<PAGE>
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) July 18, 1996
----------------------------
LADD FURNITURE, INC.
(Exact name of registrant as specified in its charter)
North Carolina 0-11577 56-1311320
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(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of Incorporation)
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One Plaza Center, Box HP-3, High Point, North Carolina 27261-1500
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (910) 889-0333
--------------------------
N/A
(Former name or former address, if changed since last report.)
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ITEM 1. Changes in Control of Registrant.
Not Applicable.
ITEM 2. Acquisition or Disposition of Assets.
Not Applicable.
ITEM 3. Bankruptcy or Receivership.
Not Applicable.
ITEM 4. Changes in Registrant's Certifying Accountant.
Not Applicable.
ITEM 5. Other Events.
On July 12, 1996, the Registrant entered into a Loan and Security
Agreement with certain of the Registrant's subsidiaries, the financial
institutions parties thereto from time to time as "Lenders", NationsBank, N.A.
(South) ("NationsBank") and Fleet Capital Corporation as the "Co-Agents" and
NationsBank as the agent for the Lenders providing for a $190 million credit
facility (the "Credit Facility"). The initial funding of this Credit Facility
occurred on July 18, 1996. The Credit Facility consists of a $125 million
three-year revolving credit facility and a $65 million term loan and is secured
by a first priority lien on substantially all of the assets of the Registrant
and its subsidiaries. The Credit Facility was used to refinance the Registrant's
existing credit facility and provides additional liquidity.
On July 22, 1996, the Registrant issued a press release reporting its
second quarter results of operations. The press release is attached hereto as
Exhibit 10.3.
ITEM 6. Resignations of Registrant's Directors.
Not Applicable.
2
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ITEM 7. Financial Statements and Exhibits.
a) Exhibits
10.1 Loan and Security Agreement dated as of July
12, 1996 among LADD Furniture, Inc., certain
of its subsidiaries, the financial
institutions party thereto from time to time
as the lenders, NationsBank, N.A. (South)
and Fleet Capital Corporation as the
"Co-Agent," and NationsBank, N.A. (South),
as agent for the lenders.
10.2 Press Release dated July 18, 1996.
10.3 Press Release dated July 22, 1996.
ITEM 8. Change in Fiscal Year.
Not Applicable.
3
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
LADD FURNITURE, INC.
Date: July 24, 1996 By: /s/William S. Creekmuir
-----------------------
William S. Creekmuir
Title: Executive Vice President, Chief Financial
Officer, Treasurer and Secretary
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[EXECUTION COPY]
$190,000,000
LOAN AND SECURITY AGREEMENT
Dated as of July 12, 1996
Between
LADD FURNITURE, INC.
AMERICAN FURNITURE COMPANY, INCORPORATED
LEA INDUSTRIES, INC.
BARCLAY FURNITURE CO.
CLAYTON-MARCUS COMPANY, INC.
LADD CONTRACT SALES CORP.
LADD INTERNATIONAL SALES CORP.
LADD TRANSPORTATION, INC.
PENNSYLVANIA HOUSE, INC.
PILLIOD FURNITURE, INC.
(the Borrowers)
and
THE FINANCIAL INSTITUTIONS PARTY
HERETO FROM TIME TO TIME
(the Lenders)
and
NATIONSBANK, N.A. (SOUTH)
FLEET CAPITAL CORPORATION
(the Co-Agents)
and
NATIONSBANK, N.A. (SOUTH)
(the Administrative Agent)
THIS AGREEMENT SECURES OBLIGATORY FUTURE
ADVANCES MADE FOR COMMERCIAL PURPOSES
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TABLE OF CONTENTS 1
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Page
ARTICLE 1.
DEFINITIONS
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SECTION 1.1. Definitions............................................................................... 1
SECTION 1.2. General Interpretive Rules................................................................ 39
Section 1.3 Exhibits and Schedules.................................................................... 41
ARTICLE 2
REVOLVING CREDIT FACILITY
SECTION 2.1. Revolving Credit Loans.................................................................... 42
SECTION 2.2. Manner of Borrowing Revolving Credit Loans................................................ 42
SECTION 2.3. Repayment of Revolving Credit Loans....................................................... 45
SECTION 2.4. Revolving Credit Note..................................................................... 45
SECTION 2.5. Extension of Revolving Credit Facility.................................................... 46
ARTICLE 3
LETTER OF CREDIT FACILITY
SECTION 3.1. Agreement to Issue........................................................................ 47
SECTION 3.2. Amounts................................................................................... 47
SECTION 3.3. Conditions................................................................................ 47
SECTION 3.4. Issuance of Letters of Credit............................................................. 48
SECTION 3.5. Duties of NationsBank..................................................................... 49
SECTION 3.6. Payment of Reimbursement Obligations...................................................... 49
SECTION 3.7. Participations............................................................................ 50
SECTION 3.8. Indemnification, Exoneration.............................................................. 51
SECTION 3.9. Supporting Letter of Credit;
Cash Collateral Account........................................................ 53
ARTICLE 4
TERM LOAN FACILITY
SECTION 4.1. Term Loan................................................................................. 54
SECTION 4.2. Manner of Borrowing Term Loan............................................................. 54
SECTION 4.3. Repayment of Term Loan.................................................................... 54
SECTION 4.4. Term Notes................................................................................ 54
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1 This Table of Contents is included for reference purposes only and does not
constitute part of the Loan and Security Agreement.
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ARTICLE 5
GENERAL LOAN PROVISIONS
SECTION 5.1. Interest.................................................................................. 55
SECTION 5.2. Certain Fees.............................................................................. 56
SECTION 5.3. Manner of Payment......................................................................... 58
SECTION 5.4. General................................................................................... 59
SECTION 5.5. Loan Accounts; Statements of Account...................................................... 59
SECTION 5.6. Reduction of Revolving Credit Facility;
Termination of Agreement....................................................... 60
SECTION 5.7. Making of Loans........................................................................... 61
SECTION 5.8. Settlement Among Lenders.................................................................. 63
SECTION 5.9. Mandatory Prepayments..................................................................... 67
SECTION 5.10. Prepayment Fee............................................................................ 69
SECTION 5.11. Payments Not at End of Interest Period;
Failure to Borrow.............................................................. 69
SECTION 5.12. Assumptions Concerning Funding of
Eurodollar Rate Loans.......................................................... 70
SECTION 5.13. Notice of Conversion or Continuation...................................................... 70
SECTION 5.14. Conversion or Continuation................................................................ 71
SECTION 5.15. Duration of Interest Periods; ............................................................ 71
SECTION 5.16. Changed Circumstances..................................................................... 72
SECTION 5.17. Cash Collateral Account;
Investment Accounts............................................................ 74
SECTION 5.18. Borrowers' Representative................................................................. 76
SECTION 5.19. Joint and Several Liability............................................................... 77
SECTION 5.20. Obligations Absolute...................................................................... 78
SECTION 5.21. Waiver of Suretyship Defenses............................................................. 78
ARTICLE 6
CONDITIONS PRECEDENT
SECTION 6.1. Conditions Precedent to Revolving Credit
Loans and Term Loans........................................................... 80
SECTION 6.2. All Loans; Letters of Credit.............................................................. 84
SECTION 6.3. Conditions as Covenants................................................................... 85
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF BORROWER
SECTION 7.1. Representations and Warranties............................................................ 86
SECTION 7.2. Survival of Representations and
Warranties, Etc................................................................ 99
ARTICLE 8
SECURITY INTEREST
SECTION 8.1. Security Interest.........................................................................100
SECTION 8.2. Continued Priority of Security Interest...................................................101
(ii)
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ARTICLE 9
COLLATERAL COVENANTS
SECTION 9.1. Collection of Receivables.................................................................103
SECTION 9.2. Verification and Notification.............................................................104
SECTION 9.3. Disputes, Returns and Adjustments.........................................................105
SECTION 9.4. Invoices..................................................................................105
SECTION 9.5. Delivery of Instruments...................................................................106
SECTION 9.6. Sales of Inventory........................................................................106
SECTION 9.7. Ownership and Defense of Title............................................................106
SECTION 9.8. Insurance.................................................................................106
SECTION 9.9. Location of Offices and Collateral........................................................108
SECTION 9.10. Records Relating to Collateral............................................................108
SECTION 9.11. Inspection................................................................................108
SECTION 9.12. Information and Reports...................................................................109
SECTION 9.13. Power of Attorney.........................................................................110
SECTION 9.14. Additional Real Estate and Leases.........................................................111
SECTION 9.15. Assignment of Claims Act..................................................................112
ARTICLE 10
AFFIRMATIVE COVENANTS
SECTION 10.1. Preservation of Corporate Existence
and Similar Matters............................................................113
SECTION 10.2. Compliance with Applicable Law............................................................113
SECTION 10.3. Maintenance of Property...................................................................113
SECTION 10.4. Conduct of Business.......................................................................113
SECTION 10.5. Insurance.................................................................................114
SECTION 10.6. Payment of Taxes and Claims...............................................................114
SECTION 10.7. Accounting Methods and Financial Records..................................................114
SECTION 10.8. Use of Proceeds...........................................................................114
SECTION 10.9. Hazardous Waste and Substances;
Environmental Requirements.....................................................115
ARTICLE 11
INFORMATION
SECTION 11.1. Financial Statements......................................................................116
SECTION 11.2. Accountants' Certificate..................................................................117
SECTION 11.3. Officer's Certificate.....................................................................117
SECTION 11.4. Copies of Other Reports...................................................................118
SECTION 11.5. Notice of Litigation and Other Matters....................................................119
SECTION 11.6. ERISA.....................................................................................119
SECTION 11.7. Revisions or Updates to Schedules.........................................................120
(iii)
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ARTICLE 12
NEGATIVE COVENANTS
SECTION 12.1. Financial Ratios..........................................................................121
SECTION 12.2. Debt......................................................................................122
SECTION 12.3. Guaranties................................................................................123
SECTION 12.4. Investments...............................................................................123
SECTION 12.5. Capital Expenditures......................................................................123
SECTION 12.6. Restricted Distributions and
Payments, Etc..................................................................123
SECTION 12.7. Merger, Consolidation and Sale of Assets..................................................124
SECTION 12.8. Transactions with Affiliates..............................................................124
SECTION 12.9. Liens.....................................................................................124
SECTION 12.10. Operating Leases..........................................................................124
SECTION 12.11. Real Estate Leases........................................................................124
SECTION 12.12. Plans.....................................................................................124
SECTION 12.13. Sales and Leasebacks......................................................................124
ARTICLE 13
DEFAULT
SECTION 13.1. Events of Default.........................................................................126
SECTION 13.2. Remedies..................................................................................130
SECTION 13.3. Application of Proceeds...................................................................133
SECTION 13.4. Power of Attorney.........................................................................133
SECTION 13.5. Miscellaneous Provisions Concerning
Remedies.......................................................................134
ARTICLE 14
ASSIGNMENTS
SECTION 14.1. Successors and Assigns; Participations....................................................136
SECTION 14.2. Representation of Lenders.................................................................139
ARTICLE 15
ADMINISTRATIVE AGENT
SECTION 15.1. Appointment of Agent......................................................................140
SECTION 15.2. Delegation of Duties......................................................................140
SECTION 15.3. Exculpatory Provisions....................................................................140
SECTION 15.4. Reliance by Agent.........................................................................141
SECTION 15.5. Notice of Default.........................................................................141
SECTION 15.6. Non-Reliance on Agents and Other Lenders..................................................142
SECTION 15.7. Indemnification...........................................................................143
SECTION 15.8. Agent in Its Individual Capacity..........................................................143
SECTION 15.9. Successor Agent...........................................................................143
SECTION 15.10. Notices from Agent to Lenders.............................................................144
SECTION 15.11. Co-Agents...................................................................................144
(iv)
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ARTICLE 16
MISCELLANEOUS
SECTION 16.1. Notices...................................................................................145
SECTION 16.2. Expenses..................................................................................146
SECTION 16.3. Stamp and Other Taxes.....................................................................148
SECTION 16.4. Setoff....................................................................................148
SECTION 16.5. Litigation................................................................................148
SECTION 16.6. Waiver of Rights..........................................................................149
SECTION 16.7. Consent to Advertising and Publicity......................................................149
SECTION 16.8. Reversal of Payments......................................................................150
SECTION 16.9. Injunctive Relief.........................................................................150
SECTION 16.10. Accounting Matters........................................................................150
SECTION 16.11. Amendments................................................................................150
SECTION 16.12. Assignment................................................................................152
SECTION 16.13. Performance of Borrowers' Duties..........................................................152
SECTION 16.14. Indemnification...........................................................................153
SECTION 16.15. All Powers Coupled with Interest..........................................................153
SECTION 16.16. Survival..................................................................................153
SECTION 16.17. Titles and Captions.......................................................................154
SECTION 16.18. Severability of Provisions................................................................154
SECTION 16.19. Governing Law.............................................................................154
SECTION 16.20. Counterparts..............................................................................154
SECTION 16.21. Reproduction of Documents.................................................................154
SECTION 16.22. Term of Agreement.........................................................................155
SECTION 16.23. Increased Capital.........................................................................155
SECTION 16.24. Pro-Rata Participation....................................................................156
SECTION 16.25. Confidentiality...........................................................................156
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(v)
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ANNEX A COMMITMENTS
ANNEX B APPLICABLE MARGINS
EXHIBIT A FORM OF REVOLVING CREDIT NOTE
EXHIBIT B FORM OF TERM NOTE
EXHIBIT C FORM OF BORROWING BASE CERTIFICATE
EXHIBIT D FORM OF OPINION OF COUNSEL FOR BORROWER
EXHIBIT E FORM OF ASSIGNMENT AND ACCEPTANCE
EXHIBIT F FORM OF SETTLEMENT REPORT
Schedule 1.1A Permitted Investments
Schedule 1.1B Permitted Liens
Schedule 1.1C New BOT Transaction Equipment
Schedule 7.1(a) Organization
Schedule 7.1(b) Capitalization
Schedule 7.1(c) Subsidiaries; Ownership of Stock
Schedule 7.1(e) Compliance with Laws
Schedule 7.1(f) Borrowers' Businesses
Schedule 7.1(g) Governmental Approvals
Schedule 7.1(h) Title to Properties
Schedule 7.1(i) Liens
Schedule 7.1(j) Indebtedness and Guaranties
Schedule 7.1(k) Litigation
Schedule 7.1(l) Tax Matters
Schedule 7.1(p) ERISA
Schedule 7.1(t) Location of Offices and Receivables
Schedule 7.1(u) Location of Inventory
Schedule 7.1(v) Equipment
Schedule 7.1(w) Real Estate
Schedule 7.1(x) Corporate and Fictitious Names
Schedule 7.1(aa) Employee Relations
Schedule 7.1(bb) Proprietary Rights
Schedule 7.1(cc) Trade Names
Schedule 7.1(dd) Bank Accounts, Lockboxes, Etc.
Schedule 10.8 Use of Proceeds
(vi)
LOAN AND SECURITY AGREEMENT
Dated as of July 12, 1996
LADD FURNITURE, INC., a North Carolina corporation, AMERICAN
FURNITURE COMPANY, INCORPORATED, a Virginia corporation, BARCLAY FURNITURE CO.,
a Mississippi corporation, CLAYTON-MARCUS COMPANY, INC., a North Carolina
corporation, LADD CONTRACT SALES CORPORATION, a North Carolina corporation, LADD
INTERNATIONAL SALES CORP., a Barbados corporation, LADD TRANSPORTATION, INC., a
North Carolina corporation, LEA INDUSTRIES, INC., a North Carolina corporation,
PENNSYLVANIA HOUSE, INC., a North Carolina corporation, PILLIOD FURNITURE, INC.,
a North Carolina corporation, the financial institutions party to this Agreement
from time to time as Lenders, NATIONSBANK, N.A. (SOUTH), a national banking
association, and FLEET CAPITAL CORPORATION, a Rhode Island corporation, as
agents for the Lenders (the "Co-Agents"), and NATIONSBANK, N.A. (SOUTH), as
administrative agent for the Lenders (the "Administrative Agent"), agree as
follows:
ARTICLE 1.
DEFINITIONS
SECTION 1.1. Definitions. For the purposes of this
Agreement:
"Account Debtor" means a Person who is obligated on a
Receivable.
"Acquire" or "Acquisition", as applied to any Business Unit or
Investment, means the acquiring or acquisition of such Business Unit or
Investment by purchase, exchange, issuance of stock or other securities, or by
merger, reorganization or any other method.
"Adjusted Net Worth" means the consolidated Net Worth of the
Borrowers and the Consolidated Subsidiaries less the amount included therein for
any amounts due from Affiliates.
"Adjusted Total Debt Coverage Ratio" means, as of the last day
of any Fiscal Quarter after the Effective Date, the result obtained by dividing
the principal amount of consolidated Debt of
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LADD and its Consolidated Subsidiaries as of such date, by consolidated EBITDA
of LADD and its Consolidated Subsidiaries (i) for the period of four consecutive
Fiscal Quarters ended on such date or (ii) for any shorter period beginning on
June 30, 1996 and ending on the last day of such Fiscal Quarter, multiplied by a
fraction, the numerator of which is four and the denominator of which is the
number of whole Fiscal Quarters in such shorter period.
"Administrative Agent" means NationsBank and any successor
administrative agent appointed pursuant to Section 15.9 hereof.
"Affiliate" means, with respect to a Person, (a) any partner,
officer, shareholder (if holding more than 20% of the outstanding shares of
capital stock of such Person), director, employee or managing agent of such
Person, (b) any spouse or children of such Person living in the same household,
and (c) any other Person (other than a Subsidiary) that, (i) directly or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, such given Person, (ii) directly or indirectly
beneficially owns or holds 20% or more of any class of voting stock or
partnership or other voting interest of such Person or any Subsidiary of such
Person, or (iii) 20% or more of the voting stock or partnership or other voting
interest of which is directly or indirectly beneficially owned or held by such
Person or a Subsidiary of such Person. The term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through ownership of voting
securities or partnership or other voting interest, by contract or otherwise.
"Agency Account" means an account of a Borrower maintained by
it with a Clearing Bank pursuant to an Agency Account Agreement.
"Agency Account Agreement" means an agreement among one or
more Borrowers, the Agent and a Clearing Bank, in form and substance
satisfactory to the Agent, concerning the collection and transfer of payments
which represent the proceeds of Receivables or of any other Collateral or of the
Real Estate.
"Agent's Office" means the office of the Administrative Agent
specified in or determined in accordance with the provisions of Section 16.1.
"Agreement" means and includes this Agreement, including all
Schedules, Exhibits and other attachments hereto, and all amendments,
modifications and supplements hereto and thereto.
"Agreement Date" means the date as of which this Agreement
is dated.
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"American" means American Furniture Company, Incorporated, a
Virginia corporation and a wholly owned, Consolidated Subsidiary.
"Applicable Law" means all applicable provisions of
constitutions, statutes, rules, regulations and orders of all governmental
bodies and of all orders and decrees of all courts and arbitrators, including,
without limitation, Environmental Laws.
"Applicable Margin" means (a) as to Prime Rate Revolving
Credit Loans, 1-3/4%, (b) as to Prime Rate Term Loans, 2%, (c) as to Eurodollar
Rate Revolving Credit Loans, 2-3/4% and (d) as to Eurodollar Rate Term Loans,
3%, or in each case, beginning after delivery of the audited financial
statements of LADD and its Consolidated Subsidiaries for Fiscal Year 1996, such
other percentage indicated on the performance pricing matrix attached hereto as
Annex B, as may at the time be applicable after taking into account the
Borrowers' consolidated Total Debt Coverage Ratio computed based on the
consolidated financial statements of LADD and its Consolidated Subsidiaries for
the then most recently ended Fiscal Quarter, timely delivered in accordance with
Section 11.1.
"Asset Disposition" means the disposition of any asset of any
Borrower or any of its Subsidiaries, other than sales of Inventory in the
ordinary course of business.
"Assignment and Acceptance" means an assignment and acceptance
in the form attached hereto as Exhibit E assigning all or a portion of a
Lender's interests, rights and obligations under this Agreement pursuant to
Section 14.1.
"Barclay" means Barclay Furniture Co., a Mississippi
corporation and a wholly owned Consolidated Subsidiary.
"Benefit Plan" means an "employee pension benefit plan" as
defined in Section 3(2) of ERISA (other than a Multiemployer Plan) in respect of
which a Borrower or any Related Company is, or within the immediately preceding
six (6) years was, an "employer" as defined in Section 3(5) of ERISA, including
such plans as may be established after the Agreement Date.
"Borrower" means each of LADD, American, Barclay,
Clayton-Marcus, Contract Sales, International, Transportation, Lea
(NC), Pennsylvania House, and Pilliod, and "Borrowers" means all
such entities collectively.
"Borrowing" means a borrowing of Revolving Credit Loans
bearing interest at the same rate, made by all Lenders on the same date and, in
the case of Eurodollar Rate Loans, having a single Interest Period and the
continuation or conversion of an existing Loan or Loans in whole or in part.
3
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"Borrowing Base" means at any time an amount equal to the
lesser of:
(a) the Revolving Credit Facility, minus the sum of
(i) the Letter of Credit Reserve, plus
(ii) the aggregate amount of the Environmental Compliance
Reserves and reserves in respect of Interest Rate Protection
Agreements, plus
(iii) after the Effective Date, $2,500,000,
(b) an amount equal to
(i) 85% (or such lesser percentage as the Administrative Agent
may in its reasonable credit judgment determine from time to time) of
the face value of the Eligible Receivables due and owing at such time,
plus
(ii) the lesser of
(A) the sum of (w) 65% (or such lesser percentage as
the Administrative Agent may in its reasonable credit judgment
determine from time to time) of the lesser of cost determined on a FIFO
(or first-in-first-out) accounting basis and fair market value of
Eligible Inventory consisting of raw, rough lumber, either green or
dried, commodity sheet particle board, plywood and multi-density
fiberboard, (x) 60% (or such lesser percentage as the Administrative
Agent may in its reasonable credit judgment determine from time to
time) of the lesser of cost determined on a FIFO (or
first-in-first-out) accounting basis and fair market value of Eligible
Inventory consisting of finished goods, (y) 45% (or such lesser
percentage as the Administrative Agent may in its reasonable credit
judgment determine from time to time) of the lesser of cost determined
on a FIFO (or first-in-first-out) accounting basis and fair market
value) of Eligible Inventory consisting of fabric and vinyl on rolls
and leather hides and (z) 40% (or such lesser percentage as the
Administrative Agent may in its reasonable credit judgment determine
from time to time) of the lesser of cost determined on a FIFO (or
first-in-first-out) accounting basis and fair market value of the
balance of raw materials, all of the foregoing net of any Borrower's
reserves for obsolescence as determined from time to time by such
Borrower and the Administrative Agent, at such time, and
(B) $60,000,000, minus
(iii) the sum of
(A) the Letter of Credit Reserve, plus
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(B) the aggregate amount of the Environmental
Compliance Reserves and reserves in respect of Interest
Rate Protection Agreements, plus
(C) after the Effective Date, $2,500,000, plus
(D) such other reserves as the Administrative Agent
may in its reasonable credit judgment establish from time to
time.
"Borrowing Base Certificate" means a certificate in the form
attached hereto as Exhibit C.
"Business Day" means any day other than a Saturday, Sunday or
other day on which banks in Atlanta, Georgia are authorized to close and, when
used with respect to Eurodollar Rate Loans, means any such day on which dealings
are also carried on in the applicable interbank Eurodollar market.
"Business Unit" means the assets constituting the business or
a division or operating unit thereof of any Person.
"Capital Expenditures" means, with respect to any Person, all
capital expenditures that are not, in accordance with GAAP, treated as expense
items for such Person in the year made or incurred.
"Capitalized Lease" means a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP.
"Capitalized Lease Obligation" means Indebtedness represented
by obligations under a Capitalized Lease, and the amount of such Indebtedness
shall be the capitalized amount of such obligations determined in accordance
with GAAP.
"Cash Collateral" means collateral consisting of cash or Cash
Equivalents on which the Administrative Agent, for the benefit of itself as
Administrative Agent and the Lenders, has a first priority Lien.
"Cash Collateral Account" means a special interest-bearing
deposit account consisting of cash maintained at the principal office of the
Administrative Agent and under the sole dominion and control of the
Administrative Agent, for its benefit and for the benefit of the Lenders,
established pursuant to the provisions of Section 5.17(a) for purposes set forth
therein.
"Cash Equivalents" means
(a) marketable direct obligations issued or
unconditionally guaranteed by the United States Government or
issued by any agency thereof and backed by the full faith and
5
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credit of the United States, in each case maturing within one year
from the date of acquisition thereof;
(b) commercial paper maturing no more than one year from the
date issued and, at the time of acquisition thereof, having a rating of at least
A-1 from Standard & Poor's Corporation or at least P-1 from Moody's Investors
Service, Inc.;
(c) certificates of deposit or bankers' acceptances issued in
Dollar denominations and maturing within one year from the date of issuance
thereof issued by any commercial bank organized under the laws of the United
States of America or any state thereof or the District of Columbia having
combined capital and surplus of not less than $100,000,000 and, unless issued by
the Administrative Agent or a Lender, not subject to set-off or offset rights in
favor of such bank arising from any banking relationship with such bank; and
(d) repurchase agreements in form and substance and for
amounts satisfactory to the Administrative Agent.
"Cash Flow" means, for any accounting period of the Borrower,
an amount equal to the sum of the consolidated Net Income of the Borrower and
its Consolidated Subsidiaries for such accounting period, plus depreciation,
amortization and other non-cash charges against Net Income for such period, to
the extent the same were included in the computation of consolidated Net Income,
minus cash outlays for Capital Expenditures (other than Financed Capital
Expenditures) for such period.
"Clearing Bank" means Harris Bank & Trust Company, Wachovia
Bank of North Carolina, N.A., KeyBank, N.A. (Society National Bank) and any
other banking institution with which an Agency Account has been established
pursuant to an Agency Account Agreement.
"Clayton-Marcus" means Clayton-Marcus Company, Inc., a North
Carolina corporation and a wholly owned Consolidated Subsidiary.
"Collateral" means and includes all of each Borrower's right,
title and interest in and to each of the following, wherever located and whether
now or hereafter existing or now owned or hereafter acquired or arising:
(a) (i) all rights to the payment of money or other forms of
consideration of any kind (whether classified under the UCC as accounts,
contract rights, chattel paper, general intangibles or otherwise) including, but
not limited to, accounts receivable, letters of credit and the right to receive
payment thereunder, chattel paper, tax refunds, insurance proceeds, any rights
under contracts not yet earned by performance and not evidenced by an instrument
or chattel paper, notes, drafts, instruments, documents, acceptances and all
other debts,
6
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obligations and liabilities in whatever form from any Person, (ii) all
guaranties, security and Liens securing payment thereof, (iii) all goods,
whether now owned or hereafter acquired, and whether sold, delivered,
undelivered, in transit or returned, which may be represented by, or the sale or
lease of which may have given rise to, any such right to payment or other debt,
obligation or liability, and (iv) all proceeds of any of the foregoing (the
foregoing, collectively, "Receivables"),
(b) (i) all inventory, (ii) all goods intended for sale or
lease or for display or demonstration, (iii) all work in process, (iv) all raw
materials and other materials and supplies of every nature and description used
or which might be used in connection with the manufacture, packing, shipping,
advertising, selling, leasing or furnishing of goods or services or otherwise
used or consumed in the conduct of business, and (v) all documents evidencing
and general intangibles relating to any of the foregoing (the foregoing,
collectively, "Inventory"),
(c) (i) all machinery, apparatus, equipment, motor vehicles,
tractors, trailers, rolling stock, fittings, fixtures and other tangible
personal property (other than Inventory) of every kind and description, (ii) all
tangible personal property (other than Inventory) and fixtures used in the
Borrower's business operations or owned by the Borrower or in which the Borrower
has an interest (but subject to the acknowledged interest of any equipment
lessor), and (iii) all parts, accessories and special tools and all increases
and accessions thereto and substitutions and replacements therefor (the
foregoing, collectively, "Equipment"),
(d) all general intangibles, choses in action and causes of
action and all other intangible personal property of every kind and nature
(other than Receivables), including, without limitation, Proprietary Rights,
corporate or other business records, inventions, designs, blueprints, plans,
specifications, trade secrets, goodwill, computer software, customer lists,
registrations, licenses, franchises, tax refund claims, reversions or any rights
thereto and any other amounts payable to such Person from any Benefit Plan,
Multiemployer Plan or other employee benefit plan, rights and claims against
carriers and shippers, rights to indemnification, business interruption
insurance and proceeds thereof, property, casualty or any similar type of
insurance and any proceeds thereof, the beneficiary's interest in proceeds of
insurance covering the lives of key employees and any letter of credit,
guarantee, claims, security interest or other security for the payment by an
Account Debtor of any of the Receivables (the foregoing, collectively, "General
Intangibles"),
(e) any demand, time, savings, passbook, money market or like
depository account, and all certificates of deposit, maintained with a bank,
savings and loan association, credit union or like organization, other than an
account evidenced by a
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certificate of deposit that is an instrument under the UCC (the foregoing,
collectively, "Deposit Accounts"),
(f) all certificated and uncertificated securities, all
security entitlements, all securities accounts, all commodity contracts and all
commodity accounts, other than any such Investments made in the SERP (the
foregoing, collectively, "Investment Property"),
(g) (i) any investment account maintained by or on behalf of
the Borrower with the Administrative Agent or any Lender or any Affiliate of the
Administrative Agent or any Lender, (ii) any agreement governing such account,
(iii) all cash, money, notes, securities, instruments, goods, accounts,
documents, chattel paper, general intangibles and other property now or
hereafter held by the Administrative Agent or any Lender or any Affiliate of the
Administrative Agent or any Lender on behalf of the Borrower in connection with
such investment account or deposited by the Borrower or on the Borrower's behalf
to such investment account or otherwise credited thereto for the Borrower's
benefit, or distributable to the Borrower from such investment account, together
with all contracts for the sale or purchase of the foregoing, (iv) all of the
Borrower's right, title and interest with respect to the deposit, investment,
allocation, disposition, distribution or withdrawal of the foregoing, (v) all of
the Borrower's right, title and interest with respect to the making of
amendments, modifications or additions of or to the terms and conditions under
which the investment account or investments maintained therein is to be
maintained by the Borrower, any Lender or any Affiliate of the Administrative
Agent or any Lender on the Borrower's behalf, and (vi) all of the Borrower's
books, records and receipts pertaining to or confirming any of the foregoing
(the foregoing, collectively, "Investment Accounts"),
(h) all cash or other property deposited with the
Administrative Agent or any Lender or any Affiliate of the Administrative Agent
or any Lender or which the Administrative Agent, for its benefit and for the
benefit of the Lenders, or any Lender or such Affiliate is entitled to retain or
otherwise possess as collateral pursuant to the provisions of this Agreement or
any of the Loan Documents or any agreement relating to any Letter of Credit,
including, without limitation, amounts on deposit in the Cash Collateral
Account,
(i) all goods and other property, whether or not delivered,
(i) the sale or lease of which gives or purports to give rise to any Receivable,
including, but not limited to, all merchandise returned or rejected by or
repossessed from customers, or (ii) securing any Receivable, including, without
limitation, all rights as an unpaid vendor or lienor (including, without
limitation, stoppage in transit, replevin and reclamation) with respect to such
goods and other properties,
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(j) all mortgages, deeds to secure debt and deeds of trust on
real or personal property, guaranties, leases, security agreements and other
agreements and property which secure or relate to any Receivable or other
Collateral or the Real Estate or are acquired for the purpose of securing and
enforcing any item thereof,
(k) all documents of title, including bills of lading
and warehouse receipts, policies and certificates of insurance,
securities, chattel paper and other documents and instruments,
(l) all files, correspondence, computer programs, tapes, disks
and related data processing software which contain information identifying or
pertaining to any of the Collateral or Real Estate or any Account Debtor or
showing the amounts thereof or payments thereon or otherwise necessary or
helpful in the realization thereon or the collection thereof,
(m) any and all products and cash and non-cash proceeds of the
foregoing (including, but not limited to, any claims to any items referred to in
this definition and any claims against third parties for loss of, damage to or
destruction of any or all of the Collateral or Real Estate or for proceeds
payable under or unearned premiums with respect to policies of insurance) in
whatever form, including, but not limited to, cash, negotiable instruments and
other instruments for the payment of money, chattel paper, security agreements
and other documents.
"Commitment" means, as to each Lender, the amount set forth
opposite such Lender's name on Annex A hereto, representing such Lender's
obligation, upon and subject to the terms and conditions of this Agreement
(including the applicable provisions of Section 14.1), to make its Proportionate
Share of Loans under the Revolving Credit Facility and the Term Loan Facilities
and to purchase participations in Letters of Credit or, from and after the date
hereof, the amount set forth in the Register representing such Lender's
obligation to make its Proportionate Share of Loans under the Revolving Credit
Facility and to purchase participations in Letters of Credit and its
corresponding interest in Term Loans outstanding.
"Commitment Percentage" means, as to any Lender at the time of
determination, the percentage of the Total Commitment at such time obtained by
dividing such Lender's Commitment at such time by the Total Commitment at such
time.
"Consolidated Subsidiaries" means, as to LADD, each other
Borrower and other Subsidiary of LADD listed on Schedule 7.1(c) and any
additional Subsidiary of LADD whose accounts are at the time in question, in
accordance with GAAP and pursuant to the written consent of the Required
Lenders, which consent may be withheld in their absolute discretion or
conditioned upon, inter alia, the execution and delivery of guaranties, security
agreements,
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mortgages and other documents required by the Required Lenders in their absolute
discretion, consolidated with those of LADD.
"Contaminant" means any waste, pollutant, hazardous substance,
toxic substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, or any constituent of any such substance or waste.
"Contract Sales" means LADD Contract Sales Corporation, a
North Carolina corporation and a wholly owned Consolidated Subsidiary.
"Controlled Disbursement Account" means one or more accounts
maintained by and in the name of a Borrower with a Disbursing Bank, which is
designated as such on Schedule 7.1(dd) or of which the Administrative Agent
otherwise has written notice from such Borrower, not less than five Business
Days prior to the first deemed request for a Revolving Credit Loan by the
Disbursing Bank in respect thereof, for the purposes of disbursing Revolving
Credit Loan proceeds and other amounts deposited thereto.
"Copyrights" means and includes, in each case whether now
existing or hereafter arising, all of a Borrower's right, title and
interest in and to
(a) all copyrights, rights and interests in copyrights,
works protectable by copyright, copyright registrations and
copyright applications;
(b) all renewals of any of the foregoing;
(c) all income, royalties, damages and payments now or
hereafter due and/or payable under any of the foregoing, including, without
limitation, damages or payments for past or future infringements of any of the
foregoing;
(d) the right to sue for past, present and future
infringements of any of the foregoing; and
(e) all rights corresponding to any of the foregoing
throughout the world.
"Current Assets" means, with respect to any Person, the
aggregate amount of assets of such Person which should properly be classified as
current assets in accordance with GAAP, after deducting adequate reserves in
each case where a reserve is appropriate in accordance with GAAP.
"Current Liabilities" means, with respect to any Person, the
aggregate amount of all Liabilities of such Person which should properly be
classified as current liabilities in accordance with GAAP.
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"Current Maturities" means, when used in connection with
Funded Debt, as of any date of determination, the principal amount of such Debt
coming due on such date or during the twelve-month period following such date in
accordance with the terms of any instrument or agreement evidencing such Debt or
relating thereto.
"Daystrom" means the assets and property of the Daystrom
Furniture division of LADD, the business of which was discontinued, effective
June 28, 1996 (except for limited plating operations).
"Debt" means
(a) Indebtedness for money borrowed,
(b) Indebtedness, whether or not in any such case the
same was for money borrowed,
(i) represented by notes payable, drafts accepted and
reimbursement obligations under standby letters of credit and similar
instruments that represent extensions of credit,
(ii) constituting obligations evidenced by bonds,
debentures, notes or similar instruments, or
(iii) upon which interest charges are customarily paid or that was
issued or assumed as full or partial payment for property (other than
trade credit that is incurred in the ordinary course of business),
(c) Indebtedness that constitutes a Capitalized Lease
Obligation,
(d) Indebtedness under Interest Rate Protection
Agreements, and
(e) Indebtedness that is such by virtue of clause (c) of the
definition thereof, but only to the extent that the obligations Guaranteed are
obligations that would otherwise constitute "Debt."
"Default" means any of the events specified in Section 13.1
which with the passage of time or giving of notice or both would constitute an
Event of Default.
"Default Margin" means 2.0%.
"Deposit Account" has the meaning specified in the
definition "Collateral."
"Disbursing Bank" means any commercial bank with which a
Controlled Disbursement Account is maintained after the Effective Date.
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"Dollar" and "$" means freely transferable United States
dollars.
"EBITDA" for a specified period means consolidated Net Income
of LADD and its Consolidated Subsidiaries for such period, before provision for
interest expense, income taxes, depreciation expense and amortization.
"ERISA" means the Employee Retirement Income Security Act of
1974, as in effect from time to time.
"Effective Date" means the later of:
(a) the Agreement Date, and
(b) the first date on which all of the conditions set forth in
Article 6 shall have been fulfilled.
"Effective Interest Rate" means each rate of interest per
annum on the Revolving Credit Loans and the Term Loans in effect from time to
time pursuant to the provisions of Sections 5.1(a), (b) and (c).
"Eligible Assignee" means (i) a commercial bank organized
under the laws of the United States, or any State thereof, having total assets
in excess of $1,000,000,000 or any commercial finance or asset based lending
affiliate of any such commercial bank; and (ii) any Lender listed on the
signature page of this Agreement; provided in each case that the representation
contained in Section 14.2 hereof shall be applicable with respect to such
institution or Lender.
"Eligible Inventory" means items of Inventory of a Borrower
held for sale in the ordinary course of the business of such Borrower (but not
including maintenance supplies) which meet all of the following requirements:
(a) such Inventory is owned by a Borrower, is subject to the Security Interest,
which is perfected as to such Inventory, and is subject to no other Lien
whatsoever other than a non-consensual Permitted Lien; (b) such Inventory
consists of raw materials or finished goods or packaging or shipping materials
and does not consist of work-in-process, supplies or consigned goods; (c) such
Inventory is in good condition and meets all standards applicable to such goods,
their use or sale imposed by any governmental agency, or department or division
thereof, having regulatory authority over such matters; (d) such Inventory is
currently either usable or saleable, at prices approximating at least the cost
thereof, in the normal course of such Borrower's business; (e) such Inventory is
not obsolete or returned or repossessed or used goods taken in trade; (f) such
Inventory is located within the United States at one of the locations listed in
Schedule 7.1(u); (g) such Inventory is in the possession and control of such
Borrower (and not any third party) and if located in a warehouse or other
facility leased by a
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Borrower, the lessor has delivered to the Administrative Agent a waiver and
consent in form and substance satisfactory to the Administrative Agent, provided
that up to $250,000 of otherwise Eligible Inventory may be located on premises
not owned by a Borrower and not covered by a waiver and consent; and (h) such
Inventory is not deemed ineligible by the Administrative Agent for any other
reason in the exercise of the Administrative Agent's reasonable credit judgment,
utilizing criteria customarily employed by asset-based lenders.
"Eligible Receivable" means a Receivable of a Borrower that is
a Floor Plan Receivable or that consists of the unpaid portion of the obligation
stated on the invoice issued to an Account Debtor with respect to Inventory sold
and shipped to or services performed for such Account Debtor in the ordinary
course of business, net of any credits or rebates owed by any Borrower to the
Account Debtor, and that meets all of the following requirements: (a) such
Receivable is owned by a Borrower and represents a complete bona fide
transaction which requires no further act under any circumstances on the part of
any Borrower to make such Receivable payable by the Account Debtor; (b) such
Receivable is not unpaid more than 90 days after the date of the original
invoice or past due more than 60 days after its due date, which shall not be
later than 30 days after the invoice date, provided that up to (i) 15% of
aggregate Eligible Receivables may be due more than 30 days but not more than
120 days and (ii) an additional 5% of aggregate Eligible Receivables may be due
more than 30 days but not more than 180 days, after the date of the original
invoice and as to any such Receivable is not unpaid more than 30 days after such
due date; (c) such Receivable does not arise out of any transaction with any
Subsidiary, Affiliate (other than an employee of LADD or any Subsidiary),
creditor, lessor or supplier of such Borrower; (d) such Receivable is not owing
by an Account Debtor more than 40% of whose then-existing accounts owing to the
Borrowers do not meet the requirements set forth in clause (b) above; (e) if the
Account Debtor with respect thereto is located outside of the United States of
America (including Puerto Rico) or Canada, the goods which gave rise to such
Receivable were shipped after receipt by such Borrower from the Account Debtor
of an irrevocable letter of credit that has been confirmed by a financial
institution acceptable to the Administrative Agent, is in form and substance
acceptable to the Administrative Agent, payable in the full face amount of the
face value of the Receivable in Dollars at a place of payment located within the
United States and has, if requested by the Administrative Agent, been duly
assigned to the Administrative Agent, provided that otherwise Eligible
Receivables owing by non-US Account Debtors and not supported by letters of
credit may be included as "Eligible Receivables" in an aggregate amount (x) not
to exceed $500,000 at any time outstanding, (y) with the approval of the
Administrative Agent, not to exceed $2,000,000 at any time outstanding, or (z)
with the approval of the Required Lenders, more than $2,000,000 at any time
outstanding; (f) the Account Debtor with respect to such Receivable
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<PAGE>
is not located in a state which imposes conditions on the enforceability of
Receivables with which such Borrower has not complied; (g) if requested by the
Administrative Agent, such Receivable, to the extent it is subject to the
Assignment of Claims Act of 1940, as amended from time to time, has been
assigned to the Administrative Agent in accordance with the requirements
thereof; (h) such Borrower is not in breach of any express or implied
representation or warranty with respect to the goods the sale of which gave rise
to such Receivable; (i) the Account Debtor with respect to such Receivable is
not insolvent or the subject of any bankruptcy or insolvency proceedings of any
kind or of any other proceeding or action, threatened or pending, which might,
in the Administrative Agent's sole judgment, have a materially adverse effect on
such Account Debtor; (j) the goods the sale of which gave rise to such
Receivable were shipped or delivered to the Account Debtor on an absolute sale
basis and not on a bill and hold sale basis, a consignment sale basis, a
guaranteed sale basis, a sale or return basis or on the basis of any other
similar understanding, and such goods have not been returned or rejected; (k)
such Receivable is not owing by an Account Debtor or a group of affiliated
Account Debtors whose then-existing accounts owing to the Borrowers exceed in
face amount 15% of the Borrowers' total Eligible Receivables; (l) such
Receivable is evidenced by an invoice or other documentation in form acceptable
to the Administrative Agent containing only terms normally offered by such
Borrower and dated no later than the date of shipment; (m) such Receivable is a
valid, legally enforceable obligation of the Account Debtor with respect thereto
and is not subject to any present, or contingent (and no facts exist which are
the basis for any future), offset, deduction or counterclaim, dispute or other
defense on the part of such Account Debtor; (n) such Receivable is not evidenced
by chattel paper or an instrument of any kind; (o) such Receivable does not
arise from the performance of services, including services under or related to
any warranty obligation of a Borrower or out of service charges by a Borrower or
other fees for the time value of money; (p) such Receivable is subject to the
Security Interest, which is perfected as to such Receivable, and is subject to
no other Lien whatsoever, including, without being limited to, a Lien in favor
of any provider of "floor plan" financing to dealers of any Borrower, other than
a non-consensual Permitted Lien, and the goods giving rise to such Receivable
were not, at the time of the sale thereof, subject to any Lien other than a
non-consensual Permitted Lien; and (q) such Receivable is not deemed ineligible
by the Administrative Agent for any other reason in the exercise of the
Administrative Agent's reasonable credit judgment, utilizing criteria
customarily employed by asset-based lenders.
"Environmental Compliance Reserves" means reserves for the
cost of Remedial Action by the Borrower determined by the Administrative Agent
from time to time in its reasonable discretion based upon the reports delivered
pursuant to Section 10.9(b) and
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such other advice, analysis and engineering studies as it deems appropriate.
"Environmental Laws" means all federal, state, local and
foreign laws now or hereafter in effect relating to pollution or protection of
the environment, including laws relating to emissions, discharges, Releases or
threatened Releases of pollutants, Contaminants, chemicals, or industrial, toxic
or hazardous substances or wastes into the environment (including, without
limitation, ambient air, surface water, ground water, or land), or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, removal, transport, or handling of pollutants, Contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes, and any and
all regulations, notices or demand letters issued, entered, promulgated or
approved thereunder; such laws and regulations include but are not limited to
the Resource Conservation and Recovery Act, 42 U.S.C. ss. 6901 et seq., as
amended; the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. ss. 9601 et seq., as amended; the Toxic Substances Control Act,
15 U.S.C. ss. 2601 et seq., as amended; the Clean Air Act, 46 U.S.C. ss. 7401 et
seq., as amended; and state and federal lien and environmental cleanup programs.
"Environmental Lien" means a Lien in favor of any governmental
entity for (a) any liability under Environmental Laws or (b) damages arising
from, or costs incurred by such governmental entity in response to, a Release or
threatened Release of Contaminant into the environment.
"Equipment" has the meaning specified in the definition
"Collateral."
"Eurodollar Rate" means, with respect to any Eurodollar Rate
Loan for the Interest Period applicable thereto, a simple per annum interest
rate determined pursuant to the following formula:
Eurodollar Rate = Interbank Offered Rate
---------------------------
1 - Eurodollar Reserve Percentage
The Eurodollar Rate shall be adjusted automatically as of the effective date of
any change in the Eurodollar Reserve Percentage.
"Eurodollar Rate Loan" means any Loan bearing interest at a
rate determined by reference to the Eurodollar Rate, including any such Loans
continued as or converted into, a Eurodollar Rate Loan on the same day by the
Lenders for the same Interest Period.
"Eurodollar Rate Revolving Credit Loan" means a
Eurodollar Rate Loan outstanding under the Revolving Credit
Facility.
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<PAGE>
"Eurodollar Rate Term Loan" means a Eurodollar Rate Loan
outstanding under a Term Loan Facility.
"Eurodollar Reserve Percentage" means that percentage
(expressed as a decimal) which is in effect from time to time under Regulation D
of the Board of Governors of the Federal Reserve System, as such regulation may
be amended from time to time, or any successor regulation, as the maximum
reserve requirement (including, without limitation, any basic, supplemental,
emergency, special, or marginal reserves) applicable with respect to
Eurocurrency liabilities as that term is defined in Regulation D (or against any
other category of liabilities that includes deposits by reference to which the
interest rate of Eurodollar Rate Loans is determined), whether or not any Lender
has any Eurocurrency liabilities subject to such reserve requirement at that
time. Eurodollar Rate Loans shall be deemed to constitute Eurocurrency
liabilities and as such shall be deemed subject to reserve requirements without
benefits of credits for proration, exceptions or offsets that may be available
from time to time to any Lender.
"Event of Default" means any of the events specified in
Section 13.1, provided that any requirement for notice or lapse of time or any
other condition has been satisfied.
"Excess Cash Flow" for any specified period means EBITDA for
such period minus Capital Expenditures (other than Financed Capital
Expenditures), minus interest expense, minus scheduled principal payments on
Debt, minus cash taxes, in each case of LADD and the Consolidated Subsidiaries
on a consolidated basis for the same specified period.
"Executive Officers" means Fred L. Schuermann, Jr., William S.
Creekmuir, Kenneth E. Church, Michael P. Haley and Donald L. Mitchell.
"Federal Funds Effective Rate" means, for any period, a
fluctuating interest rate per annum equal for each day during such period 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 which is a Business Day, the average of the
quotations for such day on such transactions received by NationsBank from three
federal funds brokers of recognized standing selected by NationsBank.
"Financed Capital Expenditures" means Capital Expenditures
funded with the proceeds of Permitted Purchase Money Debt (excluding Loans) and
those represented by Capitalized Lease Obligations.
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<PAGE>
"Financial Officer" means the chief financial officer,
Treasurer, Assistant Treasurer, Corporate Controller or Assistant Corporate
Controller of LADD.
"Financing Statements" means any and all Uniform Commercial
Code financing statements, in form and substance satisfactory to the Agent,
executed and delivered by the Borrowers (or any of them) to the Administrative
Agent, naming the Administrative Agent, for the benefit of the Lenders, as
secured party and one or more Borrowers as debtor, in connection with this
Agreement.
"Fiscal Month" means each consecutive period of four or five
weeks, beginning on the first day of a Fiscal Year, in the pattern four weeks,
four weeks, five weeks (constituting a Fiscal Quarter), and including, in any
Fiscal Year of 53 weeks, one six- week period ending on the last day of such
Fiscal Year or two consecutive periods of five weeks each ending on the last day
of such Fiscal Year.
"Fiscal Quarter" means each consecutive period of 13 weeks
beginning on the first day of a Fiscal Year (and, in the case of any Fiscal Year
of 53 weeks, the 14-week period occurring at the end thereof).
"Fiscal Year" means each period of 52 or 53 weeks beginning on
the Sunday after the Saturday nearest December 31 in one calendar year and
ending on the Saturday nearest December 31 of the next succeeding calendar year
and when preceded by the designation of a calendar year (e.g., 1997 Fiscal Year)
means the 52 or 53 week period ended or ending on the Saturday nearest December
31 of such designated calendar year.
"Fixed Charge Coverage Ratio" means, as of the last day of any
Fiscal Quarter, the result obtained by dividing (i) the sum of EBITDA minus cash
income taxes paid minus Maintenance Capex for the specified measurement period
minus Restricted Distributions of LADD and its Consolidated Subsidiaries on a
consolidated basis made during the specified measurement period, by (ii) the sum
of interest expense, plus scheduled principal payments on Debt of LADD and its
Consolidated Subsidiaries on a consolidated basis for the same period.
"Floor Plan Receivable" means a Receivable owing to a Borrower
by a Person principally engaged in the business of providing financing to
retailers secured by inventory, where such Receivable is attributable to a sale
of Inventory by such Borrower to its customer and the provider of such financing
has agreed to provide financing to such customer in connection with such sale
upon terms and conditions satisfactory to the Administrative Agent in its
reasonable credit judgment.
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"Funded Debt" means Debt having a maturity of more than 12
months from the date of the most recent consolidated balance sheet of the
Borrowers or having a maturity of less than 12 months from the date of such
balance sheet but by its terms being renewable or extendable beyond 12 months
from the date of such balance sheet at the option of the Person liable thereon.
"GAAP" means generally accepted accounting principles
consistently applied and maintained throughout the period indicated and, when
used with reference to the Borrowers or any Subsidiary, consistent with the
prior financial practice of the Borrowers, as reflected on the financial
statements referred to in Section 7.1(n); provided, however, that, in the event
that changes shall be mandated by the Financial Accounting Standards Board or
any similar accounting authority of comparable standing, or shall be recommended
by the Borrowers' independent public accountants, such changes shall be included
in GAAP as applicable to the Borrowers only from and after such date as the
Borrowers, the Required Lenders and the Administrative Agent shall have amended
this Agreement to the extent necessary to reflect any such changes in the
financial covenants set forth in Article 12.
"General Intangibles" has the meaning specified in the
definition "Collateral."
"Governmental Approvals" means all authorizations, consents,
approvals, licenses and exemptions of, registrations and filings with, and
reports to, all governmental bodies, whether federal, state, local or foreign
national or provincial and all agencies thereof.
"Guaranty", "Guaranteed" or to "Guarantee" as applied to any
obligation of another Person shall mean and include
(a) a guaranty (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), directly or
indirectly, in any manner, of any part or all of such obligation of such other
Person, and
(b) an agreement, direct or indirect, contingent or otherwise,
and whether or not constituting a guaranty, the practical effect of which is to
assure the payment or performance (or payment of damages in the event of
nonperformance) of any part or all of such obligation of such other Person
whether by
(i) the purchase of securities or obligations,
(ii) the purchase, sale or lease (as lessee or lessor) of property
or the purchase or sale of services primarily for the purpose of
enabling the obligor with respect to such obligation to make any
payment or performance (or payment of damages in the event of
nonperformance) of or on account of
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any part or all of such obligation, or to assure the owner of
such obligation against loss,
(iii) the supplying of funds to or in any other manner
investing in the obligor with respect to such obligation,
(iv) repayment of amounts drawn down by beneficiaries of
letters of credit, or
(v) the supplying of funds to or investing in a Person on
account of all or any part of such Person's obligation under a Guaranty
of any obligation or indemnifying or holding harmless, in any way, such
Person against any part or all of such obligation.
"Indebtedness" of any Person means, without duplication, all
Liabilities of such Person, and to the extent not otherwise included in
Liabilities, the following:
(a) all obligations for money borrowed or for the deferred
purchase price of property or services or in respect of drafts accepted or
similar instruments or reimbursement obligations under standby letters of
credit,
(b) all obligations secured by any Lien to which any property
or asset owned or held by such Person is subject, whether or not the obligation
secured thereby shall have been assumed by such Person,
(c) all obligations of other Persons which such Person has
Guaranteed, including, but not limited to, all obligations of such Person
consisting of recourse liability with respect to accounts receivable sold or
otherwise disposed of by such Person,
(d) all obligations of such Person in respect of
Interest Rate Protection Agreements, and
(e) in the case of the Borrowers (without duplication)
all obligations under the Revolving Credit Loans and the Term
Loans.
"Initial Notice of Borrowing" means the Notice of Borrowing
given by the Borrowers with respect to the Initial Loans which shall also
specify the method of disbursement.
"Initial Loans" means the Revolving Credit Loans and the Term
Loans made to the Borrowers on the Effective Date pursuant to the Initial Notice
of Borrowing.
"Interbank Offered Rate" means, with respect to any Eurodollar
Rate Loan for the Interest Period applicable thereto, the average (rounded
upward to the nearest one-sixteenth (1/16) of one percent) per annum rate of
interest determined by the Administrative Agent (each such determination to be
conclusive and
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binding absent manifest error) as of two Business Days prior to the first day of
such Interest Period as the effective rate at which deposits in immediately
available funds in Dollars are being offered or quoted to major banks in the
interbank market for Eurodollar deposits for a term comparable to such Interest
Period and in the amount of such Eurodollar Rate Loan. Such rate may be
determined by the Administrative Agent from any interest rate reporting service
of recognized standing that the Administrative Agent shall select.
"Interest Payment Date" means the first day of each calendar
month commencing July 1, 1996 and continuing thereafter until the Secured
Obligations have been irrevocably paid in full.
"Interest Period" means with respect to each Eurodollar Rate
Loan, the period commencing on the date of the making or continuation of or
conversion to such Eurodollar Rate Loan and ending one, two, three or six months
thereafter, as the Borrowers may elect in the applicable Notice of Borrowing or
Notice of Conversion or Continuation; provided, that:
(i) any Interest Period that would otherwise end on a
day that is not a Business Day shall, subject to the provisions of
clause (iii) below, be extended to the next succeeding Business Day
unless such Business Day falls in the next calendar month, in which
case such Interest Period shall end on the immediately preceding
Business Day;
(ii) any Interest Period that begins on the last
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (iii) below, end on the last
Business Day of a calendar month;
(iii) any Interest Period that would otherwise end
after the Termination Date shall end on the Termination Date;
(iv) no Interest Period applicable to a Eurodollar
Rate Term Loan may end after the next scheduled principal repayment
date unless the aggregate principal amount of Prime Rate Term Loans and
Eurodollar Rate Term Loans having Interest Periods ending prior to such
repayment date is at least equal to the amount of the principal
repayment due hereunder on such date; and
(v) notwithstanding clause (iii) above, no Interest
Period shall have a duration of less than one month and if any
applicable Interest Period would be for a shorter period, such Interest
Period shall not be available hereunder.
"Interest Rate Protection Agreement" shall mean an interest
rate swap, cap or collar agreement or similar arrangement between any Borrower
and a Lender, acceptable to the Administrative Agent in its reasonable credit
judgment, providing for the transfer
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or mitigation of interest risks either generally or under specific
contingencies.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended from time to time.
"International" means LADD International Sales Corp., a
Barbados corporation and a wholly-owned Consolidated Subsidiary of LADD.
"Inventory" has the meaning specified in the definition
"Collateral."
"Investment" means, with respect to any Person:
(a) the acquisition or ownership by such Person of any
share of capital stock, evidence of Indebtedness or other security
issued by any other Person,
(b) any loan, advance or extension of credit to, or
contribution to the capital of, any other Person, excluding (i) advances to
employees in the ordinary course of business for business expenses or, up to an
aggregate principal amount not to exceed $1,000,000 at any time outstanding, to
finance such employees' purchases of computers or furniture consistent with the
Borrowers' existing policies relating to such employee loans and (ii) non-cash
advances to Executive Officers applied to pay the purchase price (whether by
exercise of options or otherwise) of shares of the capital stock of LADD
purchased by them, up to an aggregate principal amount not to exceed $750,000 at
any time outstanding,
(c) any Guaranty of the obligations of any other Person,
(d) any other investment (other than the Acquisition of
a Business Unit) in any other Person, and
(e) any commitment or option to make any of the investments
listed in clauses (a) through (d) above if, in the case of an option, the
consideration therefor exceeds $25,000.
"Investment Account" has the meaning specified in the
definition "Collateral."
"Investment Property" has the meaning specified in the
definition "Collateral."
"IRS" means the Internal Revenue Service.
"LFI" means LFI Capital Management, Inc., a Delaware
corporation and wholly owned Consolidated Subsidiary of LADD.
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"LADD" means LADD Furniture, Inc., a North Carolina
corporation.
"Lea (NC)" means Lea Industries, Inc., a North Carolina
corporation and wholly owned Subsidiary of American and a Consolidated
Subsidiary.
"Lender" means at any time any financial institution party to
this agreement at such time, including any such Person becoming a party hereto
pursuant to the provisions of Article 14, and "Lenders" means at any time all of
the financial institutions party to this Agreement at such time, including any
such Persons becoming parties hereto pursuant to the provisions of Article 14.
"Letter of Credit" means any letter of credit issued for the
account of a Borrower (a) by any Lender and outstanding on the Effective Date
pursuant to a Reimbursement Agreement satisfactory to the Administrative Agent
or (b) by NationsBank pursuant to Article 3.
"Letter of Credit Amount" means, with respect to any Letter of
Credit, the aggregate maximum amount at any time available for drawing under
such Letter of Credit.
"Letter of Credit Availability" means, as of the date of
determination, the aggregate face amount of Letter of Credit Obligations
available to be outstanding hereunder at the time of determination in accordance
with Section 3.2, which shall be an amount equal to the lesser of (i) the Letter
of Credit Facility minus the Letter of Credit Obligations and (ii) the Revolving
Credit Availability, on such date.
"Letter of Credit Facility" means a subfacility of the
Revolving Credit Facility providing for the issuance of Letters of Credit
described in Article 3 up to an aggregate amount of Letter of Credit Obligations
at any one time outstanding not to exceed $15,000,000.
"Letter of Credit Obligations" means, at any time, the sum of
(a) the Reimbursement Obligations of the Borrowers at such time, plus (b) the
aggregate Letter of Credit Amount of Letters of Credit outstanding at such time,
plus (c) the aggregate Letter of Credit Amount of Letters of Credit the issuance
of which has been authorized by the Administrative Agent and NationsBank
pursuant to Section 3.4(b) but that have not yet been issued, in each case as
determined by the Administrative Agent.
"Letter of Credit Reserve" means, at any time, an amount equal
to the sum of (a) the aggregate Letter of Credit Obligations at such time with
respect to standby Letters of Credit, plus (b) 50% of the aggregate Letter of
Credit Obligations at such time with respect to documentary or commercial
Letters of Credit, minus (c) the aggregate amount of all Letter of Credit
Obligations that are fully secured by Cash Collateral.
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"Liabilities" of any Person means all items (except for items
of capital stock, additional paid-in capital or retained earnings, or of general
contingency or deferred tax reserves) which in accordance with GAAP would be
included in determining total liabilities as shown on the liability side of a
balance sheet of such Person as at the date as of which Liabilities are to be
determined.
"LIFO Reserve" means and includes at any time the difference
between the amount at which the Inventory of the Borrower is carried on its
balance sheet under last-in-first-out method of inventory accounting and the
amount at which such Inventory would be so carried based upon the
first-in-first-out method of inventory accounting, all determined in accordance
with GAAP.
"Lien" as applied to the property of any Person means:
(a) any mortgage, deed to secure debt, deed of trust, lien,
pledge, charge, lease constituting a Capitalized Lease Obligation, conditional
sale or other title retention agreement, or other security interest, security
title or encumbrance of any kind in respect of any property of such Person, or
upon the income or profits therefrom,
(b) any arrangement, express or implied, under which any
property of such Person is transferred, sequestered or otherwise identified for
the purpose of subjecting the same to the payment of Indebtedness or performance
of any other obligation in priority to the payment of the general, unsecured
creditors of such Person,
(c) any Indebtedness which is unpaid more than thirty (30)
days after the same shall have become due and payable and which if unpaid might
by law (including, but not limited to, bankruptcy and insolvency laws), or
otherwise, be given any priority whatsoever over the claims of general unsecured
creditors of such Person,
(d) the filing of, or any agreement to give, any financing
statement under the Uniform Commercial Code or its equivalent in any
jurisdiction, excluding informational financing statements relating to property
leased by a Borrower, and
(e) in the case of Real Estate, reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances.
"Loan" means any Revolving Credit Loan or Term Loan, as well
as all such loans collectively, as the context requires.
"Loan Account" and "Loan Accounts" have the meanings
specified in Section 5.5.
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"Loan Documents" means collectively this Agreement, the Notes,
the Security Documents and each other instrument, agreement or document executed
by a Borrower or any Affiliate or Subsidiary of a Borrower in connection with
this Agreement whether prior to, on or after the Effective Date and each other
instrument, agreement or document referred to herein or contemplated hereby.
"Loan Year" means each period of twelve (12) consecutive
months commencing on the Effective Date and on each anniversary thereof.
"Lockbox" means each U. S. Post Office Box specified in
a Lockbox Agreement.
"Lockbox Agreement" means each agreement between the Borrower
and a Clearing Bank concerning the establishment of a Lockbox for the collection
of Receivables.
"Maintenance Capex" for any specified period means the lesser
of consolidated Capital Expenditures of LADD and the Consolidated Subsidiaries
(other than Financed Capital Expenditures) for such period and $8,000,000 per
year or the ratable portion thereof attributable to a specified period less
than a full year.
"Margin Stock" means margin stock as defined in Section
221.1(h) of Regulation U, as the same may be amended or supplemented from time
to time.
"Materially Adverse Effect" means any act, omission,
situation, circumstance, event or undertaking which would, singly or in any
combination with one or more other acts, omissions, situations, circumstances,
events or undertakings, have, or reasonably be expected by the Administrative
Agent to have, a materially adverse effect upon (a) the business, assets,
properties, liabilities, condition (financial or otherwise), results of
operations or business prospects of the Borrowers and the Subsidiaries taken as
a whole, (b) the value of the Collateral and the Real Estate, the Security
Interest or on the priority of the Security Interest, (c) the respective ability
of any Borrower or any of the Subsidiaries to perform any obligations under this
Agreement or any other Loan Document to which it is a party, or (d) the
legality, validity, binding effect, enforceability or admissibility into
evidence of any Loan Document or the ability of the Administrative Agent or any
Lender to enforce any rights or remedies under or in connection with any Loan
Document.
"Mortgages" means and includes any and all of the mortgages,
deeds of trust, deeds to secure debt, assignments and other instruments executed
and delivered by any Borrower to or for the benefit of the Administrative Agent
by which the Administrative Agent, on behalf of the Lenders, acquires a Lien on
such Borrower's Real Estate or a collateral assignment of such Borrower's
interest
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under leases of Real Estate, and all amendments, modifications and
supplements thereto.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA to which any Borrower or a Related Company is
required to contribute or has contributed within the immediately preceding six
(6) years.
"Myrtle IRBs" means Industrial Revenue Bonds to be issued by
the Mississippi Business Finance Corporation in the proposed original principal
amount of up to $2,000,000, in connection with the expansion of certain
facilities of Barclay in Myrtle, Union County, Mississippi. Repayment of the
loan made to Barclay from the proceeds of the Myrtle IRBs will be repayable over
not less than 12 years and will be secured by a Letter of Credit.
"NationsBank" means NationsBank, N.A. (South).
"Net Amount" means, with respect to any Investments made by
any Person, the gross amount of all such Investments minus the aggregate amount
of all cash received and the fair value, at the time of receipt by such Person,
of all property received as payments of principal or premiums, returns of
capital, liquidating dividends or distributions, proceeds of sale or other
dispositions with respect to such Investments.
"Net Income" means, as applied to any Person for any
accounting period, the net income or net loss, as the case may be, of such
Person for the period in question after giving effect to deduction of or
provision for all operating expenses, all taxes and reserves (including reserves
for deferred taxes) and all other proper deductions, all determined in
accordance with GAAP, but excluding in any case,
(a) any net gains or losses on the sale or other disposition,
not in the ordinary course of business, of Investments, Business Units and other
capital assets, provided that there shall also be excluded any related charges
for taxes thereon, and
(b) any other "extraordinary item" as determined in
accordance with GAAP.
"Net Outstandings" of any Lender means, at any time, the sum
of (a) all amounts paid by such Lender (other than pursuant to Section 15.7) to
the Administrative Agent in respect of Loans by such Lender under the Revolving
Credit Facility, minus (b) all amounts received by the Administrative Agent and
paid by the Administrative Agent to such Lender for application, pursuant to
this Agreement, to reduction of the outstanding principal balance of the Loans
of such Lender outstanding under the Revolving Credit Facility.
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"Net Proceeds" means proceeds received by a Borrower or any
Subsidiary in cash from any Asset Disposition (including, without limitation,
payments under notes or other debt securities received in connection with any
Asset Disposition, but excluding proceeds received in connection with the
disposition of Daystrom assets), net of: (a) the transaction costs of such sale,
lease, transfer or other disposition; (b) any tax liability determined by the
Borrowers to have arisen from such transaction; and (c) amounts applied to
repayment of Indebtedness (other than the Secured Obligations) secured by a Lien
on the asset or property disposed.
"Net Worth" means, with respect to any Person, such Person's
total shareholder's equity which would appear as such on a balance sheet of such
Person prepared in accordance with GAAP.
"New BOT Transaction" means a combination of sale-leaseback
transactions and direct leases under a lease financing facility that LADD
intends to consummate with BTM Capital Corporation (together with any Affiliate
of BTM Capital Corporation that is a party to such transactions, "BOT") on or
about the Effective Date and thereafter, pursuant to which Equipment of various
Borrowers having an aggregate approximate cost not greater than $4,500,000
acquired during Fiscal Years 1994 through 1997, including Equipment identified
on Schedule 1.1C -- New BOT Transaction Equipment, will be sold to BOT and
leased back from BOT by LADD or leased directly from BOT.
"Non-Ratable Loan" means a Prime Rate Revolving Credit Loan
made by NationsBank in accordance with the provisions of Section 5.8(c).
"Note" means any of the Revolving Credit Notes and the Term
Notes and "Notes" means more than one such Note.
"Notice of Borrowing" means a written notice, or telephonic
notice followed by a confirming same-day written notice, requesting a Borrowing
of either a Prime Rate Revolving Credit Loan or a Eurodollar Revolving Credit
Loan, which is given by telex or facsimile transmission in accordance with the
applicable provisions of Section 2.2 and which specifies (i) the amount of the
requested Borrowing, (ii) the date of the requested Borrowing, and (iii) if the
requested Borrowing is of a Eurodollar Revolving Credit Loan, the duration of
the applicable Interest Period.
"Notice of Conversion or Continuation" has the meaning
specified in Section 5.13.
"Operating Lease" means any operating lease of real or
personal property, as determined in accordance with GAAP.
"PBGC" means the Pension Benefit Guaranty Corporation and
any successor agency.
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"Patent Assignment" means the Assignment for Security-
Patents, dated on or about the Effective Date, made by the Borrowers to the
Administrative Agent, for the benefit of the Lenders, as the same may be
amended, modified or supplemented from time to time.
"Patents" means and includes, in each case whether now
existing or hereafter arising, all of each Borrower's right, title and interest
in and to:
(i) any and all patents and patent applications,
(ii) inventions and improvements described and claimed
therein,
(ii) reissues, divisions, continuations, renewals,
extensions and continuations-in-part thereof,
(iii) income, royalties, damages, claims and payments now or
hereafter due and/or payable under and with respect thereto, including, without
limitation, damages and payments for past and future infringements thereof,
(iv) rights to sue for past, present and future
infringements thereof, and
(v) all rights corresponding to any of the foregoing
throughout the world.
"Pennsylvania House" means Pennsylvania House, Inc., a
North Carolina corporation and wholly owned Consolidated Subsidiary
of LADD.
"Permitted Investments" means
(a) Investments of a Borrower in:
(i) negotiable certificates of deposit and time deposits
issued by NationsBank or by any United States bank or trust company having
capital, surplus and undivided profits in excess of $100,000,000,
(ii) any direct obligation of the United States of America or
any Agency or instrumentality thereof which has a remaining maturity at the time
of purchase of not more than one year and repurchase agreements relating to the
same,
(iii) sales of inventory on credit in the ordinary course
of business,
(iv) shares of capital stock, evidence of Indebtedness or
other security acquired by such Borrower in consideration for or as evidence of
past-due or restructured Receivables in an aggregate
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face amount of such Receivables at any time not to exceed $2,500,000 (as to all
Borrowers in the aggregate),
(v) Guaranties permitted pursuant to Section 12.3,
(vi) an SPSub, provided the amount of such Investment does not
exceed the value of the Proprietary Rights transferred to such SPSub in a
Proprietary Rights Transfer, plus $10,000,
(vii) those items described on Schedule 1.1B - Permitted
Investments, and
(viii) other Investments not in excess of $100,000
individually or $1,000,000 in the aggregate during the term of this
Agreement, and
(b) as to LADD and American, their respective Investments in
Subsidiaries existing on the Effective Date, as the Net Amount thereof may
increase or decrease as a result of the operations of such Subsidiaries and any
distributions made by such Subsidiaries.
"Permitted Liens" means:
(a) Liens securing taxes, assessments and other governmental
charges or levies (excluding any Lien imposed pursuant to any of the provisions
of ERISA) or the claims of materialmen, mechanics, carriers, warehousemen or
landlords for labor, materials, supplies or rentals incurred in the ordinary
course of business, but (i) in all cases only if payment shall not at the time
be required to be made in accordance with Section 10.6, and (ii) in the case of
warehousemen or landlords, only if such liens are junior to the Security
Interest in any of the Collateral or the Real Estate,
(b) Liens consisting of deposits or pledges made in the
ordinary course of business in connection with, or to secure payment of,
obligations under workers' compensation, unemployment insurance or similar
legislation or under payment or performance bonds,
(c) Liens constituting encumbrances in the nature of zoning
restrictions, easements, and rights or restrictions of record on the use of real
property, which do not materially detract from the value of such property or
impair the use thereof in the business of the relevant Borrower,
(d) Purchase Money Liens,
(e) Liens shown on Schedule 1.1C - Permitted Liens,
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(f) Liens of the Administrative Agent, for the benefit
of the Lenders, arising under this Agreement and the other Loan
Documents, and
(g) Liens in existence immediately prior to the Effective Date
that are satisfied in full and released on the Effective Date or promptly
thereafter as a result of the application of the proceeds of the Loans or cash
on hand.
"Permitted Purchase Money Debt" means Purchase Money Debt of
the Borrowers (or any of them) incurred after the Agreement Date
(a) which is secured by a Purchase Money Lien,
(b) the aggregate principal amount of which does not
exceed an amount equal to 100% of the lesser of
(i) the cost (including the principal amount of such Debt,
whether or not assumed) of the tangible personal property (other than
Inventory) subject to such Lien, and
(ii) the fair value of such tangible personal property
(other than Inventory) at the time of its acquisition, and
(c) which, when aggregated with the principal amount of all
other such Debt and Capitalized Lease Obligations of the Borrowers at the time
outstanding, does not exceed $10,000,000.
"Person" means an individual, corporation, limited liability
corporation, partnership, association, trust or unincorporated organization, or
a government or any agency or political subdivision thereof.
"Pilliod" means Pilliod Furniture, Inc., a North Carolina
corporation and wholly owned Consolidated Subsidiary of LADD.
"Pledge Agreement" means each Stock Pledge Agreement dated as
of the Effective Date or thereafter, between a Borrower and the Administrative
Agent, for the ratable benefit of the Lenders, as amended, modified or
supplemented from time to time.
"Prime Rate" means on any day the interest rate per annum
equal to the rate of interest most recently publicly announced by the
Administrative Agent at its head office in Atlanta, Georgia as its "prime" rate.
The Administrative Agent lends at rates above and below the Prime Rate.
"Prime Rate Loan" means any Prime Rate Revolving Credit
Loan or Prime Rate Term Loan, and "Prime Rate Loans" means more
than one such Loan.
"Prime Rate Revolving Credit Loan" means each Borrowing
of Prime Rate Loans under the Revolving Credit Facility on the same
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day, a specified principal amount of Prime Rate Loans outstanding under the
Revolving Credit Facility, and any Non-Ratable Loan.
"Prime Rate Term Loan" means at any time the aggregate
principal amount of Prime Rate Loans then outstanding under Term Loan Facility.
"Projections" means the forecasted (a) consolidated balance
sheets, (b) consolidated statements of operations and (c) cash flow statements
of LADD and the Consolidated Subsidiaries for the 1996 Fiscal Year, prepared on
a quarterly basis, and for the 1997 and 1998 Fiscal Years, prepared on an annual
basis, together with appropriate supporting details and a statement of
underlying assumptions.
"Proportionate Share" or "Ratable Share" or "Ratable" means,
as to any Lender, such Lender's share of an amount in Dollars or other property
at the time of determination equal to (i) the Commitment Percentage of such
Lender, or (ii) if the Commitments are terminated, the percentage of the total
principal amount of Loans outstanding at such time obtained by dividing the
principal amount of the Loans then owing to such Lender by the total principal
amount of all Loans then owing to all Lenders, or (iii) if no Loans are
outstanding, the percentage of the total Letter of Credit Obligations then
outstanding obtained by dividing such Lender's participation in such Letter of
Credit Obligations by the total Letter of Credit Obligations then outstanding.
"Proprietary Rights" means all Patents, Copyrights,
Trademarks, including, without limitation, the Proprietary Rights set forth on
Schedule 7.1(bb) hereto, and all other rights under any of the foregoing, all
extensions, renewals, reissues, divisions, continuations, and
continuations-in-part of any of the foregoing, and all rights to sue for past,
present and future infringement of any of the foregoing owned by any Borrower on
the Agreement or acquired thereafter by any Borrower or acquired thereafter by
any SPSub, whether pursuant to a Proprietary Rights Transfer or otherwise.
"Proprietary Rights Transfer" means one or more integrated
transactions including (a) the creation of one or more new special purpose
Subsidiaries incorporated under the laws of the State of Delaware or the State
of Nevada (each, an "SPSub"), each wholly owned by a Borrower, (b) the transfer,
subject to the rights of the Administrative Agent and the Lenders pursuant to
the provisions of Section 13.2(b)(viii), of Proprietary Rights by the Borrowers
(or any of them) to one or more SPSubs, and (c) the execution and delivery by
the appropriate Borrower and SPSub of a license permitting such Borrower to use,
subject to such payment and other terms as the Board of Directors of such
Borrower may approve, the Proprietary Rights owned by such SPSub that are
consented to by the Required Lenders (including the Co-Agents), which consent
may be conditioned upon the Borrowers' demonstrating
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to the satisfaction of the Required Lenders and the Co-Agents that such
transaction(s) are reasonably expected to produce material benefits to LADD and
its Consolidated Subsidiaries, and upon the execution and delivery by the SPSubs
and the Borrowers of such additional agreements as the Required Lenders or the
Co-Agents may reasonably specify, including, without being limited to, covenants
of such SPSub to engage in no business other than the licensing of Proprietary
Rights to one or more Borrowers and to maintain its assets and other properties
free and clear of any Lien and the execution and delivery by the Borrower parent
of an SPSub of a Pledge Agreement with respect to the shares of such SPSub.
"Purchase Money Debt" means Debt issued or incurred to finance
the payment of all or any part of the purchase price (not in excess of the fair
market value thereof) of any tangible personal property (other than Inventory)
and incurred at the time of or within 10 days prior to or after the acquisition
of such tangible asset.
"Purchase Money Lien" means any Lien securing Purchase Money
Debt, but only if such Lien shall at all times be confined solely to the
property (other than Inventory) the purchase price of which was financed through
the incurrence of the Purchase Money Debt secured by such Lien.
"Real Estate" means all of each Borrower's now or hereafter
owned or leased estates in real property, including, without limitation, all
fees, leaseholds and future interests, together with all of each Borrower's now
or hereafter owned or leased interests in the improvements and emblements
thereon, the fixtures attached thereto and the easements appurtenant thereto,
including, without limitation the real property described on Schedule 7.1(w) and
"Excluded Real Estate" means the parcels identified as such on Schedule 7.1(w).
"Receivables" has the meaning specified in the definition
"Collateral."
"Register" has the meaning specified in Section 14.1(d).
"Regulation U" means Regulation U of the Board of Governors of
the Federal Reserve System (or any successor), as the same may be amended or
supplemented from time to time.
"Reimbursement Agreement" means, with respect to a Letter of
Credit outstanding on the Effective Date, the agreement or other document
pursuant to which the account party under such Letter of Credit is obligated to
reimburse the issuer thereof for any amounts drawn thereunder, and with respect
to any Letter of Credit issued on or after the Effective Date, such form of
application therefor and form of reimbursement agreement therefor (whether in a
single document or several documents) as NationsBank may employ in the ordinary
course of business for its own account, with such
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modifications thereto as may be agreed upon by NationsBank and the relevant
Borrower, provided that such application and agreement and any modifications
thereto are not inconsistent with the terms of this Agreement.
"Reimbursement Obligations" means the reimbursement or
repayment obligations of the Borrowers to NationsBank pursuant to Section 3.6 or
pursuant to a Reimbursement Agreement with respect to amounts that have been
drawn under Letters of Credit.
"Related Company" means any (i) corporation which is a member
of the same controlled group of corporations (within the meaning of Section
414(b) of the Internal Revenue Code) as any Borrower; (ii) partnership or other
trade or business (whether or not incorporated) under common control (within the
meaning of Section 414(c) of the Internal Revenue Code) with any Borrower; or
(iii) member of the same affiliated service group (within the meaning of Section
414(m) of the Internal Revenue Code) as any Borrower, any corporation described
in clause (i) above or any partnership, trade or business described in clause
(ii) above.
"Release" means release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment or into or out of any property, including the
movement of Contaminants through or in the air, soil, surface water or
groundwater.
"Remedial Action" means actions required to (i) clean up,
remove, treat or in any other way address Contaminants in the indoor or outdoor
environment; (ii) prevent the Release or threat of Release or minimize the
further Release of Contaminants so they do not migrate or endanger or threaten
to endanger public health or welfare or the indoor or outdoor environment; or
(iii) perform pre- remedial studies and investigations and post-remedial
monitoring and care.
"Reportable Event" has the meaning set forth in Section
4043(b) of ERISA, but shall not include a Reportable Event as to which the
provision for 30 days' notice to the PBGC is waived under applicable
regulations.
"Required Lenders" means, at any time, any combination of
Lenders whose Commitment Percentages at such time aggregate in excess of 51%.
"Restricted Distribution" by any Person means (a) its
retirement, redemption, purchase, or other acquisition or retirement for value
of any capital stock or other equity securities (except equity securities
acquired on the conversion thereof into other equity securities of such Person)
or partnership interests issued by such Person, (b) the declaration or payment
of any dividend or distribution in cash or property on or with respect to any
such securities (other than dividends payable solely in
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shares of its capital stock) or partnership interests, excluding, however, any
such dividend, distribution or payment to any Borrower by any other Borrower or
by any Subsidiary of such Borrower, (c) any loan or advance by such Person to,
or other investment by such Person in, the holder of any of such securities or
partnership interests, and (d) any other payment by such Person in respect of
such securities or partnership interests.
"Restricted Payment" means (a) any redemption or prepayment or
other retirement, prior to the stated maturity thereof or prior to the due date
of any regularly scheduled installment or amortization payment with respect
thereto, of any Debt (other than the Loans) or of any Indebtedness that is
junior and subordinate to the Secured Obligations, (b) the payment by any Person
of the principal amount of or interest on any Indebtedness (other than trade
debt) owing to an Affiliate of such Person or to any Affiliate of any such
Affiliate and (c) the payment of any management, consulting or similar fee by
any Person to any Affiliate of such Person.
"Revolving Credit Availability" means, as of the date of
determination, the aggregate principal amount of Revolving Credit Loans
available to be borrowed by the Borrowers hereunder at the time in accordance
with Section 2.1, which shall be an amount equal to the remainder derived by
subtracting the aggregate principal amount of Revolving Credit Loans outstanding
on such date from the Borrowing Base on such date.
"Revolving Credit Facility" means the credit facility
providing for Revolving Credit Loans based upon the Borrowing Base described in
Section 2.1 up to an aggregate principal amount at any one time outstanding not
to exceed $125,000,000, as reduced by the Borrowers in accordance with Section
5.6(a) or such lesser or greater amount as shall be agreed upon from time to
time in writing by the Administrative Agent, the Lenders and the Borrowers.
"Revolving Credit Loans" means loans made to the Borrowers
pursuant to Section 2.1, including any Non-Ratable Loans.
"Revolving Credit Note" means each Revolving Credit Note made
by the Borrowers payable to the order of a Lender evidencing the joint and
several obligation of the Borrowers to pay the aggregate unpaid principal amount
of the Loans made to them by such Lender under the Revolving Credit Facility
(and any promissory note or notes that may be issued from time to time in
substitution, renewal, extension, replacement or exchange therefor whether
payable to such Lender or to a different Lender in connection with a Person
becoming a Lender after the Effective Date or otherwise) substantially in the
form of Exhibit A hereto, with all blanks properly completed, either as
originally executed or as the same may from time to time be supplemented,
modified, amended, renewed, extended or refinanced.
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"SPSub" has the meaning specified in the definition
"Proprietary Rights Transfer."
"Schedule of Equipment" means a schedule delivered by the
Borrowers to the Administrative Agent pursuant to the provisions of Section
9.12(c).
"Schedule of Inventory" means a schedule delivered by the
Borrowers to the Administrative Agent pursuant to the provisions of Section
9.12(b).
"Schedule of Receivables" means a schedule delivered by the
Borrowers to the Administrative Agent pursuant to the provisions of Section
9.12(a).
"Secured Obligations" means, in each case whether now in
existence or hereafter arising,
(a) the principal of, and interest and premium, if any,
on, the Loans,
(b) the Reimbursement Obligations and all other obligations of
the Borrowers to the Administrative Agent or any Lender arising in connection
with the issuance of Letters of Credit,
(c) all obligations to any Lender or any Affiliate of a
Lender under any Interest Rate Protection Agreement, and
(d) all indebtedness, liabilities, obligations, covenants and
duties of the Borrowers or any Subsidiary to the Administrative Agent, the
Co-Agents or to the Lenders or to any Affiliate of the Administrative Agent, the
Co-Agents or any Lender of every kind, nature and description arising under or
in respect of this Agreement, the Notes or any of the other Loan Documents,
whether direct or indirect, absolute or contingent, due or not due, contractual
or tortious, liquidated or unliquidated, and whether or not evidenced by any
note, and whether or not for the payment of money, including without limitation,
fees required to be paid pursuant to Article 5 and expenses required to be paid
or reimbursed pursuant to Section 16.2.
"Security Documents" means each of the following:
(a) the Mortgages,
(b) the Financing Statements,
(c) the Pledge Agreement, and
(d) each other writing executed and delivered by a
Borrower or any other Person securing the Secured Obligations.
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"Security Interest" means the Liens of the Administrative
Agent, for the benefit of itself as Administrative Agent and the Lenders and
Affiliates of the Lenders, on and in the Collateral and the Real Estate effected
hereby or by any of the Security Documents or pursuant to the terms hereof or
thereof.
"SERP" means the LADD Furniture, Inc. Supplemental Retirement
Income Plan, a nonqualified, supplemental retirement plan established by LADD.
"Settlement Date" means each Business Day after the Effective
Date selected by the Administrative Agent in its sole discretion subject to and
in accordance with the provisions of Section 5.8(c)(i) as of which a Settlement
Report is delivered by the Administrative Agent and on which settlement is to be
made among the Lenders in accordance with the provisions of Section 5.8.
"Settlement Report" means each report, substantially in the
form attached hereto as Exhibit F, prepared by the Administrative Agent and
delivered to each Lender and setting forth, among other things, as of the
Settlement Date indicated thereon and as of the next preceding Settlement Date,
the aggregate principal balance of all Revolving Credit Loans outstanding, each
Lender's Proportionate Share thereof, each Lender's Net Outstandings and all
Non-Ratable Loans made, and all payments of principal, interest and fees
received by the Administrative Agent from the Borrowers during the period
beginning on such next preceding Settlement Date and ending on such Settlement
Date.
"Subsidiary"
(a) when used to determine the relationship of a Person to
another Person, means a Person of which an aggregate of 50% or more of the stock
of any class or classes or 50% or more of other ownership interests is owned of
record or beneficially by such other Person, or by one or more Subsidiaries of
such other Person, or by such other Person and one or more Subsidiaries of such
Person,
(i) if the holders of such stock, or other ownership
interests, (A) are ordinarily, in the absence of contingencies,
entitled to vote for the election of a majority of the directors (or
other individuals performing similar functions) of such Person, even
though the right so to vote has been suspended by the happening of such
a contingency, or (B) are entitled, as such holders, to vote for the
election of a majority of the directors (or individuals performing
similar functions) of such Person, whether or not the right so to vote
exists by reason of the happening of a contingency, or
(ii) in the case of such other ownership interests, if
such ownership interests constitute a majority voting
interest,
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(b) when used with respect to a Plan, ERISA or a provision of
the Internal Revenue Code pertaining to employee benefit plans, also means any
corporation, trade or business (whether or not incorporated) which is under
common control with any Borrower and is treated as a single employer with such
Borrower under Section 414(b) or (c) of the Internal Revenue Code and the
regulations thereunder and
(c) when used without other designation of ownership, means a
Subsidiary of LADD.
"Tangible Net Worth" means, as applied to the Borrowers, the
Adjusted Net Worth of LADD and its Consolidated Subsidiaries at the time in
question, after excluding therefrom the amount of all intangible items reflected
therein, including, without limitation, all unamortized debt discount and
expense, unamortized research and development expense, unamortized deferred
charges, goodwill, patents, trademarks, service marks, trade names, copyrights,
unamortized excess cost of investment in non-Consolidated Subsidiaries over
equity at dates of acquisition and all similar items which should properly be
treated as intangibles in accordance with GAAP.
"Term Loan" means, as to any Lender, the aggregate Loans
outstanding from such Lender under the Term Loan Facility and refers to both
Eurodollar Rate Term Loans and Prime Rate Term Loans.
"Term Loan Facility" means an amount equal to $65,000,000.
"Term Note" means each Term Note made by the Borrowers payable
to the order of a Lender evidencing the joint and several obligation of the
Borrowers to pay the aggregate unpaid principal amount of the Loans made to it
by such Lender under the Term Loan Facility (and any promissory note or notes
that may be issued from time to time in substitution, renewal, extension,
replacement or exchange therefor whether payable to such Lender or to a
different Lender in connection with a Person becoming a Lender after the
Effective Date or otherwise) substantially in the form of Exhibit B hereto, with
all blanks properly completed, either as originally executed or as the same may
from time to time be supplemented, modified, amended, renewed, extended or
refinanced and "Term Notes" means more than one such Note.
"Termination Date" means July 12, 1999, such earlier date as
all Secured Obligations shall have been irrevocably paid in full and the
Revolving Credit Facility shall have been terminated, or such later date as to
which the same may be extended pursuant to the provisions of Section 2.5.
"Termination Event" means
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(a) a Reportable Event, or
(b) the filing of a notice of intent to terminate a
Benefit Plan or the treatment of a Benefit Plan amendment as a
termination under Section 4041 of ERISA, or
(c) the institution of proceedings to terminate a
Benefit Plan by the PBGC under Section 4042 of ERISA, or the
appointment of a trustee to administer any Plan.
"Total Commitment" means the sum of the Commitments.
"Total Debt Coverage Ratio" means, as of the last day of any
Fiscal Quarter ending after the Effective Date, the result obtained by dividing
the principal amount of consolidated Debt of LADD and its Consolidated
Subsidiaries as of such date, by consolidated EBITDA of LADD and its
Consolidated Subsidiaries for the period of four consecutive Fiscal Quarters
ended on such date.
"Total Facilities" means the aggregate of the Revolving
Credit Facility and the Term Loan Facility.
"Trademark Assignment" means the Assignment for Security -
Trademarks, dated on or about the Effective Date, by the Borrowers to the
Administrative Agent for the benefit of the Lenders, as the same may be amended,
modified or supplemented from time to time.
"Trademarks" means and includes in each case whether now
existing or hereafter arising, all of each Borrower's right, title and interest
in and to
(a) trademarks (including service marks), trade names
and trade styles and the registrations and applications for
registration thereof and the goodwill of the business symbolized by
the trademarks,
(b) licenses of the foregoing, whether as licensee or
licensor,
(c) renewals thereof,
(d) income, royalties, damages and payments now or hereafter
due and/or payable with respect thereto, including, without limitation, damages,
claims and payments for past and future infringements thereof,
(e) rights to sue for past, present and future
infringements thereof, including the right to settle suits
involving claims and demands for royalties owing, and
(f) all rights corresponding to any of the foregoing
throughout the world.
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"Transportation" means LADD Transportation, Inc., a North
Carolina corporation and a wholly-owned Consolidated Subsidiary of LADD.
"Type" when used in respect of any Loan or Borrowing, shall
refer to the rate by reference to which interest on such Loan or on the Loans
comprising such Borrowing is determined.
"Unfunded Vested Accrued Benefits" means with respect to
any Benefit Plan at any time, the amount (if any) by which
(a) the present value of all vested nonforfeitable
benefits under such Benefit Plan exceeds
(b) the fair value of all Benefit Plan assets allocable
to such benefits,
all determined as of the then most recent valuation date for such
Benefit Plan.
"Uniform Commercial Code" means the Uniform Commercial Code as
in effect from time to time in the State of North Carolina.
"Unused Revolving Credit Facility" means at any time (a) the
Revolving Credit Facility, minus (b) the sum (without duplication) of (i) the
aggregate principal amount of Revolving Credit Loans outstanding at such time,
plus (ii) the aggregate amount of Letter of Credit Obligations at such time,
plus (iii) the amount of other reserves against the Borrowing Base maintained
from time to time by the Administrative Agent in order to preserve the
Borrowers' borrowing capacity in light of a known, current or potential demand
on the Borrowers (or any of them) for payments, but not any such reserves
established to reflect a change in the value or probable value of the
Collateral.
SECTION 1.2. General Interpretive Rules.
(a) All terms of an accounting nature not specifically defined
herein shall have the meanings ascribed thereto by GAAP.
(b) The terms accounts, chattel paper, contract rights,
documents, equipment, instruments, general intangibles, proceeds and inventory,
as and when used in this Agreement or the Security Documents, shall have the
meanings given those terms in the Uniform Commercial Code.
(c) Unless otherwise specified, the words "hereof," "herein,"
"hereunder" and words of similar import, when used in this Agreement, refer to
this Agreement as a whole and not to any particular provision, section or
subsection of this Agreement.
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(d) Wherever from the context it appears appropriate, each
term stated in either the singular or plural shall include the singular and
plural, and pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, the feminine and the neuter. Words denoting individuals
include corporations and vice versa.
(e) References to any legislation or statute or code, or to
any provisions of any legislation or statute or code, shall include any
modification or reenactment of, or any legislative, statutory or code provision
substituted for, such legislation, statute or code or provision thereof.
(f) References to any document or agreement (including this
Agreement) shall include references to such document or agreement as amended,
novated, supplemented, modified or replaced from time to time, so long as and to
the extent that such amendment, novation, supplement, modification or
replacement that is either not prohibited by the terms of this Agreement or is
consented to by the Required Lenders and the Administrative Agent (or otherwise
in accordance with the terms hereof).
(g) Except where specifically restricted in a Loan Document,
references to any Person include its successor or substitutes and assigns
permitted or not prohibited under such Loan Document.
(h) References to the time of day are to the time of day
in the city in which the Agent's Office is located.
(i) The terms "payment", "prepayment", "distribution" and
similar terms used in the definitions of "Restricted Distribution" and
"Restricted Payment" and in Section 10.6, shall include payment by means of the
transfer of funds or of property and, in the event of a transfer of property,
the payment shall be deemed to be in an amount equal to the greater of the fair
market value and the book value of the property at the time of the transfer.
(j) Titles of Articles and Sections in this Agreement are for
convenience only, do not constitute part of this Agreement and neither limit nor
amplify the provisions of this Agreement, and all references in this Agreement
to Articles, Sections, subsections, paragraphs, clauses, subclauses, Schedules
or Exhibits shall refer to the corresponding Article, Section, subsection,
paragraph, clause or subclause of, or Schedule or Exhibit attached to, this
Agreement, unless specific reference is made to the articles, sections or other
subdivisions or divisions of, or to schedules or exhibits to, another document
or instrument.
(k) Whenever from the context it appears appropriate, the term
"Loan", including such terms as used as part of a defined term including the
term "Loan", shall mean and include a Loan made
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by all Lenders to the Borrowers as well as a Lender's Proportionate
Share of any such Loan.
(l) Whenever the phrase "to the knowledge of the Borrowers"
(or any of them) or words of similar import relating to the knowledge of any
Borrower are used herein, such phrase shall mean and refer to (i) the actual
knowledge of the President or chief financial officer of LADD or (ii) the
knowledge that such officers would have obtained if they had engaged in good
faith in the diligent performance of their duties, including the making of such
reasonable specific inquiries as may be necessary of the appropriate persons in
a good faith attempt to ascertain the accuracy of the matter to which such
phrase relates.
(m) Each reference herein to "reasonable attorneys' fees" or
"reasonable counsel fees" shall mean and refer to the reasonable fees (and
expenses) actually incurred by the party retaining such attorneys or counsel,
computed on the basis customarily employed by such attorneys or counsel and not
on the basis of a percentage of recovery or claim or other similar basis. Each
party hereto knowingly and intentionally waives any benefit of any otherwise
applicable statutory provision that would entitle it to recover attorneys' fees
on such a percentage of recovery basis.
Section 1.3 Exhibits and Schedules. All Exhibits and
Schedules attached hereto are by reference made a part hereof.
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ARTICLE 2
REVOLVING CREDIT FACILITY
SECTION 2.1. Revolving Credit Loans. Upon the terms and
subject to the conditions of, and in reliance upon the representations and
warranties made under, this Agreement, each Lender agrees, severally, but not
jointly, to make Revolving Credit Loans under the Revolving Credit Facility to
the Borrowers from time to time from the Effective Date to but not including the
Termination Date, as requested or deemed requested by the Borrowers in
accordance with the terms of Section 2.2, in amounts equal to such Lender's
Proportionate Share of each Revolving Credit Loan requested or deemed requested
hereunder up to an aggregate amount at any one time outstanding equal to such
Lender's Proportionate Share of the Borrowing Base; provided, however, that no
Borrowing of a Revolving Credit Loan shall exceed the Revolving Credit
Availability at the time and the aggregate principal amount of all outstanding
Loans under the Revolving Credit Facility (after giving effect to the Loans
requested) shall not exceed the Borrowing Base. It is expressly understood and
agreed that the Lenders may and at present intend to use the Borrowing Base as a
maximum ceiling on Loans made to the Borrower under the Revolving Credit
Facility; provided, however, that it is agreed that should the aggregate
outstanding amount of such Loans exceed the ceiling so determined or any other
limitation set forth in this Agreement, such Loans shall nevertheless constitute
Secured Obligations and, as such, shall be entitled to all benefits thereof and
security therefor. The principal amount of any Loan made under the Revolving
Credit Facility which is repaid may, subject to the terms and conditions of this
Agreement, be reborrowed by the Borrower in accordance with the terms of this
Section 2.1. The Administrative Agent's and each Lender's books and records
reflecting the date and the amount of each Loans made under the Revolving Credit
Facility and each repayment of principal thereof shall constitute prima facie
evidence of the accuracy of the information contained therein, subject to the
provisions of Section 5.8.
SECTION 2.2. Manner of Borrowing Revolving Credit
Loans. Borrowings under the Revolving Credit Facility shall be
made as follows:
(a) Requests for Borrowing.
(i) Prime Rate Revolving Credit Loans. Unless the
Borrowers shall previously have requested a Eurodollar Rate Revolving
Credit Loan and authorized the application of the proceeds thereof to
any purpose described in clauses (A) through (E) below and the Lenders
shall have disbursed such Eurodollar Rate Revolving Credit Loan for
such purpose, a request for the Borrowing of a Prime Rate Revolving
Credit
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Loan shall be made, or shall be deemed to be made, in the following
manner:
(A) with respect to the initial Borrowing to
be made on the Effective Date (which, notwithstanding the
foregoing may only be a Prime Rate Loan), the Borrowers shall
give the Administrative Agent an Initial Notice of Borrowing
at least two Business Days prior to the proposed date of the
Borrowing, and, with respect to each subsequent Borrowing, the
Borrowers may request a Prime Rate Revolving Credit Loan by
giving the Administrative Agent a Notice of Borrowing, before
11:30 a.m. on the proposed date of the Borrowing, provided
that if such notice is received after 11:30 a.m. on the
proposed date of Borrowing, the proposed Borrowing will be
postponed automatically to the next Business Day.
(B) whenever a check or other item is
presented to a Disbursing Bank for payment against a
Controlled Disbursement Account in an amount greater than the
then available balance in such account, such Disbursing Bank
shall, and is hereby irrevocably authorized by the Borrowers
to, give the Administrative Agent notice thereof, which notice
shall be deemed to be a request for a Prime Rate Revolving
Credit Loan on the date of such notice in an amount equal to
the excess of such check or other item over such available
balance, and such request shall be irrevocable,
(C) unless payment is otherwise made by the
Borrowers (or any of them), the becoming due of any amount
required to be paid under this Agreement or any of the Notes
as interest shall be deemed to be a request for a Prime Rate
Revolving Credit Loan on the due date in the amount required
to pay such interest, and such request shall be irrevocable,
(D) unless payment is otherwise made by the
Borrowers (or any of them), the becoming due of any other
Secured Obligation shall be deemed to be a request for a Prime
Rate Revolving Credit Loan on the due date in the amount then
so due, and such request shall be irrevocable, and
(E) the receipt by the Administrative Agent
of notification from NationsBank to the effect that a drawing
has been made under a Letter of Credit and that the Borrowers
have failed to reimburse NationsBank therefor in accordance
with the terms of the Letter of Credit, the Reimbursement
Agreement and Article 3, shall be deemed to be a request for a
Prime Rate Revolving Credit Loan on the date such notification
is received in the amount of such drawing which is so
unreimbursed.
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(ii) Eurodollar Rate Revolving Credit Loans. At any
time after the Effective Date, the Borrowers may request a Eurodollar
Rate Loan under the Revolving Credit Facility by giving the
Administrative Agent a Notice of Borrowing (which notice shall be
irrevocable) not later than 11:30 a.m. on the date three Business Days
before the day on which the requested Eurodollar Rate Revolving Credit
Loan is to be made.
(iii) Notification of Lenders. In the case of each
Eurodollar Rate Revolving Credit Loan and, unless the Administrative
Agent has elected periodic settlements pursuant to Section 5.8, in the
case of each Prime Rate Revolving Credit Loan, the Administrative Agent
shall promptly notify the Lenders of any notice of Borrowing given or
deemed given pursuant to this Section 2.2(a) by 12:00 noon on the
proposed Borrowing date (in the case of Prime Rate Revolving Credit
Loans) or by 3:00 p.m. three Business Days before the proposed
Borrowing date (in the case of Eurodollar Rate Revolving Credit Loans).
Not later than 1:30 p.m. on the proposed Borrowing date, each Lender
will make available to the Administrative Agent, for the account of the
Borrowers, at the Agent's Office in funds immediately available to the
Administrative Agent, such Lender's Proportionate Share of such Prime
Rate Revolving Credit Loan or Eurodollar Rate Revolving Credit Loan, as
the case may be.
(b) Disbursement of Loans. Each Borrower hereby irrevocably
authorizes the Administrative Agent to disburse the proceeds of each Borrowing
requested, or deemed to be requested, pursuant to this Section 2.2(a) as
follows:
(i) the proceeds of each Borrowing requested under
Section 2.2(a)(i)(A) (other than the Borrowing of the Initial Loans),
2.2(a)(i)(B) or 2.2(a)(ii) shall be disbursed by the Administrative
Agent in Dollars in immediately available funds by wire transfer to a
Controlled Disbursement Account or, in the absence of a Controlled
Disbursement Account, by wire transfer to such other account as may be
agreed upon by the Borrowers and the Administrative Agent from time to
time, and the proceeds of the Initial Loans under Section 2.2(a)(i)(A)
shall be disbursed in accordance with the Initial Notice of Borrowing.
(ii) the proceeds of each Borrowing deemed requested
under Section 2.2(a)(i)(C) or (D) shall be disbursed by the
Administrative Agent by way of direct payment of the relevant interest
or Secured Obligation, and
(iii) the proceeds of each Borrowing deemed requested
under Section 2.2(a)(i)(E) shall be disbursed by the Administrative
Agent directly to NationsBank on behalf of the Borrowers.
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SECTION 2.3. Repayment of Revolving Credit Loans. The
Revolving Credit Loans will be repaid as follows:
(a) The outstanding principal amount of all the
Revolving Credit Loans is due and payable, and shall be repaid by
the Borrowers in full, not later than the Termination Date;
(b) If at any time the aggregate outstanding unpaid principal
amount of the Revolving Credit Loans exceeds the Borrowing Base in effect at
such time, the Borrowers shall repay the Revolving Credit Loans in an amount
sufficient to reduce the aggregate unpaid principal amount of such Revolving
Credit Loans by an amount equal to such excess, together with accrued and unpaid
interest on the amount so repaid to the date of repayment;
(c) Each Borrower hereby instructs the Administrative Agent to
repay the Revolving Credit Loans outstanding on any day in an amount equal to
the amount, if any, received by the Administrative Agent on such day pursuant to
Section 9.1(b); provided that payments received in excess of outstanding
Revolving Credit Loans or payments received on account of Eurodollar Rate Loans
which would otherwise result in prepayment of such Loans prior to the end of the
Interest Period applicable thereto may, upon the instruction of the Borrowers to
the Administrative Agent not later than 1:00 p.m. on any Business Day, be
applied to the Cash Collateral Account or any Investment Account; and
(d) Each Eurodollar Rate Loan is due and payable on the last
day of the Interest Period applicable thereto, except to the extent converted or
continued in accordance with Sections 5.13 and 5.14.
Repayments pursuant to Section 2.3(b) or (c) shall be applied first to the Prime
Rate Revolving Credit Loans and then, subject to the provisions of Section
2.3(c), to Eurodollar Rate Revolving Credit
Loans.
SECTION 2.4. Revolving Credit Note. Each Lender's Revolving
Credit Loans and the joint and several obligation of the Borrowers to repay such
Revolving Credit Loans shall also be evidenced by a Revolving Credit Note
payable to the order of such Lender. Each Revolving Credit Note shall be dated
the Effective Date (or later "effective date" under any Assignment and
Acceptance) and be duly and validly executed and delivered by each Borrower.
SECTION 2.5. Extension of Revolving Credit Facility. Upon the
request of the Borrowers made during the 13th month prior to the Termination
Date, the Lenders may, in their sole discretion, effective as of the date one
year prior to the Termination Date, agree to extend the Revolving Credit
Facility for a period of one year. Each such extension shall be effected by the
delivery to the Borrowers of a written notice to that effect by all of the
Lenders,
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not later than the date one year prior to the Termination Date in effect before
such extension.
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ARTICLE 3
LETTER OF CREDIT FACILITY
SECTION 3.1. Agreement to Issue. Upon the terms and subject to
the conditions of, and in reliance upon the representations and warranties made
under, this Agreement, NationsBank agrees to issue for the account of any
Borrower one or more Letters of Credit in accordance with this Article 3, from
time to time during the period commencing on the Effective Date and ending on
the Termination Date.
SECTION 3.2. Amounts. NationsBank shall not have any
obligation to issue any Letter of Credit at any time:
(a) if, after giving effect to the issuance of the requested
Letter of Credit, (i) the aggregate Letter of Credit Obligations of the
Borrowers would exceed the Letter of Credit Facility then in effect or (ii) the
aggregate principal amount of the Revolving Credit Loans outstanding would
exceed the Borrowing Base (after reduction for the Letter of Credit Reserve in
respect of such Letter of Credit) or (iii) if no Revolving Credit Loans are
outstanding, the aggregate Letter of Credit Obligations would exceed the
Borrowing Base; or
(b) other than as set forth on Exhibit B to Schedule 7.1(j),
which has a stated term longer than one calendar year (but which may include a
renewal or "evergreen" provision that could, subject to the provisions of
Section 3.4(d), result in such Letter of Credit remaining outstanding for more
than one year) or an expiration date after the last Business Day that is more
than 30 days prior to the Termination Date.
SECTION 3.3. Conditions. The obligation of NationsBank to
issue any Letter of Credit is subject to the satisfaction of (a) the applicable
conditions precedent contained in Article 6 and (b) the following additional
conditions precedent in a manner satisfactory to the Administrative Agent and
NationsBank:
(i) the Borrowers shall have delivered to NationsBank and the
Administrative Agent at such times and in such manner as NationsBank or
the Administrative Agent may prescribe an application in form and
substance satisfactory to NationsBank and the Administrative Agent for
the issuance of the Letter of Credit, a Reimbursement Agreement and
such other documents as may be required pursuant to the terms thereof,
and the form and terms of the proposed Letter of Credit shall be
satisfactory to NationsBank and the Administrative Agent; and
(ii) as of the date of issuance, no order of any court,
arbitrator or governmental authority having jurisdiction or
authority over NationsBank shall purport by its terms to
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enjoin or restrain banks generally from issuing letters of credit of
the type and in the amount of the proposed Letter of Credit, and no
law, rule or regulation applicable to banks generally and no request or
directive (whether or not having the force of law) from any
governmental authority with jurisdiction over banks generally shall
prohibit, or request that NationsBank refrain from, the issuance of
letters of credit generally or the issuance of such Letter of Credit.
SECTION 3.4. Issuance of Letters of Credit.
(a) Request for Issuance. The Borrowers shall give NationsBank
and the Administrative Agent written notice of the Borrowers' request for the
issuance of a Letter of Credit no later than two Business Days prior to the
proposed date of issuance of the Letter of Credit. Such notice shall be
irrevocable and shall specify the original face amount of the Letter of Credit
requested, the effective date (which date shall be a Business Day) of issuance
of such requested Letter of Credit, whether such Letter of Credit may be drawn
in a single or in multiple draws, the date on which such requested Letter of
Credit is to expire (which date shall be a Business Day earlier than the 30th
day prior to the Termination Date), the purpose for which such Letter of Credit
is to be issued and the beneficiary of the requested Letter of Credit. The
Borrowers shall attach to such notice the form of the Letter of Credit that the
Borrowers request to be issued.
(b) Responsibilities of the Agent; Issuance. The
Administrative Agent shall determine, as of the Business Day immediately
preceding the requested effective date of issuance of the Letter of Credit set
forth in the notice from the Borrowers pursuant to Section 3.4(a), the amount of
the Letter of Credit Availability. If (i) the form of the Letter of Credit
delivered by the Borrowers to the Administrative Agent is acceptable to
NationsBank and the Administrative Agent in their sole, reasonable discretion,
(ii) the undrawn face amount of the requested Letter of Credit is less than or
equal to the Letter of Credit Availability and (iii) the Administrative Agent
has received a certificate from the Borrowers stating that the applicable
conditions set forth in Article 6 have been satisfied (and, absent prior written
notice to the contrary, submission of a duly executed Letter of Credit
application shall constitute a representation by the Borrower(s) to such
effect), then NationsBank will cause the Letter of Credit to be issued.
(c) Notice of Issuance. Promptly after the issuance of any
Letter of Credit, NationsBank shall give the Administrative Agent written or
facsimile notice, or telephonic notice confirmed promptly thereafter in writing,
of the issuance of such Letter of Credit, and the Administrative Agent shall
give each Lender written or facsimile notice, or telephonic notice confirmed
promptly thereafter in writing, of the issuance of such Letter of Credit.
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(d) No Extension or Amendment. No Letter of Credit
shall be extended or amended unless the requirements of this
Section 3.4 are met as though a new Letter of Credit were being
requested and issued.
SECTION 3.5. Duties of NationsBank. Any action taken or
omitted to be taken by NationsBank under or in connection with any Letter of
Credit, if taken or omitted in the absence of gross negligence or willful
misconduct, shall not result in any liability of NationsBank to any Lender or
relieve any Lender of its obligations hereunder to NationsBank. In determining
whether to pay under any Letter of Credit, NationsBank shall have no obligation
to any Lender other than to confirm that any documents required to be delivered
under such Letter of Credit in connection with such drawing have been presented
and appear on their face to comply with the requirements of such Letter of
Credit.
SECTION 3.6. Payment of Reimbursement Obligations.
(a) Payment to Issuer. Notwithstanding any provisions to the
contrary in any Reimbursement Agreement, the Borrowers, jointly and severally,
agree to reimburse NationsBank for any drawings (whether partial or full) under
each Letter of Credit issued by NationsBank and agree to pay to NationsBank the
amount of all other Reimbursement Obligations and other amounts payable to
NationsBank under or in connection with such Letter of Credit immediately when
due, irrespective of any claim, set-off, defense or other right which any
Borrower may have at any time against NationsBank or any other Person.
(b) Recovery or Avoidance of Payments. In the event any
payment by or on behalf of the Borrowers with respect to any Letter of Credit
(or any Reimbursement Obligation relating thereto) received by NationsBank, or
by the Administrative Agent and distributed by the Administrative Agent to the
Lenders on account of their respective participations therein, is thereafter set
aside, avoided or recovered from NationsBank or the Administrative Agent in
connection with any receivership, liquidation or bankruptcy proceeding, the
Lenders shall, upon demand by the Administrative Agent, pay to the
Administrative Agent, for the account of the Administrative Agent or
NationsBank, their respective Proportionate Shares of such amount set aside,
avoided or recovered together with interest at the rate required to be paid by
the Administrative Agent (or NationsBank) upon the amount required to be repaid
by it.
SECTION 3.7. Participations.
(a) Purchase of Participations. On the Effective Date with
respect to any Letters of Credit outstanding on such date and immediately upon
issuance by NationsBank of a Letter of Credit with respect to all other Letters
of Credit, each Lender shall be deemed to have irrevocably and unconditionally
purchased and received
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without recourse or warranty, an undivided interest and participation in such
Letter of Credit, equal to such Lender's Proportionate Share of the face amount
thereof (including, without limitation, all obligations of the Borrowers with
respect thereto, other than amounts owing to NationsBank under Section 5.2(d),
and any security therefor or guaranty pertaining thereto).
(b) Sharing of Letter of Credit Payments. In the event that
NationsBank makes a payment under any Letter of Credit and NationsBank shall not
have been repaid such amount pursuant to Section 3.6, then NationsBank shall be
deemed to have made a Non- Ratable Loan in the amount of such payment, and
notwithstanding the occurrence or continuance of a Default or Event of Default
at the time of such payment, such Non-Ratable Loan shall be subject to the
provisions of Section 5.8(c) and the absolute obligations of the Lenders to pay
for their respective participation interests therein.
(c) Sharing of Reimbursement Obligation Payments. Whenever
NationsBank receives a payment from or on behalf of the Borrowers on account of
a Reimbursement Obligation as to which the Administrative Agent has previously
received for the account of NationsBank payment from a Lender pursuant to this
Section 3.7, NationsBank shall promptly pay to the Administrative Agent, for the
benefit of such Lender, such Lender's Proportionate Share of the amount of such
payment from the Borrowers in Dollars. Each such payment shall be made by
NationsBank on the Business Day on which NationsBank receives immediately
available funds from the Administrative Agent pursuant to the immediately
preceding sentence, if received prior to 11:00 a.m. on such Business Day, and
otherwise on the next succeeding Business Day.
(d) Documentation. Upon the request of any Lender, the
Administrative Agent shall furnish to such Lender copies of any Letter of
Credit, Reimbursement Agreement or application for any Letter of Credit and such
other documentation as may reasonably be requested by such Lender.
(e) Obligations Irrevocable. The obligations of each Lender to
make payments to the Administrative Agent with respect to any Letter of Credit
and their participations therein pursuant to the provisions of Section 5.8(c)
hereof or otherwise and the obligations of the Borrowers to make payments to
NationsBank or to the Administrative Agent, for the account of Lenders, shall be
irrevocable, shall not be subject to any qualification or exception whatsoever
and shall be made in accordance with the terms and conditions of this Agreement
(assuming, in the case of the obligations of the Lenders to make such payments,
that the Letter of Credit has been issued in accordance with Section 3.4),
including, without limitation, any of the following circumstances:
(i) Any lack of validity or enforceability of this
Agreement or any of the other Loan Documents;
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(ii) The existence of any claim, set-off, defense or other right
which any Borrower may have at any time against a beneficiary named in
a Letter of Credit or any transferee of any Letter of Credit (or any
Person for whom any such transferee may be acting), any Lender,
NationsBank or any other Person, whether in connection with this
Agreement, any Letter of Credit, the transactions contemplated herein
or any unrelated transactions (including any underlying transactions
between any Borrower or any other Person and the beneficiary named in
any Letter of Credit);
(iii) Any draft, certificate or any other document presented under
the Letter of Credit upon which payment has been made in good faith and
according to its terms proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) The surrender or impairment of any Collateral, Real Estate or
any other security for the Secured Obligations or the performance or
observance of any of the terms of any of the Loan Documents;
(v) The occurrence of any Default or Event of Default;
or
(vi) NationsBank's or the Administrative Agent's failure to deliver
the notice provided for in Section 3.4(c).
SECTION 3.8. Indemnification, Exoneration.
(a) Indemnification. In addition to amounts payable as
elsewhere provided in this Article 3, the Borrowers agree, jointly and
severally, to protect, indemnify, pay and save the Lenders and the
Administrative Agent harmless from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
attorneys' fees) which any Lender or the Administrative Agent may incur or be
subject to as a consequence, directly or indirectly, of
(i) the issuance of any Letter of Credit, other than as
a result of its gross negligence or willful misconduct, as
determined by a court of competent jurisdiction, or
(ii) the failure of NationsBank to honor a drawing under any Letter
of Credit as a result of any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto governmental
authority (all such acts or omissions being hereinafter referred to
collectively as "Government Acts").
(b) Assumption of Risk by the Borrowers. As among the
Borrowers, the Lenders and the Administrative Agent, the Borrowers
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assume all risks of the acts and omissions of, or misuse of any of the Letters
of Credit by, the respective beneficiaries of such Letters of Credit. In
furtherance and not in limitation of the foregoing, subject to the provisions of
the applications for the issuance of Letters of Credit, the Lenders and the
Administrative Agent shall not be responsible for:
(i) the form, validity, sufficiency, accuracy, genuineness or
legal effect of any document submitted by any Person in connection with
the application for and issuance of and presentation of drafts with
respect to any of the Letters of Credit, even if it should prove to be
in any or all respects invalid, insufficient, inaccurate, fraudulent or
forged;
(ii) the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign any Letter of Credit or
the rights or benefits thereunder or proceeds thereof, in whole or in
part, which may prove to be invalid or ineffective for any reason;
(iii) the failure of the beneficiary of any Letter of Credit to
comply duly with conditions required in order to draw upon such Letter
of Credit;
(iv) errors, omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they be in cipher;
(v) errors in interpretation of technical terms;
(vi) any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under any Letter of Credit
or of the proceeds thereof;
(vii) the misapplication by the beneficiary of any Letter
of Credit of the proceeds of any drawing under such Letter of
Credit; or
(viii) any consequences arising from causes beyond the control of the
Lenders or the Administrative Agent, including, without limitation, any
Government Acts.
None of the foregoing shall affect, impair or prevent the vesting of any of the
Administrative Agent's rights or powers under this Section 3.8.
(c) Exoneration. In furtherance and extension, and not in
limitation, of the specific provisions set forth above, any action taken or
omitted by the Administrative Agent, NationsBank or any Lender under or in
connection with any of the Letters of Credit or any related certificates, if
taken or omitted in good faith,
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shall not result in any liability of any Lender or the Administrative Agent to
the Borrowers (or any of them) or relieve the Borrowers (or any of them) of any
of their obligations hereunder to any such Person.
SECTION 3.9. Supporting Letter of Credit; Cash Collateral
Account. Upon the occurrence of an Event of Default or, if, notwithstanding the
provisions of Section 3.2(b), any Letter of Credit is outstanding on the
Termination Date, then on or prior to the Termination Date, the Borrowers shall,
promptly on demand by the Administrative Agent, deposit with the Administrative
Agent, for the ratable benefit of the Lenders, with respect to each Letter of
Credit then outstanding, as the Administrative Agent shall specify, either (a) a
standby letter of credit (a "Supporting Letter of Credit") in form and substance
satisfactory to the Administrative Agent, issued by an issuer satisfactory to
the Administrative Agent in its sole and absolute judgment in an amount equal to
the greatest amount for which such Letter of Credit may be drawn, under which
Supporting Letter of Credit the Administrative Agent shall be entitled to draw
amounts necessary to reimburse the Administrative Agent and the Lenders for
payments made by the Administrative Agent and the Lenders under such Letter of
Credit or under any reimbursement or guaranty agreement with respect thereto, or
(b) Cash Collateral in an amount necessary to reimburse the Administrative Agent
and the Lenders for payments made by the Administrative Agent and the Lenders
under such Letter of Credit or under any reimbursement or guaranty agreement
with respect thereto. Such Supporting Letter of Credit or Cash Collateral shall
be held by the Administrative Agent for the benefit of the Lenders, as security
for, and to provide for the payment of, the Reimbursement Obligations. In
addition, the Administrative Agent may at any time after such Event of Default
or Termination Date apply any or all of such Cash Collateral to the payment of
any or all of the Secured Obligations then due and payable. The Cash Collateral
shall be deposited in the Cash Collateral Account or an Investment Account and
shall be administered in accordance with the provisions of Section 5.17.
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ARTICLE 4
TERM LOAN FACILITY
SECTION 4.1. Term Loan. Upon the terms and subject to the
conditions of, and in reliance upon the representations and warranties made
under, this Agreement, each Lender agrees, severally but not jointly, to make a
Prime Rate Loan to the Borrowers on the Effective Date in a principal amount
equal to such Lender's Proportionate Share of the Term Loan Facility.
SECTION 4.2. Manner of Borrowing Term Loans. The
Borrowers shall give the Administrative Agent an Initial Notice of
Borrowing at least two Business Days' prior to the occurrence of
the Effective Date. Upon receipt of such notice from the
Borrowers, the Administrative Agent shall promptly notify each
Lender thereof. Each Lender will make Prime Rate Loans in the
amount equal to its Proportionate Share of the aggregate principal
amount of the Term Loan available to the Administrative Agent, for
the account of the Borrowers, at the Agent's Office, prior to 12:00
noon on the Effective Date in funds immediately available to the
Administrative Agent. Not later than 12:00 noon on the Effective
Date, upon satisfaction of the applicable conditions set forth in
Sections 6.1 and 6.2, the Administrative Agent will disburse the
Term Loans on the Effective Date, in same day funds in accordance
with the terms of the Initial Notice of Borrowing.
SECTION 4.3. Repayment of Term Loan. The principal amount of
the Term Loan is due and payable, and shall be repaid in full by the Borrowers,
in 40 consecutive quarterly installments on the first day of each January,
April, July and October, beginning January 1, 1997, each such installment to be
in the amount of $1,625,000, provided that the final installment shall be in the
amount of the then unpaid balance of the Term Loan.
SECTION 4.4. Term Notes. The Loans made by each Lender as part
of the Term Loan and the joint and several obligation of the Borrowers to repay
such Loans shall also be evidenced by a Term Note payable to the order of such
Lender. Each such Term Note shall be dated the Effective Date (or the later
"effective date" under any Assignment and Acceptance) and be duly and validly
executed and delivered by each Borrower.
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ARTICLE 5
GENERAL LOAN PROVISIONS
SECTION 5.1. Interest.
(a) Prime Rate Loans. Subject to the provisions of Section
5.1(d), the Borrowers will pay interest on the unpaid principal amount of each
Prime Rate Loan, for each day from the day such Loan is made until such Loan is
paid (whether at maturity, by reason of acceleration, or otherwise) or is
converted to an Loan of a different Type, at a rate per annum equal to the sum
of (i) the Applicable Margin and (ii) the Prime Rate, payable monthly in arrears
as it accrues on each Interest Payment Date.
(b) Eurodollar Rate Loans. Subject to the provisions of
Section 5.1(d), the Borrowers will pay interest on the unpaid principal amount
of each Eurodollar Rate Loan for the applicable Interest Period at a rate per
annum equal to the sum of (i) the Applicable Margin and (ii) the Eurodollar
Rate, payable in arrears as it accrues on each Interest Payment Date, and when
such Eurodollar Rate Loan is due (whether at maturity, by reason of acceleration
or otherwise).
(c) Other Secured Obligation. The Borrowers will, to the
extent permitted by Applicable Law, pay interest on the unpaid principal amount
of any Secured Obligation that is due and payable, other than the Loans, in
accordance with Sections 5.1(a) or (d), as applicable, as if such Secured
Obligation were a Prime Rate Revolving Credit Loan.
(d) Default Rate. If there shall occur and be continuing an
Event of Default, at the election of the Required Lenders, the unpaid principal
amount of the Loans and other Secured Obligations shall no longer bear interest
in accordance with the terms of Section 5.1(a), 5.1(b) or 5.1(c), but shall bear
interest for each day from the date of such Event of Default until such Event of
Default shall have been cured or waived at a rate per annum equal to the sum of
(i) the Default Margin and (ii) the rate otherwise applicable to such Loan or
other Secured Obligation, payable on demand. The interest rate provided for in
the preceding sentence shall, to the extent permitted by Applicable Law, apply
to and accrue on the amount of any judgment entered with respect to any Secured
Obligation and shall continue to accrue at such rate during any proceeding
described in Section 13.1(g) or (h).
(e) Calculation of Interest. The interest rates provided for
in Sections 5.1(a), (b), (c) and (d) shall be computed on the basis of a year of
360 days and the actual number of days elapsed. Each interest rate determined
with reference to the Prime Rate shall be adjusted automatically as of the
opening of business on the effective date of each change in the Prime Rate.
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(f) Maximum Rate. It is not intended by the Lenders, and
nothing contained in this Agreement or the Notes shall be deemed, to establish
or require the payment of a rate of interest in excess of the maximum rate
permitted by Applicable Law (the "Maximum Rate"). If, in any month, the
Effective Interest Rate, absent such limitation, would have exceeded the Maximum
Rate, then the Effective Interest Rate for that month shall be the Maximum Rate,
and, if in future months, the Effective Interest Rate would otherwise be less
than the Maximum Rate, then the Effective Interest Rate shall remain at the
Maximum Rate until such time as the amount of interest paid hereunder equals the
amount of interest which would have been paid if the same had not been limited
by the Maximum Rate. In the event that, upon payment in full of the Secured
Obligations, the total amount of interest paid or accrued under the terms of
this Agreement is less than the total amount of interest which would have been
paid or accrued if the Effective Interest Rate had at all times been in effect,
then the Borrowers shall, to the extent permitted by Applicable Law, pay to the
Lenders an amount equal to the excess, if any, of (i) the lesser of (A) the
amount of interest which would have been charged if the Maximum Rate had, at all
times, been in effect and (B) the amount of interest which would have accrued
had the Effective Interest Rate, at all times, been in effect and (ii) the
amount of interest actually paid or accrued under this Agreement. In the event
the Lenders receive, collect or apply as interest any sum in excess of the
Maximum Rate, such excess amount shall be applied to the reduction of the
principal balance of the Secured Obligations, and if no such principal is then
outstanding, such excess or part thereof remaining, shall be paid to the
Borrowers. For the purposes of computing the Maximum Rate, to the extent
permitted by applicable law, all interest and charges, discounts, amounts,
premiums or fees deemed to constitute interest under applicable law, shall be
amortized, prorated, allocated and spread in substantially equal parts
throughout the full term of this Agreement. The provisions of this Section
5.1(f) shall be deemed to be incorporated into every Loan Document (whether or
not any provision of this Section 5.1(f) is specifically referred to therein).
SECTION 5.2. Certain Fees.
(a) Origination Fee. On the Effective Date, as additional
consideration for the extensions of credit provided for hereunder, the Borrowers
shall pay to the Administrative Agent an origination fee in accordance with the
terms of the separate letter between the Administrative Agent and LADD, for
itself and the other Borrowers. The origination fee provided for herein shall
compensate the Administrative Agents for the internal costs associated with the
origination, structuring, underwriting, processing, approving and closing of the
transactions contemplated by this Agreement, but not including any out-of-pocket
expenses for which the Borrowers have agreed to reimburse any Co-Agent, the
Administrative Agent or any Lender, including, without limitation,
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the Administrative Agent's or any Lender's reasonable out-of-pocket expenses
incurred in connection with its due diligence examination of the Borrowers and
the closing of the transactions contemplated by this Agreement.
(b) Agent Fee. For administration and other services performed
by the Administrative Agent in connection with its continuing administration of
this Agreement, the Borrowers shall pay to the Administrative Agent, for its own
account, and not for the account of the Lenders, an annual fee of $150,000,
payable in equal quarterly installments (prorated for any period less than a
full quarter), beginning on the Effective Date and on the first day of each
January, April, July and October thereafter for so long as any Secured
Obligation shall remain outstanding or the Revolving Credit Facility shall not
have been terminated.
(c) Commitment Fee. In connection with and as consideration
for the holding available for the use of the Borrowers hereunder the full amount
of the Revolving Credit Facility, the Borrowers will pay a fee to the
Administrative Agent, for the Ratable benefit of the Lenders, for each day from
the Effective Date until the Termination Date, in an amount equal to 1/2 of 1%
per annum of the Unused Revolving Credit Facility for such day. Such fee shall
be payable monthly in arrears on the first day of each calendar month and on the
date of any permanent reduction in the Revolving Credit Facility.
(d) Letter of Credit Fees.
(i) The Borrowers agree to pay to the Administrative Agent,
for the Ratable benefit of the Lenders, Letter of Credit fees equal to
(A) 1% per annum on the face amount of each commercial or documentary
Letter of Credit and (B) the Applicable Margin applicable from time to
time to Eurodollar Rate Revolving Credit Loans on the average daily
aggregate Letter of Credit Amount of all standby Letters of Credit from
time to time outstanding during the term of this Agreement. Such fees
payable shall be payable to the Administrative Agent for the Ratable
benefit of the Lenders in advance on the date of issuance of each
Letter of Credit, shall be calculated according to the anticipated
average daily Letter of Credit Amount based on the stated term of each
Letter of Credit and shall be calculated based on a year of 360 days
and the actual number of days elapsed. In the event any standby Letter
of Credit is canceled or terminated prior to the expiration of its
stated term, the Lenders will make appropriate adjustments in such fees
based on the actual average daily face amount of outstanding standby
Letters of Credit and will refund to the Borrowers the amount of any
excess fee paid pursuant to this Section 3.2(d).
(ii) The Borrowers agree to pay to Administrative Agent,
for the account of NationsBank, a fee in the amount of 1/8 of
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1% of the face amount of each Letter of Credit issued on or after the
Effective Date, payable in advance on the date of issuance, and the
standard fees and charges of NationsBank for issuing, administering,
amending, renewing, paying and canceling letters of credit, as and when
assessed.
(e) Collection Fee. During the period from and including the
Effective Date to and including the Termination Date, the Borrowers will pay to
the Administrative Agent for its own account on the first day of each month an
amount of interest computed at the Effective Interest Rate applicable to Prime
Rate Loans on each remittance (other than a remittance received via wire
transfer, automated clearinghouse transfer or otherwise in immediately available
funds) received by the Administrative Agent against Receivables (as contemplated
by Section 9.1 hereof) during the preceding month, from the close of business on
the date of receipt of each such remittance until the close of business on the
Business Day following the receipt of the remittance, as compensation for delays
in the collection and clearance of checks and other remittances.
(f) General. All fees shall be fully earned by the identified
recipient thereof when due and payable and, except as otherwise set forth herein
or required by applicable law, shall not be subject to refund or rebate. All
fees provided for in this Section 5.2 are for compensation for services and are
not, and shall not be deemed to be, interest or a charge for the use of money.
SECTION 5.3. Manner of Payment.
(a) Except as otherwise expressly provided in Section 9.1(b),
each payment (including prepayments) by the Borrowers on account of the
principal of or interest on the Loans or of any other amounts payable to the
Administrative Agent or the Lenders under this Agreement or any Note shall be
made not later than 12:00 noon on the date specified for payment under this
Agreement to the Administrative Agent, for its own account or the account of the
Lenders, as the case may be, at the Agent's Office, in Dollars, in immediately
available funds and shall be made without any setoff, counterclaim or deduction
whatsoever. Any payment received after such time but before 4:00 p.m. on such
day shall be deemed a payment on such date for the purposes of Section 13.1, but
for all other purposes shall be deemed to have been made on the next succeeding
Business Day.
(b) Each Borrower hereby irrevocably authorizes each Lender
and each Affiliate of such Lender and each participant herein to charge any
account of such Borrower maintained with such Lender or such Affiliate or
participant with such amounts as may be necessary from time to time to pay any
Secured Obligations (whether or not owed to such Lender, Affiliate or
participant) which are not paid when due.
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SECTION 5.4. General. At any time when the Administrative
Agent has elected daily settlements among the Lenders, if any payment under this
Agreement or any Note shall be specified to be made on a day which is not a
Business Day, it may, at the Administrative Agent's discretion, be made on the
next succeeding day which is a Business Day and any such extension of time shall
be included in computing interest, if any, payable in connection with such
payment.
SECTION 5.5. Loan Accounts; Statements of Account.
(a) Each Lender shall open and maintain on its books at least
one loan account in the Borrowers' name (each, a "Loan Account" and
collectively, the "Loan Accounts"). Each such Loan Account shall show as debits
thereto each Loan made under this Agreement by such Lender to the Borrowers and
as credits thereto all payments received by such Lender and applied to principal
of such Loans, so that the balance of the Loan Account at all times reflects the
principal amount due such Lender from the Borrowers.
(b) The Administrative Agent shall maintain on its books a
control account for the Borrowers in which shall be recorded (i) the amount of
each disbursement made hereunder, (ii) the amount of any principal or interest
due or to become due from the Borrowers hereunder, and (iii) the amount of any
sum received by the Administrative Agent hereunder from the Borrowers and each
Lender's share therein.
(c) The entries made in the accounts pursuant to subsections
(a) and (b) shall be prima facie evidence, in the absence of manifest error, of
the existence and amounts of the obligations of the Borrowers therein recorded
and in case of discrepancy between such accounts, in the absence of manifest
error, the accounts maintained pursuant to subsection (b) shall be controlling.
(d) The Administrative Agent will account to the Borrowers
monthly with a statement of Loans, charges and payments made to and by the
Borrowers pursuant to this Agreement, and such accounts rendered by the
Administrative Agent shall be deemed final, binding and conclusive, save for
manifest error, unless the Administrative Agent is notified by the Borrowers in
writing to the contrary within 30 days of the date the account to the Borrowers
was so rendered. Such notice by the Borrowers shall be deemed an objection to
only those items specifically objected to therein. Failure of the Administrative
Agent to render such account shall in no way affect the rights of the
Administrative Agent or of the Lenders hereunder.
SECTION 5.6. Reduction of Revolving Credit Facility;
Termination of Agreement.
(a) Reduction of Revolving Credit Facility.
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(i) The Borrowers shall have the right, at any time and from
time to time after the first anniversary of the Effective Date, upon at
least 30 days' prior irrevocable, written notice to the Administrative
Agent, to terminate or reduce permanently all or a portion of the
Revolving Credit Facility; provided, however, that any such partial
reduction shall be made in an amount not less than $5,000,000 or in
increments of $1,000,000 in excess thereof and shall not reduce the
Revolving Credit Facility below the amount of the aggregate Letter of
Credit Reserve. As of the date of termination or reduction set forth in
such notice, the Revolving Credit Facility shall be permanently reduced
to the amount stated in the Borrowers' notice for all purposes herein,
and the Borrowers shall pay the amount necessary to reduce the amount
of the Revolving Credit Loans outstanding under the Revolving Credit
Facility as so reduced, together with accrued interest on the amounts
so prepaid.
(ii) The amount of the Revolving Credit Facility shall be
automatically reduced to zero on the Termination Date.
(iii) The Revolving Credit Facility or any portion thereof
terminated or reduced pursuant to this Section 5.6 may not be
reinstated.
(b) Termination of Agreement. Subject to the provisions of
Section 5.10, the Borrowers shall have the right, at any time, to terminate this
Agreement upon not less than 30 Business Days' prior written notice, which
notice shall specify the effective date of such termination. Upon receipt of
such notice, the Administrative Agent shall promptly notify each Lender thereof.
On the date specified in such notice, such termination shall be effected,
provided, that the Borrowers shall, on or prior to such date, pay to the
Administrative Agent, for its account and the account of the Lenders, in same
day funds, an amount equal its account and to all Secured Obligations (other
than with respect to Letter of Credit Obligations) outstanding on such date,
including, without limitation, all (i) accrued interest thereon, (ii) all
accrued fees provided for hereunder, and (iii) any amounts payable to the
Lenders pursuant to Sections 5.10, 5.11, 5.16, 16.2, 16.3, 16.14 and 16.23, and,
in addition thereto, shall deliver to the Administrative Agent, in respect of
each outstanding Letter of Credit, either a Supporting Letter of Credit or Cash
Collateral as provided in Section 3.9. Additionally, the Borrowers shall provide
the Administrative Agent and the Lenders with indemnification in form and
substance satisfactory to the Administrative Agent with respect to such matters
as the Administrative Agent and the Lenders shall reasonably require and a
general release of all claims. Following a notice of termination as provided for
in this Section 5.6(b) and upon payment in full of the amounts specified in this
Section 5.6(b), and execution and delivery of any required indemnification and
release, this Agreement shall be terminated and the Administrative Agent, the
Co-Agents, the Lenders and the
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Borrowers shall have no further obligations to any other party hereto, except
for the obligations to the Administrative Agent and the Lenders pursuant to
Section 16.14 hereof, which shall survive any termination of this Agreement.
SECTION 5.7. Making of Loans.
(a) Nature of Obligations of Lenders to Make Loans. The
obligations of the Lenders under this Agreement to make the Loans
are several and are not joint or joint and several.
(b) Assumption by Agent. Subject to the provisions of Section
5.8 and notwithstanding the occurrence or continuance of a Default or Event of
Default or other failure of any condition to the making of Loans under the
Revolving Credit Facility hereunder subsequent to the Initial Loans, unless the
Administrative Agent shall have received notice from a Lender in accordance with
the provisions of Section 5.7(c) prior to a proposed Borrowing date that such
Lender will not make available to the Administrative Agent such Lender's
Proportionate Share of the Revolving Credit Loan to be borrowed on such date,
the Administrative Agent may assume that such Lender will make such
Proportionate Share available to the Administrative Agent in accordance with
Section 2.2(a), and the Administrative Agent may, in reliance upon such
assumption, make available to the Borrowers on such date a corresponding amount.
If and to the extent such Lender shall not make such Proportionate Share
available to the Administrative Agent, such Lender and the Borrowers severally
agree to repay to the Administrative Agent forthwith on demand such
corresponding amount together with interest thereon for each day from the date
such amount is made available to the Borrowers until the date such amount is
repaid to the Administrative Agent at the Effective Interest Rate or, if lower,
subject to Section 5.1(f), the Maximum Rate if repaid by the Borrowers or at the
Federal Funds Effective Rate, if paid by such Lender. If such Lender shall repay
to the Administrative Agent such corresponding amount, the amount so repaid
shall constitute such Lender's Proportionate Share of the Loan made on such
Borrowing date for purposes of this Agreement. The failure of any Lender to make
its Proportionate Share of any Loan available shall not (without regard to
whether a Borrower shall have returned the amount thereof to the Administrative
Agent in accordance with this Section 5.7) relieve it or any other Lender of its
obligation, if any, hereunder to make its Proportionate Share of the Loan
available on such Borrowing date, but no Lender shall be responsible for the
failure of any other Lender to make its Proportionate Share of a Loan available
on the Borrowing date.
(c) Delegation of Authority to Agent. Without limiting the
generality of Section 15.1, each Lender expressly authorizes the Administrative
Agent to determine on behalf of such Lender (i) any reduction or increase of
advance rates applicable to the Borrowing Base, so long as such advance rates do
not at any time exceed the rates set forth in the definition "Borrowing Base,"
(ii)
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the creation or elimination of any reserves (other than the Letter of Credit
Reserve) against the Revolving Credit Facility and the Borrowing Base and (iii)
the designation of any Inventory or Receivables as not constituting Eligible
Inventory or Eligible Receivables. Such authorization may be withdrawn by the
Required Lenders by giving the Administrative Agent written notice of such
withdrawal signed by the Required Lenders; provided, however, that unless
otherwise agreed by the Administrative Agent such withdrawal of authorization
shall not become effective until the thirtieth Business Day after receipt of
such notice by the Administrative Agent. Thereafter, the Required Lenders shall
jointly instruct the Administrative Agent in writing regarding such matters with
such frequency as the Required Lenders shall jointly determine. Unless and until
the Administrative Agent shall have received written notice from the Required
Lenders as to the existence of a Default, an Event of Default or some other
circumstance which would relieve the Lenders of their respective obligations to
make Loans hereunder, which notice shall be in writing and shall be signed by
the Required Lenders and shall expressly state that the Required Lenders do not
intend to make available to the Administrative Agent such Lenders' Ratable Share
of Loans made after the effective date of such notice, the Administrative Agent
shall be entitled to continue to make the assumptions described in Section
5.7(b). After receipt of the notice described in the preceding sentence, which
shall become effective on the third Business Day after receipt of such notice by
the Administrative Agent unless otherwise agreed by the Agent, the Agent shall
be entitled to make the assumptions described in Section 5.7(b) as to any Loans
as to which it has not received a written notice to the contrary prior to 11:00
a.m. on the Business Day next preceding the day on which the Loan is to be made.
The Administrative Agent shall not be required to make any Loan as to which it
shall have received notice by a Lender of such Lender's intention not to make
its Ratable Share of such Loan available to the Administrative Agent. Any
withdrawal of authorization under this Section 5.7(c) shall not affect the
validity of any Loans made prior to the effectiveness thereof.
SECTION 5.8. Settlement Among Lenders.
(a) Term Loans. The Administrative Agent shall pay to each
Lender on each Interest Payment Date or Installment Payment Date, as the case
may be, its Ratable Share (or, if different, a proportionate amount based on the
principal amount of the Term Loans owing to such Lender), of all payments
received by the Administrative Agent hereunder in immediately available funds in
respect of the principal of, or interest on, the Term Loans, net of any amounts
payable by such Lender to the Administrative Agent, by wire transfer of same day
funds.
(b) Revolving Credit Loans. It is agreed that each Lender's
Net Outstandings are intended by the Lenders to be equal at all times to such
Lender's Ratable Share of the aggregate principal amount of all Revolving Credit
Loans outstanding.
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Notwithstanding such agreement, the several and not joint obligation of each
Lender to make its Ratable Share of Loans under the Revolving Credit Facility in
accordance with the terms of this Agreement and each Lender's right to receive
its Ratable Share of principal payments on Revolving Credit Loans, the Lenders
agree that in order to facilitate the administration of this Agreement and the
Loan Documents that settlement among them may take place on a periodic basis in
accordance with the provisions of this Section 5.8.
(c) Settlement Procedures as to Revolving Credit Loans. To the
extent and in the manner hereinafter provided in this Section 5.8, settlement
among the Lenders as to Prime Rate Revolving Credit Loans may occur periodically
on Settlement Dates determined from time to time by the Administrative Agent,
which may occur before or after the occurrence or during the continuance of a
Default or Event of Default and whether or not all of the conditions set forth
in Section 6.2 have been met. On each Settlement Date payments shall be made by
or to NationsBank and the other Lenders in the manner provided in this Section
5.8 in accordance with the Settlement Report delivered by the Administrative
Agent pursuant to the provisions of this Section 5.8 in respect of such
Settlement Date so that as of each Settlement Date, and after giving effect to
the transactions to take place on such Settlement Date, each Lender's Net
Outstandings shall equal such Lender's Ratable Share of the Revolving Credit
Loans.
(i) Selection of Settlement Dates. If the Administrative Agent
elects, in its discretion, but subject to the consent of NationsBank,
to settle accounts among the Lenders with respect to principal amounts
of Prime Rate Revolving Credit Loans less frequently than each Business
Day, then the Administrative Agent shall designate periodic Settlement
Dates which may occur on any Business Day after the Effective Date;
provided, however, that (A) the Administrative Agent shall designate as
a Settlement Date any Business Day which is an Interest Payment Date
and (B) a Settlement Date shall occur not less often than every five
Business Days. The Administrative Agent shall designate a Settlement
Date by delivering to each Lender a Settlement Report not later than
12:00 noon on the proposed Settlement Date, which Settlement Report
will be in the form of Exhibit F hereto and shall be with respect to
the period beginning on the next preceding Settlement Date and ending
on such designated Settlement Date.
(ii) Non-Ratable Loans and Payments. Between Settlement Dates,
the Administrative Agent shall request and NationsBank may (but shall
not be obligated to) advance to the Borrowers out of NationsBank's own
funds, the entire principal amount of any Prime Rate Revolving Credit
Loan requested or deemed requested pursuant to Section 2.2(a) (any such
Prime Rate Revolving Credit Loan being referred to as a "Non-Ratable
Loan"). The making of each Non-Ratable Loan by NationsBank
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shall be deemed to be a purchase by NationsBank of a 100% participation
in each other Lender's Proportionate Share of such Non-Ratable Loan.
All payments of principal, interest and any other amount with respect
to such Non-Ratable Loan shall be payable to and received by the
Administrative Agent for the account of NationsBank. Upon demand by
NationsBank, with notice thereof to the Administrative Agent, each
other Lender shall pay to NationsBank, as the repurchase of such
participation, an amount equal to 100% of such Lender's Proportionate
Share of the principal amount of such Non- Ratable Loan. Any payments
received by the Administrative Agent between Settlement Dates which in
accordance with the terms of this Agreement are to be applied to the
reduction of the outstanding principal balance of Revolving Credit
Loans, shall be paid over to and retained by NationsBank for such
application, and such payment to and retention by NationsBank shall be
deemed, to the extent of each other Lender's Proportionate Share of
such payment, to be a purchase by each such other Lender of a
participation in the Revolving Credit Loans (including the repurchase
of participations in Non- Ratable Loans) held by NationsBank. Upon
demand by another Lender, with notice thereof to the Administrative
Agent, NationsBank shall pay to the Administrative Agent, for the
account of such other Lender, as a repurchase of such participation, an
amount equal to such other Lender's Proportionate Share of any such
amounts (after application thereof to the repurchase of any
participations of NationsBank in such other Lender's Proportionate
Share of any Non-Ratable Loans) paid only to NationsBank by the
Administrative Agent.
(iii) Settlement. On each Settlement Date each Lender shall transfer
to the Administrative Agent and the Administrative Agent shall transfer
to each Lender such amounts as are necessary to insure that, after
giving effect to all such transfers, each Lender's Net Outstandings are
equal to such Lenders Proportionate Share of the aggregate principal
amount of all Revolving Loans then outstanding.
(iv) Return of Payments. If any amounts received by NationsBank in
respect of the Secured Obligations are later required to be returned or
repaid by NationsBank to the Borrowers or any other obligor or their
respective representatives or successors in interest, whether by court
order, settlement or otherwise, in excess of the NationsBank's
Proportionate Share of all such amounts required to be returned by all
Lenders, each other Lender shall, upon demand by NationsBank with
notice to the Administrative Agent, pay to the Administrative Agent for
the account of NationsBank, an amount equal to the excess of such
Lender's Proportionate Share of all such amounts required to be
returned by all Lenders over the amount, if any, returned directly by
such Lender.
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(v) Payments to Agent, Lenders.
(A) Payment by any Lender to the Administrative Agent
shall be made not later than 1:30 p.m. on the Business Day
such payment is due, provided that if such payment is due on
demand by another Lender, such demand is made on the paying
Lender not later than 10:00 a.m. on such Business Day. Payment
by the Agent to any Lender shall be made by wire transfer,
promptly following the Administrative Agent's receipt of funds
for the account of such Lender and in the type of funds
received by the Administrative Agent, provided that if the
Administrative Agent receives such funds at or prior to 1:00
p.m., the Administrative Agent shall pay such funds to such
Lender by 2:00 p.m. on such Business Day. If a demand for
payment is made after the applicable time set forth above, the
payment due shall be made by 2:00 p.m. on the first Business
Day following the date of such demand.
(B) If a Lender shall, at any time, fail to make any
payment to the Administrative Agent required hereunder, the
Administrative Agent may, but shall not be required to, retain
payments that would otherwise be made to such Lender hereunder
and apply such payments to such Lender's defaulted obligations
hereunder, at such time, and in such order, as the
Administrative Agent may elect in its sole discretion.
(C) With respect to the payment of any funds under
this Section 5.8(c), whether from the Administrative Agent to
a Lender or from a Lender to the Administrative Agent, the
party failing to make full payment when due pursuant to the
terms hereof shall, upon demand by the other party, pay such
amount together with interest on such amount at the Federal
Funds Effective Rate.
(d) Settlement of Other Secured Obligations. All other
amounts received by the Administrative Agent on account of, or
applied by the Administrative Agent to the payment of, any Secured
Obligation owed to the Lenders (including, without limitation, fees
payable to the Lenders pursuant to Sections 5.2(a), (c) and (d) and
proceeds from the sale of, or other realization upon, all or any
part of the Collateral or Real Estate following an Event of
Default) that are received by the Administrative Agent on or prior
to 1:00 p.m. on a Business Day will be paid by the Administrative
Agent to each Lender on the same Business Day, and any such amounts
that are received by the Administrative Agent after 1:00 p.m. will
be paid by the Administrative Agent to each Lender on the following
Business Day. Unless otherwise stated herein, the Administrative
Agent shall distribute to each Lender such Lender's Proportionate
Share of fees payable to the Lenders pursuant to Sections 5.2(a),
(c) and (d) and shall distribute to each Lender such Lender's
Proportionate Share (or if different, such Lender's share based
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upon the amount of the Secured Obligations then owing to each Lender) of the
proceeds from the sale of, or other realization upon, all or any part of the
Collateral or Real Estate following an Event of Default.
(e) Allocation of Payments from Borrowers. All monies to be
applied to the Secured Obligations, whether such monies represent voluntary
payments by the Borrowers or are received pursuant to demand for payment or
realized from any disposition of Collateral, shall be allocated among the
Administrative Agent and such of the Lenders and other holders of the Secured
Obligations as are entitled thereto (and, with respect to monies allocated to
the Lenders, on a Ratable basis unless otherwise provided in this Section
5.8(e): (i) first, to NationsBank to pay principal and accrued interest on any
portion of any Non-Ratable Loan which NationsBank may have advanced on behalf of
any Lender (other than itself) and for which NationsBank has not been reimbursed
by such Lender or the Borrowers; (ii) second, to the Administrative Agent to pay
the amount of expenses that have not been reimbursed to the Administrative Agent
by the Borrowers or the Lenders, together with interest accrued thereon; (iii)
third, to the Administrative Agent to pay any indemnified amount that has not
been paid to the Administrative Agent by the Borrowers or the Lenders, together
with interest accrued thereon; (iv) fourth, to the Administrative Agent to pay
any fees due and payable to the Administrative Agent under this Agreement; (v)
fifth, to the Lenders for any indemnified amount that they have paid to the
Administrative Agent and for any expenses that they have reimbursed to the
Administrative Agent; (vi) sixth, to the Lenders in payment of the unpaid
principal and accrued interest in respect of the Loans and any other Secured
Obligations then outstanding and held by any Lender to be shared among Lenders
on a Ratable basis, or on such other basis as may be agreed upon in writing by
all of the Lenders (which agreement or agreements may be entered into without
notice to or the consent or approval of the Borrowers), and (vii) seventh, to
the holders of the other Secured Obligations who are not Lenders on a pro rata
basis. The allocations set forth in this Section 5.8(e) are solely to determine
the rights and priorities of the Administrative Agent and the Lenders as among
themselves and may be changed by the Administrative Agent and the Lenders
without notice or the consent of approval of the Borrowers or any other Person.
Whenever allocation is made pursuant to this Section 5.8(e) to the holder of
Secured Obligations in which another Lender acquires a participation, the monies
received by such holder shall be shared as between such holder and such
participants on a Ratable basis.
SECTION 5.9. Mandatory Prepayments.
(a) Prepayments from Asset Dispositions. Subject to the
other provisions of this Section 5.9(a), immediately upon receipt
by (i) a Borrower or any of its Subsidiaries of the Net Proceeds of
any Asset Disposition and (ii) at the Administrative Agent's
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request, upon receipt by LADD of cash proceeds (net of tax and commissions) in
excess of $1,500,000 from the sale of any Real Estate included in the Daystrom
assets, such Borrower shall apply such Net Proceeds or net cash proceeds in
excess of $1,500,000 to prepayment of the Loans as provided in Section 5.9(c).
Notwithstanding the preceding sentence, the Borrowers shall have no obligation
to make any such prepayment:
(A) in connection with any Asset Disposition, the total Net
Proceeds of which, when added to the Net Proceeds of all related Asset
Dispositions, do not exceed $10,000, nor shall such de minimis amounts
of Net Proceeds be required to be included in any computation of total
Net Proceeds for any other purpose of this Agreement;
(B) to the extent that the Net Proceeds from Asset
Dispositions during any Fiscal Year do not exceed, in the aggregate,
$500,000; or
(C) to the extent that total Net Proceeds from Asset
Dispositions from June 30, 1996 through the date of determination do
not exceed the sum of the aggregate amount of prepayments made during
such period pursuant to this Section 5.9(a) plus the aggregate amount
of Capital Expenditures made by the Borrowers during such period to
acquire Equipment or other property that is Collateral or Real Estate
and is subject to a perfected first priority Lien in favor of the
Administrative Agent for its benefit and the benefit of the Lenders and
to no other Lien.
Further, if the Borrowers reasonably expect such amounts equal to the amounts of
Net Proceeds that would otherwise be required to be applied to prepayment of the
Term Loan to be reinvested within six months after the date of receipt in
productive assets of a kind then used or useable in the business of the
Borrowers (or any of them) and that are or will be subject to a perfected first
priority Lien in favor of the Administrative Agent for its benefit and the
benefit of the Lenders and to no other Lien, then (1) to the extent such
proceeds do not exceed the balance from time to time of the Revolving Credit
Loans, such proceeds shall be applied to the repayment of the outstanding
balance of the Revolving Credit Loans and the Administrative Agent shall, until
such proceeds are reinvested, establish a reserve against the Borrowing Base in
the amount of the proceeds so applied and (2) to the extent such proceeds exceed
the balance from time to time of the Revolving Credit Loans, the Borrowers shall
deposit such proceeds with the Administrative Agent to be held as Cash
Collateral. Upon the Borrowers' reinvestment of such proceeds as described
above, the Administrative Agent shall release its security interest in such Cash
Collateral in respect of the reinvested funds and shall eliminate the reserve
against the Borrowing Base. To the extent that the Borrowers fail to reinvest
such proceeds within six months as provided above, each Borrower authorizes and
directs the
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Administrative Agent to eliminate such reserve, to apply the amount of the Cash
Collateral in respect of the unreinvested amount to the prepayment of the Loans
as provided in Section 5.9(c), to make Revolving Credit Loans in an amount equal
to the reserved amount that is not reinvested and to apply the proceeds of such
Revolving Credit Loans in prepayment of the Loans as provided in Section 5.9(c).
(b) Prepayments from Equity Offerings. In the event that at
any time after the Effective Date, LADD or any other Borrower issues capital
stock or other securities or receives an additional capital contribution in
respect of existing capital stock or other securities (excluding any such
issuance (i) of restricted stock to employees or directors of any Borrower, (ii)
to or receipt from another Borrower or any Subsidiary, (iii) in any 401(k) plan
sponsored by a Borrower as employer contributions and (iv) upon the exercise of
any stock option held by a director or employee of any Borrower), no later than
the third Business Day following the date of receipt of the proceeds from such
issuance, the Borrowers shall apply such proceeds, net of underwriting discounts
and commissions and other reasonable costs associated therewith, in prepayment
of the Loans as provided in Section 5.9(c).
(c) Application of Proceeds of Prepayments. All prepayments
pursuant to this Section 5.9 shall be applied first to the outstanding principal
of the Term Loan to the extent thereof and then to the outstanding Revolving
Credit Loans to the extent thereof, provided that payments shall be first
applied to Prime Rate Loans to the extent thereof and then to Eurodollar Rate
Loans and any payments received which would otherwise result in prepayment of
such Eurodollar Rate Loans prior to the end of the Interest Period applicable
thereto may, upon the request of the Borrowers, in the absence of an Event of
Default, be applied to the Cash Collateral Account or any Investment Account,
with any excess after prepayment in full of the Loans to be deposited with the
Administrative Agent to be held as Cash Collateral for the Secured Obligations
and applied by the Administrative Agent from time to time to outstanding
Revolving Credit Loans promptly upon the making of such Revolving Credit Loans
or, after the Termination Date, to any of the Secured Obligations in such manner
as the Administrative Agent shall determine in its sole discretion. All
prepayments of the Term Loans shall be applied to the principal installments
payable thereon in inverse order of maturity.
(i) Excess Cash Flow Recapture. On or about March 31 of each
year beginning March 31, 1998, but in any event within three Business Days after
delivery of the audited consolidated financial statements for LADD and its
Consolidated Subsidiaries for Fiscal Year 1997 and each Fiscal Year thereafter,
the Borrowers shall pay to the Administrative Agent for application to the
prepayment of the principal amount of the Term Loan in accordance with the
provisions of Section 5.9(c), an amount equal to 50% of the Excess
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Cash Flow for the Fiscal Year in respect of which such financial statements were
delivered.
SECTION 5.10. Prepayment Fee. If the Borrowers prepay the
Loans in whole and terminate this Agreement prior to the Termination Date, the
Borrowers shall pay to the Administrative Agent for the Ratable benefit of the
Lenders on such date of termination, as liquidated damages and compensation for
the costs of making funds available to the Borrowers under this Agreement, and
not as a penalty, an amount equal to the percentage amount specified below for
the Loan Year in which such prepayment is made multiplied by the average total
principal amount of Loans outstanding during the 12 Consecutive Fiscal Months
next preceding such early termination date:
Loan Year Percent
--------- -------
1 2%
2 1%
3 1/4 of 1%
SECTION 5.11. Payments Not at End of Interest Period; Failure
to Borrow. If for any reason any payment of principal with respect to any
Eurodollar Rate Loan is made on any day prior to the last day of the Interest
Period applicable to such Eurodollar Rate Loan or, after having given a Notice
of Borrowing with respect to any Eurodollar Rate Revolving Credit Loan or a
Notice of Conversion or Continuation with respect to any Loan to be continued as
or converted into a Eurodollar Rate Loan, such Loan is not made or is not
continued as or converted into a Eurodollar Rate Loan due to the Borrowers'
failure to borrow or to fulfill the applicable conditions set forth in Article
6, the Borrowers shall pay to each Lender upon the request of the Administrative
Agent or such Lender, in addition to any amounts that may be due under Section
5.10, an amount (if a positive number) computed pursuant to the following
formula:
L = (R - T) x P x D
-----------------
360
L = amount payable
R = interest rate applicable to the Eurodollar
Rate Loan not borrowed, continued or
converted, or prepaid
T = effective interest rate per annum at which any
readily marketable bonds or other obligations
of the United States, selected at the
Administrative Agent's sole discretion,
maturing on or near the last day of the then
applicable or requested Interest Period for
such Loan and in approximately the same amount
as such Loan, can be purchased by such Lender
on the day of such payment of principal or
failure to borrow, continue or convert
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P = the amount of principal paid or the amount of
the Loan requested or to have been continued
or converted
D = the number of days remaining in the Interest
Period as of the date of such payment or the
number of days in the requested Interest
Period
The Borrowers shall pay such amount upon presentation by the Administrative
Agent (or as to any Lender, by such Lender) of a statement setting forth the
amount and the Administrative Agent's (or such Lender's) calculation thereof
pursuant hereto, which statement shall be deemed true and correct absent
manifest error.
SECTION 5.12. Assumptions Concerning Funding of Eurodollar
Rate Loans. Calculation of all amounts payable to the Lenders under this Article
5 shall be made as though each Lender had actually funded or committed to fund
its Eurodollar Rate Loans through the purchase of an underlying deposit in an
amount equal to the amount of such ratable share and having a maturity
comparable to the relevant Interest Period for such Eurodollar Rate Loan;
provided, however, each Lender may fund its Eurodollar Rate Loans in any manner
it deems fit and the foregoing assumption shall be utilized only for the
calculation of amounts payable under this Article 5.
SECTION 5.13. Notice of Conversion or Continuation. Whenever
the Borrowers desire, subject to the provisions of Section 5.7, to convert an
outstanding Loan into a Loan or Loans of a different Type or to continue all or
a portion of an outstanding Eurodollar Rate Loan for a subsequent Interest
Period, the Borrowers shall notify the Administrative Agent by telephone or in
writing (which notice shall be irrevocable) not later than 11:30 a.m. on the
date two Business Days before the day on which such proposed conversion or
continuation is to be effective (and such effective date of any continuation
shall be the last day of the Interest Period for the applicable Eurodollar Rate
Loan). Each such notice (a "Notice of Conversion or Continuation") shall (i)
identify the Loan to be converted or continued, the aggregate outstanding
principal balance thereof and, if a Eurodollar Rate Loan, the last day of the
Interest Period applicable to such Loan, (ii) specify the effective date of such
conversion or continuation, (iii) specify the principal amount of such Loan to
be converted or continued and, if converted, the Type or Types into which the
same is to be converted, and (iv) the Interest Period to be applicable to the
Eurodollar Rate Loan as converted or continued, and shall, if notice thereof was
originally given by telephone, be immediately followed by a signed, written
confirmation thereof by the Borrowers in a form acceptable to the Administrative
Agent, provided that if such written confirmation differs in any respect from
the action taken by the Lenders, the records of the Administrative Agent shall
control absent manifest error.
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SECTION 5.14. Conversion or Continuation. Provided that no
Event of Default shall have occurred and be continuing (but subject to the
provisions of Sections 5.13 and 5.16), the Borrowers may request that all or any
part of any outstanding Loan be converted into a Loan or Loans of a different
Type or be continued as a Loan or Loans of the same Type, in the same aggregate
principal amount, on any Business Day (which, in the case of continuation of a
Eurodollar Rate Loan, shall be the last day of the Interest Period applicable to
such Loan), upon notice (which notice shall be irrevocable) given in accordance
with Section 5.13, provided that nothing in this Article 5 shall be construed to
permit the conversion of a Revolving Credit Loan to a Term Loan or vice versa.
SECTION 5.15. Duration of Interest Periods; Maximum
Number of Eurodollar Rate Loans; Minimum Increments.
(a) Subject to the provisions of the definition "Interest
Period", the duration of each Interest Period applicable to a Eurodollar Rate
Loan shall be as specified in the applicable Notice of Borrowing or Notice of
Conversion or Continuation. The Borrowers may elect a subsequent Interest Period
to be applicable to any Eurodollar Rate Loan by giving a Notice of Conversion or
Continuation with respect to such Loan in accordance with Section 5.13.
(b) If the Administrative Agent does not receive a notice of
election in accordance with Section 5.13 with respect to the continuation of
Eurodollar Rate Loan within the applicable time limits specified in said Section
5.13, or if, when such notice must be given, an Event of Default exists or such
Type of Loan is not available, the Borrowers shall be deemed to have elected to
convert such Eurodollar Rate Loan in whole into a Prime Rate Loan on the last
day of the Interest Period therefor.
(c) Notwithstanding the foregoing, the Borrowers may not
select an Interest Period that would end, but for the provisions of the
definition "Interest Period," after the Termination Date.
(d) In no event shall there be more than 10 Eurodollar Rate
Loans outstanding hereunder at any time. For the purpose of this subsection (d),
each Revolving Credit Loan and each Eurodollar Rate Term Loan having a distinct
Interest Period shall be deemed to be a separate Loan hereunder.
(e) Each Eurodollar Rate Loan shall be in a minimum
amount of $5,000,000.
SECTION 5.16. Changed Circumstances.
(a) If the introduction of or any change in or in the
interpretation of (in each case, after the date hereof) any law or
regulation makes it unlawful, or any Governmental Authority
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asserts, after the date hereof, that it is unlawful, for any Lender to perform
its obligations hereunder to make Eurodollar Rate Loan or to fund or maintain
Eurodollar Rate Loan hereunder, such Lender shall notify the Agent of such event
and the Administrative Agent shall notify the Borrowers of such event, and the
right of the Borrowers to select Eurodollar Rate Loan for any subsequent
Interest Period or in connection with any subsequent conversion of any Loan
shall be suspended until the Administrative Agent shall notify the Borrowers
that the circumstances causing such suspension no longer exist, and the
Borrowers shall forthwith prepay in full all Eurodollar Rate Revolving Credit
Loans then outstanding and shall convert each Eurodollar Rate Term Loan into a
Prime Rate Term Loan, and shall pay all interest accrued thereon through the
date of such prepayment or conversion, unless the Borrowers, within three
Business Days after such notice from the Administrative Agent, request the
conversion of all Eurodollar Rate Loans then outstanding into Prime Rate Loans;
provided, that if the date of such repayment or proposed conversion is not the
last day of the Interest Period applicable to such Eurodollar Rate Loan, the
Borrowers shall also pay any amount due pursuant to Section 5.11.
(b) If the Administrative Agent shall, at least one Business
Day before the date of any requested Revolving Credit Loan or the effective date
of any conversion or continuation of an existing Loan to be made or continued as
or converted into a Eurodollar Rate Loan (each such requested Revolving Credit
Loan made and Loan to be converted or continued, a "Pending Loan"), notify the
Borrowers that the Eurodollar Rate will not adequately reflect the cost to the
Lenders of making or funding such Pending Loan as a Eurodollar Rate Loan or that
the Interbank Offered Rate is not reasonably determinable, including from any
interest rate reporting service of recognized standing, then the right of the
Borrowers to select Eurodollar Rate Loan for such Pending Loan, any subsequent
Revolving Credit Loan or in connection with any subsequent conversion or
continuation of any Loan shall be suspended until the Administrative Agent shall
notify the Borrowers that the circumstances causing such suspension no longer
exist, and each Pending Loan and each such subsequent Loan requested to be made,
continued or converted shall be made or continued as or converted into a Prime
Rate Loan.
(c) If, due to either (i) the introduction of or any change
(other than any change by way of imposition or increase of reserve requirements
included in the Eurodollar Reserve Percentage) in or in the interpretation of,
in each case after the date hereof, any law or regulation (except to the extent
such introduction, change or interpretation affects taxes measured by net
income), or (ii) the compliance with any guideline or request (except to the
extent such guideline or request affects taxes measured by net income) from any
central bank or other governmental authority (whether or not having the force of
law) made after the date hereof, there shall be any increase in the cost to any
Lender of agreeing to make or making, funding or maintaining Eurocurrency
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Rate Loans (other than as separately provided for in Section 5.16(d)), then the
Borrowers shall from time to time, within 30 days after demand by such Lender
(with a copy of such demand to the Administrative Agent), pay to the
Administrative Agent for the account of such Lender additional amounts
sufficient to compensate such Lender for such increased cost.
(d) If (i) the adoption of or change in, after the date
hereof, any law, rule, regulation or guideline regarding capital requirements
for banks or bank holding companies, or any change, after the date hereof, in
the interpretation or application thereof by any governmental authority charged
with the interpretation or administration thereof, or (ii) compliance by such
Lender with any guideline, request or directive, made or promulgated after the
date hereof, of any such entity regarding capital adequacy (whether or not
having the force of law), has the effect of reducing the return on a Lender's
capital as a consequence of its maintaining its Loans or commitment to make
Revolving Credit Loans hereunder to a level below that which such Lender could
have achieved but for such adoption, change or compliance (taking into
consideration such Lender's policies with respect to capital adequacy
immediately before such adoption, change or compliance and assuming the full
utilization of such Lender's capital immediately before such adoption, change or
compliance) or if any change in law, regulation, treaty or official directive or
the interpretation or application thereof by any court or by any governmental
authority charged with the administration thereof or the compliance with any
guideline or request of any central bank or other governmental authority
(whether or not having the force of law) subjects a Lender to any tax with
respect to payments of principal or interest or any other amounts payable
hereunder by the Borrowers or otherwise with respect to the transactions
contemplated hereby (except for taxes on the overall net income of such Lender
imposed by the United States of America or any political subdivision thereof),
in each case by any amount deemed by such Lender to be material, then such
Lender shall promptly after its determination of such occurrence notify the
Borrowers and the Administrative Agent thereof. The Borrowers agree to pay to
the Administrative Agent, for the account of such Lender, as an additional fee
from time to time, within 30 days after demand by such Lender, such amount as
such Lender certifies to be the amount that will compensate it for such
reduction.
(e) Before giving any notice pursuant to Section 5.16(a) or
making any demand pursuant to Section 5.16(c) or (d), each Lender agrees to use
its best efforts (consistent with its internal policy and legal and regulatory
restrictions) to designate a different lending office if the making of such a
designation would avoid the need for such notice or demand, or reduce the amount
of such increased cost or reduction in return and would not, in the reasonable
judgment of such Lender, be otherwise disadvantageous to such Lender.
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(f) A certificate of the Lender claiming compensation under
Section 5.16(c) or (d) shall be conclusive in the absence of manifest error.
Such certificate shall set forth the nature of the occurrence giving rise to
such compensation, the additional amount or amounts to be paid to it hereunder
and the method by which such amounts were determined. In determining such
amount, a Lender may use any reasonable averaging and attribution methods.
SECTION 5.17. Cash Collateral Account; Investment
Accounts.
(a) Cash Collateral Account. The Borrowers shall
establish a Cash Collateral Account in which to deposit Collateral
consisting of cash or Cash Equivalents from time to time
(i) representing payments received pursuant to Sections 2.3(c)
and 5.9 in excess of then outstanding Revolving Credit Loans or on
account of Eurodollar Rate Loans which would otherwise result in
repayment of such Loans prior to the end of the Interest Period
applicable thereto,
(ii) with respect to Letter of Credit Obligations (x) at the
request of the Administrative Agent upon the occurrence of an Event of
Default, or (y) for the purposes set forth in Section 5.6 in the event
of termination of this Agreement, or
(iii) for any other purpose appropriate under this Agreement
to provide security for the Secured Obligations.
On the last day of the applicable Interest Period as to any amounts deposited to
the Cash Collateral Account pursuant to clause (i) above or if a drawing under a
Letter of Credit occurs with respect to any amounts deposited to the Cash
Collateral Account pursuant to clause (ii) above, each Borrower hereby
authorizes the Administrative Agent to use the monies deposited in the Cash
Collateral Account to make payment to the payee with respect to such Loan,
drawing. The Cash Collateral Account shall be in the name of the Administrative
Agent and the Administrative Agent shall have sole dominion and control over,
and sole access to, the Cash Collateral Account. Neither any Borrower nor any
Person claiming on behalf of or through any Borrower shall have any right to
withdraw any of the funds held in the Cash Collateral Account. Each Borrower
agrees that it will not at any time (x) sell or otherwise dispose of any
interest in the Cash Collateral Account or any funds held therein or (y) create
or permit to exist any Lien upon or with respect to the Cash Collateral Account
or any funds held therein, except as provided in or contemplated by this
Agreement. The Administrative Agent shall exercise reasonable care in the
custody and preservation of any funds held in the Cash Collateral Account and
shall be deemed to have exercised such care if such funds are accorded treatment
substantially equivalent to that which the Administrative Agent accords other
funds deposited with the Administrative Agent, it being understood that the
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Administrative Agent shall not have any responsibility for taking any necessary
steps to preserve rights against any parties with respect to any funds held in
the Cash Collateral Account. Subject to the right of the Administrative Agent to
withdraw funds from the Cash Collateral Account as provided herein, the
Administrative Agent will, so long as no Default or Event of Default shall have
occurred and be continuing, from time to time invest funds on deposit in the
Cash Collateral Account, reinvest proceeds of any such investments which may
mature or be sold, and invest interest or other income received from any such
investments, in each case, in Cash Equivalents, as the Borrowers may direct
prior to the occurrence of a Default or Event of Default and as the
Administrative Agent may select after the occurrence and during the continuance
of a Default or Event of Default. Such proceeds, interest and income which are
not so invested or reinvested in Cash Equivalents shall be deposited and held by
the Administrative Agent in the Cash Collateral Account. The Administrative
Agent makes no representation or warranty as to, and shall not be responsible
for, the rate of return, if any, earned in any Cash Collateral. Any earnings on
Cash Collateral shall be held as additional Cash Collateral on the terms set
forth in this Section 5.17.
(b) Investment Accounts. The Borrowers may from time to time
establish one or more Investment Accounts with the Administrative Agent, any
Lender or any Affiliate of a Lender, for the purpose of investing in Cash
Equivalents any cash collateral representing payments received pursuant to
Section 2.3(c) and Section 5.9 in excess of then outstanding Revolving Credit
Loans or on account of Eurodollar Rate Loans which would otherwise result in
repayment of such Loans prior to the end of the Interest Period applicable
thereto. Each Borrower hereby acknowledges and agrees that each such Investment
Account shall constitute Collateral hereunder and shall be maintained with the
Administrative Agent, a Lender or Affiliate of a Lender as security for the
Secured Obligations. Notwithstanding the foregoing, until such time as the
Administrative Agent shall otherwise instruct the Administrative Agent, Lender
or Affiliate of a Lender maintaining such account, the Borrowers shall be
entitled to direct the investment of the funds deposited therein. Each Borrower
agrees that it will not at any time (x) sell or otherwise dispose of any
interest in any Investment Account or any funds held therein other than by
application thereof to any Secured Obligation, or (y) create or permit to exist
any Lien upon or with respect to any Investment Account or any funds held
therein, except as provided in or contemplated by this Agreement. Each Borrower
agrees that at any time, and from time to time, at the expense of the Borrowers,
the Borrowers will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or desirable, or
that the Administrative Agent or any Lender may request, in order to perfect and
protect any security interest in any Investment Account granted or purported to
be granted hereby or to enable the Administrative Agent, for its benefit and the
benefit of the Lenders, to exercise and enforce its
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rights and remedies hereunder with respect to such Investment Account.
SECTION 5.18. Borrowers' Representative. Each of American,
Barclay, Clayton-Marcus, Contract Sales, Lea (NC), Pennsylvania House,
Transportation, International and Pilliod hereby appoints LADD as, and LADD
shall act under this Agreement as, the representative of such other Borrowers
for all purposes, including, without being limited to, requesting Borrowings and
receiving account statements and other notices and communications to the
Borrowers (or any of them) from the Administrative Agent or any Lender. The
Administrative Agent and the Lenders may rely, and shall be fully protected in
relying, on any Notice of Borrowing, Notice of Conversion or Continuation,
disbursement instruction, report, information or any other notice or
communication made or given by LADD, whether in its own name, on behalf of any
other Borrower or on behalf of "the Borrowers," and neither the Administrative
Agent nor any Lender shall have any obligation to make any inquiry or request
any confirmation from or on behalf of any other Borrower as to the binding
effect on it of any such Notice, instruction, report, information, other notice
or communication, nor shall the joint and several character of the Borrowers'
liability for the Secured Obligations be affected, provided that the provisions
of this Section 5.18 shall not be construed so as to preclude any Borrower from
directly requesting Borrowings or taking other actions permitted to be taken by
"a Borrower" hereunder. The Administrative Agent and each Lender intend to
maintain a single Loan Account in the name of "LADD Furniture, Inc." hereunder
and each Borrower expressly agrees to such arrangement and confirms that such
arrangement shall have no effect on the joint and several character of its
liability for the Secured Obligations.
SECTION 5.19. Joint and Several Liability.
(a) Joint and Several Liability. The Secured Obligations shall
constitute one joint and several direct and general obligation of all of the
Borrowers. Notwithstanding anything to the contrary contained herein, each of
the Borrowers shall be jointly and severally, with each other Borrower, directly
and unconditionally liable to the Administrative Agent and the Lenders for all
Secured Obligations and shall have the obligations of co-maker with respect to
the Revolving Credit Loans, the Revolving Credit Notes, the Term Loans, the Term
Notes and the Secured Obligations, it being agreed that the advances to each
Borrower inure to the benefit of all Borrowers, and that the Administrative
Agent and the Lenders are relying on the joint and several liability of the
Borrowers as co-makers in extending the Loans hereunder. Each Borrower hereby
unconditionally and irrevocably agrees that upon default in the payment when due
(whether at stated maturity, by acceleration or otherwise) of any principal of,
or interest on, any Revolving Credit Loan, Term Loan or other Secured Obligation
payable to the Administrative Agent or
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any Lender, it will forthwith pay the same, without notice or demand.
(b) No Reduction in Obligations. No payment or payments made
by any of the Borrowers or any other Person or received or collected by the
Administrative Agent or any Lender from any of the Borrowers or any other Person
by virtue of any action or proceeding or any set-off or appropriation or
application at any time or from time to time in reduction of or in payment of
the Secured Obligations shall be deemed to modify, reduce, release or otherwise
affect the liability of each Borrower under this Agreement, which shall remain
liable for the Secured Obligations until the Secured Obligations are paid in
full and the Revolving Credit Facility is terminated.
SECTION 5.20. Obligations Absolute. Each Borrower agrees that
the Secured Obligations will be paid strictly in accordance with the terms of
the Loan Documents, regardless of any law, regulation or order now or hereafter
in effect in any jurisdiction affecting any of such terms or the rights of the
Administrative Agent or any Lender with respect thereto. All Secured Obligations
shall be conclusively presumed to have been created in reliance hereon. The
liabilities under this Agreement shall be absolute and unconditional
irrespective of:
(a) any lack of validity or enforceability of any Loan
Documents or any other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payments of, or
in any other term of, all or any part of the Secured Obligations, or any other
amendment or waiver thereof or any consent to departure therefrom, including,
but not limited to, any increase in the Secured Obligations resulting from the
extension of additional credit to any Borrower or otherwise;
(c) any taking, exchange, release or non-perfection of
any collateral, or any release or amendment or waiver of or consent
to departure from any guaranty for all or any of the Secured
Obligations;
(d) any change, restructuring or termination of the
corporate structure or existence of any Borrower; or
(e) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, any Borrower
or a guarantor.
This Agreement shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Secured Obligations is rescinded or
must otherwise be returned by the Administrative Agent or any Lender upon the
insolvency, bankruptcy or reorganization of any Borrower or otherwise, all as
though such payment had not been made.
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SECTION 5.21. Waiver of Suretyship Defenses. Each Borrower
agrees that the joint and several liability of the Borrowers provided for in
Section 5.20 shall not be impaired or affected by any modification, supplement,
extension or amendment or any contract or agreement to which the other Borrowers
may hereafter agree (other than an agreement signed by the Administrative Agent
and the Lenders specifically releasing such liability), nor by any delay,
extension of time, renewal, compromise or other indulgence granted by the
Administrative Agent or any Lender with respect to any of the Secured
Obligations, nor by any other agreements or arrangements whatever with the other
Borrowers or with anyone else, each Borrower hereby waiving all notice of such
delay, extension, release, substitution, renewal, compromise or other
indulgence, and hereby consenting to be bound thereby as fully and effectually
as if it had expressly agreed thereto in advance. The liability of each Borrower
is direct and unconditional as to all of the Secured Obligations, and may be
enforced without requiring the Administrative Agent or any Lender first to
resort to any other right, remedy or security. Each Borrower hereby expressly
waives promptness, diligence, notice of acceptance and any other notice (except
to the extent expressly provided for herein or in another Loan Document) with
respect to any of the Secured Obligations, the Revolving Credit Notes, the Term
Notes, this Agreement or any other Loan Document and any requirement that the
Administrative Agent or any Lender protect, secure, perfect or insure any Lien
or any property subject thereto or exhaust any right or take any action against
any Borrower or any other Person or any collateral, including any rights any
Borrower may otherwise have under O.C.G.A. ss. 10-7-24 or N.C Gen. Stat. ss. 26-
7 et seq. or any successor statute or any analogous statute in any jurisdiction
under the laws of which any Borrower is incorporated or in which any Borrower
conducts business.
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ARTICLE 6
CONDITIONS PRECEDENT
SECTION 6.1. Conditions Precedent to Revolving Credit Loans
and Term Loans. Notwithstanding any other provision of this Agreement, the
obligations of the Lenders to make Loans hereunder are subject to the
satisfaction of each of the following conditions, prior to or contemporaneously
with the making of the first such Loans:
(a) Closing Documents. The Administrative Agent shall
have received each of the following, all of which shall be
satisfactory in form and substance to the Administrative Agent and
its special counsel:
(1) this Agreement, duly executed and delivered by each
Borrower;
(2) the Notes, each dated the Effective Date and duly
executed and delivered by each Borrower;
(3) certified copies of the articles of incorporation and
by-laws and shareholder agreements, if any, of each Borrower as in
effect on the Effective Date and all corporate action, including
shareholder approval, if necessary, taken by each Borrower and/or its
shareholders to authorize the execution, delivery and performance of
this Agreement and the other Loan Documents and the Borrowings under
this Agreement;
(4) certificates of incumbency and specimen signatures with
respect to each of the officers of each Borrower who is authorized to
execute and deliver this Agreement or any other Loan Document on behalf
of such Borrower or any document, certificate or instrument to be
delivered in connection with this Agreement or the other Loan Documents
and to request Borrowings under this Agreement;
(5) a certificate evidencing the good standing of each
Borrower in the jurisdiction of its incorporation and in each other
jurisdiction in which it is qualified as a foreign corporation to
transact business;
(6) the Financing Statements duly executed and delivered by
the Borrowers, and evidence satisfactory to the Administrative Agent
that the Financing Statements have been filed in each jurisdiction
where such filing may be necessary or appropriate to perfect the
Security Interest;
(7) landlord's waiver and consent agreements duly
executed on behalf of each landlord of real property on which
any Collateral is located;
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(8) mortgagee's waiver and consent agreements duly executed on
behalf of each mortgagee of real property on which any Collateral or
Real Estate is located;
(9) copies of the Mortgages duly executed and delivered by the
relevant Borrower and evidencing the recording of each such instrument
in the appropriate jurisdiction for the recording thereof on the Real
Estate subject thereto or, at the option of the Administrative Agent,
in proper form for recording in such jurisdiction;
(10) one or more fully paid mortgagee title insurance policies
or, at the option of the Lender, unconditional commitments for the
issuance thereof with all requirements and conditions to the issuance
of the final policy deleted or marked satisfied, issued by a title
insurance company satisfactory to the Administrative Agent, each in an
amount equal to not less than the fair market value of the Real Estate
subject to the Mortgage insured thereby, insuring that such Mortgage
creates a valid first lien on, and security title to, all Real Estate
described therein, with no survey exceptions and no other exceptions
which the Administrative Agent shall not have approved in writing;
(11) such materials and information concerning the Real Estate
as the Administrative Agent may require, including, without limitation,
(i) and accurate surveys satisfactory to the Lender of the owned Real
Estate, certified to the Lender and showing the location of the
100-year and 50-year flood plains thereon, (ii) zoning letters as to
the zoning status of the owned Real Estate, (iii) copies of existing
certificates of occupancy covering any of the Real Estate, and (iv)
owner's affidavits as to such matters relating to the owned Real Estate
as the Lender may request;
(12) a report from a qualified engineering firm or other
qualified consultant acceptable to the Administrative Agent with
respect to an investigation and assessment of all owned Real Estate,
which shall be based on a thorough review of past and present uses,
occupants, ownership and tenancy of the property and/or adjacent
properties and/or upgradient properties regarding
(A) subsurface ground water hazards, soils and/or
test boring reports;
(B) contact with local, state or federal agencies
regarding known or suspected hazardous material contamination
of the property or other properties in the area;
(C) review of aerial photographs;
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(D) visual site inspection noting unregulated
fills, storage tanks or areas, ground discoloration or
soil odors; and
(E) other investigative methods deemed necessary by
the consultant or the Administrative Agent to enable the
consultant to report that there is no apparent or likely
contamination of the property or another property in the area;
(13) if deemed necessary in the sole judgment of the
Administrative Agent to further investigate suspected or likely
contamination, supplemental environmental reports prepared by qualified
consultants of the analysis of core drilling or ground water samples
from the property, showing no contamination by hazardous materials;
(14) an appraisal of all Equipment and owned Real Estate,
prepared by an appraiser satisfactory to the Administrative Agent,
establishing values at levels satisfactory to the Administrative Agent
to support the Loans;
(15) a Schedule of Inventory, a Schedule of Receivables
and a Schedule of Equipment, each prepared as of a recent
date;
(16) certificates or binders of insurance relating to (i) each
of the policies of insurance covering any of the Collateral or Real
Estate together with loss payable clauses which comply with the terms
of Section 9.8(b) and (ii) each of the policies of insurance required
by the Mortgages, together with mortgagee clauses satisfactory to the
Administrative Agent;
(17) such Agency Account Agreements as shall be required
by the Administrative Agent duly executed by the applicable
Clearing Bank and the relevant Borrower;
(18) a Borrowing Base Certificate prepared as of the Effective
Date duly executed and delivered by the chief financial officer of LADD
demonstrating Revolving Credit Availability, after giving effect to the
Initial Loans, of not less than $15,000,000, together which such
additional evidence of such Revolving Credit Availability as the
Administrative Agent shall require;
(19) an Initial Notice of Borrowing from the Borrowers to
the Administrative Agent requesting the Initial Loans and
specifying the method of disbursement;
(20) copies of all the financial statements referred to
in Section 7.1(n) and meeting the requirements thereof;
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(21) a certificate of the President or Executive Vice
President of LADD and of the President or a Vice President of each
other Borrower stating that, to the best of his knowledge and based on
an examination sufficient to enable him to make an informed statement,
(a) all of the representations and warranties made or deemed to be made
under this Agreement are true and correct as of the Effective Date,
both with and without giving effect to the Loans to be made at such
time and the application of the proceeds thereof, and (b) no Default or
Event of Default exists;
(22) evidence satisfactory to the Administrative Agent of the
release and termination of (or agreement to release and terminate) all
Liens other than Permitted Liens, including, without being limited to,
a payoff letter from NationsBank, N.A., as Agent;
(23) a certification from the principal officer of the
Borrowers as to such factual matter as shall be required by
the Administrative Agent;
(24) a signed opinion of Petree Stockton, L.L.P., counsel for
the Borrowers, and such local counsel as the Administrative Agent shall
deem necessary or desirable, opining as to such matters in connection
with this Agreement as the Administrative Agent or its counsel or any
Lender may reasonably request;
(25) the Patent Assignment duly executed and delivered by
the Borrower(s);
(26) the Trademark Assignment duly executed and delivered
by the Borrower(s);
(27) a Pledge Agreement, duly executed and delivered by LADD,
together with stock transfer powers, duly executed by LADD in blank,
and stock certificates representing 100% of the issued and outstanding
capital stock of each of its Subsidiaries (other than Lea(NC)); a
Pledge Agreement, duly executed and delivered by LADD, together with
stock transfer powers, duly executed by LADD in blank, and stock
certificates representing 12% of the originally issued and outstanding
capital stock of Brown Jordan International, Inc.; and a Pledge
Agreement, duly executed and delivered by American, together with stock
transfer powers, duly executed by American in blank, and stock
certificates representing 100% of the issued and outstanding capital
stock of Lea (NC); and
(28) copies of each of the other Loan Documents duly executed
by the parties thereto with evidence satisfactory to the Administrative
Agent and its counsel of the due authorization, binding effect and
enforceability of each such Loan Document on each such party and such
other documents and
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instruments as the Administrative Agent or any Lender may
reasonably request.
(b) Fees. The Borrowers shall have paid all of the fees
payable on the Effective Date referred to herein.
(c) Capitalization. The Borrowers shall have demonstrated to
the satisfaction of the Administrative Agent and the Lenders that as of the
Effective Date, after giving effect to the consummation of the transactions
contemplated by this Agreement, including the extension of the Initial Loans and
the payment of all fees and expenses in connection with such transactions, the
fair saleable value of the Borrowers' assets on a consolidated basis will exceed
the amount required to pay their debts as they become absolute and matured
(including contingent, subordinated, unmatured and unliquidated liabilities),
that the Borrowers are able and anticipate that they will be able to meet their
obligations as they mature and, on a consolidated basis, have adequate capital
to conduct the business in which they are or propose to be engaged.
(d) Security Interests. The Administrative Agent shall have
received satisfactory evidence that the Administrative Agent (for the benefit of
Lenders) has a valid and perfected first priority Lien as of such date in all of
the Collateral and Real Estate, subject only to Permitted Liens.
SECTION 6.2. All Loans; Letters of Credit. At the time
of making of each Loan, including the Initial Loans and all
subsequent Loans, and the issuance of each Letter of Credit:
(a) all of the representations and warranties made or deemed
to be made under this Agreement shall be true and correct in all material
respects at such time both with and without giving effect to the Loans to be
made at such time and the application of the proceeds thereof,
(b) the corporate actions of the Borrowers referred to in
Section 6.1(a)(3) shall remain in full force and effect and the incumbency of
officers shall be as stated in the certificates of incumbency delivered pursuant
to Section 6.1(a)(4) or as subsequently modified and reflected in a certificate
of incumbency delivered to the Administrative Agent, and
(c) each request or deemed request for any borrowing hereunder
shall be deemed to be a certification by the Borrowers to the Administrative
Agent and the Lenders as to the matters set forth in Section 6.2(a) and (b) and
the Administrative Agent may, without waiving either condition, consider the
conditions specified in Sections 6.2(a) and (b) fulfilled and a representation
by the Borrowers to such effect made, if no written notice to the contrary is
received by the Administrative Agent prior to the making of the Loan then to be
made.
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SECTION 6.3. Conditions as Covenants. In the event that the
Lenders make the Initial Loans or a Letter of Credit is issued prior to the
satisfaction of all conditions precedent set forth in Section 6.1, and such
conditions are not waived in writing by the Administrative Agent, the Borrowers
shall nevertheless cause such condition or conditions to be satisfied within 30
days after the making of such Initial Loans or the issuance of such Letter of
Credit.
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ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF BORROWER
SECTION 7.1. Representations and Warranties. Each
Borrower represents and warrants to the Administrative Agent and to
the Lenders as follows:
(a) Organization; Power; Qualification. Each Borrower and each
of its Subsidiaries is a corporation, duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation, having the
power and authority to own its properties and to carry on its business as now
being and hereafter proposed to be conducted and is duly qualified and
authorized to do business in each jurisdiction in which the character of its
properties or the nature of its business requires such qualification or
authorization except where the failure to so qualify would not have a Materially
Adverse Effect. The jurisdictions in which each of the Borrowers and each of its
Subsidiaries is qualified to do business as a foreign corporation are listed on
Schedule 7.1(a).
(b) Capitalization; Shareholder Agreements. The outstanding
capital stock of each Borrower has been duly and validly issued and is fully
paid and nonassessable, and the number and owners of such shares of capital
stock of such Borrower are set forth on Schedule 7.1(b). The issuance and sale
of each Borrower's capital stock have been registered or qualified under
applicable federal and state securities laws or are exempt therefrom. Except as
set forth on Schedule 7.1(b), there are no shareholders agreements, options,
subscription agreements or other agreements or understandings to which any
Borrower is a party in effect with respect to the capital stock of such
Borrower, including, without limitation, agreements providing for special voting
requirements or arrangements for approval of corporate actions or other matters
relating to corporate governance or restrictions on share transfer or providing
for the issuance of any securities convertible into shares of the capital stock
of such Borrower, any warrants or other rights to acquire any shares or
securities convertible into such shares, or any agreement that obligates such
Borrower, either by its terms or at the election of any other Person, to
repurchase such shares under any circumstances.
(c) Subsidiaries. Schedule 7.1(c) correctly sets forth the
name of each Subsidiary of a Borrower, its jurisdiction of incorporation, the
name of its immediate parent or parents, and the percentage of its issued and
outstanding securities owned by a Borrower or any other Subsidiary and
indicating whether such Subsidiary is a Consolidated Subsidiary. Except as set
forth on Schedule 7.1(c),
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(i) no Subsidiary has issued any securities convertible into
shares of such Subsidiary's capital stock or any options, warrants or
other rights to acquire any shares or securities convertible into such
shares,
(ii) the outstanding stock and securities of each Subsidiary are
owned by LADD or another Borrower directly or indirectly through one or
more wholly owned Subsidiaries, free and clear of all Liens, warrants,
options and rights of others of any kind whatsoever (other than the
Lien created pursuant to the Pledge Agreement), and
(iii) no Borrower has any Subsidiaries.
The outstanding capital stock of each Subsidiary has been duly and validly
issued and is fully paid and nonassessable by the issuer, and the number and
owners of the shares of such capital stock are set forth on Schedule 7.1(c).
(d) Authorization of Agreement, Notes, Loan Documents and
Borrowing. Each Borrower has the right and power, and has taken all necessary
action to authorize it, to execute, deliver and perform this Agreement and each
of the Loan Documents in accordance with their respective terms. This Agreement
and each of the Loan Documents have been duly executed and delivered by the duly
authorized officers of each Borrower party thereto and each is, or each when
executed and delivered in accordance with this Agreement will be, a legal, valid
and binding obligation of such Borrower, enforceable in accordance with its
terms, subject to the effect of applicable bankruptcy, insolvency, moratorium,
reorganization and similar laws affecting creditors' rights generally.
(e) Compliance of Agreement, Notes, Loan Documents and
Borrowing with Laws, Etc. Except as set forth on Schedule 7.1(e), the execution,
delivery and performance of this Agreement and each of the Loan Documents in
accordance with their respective terms and the borrowings hereunder do not and
will not, by the passage of time, the giving of notice or otherwise,
(i) require any Governmental Approval or violate any
Applicable Law relating to a Borrower or any of its
Subsidiaries,
(ii) conflict with, result in a breach of or constitute a default
under the articles or certificate of incorporation, by-laws or any
shareholders' agreement of a Borrower or any of its Subsidiaries,
(iii) conflict with, result in a breach of or constitute a default
under any material provisions of any indenture, agreement or other
instrument to which a Borrower or any of its Subsidiaries is a party or
by which a Borrower, any of its Subsidiaries or any of a Borrower's or
such Subsidiaries'
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property may be bound or any Governmental Approval relating to a
Borrower or any of its Subsidiaries if such conflict, breach or
default, alone or together with other such conflicts, breaches or
defaults, could reasonably be expected to have a Materially Adverse
Effect, or
(iv) result in or require the creation or imposition of any Lien
upon or with respect to any property now owned or hereafter acquired by
a Borrower other than the Security Interest.
(f) Business. Each Borrower is engaged principally in
the business(es) indicated on Schedule 7.1(f).
(g) Compliance with Law; Governmental Approvals.
(i) Except as set forth in Schedule 7.1(g) or as
disclosed on a report delivered pursuant to Section 6.1(a)(12)
or (13), each Borrower and each of its Subsidiaries
(A) has all Governmental Approvals, including permits
relating to federal, state and local Environmental Laws,
ordinances and regulations, required by any Applicable Law for
it to conduct its business, each of which is in full force and
effect, is final and not subject to review on appeal and is
not the subject of any pending or, to the knowledge of any
Borrower, threatened attack by direct or collateral
proceeding, and
(B) is in compliance with each Governmental Approval
applicable to it and in compliance with all other Applicable
Laws relating to it, including, without being limited to, all
Environmental Laws and all occupational health and safety laws
applicable to any Borrower, any of its Subsidiaries or their
respective properties,
except for instances of noncompliance which would not, singly or in the
aggregate, cause a Default or Event of Default or have a Materially
Adverse Effect and in respect of which reserves in respect of the
Borrower's or such Subsidiary's reasonably anticipated liability, to
the extent required in accordance with GAAP, have been established on
the consolidated books of LADD.
(ii) Without limiting the generality of the above, except as
disclosed on a report delivered pursuant to Section 6.1(a)(12) or (13)
or as otherwise disclosed in writing to the Administrative Agent and
the Lenders prior to the Agreement Date or with respect to matters
which could not reasonably be expected to have, singly or in the
aggregate, a Materially Adverse Effect:
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(A) the operations of each Borrower and each of its
Subsidiaries comply in all material respects with all
applicable environmental, health and safety requirements of
Applicable Law;
(B) each Borrower and each of its Subsidiaries has
obtained all environmental, health and safety permits
necessary for its operation, and all such permits are in good
standing and each Borrower and each of its Subsidiaries is in
compliance in all material respects with all terms and
conditions of such permits;
(C) neither any Borrower nor any of its Subsidiaries
nor any of their respective present or past property or
operations are subject to any order from or agreement with any
public authority or private party respecting (x) any
environmental, health or safety requirements of Applicable
Law, (y) any Remedial Action, or (z) any liabilities and costs
arising from the Release or threatened Release of a
Contaminant into the environment;
(D) none of the operations of any Borrower or of any
of its Subsidiaries is subject to any judicial or
administrative proceeding alleging a violation of any
environmental, health or safety requirement of Applicable Law;
(E) none of the present or past operations of any
Borrower or any of its Subsidiaries is the subject of any
investigation by any public authority evaluating whether any
Remedial Action is needed to respond to a Release or
threatened Release of a Contaminant into the environment;
(F) neither any Borrower nor any of its Subsidiaries
has filed any notice under any requirement of Applicable Law
indicating past or present treatment, storage or disposal of a
hazardous waste, as that term is defined under 40 CFR Part 261
or any state equivalent;
(G) neither any Borrower nor any of its Subsidiaries
has filed any notice under any requirement of Applicable Law
reporting a Release of a Contaminant into the environment;
(H) except in compliance in all material respects
with applicable Environmental Laws, during the course of each
Borrower's or any of its Subsidiaries' ownership of or
operations on the Real Estate, there has been no (1)
generation, treatment, recycling, storage or disposal of
hazardous waste, as that term is defined under 40 CFR Part 261
or any state equivalent, (2) use of underground storage tanks
or surface impoundments, (3) use of
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asbestos-containing materials, or (4) use of
polychlorinated biphenyls (PCBs) used in hydraulic oils,
electrical transformers or other equipment;
(I) neither any Borrower nor any of its Subsidiaries
has entered into any negotiations or agreements with any
Person (including, without limitation, any prior owner of any
of the Real Estate or other property of such Borrower or any
of its Subsidiaries) relating to any Remedial Action or
environment-related claim;
(J) neither any Borrower nor any of its Subsidiaries
has received any notice or claim to the effect that it is or
may be liable to any Person as a result of the Release or
threatened Release of a Contaminant into the environment;
(K) neither any Borrower nor any of its Subsidiaries
has any material contingent liability in connection with any
Release or threatened Release of any Contaminant into the
environment;
(L) no Environmental Lien has attached to any of
the Real Estate or other property of any Borrower or of
any of its Subsidiaries;
(M) the presence and condition of all asbestos-
containing material which is on or part of the Real Estate
(excluding any raw materials used in the manufacture of
products or products themselves) do not violate in any
material respect any currently applicable requirement of
Applicable Law; and
(N) neither any Borrower nor any of its Subsidiaries
manufactures, distributes or sells, and has never
manufactured, distributed or sold, products which contain
asbestos-containing material.
(iii) Each Borrower has notified the Lenders and the Administrative
Agent of the receipt by such Borrower or by any of its Subsidiaries of
any notice of a material violation of any Environmental Laws and
occupational health and safety laws applicable to such Borrower, any of
its Subsidiaries or any of their respective properties.
(h) Title to Properties. Except as set forth in Schedule
7.1(h), each Borrower and each of its Subsidiaries has valid and legal title to
or leasehold interest in all personal property, Real Estate owned and other
assets used in its business, including, but not limited to, those reflected on
the most recent consolidated balance sheet of LADD delivered pursuant to Section
7.1(n).
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(i) Liens. Except as set forth in Schedule 7.1(i), none of the
properties and assets of any Borrower or any Subsidiary is subject to any Lien,
except Permitted Liens. Other than the Financing Statements, no financing
statement under the Uniform Commercial Code of any State or other instrument
evidencing a Lien which names a Borrower or any Subsidiary as debtor has been
filed (and has not been terminated) in any State or other jurisdiction, and
neither any Borrower nor any Subsidiary has signed any such financing statement
or other instrument or any security agreement authorizing any secured party
thereunder to file any such financing statement or instrument, except to perfect
those Liens listed on Schedule 7.1(i).
(j) Indebtedness and Guaranties. Schedule 7.1(j) is a complete
and correct listing of all (i) Debt and (ii) Guaranties of Debt and of any
obligation owing by a Person other than a Borrower, of each Borrower and each
Subsidiary. Each Borrower and Subsidiary has performed and is in compliance with
all of the terms of such Debt and Guaranties and all instruments and agreements
relating thereto, and no default or event of default, or event or condition
which with notice or lapse of time, or both, would constitute such a default or
event of default, exists with respect to any such Debt or Guaranty.
(k) Litigation. Except as set forth on Schedule 7.1(k), there
are no actions, suits or proceedings pending (nor, to the knowledge of any
Borrower, are there any actions, suits or proceedings threatened, or any
reasonable basis therefor) against or in any other way relating to or affecting
any Borrower or Subsidiary or any of their respective properties in any court or
before any arbitrator of any kind or before or by any governmental body, except
actions, suits or proceedings of the character normally incident to the kind of
business conducted by the Borrowers or Subsidiaries which, if adversely
determined, could not reasonably be expected, singly or in the aggregate, to
have a Materially Adverse Effect, and there are no strikes or walkouts in
progress, pending or contemplated relating to any labor contracts to which any
Borrower or any Subsidiary is a party, relating to any labor contracts being
negotiated, or otherwise.
(l) Tax Returns and Payments. Except as set forth on Schedule
7.1(l), all United States federal, state and local as well as foreign national,
provincial and local and other tax returns of the Borrowers and each of the
Subsidiaries required by Applicable Law to be filed have been duly filed (except
as extended), and all United States federal, state and local and foreign
national, provincial and local and other taxes, assessments and other
governmental charges or levies upon the Borrowers or any of the Subsidiaries and
the Borrowers' and the Subsidiaries' property, income, profits and assets which
are due and payable have been paid, except any such nonpayment which is at the
time permitted under Section 10.6. The charges, accruals and reserves on the
consolidated books of LADD in respect of United States federal,
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state and local and foreign national, provincial and local taxes for all fiscal
years and portions thereof since the organization of each respective Borrower
are in the judgment of the Borrowers adequate, and no Borrower knows of any
reason to anticipate any additional assessments for any of such years which,
singly or in the aggregate, might have a Materially Adverse Effect.
(m) Inconsistent Provisions. Neither any Borrower nor any
Subsidiary is a party to any indenture, agreement, lease or other instrument, or
subject to any charter or corporate restriction, Governmental Approval or
Applicable Law compliance with the terms of which might have a Materially
Adverse Effect.
(n) Financial Statements.
(i) The Borrowers have furnished to the Administrative Agent
and the Lenders copies of the annual audited consolidated balance sheet
of LADD and the Consolidated Subsidiaries as of December 30, 1995 and
the related audited consolidated statements of operations, cash flows
and shareholder's equity for the Fiscal Year ended on such date,
reported on by KPMG Peat Marwick LLP and copies of the consolidated
balance sheet of LADD and the Consolidated Subsidiaries as of March 30,
1996 and of the related statements of operations and cash flows for the
13-week period then ended. Such financial statements present fairly, in
all material respects, as of their respective dates and in accordance
with GAAP (subject to year-end adjustments and but for the omission of
notes in the unaudited statements) the consolidated financial condition
of LADD and the Consolidated Subsidiaries as of such dates and the
consolidated results of operations of LADD and the Consolidated
Subsidiaries for the periods ended on such dates.
(ii) The Borrowers have furnished to the Administrative Agent and
the Lenders copies of the Projections. The Projections have been
prepared by the Borrowers in light of the past operations of the
businesses of the Borrowers and represent as of the respective dates
thereof the good faith opinion of the Borrowers and its senior
management concerning the most probable course of business of the
Borrowers.
(iii) Except as disclosed or reflected in the annual financial
statements described in clause (i) above, the Borrowers do not have any
material liabilities, contingent or otherwise, and there were no
material unrealized or anticipated losses of the Borrowers.
(o) Adverse Change. Since the date of the last financial
statements of the Borrowers delivered to the Administrative Agent pursuant to
Section 7.1(n)(i),
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(i) no material adverse change has occurred in the
business, assets, liabilities, financial condition, results of
operations or business prospects of the Borrowers, and
(ii) no event has occurred or failed to occur which has had, or may
have, singly or in the aggregate, a Materially Adverse Effect.
(p) ERISA.
(i) Neither any Borrower nor any Related Company
maintains or contributes to any Benefit Plan other than those
listed on Schedule 7.1(p).
(ii) No Benefit Plan has been terminated or partially terminated,
and no Multiemployer Benefit Plan is insolvent or in reorganization,
nor have any proceedings been instituted to terminate any Benefit Plan
or to reorganize any Multiemployer Plan.
(iii) Neither any Borrower nor any Related Company has incurred any
withdrawal liability, including contingent withdrawal liability, to any
Multiemployer Benefit Plan pursuant to Title IV of ERISA.
(iv) Neither any Borrower nor any Related Company has incurred any
liability to the PBGC other than for required insurance premiums which
have been paid when due.
(v) No Reportable Event has occurred with respect to a
Plan.
(vi) No Benefit Plan has an "accumulated funding deficiency"
(whether or not waived) as defined in Section 302(a)(2) of ERISA or in
Section 412 of the Internal Revenue Code.
(vii) Each Benefit Plan is in substantial compliance with ERISA, and
neither any Borrower nor any Related Company has received any
communication from a governmental agency asserting that a Benefit Plan
is not in compliance with ERISA.
(viii) Each Benefit Plan which is intended to be a qualified
Benefit Plan has been determined by the IRS to be qualified under
Section 401(a) of the Internal Revenue Code as currently in effect or
will be (or has been) submitted to the IRS for such determination prior
to the end of the remedial amendment period under Section 401(b) of the
Internal Revenue Code and the regulations promulgated thereunder and
neither any Borrower nor any Related Company knows or has reason to
know why each such Benefit Plan should not continue to be so qualified,
and each trust related to such Benefit Plan that has been submitted to
the IRS for determination of exempt
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status has been determined to be exempt from federal income tax under
Section 501(a) of the Internal Revenue Code or will be submitted to the
IRS for a determination of exempt status.
(ix) Except as provided on Schedule 7.1(p), neither any
Borrower nor any Related Company maintains or contributes to any
employer welfare benefit plan within the meaning of Section 3(l) of
ERISA which provides benefits to employees after termination of
employment other than as required by Section 601 of ERISA.
(x) Schedule B to the most recent annual report filed with the IRS
with respect to each Benefit Plan and furnished to the Administrative
Agent is complete and accurate. Since the date of each such Schedule B,
there has been no adverse change in funding status or financial
condition of the Benefit Plan relating to such Schedule B.
(xi) Neither any Borrower nor any Related Company has failed to make
a required installment under Subsection (m) of Section 412 of the
Internal Revenue Code or any other payment required under Section 412
of the Internal Revenue Code on or before the due date for such
installment or other payment.
(xii) Neither any Borrower nor any Related Company is required to
provide security to a Benefit Plan under Section 401(a)(29) of the
Internal Revenue Code due to a Benefit Plan amendment that results in
an increase in current liability for the plan year.
(xiii) Neither any Borrower, nor any Related Company, nor any other
"party-in-interest" or "disqualified person" has engaged in a nonexempt
"prohibited transaction," as such terms are defined in Section 4975 of
the Internal Revenue Code and Section 406 of ERISA, in connection with
any Benefit Plan or has taken or failed to take any action which would
constitute or result in a Termination Event.
(xiv) Neither any Borrower nor any Related Company has failed to
comply with the health care continuation coverage requirements of
Section 4980B of the Internal Revenue Code in respect of employees and
former employees of such Borrower or such Related Company and their
dependents and beneficiaries which alone or in the aggregate would
subject such Borrower or such Related Company to any material
liability.
(xv) Neither any Borrower nor any Related Company has (A) failed to
make a required contribution or payment to a Multiemployer Benefit Plan
or (B) made a complete or partial withdrawal under Sections 4203 or
4205 of ERISA from a Multiemployer Benefit Plan nor has a condition
occurred which if continued, would result in such a withdrawal. Except
as provided on Schedule 7.1(p), to the best knowledge of each
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Borrower after due inquiry, neither any Borrower nor any Related
Company shall have any obligation to (1) make contributions to any
Multiemployer Benefit Plan on or after the Effective Date, or (2) pay
withdrawal liability to any Multiemployer Benefit Plan in an amount in
excess of a "de minimis amount" as such term is defined in Section 4209
of ERISA.
(q) Absence of Defaults. Neither any Borrower nor any
of its Subsidiaries is in default under its articles or certificate
of incorporation or by-laws and no event has occurred, which has
not been remedied, cured or waived,
(i) which constitutes a Default or an Event of Default,
or
(ii) which constitutes, or which with the passage of time or giving
of notice, or both, would constitute, a default or event of default by
such Borrower or any of its Subsidiaries under any material agreement
(other than this Agreement) or judgment, decree or order to which such
Borrower or any of its Subsidiaries is a party or by which such
Borrower, any of its Subsidiaries or any of their respective properties
may be bound or which would require such Borrower or any of its
Subsidiaries to make any payment under any thereof prior to the
scheduled maturity date therefor, except, in the case only of any such
agreement, for alleged defaults which are being contested in good faith
by appropriate proceedings and with respect to which reserves in
respect of such Borrower's or such Subsidiary's reasonably anticipated
liability have been established on the books of such Borrower or such
Subsidiary.
(r) Accuracy and Completeness of Information.
(i) All written information, reports and other papers and data
produced by or on behalf of the Borrowers and furnished to the
Administrative Agent or any Lender were, at the time the same were so
furnished, complete and correct in all material respects, to the extent
necessary to give the recipient a true and accurate knowledge of the
subject matter. No fact is known to the Borrowers which has had, or may
in the future have (so far as the Borrowers can reasonably foresee), a
Materially Adverse Effect which has not been set forth in the financial
statements or disclosure delivered prior to the Effective Date, in each
case referred to in Section 7.1(n), or in such written information,
reports or other papers or data or otherwise disclosed in writing to
the Administrative Agent and the Lenders prior to the Agreement Date.
No document furnished or written statement made to the Administrative
Agent or any Lender by the Borrowers in connection with the
negotiation, preparation or execution of this Agreement or any of the
Loan Documents contains or will contain any untrue statement of a fact
material to the creditworthiness of the
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Borrowers or omits or will omit to state a material fact necessary in
order to make the statements contained therein not misleading.
(ii) The Borrowers have no reason to believe that any document
furnished or written statement made to the Administrative Agent or any
Lender by any Person other than a Borrower (and of which an Executive
Officer has received a copy) in connection with the negotiation,
preparation or execution of this Agreement or any of the Loan Documents
contained any incorrect statement of a material fact or omitted to
state a material fact necessary in order to make the statements made,
in light of the circumstances under which they were made, not
misleading.
(s) Solvency. In each case after giving effect to the
Indebtedness represented by the Loans outstanding and to be incurred, the
transactions contemplated by this Agreement, the Borrowers and the Subsidiaries
are solvent, having, on a consolidated basis, assets of a fair salable value
which exceeds the amount required to pay their debts as they become absolute and
matured (including contingent, subordinated, unmatured and unliquidated
liabilities), and the Borrowers and the Subsidiaries are able to and anticipate
that they will be able to meet their consolidated debts as they mature and have
adequate capital, on a consolidated basis, to conduct the businesses in which
they is or propose to be engaged.
(t) Receivables.
(i) Status.
(A) Each Receivable reflected in the computations
included in any Borrowing Base Certificate meets the criteria
enumerated in clauses (a) through (p) of the definition of
Eligible Receivables, except as disclosed in such Borrowing
Base Certificate or as disclosed in a timely manner in a
subsequent Borrowing Base Certificate or otherwise in writing
to the Administrative Agent.
(B) No Borrower has knowledge of any fact or
circumstance not disclosed to the Administrative Agent in a
Borrowing Base Certificate or otherwise in writing which would
impair the validity or collectibility of any Receivable of
$250,000 or more or of Receivables which (regardless of the
individual amount thereof) aggregate $1,000,000 or more.
(ii) Chief Executive Office. The chief executive office
of each Borrower and the books and records relating to the
Receivables of such Borrower are located at the address or
addresses set forth on Schedule 7.1(t); no Borrower has not
maintained its chief executive office or books and records
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relating to any Receivables at any other address at any time during the
year immediately preceding the Agreement Date except as disclosed on
Schedule 7.1(t).
(u) Inventory.
(i) Schedule of Inventory. All Inventory included in any
Schedule of Inventory or Borrowing Base Certificate delivered to the
Administrative Agent pursuant to Section 9.12 meets the criteria
enumerated in clauses (a) through (g) of the definition of Eligible
Inventory, except as disclosed in such Schedule of Inventory or
Borrowing Base Certificate or in a subsequent Schedule of Inventory or
Borrowing Base Certificate, or as otherwise specifically disclosed in
writing to the Administrative Agent.
(ii) Condition. All Inventory is in good condition, meets all
standards imposed by any governmental agency, or department or division
thereof, having regulatory authority over such goods, their use or
sale, and is currently either usable or salable in the normal course of
a Borrower's business, except to the extent reserved against in the
financial statements referred to in Section 7.1(n) or delivered
pursuant to Article 11 or as disclosed on a Schedule of Inventory
delivered to the Administrative Agent pursuant to Section 9.12(b).
(iii) Location. All Inventory is located on the premises set forth
on Schedule 7.1(u) or is Inventory in transit to one of such locations,
except as otherwise disclosed in writing to the Administrative Agent
and the Borrower has not, in the last year, located such Inventory at
premises other than those set forth on Schedule 7.1(u).
(v) Equipment. All Equipment is in good order and repair in
all material respects and is located on the premises set forth on Schedule
7.1(v) and has been so located at all times during the last year.
(w) Real Property. No Borrower owns any Real Estate nor leases
any Real Estate other than that described on Schedule 7.1(w) and other than Real
Estate acquired or leased after the Effective Date for which the relevant
Borrower has complied with the requirements of Section 9.14.
(x) Corporate and Fictitious Names. Except as otherwise
disclosed on Schedule 7.1(x), during the 12-month period preceding the Agreement
Date, neither any Borrower nor any predecessor thereof has been known as or used
any corporate or fictitious name other than the corporate name of such Borrower
on the Effective Date.
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(y) Federal Reserve Regulations. Neither any Borrower nor any
of its Subsidiaries is engaged and none will engage, principally or as one of
its important activities, in the business of extending credit for the purpose of
"purchasing" or "carrying" (as each of the quoted terms is defined or used in
Regulations G and U of the Board of Governors of the Federal Reserve System) any
Margin Stock. No part of the proceeds of any of the Loans will be used for so
purchasing or carrying Margin Stock or, in any event, for any purpose which
violates, or which would be inconsistent with, the provisions of Regulation G,
T, U or X of such Board of Governors. If requested by the Administrative Agent
or any Lender, the Borrowers will furnish to the Administrative Agent and the
Lenders a statement or statements in conformity with the requirements of said
Regulation G, T, U or X to the foregoing effect.
(z) Investment Company Act. No Borrower is an
"investment company" or a company "controlled" by an "investment
company" (as each of the quoted terms is defined or used in the
Investment Company Act of 1940, as amended).
(aa) Employee Relations. Each Borrower and each of its
Subsidiaries has an adequate work force in place and is not, except as set forth
on Schedule 7.1(aa), party to any collective bargaining agreement nor has any
labor union been recognized as the representative of the Borrower's or any of
its Subsidiaries' employees, and no Borrower knows of any pending, threatened or
contemplated strikes, work stoppage or other labor disputes involving a
Borrower's or any of its Subsidiaries' employees.
(bb) Proprietary Rights. Schedule 7.1(bb) sets forth a correct and
complete list of all of the Proprietary Rights. None of the Proprietary Rights
is subject to any licensing agreement or similar arrangement except as set forth
on Schedule 7.1(bb) or as entered into in the sale or distribution of a
Borrower's Inventory in the ordinary course of business or as contemplated by
the provisions of Section 12.7. To the best of the Borrowers' knowledge, except
as set forth on Schedule 7.1(bb), none of the Proprietary Rights infringes on or
conflicts with any other Person's property, and no other Person's property
infringes on or conflicts with the Proprietary Rights. The Proprietary Rights
described on Schedule 7.1(bb) constitute all of the property of such type
necessary to the current and anticipated future conduct of the Borrowers'
business.
(cc) Trade Names. All trade names or styles under which any
Borrower sells Inventory or Equipment or creates Receivables, or to which
instruments in payment of Receivables are made payable, are listed on Schedule
7.1(cc).
(dd) Bank Accounts, Lockboxes, Etc. Schedule 7.1(dd) is
a complete and correct list of all checking accounts, deposit
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accounts, lockboxes and other bank accounts maintained by any Borrower.
SECTION 7.2. Survival of Representations and Warranties,
Etc. All representations and warranties set forth in this Article 7 and all
statements contained in any certificate, financial statement, or other
instrument, delivered by or on behalf of the Borrowers (or any of them) pursuant
to or in connection with this Agreement or any of the Loan Documents (including,
but not limited to, any such representation, warranty or statement made in or in
connection with any amendment thereto) shall constitute representations and
warranties made under this Agreement. All representations and warranties made
under this Agreement shall be made or deemed to be made at and as of the
Agreement Date, at and as of the Effective Date and at and as of the date of
each Loan, except that representations and warranties which, by their terms are
applicable only to one such date shall be deemed to be made only at and as of
such date. All representations and warranties made or deemed to be made under
this Agreement shall survive and not be waived by the execution and delivery of
this Agreement, any investigation made by or on behalf of the Lender or any
borrowing hereunder.
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ARTICLE 8
SECURITY INTEREST
SECTION 8.1. Security Interest.
(a) To secure the payment, observance and performance of the
Secured Obligations, each Borrower hereby mortgages, pledges and assigns all of
the Collateral and owned Real Estate (other than Excluded Real Estate) to the
Administrative Agent, for the benefit of itself as Administrative Agent and the
Lenders and Affiliates of the Lenders, and grants to the Administrative Agent,
for the benefit of itself as Administrative Agent and the Lenders and Affiliates
of the Lenders, a continuing security interest in, and a continuing Lien upon,
all of the Collateral and owned such Real Estate.
(b) As additional security for all of the Secured Obligations,
each Borrower grants to the Administrative Agent, for the benefit of itself as
Administrative Agent and the Lenders and Affiliates of the Lenders, a security
interest in, and assigns to the Administrative Agent, for the benefit of itself
as Administrative Agent and the Lenders and Affiliates of the Lenders, all of
such Borrower's right, title and interest in and to, any deposits or other sums
at any time credited by or due from each Lender and each Affiliate of a Lender
to such Borrower, or credited by or due from any participant of any Lender to
such Borrower, with the same rights therein as if the deposits or other sums
were credited by or due from such Lender. Each Borrower hereby authorizes each
Lender and each Affiliate of such Lender and each participant to pay or deliver
to the Administrative Agent, for the account of the Lenders, without any
necessity on the Administrative Agent's or any Lender's part to resort to other
security or sources of reimbursement for the Secured Obligations, at any time
during the continuation of any Event of Default or in the event that the
Administrative Agent, on behalf of the Lenders, should make demand for payment
hereunder and without further notice to such Borrower (such notice being
expressly waived), any of the aforesaid deposits (general or special, time or
demand, provisional or final) or other sums for application to any Secured
Obligation, irrespective of whether any demand has been made or whether such
Secured Obligation is mature, and the rights given the Administrative Agent, the
Lenders, their Affiliates and participants hereunder are cumulative with such
Person's other rights and remedies, including other rights of set-off. The
Administrative Agent will promptly notify the Borrowers of its receipt of any
such funds for application to the Secured Obligations, but failure to do so will
not affect the validity or enforceability thereof. The Administrative Agent may
give notice of the above grant of a security interest in and assignment of the
aforesaid deposits and other sums, and authorization, to, and make any suitable
arrangements with, any
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Lender, any such Affiliate of any Lender or participant for effectuation
thereof, and each Borrower hereby irrevocably appoints the Administrative Agent
as its attorney to collect any and all such deposits or other sums to the extent
any such payment is not made to the Administrative Agent or any Lender by such
Lender, Affiliate or participant.
SECTION 8.2. Continued Priority of Security Interest.
(a) The Security Interest granted by each Borrower shall at
all times be valid, perfected and enforceable against such Borrower and all
third parties in accordance with the terms of this Agreement, as security for
the Secured Obligations, and neither the Collateral nor the Real Estate shall at
any time be subject to any Liens that are prior to, on a parity with or junior
to the Security Interest, other than Permitted Liens.
(b) Each Borrower shall, at its sole cost and expense, take
all action that may be necessary or desirable, or that the Administrative Agent
may reasonably request, so as at all times to maintain the validity, perfection,
enforceability and rank of the Security Interest in the Collateral and Real
Estate in conformity with the requirements of Section 8.2(a), or to enable the
Administrative Agent and the Lenders to exercise or enforce their rights
hereunder, including, but not limited to:
(i) paying all taxes, assessments and other claims lawfully
levied or assessed on any of the Collateral and Real Estate, except to
the extent that such taxes, assessments and other claims constitute
Permitted Liens,
(ii) using all reasonable efforts to obtain, after the
Agreement Date, landlords', mortgagees', bailees', warehousemen's or
processors' releases, subordinations or waivers, and mechanics'
releases, subordinations or waivers,
(iii) delivering to the Administrative Agent, for the benefit
of the Lenders, endorsed or accompanied by such instruments of
assignment as the Administrative Agent may specify, and stamping or
marking, in such manner as the Administrative Agent may specify, any
and all chattel paper, instruments, letters and advices of guaranty and
documents evidencing or forming a part of the Collateral, and
(iv) executing and delivering financing statements, pledges,
designations, hypothecations, notices and assignments in each case in
form and substance satisfactory to the Administrative Agent relating to
the creation, validity, perfection, maintenance or continuation of the
Security Interest under the Uniform Commercial Code or other Applicable
Law.
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(c) The Administrative Agent is hereby authorized to file one
or more financing or continuation statements or amendments thereto without the
signature of or in the name of any Borrower for any purpose described in Section
8.2(b). The Administrative Agent will give the Borrowers notice of the filing of
any such statements or amendments, which notice shall specify the locations
where such statements or amendments were filed. A carbon, photographic,
xerographic or other reproduction of this Agreement or of any of the Security
Documents or of any financing statement filed in connection with this Agreement
is sufficient as a financing statement.
(d) Each Borrower shall mark its books and records as directed
by the Administrative Agent and as may be necessary or appropriate to evidence,
protect and perfect the Security Interest and shall cause its financial
statements to reflect the Security Interest.
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ARTICLE 9
COLLATERAL COVENANTS
Each Borrower covenants and agrees that until the Revolving
Credit Facility has been terminated and all the Secured Obligations have been
paid in full, unless the Required Lenders shall otherwise consent in the manner
provided in Section 16.11:
SECTION 9.1. Collection of Receivables.
(a) At the request of the Administrative Agent, the Borrowers
will cause all monies, checks, notes, drafts and other payments relating to or
constituting proceeds of trade accounts receivable to be forwarded to a Lockbox
for deposit in an Agency Account in accordance with the procedures set out in
the corresponding Agency Account Agreement. The Borrowers will promptly cause
all monies, checks, notes, drafts and other payments relating to or constituting
proceeds of other Receivables, of any other Collateral or Real Estate and of any
trade accounts receivable that are not forwarded to a Lockbox, to be transferred
to or deposited in an Agency Account or in a collection account maintained with
the Administrative Agent. In particular, each Borrower will:
(i) advise each Account Debtor on trade accounts receivable to
address all remittances with respect to amounts payable on account
thereof to a specified Lockbox (if applicable),
(ii) advise each other Account Debtor that makes payment to such
Borrower by wire transfer, automated clearinghouse ("ACH") transfer or
similar means to make payment directly to an Agency Account or such
collection account, and
(iii) stamp all invoices relating to trade accounts receivable with
a legend satisfactory to the Administrative Agent indicating that
payment is to be made to such Borrower via a specified Lockbox (if
applicable).
(b) The Borrowers and the Administrative Agent shall (A) cause
all collected balances in each Agency Account to be transmitted daily by wire
transfer, ACH transfer, depository transfer check or other means in accordance
with the procedures set forth in the corresponding Agency Account Agreement, to
the Administrative Agent at the Agent's Office and (B) cause all balances in any
collection account maintained with the Administrative Agent:
(i) to be applied on the Business Day they are received
on account of the Secured Obligations as provided in Sections
2.3(c), 13.2, and 13.3, and
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(ii) with respect to the balance, so long as no Default or
Event of Default has occurred and is continuing, for transfer by wire
transfer, ACH transfer or depository transfer check to a Controlled
Disbursement Account or as the Borrowers and the Administrative Agent
may otherwise agree;
provided that the application of any items evidencing uncollected balances at
any time to the Secured Obligations shall be conditioned upon final payment in
cash or solvent credits of the items giving rise to them and the Borrowers shall
pay monthly in arrears to the Administrative Agent for the account of
NationsBank or for the ratable account of the Lenders in accordance with the
settlement mode in effect a fee at the rate then applicable to Prime Rate
Revolving Credit Loans payable monthly in arrears on the first day of each
calendar month after the Effective Date and on the Termination Date on the
average daily balance during such month of uncollected balances (but not funds
received by Fedwire, ACH or other transfer of immediately available funds)
applied to reduce the Secured Obligations, with the same economic effect to the
Borrowers as if uncollected balances were credited against the Secured
Obligations only on the Business Day following the day of receipt by the
Administrative Agent.
(c) Any monies, checks, notes, drafts or other payments
referred to in subsection (a) of this Section 9.1 which, notwithstanding the
terms of such subsection, are received by or on behalf of a Borrower will be
held in trust for the Administrative Agent and will be delivered to the
Administrative Agent or a Clearing Bank, as promptly as possible, in the exact
form received, together with any necessary endorsements for application by the
Administrative Agent directly to the Secured Obligations or, if applicable, for
deposit in the Agency Account maintained with a Clearing Bank and processing in
accordance with the terms of the corresponding Agency Account Agreement.
SECTION 9.2. Verification and Notification. The
Administrative Agent shall have the right at any time and from time
to time,
(a) in the name of the Administrative Agent, the Lenders or in
the name of the Borrowers (or any of them), to verify the validity, amount or
any other matter relating to any Receivables by mail, telephone, telegraph or
otherwise,
(b) to review, audit and make extracts from all records
and files related to any of the Receivables, and
(c) at any time after a Default or Event of Default has
occurred and is continuing, to notify the Account Debtors or obligors under any
Receivables of the assignment of such Receivables to the Administrative Agent,
for the benefit of the Lenders, and to direct such Account Debtor or obligors to
make payment of all amounts due or to become due thereunder directly to
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the Administrative Agent, for the account of the Lenders, and, upon such
notification and at the expense of the Borrowers, to enforce collection of any
such Receivables and to adjust, settle or compromise the amount or payment
thereof, in the same manner and to the same extent as the Borrowers (or any of
them) might have done.
SECTION 9.3. Disputes, Returns and Adjustments.
(a) In the event any amounts due and owing under any
Receivable for an amount in excess of $250,000 are in dispute between the
Account Debtor and a Borrower, the Borrowers shall provide the Administrative
Agent with prompt written notice thereof.
(b) The Borrowers shall notify the Administrative Agent
promptly of all returns and credits in excess of $250,000 in respect of any
Receivable, which notice shall specify the Receivable affected.
(c) The Borrowers may, in the ordinary course of business
unless a Default or an Event of Default has occurred and is continuing, grant
any extension of time for payment of any Receivable or compromise, compound or
settle the same for less than the full amount thereof, or release wholly or
partly any Person liable for the payment thereof, or allow any credit or
discount whatsoever therein; provided that (i) no such action results in the
reduction of more than $250,000 in the amount payable with respect to any
Receivable or of more than $1,000,000 with respect to all Receivables in any
Fiscal Year (in each case, excluding the allowance of credits or discounts
generally available to Account Debtors in the ordinary course of the Borrowers'
business), and (ii) the Administrative Agent is promptly notified of the amount
of such adjustments and the Receivable(s) affected thereby.
SECTION 9.4. Invoices.
(a) No Borrower will use any invoices other than invoices in
the form delivered to the Administrative Agent prior to the Agreement Date
without giving the Administrative Agent 30 days' prior notice of the intended
use of a different form of invoice together with a copy of such different form.
(b) Upon the request of the Administrative Agent, each
Borrower shall deliver to the Administrative Agent, at the Borrower's expense,
copies of customers' invoices or the equivalent, original shipping and delivery
receipts or other proof of delivery, customers' statements, customer address
lists, the original copy of all documents, including, without limitation,
repayment histories and present status reports, relating to Receivables and such
other documents and information relating to the Receivables as the
Administrative Agent shall specify.
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SECTION 9.5. Delivery of Instruments. In the event any
Receivable is at any time evidenced by a promissory note, trade acceptance or
any other instrument for the payment of money, the relevant Borrower will
immediately upon request therefor by the Administrative Agent, deliver such
instrument to the Administrative Agent, appropriately endorsed to the
Administrative Agent, for the benefit of the Lenders.
SECTION 9.6. Sales of Inventory. All sales of
Inventory will be made in compliance with all requirements of
Applicable Law.
SECTION 9.7. Ownership and Defense of Title.
(a) Except for Permitted Liens, the Borrowers (or any of them)
shall at all times be the sole owner or lessee of each and every item of
Collateral and Real Estate and shall not create any lien on, or sell, lease,
exchange, assign, transfer, pledge, hypothecate, grant a security interest or
security title in or otherwise dispose of, any of the Collateral or such Real
Estate or any interest therein, except for sales of Inventory in the ordinary
course of business, for cash or on open account or on terms of payment
ordinarily extended to its customers, and except for dispositions that are
otherwise expressly permitted under this Agreement. The inclusion of "proceeds"
of the Collateral or Real Estate under the Security Interest shall not be deemed
a consent by the Administrative Agent or the Lenders to any other sale or other
disposition of any part or all of the Collateral or Real Estate. To the extent
that any such sale or other disposition is made in accordance with the terms of
this Agreement or the other Loan Documents, the Administrative Agent shall, at
the request and expense of the Borrowers, promptly execute and delivery such
releases of Lien affecting the property so sold or disposed of as the Borrowers
may reasonably request.
(b) Each Borrower shall defend its title or leasehold interest
in and to, and the Security Interest in, the Collateral and the Real Estate
against the claims and demands of all Persons.
SECTION 9.8. Insurance.
(a) The Borrowers shall at all times maintain insurance on the
Inventory and Equipment against loss or damage by fire, theft (excluding theft
by employees), burglary, pilferage, loss in transit and such other hazards as
the Administrative Agent shall reasonably specify, in amounts not to exceed
those obtainable at commercially reasonable rates and under policies issued by
insurers acceptable to the Administrative Agent in the exercise of its
reasonable judgment. All premiums on such insurance shall be paid by the
Borrowers and copies of the policies delivered promptly upon its request to the
Administrative Agent. The Borrowers will not use or permit the Inventory or
Equipment to be used in violation of
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Applicable Law or in any manner which might render inapplicable any insurance
coverage.
(b) All insurance policies required under Section 9.8(a) shall
name the Administrative Agent, for the benefit of the Lenders, as an additional
insured and shall contain loss payable clauses in the form submitted to the
Borrowers by the Administrative Agent, or otherwise in form and substance
satisfactory to the Required Lenders, naming the Administrative Agent, for the
benefit of the Lenders, as loss payee, as its interests may appear, and
providing that
(i) all proceeds thereunder shall be payable to the
Administrative Agent, for the benefit of the Lenders,
(ii) no such insurance shall be affected by any act or
neglect of the insurer or owner of the property described in
such policy, and
(iii) such policy and loss payable clauses may be canceled,
amended or terminated only upon at least ten (10) days' prior written
notice given to the Administrative Agent.
(c) Any proceeds of insurance referred to in this Section 9.8
which are paid to the Administrative Agent, for the account of the Lenders,
shall be, at the option of the Required Lenders in their sole discretion, either
(i) applied to replace the damaged or destroyed property, or (ii) applied to the
payment or prepayment of the Secured Obligations, provided that (x) insurance
proceeds attributable to damage to or loss of Inventory shall at the request of
the Borrowers be applied to repay outstanding Revolving Credit Loans and (y) in
the event that the proceeds from any single casualty do not exceed $1,500,000
(or $2,500,000 including proceeds payable in respect of any loss of or damage to
Real Estate arising out of the same casualty), then, upon the Borrowers' written
request to the Administrative Agent, provided that no Default or Event of
Default shall have occurred and be continuing, such proceeds shall be disbursed
by the Administrative Agent to the affected Borrower pursuant to such procedures
as the Administrative Agent shall reasonably establish for application to the
replacement of the damaged or destroyed property.
SECTION 9.9. Location of Offices and Collateral.
(a) No Borrower will change the location of its chief
executive office or the place where it keeps its books and records relating to
the Collateral or change its name, its identity or corporate structure without
giving the Administrative Agent 60 days' prior written notice thereof.
(b) All Inventory, other than Inventory in transit to any such
location, will at all times be kept by each Borrower at the locations identified
to such Borrower set forth in Schedule
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7.1(v), and shall not, without the prior written consent of the Administrative
Agent, be removed therefrom except pursuant to sales of Inventory permitted
under Section 9.7(a).
(c) If any Inventory is in the possession or control of any of
a Borrower's agents or processors, such Borrower shall notify such agents or
processors of the Security Interest (and shall promptly provide copies of any
such notice to the Administrative Agent and the Lenders) and, upon the
occurrence of an Event of Default, shall instruct them (and cause them to
acknowledge such instruction) to hold all such Inventory for the account of the
account of the Lenders, subject to the instructions of the Administrative Agent.
SECTION 9.10. Records Relating to Collateral.
(a) Each Borrower will at all times
(i) keep complete and accurate records of Inventory on a basis
consistent with past practices of such Borrower so as to permit
comparison of Inventory records relating to different time periods,
itemizing and describing the kind, type and quantity of Inventory and
such Borrower's cost thereof and a current price list for such
Inventory, and
(ii) keep complete and accurate records of all other
Collateral and Real Estate.
(b) Each Borrower will prepare a physical listing of all
Inventory of each Borrower, wherever located, on a rotating, annual schedule.
SECTION 9.11. Inspection. The Administrative Agent and
each Lender (by any of their officers, employees or agents) shall
have the right, to the extent that the exercise of such right shall
be within the control of the Borrowers, at any time or times to
(a) visit the properties of the Borrowers and the
Subsidiaries, inspect the Collateral, the Real Estate and the other assets of
the Borrowers and the Subsidiaries and inspect and make extracts from the books
and records of the Borrowers and the Subsidiaries, including but not limited to
management letters prepared by independent accountants, all during customary
business hours at such premises;
(b) subject to the provisions of Section 16.25, to discuss the
Borrowers' and the Subsidiaries' business, assets, liabilities, financial
condition, results of operations and business prospects, insofar as the same are
reasonably related to the rights of the Administrative Agent or the Lenders
hereunder or under any of the Loan Documents, with the Borrowers' and the
Subsidiaries' (i) principal officers, (ii) independent accountants, and (iii)
any other Person;
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(c) verify the amount, quantity, value and condition of, or
any other matter relating to, any of the Collateral (other than Receivables) and
Real Estate and in this connection to review, audit and make extracts from all
records and files related to any of the Collateral or Real Estate.
The Borrowers will deliver to the Administrative Agent, for the benefit of the
Lenders, any instrument necessary for it to obtain records from any service
bureau maintaining records on behalf of the Borrowers (or any of them).
SECTION 9.12. Information and Reports.
(a) Schedule of Receivables. The Borrowers shall
deliver to the Administrative Agent on or before the Effective Date
and not later than the 20th day of each Fiscal Month thereafter a
Schedule of Receivables which
(i) shall be as of the last day of the immediately
preceding Fiscal Month,
(ii) shall be reconciled to the Borrowing Base
Certificate as of such last day, and
(iii) shall set forth a detailed aged trial balance of all its
then existing Receivables, specifying the names and balance due for
each Account Debtor obligated on a Receivable so listed.
(b) Schedule of Inventory. The Borrowers shall deliver to the
Administrative Agent and to each Lender on or before the Effective Date and not
later than the 20th day of each Fiscal Month thereafter a Schedule of Inventory
as of the last day of the immediately preceding Fiscal Month, itemizing and
describing in summary form satisfactory to the Administrative Agent, the kind,
type and quantity (by Dollar amount) of Inventory, each Borrower's cost thereof
and the location thereof.
(c) Schedule of Equipment. The Borrowers shall deliver to the
Administrative Agent on or before the Effective Date and thereafter at the
request of the Administrative Agent, a Schedule of Equipment as of a date not
earlier than 30 days prior to the date of delivery, itemizing and describing in
reasonable detail, each Borrower's Equipment, the cost of each item thereof
having an original cost in excess of $10,000 and the book value and location
thereof.
(d) Borrowing Base Certificate. The Borrowers shall deliver to
the Administrative Agent and to each Lender on or before the Effective Date and
not later than the 20th day of each Fiscal Month thereafter, a Borrowing Base
Certificate prepared as of the close of business on the last day of the
immediately preceding
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Fiscal Month, together with copies of such schedules or summaries as the
Borrowers may provide in support or explanation of the Borrowing Base
Certificate.
(e) Notice of Diminution of Value. The Borrowers shall give
prompt notice to the Administrative Agent of any matter or event which has
resulted in, or may result in, the diminution in excess of $2,000,000 in the
value of any of the Collateral, except for any such diminution in the value of
any Receivables or Inventory in the ordinary course of business which has been
appropriately reserved against, as reflected in financial statements previously
delivered to the Administrative Agent and the Lenders pursuant to Article 11.
(f) Additional Information. The Administrative Agent may in
its discretion from time to time request that the Borrowers deliver the
schedules, certificates described in Sections 9.12(a), (b) and (d) more or less
often and on different schedules than specified in such Sections and the
Borrowers will comply with such requests. The Borrowers will also furnish to the
Administrative Agent and each Lender such other information with respect to the
Collateral (including, without being limited to, information as to any Floor
Plan Receivables and address lists of Account Debtors) as the Administrative
Agent or any Lender may from time to time reasonably request.
SECTION 9.13. Power of Attorney. Each Borrower hereby
appoints the Administrative Agent as its attorney, with power
(a) to endorse the name of such Borrower on any checks, notes,
acceptances, money orders, drafts or other forms of payment or security that may
come into the Administrative Agent's or any Lender's possession, and
(b) to sign the name of such Borrower on any invoice or bill
of lading relating to any Receivable, Inventory or other Collateral, on any
drafts against customers related to letters of credit, on schedules and
assignments of Receivables furnished to the Administrative Agent or any Lender
by the Borrowers (or any of them), on notices of assignment, financing
statements and other public records relating to the perfection or priority of
the Security Interest, verifications of account and notices to or from
customers.
SECTION 9.14. Additional Real Estate and Leases.
(a) Each Borrower shall notify the Administrative Agent
promptly upon its acquisition of any interest in real property after the
Agreement Date. Upon request by the Administrative Agent, each such Borrower
shall deliver to the Administrative Agent, at the Administrative Agent's
request, for the benefit of itself as Administrative Agent and the Lenders, an
executed Mortgage in form and substance satisfactory to the Administrative
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Agent, conveying to the Administrative Agent, for the benefit of itself and the
Lenders, a first priority Lien on such Real Estate, including, if requested by
the Administrative Agent, on any long-term leasehold interest therein, subject
only to such prior Liens as the Administrative Agent shall consent to in writing
or, in the case of leased Real Estate, at the Administrative Agent's election, a
landlord's waiver and consent in form and substance satisfactory to the
Administrative Agent. If requested by the Administrative Agent, such Borrower
shall also deliver to the Administrative Agent at the Borrowers' expense a
mortgagee title insurance policy in favor of the Administrative Agent and the
Lenders insuring such Mortgage to create and convey such Lien, subject only to
such exceptions as are consented to by the Administrative Agent and shall
deliver to the Administrative Agent, at the Administrative Agent's request, the
other items set forth in Section 6.1(a) clauses (11) through (14) (as
applicable) with respect to such Real Estate, all in form and substance
satisfactory to the Administrative Agent.
(b) Promptly upon a Borrower's entry into any lease of Real
Estate (other than a lease conveying an estate in real property, which shall be
subject to the provisions of subsection (a) above), such Borrower shall, at the
request of the Administrative Agent, collaterally assign to the Administrative
Agent, for the benefit of itself as the Administrative Agent and the Lenders,
such Borrower's interest in such lease, in form and substance satisfactory to
the Administrative Agent. Such Borrower shall also deliver to the Administrative
Agent an executed landlord's waiver and consent with respect to such lease in
form and substance satisfactory to the Administrative Agent, provided that the
Borrowers' failure to obtain any such waiver and consent of a landlord of any
office, warehouse or distribution facility shall not constitute an Event of
Default hereunder unless and until the value of the Collateral located on such
leased premises (including, if such premises are the chief executive office and
principal place of business of a Borrower, all Receivables of such Borrower) and
all other leased premises in respect of which a satisfactory landlord waiver and
consent is not in place is equal to not more than $4,000,000, or as otherwise
determined by the Administrative Agent from time to time.
(c) If the Real Estate formerly used in the business of
Daystrom has not been sold or transferred to a Person not an Affiliate of a
Borrower within 180 days following the Effective Date, then LADD shall execute
and deliver to the Administrative Agent a Mortgage with respect to each such
parcel of Real Estate in form and substance satisfactory to the Administrative
Agent, conveying to the Administrative Agent, for the benefit of itself and the
Lenders, a first priority Lien on such Real Estate, subject only to such prior
Liens as the Administrative Agent shall consent to in writing. If requested by
the Administrative Agent, such Borrower shall also deliver to the Administrative
Agent at the Borrowers' expense a mortgagee title insurance policy in favor of
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the Administrative Agent and the Lenders insuring such Mortgage to create and
convey such Lien, subject only to such exceptions as are consented to by the
Administrative Agent and shall deliver to the Administrative Agent, at the
Administrative Agent's request, the other items set forth in Section 6.1(a)
clauses (11) through (14) (as applicable) with respect to such Real Estate, all
in form and substance satisfactory to the Administrative Agent.
SECTION 9.15. Assignment of Claims Act. Upon the request of
the Administrative Agent, the Borrowers (or any of them, as specified by the
Administrative Agent) shall execute any documents or instruments and shall take
such steps or actions reasonably required by the Administrative Agent so that
all monies due or to become due under any contract with the United States of
America, the District of Columbia or any state, county, municipality or other
domestic or foreign governmental entity, or any department, agency or
instrumentality thereof, will be assigned to the Administrative Agent, for the
benefit of itself and the Lenders, and notice given thereof in accordance with
the requirements of the Assignment of Claims Act of 1940, as amended, or any
other laws, rules or regulations relating to the assignment of any such contract
and monies due to or to become due.
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ARTICLE 10
AFFIRMATIVE COVENANTS
The Borrowers covenant and agree that the Borrowers will duly
and punctually pay the principal of, and interest on, and all other amounts
payable with respect to, the Loans and all other Secured Obligations in
accordance with the terms of the Loan Documents and that until the Revolving
Credit Facility has been terminated and all the Secured Obligations have been
paid in full, unless the Required Lenders shall otherwise consent in the manner
provided for in Section 16.11, each Borrower will, and will cause each of its
Subsidiaries to:
SECTION 10.1. Preservation of Corporate Existence and Similar
Matters. Preserve and maintain its corporate existence, rights, franchises,
licenses and privileges in the jurisdiction of its incorporation and qualify
and, except where the failure to do so would not have a Materially Adverse
Effect, remain qualified as a foreign corporation and authorized to do business
in each jurisdiction in which the character of its properties or the nature of
its business requires such qualification or authorization.
SECTION 10.2. Compliance with Applicable Law. Comply in all
material respects with all Applicable Law relating to it or to such Subsidiary
except to the extent being contested in good faith by appropriate proceedings
and for which reserves in respect of its or such Subsidiary's reasonably
anticipated liability have been appropriately established.
SECTION 10.3. Maintenance of Property. In addition to,
and not in derogation of, the requirements of Section 9.7 and of
the Security Documents,
(a) protect and preserve all properties material to its
business, including copyrights, patents, trade names and trademarks, and
maintain in good repair, working order and condition in all material respects,
with reasonable allowance for wear and tear, all tangible properties, and
(b) from time to time make or cause to be made all needed and
appropriate repairs, renewals, replacements and additions to such properties
necessary for the conduct of its business, so that the business carried on in
connection therewith may be properly and advantageously conducted at all times.
SECTION 10.4. Conduct of Business. At all times engage
only in the businesses indicated for such Borrower on Schedule
7.1(f), Proprietary Rights Transfers, and related activities.
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SECTION 10.5. Insurance. Maintain, in addition to the coverage
required by Section 9.8 and the Security Documents, insurance with responsible
insurance companies against such risks and in such amounts as is customarily
maintained by similar businesses or as may be required by Applicable Law, and
from time to time deliver to the Administrative Agent or any Lender upon its
request a detailed list of the insurance then in effect, stating the names of
the insurance companies, the amounts and rates of the insurance, the dates of
the expiration thereof and the properties and risks covered thereby.
SECTION 10.6. Payment of Taxes and Claims. Pay or
discharge when due
(a) all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits or upon any properties belonging
to it, except that real property ad valorem taxes shall be deemed to have been
so paid or discharged if the same are paid before they become delinquent, and
(b) all lawful claims of materialmen, mechanics, carriers,
warehousemen and landlords for labor, materials, supplies and rentals which, if
unpaid, might become a Lien on any of its properties;
except that this Section 10.6 shall not require the payment or discharge of any
such tax, assessment, charge, levy or claim which is being contested in good
faith by appropriate proceedings and for which reserves in respect of reasonably
anticipated liability have been appropriately established.
SECTION 10.7. Accounting Methods and Financial Records.
Maintain a system of accounting, and keep such books, records and accounts
(which shall be true and complete), as may be required or as may be necessary to
permit the preparation by LADD, on a consolidated basis, of financial statements
in accordance with GAAP, except that no Borrower shall be required to adjust its
LIFO Reserve more frequently than annually.
SECTION 10.8. Use of Proceeds.
(a) Use the proceeds of
(i) the initial Revolving Credit Loan and the Term Loans
to pay amounts indicated on Schedule 10.8 to the Persons
indicated thereon, and
(ii) all subsequent Loans only for working capital and
general business purposes, and
(b) not use any part of such proceeds to purchase or, to
carry or reduce or retire or refinance any credit incurred to
purchase or carry, any Margin Stock (within the meaning of
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Regulation G or U of the Board of Governors of the Federal Reserve System) or,
in any event, for any purpose which would involve a violation of such Regulation
G or U or of Regulation T or X of such Board of Governors, or for any purpose
prohibited by law or by the terms and conditions of this Agreement.
SECTION 10.9. Hazardous Waste and Substances; Environmental
Requirements.
(a) In addition to, and not in derogation of, the requirements
of Section 10.2 and of the Security Documents, comply in all material respects
with all Environmental Laws and all Applicable Laws relating to occupational
health and safety (except for instances of noncompliance that are being
contested in good faith by appropriate proceedings if reserves in respect of its
or such Subsidiary's reasonably anticipated liability therefor have been
appropriately established), promptly notify the Administrative Agent of its
receipt of any written notice of a significant violation of any such
Environmental Laws or other such Applicable Laws and indemnify and hold the
Administrative Agent and the Lenders harmless from all loss, cost, damage,
liability, claim and expense incurred by or imposed upon the Administrative
Agent or any Lender on account of such Borrower's failure to perform its
obligations under this Section 10.9.
(b) Whenever such Borrower gives notice to the Administrative
Agent pursuant to this Section 10.9 or otherwise with respect to a matter that
reasonably could be expected to result in liability to such Borrower or any
Subsidiary in excess of $1,000,000 in the aggregate, such Borrower shall, at the
Administrative Agent's request and the Borrowers' expense (i) cause an
independent environmental engineer acceptable to the Administrative Agent to
conduct an assessment, including tests where necessary, of the site where the
noncompliance or alleged noncompliance with Environmental Laws has occurred and
prepare and deliver to the Administrative Agent a report setting forth the
results of such assessment, a proposed plan to bring such Borrower (or such
Subsidiary) into compliance with such Environmental Laws (if such assessment
indicates noncompliance) and an estimate of the costs thereof, and (ii) provide
to the Administrative Agent a supplemental report of such engineer whenever the
scope of the noncompliance, or the response thereto or the estimated costs
thereof, shall materially adversely change.
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ARTICLE 11
INFORMATION
Until the Revolving Credit Facility has been terminated and
all the Secured Obligations have been paid in full, unless otherwise specified
or the Required Lenders shall otherwise consent in the manner set forth in
Section 16.11, the Borrowers will furnish to the Administrative Agent and to
each Lender at its offices then designated for notices pursuant to Section 16.1,
the statements, reports, certificates, and other information provided for in
this Article 11. All written information, reports, statements and other papers
and data furnished to the Administrative Agent or any Lender by or on behalf of
the Borrowers (or any of them) at their (or its) request, whether pursuant to
this Article 11 or any other provision of this Agreement or of any other Loan
Document, shall be, at the time the same is so furnished, complete and correct
in all material respects to the extent necessary to give the Administrative
Agent and the Lenders true and accurate knowledge of the subject matter.
Specifically, the Borrowers will so furnish:
SECTION 11.1. Financial Statements.
(a) Audited Year-End Statements. As soon as available, but in
any event within 90 days after the end of each Fiscal Year, copies of the
consolidating and consolidated balance sheets of LADD and the Consolidated
Subsidiaries as at the end of such Fiscal Year and the related consolidating and
consolidated statements of operations and consolidated statements of
shareholders' equity and cash flows for such Fiscal Year, in each case setting
forth in comparative form the figures for the previous Fiscal Year, reported on,
as to such consolidated statements, without qualification by KPMG Peat Marwick
LLP or other independent certified public accountants of nationally recognized
standing selected by LADD; and
(b) Monthly Financial Statements. As soon as available after
the end of each Fiscal Month, but in any event within 30 days after the last day
of each Fiscal Month that is not also the last day of a Fiscal Quarter and
within 45 days after the last day of any Fiscal Quarter, copies of
(i) the unaudited consolidating balance sheets as of the last
day of such Fiscal Month and related statements of operations for LADD
and the Consolidated Subsidiaries for the portion of the Fiscal Year
through the end of such Fiscal Month, and
(ii) the unaudited consolidated balance sheet of LADD and the
Consolidated Subsidiaries as at the end of such Fiscal Month or Fiscal
Quarter, as the case may be, and the related unaudited consolidated
statements of operations and cash flows
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for LADD and the Consolidated Subsidiaries for such Fiscal Month, the
Fiscal Quarter, if applicable, ended on the last day of such Fiscal
Month and for the portion of the Fiscal Year through such Fiscal Month,
certified by a Financial Officer as presenting fairly the financial condition
and results of operations of LADD and the Consolidated Subsidiaries taken as a
whole (and subject to normal year-end audit adjustments) for the applicable
period(s);
all such financial statements to be complete and correct in all material
respects and, as to such consolidated statements, prepared in accordance with
GAAP (except, with respect to interim financial statements, for the omission of
notes and for the effect of normal year-end audit adjustments) applied
consistently throughout the periods reflected therein, provided that unaudited
consolidated financial statements prepared as of a date that is not the last day
of a Fiscal Quarter may be prepared based on divisional accounting practices
that are consistent with those employed as of the Agreement Date by the relevant
Borrowers and that are disclosed in writing in connection with the delivery of
such statements.
(c) Business Plans, Projections. As soon as available, but in
any case not later than February 15 of each calendar year, the business plan or
projected consolidated balance sheet and results of operations of LADD and the
Consolidated Subsidiaries for the current Fiscal Year, prepared on a monthly
basis, and for the two succeeding Fiscal Years, prepared on a quarterly basis.
SECTION 11.2. Accountants' Certificate. Together with the
financial statements referred to in Section 11.1(a), a certificate of such
accountants addressed to the Administrative Agent stating that in making the
examination necessary for the audit of such financial statements, nothing has
come to their attention to lead them to believe that any Default or Event of
Default exists and, in particular, they have no knowledge of any Default or
Event of Default or, if such is not the case, specifying such Default or Event
of Default and its nature. Such certificate of the Borrowers' independent public
accountants may contain such exculpatory provisions as are customarily employed
by such accountants in similar circumstances.
SECTION 11.3. Officer's Certificate. At the time that the
Borrowers furnish the financial statements pursuant to Section 11.1(b) for any
Fiscal Month that is the last Fiscal Month of a Fiscal Quarter, a certificate of
the President of LADD or of a Financial Officer
(a) setting forth as at the end of such Fiscal Quarter or
Fiscal Year, as the case may be, the calculations required to establish whether
or not the Borrowers were in compliance with the requirements of Sections 5.9,
12.1, 12.2, 12.5, 12.6, 12.10 and 12.15, as at the end of each respective
period,
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(b) stating that the information on the schedules to this
Agreement is complete and accurate as of the date of such certificate or, if
such is not the case, attaching to such certificate updated schedules in
accordance with the provisions of Section 11.7, and
(c) stating that, based on a reasonably diligent examination,
no Default or Event of Default exists, or, if such is not the case, specifying
such Default or Event of Default and its nature, when it occurred, whether it is
continuing and the steps being taken by the Borrowers (or any of them) with
respect to such Default or Event of Default.
SECTION 11.4. Copies of Other Reports.
(a) To the Administrative Agent, promptly upon receipt
thereof, copies of all reports, if any, submitted to any Borrower or its Board
of Directors by its independent public accountants, provided, that any
management letter shall also be provided directly to each Lender.
(b) As soon as practicable, copies of all financial statements
and reports that LADD shall send to its shareholders generally and of all
registration statements and all regular or periodic reports which any Borrower
shall file with the Securities and Exchange Commission or any successor
commission.
(c) From time to time and as soon as reasonably practicable
following each request, such forecasts, data, certificates, reports, statements,
opinions of counsel, documents or further information regarding the business,
assets, liabilities, financial condition, results of operations or business
prospects of any Borrower or any Subsidiary as the Administrative Agent or any
Lender may reasonably request and that the Borrowers have or (except in the case
of legal opinions relating to the perfection or priority of the Security
Interest) without unreasonable expense can obtain; provided, however, that the
Lenders shall, to the extent reasonably practicable, coordinate examinations of
the Borrowers' records by their respective internal examiners. The rights of the
Administrative Agent and the Lenders under this Section 11.4 are in addition to
and not in derogation of their rights under any other provision of this
Agreement or of any other Loan Document.
(d) If requested by the Administrative Agent or any Lender,
the Borrowers will furnish to the Administrative Agent and the Lenders
statements in conformity with the requirements of Federal Reserve Form G-3 or
U-1 referred to in Regulation G and U, respectively, of the Board of Governors
of the Federal Reserve System.
SECTION 11.5. Notice of Litigation and Other Matters.
Prompt notice of:
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(a) the commencement, to the extent a Borrower is aware of the
same, of all proceedings and investigations by or before any governmental or
nongovernmental body and all actions and proceedings in any court or before any
arbitrator against or in any other way relating to or affecting any Borrower,
any Subsidiary or any Borrower's or any Subsidiary's properties, assets or
businesses, which might, singly or in the aggregate, result in the occurrence of
a Default or an Event of Default, or have a Materially Adverse Effect,
(b) any amendment of the articles of incorporation or
by-laws of any Borrower or any Subsidiary,
(c) any change in the business, assets, liabilities, financial
condition, results of operations or business prospects of any Borrower or any
Subsidiary which has had or may have, singly or in the aggregate, a Materially
Adverse Effect and any change in the Executive Officers, and
(d) any Default or Event of Default or any event which
constitutes or which with the passage of time or giving of notice or both would
constitute a default or event of default by a Borrower or any Subsidiary under
any material agreement (other than this Agreement) to which such Borrower or
Subsidiary is a party or by which such Borrower, any of its Subsidiaries or any
of their respective properties may be bound.
SECTION 11.6. ERISA. As soon as possible and in any
event within 30 days after a Borrower knows, or has reason to know,
that:
(a) any Termination Event with respect to a Benefit Plan
has occurred or will occur, or
(b) the aggregate present value of the Unfunded Vested
Accrued Benefits under all Benefit Plans, as determined in
accordance with FAS No. 35, is equal to an amount in excess of $0,
or
(c) any Borrower or any Subsidiary is in "default" (as defined
in Section 4219(c)(5) of ERISA) with respect to payments to a Multiemployer
Benefit Plan required by reason of a Borrower's or Subsidiary's complete or
partial withdrawal (as described in Section 4203 or 4205 of ERISA) from such
Multiemployer Plan,
a certificate of the President of LADD or of a Financial Officer setting forth
the details of such event and the action which is proposed to be taken with
respect thereto, together with any notice or filing which may be required by the
PBGC or other agency of the United States government with respect to such event.
SECTION 11.7. Revisions or Updates to Schedules. Should
any of the information or disclosures provided on any of the
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Schedules originally attached hereto become outdated or incorrect in any
material respect, as part of the officer's certificate required pursuant to
Section 11.3(b), such revisions or updates to such Schedule(s) as may be
necessary or appropriate to update or correct such Schedule(s), provided that no
such revisions or updates to any Schedule(s) shall be deemed to have amended,
modified or superseded such Schedule(s) as attached hereto immediately prior to
the submission of such revised or updated Schedule(s), or to have cured any
breach of warranty or representation resulting from the inaccuracy or
incompleteness of any such Schedule(s), unless and until the Required Lenders in
their sole and absolute discretion, shall have accepted in writing such
revisions or updates to such Schedule(s).
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ARTICLE 12
NEGATIVE COVENANTS
Until the Revolving Credit Facility has been terminated and
all the Secured Obligations have been paid in full, unless the Required Lenders
shall otherwise consent in the manner set forth in Section 16.11, the Borrowers
will not directly or indirectly and, in the case of Sections 12.2 through 12.14,
will not permit the Subsidiaries to:
SECTION 12.1. Financial Ratios. Permit:
(a) Minimum Net Worth. Consolidated Net Worth of LADD
and its Consolidated Subsidiaries on a consolidated basis,
(i) as of the Effective Date, to be less than
$116,000,000, or
(ii) as of the last day of Fiscal Year 1996 to be less
than $120,000,000, or
(iii) as of the last day of any Fiscal Year ending
thereafter, to be less than the sum of
(A) consolidated Net Worth of LADD and its
Consolidated Subsidiaries on a consolidated basis as of the
last day of Fiscal Year 1996 or such later last day of the
immediately preceding Fiscal Year, plus
(B) an amount equal to the greater of (1) 25% of
consolidated Net Income (without deduction for any loss) of
LADD and the Consolidated Subsidiaries on a consolidated basis
for the Fiscal Year then ended and (2) $2,000,000 as to Fiscal
Year 1997 or $4,000,000 as to each Fiscal Year thereafter
(prorated for any period less than a full Fiscal Year).
(b) Minimum Fixed Charge Coverage. The Fixed Charge Coverage
Ratio for any period of four consecutive Fiscal Quarters ending on a date or
during a period specified below to be less than the ratio indicated opposite
such date or period:
Period Ending Ratio
Last day of second Fiscal
Quarter, Fiscal Year 1997 1.15 to 1
Last day of third Fiscal
Quarter, Fiscal Year 1997 1.20 to 1
Last day of Fiscal Year 1997 1.30 to 1
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Last day of first Fiscal
Quarter, Fiscal Year 1998 1.35 to 1
On or after the last day of
second Fiscal Quarter, Fiscal
Year 1998 1.50 to 1
(c) Maximum Total Debt Coverage. The Adjusted Total
Debt Coverage Ratio as of the last day of any Fiscal Quarter ending
on a date or during a period specified below to be greater than the
ratio indicated opposite such date or period:
Period Ending Ratio
Last day of Fiscal Year 1996 7.00 to 1
Last day of first Fiscal
Quarter, Fiscal Year 1997 6.00 to 1
Last day of second Fiscal
Quarter, Fiscal Year 1997 5.00 to 1
Last day of third Fiscal Quarter
or final Fiscal Quarter, Fiscal
Year 1997 4.50 to 1
Last day of first Fiscal
Quarter, Fiscal Year 1998 and
thereafter 4.00 to 1
(d) Minimum EBITDA. EBITDA for the period beginning on July 1,
1996 and ending (i) on the last day of Fiscal Year 1996 to be less than
$14,000,000 or (ii) of the last day of the first Fiscal Quarter of Fiscal Year
1997 to be less than $22,000,000.
SECTION 12.2. Debt. Create, assume, or otherwise become or
remain obligated in respect of, or permit or suffer to exist or to be created,
assumed or incurred or to be outstanding any Debt, except that this Section 12.2
shall not apply to:
(a) Debt of the Borrowers arising under this Agreement,
represented by the Loans, the Notes and the Letters of Credit,
(b) Debt reflected on Schedule 7.1(j), excluding any
such Debt that is to be paid in full on the Effective Date,
(c) Permitted Purchase Money Debt and Capitalized Lease
Obligations incurred after the Agreement Date, not to exceed
$10,000,000 at any time outstanding,
(d) Debt represented by the Myrtle IRBs,
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(e) Debt owing to Commonwealth in an amount (including
contingent liabilities) not to exceed $4,000,000,
(f) Debt owing to Wachovia Leasing Corporation in respect of
financing provided to lessees from Contract Sales in an amount (including
contingent liabilities) not to exceed $100,000,
(g) Debt of any Borrower to any other Borrower or to
LFI, and
(h) other Debt in a principal amount at any time
outstanding not to exceed $2,500,000.
SECTION 12.3. Guaranties. Become or remain liable with respect
to any Guaranty of any obligation of any other Person, except that this Section
12.3 shall not apply to (a) Guaranties by LADD of operating obligations
(including operating leases) or Debt permitted pursuant to Section 12.2 of the
other Borrowers, (b) LADD's or any other Borrower's continuing contingent
obligations in existence as of the Agreement Date to indemnify transferees from
LADD or a current or former Subsidiary of a Business Unit (whether such transfer
was by sale of assets or of capital stock), (c) assurances by LADD in favor of
providers of "floor plan" financing to any Borrower or (d) any Secured
Obligations deemed or construed to be a "Guaranty."
SECTION 12.4. Investments. Acquire, after the Agreement
Date, any Business Unit or Investment or, after such date, maintain
any Investment, other than Permitted Investments.
SECTION 12.5. Capital Expenditures. Make or incur any Capital
Expenditures in the aggregate in excess of $7,000,000 for the period comprising
the second half of Fiscal Year 1996 or in excess of $15,000,000 for any Fiscal
Year thereafter, provided that Capital Expenditures in excess of $8,000,000 in
any Fiscal Year (other than Financed Capital Expenditures otherwise permitted
hereunder) shall not be made unless, after giving pro forma effect to each such
expenditure as if made on the first day of the most recently ended period of 12
consecutive Fiscal Months (or such shorter period beginning on the Effective
Date and ending on the last day of the Fiscal Month next preceding the date of
determination), daily average Revolving Credit Availability during such period
would be at least $15,000,000.
SECTION 12.6. Restricted Distributions and Payments, Etc.
Declare or make any Restricted Distribution or Restricted Purchase, except that
after the last day of Fiscal Year 1997, at any time when the smallest Applicable
Margin provided for on the pricing matrix attached hereto as Annex B is
applicable to Loans hereunder and so long as no Default or Event of Default
shall have occurred and be continuing on the date of declaration thereof, LADD
may pay quarterly cash dividends to its shareholders at an annual rate per share
not greater than 25% of the Net Income per share of
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LADD and the Consolidated Subsidiaries on a consolidated basis for the period of
four consecutive Fiscal Quarters next preceding the Fiscal Quarter during which
such dividend is declared and paid.
SECTION 12.7. Merger, Consolidation and Sale of Assets. Merge
or consolidate with any other Person or sell, lease or transfer or otherwise
dispose of all or a substantial portion of its assets to any Person other than
sales of Inventory in the ordinary course of business, except that this Section
12.7 does not apply to any Proprietary Rights Transfer.
SECTION 12.8. Transactions with Affiliates. Effect any
transaction with any Affiliate on a basis less favorable to the Borrowers than
would be the case if such transaction had been effected with a Person not an
Affiliate.
SECTION 12.9. Liens. Create, assume or permit or suffer
to exist or to be created or assumed any Lien on any of the
Collateral or the other assets of the Borrowers (or any of them),
other than Permitted Liens.
SECTION 12.10. Operating Leases. Without the consent of the
Required Lenders, enter into any Operating Lease if the aggregate annual rental
payable under all Operating Leases of the Borrowers would exceed $14,000,000 in
the aggregate at any time after the Effective Date.
SECTION 12.11. Real Estate Leases. Enter into any real
property lease, including a lease relating to the Real Estate occupied by the
Borrowers (or any of them) on the Effective Date, without the prior written
consent of the Administrative Agent, on behalf of the Lenders, which consent
shall not be unreasonably withheld.
SECTION 12.12. Plans. Permit any condition to exist in
connection with any Benefit Plan which might constitute grounds for the PBGC to
institute proceedings to have such Benefit Plan terminated or a trustee
appointed to administer such Plan, and any other condition, event or transaction
with respect to any Benefit Plan which could result in the incurrence by the
Borrowers (or any of them) of any material liability, fine or penalty.
SECTION 12.13. Sales and Leasebacks. Enter into any
arrangement with any Person providing for a Borrower's leasing from such Person
any real or personal property which has been or is to be sold or transferred,
directly or indirectly, by such Borrower to such Person except that this Section
12.13 does not apply to Proprietary Rights Transfers, to the New BOT
Transaction.
SECTION 12.14. Amendments of Other Agreements. Amend in any
way the interest rate (or formula pursuant to which such interest rate is
determined) or principal amount or schedule of payments of principal and
interest with respect to any Debt (other
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than the Secured Obligations) other than to reduce the interest rate or extend
the schedule of payments with respect thereto.
SECTION 12.15. Minimum Revolving Credit Availability. Permit
average Revolving Credit Availability to be less than $5,000,000 for any Fiscal
Month.
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ARTICLE 13
DEFAULT
SECTION 13.1. Events of Default. Each of the following shall
constitute an Event of Default, whatever the reason for such event and whether
it shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment or order of any court or any order, rule or regulation
of any governmental or nongovernmental body:
(a) Default in Payment. The Borrowers shall default in any
payment of principal of or interest on any Loan or any Note when and as due
(whether at maturity, by reason of acceleration or otherwise).
(b) Other Payment Default. The Borrowers shall default in the
payment, as and when due, of principal of or interest on, any other Secured
Obligation, and such default shall continue for a period of 30 days after
written notice thereof has been given to the Borrowers by the Administrative
Agent.
(c) Misrepresentation. Any representation or warranty made or
deemed to be made by the Borrowers (or any of them) under this Agreement or any
Loan Document, or any amendment hereto or thereto, shall at any time prove to
have been incorrect or misleading in any material respect when made.
(d) Default in Performance. The Borrowers shall default
in the performance or observance of any term, covenant, condition
or agreement to be performed by the Borrowers (or any of them),
contained in
(i) Articles 8 or 12, or Sections 9.1(b), 9.1(c), 9.7, 9.8,
9.12, 9.13, 10.1 (insofar as it requires the preservation of the
corporate existence of a Borrower), 10.8. 11.5(d) or 11.6, and the
Agent shall have delivered to the Borrowers written notice of such
default, or
(ii) this Agreement (other than as specifically provided for
otherwise in this Section 13.1) and such default shall continue for a
period of 30 days after written notice thereof has been given to the
Borrowers by the Administrative Agent or, if such default is not
susceptible of cure within such 30- day period, the Borrowers are
diligently attempting to cure such default and the continued existence
of such default is not, in the opinion of the Administrative Agent,
likely to have a Materially Adverse Effect, for a period of up to 90
days after written notice thereof has been given to the Borrowers by
the Administrative Agent.
(e) Debt Cross-Default.
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(i) The Borrowers (or any of them) or any Subsidiary shall
fail to pay when due and payable the principal of or interest on any
Debt (other than the Loans) outstanding in a principal amount in excess
of $2,000,000, or
(ii) the maturity of any such Debt shall have (A) been
accelerated (declared to be due and payable) in accordance with the
provisions of any indenture, contract or instrument providing for the
creation of or concerning such Debt, or (B) been required to be prepaid
prior to the stated maturity thereof, or
(iii) any event shall have occurred and be continuing which
would permit any holder or holders of such Debt, any trustee or agent
acting on behalf of such holder or holders or any other Person so to
accelerate such maturity, and the Borrowers shall have failed to cure
such default prior to the expiration of any applicable cure or grace
period.
(f) Other Cross-Defaults. Any Borrower or any Subsidiary shall
default in the payment when due, or in the performance or observance, of any
obligation or condition of any agreement, contract or lease (other than this
Agreement, the Security Documents or any such agreement, contract or lease
relating to Debt) if the existence of any such defaults, singly or in the
aggregate, could in the reasonable judgment of the Administrative Agent have a
Materially Adverse Effect; provided, however, that for the purposes of this
provision where such a default could result only in a monetary loss, a Material
Adverse Effect shall not be deemed to have occurred unless the aggregate of such
losses would exceed $2,000,000.
(g) Voluntary Bankruptcy Proceeding. Any Borrower or
any Subsidiary shall
(i) commence a voluntary case under the federal
bankruptcy laws (as now or hereafter in effect),
(ii) file a petition seeking to take advantage of any other laws,
domestic or foreign, relating to bankruptcy, insolvency,
reorganization, winding up or composition for adjustment of debts,
(iii) consent to or fail to contest in a timely and appropriate
manner any petition filed against it in an involuntary case under such
bankruptcy laws or other laws,
(iv) apply for or consent to, or fail to contest in a timely and
appropriate manner, the appointment of, or the taking of possession by,
a receiver, custodian, trustee, or liquidator of itself or of a
substantial part of its property, domestic or foreign,
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(v) admit in writing its inability to pay its debts as
they become due,
(vi) make a general assignment for the benefit of
creditors, or
(vii) take any corporate action for the purpose of
authorizing any of the foregoing.
(h) Involuntary Bankruptcy Proceeding. A case or other
proceeding shall be commenced against any Borrower or any
Subsidiary in any court of competent jurisdiction seeking
(i) relief under the federal bankruptcy laws (as now or
hereafter in effect) or under any other laws, domestic or foreign,
relating to bankruptcy, insolvency, reorganization, winding up or
adjustment of debts,
(ii) the appointment of a trustee, receiver, custodian, liquidator
or the like of such Borrower, any of its Subsidiaries or of all or any
substantial part of the assets, domestic or foreign, of such Borrower
or any of its Subsidiaries,
and such case or proceeding shall continue undismissed or unstayed for a period
of 60 consecutive calendar days, or an order granting the relief requested in
such case or proceeding against such Borrower or any of its Subsidiaries
(including, but not limited to, an order for relief under such federal
bankruptcy laws) shall be entered.
(i) Loan Documents. (A) Any event of default or "Event of
Default" under any other Loan Document shall occur or, if such other Loan
Document does not expressly define "events of default" for the purposes thereof,
the Borrowers (or any of them) shall default in the performance or observance of
any material term, covenant, condition or agreement contained in, or the payment
of any other sum covenanted to be paid by the Borrowers (or any of them) under,
any such other Loan Document or (B) any provision of this Agreement or of any
other Loan Document after delivery thereof hereunder shall for any reason cease
to be valid and binding, other than a nonmaterial provision rendered
unenforceable by operation of law, or the Borrowers (or any of them) or any
other party thereto (other than the Lender) shall so state in writing.
(j) Failure of Agreements. Any Borrower shall challenge the
validity and binding effect of any provision of any Loan Document after delivery
thereof hereunder or shall state in writing its intention to make such a
challenge, or this Agreement or any Security Document, after delivery thereof
hereunder, shall for any reason (except to the extent permitted by the terms
thereof or by reason of any action taken independently by the Administrative
Agent or any Lender) cease to create a valid, perfected and, except
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as otherwise expressly permitted herein, first priority Lien on, or security
interest in, any of the Collateral or Real Estate purported to be covered
thereby.
(k) Judgment. A final judgment or order for the payment of
money in an amount that exceeds the uncontested insurance available therefor by
$2,000,000 or more shall be entered against the Borrowers (or any of them) by
any court and such judgment or order shall continue undischarged or unstayed for
30 days.
(l) Attachment. A warrant or writ of attachment or execution
or similar process which exceeds $2,000,000 in value shall be issued against any
property of the Borrowers (or any of them) and such warrant or process shall
continue undischarged or unstayed for ten days.
(m) ERISA.
(i) Any Termination Event with respect to a Benefit Plan shall
occur that, after taking into account the excess, if any, of (A) the
fair market value of the assets of any other Benefit Plan with respect
to which a Termination Event occurs on the same day (but only to the
extent that such excess is the property of the Borrowers) over (B) the
present value on such day of all vested nonforfeitable benefits under
such other Benefit Plan, results in an Unfunded Vested Accrued Benefit
in excess of $0, or
(ii) any Benefit Plan shall incur an "accumulated funding
deficiency" (as defined in Section 412 of the Internal Revenue Code or
Section 302(a)(2) of ERISA) for which a waiver has not been obtained in
accordance with the applicable provisions of the Internal Revenue Code
and ERISA, or
(iii) any Borrower is in "default" (as defined in Section
4219(c)(5) of ERISA) with respect to payments to a Multiemployer
Benefit Plan resulting from a Borrower's complete or partial withdrawal
(as described in Section 4203 or 4205 of ERISA) from such Multiemployer
Plan.
(n) Qualified Audits. The independent certified public
accountants retained by LADD shall refuse to deliver an opinion in accordance
with Section 9.1(a) with respect to the annual consolidated financial statements
of LADD and the Consolidated Subsidiaries.
(o) Change of Control. A Person or "group" of Persons (within
the meaning of Section of the Securities Exchange Act of 1934, as amended),
other than one or more of the Executive Officers (with respect to stock acquired
while he was an officer of a Borrower) and members of the Board of Directors on
the Agreement Date shall acquire, beneficially or of record, 50% or more of the
outstanding capital stock of LADD.
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SECTION 13.2. Remedies.
(a) Automatic Acceleration and Termination of Facilities. Upon
the occurrence of an Event of Default specified in Section 13.1(g) or (h), (i)
the principal of and the interest on the Loans and any Note at the time
outstanding, and all other amounts owed to the Administrative Agent or the
Lenders under this Agreement or any of the other Loan Documents and all other
Secured Obligations, shall thereupon become due and payable without presentment,
demand, protest, or other notice of any kind, all of which are expressly waived,
anything in this Agreement or any of the Loan Documents to the contrary
notwithstanding, and (ii) the Revolving Credit Facility and the right of the
Borrowers to request Borrowings under this Agreement shall immediately
terminate.
(b) Other Remedies. If any Event of Default shall have
occurred, and during the continuance of any Event of Default, the Administrative
Agent may, and at the direction of the Required Lenders in their sole and
absolute discretion shall, do any of the following:
(i) declare the principal of and interest on the Loans and any
Note at the time outstanding, and all other amounts owed to the
Administrative Agent or the Lenders under this Agreement or any of the
other Loan Documents and all other Secured Obligations, to be forthwith
due and payable, whereupon the same shall immediately become due and
payable without presentment, demand, protest or other notice of any
kind, all of which are expressly waived, anything in this Agreement or
the Loan Documents to the contrary notwithstanding;
(ii) terminate the Revolving Credit Facility and any
other right of the Borrowers to request borrowings hereunder;
(iii) notify, or request the Borrowers to notify, in writing or
otherwise, any Account Debtor or obligor with respect to any one or
more of the Receivables to make payment to the Administrative Agent,
for the benefit of the Lenders, or any agent or designee of the
Administrative Agent, at such address as may be specified by the
Administrative Agent and if, notwithstanding the giving of any notice,
any Account Debtor or other such obligor shall make payments to the
Borrowers, the Borrowers shall hold all such payments they receive in
trust for the Administrative Agent, for the account of the Lenders,
without commingling the same with other funds or property of, or held
by, the Borrower, and shall deliver the same to the Administrative
Agent or any such agent or designee of the Administrative Agent
immediately upon receipt by the Borrowers in the identical form
received, together with any necessary endorsements;
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(iv) settle or adjust disputes and claims directly with Account
Debtors and other obligors on Receivables for amounts and on terms
which the Administrative Agent considers advisable and in all such
cases only the net amounts received by the Administrative Agent, for
the account of the Lenders, in payment of such amounts, after
deductions of reasonable costs and attorneys' fees, shall constitute
Collateral and the Borrowers shall have no further right to make any
such settlements or adjustments or to accept any returns of
merchandise;
(v) enter upon any premises in which Inventory or Equipment
may be located and, without resistance or interference by any Borrower,
take physical possession of any or all thereof and maintain such
possession on such premises or move the same or any part thereof to
such other place or places as the Administrative Agent shall choose,
without being liable to the Borrowers on account of any loss, damage or
depreciation that may occur as a result thereof, so long as the
Administrative Agent shall act reasonably and in good faith;
(vi) require the Borrowers to and the Borrowers shall, without
charge to the Administrative Agent or any Lender, assemble the
Inventory and Equipment and maintain or deliver it into the possession
of the Administrative Agent or any agent or representative of the
Administrative Agent at such place or places as the Administrative
Agent may designate and as are reasonably convenient to both the
Administrative Agent and LADD;
(vii) at the expense of the Borrowers, cause any of the Inventory
and Equipment to be placed in a public or field warehouse, and the
Administrative Agent shall not be liable to the Borrowers on account of
any loss, damage or depreciation that may occur as a result thereof, so
long as the Administrative Agent shall act reasonably and in good
faith;
(viii) without notice, demand or other process, and without payment
of any rent or any other charge, enter any of the Borrowers' premises
and, without breach of the peace, until the Administrative Agent, on
behalf of the Lenders, completes the enforcement of its rights in the
Collateral and the Real Estate, take possession of such premises or
place custodians in exclusive control thereof, remain on such premises
and use the same and any of the Borrowers' Equipment, for the purpose
of (A) completing any work in process, preparing any Inventory for
disposition and disposing thereof, and (B) collecting any Receivable,
and the Administrative Agent for the benefit of the Lenders is hereby
granted (to the extent any Borrower may do so) a license or sublicense
and all other rights as may be necessary, appropriate or desirable to
use the Proprietary Rights in connection with the foregoing, and the
rights of the
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Borrowers under all licenses, sublicenses and franchise agreements
shall inure to the Administrative Agent for the benefit of the Lenders
(provided, however, that any use of any federally registered trademarks
as to any goods shall be subject to the control as to the quality of
such goods of the owner of such trademarks and the goodwill of the
business symbolized thereby);
(ix) exercise any and all of its rights under any and all
of the Security Documents;
(x) apply any Collateral consisting of cash to the payment of
the Secured Obligations in any order in which the Administrative Agent,
on behalf of the Lenders, may elect or use such cash in connection with
the exercise of any of its other rights hereunder or under any of the
Security Documents;
(xi) establish or cause to be established one or more Lockboxes or
other arrangement for the deposit of proceeds of Receivables, and, in
such case, the Borrowers shall cause to be forwarded to the
Administrative Agent at the Agent's Office, on a daily basis, copies of
all checks and other items of payment and deposit slips related thereto
deposited in such Lockboxes, together with collection reports in form
and substance satisfactory to the Administrative Agent; and
(xii) exercise all of the rights and remedies of a secured party
under the Uniform Commercial Code and under any other Applicable Law,
including, without limitation, the right, without notice except as
specified below and with or without taking possession thereof, to sell
the Collateral or any part thereof in one or more parcels at public or
private sale, at any location chosen by the Administrative Agent, for
cash, on credit or for future delivery, and at such price or prices and
upon such other terms as the Administrative Agent may deem commercially
reasonable. The Borrowers agree that, to the extent notice of sale
shall be required by law, at least ten (10) days' notice to the
Borrowers of the time and place of any public sale or the time after
which any private sale is to be made shall constitute reasonable
notification, but notice given in any other reasonable manner or at any
other reasonable time shall constitute reasonable notification. The
Administrative Agent shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. The
Administrative Agent may adjourn any public or private sale from time
to time by announcement at the time and place fixed therefor, and such
sale may, without further notice, be made at the time and place to
which it was so adjourned.
SECTION 13.3. Application of Proceeds. All proceeds from each
sale of, or other realization upon, all or any part of the Collateral or Real
Estate following an Event of Default shall be applied or paid over as follows:
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(a) First: to the payment of all costs and expenses incurred
in connection with such sale or other realization, including reasonable
attorneys' fees actually incurred,
(b) Second: to the payment of the Secured Obligations (with
the Borrowers remaining liable for any deficiency), to each Lender (in any
capacity hereunder) strictly in proportion to the amount of the total Secured
Obligations held by such Lender and otherwise as the Administrative Agent may
elect,
(c) Third: the balance (if any) of such proceeds shall be paid
to the appropriate Borrower, subject to any duty imposed by law, or otherwise to
whomsoever shall be entitled thereto.
The Borrowers shall remain jointly and severally liable and will pay, on demand,
any deficiency remaining in respect of the Secured Obligations, together with
interest thereon at a rate per annum equal to the highest rate then payable
hereunder on such Secured Obligations, which interest shall constitute part of
the Secured Obligations.
SECTION 13.4. Power of Attorney. In addition to the
authorizations granted to the Administrative Agent under Section 9.13 or under
any other provision of this Agreement or of any other Loan Document, during the
continuance of an Event of Default, each Borrower hereby irrevocably designates,
makes, constitutes and appoints the Administrative Agent (and all Persons
designated by the Administrative Agent from time to time) as such Borrower's
true and lawful attorney, and agent in fact, and the Administrative Agent, or
any agent of the Administrative Agent, may, without notice to such Borrower, and
at such time or times as the Administrative Agent or any such agent in its sole
discretion may determine, in the name of such Borrower, another Borrower, the
Administrative Agent or the Lenders,
(a) demand payment of the Receivables,
(b) enforce payment of the Receivables by legal
proceedings or otherwise,
(c) exercise all of any Borrower's rights and remedies
with respect to the collection of Receivables,
(d) settle, adjust, compromise, extend or renew any or
all of the Receivables,
(e) settle, adjust or compromise any legal proceedings
brought to collect the Receivables,
(f) discharge and release the Receivables or any of
them,
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(g) prepare, file and sign the name of a Borrower on any
proof of claim in bankruptcy or any similar document against any
Account Debtor,
(h) prepare, file and sign the name of a Borrower on any
notice of Lien, assignment or satisfaction of Lien, or similar document in
connection with any of the Collateral or Real Estate,
(i) endorse the name of a Borrower upon any chattel paper,
document, instrument, notice, freight bill, bill of lading or similar document
or agreement relating to the Receivables, the Inventory or any other Collateral,
(j) use the stationery of a Borrower and sign the name
of a Borrower to verifications of the Receivables and on any notice
to the Account Debtors,
(k) open the Borrowers' mail,
(l) notify the post office authorities to change the
address for delivery of the Borrowers' mail to an address
designated by the Administrative Agent, and
(m) use the information recorded on or contained in any data
processing equipment and computer hardware and software relating to the
Receivables, Inventory or other Collateral or Real Estate to which a Borrower
has access.
SECTION 13.5. Miscellaneous Provisions Concerning
Remedies.
(a) Rights Cumulative. The rights and remedies of the
Administrative Agent and the Lenders under this Agreement, the Notes and each of
the Loan Documents shall be cumulative and not exclusive of any rights or
remedies which it or they would otherwise have. In exercising such rights and
remedies the Administrative Agent and the Lenders may be selective and no
failure or delay by the Administrative Agent or any Lender in exercising any
right shall operate as a waiver of it, nor shall any single or partial exercise
of any power or right preclude its other or further exercise or the exercise of
any other power or right.
(b) Waiver of Marshalling. Each Borrower hereby waives
any right to require any marshalling of assets and any similar
right.
(c) Limitation of Liability. Nothing contained in this Article
13 or elsewhere in this Agreement or in any of the Loan Documents shall be
construed as requiring or obligating the Administrative Agent, the Co-Agents,
any Lender or any agent or designee of the Administrative Agent, the Co-Agents
or any Lender to make any demand, or to make any inquiry as to the nature or
sufficiency of any payment received by it, or to present or file
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any claim or notice or take any action, with respect to any Receivable or any
other Collateral or Real Estate or the monies due or to become due thereunder or
in connection therewith, or to take any steps necessary to preserve any rights
against prior parties, and the Administrative Agent, the Co-Agents, the Lenders
and their agents or designees shall have no liability to the Borrowers (or any
of them) for actions taken pursuant to this Article 13, any other provision of
this Agreement or any of the Loan Documents so long as the Administrative Agent,
the Co-Agents or such Lender shall act in good faith and in a commercially
reasonable manner.
(d) Appointment of Receiver. In any action under this Article
13, the Administrative Agent shall be entitled during the continuance of an
Event of Default, to the fullest extent permitted by Applicable Law, to the
appointment of a receiver, without notice of any kind whatsoever, to take
possession of all or any portion of the Collateral and Real Estate and to
exercise such power as the court shall confer upon such receiver.
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ARTICLE 14
ASSIGNMENTS
SECTION 14.1. Successors and Assigns; Participations.
(a) This Agreement shall be binding upon and inure to the
benefit of the Borrowers, the Lenders, the Co-Agents, the Administrative Agent,
all future holders of the Notes, and their respective successors and assigns,
except that no Borrower may assign or transfer any of its rights or obligations
under this Agreement without the prior written consent of each Lender.
(b) Each Lender may, with the prior consent of the
Administrative Agent and (so long as no Default or Event of Default shall have
occurred and be continuing) of LADD (which consent will not, in either case, be
unreasonably withheld or delayed) or as part of a sale of all or substantially
all of such Lender's assets of a similar type assign to one or more Eligible
Assignees all or a portion of its interests, rights and obligations under this
Agreement (including, without limitation, all or a portion of the Loans at the
time owing to it and the Notes held by it); provided, however, that (i) each
such assignment shall be of a constant, and not a varying, percentage of all the
assigning Lender's rights and obligations under this Agreement, (ii) the amount
of the Commitment of the assigning Lender that is subject to each such
assignment (determined as of the date the Assignment and Acceptance with respect
to such assignment is delivered to the Administrative Agent) shall in no event
be less than $10,000,000, (iii) in the case of a partial assignment, the amount
of the Commitment that is retained by the assigning Lender (determined as of the
date the Assignment and Acceptance with respect to such assignment is delivered
to the Administrative Agent) shall in no event be less than $10,000,000, (iv)
the parties to each such assignment shall execute and deliver to the
Administrative Agent, for its acceptance and recording in the Register an
Assignment and Acceptance, together with any Note or Notes subject to such
assignment and such assignee's pro rata share of the Administrative Agent's
syndication expenses, (v) such assignment shall not, without the consent of the
Borrowers, require any Borrower to file a registration statement with the
Securities and Exchange Commission or apply to or qualify the Loans or the Notes
under the blue sky laws of any state, and (vi) the representation contained in
Section 14.2 hereof shall be true with respect to any such proposed assignee.
Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in each Assignment and Acceptance, which effective date
shall be at least five Business Days after the execution thereof, (A) the
assignee thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender
hereunder, and (B) the Lender assignor thereunder shall, to the extent
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provided in such assignment, be released from its obligations under this
Agreement.
(c) By executing and delivering an Assignment and Acceptance,
the Lender assignor thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than the
representation and warranty that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse claim, such Lender
assignor 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 the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any other
instrument or document furnished pursuant hereto; (ii) such Lender assignor
makes no representation or warranty and assumes no responsibility with respect
to the financial condition of the Borrowers (or any of them) or the performance
or observance by the Borrowers (or any of them) of any of its obligations under
this Agreement or any other instrument or document furnished pursuant hereto;
(iii) such assignee confirms that it has received a copy of this Agreement,
together with copies of the financial statements referred to in Section 7.1(n)
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
Administrative Agent, such Lender assignor or any other Lender, 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 Administrative Agent to take such
action as agent on its behalf and to exercise such powers under this Agreement
and the other Loan Documents as are delegated to the Administrative Agent by the
terms hereof and thereof, together with such powers 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.
(d) The Administrative Agent shall maintain a copy of each
Assignment and Acceptance delivered to it and a register for the recordation of
the names and addresses of the Lenders and the Commitment and Proportionate
Share of, and principal amount of the Loans and owing to, each Lender from time
to time (the "Register"). The entries in the Register shall be conclusive, in
the absence of manifest error, and the Borrowers, the Administrative Agent and
the Lenders may treat each person whose name is recorded in the Register as a
Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by any Borrower or any Lender at any reasonable time
and from time to time upon reasonable prior notice.
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(e) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender and an Eligible Assignee together with any Note or Notes
subject to such assignment and a fee in an amount equal to $3,500, the
Administrative Agent shall, if such Assignment and Acceptance has been completed
and is in the form of Exhibit E, (i) accept such Assignment and Acceptance, (ii)
record the information contained therein in the Register, (iii) give prompt
notice thereof to the Lenders and the Borrowers, and (iv) promptly deliver a
copy of such Acceptance and Assignment to the Borrowers. Within five Business
Days after receipt of notice, the Borrowers shall execute and deliver to the
Administrative Agent in exchange for the surrendered Note or Notes a new Note or
Notes to the order of such Eligible Assignee in amounts equal to the Commitment
assumed by such Eligible Assignee pursuant to such Assignment and Acceptance and
a new Note or Notes 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 the assigned
Notes. Each surrendered Note or Notes shall be canceled and returned to the
Borrowers.
(f) Each Lender may sell participations to one or more banks
or other entities in all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its Commitment
hereunder and the Loans owing to it and the Notes held by it); provided,
however, that (i) each such participation shall be in an amount not less than
$10,000,000, (ii) such Lender's obligations under this Agreement (including,
without limitation, its Commitment hereunder) shall remain unchanged, (iii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iv) such Lender shall remain the holder of the
Notes held by it for all purposes of this Agreement, (v) the Borrowers, the
Administrative Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement; provided, that such Lender may agree with any
participant that such Lender will not, without such participant's consent, agree
to or approve any waivers or amendments which would reduce the principal of or
the interest rate on any Loans, extend the term or increase the amount of the
commitments of such participant, reduce the amount of any fees to which such
participant is entitled, extend any scheduled payment date for principal or
release Collateral or Real Estate securing the Loans (other than Collateral or
Real Estate disposed of pursuant to Section 9.7 hereof or otherwise in
accordance with the terms of this Agreement or the Security Documents), and (vi)
any such disposition shall not, without the consent of the Borrowers, require
any Borrower to file a registration statement with the Securities and Exchange
Commission to apply to qualify the Loans or the Notes under the blue sky law of
any state. The Lender selling a participation to any bank or
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other entity that is not an Affiliate of such Lender shall give prompt notice
thereof to the Borrowers.
(g) Any Lender may, in connection with any assignment,
proposed assignment, participation or proposed participation pursuant to this
Section 14.1, disclose to the assignee, participant, proposed assignee or
proposed participant, any information relating to the Borrowers furnished to
such Lender by or on behalf of the Borrowers, provided that, prior to any such
disclosure, each such assignee, proposed assignee, participant or proposed
participant shall agree with the Borrowers or such Lender (which in the case of
an agreement with only such Lender, the Borrowers shall be recognized as third
party beneficiaries thereof) to preserve the confidentiality of any confidential
information relating to the Borrowers received from such Lender.
SECTION 14.2. Representation of Lenders. Each Lender hereby
represents that it will make each Loan hereunder as a commercial loan for its
own account in the ordinary course of its business; provided, however, that
subject to Section 13.1 hereof, the disposition of the Notes or other evidence
of the Secured Obligations held by any Lender shall at all times be within its
exclusive control.
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ARTICLE 15
ADMINISTRATIVE AGENT
SECTION 15.1. Appointment of Agent. Each of the Lenders hereby
irrevocably designates and appoints NationsBank, N.A. (South) as the
Administrative Agent of such Lender under this Agreement and the other Loan
Documents, and each Lender irrevocably authorizes the Administrative Agent, as
the Administrative Agent for such Lender, to take such action on its behalf
under the provisions of this Agreement and the other Loan Documents and to
exercise such powers and perform such duties as are expressly delegated to the
Administrative Agent by the terms of this Agreement and such other Loan
Documents, including, without limitation, to make determinations as to the
eligibility of Inventory and Receivables and to adjust the advance ratios
contained in the definition "Borrowing Base" (so long as such advance ratios, as
adjusted, do not exceed those set forth in the definition "Borrowing Base") and
to reduce or eliminate the reserve referred to in clauses (a)(iii) and
(b)(iii)(C) of the definition "Borrowing Base, together with such other powers
as are reasonably incidental thereto. Notwithstanding any provision to the
contrary elsewhere in this Agreement or the other Loan Documents, the
Administrative Agent shall not have any duties or responsibilities, except those
expressly set forth herein and therein, or any fiduciary relationship with any
Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or the other Loan
Documents or otherwise exist against the Administrative Agent.
SECTION 15.2. Delegation of Duties. The Administrative Agent
may execute any of its duties under this Agreement and the other Loan Documents
by or through agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Administrative
Agent shall not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.
SECTION 15.3. Exculpatory Provisions. Neither the
Administrative Agent nor any of its trustees, officers, directors, employees,
agents, attorneys-in-fact or Affiliates shall be (i) liable to any Lender (or
any Lender's participants) for any action lawfully taken or omitted to be taken
by it or such Person under or in connection with this Agreement or the other
Loan Documents (except for its or such Person's own gross negligence or willful
misconduct), or (ii) responsible in any manner to any Lender (or any Lender's
participants) for any recitals, statements, representations or warranties made
by the Borrowers (or any of them) or any officer thereof contained in this
Agreement or the other Loan Documents or in any certificate, report, statement
or other document referred to or provided for in, or received by the
Administrative Agent under or in connection with, this Agreement or
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the other Loan Documents or for the existence, value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or the other Loan
Documents or any Collateral or Real Estate or Lien or other interest therein or
for any failure of the Borrowers (or any of them) to perform its obligations
hereunder or thereunder. The Administrative Agent shall not be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement, or to inspect the properties, books or records of the Borrowers (or
any of them), provided that the Administrative Agent shall perform a field
examination of the Collateral, in accordance with the Administrative Agent's
customary standards and practices for such examinations, at least annually and
shall make the results thereof available to the Lenders.
SECTION 15.4. Reliance by Agent. The Administrative Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
Note, writing, resolution, notice, consent, certificate, affidavit, letter,
cablegram, telegram, telecopy, telex or teletype message, statement, order or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon advice
and statements of legal counsel (including, without limitation, counsel to the
Borrowers), independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent may deem and treat the payee of
any Note as the owner thereof for all purposes unless such Note shall have been
transferred in accordance with Section 14.1. The Administrative Agent shall be
fully justified in failing or refusing to take any action under this Agreement
and the other Loan Documents unless it shall first receive such advice or
concurrence of the Required Lenders as it deems appropriate and shall be
indemnified to its satisfaction by the Lenders against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action. The Administrative Agent shall in all cases be fully protected
in acting, or in refraining from acting, under this Agreement and the Notes in
accordance with a request of the Required Lenders, and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders and all future holders of the Notes.
SECTION 15.5. Notice of Default. The Administrative Agent
shall not be deemed to have knowledge or notice of the occurrence of any Default
or Event of Default hereunder unless the Administrative Agent has received
notice from a Lender or the Borrowers referring to this Agreement, describing
such Default or Event of Default and stating that such notice is a "notice of
default" or the Lender that is the Administrative Agent (which is NationsBank on
the Effective Date) has actual knowledge of such Default or Event of Default, in
which case the Administrative Agent shall be deemed to have received such a
notice. In the event that the Administrative Agent receives or is deemed to have
received such a notice, the Administrative Agent shall promptly give notice
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thereof to the Lenders. The Administrative Agent shall take such action with
respect to such Default or Event of Default as shall be reasonably directed by
the Required Lenders; provided that unless and until the Administrative Agent
shall have received such directions, the Administrative Agent may (but shall not
be obligated to) continue making Revolving Credit Loans to the Borrowers on
behalf of the Lenders in reliance on and subject to the provisions of Section
5.7 and take such other action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interests of the Lenders.
SECTION 15.6. Non-Reliance on Agents and Other Lenders. Each
Lender expressly acknowledges that neither the Administrative Agent nor any
Co-Agent or any of its respective officers, directors, counsel, employees,
agents, attorneys-in-fact or Affiliates has made any representations or
warranties to it and that no act by the Administrative Agent or a Co-Agent
thereafter taken, including any review of the affairs of the Borrowers, shall be
deemed to constitute any representation or warranty by the Administrative Agent
or such Co-Agent to any Lender. Each Lender represents to the Administrative
Agent and the Co-Agents that it has, independently and without reliance upon the
Administrative Agent, any Co-Agent or any other Lender, and based on such
documents and information as it has deemed appropriate, made its own appraisal
of and investigation into the business, operations, property, financial (and
other) condition and creditworthiness of the Borrowers and made its own decision
to make its Loans hereunder and enter into this Agreement. Each Lender also
represents that it will, independently and without reliance upon the
Administrative Agent, any Co-Agent or any other Lender, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit analysis, appraisals and decisions in taking or not taking
action under this Agreement and the other Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial (and other) condition and creditworthiness of
the Borrowers. Except for notices, reports and other documents expressly
required to be furnished to the Lenders by the Administrative Agent hereunder or
under the other Loan Documents, neither the Administrative Agent nor any
Co-Agent shall have any duty or responsibility to provide any Lender with any
credit or other information concerning the business, operations, property,
financial (and other) condition or creditworthiness of the Borrowers which may
come into the possession of the Administrative Agent, any Co-Agent or any of its
respective officers, directors, employees, agents, attorneys-in-fact or
Affiliates.
SECTION 15.7. Indemnification. The Lenders agree to indemnify
each of the Administrative Agent and each Co-Agent in its capacity as such (to
the extent not reimbursed by the Borrowers and without limiting any obligation
of the Borrowers to do so), ratably according to their respective Commitment
Percentages, from and
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against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever which may at any time (including, without limitation, at any time
following the payment of the Notes) be imposed on, incurred by or asserted
against the Administrative Agent or such Co-Agent in any way relating to or
arising out of this Agreement or the other Loan Documents, or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the
Administrative Agent or such Co-Agent under or in connection with any of the
foregoing; provided that no Lender shall be liable for the payment of any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting solely from the
Administrative Agent's or a Co-Agent's gross negligence or willful misconduct or
resulting solely from transactions or occurrences that occur at a time after
such Lender has assigned all of its interests, rights and obligations under this
Agreement pursuant to Section 14.1 or, in the case of a Lender to which an
assignment is made hereunder pursuant to Section 14.1, at a time before such
assignment. The agreements in this subsection shall survive the payment of the
Notes, the Secured Obligations and all other amounts payable hereunder and the
termination of this Agreement.
SECTION 15.8. Agent in Its Individual Capacity. The
institution at the time acting as the Administrative Agent and its Affiliates
may make loans to, accept deposits from and generally engage in any kind of
business with the Borrowers and the Guarantor and their respective Subsidiaries
as if it were not the Administrative Agent hereunder. With respect to its
Commitment, the Loans made or renewed by it and any Note issued to it and any
Letter of Credit issued by it, such institution shall have and may exercise the
same rights and powers under this Agreement and the other Loan Documents and
shall be subject to the same obligations and liabilities as and to the extent
set forth herein and in the other Loan Documents for any other Lender. The terms
"Lenders" and "Required Lenders" or any other term shall, unless the context
clearly otherwise indicates, include such institution in its individual capacity
as a Lender or one of the Required Lenders.
SECTION 15.9. Successor Agent. The Administrative Agent may
resign as Administrative Agent upon 10 days' notice to the Lenders and, if the
Commitment Percentage of the Lender that is the Administrative Agent has been
reduced to less than 10%, may be removed by a vote of the Required Lenders. Any
such resignation shall be effective on the date specified in the Administrative
Agent's notice of resignation, provided that if no successor agent has been
appointed in accordance with the provisions of this Section 15.9 on or before
such date, such effective date may be extended until a successor has been so
appointed, but not for more than 30 days; and any such removal shall be
effective upon the appointment of a successor agent in accordance with the
provisions of this Section 15.9. If the Administrative Agent shall resign or
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be removed as Administrative Agent under this Agreement, then the Required
Lenders shall appoint from among the Lenders a successor agent for the Lenders
which successor agent shall be approved by the Borrowers (which approval shall
not be unreasonably withheld), whereupon such successor agent shall succeed to
the rights, powers and duties of the Administrative Agent, and the term
"Administrative Agent" shall mean such successor agent effective upon its
appointment, and the former Administrative Agent's rights, powers and duties as
Administrative Agent shall be terminated, without any other or further act or
deed on the part of such former Administrative Agent or any of the parties to
this Agreement or any holders of the Notes. After any retiring or removed
Administrative Agent's resignation or removal hereunder as Administrative Agent
becomes effective, the provisions of Section 15.7 shall inure to its benefit as
to any actions taken or omitted to be taken by it while it was Administrative
Agent under this Agreement.
SECTION 15.10. Notices from Agent to Lenders. The
Administrative Agent shall promptly, upon receipt thereof, forward to each
Lender copies of any written notices, reports or other information supplied to
it by the Borrowers (but which the Borrowers are not required to supply directly
to the Lenders).
SECTION 15.11. Co-Agents. For avoidance of doubt, it is
expressly acknowledged and agreed by the Administrative Agent and each Lender
for the benefit of the Co-Agents that, other than the rights explicitly reserved
to the Co-Agents under this Agreement, no Co-Agent, in such capacity, has any
obligations hereunder nor shall any Co-Agent, in such capacity, be responsible
or accountable to any other party hereto for any action or failure to act
hereunder, other than in connection with such explicitly reserved rights and
then only for claims, damages, losses (other than consequential losses) and
other liabilities arising out such Co- Agent's own gross negligence or willful
misconduct.
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ARTICLE 16
MISCELLANEOUS
SECTION 16.1. Notices.
(a) Method of Communication. Except as specifically provided
in this Agreement or in any of the other Loan Documents, all notices and the
communications hereunder and thereunder shall be in writing addressed as
provided in Section 16.1(b) or by telephone, subsequently confirmed in writing.
Notices in writing shall be delivered personally or sent by certified or
registered mail, postage pre-paid, or by overnight courier, telex or facsimile
transmission and shall be deemed received in the case of personal delivery, when
delivered, in the case of mailing, when receipted for, in the case of overnight
delivery, on the next Business Day after delivery to the courier, and in the
case of telex and facsimile transmission, upon transmittal, provided that in the
case of notices to the Administrative Agent pursuant to Articles 2 and 3 and
Section 5.13, notice shall be deemed to have been given only when such notice is
actually received by the Administrative Agent. A telephonic notice to the
Administrative Agent, as understood by the Administrative Agent, will be deemed
to be the controlling and proper notice in the event of a discrepancy with or
failure to receive a confirming written notice.
(b) Addresses for Notices. Notices to any party shall be sent
to it at the following addresses, or any other address of which all the other
parties are notified in writing by such first party:
If to the Borrowers c/o LADD Furniture, Inc.
by mail: P.O. Box HP-3
High Point, North Carolina
27261-1500
or by courier: One Plaza Center
High Point, North Carolina 27261-
1500
in each case: Attn: William S. Creekmuir
Facsimile No.: 910 888-6344
with a courtesy
copy to: Robert Esleeck, Esq.
Petree Stockton, L.L.P.
1001 West Fourth Street
Winston Salem, North Carolina
27101
Facsimile No.: 910 607-7505
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If to the Administra-
tive Agent: NationsBank, N.A. (South)
Business Credit Division
600 Peachtree Street
13 Plaza
Atlanta, Georgia 30308
Attn: David Sapp
Facsimile No.: 404-607-6439
If to a Lender: At the address of such Lender
set forth on the signature
pages hereof.
(c) Agent's Office. The Administrative Agent hereby designates
its office located at 600 Peachtree Street, Atlanta, Georgia 30308, or any
subsequent office which shall have been specified for such purpose by written
notice to the Borrowers, as the office to which payments due are to be made and
at which Loans will be disbursed.
SECTION 16.2. Expenses. The Borrowers agree, jointly and
severally, to pay or reimburse on demand all costs and expenses incurred by the
Administrative Agent, including, without limitation, the reasonable fees and
disbursements of counsel, in connection with
(a) the negotiation, preparation, execution, delivery,
administration, enforcement and termination of this Agreement and each
of the other Loan Documents, whenever the same shall be executed and
delivered, including, without limitation
(i) the out-of-pocket costs and expenses incurred
in connection with the administration and interpretation
of this Agreement and the other Loan Documents;
(ii) the costs and expenses of appraisals of the
Collateral and Real Estate;
(iii) the costs and expenses of lien and title
searches and title insurance;
(iv) the costs and expenses of environmental reports
with respect to the Real Estate;
(v) taxes, fees and other charges for recording the
Mortgages, filing the Financing Statements and continuations
and the costs and expenses of taking other actions to perfect,
protect, and continue the Security
Interests;
(b) as to the preparation, execution and delivery of any
waiver, amendment, supplement or consent by the Administrative
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Agent and the Lenders relating to this Agreement or any of the
Loan Documents;
(c) sums paid or incurred to pay any amount or take any
action required of the Borrowers (or any of them) under the
Loan Documents that the Borrowers fail to pay or take;
(d) costs of inspections and verifications of the Collateral
and Real Estate, including, without limitation, standard per diem fees
charged by the Administrative Agent, travel, lodging, and meals for
inspections of the Collateral and Real Estate and the Borrowers'
operations and books and records by the Administrative Agent's agents
up to four times per year and whenever an Event of Default exists;
(e) costs and expenses of forwarding loan proceeds, collecting
checks and other items of payment, and establishing and maintaining
each Controlled Disbursement Account, Agency
Account and Lockbox;
(f) costs and expenses of preserving and protecting the
Collateral and Real Estate;
(g) consulting, after the occurrence of a Default, with one or
more Persons, including appraisers, accountants and lawyers, concerning
the value of any Collateral for the Secured Obligations or the Real
Estate or related to the nature, scope or value of any right or remedy
of the Administrative Agent or any Lender hereunder or under any of the
Loan Documents, including any review of factual matters in connection
therewith, which expenses shall include the fees and disbursements of
such Persons; and
(h) costs and expenses paid or incurred to obtain payment of
the Secured Obligations, enforce the Security Interests, sell or
otherwise realize upon the Collateral or Real Estate, and otherwise
enforce the provisions of the Loan Documents, or to prosecute or defend
any claim in any way arising out of, related to or connected with, this
Agreement or any of the Loan Documents, which expenses shall include
the reasonable fees and disbursements of counsel and of experts and
other consultants retained by the Administrative Agent or any Lender.
The foregoing shall not be construed to limit any other provisions of the Loan
Documents regarding costs and expenses to be paid by the Borrowers. Each
Borrower hereby authorizes the Administrative Agent and the Lenders to debit
such Borrower's Loan Accounts (by increasing the principal amount of the
Revolving Credit Loan) in the amount of any such costs and expenses owed by the
Borrowers when due.
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SECTION 16.3. Stamp and Other Taxes. The Borrowers will pay
any and all stamp, registration, recordation and similar taxes, fees or charges
and shall indemnify the Administrative Agent and the Lenders against any and all
liabilities with respect to or resulting from any delay in the payment or
omission to pay any such taxes, fees or charges, which may be payable or
determined to be payable in connection with the execution, delivery, performance
or enforcement of this Agreement and any of the Loan Documents or the perfection
of any rights or security interest thereunder, including, without limitation,
the Security Interest.
SECTION 16.4. Setoff. In addition to any rights now or
hereafter granted under Applicable Law and not by way of limitation of any such
rights, during the continuance of any Event of Default, each Lender, any
participant with such Lender in the Loans and each Affiliate of each Lender are
hereby authorized by each Borrower at any time or from time to time, without
notice to the Borrowers or to any other Person, any such notice being hereby
expressly waived, to set off and to appropriate and to apply any and all
deposits (general or special, including, but not limited to, indebtedness
evidenced by certificates of deposit, whether matured or unmatured) and any
other indebtedness at any time held or owing by any Lender or any Affiliate of
any Lender or any participant to or for the credit or the account of any
Borrower against and on account of the Secured Obligations irrespective or
whether or not
(a) the Administrative Agent or such Lender shall have
made any demand under this Agreement or any of the Loan
Documents, or
(b) the Administrative Agent or such Lender shall have
declared any or all of the Secured Obligations to be due and payable as
permitted by Section 13.2 and although such Secured Obligations shall
be contingent or unmatured.
SECTION 16.5. Litigation. THE BORROWERS, THE ADMINISTRATIVE
AGENT AND EACH LENDER HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY WAIVE
TRIAL BY JURY IN ANY ACTION OR PROCEEDING OF ANY KIND OR NATURE IN ANY COURT IN
WHICH AN ACTION MAY BE COMMENCED BY OR AGAINST THE BORROWERS (OR ANY OF THEM),
THE ADMINISTRATIVE AGENT OR SUCH LENDER ARISING OUT OF THIS AGREEMENT, THE
COLLATERAL, THE REAL ESTATE OR ANY ASSIGNMENT THEREOF OR BY REASON OF ANY OTHER
CAUSE OR DISPUTE WHATSOEVER BETWEEN THE BORROWERS (OR ANY OF THEM) AND THE
ADMINISTRATIVE AGENT OR ANY LENDER OF ANY KIND OR NATURE. EACH BORROWER, THE
ADMINISTRATIVE AGENT AND THE LENDERS HEREBY AGREE THAT THE FEDERAL COURT OF THE
NORTHERN DISTRICT OF GEORGIA OR, AT THE OPTION OF THE ADMINISTRATIVE AGENT OR
ANY LENDER, ANY COURT IN WHICH THE ADMINISTRATIVE AGENT OR SUCH LENDER SHALL
INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER
JURISDICTION OVER THE MATTER IN CONTROVERSY, SHALL HAVE NONEXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE BORROWERS
(OR ANY OF THEM) AND THE ADMINISTRATIVE AGENT OR SUCH
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LENDER, PERTAINING DIRECTLY OR INDIRECTLY TO THIS AGREEMENT OR THE LOAN
DOCUMENTS OR TO ANY MATTER ARISING THEREFROM. EACH BORROWER EXPRESSLY SUBMITS
AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING
COMMENCED IN SUCH COURTS, HEREBY WAIVING PERSONAL SERVICE OF THE SUMMONS AND
COMPLAINT, OR OTHER PROCESS OR PAPERS ISSUED THEREIN AND AGREEING THAT SERVICE
OF SUCH SUMMONS AND COMPLAINT OR OTHER PROCESS OR PAPERS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO THE BORROWERS AT THE ADDRESS OF THE
BORROWERS SET FORTH IN SECTION 16.1. THE NONEXCLUSIVE CHOICE OF FORUM SET FORTH
IN THIS SECTION SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT OF ANY JUDGMENT
OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO
ENFORCE SAME IN ANY APPROPRIATE JURISDICTION.
_______ (initials)
SECTION 16.6. Waiver of Rights. EACH BORROWER HEREBY
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY WAIVES ALL RIGHTS WHICH SUCH BORROWER
HAS UNDER CHAPTER 14 OF TITLE 44 OF THE OFFICIAL CODE OF GEORGIA OR UNDER ANY
SIMILAR PROVISION OF APPLICABLE LAW TO NOTICE AND TO A JUDICIAL HEARING PRIOR TO
THE ISSUANCE OF A WRIT OF POSSESSION ENTITLING THE ADMINISTRATIVE AGENT OR ANY
LENDER, OR THE SUCCESSORS AND ASSIGNS OF THE ADMINISTRATIVE AGENT OR SUCH LENDER
TO POSSESSION OF THE COLLATERAL OR REAL ESTATE UPON EVENT OF DEFAULT. WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING AND WITHOUT LIMITING ANY OTHER RIGHT
WHICH THE ADMINISTRATIVE AGENT OR THE LENDERS MAY HAVE, EACH BORROWER CONSENTS
THAT IF LENDER FILES A PETITION FOR AN IMMEDIATE WRIT OF POSSESSION IN
COMPLIANCE WITH SECTIONS 44-14-261 AND 44-14-262 OF THE OFFICIAL CODE OF GEORGIA
OR UNDER ANY SIMILAR PROVISION OF APPLICABLE LAW, AND THIS WAIVER OR A COPY
HEREOF IS ALLEGED IN SUCH PETITION AND ATTACHED THERETO, THE COURT BEFORE WHICH
SUCH PETITION IS FILED MAY DISPENSE WITH ALL RIGHTS AND PROCEDURES HEREIN WAIVED
AND MAY ISSUE FORTHWITH AN IMMEDIATE WRIT OF POSSESSION IN ACCORDANCE WITH
CHAPTER 14 OF TITLE 44 OF THE OFFICIAL CODE OF GEORGIA OR IN ACCORDANCE WITH ANY
SIMILAR PROVISION OF APPLICABLE LAW, WITHOUT THE NECESSITY OF AN ACCOMPANYING
BOND AS OTHERWISE REQUIRED BY SECTION 44-14-263 OF THE OFFICIAL CODE OF GEORGIA
OR BY ANY SIMILAR PROVISION UNDER APPLICABLE LAW. EACH BORROWER HEREBY
ACKNOWLEDGES THAT IT HAS READ AND FULLY UNDERSTANDS THE TERMS OF THIS WAIVER AND
THE EFFECT HEREOF.
______ (initials)
SECTION 16.7. Consent to Advertising and Publicity. With the
prior written consent of the Borrowers, which consent shall not be unreasonably
withheld, the Administrative Agent, on behalf of the Lenders, may issue and
disseminate to the public information describing the credit accommodation
entered into pursuant to this Agreement, including the name and address of each
Borrower, the amount of and a general description of the credit facilities
provided hereunder and of the Borrowers' business.
SECTION 16.8. Reversal of Payments. The Administrative
Agent and each Lender shall have the continuing and exclusive right
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to apply, reverse and re-apply any and all payments to any portion of the
Secured Obligations in a manner consistent with the terms of this Agreement. To
the extent a Borrower makes a payment or payments to the Administrative Agent,
for the account of the Lenders, or any Lender receives any payment or proceeds
of the Collateral or Real Estate for the Borrowers' benefit, which payment(s) or
proceeds or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside and/or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, state or federal law,
common law or equitable cause, then, to the extent of such payment or proceeds
received, the Secured Obligations or part thereof intended to be satisfied shall
be revived and continued in full force and effect, as if such payment or
proceeds had not been received by the Administrative Agent or such Lender.
SECTION 16.9. Injunctive Relief. Each Borrower recognizes
that, in the event such Borrower fails to perform, observe or discharge any of
its obligations or liabilities under this Agreement, any remedy at law may prove
to be inadequate relief to the Administrative Agent and the Lenders; therefore,
each Borrower agrees that if any Event of Default shall have occurred and be
continuing, the Administrative Agent and the Lenders, if the Administrative
Agent or any Lender so requests, shall be entitled to temporary and permanent
injunctive relief without the necessity of proving actual damages.
SECTION 16.10. Accounting Matters. All financial and
accounting calculations, measurements and computations made for any purpose
relating to this Agreement, including, without limitation, all computations
utilized by LADD to determine whether the Borrowers are in compliance with any
covenant contained herein, shall, unless this Agreement otherwise provides or
unless Required Lenders shall otherwise consent in writing, be performed in
accordance with GAAP.
SECTION 16.11. Amendments.
(a) Except as set forth in subsection (b) below, any term,
covenant, agreement or condition of this Agreement or any of the other Loan
Documents may be amended or waived, and any departure therefrom may be consented
to by the Required Lenders, if, but only if, such amendment, waiver or consent
is in writing signed by the Required Lenders and, in the case of an amendment
(other than an amendment described in Section 16.11(d)), by the Borrowers,
provided that no such amendment, unless consented to by the Administrative
Agent, shall alter or affect the rights or responsibilities of the
Administrative Agent, and in any such event, the failure to observe, perform or
discharge any such term, covenant, agreement or condition (whether such
amendment is executed or such waiver or consent is given before or after such
failure) shall not be construed as a breach of such term, covenant, agreement or
condition or as a Default or an Event of Default.
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Unless otherwise specified in such waiver or consent, a waiver or consent given
hereunder shall be effective only in the specific instance and for the specific
purpose for which given. In the event that any such waiver or amendment is
requested by the Borrowers, the Administrative Agent and the Lenders may require
and charge a fee in connection therewith and consideration thereof in such
amount as shall be determined by the Administrative Agent and the Required
Lenders in their discretion.
(b) Without the prior unanimous written consent of the
Lenders,
(i) no amendment, consent or waiver shall (A) affect
the amount or extend the time of the obligation of any Lender to make
Loans or (B) extend the originally scheduled time or times of payment
of the principal of any Loan or (C) alter the time or times of payment
of interest on any Loan or of any fees payable for the account of the
Lenders or (D) alter the amount of the principal of any Loan or the
rate of interest thereon or (E) alter the amount of any commitment fee
or other fee payable hereunder for the account of the Lenders or (F)
permit any subordination of the principal of or interest on any Loan or
(G) permit the subordination of the Security Interests in any
Collateral or Real Estate,
(ii) no Collateral or Real Estate having an aggregate value
greater than $500,000 shall be released by the Administrative Agent in
any 12-month period other than as specifically permitted in this
Agreement or the Security Documents nor shall any Collateral or Real
Estate be released at a time when the Administrative Agent is entitled
to exercise remedies hereunder upon default, nor shall the Borrowers
(or any of them) be released from liability for the Secured
Obligations,
(iii) except to the extent expressly provided in
Sections 5.7 and 15.1, the definition "Borrowing Base" shall
not be amended,
(iv) none of the provisions of this Section 16.11, of
Section 5.8(e), of the definitions "Lenders," "Proportionate Share,"
"Ratable Share" or "Required Lenders" or, if it alters the effect of
such definitions or other provisions enumerated in this clause (iv), of
any other defined term used in such definitions or provisions, or the
provisions of Article 13 shall be amended, and
(v) neither the Administrative Agent nor any Lender shall
consent to any amendment to or waiver of the amortization, deferral or
subordination provisions of any instrument or agreement evidencing or
relating to obligations of the Borrowers (or any of them) that are
expressly subordinate to any of the Secured Obligations if such
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amendment or waiver would be adverse to the Lenders in their
capacities as Lenders hereunder;
provided, however, that anything herein to the contrary notwithstanding, the
Required Lenders shall have the right to waive any Default or Event of Default
and the consequences hereunder of such Default or Event of Default provided only
that such Default or Event of Default does not arise under Section 13.1(g) or
(h) or out of a breach of or failure to perform or observe any term, covenant or
condition of this Agreement or any other Loan Document (other than the
provisions of Article 13 of this Agreement) the amendment of which requires the
unanimous consent of the Lenders. The Required Lenders shall have the right,
with respect to any Default or Event of Default that may be waived by them, to
enter into an agreement with the Borrowers providing for the forbearance from
the exercise of any remedies provided hereunder or under the other Loan
Documents without thereby waiving any such Default or Event of Default.
(c) The making of Loans hereunder by the Lenders during the
existence of a Default or Event of Default shall not be deemed to constitute a
waiver of such Default or Event of Default.
(d) Notwithstanding any provision of this Agreement or the
other Loan Documents to the contrary, no consent, written or otherwise, of the
Borrowers (or any of them) shall be necessary or required in connection with any
amendment to Article 15 or Section 5.8, and any amendment to such provisions may
be effected solely by and among the Administrative Agent and the Lenders,
provided that no such amendment shall impose any obligation on the Borrowers.
SECTION 16.12. Assignment. All the provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, except that no Borrower may assign
or transfer any of its rights under this Agreement.
SECTION 16.13. Performance of Borrowers' Duties.
(a) The Borrowers' obligations under this Agreement and each
of the Loan Documents shall be performed by the Borrowers at their sole cost and
expense.
(b) If the Borrowers shall fail to do any act or thing which
they have covenanted to do under this Agreement or any of the Loan Documents,
the Administrative Agent, on behalf of the Lenders, may (but shall not be
obligated to) do the same or cause it to be done either in the name of the
Administrative Agent or the Lenders or in the name and on behalf of the
Borrowers, and each Borrower hereby irrevocably authorizes the Administrative
Agent so to act.
SECTION 16.14. Indemnification. The Borrowers agree,
jointly and severally, to reimburse the Administrative Agent and
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the Lenders for all costs and expenses, including reasonable counsel fees and
disbursements, incurred, and to indemnify and hold the Administrative Agent and
the Lenders harmless from and against all losses suffered by, the Administrative
Agent or any Lender in connection with
(a) the exercise by the Administrative Agent or any
Lender of any right or remedy granted to it under this
Agreement or any of the Loan Documents,
(b) any claim, and the prosecution or defense thereof,
arising out of or in any way connected with this Agreement or
any of the Loan Documents, and
(c) the collection or enforcement of the Secured
Obligations or any of them,
other than such costs, expenses and liabilities arising out of the
Administrative Agent's or any Lender's gross negligence or willful misconduct.
SECTION 16.15. All Powers Coupled with Interest. All powers of
attorney and other authorizations granted to the Administrative Agent and the
Lenders and any Persons designated by the Administrative Agent or the Lenders
pursuant to any provisions of this Agreement or any of the Loan Documents shall
be deemed coupled with an interest and shall be irrevocable so long as any of
the Secured Obligations remain unpaid or unsatisfied.
SECTION 16.16. Survival. Notwithstanding any termination
of this Agreement,
(a) until all Secured Obligations have been irrevocably paid
in full or otherwise satisfied, the Administrative Agent, for the benefit of the
Lenders, shall retain its Security Interest and shall retain all rights under
this Agreement and each of the Security Documents with respect to such
Collateral and Real Estate as fully as though this Agreement had not been
terminated,
(b) the indemnities to which the Administrative Agent and the
Lenders are entitled under the provisions of this Article 16 and any other
provision of this Agreement and the Loan Documents shall continue in full force
and effect and shall protect the Administrative Agent and the Lenders against
events arising after such termination as well as before, and
(c) in connection with the termination of this Agreement and
the release and termination of the Security Interests, the Administrative Agent,
on behalf of itself as agent and the Lenders, may require such assurances and
indemnities as it shall reasonably deem necessary or appropriate to protect the
Administrative Agent and the Lenders against loss on account of such release and
termination, including, without limitation, with respect to credits
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previously applied to the Secured Obligations that may subsequently
be reversed or revoked.
SECTION 16.17. Titles and Captions. Titles and captions of
Articles, Sections and subsections in this Agreement are for convenience only,
and neither limit nor amplify the provisions of this Agreement.
SECTION 16.18. Severability of Provisions. Any provision of
this Agreement or any Loan Document which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only to the extent
of such prohibition or unenforceability without invalidating the remainder of
such provision or the remaining provisions hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.
SECTION 16.19. Governing Law. This Agreement, the Notes and
the Security Documents (except to the extent otherwise expressly set forth
therein) shall be deemed to have been made in the State of Georgia and the
validity, construction, interpretation and enforcement hereof and thereof and
the rights of the parties hereto and thereto shall be determined under, governed
by and construed in accordance with the internal laws of the State of Georgia,
without regard to principles of conflicts of law, except that the waiver
contained in the first sentence of Section 16.5 shall be construed in accordance
with and governed by the internal laws of the jurisdiction in which any such
action or proceeding is commenced.
SECTION 16.20. 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 shall be binding upon all parties, their successors and assigns, and all of
which taken together shall constitute one and the same agreement.
SECTION 16.21. Reproduction of Documents. This Agreement, each
of the Loan Documents and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by the Administrative Agent or any Lender, and
(c) financial statements, certificates and other information previously or
hereafter furnished to the Administrative Agent or any Lender, may be reproduced
by the Administrative Agent or such Lender by any photographic, photostatic,
microfilm, microcard, miniature photographic or other similar process and such
Person may destroy any original document so produced. Each party hereto
stipulates that, to the extent permitted by Applicable Law, any such
reproduction shall be as admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original shall be in
existence and whether or not such reproduction was made by the Administrative
Agent or such
152
<PAGE>
Lender in the regular course of business), and any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence.
SECTION 16.22. Term of Agreement. This Agreement shall remain
in effect from the Agreement Date through the Termination Date and thereafter
until all Secured Obligations shall have been irrevocably paid and satisfied in
full. No termination of this Agreement shall affect the rights and obligations
of the parties hereto arising prior to such termination.
SECTION 16.23. Increased Capital. If any Lender shall have
determined that the adoption of any applicable law, rule, regulation, guideline,
directive or request (whether or not having force of law) regarding capital
requirements for banks or bank holding companies, or any change therein or in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by such Lender with any of the foregoing
imposes or increases a requirement by such Lender to allocate capital resources
to such Lender's Commitment to make Loans hereunder which has or would have the
effect of reducing the return on such Lender's capital to a level below that
which such Lender could have achieved (taking into consideration such Lender's
then existing policies with respect to capital adequacy and assuming full
utilization of such Lender's capital) but for such adoption, change or
compliance by any amount deemed by such Lender to be material: (i) such Lender
shall promptly after its determination of such occurrence give notice thereof to
the Borrower; and (ii) the Borrower shall pay to such Lender as an additional
fee from time to time on demand such amount as such Lender certifies to be the
amount that will compensate it for such reduction. A certificate of such Lender
claiming compensation under this Section 16.23 shall be conclusive in the
absence of manifest error. Such certificate shall set forth the nature of the
occurrence giving rise to such compensation, the additional amount or amounts to
be paid to it hereunder and the method by which such amounts were determined. In
determining such amount, such Lender may use any reasonable averaging and
attribution methods.
SECTION 16.24. Pro-Rata Participation.
(a) Each Lender agrees that if, as a result of the exercise of
a right of setoff, banker's lien or counterclaim or other similar right or the
receipt of a secured claim it receives any payment in respect of the Secured
Obligations, it shall promptly notify the Administrative Agent thereof (and the
Administrative Agent shall promptly notify the other Lenders). If, as a result
of such payment, such Lender receives a greater percentage of the Secured
Obligations owed to it under this Agreement than the percentage received by any
other Lender, such Lender shall purchase a participation (which it shall be
deemed to have purchased simultaneously upon the receipt of such payment) in
153
<PAGE>
the Secured Obligations then held by such other Lenders so that all such
recoveries of principal and interest with respect to all Secured Obligations
owed to each Lender shall be pro rata on the basis of its respective amount of
the Secured Obligations owed to all Lenders, provided that if all or part of
such proportionately greater payment received by such purchasing Lender is
thereafter recovered by or on behalf of the Borrowers from such Lender, such
purchase shall be rescinded and the purchase price paid for such participation
shall be returned to such Lender to the extent of such recovery, but without
interest.
(b) Each Lender which receives such a secured claim shall, to
the extent practicable, exercise its rights in respect of such secured claim in
a manner consistent with the rights of the Lenders entitled under this Section
16.24 to share in the benefits of any recovery on such secured claim.
(c) Each Borrower expressly consents to the foregoing
arrangements and agrees that any holder of a participation in any Secured
Obligation so purchased or otherwise acquired of which such Borrower has
received notice may exercise any and all rights of banker's lien, set-off or
counterclaim with respect to any and all monies owing by such Borrower to such
holder as fully as if such holder were a holder of such Secured Obligation in
the amount of the participation held by such holder.
SECTION 16.25. Confidentiality. The Administrative Agent, the
Co-Agents and each Lender agrees (for itself and its Affiliates, directors,
officers, employees and representatives) to use reasonable precautions to keep
confidential, in accordance with their customary procedures for handling
confidential information of this nature and in accordance with safe and sound
banking practices, any non-public information supplied to it by the Borrowers
(or any of them) pursuant to this Agreement which is identified by such
Borrowers as being confidential the time the same is delivered to the
Administrative Agent, the Co-Agents or the Lenders, provided that nothing herein
shall limit the disclosure of any such information (a) to the extent required by
statute, rule, regulation or judicial process, (b) to counsel for the
Administrative Agent, any Co-Agent or any Lender, (c) to bank examiners,
auditors or accountants or other professional advisors involved in the
administration of the transactions contemplated hereby and by the other Loan
Documents, (d) to the Administrative Agent, the Co-Agents or any Lender or to
any Affiliate of the disclosing party, (e) in connection with any litigation or
dispute to which any one or more of the Lenders is a party, (f) to any assignee
or participant so long as such assignee or participant (or prospective assignee
or participant) agree in writing with the relevant Lender to be bound, mutatis
mutandis, by the provisions of this Section 16.25, or (g) to the extent such
information has been received from any Person not bound by a duty of
confidentiality; provided, further, that, unless specifically prohibited by
Applicable Law, each Lender shall, prior to disclosure thereof,
154
<PAGE>
notify the Borrowers of any request for disclosure of any such non-public
information (i) by any governmental agency or representative thereof (other than
any such request in connection with an examination of the financial condition of
such Lender by such governmental agency) or (ii) pursuant to legal process; and
provided finally that in no event shall the Administrative Agent, any Co-Agent
or any Lender be obligated or required to return any materials furnished by the
Borrowers. The obligations of the Administrative Agent, each Co-Agent and any
Lender under this Section 16.25 shall supersede and replace the obligations of
such Person under any confidentiality agreement or letter in respect of the
transactions contemplated by this Agreement and signed by such Person and
delivered by such Person to the Borrowers (or any of them) prior to the
Effective Date.
155
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers in several
counterparts all as of the day and year first written above.
BORROWERS:
LADD FURNITURE, INC.
[Corporate Seal]
Attest: By:___________________________
William S. Creekmuir
By:_________________________ Executive Vice President
Name: ___________________
Title: __________________
AMERICAN FURNITURE COMPANY,
INCORPORATED
[Corporate Seal]
Attest: By:___________________________
William S. Creekmuir
By:_________________________ Vice President
Name: ___________________
Title: __________________
LEA INDUSTRIES, INC.
(a North Carolina corporation)
[Corporate Seal]
Attest: By:___________________________
William S. Creekmuir
By:_________________________ Vice President
Name: ___________________
Title: __________________
BARCLAY FURNITURE CO.
[Corporate Seal]
Attest: By:___________________________
William S. Creekmuir
By:_________________________ Vice President
Name: ___________________
Title: __________________
156
<PAGE>
CLAYTON-MARCUS COMPANY, INC.
[Corporate Seal]
Attest: By:___________________________
William S. Creekmuir
By:_________________________ Vice President
Name: ___________________
Title: __________________
LADD CONTRACT SALES CORP.
[Corporate Seal]
Attest: By:___________________________
William S. Creekmuir
By:_________________________ Vice President
Name: ___________________
Title: __________________
PENNSYLVANIA HOUSE, INC.
[Corporate Seal]
Attest: By:___________________________
William S. Creekmuir
By:_________________________ Vice President
Name: ___________________
Title: __________________
PILLIOD FURNITURE, INC.
[Corporate Seal]
Attest: By:___________________________
William S. Creekmuir
By:_________________________ Vice President
Name: ___________________
Title: __________________
LADD TRANSPORTATION, INC.
[Corporate Seal]
Attest: By:___________________________
William S. Creekmuir
By:_________________________ Vice President
Name: ___________________
Title: __________________
157
<PAGE>
LADD INTERNATIONAL SALES CORP.
[Corporate Seal]
Attest: By:___________________________
William S. Creekmuir
By:_________________________ Vice President
Name: ___________________
Title: __________________
ADMINISTRATIVE AGENT:
NATIONSBANK, N.A. (SOUTH)
By:___________________________
Reece Chapman
Senior Vice President
Address: 600 Peachtree Street
13 Plaza
Atlanta, Georgia 30308
Attn: Business Credit
Facsimile No.: 404-607-6437
CO-AGENTS:
NATIONSBANK, N.A. (SOUTH)
By:___________________________
Reece Chapman
Senior Vice President
Address: 600 Peachtree Street
13 Plaza
Atlanta, Georgia 30308
Attn: Business Credit
Facsimile No.: 404-607-6437
158
<PAGE>
FLEET CAPITAL CORPORATION
By: _________________________
Name:
Title:
Address: 300 Galleria Parkway
Suite 800
Atlanta, Georgia 30339
Attn: John W. Getz
Facsimile No.: 770-859-
159
<PAGE>
LENDERS:
NATIONSBANK, N.A. (SOUTH)
By:___________________________
Reece Chapman
Senior Vice President
Address: 600 Peachtree Street
13 Plaza
Atlanta, Georgia 30308
Attn: Business Credit
Facsimile No.: 404-607-6437
160
<PAGE>
FLEET CAPITAL CORPORATION
By: _________________________
John W. Getz
Title:
Address: 300 Galleria Parkway
Suite 800
Atlanta, Georgia 30339
Attn:
Facsimile No.: 770-859-
161
<PAGE>
BANKAMERICA BUSINESS CREDIT
By:___________________________
Victor Alfirevic
Vice President
Address: BankAmerica Business Credit,
Inc.
Two North Lake Avenue,
Suite 400
Attn: Victor Alfirevic
Facsimile No.: 818-796-3358
162
<PAGE>
EXHIBIT A
FORM OF REVOLVING CREDIT NOTE
$____________________ Atlanta, Georgia
_________ ___, 1996
FOR VALUE RECEIVED, the undersigned, LADD FURNITURE, INC., a North
Carolina corporation, AMERICAN FURNITURE COMPANY, INCORPORATED, a Virginia
corporation, BARCLAY FURNITURE CO., a Mississippi corporation, CLAYTON-MARCUS
COMPANY, INC., a North Carolina corporation, LADD CONTRACT SALES CORPORATION, a
North Carolina corporation, LADD INTERNATIONAL SALES CORP., a Barbados
corporation, LADD TRANSPORTATION, INC., a North Carolina corporation,, LEA
INDUSTRIES, INC. (NORTH CAROLINA), a North Carolina corporation, PENNSYLVANIA
HOUSE, INC., a North Carolina corporation and PILLIOD FURNITURE, INC., a North
Carolina corporation, (collectively, the "Borrowers"), hereby jointly and
severally unconditionally promise to pay to the order of
___________________________ (the "Lender") at the offices of NationsBank, N.A.
(South), a national banking association, as administrative agent for the Lenders
(together with its successor agents the "Administrative Agent") located at 600
Peachtree Street, N.E., Atlanta, Georgia, 30308, or at such other place within
the United States as shall be designated from time to time by the Administrative
Agent, on the Termination Date, the principal amount of
____________________________________ AND NO/100 DOLLARS ($_____________.00), or
such lesser principal amount as may then constitute the aggregate unpaid balance
of all Revolving Credit Loans made by the Lender to the Borrowers pursuant to
the Loan Agreement (as hereinafter defined), in lawful money of the United
States of America in federal or other immediately available funds.
The Borrowers also jointly and severally unconditionally promise to pay
interest on the unpaid principal amount of this Note outstanding from time to
time for each day from the date of disbursement until such principal amount is
paid in full at the rates per annum and on the dates specified in the Loan
Agreement applicable from time to time in accordance with the provisions
thereof. Nothing contained in this Note or in the Loan Agreement shall be deemed
to establish or require the payment of a rate of interest in excess of the
maximum rate permitted by any Applicable Law. In the event that any rate of
interest required to be paid hereunder exceeds the maximum rate permitted by
Applicable Law, the provisions of the Loan Agreement relating to the payment of
interest under such circumstances shall control.
This Note is one of the Revolving Credit Notes referred to in that
certain Loan and Security Agreement dated as of July ___, 1996 (as amended,
modified, supplemented or restated from time to time, the "Loan Agreement";
terms defined therein being used in this Note as therein defined) among the
Borrowers, the financial institutions party thereto from time to time (the
"Lenders"), NationsBank, N.A. (South), a national banking association and Fleet
Capital Corporation, a Rhode Island corporation, as agents for the Lenders (the
"Co-Agents"), and the Administrative Agent, is subject to, and entitled to, all
provisions and benefits of the Loan Documents, is secured by the Collateral and
other property as provided in the Loan Documents, is
<PAGE>
subject to optional and mandatory prepayment in whole or in part and is subject
to acceleration prior to maturity upon the occurrence of one or more Events of
Default, all as provided in the Loan Documents.
Presentment for payment, demand, protest and notice of demand, notice
of dishonor, notice of non-payment and all other notices are hereby waived by
the Borrowers, except to the extent expressly provided in the Loan Agreement. No
failure to exercise, and no delay in exercising, any rights hereunder on the
part of the holder hereof shall operate as a waiver of such rights.
The Borrowers hereby jointly and severally agree to pay on demand all
costs and expenses incurred in collecting the Secured Obligations hereunder or
in enforcing or attempting to enforce any of the Lender's rights hereunder,
including, but not limited to, reasonable attorneys' fees and expenses if
collected by or through an attorney, whether or not suit is filed.
The provisions of Section 16.5 of the Loan Agreement are hereby
expressly incorporated by reference herein.
This Revolving Credit Note shall be governed by, and construed in
accordance with, the laws of the State of Georgia without giving effect to the
conflict of laws principles thereof.
IN WITNESS WHEREOF, the undersigned has executed the Revolving Credit
Note as of the day and year first above written.
BORROWERS:
LADD FURNITURE, INC.
[Corporate Seal]
Attest: By:
Name:
By: Title:
Name:
Title:
[signatures continued on following page]
(viii)
<PAGE>
[signatures continued from preceding page]
AMERICAN FURNITURE COMPANY,
INCORPORATED
[Corporate Seal]
Attest: By:
Name:
By: Title:
Name:
Title:
BARCLAY FURNITURE CO.
[Corporate Seal]
Attest: By:
Name:
By: Title:
Name:
Title:
CLAYTON-MARCUS COMPANY, INC.
[Corporate Seal]
Attest: By:
Name:
By: Title:
Name:
Title:
LADD CONTRACT SALES CORPORATION
[Corporate Seal]
Attest: By:
Name:
By: Title:
Name:
Title:
[signatures continued on following page]
(ix)
<PAGE>
[signatures continued from preceding page]
LADD INTERNATIONAL SALES CORP.
[Corporate Seal]
Attest: By:
Name:
By: Title:
Name:
Title:
LADD TRANSPORTATION, INC.
[Corporate Seal]
Attest: By:
Name:
By: Title:
Name:
Title:
LEA INDUSTRIES, INC. (NORTH
CAROLINA)
[Corporate Seal]
Attest: By:
Name:
By: Title:
Name:
Title:
PENNSYLVANIA HOUSE, INC.
[Corporate Seal]
Attest: By:
Name:
By: Title:
Name:
Title:
[signatures continued on following page]
(x)
<PAGE>
[signatures continued from preceding page]
PILLIOD FURNITURE, INC.
[Corporate Seal]
Attest: By:
Name:
By: Title:
Name:
Title:
(xi)
<PAGE>
EXHIBIT B
FORM OF TERM NOTE
$____________________ Atlanta, Georgia
________ ___, 1996
FOR VALUE RECEIVED, the undersigned, LADD FURNITURE, INC., a North
Carolina corporation, AMERICAN FURNITURE COMPANY, INCORPORATED, a Virginia
corporation, BARCLAY FURNITURE CO., a Mississippi corporation, CLAYTON-MARCUS
COMPANY, INC., a North Carolina corporation, LADD CONTRACT SALES CORPORATION, a
North Carolina corporation, LADD INTERNATIONAL SALES CORP., a Barbados
corporation, LADD TRANSPORTATION, INC., a North Carolina corporation, LEA
INDUSTRIES, INC. (NORTH CAROLINA), a North Carolina corporation, PENNSYLVANIA
HOUSE, INC., a North Carolina corporation and PILLIOD FURNITURE, INC., a North
Carolina corporation, (collectively, the "Borrowers"), hereby jointly and
severally unconditionally promise to pay to the order of
___________________________ (the "Lender") at the offices of NationsBank, N.A.
(South), a
national banking association, as administrative agent for the Lenders (together
with its successor agents the "Administrative Agent") located at 600 Peachtree
Street, N.E., Atlanta, Georgia, 30308, or at such other place within the United
States as shall be designated from time to time by the Administrative Agent, the
principal amount of ____________________________________ AND NO/100 DOLLARS
($_____________.00), constituting the Term Loan made by the Lender to the
Borrowers pursuant to the Loan Agreement (as hereinafter defined), in lawful
money of the United States of America in federal or other immediately available
funds, in such amounts and on the dates specified in the Loan Agreement
applicable from time to time in accordance with the provisions thereof.
The Borrowers also jointly and severally unconditionally promise to pay
interest on the unpaid principal amount of this Note outstanding from time to
time for each day from the date of disbursement until such principal amount is
paid in full at the rates per annum and on the dates specified in the Loan
Agreement applicable from time to time in accordance with the provisions
thereof. Nothing contained in this Note or in the Loan Agreement shall be deemed
to establish or require the payment of a rate of interest in excess of the
maximum rate permitted by any Applicable Law. In the event that any rate of
interest required to be paid hereunder exceeds the maximum rate permitted by
Applicable Law, the provisions of the Loan Agreement relating to the payment of
interest under such circumstances shall control.
This Note is the Term Note referred to in that certain Loan and
Security Agreement dated as of July ___, 1996 (as amended, modified,
supplemented or restated from time to time, the "Loan Agreement"; terms defined
therein being used in this Note as therein defined) among the Borrowers, the
financial institutions party thereto from time to time (the "Lenders"),
NationsBank, N.A. (South), a national banking association and Fleet Capital
Corporation, a Rhode Island corporation, as agents for the Lenders (the
"Co-Agents"), and the Administrative Agent, is subject
<PAGE>
to, and entitled to, all provisions and benefits of the Loan Documents, is
secured by the Collateral and other property as provided in the Loan Documents,
is subject to optional and mandatory prepayment in whole or in part and is
subject to acceleration prior to maturity upon the occurrence of one or more
Events of Default, all as provided in the Loan Documents.
Presentment for payment, demand, protest and notice of demand, notice
of dishonor, notice of non-payment and all other notices are hereby waived by
the Borrowers, except to the extent expressly provided in the Loan Agreement. No
failure to exercise, and no delay in exercising, any rights hereunder on the
part of the holder hereof shall operate as a waiver of such rights.
The Borrowers hereby jointly and severally agree to pay on demand all
costs and expenses incurred in collecting the Secured Obligations hereunder or
in enforcing or attempting to enforce any of the Lender's rights hereunder,
including, but not limited to, reasonable attorneys' fees and expenses if
collected by or through an attorney, whether or not suit is filed.
The provisions of Section 16.5 of the Loan Agreement are hereby
expressly incorporated by reference herein.
This Term Note shall be governed by, and construed in accordance with,
the laws of the State of Georgia without giving effect to the conflict of laws
principles thereof.
IN WITNESS WHEREOF, the undersigned have executed the Term Note as of
the day and year first above written.
BORROWERS:
LADD FURNITURE, INC.
[Corporate Seal]
Attest: By:
Name:
By: Title:
Name:
Title:
[signatures continued on following page]
(xiii)
<PAGE>
[signatures continued from preceding page]
AMERICAN FURNITURE COMPANY,
INCORPORATED
[Corporate Seal]
Attest: By:
Name:
By: Title:
Name:
Title:
BARCLAY FURNITURE CO.
[Corporate Seal]
Attest: By:
Name:
By: Title:
Name:
Title:
CLAYTON-MARCUS COMPANY, INC.
[Corporate Seal]
Attest: By:
Name:
By: Title:
Name:
Title:
LADD CONTRACT SALES CORPORATION
[Corporate Seal]
Attest: By:
Name:
By: Title:
Name:
Title:
[signatures continued on following page]
(xiv)
<PAGE>
[signatures continued from preceding page]
LADD INTERNATIONAL SALES CORP.
[Corporate Seal]
Attest: By:
Name:
By: Title:
Name:
Title:
LADD TRANSPORTATION, INC.
[Corporate Seal]
Attest: By:
Name:
By: Title:
Name:
Title:
LEA INDUSTRIES, INC. (NORTH
CAROLINA)
[Corporate Seal]
Attest: By:
Name:
By: Title:
Name:
Title:
PENNSYLVANIA HOUSE, INC.
[Corporate Seal]
Attest: By:
Name:
By: Title:
Name:
Title:
[signatures continued on following page]
(xv)
<PAGE>
[signatures continued from preceding page]
PILLIOD FURNITURE, INC.
[Corporate Seal]
Attest: By:
Name:
By: Title:
Name:
Title:
(xvi)
<PAGE>
NEWS RELEASE
FOR IMMEDIATE RELEASE
July 18, 1996
Contact: John J. Ong
Phone: (910) 888-6353
LADD COMPLETES $190 MILLION BANK FINANCING
HIGH POINT, NC - Fred L. Schuermann, Jr., president and chief executive
officer of LADD Furniture, Inc., announced today that the corporation has
completed a new $190 million bank financing agreement. Schuermann commented,
"This new agreement provides LADD with considerable financial flexibility and
the credit availability to continue implementing management's aggressive
turnaround plans." The new facility will be used to refinance LADD's outstanding
bank debt and provide additional liquidity.
LADD executive vice president and chief financial officer William S.
Creekmuir said the new secured financing facility, underwritten by a bank group
led by NationsBank, consists of a $125 million three-year revolving credit
facility and a $65 million term loan. Creekmuir said, "The new arrangement
represents a strong vote of confidence on the part of the lending group in both
LADD's management team and our future plans." He concluded, "At current
borrowing levels, the company's interest expense will increase marginally under
the new facility."
Headquartered in High Point, NC, LADD is one of the largest North
American manufacturers of residential furniture. LADD markets its wide range of
residential wood and upholstered furniture domestically under the major brand
names American Drew, American of Martinsville, Barclay, Clayton Marcus,
Kenbridge, Lea, Pennsylvania House and Pilliod, and exports these same brand
names products worldwide through LADD International. Under the American of
Martinsville name, LADD is also one of the world's leading suppliers of guest
room furniture to the hotel/motel industry, as well as to health care
facilities, retirement homes and governmental and university dormitory markets.
LADD also owns and operates LADD transportation, a support company. LADD's stock
is traded on the over-the-counter National Market System under the Nasdaq symbol
LADF.
<PAGE>
NEWS RELEASE
FOR IMMEDIATE RELEASE
July 22, 1996
(LADD Furniture, Inc. logo appears here) Contact: John J. Ong
One Plaza Center Box HP3 (910) 888-6353
High Point, NC 27261-1500 E-mail: [email protected]
LADD REPORTS $1.2 MILLION SECOND QUARTER PROFIT
HIGH POINT, NC LADD Furniture, Inc. today reported a net profit of
$1.2 million or $0.15 per share for this year's second quarter, compared to a
net loss of $27.3 million or $3.54 per share in the same quarter of fiscal 1995.
The year-earlier loss included a pretax restructuring charge of $25.7 million
and a pretax non-cash charge of $10.2 million. Net sales for this year's second
quarter declined to $127.1 million from $149.0 million in the same period of
fiscal 1995, with the decline resulting from LADD's divestiture of several of
its business units during late 1995 and early 1996.
For the first six months of 1996, net sales declined to $265.9
million from $302.4 million a year earlier, reflecting the absence of the
divested businesses from this year's sales figures. A net loss of $5.8 million
or $0.76 per share was incurred in the first half of 1996, compared to a
year-earlier net loss of $27.3 million or $3.54 per share.
LADD president and CEO Fred L. Schuermann, Jr. said, "Excluding the
four divestiture companies, our 1996 second quarter net sales increased slightly
to $122.4 million from $120.9 million in the same quarter of 1995. According to
Schuermann, LADD's 1996 second quarter results were affected by a number of
factors, including a gain realized as a result of the company's
previously-announced curtailment of its retiree health care insurance program,
partially offset by increased bad debt reserves and allowances for potential
losses on discontinued products.
"Overall," Schuermann said, "we made significant progress toward
turning LADD's operating results around during the second quarter. We expect to
see further improvement in operating results in forthcoming quarters,
particularly as some of our recent cost reduction and management reorganization
actions begin to positively affect the company's profit margins." Schuermann
expressed some disappointment with the current trend of U.S. furniture sales,
noting that a number of retailers continued to report declining same store sales
through mid-year. "We hope this is only a temporary lull," Schuermann said, "and
that recent strength in U.S. housing activity will begin to translate into
improved consumer demand for furniture in the second half of the year."
- OVER -
The LADD family of fine furniture companies
Lea Industries (BULLET) American Drew (BULLET) Clayton Marcus (BULLET) Barclay
American of Martinsville (BULLET) Kenbridge (BULLET)
Pennsylvania House (BULLET) Pilliod
<PAGE>
Schuermann added that LADD has been unable to consummate the sale of
its Daystrom Furniture operation as an ongoing business, and said the previously
announced close-down of the company is nearing completion. "We are expecting to
be able to collect Daystrom's receivables and sell its equipment during the
third quarter of this year, and we will also sell the Daystrom plant, although
this will probably take additional time," he said.
Executive vice president and chief financial officer William S.
Creekmuir said he was pleased that the company's total debt was reduced by $4.1
million during the second quarter. Creekmuir also noted that LADD last week
completed a new $190 million secured bank financing agreement, which was used to
refinance the company's outstanding bank debt and provide additional liquidity.
The facility consists of a $125 million three-year revolving credit facility and
a $65 million term loan. Creekmuir said, "This new financing arrangement
represents a strong vote of confidence on the part of the lending group in
LADD's management team and our future plans." He concluded, "At current
borrowing levels, the company's interest expense will increase marginally under
the new credit facility."
Headquartered in High Point, NC, LADD is one of the largest North
American manufacturers of residential furniture. LADD markets its wide range of
residential wood and upholstered furniture domestically under the major brand
names American Drew, American of Martinsville, Barclay, Clayton Marcus,
Kenbridge, Lea, Pennsylvania House and Pilliod, and exports these same brand
name products worldwide through LADD International. Under the American of
Martinsville name, LADD is also one of the world's leading suppliers of guest
room furniture to the hotel/motel industry, as well as to health care
facilities, retirement homes and governmental and university dormitory markets.
LADD also owns and operates LADD Transportation, a support company. LADD's stock
is traded on the Nasdaq National Market under the symbol LADF.
TABLE FOLLOWS
#######
NOTE: To receive fax copies of recent LADD news releases free of charge, just
dial 800-758-5804, extension 501325. These releases are also available via the
Internet @www.prnewswire.com ("Company news").
<PAGE>
LADD FURNITURE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (PRELIMINARY AND UNAUDITED)
13 WEEKS ENDED
JUNE 29, 1996 JULY 1, 1995
Net sales $127,096,000 148,989,000
Earnings (loss) before interest
and income taxes 4,115,000 (41,221,000)
Interest expense 3,058,000 2,846,000
Earnings (loss) before income taxes 1,057,000 (44,067,000)
Income tax benefit 108,000 16,744,000
Net earnings (loss) $ 1,165,000 (27,323,000)
Net earnings (loss) per common share $ 0.15 (3.54)
Weighted average number of
common shares outstanding 7,722,837 7,725,236
26 WEEKS ENDED
JUNE 29, 1996(A) JULY 1, 1995(B)
Net sales $265,940,000 302,377,000
Loss before interest
and income taxes 4,884,000 38,383,000
Interest expense 5,718,000 5,649,000
Loss before income taxes 10,602,000 44,032,000
Income tax benefit 4,772,000 16,733,000
Net loss $ 5,830,000 27,299,000
Net loss per common share $ 0.76 3.54
Weighted average number of
common shares outstanding 7,723,803 7,715,180
NOTES:
(A) THE 1996 SIX MONTH FIGURES INCLUDE A PRETAX RESTRUCTURING CHARGE
OF $4.9 MILLION.
(B) THE 1995 SIX MONTH FIGURES INCLUDE A PRETAX RESTRUCTURING CHARGE
OF $25.7 MILLION AND A NON-CASH CHARGE OF $10.2 MILLION.
-over-
<PAGE>
LADD FURNITURE, INC. AND SUBSIDIARIES - SUPPLEMENTAL FINANCIAL DATA
JULY 22, 1996 CONTACT: JOHN J. ONG, CFA (910) 888-6353
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
QUARTERS ENDED
IN THOUSANDS, EXCEPT PER SHARE DATA 6/29/96* 3/30/96* 12/30/95 9/30/95 7/1/95** 4/1/95
<S> <C> <C> <C> <C> <C> <C>
Net sales $ 127,096 138,844 152,981 159,144 148,989 153,388
Cost of sales 103,553 119,264 125,379 130,549 133,492 126,560
Gross profit 23,543 19,580 27,602 28,595 15,497 26,828
Selling, general and administrative expenses 19,110 21,788 25,792 23,402 28,335 23,816
Restructuring expense (279) 5,149 (576) -- 25,696 --
Operating income (loss) 4,712 (7,357) 2,386 5,193 (38,534) 3,012
Other deductions:
Interest expense 3,058 2,660 3,152 2,997 2,846 2,803
Other, net 597 1,642 661 163 2,687 174
3,655 4,302 3,813 3,160 5,533 2,977
Earnings (loss) before income taxes 1,057 (11,659) (1,427) 2,033 (44,067) 35
Income tax expense (benefit) (108) (4,664) (1,645) 142 (16,744) 11
Net earnings (loss) $ 1,165 (6,995) 218 1,891 (27,323) 24
Net earnings (loss) per common share $ 0.15 (0.91) 0.03 0.24 (3.54) 0.00
Weighted average number of common
shares outstanding 7,723 7,725 7,729 7,726 7,725 7,705
</TABLE>
*THE 1996 QUARTERLY RESULTS REFLECT THE COMPANY'S SALE OF ITS BROWN JORDAN
AND LEA LUMBER & PLYWOOD BUSINESSES EFFECTIVE DECEMBER 29, 1995, AND ITS
FOURNIER FURNITURE BUSINESS EFFECTIVE FEBRUARY 26, 1996.
** THE 1995 SECOND QUARTER FIGURES INCLUDE A PRETAX NON-CASH CHARGE OF $10.2
MILLION, IN ADDITION TO THE $25.7 MILLION PRETAX RESTRUCTURING CHARGE SHOWN.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
DOLLAR AMOUNTS IN THOUSANDS 6/29/96 3/30/96 12/30/95 9/30/95 7/1/95 4/1/95
ASSETS
<S> <C> <C> <C> <C> <C> <C>
Current assets:
Cash $ 430 1,049 1,272 2,913 1,406 1,787
Trade accounts receivable, net 72,429 77,579 38,288 45,337 41,347 59,767
Inventories 94,394 91,386 89,466 86,313 91,127 124,181
Prepaid expenses and other current assets 17,179 20,263 13,663 10,520 11,670 10,515
Total current assets 184,432 190,277 142,689 145,083 145,550 196,250
Property, plant and equipment, net 82,633 82,652 82,586 82,567 83,826 109,014
Businesses held for sale, net -- -- 8,052 32,587 31,184 --
Intangible and other assets, net 79,996 78,900 79,659 76,631 76,515 83,792
$347,061 351,829 312,986 336,868 337,075 389,056
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt $ 3,511 3,563 309 558 618 657
Short-term bank borrowings 5,000 5,000 3,037 2,450 1,950 5,025
Trade accounts payable 31,373 25,984 28,419 26,517 24,059 25,041
Accrued expenses and other current liabilities 32,861 32,620 31,396 30,629 29,814 32,267
Total current liabilities 72,745 67,167 63,161 60,154 56,441 62,990
Long-term debt, excluding current installments 144,637 148,687 112,598 140,182 145,287 153,102
Deferred compensation and other liabilities 2,515 8,211 6,593 7,053 7,000 6,402
Deferred income taxes 7,530 9,338 5,437 4,255 4,769 15,386
Total liabilities 227,427 233,403 187,789 211,644 213,497 237,880
Total shareholders' equity 119,634 118,426 125,197 125,224 123,578 151,176
$347,061 351,829 312,986 336,868 337,075 389,056
</TABLE>
ALL SHARE AND PER SHARE DATA HAVE BEEN RESTATED TO REFLECT A 1-FOR-3 REVERSE
SPLIT OF LADD'S COMMON STOCK, WHICH BECAME EFFECTIVE ON MAY 16, 1995. THE PERIOD
ENDED MARCH 30, 1996 REFLECTS THE TERMINATION OF THE COMPANY'S ACCOUNTS
RECEIVABLE SECURITIZATION PROGRAM EFFECTIVE MARCH 28, 1996.
