter into, and to take action or
refrain from taking action under, the Loan Documents.
(xx) A Notice of Borrowing and a Borrowing Base
Certificate of the Borrower and its Subsidiaries, taken as a
whole after giving effect to the Transaction and the
transactions contemplated thereby, as of January 31, 1999, in
substantially the form of Exhibit I hereto, duly executed by
the Borrower.
(xxi) A favorable opinion of Kirkland & Ellis,
special counsel for the Loan Parties, in substantially the
form of Exhibit J hereto.
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69
(xxii) A favorable opinion of Bridgers, Horton,
Rountree & Boyette, special North Carolina counsel to the Loan
Parties, in substantially the form of Exhibit L hereto.
(xxiii) A favorable opinion of Friday, Eldredge &
Clark, special Arkansas counsel to the Loan Parties, in
substantially the form of Exhibit M hereto.
(xxiv) An undertaking (the "JUNIOR NOTEHOLDERS
UNDERTAKING") by the holders of the Junior Notes in
substantially the Form of Exhibit O hereto, duly executed by
at least 90% of the holders of the Junior Notes other than
those notes held by Soannes.
(xxv) a deed of charge over shares in substantially
the form of Exhibit D-2 hereto (each a "Deed of Charge"), duly
executed by each of AmPac, Ex-Cell and Ex-Cell Fashions (H.K.)
Limited; and
SECTION 3.02. Conditions Precedent to Each Borrowing, Swing
Line Advance and Issuance. The obligation of each Appropriate Lender to make an
Advance (other than a Letter of Credit Advance made by the Issuing Bank or a
Working Capital Lender pursuant to Section 2.03(c) and a Swing Line Advance made
by a Working Capital Lender pursuant to Section 2.02(b)) on the occasion of each
Borrowing (including on the Third Restatement Date), and the obligation of the
Issuing Bank to issue a Letter of Credit (including the initial issuance) and
the obligation of the Swing Line Bank to make Swing Line Advances, shall be
subject to the further conditions precedent that on the date of such Borrowing
(including a Swing Line Advance made by the Swing Line Bank), issuance or Swing
Line Advance, (a) the following statements shall be true (and each of the giving
of the applicable Notice of Borrowing (including a Swing Line Advance made by
the Swing Line Bank), Notice of Issuance and the acceptance by the Borrower of
the proceeds of such Borrowing or of such Letter of Credit shall constitute a
representation and warranty by the Borrower that both on the date of such notice
and on the date of such Borrowing or issuance such statements are true):
(i) the representations and warranties contained in each Loan
Document are correct on and as of such date, before and after giving
effect to such Borrowing or issuance and to the application of the
proceeds therefrom, as though made on and as of such date other than
any such representations or warranties that, by their terms, refer to a
specific date other than the date of such Borrowing or issuance, in
which case as of such specific date;
(ii) no event has occurred and is continuing, or would result
from such Borrowing or issuance or from the application of the proceeds
therefrom, that constitutes a Default; and
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(iii) for each Working Capital Advance, Swing Line Advance
made by the Swing Line Bank or issuance of any Letter of Credit, the
sum of the Loan Values of the Eligible Collateral (as determined by the
Agent based on the most recent Borrowing Base Certificate delivered to
the Lender Parties hereunder) exceeds the aggregate principal amount of
the Working Capital Advances plus the Swing Line Advances plus the
Letter of Credit Advances to be outstanding plus the aggregate
Available Amount of all Letters of Credit then outstanding after giving
effect to such Advance or issuance, respectively;
and (b) the Agent shall have received such other approvals, opinions or
documents as any Appropriate Lender through the Agent may reasonably request.
SECTION 3.03. Determinations Under Section 3.01. For purposes
of determining compliance with the conditions specified in Section 3.01, each
Lender Party shall be deemed to have consented to, approved or accepted or to be
satisfied with each document or other matter required thereunder to be consented
to, approved by, or acceptable or satisfactory to, the Lender Parties unless an
officer of the Agent responsible for the transactions contemplated by the Loan
Documents shall have received notice from such Lender Party prior to the Third
Restatement Date specifying its objection thereto and such Lender Party shall
not have made available to the Agent such Lender Party's ratable portion of the
Borrowing on the Third Restatement Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Loan
Parties. The Borrower represents and warrants as follows:
(a) Each Loan Party (i) is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation, (ii) is duly qualified and in good
standing as a foreign corporation in each other jurisdiction in which
it owns or leases property or in which the conduct of its business
requires it to so qualify or be licensed except where the failure to so
qualify or be licensed could not have a Material Adverse Effect and
(iii) has all requisite corporate power and authority (including,
without limitation, all governmental licenses, permits and other
approvals) to own or lease and operate its properties and to carry on
its business as now conducted and as proposed to be conducted. All of
the outstanding Equity Interests of each of Glenoit Assets Corp.,
AmPac, Promising Star, Grand Avenue and Glenoit of Canada have been
validly issued, are fully paid and non-assessable and are owned,
directly or indirectly, by the Borrower in the amounts and types
specified on Schedule 4.01(a) free and clear of all Liens. All of the
Equity Interests of the Borrower have been validly issued, are fully
paid
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71
and non-assessable and are owned by Universal in the amounts and
types specified on Schedule 4.01(a) free and clear of all Liens. All of
the Equity Interests of Universal have been validly issued, are fully
paid and non-assessable and are owned by the Investor Group, in the
amounts and types specified on Schedule 4.01(a) free and clear of all
Liens. All of the Equity Interests of Ex-Cell, Ex-Cell Bentonville,
Linde, Ex-Cell (China), Ex-Cell (Far East) and Ex-Cell (H.K.) are
validly issued and are fully paid and non-assessable and, upon the
consummation of the Transaction, will be owned, directly or indirectly,
by the Borrower, in the amounts and types specified on Schedule 4.01(a)
free and clear of all Liens. For purposes of this Agreement, a Person
wholly owns a Subsidiary notwithstanding that another Person holds an
Equity Interest in such Subsidiary by reason only of a requirement of
the law of the jurisdiction of incorporation of such Subsidiary.
(b) Set forth on Schedule 4.01(b) hereto is a complete and
accurate list of all Subsidiaries of each Loan Party, showing as of the
Third Restatement Date (as to each such Subsidiary) the jurisdiction of
its incorporation, the number of shares of each class of Equity
Interests authorized, and the number outstanding, on the Third
Restatement Date and the percentage of the outstanding shares of each
such class of its Equity Interests owned (directly or indirectly) by
such Loan Party and the number of shares covered by all outstanding
options, warrants, rights of conversion or purchase and similar rights
at the Third Restatement Date. All of the outstanding Equity Interests
in each Loan Party's Subsidiaries have been validly issued, are fully
paid and non-assessable and are owned by such Loan Party or one or more
of its Subsidiaries free and clear of all Liens, except those created
under the Loan Documents. Each such Subsidiary (i) is a corporation
duly organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation, (ii) is duly qualified and in
good standing as a foreign corporation in each other jurisdiction in
which it owns or leases property or in which the conduct of its
business requires it to so qualify or be licensed except where the
failure to so qualify or be licensed could not have a Material Adverse
Effect and (iii) has all requisite corporate power and authority
(including, without limitation, all governmental licenses, permits and
other approvals) to own or lease and operate its properties and to
carry on its business as now conducted and as proposed to be conducted.
(c) The execution, delivery and performance by each Loan Party
of this Agreement, the Notes, each other Loan Document and each of the
Related Documents to which it is or is to be a party, and the
consummation of the Transaction and the other transactions contemplated
hereby and thereby, are within such Loan Party's corporate powers, have
been duly authorized by all necessary corporate action, and do not (i)
contravene such Loan Party's charter or bylaws, (ii) violate any law
(including, without limitation, the Securities Exchange Act of 1934 and
the Racketeer Influenced and Corrupt Organizations Chapter of the
Organized Crime Control Act of 1970), rule, regulation (including,
without limitation, Regulation X of the Board of Governors of the
Federal
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72
Reserve System), order, writ, judgment, injunction, decree,
determination or award, (iii) conflict with or result in the breach of,
or constitute a default under, any material contract, loan agreement,
indenture, mortgage, deed of trust, lease or other instrument binding
on or affecting any Loan Party, any of its Subsidiaries or any of their
properties or (iv) except for the Liens created under the Loan
Documents, result in or require the creation or imposition of any Lien
upon or with respect to any of the properties of any Loan Party or any
of its Subsidiaries. No Loan Party or any of its Subsidiaries is in
violation of any such law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award or in breach of any such
contract, loan agreement, indenture, mortgage, deed of trust, lease or
other instrument, the violation or breach of which could have a
Material Adverse Effect.
(d) No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body
or any other third party is required for (i) the due execution,
delivery, recordation, filing or performance by any Loan Party of this
Agreement, the Notes, any other Loan Document or any Related Document
to which it is or is to be a party, or for the consummation of the
Transaction and the other transactions contemplated hereby or thereby,
(ii) the grant by any Loan Party of the Liens granted by it pursuant to
the Collateral Documents, (iii) the perfection or maintenance of the
Liens created by the Collateral Documents (including the first priority
nature thereof) or (iv) the exercise by the Agent or any Lender Party
of its rights under the Loan Documents or the remedies in respect of
the Collateral pursuant to the Collateral Documents, except for the
authorizations, approvals, actions, notices and filings listed on
Schedule 4.01(d), all of which have been duly obtained, taken, given or
made and are in full force and effect (other than filings with the
patent, trademark and copyright offices of the United States and in the
relevant foreign countries and filings of Deeds of Charge in the
applicable jurisdictions). All applicable waiting periods in connection
with the transactions contemplated hereby and thereby have expired
without any action having been taken by any competent authority
restraining, preventing or imposing materially adverse conditions upon
the Transaction or the rights of the Loan Parties or their Subsidiaries
freely to transfer or otherwise dispose of, or to create any Lien on,
any properties now owned or hereafter acquired by any of them.
(e) This Agreement has been, and each of the Notes, each other
Loan Document and each Related Document when delivered hereunder will
have been, duly executed and delivered by each Loan Party thereto. This
Agreement is, and each of the Notes, each other Loan Document and each
Related Document when delivered hereunder will be, the legal, valid and
binding obligation of each Loan Party thereto, enforceable against such
Loan Party in accordance with its terms except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
laws relating to or limiting creditors' rights or by equitable
principles generally.
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73
(f) (i) The Consolidated and consolidating balance sheets of
the Borrower and its Subsidiaries as at January 3, 1998, and the
related Consolidated and consolidating statements of income and
Consolidated statement of cash flow of the Borrower and its
Subsidiaries for the Fiscal Year then ended, accompanied by an opinion
as to the Consolidated statements of PriceWaterhouse Coopers,
independent public accountants, and the Consolidated and consolidating
balance sheets of the Borrower and its Subsidiaries as at January 2,
1999, and the related Consolidated and consolidating statements of
income and Consolidated statement of cash flow of the Borrower and its
Subsidiaries for the twelve Fiscal Months then ended, duly certified by
the chief financial officer of the Borrower, copies of which have been
furnished to each Lender Party, fairly present, subject, in the case of
said balance sheet as at January 2, 1999, and said statements of income
and cash flow for the twelve Fiscal Months then ended, to year-end
audit adjustments and the absence of financial statement footnotes, the
financial condition of the Borrower and its Subsidiaries as at such
dates and the results of the operations of the Borrower and its
Subsidiaries for the periods ended on such dates, all in accordance
with generally accepted accounting principles applied on a consistent
basis, and since January 3, 1998 there has been no Material Adverse
Change.
(ii) The Consolidated and consolidating balance
sheets of the Ex-Cell Group as at June 30, 1998, and the related
Consolidated and consolidating statements of income and Consolidated
statement of cash flow of the Ex-Cell-Group for the Fiscal Year then
ended, accompanied by an opinion as to the Consolidated statements
acceptable to the Lender Parties of Hertz, Herson & Company, LLP,
independent public accountants, and the Consolidated and consolidating
balance sheets of the Ex-Cell Group as at December 31, 1998, and the
related Consolidated and consolidating statements of income and
Consolidated statement of cash flow of the Ex-Cell Group for the twelve
Fiscal Months then ended, duly certified by the chief financial officer
of Ex-Cell, copies of each of which have been furnished to each Lender
Party, fairly present, subject, in the case of said balance sheet as at
December 31, 1998 and said statements of income and cash flow for the
twelve Fiscal Months then ended, to year-end audit adjustments and the
absence of financial statement footnotes, the financial condition of
the Ex-Cell Group as at such dates and the results of the operations of
the Ex-Cell Group for the periods ended on such dates, all in
accordance with generally accepted accounting principles applied on a
consistent basis, and since June 30, 1998 there has been no material
adverse change in the business, condition (financial or otherwise),
operations, performance, properties or prospects of the Ex-Cell Group.
(iii) The audited statements of assets, liabilities
and members' equity of Ansam as at December 31, 1997, and the related
statements of changes in members' equity, and revenue and expenses, and
cash flow of Ansam for the Fiscal Year then ended, accompanied by an
opinion acceptable to the Lender Parties of Hertz, Herson & Company,
LLP, independent public accountants, and the reviewed statements of
assets,
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74
liabilities and members' equity of Ansam as at June 30, 1998,
including footnotes thereto, and the related statements of changes in
members' equity, and revenue and expenses, and cash flow of Ansam for
the six Fiscal Months then ended, accompanied by an opinion acceptable
to the Lender Parties of Hertz, Herson & Company, LLP, independent
public accountants, copies of each of which have been furnished to each
Lender Party, fairly present, subject, in the case of said statements
of assets, liabilities and members' equity as at December 31, 1997 and
said statements of changes in members' equity, and revenue and
expenses, and cash flow for the six Fiscal Months then ended, to
year-end audit adjustments and the absence of financial statement
footnotes other than as specified herein, the financial condition of
Ansam as at such dates and the results of the operations of Ansam for
the periods ended on such dates, all on a federal income tax basis, and
since December 31, 1997 there has been no material adverse change in
the business, condition (financial or otherwise), operations,
performance, properties or prospects of Ansam.
(iv) The Consolidated and consolidating balance sheets of
AmPac and its Subsidiaries as at December 31, 1997, and the related
Consolidated and consolidating statements of income and Consolidated
statement of cash flow of AmPac and its Subsidiaries for the Fiscal
Year then ended, accompanied by an opinion as to the Consolidated
statements of KPMG Peat Marwick, independent public accountants, and
the Consolidated and consolidating balance sheets of AmPac and its
Subsidiaries as at October 2, 1998, and the related Consolidated and
consolidating statements of income and Consolidated statement of cash
flow of AmPac and its Subsidiaries for the nine Fiscal Months then
ended, duly certified by a co-chief executive officer of AmPac, copies
of which have been furnished to each Lender Party, fairly present,
subject, in the case of said balance sheet as at October 2, 1998, and
said statements of income and cash flow for the nine Fiscal Months then
ended, to year-end audit adjustments and the absence of financial
statement footnotes, the financial condition of AmPac and its
Subsidiaries as at such dates and the results of the operations of
AmPac and its Subsidiaries for the periods ended on such dates, all in
accordance with generally accepted accounting principles applied on a
consistent basis, and since December 31, 1997 there has been no
Material Adverse Change.
(g) The Consolidated and combined pro forma balance sheet of
the Borrower and its Subsidiaries, the Ex-Cell Group and Ansam as at
January 2, 1999, certified by the chief financial officer of the
Borrower, copies of which have been furnished to each Lender Party,
fairly present the Consolidated pro forma financial condition of the
Borrower and its Subsidiaries as at such date after giving effect to
the Transaction and the other transactions contemplated hereby, all in
accordance with GAAP.
(h) The Consolidated forecasted balance sheets, income
statements and cash flow statements of the Borrower and its
Subsidiaries (including the Ex-Cell Group and Ansam in respect of
Section 3.01(i)(xiv)) delivered to the Lender Parties pursuant to
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75
Section 3.01(i)(xiv) or 5.03(e) were prepared in good faith on the
basis of the assumptions stated therein, which assumptions were fair in
the light of conditions existing at the time of delivery and on the
Third Restatement Date of such forecasts, and represented, at the time
of delivery, the Borrower's best estimate of its future financial
performance.
(i) Neither the Borrower Information nor any other
information, exhibit or report (excluding any financial projections)
furnished by any Loan Party or any Seller to the Agent or any Lender
Party in connection with the negotiation of the Loan Documents or
pursuant to the terms of the Loan Documents contained any untrue
statement of a material fact or omitted to state a material fact
necessary to make the statements made therein not misleading.
(j) There is no action, suit, investigation, litigation or
proceeding affecting any Loan Party or any of its Subsidiaries,
including any Environmental Action, pending or, to the best of the Loan
Parties' knowledge, threatened before any court, governmental agency or
arbitrator that (i) could reasonably be expected to have a Material
Adverse Effect, or (ii) purports to affect the legality, validity or
enforceability of this Agreement, any Note, any other Loan Document or
any Related Document or the consummation of the transactions
contemplated hereby.
(k) No proceeds of any Advance or drawings under any Letter of
Credit will be used to acquire any equity security of a class that is
registered pursuant to Section 12 of the Securities Exchange Act of
1934.
(l) None of the Loan Parties is engaged in the business of
extending credit for the purpose of purchasing or carrying Margin
Stock, and no proceeds of any Advance or drawings under any Letter of
Credit will be used by any of the Loan Parties to purchase or carry any
Margin Stock or to extend credit to others for the purpose of
purchasing or carrying any Margin Stock.
(m) Set forth on Schedule 4.01(m) hereto is a complete and
accurate list of all Plans, Multiemployer Plans and Welfare Plans;
provided, however, that with respect to the Plans, Multiemployer Plans
and Welfare Plans of any ERISA Affiliate which is not a Loan Party,
this representation is made to the best knowledge of the Loan Parties.
(n) No ERISA Event has occurred or is reasonably expected to
occur with respect to any Plan; provided, however, that with respect to
any ERISA Event with respect to any Plan of any ERISA Affiliate which
is not a Loan Party, this representation is made to the best knowledge
of the Loan Parties.
(o) As of the last annual actuarial valuation date, there is
no material unfunded current liability, as defined in Section 302(d)(8)
of ERISA, of any Plan and there has been
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no material adverse change in the funding status of any such Plan since
such date; provided, however, that with respect to any Plan of any
ERISA Affiliate which is not a Loan Party, this representation is made
to the best knowledge of the Loan Parties.
(p) Schedule B (Actuarial Information) to the most recent
annual report (Form 5500 Series) for each Plan maintained by any Loan
Party, copies of which have been filed with the Internal Revenue
Service and furnished to the Lender Parties, is complete and accurate
and fairly presents the funding status of such Plan, and since the date
of such Schedule B there has been no material adverse change in such
funding status.
(q) Neither any Loan Party nor any ERISA Affiliate has
incurred or is reasonably expected to incur any Withdrawal Liability to
any Multiemployer Plan; provided, however, that with respect to any
Multiemployer Plan of any ERISA Affiliate which is not a Loan Party,
this representation is made to the best knowledge of the Loan Parties.
(r) Neither any Loan Party nor any ERISA Affiliate has been
notified by the sponsor of a Multiemployer Plan that such Multiemployer
Plan is in reorganization or has been terminated, within the meaning of
Title IV of ERISA, and no such Multiemployer Plan is reasonably
expected to be in reorganization or to be terminated, within the
meaning of Title IV of ERISA; provided, however, that with respect to
any Multiemployer Plan of any ERISA Affiliate which is not a Loan
Party, this representation is made to the best knowledge of the Loan
Parties.
(s) Except as set forth in the financial statements referred
to in this Section 4.01 and in Section 5.03, the Loan Parties and their
respective Subsidiaries have no material liability with respect to
"expected post retirement benefit obligations" within the meaning of
Statement of Financial Accounting Standards No. 106.
(t) Neither the business nor the properties of any Loan Party
or any of its Subsidiaries are affected by any fire, explosion,
accident, strike, lockout or other labor dispute, drought, storm, hail,
earthquake, embargo, act of God or of the public enemy or other
casualty (whether or not covered by insurance) that could have a
Material Adverse Effect.
(u) Except as set forth in Schedule 4.01(u) hereto, the
operations and properties of each Loan Party and each of its
Subsidiaries comply in all material respects with all applicable
Environmental Laws and Environmental Permits, all past claims of
non-compliance with such Environmental Laws and Environmental Permits
have been resolved without ongoing material obligations or costs. No
circumstances exist that could reasonably be expected to (i) form the
basis of an Environmental Action against any Loan Party or any of its
Subsidiaries or any of its properties that could have a Material
Adverse
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Effect or (ii) cause any such property to be subject to any material
restrictions on ownership, occupancy, use or transferability under any
Environmental Law.
(v) Except as set forth in Schedule 4.01(u) hereto, none of
the material properties currently or formerly owned or operated by any
Loan Party or any of its Subsidiaries is listed, or, to the best
knowledge of the Loan Parties or any of their Subsidiaries, proposed
for listing on the NPL or on the CERCLIS or any analogous foreign,
state or local list or is adjacent to any such property.
(w) Except as set forth in Schedule 4.01(u) hereto, neither
any Loan Party nor any of its Subsidiaries is undertaking, and has not
completed, either individually or together with other potentially
responsible parties, any investigation or assessment or remedial or
response action relating to any actual or threatened release, discharge
or disposal of Hazardous Materials at any site, location or operation,
either voluntarily or pursuant to the order of any governmental or
regulatory authority or the requirements of any Environmental Law.
(x) Neither any Loan Party nor any of its Subsidiaries is a
party to any indenture, loan or credit agreement or any lease or other
agreement or instrument or subject to any charter or corporate
restriction the compliance with which could have a Material Adverse
Effect.
(y) The Collateral Documents create a valid and perfected
first priority security interest in the Collateral securing the payment
of the Secured Obligations, and all filings and other actions necessary
or desirable to perfect and protect such security interest have been
duly taken (other than any filings in any foreign jurisdiction with
respect to security interests granted in patents, trademarks and
copyrights of the Loan Parties). The Loan Parties are the legal and
beneficial owners of the Collateral free and clear of any Lien, except
for the Liens created or permitted under the Loan Documents.
(z) Each Loan Party and each of its Subsidiaries and
Affiliates has filed, has caused to be filed or has been included in
all tax returns (Federal, state, local and foreign) required to be
filed and has paid all taxes shown thereon to be due, together with
applicable interest and penalties.
(aa) Set forth on Schedule 4.01(aa) hereto is a complete and
accurate list, as of the Third Restatement Date, of each taxable year
of each Loan Party and each of its Subsidiaries and Affiliates (other
than CVC and any of its Affiliates which is not a Loan Party) for which
Federal income tax returns have been filed and for which the expiration
of the applicable statute of limitations for assessment or collection
has not occurred by reason of extension or otherwise (an "OPEN YEAR").
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(bb) There is no unpaid amount, as of the Third Restatement
Date, of adjustments to the Federal income tax liability of each Loan
Party and each of its Subsidiaries and Affiliates (other than CVC and
any of its Affiliates which is not a Loan Party) proposed by the
Internal Revenue Service with respect to Open Years. No issues other
than those set forth on Schedule 4.01(bb) have been raised by the
Internal Revenue Service in respect of Open Years that, in the
aggregate, could have a Material Adverse Effect.
(cc) There is no unpaid amount, as of the Third Restatement
Date, of adjustments to the state, local and foreign tax liability of
each Loan Party and each of its Subsidiaries and Affiliates (other than
CVC and any of its Affiliates which is not a Loan Party) proposed by
all state, local and foreign taxing authorities (other than amounts
arising from adjustments to Federal income tax returns, if any). No
issues have been raised by such taxing authorities that, in the
aggregate, could have a Material Adverse Effect.
(dd) Neither any Loan Party nor any of its Subsidiaries is an
"investment company," or an "affiliated person" of, or "promoter" or
"principal underwriter" for, an "investment company," as such terms are
defined in the Investment Company Act of 1940, as amended. Neither the
making of any Advances, nor the issuance of any Letters of Credit, nor
the application of the proceeds or repayment thereof by the Borrower,
nor the consummation of the other transactions contemplated hereby,
will violate any provision of such Act or any rule, regulation or order
of the Securities and Exchange Commission thereunder.
(ee) Each Loan Party is, individually and together with its
Subsidiaries, Solvent.
(ff) Set forth on Schedule 3.01(h)(ii) hereto is a complete
and accurate list of all Surviving Debt, showing as of the Third
Restatement Date the principal amount outstanding thereunder, the
maturity date thereof and the amortization schedule therefor.
(gg) Set forth on Schedule 4.01(gg) hereto is a complete and
accurate list of all real property owned by any Loan Party or any of
its Subsidiaries, showing as of the Third Restatement Date the street
address, county or other relevant jurisdiction, state, record owner and
book and fair value thereof. Each Loan Party or such Subsidiary has
good, marketable and insurable fee simple title to such real property,
free and clear of all Liens, other than Liens created or permitted by
the Loan Documents.
(hh) Set forth on Schedule 4.01(hh) hereto is a complete and
accurate list of all leases of real property under which any Loan Party
or any of its Subsidiaries is the lessee, showing as of the Third
Restatement Date the street address, county or other relevant
jurisdiction, state, lessor, lessee, expiration date and annual rental
cost thereof. Each such
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lease is the legal, valid and binding obligation of the lessor thereof,
enforceable in accordance with its terms.
(ii) Set forth on Schedule 4.01(ii) hereto is a complete and
accurate list of all Investments held by any Loan Party or any of its
Subsidiaries, showing as of the Third Restatement Date the amount,
obligor or issuer and maturity, if any, thereof.
(jj) Set forth on Schedule 4.01(jj) hereto is a complete and
accurate list of all patents, trademarks, trade names, service marks
and copyrights, and all applications therefor and licenses thereof, of
each Loan Party or any of its Subsidiaries, showing as of the Third
Restatement Date the jurisdiction in which registered, the registration
or application number, as the case may be, and the date of registration
or filing, as the case may be.
(kk) The proceeds of the Advances and the Letters of Credit
will be used by the Loan Parties solely in accordance with the terms of
Section 2.14.
(ll) Each Loan Party has reviewed the areas within its
business and operations which could reasonably be expected to be
adversely affected by, and has developed or is in the process of
developing a program to address on a timely basis, "Year 2000 Issues"
(i.e., the risk that computer applications used by such Loan Party may
be unable to recognize or perform properly date sensitive functions
involving certain dates prior to, and any date after, December 31,
1999) and, based on such review, such Loan Party reasonably believes
that the "Year 2000 Issues" (and the cost of remedying the same) will
not have a Material Adverse Effect.
ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01. Affirmative Covenants. So long as any Obligation
of any Loan Party under or in respect of any Loan Document shall remain unpaid,
any Letter of Credit shall be outstanding, any Secured Hedge Agreement shall be
in effect, or any Lender Party shall have any Commitment hereunder:
(a) Compliance with Laws, Etc. Each Loan Party shall comply,
and cause each of its Subsidiaries to comply, in all material respects,
with all applicable laws, rules, regulations and orders material to the
business and operations of such Loan Party, such compliance to include,
without limitation, compliance with ERISA and the Racketeer Influenced
and Corrupt Organizations Chapter of the Organized Crime Control Act of
1970.
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(b) Payment of Taxes, Etc. Each Loan Party shall pay and
discharge, and cause each of its Subsidiaries to pay and discharge,
before the same shall become delinquent, (i) all taxes, assessments and
governmental charges or levies imposed upon it or upon its property and
(ii) all lawful claims that, if unpaid, might by law become a Lien upon
its property; provided, however, that no Loan Party nor any of its
Subsidiaries shall be required to pay or discharge any such tax,
assessment, charge or claim that is being contested in good faith and
by proper proceedings and as to which appropriate reserves are being
maintained, unless and until any Lien resulting therefrom attaches to
its property and becomes enforceable against its other creditors.
(c) Compliance with Environmental Laws. Each Loan Party shall
comply, and cause each of its Subsidiaries and all lessees and other
Persons operating or occupying its properties to comply, in all
material respects, with all applicable Environmental Laws and
Environmental Permits; obtain and renew and cause each of its
Subsidiaries to obtain and renew all Environmental Permits necessary
for its operations and properties; and conduct, and cause each of its
Subsidiaries to conduct, any investigation, study, sampling and
testing, and undertake any cleanup, removal, remedial or other action
necessary to remove and clean up all Hazardous Materials from any of
its properties, in accordance with and as required by all applicable
requirements of all Environmental Laws; provided, however, that no Loan
Party nor any of its Subsidiaries shall be required to undertake any
such cleanup, removal, remedial or other action to the extent that its
obligation to do so is being contested in good faith and by proper
proceedings and appropriate reserves are being maintained with respect
to such circumstances.
(d) Maintenance of Insurance. Each Loan Party shall maintain,
and cause each of its Subsidiaries to maintain, insurance with
responsible and reputable insurance companies or associations in such
amounts and covering such risks as is usually carried by companies
engaged in similar businesses and owning similar properties in the same
general areas in which such Loan Party or such Subsidiary operates.
(e) Preservation of Corporate Existence, Etc. Each Loan Party
shall preserve and maintain, and cause each of its Subsidiaries to
preserve and maintain, its corporate existence, rights (charter and
statutory), permits, licenses, approvals, privileges and franchises;
provided, however, that the Subsidiaries of the Borrower may consummate
any merger or consolidation permitted under Section 5.02(d).
(f) Visitation Rights. Each Loan Party shall, at any
reasonable time and from time to time upon reasonable prior notice,
permit the Agent or any of the Lender Parties or any agents or
representatives thereof, to examine and make copies of and abstracts
from the records and books of account of, and visit the properties of,
such Loan Party and any of its Subsidiaries, and to discuss the
affairs, finances and accounts of such Loan Party and
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any of its Subsidiaries with any of their officers or directors and
with their independent certified public accountants.
(g) Preparation of Environmental Reports. The Loan Parties
shall, at the request of the Agent at the following times, (i) upon the
occurrence and continuance of an Event of Default, (ii) upon the
acquisition of real property by any Loan Party or any of its
Subsidiaries, (iii) upon the Agent's reasonable belief that any of the
representations or warranties contained in Sections 4.01(u), 4.01(v) or
4.01(w) is false in a material respect or that any of the covenants
contained in Section 5.01(c) has been breached in a recent material
respect or, (iv) two other times (determined in the discretion of the
Required Lenders) during the term of this Agreement, provide to the
Lender Parties within 60 days after such request, at the expense of the
Loan Parties, a Phase I environmental site assessment report for any of
their or their Subsidiaries' properties described in such request,
prepared by an environmental consulting firm acceptable to the Agent
indicating, as appropriate, the presence or absence of Hazardous
Materials and the estimated cost of any compliance, removal or remedial
action in connection with any Hazardous Materials on such properties;
without limiting the generality of the foregoing, if the Agent
determines at any time that a material risk exists that any such report
will not be provided within the time referred to above, the Agent may
retain an environmental consulting firm to prepare such report at the
expense of the Loan Parties, and the Loan Parties hereby grant and
agree to cause any Subsidiary that owns any property described in such
request to grant at the time of such request, to the Agent, the Lender
Parties, such firm and any agents or representatives thereof an
irrevocable non-exclusive license, subject to the rights of tenants, to
enter onto their respective properties to undertake such an assessment.
(h) Keeping of Books. Each Loan Party shall keep, and cause
each of its Subsidiaries to keep, proper books of record and account,
in which full and correct entries shall be made of all financial
transactions and the assets and business of such Loan Party and each
such Subsidiary in accordance with generally accepted accounting
principles.
(i) Maintenance of Properties, Etc. Each Loan Party shall
maintain and preserve, and cause each of its Subsidiaries to maintain
and preserve, all of its properties that are reasonably required in the
conduct of its business in good working order and condition, ordinary
wear and tear excepted.
(j) Compliance with Terms of Leaseholds. Each Loan Party shall
make all payments and otherwise perform all obligations in respect of
all leases of real property to which such Loan Party or any of its
Subsidiaries is a party, keep such leases in full force and effect and
not allow such leases to lapse or be terminated or any rights to renew
such leases to be forfeited or cancelled, notify the Agent of any
material default by any party
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with respect to such leases and cooperate with the Agent in all
respects to cure any such default, and cause each of its Subsidiaries
to do so, except where the failure to so comply with the foregoing
could not have a Material Adverse Effect.
(k) Performance of Related Documents and Other Agreements.
Each Loan Party shall perform and observe all of the terms and
provisions of the Related Documents (other than the Stockholders
Agreement) to be performed or observed by it, maintain each such
Related Document (other than the Stockholders Agreement) in full force
and effect, enforce such Related Document (other than the Stockholders
Agreement) in accordance with its terms, take all such action to such
end as may be from time to time requested by the Agent and, upon
request of the Agent, make to each other party to each such Related
Document (other than the Stockholders Agreement) such demands and
requests for information and reports or for action as such Loan Party
is entitled to make under such Related Document (other than the
Stockholders Agreement), except where the failure to so comply with the
foregoing could not have a Material Adverse Effect.
(l) Transactions with Affiliates. Each Loan Party shall
conduct, and cause each of its Subsidiaries to conduct, all
transactions otherwise permitted under the Loan Documents with any of
their Affiliates on terms that are fair and reasonable and no less
favorable to such Loan Party or such Subsidiary than it would obtain in
a comparable arm's-length transaction with a Person not an Affiliate;
provided that the Lender Parties hereby agree that the terms of all
employment-related arrangements and contracts between any Loan Party
and any member of the senior management of such Loan Party shall be
deemed to be fair and reasonable if approved by the board of directors
of such Loan Party.
(m) Covenant to Give Security. In addition to the requirements
of Section 5.01(o), each Loan Party shall at the request of the Agent,
at the expense of such Loan Party, (i) within 10 days after such
request, furnish to the Agent a description of the real and personal
properties of such Loan Party and its Subsidiaries in detail
satisfactory to the Agent, (ii) within 15 days after such request, duly
execute and deliver to the Agent mortgages, pledges, assignments and
other security agreements, as specified by and in form and substance
satisfactory to the Agent, securing payment of all the Obligations of
such Loan Party under the Loan Documents and constituting Liens on all
such properties, (iii) within 30 days after such request, take whatever
action (including, without limitation, the recording of mortgages, the
filing of Uniform Commercial Code financing statements, the giving of
notices and the endorsement of notices on title documents) may be
necessary or advisable in the opinion of the Agent to vest in the Agent
(or in any representative of the Agent designated by it) valid and
subsisting Liens on the properties purported to be subject to the
security agreements delivered pursuant to this Section 5.01(m),
enforceable against all third parties in accordance with their terms,
(iv) within 60 days after such request, deliver to the Agent a signed
copy of a favorable
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opinion, addressed to the Agent, of counsel for such Loan Party
acceptable to the Agent as to the matters contained in clauses (i),
(ii) and (iii) above, as to such security agreements being legal, valid
and binding obligations of such Loan Party and its Subsidiaries
enforceable in accordance with their terms and as to such other matters
as the Agent may reasonably request and (v) at any time and from time
to time, promptly execute and deliver any and all further instruments
and documents and take all such other action as the Agent may deem
desirable in obtaining the full benefits of, or in preserving the Liens
of, such security agreements; provided, however, that in the case of an
acquisition of a Foreign Subsidiary by a Loan Party, such Loan Party
shall deliver, or cause to be delivered on its behalf, to the Agent
certificates or other instruments evidencing such Loan Party's Equity
Interest in such Foreign Subsidiary required to be delivered under
clause (i) above within in 60 days of such acquisition.
(n) Syndication. Take all actions which the Agent may
reasonably request to assist it in forming a syndicate acceptable to it
in accordance with Section 8.07, including, but not be limited to, (i)
making senior management of the Borrower and representatives of the
Borrower and the Investor Group available to participate in
informational meetings with potential lenders at such times and places
as the Agent may reasonably request and (ii) timely providing the Agent
with all information reasonably deemed necessary by it to successfully
complete the syndication, including, without limitation, a summary of
the operating prospects (including financial projections) of the
Borrower and its Subsidiaries.
(o) Additional Loan Parties. Each Loan Party shall execute and
deliver, and shall cause any newly organized or acquired Subsidiary of
such Loan Party to execute and deliver, as applicable, to the Agent as
promptly as practicable and in any event within 10 days after the
organization or acquisition of such Subsidiary (i) a security agreement
supplement in the form of Exhibit B to the Third Amended and Restated
Security Agreement, (ii) a guaranty supplement in the form of Exhibit A
to the Subsidiary Guarantee unless the delivery thereof would have
adverse tax consequences for such Subsidiary and such Loan Party has
provided to the Agent written notice acceptable to the Agent of such
adverse consequences, and (iii) such other documents, agreements,
certificates or instruments as the Agent may reasonably request, in
each case in form and substance reasonably satisfactory to the Agent,
and to take all such other actions that may be necessary or that the
Agent may deem reasonably desirable in order to perfect and protect any
pledge, assignment or security interest granted by such security
agreement (granting a security interest in the receivables, inventory,
deposit accounts, equipment, intellectual property and other assets of
such Subsidiary) of such Subsidiary to the Agent for the benefit of the
Lender Parties or to enable the Agent to exercise and enforce its
rights and remedies thereunder.
(p) Interest Rate Hedging. Enter into on or prior to April 15,
1999, and maintain at all times thereafter, interest rate Hedge
Agreements with Persons acceptable
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to the Lender Parties, covering a notional amount of not less than 75%
of the Term Commitments and providing for such Persons to make payments
thereunder for a period of not less than three years to the extent of
increases in interest rates greater than 3.00% above the weighted
average Eurodollar Rate for an Interest Period of one month on the date
hereof.
(q) Further Assurances. (i) Promptly upon request by the
Agent, or any Lender Party through the Agent, correct, and cause each
of its Subsidiaries promptly to correct, any material defect or error
that may be discovered in any Loan Document or in the execution,
acknowledgment, filing or recordation thereof, and
(ii) Promptly upon the request by the Agent, or any Lender
Party through the Agent, do, execute, acknowledge, deliver, record,
re-record, file, re-file, register, re-register any and all such
further acts, deeds, conveyances, pledge agreements, mortgages, deeds
of trust, trust deeds, assignments, financing statements and
continuations thereof, termination statements, notices of assignment,
transfers, certificates, assurances and other instruments as the Agent,
or any Lender Party through the Agent, may reasonably require from time
to time in order to (A) carry out more effectively the purposes of the
Loan Documents, (B) to the fullest extent permitted by applicable law,
subject any Loan Party's or any of its Subsidiaries' properties,
assets, rights or interests to the Liens now or hereafter intended to
be covered by any of the Collateral Documents, (C) perfect and maintain
the validity, effectiveness and priority of any of the Collateral
Documents and any of the Liens intended to be created thereunder and
(D) assure, convey, grant, assign, transfer, preserve, protect and
confirm more effectively unto the Secured Parties under any Loan
Document or under any other instrument executed in connection with any
Loan Document to which any Loan Party or any of its Subsidiaries is or
is to be a party, and cause each of its Subsidiaries to do so, and
(iii) Use reasonable best efforts to cause the due execution
of the Junior Noteholders Undertaking by 100% of all of the holders of
the Junior Notes.
SECTION 5.02. Negative Covenants. So long as any Obligation of
any Loan Party under or in respect of any Loan Document shall remain unpaid, any
Letter of Credit shall be outstanding, any Secured Hedge Agreement shall be in
effect, or any Lender Party shall have any Commitment hereunder:
(a) Liens, Etc. None of the Loan Parties shall at any time
create, incur, assume or suffer to exist, or permit any of its
Subsidiaries to create, incur, assume or suffer to exist, any Lien on
or with respect to any of its properties of any character (including,
without limitation, accounts) whether now owned or hereafter acquired,
or sign or file or suffer to exist, or permit any of its Subsidiaries
to sign or file or suffer to exist, under the Uniform Commercial Code
of any jurisdiction, a financing statement that
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names the Borrower or any of its Subsidiaries as debtor, or sign or
suffer to exist, or permit any of its Subsidiaries to sign or suffer to
exist, any security agreement authorizing any secured party thereunder
to file such financing statement, or assign, or permit any of its
Subsidiaries to assign, any accounts or other right to receive income,
excluding, however, from the operation of the foregoing restrictions
the following:
(i) Liens created under the Loan Documents;
(ii) Permitted Liens and Permitted Encumbrances;
(iii) solely in the case of the Borrower and its
Subsidiaries, Liens described on Schedule 5.02(a)(iii) hereto;
(iv) solely in the case of the Borrower and its
Subsidiaries, Liens arising in connection with Capitalized
Leases permitted under Section 5.02(b)(iii)(A); provided that
no such Lien shall extend to or cover any Collateral or assets
other than the assets subject to such Capitalized Leases;
(v) solely in the case of the Borrower and its
Subsidiaries, purchase money Liens upon or in real property or
equipment acquired or held by the Borrower or any of its
Subsidiaries in the ordinary course of business to secure the
purchase price of such property or equipment or to secure Debt
incurred solely for the purpose of financing the acquisition
of any such property or equipment to be subject to such Liens,
or Liens existing on any such property or equipment at the
time of acquisition (other than any such Liens created in
contemplation of such acquisition that do not secure the
purchase price), or extensions, renewals or replacements of
any of the foregoing for the same or a lesser amount;
provided, however, that no such Lien shall extend to or cover
any property other than the property or equipment being
acquired, and no such extension, renewal or replacement shall
extend to or cover any property not theretofore subject to the
Lien being extended, renewed or replaced; and provided further
that the aggregate principal amount of the Debt secured by
Liens permitted by this clause (v) shall not exceed the amount
permitted under Section 5.02(b)(iii)(A) at any time
outstanding and that any such Debt shall not otherwise be
prohibited by the terms of the Loan Documents;
(vi) solely in the case of the Borrower and its
Subsidiaries, the filing of financing statements solely as a
precautionary measure in connection with operating leases;
(vii) solely in the case of the Borrower and its
Subsidiaries, Liens not otherwise permitted under this Section
5.02(a) securing Debt or other liabilities or
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obligations of the Borrower and its Subsidiaries in an
aggregate principal amount not to exceed $200,000 at any time
outstanding;
(viii) solely in the case of the Borrower and its
Subsidiaries, the replacement, extension or renewal of any
Lien permitted by clause (iii) above upon or in the same
property theretofore subject thereto or the replacement,
extension or renewal (without increase in the amount or change
in any direct or contingent obligor) of the Debt secured
thereby; and
(ix) Liens on Ex-Cell Program Receivables in favor of
any Ex-Cell Program Purchaser created under the Ex-Cell
Factoring Program.
(b) Debt. None of the Loan Parties shall at any time create,
incur, assume or suffer to exist, or permit any of its Subsidiaries to
create, incur, assume or suffer to exist, any Debt other than:
(i) in the case of Universal:
(A) the Junior Notes;
(B) the Stirling Notes; and
(C) Debt under the Loan Documents.
(ii) in the case of the Borrower:
(A) the Subordinated Notes;
(B) Debt owed to any Subsidiary of the
Borrower; provided, however, that such obligation (1)
is subject to an intercompany subordination agreement
in substantially the form of Exhibit H hereto (an
"INTERCOMPANY SUBORDINATION AGREEMENT") executed by
the Borrower and each such Subsidiary and (2) is
evidenced by a promissory note in form and substance
reasonably satisfactory to the Agent, which shall be
pledged under the terms of the Collateral Documents
to the Agent, on behalf of the Secured Parties,
immediately upon its creation; and
(C) any promissory note delivered in
connection with any earn-out payment as contemplated
by Section 3.02 of the AmPac Stock Purchase
Agreement; provided that (1) any such promissory note
shall be on terms and conditions acceptable to the
Agent and (2) any such
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promissory note shall have been extinguished within
10 days of its issuance.
(iii) in the case of the Borrower and its
Subsidiaries,
(A) Capitalized Leases and Debt secured by
Liens permitted by Section 5.02(a)(v) not to exceed
in the aggregate $8,000,000 at any time outstanding
and the amortization of which shall not exceed
$1,600,000 in any 12-Fiscal Month period,
(B) Debt under the Loan Documents;
(C) Debt owed (I) to the Borrower by any
wholly owned U.S. Subsidiary or any wholly owned
Canadian Subsidiary that is a Loan Party, (II) to
Ex-Cell by Ex-Cell Bentonville, and (III) to the
Borrower or any Subsidiary and constituting
Investment allowed pursuant to Section 5.02(f)(v)(D);
provided, however, that such Debt shall be evidenced
by a promissory note in form and substance reasonably
satisfactory to the Agent, which shall be pledged
under the terms of the Collateral Documents to the
Agent, on behalf of the Secured Parties, immediately
upon its creation;
(D) Surviving Debt identified on Part
(ii)(A) of Schedule 3.01(h) of the Borrower and its
Subsidiaries;
(E) indorsement of negotiable instruments
for deposit or collection or similar transactions in
the ordinary course of business;
(F) other unsecured Debt not otherwise
permitted under this Section 5.02(b) aggregating not
more than $1,000,000 at any one time outstanding; and
(G) Debt incurred by Ex-Cell under the
Ex-Cell Program Agreement.
(c) Capital Expenditures. None of the Loan Parties shall make,
or permit any of its Subsidiaries to make, any Capital Expenditures
that would cause the aggregate of all such Capital Expenditures made by
the Borrower and its Subsidiaries in any period set forth below to
exceed the amount set forth below for such period:
<PAGE>
88
Fiscal Year U.S. Dollar Amount
----------- ------------------
Fiscal Year 1999 $8,200,000
Fiscal Year 2000 $6,800,000
Fiscal Year 2001 $6,800,000
Fiscal Year 2002 $6,800,000
Fiscal Year 2003 $6,800,000
Fiscal Year 2004 $6,800,000
; provided, however, that if at the end of any Fiscal Year set forth
above, the amount specified above for such Fiscal Year exceeds the
amount of Capital Expenditures made by the Borrower and its
Subsidiaries during such Fiscal Year (the amount of such excess being
the "EXCESS AMOUNT"), the Borrower and its Subsidiaries shall be
entitled to make additional Capital Expenditures in the succeeding
Fiscal Year in an amount (such amount being referred to herein as the
"CARRY OVER AMOUNT") equal to the lower of (i) the Excess Amount and
(ii) 50% of the amount specified for such prior Fiscal Year.
(d) Mergers, Etc. None of the Loan Parties shall at any time
merge into or consolidate with any Person or permit any Person to merge
into it, or permit any of its Subsidiaries to do so, except that (i)
the Borrower may consummate the Transaction, (ii) any Subsidiary of the
Borrower may merge into or consolidate with any other Subsidiary of the
Borrower provided that, in the case of any such merger or
consolidation, the Person formed by such merger or consolidation shall
be a wholly owned U.S. Subsidiary of the Borrower (iii) any Foreign
Subsidiary of the Borrower may merge into or consolidate with any other
Foreign Subsidiary of the Borrower provided that in the case of any
such merger or consolidation, the Person formed by such merger or
consolidation shall be a wholly owned Subsidiary of the Borrower, and
(iv) any wholly owned U.S. Subsidiary of the Borrower may merge into or
consolidate with the Borrower provided that, in the case of any such
merger or consolidation, the Borrower shall be the surviving Person.
(e) Sales, Etc. of Assets. None of the Loan Parties shall at
any time sell, lease, transfer or otherwise dispose of, or permit any
of its Subsidiaries to sell, lease, transfer or otherwise dispose of,
any assets, or grant any option or other right to purchase, lease or
otherwise acquire any assets, except:
(i) sales of Inventory (including, without
limitation, sales of obsolete or slow-moving Inventory) in the
ordinary course of its business;
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89
(ii) sales of assets for cash and for fair value in
an aggregate amount not to exceed $500,000 in any Fiscal Year;
(iii)dispositions of condemned or damaged property;
(iv) licenses of patents, trademarks, trade names,
service marks and copyrights in the ordinary course of
business;
(v) in a transaction otherwise permitted by Section
5.02(d); and
(vi) sales of Ex-Cell Program Receivables in
accordance with the terms and conditions of the Ex-Cell
Program Agreement.
(f) Investments in Other Persons. None of the Loan Parties
shall at any time make or hold, or permit any of its Subsidiaries to
make or hold, any Investment in any Person other than:
(i) loans and advances by the Borrower and its
Subsidiaries to its employees in the ordinary course of
business in an aggregate principal amount not to exceed
$1,000,000 at any time outstanding;
(ii) Investments by the Borrower and its Subsidiaries
in Cash Equivalents, provided that, to the extent such
Investments in Cash Equivalents exceed $750,000 in aggregate
principal amount at any time outstanding, the Agent shall
have, for the benefit of the Secured Parties, a valid
perfected first priority security interest in the Cash
Equivalents in excess of $750,000, and the Borrower shall take
all such action as the Agent may deem necessary or desirable
to perfect and protect such security interest;
(iii) Investments existing on the Third Restatement
Date and described on Schedule 4.01(ii) hereto;
(iv) refundable advances and deposits required to be
made in the ordinary course of business by the Borrower and
its Subsidiaries;
(v) Investments (A) by the Borrower existing on the
Third Restatement Date; (B) by the Borrower in any wholly
owned U.S. Subsidiary or Canadian Subsidiary of the Borrower
that is a Loan Party; (C) by the Borrower or any other Loan
Party in any Related Textile Business or non-Canadian Foreign
Subsidiary in an aggregate amount not to exceed $5,000,000
from the Third Restatement Date; provided, however, that any
such Related Textile Business shall become a wholly owned
Subsidiary of the Borrower or a joint venture in which the
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90
Borrower has control; provided, further, that, in the case of
each of clauses (B) and (C), no Default shall have occurred
and be continuing at the time such Investment is made or would
result therefrom;
(vi) in the case of the Borrower or any of its
Subsidiaries, Investments consisting of equity or debt in any
obligor of a receivable owing to the Borrower or any of its
Subsidiaries in a bankruptcy action involving such obligor and
which were received by the Borrower or any of its Subsidiaries
in satisfaction of such obligor's obligations to the Borrower
and its Subsidiaries; and
(vii) Investments not otherwise permitted under this
Section 5.02(f) in an aggregate amount not to exceed $250,000
at any time outstanding.
(g) Dividends, Etc. None of the Loan Parties shall at any time
declare or pay any dividends, purchase, redeem, retire, defease or
otherwise acquire for value any of its capital stock or any warrants,
rights or options to acquire such capital stock, now or hereafter
outstanding, return any capital to its stockholders as such, make any
distribution of assets, capital stock, warrants, rights, options,
obligations or securities to its stockholders as such or issue or sell
any capital stock or any warrants, rights or options to acquire such
capital stock, or permit any of its Subsidiaries to do any of the
foregoing or permit any of its Subsidiaries to purchase, redeem,
retire, defease or otherwise acquire for value any capital stock of the
Borrower or any warrants, rights or options to acquire such capital
stock or to issue or sell any capital stock or any warrants, rights or
options to acquire such capital stock, except that:
(i) any Subsidiary of the Borrower may declare and
pay cash dividends to the Borrower or any of its U.S. wholly
owned Subsidiaries;
(ii) in any month in which the semiannual interest
obligations of Universal under the Split-Pay Note become due
and payable, the Borrower may declare and pay cash dividends
to Universal for the sole purpose of enabling Universal to pay
its interest obligations under the Split-Pay Note which become
due and payable in such month; provided, however, that (A)
Universal shall not have the right to pay such interest
in-kind (including, without limitation, in the form of
additional notes) or otherwise defer the payment of such
interest in cash; (B) the aggregate amount of such cash
dividends paid in any six-month period by the Borrower to
Universal for such purposes shall not exceed $300,000 and (C)
no Default shall have occurred and be continuing at the time
such cash dividends are paid or would result therefrom;
(iii) the Borrower may declare and pay cash dividends
to Universal for the sole purpose of enabling Universal (A) to
pay taxes, (B) to pay expenses
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91
incurred in the ordinary course of business in an aggregate
amount not to exceed $150,000 in any Fiscal Year and (C) to
satisfy Universal's obligations under the Management Stock
Option Plan Agreement to purchase, and Universal may purchase
or redeem, shares of its stock held by any of its employees
upon the death or termination of such employee in exchange for
cash and other consideration in an aggregate amount not to
exceed $300,000; provided, however, that in the case of clause
(C) no Default shall have occurred and be continuing at the
time such cash dividends are paid or would result therefrom;
(iv) Universal may issue shares of, or options to
purchase, its capital stock to members of its senior
management pursuant to the terms of the Management Stock
Option Plan Agreement; provided, however, that the number of
shares of capital stock of Universal which may be issued in
connection with the Management Stock Option Plan Agreement
shall not exceed 5% of the total number of shares of capital
stock of Universal issued and outstanding at any time on a
fully diluted basis.
(v) Universal may issue or sell capital stock to any
Person for not less than fair market value, provided that the
Net Cash Proceeds of all such issuances or sales (other than
such Net Cash Proceeds received pursuant to clause (v) above)
is contributed by Universal to the Borrower and the Borrower
applies such Net Cash Proceeds to the prepayments of Advances
pursuant to Section 2.06(b)(ii);
(vi) Universal may issue stock for all or a portion
of the consideration paid in connection with the acquisition
of a Related Textile Business in accordance with Section
5.02(f)(v) to the seller or sellers of such Business; and
(vii) Universal may declare and make stock dividends
payable in shares of its common stock.
(h) Change in Nature of Business. None of the Loan Parties
shall at any time engage, or permit any of its Subsidiaries to engage,
in any business other than the manufacturing of home textiles and
specialty textiles and other activities incidental thereto, including,
without limitation, the ownership of properties incidental to such
businesses.
(i) Charter Amendments. None of the Loan Parties shall at any
time amend, or permit any of its Subsidiaries to amend, its certificate
of incorporation or bylaws unless agreed to by the Agent in writing in
advance of any such amendment.
(j) Accounting Changes. None of the Loan Parties shall at any
time make or permit, or permit any of its Subsidiaries to make or
permit, any change in (i) accounting
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92
policies or reporting practices, except as required by generally
accepted accounting principles or (ii) Fiscal Year, except, in
connection with any Subsidiary acquired by a Loan Party, such changes
to such Subsidiary's accounting policies, reporting practices or Fiscal
Year as are required to conform such Subsidiary's accounting policies,
reporting practices or Fiscal Year to the accounting policies,
reporting practices and Fiscal Year of such Loan Party.
(k) Prepayments, Etc., of Debt. None of the Loan Parties shall
at any time (i) prepay, redeem, purchase, defease or otherwise satisfy
prior to the scheduled maturity thereof in any manner, or make any
payment in violation of any subordination terms of, any Debt, other
than (x) the prepayment of the Advances in accordance with the terms of
this Agreement, (y) regularly scheduled or required repayments or
redemptions of Surviving Debt of the Borrower and its Subsidiaries
(other than the Subordinated Notes) and (z) the prepayment of Debt
under the Accounts Receivable Management Agreement, or (ii) amend,
modify or change in any manner any term or condition of any Surviving
Debt, or permit any of its Subsidiaries to do any of the foregoing
other than to prepay any Debt payable to the Borrower.
(l) Amendment, Etc., of Related Documents. None of the Loan
Parties shall at any time cancel or terminate any or consent to or
accept any cancellation or termination thereof, amend, modify or change
in any manner any term or condition of any Related Document or give any
consent, waiver or approval thereunder, waive any default under or any
breach of any term or condition of any Related Document, agree in any
manner to any other amendment, modification or change of any term or
condition of any Related Document or take any other action in
connection with any Related Document that would impair the value of the
interest or rights of such Loan Party thereunder or that would impair
the rights or interests of the Agent or any Lender Party, or permit any
of its Subsidiaries to do any of the foregoing.
(m) Negative Pledge. None of the Loan Parties shall at any
time enter into or suffer to exist, or permit any of its Subsidiaries
to enter into or suffer to exist, any agreement prohibiting or
conditioning the creation or assumption of any Lien upon any of its
property or assets other than (i) in favor of the Secured Parties, (ii)
in connection with any Debt secured by Capitalized Leases and purchase
money Liens, in each case, to the extent permitted under Section
5.02(b)(iii)(A) only with respect to the specific assets referred to in
such Section 5.02(b)(iii)(A), (iii) in connection with the Subordinated
Notes and (iv) in the case of Ex-Cell, in connection with the Ex-Cell
Factoring Program.
(n) Partnerships. None of the Loan Parties shall at any time
become a general partner in any general or limited partnership or joint
venture (other than in a joint venture in which such Loan Party has
control and has made an Investment in accordance with Section
5.02(f)(v)), or permit any of its Subsidiaries to do so.
<PAGE>
93
(o) Other Transactions. None of the Loan Parties shall at any
time engage, or permit any of its Subsidiaries to engage, in any
transaction involving commodity options or futures contracts or any
similar speculative transactions (including, without limitation,
take-or-pay contracts).
SECTION 5.03. Reporting Requirements. So long as any
Obligation of any Loan Party under or in respect of any Loan Document shall
remain unpaid, any Letter of Credit shall be outstanding, any Secured Hedge
Agreement shall be in effect, or any Lender Party shall have any Commitment
hereunder, the Borrower will furnish to the Agent and the Lender Parties:
(a) Default and Prepayment Notices. (i) As soon as possible
and in any event within two Business Days after the occurrence of each
Default or any event, development or occurrence reasonably likely to
have a Material Adverse Effect continuing on the date of such
statement, a statement of the chief financial officer of the Borrower
setting forth details of such Default, event, development or occurrence
and the action that the Borrower has taken and proposes to take with
respect thereto, and (ii) as soon as possible and in any event no later
than 11:00 A.M. (New York City time) at least three Business Days
before any prepayment of Term Advances is to be made by the Borrower
pursuant to Section 2.06 (the "PREPAYMENT Date"), written notice of the
principal amount of such prepayment (the "PREPAYMENT AMOUNT") and the
applicable Prepayment Date. Each such notice (a "PREPAYMENT NOTICE")
shall be by telex or telecopier or otherwise as provided in Section
8.02.
(b) Monthly Financials. As soon as available and in any event
no later than 30 days, or, if such Fiscal Month ends any time during
the first nine Fiscal Months in the 1999 Fiscal Year or in any other
Fiscal Year and is the last month in a Fiscal Quarter, 45 days, after
the end of each Fiscal Month thereafter, a Consolidated and
consolidating balance sheets of each Loan Party and its Subsidiaries as
of the end of such Fiscal Month and Consolidated and consolidating
statements of income and cash flow of such Loan Party and its
Subsidiaries for the period commencing at the end of the previous
Fiscal Month and ending with the end of such Fiscal Month and
Consolidated and consolidating statements of income and cash flow of
such Loan Party and its Subsidiaries for the period commencing at the
end of the previous Fiscal Year and ending with the end of such Fiscal
Month, setting forth in each case in comparative form the corresponding
figures for the corresponding Fiscal Month of the preceding Fiscal
Year, all in reasonable detail and duly certified (subject to year end
audited adjustments) by the chief financial officer of the Borrower as
having been prepared in accordance with generally accepted accounting
principles consistent with those applied in the most recent annual
audit, together with (i) a certificate of said officer stating that no
Default has occurred and is continuing or, if a Default has occurred
and is continuing, a statement as to the nature thereof and the action
that such Loan Party has taken and proposes to take with respect
thereto, (ii) a schedule in
<PAGE>
94
form satisfactory to the Agent of the computations used by such Loan
Party in determining the Total Leverage Ratio, (iii) in the event of
any change from GAAP in the generally accepted accounting principles
used in the preparation of such financial statements, a statement of
reconciliation conforming such financial statements to GAAP, (iv)
copies of any management discussions distributed to any member of the
Investor Group other than Thomas O'Gorman, and (v) [consolidating
financial information of Universal]; provided, however, that in respect
of each Fiscal Month ending in March, June, September and December, the
Borrower shall furnish to the Lender Parties a schedule in form
satisfactory to the Agent of the computations used by each Loan Party
in determining compliance with the covenants contained in Section 5.04.
(c) Annual Financials. As soon as available and in any event
no later than 90 days after the end of each Fiscal Year, a copy of the
annual audit report for such year for each Loan Party and its
Subsidiaries, including therein Consolidated and consolidating balance
sheets of such Loan Party and its Subsidiaries as of the end of such
Fiscal Year and Consolidated and consolidating statements of income and
cash flow of such Loan Party and its Subsidiaries for such Fiscal Year,
in each case accompanied, with respect to such Consolidated financial
statements, by an opinion acceptable to the Required Lenders of
PriceWaterhouse Coopers or other independent public accountants of
recognized standing acceptable to the Required Lenders, together with
(x) a certificate of the chief financial officer of such Loan Party
stating that no Default has occurred and is continuing or, if a Default
has occurred and is continuing, a statement as to the nature thereof
and the action that such Loan Party has taken and proposes to take with
respect thereto, (y) in the event of any change from GAAP in the
generally accepted accounting principles used in the preparation of
such financial statements, a statement of reconciliation conforming
such financial statements to GAAP and (z) copies of management
discussions distributed to any member of the Investor Group other than
Thomas O'Gorman.
(d) Annual Forecasts. As soon as available and in any event no
later than 15 days before the end of each Fiscal Year, forecasts
prepared by management of such Loan Party, in form satisfactory to the
Agent, of Consolidated balance sheets, income statements and cash flow
statements on a monthly basis for the Fiscal Year following such Fiscal
Year then ended.
(e) ERISA Events and ERISA Reports. Promptly and in any event
within 15 days after any Loan Party or any ERISA Affiliate knows or has
reason to know that any ERISA Event has occurred, a statement of the
chief financial officer of the Borrower describing such ERISA Event and
the action, if any, that such Loan Party or such ERISA Affiliate has
taken and proposes to take with respect thereto.
<PAGE>
95
(f) Plan Terminations. Promptly and in any event within three
Business Days after receipt thereof by any Loan Party or any ERISA
Affiliate, copies of each notice from the PBGC stating its intention to
terminate any Plan or to have a trustee appointed to administer any
Plan.
(g) Plan Annual Reports. Promptly and in any event within 30
days after the filing thereof with the Internal Revenue Service, copies
of each Schedule B (Actuarial Information) to the annual report (Form
5500 Series) with respect to each Plan.
(h) Multiemployer Plan Notices. Promptly and in any event
within five Business Days after receipt thereof by any Loan Party or
any ERISA Affiliate from the sponsor of a Multiemployer Plan, copies of
each notice concerning (i) the imposition of Withdrawal Liability by
any such Multiemployer Plan, (ii) the reorganization or termination,
within the meaning of Title IV of ERISA, of any such Multiemployer Plan
or (iii) the amount of liability incurred, or that may be incurred, by
such Loan Party or any ERISA Affiliate in connection with any event
described in clause (i) or (ii).
(i) Litigation. Promptly after the commencement thereof,
notice of all actions, suits, investigations, litigation and
proceedings before any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign,
affecting any Loan Party or any of its Subsidiaries of the type
described in Section 4.01(j).
(j) Securities Reports. Promptly after the sending or filing
thereof, copies of all proxy statements, financial statements and
reports that any Loan Party or any of its Subsidiaries sends to its
stockholders, and copies of all regular, periodic and special reports,
and all registration statements, that any Loan Party or any of its
Subsidiaries files with the Securities and Exchange Commission or any
governmental authority that may be substituted therefor, or with any
national securities exchange.
(k) Creditor Reports. Promptly after the furnishing thereof,
copies of any statement or report furnished to any other holder of the
Debt of any Loan Party or of any of its Subsidiaries pursuant to the
terms of any indenture, loan or credit or similar agreement and not
otherwise required to be furnished to the Lender Parties pursuant to
any other clause of this Section 5.03.
(l) Agreement Notices. Promptly upon receipt thereof, copies
of all notices, requests and other documents received by any Loan Party
or any of its Subsidiaries under or pursuant to any Related Document or
indenture, loan or credit or similar agreement regarding or related to
any breach or default by any party thereto or any other event that
could materially impair the value of the interests or the rights of any
Loan Party or any of its Subsidiaries or otherwise have a Material
Adverse Effect and copies of any amendment, modification or waiver of
any provision of any Related Agreement or
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96
indenture, loan or credit or similar agreement and, from time to time
upon request by the Agent, such information and reports regarding the
Related Documents as the Agent may reasonably request.
(m) Revenue Agent Reports. Within 10 days after receipt,
copies of all Revenue Agent Reports (Internal Revenue Service Form
886), or other written proposals of the Internal Revenue Service, that
propose, determine or otherwise set forth positive adjustments to the
Federal income tax liability of the affiliated group (within the
meaning of Section 1504(a)(1) of the Internal Revenue Code) of which a
Loan Party is a member aggregating $250,000 or more.
(n) Environmental Conditions. Promptly after the assertion or
occurrence thereof, notice of any Environmental Action against or of
any condition or occurrence on any property of any Loan Party or any of
its Subsidiaries that results in a material noncompliance by any Loan
Party or any of its Subsidiaries with any Environmental Law or
Environmental Permit that could be reasonably expected to have a
Material Adverse Effect.
(o) Real Property. As soon as available and in any event
within 30 days after the end of each Fiscal Year, a report
supplementing Schedules 4.01(gg) and 4.01(hh) hereto, including an
identification of all real and leased property disposed of by the
Borrower or any of its Subsidiaries during such Fiscal Year, a list and
description (including the street address, county or other relevant
jurisdiction, state, record owner, book value thereof, and in the case
of leases of property, lessor, lessee, expiration date and annual
rental cost thereof) of all real property acquired or leased during
such Fiscal Year and a description of such other changes in the
information included in such Schedules as may be necessary for such
Schedules to be accurate and complete.
(p) Borrowing Base Certificate. As soon as available and in
any event within 15 Business Days after the end of each Fiscal Month, a
Borrowing Base Certificate of the Borrower and its Subsidiaries, taken
as a whole, as at the end of such Fiscal Month, certified by the chief
financial officer of the Borrower.
(q) Other Information. Such other information respecting the
business, condition (financial or otherwise), operations, performance,
properties or prospects of any Loan Party or any of its Subsidiaries as
any Lender Party (through the Agent) may from time to time reasonably
request.
SECTION 5.04. Financial Covenants. So long as any Obligation
of any Loan Party under or in respect of any Loan Document shall remain unpaid,
any Letter of Credit shall be outstanding, any Secured Hedge Agreement shall be
in effect, or any Lender Party shall have any Commitment hereunder, the Borrower
and its Subsidiaries will:
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97
(a) Leverage Ratios. (i) Maintain a Total Leverage Ratio as of
the end of each Rolling Period ended during each Fiscal Quarter of each
Fiscal Year set forth below of not more than the ratio set forth below
for each Rolling Period ended during each such Fiscal Quarter:
Fiscal Month Ratio
------------ -----
March 1999 5.85:1.00
June 1999 5.85:1.00
Sep 1999 5.85:1.00
Dec 1999 5.85:1.00
March 2000 5.85:1.00
June 2000 5.85:1.00
Sep 2000 5.85:1.00
Dec 2000 5.85:1.00
March 2001 5.85:1.00
June 2001 5.65:1.00
Sep 2001 5.65:1.00
Dec 2001 5.35:1.00
March 2002 5.35:1.00
June 2002 5.35:1.00
Sep 2002 5.10:1.00
Dec 2002 5.10:1.00
March 2003 4.85:1.00
June 2003 4.85:1.00
Sep 2003 4.60:1.00
Dec 2003 4.60:1.00
March 2004 4.35:1.00
June 2004 4.35:1.00
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98
Fiscal Month Ratio
------------ -----
Sep 2004 4.35:1.00
Dec 2004 4.35:1.00
(i) Maintain a Senior Leverage Ratio as of the end of
each Rolling Period ended during each Fiscal Quarter of each Fiscal
Year set forth below of not more than the ratio set forth below for
each Rolling Period ended during each such Fiscal Quarter:
Fiscal Month Ratio
------------ -----
March 1999 3.70:1.00
June 1999 3.70:1.00
Sep 1999 3.70:1.00
Dec 1999 3.70:1.00
March 2000 3.70:1.00
June 2000 3.70:1.00
Sep 2000 3.70:1.00
Dec 2000 3.70:1.00
March 2001 3.70:1.00
June 2001 3.50:1.00
Sep 2001 3.50:1.00
Dec 2001 3.25:1.00
March 2002 3.25:1.00
June 2002 3.25:1.00
Sep 2002 3.00:1.00
Dec 2002 3.00:1.00
March 2003 2.75:1.00
June 2003 2.75:1.00
Sep 2003 2.50:1.00
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99
Dec 2003 2.50:1.00
March 2004 2.25:1.00
June 2004 2.25:1.00
Sep 2004 2.25:1.00
Dec 2004 2.25:1.00
(b) Fixed Charge Coverage Ratio. Maintain a Fixed Charge
Coverage Ratio of 1.05 to 1.00 as of the end of each Rolling Period.
(c) Interest Coverage Ratio. Maintain an Interest Coverage
Ratio as of the end of each Rolling Period ended during each Fiscal
Quarter in each Fiscal Year set forth below of not less than the ratio
set forth below for each Rolling Period ended during each such Fiscal
Quarter:
Fiscal Month Ratio
------------ -----
March 1999 1.65:1.00
June 1999 1.65:1.00
Sep 1999 1.65:1.00
Dec 1999 1.65:1.00
March 2000 1.70:1.00
June 2000 1.70:1.00
Sep 2000 1.75:1.00
Dec 2000 1.75:1.00
March 2001 1.75:1.00
June 2001 1.75:1.00
Sep 2001 1.75:1.00
Dec 2001 1.90:1.00
March 2002 1.90:1.00
June 2002 1.90:1.00
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100
Fiscal Month Ratio
------------ -----
Sep 2002 2.00:1.00
Dec 2002 2.00:1.00
March 2003 2.00:1.00
June 2003 2.00:1.00
Sep 2003 2.25:1.00
Dec 2003 2.25:1.00
March 2004 2.25:1.00
June 2004 2.25:1.00
Sep 2004 2.50:1.00
Dec 2004 2.50:1.00
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. If any of the following events
("Events of Default") shall occur and be continuing:
(a) the Borrower shall fail to pay any principal of, or interest on,
any Advance, or any Loan Party shall fail to make any other payment under any
Loan Document, in each case when the same becomes due and payable; or
(b) any representation or warranty made by any Loan Party (or any of
its officers) under or in connection with any Loan Document shall prove to have
been incorrect in any material respect when made; or
(c) any Loan Party or, if applicable, any of its Subsidiaries shall
fail to perform or observe any term, covenant or agreement contained in Section
2.14, 5.01(e), (f), (g), (l), (m) or (o), 5.02, 5.03 or 5.04; or
(d) any Loan Party or, if applicable, any of its Subsidiaries shall
fail to perform any other term, covenant or agreement contained in any Loan
Document on its part to be performed or observed if such failure shall remain
unremedied for 10 Business Days after the earlier of the date on which (A) a
Responsible Officer of any Loan Party becomes aware of such failure or (B)
written notice thereof shall have been given to any Loan Party by the Agent or
any Lender Party; or
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(e) any Loan Party or any of its Subsidiaries shall fail to pay any
principal of, premium or interest on or any other amount payable in respect of
any Debt that is outstanding in a principal or notional amount of at least
$1,000,000 either individually or in the aggregate (but excluding Debt
outstanding hereunder) of such Loan Party or such Subsidiary (as the case may
be), when the same becomes due and payable (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise), and such failure shall
continue after the applicable grace period, if any, specified in the agreement
or instrument relating to such Debt; or any other event shall occur or
condition shall exist under any agreement or instrument relating to any such
Debt and shall continue after the applicable grace period, if any, specified in
such agreement or instrument, if the effect of such event or condition is to
accelerate, or to permit the acceleration of, the maturity of such Debt or
otherwise to cause, or to permit the holder thereof to cause, such Debt to
mature; or any such Debt shall be declared to be due and payable or required to
be prepaid or redeemed (other than by a regularly scheduled required prepayment
or redemption), purchased or defeased, or an offer to prepay, redeem, purchase
or defease such Debt shall be required to be made, in each case prior to the
stated maturity thereof;
(f) there shall occur any Material Adverse Change; or
(g) any Loan Party or any of its Subsidiaries shall generally not pay
its debts as such debts become due, or shall admit in writing its inability to
pay its debts generally, or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against any Loan Party
or any of its Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee, or
other similar official for it or for any substantial part of its property and,
in the case of any such proceeding instituted against it (but not instituted by
it) that is being diligently contested by it in good faith, either such
proceeding shall remain undismissed or unstayed for a period of 30 days or any
of the actions sought in such proceeding (including, without limitation, the
entry of an order for relief against, or the appointment of a receiver,
trustee, custodian or other similar official for, it or any substantial part of
its property) shall occur; or any Loan Party or any of its Subsidiaries shall
take any corporate action to authorize any of the actions set forth above in
this subsection (g); or
(h) any judgment or order for the payment of money in excess of
$1,000,000 (to the extent not fully paid or discharged) shall be rendered
against any Loan Party or any of its Subsidiaries and either (i) enforcement
proceedings shall have been commenced by any creditor upon such judgment or
order or (ii) there shall be any period of 10 consecutive days during which a
stay of enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; or
(i) any non-monetary judgment or order shall be rendered against any
Loan Party or any of its Subsidiaries that could have a Material Adverse
Effect, and there shall be any period
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of 10 consecutive days during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not be in effect; or
(j) any provision of any Loan Document after delivery thereof pursuant
to Sections 3.01, 5.01(m) or 5.01(o) shall for any reason cease to be valid and
binding on or enforceable against any Loan Party to it, or any such Loan Party
shall so state in writing; or
(k) any Collateral Document after delivery thereof pursuant to Sections
3.01, 5.01(m) or 5.01(o) shall for any reason (other than pursuant to the terms
thereof) cease to create a valid and perfected first priority lien on and
security interest in a material portion of Collateral purported to be covered
thereby; or
(l) (i) the Investor Group or any member thereof shall sell or
otherwise transfer 10% or more of its shares of capital stock of Universal
(other than, solely in the case of CVC, any sale or transfer to 399 Venture
Partners, Inc., Court Square Capital, Ltd., or Citicorp Capital Investors,
Ltd., each of which is a Delaware corporation and a wholly owned Subsidiary of
Citibank, N.A.), (ii) at any time prior to an initial public offering of
Universal, the Investor Group shall cease to be the record and beneficial owner
of at least 57% of the fully diluted Voting Stock of Universal, (iii) at any
time from and after an initial public offering of Universal, the Investor Group
shall cease to be the record and beneficial owner of at least 40% of the fully
diluted Voting Stock of Universal, (iv) any Person or "group" (within the
meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended)
(other than the Investor Group) shall own or control more than 30% of the fully
diluted Voting Stock of Universal, or (v) any Person or two or more Persons
acting in concert (other than the Investor Group) shall have acquired by
contract or otherwise, or shall have entered into a contract or arrangement
that, upon consummation, will result in its or their acquisition of the power
to exercise, directly or indirectly, a controlling influence over the
management or policies of Universal; or
(m) (i) Universal shall cease to own 100% of the Equity Interests of
the Borrower or (ii) any Person other than the Borrower shall own any of the
Equity Interests of any of its Subsidiaries; or
(n) Any Loan Party or any ERISA Affiliate shall incur or could be
reasonably expected to incur liability in excess of $1,000,000 in the aggregate
as a result of one or more of the following and any Loan Party could be
reasonably expected to be required to make a payment in respect of such amount:
(i) the occurrence of any ERISA Event; (ii) the partial or complete withdrawal
of any Loan Party or any of its ERISA Affiliates from a Multiemployer Plan; or
(iii) the reorganization or termination of a Multiemployer Plan;
then, and in any such event, the Agent (i) shall at the request, or may with the
consent, of the Required Lenders, by notice to the Borrower, declare the
Commitments of each Lender Party and the obligation of each Lender to make
Advances (other than Letter of Credit Advances by the Issuing Bank or a Working
Capital Lender pursuant to Section 2.03(c) and Swing Line Advances by a Working
Capital Lender pursuant to Section 2.02(b)) and of the Issuing Bank to issue
Letters of Credit to be terminated, whereupon the same shall forthwith
terminate, and (ii) shall at
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the request, or may with the consent, of the Required Lenders, by notice to the
Borrower, declare the Advances, all interest thereon and all other amounts
payable under this Agreement, the Notes, if any, and the other Loan Documents to
be forthwith due and payable, whereupon the Advances, all such interest and all
such amounts shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by the Borrower; provided, however, that in the event of an actual or
deemed entry of an order for relief with respect to any Loan Party or any of its
Subsidiaries under the Federal Bankruptcy Code, (x) the Commitments of each
Lender Party and the obligation of each Lender to make Advances (other than
Letter of Credit Advances by the Issuing Bank or a Working Capital Lender
pursuant to Section 2.03(c) and Swing Line Advances by a Working Capital Lender
pursuant to Section 2.02(b) and of the Issuing Bank to issue Letters of Credit
shall automatically be terminated and (y) the Advances, all such interest and
all such amounts shall automatically become and be due and payable, without
presentment, demand, protest or any notice of any kind, all of which are hereby
expressly waived by the Borrower.
SECTION 6.02. Actions in Respect of the Letters of Credit upon Default.
If any Event of Default shall have occurred and be continuing, the Agent may,
and upon the request of the Required Lenders shall, irrespective of whether it
is taking any of the actions described in Section 6.01 or otherwise, make demand
upon the Borrower to, and forthwith upon such demand the Borrower will, pay to
the Agent on behalf of the Lender Parties in same day funds at the Agent's
office designated in such demand, for deposit in the L/C Cash Collateral
Account, an amount equal to the aggregate Available Amount of all Letters of
Credit then outstanding. If at any time the Agent determines that any funds held
in the L/C Cash Collateral Account are subject to any right or claim of any
Person other than the Agent and the Lender Parties or that the total amount of
such funds is less than the aggregate Available Amount of all Letters of Credit,
the Borrower will, forthwith upon demand by the Agent, pay to the Agent, as
additional funds to be deposited and held in the L/C Cash Collateral Account, an
amount equal to the excess of (a) such aggregate Available Amount over (b) the
total amount of funds, if any, then held in the L/C Cash Collateral Account that
the Agent determines to be free and clear of any such right and claim.
ARTICLE VII
THE AGENT
SECTION 7.01. Authorization and Action. Each Lender Party (in its
capacities as a Lender, the Issuing Bank (if applicable) and a potential Hedge
Bank) hereby appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers and discretion under this Agreement and
the other Loan Documents as are delegated to the Agent by the terms hereof and
thereof, together with such powers and discretion as are reasonably incidental
thereto. As to any matters not expressly provided for by the Loan Documents
(including, without limitation, enforcement or collection of the Debt resulting
from the Advances), the Agent shall not be required to exercise any discretion
or take any action, but shall be required to act or to refrain from acting (and
shall be fully protected in so acting or refraining from acting) upon the
instructions of the Required Lenders, and such instructions shall be
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binding upon all Lender Parties and all holders of Notes; provided, however,
that the Agent shall not be required to take any action that exposes the Agent
to personal liability or that is contrary to this Agreement or applicable law.
The Agent agrees to give to each Lender Party prompt notice of each notice given
to it by the Borrower pursuant to the terms of this Agreement.
SECTION 7.02. Agent's Reliance, Etc. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or them under or in connection with the Loan
Documents, except for its or their own gross negligence or willful misconduct.
Without limitation of the generality of the foregoing, the Agent: (a) may treat
the Lender that made any Advance as the holder of the Debt resulting therefrom
until the Agent receives and accepts an Assignment and Acceptance entered into
by such Lender, as assignor, and an Eligible Assignee, as assignee, as provided
in Section 8.07; (b) may consult with legal counsel (including counsel for any
Loan Party), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith by
it in accordance with the advice of such counsel, accountants or experts; (c)
makes no warranty or representation to any Lender Party and shall not be
responsible to any Lender Party for any statements, warranties or
representations (whether written or oral) made in, or in connection with, the
Loan Documents; (d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of any
Loan Document on the part of any Loan Party or to inspect the property
(including the books and records) of any Loan Party; (e) shall not be
responsible to any Lender Party for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of, or the perfection or
priority of any lien or security interest created or purported to be created
under or in connection with, any Loan Document or any other instrument or
document furnished pursuant thereto; and (f) shall incur no liability under or
in respect of any Loan Document by acting upon any notice, consent, certificate
or other instrument or writing (which may be by telegram, telecopy or telex)
believed by it to be genuine and signed or sent by the proper party or parties.
SECTION 7.03. BNP and Affiliates. With respect to its Commitments, the
Advances made by it and any Notes issued to it, BNP shall have the same rights
and powers under the Loan Documents as any other Lender Party and may exercise
the same as though it were not the Agent; and the term "Lender Party" or
"Lenders" shall, unless otherwise expressly indicated, include BNP in its
individual capacity. BNP and its affiliates may accept deposits from, lend money
to, act as trustee under indentures of, accept investment banking engagements
from and generally engage in any kind of business with, any Loan Party, any of
its Subsidiaries and any Person who may do business with or own securities of
any Loan Party or any such Subsidiary, all as if BNP were not the Agent and
without any duty to account therefor to the Lender Parties.
SECTION 7.04. Lender Party Credit Decision. Each Lender Party
acknowledges that it has, independently and without reliance upon the Agent or
any other Lender Party and, based on the financial statements referred to in
Section 4.01 and such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender Party also acknowledges that it will, independently and
without reliance upon the Agent or any other Lender Party and based on such
documents and information
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as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement.
SECTION 7.05. Indemnification. (a) Each Lender Party severally agrees
to indemnify the Agent (to the extent not promptly reimbursed by the Borrower)
from and against such Lender Party's ratable share (determined as provided
below) of any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever (including without limitation reasonable fees and expenses of
counsel) that may be imposed on, incurred by, or asserted against the Agent in
any way relating to or arising out of the Loan Documents or any action taken or
omitted by the Agent under the Loan Documents (collectively, the "INDEMNIFIED
COSTS"); provided, however, that no Lender Party shall be liable for any portion
of such Indemnified Costs resulting from the Agent's gross negligence or willful
misconduct. Without limitation of the foregoing, each Lender Party agrees to
reimburse the Agent promptly upon demand for its ratable share of any costs and
expenses (including, without limitation, fees and expenses of counsel) payable
by the Borrower under Section 8.04, to the extent that the Agent is not promptly
reimbursed for such costs and expenses by the Borrower. For purposes of this
Section 7.05, the Lender Parties' respective ratable shares of any amount shall
be determined, at any time, according to the sum of (a) the aggregate principal
amount of the Advances outstanding at such time and owing to the respective
Lender Parties, (b) their respective Pro Rata Shares of the aggregate Available
Amount of all Letters of Credit outstanding at such time, (c) the aggregate
unused portions of their respective Term Commitments at such time and (d) their
respective Unused Working Capital Commitments at such time. In the case of any
investigation, litigation or proceeding giving rise to any Indemnified Costs,
this Section 7.05 applies whether any such investigation, litigation, or
proceeding is brought by the Agent, any Lender, any other Lender Party or a
third party. The failure of any Lender Party to reimburse the Agent promptly
upon demand for its ratable share of any amount required to be paid by the
Lender Party to the Agent as provided herein shall not relieve any other Lender
Party of its obligation hereunder to reimburse the Agent for its ratable share
of such amount, but no Lender Party shall be responsible for the failure of any
other Lender Party to reimburse the Agent for such other Lender Party's ratable
share of such amount. Without prejudice to the survival of any other agreement
of any Lender Party hereunder, the agreement and obligations of each Lender
Party contained in this Section 7.05(a) shall survive the payment in full of
principal, interest and all other amounts payable hereunder and under the other
Loan Documents.
(b) Each Lender Party severally agrees to indemnify the Issuing Bank (to the
extent not promptly reimbursed by the Borrower) from and against such Lender
Party's ratable share (determined as provided below) of any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever that may be imposed
on, incurred by, or asserted against the Issuing Bank in any way relating to or
arising out of the Loan Documents or any action taken or omitted by the Issuing
Bank under the Loan Documents; provided, however, that no Lender Party shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the Issuing Bank's gross negligence or willful misconduct. Without
limitation of the foregoing, each Lender Party agrees to reimburse the Issuing
Bank promptly
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upon demand for its ratable share of any costs and expenses (including, without
limitation, fees and expenses of counsel) payable by the Borrower under Section
8.04, to the extent that the Issuing Bank is not promptly reimbursed for such
costs and expenses by the Borrower. For purposes of this Section 7.05(b), the
Lender Parties' respective ratable shares of any amount shall be determined, at
any time, according to the sum of (a) the aggregate principal amount of the
Advances outstanding at such time and owing to the respective Lender Parties,
(b) their respective Pro Rata Shares of the aggregate Available Amount of all
Letters of Credit outstanding at such time, (c) their respective unused portions
of their Term Commitments at such time plus (d) their respective Unused Working
Capital Commitments at such time. The failure of any Lender Party to reimburse
the Issuing Bank promptly upon demand for its ratable share of any amount
required to be paid by the Lender Parties to the Issuing Bank as provided herein
shall not relieve any other Lender Party of its obligation hereunder to
reimburse the Issuing Bank for its ratable share of such amount, but no Lender
Party shall be responsible for the failure of any other Lender Party to
reimburse the Issuing Bank for such other Lender Party's ratable share of such
amount. Without prejudice to the survival of any other agreement of any Lender
Party hereunder, the agreement and obligations of each Lender Party contained in
this Section 7.05(b) shall survive the payment in full of principal, interest
and all other amounts payable hereunder and under the other Loan Documents.
SECTION 7.06. Successor Agents. The Agent may resign at any time by
giving written notice thereof to the Lender Parties and the Borrower and may be
removed at any time with or without cause by the Required Lenders. Upon any such
resignation or removal, the Required Lenders shall have the right to appoint a
successor Agent provided that, so long as the consent of the Borrower is not
unreasonably withheld, the Borrower shall have the right to consent to any such
successor Agent (other than a successor Agent that is a Lender at such time with
a commitment of at least $5,000,000 and a combined capital and surplus of at
least $500,000,000). If no successor Agent shall have been so appointed by the
Required Lenders, and shall have accepted such appointment, within 30 days after
the retiring Agent's giving of notice of resignation or the Required Lenders'
removal of the retiring Agent, then the retiring Agent may, on behalf of the
Lender Parties, appoint a successor Agent provided that, so long as the consent
of the Borrower is not unreasonably withheld, the Borrower shall have the right
to consent to any such successor Agent (other than a successor Agent that is a
Lender at such time with a commitment of at least $5,000,000 and a combined
capital and surplus of at least $500,000,000). Upon the acceptance of any
appointment as Agent hereunder by a successor Agent and upon the execution and
filing or recording of such financing statements, or amendments thereto, and
such other instruments or notices, as may be necessary or desirable, or as the
Required Lenders may request, in order to continue the perfection of the Liens
granted or purported to be granted by the Collateral Documents, such successor
Agent shall succeed to and become vested with all the rights, powers,
discretion, privileges and duties of the retiring Agent, and the retiring Agent
shall be discharged from its duties and obligations under the Loan Documents.
After any retiring Agent's resignation or removal hereunder as Agent, the
provisions of this Article VII shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement.
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SECTION 7.07 Agents. The designation of Fleet National Bank as
Syndication Agent and LaSalle National Bank as Documentation does not confer any
rights or impose any obligations in addition to those rights and obligations
applicable to the Lenders generally.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments, Etc. No amendment or waiver of any provision
of this Agreement or the Notes or any other Loan Document, nor consent to any
departure by the Loan Parties therefrom, shall in any event be effective unless
the same shall be in writing and signed (or, in the case of the Collateral
Documents, consented to) by the Required Lenders, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that (a) no amendment, waiver or
consent shall, unless in writing and signed by all of the Lenders, do any of the
following at any time: (i) waive any of the conditions specified in Section
3.01, (ii) change the number of Lenders or the percentage of (x) the
Commitments, (y) the aggregate unpaid principal amount of the Advances or (z)
the aggregate Available Amount of outstanding Letters of Credit that, in each
case, shall be required for the Lenders or any of them to take any action
hereunder, (iii) release all or substantially all of the Collateral in any
transaction or series of related transactions or permit the creation,
incurrence, assumption or existence of any Lien on all or substantially all of
the Collateral in any transaction or series of related transactions to secure
any Obligations other than Obligations owing to the Secured Parties under the
Loan Documents or (iv) amend this Section 8.01 and (b) no amendment, waiver or
consent shall, unless in writing and signed by the Required Lenders, the Agents
and each Lender that has a Commitment under the Term A Facility, Term B Facility
or Working Capital Facility if affected by such amendment, waiver or consent,
(i) increase the Commitments of such Lender, or subject such Lender to any
additional obligations, (ii) reduce the principal of, or interest on, Advances
payable to such Lender or any fees or other amounts payable hereunder to such
Lender, (iii) postpone any date fixed for any payment of principal of, or
interest on, Advances payable to such Lender or any fees or other amounts
payable hereunder to such Lender or (iv) change the order of application of any
prepayment set forth in Section 2.06 in any manner that materially affects such
Lender; provided further that no amendment, waiver or consent shall, unless in
writing and signed by the Swing Line Bank or the Issuing Bank, as the case may
be, in addition to the Lenders required above to take such action, affect the
rights or obligations of the Swing Line Bank or the Issuing Bank, as the case
may be, under this Agreement; and provided further that no amendment, waiver or
consent shall, unless in writing and signed by the Agent in addition to the
Lenders required above to take such action, affect the rights or duties of the
Agent under this Agreement or the other Loan Documents.
SECTION 8.02. Notices, Etc. All notices and other communications
provided for hereunder shall be in writing (including telegraphic, telecopy or
telex communication) and mailed, telegraphed, telecopied, telexed or delivered
to the Borrower, at 111 West 40th Street, New York, NY 10018, Attention: Chief
Executive Officer, telecopier no. (212) 391-2341; if to
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any Restatement Lender or the Issuing Bank, at its Domestic Lending Office
specified opposite its name on Schedule I hereto; if to any other Lender Party,
at its Domestic Lending Office specified in the Assignment and Acceptance
pursuant to which it became a Lender Party; and if to the Agent, at its address
at 499 Park Avenue, New York, New York 10022, Attention: Structured Finance
Group, telecopier number (212) 418-8269; or, as to each party, at such other
address as shall be designated by such party in a written notice to the other
parties. All such notices and communications shall, when mailed, telegraphed,
telecopied or telexed, be effective when deposited in the mails, delivered to
the telegraph company, transmitted by telecopier or confirmed by telex
answerback, respectively, except that notices and communications to the Agent
pursuant to Article II, III or VII shall not be effective until received by the
Agent. Delivery by telecopier of an executed counterpart of any amendment or
waiver of any provision of this Agreement or the Notes or of any Exhibit hereto
to be executed and delivered hereunder shall be effective as delivery of a
manually executed counterpart thereof.
SECTION 8.03. No Waiver; Remedies. No failure on the part of any Lender
Party or the Agent to exercise, and no delay in exercising, any right hereunder
or under any Note shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
SECTION 8.04. Costs and Expenses. (a) The Borrower agrees to pay on
demand (i) all reasonable costs and expenses of the Agent in connection with the
preparation, execution, delivery, administration, modification and amendment of
the Loan Documents (including, without limitation, (A) all due diligence,
collateral review, syndication, transportation, computer, duplication,
appraisal, audit, insurance, consultant, search, filing and recording fees and
expenses and (B) the reasonable fees and expenses of outside counsel for the
Agent with respect thereto, with respect to advising the Agent as to its rights
and responsibilities, or the perfection, protection or preservation of rights or
interests, under the Loan Documents, with respect to negotiations with any Loan
Party or with other creditors of any Loan Party or any of its Subsidiaries
arising out of any Default or any events or circumstances that may give rise to
a Default and with respect to presenting claims in or otherwise participating in
or monitoring any bankruptcy, insolvency or other similar proceeding involving
creditors' rights generally and any proceeding ancillary thereto) and (ii) all
costs and expenses of the Agent and the Lender Parties in connection with the
enforcement of the Loan Documents, whether in any action, suit or litigation,
any bankruptcy, insolvency or other similar proceeding affecting creditors'
rights generally (including, without limitation, the reasonable fees and
expenses of counsel for the Agent and each Lender Party with respect thereto).
(b) The Borrower agrees to indemnify and hold harmless the Agent, each
Lender Party and each of their Affiliates and their officers, directors,
employees, agents and advisors (each, an "INDEMNIFIED PARTY") from and against
any and all claims, damages, losses, liabilities and expenses (including,
without limitation, reasonable fees and expenses of counsel) that may be
incurred by or asserted or awarded against any Indemnified Party, in each case
arising out of or in connection with or by reason of, or in connection with the
preparation for a defense of, any investigation, litigation or proceeding
arising out of, related to or in connection with (i) the
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Facilities, the actual or proposed use of the proceeds of the Advances or the
Letters of Credit, the Loan Documents or any of the transactions contemplated
thereby, including, without limitation, any acquisition or proposed acquisition
(including, without limitation, the Transaction and any of the other
transactions contemplated hereby) by the Borrower or any of its Subsidiaries or
Affiliates or (ii) the actual or alleged presence of Hazardous Materials on any
property of any Loan Party or any of its Subsidiaries or any Environmental
Action relating in any way to any Loan Party or any of its Subsidiaries, in each
case whether or not such investigation, litigation or proceeding is brought by
any Loan Party, its directors, shareholders or creditors or an Indemnified Party
or any Indemnified Party is otherwise a party thereto and whether or not the
transactions contemplated hereby are consummated, except to the extent such
claim, damage, loss, liability or expense is found in a final, non-appealable
judgment by a court of competent jurisdiction to have resulted from such
Indemnified Party's gross negligence or willful misconduct. The Borrower also
agrees not to assert any claim against the Agent, any Lender Party or any of
their Affiliates, or any of their respective officers, directors, employees,
attorneys and agents, on any theory of liability, for special, indirect,
consequential or punitive damages arising out of or otherwise relating to the
Facilities, the actual or proposed use of the proceeds of the Advances or the
Letters of Credit, the Loan Documents or any of the transactions contemplated
thereby.
(c) If any payment of principal of, or Conversion of, any Eurodollar
Rate Advance is made by the Borrower to or for the account of a Lender Party
other than on the last day of the Interest Period for such Advance, as a result
of the completion of syndication by the Agent as contemplated by Section
2.02(c), a payment or Conversion pursuant to Section 2.09(b)(i) or 2.10(d),
acceleration of the maturity of the Notes pursuant to Section 6.01 or for any
other reason or by an Eligible Assignee to a Lender Party, the Borrower shall,
upon demand by such Lender Party (with a copy of such demand to the Agent), pay
to the Agent for the account of such Lender Party any amounts required to
compensate such Lender Party for any additional losses, costs or expenses that
it may reasonably incur as a result of such payment, including, without
limitation, any loss (including loss of anticipated profits), cost or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by any Lender Party to fund or maintain such Advance.
(d) If any Loan Party fails to pay when due any costs, expenses or
other amounts payable by it under any Loan Document, including, without
limitation, fees and expenses of counsel and indemnities, such amount may be
paid on behalf of such Loan Party by the Agent or any Lender Party, in its sole
discretion.
(e) Without prejudice to the survival of any other agreement of any
Loan Party hereunder or under any other Loan Document, the agreements and
obligations of the Borrower contained in Sections 2.10 and 2.12 and this Section
8.04 shall survive the payment in full of principal, interest and all other
amounts payable hereunder and under any of the other Loan Documents.
SECTION 8.05. Right of Set-off. Upon (a) the occurrence and during the
continuance of any Event of Default and (b) the making of the request or the
granting of the consent specified by
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Section 6.01 to authorize the Agent to declare the Notes due and payable
pursuant to the provisions of Section 6.01, each Lender Party and each of its
respective Affiliates is hereby authorized at any time and from time to time, to
the fullest extent permitted by law, to set off and otherwise apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Lender Party or such
Affiliate to or for the credit or the account of the Borrower against any and
all of the Obligations of the Borrower now or hereafter existing under this
Agreement and the Note or Notes (if any) held by such Lender Party, irrespective
of whether such Lender Party shall have made any demand under this Agreement or
such Note or Notes and although such obligations may be unmatured. Each Lender
Party agrees promptly to notify the Borrower after any such set-off and
application; provided, however, that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of each Lender
Party and its respective Affiliates under this Section are in addition to other
rights and remedies (including, without limitation, other rights of set-off)
that such Lender Party and its respective Affiliates may have.
SECTION 8.06. Binding Effect. This Agreement shall become effective
when it shall have been executed by the Borrower and the Agent and when the
Agent shall have been notified by each Restatement Lender and the Issuing Bank
that such Restatement Lender and the Issuing Bank has executed it and thereafter
shall be binding upon and inure to the benefit of the Borrower, the Agent and
each Lender Party and their respective successors and assigns, except that the
Borrower shall not have the right to assign its rights hereunder or any interest
herein without the prior written consent of the Lender Parties.
SECTION 8.07. Assignments and Participations. (a) Each Lender may, upon
at least five Business Days' notice to the Agent, assign to one or more Eligible
Assignees all or a portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitment or
Commitments, the Advances owing to it and the Note or Notes held by it);
provided, however, that (i) each such assignment shall be of a uniform, and not
a varying, percentage of all rights and obligations under and in respect of any
one Facility, (ii) except in the case of an assignment to a Person that,
immediately prior to such assignment, was a Lender or an assignment of all of a
Lender's rights and obligations under this Agreement, the amount of the
Commitment of the assigning Lender being assigned pursuant to each such
assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall in no event be less than $5,000,000 and shall
be in an integral multiple of $500,000, (iii) each such assignment shall be to
an Eligible Assignee, (iv) no such assignments shall be permitted without the
consent of the Agent until the Agent shall have notified the Lender Parties that
syndication of the Commitments hereunder has been completed, and (v) the parties
to each such assignment shall execute and deliver to the Agent, for its
acceptance and recording in the Register, an Assignment and Acceptance, together
with any Note or Notes subject to such assignment and a processing and
recordation fee of $2,000.
(b) The Issuing Bank may assign to an Eligible Assignee all of its
rights and obligations under the undrawn portion of its Letter of Credit
Commitment at any time; provided, however, that (i) each such assignment shall
be to an Eligible Assignee and (ii) the parties to each such assignment shall
execute and deliver to the Agent, for its acceptance and recording in
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the Register, an Assignment and Acceptance, together with a processing and
recordation fee of $2,000.
(c) Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in such Assignment and Acceptance, (x) the
assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Lender or Issuing Bank, as the
case may be, hereunder and (y) the Lender or Issuing Bank assignor thereunder
shall, to the extent that rights and obligations hereunder have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender's or Issuing Bank's rights and obligations under this Agreement, such
Lender or Issuing Bank shall cease to be a party hereto).
(d) By executing and delivering an Assignment and Acceptance, the
Lender Party assignor thereunder and the assignee thereunder confirm to and
agree with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Lender Party makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or any other Loan Document or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of, or the perfection or
priority of any lien or security interest created or purported to be created
under or in connection with, this Agreement or any other Loan Document or any
other instrument or document furnished pursuant hereto or thereto; (ii) such
assigning Lender Party makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or any
other Loan Party or the performance or observance by any Loan Party of any of
its obligations under any Loan Document or any other instrument or document
furnished pursuant thereto; (iii) such assignee confirms that it has received a
copy of this Agreement, together with copies of the financial statements
referred to in Section 4.01 and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance; (iv) such assignee will, independently and
without reliance upon the Agent, such assigning Lender Party or any other Lender
Party and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under this Agreement; (v) such assignee confirms that it is an Eligible
Assignee; (vi) such assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers and discretion under
the Loan Documents as are delegated to the Agent by the terms hereof, together
with such powers and discretion as are reasonably incidental thereto; and (vii)
such assignee agrees that it will perform in accordance with their terms all of
the obligations which by the terms of this Agreement are required to be
performed by it as a Lender or Issuing Bank, as the case may be.
(e) The Agent shall maintain at its address referred to in Section 8.02
a copy of each Assignment and Acceptance delivered to and accepted by it and a
register for the recordation of the names and addresses of the Lender Parties
and the Commitment under each Facility of, and principal amount of the Advances
owing under each Facility to, each Lender Party from time to
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time (the "REGISTER"). The entries in the Register shall be conclusive and
binding for all purposes, absent manifest error, and the Borrower, the Agent and
the Lender Parties may treat each Person whose name is recorded in the Register
as a Lender Party hereunder for all purposes of this Agreement. The Register
shall be available for inspection by the Borrower or any Lender Party at any
reasonable time and from time to time upon reasonable prior notice.
(f) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender Party and an assignee, together with any Note or Notes subject
to such assignment, the Agent shall, if such Assignment and Acceptance has been
completed and is in substantially the form of Exhibit C hereto, (i) accept such
Assignment and Acceptance, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to the Borrower. In the case of
any assignment by a Lender, within five Business Days after its receipt of such
notice, the Borrower shall, at its own expense, execute and deliver to the Agent
in exchange for the surrendered Note or Notes a new Note to the order of such
Eligible Assignee in an amount equal to the Commitment assumed by it under a
Facility pursuant to such Assignment and Acceptance and, if the assigning Lender
has retained a Commitment hereunder under such Facility, a new Note to the order
of the assigning Lender in an amount equal to the Commitment retained by it
hereunder. Such new Note or Notes shall be in an aggregate principal amount
equal to the aggregate principal amount of such surrendered Note or Notes, shall
be dated the effective date of such Assignment and Acceptance, and shall
otherwise be in substantially the form of Exhibit A-1 or A-2 hereto, as the case
may be.
(g) Each Lender Party may sell participations in or to all or a portion
of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitments, the Advances owing to it and
the Note or Notes (if any) held by it) to any Person other than any Loan Party
or any of its Subsidiaries or Affiliates; provided, however, that (i) such
Lender Party's obligations under this Agreement (including, without limitation,
its Commitments) shall remain unchanged, (ii) such Lender Party shall remain
solely responsible to the other parties hereto for the performance of such
obligations, (iii) such Lender Party shall remain the holder of any such Note
for all purposes of this Agreement, (iv) the Borrower, the Agent and the other
Lender Parties shall continue to deal solely and directly with such Lender Party
in connection with such Lender Party's rights and obligations under this
Agreement and (v) no participant under any such participation shall have any
right to approve any amendment or waiver of any provision of any Loan Document,
or any consent to any departure by any Loan Party therefrom, except to the
extent that such amendment, waiver or consent would reduce the principal of, or
interest on, the Notes or any fees or other amounts payable hereunder, in each
case to the extent subject to such participation, postpone any date fixed for
any payment of principal of, or interest on, the Notes or any fees or other
amounts payable hereunder, in each case to the extent subject to such
participation, or release all or substantially all of the Collateral.
(h) Any Lender Party may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
8.07, disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrower furnished to such Lender
Party by or on behalf of the Borrower; provided, however, that, prior to any
such disclosure, the assignee or participant or proposed assignee or participant
shall agree to
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preserve the confidentiality of any Confidential Information received by it from
such Lender Party.
(i) Notwithstanding any other provision set forth in this Agreement,
any Lender Party may at any time create a security interest in all or any
portion of its rights under this Agreement (including, without limitation, the
Advances owing to it and the Note or Notes held by it) in favor of any Federal
Reserve Bank in accordance with Regulation A of the Board of Governors of the
Federal Reserve System.
SECTION 8.08. 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 shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this Agreement by
telecopier shall be effective as delivery of a manually executed counterpart of
this Agreement.
SECTION 8.09. No Liability of the Issuing Bank. The Borrower assumes
all risks of the acts or omissions of any beneficiary or transferee of any
Letter of Credit with respect to its use of such Letter of Credit. Neither the
Issuing Bank nor any of its officers or directors shall be liable or responsible
for: (a) the use that may be made of any Letter of Credit or any acts or
omissions of any beneficiary or transferee in connection therewith; (b) the
validity, sufficiency or genuineness of documents, or of any endorsement
thereon, even if such documents should prove to be in any or all respects
invalid, insufficient, fraudulent or forged; (c) payment by the Issuing Bank
against presentation of documents that do not comply with the terms of a Letter
of Credit, including failure of any documents to bear any reference or adequate
reference to the Letter of Credit; or (d) any other circumstances whatsoever in
making or failing to make payment under any Letter of Credit, except that the
Borrower shall have a claim against the Issuing Bank, and the Issuing Bank shall
be liable to the Borrower, to the extent of any direct, but not consequential,
damages suffered by the Borrower that the Borrower proves were caused by (i) the
Issuing Bank's willful misconduct or gross negligence in determining whether
documents presented under any Letter of Credit comply with the terms of the
Letter of Credit or (ii) the Issuing Bank's willful failure to make lawful
payment under a Letter of Credit after the presentation to it of a draft and
certificates strictly complying with the terms and conditions of the Letter of
Credit. In furtherance and not in limitation of the foregoing, the Issuing Bank
may accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary.
SECTION 8.10. Confidentiality. Neither the Agent nor any Lender Party
shall disclose any Confidential Information to any Person without the consent of
the Borrower, other than (a) to the Agent's or such Lender Party's Affiliates
and their officers, directors, employees, agents and advisors and to actual or
prospective Eligible Assignees and participants, and then only on a confidential
basis, (b) as required by any law, rule or regulation or judicial process and
(c) as requested or required by any state, federal or foreign authority or
examiner regulating banks or banking.
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SECTION 8.11. Jurisdiction, Etc. (a) Each of the parties hereto hereby
irrevocably and unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of any New York State court or federal court of the
United States of America sitting in New York City, and any appellate court from
any thereof, in any action or proceeding arising out of or relating to this
Agreement or any of the other Loan Documents to which it is a party, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in any such New York State
court or, to the extent permitted by law, in such federal court. Each of the
parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement shall
affect any right that any party may otherwise have to bring any action or
proceeding relating to this Agreement or any of the other Loan Documents in the
courts of any jurisdiction.
(b) Each of the parties hereto irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection that
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or any of the other Loan
Documents to which it is a party in any New York State or federal court. Each of
the parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
SECTION 8.12. Final Agreement. This written agreement and the other
Loan Documents represent the final agreement between the parties hereto and may
not be contradicted by evidence of prior, contemporaneous or subsequent oral
agreements of the parties. There are no unwritten oral agreements between the
parties hereto.
SECTION 8.13. Governing Law. This Agreement and the Notes shall be
governed by, and construed in accordance with, the laws of the State of New
York.
SECTION 8.14. Waiver of Jury Trial. Each of the Borrower, the Agent and
the Lender Parties irrevocably waives all right to trial by jury in any action,
proceeding or counterclaim (whether based on contract, tort or otherwise)
arising out of or relating to any of the Loan Documents, the Advances or the
actions of the Agent or any Lender Party in the negotiation, administration,
performance or enforcement thereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
THE BORROWER
GLENOIT CORPORATION
By /s/ Lester D. Sears
---------------------------------
Name: Lester D. Sears
Title: EVP and CEO
THE AGENT, ISSUING BANK AND SWING LINE BANK
BANQUE NATIONALE DE PARIS,
as Agent, Issuing Bank and Swing Line Bank
By /s/ Alan Mustacchi
---------------------------------
Name: Alan Mustacchi
Title: Director
By /s/ John Capperella
---------------------------------
Name: John Capperella
Title: VP
THE RESTATEMENT LENDERS
BANQUE NATIONALE DE PARIS
By /s/ Alan Mustacchi
---------------------------------
Name: Alan Mustacchi
Title: Director
By /s/ John Capperella
---------------------------------
Name: John Capperella
Title: VP
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116
CENTURA BANK
By /s/ Lowry D. Perry
---------------------------------
Name: Lowry D. Perry
Title: Bank Officer
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117
FIRST SOURCE FINANCIAL, LLP.
By /s/ John P. Phacker
---------------------------------
Name: John P. Phacker
Title: Senior VP
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118
FLEET BANK, N.A.
By /s/ Steven R. Navarro
---------------------------------
Name: Steven R. Navarro
Title: Senior VP
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119
LASALLE NATIONAL BANK
By /s/ Brad Farris
---------------------------------
Name: Brad Farris
Title: Assistant VP
GLENOIT ANNOUNCES PURCHASE OF EX-CELL HOME FASHIONS, INC.
New York (February 12, 1999) - Glenoit Corporation announced the purchase of
Ex-Cell Home Fashions, Inc., a leading designer, manufacturer, and marketer of
home furnishings including shower curtains and related bath products, table
linens and decorative pillows. Thomas J. O'Gorman, President and Chief Executive
Officer of Glenoit, stated, "We are delighted to welcome Ex-Cell to the Glenoit
family of products for the home. We have a high regard for Sam Samelson and his
management team. Mr. Samelson will be the President and Chief Executive Officer
of Ex-Cell and Ex-Cell will operate as a wholly owned subsidiary of Glenoit."
This acquisition represents a further step in Glenoit's strategy to increase its
presence in the Home Furnishings Industry through selected high quality
acquisitions. Ex-Cell's product mix will complement Glenoit's recent
acquisitions of American Pacific and Madison Landing and its printed rug
division, allowing Glenoit to expand its position with key retailers.
Mr. Samelson said, "I am delighted to have joined Glenoit. The combined
companies will have the market presence and financial resources to grow our
business more rapidly and better serve our customers."
In addition to American Pacific, Madison Landing, and Ex-Cell, Glenoit
Corporation is a domestic manufacturer and marketer of specialty pile fabrics
and a domestic manufacturer of a wide variety of kitchen rugs, welcome mats,
bath rugs, and children's area rugs. American Pacific is a marketer of specialty
decorative bedding, hand-made quilts, bath products, and fashion window
coverings. Madison Landing is a manufacturer and marketer of decorative pillows.
