UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 28, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission File number 1-10095
DELTA WOODSIDE INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
SOUTH CAROLINA 57-0535180
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
233 North Main Street
Hammond Square, Suite 200
Greenville, South Carolina 29601
(Address of principal executive offices) (Zip Code)
864\232-8301
Registrant's telephone number, including area code
Not Applicable
Former name, former address and former fiscal year, if
changed since last report.
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock, $.01 Par Value--24,515,646 shares as of January 31,
1997.
INDEX
DELTA WOODSIDE INDUSTRIES, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Page
Condensed consolidated balance sheets--
December 28, 1996 and June 29, 1996 3-4
Condensed consolidated statements of income --
Three and six months ended December 28, 1996
and December 30, 1995 5
Condensed consolidated statements of cash
flows-- Six months ended December 28, 1996
and December 30, 1995 6
Notes to condensed consolidated financial
statements-- December 28, 1996 7
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition 8-9
Part II. OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 10
Item 3. Defaults upon Senior Securities 10
Item 4. Submission of Matters to a Vote of Security
Holders 10
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 10
SIGNATURES 11
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DELTA WOODSIDE INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
December 28, June 29,
1996 1996
(Unaudited)
(In thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 6,988 $ 6,271
Accounts receivable:
Factor 77,702 63,194
Trade 56,409 65,230
134,111 128,424
Less allowances for doubtful
accounts and returns 4,730 6,258
129,381 122,166
Inventories
Finished goods 63,181 64,122
Work in process 63,916 60,739
Raw materials and supplies 20,322 16,197
147,419 141,058
Prepaid and other current assets 2,382 10,258
Deferred income tax (72)
TOTAL CURRENT ASSETS 286,098 279,753
PROPERTY, PLANT AND EQUIPMENT
Cost 376,113 357,613
Less accumulated depreciation 149,752 136,879
226,361 220,734
EXCESS OF COST OVER ASSIGNED VALUE
OF NET ASSETS ACQUIRED 26,045 26,464
OTHER ASSETS 10,518 10,765
$549,022 $537,716
DELTA WOODSIDE INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS--Continued
December 28, June 29,
1996 1996
(Unaudited)
LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES
Trade accounts payable $ 51,366 $ 41,779
Accrued and sundry liabilities 28,729 28,261
Current portion of long-term debt 236,521 242,361
TOTAL CURRENT LIABILITIES 316,616 312,401
LONG-TERM DEBT, less current portion 966 283
OTHER LIABILITIES AND DEFERRED CREDITS 9,355 7,697
SHAREHOLDERS' EQUITY
Common Stock, par value $.01--
authorized 50,000,000 shares, issued
and outstanding 24,512,000 shares
at December 28, 1996 and 24,460,000
shares at June 29, 1996 245 245
Additional paid-in capital 164,761 164,170
Retained earnings 57,079 52,920
222,085 217,335
$549,022 $537,716
See notes to condensed consolidated financial statements
DELTA WOODSIDE INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended Six Months Ended
December 28, December 30, December 28, December 30,
1996 1995 1996 1995
(In thousands, except per share data)
Net sales $ 162,671 $ 150,558 $ 307,192 $ 291,601
Cost of goods sold 136,604 134,944 255,897 255,223
Gross profit on sales 26,067 15,614 51,295 36,378
Selling, general and
administrative expenses 18,492 19,257 36,846 34,139
Litigation (credit) (9,000) (9,000)
7,575 5,357 14,449 11,239
Other expense (income):
Interest expense 5,959 4,484 11,131 8,571
Interest income
and other (1,422) (54) (1,873) (594)
4,537 4,430 9,258 7,977
INCOME BEFORE
INCOME TAXE S 3,038 927 5,191 3,262
Income taxes 880 560 1,030 1,568
NET INCOME $ 2,158 $ 367 $ 4,161 $ 1,694
Net income per share $ .09 $ .02 $ .17 $ .07
Dividends per share of
common stock $ .10 $ .20
Weighted average shares
outstanding 24,511 24,444 24,511 24,426
See notes to condensed consolidated financial statements
DELTA WOODSIDE INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended
December 28, December 30,
1996 1995
(In thousands)
OPERATING ACTIVITIES
Net income $ 4,161 $ 1,694
Depreciation 13,636 13,120
Amortization 996 1,034
Other 5,785 1,201
Changes in operating assets and
liabilities (6,621) 23,924
NET CASH PROVIDED BY OPERATING ACTIVITIES 17,957 40,973
INVESTING ACTIVITIES
Property, plant and equipment purchases (12,784) (43,093)
Other 1,300 815
NET CASH (USED) BY INVESTING ACTIVITIES (11,484) (42,278)
FINANCING ACTIVITIES
Proceeds from revolving lines of credit 965 142,382
Payments on revolving lines of credit (6,485) (135,400)
Scheduled principal payments of long-term debt (158) (122)
Dividends paid (4,887)
Other (78) (106)
NET CASH (USED) PROVIDED BY
FINANCING ACTIVITIES ( 5,756) 1,867
INCREASE IN CASH AND
CASH EQUIVALENTS 717 562
Cash and cash equivalents at beginning of period 6,271 719
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 6,988 $ 1,281
See notes to condensed consolidated financial statements
DELTA WOODSIDE INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
December 28, 1996
NOTE A--BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial
statements of Delta Woodside Industries, Inc. ("the Company")
have been prepared in accordance with generally accepted
accounting principles for interim financial information and with
the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management,
all adjustments (consisting of only normal recurring accruals)
considered necessary for a fair presentation have been included.
Operating results for the three months ended December 28, 1996
are not necessarily indicative of the results that may be
expected for the year ending June 28, 1997. For further
information, refer to the consolidated financial statements and
footnotes thereto included in the Company's annual report on Form
10-K for the year ended June 29, 1996.
NOTE B--SHORT-TERM DEBT
The Company has amended its existing Credit Facility The
amended Credit Facility waives prior loan covenant violations.
Because the facility matures on September 30, 1997, it has been
reported as current in the accompanying financial statements.
Although there can be no assurance, the Company believes that it
will be able to replace the existing Credit Facility prior to
maturity. The Company expects such a new facility to have a
similar or slightly higher rate of interest.
NOTE C--TAXES
The estimated effective tax rate for fiscal 1997 is 20% as
compared to an effective rate of 48% for the fiscal year ended
June 29, 1996. The lower tax rate in fiscal 1997 is primarily a
result of positive pretax earnings expectations in fiscal 1997,
which should result in a decrease in the valuation allowance
previously recognized for deferred taxes. The higher tax rate in
1996 was due to lower pretax earning along with permanent tax
differences.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
Net sales for the first quarter ended December 28, 1996 totaled
$162,671,000, as compared to $150,558,000 in the prior year's
first quarter, an increase of 8%. Net income was $2,158,000 for
the quarter ended December 28, 1996 as compared to $367,000 for
the quarter ended December 30, 1995. On a per share basis, net
income was $.09 per share on the 24,511,000 average shares
outstanding, as compared to $.02 per share on the 24,444,000
average shares outstanding in the second quarter of fiscal 1996.
Consolidated gross profit margin was 16% in the quarter ended
December 28, 1996, as compared to 10% in the quarter ended
December 30, 1995. During the second quarter of fiscal 1997, 60%
of the Company's gross profit came from the textile segment
compared to 32% in the second quarter of fiscal 1996. Apparel
segment gross profit as a percent of total gross profit declined
from 45% in the second quarter of fiscal 1996 to 33% in the
second quarter of fiscal 1997.
Consolidated operating earnings for the quarter and year-to-date
periods ended December 28, 1996 increased from the same periods
in the prior fiscal year. Profits were higher in the textile
segment. Profits were lower in the apparel segment only because
earnings in the second quarter of the prior fiscal year included
a pretax credit to operating profits of $9,000,000 related to
prior litigation charges.
Net sales in the textile segment totaled $111 million in the
quarter ended December 28, 1996 up 10% from the same quarter of
the prior year. Sales of woven fabrics were up 7% resulting from
an increase in unit sales and unit prices. Sales of government
fabrics decreased while sales to commercial accounts increased.
Gross profit on sales of woven fabrics also increased in part due
to manufacturing efficiencies resulting from completion of the
major portion of the plant renovation and modernization program,
and as a result of lower raw material costs. The Company is
still working on the second half of the modernization project in
the Beattie spinning and weaving mill in Fountain Inn, South
Carolina, but expects this phase to be completed early in
calendar 1997. Sales of knitted fabrics increased to $25 million
in the second quarter of fiscal 1997 up from $21 million in the
second quarter of fiscal 1996. Sales increased as a result of an
increase in goods sold and in average unit prices. Increased
margins on sales of knitted fabrics were due principally to
lower raw material costs and improved absorption of fixed costs
resulting from higher manufacturing production levels. The
knitted textile division showed an operating loss in the quarter
just ended. However, the smaller operating loss in the current
quarter was a $4.8 million improvement over the same quarter of
last fiscal year. Expenses for the current year include certain
unexpected costs associated with interruption of operations in
Wallace, North Carolina, from Hurricane Fran in September 1996.
Order backlogs were up in both the woven fabrics and the knitted
fabrics divisions from $76 million a year ago to $79 million at
December 28, 1996.
Net sales in the apparel segment were $46 million in the second
quarter of fiscal 1997, up 11% from the same quarter of the prior
fiscal year. Sales of branded apparel and knitted apparel for
printing increased. The increased sales of branded apparel were
due to more units being sold, but at lower average prices, as the
Company continues to dispose of excess inventories which were
written down in fiscal 1996. Unit sales of knitted apparel for
printing increased, but average unit prices decreased. Gross
profit in the apparel segment was higher than in the same quarter
of last fiscal year. Excluding the effect of the $9,000,000
litigation credit described above, operating profits in the
apparel segment were also higher.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS --Continued
The Company's order backlog at December 28, 1996, was
$160,325,000 an increase of 5% from order backlogs at December
30, 1995. Order backlogs increased in both the textile and
apparel segments.
Inventories were up approximately $7 million compared to June 29,
1996, primarily due to increases in work-in-process and raw
materials in anticipation of requirements for succeeding
quarters. Finished goods declined slightly.
The Company has amended its existing Credit Facility. The amended
Credit Facility waives prior loan covenant defaults and adds land
and buildings as collateral. Total Collateral under the Credit
Facility has a net book value of approximately $480 million at
December 28, 1996. Because the facility matures on September 30, 1997,
it has been reported as current in the accompanying financial statements.
Although there can be no assurance, the Company believes that it will
be able to replace the existing Credit Facility prior to maturity. The Company
expects such a new facility to have a similar or slightly higher
rate of interest.
The estimated effective tax rate for fiscal 1997 is 20% as
compared to an effective rate of 48% for the fiscal year ended
June 29, 1996. The lower tax rate in fiscal 1997 is primarily a
result of higher pretax earnings estimates in fiscal 1997, which
should result in a decrease in the valuation allowance previously
recognized for deferred taxes. The higher tax rate in 1996 was
due to lower pretax earning along with permanent tax differences.
The Company believes that, with replacement of the existing
Credit Facility, cash flow generated by its operations and funds
available under the future Credit Facility will be sufficient to
service its bank debt, to satisfy its day-to-day working capital
needs and to fund its planned capital expenditures.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings*
Item 2. Changes in Securities*
Item 3. Defaults upon Senior Securities*
Item 4. Submission of Matters to a Vote of Security Holders
The following summarizes the votes at the Annual
Meeting of the Company's shareholders held on November 7, 1996:
Election of Broker
Directors For Against Withheld Abstentions Nonvotes
C. C. Guy 23,056,088 0 144,040 N/A N/A
J. F. Kane 23,057,286 0 142,843 N/A N/A
M. Lennon 23,056,073 0 144,056 N/A N/A
E. E. Maddrey, II 23,055,128 0 145,001 N/A N/A
B. Mickel 23,054,978 0 145,150 N/A N/A
B. A. Mickel 23,055,149 0 144,979 N/A N/A
B. C. Rainsford 23,056,871 0 143,257 N/A N/A
Ratification of
Appointment of
KPMG Peat Marwick
as Independent
Auditors
For Fiscal 1997 23,089,560 77,071 33,498 N/A N/A
Item 5. Other Information*
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits required by Item 601 of Regulation S-K
4.2.3 Second Amendment and Waiver Agreement dated as of
December 20, 1996, among Delta Woodside Industries, Inc.,
the guarantors identified as such on the
signature pages attached, the lenders and
agents, together with forms of certain real
estate lien documents.
(b) No reports were filed on Form 8-K during the
quarter ended December 28, 1996.
* Items 1, 2, 3 and 5 are not applicable
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 thereunto duly authorized.
Delta Woodside Industries, Inc.
(Registrant)
Date February 7, 1997 /s/ E. Erwin Maddrey, II
E. Erwin Maddrey, II
President and
Chief Executive Officer
Date February 7, 1997 /s/ Douglas J. Stevens
Douglas J. Stevens
Controller and
Assistant Secretary
Exhibit Index
4.3.2 Second Amendment and Waiver Agreement dated as of December 20, 1996
Exibit 4.2.3
SECOND AMENDMENT AND WAIVER AGREEMENT
THIS SECOND AMENDMENT AND WAIVER AGREEMENT (this "Agreement" or
the Second Amendment and Waiver), dated as of December 20,
1996, is entered into by and among Delta Woodside Industries, Inc.
(the "Borrower"), the guarantorsidentified as such on the signature
pages attached hereto (the "Subsidiary Guarantors;" collectively,
the Borrower and the Subsidiary Guarantors are referred to as the
"Credit Parties"), the lenders identified as such on the signature
pages hereto (the "Lenders"), NationsBank, N.A., as Agent (the
"Agent") for the Lenders, and Bank of America National Trust and Savings
Association and The Bank of New York, as Co-Agents (the "Co-Agents")
for the Lenders.
RECITALS
A. The Borrower, the Lenders, the Agent and the Co-Agents
entered into that certain Amended and Restated Credit Agreement
dated as of March 15, 1996, as amended from time to time thereafter
(the "Existing Credit Agreement").
B. The Subsidiary Guarantors and the Agent entered into that
certain Amended and Restated Guaranty Agreement dated as of March 15, 1996
(the "Subsidiary Guaranty").
C. Pursuant to that certain Amendment and Waiver Agreement,
dated as of May 20, 1996, among the Borrower, the Subsidiary Guarantors,
the Lenders, the Agent and the Co-Agents, the Lenders temporarily
waived the Borrower's failure to comply with Sections 9.1(a) and 9.1(d) of
the Existing Credit Agreement for the Fiscal Quarter ended March
31, 1996 (the "Initial Financial Covenant Defaults").
D.The Borrower has also failed to comply with: (1) Sections
9.1(a), (b) and (d) of the Existing Credit Agreement for the
Fiscal Quarter ended June 29, 1996, and Sections 9.1(a) and (b)
of the Existing Credit Agreement for the Fiscal Quarter ended
September 28, 1996, respectively (the Subsequent Financial
Covenant Defaults); and (2) Section 4.4(a)(i) governing the
mandatory prepayment of outstanding Loans in excess of the
Borrowing Base (the Mandatory Payment Default) (the Initial
Financial Covenant Defaults, the Subsequent Financial Covenant
Defaults and the Mandatory Payment Default shall be referred to
collectively as the Existing Defaults)
E. The Borrower has requested that the Lenders (i) permanently
waive their right to enforce any of their rights and remedies
under the Existing Credit Agreement with respect to the Existing
Defaults and (ii) amend certain provisions of the Existing Credit
Agreement and the other Loan Documents in connection therewith.
F.The Lenders have agreed to execute and deliver this Agreement
on the terms and conditions set forth herein.
NOW, THEREFORE, IN CONSIDERATION of the premises and other good
and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
PART I
DEFINITIONS
SUBPART 1.1 General Definitions. Unless otherwise defined
herein or the context otherwise requires, terms used in this Agreement,
including the preamble and recitals, have the meanings provided in the
Amended Credit Agreement.
SUBPART 1.2 Certain Definitions. Unless the context otherwise
requires, the following terms used in this Agreement shall have the indicated
definitions:
Amended Credit Agreement means the Existing Credit Agreement as
amended hereby.
Amendment No. 2 Execution Date means the date upon which the
Agent has received duly executed signature pages to this Second Amendment
and Waiver from each of the Credit Parties, the Lenders, and the Co-Agents.
Amendment No. 2 Effective Date has the meaning ascribed to such
term in Subpart 6.1 of this Second Amendment and Waiver.
PART II
AMENDMENTS TO EXISTING CREDIT AGREEMENT
The Existing Credit Agreement is hereby amended in accordance
with this Part II. Except as so amended, the Existing Credit Agreement shall
continue in full force and effect.
SUBPART 2.1 Amendments to Section 1.1. Section 1.1 of the
Existing Credit Agreement is hereby amended by:
(a) amending in their entirety each of the following
definitions to read as follows:
"Collateral Documents" means, collectively, the Borrower Security
Agreement, the Subsidiaries Security Agreement, the Pledge
Agreement, the Leasehold Mortgage, any Mortgage, any assignments
of factoring proceeds and such other documents executed and
delivered in connection with the attachment and perfection of the
Agent's security interests and liens, for the benefit of the
Lenders, arising thereunder, including without limitation, UCC
financing statements.
"Loan Documents" means, collectively, this Agreement, the
Amendment and Waiver, the Second Amendment and Waiver, the Notes,
the Subsidiary Guaranty, the Applications, the Collateral
Documents and each of the other documents, instruments and
agreements referred to herein or contemplated hereby.
Permitted Indebtedness for Money Borrowed means
(a)Indebtedness for Money Borrowed of the Borrower represented by
the Loans and the Notes or arising under the Letters of Credit or
the related Applications;
(b)the Guaranteed Obligations;
(c)Intercompany Indebtedness;
(d)Existing Indebtedness;
(e) Indebtedness for recourse obligations incurred in connection
with any Permitted Receivables Financing (solely to the extent of
actual defaulted or delinquent receivables);
(f) Indebtedness for Money Borrowed owed by International Apparel
Marketing Corporation to the Borrower or any Subsidiary Guarantor
the aggregate principal amount of which outstanding at any time
does not exceed $1,000,000;
(g)Indebtedness for Money Borrowed representing obligations of
the Borrower or any Subsidiary Guarantor to General Electric
Capital Corporation for the financing of equipment leases, the
aggregate principal amount of which outstanding at any time does
not exceed $14,112,000, subject to review of the documentation
therefor satisfactory to the Agent and the Majority Lenders;
(h)Indebtedness for Money Borrowed comprised of term loan
financing secured by a mortgage on the distribution center owned
by Duck Head Apparel Company, Inc., located in Barrow County,
Georgia, the aggregate principal amount of which outstanding at
any time does not exceed $7,000,000, and the terms and conditions
of which are reasonably satisfactory to the Agent and the
Majority Lenders;
(i)other Indebtedness for Money Borrowed of the Borrower or any
of its Subsidiaries the aggregate principal amount of which
outstanding at any time does not exceed $10,000,000; and
(j)Guaranties of any Indebtedness for Money Borrowed described in
any of clauses (a) through (i) above.
provided, however, that the aggregate outstanding principal
amount of all Permitted Indebtedness for Money Borrowed
(exclusive of the obligations described in paragraph (g) above)
shall not exceed at any time an amount equal to $263,500,000
minus the aggregate amount of all reductions in the Commitments
from time to time pursuant to Section 4.3.
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 in all cases only if payment shall not at the time be
required to be made in accordance with Section 7.6,
(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 obligations to utilities,
(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 as used by the Borrower or any of its
Subsidiaries, as applicable, or impair the use thereof in the
business of the Borrower or any Subsidiary,
(d)Liens existing on property of any Person at the time such
Person becomes a Subsidiary of the Borrower, but only if the
obligation secured by any such Lien is not in default and such
Lien is and remains confined to the property subject thereto at
the time such Person becomes a Subsidiary,
(e)Liens arising in connection with a Permitted Receivables
Financing, but (i) only to the extent of the applicable accounts
receivable subject to such Permitted Receivables Financing and
related property and, (ii) in the case of a Factoring Agreement,
only if the proceeds payable thereunder have been assigned to the
Agent for the benefit of the Lenders in a manner reasonably
acceptable to the Agent and the Majority Lenders,
(f)Existing Liens,
(g)Permitted Purchase Money Liens,
(h)Liens of an Issuer on goods or documents securing
reimbursement obligations with respect to a Letter of Credit
issued to insure the payment for such goods or documents,
(i)Liens created solely by the filing or recording of any
judgment in public records or by an attempt to execute on any
judgment, provided that in either such case no Event of Default
has occurred and is continuing under Section 10.1(j) with respect
to such judgment,
(j)Liens in favor of the Agent for the benefit of the Lenders or
the Lenders and the Issuers,
(k) Liens in favor of Carolina First Bank upon or against (i) the
distribution center in Barrow County, Georgia, owned by Duck Head
Apparel Company, Inc., in the nature of a security deed or
mortgage, provided that Carolina First Bank has executed and
delivered to the Agent a mortgagee lien waiver with respect to
the Collateral in favor of the Agent for the benefit of the
Lenders, such waiver to be in form and content reasonably
satisfactory to the Agent and the Majority Lenders, and (ii) a
certificate of deposit in a principal amount not to exceed
$500,000.00 held in the possession of Carolina First Bank, in
each case securing a term loan facility in an amount outstanding
at any one time not in excess of $7,000,000, and in each case on
such terms and conditions as are reasonably satisfactory to the
Agent and the Majority Lenders, and
(l)Any other Lien with respect to property of the Borrower or any
of its Subsidiaries which is subject to a Mortgage if such Lien
is consented to by the Agent and the Majority Lenders.
and (b) adding in the appropriate alphabetical order the
following definitions to read in their entirety as follows:
Amendment No. 2 Execution Date means the date upon which the
Agent has received duly executed signature pages to the Second
Amendment and Waiver from each of the Borrower, the Subsidiary
Guarantors, the Lenders, and the Co-Agents.
"Second Amendment and Waiver" means that certain Second Amendment
and Waiver Agreement, dated as of December 20, 1996, between the
Borrower, the Subsidiary Guarantors, the Lenders, the Agent and
the Co-Agents.
"Mortgages" means the fully executed and notarized mortgages,
security deeds, and deeds of trusts which secure the liabilities
of a Subsidiary Guarantor arising under the Subsidiary Guaranty,
and encumbering the fee interest and/or leasehold interest of any
of the Credit Parties in each real property asset designated on
Schedule 1 to the Second Amendment and Waiver, substantially in
the form of the applicable mortgage or deed of trust attached as
Exhibit A to the Second Amendment and Waiver.
SUBPART 2.2. Amendment to Section 2.3. Section 2.3 of the
Existing Credit Agreement is amended by adding a new Section
2.3(g), which reads in its entirety as follows:
(g) Notwithstanding any other provision of this Agreement, and
subject only to the provisions of Section 4.1, from and after
the Amendment No. 2 Execution Date, the interest rate applicable
to all Loans and other Obligations arising under the Loan
Documents shall be the Base Rate.
SUBPART 2.3. Amendment to Section 4.3. Section 4.3(b) of the
Existing Credit Agreement is
amended to read in its entirety as follows:
(b)Mandatory Reductions.
(i)The aggregate Commitments of the Lenders shall be reduced
ratably as of the last day of Fiscal Year 1996 and each Fiscal
Year thereafter by an amount equal to $15,000,000 minus the
aggregate amount of Commitment reductions pursuant to Section
4.3(a) during the Fiscal Year then ended.
(ii)The aggregate Commitments of the Lenders shall be reduced
ratably by an amount equal to the amount of any prepayment of
principal of the Committed Loans pursuant to Section 4.4(a)(ii).
SUBPART 2.4. Amendment to Section 4.4(a). Section 4.4(a)(ii)
of the Existing Credit Agreement is amended to read in its
entirety as follows:
(ii)If at any time on or after the Agreement Date the Borrower or
any of its Subsidiaries shall receive Net Disposition Proceeds
which in the aggregate exceed $5,000,000, then the Borrower shall
promptly prepay the Loans by an amount equal to such excess,
together with accrued and unpaid interest on the principal amount
prepaid to the date of prepayment; provided, however,
notwithstanding the foregoing, upon the sale and leaseback of the
distribution center and/or the equipment permitted by Section
9.11, the Borrower and its Subsidiaries shall not be required to
make such mandatory prepayment to the extent that the Net
Disposition Proceeds thereof are used by the Borrower or its
Subsidiaries for general working capital purposes.
SUBPART 2.5. Amendment to Section 4.15. Section 4.15 of the
Existing Credit Agreement is amended by adding new Sections
4.15(e) and (f), which read in their entirety as follows:
(e) Second Amendment Fee. The Borrower shall pay to the Agent
for the account of each Lender on the Amendment No. 2 Execution
Date, in consideration of the agreements of the Lenders in the
Second Amendment and Waiver, an amendment fee of 0.125% of each
Lenders Commitment.
(f) Supplemental Fees. In the event that any of the Loans
remain outstanding as of March 31, 1997, then the Borrower shall
pay to the Agent, on or before April 4, 1997, for the account of
each Lender a supplemental fee in the amount of 0.125% of each
Lenders Commitment (or if the Commitments have been terminated,
of each Lenders outstanding Loans). In the event that any of the
Loans remain outstanding as of June 30, 1997, then the Borrower
shall pay to the Agent, on or before July 3, 1997, for the
account of each Lender a supplemental fee in the amount of 0.125%
of each Lenders Commitment (or if the Commitments have been
terminated, of each Lenders outstanding Loans). Such fees shall
be fully earned when due.
SUBPART 2.6. Addition of a New Section 7.13. The Existing
Credit Agreement is further amended by adding a new Section 7.13
which reads in its entirety as follows:
Section 7.13. Depository Accounts. Except as provided herein,
the Borrower shall, and shall cause each of its Subsidiaries to,
maintain its primary depository and disbursement accounts
(accounts with a depository in which funds of more than $25,000
in the aggregate at any time are on deposit) with the Agent or
one of the Lenders; provided, however, that the Borrower and its
Subsidiaries may maintain such depository and disbursement
accounts with any bank or other financial institution other than
the Agent or the Lenders if such bank or other institution has
executed and delivered to the Agent a bank agency agreement, in
form and content reasonably satisfactory to the Agent and the
Majority Lenders, pursuant to which such other bank or
institution agrees to hold all such deposits for the benefit of
the Lenders and subject to the security interest of the Agent for
the benefit of the Lenders; provided, further, the Borrower and
its Subsidiaries shall be permitted to maintain a certificate of
deposit with Carolina First Bank in a principal amount not to
exceed $500,000.00 for so long as the Borrower or its
Subsidiaries have Permitted Indebtedness for Money Borrowed
outstanding to Carolina First Bank.
SUBPART 2.7. Amendment to Section 8.1. Section 8.1 of the
Existing Credit Agreement is amended by adding the following new
Section 8.1(c), immediately following subsection 8.1(b):
(c) Monthly Reports. (i) As soon as practicable and in any
event within 30 days after the end of each monthly accounting
period of each Fiscal Year of the Borrower, a company-prepared
Consolidated balance sheet of the Borrower and each of its
Consolidated Subsidiaries and a company-prepared consolidating
balance sheet of the Borrower and each of its Consolidated
Subsidiaries as at the end of such monthly period, together with
related Consolidated and consolidating statements of income and
retained earnings and of cash flows for such period, in each case
setting forth in comparative form figures (except in the case of
cash flows) as of the end of and for the corresponding period of
the preceding Fiscal Year, all in reasonable form and detail
acceptable to the Majority Lenders and the Agent, and accompanied
by a certificate of the chief financial officer of the Borrower
as being true and correct in all material respects and as having
been prepared in accordance with GAAP, subject to changes
resulting from normal year-end audit adjustments.
(ii) Within 30 days after the end of each monthly accounting
period of each Fiscal Year of the Borrower, a report of the
Borrower analyzing (A) the aging of the Borrowers receivables and
the inventory of Duck Head Apparel Company, Inc., each such
report in reasonable form and detail acceptable to the Majority
Lenders and the Agent, and accompanied by a certificate signed by
the chief financial officer of the Borrower as being true and
correct in all material respects, and (B) the amount of orders
received by the Borrower and/or its Subsidiaries which have not
been processed or for which shipments have not been made,
reported in a form and manner as currently provided to the Agent
and the Lenders.
(iii) Accompanying the reports specified in preceding clauses
(i) and (ii), an updated, revised monthly report, projecting for
the ensuing 90 days the cash position and availability of the
Borrower and its Consolidated Subsidiaries, including without
limitation a projection of weekly cash receipts and disbursements
and projected weekly changes in net cash position, such reports
to be in reasonable form and detail acceptable to the Majority
Lenders and the Agent.
SUBPART 2.8. Amendment to Section 8.10. Section 8.10 of the
Existing Credit Agreement is amended to read in its entirety as
follows:
Section 8.10. Borrowing Base Reports. On Thursday of each
calendar week, a Borrowing Base Report as of the end of the
immediately preceding calendar week, substantially in the form of
Exhibit N hereto and signed and certified by the chief financial
officer of the Borrower to be true and correct in all material
respects as of the date thereof. Each such Borrowing Base Report
shall contain weekly updates of Eligible Receivables and monthly
updates of Eligible Inventory and Eligible Equipment.
SUBPART 2.9. Addition of a New Section 8.11. The Existing
Credit Agreement is amended by adding a new Section 8.11 which
reads in its entirety as follows:
Section 8.11. Report of Consultant. As soon as practicable but
in any event by February 15, 1997, the Borrower shall provide to
the Agent and each of the Lenders a copy of each written report
and all recommendations of the third party consultant previously
described to the Agent and the Lenders concerning certain
operational issues of the Borrower, together with such financial
data and other financial information provided by such third party
consultant to the Borrower supporting the conclusions and
recommendations in such report. Upon the request of the Majority
Lenders, the Borrower shall convene a meeting no later than March
15, 1997 at which all Lenders may attend in order to review and
discuss in person such report, recommendations and other
information with the third party consultant. The Borrower agrees
to provide promptly to the Agent and each of the Lenders all
future similar reports, recommendations and information.
SUBPART 2.10. Amendment to Section 9.1(a). Section 9.1(a) of
the Existing Credit Agreement is amended to read in its entirety
as follows:
(a) Minimum Consolidated Tangible Net Worth. Consolidated
Tangible Net Worth of the Borrower and its Consolidated
Subsidiaries as of the last day of any Fiscal Quarter to be less
than $180,000,000, increased on a cumulative basis as of the last
day of each Fiscal Quarter (beginning with the last day of the
Fiscal Quarter ending March 31, 1997) by 90% of Consolidated Net
Income (if positive) of the Borrower and its Consolidated
Subsidiaries for the Fiscal Quarter then ending.
SUBPART 2.11. Amendment to Section 9.1(b). Section 9.1(b) of
the Existing Credit Agreement is amended to read in its entirety
as follows:
(b) Leverage Ratio. The Leverage Ratio as of the end of the
following Fiscal Quarters to be greater than the corresponding
following amounts:
Fiscal Quarter Ending December 28, 19962.00 to 1.00
Fiscal Quarter Ending March 29, 19971.90 to 1.00
Fiscal Quarter Ending June 28, 1997 and1.80 to 1.00
as of the end of each Fiscal Quarter
thereafter
SUBPART 2.12. Amendment to Section 9.5. Section 9.5 of the
Existing Credit Agreement is amended to read in its entirety as
follows:
Section 9.5. Capital Expenditures. From and after November 29,
1996 through and including September 30, 1997, incur any Capital
Expenditure, except for Capital Expenditures of the Borrower or
any Subsidiary which, together with all other Capital
Expenditures by the Borrower and its Consolidated Subsidiaries
incurred during such period, do not exceed in the aggregate
$15,000,000.
SUBPART 2.13. Amendment to Section 9.11. Section 9.11 of the
Existing Credit Agreement is amended to read in its entirety as
follows:
Section 9.11. Sales and Leasebacks. Enter into any arrangement
with any Person providing for its leasing from such Person of
real or personal property which has been or is to be sold or
transferred, directly or indirectly, by the Borrower or any of
its Subsidiaries to such Person; provided, however, that Duck
Head Apparel Company, Inc. may enter into a sale and leaseback of
its distribution center located in Barrow County, Georgia
provided that (i) such transaction is consummated on or before
March 31, 1997 and (ii) such transaction is on terms and
conditions reasonably satisfactory to the Agent and the Majority
Lenders, including without limitation that the aggregate amount
of Indebtedness for Money Borrowed in connection with such
transaction shall not exceed $9,000,000; and provided further,
that any lease described in paragraph (g) of the definition of
Permitted Indebtedness for Money Borrowed may be the result of or
structured as a sale and leaseback of the subject equipment.
SUBPART 2.14. Amendment to Section 10.1(d). Section 10.1(d)
of the Existing Credit Agreement is amended to read in its
entirety as follows:
(d) Default in Performance. The Borrower shall fail to perform
or observe any term, covenant, condition or agreement contained
in
(i) Article 9 (other than Section 9.4 or 9.8) or Section 7.1
(insofar as it requires the preservation of the corporate
existence of the Borrower or any Significant Subsidiary), 7.9,
7.13, or 8.6; or
(ii) this Agreement or any other Loan Document (other than a
default in the performance or observance of which is dealt with
specifically elsewhere in this Section 10.1) and such default
shall continue for a period of 15 days after written notice
thereof has been given to the Borrower by the Agent.
PART III
AMENDMENTS TO BORROWER SECURITY AGREEMENT
The Borrower Security Agreement is hereby amended in accordance
with this Part III. Except as so amended, the Borrower Security
Agreement shall continue in full force and effect.
SUBPART 3.1. Amendment to Section 2. Section 2 of the Borrower
Security Agreement is amended to read in its entirety as follows:
2. Grant of Security Interest in the Collateral. To secure the
prompt payment and performance in full when due, whether by lapse
of time, acceleration or otherwise, of the Secured Obligations
(as defined in Section 3 hereof), the Borrower hereby grants to
the Agent, for the benefit of the Lenders, a continuing security
interest in, and a right to set off against, any and all right,
title, and interest of the Borrower in and to the following,
whether now owned or existing or owned, acquired or arising
hereafter (collectively the Collateral):
(a) All machinery, equipment, furniture and fixtures of every
kind and description including, without limitation, all fixtures,
accessories, tools, office furniture, furnishings, office
equipment and trade fixtures;
(b) All accounts, all accounts receivable and all goods
represented by or securing such accounts;
(c) All inventory, including, without limitation, all raw
materials, all work in process and all goods held by the Borrower
for sale or lease;
(d) All instruments, documents and chattel paper that arise from
a sale of goods or services by the Borrower;
(e) The industrial revenue bond (the Bond) issued in connection
with that certain indenture, dated as of May 26, 1994, among
Florence County, South Carolina, Greenville County, South
Carolina and Marlboro County, South Carolina and the Borrower, as
Purchaser thereunder;
(f) All contract rights under the Factoring Agreements and the
Bond Documents (collectively, the Contracts);
(g) All accessions and additions to, and substitutions and
replacements of, any and all of the foregoing, whether now
existing or hereafter arising, including, without limitation, all
property conveyed to the Borrower pursuant to that certain escrow
agreement, dated as of May 26, 1994, among the Escrow Agent, as
named therein, Florence County, South Carolina, Greenville
County, South Carolina, Marlboro County, South Carolina, the
Borrower and Delta Mills, Inc.;
(h) All cash, deposits, deposit account balances, money,
currency, legal tender, and cash equivalents of any kind or
nature; and
(i) All proceeds and products of the foregoing and all insurance
relating to the foregoing collateral and all proceeds thereof
(including, without limitation, insurance proceeds payable on
account of business interruption), whether now existing or
hereafter arising.
PART IV
AMENDMENT TO SUBSIDIARIES SECURITY AGREEMENT
The Subsidiaries Security Agreement is hereby amended in
accordance with this Part IV. Except as so amended, the
Subsidiaries Security Agreement shall continue in full force and
effect.
SUBPART 4.1. Amendments to Section 2. Section 2 of the
Subsidiaries Security Agreement is amended to read in its
entirety as follows:
2. Grant of Security Interest in the Collateral. To secure the
prompt payment and performance in full when due, whether by lapse
of time, acceleration or otherwise, of the Secured Obligations
(as defined in Section 3 hereof), each Subsidiary Guarantor
hereby grants to the Agent, for the benefit of the Lenders, a
continuing security interest in, and a right to set off against,
any and all right, title, and interest of such Subsidiary
Guarantor in and to the following, whether now owned or existing
or owned, acquired or arising hereafter (collectively the
Collateral):
(a) All machinery, equipment, furniture and fixtures of every
kind and description including, without limitation, all fixtures,
accessories, tools, office furniture, furnishings, office
equipment and trade fixtures;
(b) All accounts, all accounts receivable and all goods
represented by or securing such accounts;
(c) All inventory, including, without limitation, all raw
materials, all work in process and all goods held by such
Subsidiary Guarantor for sale or lease;
(d) All instruments, documents and chattel paper that arise from
a sale of goods or services by such Subsidiary Guarantor;
(e) All contract rights under the Factoring Agreements and the
Bond Documents (collectively, the Contracts);
(f) All accessions and additions to, and substitutions and
replacements of, any and all of the foregoing, whether now
existing or hereafter arising, including, without limitation, all
property conveyed to Delta Mills, Inc. pursuant to that certain
escrow agreement, dated as of May 26, 1994, among the Escrow
Agent, as named therein, Florence County, South Carolina,
Greenville County, South Carolina, Marlboro County, South
Carolina, the Borrower and Delta Mills, Inc.;
(g) All cash, deposits, deposit account balances, money,
currency, legal tender, and cash equivalents of any kind or
nature; and
(h) All proceeds and products of the foregoing and all insurance
relating to the foregoing collateral and all proceeds thereof
(including, without limitation, insurance proceeds payable on
account of business interruption), whether now existing or
hereafter arising.
SUBPART 4.2. Amendments to Section 5. Section 5 of the
Subsidiaries Security Agreement is amended by adding a new
subsection (j) which reads in its entirety as follows:
(j) Subject to the Credit Agreement, maintain its primary
depository and disbursement accounts (accounts with a depository
in which funds of more than $25,000 in the aggregate at any time
are on deposit) with the Agent or one of the Lenders; provided,
however, that any Subsidiary Guarantor may maintain such
depository and disbursement accounts with any bank or other
financial institution other than the Agent or the Lenders if such
bank or other institution has executed and delivered to the Agent
a bank agency agreement, in form and content reasonably
satisfactory to the Agent and the Majority Lenders, pursuant to
which such other bank or institution agrees to hold all such
deposits for the benefit of the Lenders and subject to the
security interest of the Agent hereunder.
PART V
REPRESENTATIONS AND WARRANTIES OF CREDIT PARTIES
.Each Credit Party hereby represents and warrants to the Agent
and to each Lender that:
(i)each of the representations and warranties of the Borrower
contained in the Amended Credit Agreement and in each other Loan
Document is true as of the date hereof (after giving effect to
this Agreement);
(ii)no Default or Event of Default exists and is continuing ,
except the Existing Defaults; and
(iii)since the date of the last financial statements of the
Borrower delivered to Lenders, no material adverse change has
occurred in the business, financial condition, operations or
prospects of the Borrower other than as previously disclosed to
the Lenders.
PART VI
CONDITIONS TO EFFECTIVENESS
SUBPART 6.1. Effective Time of Amendments. The amendments and
waivers set forth in this Agreement shall be and become effective
as of the first Business Day upon which each of the conditions
set forth in this Subpart 6.1 shall have been completed to the
satisfaction of the Agent and the Lenders (the Amendment No. 2
Effective Date).
SUBPART 6.1.1. Execution of Agreement. The Agent shall have
received counterparts (or other evidence of execution, including
telephonic message, satisfactory to the Agent) of the due
execution of this Agreement on behalf of the Credit Parties and
each of the Lenders.
SUBPART 6.1.2. Mortgages. The Agent shall have received the
fully executed and notarized Mortgages for each of the real
property assets designated on Schedule 1 (the Mortgaged
Property) attached hereto and incorporated herein by reference,
each such Mortgage being
substantially in the form of the corresponding mortgage or deed
of trust form for the respective
State as contained in Exhibit A to this Agreement. Each such
Mortgage shall grant and
convey to the Agent for the benefit of the Lenders (or as
applicable, to a trustee for the benefit of
the Agent and the Lenders) a valid first priority lien on the
corresponding Mortgaged Property and shall be in recordable form,
subject only to (a) Liens securing taxes, assessments, and other
governmental charges or levies (excluding any Lien imposed
pursuant to any of the provisions of ERISA) which are not yet due
and payable; (b) Liens or claims of materialmen and mechanics,
incurred in the ordinary course of the Credit Parties business,
payment of which is not yet due; (c) Liens constituting
encumbrances in the nature of zoning restrictions, easements, and
rights or restrictions of record on the use of the Mortgaged
Property, which do not materially detract from the value of such
Mortgaged Property as used by any of the Credit Parties or impair
the use thereof in the business of any of the Credit Parties; and
(d) such other Liens as shall be reasonably acceptable to the
Agent and the Majority Lenders. With respect to any Mortgaged
Property that is a leasehold estate, unless in any such case the
Credit Parties are unable after good faith efforts to obtain the
same, the Agent shall have received (a) such estoppel letters,
consents, and waivers from the landlords on such real property as
may be reasonably required by the Agent, which estoppel letters
shall be in form and substance reasonably satisfactory to the
Agent and (b) evidence that the applicable lease, a memorandum of
lease with respect thereto, or other evidence of such lease in
form and substance reasonably satisfactory to the Agent has been
recorded in all places to the extent necessary or desirable, in
the reasonable judgment of the Agent, so as to enable the
Mortgage encumbering such leasehold interest to create a valid
and enforceable first priority lien on such leasehold interest in
favor of the Agent for the benefit of the Lenders.
SUBPART 6.1.3. Legal Opinions. The Agent shall have received
(a) an opinion of Wyche, Burgess, Freeman & Parham, P.A., counsel
to the Credit Parties, reasonably satisfactory in form and
substance to the Agent and the Lenders, opining as to inter alia
the due authorization, validity, and enforceability of this
Agreement, and (b) an opinion of counsel (which counsel shall be
reasonably satisfactory to the Agent) in each state in which
Mortgaged Property is located with respect to the enforceability
of the form of Mortgage recorded in such state and such other
matters as the Agent and the Lenders may reasonably request, in
form and substance reasonably satisfactory to the Agent and the
Lenders.
SUBPART 6.1.4. Amendment Fees. The Agent shall have received
from the Borrower, on the Amendment No. 2 Execution Date, for the
account of each Lender, in immediately available funds, the
amendment fee of 0.125% of each Lenders Commitment set forth in
Section 4.15(e) of the Amended Credit Agreement.
SUBPART 6.1.5. Corporate Action. The Agent shall have received
certified copies of all corporate action taken by each Credit
Party approving this Agreement and each of the documents executed
and delivered in connection herewith (including, without
limitation, a certificate setting forth the resolutions of the
Board of Directors of each Credit Party adopted in respect of the
transactions contemplated by this Agreement.)
SUBPART 6.1.6. Other Documents. The Agent shall have received
such other documents relating to the transactions contemplated
hereby as the Agent or counsel to the Agent may reasonably
request of the Borrower in writing on or before the Amendment No.
2 Execution Date.
SUBPART 6.1.7. Expenses of Agent. The Borrower shall have (a)
reimbursed the Agent for all reasonable out-of-pocket expenses of
the Agent, including, without limitation, all reasonable fees and
expenses of its attorneys, incurred in connection with the
negotiation, preparation or execution of this Agreement, and (b)
paid to the Agent the estimated recording costs and fees (as
reasonably estimated by the Agent) for the filing and recordation
of the Mortgages.
SUBPART 6.1.8. Bank Accounts. The Agent shall have received
evidence which it deems of satisfactory form and content
demonstrating that (i) subject to 7.13 of the Amended Credit
Agreement, the Credit Parties have established and maintained in
bank accounts with one or more of the Lenders all of their
primary deposit and disbursement accounts, (ii) the Credit
Parties have made from their existing cash balances payments
sufficient to enable the Borrower to be in compliance with
Section 4.4(a)(i) of the Amended Credit Agreement, and (iii) that
none of the Credit Parties maintains any material cash balances
with any bank or other financial institution other than the
Lenders, unless such other bank or financial institution has
executed and delivered to the Agent for the benefit of the
Lenders a bank agency agreement in form and content reasonably
satisfactory to the Agent and the Majority Lenders. Together
with other reasonable due diligence measures, the Agent may rely
on a certificate of the chief financial officer of the Borrower
stating that all such material cash balances of the Credit
Parties have been deposited with one or more of the Lenders or
with a bank or other financial institution which has executed and
delivered a satisfactory bank agency agreement.
PART VII
WAIVER
Effective as of the Amendment No. 2 Effective Date, the Lenders
hereby waive each of the Existing Defaults. Such waiver is
effective only with respect to the Existing Defaults existing as
of the Amendment No. 2 Execution Date and does not relate to or
affect any prospective Default or Event of Default.
PART VIII
MISCELLANEOUS
SUBPART 8.1 Further Assurances. As soon as practicable after
receipt of a written request from the Agent, and in any event not
later than 30 days from the date such request is received by the
Borrower, the Credit Parties shall cause to be delivered to the
Agent, in form and content reasonably satisfactory to the Agent,
all documents or other instruments incident to the transactions
contemplated by this Agreement that in the reasonable judgment of
the Agent are necessary to effect such transactions.
SUBPART 8.2 . Reaffirmation of Liens and Subsidiary Guaranty.
The Credit Parties hereby reaffirm the liens and security
interests created and granted pursuant to the Amended Credit
Agreement and other Loan Documents and agree that this Agreement
shall in no manner adversely affect or impair such liens and
security interests. Each of the Subsidiary Guarantors hereby
acknowledges and consents to the amendments made to the Existing
Credit Agreement and the related Loan Documents, and further
hereby reaffirms and restates its unconditional guaranty fully to
the extent set forth in the Subsidiary Guaranty.
SUBPART 8.3. References. References in this Agreement to any
Part or Subpart are, unless otherwise specified, to such Part or
Subpart of this Agreement. As of the Amendment No. 2 Effective
Date, all references in the Loan Documents to the Credit
Agreement, the Borrower Security Agreement, or the Subsidiaries
Security Agreement shall be deemed to refer to such document as
amended by this Agreement.
SUBPART 8.4. Counterparts. This Agreement may be executed by
the parties hereto in several counterparts, each of which shall
be deemed to be an original and all of which constitute together
one and the same agreement.
SUBPART 8.5. Governing Law. This Agreement shall be deemed to
be a contract made under and governed by the internal laws and
judicial decisions of the State of North Carolina without giving
effect to the conflict of law principles thereof.
SUBPART 8.6. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns.
SUBPART 8.7. Entire Agreement. The Amended Credit Agreement,
this Agreement, and the other Loan Documents, as amended hereby,
constitute the entire contract among the parties relative to the
subject matter hereof and thereof.
SUBPART 8.8. No Other Changes. Except as expressly modified and
amended in this Agreement, all of the terms, provisions and
conditions of the Loan Documents shall remain unchanged.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
COMPANY:
DELTA WOODSIDE INDUSTRIES, INC.
By: /s/ Bettis C. Rainsford
Title: Executive Vice President
SUBSIDIARY GUARANTORS:
ALCHEM CAPITAL CORPORATION
By /s/ Bettis C. Rainsford
Title: Executive Vice President
DELTA MILLS, INC.
By /s/ Bettis C. Rainsford
Title: Executive Vice President
DUCK HEAD APPAREL COMPANY, INC.
By /s/ Bettis C. Rainsford
Title: Executive Vice President
CARGUD, SOCIEDAD ANONIMA
By /s/ Bettis C. Rainsford
Title: Executive Vice President
ARMONIA TEXTIL, SOCIEDAD ANONIMA
By /s/ Bettis C. Rainsford
Title: Executive Vice President
NAUTILUS INTERNATIONAL, INC.
By /s/ Bettis C. Rainsford
Title: Executive Vice President
NAUTILUS DIRECT, INC.
By /s/ Bettis C. Rainsford
Title: Executive Vice President
DELTA CONSOLIDATED CORPORATION
By /s/ Bettis C. Rainsford
Title: Executive Vice President
DELTA MERCHANDISING, INC.
By /s/ Bettis C. Rainsford
Title: Executive Vice President
DELTA APPAREL HONDURAS, S.A.
By /s/ Bettis C. Rainsford
Title: Executive Vice President
[Remainder of this Page Left Blank]
AGENT:
NATIONSBANK, N.A.
By: /s/ E. Phifer Helms
Title: Senior Vice President
CO-AGENTS:
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By: /s/ Michael J. McKenney
Title: Vice President
THE BANK OF NEW YORK
By: /s/ Ann Marie Beeble
Title: Assistant Vice President
LENDERS:
NATIONSBANK, N.A.
By: /s/ E. Phiver Helms
Title: Senior Vice President
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
By: /s/ Michael J. McKenney
Title: Vice President
THE BANK OF NEW YORK
By: /s/ Ann Marie Beeble
Title: Assistant Vice President
FIRST UNION NATIONAL BANK OF SOUTH CAROLINA
By: /s/ Harry Farthing
Title: Vice President
WACHOVIA BANK OF SOUTH CAROLINA
By: /s/ Suzanne Morrison
Title: Assistant Vice President
THE CHASE MANHATTAN BANK
as successor by merger to The Chase
Manhattan Bank, N.A.
By: /s/ Jo Zalon Meer
Title: Vice President
THE BANK OF NOVA SCOTIA
By:
Title:
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Rose M. Crump
Title: Vice President
FLEET BANK, N.A.
By: /s/ Thomas M. Fasano
Title: Vice President
Schedule 1
<TABLE>
Mortgaged Properties
<CAPTION>
Approx.
Street Address City,State Utilization Sq. Ft.
<S> <C> <C> <C> <C>
Textile Segment
Delta Mill
Beattie 700 North Woods Dr Fountain Inn, SC Spin/Weave 390,000
Furman 710 North Woods Dr Fountain Inn, SC Weave 116,000
Estes 750 Estes Drive Piedmont, SC Spin/weave 332,000
Delta 3 4351 Brick Yard Rd Wallace, SC Dye/finish 555,000
Cypress 1728 N. Old River Rd. Pamplico, SC Spin 144,000
Pamplico 1728 N. Old River Rd. Pamplico, SC Spin/weave 275,000
Delta 2 4222 Delta Plant Road Wallace, SC Dye/finish 347,000
Catawba West Finger Street Maiden, NC Spin 115,000
Stevcoknit
Carter 615 Wilmington Rd. Wallace, NC Dye/finish 485,000
Holly 615 Wilmington Rd. Wallace, NC Knit/finish 224,000
Rainsford 450 Rabbit Trail Edgefield, SC Spin 296,000
Mickel 655 Old Greenvl Hwy. Spartanburg, SC Spin 207,000
Apparel Segment
Delta Apparel
Maiden 408 South Main Ave. Maiden, NC Knit/dye/
finish/cut 305,000
Washington 314 Water Street Washington, GA Sew 129,800
Sandersville 1006 South Harris St. Sandersville, GA Sew 27,000
Distribution
Center 1201 Abiline Place Knoxville, TN Distribution 550,000
Decatur Jones Street Decatur, TN Sew 75,000
Fitness
Equipment
Nautilus
Nautilus 709 Power House Road Independence, VA Manufacturing 264,375
Total Estimated Value
</TABLE>
<TABLE>
Mortaged Properties
<CAPTION>
Owned
Approx Contact Phone or Estimated Book
Acreage Person Number Leased Value Value
<S> <C> <C> <C> <C> <C> <C>
Textile Segment
Delta Mills
Beattie 112.00 K. Holsombeck 864-255-4118 Owned 8,200,000 9,641,000
Furman 21.00 K. Holsombeck 864-255-4118 Owned 2,100,000 2,380,000
Estes 114.00 K. Holsombeck 864-255-4118 Owned 5,000,000 163,000
Delta 3 527.00 K. Holsombeck 864-255-4118 Owned 8,200,000 1,023,000
Cypress 4.00 K. Holsombeck 864-255-4118 Owned 2,300,000 598,000
Pamplico 520.00 K. Holsombeck 864-255-4118 Owned 500,000 3,953,000
Delta 2 295.00 K. Holsombeck 864-255-4118 Owned 5,600,000 3,234,000
Catawba 34.00 K. Holsombeck 864-255-4118 Owned 1,500,000 918,000
Stevcoknit
Carter 72.00 Cliff Neal 864-879-6708 Owned 3,700,000 0
Holly 3.00 Cliff Neal 864-879-6708 Owned 2,700,000 0
Rainsford 43.00 Cliff Neal 864-879-6708 Owned 6,000,000 8,598,000
Mickel 14.00 Cliff Neal 864-879-6708 Owned 5,000,000 5,809,000
Apparel Segment
Delta Apparel
Maiden 45.00 D. Carrington 770-806-6800-815 Owned 4,300,000 2,152,000
Washington 6.00 D. Carrington 770-806-6800-815 Owned 200,000 191,000
Sandersville 5.00 D. Carrington 770-806-6800-815 Owned 200,000 182,000
Distribution
Center 21.00 D. Carrington 770-806-6800-815 Owned 3,000,000 101,000
Decatur 11.00 D. Carrington 770-806-6800-815 Owned 1,396,000 1,176,000
Fitness Equipment
Nautilus
Nautilus 54.66 Cindy Rudy 540-773-2881-218 Owned 4,092,250 4,337,000
Total Estimated Value 63,988,250 44,456,000
</TABLE)
EXHIBIT A
Forms of Mortgages and Deeds of Trust
[South Carolina]
Drawn By and Return To:
#__
Moore & Van Allen, PLLC (DSW)
NationsBank Corporate Center
100 North Tryon Street, Floor 47
Charlotte, North Carolina 28202-4003
THIS MORTGAGE COVERS GOODS WHICH ARE OR ARE TO BECOME FIXTURES,
IS EFFECTIVE AS A FINANCING STATEMENT FILED AS A FIXTURE FILING
AND IS TO BE FILED IN THE REAL ESTATE RECORDS.
MORTGAGE AND SECURITY AGREEMENT
STATE OF SOUTH CAROLINA
COUNTY OF _______________
THIS MORTGAGE AND SECURITY AGREEMENT (this "Mortgage") is made
and entered into as of the _______ day of ____________, 1996, by
and between
____________________________________, a ____________ corporation,
whose address is ________________________________ (the Grantor"
or Mortgagor); and
NATIONSBANK, N.A., in its capacity as collateral agent (in such
capacity, the "Collateral Agent" or Mortgagee) for the lenders
from time to time party to the Credit Agreement described herein
(the "Lenders") with a mailing address of 100 North Tryon Street,
NC1-007-08-11, Charlotte, North Carolina 28255.
WHEREAS, pursuant to that certain credit agreement, dated as of
March 15, 1996, by and among Delta Woodside Industries, Inc. (the
Borrower), the lenders parties thereto from time to time (the
Lenders), NationsBank, N.A. as the agent for the Lenders, and
Bank of America National Trust and Savings Association and The
Bank of New York as co-agents (as heretofore amended, the
Existing Credit Agreement), the Lenders have made available to
the Borrower certain revolving credit facilities (the Credit
Facilities);
WHEREAS, the Grantor is an indirect wholly-owned subsidiary of
the Borrower and benefits from having access to working capital
through the Credit Facilities and such Credit Facilities are
critical to the ongoing business operations of the Grantor;
WHEREAS, the Grantor executed that certain Subsidiary Guaranty,
dated as of March 15, 1996 (as amended, modified or restated from
time to time, the Guaranty), guarantying pursuant to the terms
thereof the repayment of the Credit Facilities;
WHEREAS, the Borrower is currently in default under the terms of
the Existing Credit Agreement;
WHEREAS, the Borrower, the Lenders, the Collateral Agent, the
Grantor, and the other Subsidiary Guarantors have executed that
certain Second Amendment and Waiver Agreement, dated as of
December 20, 1996, pursuant to which the Lenders have agreed
inter alia to waive certain outstanding defaults under the
Existing Credit Agreement and to amend certain provisions of the
Existing Credit Agreement (as amended, the Credit Agreement),
and the Borrower has agreed inter alia to cause the Grantor to
execute and deliver this Mortgage; and
WHEREAS, the Grantor is the owner of the fee simple interest in
the real property described on Exhibit A attached hereto and
incorporated herein by reference.
W I T N E S S E T H:
In order to secure the payment of its obligations under the
Guaranty together with any renewals or extensions or
modifications thereof upon the same or different terms and also
to secure in accordance with Section 29-3-50, as amended, Code of
Laws of South Carolina (1976): (i) all future advances and
readvances that may subsequently be made to the Borrower by the
Lenders evidenced by any promissory notes given in connection
with the Credit Agreement, and all renewals and extensions
thereof; and (ii) all other indebtedness of the Grantor or the
Borrower to the Lenders, now or hereafter existing, whether
direct or indirect, including without limitation the Secured
Obligations and Indebtedness (as such terms are hereinafter
defined) the maximum amount of all indebtedness outstanding at
any one time secured hereby not to exceed $248,500,000, plus
interest thereon, all charges and expenses of collection incurred
by Collateral Agent including court costs and reasonable
attorney's fees,
The Grantor, in consideration of the indebtedness herein recited
and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, irrevocably grants,
mortgages, remises, aliens, assigns and conveys to the Collateral
Agent and the Collateral Agent's successors and assigns, subject
to the further terms of this Mortgage, all of the Grantor's
right, title and interest (thereunder or otherwise) in and to the
following described land, real property interests, buildings,
improvements, fixtures, furniture and appliances and other
personal property:
(a)All that tract or parcel of land and other real property
interests in __________ County, South Carolina more particularly
described in Exhibit A attached hereto and made a part hereof
(the "Land"); and
(b)All buildings and improvements of every kind and description
now or hereafter erected or placed on the Land (the
"Improvements") and all materials intended for construction,
reconstruction, alteration and repair of such Improvements now or
hereafter erected thereon, all of which materials shall be deemed
to be included within the Premises (as hereinafter defined)
immediately upon the delivery thereof to the Land, and all
fixtures and articles of personal property now or hereafter owned
by the Grantor and attached to or contained in and used in
connection with the Land and Improvements including, but not
limited to, all furniture, furnishings, apparatus, machinery,
equipment, motors, elevators, fittings, radiators, ranges,
refrigerators, awnings, shades, screens, blinds, carpeting,
office equipment and other furnishings and all plumbing, heating,
lighting, cooking, laundry, ventilating, refrigerating,
incinerating, air conditioning and sprinkler equipment and
fixtures and appurtenances thereto and all renewals or
replacements thereof or articles in substitution thereof, whether
or not the same are or shall be attached to the Land and
Improvements in any manner (the "Tangible Personalty") and all
proceeds of the Tangible Personalty (hereinafter, the Land,
Improvements and Tangible Personalty may be collectively referred
to as the "Premises").
TO HAVE AND HOLD the same, together with all privileges,
hereditaments, easements and appurtenances thereunto belonging,
to the Collateral Agent and the Collateral Agent's successors and
assigns to secure the indebtedness herein recited.
And, as additional security for said indebtedness, the Grantor
hereby conditionally assigns to the Collateral Agent all right,
title and interest of the Grantor in and to the security
deposits, rents, issues, profits and revenues of the Premises
from time to time accruing (the "Rents and Profits"), reserving
only the right to the Grantor to collect and enjoy the same as
long as there shall exist no Event of Default (as defined in
Article III).
As additional collateral and further security for said
indebtedness, the Grantor does hereby assign to the Collateral
Agent and grants to the Collateral Agent a security interest in
all of the right, title and interest of the Grantor in and to any
and all insurance policies and proceeds thereof and any and all
leases (including equipment leases), rental agreements, sales
contracts, management contracts, franchise agreements,
construction contracts, architects' contracts, technical services
agreements, or other contracts, licenses and permits now or
hereafter affecting the Premises (the "Intangible Personalty") or
any part thereof, and the Grantor agrees to execute and deliver
to the Collateral Agent such additional instruments, in form and
substance reasonably satisfactory to the Collateral Agent, as may
hereafter be reasonably requested by the Collateral Agent to
evidence and confirm said assignment; provided, however, that
acceptance of any such assignment shall not be construed as a
consent by the Collateral Agent to any lease, rental agreement,
management contract, franchise agreement, construction contract,
technical services agreement or other contract, license or
permit, or to impose upon the Collateral Agent any obligation
with respect thereto. Notwithstanding the foregoing provisions,
such assignment and grant of security interest contained herein
shall not extend to, and the Intangible Personalty shall not
include, any personalty which is now or hereafter held by the
Grantor as licensee, lessee or otherwise, to the extent that (a)
such personalty is not assignable or capable of being encumbered
as a matter of law or under the terms of the license, lease or
other agreement applicable thereto (but solely to the extent that
any such restriction shall be enforceable under applicable law),
without the consent of the licensor or lessor thereof or other
applicable party thereto and (b) such consent has not been
obtained; provided, however, that the foregoing assignment and
grant of security interest shall extend to, and the Intangible
Personalty shall include, any and all proceeds of such personalty
to the extent that the assignment or encumbering of such proceeds
is not so restricted as a matter of law or under the terms of the
license, lease or other agreement applicable thereto.
All the Tangible Personalty which comprise a part of the Premises
shall, as far as permitted by law, be deemed to be affixed to the
aforesaid Land and conveyed therewith. As to the balance of the
Tangible Personalty and the Intangible Personalty, this Mortgage
shall be considered to be a security agreement which creates a
security interest in such items for the benefit of the Collateral
Agent. In that regard, the Grantor grants to the Collateral
Agent all of the rights and remedies of a secured party under the
South Carolina Uniform Commercial Code and grants to the
Collateral Agent a security interest in all of the Tangible
Personalty and Intangible Personalty.
The Grantor and the Collateral Agent covenant, represent and
agree as follows:
ARTICLE I
Secured Obligations
1.1Obligations Secured. NationsBank, N.A., as agent (the Agent)
for the Lenders, the Lenders, the co-agents named therein, and
the Borrower executed that certain Credit Agreement dated as of
March 15, 1996, as amended by that certain Amendment and Waiver,
dated as of May 20, 1996, and further amended by that certain
Second Amendment and Waiver Agreement, dated as of December 20,
1996 (as amended, modified, supplemented, extended, renewed, or
replaced from time to time, the Credit Agreement) pursuant to
which the Lenders have provided a working capital credit facility
to the Borrower of up to $248,500,000 (hereinafter the loans and
extensions of credit thereunder may be called the "Loans"); terms
used but not otherwise defined herein shall have the meanings
provided in the Credit Agreement); which Loans are evidenced by
(i) those revolving credit promissory notes of the Borrower (as
referenced and defined in the Credit Agreement, and as amended,
modified, supplemented, extended, renewed or replaced from time
to time, the "Revolving Notes" or "Notes"), under which sums may
be advanced, paid back or readvanced and (ii) to the extent
provided in the Credit Agreement those letters of credit for the
account of the Borrower or the Subsidiary Guarantors (as
referenced in the Credit Agreement, the "Letters of Credit").
To support the repayment of the Loans, the Grantor, and each
other Subsidiary Guarantor, has executed that certain Subsidiary
Guaranty, dated as of March 15, 1996 (as amended, modified,
supplemented, extended, renewed, or replaced from time to time,
the Subsidiary Guaranty), pursuant to which the Subsidiary
Guarantors (including without limitation the Grantor) have
guaranteed, subject to the terms of the Subsidiary Guaranty, the
repayment in full of the Loans. This Mortgage is given to
secure:
(a) all present and future indebtedness, obligations and
liabilities of the Grantor under or in connection with the
Subsidiary Guaranty or any other Loan Documents;
(b) all indebtedness of the Grantor owing to the Lenders now or
hereafter issued in connection with this Mortgage, any other Loan
Documents, or any other instruments or documents executed by the
Grantor relating to any Loan Documents, whether now existing or
hereafter arising, due or to become due, direct or indirect,
absolute or contingent, and howsoever evidenced, held or
acquired, together with any and all modifications, extensions,
renewals, and/or substitutions of any of the foregoing; and
(c) all expenses and charges, legal and otherwise, reasonably
incurred by the Collateral Agent and/or the Lenders in collecting
or enforcing any of such indebtedness, obligations and
liabilities or in realizing on or protecting any security
therefor, including without limitation the security afforded
hereunder.
All of the foregoing obligations and indebtedness is collectively
referred to herein as the Secured Obligations or the
Indebtedness.
ARTICLE II
The Grantor's Covenants, Representations and Agreements
2.1Title to Property. The Grantor represents and warrants to the
Collateral Agent that (i) it is the owner of the Tangible
Personalty (to the extent such Tangible Personalty does not
constitute fixtures), and has the right to convey the same, (ii)
that as of the date hereof title to such property is free and
clear of all encumbrances except (a) any Lien for real estate
taxes or water and sewer charges that are not due and payable,
(b) all easements, restrictions, and other matters of record
(other than any Liens) which affect the Land without materially
impairing the use or value thereof, (c) special assessments which
are or may be pending, but which have not become a Lien, (d) such
matters as would be shown on a current and accurate survey of the
Land (other than a Lien) which do not materially impair the use
or value of the Land, and (e) any matter shown on Exhibit B
attached hereto which is reasonably satisfactory to the Agent and
the Majority Lenders (collectively, the "Permitted
Encumbrances"), and (iii) it will warrant and defend the title to
such property except for the Permitted Encumbrances against the
claims of all Persons. As to the balance of the Premises, the
Rents and Profits and the Intangible Personalty, the Grantor
represents and warrants that it has title to such property, that
title as of the date hereof to such property is free and clear of
all encumbrances except for the Permitted Encumbrances, that it
has the right to convey such property and that it will warrant
and defend such property except for the Permitted Encumbrances
against the claims of all Persons.
2.2Taxes and Fees. Subject to Section 7.6 of the Credit
Agreement, the Grantor will pay timely all material taxes,
general and special assessments, insurance premiums, permit fees,
inspection fees, license fees, water and sewer charges, franchise
fees and equipment rents and any other material charges or fees
relating to the Premises against it or the Premises (and the
Grantor, upon request of the Collateral Agent, will submit to the
Collateral Agent receipts evidencing said payments).
2.3Reimbursement. The Grantor agrees that if it shall fail to
pay on or before the date that the same become delinquent any
tax, assessment or charge levied or assessed against the Premises
or any utility charge, whether public or private, or any
insurance premium or if it shall fail to procure the insurance
coverage and the delivery of the insurance certificates required
hereunder, or if it shall fail to pay any other charge or fee
described in Sections 2.2, 2.3 or 2.6 hereof, then the Collateral
Agent, at its option, may pay or procure the same and will give
the Grantor prompt notice of any such expenditures. The Grantor
will reimburse the Collateral Agent upon demand for any sums of
money paid by the Collateral Agent pursuant to this Section,
together with interest on each such payment at the default rate
of interest provided in the Credit Agreement, and all such sums
and interest thereon shall be secured hereby.
2.4Additional Documents. The Grantor agrees to execute and
deliver to the Collateral Agent, concurrently with the execution
of this Mortgage and upon the request of the Collateral Agent
from time to time hereafter, all financing statements and other
documents reasonably required to perfect and maintain the
security interest created hereby. The Grantor hereby irrevocably
(as long as any Loans or Letters of Credit remain outstanding or
the Commitments have not been terminated) makes, constitutes and
appoints the Collateral Agent as the true and lawful attorney of
the Grantor to sign the name of the Grantor on any financing
statement, continuation of financing statement or similar
document required to perfect or continue such security interests.
2.5Sale or Encumbrance. Except in the ordinary course of
business and except as permitted by the Credit Agreement, the
Grantor will not sell, encumber or otherwise dispose of any of
the Tangible Personalty except to incorporate such into the
Improvements or replace such with goods of quality and value at
least equal to that replaced. In the event the Grantor sells or
otherwise disposes of any of the Tangible Personalty in
contravention of the foregoing sentence, the Collateral Agent's
security interest in the proceeds of the Tangible Personalty
shall continue pursuant to this Mortgage.
2.6Fees and Expenses. The Grantor will promptly pay upon demand
any and all reasonable and actual costs and expenses of the
Collateral Agent, (a) as required under the Credit Agreement and
(b) as necessary to protect the Premises, the Rents and Profits
or the Intangible Personalty or to exercise any rights or
remedies under this Mortgage or with respect to the Premises,
Rents and Profits or the Intangible Personalty. All of the
foregoing costs and expenses shall be secured hereby.
2.7Leases and Other Agreements. Without first obtaining on each
occasion the written approval of the Collateral Agent, the
Grantor shall not, except as permitted by the Credit Agreement or
as shall not materially affect the value or impair the use of the
Premises, enter into, cancel, surrender or materially modify or
permit the cancellation of any material lease (including any
equipment lease), rental agreement, management contract,
franchise agreement, construction contract, technical services
agreement or other material contract, license or permit now or
hereafter affecting the Premises, or materially modify any of
said instruments, or accept or permit to be made, any prepayment
(more than one month) of any installment of rent or fees
thereunder. Certified copies of each such approved material
lease or other material agreement not previously delivered to the
Collateral Agent shall be submitted to the Collateral Agent as
soon as possible. The Grantor shall faithfully keep and perform,
or cause to be kept and performed, in all material respects, all
of the covenants, conditions, and agreements contained in each of
said agreements, now or hereafter existing, on the part of the
Grantor to be kept and performed (including performance of all
covenants to be performed under any and all leases of the
Premises or any part thereof) and shall at all times use
commercially reasonable efforts to enforce, with respect to each
other party to said agreements, all obligations, covenants and
agreements by such other party to be performed thereunder.
2.8Maintenance of Premises. The Grantor will abstain from and
will not permit the commission of waste in or about the Premises
and will maintain, or cause to be maintained (subject to
reconstruction periods after the occurrence of an act of God),
the Premises in good condition and repair, reasonable wear and
tear excepted.
2.9Insurance.
(a)Liability: The Grantor covenants to maintain or cause to be
maintained general accident and public liability insurance
against all claims for bodily injury, death or property damage
occurring upon, in or about any part of the Premises. The
policies must be from a company and in forms and amounts
reasonably satisfactory to the Collateral Agent.
(b)Casualty: The Grantor shall, at its own cost, keep all
buildings now or hereafter comprising a part of the Premises
insured against loss or damage by fire and such other insurable
risks, casualties and hazards as the Collateral Agent may from
time to time specify. The policy must be from a company and in
form, content and amount reasonably satisfactory to the
Collateral Agent.
(c)Flood: If any part of the Improvements are located in an area
having "special flood hazards", a flood insurance policy naming
the Collateral Agent as mortgagee must be submitted to the
Collateral Agent. The policy must be from a company and in form,
content and amount reasonably satisfactory to the Collateral
Agent.
(d)Delivery of Policies and Renewals: The Grantor agrees to
deliver to the Collateral Agent, upon the request of the
Collateral Agent, as additional security hereto, a copy of the
policies of such insurance pursuant to subsections (a), (b), and
(c) hereof, and any insurance policies required by the terms of
the Credit Agreement or the other Loan Documents. Renewals of
such policies shall be so delivered at least ten (10) days before
any such insurance shall expire. In the event the Grantor fails
to maintain insurance as required hereunder the Collateral Agent
has the right to procure such insurance whether or not the
Grantor's failure to maintain such insurance constitutes an Event
of Default (as defined in Article III) or an event or condition
which, upon the giving of notice or the passage of time, or both,
would constitute an Event of Default. Any amounts paid by the
Collateral Agent for insurance shall be due and payable to the
Collateral Agent upon demand and shall be secured by this
Mortgage.
(e)Proof of Loss; Claims Settlement: In the event of a material
loss, the Grantor shall give prompt notice thereof to the
insurance carrier and the Collateral Agent. Subject to the
rights of the holder of any prior Permitted Encumbrance, Grantor
shall have the right to adjust and compromise any loss under any
insurance policies maintained with regard to this Premises,
provided that any settlement with regard to any such loss shall
be subject to the Collateral Agent's prior approval (which shall
not be unreasonably withheld); provided further, however, that if
Grantor fails to so adjust and compromise or if, prior to such
adjustment and compromise, a Default or an Event of Default
occurs under any of the Loan Documents, then Collateral Agent
shall be, and is hereby, authorized and empowered, at its option,
to adjust or compromise any loss under any insurance policies
maintained pursuant to this Section. Subject to the rights of
the holder of any prior Permitted Encumbrance, each insurance
company is hereby authorized and directed to make payment for all
such losses directly to Collateral Agent, instead of to Grantor
and Collateral Agent jointly, upon request of the Collateral
Agent during the continuance of a Default or an Event of Default.
In the event any insurance company fails to disburse directly and
solely to Collateral Agent but disburses instead either solely to
Grantor or to Grantor and Collateral Agent jointly, in violation
of the preceding sentence, Grantor agrees immediately to endorse
and transfer such proceeds to Collateral Agent. Upon failure of
Grantor to endorse and transfer such proceeds as aforesaid,
Collateral Agent may execute such endorsements or transfers for
and in the name of Grantor and Grantor hereby irrevocably
appoints Collateral Agent as Grantors agent and attorney-in-fact
so to do. The Collateral Agent is hereby authorized, in its sole
discretion, to collect the proceeds of any insurance claims
during the continuance of a Default or an Event of Default.
(f)Use of Proceeds: Provided that there is no Default or Event
of Default, Grantor may apply, subject to the rights of the
holder of any prior Permitted Encumbrance, the proceeds of any
insurance or any part thereof to restoration or repair of the
property damaged.
2.10Releases and Waivers. The Grantor agrees that no release by
the Collateral Agent or the Lenders of any of the Grantor's
successors in title from liability on the Secured Obligations, no
release by the Collateral Agent of any portion of the Premises,
the Rents and Profits or the Intangible Personalty, no
subordination of lien, no forbearance on the part of the Lenders
or the Collateral Agent to collect on the Secured Obligations, or
any part thereof, no waiver of any right granted or remedy
available to the Collateral Agent or the Lenders and no action
taken or not taken by the Collateral Agent or the Lenders shall
in any way diminish the Grantor's obligation to the Collateral
Agent and the Lenders or have the effect of releasing the
Grantor, or any successor to the Grantor, from full
responsibility to the Collateral Agent or the Lenders for the
complete discharge of each and every of the Grantor's obligations
hereunder or under the Credit Agreement or any of the other Loan
Documents.
2.11.Eminent Domain.
(a)Participation in Proceedings: Grantor shall promptly notify
the Collateral Agent of any actual or threatened initiation of
any eminent domain proceeding as to any material part of the
Premises and shall deliver to the Collateral Agent copies of any
and all papers served or received in connection with such
proceedings, and the Collateral Agent shall have the right, at
its option, to participate in such proceedings at the expense of
Grantor (including, without limitation, the Collateral Agent's
reasonable attorneys' fees) and Grantor will execute such
documents and take such other steps as required to permit such
participation.
(b)Right to Settle Claims: In the event of a condemnation or
similar proceeding, the Grantor shall give prompt notice thereof
to the Collateral Agent. Grantor shall have the right to adjust,
compromise and otherwise negotiate an award with regard to any
such proceeding, provided that any settlement with regard to any
such proceeding shall be subject to the Majority Lenders prior
approval (which shall not be unreasonably withheld); provided,
however, that if Grantor fails to so negotiate or if, prior to
the conclusion of such negotiation, a Default or an Event of
Default occurs under any of the Loan Documents, then the
Collateral Agent shall be, and is hereby, authorized and
empowered, at its option, to negotiate the award with regard to
any such proceeding. Subject to the rights of the holder of any
prior Permitted Encumbrance, each governmental unit making any
such award is hereby authorized and directed to make payment of
all such awards directly to Collateral Agent, instead of to
Grantor and Collateral Agent jointly, upon request of the
Collateral Agent during the continuance of a Default or an Event
of Default. In the event any governmental unit fails to disburse
directly and solely to Collateral Agent but disburses instead
either solely to Grantor or to Grantor and Collateral Agent
jointly, in violation of the preceding sentence, Grantor agrees
immediately to endorse and transfer such award or proceeds to
Collateral Agent. Upon failure of Grantor to endorse and
transfer such award or proceeds as aforesaid, Collateral Agent
may execute such endorsements or transfers for and in the name of
Grantor and Grantor hereby irrevocably appoints Collateral Agent
as Grantor's agent and attorney-in-fact so to do. The Collateral
Agent is hereby authorized, in its sole discretion, to collect
the award or proceeds of any such condemnation or similar
proceeding and is hereby authorized to apply the same to the
outstanding balance of the Secured Obligations during the
continuance of a Default or an Event of Default. Provided that
there is no Default or Event of Default, Grantor may apply,
subject to the rights of the holder of any prior Permitted
Encumbrance, the award or proceeds of any such condemnation or
similar proceeding to the replacement of the affected property.
(c)Further Assignments: The Grantor agrees to execute such
further assignments and agreements as may be reasonably required
by the Collateral Agent to assure the effectiveness of this
Section. During the continuance of a Default or an Event of
Default, the Collateral Agent may apply any condemnation awards
or proceeds to the outstanding balance of the Secured
Obligations.
2.12Environmental Assessment. Upon the earlier to occur of (i) a
Default or an Event of Default and (ii) March 31, 1997, and upon
the request of the Collateral Agent and the Majority Lenders, the
Grantor agrees to provide the Collateral Agent (at the Grantors
expense and within 45 days of such request) with a current
environmental assessment of the Premises. Such assessment shall
be in a form satisfactory to the Collateral Agent and from an
environmental engineer or consultant reasonably satisfactory to
the Collateral Agent. If the Grantor shall fail to comply with
such request (prior to or after an Event of Default), then the
Collateral Agent shall have the option, but be under no
obligation, to obtain such an environmental assessment, and all
fees, costs and expenses associated with the Collateral Agent's
obtaining such report shall be added to the amount of the Secured
Obligations and be secured by this Mortgage.
2.13Appraisal. Upon the earlier to occur of (i) a Default or an
Event of Default and (ii) June 30, 1997, and upon request of the
Majority Lenders and the Collateral Agent, the Grantor agrees to
provide the Collateral Agent (at Grantors expense and within 45
days of such request) a current written appraisal or reappraisal
of the Premises. Such appraisal shall be prepared in accordance
with reasonable written instructions from the Collateral Agent
and prepared by a qualified appraiser reasonably satisfactory to
the Collateral Agent. If the Grantor shall fail to comply with
such request (prior to or after an Event of Default), then the
Collateral Agent shall have the option, but be under no
obligation, to obtain such an appraisal, and all fees, costs and
expenses associated with the Collateral Agent's obtaining such
appraisal shall be added to the amount of the Secured Obligations
and be secured by this Mortgage.
2.14Survey. Upon the earlier to occur of (i) a Default and an
Event of Default and (ii) March 31, 1997, and upon the request of
the Collateral Agent and the Majority Lenders, the Grantor agrees
to provide the Collateral Agent (at Grantors expense and within
45 days of such request) current surveys of the Land. Such
surveys shall be prepared in accordance with written instructions
from the Collateral Agent and prepared by a qualified surveyor
reasonably satisfactory to the Collateral Agent. If the Grantor
shall fail to comply with such request (prior to or after an
Event of Default), then the Collateral Agent shall have the
option, but be under no obligation, to obtain such surveys, and
all fees, costs and expenses associated with the Collateral
Agent's obtaining such surveys shall be added to the amount of
the Secured Obligations and be secured by this Mortgage.
2.15Title Policies. Upon the earlier to occur of (i) a Default
and an Event of Default and (ii) March 31, 1997, and upon the
request of the Collateral Agent and the Majority Lenders, the
Grantor agrees to provide the Collateral Agent (at the Grantors
expense and within 45 days of such request) with ALTA mortgagee
title insurance policies issued by a title insurer reasonably
satisfactory to the Collateral Agent, in amounts not less than
the amounts designated for the Premises on Schedule 1 to the
Second Amendment and Waiver, assuring the Collateral Agent and
the Lenders that this Mortgage creates a valid and enforceable
first priority mortgage lien on the Premises, free and clear of
all defects and encumbrances excepted Permitted Encumbrances and
subject to a standard survey exception, which such title policies
shall be in form and substance reasonably satisfactory to the
Collateral Agent and the Majority Lenders and shall provide for
such affirmative insurance and such reinsurance as the Collateral
Agent may reasonably request.
2.16Environmental Indemnification. The Grantor covenants and
agrees with regard to the Premises that it will (i) conduct and
complete all investigations, studies, sampling and testing and
all remedial, removal, and other actions necessary to clean up
and remove all Contaminants on, from, or affecting the Premises
(A) in accordance with all applicable federal, state, and local
laws, regulations, rules, and policies, (B) to the reasonable
satisfaction of the Collateral Agent, and (C) in accordance with
the orders and directives of all federal, state and local
governmental authorities, and (ii) defend, indemnify, and hold
harmless the Collateral Agent and each of the Lenders, their
respective employees, agents, officers, and directors (except to
the extent arising from the Collateral Agents or such Lenders
gross negligence or willful misconduct) from and against any
claims, demands, penalties, fines, liabilities, settlements,
damages, costs, or expenses (including, without limit, reasonable
attorney and consultant fees, investigation and laboratory fees,
court costs, and litigation expenses) of whatever kind of nature,
known or unknown, contingent or otherwise, arising out of or in
any way related to (A) the presence, disposal, release, or
threatened release of any Contaminant which are on, from, or
affecting the soil, water, vegetation, buildings, personal
property, persons, animals, or otherwise; (B) any personal injury
(including wrongful death) or property damage (real or personal)
arising out of or related to such Contaminants; (C) any lawsuit
brought or threatened, settlement reached, or governmental order
relating to such Contaminants, and/or (D) any violation of laws,
orders, regulations, requirements, or demands of government
authorities, or any policies or requirements of the Collateral
Agent or any of the Lenders set forth herein or in any of the
Loan Documents, which are based upon or in any way related to
such Contaminants. For the purposes hereof, the term
"Contaminants" shall mean any substance, material or waste the
generation, handling, storage, treatment or disposal of which is
regulated by any local or state government authority in any
jurisdiction in which the Grantor has owned, leased or operated
real property or disposed of hazardous materials, or by the
United States government, including any material or substance
which is (a) defined as a "contaminant," "hazardous waste,"
"hazardous material," "hazardous substance," "extremely hazardous
waste," or "restricted hazardous waste" or other similar term or
phrase under any such law, (b) petroleum, (c) designated as a
"hazardous substance" pursuant to Section 311 of the Clean Water
Act, 33 U.S.C. 1251 et seq. (33 U.S.C. 1321) or listed pursuant
to Section 307 of the Clean Water Act (33 U.S.C. 1317), (d)
defined as a "hazardous waste" pursuant to Section 1004 of the
Resource Conservation and Recovery Act, 42 U.S.C. 6901, et seq.
(42 U.S.C. 6903 or (e) defined as "hazardous substance" pursuant
to Section 101 of the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. 9601, et seq. (42
U.S.C. 6901). Except as disclosed in writing to the Agent and
the Lenders on or prior to the date hereof, to the best of
Grantors knowledge and belief, the Premises and its current use
and all off-site disposals by the Grantor of any Contaminants
comply in all material respects with all Environmental Laws.
ARTICLE III
Event of Default
An Event of Default shall exist under the terms of this Mortgage
upon the existence of an Event of Default under the terms of the
Credit Agreement.
ARTICLE IV
Foreclosure
4.1Acceleration of Loan; Foreclosure. Upon the occurrence and
during the continuance of an Event of Default and otherwise in
compliance with Section 10.2 of the Credit Agreement, the entire
balance of the Loans and Letters of Credit and any other
obligations due under the Loan Documents, including all accrued
interest, shall, at the option of the Collateral Agent, become
immediately due and payable. Upon failure to pay the Loans and
Letters of Credit or reimburse any other amounts due under the
Loan Documents in full at any stated or accelerated maturity, the
Collateral Agent may foreclose the lien of this Mortgage by
judicial or nonjudicial proceeding in a manner permitted by
applicable law. The Grantor hereby waives any statutory right of
redemption in connection with such foreclosure proceeding.
4.2Proceeds of Sale. Following a foreclosure sale, the proceeds
of such sale shall, subject to applicable law, be applied as
follows: first, to all costs and expenses of the Collateral
Agent (including without limitation reasonable attorney's fees
and expenses) incurred in connection with the implementation
and/or enforcement of this Mortgage and/or any of the other Loan
Documents; second, to all costs and expenses of the Lenders
(including without limitation reasonable attorneys' fees and
expenses) incurred in connection with the implementation and/or
enforcement of this Mortgage and/or any of the other Loan
Documents; third, to such of the Secured Obligations as consist
of accrued but unpaid interest and fees; fourth, to the principal
amount of the Secured Obligations; fifth, to all other amounts
payable with respect to the Secured Obligations; and sixth, to
the payment of surplus, if any, to whomever may be lawfully
entitled to receive such surplus. The Grantor shall remain
liable to the Lenders for any deficiency.
ARTICLE V
Additional Rights and Remedies of the Collateral Agent
5.1Rights Upon Maturity or an Event of Default. Upon the
occurrence and during the continuance of an Event of Default, the
Collateral Agent, immediately and without additional notice and
without liability therefor to the Grantor and to the extent
permitted by applicable law, except for its own gross negligence
or willful misconduct, may do or cause to be done any or all of
the following: (a) take physical possession of the Premises; (b)
exercise its right to collect the Rents and Profits; (c) enter
into contracts for the completion, repair and maintenance of the
Improvements thereon; (d) expend Loan funds and any rents, income
and profits derived from the Premises for payment of any taxes,
insurance premiums, assessments and charges for completion,
repair and maintenance of the Improvements, preservation of the
lien of this Mortgage and satisfaction and fulfillment of any
liabilities or obligations of the Grantor arising out of or in
any way connected with the construction of Improvements on the
Premises whether or not such liabilities and obligations in any
way affect, or may affect, the lien of this Mortgage; (e) enter
into leases demising the Premises or any part thereof; (f) take
steps to protect and enforce the specific performance of any
covenant, condition or agreement in the Notes, this Mortgage, the
Credit Agreement, or the other Loan Documents, or to aid the
execution of any power herein granted; and (g) generally,
supervise, manage, and contract with reference to the Premises as
if the Collateral Agent were equitable owner of the Premises.
The Grantor also agrees that any of the foregoing rights and
remedies of the Collateral Agent may be exercised at any time
independently of the exercise of any other such rights and
remedies, and the Collateral Agent may continue to exercise any
or all such rights and remedies until the Event(s) of Default are
cured or waived with the consent of the Majority Lenders or the
Lenders (as required by the Credit Agreement) or until
foreclosure and the conveyance of the Premises or until the
Indebtedness secured hereby is satisfied or paid in full and the
Commitments are terminated.
5.2Appointment of Receiver. If upon the maturity of any of the
Loans or Letters of Credit or any other amounts or obligations
under the Loan Documents, the same remain unpaid, or upon the
occurrence and continuance of an Event of Default, the Collateral
Agent as a matter of right shall be entitled to the appointment
of a receiver or receivers for all or any part of the Premises,
to take possession of and to operate the Premises, and to collect
the rents, issues, profits, and income thereof, all expenses of
which shall be added to the indebtedness secured hereby, whether
such receivership be incident to a proposed sale (or sales) of
such property or otherwise, and without regard to the value of
the Premises or the solvency of any Person or Persons liable for
the payment of the indebtedness secured hereby, and the Grantor
does hereby irrevocably consent to the appointment of such
receiver or receivers, waives any and all defenses to such
appointment, and agrees not to oppose any application therefor by
Collateral Agent. Nothing herein is to be construed to deprive
the Collateral Agent of any other right, remedy or privilege it
may have under the law to have a receiver appointed. Any money
advanced by the Collateral Agent in connection with any such
receivership shall be a demand obligation (which obligation the
Grantor hereby promises to pay) owing by the Grantor to the
Collateral Agent pursuant to this Mortgage.
5.3Waivers. No waiver of any Event of Default shall at any time
thereafter be held to be a waiver of any rights of the Collateral
Agent stated anywhere in the Notes, this Mortgage, the Credit
Agreement or any of the other Loan Documents, nor shall any
waiver of a prior Event of Default operate to waive any
subsequent Event(s) of Default. All remedies provided in this
Mortgage, in the Notes, in the Credit Agreement and in the other
Loan Documents are cumulative and may, at the election of the
Collateral Agent, be exercised alternatively, successively, or in
any manner and are in addition to any other rights provided by
law.
5.4Delivery of Possession After Foreclosure. In the event there
is a foreclosure sale hereunder and at the time of such sale, the
Grantor or the Grantor's heirs, devises, representatives,
successors or assigns are occupying or using the Premises, or any
part thereof, each and all immediately shall become the tenant of
the purchaser at such sale, which tenancy shall be a tenancy from
day to day, terminable at the will of either landlord or tenant,
at a reasonable rental per day based upon the value of the
property occupied, such rental to be due daily to the purchaser;
and to the extent permitted by applicable law, the purchaser at
such sale, notwithstanding any language herein apparently to the
contrary, shall have the sole option to demand possession
immediately following the sale or to permit the occupants to
remain as tenants at will. In the event the tenant fails to
surrender possession of said property upon demand, the purchaser
shall be entitled to institute and maintain a summary action for
possession of the property (such as an action for forcible
detainer) in any court having jurisdiction.
ARTICLE VI
General Conditions
6.1Terms. The singular used herein shall be deemed to include
the plural; the masculine deemed to include the feminine and
neuter; and the named parties deemed to include their heirs,
successors and assigns. The term "Lender" shall include any of
the Persons identified as a "Lender" on the signature pages to
the Credit Agreement, and any Person which may become a Lender by
way of assignment in accordance with the terms of the Credit
Agreement, together with their successors and assigns. Any
capitalized term not otherwise defined herein shall have the
meaning ascribed to such term in the Credit Agreement.
6.2Notices. All notices and other communications required to be
given hereunder shall have been duly given and shall be effective
(i) when delivered, (ii) when transmitted via telecopy (or other
facsimile device) to the number set out below, (iii) the Business
Day following the day on which the same has been delivered
prepaid to a reputable national overnight air courier service, or
(iv) the third Business Day following the day on which the same
is sent by certified or registered mail, postage prepaid, in each
case to the respective parties at the address or telecopy numbers
set forth below, or at such other address as such party may
specify by written notice to the other parties hereto.
to the Grantor:
to the Collateral Agent:
6.3Severability. If any provision of this Mortgage is determined
to be illegal, invalid or unenforceable, such provision shall be
fully severable and the remaining provisions shall remain in full
force and effect and shall be construed without giving effect to
the illegal, invalid or unenforceable provisions.
6.4Headings. The captions and headings herein are inserted only
as a matter of convenience and for reference and in no way
define, limit, or describe the scope of this Mortgage nor the
intent of any provision hereof.
6.5Conflicting Terms. In the event the terms and conditions of
this Mortgage conflict with the terms and conditions of the
Credit Agreement, the terms and conditions of the Credit
Agreement shall control and supersede the provisions of this
Mortgage with respect to such conflicts.
6.6GOVERNING LAW. This Mortgage shall be governed by and
construed in accordance with the internal law of the State of
North Carolina; provided, however, that the provisions of this
Mortgage relating to the creation, perfection and enforcement of
the lien and security interest created by this Mortgage in
respect of the Premises and the exercise of each remedy provided
hereby, including the power of foreclosure or power of sale
procedures set forth in this Mortgage, shall be governed by and
construed in accordance with the internal law of the state where
the Premises is located. In the event of a conflict between the
laws of the State of North Carolina and such internal law with
respect to creation, perfection and enforcement of the lien and
security interest created by this Mortgage, the laws of the state
in which the Premises is located shall govern.
PROVIDED ALWAYS, and it is the true intent and meaning of the
Grantor and the Collateral Agent, that if the Grantor, its
successors and assigns, shall pay or cause to be paid and
discharged unto the Collateral Agent, its successors and assigns,
the Secured Obligations according to the terms of this Mortgage
and the Loan Documents, then this Mortgage shall cease, determine
and be void, otherwise it shall remain in full force and virtue.
And it is agreed, by and between the Grantor and the Collateral
Agent, that the Grantor is to hold and enjoy the said premises
until an Event of Default shall occur under the terms of this
Mortgage.
IN WITNESS WHEREOF, the Grantor has executed this Mortgage under
seal as of the above written date.
_______________________________________
a ________________ corporation
By:
Name:
Title:
[Corporate Seal]
Signed, sealed and delivered
in the presence of (as to
all signatures)
______________________________________
____________________, Witness
______________________________________
____________________, Witness
STATE OF _____________________
COUNTY OF ___________________
I, ___________________________, a Notary Public for
_________________________, do hereby certify
that___________________, the ____________________ of
___________________________________ personally appeared before me
this day and acknowledged the due execution of the foregoing
instrument.
Witness my hand and (where an official seal is required by law)
official seal this _____ day of December, 1996.
____________________________[SEAL]
Signature of Notary Public
My commission expires:_______________
EXHIBIT A
[Legal Description]
NOTE:The Legal Description must contain a proper derivation
clause to meet recordation requirements.
[Virginia]
Drawn By and Return To:
#__
Moore & Van Allen, PLLC (DSW)
NationsBank Corporate Center
100 North Tryon Street, Floor 47
Charlotte, North Carolina 28202-4003
THIS IS A CREDIT LINE DEED OF TRUST
COLLATERAL IS OR INCLUDES FIXTURES
COMMONWEALTH OF VIRGINIA
COUNTY OF _______________
THIS DEED OF TRUST AND SECURITY AGREEMENT (this "Deed of Trust")
is made and entered into as of the _______ day of ____________,
1996, by and between
____________________________________, a ____________ corporation,
whose
address is ________________________________ (the Grantor" or
Mortgagor); and
JAMES S. MATHEWS of the City of Norfolk, Virginia (the Trustee);
and
NATIONSBANK, N.A., in its capacity as collateral agent (in such
capacity, the
"Collateral Agent" or Mortgagee) for the lenders from time to
time party to the Credit Agreement described herein (the
"Lenders") with a mailing address of 100 North Tryon Street, NC1-
007-08-11, Charlotte, North Carolina 28255.
WHEREAS, pursuant to that certain credit agreement, dated as of
March 15, 1996, by and among Delta Woodside Industries, Inc. (the
Borrower), the lenders parties thereto from time to time (the
Lenders), NationsBank, N.A. as the agent for the Lenders, and
Bank of America National Trust and Savings Association and The
Bank of New York as co-agents (as heretofore amended, the
Existing Credit Agreement), the Lenders have made available to
the Borrower certain revolving credit facilities (the Credit
Facilities);
WHEREAS, the Grantor is an indirect wholly-owned subsidiary of
the Borrower and benefits from having access to working capital
through the Credit Facilities and such Credit Facilities are
critical to the ongoing business operations of the Grantor;
WHEREAS, the Grantor executed that certain Subsidiary Guaranty,
dated as of March 15, 1996 (as amended, modified or restated from
time to time, the Guaranty), guarantying pursuant to the terms
thereof the repayment of the Credit Facilities;
WHEREAS, the Borrower is currently in default under the terms of
the Existing Credit Agreement;
WHEREAS, the Borrower, the Lenders, the Collateral Agent, the
Grantor, and the other Subsidiary Guarantors have executed that
certain Second Amendment and Waiver Agreement, dated as of
December 20, 1996, pursuant to which the Lenders have agreed
inter alia to waive certain outstanding defaults under the
Existing Credit Agreement and to amend certain provisions of the
Existing Credit Agreement (as amended, the Credit Agreement),
and the Borrower has agreed inter alia to cause the Grantor to
execute and deliver this Deed of Trust; and
WHEREAS, the Grantor is the owner of the fee simple interest in
the real property described on Exhibit A attached hereto and
incorporated herein by reference.
W I T N E S S E T H:
The Grantor, in consideration of the indebtedness herein recited
and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, irrevocably grants,
mortgages, remises, aliens, assigns and conveys to the Trustee
and the Trustees successors and assigns, subject to the further
terms of this Deed of Trust, all of the Grantors right, title and
interest (thereunder or otherwise) in and to the following
described land, real property interests, buildings, improvements,
fixtures, furniture, and appliances and other personal property:
(a)All that tract or parcel of land and other real property
interests in __________ County, Virginia, more particularly
described in Exhibit A attached hereto and made a part hereof
(the "Land"); and
(b)All buildings and improvements of every kind and description
now or hereafter erected or placed on the Land (the
"Improvements") and all materials intended for construction,
reconstruction, alteration and repair of such Improvements now or
hereafter erected thereon, all of which materials shall be deemed
to be included within the Premises (as hereinafter defined)
immediately upon the delivery thereof to the Land, and all
fixtures and articles of personal property now or hereafter owned
by the Grantor and attached to or contained in and used in
connection with the Land and Improvements including, but not
limited to, all furniture, furnishings, apparatus, machinery,
equipment, motors, elevators, fittings, radiators, ranges,
refrigerators, awnings, shades, screens, blinds, carpeting,
office equipment and other furnishings and all plumbing, heating,
lighting, cooking, laundry, ventilating, refrigerating,
incinerating, air conditioning and sprinkler equipment and
fixtures and appurtenances thereto and all renewals or
replacements thereof or articles in substitution thereof, whether
or not the same are or shall be attached to the Land and
Improvements in any manner (the "Tangible Personalty") and all
proceeds of the Tangible Personalty (hereinafter, the Land,
Improvements and Tangible Personalty may be collectively referred
to as the "Premises").
TO HAVE AND HOLD the same, together with all privileges,
hereditaments, easements and appurtenances thereunto belonging,
to the Collateral Agent and the Collateral Agent's successors and
assigns to secure the indebtedness herein recited.
And, as additional security for said indebtedness, the Grantor
hereby conditionally assigns to the Collateral Agent all right,
title and interest of the Grantor in and to the security
deposits, rents, issues, profits and revenues of the Premises
from time to time accruing (the "Rents and Profits"), reserving
only the right to the Grantor to collect and enjoy the same as
long as there shall exist no Event of Default (as defined in
Article III).
As additional collateral and further security for said
indebtedness, the Grantor does hereby assign to the Collateral
Agent and grants to the Collateral Agent a security interest in
all of the right, title and interest of the Grantor in and to any
and all insurance policies and proceeds thereof and any and all
leases (including equipment leases), rental agreements, sales
contracts, management contracts, franchise agreements,
construction contracts, architects' contracts, technical services
agreements, or other contracts, licenses and permits now or
hereafter affecting the Premises (the "Intangible Personalty") or
any part thereof, and the Grantor agrees to execute and deliver
to the Collateral Agent such additional instruments, in form and
substance reasonably satisfactory to the Collateral Agent, as may
hereafter be reasonably requested by the Collateral Agent to
evidence and confirm said assignment; provided, however, that
acceptance of any such assignment shall not be construed as a
consent by the Collateral Agent to any lease, rental agreement,
management contract, franchise agreement, construction contract,
technical services agreement or other contract, license or
permit, or to impose upon the Collateral Agent any obligation
with respect thereto. Notwithstanding the foregoing provisions,
such assignment and grant of security interest contained herein
shall not extend to, and the Intangible Personalty shall not
include, any personalty which is now or hereafter held by the
Grantor as licensee, lessee or otherwise, to the extent that (a)
such personalty is not assignable or capable of being encumbered
as a matter of law or under the terms of the license, lease or
other agreement applicable thereto (but solely to the extent that
any such restriction shall be enforceable under applicable law),
without the consent of the licensor or lessor thereof or other
applicable party thereto and (b) such consent has not been
obtained; provided, however, that the foregoing assignment and
grant of security interest shall extend to, and the Intangible
Personalty shall include, any and all proceeds of such personalty
to the extent that the assignment or encumbering of such proceeds
is not so restricted as a matter of law or under the terms of the
license, lease or other agreement applicable thereto.
All the Tangible Personalty which comprise a part of the Premises
shall, as far as permitted by law, be deemed to be affixed to the
aforesaid Land and conveyed therewith. As to the balance of the
Tangible Personalty and the Intangible Personalty, this Deed of
Trust shall be considered to be a security agreement which
creates a security interest in such items for the benefit of the
Collateral Agent. In that regard, the Grantor grants to the
Collateral Agent all of the rights and remedies of a secured
party under the South Carolina Uniform Commercial Code and grants
to the Collateral Agent a security interest in all of the
Tangible Personalty and Intangible Personalty.
The Grantor, the Trustee, and the Collateral Agent covenant,
represent and agree as follows:
ARTICLE I
Secured Obligations
1.1Obligations Secured. NationsBank, N.A., as agent (the Agent)
for the Lenders, the Lenders, the co-agents named therein, and
the Borrower executed that certain Credit Agreement dated as of
March 15, 1996, as amended by that certain Amendment and Waiver,
dated as of May 20, 1996, and further amended by that certain
Second Amendment and Waiver Agreement, dated as of December 20,
1996 (as amended, modified, supplemented, extended, renewed, or
replaced from time to time, the Credit Agreement) pursuant to
which the Lenders have provided a working capital credit facility
to the Borrower of up to $248,500,000 (hereinafter the loans and
extensions of credit thereunder may be called the "Loans"); terms
used but not otherwise defined herein shall have the meanings
provided in the Credit Agreement); which Loans are evidenced by
(i) those revolving credit promissory notes of the Borrower (as
referenced and defined in the Credit Agreement, and as amended,
modified, supplemented, extended, renewed or replaced from time
to time, the "Revolving Notes" or "Notes"), under which sums may
be advanced, paid back or readvanced and (ii) to the extent
provided in the Credit Agreement those letters of credit for the
account of the Borrower or the Subsidiary Guarantors (as
referenced in the Credit Agreement, the "Letters of Credit").
To support the repayment of the Loans, the Grantor, and each
other Subsidiary Guarantor, has executed that certain Subsidiary
Guaranty, dated as of March 15, 1996 (as amended, modified,
supplemented, extended, renewed, or replaced from time to time,
the Subsidiary Guaranty), pursuant to which the Subsidiary
Guarantors (including without limitation the Grantor) have
guaranteed, subject to the terms of the Subsidiary Guaranty, the
repayment in full of the Loans. This Deed of Trust is given to
secure:
(a) all present and future indebtedness, obligations and
liabilities of the Grantor under or in connection with the
Subsidiary Guaranty or any other Loan Documents;
(b) all indebtedness of the Grantor owing to the Lenders now or
hereafter issued in connection with this Deed of Trust, any other
Loan Documents, or any other instruments or documents executed by
the Grantor relating to any Loan Documents, whether now existing
or hereafter arising, due or to become due, direct or indirect,
absolute or contingent, and howsoever evidenced, held or
acquired, together with any and all modifications, extensions,
renewals, and/or substitutions of any of the foregoing; and
(c) all expenses and charges, legal and otherwise, reasonably
incurred by the Collateral Agent and/or the Lenders in collecting
or enforcing any of such indebtedness, obligations and
liabilities or in realizing on or protecting any security
therefor, including without limitation the security afforded
hereunder.
All of the foregoing obligations and indebtedness is collectively
referred to herein as the Secured Obligations or the
Indebtedness.
ARTICLE II
The Grantor's Covenants, Representations and Agreements
2.1Title to Property. The Grantor represents and warrants to the
Collateral Agent that (i) it is the owner of the Tangible
Personalty (to the extent such Tangible Personalty does not
constitute fixtures), and has the right to convey the same, (ii)
that as of the date hereof title to such property is free and
clear of all encumbrances except (a) any Lien for real estate
taxes or water and sewer charges that are not due and payable,
(b) all easements, restrictions, and other matters of record
(other than any Liens) which affect the Land without materially
impairing the use or value thereof, (c) special assessments which
are or may be pending, but which have not become a Lien, (d) such
matters as would be shown on a current and accurate survey of the
Land (other than a Lien) which do not materially impair the use
or value of the Land, and (e) any matter shown on Exhibit B
attached hereto which is reasonably satisfactory to the Agent and
the Majority Lenders (collectively, the "Permitted
Encumbrances"), and (iii) it will warrant and defend the title to
such property except for the Permitted Encumbrances against the
claims of all Persons. As to the balance of the Premises, the
Rents and Profits and the Intangible Personalty, the Grantor
represents and warrants that it has title to such property, that
title as of the date hereof to such property is free and clear of
all encumbrances except for the Permitted Encumbrances, that it
has the right to convey such property and that it will warrant
and defend such property except for the Permitted Encumbrances
against the claims of all Persons.
2.2Taxes and Fees. Subject to Section 7.6 of the Credit
Agreement, the Grantor will pay timely all material taxes,
general and special assessments, insurance premiums, permit fees,
inspection fees, license fees, water and sewer charges, franchise
fees and equipment rents and any other material charges or fees
relating to the Premises against it or the Premises (and the
Grantor, upon request of the Collateral Agent, will submit to the
Collateral Agent receipts evidencing said payments).
2.3Reimbursement. The Grantor agrees that if it shall fail to
pay on or before the date that the same become delinquent any
tax, assessment or charge levied or assessed against the Premises
or any utility charge, whether public or private, or any
insurance premium or if it shall fail to procure the insurance
coverage and the delivery of the insurance certificates required
hereunder, or if it shall fail to pay any other charge or fee
described in Sections 2.2, 2.3 or 2.6 hereof, then the Collateral
Agent, at its option, may pay or procure the same and will give
the Grantor prompt notice of any such expenditures. The Grantor
will reimburse the Collateral Agent upon demand for any sums of
money paid by the Collateral Agent pursuant to this Section,
together with interest on each such payment at the default rate
of interest provided in the Credit Agreement, and all such sums
and interest thereon shall be secured hereby.
2.4Additional Documents. The Grantor agrees to execute and
deliver to the Collateral Agent, concurrently with the execution
of this Deed of Trust and upon the request of the Collateral
Agent from time to time hereafter, all financing statements and
other documents reasonably required to perfect and maintain the
security interest created hereby. The Grantor hereby irrevocably
(as long as any Loans or Letters of Credit remain outstanding or
the Commitments have not been terminated) makes, constitutes and
appoints the Collateral Agent as the true and lawful attorney of
the Grantor to sign the name of the Grantor on any financing
statement, continuation of financing statement or similar
document required to perfect or continue such security interests.
2.5Sale or Encumbrance. Except in the ordinary course of
business and except as permitted by the Credit Agreement, the
Grantor will not sell, encumber or otherwise dispose of any of
the Tangible Personalty except to incorporate such into the
Improvements or replace such with goods of quality and value at
least equal to that replaced. In the event the Grantor sells or
otherwise disposes of any of the Tangible Personalty in
contravention of the foregoing sentence, the Collateral Agent's
security interest in the proceeds of the Tangible Personalty
shall continue pursuant to this Deed of Trust.
2.6Fees and Expenses. The Grantor will promptly pay upon demand
any and all reasonable and actual costs and expenses of the
Collateral Agent, (a) as required under the Credit Agreement and
(b) as necessary to protect the Premises, the Rents and Profits
or the Intangible Personalty or to exercise any rights or
remedies under this Deed of Trust or with respect to the
Premises, Rents and Profits or the Intangible Personalty. All of
the foregoing costs and expenses shall be secured hereby.
2.7Leases and Other Agreements. Without first obtaining on each
occasion the written approval of the Collateral Agent, the
Grantor shall not, except as permitted by the Credit Agreement or
as shall not materially affect the value or impair the use of the
Premises, enter into, cancel, surrender or materially modify or
permit the cancellation of any material lease (including any
equipment lease), rental agreement, management contract,
franchise agreement, construction contract, technical services
agreement or other material contract, license or permit now or
hereafter affecting the Premises, or materially modify any of
said instruments, or accept or permit to be made, any prepayment
(more than one month) of any installment of rent or fees
thereunder. Certified copies of each such approved material
lease or other material agreement not previously delivered to the
Collateral Agent shall be submitted to the Collateral Agent as
soon as possible. The Grantor shall faithfully keep and perform,
or cause to be kept and performed, in all material respects, all
of the covenants, conditions, and agreements contained in each of
said agreements, now or hereafter existing, on the part of the
Grantor to be kept and performed (including performance of all
covenants to be performed under any and all leases of the
Premises or any part thereof) and shall at all times use
commercially reasonable efforts to enforce, with respect to each
other party to said agreements, all obligations, covenants and
agreements by such other party to be performed thereunder.
2.8Maintenance of Premises. The Grantor will abstain from and
will not permit the commission of waste in or about the Premises
and will maintain, or cause to be maintained (subject to
reconstruction periods after the occurrence of an act of God),
the Premises in good condition and repair, reasonable wear and
tear excepted.
2.9Insurance.
(a)Liability: The Grantor covenants to maintain or cause to be
maintained general accident and public liability insurance
against all claims for bodily injury, death or property damage
occurring upon, in or about any part of the Premises. The
policies must be from a company and in forms and amounts
reasonably satisfactory to the Collateral Agent.
(b)Casualty: The Grantor shall, at its own cost, keep all
buildings now or hereafter comprising a part of the Premises
insured against loss or damage by fire and such other insurable
risks, casualties and hazards as the Collateral Agent may from
time to time specify. The policy must be from a company and in
form, content and amount reasonably satisfactory to the
Collateral Agent.
(c)Flood: If any part of the Improvements are located in an area
having "special flood hazards", a flood insurance policy naming
the Collateral Agent as Deed of Trust must be submitted to the
Collateral Agent. The policy must be from a company and in form,
content and amount reasonably satisfactory to the Collateral
Agent.
(d)Delivery of Policies and Renewals: The Grantor agrees to
deliver to the Collateral Agent, upon the request of the
Collateral Agent, as additional security hereto, a copy of the
policies of such insurance pursuant to subsections (a), (b), and
(c) hereof, and any insurance policies required by the terms of
the Credit Agreement or the other Loan Documents. Renewals of
such policies shall be so delivered at least ten (10) days before
any such insurance shall expire. In the event the Grantor fails
to maintain insurance as required hereunder the Collateral Agent
has the right to procure such insurance whether or not the
Grantor's failure to maintain such insurance constitutes an Event
of Default (as defined in Article III) or an event or condition
which, upon the giving of notice or the passage of time, or both,
would constitute an Event of Default. Any amounts paid by the
Collateral Agent for insurance shall be due and payable to the
Collateral Agent upon demand and shall be secured by this Deed of
Trust.
(e)Proof of Loss; Claims Settlement: In the event of a material
loss, the Grantor shall give prompt notice thereof to the
insurance carrier and the Collateral Agent. Subject to the
rights of the holder of any prior Permitted Encumbrance, Grantor
shall have the right to adjust and compromise any loss under any
insurance policies maintained with regard to this Premises,
provided that any settlement with regard to any such loss shall
be subject to the Collateral Agent's prior approval (which shall
not be unreasonably withheld); provided further, however, that if
Grantor fails to so adjust and compromise or if, prior to such
adjustment and compromise, a Default or an Event of Default
occurs under any of the Loan Documents, then Collateral Agent
shall be, and is hereby, authorized and empowered, at its option,
to adjust or compromise any loss under any insurance policies
maintained pursuant to this Section. Subject to the rights of
the holder of any prior Permitted Encumbrance, each insurance
company is hereby authorized and directed to make payment for all
such losses directly to Collateral Agent, instead of to Grantor
and Collateral Agent jointly, upon request of the Collateral
Agent during the continuance of a Default or an Event of Default.
In the event any insurance company fails to disburse directly and
solely to Collateral Agent but disburses instead either solely to
Grantor or to Grantor and Collateral Agent jointly, in violation
of the preceding sentence, Grantor agrees immediately to endorse
and transfer such proceeds to Collateral Agent. Upon failure of
Grantor to endorse and transfer such proceeds as aforesaid,
Collateral Agent may execute such endorsements or transfers for
and in the name of Grantor and Grantor hereby irrevocably
appoints Collateral Agent as Grantors agent and attorney-in-fact
so to do. The Collateral Agent is hereby authorized, in its sole
discretion, to collect the proceeds of any insurance claims
during the continuance of a Default or an Event of Default.
(f)Use of Proceeds: Provided that there is no Default or Event
of Default, Grantor may apply, subject to the rights of the
holder of any prior Permitted Encumbrance, the proceeds of any
insurance or any part thereof to restoration or repair of the
property damaged.
2.10Releases and Waivers. The Grantor agrees that no release by
the Collateral Agent or the Lenders of any of the Grantor's
successors in title from liability on the Secured Obligations, no
release by the Collateral Agent of any portion of the Premises,
the Rents and Profits or the Intangible Personalty, no
subordination of lien, no forbearance on the part of the Lenders
or the Collateral Agent to collect on the Secured Obligations, or
any part thereof, no waiver of any right granted or remedy
available to the Collateral Agent or the Lenders and no action
taken or not taken by the Collateral Agent or the Lenders shall
in any way diminish the Grantor's obligation to the Collateral
Agent and the Lenders or have the effect of releasing the
Grantor, or any successor to the Grantor, from full
responsibility to the Collateral Agent or the Lenders for the
complete discharge of each and every of the Grantor's obligations
hereunder or under the Credit Agreement or any of the other Loan
Documents.
2.11.Eminent Domain.
(a)Participation in Proceedings: Grantor shall promptly notify
the Collateral Agent of any actual or threatened initiation of
any eminent domain proceeding as to any material part of the
Premises and shall deliver to the Collateral Agent copies of any
and all papers served or received in connection with such
proceedings, and the Collateral Agent shall have the right, at
its option, to participate in such proceedings at the expense of
Grantor (including, without limitation, the Collateral Agent's
reasonable attorneys' fees) and Grantor will execute such
documents and take such other steps as required to permit such
participation.
(b)Right to Settle Claims: In the event of a condemnation or
similar proceeding, the Grantor shall give prompt notice thereof
to the Collateral Agent. Grantor shall have the right to adjust,
compromise and otherwise negotiate an award with regard to any
such proceeding, provided that any settlement with regard to any
such proceeding shall be subject to the Majority Lenders prior
approval (which shall not be unreasonably withheld); provided,
however, that if Grantor fails to so negotiate or if, prior to
the conclusion of such negotiation, a Default or an Event of
Default occurs under any of the Loan Documents, then the
Collateral Agent shall be, and is hereby, authorized and
empowered, at its option, to negotiate the award with regard to
any such proceeding. Subject to the rights of the holder of any
prior Permitted Encumbrance, each governmental unit making any
such award is hereby authorized and directed to make payment of
all such awards directly to Collateral Agent, instead of to
Grantor and Collateral Agent jointly, upon request of the
Collateral Agent during the continuance of a Default or an Event
of Default. In the event any governmental unit fails to disburse
directly and solely to Collateral Agent but disburses instead
either solely to Grantor or to Grantor and Collateral Agent
jointly, in violation of the preceding sentence, Grantor agrees
immediately to endorse and transfer such award or proceeds to
Collateral Agent. Upon failure of Grantor to endorse and
transfer such award or proceeds as aforesaid, Collateral Agent
may execute such endorsements or transfers for and in the name of
Grantor and Grantor hereby irrevocably appoints Collateral Agent
as Grantor's agent and attorney-in-fact so to do. The Collateral
Agent is hereby authorized, in its sole discretion, to collect
the award or proceeds of any such condemnation or similar
proceeding and is hereby authorized to apply the same to the
outstanding balance of the Secured Obligations during the
continuance of a Default or an Event of Default. Provided that
there is no Default or Event of Default, Grantor may apply,
subject to the rights of the holder of any prior Permitted
Encumbrance, the award or proceeds of any such condemnation or
similar proceeding to the replacement of the affected property.
(c)Further Assignments: The Grantor agrees to execute such
further assignments and agreements as may be reasonably required
by the Collateral Agent to assure the effectiveness of this
Section. During the continuance of a Default or an Event of
Default, the Collateral Agent may apply any condemnation awards
or proceeds to the outstanding balance of the Secured
Obligations.
2.12Environmental Assessment. Upon the earlier to occur of (i) a
Default or an Event of Default and (ii) March 31, 1997, and upon
the request of the Collateral Agent and the Majority Lenders, the
Grantor agrees to provide the Collateral Agent (at the Grantors
expense and within 45 days of such request) with a current
environmental assessment of the Premises. Such assessment shall
be in a form satisfactory to the Collateral Agent and from an
environmental engineer or consultant reasonably satisfactory to
the Collateral Agent. If the Grantor shall fail to comply with
such request (prior to or after an Event of Default), then the
Collateral Agent shall have the option, but be under no
obligation, to obtain such an environmental assessment, and all
fees, costs and expenses associated with the Collateral Agent's
obtaining such report shall be added to the amount of the Secured
Obligations and be secured by this Deed of Trust.
2.13Appraisal. Upon the earlier to occur of (i) a Default or an
Event of Default and (ii) June 30, 1997, and upon request of the
Majority Lenders and the Collateral Agent, the Grantor agrees to
provide the Collateral Agent (at Grantors expense and within 45
days of such request) a current written appraisal or reappraisal
of the Premises. Such appraisal shall be prepared in accordance
with reasonable written instructions from the Collateral Agent
and prepared by a qualified appraiser reasonably satisfactory to
the Collateral Agent. If the Grantor shall fail to comply with
such request (prior to or after an Event of Default), then the
Collateral Agent shall have the option, but be under no
obligation, to obtain such an appraisal, and all fees, costs and
expenses associated with the Collateral Agent's obtaining such
appraisal shall be added to the amount of the Secured Obligations
and be secured by this Deed of Trust.
2.14Survey. Upon the earlier to occur of (i) a Default and an
Event of Default and (ii) March 31, 1997, and upon the request of
the Collateral Agent and the Majority Lenders, the Grantor agrees
to provide the Collateral Agent (at Grantors expense and within
45 days of such request) current surveys of the Land. Such
surveys shall be prepared in accordance with written instructions
from the Collateral Agent and prepared by a qualified surveyor
reasonably satisfactory to the Collateral Agent. If the Grantor
shall fail to comply with such request (prior to or after an
Event of Default), then the Collateral Agent shall have the
option, but be under no obligation, to obtain such surveys, and
all fees, costs and expenses associated with the Collateral
Agent's obtaining such surveys shall be added to the amount of
the Secured Obligations and be secured by this Deed of Trust.
2.15Title Policies. Upon the earlier to occur of (i) a Default
and an Event of Default and (ii) March 31, 1997, and upon the
request of the Collateral Agent and the Majority Lenders, the
Grantor agrees to provide the Collateral Agent (at the Grantors
expense and within 45 days of such request) with ALTA Deed of
Trust title insurance policies issued by a title insurer
reasonably satisfactory to the Collateral Agent, in amounts not
less than the amounts designated for the Premises on Schedule 1
to the Second Amendment and Waiver, assuring the Collateral Agent
and the Lenders that this Deed of Trust creates a valid and
enforceable first priority Deed of Trust lien on the Premises,
free and clear of all defects and encumbrances excepted Permitted
Encumbrances and subject to a standard survey exception, which
such title policies shall be in form and substance reasonably
satisfactory to the Collateral Agent and the Majority Lenders and
shall provide for such affirmative insurance and such reinsurance
as the Collateral Agent may reasonably request.
2.16Environmental Indemnification. The Grantor covenants and
agrees with regard to the Premises that it will (i) conduct and
complete all investigations, studies, sampling and testing and
all remedial, removal, and other actions necessary to clean up
and remove all Contaminants on, from, or affecting the Premises
(A) in accordance with all applicable federal, state, and local
laws, regulations, rules, and policies, (B) to the reasonable
satisfaction of the Collateral Agent, and (C) in accordance with
the orders and directives of all federal, state and local
governmental authorities, and (ii) defend, indemnify, and hold
harmless the Collateral Agent and each of the Lenders, their
respective employees, agents, officers, and directors (except to
the extent arising from the Collateral Agents or such Lenders
gross negligence or willful misconduct) from and against any
claims, demands, penalties, fines, liabilities, settlements,
damages, costs, or expenses (including, without limit, reasonable
attorney and consultant fees, investigation and laboratory fees,
court costs, and litigation expenses) of whatever kind of nature,
known or unknown, contingent or otherwise, arising out of or in
any way related to (A) the presence, disposal, release, or
threatened release of any Contaminant which are on, from, or
affecting the soil, water, vegetation, buildings, personal
property, persons, animals, or otherwise; (B) any personal injury
(including wrongful death) or property damage (real or personal)
arising out of or related to such Contaminants; (C) any lawsuit
brought or threatened, settlement reached, or governmental order
relating to such Contaminants, and/or (D) any violation of laws,
orders, regulations, requirements, or demands of government
authorities, or any policies or requirements of the Collateral
Agent or any of the Lenders set forth herein or in any of the
Loan Documents, which are based upon or in any way related to
such Contaminants. For the purposes hereof, the term
"Contaminants" shall mean any substance, material or waste the
generation, handling, storage, treatment or disposal of which is
regulated by any local or state government authority in any
jurisdiction in which the Grantor has owned, leased or operated
real property or disposed of hazardous materials, or by the
United States government, including any material or substance
which is (a) defined as a "contaminant," "hazardous waste,"
"hazardous material," "hazardous substance," "extremely hazardous
waste," or "restricted hazardous waste" or other similar term or
phrase under any such law, (b) petroleum, (c) designated as a
"hazardous substance" pursuant to Section 311 of the Clean Water
Act, 33 U.S.C. 1251 et seq. (33 U.S.C. 1321) or listed pursuant
to Section 307 of the Clean Water Act (33 U.S.C. 1317), (d)
defined as a "hazardous waste" pursuant to Section 1004 of the
Resource Conservation and Recovery Act, 42 U.S.C. 6901, et seq.
(42 U.S.C. 6903 or (e) defined as "hazardous substance" pursuant
to Section 101 of the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. 9601, et seq. (42
U.S.C. 6901). Except as disclosed in writing to the Agent and
the Lenders on or prior to the date hereof, to the best of
Grantors knowledge and belief, the Premises and its current use
and all off-site disposals by the Grantor of any Contaminants
comply in all material respects with all Environmental Laws.
ARTICLE III
Event of Default
An Event of Default shall exist under the terms of this Deed of
Trust upon the existence of an Event of Default under the terms
of the Credit Agreement.
ARTICLE IV
Foreclosure
4.1Acceleration of Loan; Foreclosure. Upon the occurrence and
during the continuance of an Event of Default and otherwise in
compliance with Section 10.2 of the Credit Agreement, the entire
balance of the Loans and Letters of Credit and any other
obligations due under the Loan Documents, including all accrued
interest, shall, at the option of the Collateral Agent, become
immediately due and payable. Upon failure to pay the Loans and
Letters of Credit or reimburse any other amounts due under the
Loan Documents in full at any stated or accelerated maturity, the
Collateral Agent may foreclose the lien of this Deed of Trust by
judicial or nonjudicial proceeding in a manner permitted by
applicable law. The Grantor hereby waives any statutory right of
redemption in connection with such foreclosure proceeding.
4.2Power of Sale. The Trustee is hereby granted a power of sale
and may sell the Premises (together with the Rents and Profits
and Intangible Personalty), or such part or parts thereof or
interests therein as the Collateral Agent may select after first
having given such notice of hearing as to commencement of
foreclosure proceedings and obtained such findings or leave of
court as then may be required by law and then having given such
notice and advertised the time and place of such sale in such
manner as then may be provided by law, and upon such sale and any
resale and upon compliance with the law then relating to
foreclosure proceedings, to convey title to the purchaser.
4.3Proceeds of Sale. Following a foreclosure sale, the proceeds
of such sale shall, subject to applicable law, be applied as
follows: first, to all costs and expenses of the Collateral
Agent (including without limitation reasonable attorney's fees
and expenses) incurred in connection with the implementation
and/or enforcement of this Deed of Trust and/or any of the other
Loan Documents; second, to all costs and expenses of the Lenders
(including without limitation reasonable attorneys' fees and
expenses) incurred in connection with the implementation and/or
enforcement of this Deed of Trust and/or any of the other Loan
Documents; third, to such of the Secured Obligations as consist
of accrued but unpaid interest and fees; fourth, to the principal
amount of the Secured Obligations; fifth, to all other amounts
payable with respect to the Secured Obligations; and sixth, to
the payment of surplus, if any, to whomever may be lawfully
entitled to receive such surplus. The Grantor shall remain
liable to the Lenders for any deficiency.
ARTICLE V
Additional Rights and Remedies of the Collateral Agent
5.1Rights Upon Maturity or an Event of Default. Upon the
occurrence and during the continuance of an Event of Default, the
Collateral Agent, immediately and without additional notice and
without liability therefor to the Grantor and to the extent
permitted by applicable law, except for its own gross negligence
or willful misconduct, may do or cause to be done any or all of
the following: (a) take physical possession of the Premises; (b)
exercise its right to collect the Rents and Profits; (c) enter
into contracts for the completion, repair and maintenance of the
Improvements thereon; (d) expend Loan funds and any rents, income
and profits derived from the Premises for payment of any taxes,
insurance premiums, assessments and charges for completion,
repair and maintenance of the Improvements, preservation of the
lien of this Deed of Trust and satisfaction and fulfillment of
any liabilities or obligations of the Grantor arising out of or
in any way connected with the construction of Improvements on the
Premises whether or not such liabilities and obligations in any
way affect, or may affect, the lien of this Deed of Trust; (e)
enter into leases demising the Premises or any part thereof; (f)
take steps to protect and enforce the specific performance of any
covenant, condition or agreement in the Notes, this Deed of
Trust, the Credit Agreement, or the other Loan Documents, or to
aid the execution of any power herein granted; and (g) generally,
supervise, manage, and contract with reference to the Premises as
if the Collateral Agent were equitable owner of the Premises.
The Grantor also agrees that any of the foregoing rights and
remedies of the Collateral Agent may be exercised at any time
independently of the exercise of any other such rights and
remedies, and the Collateral Agent may continue to exercise any
or all such rights and remedies until the Event(s) of Default are
cured or waived with the consent of the Majority Lenders or the
Lenders (as required by the Credit Agreement) or until
foreclosure and the conveyance of the Premises or until the
Indebtedness secured hereby is satisfied or paid in full and the
Commitments are terminated.
5.2Appointment of Receiver. If upon the maturity of any of the
Loans or Letters of Credit or any other amounts or obligations
under the Loan Documents, the same remain unpaid, or upon the
occurrence and continuance of an Event of Default, the Collateral
Agent as a matter of right shall be entitled to the appointment
of a receiver or receivers for all or any part of the Premises,
to take possession of and to operate the Premises, and to collect
the rents, issues, profits, and income thereof, all expenses of
which shall be added to the indebtedness secured hereby, whether
such receivership be incident to a proposed sale (or sales) of
such property or otherwise, and without regard to the value of
the Premises or the solvency of any Person or Persons liable for
the payment of the indebtedness secured hereby, and the Grantor
does hereby irrevocably consent to the appointment of such
receiver or receivers, waives any and all defenses to such
appointment, and agrees not to oppose any application therefor by
Collateral Agent. Nothing herein is to be construed to deprive
the Collateral Agent of any other right, remedy or privilege it
may have under the law to have a receiver appointed. Any money
advanced by the Collateral Agent in connection with any such
receivership shall be a demand obligation (which obligation the
Grantor hereby promises to pay) owing by the Grantor to the
Collateral Agent pursuant to this Deed of Trust.
5.3Waivers. No waiver of any Event of Default shall at any time
thereafter be held to be a waiver of any rights of the Collateral
Agent stated anywhere in the Notes, this Deed of Trust, the
Credit Agreement or any of the other Loan Documents, nor shall
any waiver of a prior Event of Default operate to waive any
subsequent Event(s) of Default. All remedies provided in this
Deed of Trust, in the Notes, in the Credit Agreement and in the
other Loan Documents are cumulative and may, at the election of
the Collateral Agent, be exercised alternatively, successively,
or in any manner and are in addition to any other rights provided
by law.
5.4Delivery of Possession After Foreclosure. In the event there
is a foreclosure sale hereunder and at the time of such sale, the
Grantor or the Grantor's heirs, devises, representatives,
successors or assigns are occupying or using the Premises, or any
part thereof, each and all immediately shall become the tenant of
the purchaser at such sale, which tenancy shall be a tenancy from
day to day, terminable at the will of either landlord or tenant,
at a reasonable rental per day based upon the value of the
property occupied, such rental to be due daily to the purchaser;
and to the extent permitted by applicable law, the purchaser at
such sale, notwithstanding any language herein apparently to the
contrary, shall have the sole option to demand possession
immediately following the sale or to permit the occupants to
remain as tenants at will. In the event the tenant fails to
surrender possession of said property upon demand, the purchaser
shall be entitled to institute and maintain a summary action for
possession of the property (such as an action for forcible
detainer) in any court having jurisdiction.
5.5 Substitute Trustee. The Trustee may resign by an instrument
in writing addressed to the Collateral Agent, or the Trustee may
be removed at any time with or without cause by an instrument in
writing executed by the Collateral Agent in case of the death,
resignation, removal, or disqualification of the Trustee, or if
for any reason the Collateral Agent shall deem it desirable to
appoint a substitute or successor trustee to act instead of the
herein named trustee or any substitute or successor trustee, then
the Collateral Agent shall have the right and is hereby
authorized and empowered to appoint a successor trustee, or a
substitute trustee, without other formality than appointment and
designation in writing executed by the Collateral Agent and the
authority hereby conferred shall extend to the appointment of
other successor and substitute trustees successively until the
indebtedness secured hereby has been paid in full, or until the
Premises is fully and finally sold hereunder. If the Collateral
Agent is a corporation or association and such appointment is
executed on its behalf by an officer of such corporation or
association such appointment shall be conclusively presumed to be
executed with authority and shall be valid and sufficient without
proof of any action by the board of directors or any superior
officer of the corporation or association. Upon the making of
any such appointment and designation, all of the estate and title
of the Trustee in the Premises shall vest in the named successor
or substitute trustee who shall thereupon succeed to, and shall
hold, possess and execute all rights, powers, privileges,
immunities and duties herein conferred upon the Trustee. All
references herein to Trustee shall be deemed to refer to the
Trustee (including any successor or substitute trustee appointed
and designated as herein provided) from time to time acting
hereunder.
5.6No Liability of Trustee. The Trustee shall not be liable for
any error of judgment or act done by the Trustee in good faith,
or otherwise be responsible or accountable under any
circumstances whatsoever (including Trustees negligence), except
for the Trustees gross negligence or willful misconduct. The
Trustee shall have the right to rely on any instrument, document,
or signature authorizing or supporting any action taken or
proposed to be take by it hereunder, believed by it in good faith
to be genuine. All moneys received by the Trustee until used or
applied as herein provided, shall be held in trust for the
purposes for which they were received but need not be segregated
in any manner from any other moneys (except to the extent
required by law), and the Trustee shall be under no liability for
interest on any moneys received by it hereunder. The Grantor
hereby ratifies and confirms any and all acts which the herein
named Trustee or its successor or successors, substitute or
substitutes, in this trust shall do lawfully by virtue hereof and
the Grantor will reimburse the Trustee for, and save it harmless
against, any and all liability and expenses which may be incurred
by it in the performance of its duties in accordance with the
terms hereof (except any liability or expense resulting directly
from the Trustees gross negligence or willful misconduct). The
foregoing indemnity shall not terminate upon discharge of the
secured indebtedness or foreclosure, or relase or other
termination, of this Deed of Trust.
ARTICLE VI
General Conditions
6.1Terms. The singular used herein shall be deemed to include
the plural; the masculine deemed to include the feminine and
neuter; and the named parties deemed to include their heirs,
successors and assigns. The term "Lender" shall include any of
the Persons identified as a "Lender" on the signature pages to
the Credit Agreement, and any Person which may become a Lender by
way of assignment in accordance with the terms of the Credit
Agreement, together with their successors and assigns. Any
capitalized term not otherwise defined herein shall have the
meaning ascribed to such term in the Credit Agreement.
6.2Notices. All notices and other communications required to be
given hereunder shall have been duly given and shall be effective
(i) when delivered, (ii) when transmitted via telecopy (or other
facsimile device) to the number set out below, (iii) the Business
Day following the day on which the same has been delivered
prepaid to a reputable national overnight air courier service, or
(iv) the third Business Day following the day on which the same
is sent by certified or registered mail, postage prepaid, in each
case to the respective parties at the address or telecopy numbers
set forth below, or at such other address as such party may
specify by written notice to the other parties hereto.
to the Grantor:
to the Collateral Agent:
to the Trustee:
6.3Severability. If any provision of this Deed of Trust is
determined to be illegal, invalid or unenforceable, such
provision shall be fully severable and the remaining provisions
shall remain in full force and effect and shall be construed
without giving effect to the illegal, invalid or unenforceable
provisions.
6.4Headings. The captions and headings herein are inserted only
as a matter of convenience and for reference and in no way
define, limit, or describe the scope of this Deed of Trust nor
the intent of any provision hereof.
6.5Conflicting Terms. In the event the terms and conditions of
this Deed of Trust conflict with the terms and conditions of the
Credit Agreement, the terms and conditions of the Credit
Agreement shall control and supersede the provisions of this Deed
of Trust with respect to such conflicts.
6.6GOVERNING LAW. This Deed of Trust shall be governed by and
construed in accordance with the internal law of the State of
North Carolina; provided, however, that the provisions of this
Deed of Trust relating to the creation, perfection and
enforcement of the lien and security interest created by this
Deed of Trust in respect of the Premises and the exercise of each
remedy provided hereby, including the power of foreclosure or
power of sale procedures set forth in this Deed of Trust, shall
be governed by and construed in accordance with the internal law
of the state where the Premises is located. In the event of a
conflict between the laws of the State of North Carolina and such
internal law with respect to creation, perfection and enforcement
of the lien and security interest created by this Deed of Trust,
the laws of the state in which the Premises is located shall
govern.
6.7 Virginia Statutory Provisions. With respect to the
Premises, notwithstanding anything contained herein to the
contrary:
(a) Statutory Short Form References. The following provisions
of Section 55-59.2 and 55-60 of the Code of Virginia 1954, as
amended (the Virginia Code), are hereby incorporated herein by
reference:
Exemptions waived.
Subject to call upon default.
Renewal or extension permitted.
Reinstatement permitted.
Right of anticipation reserved on the terms set forth in the
Notes.
Priority in direct order of maturity.
Substitution of Virginia Trustee permitted with or without cause
pursuant to
provisions of Section 26-49 of the Virginia Code.
(b) Application of the Proceeds. The Trustee shall receive the
proceeds of any sale, no purchaser being required to see to the
application of the proceeds, except as may otherwise be provided
in Section 58.1-3340 of the Virginia Code, and apply the same in
the manner required by Section 55-59.4 of the Virginia Code.
(c) Any Trustee May Act. If more than one Trustee is appointed
under this Deed of Trust, all rights granted to and all powers
conferred upon the Trustee hereunder may be exercised by both or
either of the Trustees.
IN WITNESS WHEREOF, the Grantor has executed this Deed of Trust
under seal as of the above written date.
_______________________________________
a ________________ corporation
By:
Name:
Title:
Attest:
By:____________________________
Title:___________________________
[Corporate Seal]
COMMONWEALTH OF VIRGINIA
COUNTY OF ___________________
I, ___________________________, a Notary Public for
_________________________, do hereby certify
that___________________, the ____________________ of
___________________________________ personally appeared before me
this day and acknowledged the due execution of the foregoing
instrument.
Witness my hand and (where an official seal is required by law)
official seal this _____ day of December, 1996.
____________________________[SEAL]
Signature of Notary Public
My commission expires:_______________
EXHIBIT A
[Legal Description]
NOTE:The Legal Description must contain a proper derivation
clause to meet recordation requirements.
[North Carolina]
Drawn By and Return To:
#__
Moore & Van Allen, PLLC (DSW)
NationsBank Corporate Center
100 North Tryon Street, Floor 47
Charlotte, North Carolina 28202-4003
STATE OF NORTH CAROLINA
COUNTY OF _______________
DEED OF TRUST AND SECURITY AGREEMENT
THIS DEED OF TRUST AND SECURITY AGREEMENT (this "Deed of Trust")
is made and entered into as of the _______ day of ____________,
1996, by and between
____________________________________, a ____________ corporation,
whose
address is ________________________________ (the Grantor" or
Mortgagor); and
DAVID S. WALLS of the County of Mecklenburg, Charlotte, North
Carolina
( Trustee); and
NATIONSBANK, N.A., in its capacity as collateral agent (in such
capacity, the "Collateral Agent" or Mortgagee) for the lenders
from time to time party to the Credit Agreement described herein
(the "Lenders") with a mailing address of 100 North Tryon Street,
NC1-007-08-11, Charlotte, North Carolina 28255.
WHEREAS, pursuant to that certain credit agreement, dated as of
March 15, 1996, by and among Delta Woodside Industries, Inc. (the
Borrower), the lenders parties thereto from time to time (the
Lenders), NationsBank, N.A. as the agent for the Lenders, and
Bank of America National Trust and Savings Association and The
Bank of New York as co-agents (as heretofore amended, the
Existing Credit Agreement), the Lenders have made available to
the Borrower certain revolving credit facilities (the Credit
Facilities);
WHEREAS, the Grantor is an indirect wholly-owned subsidiary of
the Borrower and benefits from having access to working capital
through the Credit Facilities and such Credit Facilities are
critical to the ongoing business operations of the Grantor;
WHEREAS, the Grantor executed that certain Subsidiary Guaranty,
dated as of March 15, 1996 (as amended, modified or restated from
time to time, the Guaranty), guarantying pursuant to the terms
thereof the repayment of the Credit Facilities;
WHEREAS, the Borrower is currently in default under the terms of
the Existing Credit Agreement;
WHEREAS, the Borrower, the Lenders, the Collateral Agent, the
Grantor, and the other Subsidiary Guarantors have executed that
certain Second Amendment and Waiver Agreement, dated as of
December 20, 1996, pursuant to which the Lenders have agreed
inter alia to waive certain outstanding defaults under the
Existing Credit Agreement and to amend certain provisions of the
Existing Credit Agreement (as amended, the Credit Agreement),
and the Borrower has agreed inter alia to cause the Grantor to
execute and deliver this Deed of Trust; and
WHEREAS, the Grantor is the owner of the fee simple interest in
the real property described on Exhibit A attached hereto and
incorporated herein by reference.
W I T N E S S E T H:
The Grantor, in consideration of the indebtedness herein recited
and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, irrevocably grants,
mortgages, remises, aliens, assigns and conveys to the Trustee
and the Trustees successors and assigns, subject to the further
terms of this Deed of Trust, all of the Grantors right, title and
interest (thereunder or otherwise) in and to the following
described land, real property interests, buildings, improvements,
fixtures, furniture, and appliances and other personal property:
(a)All that tract or parcel of land and other real property
interests in __________ County, North Carolina, more particularly
described in Exhibit A attached hereto and made a part hereof
(the "Land"); and
(b)All buildings and improvements of every kind and description
now or hereafter erected or placed on the Land (the
"Improvements") and all materials intended for construction,
reconstruction, alteration and repair of such Improvements now or
hereafter erected thereon, all of which materials shall be deemed
to be included within the Premises (as hereinafter defined)
immediately upon the delivery thereof to the Land, and all
fixtures and articles of personal property now or hereafter owned
by the Grantor and attached to or contained in and used in
connection with the Land and Improvements including, but not
limited to, all furniture, furnishings, apparatus, machinery,
equipment, motors, elevators, fittings, radiators, ranges,
refrigerators, awnings, shades, screens, blinds, carpeting,
office equipment and other furnishings and all plumbing, heating,
lighting, cooking, laundry, ventilating, refrigerating,
incinerating, air conditioning and sprinkler equipment and
fixtures and appurtenances thereto and all renewals or
replacements thereof or articles in substitution thereof, whether
or not the same are or shall be attached to the Land and
Improvements in any manner (the "Tangible Personalty") and all
proceeds of the Tangible Personalty (hereinafter, the Land,
Improvements and Tangible Personalty may be collectively referred
to as the "Premises").
TO HAVE AND HOLD the same, together with all privileges,
hereditaments, easements and appurtenances thereunto belonging,
to the Collateral Agent and the Collateral Agent's successors and
assigns to secure the indebtedness herein recited.
And, as additional security for said indebtedness, the Grantor
hereby conditionally assigns to the Collateral Agent all right,
title and interest of the Grantor in and to the security
deposits, rents, issues, profits and revenues of the Premises
from time to time accruing (the "Rents and Profits"), reserving
only the right to the Grantor to collect and enjoy the same as
long as there shall exist no Event of Default (as defined in
Article III).
As additional collateral and further security for said
indebtedness, the Grantor does hereby assign to the Collateral
Agent and grants to the Collateral Agent a security interest in
all of the right, title and interest of the Grantor in and to any
and all insurance policies and proceeds thereof and any and all
leases (including equipment leases), rental agreements, sales
contracts, management contracts, franchise agreements,
construction contracts, architects' contracts, technical services
agreements, or other contracts, licenses and permits now or
hereafter affecting the Premises (the "Intangible Personalty") or
any part thereof, and the Grantor agrees to execute and deliver
to the Collateral Agent such additional instruments, in form and
substance reasonably satisfactory to the Collateral Agent, as may
hereafter be reasonably requested by the Collateral Agent to
evidence and confirm said assignment; provided, however, that
acceptance of any such assignment shall not be construed as a
consent by the Collateral Agent to any lease, rental agreement,
management contract, franchise agreement, construction contract,
technical services agreement or other contract, license or
permit, or to impose upon the Collateral Agent any obligation
with respect thereto. Notwithstanding the foregoing provisions,
such assignment and grant of security interest contained herein
shall not extend to, and the Intangible Personalty shall not
include, any personalty which is now or hereafter held by the
Grantor as licensee, lessee or otherwise, to the extent that (a)
such personalty is not assignable or capable of being encumbered
as a matter of law or under the terms of the license, lease or
other agreement applicable thereto (but solely to the extent that
any such restriction shall be enforceable under applicable law),
without the consent of the licensor or lessor thereof or other
applicable party thereto and (b) such consent has not been
obtained; provided, however, that the foregoing assignment and
grant of security interest shall extend to, and the Intangible
Personalty shall include, any and all proceeds of such personalty
to the extent that the assignment or encumbering of such proceeds
is not so restricted as a matter of law or under the terms of the
license, lease or other agreement applicable thereto.
All the Tangible Personalty which comprise a part of the Premises
shall, as far as permitted by law, be deemed to be affixed to the
aforesaid Land and conveyed therewith. As to the balance of the
Tangible Personalty and the Intangible Personalty, this Deed of
Trust shall be considered to be a security agreement which
creates a security interest in such items for the benefit of the
Collateral Agent. In that regard, the Grantor grants to the
Collateral Agent all of the rights and remedies of a secured
party under the South Carolina Uniform Commercial Code and grants
to the Collateral Agent a security interest in all of the
Tangible Personalty and Intangible Personalty.
The Grantor, the Trustee, and the Collateral Agent covenant,
represent and agree as follows:
ARTICLE I
Secured Obligations
1.1Obligations Secured. NationsBank, N.A., as agent (the Agent)
for the Lenders, the Lenders, the co-agents named therein, and
the Borrower executed that certain Credit Agreement dated as of
March 15, 1996, as amended by that certain Amendment and Waiver,
dated as of May 20, 1996, and further amended by that certain
Second Amendment and Waiver Agreement, dated as of December 20,
1996 (as amended, modified, supplemented, extended, renewed, or
replaced from time to time, the Credit Agreement) pursuant to
which the Lenders have provided a working capital credit facility
to the Borrower of up to $248,500,000 (hereinafter the loans and
extensions of credit thereunder may be called the "Loans"); terms
used but not otherwise defined herein shall have the meanings
provided in the Credit Agreement); which Loans are evidenced by
(i) those revolving credit promissory notes of the Borrower (as
referenced and defined in the Credit Agreement, and as amended,
modified, supplemented, extended, renewed or replaced from time
to time, the "Revolving Notes" or "Notes"), under which sums may
be advanced, paid back or readvanced and (ii) to the extent
provided in the Credit Agreement those letters of credit for the
account of the Borrower or the Subsidiary Guarantors (as
referenced in the Credit Agreement, the "Letters of Credit").
To support the repayment of the Loans, the Grantor, and each
other Subsidiary Guarantor, has executed that certain Subsidiary
Guaranty, dated as of March 15, 1996 (as amended, modified,
supplemented, extended, renewed, or replaced from time to time,
the Subsidiary Guaranty), pursuant to which the Subsidiary
Guarantors (including without limitation the Grantor) have
guaranteed, subject to the terms of the Subsidiary Guaranty, the
repayment in full of the Loans. This Deed of Trust is given to
secure:
(a) all present and future indebtedness, obligations and
liabilities of the Grantor under or in connection with the
Subsidiary Guaranty or any other Loan Documents;
(b) all indebtedness of the Grantor owing to the Lenders now or
hereafter issued in connection with this Deed of Trust, any other
Loan Documents, or any other instruments or documents executed by
the Grantor relating to any Loan Documents, whether now existing
or hereafter arising, due or to become due, direct or indirect,
absolute or contingent, and howsoever evidenced, held or
acquired, together with any and all modifications, extensions,
renewals, and/or substitutions of any of the foregoing; and
(c) all expenses and charges, legal and otherwise, reasonably
incurred by the Collateral Agent and/or the Lenders in collecting
or enforcing any of such indebtedness, obligations and
liabilities or in realizing on or protecting any security
therefor, including without limitation the security afforded
hereunder.
All of the foregoing obligations and indebtedness is collectively
referred to herein as the Secured Obligations or the
Indebtedness.
1.2 Amount of Secured Obligations/Future Advances. This Deed of
Trust secures all present and future disbursements comprising the
Secured Obligations. The amount of the present disbursement
secured hereby is Two Hundred Forty-Eight Million Five Hundred
Thousand Dollars ($248,500,000.00), and the maximum principal
amount which may be secured hereby at any one time is
____________________ Dollars ($______________). The time period
within which such future disbursements are to be made is the
period between the date hereof and the date fifteen (15) years
from the date hereof. Disbursements secured hereby shall not be
required to be evidenced by a written instrument or notation as
described in Section 45-68(2) of the North Carolina General
Statutes, it being the intent of the parties that the requirement
of Section 45-68(2) for a written instrument or notation for
each advance shall not be applicable to disbursements made under
the Notes or the Letters of Credit.
ARTICLE II
The Grantor's Covenants, Representations and Agreements
2.1Title to Property. The Grantor represents and warrants to the
Collateral Agent that (i) it is the owner of the Tangible
Personalty (to the extent such Tangible Personalty does not
constitute fixtures), and has the right to convey the same, (ii)
that as of the date hereof title to such property is free and
clear of all encumbrances except (a) any Lien for real estate
taxes or water and sewer charges that are not due and payable,
(b) all easements, restrictions, and other matters of record
(other than any Liens) which affect the Land without materially
impairing the use or value thereof, (c) special assessments which
are or may be pending, but which have not become a Lien, (d) such
matters as would be shown on a current and accurate survey of the
Land (other than a Lien) which do not materially impair the use
or value of the Land, and (e) any matter shown on Exhibit B
attached hereto which is reasonably satisfactory to the Agent and
the Majority Lenders (collectively, the "Permitted
Encumbrances"), and (iii) it will warrant and defend the title to
such property except for the Permitted Encumbrances against the
claims of all Persons. As to the balance of the Premises, the
Rents and Profits and the Intangible Personalty, the Grantor
represents and warrants that it has title to such property, that
title as of the date hereof to such property is free and clear of
all encumbrances except for the Permitted Encumbrances, that it
has the right to convey such property and that it will warrant
and defend such property except for the Permitted Encumbrances
against the claims of all Persons.
2.2Taxes and Fees. Subject to Section 7.6 of the Credit
Agreement, the Grantor will pay timely all material taxes,
general and special assessments, insurance premiums, permit fees,
inspection fees, license fees, water and sewer charges, franchise
fees and equipment rents and any other material charges or fees
relating to the Premises against it or the Premises (and the
Grantor, upon request of the Collateral Agent, will submit to the
Collateral Agent receipts evidencing said payments).
2.3Reimbursement. The Grantor agrees that if it shall fail to
pay on or before the date that the same become delinquent any
tax, assessment or charge levied or assessed against the Premises
or any utility charge, whether public or private, or any
insurance premium or if it shall fail to procure the insurance
coverage and the delivery of the insurance certificates required
hereunder, or if it shall fail to pay any other charge or fee
described in Sections 2.2, 2.3 or 2.6 hereof, then the Collateral
Agent, at its option, may pay or procure the same and will give
the Grantor prompt notice of any such expenditures. The Grantor
will reimburse the Collateral Agent upon demand for any sums of
money paid by the Collateral Agent pursuant to this Section,
together with interest on each such payment at the default rate
of interest provided in the Credit Agreement, and all such sums
and interest thereon shall be secured hereby.
2.4Additional Documents. The Grantor agrees to execute and
deliver to the Collateral Agent, concurrently with the execution
of this Deed of Trust and upon the request of the Collateral
Agent from time to time hereafter, all financing statements and
other documents reasonably required to perfect and maintain the
security interest created hereby. The Grantor hereby irrevocably
(as long as any Loans or Letters of Credit remain outstanding or
the Commitments have not been terminated) makes, constitutes and
appoints the Collateral Agent as the true and lawful attorney of
the Grantor to sign the name of the Grantor on any financing
statement, continuation of financing statement or similar
document required to perfect or continue such security interests.
2.5Sale or Encumbrance. Except in the ordinary course of
business and except as permitted by the Credit Agreement, the
Grantor will not sell, encumber or otherwise dispose of any of
the Tangible Personalty except to incorporate such into the
Improvements or replace such with goods of quality and value at
least equal to that replaced. In the event the Grantor sells or
otherwise disposes of any of the Tangible Personalty in
contravention of the foregoing sentence, the Collateral Agent's
security interest in the proceeds of the Tangible Personalty
shall continue pursuant to this Deed of Trust.
2.6Fees and Expenses. The Grantor will promptly pay upon demand
any and all reasonable and actual costs and expenses of the
Collateral Agent, (a) as required under the Credit Agreement and
(b) as necessary to protect the Premises, the Rents and Profits
or the Intangible Personalty or to exercise any rights or
remedies under this Deed of Trust or with respect to the
Premises, Rents and Profits or the Intangible Personalty. All of
the foregoing costs and expenses shall be secured hereby.
2.7Leases and Other Agreements. Without first obtaining on each
occasion the written approval of the Collateral Agent, the
Grantor shall not, except as permitted by the Credit Agreement or
as shall not materially affect the value or impair the use of the
Premises, enter into, cancel, surrender or materially modify or
permit the cancellation of any material lease (including any
equipment lease), rental agreement, management contract,
franchise agreement, construction contract, technical services
agreement or other material contract, license or permit now or
hereafter affecting the Premises, or materially modify any of
said instruments, or accept or permit to be made, any prepayment
(more than one month) of any installment of rent or fees
thereunder. Certified copies of each such approved material
lease or other material agreement not previously delivered to the
Collateral Agent shall be submitted to the Collateral Agent as
soon as possible. The Grantor shall faithfully keep and perform,
or cause to be kept and performed, in all material respects, all
of the covenants, conditions, and agreements contained in each of
said agreements, now or hereafter existing, on the part of the
Grantor to be kept and performed (including performance of all
covenants to be performed under any and all leases of the
Premises or any part thereof) and shall at all times use
commercially reasonable efforts to enforce, with respect to each
other party to said agreements, all obligations, covenants and
agreements by such other party to be performed thereunder.
2.8Maintenance of Premises. The Grantor will abstain from and
will not permit the commission of waste in or about the Premises
and will maintain, or cause to be maintained (subject to
reconstruction periods after the occurrence of an act of God),
the Premises in good condition and repair, reasonable wear and
tear excepted.
2.9Insurance.
(a)Liability: The Grantor covenants to maintain or cause to be
maintained general accident and public liability insurance
against all claims for bodily injury, death or property damage
occurring upon, in or about any part of the Premises. The
policies must be from a company and in forms and amounts
reasonably satisfactory to the Collateral Agent.
(b)Casualty: The Grantor shall, at its own cost, keep all
buildings now or hereafter comprising a part of the Premises
insured against loss or damage by fire and such other insurable
risks, casualties and hazards as the Collateral Agent may from
time to time specify. The policy must be from a company and in
form, content and amount reasonably satisfactory to the
Collateral Agent.
(c)Flood: If any part of the Improvements are located in an area
having "special flood hazards", a flood insurance policy naming
the Collateral Agent as Deed of Trust must be submitted to the
Collateral Agent. The policy must be from a company and in form,
content and amount reasonably satisfactory to the Collateral
Agent.
(d)Delivery of Policies and Renewals: The Grantor agrees to
deliver to the Collateral Agent, upon the request of the
Collateral Agent, as additional security hereto, a copy of the
policies of such insurance pursuant to subsections (a), (b), and
(c) hereof, and any insurance policies required by the terms of
the Credit Agreement or the other Loan Documents. Renewals of
such policies shall be so delivered at least ten (10) days before
any such insurance shall expire. In the event the Grantor fails
to maintain insurance as required hereunder the Collateral Agent
has the right to procure such insurance whether or not the
Grantor's failure to maintain such insurance constitutes an Event
of Default (as defined in Article III) or an event or condition
which, upon the giving of notice or the passage of time, or both,
would constitute an Event of Default. Any amounts paid by the
Collateral Agent for insurance shall be due and payable to the
Collateral Agent upon demand and shall be secured by this Deed of
Trust.
(e)Proof of Loss; Claims Settlement: In the event of a material
loss, the Grantor shall give prompt notice thereof to the
insurance carrier and the Collateral Agent. Subject to the
rights of the holder of any prior Permitted Encumbrance, Grantor
shall have the right to adjust and compromise any loss under any
insurance policies maintained with regard to this Premises,
provided that any settlement with regard to any such loss shall
be subject to the Collateral Agent's prior approval (which shall
not be unreasonably withheld); provided further, however, that if
Grantor fails to so adjust and compromise or if, prior to such
adjustment and compromise, a Default or an Event of Default
occurs under any of the Loan Documents, then Collateral Agent
shall be, and is hereby, authorized and empowered, at its option,
to adjust or compromise any loss under any insurance policies
maintained pursuant to this Section. Subject to the rights of
the holder of any prior Permitted Encumbrance, each insurance
company is hereby authorized and directed to make payment for all
such losses directly to Collateral Agent, instead of to Grantor
and Collateral Agent jointly, upon request of the Collateral
Agent during the continuance of a Default or an Event of Default.
In the event any insurance company fails to disburse directly and
solely to Collateral Agent but disburses instead either solely to
Grantor or to Grantor and Collateral Agent jointly, in violation
of the preceding sentence, Grantor agrees immediately to endorse
and transfer such proceeds to Collateral Agent. Upon failure of
Grantor to endorse and transfer such proceeds as aforesaid,
Collateral Agent may execute such endorsements or transfers for
and in the name of Grantor and Grantor hereby irrevocably
appoints Collateral Agent as Grantors agent and attorney-in-fact
so to do. The Collateral Agent is hereby authorized, in its sole
discretion, to collect the proceeds of any insurance claims
during the continuance of a Default or an Event of Default.
(f)Use of Proceeds: Provided that there is no Default or Event
of Default, Grantor may apply, subject to the rights of the
holder of any prior Permitted Encumbrance, the proceeds of any
insurance or any part thereof to restoration or repair of the
property damaged.
2.10Releases and Waivers. The Grantor agrees that no release by
the Collateral Agent or the Lenders of any of the Grantor's
successors in title from liability on the Secured Obligations, no
release by the Collateral Agent of any portion of the Premises,
the Rents and Profits or the Intangible Personalty, no
subordination of lien, no forbearance on the part of the Lenders
or the Collateral Agent to collect on the Secured Obligations, or
any part thereof, no waiver of any right granted or remedy
available to the Collateral Agent or the Lenders and no action
taken or not taken by the Collateral Agent or the Lenders shall
in any way diminish the Grantor's obligation to the Collateral
Agent and the Lenders or have the effect of releasing the
Grantor, or any successor to the Grantor, from full
responsibility to the Collateral Agent or the Lenders for the
complete discharge of each and every of the Grantor's obligations
hereunder or under the Credit Agreement or any of the other Loan
Documents.
2.11.Eminent Domain.
(a)Participation in Proceedings: Grantor shall promptly notify
the Collateral Agent of any actual or threatened initiation of
any eminent domain proceeding as to any material part of the
Premises and shall deliver to the Collateral Agent copies of any
and all papers served or received in connection with such
proceedings, and the Collateral Agent shall have the right, at
its option, to participate in such proceedings at the expense of
Grantor (including, without limitation, the Collateral Agent's
reasonable attorneys' fees) and Grantor will execute such
documents and take such other steps as required to permit such
participation.
(b)Right to Settle Claims: In the event of a condemnation or
similar proceeding, the Grantor shall give prompt notice thereof
to the Collateral Agent. Grantor shall have the right to adjust,
compromise and otherwise negotiate an award with regard to any
such proceeding, provided that any settlement with regard to any
such proceeding shall be subject to the Majority Lenders prior
approval (which shall not be unreasonably withheld); provided,
however, that if Grantor fails to so negotiate or if, prior to
the conclusion of such negotiation, a Default or an Event of
Default occurs under any of the Loan Documents, then the
Collateral Agent shall be, and is hereby, authorized and
empowered, at its option, to negotiate the award with regard to
any such proceeding. Subject to the rights of the holder of any
prior Permitted Encumbrance, each governmental unit making any
such award is hereby authorized and directed to make payment of
all such awards directly to Collateral Agent, instead of to
Grantor and Collateral Agent jointly, upon request of the
Collateral Agent during the continuance of a Default or an Event
of Default. In the event any governmental unit fails to disburse
directly and solely to Collateral Agent but disburses instead
either solely to Grantor or to Grantor and Collateral Agent
jointly, in violation of the preceding sentence, Grantor agrees
immediately to endorse and transfer such award or proceeds to
Collateral Agent. Upon failure of Grantor to endorse and
transfer such award or proceeds as aforesaid, Collateral Agent
may execute such endorsements or transfers for and in the name of
Grantor and Grantor hereby irrevocably appoints Collateral Agent
as Grantor's agent and attorney-in-fact so to do. The Collateral
Agent is hereby authorized, in its sole discretion, to collect
the award or proceeds of any such condemnation or similar
proceeding and is hereby authorized to apply the same to the
outstanding balance of the Secured Obligations during the
continuance of a Default or an Event of Default. Provided that
there is no Default or Event of Default, Grantor may apply,
subject to the rights of the holder of any prior Permitted
Encumbrance, the award or proceeds of any such condemnation or
similar proceeding to the replacement of the affected property.
(c)Further Assignments: The Grantor agrees to execute such
further assignments and agreements as may be reasonably required
by the Collateral Agent to assure the effectiveness of this
Section. During the continuance of a Default or an Event of
Default, the Collateral Agent may apply any condemnation awards
or proceeds to the outstanding balance of the Secured
Obligations.
2.12Environmental Assessment. Upon the earlier to occur of (i) a
Default or an Event of Default and (ii) March 31, 1997, and upon
the request of the Collateral Agent and the Majority Lenders, the
Grantor agrees to provide the Collateral Agent (at the Grantors
expense and within 45 days of such request) with a current
environmental assessment of the Premises. Such assessment shall
be in a form satisfactory to the Collateral Agent and from an
environmental engineer or consultant reasonably satisfactory to
the Collateral Agent. If the Grantor shall fail to comply with
such request (prior to or after an Event of Default), then the
Collateral Agent shall have the option, but be under no
obligation, to obtain such an environmental assessment, and all
fees, costs and expenses associated with the Collateral Agent's
obtaining such report shall be added to the amount of the Secured
Obligations and be secured by this Deed of Trust.
2.13Appraisal. Upon the earlier to occur of (i) a Default or an
Event of Default and (ii) June 30, 1997, and upon request of the
Majority Lenders and the Collateral Agent, the Grantor agrees to
provide the Collateral Agent (at Grantors expense and within 45
days of such request) a current written appraisal or reappraisal
of the Premises. Such appraisal shall be prepared in accordance
with reasonable written instructions from the Collateral Agent
and prepared by a qualified appraiser reasonably satisfactory to
the Collateral Agent. If the Grantor shall fail to comply with
such request (prior to or after an Event of Default), then the
Collateral Agent shall have the option, but be under no
obligation, to obtain such an appraisal, and all fees, costs and
expenses associated with the Collateral Agent's obtaining such
appraisal shall be added to the amount of the Secured Obligations
and be secured by this Deed of Trust.
2.14Survey. Upon the earlier to occur of (i) a Default and an
Event of Default and (ii) March 31, 1997, and upon the request of
the Collateral Agent and the Majority Lenders, the Grantor agrees
to provide the Collateral Agent (at Grantors expense and within
45 days of such request) current surveys of the Land. Such
surveys shall be prepared in accordance with written instructions
from the Collateral Agent and prepared by a qualified surveyor
reasonably satisfactory to the Collateral Agent. If the Grantor
shall fail to comply with such request (prior to or after an
Event of Default), then the Collateral Agent shall have the
option, but be under no obligation, to obtain such surveys, and
all fees, costs and expenses associated with the Collateral
Agent's obtaining such surveys shall be added to the amount of
the Secured Obligations and be secured by this Deed of Trust.
2.15Title Policies. Upon the earlier to occur of (i) a Default
and an Event of Default and (ii) March 31, 1997, and upon the
request of the Collateral Agent and the Majority Lenders, the
Grantor agrees to provide the Collateral Agent (at the Grantors
expense and within 45 days of such request) with ALTA Deed of
Trust title insurance policies issued by a title insurer
reasonably satisfactory to the Collateral Agent, in amounts not
less than the amounts designated for the Premises on Schedule 1
to the Second Amendment and Waiver, assuring the Collateral Agent
and the Lenders that this Deed of Trust creates a valid and
enforceable first priority Deed of Trust lien on the Premises,
free and clear of all defects and encumbrances excepted Permitted
Encumbrances and subject to a standard survey exception, which
such title policies shall be in form and substance reasonably
satisfactory to the Collateral Agent and the Majority Lenders and
shall provide for such affirmative insurance and such reinsurance
as the Collateral Agent may reasonably request.
2.16Environmental Indemnification. The Grantor covenants and
agrees with regard to the Premises that it will (i) conduct and
complete all investigations, studies, sampling and testing and
all remedial, removal, and other actions necessary to clean up
and remove all Contaminants on, from, or affecting the Premises
(A) in accordance with all applicable federal, state, and local
laws, regulations, rules, and policies, (B) to the reasonable
satisfaction of the Collateral Agent, and (C) in accordance with
the orders and directives of all federal, state and local
governmental authorities, and (ii) defend, indemnify, and hold
harmless the Collateral Agent and each of the Lenders, their
respective employees, agents, officers, and directors (except to
the extent arising from the Collateral Agents or such Lenders
gross negligence or willful misconduct) from and against any
claims, demands, penalties, fines, liabilities, settlements,
damages, costs, or expenses (including, without limit, reasonable
attorney and consultant fees, investigation and laboratory fees,
court costs, and litigation expenses) of whatever kind of nature,
known or unknown, contingent or otherwise, arising out of or in
any way related to (A) the presence, disposal, release, or
threatened release of any Contaminant which are on, from, or
affecting the soil, water, vegetation, buildings, personal
property, persons, animals, or otherwise; (B) any personal injury
(including wrongful death) or property damage (real or personal)
arising out of or related to such Contaminants; (C) any lawsuit
brought or threatened, settlement reached, or governmental order
relating to such Contaminants, and/or (D) any violation of laws,
orders, regulations, requirements, or demands of government
authorities, or any policies or requirements of the Collateral
Agent or any of the Lenders set forth herein or in any of the
Loan Documents, which are based upon or in any way related to
such Contaminants. For the purposes hereof, the term
"Contaminants" shall mean any substance, material or waste the
generation, handling, storage, treatment or disposal of which is
regulated by any local or state government authority in any
jurisdiction in which the Grantor has owned, leased or operated
real property or disposed of hazardous materials, or by the
United States government, including any material or substance
which is (a) defined as a "contaminant," "hazardous waste,"
"hazardous material," "hazardous substance," "extremely hazardous
waste," or "restricted hazardous waste" or other similar term or
phrase under any such law, (b) petroleum, (c) designated as a
"hazardous substance" pursuant to Section 311 of the Clean Water
Act, 33 U.S.C. 1251 et seq. (33 U.S.C. 1321) or listed pursuant
to Section 307 of the Clean Water Act (33 U.S.C. 1317), (d)
defined as a "hazardous waste" pursuant to Section 1004 of the
Resource Conservation and Recovery Act, 42 U.S.C. 6901, et seq.
(42 U.S.C. 6903 or (e) defined as "hazardous substance" pursuant
to Section 101 of the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. 9601, et seq. (42
U.S.C. 6901). Except as disclosed in writing to the Agent and
the Lenders on or prior to the date hereof, to the best of
Grantors knowledge and belief, the Premises and its current use
and all off-site disposals by the Grantor of any Contaminants
comply in all material respects with all Environmental Laws.
ARTICLE III
Event of Default
An Event of Default shall exist under the terms of this Deed of
Trust upon the existence of an Event of Default under the terms
of the Credit Agreement.
ARTICLE IV
Foreclosure
4.1Acceleration of Loan; Foreclosure. Upon the occurrence and
during the continuance of an Event of Default and otherwise in
compliance with Section 10.2 of the Credit Agreement, the entire
balance of the Loans and Letters of Credit and any other
obligations due under the Loan Documents, including all accrued
interest, shall, at the option of the Collateral Agent, become
immediately due and payable. Upon failure to pay the Loans and
Letters of Credit or reimburse any other amounts due under the
Loan Documents in full at any stated or accelerated maturity, the
Collateral Agent may foreclose the lien of this Deed of Trust by
judicial or nonjudicial proceeding in a manner permitted by
applicable law. The Grantor hereby waives any statutory right of
redemption in connection with such foreclosure proceeding.
4.2Power of Sale. The Trustee is hereby granted a power of sale
and may sell the Premises (together with the Rents and Profits
and Intangible Personalty), or such part or parts thereof or
interests therein as the Collateral Agent may select after first
having given such notice of hearing as to commencement of
foreclosure proceedings and obtained such findings or leave of
court as then may be required by law and then having given such
notice and advertised the time and place of such sale in such
manner as then may be provided by law, and upon such sale and any
resale and upon compliance with the law then relating to
foreclosure proceedings, to convey title to the purchaser.
4.3Proceeds of Sale. Following a foreclosure sale, the proceeds
of such sale shall, subject to applicable law, be applied as
follows: first, to all costs and expenses of the Collateral
Agent (including without limitation reasonable attorney's fees
and expenses) incurred in connection with the implementation
and/or enforcement of this Deed of Trust and/or any of the other
Loan Documents; second, to all costs and expenses of the Lenders
(including without limitation reasonable attorneys' fees and
expenses) incurred in connection with the implementation and/or
enforcement of this Deed of Trust and/or any of the other Loan
Documents; third, to such of the Secured Obligations as consist
of accrued but unpaid interest and fees; fourth, to the principal
amount of the Secured Obligations; fifth, to all other amounts
payable with respect to the Secured Obligations; and sixth, to
the payment of surplus, if any, to whomever may be lawfully
entitled to receive such surplus. The Grantor shall remain
liable to the Lenders for any deficiency.
ARTICLE V
Additional Rights and Remedies of the Collateral Agent
5.1Rights Upon Maturity or an Event of Default. Upon the
occurrence and during the continuance of an Event of Default, the
Collateral Agent, immediately and without additional notice and
without liability therefor to the Grantor and to the extent
permitted by applicable law, except for its own gross negligence
or willful misconduct, may do or cause to be done any or all of
the following: (a) take physical possession of the Premises; (b)
exercise its right to collect the Rents and Profits; (c) enter
into contracts for the completion, repair and maintenance of the
Improvements thereon; (d) expend Loan funds and any rents, income
and profits derived from the Premises for payment of any taxes,
insurance premiums, assessments and charges for completion,
repair and maintenance of the Improvements, preservation of the
lien of this Deed of Trust and satisfaction and fulfillment of
any liabilities or obligations of the Grantor arising out of or
in any way connected with the construction of Improvements on the
Premises whether or not such liabilities and obligations in any
way affect, or may affect, the lien of this Deed of Trust; (e)
enter into leases demising the Premises or any part thereof; (f)
take steps to protect and enforce the specific performance of any
covenant, condition or agreement in the Notes, this Deed of
Trust, the Credit Agreement, or the other Loan Documents, or to
aid the execution of any power herein granted; and (g) generally,
supervise, manage, and contract with reference to the Premises as
if the Collateral Agent were equitable owner of the Premises.
The Grantor also agrees that any of the foregoing rights and
remedies of the Collateral Agent may be exercised at any time
independently of the exercise of any other such rights and
remedies, and the Collateral Agent may continue to exercise any
or all such rights and remedies until the Event(s) of Default are
cured or waived with the consent of the Majority Lenders or the
Lenders (as required by the Credit Agreement) or until
foreclosure and the conveyance of the Premises or until the
Indebtedness secured hereby is satisfied or paid in full and the
Commitments are terminated.
5.2Appointment of Receiver. If upon the maturity of any of the
Loans or Letters of Credit or any other amounts or obligations
under the Loan Documents, the same remain unpaid, or upon the
occurrence and continuance of an Event of Default, the Collateral
Agent as a matter of right shall be entitled to the appointment
of a receiver or receivers for all or any part of the Premises,
to take possession of and to operate the Premises, and to collect
the rents, issues, profits, and income thereof, all expenses of
which shall be added to the indebtedness secured hereby, whether
such receivership be incident to a proposed sale (or sales) of
such property or otherwise, and without regard to the value of
the Premises or the solvency of any Person or Persons liable for
the payment of the indebtedness secured hereby, and the Grantor
does hereby irrevocably consent to the appointment of such
receiver or receivers, waives any and all defenses to such
appointment, and agrees not to oppose any application therefor by
Collateral Agent. Nothing herein is to be construed to deprive
the Collateral Agent of any other right, remedy or privilege it
may have under the law to have a receiver appointed. Any money
advanced by the Collateral Agent in connection with any such
receivership shall be a demand obligation (which obligation the
Grantor hereby promises to pay) owing by the Grantor to the
Collateral Agent pursuant to this Deed of Trust.
5.3Waivers. No waiver of any Event of Default shall at any time
thereafter be held to be a waiver of any rights of the Collateral
Agent stated anywhere in the Notes, this Deed of Trust, the
Credit Agreement or any of the other Loan Documents, nor shall
any waiver of a prior Event of Default operate to waive any
subsequent Event(s) of Default. All remedies provided in this
Deed of Trust, in the Notes, in the Credit Agreement and in the
other Loan Documents are cumulative and may, at the election of
the Collateral Agent, be exercised alternatively, successively,
or in any manner and are in addition to any other rights provided
by law.
5.4Delivery of Possession After Foreclosure. In the event there
is a foreclosure sale hereunder and at the time of such sale, the
Grantor or the Grantor's heirs, devises, representatives,
successors or assigns are occupying or using the Premises, or any
part thereof, each and all immediately shall become the tenant of
the purchaser at such sale, which tenancy shall be a tenancy from
day to day, terminable at the will of either landlord or tenant,
at a reasonable rental per day based upon the value of the
property occupied, such rental to be due daily to the purchaser;
and to the extent permitted by applicable law, the purchaser at
such sale, notwithstanding any language herein apparently to the
contrary, shall have the sole option to demand possession
immediately following the sale or to permit the occupants to
remain as tenants at will. In the event the tenant fails to
surrender possession of said property upon demand, the purchaser
shall be entitled to institute and maintain a summary action for
possession of the property (such as an action for forcible
detainer) in any court having jurisdiction.
5.5 Substitute Trustee. The Trustee may resign by an instrument
in writing addressed to the Collateral Agent, or the Trustee may
be removed at any time with or without cause by an instrument in
writing executed by the Collateral Agent in case of the death,
resignation, removal, or disqualification of the Trustee, or if
for any reason the Collateral Agent shall deem it desirable to
appoint a substitute or successor trustee to act instead of the
herein named trustee or any substitute or successor trustee, then
the Collateral Agent shall have the right and is hereby
authorized and empowered to appoint a successor trustee, or a
substitute trustee, without other formality than appointment and
designation in writing executed by the Collateral Agent and the
authority hereby conferred shall extend to the appointment of
other successor and substitute trustees successively until the
indebtedness secured hereby has been paid in full, or until the
Premises is fully and finally sold hereunder. If the Collateral
Agent is a corporation or association and such appointment is
executed on its behalf by an officer of such corporation or
association such appointment shall be conclusively presumed to be
executed with authority and shall be valid and sufficient without
proof of any action by the board of directors or any superior
officer of the corporation or association. Upon the making of
any such appointment and designation, all of the estate and title
of the Trustee in the Premises shall vest in the named successor
or substitute trustee who shall thereupon succeed to, and shall
hold, possess and execute all rights, powers, privileges,
immunities and duties herein conferred upon the Trustee. All
references herein to Trustee shall be deemed to refer to the
Trustee (including any successor or substitute trustee appointed
and designated as herein provided) from time to time acting
hereunder.
5.6No Liability of Trustee. The Trustee shall not be liable for
any error of judgment or act done by the Trustee in good faith,
or otherwise be responsible or accountable under any
circumstances whatsoever (including Trustees negligence), except
for the Trustees gross negligence or willful misconduct. The
Trustee shall have the right to rely on any instrument, document,
or signature authorizing or supporting any action taken or
proposed to be take by it hereunder, believed by it in good faith
to be genuine. All moneys received by the Trustee until used or
applied as herein provided, shall be held in trust for the
purposes for which they were received but need not be segregated
in any manner from any other moneys (except to the extent
required by law), and the Trustee shall be under no liability for
interest on any moneys received by it hereunder. The Grantor
hereby ratifies and confirms any and all acts which the herein
named Trustee or its successor or successors, substitute or
substitutes, in this trust shall do lawfully by virtue hereof and
the Grantor will reimburse the Trustee for, and save it harmless
against, any and all liability and expenses which may be incurred
by it in the performance of its duties in accordance with the
terms hereof (except any liability or expense resulting directly
from the Trustees gross negligence or willful misconduct). The
foregoing indemnity shall not terminate upon discharge of the
secured indebtedness or foreclosure, or release or other
termination, of this Deed of Trust.
ARTICLE VI
General Conditions
6.1Terms. The singular used herein shall be deemed to include
the plural; the masculine deemed to include the feminine and
neuter; and the named parties deemed to include their heirs,
successors and assigns. The term "Lender" shall include any of
the Persons identified as a "Lender" on the signature pages to
the Credit Agreement, and any Person which may become a Lender by
way of assignment in accordance with the terms of the Credit
Agreement, together with their successors and assigns. Any
capitalized term not otherwise defined herein shall have the
meaning ascribed to such term in the Credit Agreement.
6.2Notices. All notices and other communications required to be
given hereunder shall have been duly given and shall be effective
(i) when delivered, (ii) when transmitted via telecopy (or other
facsimile device) to the number set out below, (iii) the Business
Day following the day on which the same has been delivered
prepaid to a reputable national overnight air courier service, or
(iv) the third Business Day following the day on which the same
is sent by certified or registered mail, postage prepaid, in each
case to the respective parties at the address or telecopy numbers
set forth below, or at such other address as such party may
specify by written notice to the other parties hereto.
to the Grantor:
to the Collateral Agent:
to the Trustee:
6.3Severability. If any provision of this Deed of Trust is
determined to be illegal, invalid or unenforceable, such
provision shall be fully severable and the remaining provisions
shall remain in full force and effect and shall be construed
without giving effect to the illegal, invalid or unenforceable
provisions.
6.4Headings. The captions and headings herein are inserted only
as a matter of convenience and for reference and in no way
define, limit, or describe the scope of this Deed of Trust nor
the intent of any provision hereof.
6.5Conflicting Terms. In the event the terms and conditions of
this Deed of Trust conflict with the terms and conditions of the
Credit Agreement, the terms and conditions of the Credit
Agreement shall control and supersede the provisions of this Deed
of Trust with respect to such conflicts.
6.6GOVERNING LAW. This Deed of Trust shall be governed by and
construed in accordance with the internal law of the State of
North Carolina; provided, however, that the provisions of this
Deed of Trust relating to the creation, perfection and
enforcement of the lien and security interest created by this
Deed of Trust in respect of the Premises and the exercise of each
remedy provided hereby, including the power of foreclosure or
power of sale procedures set forth in this Deed of Trust, shall
be governed by and construed in accordance with the internal law
of the state where the Premises is located. In the event of a
conflict between the laws of the State of North Carolina and such
internal law with respect to creation, perfection and enforcement
of the lien and security interest created by this Deed of Trust,
the laws of the state in which the Premises is located shall
govern.
IN WITNESS WHEREOF, the Grantor has executed this Deed of Trust
under seal as of the above written date.
_______________________________________
a ________________ corporation
By:
Name:
Title:
Attest:
By:____________________________
Title:___________________________
[Corporate Seal]
STATE OF NORTH CAROLINA
COUNTY OF ___________________
I, ___________________________, a Notary Public for
_________________________, do hereby certify
that___________________, the ____________________ of
___________________________________ personally appeared before me
this day and acknowledged the due execution of the foregoing
instrument.
Witness my hand and (where an official seal is required by law)
official seal this _____ day of December, 1996.
____________________________[SEAL]
Signature of Notary Public
My commission expires:_______________
EXHIBIT A
[Legal Description]
NOTE:The Legal Description must contain a proper derivation
clause to meet recordation requirements.
[Georgia]
Drawn By and Return To:
#__
Moore & Van Allen, PLLC (DSW)
NationsBank Corporate Center
100 North Tryon Street, Floor 47
Charlotte, North Carolina 28202-4003
DEED TO SECURE DEBT AND SECURITY AGREEMENT
STATE OF GEORGIA
COUNTY OF _______________
THIS DEED TO SECURE DEBT AND SECURITY AGREEMENT (this "Security
Deed") is made and entered into as of the _______ day of
____________, 1996, by and
between
____________________________________, a ____________ corporation,
whose
address is ________________________________ (the Grantor" or
Mortgagor); and
NATIONSBANK, N.A., in its capacity as collateral agent (in such
capacity, the
"Collateral Agent" or Mortgagee) for the lenders from time to
time party to the Credit
Agreement described herein (the "Lenders") with a mailing address
of 100 North Tryon Street, NC1-007-08-11, Charlotte, North
Carolina 28255.
WHEREAS, pursuant to that certain credit agreement, dated as of
March 15, 1996, by and among Delta Woodside Industries, Inc. (the
Borrower), the lenders parties thereto from time to time (the
Lenders), NationsBank, N.A. as the agent for the Lenders, and
Bank of America National Trust and Savings Association and The
Bank of New York as co-agents (as heretofore amended, the
Existing Credit Agreement), the Lenders have made available to
the Borrower certain revolving credit facilities (the Credit
Facilities);
WHEREAS, the Grantor is an indirect wholly-owned subsidiary of
the Borrower and benefits from having access to working capital
through the Credit Facilities and such Credit Facilities are
critical to the ongoing business operations of the Grantor;
WHEREAS, the Grantor executed that certain Subsidiary Guaranty,
dated as of March 15, 1996 (as amended, modified or restated from
time to time, the Guaranty), guarantying pursuant to the terms
thereof the repayment of the Credit Facilities;
WHEREAS, the Borrower is currently in default under the terms of
the Existing Credit Agreement;
WHEREAS, the Borrower, the Lenders, the Collateral Agent, the
Grantor, and the other Subsidiary Guarantors have executed that
certain Second Amendment and Waiver Agreement, dated as of
December 20, 1996, pursuant to which the Lenders have agreed
inter alia to waive certain outstanding defaults under the
Existing Credit Agreement and to amend certain provisions of the
Existing Credit Agreement (as amended, the Credit Agreement),
and the Borrower has agreed inter alia to cause the Grantor to
execute and deliver this Security Deed; and
WHEREAS, the Grantor is the owner of the fee simple interest in
the real property described on Exhibit A attached hereto and
incorporated herein by reference.
W I T N E S S E T H:
The Grantor, in consideration of the indebtedness herein recited
and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, has granted,
bargained, sold, conveyed, transferred, and set over and by these
presents does hereby grant, bargain, sell, convey, transfer,
assign and set over and convey to the Collateral Agent and the
Collateral Agent's successors and assigns, subject to the further
terms of this Security Deed, all of the Grantor's right, title
and interest in and to the following described land, real
property interests, buildings, improvements, fixtures, furniture
and appliances and other personal property:
(a)All that tract or parcel of land and other real property
interests in __________ County, Georgia more particularly
described in Exhibit A attached hereto and made a part hereof
(the "Land"); and
(b)All buildings and improvements of every kind and description
now or hereafter erected or placed on the Land (the
"Improvements") and all materials intended for construction,
reconstruction, alteration and repair of such Improvements now or
hereafter erected thereon, all of which materials shall be deemed
to be included within the Premises (as hereinafter defined)
immediately upon the delivery thereof to the Land, and all
fixtures and articles of personal property now or hereafter owned
by the Grantor and attached to or contained in and used in
connection with the Land and Improvements including, but not
limited to, all furniture, furnishings, apparatus, machinery,
equipment, motors, elevators, fittings, radiators, ranges,
refrigerators, awnings, shades, screens, blinds, carpeting,
office equipment and other furnishings and all plumbing, heating,
lighting, cooking, laundry, ventilating, refrigerating,
incinerating, air conditioning and sprinkler equipment and
fixtures and appurtenances thereto and all renewals or
replacements thereof or articles in substitution thereof, whether
or not the same are or shall be attached to the Land and
Improvements in any manner (the "Tangible Personalty") and all
proceeds of the Tangible Personalty (hereinafter, the Land,
Improvements and Tangible Personalty may be collectively referred
to as the "Premises").
TO HAVE AND HOLD the same, together with all privileges,
hereditaments, easements and appurtenances thereunto belonging,
to the Collateral Agent and the Collateral Agent's successors and
assigns to secure the indebtedness herein recited.
And, as additional security for said indebtedness, the Grantor
hereby conditionally assigns to the Collateral Agent all right,
title and interest of the Grantor in and to the security
deposits, rents, issues, profits and revenues of the Premises
from time to time accruing (the "Rents and Profits"), reserving
only the right to the Grantor to collect and enjoy the same as
long as there shall exist no Event of Default (as defined in
Article III).
As additional collateral and further security for said
indebtedness, the Grantor does hereby assign to the Collateral
Agent and grants to the Collateral Agent a security interest in
all of the right, title and interest of the Grantor in and to any
and all insurance policies and proceeds thereof and any and all
leases (including equipment leases), rental agreements, sales
contracts, management contracts, franchise agreements,
construction contracts, architects' contracts, technical services
agreements, or other contracts, licenses and permits now or
hereafter affecting the Premises (the "Intangible Personalty") or
any part thereof, and the Grantor agrees to execute and deliver
to the Collateral Agent such additional instruments, in form and
substance reasonably satisfactory to the Collateral Agent, as may
hereafter be reasonably requested by the Collateral Agent to
evidence and confirm said assignment; provided, however, that
acceptance of any such assignment shall not be construed as a
consent by the Collateral Agent to any lease, rental agreement,
management contract, franchise agreement, construction contract,
technical services agreement or other contract, license or
permit, or to impose upon the Collateral Agent any obligation
with respect thereto. Notwithstanding the foregoing provisions,
such assignment and grant of security interest contained herein
shall not extend to, and the Intangible Personalty shall not
include, any personalty which is now or hereafter held by the
Grantor as licensee, lessee or otherwise, to the extent that (a)
such personalty is not assignable or capable of being encumbered
as a matter of law or under the terms of the license, lease or
other agreement applicable thereto (but solely to the extent that
any such restriction shall be enforceable under applicable law),
without the consent of the licensor or lessor thereof or other
applicable party thereto and (b) such consent has not been
obtained; provided, however, that the foregoing assignment and
grant of security interest shall extend to, and the Intangible
Personalty shall include, any and all proceeds of such personalty
to the extent that the assignment or encumbering of such proceeds
is not so restricted as a matter of law or under the terms of the
license, lease or other agreement applicable thereto.
All the Tangible Personalty which comprise a part of the Premises
shall, as far as permitted by law, be deemed to be affixed to the
aforesaid Land and conveyed therewith. As to the balance of the
Tangible Personalty and the Intangible Personalty, this Security
Deed shall be considered to be a security agreement which creates
a security interest in such items for the benefit of the
Collateral Agent. In that regard, the Grantor grants to the
Collateral Agent all of the rights and remedies of a secured
party under the Georgia Uniform Commercial Code and grants to the
Collateral Agent a security interest in all of the Tangible
Personalty and Intangible Personalty.
The Grantor and the Collateral Agent covenant, represent and
agree as follows:
ARTICLE I
Secured Obligations
1.1Obligations Secured. NationsBank, N.A., as agent (the Agent)
for the Lenders, the Lenders, the co-agents named therein, and
the Borrower executed that certain Credit Agreement dated as of
March 15, 1996, as amended by that certain Amendment and Waiver,
dated as of May 20, 1996, and further amended by that certain
Second Amendment and Waiver Agreement, dated as of December 20,
1996 (as amended, modified, supplemented, extended, renewed, or
replaced from time to time, the Credit Agreement) pursuant to
which the Lenders have provided a working capital credit facility
to the Borrower of up to $248,500,000 (hereinafter the loans and
extensions of credit thereunder may be called the "Loans"); terms
used but not otherwise defined herein shall have the meanings
provided in the Credit Agreement); which Loans are evidenced by
(i) those revolving credit promissory notes of the Borrower (as
referenced and defined in the Credit Agreement, and as amended,
modified, supplemented, extended, renewed or replaced from time
to time, the "Revolving Notes" or "Notes"), under which sums may
be advanced, paid back or readvanced and (ii) to the extent
provided in the Credit Agreement those letters of credit for the
account of the Borrower or the Subsidiary Guarantors (as
referenced in the Credit Agreement, the "Letters of Credit").
To support the repayment of the Loans, the Grantor, and each
other Subsidiary Guarantor, has executed that certain Subsidiary
Guaranty, dated as of March 15, 1996 (as amended, modified,
supplemented, extended, renewed, or replaced from time to time,
the Subsidiary Guaranty), pursuant to which the Subsidiary
Guarantors (including without limitation the Grantor) have
guaranteed, subject to the terms of the Subsidiary Guaranty, the
repayment in full of the Loans. This Security Deed is given to
secure:
(a) all present and future indebtedness, obligations and
liabilities of the Grantor under or in connection with the
Subsidiary Guaranty or any other Loan Documents;
(b) all indebtedness of the Grantor owing to the Lenders now or
hereafter issued in connection with this Security Deed, any other
Loan Documents, or any other instruments or documents executed by
the Grantor relating to any Loan Documents, whether now existing
or hereafter arising, due or to become due, direct or indirect,
absolute or contingent, and howsoever evidenced, held or
acquired, together with any and all modifications, extensions,
renewals, and/or substitutions of any of the foregoing; and
(c) all expenses and charges, legal and otherwise, reasonably
incurred by the Collateral Agent and/or the Lenders in collecting
or enforcing any of such indebtedness, obligations and
liabilities or in realizing on or protecting any security
therefor, including without limitation the security afforded
hereunder.
All of the foregoing obligations and indebtedness is collectively
referred to herein as the Secured Obligations or the
Indebtedness.
1.2 Payment of Indebtedness. Payment by the Borrower or the
Grantor of the Indebtedness, including without limitation
principal and interest on the Loans, will be in accordance with
the terms of the Subsidiary Guaranty and the Credit Agreement,
which Credit Agreement provides for the payment of the Notes and
reimbursement on the Letters of Credit on or before September 30,
1997, which is the final maturity date thereof.
ARTICLE II
The Grantor's Covenants, Representations and Agreements
2.1Title to Property. The Grantor represents and warrants to the
Collateral Agent that (i) it is the owner of the Tangible
Personalty (to the extent such Tangible Personalty does not
constitute fixtures), and has the right to convey the same, (ii)
that as of the date hereof title to such property is free and
clear of all encumbrances except (a) any Lien for real estate
taxes or water and sewer charges that are not due and payable,
(b) all easements, restrictions, and other matters of record
(other than any Liens) which affect the Land without materially
impairing the use or value thereof, (c) special assessments which
are or may be pending, but which have not become a Lien, (d) such
matters as would be shown on a current and accurate survey of the
Land (other than a Lien) which do not materially impair the use
or value of the Land, and (e) any matter shown on Exhibit B
attached hereto which is reasonably satisfactory to the Agent and
the Majority Lenders (collectively, the "Permitted
Encumbrances"), and (iii) it will warrant and defend the title to
such property except for the Permitted Encumbrances against the
claims of all Persons. As to the balance of the Premises, the
Rents and Profits and the Intangible Personalty, the Grantor
represents and warrants that it has title to such property, that
title as of the date hereof to such property is free and clear of
all encumbrances except for the Permitted Encumbrances, that it
has the right to convey such property and that it will warrant
and defend such property except for the Permitted Encumbrances
against the claims of all Persons.
2.2Taxes and Fees. Subject to Section 7.6 of the Credit
Agreement, the Grantor will pay timely all material taxes,
general and special assessments, insurance premiums, permit fees,
inspection fees, license fees, water and sewer charges, franchise
fees and equipment rents and any other material charges or fees
relating to the Premises against it or the Premises (and the
Grantor, upon request of the Collateral Agent, will submit to the
Collateral Agent receipts evidencing said payments).
2.3Reimbursement. The Grantor agrees that if it shall fail to
pay on or before the date that the same become delinquent any
tax, assessment or charge levied or assessed against the Premises
or any utility charge, whether public or private, or any
insurance premium or if it shall fail to procure the insurance
coverage and the delivery of the insurance certificates required
hereunder, or if it shall fail to pay any other charge or fee
described in Sections 2.2, 2.3 or 2.6 hereof, then the Collateral
Agent, at its option, may pay or procure the same and will give
the Grantor prompt notice of any such expenditures. The Grantor
will reimburse the Collateral Agent upon demand for any sums of
money paid by the Collateral Agent pursuant to this Section,
together with interest on each such payment at the default rate
of interest provided in the Credit Agreement, and all such sums
and interest thereon shall be secured hereby.
2.4Additional Documents. The Grantor agrees to execute and
deliver to the Collateral Agent, concurrently with the execution
of this Security Deed and upon the request of the Collateral
Agent from time to time hereafter, all financing statements and
other documents reasonably required to perfect and maintain the
security interest created hereby. The Grantor hereby irrevocably
(as long as any Loans or Letters of Credit remain outstanding or
the Commitments have not been terminated) makes, constitutes and
appoints the Collateral Agent as the true and lawful attorney of
the Grantor (i) to sign the name of the Grantor on any financing
statement, continuation of financing statement or similar
document required to perfect or continue such security interests,
and (ii) in the Event of Default and exercise of the power of
sale granted herein, to sign the name of Grantor on a deed under
power of sale.
2.5Sale or Encumbrance. Except in the ordinary course of
business and except as permitted by the Credit Agreement, the
Grantor will not sell, encumber or otherwise dispose of any of
the Tangible Personalty except to incorporate such into the
Improvements or replace such with goods of quality and value at
least equal to that replaced. In the event the Grantor sells or
otherwise disposes of any of the Tangible Personalty in
contravention of the foregoing sentence, the Collateral Agent's
security interest in the proceeds of the Tangible Personalty
shall continue pursuant to this Security Deed.
2.6Fees and Expenses. The Grantor will promptly pay upon demand
any and all reasonable and actual costs and expenses of the
Collateral Agent, (a) as required under the Credit Agreement and
(b) as necessary to protect the Premises, the Rents and Profits
or the Intangible Personalty or to exercise any rights or
remedies under this Security Deed or with respect to the
Premises, Rents and Profits or the Intangible Personalty. All of
the foregoing costs and expenses shall be secured hereby.
2.7Leases and Other Agreements. Without first obtaining on each
occasion the written approval of the Collateral Agent, the
Grantor shall not, except as permitted by the Credit Agreement or
as shall not materially affect the value or impair the use of the
Premises, enter into, cancel, surrender or materially modify or
permit the cancellation of any material lease (including any
equipment lease), rental agreement, management contract,
franchise agreement, construction contract, technical services
agreement or other material contract, license or permit now or
hereafter affecting the Premises, or materially modify any of
said instruments, or accept or permit to be made, any prepayment
(more than one month) of any installment of rent or fees
thereunder. Certified copies of each such approved material
lease or other material agreement not previously delivered to the
Collateral Agent shall be submitted to the Collateral Agent as
soon as possible. The Grantor shall faithfully keep and perform,
or cause to be kept and performed, in all material respects, all
of the covenants, conditions, and agreements contained in each of
said agreements, now or hereafter existing, on the part of the
Grantor to be kept and performed (including performance of all
covenants to be performed under any and all leases of the
Premises or any part thereof) and shall at all times use
commercially reasonable efforts to enforce, with respect to each
other party to said agreements, all obligations, covenants and
agreements by such other party to be performed thereunder.
2.8Maintenance of Premises. The Grantor will abstain from and
will not permit the commission of waste in or about the Premises
and will maintain, or cause to be maintained (subject to
reconstruction periods after the occurrence of an act of God),
the Premises in good condition and repair, reasonable wear and
tear excepted.
2.9Insurance.
(a)Liability: The Grantor covenants to maintain or cause to be
maintained general accident and public liability insurance
against all claims for bodily injury, death or property damage
occurring upon, in or about any part of the Premises. The
policies must be from a company and in forms and amounts
reasonably satisfactory to the Collateral Agent.
(b)Casualty: The Grantor shall, at its own cost, keep all
buildings now or hereafter comprising a part of the Premises
insured against loss or damage by fire and such other insurable
risks, casualties and hazards as the Collateral Agent may from
time to time specify. The policy must be from a company and in
form, content and amount reasonably satisfactory to the
Collateral Agent.
(c)Flood: If any part of the Improvements are located in an area
having "special flood hazards", a flood insurance policy naming
the Collateral Agent as mortgagee must be submitted to the
Collateral Agent. The policy must be from a company and in form,
content and amount reasonably satisfactory to the Collateral
Agent.
(d)Delivery of Policies and Renewals: The Grantor agrees to
deliver to the Collateral Agent, upon the request of the
Collateral Agent, as additional security hereto, a copy of the
policies of such insurance pursuant to subsections (a), (b), and
(c) hereof, and any insurance policies required by the terms of
the Credit Agreement or the other Loan Documents. Renewals of
such policies shall be so delivered at least ten (10) days before
any such insurance shall expire. In the event the Grantor fails
to maintain insurance as required hereunder the Collateral Agent
has the right to procure such insurance whether or not the
Grantor's failure to maintain such insurance constitutes an Event
of Default (as defined in Article III) or an event or condition
which, upon the giving of notice or the passage of time, or both,
would constitute an Event of Default. Any amounts paid by the
Collateral Agent for insurance shall be due and payable to the
Collateral Agent upon demand and shall be secured by this
Security Deed.
(e)Proof of Loss; Claims Settlement: In the event of a material
loss, the Grantor shall give prompt notice thereof to the
insurance carrier and the Collateral Agent. Subject to the
rights of the holder of any prior Permitted Encumbrance, Grantor
shall have the right to adjust and compromise any loss under any
insurance policies maintained with regard to this Premises,
provided that any settlement with regard to any such loss shall
be subject to the Collateral Agent's prior approval (which shall
not be unreasonably withheld); provided further, however, that if
Grantor fails to so adjust and compromise or if, prior to such
adjustment and compromise, a Default or an Event of Default
occurs under any of the Loan Documents, then Collateral Agent
shall be, and is hereby, authorized and empowered, at its option,
to adjust or compromise any loss under any insurance policies
maintained pursuant to this Section. Subject to the rights of
the holder of any prior Permitted Encumbrance, each insurance
company is hereby authorized and directed to make payment for all
such losses directly to Collateral Agent, instead of to Grantor
and Collateral Agent jointly, upon request of the Collateral
Agent during the continuance of a Default or an Event of Default.
In the event any insurance company fails to disburse directly and
solely to Collateral Agent but disburses instead either solely to
Grantor or to Grantor and Collateral Agent jointly, in violation
of the preceding sentence, Grantor agrees immediately to endorse
and transfer such proceeds to Collateral Agent. Upon failure of
Grantor to endorse and transfer such proceeds as aforesaid,
Collateral Agent may execute such endorsements or transfers for
and in the name of Grantor and Grantor hereby irrevocably
appoints Collateral Agent as Grantors agent and attorney-in-fact
so to do. The Collateral Agent is hereby authorized, in its sole
discretion, to collect the proceeds of any insurance claims
during the continuance of a Default or an Event of Default.
(f)Use of Proceeds: Provided that there is no Default or Event
of Default, Grantor may apply, subject to the rights of the
holder of any prior Permitted Encumbrance, the proceeds of any
insurance or any part thereof to restoration or repair of the
property damaged.
2.10Releases and Waivers. The Grantor agrees that no release by
the Collateral Agent or the Lenders of any of the Grantor's
successors in title from liability on the Secured Obligations, no
release by the Collateral Agent of any portion of the Premises,
the Rents and Profits or the Intangible Personalty, no
subordination of lien, no forbearance on the part of the Lenders
or the Collateral Agent to collect on the Secured Obligations, or
any part thereof, no waiver of any right granted or remedy
available to the Collateral Agent or the Lenders and no action
taken or not taken by the Collateral Agent or the Lenders shall
in any way diminish the Grantor's obligation to the Collateral
Agent and the Lenders or have the effect of releasing the
Grantor, or any successor to the Grantor, from full
responsibility to the Collateral Agent or the Lenders for the
complete discharge of each and every of the Grantor's obligations
hereunder or under the Credit Agreement or any of the other Loan
Documents.
2.11.Eminent Domain.
(a)Participation in Proceedings: Grantor shall promptly notify
the Collateral Agent of any actual or threatened initiation of
any eminent domain proceeding as to any material part of the
Premises and shall deliver to the Collateral Agent copies of any
and all papers served or received in connection with such
proceedings, and the Collateral Agent shall have the right, at
its option, to participate in such proceedings at the expense of
Grantor (including, without limitation, the Collateral Agent's
reasonable attorneys' fees) and Grantor will execute such
documents and take such other steps as required to permit such
participation.
(b)Right to Settle Claims: In the event of a condemnation or
similar proceeding, the Grantor shall give prompt notice thereof
to the Collateral Agent. Grantor shall have the right to adjust,
compromise and otherwise negotiate an award with regard to any
such proceeding, provided that any settlement with regard to any
such proceeding shall be subject to the Majority Lenders prior
approval (which shall not be unreasonably withheld); provided,
however, that if Grantor fails to so negotiate or if, prior to
the conclusion of such negotiation, a Default or an Event of
Default occurs under any of the Loan Documents, then the
Collateral Agent shall be, and is hereby, authorized and
empowered, at its option, to negotiate the award with regard to
any such proceeding. Subject to the rights of the holder of any
prior Permitted Encumbrance, each governmental unit making any
such award is hereby authorized and directed to make payment of
all such awards directly to Collateral Agent, instead of to
Grantor and Collateral Agent jointly, upon request of the
Collateral Agent during the continuance of a Default or an Event
of Default. In the event any governmental unit fails to disburse
directly and solely to Collateral Agent but disburses instead
either solely to Grantor or to Grantor and Collateral Agent
jointly, in violation of the preceding sentence, Grantor agrees
immediately to endorse and transfer such award or proceeds to
Collateral Agent. Upon failure of Grantor to endorse and
transfer such award or proceeds as aforesaid, Collateral Agent
may execute such endorsements or transfers for and in the name of
Grantor and Grantor hereby irrevocably appoints Collateral Agent
as Grantor's agent and attorney-in-fact so to do. The Collateral
Agent is hereby authorized, in its sole discretion, to collect
the award or proceeds of any such condemnation or similar
proceeding and is hereby authorized to apply the same to the
outstanding balance of the Secured Obligations during the
continuance of a Default or an Event of Default. Provided that
there is no Default or Event of Default, Grantor may apply,
subject to the rights of the holder of any prior Permitted
Encumbrance, the award or proceeds of any such condemnation or
similar proceeding to the replacement of the affected property.
(c)Further Assignments: The Grantor agrees to execute such
further assignments and agreements as may be reasonably required
by the Collateral Agent to assure the effectiveness of this
Section. During the continuance of a Default or an Event of
Default, the Collateral Agent may apply any condemnation awards
or proceeds to the outstanding balance of the Secured
Obligations.
2.12Environmental Assessment. Upon the earlier to occur of (i) a
Default or an Event of Default and (ii) March 31, 1997, and upon
the request of the Collateral Agent and the Majority Lenders, the
Grantor agrees to provide the Collateral Agent (at the Grantors
expense and within 45 days of such request) with a current
environmental assessment of the Premises. Such assessment shall
be in a form satisfactory to the Collateral Agent and from an
environmental engineer or consultant reasonably satisfactory to
the Collateral Agent. If the Grantor shall fail to comply with
such request (prior to or after an Event of Default), then the
Collateral Agent shall have the option, but be under no
obligation, to obtain such an environmental assessment, and all
fees, costs and expenses associated with the Collateral Agent's
obtaining such report shall be added to the amount of the Secured
Obligations and be secured by this Security Deed.
2.13Appraisal. Upon the earlier to occur of (i) a Default or an
Event of Default and (ii) June 30, 1997, and upon request of the
Majority Lenders and the Collateral Agent, the Grantor agrees to
provide the Collateral Agent (at Grantors expense and within 45
days of such request) a current written appraisal or reappraisal
of the Premises. Such appraisal shall be prepared in accordance
with reasonable written instructions from the Collateral Agent
and prepared by a qualified appraiser reasonably satisfactory to
the Collateral Agent. If the Grantor shall fail to comply with
such request (prior to or after an Event of Default), then the
Collateral Agent shall have the option, but be under no
obligation, to obtain such an appraisal, and all fees, costs and
expenses associated with the Collateral Agent's obtaining such
appraisal shall be added to the amount of the Secured Obligations
and be secured by this Security Deed.
2.14Survey. Upon the earlier to occur of (i) a Default and an
Event of Default and (ii) March 31, 1997, and upon the request of
the Collateral Agent and the Majority Lenders, the Grantor agrees
to provide the Collateral Agent (at Grantors expense and within
45 days of such request) current surveys of the Land. Such
surveys shall be prepared in accordance with written instructions
from the Collateral Agent and prepared by a qualified surveyor
reasonably satisfactory to the Collateral Agent. If the Grantor
shall fail to comply with such request (prior to or after an
Event of Default), then the Collateral Agent shall have the
option, but be under no obligation, to obtain such surveys, and
all fees, costs and expenses associated with the Collateral
Agent's obtaining such surveys shall be added to the amount of
the Secured Obligations and be secured by this Security Deed.
2.15Title Policies. Upon the earlier to occur of (i) a Default
and an Event of Default and (ii) March 31, 1997, and upon the
request of the Collateral Agent and the Majority Lenders, the
Grantor agrees to provide the Collateral Agent (at the Grantors
expense and within 45 days of such request) with ALTA mortgagee
title insurance policies issued by a title insurer reasonably
satisfactory to the Collateral Agent, in amounts not less than
the amounts designated for the Premises on Schedule 1 to the
Second Amendment and Waiver, assuring the Collateral Agent and
the Lenders that this Security Deed creates a valid and
enforceable first priority mortgage lien on the Premises, free
and clear of all defects and encumbrances excepted Permitted
Encumbrances and subject to a standard survey exception, which
such title policies shall be in form and substance reasonably
satisfactory to the Collateral Agent and the Majority Lenders and
shall provide for such affirmative insurance and such reinsurance
as the Collateral Agent may reasonably request.
2.16Environmental Indemnification. The Grantor covenants and
agrees with regard to the Premises that it will (i) conduct and
complete all investigations, studies, sampling and testing and
all remedial, removal, and other actions necessary to clean up
and remove all Contaminants on, from, or affecting the Premises
(A) in accordance with all applicable federal, state, and local
laws, regulations, rules, and policies, (B) to the reasonable
satisfaction of the Collateral Agent, and (C) in accordance with
the orders and directives of all federal, state and local
governmental authorities, and (ii) defend, indemnify, and hold
harmless the Collateral Agent and each of the Lenders, their
respective employees, agents, officers, and directors (except to
the extent arising from the Collateral Agents or such Lenders
gross negligence or willful misconduct) from and against any
claims, demands, penalties, fines, liabilities, settlements,
damages, costs, or expenses (including, without limit, reasonable
attorney and consultant fees, investigation and laboratory fees,
court costs, and litigation expenses) of whatever kind of nature,
known or unknown, contingent or otherwise, arising out of or in
any way related to (A) the presence, disposal, release, or
threatened release of any Contaminant which are on, from, or
affecting the soil, water, vegetation, buildings, personal
property, persons, animals, or otherwise; (B) any personal injury
(including wrongful death) or property damage (real or personal)
arising out of or related to such Contaminants; (C) any lawsuit
brought or threatened, settlement reached, or governmental order
relating to such Contaminants, and/or (D) any violation of laws,
orders, regulations, requirements, or demands of government
authorities, or any policies or requirements of the Collateral
Agent or any of the Lenders set forth herein or in any of the
Loan Documents, which are based upon or in any way related to
such Contaminants. For the purposes hereof, the term
"Contaminants" shall mean any substance, material or waste the
generation, handling, storage, treatment or disposal of which is
regulated by any local or state government authority in any
jurisdiction in which the Grantor has owned, leased or operated
real property or disposed of hazardous materials, or by the
United States government, including any material or substance
which is (a) defined as a "contaminant," "hazardous waste,"
"hazardous material," "hazardous substance," "extremely hazardous
waste," or "restricted hazardous waste" or other similar term or
phrase under any such law, (b) petroleum, (c) designated as a
"hazardous substance" pursuant to Section 311 of the Clean Water
Act, 33 U.S.C. 1251 et seq. (33 U.S.C. 1321) or listed pursuant
to Section 307 of the Clean Water Act (33 U.S.C. 1317), (d)
defined as a "hazardous waste" pursuant to Section 1004 of the
Resource Conservation and Recovery Act, 42 U.S.C. 6901, et seq.
(42 U.S.C. 6903 or (e) defined as "hazardous substance" pursuant
to Section 101 of the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. 9601, et seq. (42
U.S.C. 6901). Except as disclosed in writing to the Agent and
the Lenders on or prior to the date hereof, to the best of
Grantors knowledge and belief, the Premises and its current use
and all off-site disposals by the Grantor of any Contaminants
comply in all material respects with all Environmental Laws.
ARTICLE III
Event of Default
An Event of Default shall exist under the terms of this Security
Deed upon the existence of an Event of Default under the terms of
the Credit Agreement.
ARTICLE IV
Foreclosure
4.1Acceleration of Loan; Foreclosure. Upon the occurrence and
during the continuance of an Event of Default and otherwise in
compliance with Section 10.2 of the Credit Agreement, the entire
balance of the Loans and Letters of Credit and any other
obligations due under the Loan Documents, including all accrued
interest, shall, at the option of the Collateral Agent, become
immediately due and payable. Upon failure to pay the Loans and
Letters of Credit or reimburse any other amounts due under the
Loan Documents in full at any stated or accelerated maturity, the
Collateral Agent may foreclose the lien of this Security Deed by
judicial or nonjudicial proceeding in a manner permitted by
applicable law. The Grantor hereby waives any statutory right of
redemption in connection with such foreclosure proceeding.
4.2Right to Enter and Take Possession.
(a)If an Event of Default shall have occurred and be continuing,
the Grantor, upon demand of the Collateral Agent, shall forthwith
surrender to the Collateral Agent the actual possession of the
Premises and, to the extent permitted by law, the Collateral
Agent itself, or such officers or agents as it may appoint, may
enter and take possession of all of the Premises without the
appointment of a receiver, or an application therefor, and may
exclude the Grantor and its agents and employees wholly
therefrom, and shall have joint access with the Grantor to the
books, papers and accounts of the Grantor.
(b)Upon the occurrence and continuance of an Event of Default, if
the Grantor shall for any reason fail to surrender or deliver the
Premises or any part thereof after such demand by the Collateral
Agent, the Collateral Agent may obtain a judgment or decree
conferring upon the Collateral Agent the right to immediate
possession or requiring the Grantor to deliver immediate
possession of the Premises to the Collateral Agent and the
Grantor, hereby covenants and agrees that the Collateral Agent
will not oppose, contest or otherwise hinder or delay the
Collateral Agent in any action or proceeding by the Collateral
Agent to obtain such judgment or decree. The Grantor will pay to
the Collateral Agent, upon demand, all expenses incurred in
obtaining the judgment or decree, including reasonable attorneys'
fees actually incurred and all such expenses and compensation
shall constitute a part of the indebtedness secured by this
Security Deed.
(c)Upon entering or taking of possession of the Premises, the
Collateral Agent may hold, store, use, operate, manage, and
control the Premises and conduct the business thereof, and from
time to time (i) make all necessary and proper maintenance,
repairs, renewals, replacements, additions, betterments and
improvements thereto and thereon and purchase or otherwise
acquire additional fixtures, personalty or other property; (ii)
insure or keep the Premises insured; (iii) manage and operate the
Premises and exercise all the rights and powers of the Grantor to
the same extent as the Grantor could in its own name or otherwise
act with respect to the Premises; and (iv) enter into any and all
agreements with respect to the exercise by others of any of the
powers herein granted to the Collateral Agent, all as the
Collateral Agent from time to time may determine to be in its
best interests. The Collateral Agent may collect and receive all
the income, rents, issues, profits and revenues from the
Premises, including those past due as well as those accruing
thereafter. Notwithstanding any other provision contained herein
to the contrary, the Collateral Agent shall not be obligated to
discharge or perform the duties of the Grantor to any tenant or
accrue any liability as a result of any exercise by the
Collateral Agent of its rights under this Security Deed, and the
Collateral Agent shall be liable to account only for the rents,
incomes, issues, profits and revenues actually received by the
Collateral Agent.
(d)In the event that all of the Secured Obligations shall be paid
and all Events of Default shall be cured, and as a result thereof
the Collateral Agent surrenders possession of the Premises to the
Grantor, the right of taking possession shall continue to exist
if any subsequent Event of Default shall occur.
4.3Foreclosure.
(a)Upon the occurrence and during the continuance of an Event of
Default, the Collateral Agent, at its option, may sell the
Premises or any part of the Premises at one or more public sale
or sales before the door of the courthouse of the county in which
the Land or any part of the Land is situated, to the highest
bidder for cash, in order to pay the indebtedness secured hereby,
and all expenses of sale and all proceedings in connection
therewith, including reasonable attorneys' fees actually
incurred, after advertising the time, place and terms of sale
once a week for four (4) weeks immediately preceding such sale
(but without regard to the number of days) in a newspaper in
which Sheriff's sales are advertised in said county. At any such
public sale, the Collateral Agent may execute and deliver to the
purchaser a sufficient conveyance of the Premises or any part of
the Premises in fee simple, which conveyance may contain recitals
as to the happening of the default upon which the execution of
the power of sale, herein granted, depends, the said recitals
shall be presumptive evidence that all preliminary acts
prerequisite to said sale and deed were in all things duly
complied with, and to this end the Grantor hereby grants,
constitutes and appoints the Collateral Agent, the agent and
attorney-in-fact of the Grantor to make such sale and conveyance,
and thereby to divest Grantor of all right, title and interest
that the Grantor may have in and to the Premises and to vest the
same in the purchaser or purchasers at such sale or sales, and
all the acts and doings of said agent and attorney-in-fact are
hereby ratified and confirmed in any recitals and such conveyance
or conveyances as to facts essential to avail such sale shall be
binding upon the Grantor. The Grantor further hereby constitutes
and appoints the Collateral Agent the agent and attorney-in-fact
of the Grantor to make such recitals, and hereby covenants and
agrees that the recitals so to be made by the Collateral Agent
shall be binding and conclusive upon the Grantor, and that the
conveyance to be made by the Collateral Agent shall be effectual
to bar all equity of redemption of the Grantor in and to the
Premises. The aforesaid powers of attorney, power of sale and
agency hereby granted together with the power of attorney granted
in Section 2.4 are coupled with an interest and are irrevocable
by death or otherwise, are granted as cumulative of the other
remedies provided hereby or by law for collection of the
indebtedness secured hereby. In the event of any sale under this
Security Deed by virtue of the exercise of the powers herein
granted, or pursuant to any order in any judicial proceeding or
otherwise, the Premises may be sold as an entirety or in separate
parcels in such manner or order as the Collateral Agent in its
sole discretion may elect, and if the Collateral Agent so elects,
the Collateral Agent may sell the personal property covered by
this Security Deed at one or more separate sales in any manner
permitted by the Georgia Uniform Commercial Code, and one or more
exercises of the powers herein granted shall not extinguish or
exhaust such powers, until the entire Premises is sold or the
Secured Obligations are paid in full. If the Secured Obligations
are now or hereafter further secured by any chattel mortgages,
pledges, contracts of guaranty, assignments of lease or other
security instruments, the Collateral Agent may at its option
exhaust the remedies granted under any of said security
instruments either concurrently or independently, and in such
order as the Collateral Agent may determine. The Collateral
Agent shall have the right to become the purchaser at any sale
held by Grantee or substitute or successor or by any receiver or
at any public sale, and Collateral Agent shall have the right to
credit upon the amount of Collateral Agents successful bid, to
the extent necessary to satisfy such bid, all or any part of the
secured indebtedness in such manner and order as the Collateral
Agent may reasonably elect.
(b)Upon the occurrence and continuation of an Event of Default,
the Collateral Agent may, in addition to and not in abrogation of
the rights covered under subsection (a) hereof either with or
without entry or taking possession as herein provided or
otherwise, proceed by a suit or suits in law or in equity or by
any other appropriate proceeding or remedy (i) to enforce payment
of the Subsidiary Guaranty or other indebtedness of the Grantor
under the Loan Documents or the performance of any term,
covenant, condition or agreement of this Security Deed or any
other right or (ii) to pursue any other remedy available to it,
all as the Collateral Agent in its sole discretion shall elect.
4.4Proceeds of Sale. Following a foreclosure sale, the proceeds
of such sale shall, subject to applicable law, as follows:
first, to all costs and expenses of the Collateral Agent
(including without limitation reasonable attorney's fees and
expenses actually incurred) incurred in connection with the
implementation and/or enforcement of this Security Deed and/or
any of the other Loan Documents; second, to all costs and
expenses of the Lenders (including without limitation reasonable
attorneys' fees and expenses actually incurred) incurred in
connection with the implementation and/or enforcement of this
Security Deed and/or any of the other Loan Documents; third, to
such of the Secured Obligations consisting of accrued but unpaid
interest and fees; fourth, to the principal amount of the Secured
Obligations; fifth, to all other amounts payable with respect to
the Secured Obligations; and sixth, to the payment of surplus, if
any, to whomever may be lawfully entitled to receive such
surplus. The Grantor shall remain liable to the Lenders for any
deficiency.
ARTICLE V
Additional Rights and Remedies of the Collateral Agent
5.1Rights Upon Maturity or an Event of Default. Upon the
occurrence and during the continuance of an Event of Default, the
Collateral Agent, immediately and without additional notice and
without liability therefor to the Grantor and to the extent
permitted by law, except for its own gross negligence or willful
misconduct, may do or cause to be done any or all of the
following: (a) take physical possession of the Premises; (b)
exercise its right to collect the Rents and Profits; (c) enter
into contracts for the completion, repair and maintenance of the
Improvements thereon; (d) expend Loan funds and any rents, income
and profits derived from the Premises for payment of any taxes,
insurance premiums, assessments and charges for completion,
repair and maintenance of the Improvements, preservation of the
lien of this Security Deed and satisfaction and fulfillment of
any liabilities or obligations of the Grantor arising out of or
in any way connected with the construction of Improvements on the
Premises whether or not such liabilities and obligations in any
way affect, or may affect, the lien of this Security Deed; (e)
enter into leases demising the Premises or any part thereof; (f)
take such steps to protect and enforce the specific performance
of any covenant, condition or agreement in the Notes, this
Security Deed, the Credit Agreement, or the other Loan Documents,
or to aid the execution of any power herein granted; and (g)
generally, supervise, manage, and contract with reference to the
Premises as if the Collateral Agent were equitable owner of the
Premises. The Grantor also agrees that any of the foregoing
rights and remedies of the Collateral Agent may be exercised at
any time independently of the exercise of any other such rights
and remedies, and the Collateral Agent may continue to exercise
any or all such rights and remedies until the Event(s) of Default
are cured or waived with the consent of the Majority Lenders or
the Lenders (as required by the Credit Agreement) or until
foreclosure and the conveyance of the Premises or until the
Indebtedness secured hereby is satisfied or paid in full and the
Commitments are terminated.
5.2Appointment of Receiver. If upon the maturity of any of the
Loans or Letters of Credit or any other amounts or obligations
under the Loan Documents, the same remain unpaid, or upon the
occurrence and continuance of an Event of Default, the Collateral
Agent as a matter of right shall be entitled to the appointment
of a receiver or receivers for all or any part of the Premises,
to take possession of and to operate the Premises, and to collect
the rents, issues, profits, and income thereof, all expenses of
which shall be added to the indebtedness secured hereby, whether
such receivership be incident to a proposed sale (or sales) of
such property or otherwise, and without regard to the value of
the Premises or the solvency of any Person or Persons liable for
the payment of the indebtedness secured hereby, and the Grantor
does hereby irrevocably consent to the appointment of such
receiver or receivers, waives any and all defenses to such
appointment, and agrees not to oppose any application therefor by
Collateral Agent. Nothing herein is to be construed to deprive
the Collateral Agent of any other right, remedy or privilege it
may have under the law to have a receiver appointed. Any money
advanced by the Collateral Agent in connection with any such
receivership shall be a demand obligation (which obligation the
Grantor hereby promises to pay) owing by the Grantor to the
Collateral Agent pursuant to this Security Deed.
5.3Waivers. No waiver of any Event of Default shall at any time
thereafter be held to be a waiver of any rights of the Collateral
Agent stated anywhere in the Notes, this Security Deed, the
Credit Agreement or any of the other Loan Documents, nor shall
any waiver of a prior Event of Default operate to waive any
subsequent Event(s) of Default. All remedies provided in this
Security Deed, in the Notes, in the Credit Agreement and in the
other Loan Documents are cumulative and may, at the election of
the Collateral Agent, be exercised alternatively, successively,
or in any manner and are in addition to any other rights provided
by law. BY EXECUTION OF THIS SECURITY DEED AND BY INITIALLING
THIS SECTION 5.3, THE GRANTOR EXPRESSLY: (1) ACKNOWLEDGES THE
RIGHT TO ACCELERATE THE INDEBTEDNESS EVIDENCED BY THE SUBSIDIARY
GUARANTY AND THE POWER OF ATTORNEY GIVEN HEREIN TO THE COLLATERAL
AGENT TO SELL THE PREMISES BY NON-JUDICIAL FORECLOSURE UPON THE
OCCURRENCE OF AN EVENT OF DEFAULT WITHOUT ANY JUDICIAL HEARING
AND WITHOUT ANY NOTICE (EXCEPT AS OTHERWISE PROVIDED HEREIN AND
AS PROVIDED BY GEORGIA LAW); (2) EXCEPT TO THE EXTENT PROVIDED
OTHERWISE HEREIN, WAIVES ANY AND ALL RIGHTS WHICH THE GRANTOR MAY
HAVE UNDER THE CONSTITUTION OF THE UNITED STATES (INCLUDING THE
5TH AND 14TH AMENDMENTS THEREOF), THE VARIOUS PROVISIONS OF THE
CONSTITUTIONS FOR THE SEVERAL SITES, OR BY REASON OF ANY OTHER
APPLICABLE LAW, TO NOTICE, AND TO JUDICIAL HEARING PRIOR TO THE
EXERCISE BY THE COLLATERAL AGENT OF ANY RIGHT OR REMEDY HEREIN
PROVIDED TO THE COLLATERAL AGENT; (3) ACKNOWLEDGES THAT THE
GRANTOR HAS READ THIS SECURITY DEED AND ITS PROVISIONS HAVE BEEN
EXPLAINED FULLY TO THE GRANTOR AND THAT THE GRANTOR HAS CONSULTED
WITH COUNSEL OF THE GRANTORS CHOICE PRIOR TO EXECUTING THIS
SECURITY DEED, AND (4) ACKNOWLEDGES THAT ALL
WAIVERS OF THE AFORESAID RIGHTS OF THE GRANTOR HAVE BEEN MADE
KNOWINGLY, INTENTIONALLY AND WILLFULLY BY THE GRANTOR AS PART OF
A BARGAINED FOR LOAN TRANSACTION:
________________________
Initials of Grantor
5.4 Delivery of Possession After Foreclosure. In the event
there is a foreclosure sale hereunder and at the time of such
sale, the Grantor or the Grantors successors or assigns are
occupying or using the Premises, or any part thereof, each and
all immediately shall become the tenant of the purchaser at such
sale, which tenancy shall be a tenancy from day to day,
terminable at the will of either landlord or tenant, at a
reasonable rental per day based upon the value of the property
occupied, such rental to be due daily to the purchaser; and to
the extent permitted by applicable law, the purchaser at such
sale, notwithstanding any language herein apparently to the
contrary, shall have the sole option to deman possession
immediately following the sale or to permit the occupants to
remain as tenants at will. In the event that the tenant fails to
surrender possession of said property upon demand, the purchaser
shall be entitled to institute and maintain a summary action for
possession of the property (such as an action for forcible
detainer) in any court having jurisdiction.
ARTICLE VI
General Conditions
6.1Terms. The singular used herein shall be deemed to include
the plural; the masculine deemed to include the feminine and
neuter; and the named parties deemed to include their heirs,
successors and assigns. The term "Lender" shall include any of
the Persons identified as a "Lender" on the signature pages to
the Credit Agreement, and any Person which may become a Lender by
way of assignment in accordance with the terms of the Credit
Agreement, together with their successors and assigns. Any
capitalized term not otherwise defined herein shall have the
meaning ascribed to such term in the Credit Agreement.
6.2Notices. All notices and other communications required to be
given hereunder shall have been duly given and shall be effective
(i) when delivered, (ii) the Business Day following the day on
which the same has been delivered prepaid to a reputable national
overnight air courier service, or (iv) the third Business Day
following the day on which the same is sent by certified or
registered mail, postage prepaid, in each case to the respective
parties at the address or telecopy numbers set forth below, or at
such other address as such party may specify by written notice to
the other parties hereto.
to the Grantor:
to the Collateral Agent:
6.3Severability. If any provision of this Security Deed is
determined to be illegal, invalid or unenforceable, such
provision shall be fully severable and the remaining provisions
shall remain in full force and effect and shall be construed
without giving effect to the illegal, invalid or unenforceable
provisions.
6.4Headings. The captions and headings herein are inserted only
as a matter of convenience and for reference and in no way
define, limit, or describe the scope of this Security Deed nor
the intent of any provision hereof.
6.5Conflicting Terms. In the event the terms and conditions of
this Security Deed conflict with the terms and conditions of the
Credit Agreement, the terms and conditions of the Credit
Agreement shall control and supersede the provisions of this
Security Deed with respect to such conflicts.
6.6GOVERNING LAW. This Security Deed shall be governed by and
construed in accordance with the internal law of the State of
North Carolina; provided, however, that the provisions of this
Security Deed relating to the creation, perfection and
enforcement of the lien and security interest created by this
Security Deed in respect of the Premises and the exercise of each
remedy provided hereby, including the power of foreclosure or
power of sale procedures set forth in this Security Deed, shall
be governed by and construed in accordance with the internal law
of the state where the Premises is located. In the event of a
conflict between the laws of the State of North Carolina and such
internal law with respect to creation, perfection and enforcement
of the lien and security interest created by this Security Deed,
the laws of the state in which the Premises is located shall
govern.
PROVIDED ALWAYS, and it is the true intent and meaning of the
Grantor and the Collateral Agent, that if the Grantor, its
successors and assigns, shall pay or cause to be paid and
discharged unto the Collateral Agent, its successors and assigns,
the Secured Obligations according to the terms of this Security
Deed and the Loan Documents, then this Security Deed shall cease,
determine and be void, otherwise it shall remain in full force
and virtue. And it is agreed, by and between the Grantor and the
Collateral Agent, that the Grantor is to hold and enjoy the said
premises until an Event of Default shall occur under the terms of
this Security Deed.
IN WITNESS WHEREOF, the Grantor has executed this Security Deed
under seal as of the above written date.
_______________________________________
a ________________ corporation
By:
Name:
Title:
Attest:
_________________________
Name:___________________
Title:____________________
[Affix Corporate Seal]
Signed, sealed and delivered
in the presence of (as to
all signatures)
______________________________________
____________________, Witness
STATE OF ___________________
COUNTY OF __________________
Before me, a notary public, personally appeared
_____________________, who being duly sworn deposed and said that
she saw the within-named _______________________, a ___________
corporation, by ____________________, its ______________________
sign, cause to be sealed and, as his act and deed, deliver the
within-written Security Deed and Security Agreement for the use
and purposes therein mentioned and that she with
_______________________ witnessed the execution thereof.
______________________________
Witness
Sworn to before me this
_____ day of ________, 1996.
_______________________
Notary Public for the
County and State aforesaid
My Commission Expires:
_________________________
(SEAL)
EXHIBIT A
[Legal Description]
NOTE:The Legal Description must contain a proper derivation
clause to meet recordation requirements.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
registrant's condensed consolidated financial statements for the fiscal quarter
ended December 28, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-28-1997
<PERIOD-END> DEC-28-1996
<CASH> 6,988
<SECURITIES> 0
<RECEIVABLES> 134,111
<ALLOWANCES> 4,730
<INVENTORY> 147,419
<CURRENT-ASSETS> 286,098
<PP&E> 376,113
<DEPRECIATION> 149,752
<TOTAL-ASSETS> 549,022
<CURRENT-LIABILITIES> 316,616
<BONDS> 966
0
0
<COMMON> 245
<OTHER-SE> 221,840
<TOTAL-LIABILITY-AND-EQUITY> 549,022
<SALES> 307,192
<TOTAL-REVENUES> 307,192
<CGS> 255,897
<TOTAL-COSTS> 255,897
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 705
<INTEREST-EXPENSE> 11,131
<INCOME-PRETAX> 5,191
<INCOME-TAX> 1,030
<INCOME-CONTINUING> 4,161
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,161
<EPS-PRIMARY> .17
<EPS-DILUTED> .17
</TABLE>
