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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: (Date of earliest event reported): October 31, 1995
Rhodes, Inc.
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(Exact name of registrant as specified in its charter)
Georgia 1-9308 58-0536190
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(State or other jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
4370 Peachtree Road, N.E. 30319
Atlanta, Georgia ----------
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(Address of principal executive offices)
Registrant's telephone number, including area code: (404) 264-4600
Not Applicable
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(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On October 31, 1995, Rhodes, Inc., a Georgia corporation ("Rhodes"),
acquired certain of the assets and assumed certain leases and certain
liabilities related to certain employee benefits of Weberg Enterprises,
Incorporated ("Weberg"). The acquisition was consummated pursuant to an Asset
Purchase Agreement between Weberg, John P. Weberg and Rhodes dated October 2,
1995, as amended by the First Amendment thereto dated October 31, 1995, and
was accounted for as a purchase. The assets acquired consisted of the
inventory, leasehold improvements, office equipment and miscellaneous assets,
which are utilized in the operation of 21 retail furniture stores and 2
distribution centers operated under the name "Weberg Furniture" in the states
of Colorado, Texas and Illinois. Rhodes also acquired the rights to use the
name "Weberg" in connection with its continuing operation of the retail
furniture business acquired. Rhodes assumed Weberg's obligations under leases
on 11 of the store locations and entered into leases or subleases from
affiliates of Weberg for 12 stores and distribution center locations.
The aggregate purchase price for the Weberg acquisition was
approximately $31.4 million, subject to post-closing adjustment based upon the
net book value of the purchased assets on Weberg's balance sheet as of October
31, 1995. The Weberg acquisition was financed principally with borrowings under
a credit agreement (the "Credit Agreement") dated as of October 27, 1995 by and
among Rhodes, Wachovia Bank of Georgia, N.A. and Shawmut Capital Corporation
and Rhodes' existing revolving credit facility with Wachovia Bank of Georgia,
N.A. The loan proceeds remaining after the payment of the purchase price were
used to pay for expenses incurred in connection with the acquisition and for
general corporate purposes. The principal balance of the loans made under the
Credit Agreement plus any accrued but unpaid interest on such loans is due and
payable on February 28, 1996. Rhodes anticipates, however, that it will be able
to enter into a new credit facility, borrowings under which will be used to
finance the Weberg acquisition, other acquisitions and for general corporate
purposes. The aggregate purchase price paid in the Weberg acquisition was
determined through arm's length negotiations between representatives of Rhodes
and Weberg.
Neither Rhodes nor any of its affiliates had, nor to the knowledge of
Rhodes did any director or officer of Rhodes or any associate of any such
director or officer have, any material relationship with Weberg prior to the
acquisition.
Rhodes currently intends to use the purchased assets in connection
with its continuing operation of the furniture store and distribution center
locations acquired from Weberg as retail furniture stores operated initially
under the name "Weberg".
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired.
The financial statements required by this Item 7(a) are not
currently available. Such financial statements will be filed as
soon as practicable and in no event later than 60 days after
the date of this Current Report.
(b) Pro Forma Financial Information.
The pro forma financial information required by this Item 7(b)
is not currently available. Such pro forma financial
information will be filed as soon as practicable and in no
event later than 60 days after the date of this Current
Report.
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(c) Exhibits.
2.1 Asset Purchase Agreement between Weberg Enterprises,
Incorporated, John P. Weberg and Rhodes, Inc. dated October
2, 1995, as amended by the First Amendment thereto dated
October 31, 1995. The Attachments and Schedules which are
referenced in the Asset Purchase Agreement are hereby
incorporated by reference. Such Attachments and Schedules have
been omitted for purposes of this filing, but will be furnished
to the Commission supplementally upon request.
4.1 Credit Agreement dated as of October 27, 1995 by and among
Rhodes, Inc., Wachovia Bank of Georgia, N.A. and Shawmut
Capital Corporation.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
RHODES, INC.
Registrant
Date: November 15, 1995 By: /s/ Joel H. Duqan
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Joel H. Dugan
Senior Vice President, Finance and
Administration and Chief Financial Officer
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INDEX TO EXHIBITS
EXHIBIT NUMBER AND DESCRIPTION PAGE
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2.1 Asset Purchase Agreement between Weberg Enterprises,
Incorporated, John P. Weberg and Rhodes, Inc.
dated October 2, 1995, as amended by the First Amendment
thereto dated October 31, 1995 . . . . . . . . . . . . . . . . . 6
4.1 Credit Agreement dated as of October 27, 1995 by and
among Rhodes, Inc., Wachovia Bank of Georgia, N.A. and
Shawmut Capital Corporation . . . . . . . . . . . . . . . . . . 26
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EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement"), is between WEBERG
ENTERPRISES, INCORPORATED, a Delaware corporation ("Seller"); John P. Weberg,
an individual (the "Shareholder") and RHODES, INC. a Georgia corporation
("Buyer"). For reference this Agreement is dated October 2, 1995.
RECITALS:
Seller owns and operates retail furniture stores, warehouses and
distribution centers, and regional offices in Colorado, Texas and Illinois, and
its corporate departments identified by Seller as its Purchasing Department and
Operations Department (the "Business") at locations set forth in Attachment 1
("Property Locations"); and,
Seller desires to sell certain assets associated with the operation of
these Business, and Buyer desires to purchase such assets (the "Property");
NOW THEREFORE, in consideration of these premises and the respective terms,
covenants, and conditions contained herein, the parties agree as follows:
1 PURCHASE AND SALE. Subject to the terms and conditions of this
Agreement, Buyer hereby agrees to purchase, and Seller hereby agrees to sell, on
the Closing Date, the following Property:
1.1 INCLUDED ASSETS. The Property to be purchased and sold shall
consist of the following described assets of Seller related to and in any way
used in the operation of the Property at the Property Locations ("Included
Assets"):
(a) all of Seller's merchandise inventory ("Inventory");
(b) all of Seller's leasehold improvements ("Leasehold
Improvements");
(c) all of Seller's computer equipment but not including
the GERS Data General computer ("Computer
Equipment");
(d) all of Seller's office equipment ("Office Equipment");
(e) all of Seller's warehouse equipment ("Warehouse
Equipment");
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(f) all of Seller's vehicles ("Vehicles");
(g) all of Sellers prepaid expenses and deposits ("Prepaid
Expenses");
(h) all cash on hand ("Cash on Hand") in each store
location;
(i) all sales written prior to Closing Date but to be
delivered and booked after Closing Date ("Undelivered
Sales");
(j) copies of all business records ("Business Records")
relating to the Included Assets as may be requested
by Buyer: Both parties will cooperate to the fullest
extent in sharing historical financial and other
business records of the Business according to the
needs of each party;
(k) customer lists, goodwill, slogans, logos, trademarks,
service marks, tradenames (including without
limitation the tradename "Weberg's" either alone or
in combinations with one or more other words in
connection with the retail home furnishings or
furniture business) and computer software (excluding
software for the GERS Date General computer) used or
held for use in the operation of the Business and the
covenant not to compete of Seller and the Shareholder
described in Section 9.5 ("Intangible Assets"). Use
of the name "Weberg" by Shareholder, by Shareholder
d/b/a Weberg Properties, and by Seller in its
corporate name as permitted pursuant to Section 9.5,
is excluded. Rights to Seller's computer software
shall be conveyed on a non-exclusive basis;
(l) all of Seller's rights in all of the leases, contracts
and other agreements to be assumed by Buyer pursuant
to Section 4 hereof; and
(m) all transferable licenses, permits, registrations and
authorizations issued by any governmental authority
that are used in or necessary for the lawful
operation of the Business as currently operated by
Seller.
1.2 EXCLUDED ASSETS. Notwithstanding the foregoing, the Assets
shall not include any of the following ("Excluded Assets"):
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(a) all cash or cash equivalents in transit or in bank
accounts;
(b) any tax refunds arising from taxes that accrued
during any period prior to the Closing Date;
(c) insurance policies, including any premium refunds in
respect to such policies and claims covered by such
policies arising prior to the Closing Date;
(d) that contract with GERS Retail Systems dated June 30,
1995 and referred to in Section 6.2 below, and all
hardware and software associated therewith;
(e) intangible assets not specifically included in
Section 1.1;
(f) all accounts receivable of Seller; and
(g) all land and building owned by Seller.
2 PURCHASE PRICE AND TERMS.
2.1 PURCHASE PRICE. The purchase price to be paid by Buyer to
Seller for the Included Assets (the "Purchase Price") is the total of the
following:
(a) For Inventory, the Book Value (landed cost). For
reference, Seller's book value as of August 31, 1995
was $22,967,439.
(b) For Leasehold Improvements, the Book Value
(depreciated cost) plus $350,000 representing the
depreciated value of the cantilever warehouse racks
now installed in the San Antonio Distribution Center
but not now included in the book value for leasehold
improvements. For reference, Seller's book value as
of August 31, 1995 was $4,858,050.
(c) For Computer Equipment, the Book Value (depreciated
cost). For reference, Seller's book value as of
August 31, 1995 was $270,496.
(d) For Office Equipment, the Book Value (depreciated
cost). For reference, Seller's book value as of
August 31, 1995 was $99,523.
(e) For Warehouse Equipment, the Book Value (depreciated
cost). For reference, Seller's book value as of
August 31, 1995 was $368,592.
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(f) For Vehicles, the Book Value (depreciated cost). For
reference, Seller's book value as of August 31, 1995
was $123,007.
(g) For Prepaid Expenses, the Book Value. For reference,
Seller's book value as of August 31, 1995 was
$374,205.
(h) For Cash on Hand, the Book Value. For reference,
Seller's book value as of August 31, 1995 was
$22,958.
(i) For Undelivered Sales, 30% of the book value (selling
price) of Seller's Undelivered Sales as of October
31, 1995, less Customer Deposits as shown on the
October 31, 1995 Interim Balance Sheet. For
reference, Seller's book value of Undelivered Sales
as of August 31, 1995 was $4,967,486. 30% of this
total would have been $1,490,246. For reference,
Seller's book value of Customer Deposits as of August
31, 1995 was $1,392,766. The net owed to Seller by
Buyer as of August 31, 1995 would therefore have been
$97,480.
(j) For Business Records and customer lists, the sum of
$1,000,000.
For purposes of this Agreement "Book Value" shall mean the value shown
on the October 31, 1995 Interim Balance Sheet.
2.2 ESTIMATED PURCHASE PRICE. The estimated purchase price to be
paid by Buyer to Seller for the Included Assets at Closing (the "Estimated
Purchase Price") is the total of the following:
(a) For Inventory, the book value (landed cost) shown on
the September 30, 1995 Interim Balance Sheet.
(b) For Leasehold Improvements, the book value
(depreciated cost) shown on the September 30, 1995
Interim Balance Sheet, plus $350,000 representing the
depreciated value of the cantilever warehouse racks
now installed in the San Antonio Distribution Center
but not now included in the book value for leasehold
improvements.
(c) For Computer Equipment, the book value (depreciated
cost) shown on the September 30, 1995 Interim Balance
Sheet.
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(d) For Office Equipment, the book value (depreciated
cost) shown on the September 30, 1995 Interim Balance
Sheet.
(e) For Warehouse Equipment, the book value (depreciated
cost) shown on the September 30, 1995 Interim Balance
Sheet.
(f) For Vehicles, the book value (depreciated cost) shown
on the September 30, 1995 Interim Balance Sheet.
(g) For Prepaid Expenses, the book value shown on the
September 30, 1995 Interim Balance Sheet.
(h) For Cash on Hand, the book value shown on the
September 30, 1995 Interim Balance Sheet.
(i) For Undelivered Sales, 30% of the book value (selling
price) of Seller's Undelivered Sales as of September
30, 1995, less Customer Deposits as shown on the
September 30, 1995 Interim Balance Sheet.
(j) For Business Records and Intangible Assets, the sum
of $1,000,000.
2.3 EARNEST MONEY AND PAYMENT OF ESTIMATED PURCHASE PRICE AND PURCHASE
PRICE. As non-refundable Earnest Money, Buyer has paid concurrently with the
execution of this Agreement the sum of Three Hundred Thousand and No/100
Dollars ($300,000.00). Earnest money paid shall be credited against the
Estimated Purchase Price at Closing. The Estimated Purchase Price, as
determined pursuant to this Section 2.1 and 2.2 of this Article 2 and Section
11.4 of Article 11 below, shall be paid by wire transfer into Seller's bank at
Closing. Seller's wire transfer instructions are attached as Schedule 2.3.
3. REAL PROPERTY LEASES.
3.1 THIRD PARTY LEASES. All leases of properties in which the
Business is conducted not owned by John P. Weberg or Seller shall be assumed
by Buyer in accordance with their terms. All such third party leases are set
forth on Schedule 3.1.
3.2 WEBERG LEASES. The properties owned by John P. Weberg or
Seller in which the Business is conducted shall be leased to Buyer by execution
of original lease documents for each such property in the form attached on
Schedule 3.2.1, for the rent and terms set forth on Schedule 3.2.2.
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4 LEASES AND CONTRACTS.
4.1 LEASES, CONTRACTS AND OBLIGATIONS TO BE ASSUMED. Buyer shall
assume and agree to perform the following contracts only:
4.1.1 All leases provided to be assumed in Section 3.
4.1.2 All contracts and agreements affecting the operation
of the stores, the warehouses, the distribution centers and the corporate
purchasing and operations departments in which the Business is conducted. A
Schedule 4.1.2 is attached listing the material contracts and agreements.
4.2 CONTRACTS AND OBLIGATIONS NOT ASSUMED. Buyer expressly does
not assume the GERS Retail Systems agreements which Seller has entered into or
any other liabilities or obligations of Seller other than those listed in
Section 4.1.
5 CLOSE OF BUSINESS AND EMPLOYEES. Seller will cease retail business
operations at the business locations of the Property immediately following the
close of business on the Closing Date. Seller will terminate all of its
employees at the business locations of the Property effective immediately
following cessation of retail business operations on the Closing Date. Buyer
will hire on the day following Closing Date each prior employee of Seller at
the business locations of the Property who shall seek such employment.
Compensation at the rate in effect on Closing Date shall be continued
uninterrupted for such employees and such employees shall be entitled to
participate in employee benefit programs offered from time to time by Buyer to
its employees generally pursuant to Buyer's standard procedures for employee
participation in such programs; provided, however, that such employees shall
be eligible to participate in Buyer's group health and life program without a
waiting period and such employees shall retain all vacation days, to a maximum
of fifteen (15) work days, accrued but not used while working for Seller.
Attached as Schedule 5 is a list of those corporate employees who are expected
to be retained by Seller as Seller's employees following closing.
6 REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE SHAREHOLDER.
Seller and the Shareholder represent and warrant to the Buyer:
6.1 ORGANIZATION AND STANDING. Seller is a corporation duly
organized, existing, and in good standing under the laws of the State of
Delaware. Except as set forth in Section 6.6 below, Seller has all requisite
corporate power and authority to carry on its business as it is presently being
conducted and to own or lease the Property and Included Assets, and is duly
qualified and in good standing in every state of the United States in which the
conduct
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of its business or the ownership of the Included Assets requires it to be so
qualified.
6.2 AUTHORIZATION: ENFORCEABLE OBLIGATIONS. Seller has the
corporate power, authority and legal right to execute, deliver and perform this
Agreement except as set forth in 6.6 below. On or before the Closing Date,
Seller shall have, by proper corporate proceedings, duly authorized the
execution, delivery and performance of this Agreement and the consummation of
all transactions called for herein. This Agreement has been duly executed by
seller. This Agreement constitutes the legal, valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms, except as the
same may be limited or otherwise affected by applicable bankruptcy, insolvency
or other laws affecting creditor's rights.
6.3 NO THIRD PARTY OPTIONS. Except as set forth in 6.6 below,
there are no existing agreements, options, commitments or rights with, of, or
to any person to acquire any of the Property or any interest therein, except
for those agreements entered into in the normal course of business consistent
with past practice for the sale of Inventory of Seller.
6.4 TITLE TO PROPERTIES. Except as set forth in 6.6 below, the
Seller has good and marketable title to the Property, subject to no mortgage,
deed of trust, security interest, pledge, lien, conditional sales agreement,
encumbrance or charge, except for those matters explicitly disclosed in this
Agreement including the obligations to be assumed by Buyer. If a mortgage, deed
of trust, security interest, pledge, lien, conditional sales agreements,
encumbrance or charge does exist that relates to the Property, Seller shall
cause it to be fully discharged and released prior to the Closing Date.
6.5 LITIGATION. There is no litigation or proceeding (at law or in
equity or before any court, arbitrator or governmental authority or body)
pending or, to the best of Seller's knowledge, threatened against Seller which
relates to the Property or the transactions contemplated by this Agreement or
the result of which could adversely affect the Property or the transactions
contemplated by this Agreement, except a Workman's Compensation claim fully
insured, entitled Dyer v. Weberg Enterprises, Inc.
6.6 NO VIOLATION. The execution, delivery and performance of the
Agreement by Seller, and the consummation of the transactions contemplated by
this Agreement, will not violate or result in a breach of or constitute a
default under or require the consent of any other person under any provision of
any charter, bylaw, contract, lien, instrument, order, judgment, decree,
ordinance, regulation, law or any other restriction of any kind to which the
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Included Assets, Property or Seller are subject or by which Seller is bound
except for restrictions in the mortgage loan on the Denver Distribution Center,
the equipment loan on the warehouse racks installed in the Denver Distribution
Center, and provisions of the Weberg operating loan from First Interstate Bank,
each of which will be removed before Closing.
6.7 EMINENT DOMAIN. Seller has not received any notice, written or
oral, and has no knowledge of any eminent domain or condemnation proceeding
regarding any of the Property.
6.8 LABOR MATTERS. Seller is not a party to any collective
bargaining agreements, nor is there any collective bargaining agreement
currently being negotiated by Seller, and there is no labor strike, dispute,
slowdown, stoppage, solicitation or union certification cards or union
certification petition actually pending or threatened against or involving
Seller with respect to Seller's employees employed at the Property.
6.9 CONDITION OF THE INCLUDED ASSETS. The Included Assets are in
good operating condition and reasonable state of repair, subject only to
ordinary wear and tear. Except for items in need of repair, to the extent of
that needed repair, the Inventory consists of items of a quality and quantity
readily usable or readily salable, in the normal course of business, at prices
at least equal to the values at which such items are reflected on the books of
Seller, and are valued so as to reflect the normal valuation policy of Seller
in accordance with GAAP but without conversion to LIFO or provision for uniform
capitalization costs. The Included Assets constitute all of the assets necessary
to operate the Business in substantially the same manner as operated by Seller
prior to the date hereof.
6.10 FINANCIAL INFORMATION. (a) Attached hereto as Schedule 6.10 is
a true, correct and complete copy of Seller's audited financial statements as
of and for the year ended December 31, 1994, and an unaudited interim balance
sheet as of August 31, 1995 (collectively, the "Financial Statements"). The
Financial Statements are complete, have been prepared in accordance with GAAP,
fairly present the financial condition of Seller as of the dates thereof and
results of operation for the periods presented thereby, and disclose all
liabilities of Seller, whether absolute, contingent, accrued or otherwise,
existing as of the dates thereof which are of a nature required to be reflected
in financial statements prepared in accordance with GAAP. Seller has no
liability or obligation related to the Included Assets or the Business (whether
accrued, absolute, contingent or otherwise) except for (i) the liabilities and
obligations of Seller which are disclosed or reserved against in the Financial
Statements, to the extent and in the amounts so disclosed or reserved against,
and
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(ii) the liabilities incurred or accrued in the ordinary course of the Business
since August 31, 1995, and which do not, either individually or in the
aggregate, have a materially adverse effect on the Included Assets or the
Business.
(b) Seller will prepare unaudited interim balance sheets
as of September 30, 1995 (the "September 30, 1995 Interim Balance Sheet") and
as of October 31, 1995 (the "October 31, 1995 Interim Balance Sheet;" and
collectively with the September 30, 1995 Interim Balance Sheet, the "Interim
Balance Sheets"). The Interim Balance Sheets will be complete, will be prepared
in accordance with and consistent with GAAP (but without conversion to LIFO or
provision for uniform capitalization costs) and Seller's normal accounting
methods as used for the balance sheets for August 31, 1995 attached to this
Agreement as Attachment 2, and will fairly present the financial condition of
Seller as of the dates thereof.
6.11 PERMITS AND LICENSES. Seller holds, and is in compliance with
all material respects with, all licenses, permits, registrations and
authorizations necessary or required for the conduct of the Business.
6.12 CONSENTS AND APPROVALS. Except as set forth in Schedule 6.12
attached hereto, no consent or approval is required by virtue of the execution
hereof or the consummation of any of the transactions contemplated herein to
avoid the violation or breach of, or the default under, or the creation of a
lien on the Assets pursuant to the terms of, any regulation, order, decree or
award of any court or governmental agency or any lease, contract, mortgage,
note, license or any other instrument to which Seller is a party or to which it
or the Included Assets is subject.
6.13 LIMITATIONS. No representation or warranty of Seller shall be
and remain in effect beyond December 31, 2000.
7 COVENANTS OF SELLER. The Seller agrees that, subsequent to the date of
this Agreement and pending the Closing Date:
7.1 NEGATIVE COVENANTS AS TO FUTURE OPERATIONS. Seller will not,
unless provided for in this Agreement or written approval by Buyer being first
obtained:
(a) sell, assign, lease or otherwise transfer or dispose
of any of the Included Assets sold or leased under
this Agreement except Seller may sell, the Inventory
in the ordinary course of business.
(b) enter into any contract or commitment or agree to
incur any liability or indebtedness except in the
ordinary course of the business consistent with
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past practice including orders for purchase of Inventory and
customer special orders; or
(c) implement any change in its policies or practices with respect
to credit approval, collections or other operations.
7.2 AFFIRMATIVE COVENANTS AS TO THE FUTURE OPERATIONS.
Seller will:
(a) give Buyer and its representative full access, during
normal business hours, to the Property, furnish all
information as Buyer may reasonably request concerning
Seller's operations at the Property, specifically to include
all lease agreements in effect that involve any of the
Property;
(b) disclose to Buyer any information contained in its
representations and warranties set forth in this Agreement
which because of an event occurring after the date hereof, is
incomplete or is no longer correct as of all times after the
date hereof until the Closing Date;
(c) use its best efforts to conduct its business in such a
manner that on the Closing Date the representations and
warranties of Seller contained in this Agreement shall be true
as though such representation and warranties were made on and
as of this date hereof and use its best efforts to cause all
of the conditions of its obligations to Buyer under this
Agreement to be satisfied on or prior to the Closing Date;
(d) Seller shall conduct its business in all respects in the
ordinary course of business consistent with prior practice;
(e) Seller shall provide Buyer with access to its
independent accountants and its financial records and
accounting papers to enable Purchaser to cause such
accountants to prepare any audited financial statements deemed
by Buyer to be necessary to file with the Securities and
Exchange Commission (the "SEC") pursuant to the rules and
regulations promulgated by the SEC. All costs and expenses
associated with this paragraph and with filings made with the
SEC shall be paid by Buyer.
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(f) Seller shall cooperate with Purchaser to obtain the
consents necessary for the transfer of the Included Assets, to
make all necessary filings, and thereafter make any other
required submissions, with respect to this Agreement and the
transactions contemplated hereby required under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR
Act") and otherwise to consummate the transactions
contemplated hereby, and shall use its best effort to cause
each of the conditions to Closing set forth in Section 11
below to be satisfied at the earliest practicable date. All
costs and expenses associated with filings made pursuant to
the HSR Act shall be paid one-half by Buyer and one-half by
Seller.
8 REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and warrants
to Seller as follows:
8.1 ORGANIZATION AND STANDING. Buyer is a corporation duly
organized, existing and in good standing under the laws of Georgia. At Closing
Date Buyer shall be duly qualified to do business and shall be in good standing
as a foreign corporation in Colorado, Texas and Illinois.
8.2 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. Buyer
has the corporate power, authority and legal right to execute, deliver and
perform this Agreement. This Agreement has been duly executed by Buyer. This
Agreement constitutes the legal, valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms, except as the same may
be limited or otherwise affected by applicable bankruptcy, insolvency or other
laws affecting creditors' rights generally.
8.3 ASSETS ACCEPTED ONLY IN ACCORDANCE WITH REPRESENTATIONS.
Buyer shall accept the Property in the condition represented by Seller in this
Agreement. Seller makes no representations with respect to the condition of the
Property except as explicitly made in this Agreement.
9 CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS. Buyer's obligation to
purchase the Included Assets is subject to the fulfillment prior to or on the
Closing Date of each of the following conditions:
9.1 CONVEYANCE AND TRANSFER. Seller shall deliver to Buyer such
bills of sale, leases, endorsements, assignments and other good and sufficient
evidence of conveyance and transfer as in the opinion of Buyer's counsel shall
be effective to vest in Buyer good
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and marketable title to the Included Assets.
9.2 REPRESENTATIONS AND WARRANTIES; PERFORMANCE. The
representations and warranties of Seller contained in this Agreement shall be
true at and as of the time of Closing as though such representations and
warranties were made at and as of such time and Seller shall have performed and
complied with all agreements and conditions required by this Agreement to be
performed or complied with by Seller prior to or on the Closing Date. Seller
shall have furnished to Buyer a certificate dated the Closing Dated signed by a
duly authorized officer of Seller stating that all of Seller's representations
and warranties contained in this Agreement remain in all respects true and
correct as of the Closing Date and that Seller has performed and complied with
in all respects all agreements and conditions required by this Agreement to be
performed or complied with by it prior to or on the Closing Date.
9.3 NO ADVERSE CHANGE. There shall have been no material adverse
change in the Included Assets except Inventory fluctuations in the normal
course of business or in the financial condition, operation or prospects of the
Business since August 31, 1995.
9.4 CONSENTS. All consents, waivers and approvals required from
third parties or governmental authorities required in connection with the
consummation of the transactions contemplated by this Agreement shall have been
obtained and remain in full force and effect, including without limitation the
expiration or termination of the applicable waiting period under the HSR Act.
9.5 COVENANT NOT TO COMPETE. Buyer shall have received from Seller
and the Shareholder a covenant not to compete in a form reasonably satisfactory
to Buyer. The covenant not to compete shall be limited to competition in the
retail furniture business in the States of Colorado, Texas, and Illinois, and
shall be for a period of five (5) years, but shall not prohibit Seller or
Shareholder from participating in the higher priced furniture lines business
under a name other than one containing the word "Weberg."
10 INDEMNIFICATION BY SELLER AND THE SHAREHOLDER. On and after the
Closing Date, Seller and the Shareholder, jointly and severally, shall
indemnify and hold Buyer harmless against, defend and shall reimburse Buyer on
demand for any payment, including attorney fees, made by Buyer at any time
after the Closing Date in respect of: (i) any claim for brokerage or other
commissions arising from acts of Seller relating to this Agreement or to the
transactions contemplated hereby, (ii) any material inaccuracy in, or the
material breach of, any representation or warranty made by Seller herein or in
any Schedule or Exhibit hereto or in any other document or agreement executed
and delivered to Buyer pursuant
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<PAGE> 13
hereto, (iii) any material failure of Seller to perform or observe any term,
provision, covenant or agreement hereunder on the part of Seller to be
performed or observed, (iv) the operation of the Business or use of the
Included Assets prior to the Closing, and (v) any liability, debt or obligation
relating in any way to the Included Assets, Property or operations or Seller
which is not specifically assumed by Buyer pursuant to this Agreement.
11 CLOSING. The closing of the sale and purchase of the Property (the
"Closing") shall take place at the law office of Anderson, Dude, Pifher &
Lebel, P.C., 104 South Cascade Ave., Suite 204, Colorado Springs, Colorado, at
9:00 MDT on October 31, 1995 (the "Closing Date") or at such other time and
place as the parties shall determine.
11.1 BUYER OBLIGATIONS. At the Closing, the Buyer shall deliver to
Seller the Estimated Purchase Price by wire transfer to Seller's bank.
11.2 SELLER OBLIGATIONS. At the Closing, Seller shall deliver to
the Buyer:
(a) Bill of sale to all personalty constituting the
Property except vehicles, sufficient to vest all of Seller's
interest in the Included Assets to the Buyer.
(b) Certificates of title properly endorsed for all motor
vehicles to be transferred.
(c) Assignments of all contracts to be assigned as part
of the Property.
(d) Leases and assignments of leases sufficient to
constitute Buyer as tenant of each of the leases provided for
in Section 3 above.
11.3 TAXES AND PRORATIONS. Buyer and Seller shall each pay fifty
percent (50%) of any and all sales and transfer taxes payable in connection
with this Agreement. Seller and Buyer shall prorate as of the Closing Date all
property taxes, including real property taxes, and business personal property
taxes and special assessment installments on the Included Assets due and
payable for 1995, if known, otherwise the said amount shall be determined on
the real estate taxes and special assessment installments of the preceding
year. At Closing the parties shall prorate rents, and common area assessments
and charges.
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<PAGE> 14
11.4 ADJUSTMENTS RELATING TO CONDUCT OF BUSINESS. Sales which shall
have been written by Seller prior to Closing Date but which shall not have been
delivered to the customer shall be adjusted at Closing as follows:
11.4.1 Buyer shall pay to Seller at Closing the estimated costs and
profits from sales which were written but not delivered prior to Closing Date
calculated to be 30% of each such written but undelivered sale.
11.4.2 Seller shall pay to Buyer at Closing the amount of all
customer deposits held pending delivery of sales written but not delivered
prior to closing date.
11.5 POST CLOSING ADJUSTMENTS. On or before November 30, 1995 a
calculation shall be completed by the parties calculating the difference
between the Estimated Purchase Price paid at Closing based upon the September
30, 1995 Interim Balance Sheet and the Purchase Price. To the extent the
parties are in agreement with respect to Post Closing Adjustments, on or before
November 30, 1995, Seller shall pay to Buyer, or Buyer shall refund to Seller
the net difference between the actual Purchase Price and the Estimated Purchase
Price.
11.5.1 In the event of a disagreement between the parties with
respect to the September 31, 1995 Interim Balance Sheet, October 31, 1995
Interim Balance Sheet or the difference between the Estimated Purchase Price
and the Purchase Price or the Property purchased which cannot be resolved by
the parties prior to December 31, 1995, the parties hereto shall jointly select
a nationally recognized accounting firm to resolve such disputed items and the
decision of such firm shall be final and binding on the parties hereto. All
fees and expenses of the accounting firm selected pursuant to the provisions of
this Section 11.5.1, shall be paid one-half by Seller and one-half by Buyer. On
or before January 31, 1996, or on such later date as the accountant may finally
resolve any dispute between the parties, Seller shall pay to Buyer, or Buyer
shall refund to Seller, as the case may be, an amount equal to the amount
determined by such firm. Such payment shall be made by wire transfer to the
appropriate party pursuant to wire transfer instructions provided by such
party.
12 GENERAL PROVISIONS.
12.1 NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
statements contained in any certificate or other instrument delivered by or on
behalf of either party pursuant hereto or in connection with the transactions
contemplated hereby shall be deemed representations and warranties hereunder
and shall survive the Closing. Notwithstanding the above, no party will be
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<PAGE> 15
entitled to rely on any certificate or other instrument, or the statements
therein unless it is attached to the Agreement at the time of Closing.
12.2 PARTIES IN INTEREST. All the terms and provision of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the successor and assigns of Buyer and Seller.
12.3 LAW TO GOVERN. This Agreement is being made in Colorado and
shall be construed and enforced in accordance with the laws of Colorado.
12.4 NOTICES. All notices, requests, demands, waivers, consents,
approvals or other communication which are required or permitted hereunder
shall be in writing and shall be deemed to have been made when delivered
personally or by certified mail or by Federal Express to the party at its
address as follows:
Seller: Weberg Enterprises, Inc.
422 Wembley Court
Colorado Springs, Colorado 80906
Fax (719) 576-5139
with a copy to
Lawrence A. Hecox
Anderson, Dude, Pifher & Lebel, P.C.
104 South Cascade
Suite 204
Colorado Springs, CO 80903
Fax (719) 632-5452
Buyer: Rhodes, Inc.
4370 Peachtree St., N.E.
Atlanta, Georgia 30319
Fax: (404) 264-4781
Attention: Mr. Joel Lanham
with copy to
King & Spalding
120 West 45th Street
New York, New York 10036
Fax: (212) 556-2222
Attention: E. William Bates, II
or to such other address as the addressee may have specified in a notice duly
given to the sender as provided herein. Such notice, request, demand, waiver,
consent, approval or other communication
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will be deemed to have been given as of the date so delivered or mailed,
whichever occurs first.
12.5 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
12.6 FURTHER ASSISTANCE. From time to time (whether at or after the
Closing) Seller and Buyer shall execute and deliver such further instruments of
conveyance and transfer or take such other action as either party may
reasonable require in order to more effectively convey and transfer to Buyer
the Property.
12.7 COSTS. Each party shall bear its own expenses and costs
incurred in connection with the preparation of this Agreement and the
consummation of the transactions contemplated hereby, subject to the rights of
the parties to include such expenses and costs in any claim for damages
sustained as a result of a breach of this Agreement.
12.8 NO ASSIGNMENT. This Agreement is not assignable by either
party without the written consent of the other. Nothing in this Agreement is
intended to confer, expressly or by implication, upon any person who is not a
party, or successor or assign to a party, any rights or remedies under or by
reason of this Agreement.
12.9 ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the parties with respect to the transactions contemplated between them
and, except as otherwise provided, supersedes all previous negotiations,
commitments and writings.
12.10 ALTERATION. No alteration, modification or change of this
Agreement shall be valid unless made in writing and executed by the parties
hereto.
12.11 NO WAIVER. No failure or delay by any party hereto in
exercising any right, power or privilege hereunder (and no course of dealing
between or among any of the parties) shall operate as a waiver of any right,
power or privilege. No waiver of any default on any one occasion shall
constitute a waiver of any subsequent or other default. No single or partial
exercise of any right, power or privilege shall preclude the further or full
exercise thereof.
12.12 HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
12.13 PUBLIC DISCLOSURE. Except as required by law, neither of the
parties hereto shall make any disclosure to third parties except accountants,
attorneys or other professional persons
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<PAGE> 17
employed to assist in this transaction, nor otherwise make any public
statements or releases concerning this Agreement or the transaction
contemplated hereby except for such written information as shall have been
approved in writing as to form and content by each of the parties hereto, said
approval shall not be unreasonably withheld.
12.14 DEFAULT/REMEDIES. In the event that Buyer shall breach this
Agreements by failure to pay the sums required herein, and Seller shall not
have breached any of its representations, warranties, covenants or obligations,
the Seller, upon 5 days written notice to Buyer, shall have the right to
terminate this Agreement, seek specific enforcement, damages or such other
relief as it may elect, including to declare the entire unpaid balance
immediately due and payable, retake possession of all property transferred by
this Agreement, or any one or more of the above, and shall have the right and
option to bring any action at law or equity to enforce the terms of this
Agreement, and seek restitution or damages, if said sum is not paid within five
(5) days of Buyer's receipt of a notice to that effect sent by Seller.
In the event that either party shall otherwise substantially fail to comply
with the terms, conditions, warranties, or representations of this Agreement,
excluding the timely payment of sums as referred to in the paragraph
immediately above, and said failure to comply is not cured within thirty (30)
days of written notice by one party to the other setting forth said failure to
comply, or if either party shall be adjudicated bankrupt or if any proceeding
against either seeking any reorganization, arrangement, liquidation,
dissolution, or other similar relief under the present or any future federal
bankruptcy code shall remain undismissed or unstayed for an aggregate of sixty
(60) days after the commencement thereof; or if any Trustee receiver or
liquidator of either party shall be appointed without consent or acquiescence
of that party, or such appointment shall remain unvacated or unstayed for an
aggregate of sixty (60) days, then in such event, a default may be declared by
the party not in breach etc., in written notice to the other, and the
non-breaching party may declare the entire unpaid balance due hereunder
immediately due and payable, retake possession of all property transferred by
this Agreement, or any one or more of the above, and shall have the right and
option to bring an action at law or equity to enforce the terms of this
Agreement, and seek restitution, damages and specific performance.
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AGREED TO AND ACCEPTED on this 7th day of October, 1995.
WEBERG ENTERPRISES, INC.
By: /s/ John Weberg
----------------------------
Its: C.E.O.
---------------------------
/s/ John P. Weberg
- - - -------------------------------
John P. Weberg
RHODES, INC.
By: Irwin Lowenstein
----------------------------
Its: C.E.O.
- - - -------------------------------
18
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FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT
This First Amendment to Asset Purchase Agreement ("First Amendment")
is between Weberg Enterprises, Inc., a Delaware corporation ("Weberg"), John P.
Weberg, an individual ("Shareholder") and Rhodes, Inc., a Georgia corporation
("Rhodes"), and is dated for reference October 31, 1995.
Recitals:
The parties to this First Amendment entered into an Asset Purchase
Agreement ("Agreement") on October 2, 1995.
This First Amendment is intended to amend the Agreement in the
following particulars only.
NOW THEREFORE THE PARTIES AGREE AS FOLLOWS:
1. Sections 3 and 4 of the Agreement are amended to provide that the
following third party leases shall be conveyed to Rhodes in the form of
subleases; the approvals of the landlords for assignment having been sought and
not been forthcoming on a timely basis. Complete and accurate copies of such
subleases are attached hereto as Attachments A-l and A-2. Weberg and
Shareholder shall use their best efforts to assure Rhodes quiet enjoyment and
possession pursuant to the terms of such subleases:
a. Austin Warehouse
b. Seguin Showroom
2. Section 5 is amended to add the following:
SALARIED EMPLOYEES OF WEBERG WHO HAVE EARNED SEVERANCE PAY AND WHO
ELECT TO BECOME EMPLOYED BY RHODES SHALL BE CREDITED BY RHODES WITH
SEVERANCE PAY ENTITLEMENT EARNED WHILE EMPLOYED BY WEBERG. IN THE
EVENT THE EMPLOYMENT OF ANY SUCH SALARIED EMPLOYEE SHALL THEREWITH
TERMINATE OR BE TERMINATED WITHIN THE FIRST YEAR NEXT FOLLOWING
CLOSING, WEBERG SHALL REIMBURSE RHODES FOR ALL MONIES PAID TO SUCH
EMPLOYEE FOR SEVERANCE PAY EARNED WHILE HE OR SHE WAS EMPLOYED BY
WEBERG.
3. Section 11.2(a) of the Agreement is amended to provide that conveyance
of inventory at closing on October 31, 1995 shall be by Bill of Sale with
summary of inventory attached. At the post closing adjustment provided for in
Section 11.5 of the Agreement, the inventory bill of sale shall be amended to
have attached a computer printout of all inventory purchased.
4. The following Section 11.4.3 is added:
WEBERG GRANTS TO RHODES THE RIGHT TO PROCEED IN ITS NAME, PLACE AND
STEAD TO COMPLETE FINANCING PREVIOUSLY APPROVED BY HRSI, N.A. ON
CONTRACTS WRITTEN FOR SALE TO CUSTOMERS
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(AND PURCHASED BY RHODES HEREUNDER) WITH RESPECT TO MERCHANDISE NOT
DELIVERED AS OF DATE OF CLOSING.
5. Section 12.1 is amended to read as follows:
ALL STATEMENTS CONTAINED IN ANY CERTIFICATE OR OTHER INSTRUMENT
DELIVERED BY OR ON BEHALF OF EITHER PARTY PURSUANT HERETO OR IN
CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE DEEMED
REPRESENTATIONS AND WARRANTIES HEREUNDER AND SHALL SURVIVE THE
CLOSING.
6. Schedule 3.2.1 is amended to revise the following (i) Section 7.5 on
page six to delete the phrase "insurable value" in the fourth line thereof and
to replace it with the phrase "replacement value," and (ii) to add at the end
of Section 7.7 thereof the sentence: "All insurance policies shall be endorsed
to reflect that the insurer has waived its right of subrogation."
7. Schedule 4.1.2 is amended to delete:
MERCHANT AGREEMENT dated 9/19/90 and MERCHANDISE FINANCING AGREEMENT
dated 9/2/81, as amended, with HRSI, N.A. for credit services.
INDUSTRY TRACK AGREEMENT dated 3/4/94 with Union Pacific Railroad
Company for DDC rail spur.
DERMURRAGE AVERAGE AGREEMENT dated 10/7/93 with Burlington Northern
Railroad Company for rail service demurrage.
8. Except for the specific provisions set forth above, the Agreement is
ratified and confirmed in all other respects.
9. In the event the provisions of this First Amendment shall be in
conflict with any provision of the Agreement, the provisions of this First
Amendment shall control.
Weberg Enterprises, Inc.
by: /s/ John P. Weberg
-----------------------
John P. Weberg
Chief Executive Officer
/s/ John P. Weberg
---------------------------
John P. Weberg
Rhodes, Inc.
by: /s/ J.H. Dugan
------------------------
Authorized Agent
Senior V.P.
2
<PAGE> 1
Exhibit 4.1
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is made on October 27, 1995, by and among
RHODES, INC. ("Borrower"), a Georgia corporation; the financial institutions
listed on the signature pages hereof and their respective successors and
assigns (such financial institutions and their respective successors and
assigns referred to collectively herein as "Lenders," and individually as a
"Lender"); and WACHOVIA BANK OF GEORGIA, N.A. ("Agent"), a national bank, in
its capacity as "Agent" pursuant to Section 12 hereof.
Recitals:
Borrower has applied to Lenders for a revolver credit facility
("Credit Facility") as hereinafter described, and Lenders are willing to
provide to Borrower such Credit Facility on the terms and conditions described
below.
Statement of Agreement:
NOW, THEREFORE, for Ten Dollars ($10.00) in hand paid and other
valuable consideration, receipt whereof is severally acknowledged, the parties
hereto, intending to be legally bound hereby, agree as follows:
1. DEFINITIONS.
(a) In addition to such other terms as are elsewhere defined
herein, all capitalized terms used herein that are not otherwise herein defined
shall have the meanings ascribed to them in the Secured Revolver Loan
Agreement.
(b) The following terms shall have the following meanings in this
Agreement:
"Agreement" shall mean this Credit Agreement.
"Applicable Law" shall mean all laws, rules and regulations
applicable to the person, conduct, transaction, covenant or document
in question, including all applicable common law and equitable
principles; all provisions of all applicable state, federal and
foreign constitutions, statutes, rules, regulations and orders of
governmental bodies; and orders, judgments and decrees of all courts
and arbitrators.
"Average Revolver Loan Balance" shall mean, for any month, the
amount obtained by adding the aggregate of the unpaid balance of
Revolver Loans outstanding at the end of each day for the month in
question and by dividing such sum by the number of days in such month
during which the Commitments are outstanding.
<PAGE> 2
"Borrowing" shall mean the incurrence of Revolver Loans made
by both Lenders on a single date.
"Commitment" shall mean at any date, for either Lender, the
obligation of such Lender to make Revolver Loans pursuant to the terms
and conditions of this Agreement, which shall not exceed the principal
amount set forth opposite such Lender's name under the heading
"Commitment" on the signature pages hereof, as modified from time to
time pursuant to the terms of this Agreement.
"Closing Date" shall mean the date on which all of the
conditions precedent in this Agreement are satisfied and the initial
Revolver Loan is made pursuant to the terms hereof.
"Commitment Termination Date" shall mean the date that is the
soonest to occur of (i) the last day of the Term, (ii) the date on
which any petition for an order for relief under any chapter of the
Bankruptcy Code is filed by or against Borrower, (iii) the date on
which Agent elects to terminate the Commitments pursuant to this
Agreement as a consequence of the occurrence of any Event of Default,
or (iv) the date on which Borrower elects to terminate the Commitments
pursuant to the terms of this Agreement.
"Default Rate" shall mean the variable rate of interest equal
to 3% plus the Prime Rate in effect from time to time.
"Dollars" and the sign "$" shall mean lawful money of the
United States of America.
"Event of Default" shall have the meaning ascribed to it in
Section 12 hereof.
"Extraordinary Expenses" shall mean all costs, expenses, fees
and advances (including legal fees and court costs) which Agent may
suffer or incur to enforce this Agreement or any of the Related
Agreements, to collect any of the Revolver Loan Obligations or to
document any workout, restructuring or forbearance arrangement with
respect to this Agreement or the Related Agreements or the Revolver
Loans, including all costs, expenses fees or advances incurred or
suffered in the defense of any claim with respect to this Agreement or
any of the Related Agreements or the Revolver Loan Obligations or
repayment thereof brought by any Person that is at any time liable for
the payment of the whole or any part of the Revolver Loan Obligations,
a receiver or a trustee in bankruptcy for such Person or any other
Person.
"Federal Funds Rate" shall mean, for any period, a fluctuating
interest rate per annum equal for each date during
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<PAGE> 3
such period to the weighted average of the rates on overnight federal
funds transactions with members of the Federal Reserve System arranged
by federal funds brokers, as published for such day (or if such is not
a Domestic Business Day, for the next preceding Domestic Business Day)
in Atlanta, Georgia, by the Federal Reserve Bank of Atlanta, or if
such rate is not so published for any day which is a Domestic Business
Day, the average of the quotations for such day on such transactions
received by Agent from three federal funds brokers of recognized
standing selected by Agent.
"Indemnified Amount" shall mean the amount of any loss, cost,
expense or damage suffered or incurred by Agent and against which
Lenders or Borrower have agreed to indemnify Agent pursuant to the
terms of this Agreement or any of the Related Agreements.
"Loan Account" shall have the meaning described to it in
Section 7 hereof.
"Margin Stock" shall have the meaning ascribed to such term in
Regulation U and Regulation G of the Board of Governors of the Federal
Reserve System.
"Notice of Borrowing" shall have the meaning ascribed to it in
Section 3(a) hereof.
"Permitted Acquisition" shall mean any Acquisition authorized
by Section 9.6 of the Secured Revolver Loan Agreement and any other
Acquisition to which Lenders shall give their prior written consent.
"Permitted Uses" shall mean, with reference to Borrower's use
of any proceeds of the Revolver Loans, the use of such proceeds to pay
fees and transaction expenses associated with the closing of the
transactions described herein or any of the Obligations or Revolver
Loan Obligations, to make expenditures for other lawful corporate
purposes of Borrower in the ordinary course of its business to the
extent such expenditures are not prohibited by the terms of this
Agreement, or to finance Permitted Acquisitions. In no event may any
Revolver Loan proceeds be used by Borrower to purchase or carry any
Margin Stock or for any related purpose that violates the provisions
of Regulations G, T, U or X of the Board of Governors of the Federal
Reserve System.
"Person" shall mean an individual, partnership, corporation,
joint venture, joint stock company, limited liability company, land
trust, business trust, unincorporated organization, a government or
agency or political subdivision thereof, or any other form of entity.
3
<PAGE> 4
"Pro Rata" shall mean a share of or in all Revolver Loans and
payments with respect to the Revolver Loan Obligations, which share
for either Lender on any date shall be a percentage arrived at by
dividing the amount of such Lender's Commitment on such date by the
aggregate amount of the Commitments of both Lenders on such date.
"Purchase Agreement" shall mean that certain Asset Purchase
Agreement, dated October 2, 1995, among Borrower, Seller and John P
Weberg.
"Related Agreements" shall mean the Revolver Notes and any and
all other agreements, instruments and documents (other than this
Agreement), heretofore, now or hereafter executed by Borrower and
delivered to Agent or either Lender in respect of the transactions
contemplated by this Agreement.
"Revolver Loan" shall mean a loan made by a Lender to Borrower
pursuant to the terms of this Agreement.
"Revolver Loan Obligations" shall mean all of Revolver Loans,
interest accrued thereon, fees payable in connection therewith as
provided herein and all Extraordinary Expenses and other expenses
payable by Borrower to Lenders hereunder.
"Revolver Notes" shall mean the Revolver Note executed by
Borrower in favor of Wachovia on the date hereof in the face amount of
$7,500,000 and the Revolver Note executed by Borrower on the date
hereof in favor of Shawmut in the original face amount of $7,500,000,
each of which notes shall evidence the Revolver Loans to Borrower by
the payee of such note and be substantially in the form of Exhibit "A"
attached hereto.
"Secured Revolver Loan Agreement" shall mean that certain Loan
and Security Agreement dated February 24, 1994, between Borrower and
Wachovia.
"Seller" shall mean Weberg Enterprises, Incorporated, a
Delaware corporation.
"Shawmut" shall mean Shawmut Capital Corporation, a
Connecticut corporation, in its capacity as a Lender hereunder, and
its successors and assigns.
"Taxes" shall mean any present or future taxes, levies,
imposts, duties, fees, assessments, deductions, withholdings or other
charges of whatever nature, including income, receipts, excise,
property, sales, use, transfer, license, payroll, withholding, social
security and franchise taxes now or hereafter imposed or levied by the
United States, or any
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<PAGE> 5
state, local or foreign government or by any department, agency or
other political subdivision or taxing authority thereof or therein and
all interest, penalties, additions to tax and similar liabilities with
respect thereto, but excluding, in the case of each Lender, taxes
imposed on or measured by the net income or overall gross receipts of
such Lender
"Term" shall have the meaning ascribed to it in Section 8
hereof.
"Wachovia" shall mean Wachovia Bank of Georgia, N.A , a
national banking association, in its capacity as a Lender hereunder,
and its successors and assigns
(c) The terms "herein," "hereof" and "hereunder" and other words
of similar import refer to this Agreement as a whole and not to any particular
section, paragraph or subdivision. Any pronoun used shall be deemed to cover
all genders. All references to statutes and related regulations shall include
any amendments of same and any successor statutes and regulations. All
references to this Agreement or any of the other Related Agreements include
any and all modifications thereto and any and all extensions or renewals
thereof. All references to any Person shall mean and include the successors
and permitted assigns of such Person. All terms of an accounting character
used in this Agreement shall be interpreted, all accounting determinations
hereunder shall be made, and all financial statements required to be delivered
hereunder shall be prepared, in accordance with GAAP, applied on a basis
consistent with the most recent audited financial statements of Borrower
delivered to Wachovia.
2. CREDIT FACILITY. Each Lender agrees, severally to the extent
of its Commitment and not jointly with the other Lender, upon the terms and
subject to the conditions set forth herein, to make Revolver Loans to Borrower
on any Domestic Business Day during the period from the date hereof through the
day before the Commitment Termination Date, not to exceed in aggregate
principal amount outstanding at any time such Lender's Commitment at such time,
which Revolver Loans may be repaid and reborrowed in accordance with the
provisions of this Agreement. Each Borrowing of Revolver Loans shall be funded
by each Lender's Pro Rata share of the requested Revolver Loan in accordance
with their respective Commitments; but the failure of a Lender to make any
Revolver Loan shall not in itself relieve the other Lender of its Pro Rata
obligation to lend. The initial Borrowing hereunder shall be in a principal
amount in excess of $250,000. In no event shall Borrower be authorized to
obtain any Revolver Loan at a time when (i) the aggregate principal amount of
loans outstanding under the Secured Revolver Loan Agreement is less than
$30,000,000 or (ii) the aggregate principal amount of all revolver loans
outstanding under
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<PAGE> 6
the Secured Revolver Loan Agreement exceeds the Margin. The proceeds of the
Revolver Loans may be used by Borrower only for Permitted Uses. Borrower's
obligation to pay the principal of, and interest on, the Revolver Loans to each
Lender shall be evidenced by the records of Agent and such Lender and by the
Revolver Notes payable to such Lender (or the assignee of such Lender)
completed in conformity with this Agreement. All outstanding principal amounts
and accrued interest under the Revolver Loans shall be due and payable as set
forth in Section 6 hereof.
3. Manner of Borrowing and Funding Revolver Loans.
(a) Whenever it desires to make a Borrowing under this Agreement,
Borrower shall give Agent prior written notice (or telephonic notice promptly
confirmed in writing) of such Borrowing request (a "Notice of Borrowing"),
which Notice of Borrowing shall be in such form as may be prescribed from time
to time by Agent and shall be given by Borrower no later than 11:00 a.m.
(Atlanta time) at the office of Agent on the Domestic Business Day of the
requested Borrowing. Notices received after 11:00 a.m. (Atlanta time) shall be
deemed received on the next Domestic Business Day. Each Notice of Borrowing
shall be irrevocable and shall specify the principal amount of the Borrowing
and the date of Borrowing (which shall be a Domestic Business Day). Unless
payment is otherwise timely made by Borrower, the becoming due of any amount
required to be paid under this Agreement or any of the Related Agreements as
principal, accrued interest, fees or other charges shall be deemed irrevocably
to be a request for a Revolver Loan on the due date of, and in an aggregate
amount required to pay, such principal, accrued interest, fees or other
charges, and the proceeds of each such Revolver Loan may be disbursed by Agent
by way of direct payment of the relevant Revolver Loan Obligation and shall
bear interest as provided herein. As an accommodation to Borrower, Agent may
permit telephonic requests for Borrowings and electronic transmittal of
instructions, authorizations, agreements or reports to Agent by Borrower.
Unless Borrower specifically directs Agent in writing not to accept or act upon
telephonic or electronic communications from Borrower, Agent shall have no
liability to Borrower for any loss or damage suffered by Borrower as a result
of Agent's honoring of any requests, execution of any instructions,
authorizations or agreements or reliance on any reports communicated to it
telephonically or electronically and purporting to have been sent to Agent by
Borrower and Agent shall have no duty to verify the origin of any such
communication or the authority of the person sending it.
(b) Subject to its receipt of notice from Agent of the Notice of
Borrowing, each Lender shall timely honor its Commitment by funding its Pro
Rata share of each Revolver Loan that is properly requested by Borrower and
that Borrower is entitled to receive under this Agreement. Agent shall notify
Lenders of each Notice of
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Borrowing by 12:00 Noon (Atlanta time) on the proposed funding date, and each
Lender shall deposit with Agent an amount equal to it Pro Rata share of the
Revolver Loan requested by Borrower in immediately available funds not later
than 1:30 p.m. (Atlanta time) on the date of funding of such Revolver Loan,
unless Agent's notice to Lenders is received after 12:00 Noon (Atlanta time) on
the proposed funding date of a Revolver Loan, in which event Lenders shall
deposit with Agent their respective Pro Rata shares of the requested Revolver
Loan on or before 11:00 a.m. (Atlanta time) on the next Domestic Business Day.
Subject to its receipt of such amounts from Lenders, Agent shall make such
proceeds received by it available to Borrower by disbursing such proceeds in
accordance with Borrower's disbursement instructions set forth in the
applicable Notice of Borrowing. Unless Agent shall have been notified in
writing by a Lender prior to the proposed time of funding that such Lender does
not intend to deposit with Agent an amount equal to such Lender's Pro Rata
share of the requested Revolver Loan, Agent may assume that such Lender has
deposited, or promptly will deposit, its share with Agent and Agent may in its
discretion disburse a corresponding amount to Borrower on the applicable
funding date. If a Lender's Pro Rata share of such Revolver Loan is not in fact
deposited with Agent, then, if Agent has disbursed to Borrower an amount
corresponding to such defaulting Lender's Pro Rata share of the Revolver Loan,
such defaulting Lender agrees to pay, and in addition Borrower agrees to repay,
to Agent forthwith on demand such corresponding amount, together with interest
thereon, for each day from the date such amount is disbursed by Agent to or for
the benefit of Borrower until the date such amount is paid or repaid to Agent,
(i) in the case of Borrower, at the interest rate applicable to such Borrowing,
and (ii) in the case of such Lender, at the Federal Funds Rate.
4. DISBURSEMENT AUTHORIZATION. Borrower hereby irrevocably
authorizes Agent to disburse the proceeds of each Revolver Loan requested, or
deemed to be requested pursuant to this Agreement, as follows: (i) the proceeds
of each Revolver Loan deemed requested by Borrower pursuant to Section 3(a)
hereof shall be disbursed by Agent by way of direct payment of the relevant
interest or other Revolver Loan Obligation; and (ii) the proceeds of each
Revolver Loan otherwise requested by Borrower shall be disbursed by Agent by
crediting the amount of such Revolver Loan to Borrower's demand deposit account
with Agent.
5. INTEREST, FEES AND OTHER CHARGES.
(a) Borrower agrees to pay interest in respect of all unpaid
principal amounts of the Revolver Loans from the respective dates such
principal amounts are advanced until paid (whether at stated maturity, on
acceleration or otherwise) at a variable rate per annum equal to 1.0% plus the
Prime Rate in effect from time to time. The rate of interest in effect
hereunder on the date hereof, expressed in simple terms, is 9.75% per annum,
based upon a Prime
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<PAGE> 8
Rate in effect on the date hereof of 8.75%. Upon and after the occurrence of an
Event of Default, and during the continuance thereof, the principal amount of
all Revolver Loans shall bear interest at a variable rate per annum equal to
the Default Rate.
(b) In consideration of each Lender's establishment of the Credit
Facility in favor of Borrower, Borrower agrees to pay closing fees of $112,500
to Wachovia and $112,500 to Shawmut, which fees shall be fully earned and
(except to the extent otherwise required by Applicable Law) nonrefundable on
the Closing Date. Lenders acknowledge that Borrower has paid $50,000 of such
closing fees ($25,000 to each of Wachovia and Shawmut) prior to the date
hereof, and Borrower agrees that the remainder of such closing fees shall be
paid concurrently with and from the proceeds of the initial Revolver Loan
hereunder. In addition, Borrower shall pay to Agent for the Pro Rata benefit of
Lenders a monthly fee equal to 1% per annum of the amount by which the Average
Revolver Loan Balance for any month is less than $15,000,000, which fees shall
be paid monthly, in arrears, on the first day of each calendar month after the
Closing Date.
(c) All interest, fees and other charges provided for in this
Agreement or in the Revolver Notes shall be calculated daily and shall be
computed on the actual number of days elapsed over a year of 360 days.
(d) Regardless of any provision contained in this Agreement or any
of the Related Agreements, in no contingency or event whatsoever shall the
aggregate of all amounts that are contracted for, charged or received by Agent
or either Lender pursuant to the terms of this Agreement or any of the Related
Agreements and that are deemed interest under Applicable Law exceed the highest
rate permissible under any Applicable Law. If any interest is charged or
received by Agent or either Lender in excess of the maximum lawful rate,
Borrower agrees that any such charge or receipt shall be the result of an
accident and bona fide error, and such excess, to extent received, shall be
applied to reduce the principal amount of the Revolver Loan Obligations and the
balance, if any, returned to Borrower, it being the intent of the parties
hereto not to enter into a usurious or otherwise illegal relationship. All
monies paid to Agent or either Lender hereunder or under any of the Related
Agreements, whether at maturity or by prepayment, shall be subject to any
rebate of unearned interest as and to the extent required by Applicable Law.
6. REPAYMENT OF REVOLVER LOANS.
(a) All payments of principal of and interest on the Revolver
Loans and other Revolver Loan Obligations shall be made to Agent in Dollars
without any offset or counterclaim and free and clear of
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<PAGE> 9
(but without deduction for) any present or future Taxes, and, with respect to
payments made other than by application of balances in any demand deposit
account of Borrower with Agent, in immediately available funds not later than
12:00 Noon (Atlanta time) on the date due. The principal amount of the Revolver
Loans shall be paid by Borrower to Agent, for the Pro Rata benefit of Lenders,
upon the Commitment Termination Date. Interest accrued on the principal amount
of the Revolver Loan Obligations outstanding from time to time shall be paid
monthly, in arrears, on the first day of each month. On any date that the
outstanding principal amount of the revolver loans under the Secured Revolver
Loan Agreement is less than $30,000,000, Borrower shall pay, as a mandatory
prepayment of the Revolver Loans hereunder, an amount equal to the lesser of
(i) the outstanding balance of the Revolver Loans hereunder or (ii) the
difference between $30,000,000 and the outstanding principal amount of the
revolver loans under the Secured Revolver Loan Agreement.
(b) To the extent that Borrower makes a payment or payments to
Agent or either Lender and such payment or payments are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
to be repaid to a trustee, receiver or any other Person, then to the extent of
such recovery, the obligation or part thereof originally intended to be
satisfied, and all rights and remedies therefor, shall be revived and continued
in full force and effect as if such payment had not been made.
(c) All monies to be applied to the Revolver Loan Obligations,
whether constituting voluntary payments or mandatory prepayments by Borrower or
received pursuant to demand for payment, shall be allocated among Agent and
such of the Lenders as are entitled thereto (and, with respect to monies
allocated to Lenders, on a Pro Rata basis unless otherwise provided herein):
(i) first, to Agent to pay principal and accrued interest on any Revolver Loan
which Agent may have advanced on behalf of either Lender and for which Agent
has not been reimbursed by such Lender or Borrower; (ii) second, to Agent to
pay the amount of Extraordinary Expenses that have not been reimbursed to Agent
by Borrower or Lenders, together with interest thereon; (iii) third, to Agent
to pay any Indemnified Amount that has not been paid to Agent by Borrower or
Lenders, together with interest accrued thereon; (iv) fourth, to Lenders for
any Indemnified Amount that they have paid to Agent and for any Extraordinary
Expenses they have reimbursed to Agent; and (v) fifth, to Lenders in payment of
the unpaid principal and accrued interest in respect to the Revolver Loans and
any other Revolver Loan Obligations then outstanding. The allocations set forth
hereinabove are solely to determine the rights and priorities of Agent and
Lenders as among themselves and may be changed by Agent and Lenders without
notice to or the consent or approval of Borrower or any other Person.
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<PAGE> 10
7. Loan Account: Account Stated. Each Lender shall maintain in
accordance with its usual and customary practices an account or accounts (a
"Loan Account") evidencing the indebtedness of Borrower to such Lender
resulting from each Revolver Loan owing to such Lender from time to time,
including the amount of principal and interest payable and paid to such Lender
from time to time hereunder and under the Revolver Note payable to such Lender.
The entries made in each Loan Account shall constitute rebuttably presumptive
evidence of the information contained therein and if a copy of information
contained in any Loan Account is provided to any Person, or any Person inspects
any information relating to the Loan Account, at any time or from time to time,
then the information contained in the Loan Account shall be conclusive and
binding on such Person for all purposes absent manifest error, unless such
Person notifies Agent in writing within thirty days after such Person's receipt
of such copy or inspection of information related to the Loan Account of its
intention to dispute the information contained therein.
8. Term and Termination of Commitments. Subject to each Lender's
right to cease making Revolver Loans to Borrower when any Default Condition
exists or upon termination of the Commitments as provided herein, the
Commitments shall be in effect for a period commencing on the date hereof and
ending at 5:00 p.m. (Atlanta time) on February 28, 1996 (the "Term"). Agent may
(and upon the direction of either Lender, shall) terminate the Commitments
without notice upon or after the occurrence of any Event of Default. Upon at
least ten (10) days prior written notice to Agent, Borrower may, at its option,
terminate the Commitments, but no such termination by Borrower shall be
effective until Borrower has paid all of the Revolver Loan Obligations in
immediately available funds. Any notice of termination given by Borrower shall
be irrevocable unless Agent otherwise agrees in writing. All of the Revolver
Loan Obligations shall be immediately due and payable upon the effective date
of termination by Agent or, in the case of a termination by Borrower, upon the
date specified in Borrower's notice of termination of the Commitments as the
effective date of such termination, and on the effective date of any
termination (whether by Agent or Borrower) Lender shall have no obligation to
make any Revolver Loans. All agreements, covenants and duties of Borrower
contained in this Agreement and the Related Agreements shall survive any such
termination and Agent shall retain all of its rights and remedies under this
Agreement and the Related Agreements notwithstanding such termination until all
of the Revolver Loan Obligations have been paid in full, in immediately
available funds.
9. Representations and Warranties. To induce Lenders to make
Revolver Loans in accordance with the terms hereof, Borrower hereby reaffirms
all of the warranties and representations contained in the Secured Revolver
Loan Agreement and agrees that on
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<PAGE> 11
each date a Notice of Borrowing is submitted by Borrower such representations
and warranties shall be deemed reaffirmed in all respects.
10. Consent of Noteholders. Promptly after its execution of this
Agreement, Borrower shall diligently pursue and make best efforts to obtain the
consent of the Noteholders, pursuant to the Note Purchase Documents, to
Borrower's obtaining a credit facility from Lenders in an aggregate amount of
at least $65,000,000 under which Borrower may obtain loans, letters of credit
and other extensions of credit from Lenders from time to time, all of which
extensions of credit will be secured by security interests in and liens on all
of the Collateral.
11. Conditions Precedent. Notwithstanding any other provision of
this Agreement or any of the Related Agreements, and without affecting in any
manner the rights of Agent or Lenders under the other sections of this
Agreement, it is understood and agreed that Lenders shall not be required to
make the initial Revolver Loans requested by Borrower unless on or before
November 3, 1995, each of the conditions set forth below has been satisfied,
all in form and substance satisfactory to Agent's and each Lender's respective
counsel:
(a) Each of the Related Agreements shall have been duly executed
and delivered to Agent by Borrower;
(b) Wachovia shall have received copies of all filing receipts or
acknowledgments issued by any governmental authority to evidence any filing or
recordation necessary to perfect or continue the perfection of Wachovia's
security interests and liens in the Collateral and evidence in form acceptable
to Wachovia that such security interests and liens constitute valid and
perfected, first priority security interests and liens;
(c) Borrower shall have executed and delivered to Wachovia a Third
Amendment to the Secured Revolver Loan Agreement, in form and substance
satisfactory to Wachovia;
(d) Wachovia shall have received Shawmut's written consent to
Wachovia's and Borrower's execution of the Third Amendment described in Section
11(c) hereof;
(e) Wachovia shall have received Shawmut's written consent to the
transactions contemplated by the Purchase Agreement;
(f) Agent and Lenders shall have received evidence acceptable to
them that all of the transactions contemplated by the Purchase Agreement have
been consummated, except for Seller's receipt of the purchase price due
thereunder;
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(g) Agent and Lenders shall have received a copy of the corporate
resolutions of Borrower, certified by an officer of Borrower, which authorizes
Borrower's execution and delivery of, and the performance of its obligations
under, this Agreement and the Related Agreements;
(h) Wachovia shall have received a copy of the corporate
resolutions of Borrower, certified by an officer of Borrower, which authorizes
Borrower's execution and delivery of, and the performance of its obligations,
under the Third Amendment described in Section ii(c) above;
(i) Agent and Lenders shall have received a favorable, written
opinion of King & Spalding, counsel to Borrower, covering the matters set forth
on Exhibit "B" attached hereto;
(j) No Default Condition or Event of Default exists; and
(k) Agent and Lenders shall have received such other documents,
instruments and agreements as Agent or Lenders shall reasonably request in
connection with the foregoing matters.
12. Events of Default: Rights and Remedies on Default.
(a) The occurrence of any one or more of the following events or
conditions shall constitute an "Event of Default" (each of which Events of
Default shall be deemed to be continuing unless and until waived by Agent and
Lenders in accordance with the provisions of Section 13(g) hereof): (i)
Borrower shall fail to pay any of the Revolver Loan Obligations on the due date
thereof (whether due at stated maturity, on demand, upon acceleration or
otherwise); (ii) Borrower shall fail or neglect to perform, keep or observe any
covenant contained in this Agreement; or (iii) an "Event of Default" under (and
as defined in) the Secured Revolver Loan Agreement shall occur.
(b) Upon or at any time after the occurrence of an Event of
Default, Agent may in its discretion (and, upon receipt of written instructions
to do so from either Lender, shall) declare the principal of and any accrued
interest on the Revolver Loans and all other Revolver Loan Obligations owing
under this Agreement or any of the Related Agreements, whereupon the same shall
become without further notice or demand (all of which notice and demand
Borrower expressly waives) forthwith due and payable and Borrower shall
forthwith pay to Agent for the Pro Rata benefit of Lenders the entire principal
of and accrued and unpaid interest on the Revolver Loans and other Revolver
Loan Obligations plus reasonable attorneys' fees and expenses if such principal
and interest are collected by or through an attorney-at-law. Notwithstanding
the foregoing, upon any acceleration of the maturity of any of the Obligations
or any demand for payment thereof by Wachovia under the
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Secured Revolver Loan Agreement, all of the Revolver Loan Obligations shall
become automatically due and payable without declaration, notice or demand by
Agent and the Commitments shall automatically terminate. At any time that an
Event of Default exists, Agent may in its discretion (and, upon receipt of
written direction from either Lender to do so, shall) exercise from time to
time all rights and remedies under Applicable Law to enforce this Agreement and
the Related Agreements and to collect any of the Revolver Loan Obligations.
13. PROVISIONS REGARDING AGENT.
(a) Each Lender hereby irrevocably appoints and designates
Wachovia as Agent to act as herein specified. Except as otherwise provided in
this Section 13, Wachovia as such Agent shall have the authority to exercise
all rights and remedies provided for under this Agreement and the Related
Agreements as are specifically delegated to Agent by the terms hereof and
thereof, together with such other rights and powers as are reasonably
incidental thereto. Each Lender agrees that any action by Agent in accordance
with the provisions of this Agreement or the Related Agreements, and the
exercise by Agent of any power set forth herein or therein, together with such
other powers as are reasonably incidental thereto, shall be authorized and
binding upon both Lenders. Without limiting the generality of the foregoing,
Agent shall have the sole and exclusive right and authority to (i) act as the
disbursing and collecting agent for Lenders with respect to all payments and
collections arising in connection with this Agreement and the Related
Agreements and (ii) subject to the direction of the Lenders and as except as
may be otherwise specifically restricted by the terms of this Agreement,
exercise all remedies given to Agent with respect to this Agreement or any of
the Related Agreements. Agent shall not: (i) have any duties or
responsibilities except as expressly set forth in this Agreement and the
Related Agreements and shall not by reason of this Agreement or any of the
Related Agreements be a trustee or fiduciary for either Lender, (ii) be
responsible to either Lender for any recitals, statements, representations or
warranties contained in this Agreement or any of the Related Agreements or for
any failure by Borrower or any other Person (other than Agent) who was at any
time a signatory to this Agreement or any of the Related Agreements to perform
any of its obligations hereunder or thereunder, (iii) be required to initiate
or conduct any litigation or collection proceedings hereunder or under any of
the Related Agreements except to the extent directed to do so by either Lender
during the continuance of any Event of Default, or (iv) be responsible for any
action taken or omitted to be taken hereunder or under any of the Related
Agreements, except for its own willful misconduct or gross negligence. If Agent
shall request instructions from Lenders with respect to any act or action
(including the failure to act) in connection with this Agreement or
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any of the Related Agreements, Agent shall be entitled to refrain from such act
or taking such action unless and until Agent shall have received instructions
from the Lenders and Agent shall not incur any liability to any Person by
reason of so refraining. Agent shall not be responsible or liable to Borrower
or any other Person for any punitive, exemplary, or consequential damages which
may be alleged as a result of this Agreement, the Related Agreements or any of
the transactions contemplated hereby or thereby.
(b) Agent shall be entitled to rely, and shall be fully protected
in so relying, upon any certification, notice or other communication (including
any thereof by telephone, telex, telegram, telecopier message or cable)
believed by it to be genuine and correct and to have been signed, sent or made
by or on behalf of the proper Person, and upon advice and statements of legal
counsel, independent accountants and other experts selected by Agent. As to any
matters not expressly provided for by this Agreement or any of the Related
Agreements, Agent shall in all cases be fully protected in acting or refraining
from acting hereunder and thereunder in accordance with the instructions of
Lenders and such instructions and any action or failure to act pursuant thereto
shall be binding upon both Lenders.
(c) Agent shall not be deemed to have knowledge of the occurrence
of a Default Condition or an Event of Default unless it has received notice
from a Lender or Borrower specifying the occurrence of such Default Condition
or Event of Default. Upon its receipt of notice or knowledge of the occurrence
of a Default Condition or an Event of Default, Agent shall promptly notify
Lenders thereof in writing and Agent shall take such action and assert such
rights under this Agreement and the Related Agreements, or shall refrain from
doing so, as Lender shall direct from time to time.
(d) If Lender shall obtain any payment or reduction of any
Revolver Loan Obligation (whether voluntary, involuntary, through the exercise
of any right of setoff or otherwise) in excess of its Pro Rata share of
payments or reductions on account of such Revolver Loan Obligations obtained by
both Lenders, such Lender shall forthwith (i) notify the other Lender and Agent
of such receipt and (ii) purchase from the other Lender such participations in
the effected Revolver Loan Obligations as shall be necessary to cause such
purchasing Lender to share the excess payment or reduction, net of reasonable
costs incurred in connection therewith, on a Pro Rata basis, provided that if
all or any portion of such excess payment or reduction is thereafter recovered
from such purchasing Lender or additional costs are incurred, the purchase
shall be rescinded and the purchase price restored to the extent of such
recovery or such additional costs, but without interest.
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(e) Each Lender severally agrees to indemnify Agent in its
capacity as Agent hereunder (to the extent not reimbursed by Borrower under
this Agreement, but without limiting the indemnification obligation of Borrower
under this Agreement), on a Pro Rata basis, from and against any and all
claims, demands, liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind and nature
whatsoever (including reasonable attorneys' fees and expenses) that may be
imposed on, incurred by or asserted against Agent in any way related to or
arising out of this Agreement or any of the Related Agreements or any of the
transactions contemplated hereby (including the costs and expenses which
Borrower is obligated to pay to Agent under any indemnification by Borrower of
Agent) or the enforcement of any of the terms hereof, provided that neither
Lender shall be liable to Agent for any of the foregoing to the extent that
they result wholly from the willful misconduct or gross negligence of Agent.
This indemnity shall survive the payment in full of the Revolver Loan
Obligations and the termination of the Commitments.
(f) Agent shall in all cases be fully justified in failing or
refusing to act hereunder unless it shall have received further assurances to
its satisfaction from Lenders of their indemnification obligations under
Section 13(e) hereof against any and all liability and expense which may be
incurred by Agent by reason of taking or continuing to take any action. Agent
does not assume any responsibility for any failure or delay in performance or
breach by Borrower or either Lender of its obligations under this Agreement or
any of the Related Agreements. Agent does not make to Lenders, and neither
Lender makes to Agent or the other Lender, any express or implied warranty,
representation or guaranty with respect to the Revolver Loans, or the recovery
of thereof, the financial condition of Borrower, or the enforceability of this
Agreement or any of the Related Agreements.
(g) Without the prior written consent of both Lenders, Agent shall
not amend this Agreement or any of the Related Agreements or waive any Default
Condition or Event of Default. Neither Lender shall be authorized to amend or
modify any Revolver Note held by it, or to give or withhold waivers with
respect thereto, unless such amendment, modification or waiver is consented to
in writing by both Lenders.
(h) Each Lender hereby acknowledges and represents that it has,
independently and without reliance upon Agent or the other Lender, and based
upon such documents and information as it has deemed appropriate, made its own
credit analysis of Borrower and its own decision to enter into this Agreement
and to fund the Revolver Loans to be made by it hereunder, and each Lender has
made such inquiries concerning this Agreement, the Related Agreements and
Borrower as such Lender feels necessary and appropriate and has
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taken such care on its own behalf as would have been the case had it entered
into this Agreement and the Related Agreements without the intervention or
participation of the other Lender or Agent. Each Lender acknowledges and
agrees that it will, independently and without reliance upon the other Lender
or Agent, and based upon such financial information as it deems appropriate at
the time, continue to make and rely upon its own credit decisions in making
Revolver Loans and in taking or refraining to take any other action under this
Agreement or the Related Agreements. Except for notices, reports and other
information that Wachovia has furnished to Participant from time to time in
connection with the Secured Revolver Loan Agreement and except as otherwise
expressly provided for herein with respect to Notices of Borrowing, Agent shall
not have any duty or responsibility to provide either Lender with any credit or
other information concerning the affairs, financial condition, business or
properties of Borrower which may come into the possession of Agent unless and
to the extent expressly requested in writing by a Lender.
(i) This Section 13 is not intended to confer any rights or
benefits upon Borrower or any other Person except Lenders and Agent, and no
Person (including Borrower) other than Lenders and Agent shall have the right
to enforce any of the provisions of this Section 13. As between Borrower and
Agent, any action that Agent may take or purport to take on behalf of Lenders
shall be conclusively presumed to have been authorized and approved by Lenders
as herein provided.
(j) All payments by a Lender to Agent shall be made not later than
the time set forth elsewhere in this Agreement on the Domestic Business Day
that such payment is due. Payment by Agent to either Lender shall be made by
wire transfer, promptly following Agent's receipt of funds for the account of
such Lender and in the type of funds received by Agent, provided that if Agent
receives such funds that are prior to 1:00 p.m. (Atlanta time), Agent shall pay
such funds to such Lender by 2:00 p.m. (Atlanta time) on such Domestic Business
Day, but if Agent receives such funds after 1:00 p.m. (Atlanta time), Agent
shall pay such funds to such Lender by 2:00 p.m. (Atlanta time) on the next
Domestic Business Day. If a Lender shall, at any time, fail to make any payment
to Agent required hereunder, Agent may, but shall not be required to, retain
payments that would otherwise be made to such Lender hereunder and apply such
payment to such Lender's defaulted obligations hereunder, at such time or
times, and in such order, as Agent may elect in its sole discretion.
(k) All notices under or in connection with this Agreement or any
of the Related Agreements, except as otherwise expressly provided herein or
therein, shall be in writing and shall be delivered (and deemed delivered) on
the date and to the addresses of the notice party as set forth in the Secured
Revolver Loan
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Agreement. All communications to Agent shall be sent to the address set forth
in the Secured Revolver Loan Agreement for Wachovia.
(l) With respect to its obligation to lend under this Agreement,
the Revolver Loans made by it and the Revolver Note issued to it, Agent shall
have the same rights and powers hereunder and under the Related Agreements as
the other Lender or any holder of a Revolver Note and may exercise the same as
though it were not performing the duties of Agent specified herein; and the
term "Lenders" shall, unless the context clearly otherwise indicates, include
Agent, in its capacity as a Lender.
14. REIMBURSEMENT FOR CLOSING COSTS. Borrower shall promptly
reimburse Agent and Lenders for any and all costs and expenses, including
attorneys' fees, and expenses incurred by Agent or such Lender in connection
with the documentation, negotiation and closing of the transactions
contemplated by this Agreement and the Related Agreements.
15. SUCCESSORS AND ASSIGNS. The terms and provisions of this
Agreement shall be binding upon and inure to the benefit of Borrower, Agent and
Lenders and their respective successors and assigns, except that Borrower shall
not have the right to assign any of its rights or delegate performance of its
obligations under this Agreement or any of the Related Agreements.
16. GENERAL INDEMNITY BY BORROWER. Borrower hereby agrees to
indemnify Agent and each Lender and to hold Agent and each Lender harmless from
and against any liability, loss, damage, suit, action or proceeding ever
suffered or incurred by Agent or such Lender (including reasonable attorneys'
fees and legal expenses) as a result of Borrower's failure to observe, perform
or discharge Borrower's duties hereunder. This indemnity shall survive the
payment in full of the Revolver Loan Obligations and the termination of the
Commitments.
17. MODIFICATION OF AGREEMENT. This Agreement may not be modified,
altered or amended except by an agreement in writing signed by Borrower, Agent
and Lenders.
18. MISCELLANEOUS. This Agreeement and any amendments hereto may
be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which counterparts taken together shall
constitute but one and the same instruments. Time is of the essence of this
Agreement and the Related Agreements. This Agreement and the Related Agreements
embody the entire understanding and agreement of the parties hereto and thereto
with respect to the subject matter hereof and thereof and supersede all prior
agreements, understandings and inducements,
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whether express or implied, oral or written, that relate to the subject matter
of this Agreement and the Related Agreements.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered on the day and year first above written by their duly
authorized officers or agents.
BORROWER:
RHODES, INC.
By: /s/ Joel H. Dugan
------------------------------------
Title: Senior Vice President,
------------------------------
Finance and Administration
------------------------------
LENDERS:
Commitment: $7,500,000.00 WACHOVIA BANK OF GEORGIA, N.A.
By: /s/ Ken B. Harrison
------------------------------------
Title: Vice President
------------------------------
Commitment: $7,500,000.00 SHAWMUT CAPITAL CORPORATION
By: /s/ Elizabeth L. Waller
------------------------------------
Title: Vice President
------------------------------
AGENT:
WACHOVIA BANK OF GEORGIA, N.A.,
as Agent
By: /s/ Ken B. Harrison
------------------------------------
Title: Vice President
------------------------------
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EXHIBIT A
REVOLVER NOTE
October _, 1995
U.S. $_____________.__ Atlanta, Georgia
FOR VALUE RECEIVED, the undersigned, RHODES, INC., a Georgia
corporation (hereinafter referred to as "Borrower"), hereby unconditionally
promises to pay to the order of _____________________________________ (herein,
together with any subsequent holder hereof, called the "Lender") Lender's Pro
Rata share of the outstanding principal amount of all Revolver Loans pursuant
to the terms of the Credit Agreement referred to below on the date on which
such outstanding principal amounts become due and payable pursuant to Section 6
of the Credit Agreement, in strict accordance with the terms thereof. Borrower
likewise unconditionally promises to pay to Lender interest from and after the
date hereof on Lender's Pro Rata share of the outstanding principal amount of
Revolver Loans at such interest rates, payable at such times, and computed in
such manner as are specified in Sections 5 and 6 of the Credit Agreement, in
strict accordance with the terms thereof.
This Revolver Note ("Note") is issued pursuant to, and is one of the
"Revolver Notes" referred to in, the Credit Agreement dated the date hereof (as
the same may be amended from time to time, the "Credit Agreement"), among
Borrower, Wachovia Bank of Georgia, N.A. ("Agent"), as agent for the financial
institutions from time to time parties thereto as lenders ("Lenders"), and such
Lenders, and Lender is and shall be entitled to all benefits thereof and of all
Transaction Documents executed and delivered in connection therewith. The
provisions of the Credit Agreement are incorporated herein by this reference.
All capitalized terms used herein, unless otherwise defined herein, shall have
the meanings ascribed to such terms in the Credit Agreement.
The repayment of the principal balance of this Note is subject to the
provisions of Section 6 of the Credit Agreement. The entire unpaid principal
balance and all accrued interest on this Note shall be due and payable
immediately upon the termination of the Commitments as set forth in Section 8
of the Credit Agreement.
All payments of principal and interest shall be made in Dollars in
immediately available funds as specified in the Credit Agreement.
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Upon or after the occurrence of an Event of Default, the principal
balance and all accrued interest of this Note may be declared due and payable
in the manner and with the effect provided in the Credit Agreement, and, during
the continuance of such Event of Default, the unpaid principal balance hereof
shall bear interest at the Default Rate. Borrower agrees to pay, and save
Lender harmless against, any liability for the payment of, all costs and
expenses, including, but not limited to, reasonable attorneys' fees, arising in
connection with the enforcement by Lender of any of its rights under this Note,
the Credit Agreement or any of the other Transaction Documents.
All principal amounts of Revolver Loans made by Lender to Borrower
pursuant to the Credit Agreement, and all accrued and unpaid interest thereon,
shall be deemed outstanding under this Note and shall continue to be owing by
Borrower in accordance with the terms of this Note and the Credit Agreement.
In no contingency or event whatsoever, whether by reason of
advancement of the proceeds hereof or otherwise, shall the amount paid or
agreed to be paid to Lender for the use, forbearance or detention of money
advanced hereunder exceed the highest lawful rate permissible under any law
which a court of competent jurisdiction may deem applicable hereto; and, in the
event of any such payment inadvertently paid by Borrower or inadvertently
received by Lender, such excess sum shall be, at Borrower's option, returned to
Borrower forthwith or credited as a payment of principal, but shall not be
applied to the payment of interest. It is the intent hereof that Borrower not
pay or contract to pay, and that Lender not receive or contract to receive,
directly or indirectly in any manner whatsoever, interest in excess of that
which may be paid by Borrower under Applicable Law.
Time is of the essence of this Note. To the fullest extent permitted
by Applicable Law, Borrower, for itself and its legal representatives,
successors and assigns, expressly waives presentment, demand, protest, notice
of dishonor, notice of nonpayment, notice of maturity, notice of protest,
presentment for the purpose of accelerating maturity, diligence in collection,
and the benefit of any exemption or insolvency laws.
Wherever possible each provision of this Note shall be interpreted in
such a manner as to be effective and valid under Applicable Law, but if any
provision of this Note shall be prohibited or invalid under Applicable Law,
such provision shall be ineffective to the extent of such prohibition or
invalidity without invalidating the remainder of such provision or remaining
provisions of this Note. No delay or failure on the part of Lender in the
exercise of any right or remedy hereunder shall operate as a waiver thereof,
nor as an acquiescence in any default, nor shall any single or partial exercise
by Lender of any right or remedy
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preclude any other right or remedy. Lender, at its option, may enforce its
rights against any Collateral securing this Note without enforcing its rights
against Borrower, any guarantor of the indebtedness evidenced hereby or any
other property or indebtedness due or to become due to Borrower. Borrower
agrees that, without releasing or impairing Borrower's liability hereunder,
Lender may at any time release any party primarily or secondarily liable for
the indebtedness evidenced by this Note.
The rights and obligations of Lender and Borrower hereunder shall be
construed in accordance with and governed by the laws (without giving effect to
the conflict of law principles thereof) of the State of Georgia. This Note is
intended to take effect as an instrument under seal under Georgia law.
IN WITNESS WHEREOF, Borrower has caused this Note to be executed under
seal and delivered by its duly authorized officers on the date first above
written.
ATTEST: RHODES, INC.
By:
- - - ---------------------------------- -------------------------------
Assistant Secretary
[CORPORATE SEAL] Title:
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EXHIBIT B
OPINION OF BORROWER'S COUNSEL
1. Corporate power to execute, deliver and perform the Agreement, the
Related Agreements and the Third Amendment to the Secured Revolver Loan
Agreement (collectively, the "Loan Documents;').
2. Due authorization for the execution, delivery and performance by
Borrower of the Loan Documents and the Purchase Agreement.
3. The due execution and delivery of the Loan Documents and the Purchase
Agreement.
4. The execution, delivery and performance of the Loan Documents and the
Purchase Agreement do not (a) violate the Articles of Bylaws of
Borrower, (b) cause a breach or default under any agreement to which
Borrower or its property is found, (c) violate any law, regulation,
judgment or order, or (d) result in or require a lien or other
encumbrance other than in favor of Lender.
5. The Loan Documents and the Purchase Agreement are legal, valid and
binding obligations, enforceable in accordance with their respective
terms, subject to standard bankruptcy and other creditor's right and
equity exceptions.
6. Non-violation by the Agreement and the Related Agreements of any
applicable laws relating to interest or usury.
7. Absence of any registration, filing, consent or approval requirement of
any governmental authority in connection with the execution, delivery
and performance of the Loan Documents and the Purchase Agreement.
8. Consummation of transactions contemplated by the Purchase Agreement.
9. Counsel's lack of knowledge of litigation or other proceedings.
