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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K/A
AMENDMENT NO. 1
TO CURRENT REPORT ON FORM 8-K DATED OCTOBER 31, 1995
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)
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Georgia 1-9308 58-0536190
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(State of incorporation) (Commission File Number) (IRS Employer Identification No.)
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4370 Peachtree Road, N.E. 30319
Atlanta, Georgia ----------
- ---------------------------------------- (Zip Code)
(Address of principal executive offices)
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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 January 12, 1996, Rhodes, Inc. ("Rhodes") entered into a new
revolving credit facility to replace the credit facility utilized in
connection with the Weberg acquisition. For further information concerning the
new facility, see Part II - Item 2 of Rhodes' Quarterly Report on Form 10-Q for
the quarter ended November 30, 1995, which is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired.
The following financial statements of Weberg Division
(a division of Weberg Enterprises, Inc.), together with a
manually signed independent auditors' report thereon and
the notes thereto, are included in Exhibit 99.1:
(I) Independent Auditors' Report;
(II) Balance Sheet as of December 31, 1994 (Audited);
(III) Statement of Income for the Year Ended December 31,
1994 (Audited);
(IV) Statement of Cash Flows for the Year Ended
December 31, 1994 (Audited);
(V) Notes to Financial Statements;
(VI) Balance Sheet as of September 30, 1995 (Unaudited)
(VII) Statement of Income for the Nine Months Ended
September 30, 1995 (Unaudited)
(b) Pro Forma Financial Information.
The unaudited Pro Forma Combined Consolidated Statements of
Operations of the Registrant for the year ended February 28,
1995 and for the nine months ended November 30, 1995, and
the notes thereto, are included in Exhibit 99.2.
(c) Exhibits.
2.1* Asset Purchase Agreement between Weberg Enterprises,
Inc., 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 Loan and Security Agreement, dated January 12, 1996,
by and among Rhodes, Inc., Wachovia Bank of Georgia,
N.A. and Fleet Capital Corporation.
13.1 Page 13 (Part II - Item 2) of Rhodes' Quarterly
Report on Form 10-Q for the quarter ended November
30, 1995.
23.1 Consent of Deloitte & Touche LLP.
99.1 Financial Statements of Weberg Division (a division
of Weberg Enterprises, Inc.), as described in Item
7(a) of this Form 8-K/A.
99.2 Unaudited Pro Forma Combined Consolidated Statements
of Operations of the Registrant, as described in
Item 7(b) of this Form 8-K/A.
____________________
* Previously Filed
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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: January 12, 1996 By: /s/ Joel H. Dugan
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Joel H. Dugan
Senior Vice President, Finance and
Administration and Chief Financial Officer
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INDEX TO EXHIBITS
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EXHIBIT NUMBER AND DESCRIPTION PAGE
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2.1* Asset Purchase Agreement between Weberg Enterprises,
Inc., 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....................................................................... N/A
4.1 Loan and Security Agreement, dated January 12, 1996, by
and among Rhodes, Inc., Wachovia Bank of Georgia, N.A. and
Fleet Capital Corporation.....................................................
13.1 Page 13 (Part II - Item 2) of Rhodes' Quarterly Report on Form
10-Q for the quarter ended November 30, 1995..................................
23.1 Consent of Deloitte & Touche LLP..............................................
99.1 Financial Statements of Weberg Division (a division of Weberg
Enterprises, Inc.), as described in Item 7(a) of this Form
8-K/A.........................................................................
99.2 Unaudited Pro Forma Combined Consolidated Statement of Operations
of the Registrant, as described in Item 7(b) of this Form 8-K/A...............
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___________________
* Previously Filed
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EXHIBIT 4.1
_________________________________________________________________
RHODES, INC.,
as Borrower
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
LOAN AND SECURITY AGREEMENT
Dated: January 12, 1996
$65,000,000.00
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
THE FINANCIAL INSTITUTIONS
PARTY HERETO FROM TIME TO TIME, as Lenders
and
WACHOVIA BANK OF GEORGIA, N.A., as Agent
_________________________________________________________________
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TABLE OF CONTENTS
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SECTION 1. DEFINITIONS; RULES OF CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.3. Other Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
1.4. Certain Matters of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2. CREDIT FACILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.1. Revolver Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.2. Term Loan Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3. INTEREST, FEES AND CHARGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.1. Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.2. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.3. Computation of Interest and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.4. Reimbursement of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.5. Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.6. Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.7. Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.8. Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.9. Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.10. Maximum Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 4. LOAN ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.1. Manner of Borrowing and Funding Revolver Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.2. Defaulting Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.3. Special Provisions Governing LIBOR Rate Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.4. All Loans to Constitute One Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 5. PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.1. General Payment Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.2. Repayment of Revolver Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.3. Repayment of Term Loan Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.4. Payment of Other Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.5. Marshalling; Payments Set Aside . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.6. Allocation of Payments from Borrower. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.7. Application of Payments and Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.8. Loan Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.9. Gross Up for Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 6. TERM AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.1. Term of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.2. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
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SECTION 7. SECURITY INTERESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.1. Grant of Security Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.2. Lien Perfection; Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 8. COLLATERAL ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.1. General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.2. Agreements Regarding Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 9. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.1. General Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.2. Continuous Nature of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . 41
9.3. Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 10. COVENANTS AND CONTINUING AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.1. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.2. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
10.3. Specific Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 11. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
11.1. Conditions Precedent to Initial Credit Extensions . . . . . . . . . . . . . . . . . . . . . . . . . 47
11.2. Conditions Precedent to all Credit Extensions . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
11.3. Limited Waiver of Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 12. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . 49
12.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
12.2. Acceleration of the Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
12.3. Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
12.4. Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
12.5. Remedies Cumulative; No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 13. AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
13.1. Appointment, Authority and Duties of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
13.2. Agreements Regarding Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
13.3. Reliance By Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
13.4. Action Upon Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
13.5. Ratable Sharing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
13.6. Indemnification of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
13.7. Limitation on Responsibilities of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
13.8. Successor Agent and Co-Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
13.9. Consents, Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
13.10. Due Diligence and Non-Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
13.11. Representations and Warranties of Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
13.12. The Required Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
13.13. Several Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
13.14. Agent in its Individual Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
13.15. Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
13.16. Notice of Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
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13.17. Replacement of Certain Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
13.18. Remittance of Payments and Collections. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 14. BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS . . . . . . . . . . . . . . . . . . . . . . . . 61
14.1. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
14.2. Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
14.3. Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
14.4. Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 15. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
15.1. Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
15.2. General Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
15.3. Survival of All Indemnities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
15.4. Modification of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
15.5. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
15.6. Cumulative Effect; Conflict of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
15.7. Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
15.8. Agent's or Required Lenders' Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
15.9. Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
15.10. Credit Inquiries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
15.11. Time of Essence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
15.12. Entire Agreement; Exhibits and Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
15.13. Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
15.14. Obligations Several . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
15.15. Governing Law; Consent To Forum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
15.16. Waivers by Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
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LIST OF EXHIBITS AND SCHEDULES
Exhibit A Form of Revolver Note
Exhibit B Form of Term Note
Exhibit C Form of Notice of Conversion/Continuation
Exhibit D Form of Notice of Borrowing
Exhibit E Form of Compliance Certificate
Exhibit F Form of Opinion Contents
Exhibit G Form of Assignment and Acceptance
Exhibit H Form of Notice
Schedule 8.1.1 Borrower's Business Locations
Schedule 8.1.1-A Borrower's Specific Collateral Locations
Schedule 9.1.1 Jurisdictions in which Borrower and each Subsidiary is Authorized to do Business
Schedule 9.1.16 Litigation
Schedule 9.1.18 Pension Plans
Schedule 9.1.21 Labor Contracts
Schedule 10.2.5 Permitted Liens
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is made on January 12, 1996, by
and among RHODES, INC. ("Borrower"), a Georgia corporation with its chief
executive office and principal place of business at 4370 Peachtree Road, N.E.,
Atlanta, Georgia 30319; the various financial institutions listed on the
signature pages hereof and their respective successors and assigns which become
"Lenders" as provided herein (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 with an office at 191 Peachtree Street, N.E., Atlanta, Georgia
30303-1757, in its capacity as "Agent" for the Lenders pursuant to Section 13
hereof.
SECTION 1. DEFINITIONS; RULES OF CONSTRUCTION
1.1. DEFINITIONS. As used herein, the following terms shall have
the following meanings (terms defined in the singular to have the same meaning
when used in the plural and vice versa):
Account - shall have the meaning given to "account" in the UCC.
Account Debtor - any Person who is or may become obligated
under or on account of an Account.
Adjusted LIBOR Rate - with respect to each Interest Period for
a LIBOR Rate Loan, an interest rate per annum (rounded upwards, to the
next 1/16th of one percent) equal to the quotient of (a) the LIBOR
Rate in effect for such Interest Period divided by (b) a percentage
(expressed as a decimal) equal to 100% minus Statutory Reserves.
Adjusted Working Capital - for any period, the sum of
Accounts, Inventory and prepaid expenses during such period, minus
accounts payable and accrued expenses during such period.
Affiliate - a Person (other than a Subsidiary): (i) which
directly or indirectly through one or more intermediaries controls, or
is controlled by, or is under common control with, a Person; (ii)
which beneficially owns or holds 10% or more of any class of the
Voting Stock of a Person; or (iii) 10% or more of the Voting Stock (or
in the case of a Person which is not a corporation, 10% or more of the
Equity Securities) of which is beneficially owned or held by a Person
or a Subsidiary of a Person. For purposes hereof, Green Capital shall
at all times be considered an "Affiliate" of Borrower.
Agent - Wachovia in its capacity as collateral and
administrative agent for the benefit of Lenders under the Loan
Documents and any successor agent appointed pursuant to Section 13.8
of this Agreement.
Agent Indemnitees - Agent in its capacity as agent hereunder
and all of Agent's officers, directors and agents.
Applicable Law - all laws, rules and regulations applicable to
the Person, conduct, transaction, covenant or Loan Documents in
question, including all applicable common law and equitable
principles; all provisions of all applicable state and federal
constitutions, statutes, rules, regulations and orders of governmental
bodies; and orders, judgments and decrees of all courts and
arbitrators.
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Applicable Margin - with respect to LIBOR Rate Loans, 1.75%,
and with respect to Prime Rate Loans, 0%; provided, however, that if
on any day the principal amount of Loans outstanding exceeds on such
day 50% of the Value of Eligible Inventory (determined with reference
to the most recent Collateral Report), then the Applicable Margin with
respect to any of such excess consisting of LIBOR Rate Loans shall be
2.75% and the Applicable Margin with respect to any of such excess
consisting of Prime Rate Loans shall be 1.0%. For purposes of
determining what portion of any such excess consists of LIBOR Rate
Loans or Prime Rate Loans, the entire amount of Prime Rate Loans
outstanding on such day shall be allocated to such excess and if such
excess exceeds the aggregate of all such Prime Rate Loans, the balance
of such excess shall be deemed to be LIBOR Rate Loans.
Assignment and Acceptance - an assignment and acceptance
entered into by a Lender and an Eligible Assignee and accepted by
Agent, in the form of EXHIBIT G.
Availability - the amount that Borrower is entitled to borrow
from time to time as Revolver Loans, such amount being the difference
derived when the sum of the principal amount of Revolver Loans then
outstanding (including any amounts that Agent or Lenders may have paid
for the account of Borrower pursuant to any of the Loan Documents and
that have not been reimbursed by Borrower and any outstanding
Settlement Loans) is subtracted from the Borrowing Base. If the
amount outstanding is equal to or greater than the Borrowing Base,
Availability is 0.
Availability Reserve - on any date of determination thereof,
an amount equal to the sum of (i) all amounts of past due rent or
other charges owing at such time by Borrower to any landlord of any
premises where any of the Collateral is located; (ii) any amounts
which Borrower is obligated to pay pursuant to the provisions of any
of the Loan Documents that Agent or any Lender elects to pay for the
account of Borrower in accordance with authority contained in any of
the Loan Documents; and (iii) for so long as any Event of Default
exists, such additional reserves as Agent in its sole and absolute
discretion may elect to impose from time to time, without waiving any
such Event of Default or Agent's entitlement to accelerate the
maturity of the Obligations as a consequence thereof.
Average Availability - for any period, an amount equal to the
actual amount of Availability on each day during such period, as
determined by Agent, divided by the number of days in such period.
Average Revolver Loan Balance - for any month, the amount
obtained by adding the aggregate of the unpaid balance of Loan
Obligations 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.
Balances Collateral - all Property of Borrower now or
hereafter left with Agent or any Lender or now or hereafter in Agent's
or any Lender's possession, all deposit accounts of Borrower now or
hereafter opened with Agent or any Lender, all certificates of deposit
now or hereafter issued by Agent or any Lender to Borrower, and all
Payment Items now or hereafter deposited in or with Agent or any
Lender by Borrower for collection.
Bankruptcy Code - title 11 of the United States Code.
<PAGE> 8
Beneficial - shall mean Beneficial National Bank USA.
Beneficial Agreement - shall mean the Merchant Agreement
(Revolving Credit Plans) dated as of May 15, 1992 between Borrower and
Beneficial setting forth the terms of a private label credit card
program established by Beneficial for Borrower's customers.
Board of Governors - the Board of Governors of the Federal
Reserve Board.
Books and Records - all books and records of Borrower at any
time relating to any of the Collateral, and in whatever form,
including all records contained in any software or computer programs.
Borrowing - a borrowing consisting of Revolver Loans made on
the same day by Lenders (or by Wachovia in the case of a Borrowing
funded by Settlement Loans).
Borrowing Base - as at any date of determination thereof, an
amount equal to the lesser of (i) $45,000,000 or (ii) an amount equal
to 50% of the Value of Eligible Inventory minus the Availability
Reserve.
Business Day - any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the State of Georgia or is
a day on which banking institutions located in such state are closed;
provided, however, that when used with reference to a LIBOR Rate Loan
(including the making, continuing, prepaying or repaying of any LIBOR
Rate Loan), the term "Business Day" shall also exclude any day on
which banks are not open for dealings in U.S. Dollar deposits on the
London interbank market.
Capital Expenditures - expenditures made or liabilities
incurred for the acquisition of any fixed assets or improvements,
replacements, substitutions or additions thereto which have a useful
life of more than one year, including the total principal portion of
Capitalized Lease Obligations.
Capitalized Lease Obligation - any Debt represented by
obligations under a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
Cash Collateral - cash and interest earned thereon, held by
Agent in the Cash Collateral Account for the Pro Rata benefit of
Lenders as security for the Obligations to the extent provided in this
Agreement.
Cash Collateral Account - the non-interest bearing account
designated by Agent from time to time and containing all cash deposits
by Borrower with Agent pursuant to this Agreement and subject to
Agent's Lien for the Pro Rata benefit of Lenders.
Cash Equivalents - (i) marketable direct obligations issued or
unconditionally guaranteed by the United States government and backed
by the full faith and credit of the United States government having
maturities of not more than 12 months from the date of acquisition;
(ii) domestic certificates of deposit and time deposits having
maturities of not more than 12 months from the date of acquisition,
bankers' acceptances having maturities of not more than 12 months from
the date of acquisition and overnight bank deposits, in each case
issued by any commercial bank organized under the laws of the United
States, any state thereof or the District of Columbia,
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which at the time of acquisition are rated A-1 (or better) by Standard
& Poor's Corporation or P-1 (or better) by Moody's Investors Services,
Inc., and (unless issued by a Lender) not subject to offset rights in
favor of such bank arising from any banking relationship with such
bank; (iii) repurchase obligations with a term of not more than 30
days for underlying securities of the types described in clauses (i)
and (ii) entered into with any financial institution meeting the
qualifications specified in clause (ii) above; and (iv) commercial
paper having at the time of investment therein or a contractual
commitment to invest therein a rating of A-1 (or better) by Standard &
Poor's Corporation or P-1 (or better) by Moody's Investors Services,
Inc., and having a maturity within 9 months after the date of
acquisition thereof.
CERCLA - the Comprehensive Environmental Response Compensation
and Liability Act, 42 U.S.C. Section 9601 et seq. and its implementing
regulations.
Chattel Paper - shall have the meaning ascribed to the term
"chattel paper" in the UCC.
Claims - any and all claims, demands, liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever
(including reasonable attorneys' fees and expenses), whether arising
under or in connection with the Loan Documents, under any Applicable
Law (including any Environmental Law) or otherwise.
Closing Date - the date on which all of the conditions
precedent in Section 11 of this Agreement are satisfied and the
initial Loans are made under this Agreement.
Collateral - all of the Property and interests in Property
described in Section 7 of this Agreement, and all other Property and
interests in Property that now or hereafter secure the payment and
performance of any of the Obligations.
Collateral Report - a report to be submitted to Agent by
Borrower on a periodic basis as required in this Agreement and setting
forth in such form and detail as may be acceptable to Agent the Value,
amount and categories of Eligible Inventory.
Collateral Reserve Account - a non-interest bearing account
which Borrower may be required to open and maintain with Agent and
into which Borrower shall cause to be deposited all proceeds of the
Collateral.
Commitment - at any date for any Lender, the aggregate amount
of such Lender's Revolver Commitment and Term Loan Commitment and
"Commitments" means the aggregate amount of all Revolver Commitments
and Term Loan Commitments.
Commitment Termination Date - 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 or any Obligor, (iii) the date on
which Agent elects to terminate the Commitments pursuant to Section
5.2.1 of 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 Section 5.2.2 of this Agreement.
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Consolidated - the consolidation in accordance with GAAP of
the accounts or other items as to which such term applies.
Consolidated EBITDA - for any fiscal period of Borrower, an
amount equal to the sum for such fiscal period of (i) Consolidated Net
Income, plus (ii) provision for taxes based on income, plus (iii)
Consolidated Interest Expense, plus (iv) depreciation, amortization
and other non-cash charges.
Consolidated Fixed Charge Coverage Ratio - for any fiscal
period, the ratio which (A) Consolidated Net Income plus interest
expense, provision for taxes, and operating lease expense of Borrower
and its Consolidated Subsidiaries in such period, bears to (B) the sum
of interest expense and operating lease expense of Borrower and its
Consolidated Subsidiaries for the same period.
Consolidated Interest Expense - for any period, the total
interest expense of Borrower and its Subsidiaries during such period,
determined on a consolidated basis in accordance with GAAP.
Consolidated Leverage Ratio - at any date, the ratio which
Consolidated Debts of Borrower and its Consolidated Subsidiaries on
such date bears to Consolidated Net Worth on such date, all as
determined under GAAP.
Consolidated Net Income - for any period, the net income of
Borrower and its Consolidated Subsidiaries for such period, determined
on a basis in accordance with GAAP, excluding, however, (i) any
extraordinary items and (ii) any equity interest of Borrower or any
Consolidated Subsidiary in the unremitted profits or losses or any
Person that is not a Subsidiary, in each as likewise determined on a
basis in accordance with GAAP.
Consolidated Net Worth - the total shareholder's equity
(including capital stock, additional paid-in capital and retained
earnings, after deducting treasury stock) of Borrower and its
Consolidated Subsidiaries which would appear as such on a balance
sheet of Borrower and its Consolidated Subsidiaries prepared in
accordance with GAAP, minus amounts due from Affiliates and any
write-up of assets subsequent to the date of this Agreement.
Consolidated Subsidiary - at any date, a Subsidiary or other
entity the accounts of which, in accordance with GAAP, would be
consolidated with those of Borrower in its consolidated financial
statements as of such date.
Credit Card Receivables - any and all rights to payment that
Borrower may now or hereafter have from a customer or any other Person
in connection with any purchase of goods from Borrower by such
customer or other Person through the customer's or other Person's use
of a credit card, including any and all rights to payment that
Borrower may have at any time under or by virtue of the Beneficial
Agreement or any other present or future agreement and pursuant to
which Borrower is entitled to payment or remittance by reason of
Borrower's honoring of any credit card of a customer or other Person.
Current Assets - at any date, the amount at which all of the
current assets of a Person would be properly classified as current
assets shown on a balance sheet at such date in accordance
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<PAGE> 11
with GAAP except that amounts due from Affiliates and investments in
Affiliates shall be excluded therefrom.
Debt - as applied to a Person means, without duplication: (i)
all items which in accordance with GAAP would be included in
determining total liabilities as shown on the liability side of a
balance sheet of such Person as of the date as of which Debt is to be
determined, including Capitalized Lease Obligations; (ii) all
obligations of other Persons which such Person has guaranteed; (iii)
all reimbursement obligations in connection with letters of credit or
letter of credit guaranties issued for the account of such Person; and
(iv) in the case of Borrower (without duplication), the Obligations.
Default - an event or condition the occurrence of which would,
with the lapse of time or the giving of notice, or both, become an
Event of Default.
Default Rate - as defined in Section 3.1.5 of this Agreement.
Distribution - in respect of any corporation, (i) any payment
of any dividends or other distributions on capital stock of the
corporation (except distributions in such capital stock) and (ii) any
purchase, redemption or other acquisition or retirement for value of
any Securities of the corporation or any Affiliate of the corporation
unless made contemporaneously from the net proceeds of the sale of
Securities.
Document - shall have the meaning ascribed to the term
"Document" in the UCC.
Documents Collateral - all Documents (including warehouse
receipts, bill of lading, dock warrants, dock receipts and other
documents of title) in any way relating to any the Inventory.
Dollars and the sign $ - lawful money of the United States of
America.
Eligible Assignee - a Lender or an Affiliate of a Lender; a
commercial bank organized under the laws of the United States or any
state and having total assets in excess of $5,000,000,000 or an asset
based lending affiliate of any such bank; or a finance company,
insurance company, other financial institution or fund, that is
acceptable to Agent and Lenders and that in the ordinary course of
business extends credit of the type evidenced by the Notes and has
total assets in excess of $200,000,000.
Eligible Inventory - such Inventory of Borrower that is new,
saleable finished goods inventory consisting of furniture (but
excluding any "Accessories" as such term is defined below), which is
deemed by Agent to be eligible for advances, but no Inventory shall be
Eligible Inventory unless: (i) it is readily marketable in its current
form; (ii) it is not subject to a negotiable warehouse receipt or
other negotiable instrument; (iii) it is not slow-moving (and, for
purposes hereof, goods will be deemed slow-moving to the extent of
amounts representing more than 9 months of sales), obsolete or
unmerchantable; (iv) it meets all standards imposed by any
governmental agency or authority; (v) it conforms in all respects to
the warranties and representations set forth in this Agreement; (vi)
it is at all times subject to Lender's duly perfected, first priority
security interest and no other Lien except a Permitted Lien; (vii) it
is situated at a location in compliance with this Agreement and is not
in transit or outside the continental United States; and (viii) it is
not subject to any license or other agreement that limits,
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<PAGE> 12
conditions or restricts Borrower's or Lender's right to sell or
otherwise dispose of such Inventory; and (ix) is located on the
premises with respect to which Agent holds for the Pro Rata benefit of
Lenders a landlord's or mortgagee's waiver agreement acceptable to
Agent (except that Inventory located on the premises described on
Schedule 8.1.1-A attached hereto shall not be disqualified from being
Eligible Inventory during the period commencing on the date hereof and
ending on February 28, 1996, solely by virtue of Borrower's not having
procured and delivered to Agent a landlord's or mortgagee's agreement
and except that landlord waivers shall not be required for the three
present leased locations of Borrower in Fayetteville, North Carolina,
Bradenton, Florida and at 3900 Union Road, St. Louis, Missouri 63125).
No Inventory that is located in Kansas shall be deemed to be Eligible
Inventory hereunder. Standards for eligibility for Inventory may be
revised at any time or times that Agent deems necessary or desirable.
For purposes of this definition, the term "Accessories" shall include
all lamps, mirrors, pictures, ashtrays, umbrellas, trash cans and
flowers owned by Borrower.
Environmental Laws - all federal, state and local laws, rules,
regulations, ordinances, programs, permits, guidance documents
promulgated by regulatory agencies, orders and consent decrees
relating to human health and safety or the prosection or pollution of
the environment, including CERCLA.
Environmental Releases - releases as defined in CERCLA or
under any applicable state or local Environmental Law.
Equipment - all machinery, apparatus, equipment, fittings,
furniture, fixtures, motor vehicles and other tangible personal
Property (other than Inventory) of every kind and description used in
Borrower's operations or owned by Borrower or in which Borrower has an
interest, whether now owned or hereafter acquired by Borrower and
wherever located, and all parts, accessories and special tools and all
increases and accessions thereto and substitutions and replacements
therefor.
ERISA - the Employee Retirement Income Security Act of 1974,
as amended, and all rules and regulations from time to time
promulgated thereunder.
Event of Default - as defined in Section 11.1 of this
Agreement.
Excess Cash Flow - for any period, Consolidated Net Income for
such period, plus depreciation, amortization, changes in deferred
taxes and other non-cash items, and decreases in Adjusted Working
Capital for such period, less Capital Expenditures made, increases in
Adjusted Working Capital occurring during such period and scheduled
Debt amortization during such period.
Extraordinary Expenses - all costs, expenses, fees, and
advances which Agent may suffer or incur, whether prior to or after
the occurrence of an Event of Default, on account of or in connection
with (i) the repossession, storage, repair, appraisal, insuring,
completion of the manufacture of, preparing for sale, advertising for
sale, selling, collecting or otherwise preserving or realizing upon
any Collateral; (ii) the defense of Agent's Lien upon any Collateral
or the priority thereof or any adverse claim with respect to the
Loans, the Loan Documents or the Collateral asserted by any Obligor,
any receiver or trustee for any Obligor or any creditor or
representative of creditors of any Obligor; (iii) the settlement or
satisfaction of any Liens upon
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<PAGE> 13
any Collateral (whether or not such Liens are Permitted Liens); (iv)
the collection of any of the Obligations; (v) the negotiation,
documentation, and closing of any restructuring or forbearance
agreement with respect to the Loan Documents or Obligations; (vi)
amounts advanced by Agent pursuant to Section 8.1.3 of this Agreement;
(vii) the enforcement of any of the provisions of any of the Loan
Documents; or (viii) any payment under indemnity or other payment
agreement provided by Agent to any financial institution in connection
with any Dominion Account or the Concentration Account. Such costs,
expenses and advances may include transfer fees, taxes, storage fees,
insurance costs, permit fees, utility reservation and standby fees,
legal fees, appraisal fees, brokers' fees and commissions,
auctioneers' fees and commissions, accountants' fees, environmental
study fees, wages and salaries paid to employees of Borrower or
independent contractors in liquidating any Collateral, travel
expenses, all other fees and expenses payable or reimbursable by
Borrower or any other Obligor under any of the Loan Documents, and all
other fees and expenses associated with the enforcement of rights or
remedies under any of the Loan Documents, but excluding compensation
paid to employees (including inside legal counsel who are employees)
of Agent.
Federal Funds Rate - for any period, a fluctuating interest
rate per annum equal for each date during such period to the weighted
average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds
brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) in Atlanta, Georgia by the
Federal Reserve Bank of New York, or if such rate is not so published
for any day which is a Business Day, the average of the quotations for
such day on such transactions received by Agent from 3 federal funds
brokers of recognized standing selected by Agent.
Fleet - Fleet Capital Corporation, a Connecticut corporation,
and its successors and assigns.
Fleet Indemnitees - Fleet and all of its present and future
officers, directors and agents.
Fiscal Year - the fiscal year of Borrower and its Subsidiaries
for accounting and tax purposes.
GAAP - generally accepted accounting principles in the United
States of America in effect from time to time.
General Intangibles - shall have the meaning ascribed to
"General Intangibles" in the UCC.
Governmental Approvals - means all authorizations, consents,
approvals, licenses and exemptions of, registrations and filings with,
and reports to, all national state or local government (whether
domestic or foreign) and any political subdivisions thereof in any
other governmental, quasi-governmental, judicial, administrative,
public or statutory instrumentality, authority, body, agency, bureau
or entity.
Green Capital - shall mean Green Capital Investors, L.P., a
Georgia limited partnership.
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<PAGE> 14
Guarantor - any Person who may hereafter guarantee payment or
performance of the whole or any part of the Obligations.
Indemnified Amount - the amount of any loss, cost, expenses or
damages suffered or incurred by Agent Indemnitees and against which
Lenders or Borrower have agreed to indemnify Agent Indemnitees
pursuant to the terms of this Agreement or any of the other Loan
Documents.
Insolvency Proceeding - any action, case or proceeding
commenced by or against a Person, or any agreement of such Person, for
(a) the entry of an order for relief under any chapter of the
Bankruptcy Code or other insolvency or debt adjustment law (whether
state, federal or foreign), (b) the appointment of a receiver,
trustee, liquidator or other custodian for such Person or any part of
its Property, (c) an assignment or trust mortgage for the benefit of
creditors of such Person, or (d) the liquidation, dissolution or
winding up of the affairs of such Person.
Instrument - shall have the meaning ascribed to the term
"instrument" in the UCC.
Interest Period - in connection with the making or
continuation of, or conversion into, a LIBOR Rate Loan, an interest
period selected by Borrower in accordance with Section 3.1.3 to be
applicable to such LIBOR Rate Loan, which interest period shall
commence on the date such LIBOR Rate Loan is made and shall end on a
numerically corresponding day in the first, third or sixth month
thereafter (or, with respect to any Term Loan Advance that constitutes
a LIBOR Rate Loan, the twelve month period thereafter).
Inventory - all inventory of Borrower, or in which Borrower
has rights that are now owned or hereafter acquired, wherever located,
including all goods of Borrower held for sale or lease or furnished or
to be furnished under contracts of service, all goods held for display
or demonstration, all goods on lease or consignment, all returned and
repossessed goods, all raw materials, work-in-process and finished
goods, and all supplies used or consumed in Borrower's business.
Inventory Proceeds - all cash and non-cash proceeds arising
out of or resulting from any sale, lease, license or other disposition
of any Inventory or any interest therein, whether in the form of cash
or constituting Accounts, Instruments, Chattel Paper or General
Intangibles, and all proceeds of any insurance relating to any of the
Inventory.
Knowledge - the actual knowledge of any Senior Officer of
Borrower.
Lender Indemnitees - all Lenders in their capacity as lenders
under this Agreement and all of their respective present and future
officers, directors and agents.
Lenders - Wachovia, Fleet and any other Person who may from
time to time become a lender under the Loan Agreement, and their
respective successors and permitted assigns.
LIBOR Rate - with respect to an Interest Period, the rate per
annum determined by Agent on the basis of the offered rate for
deposits in Dollars in the London Interbank Market of amounts equal to
or comparable to the amount of the LIBOR Rate Loan to which such
Interest Period relates offered for a term comparable to such Interest
Period, which rate appears on the Telerate Screen LIBOR Page (or as
published by a comparable service selected by Agent) as of
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<PAGE> 15
11:00 a.m., London time, 2 Business Days prior to the first day of
such Interest Period; provided, however, that if one more than such
offered rate appears on the Telerate Screen LIBOR Page, "LIBOR Rate"
shall be the arithmetic average (rounded upward, if necessary, to the
next higher of 1/100th of 1%) of such offered rates.
LIBOR Rate Loan - a Loan, or portion thereof, during any
period in which it bears interest at a rate based upon the applicable
Adjusted LIBOR Rate.
License Agreement - shall mean any agreement between Borrower
and a Licensor pursuant to which Borrower markets, manufactures or
sells any Inventory.
Lien - any interest in Property securing an obligation owed
to, or a claim by, a Person other than the owner of the Property,
whether such interest is based on common law, statute or contract.
The term "Lien" shall also include reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions,
restrictions, leases and other title exceptions and encumbrances
affecting Property. For the purpose of this Agreement, Borrower shall
be deemed to be the owner of any Property which it has acquired or
holds subject to a conditional sale agreement or other arrangement
pursuant to which title to the Property has been retained by or vested
in some other Person for security purposes.
Loan Account - the loan account established by each Lender on
its books pursuant to Section 5.8 of this Agreement.
Loan Documents - this Agreement, the Other Agreements and the
Security Documents.
Loan - a Revolver Loan or a Term Loan Advance.
Margin Stock - as such term is defined in Regulation U and
Regulation G of the Board of Governors.
Material Adverse Effect - the effect of any event or condition
which, alone or when taken together with other events or conditions
occurring or existing concurrently therewith, (i) has a material
adverse effect upon the business, operations, Properties or condition
(financial or otherwise) of Borrower; (ii) has or may be reasonably
expected to have any material adverse effect whatsoever upon the
validity or enforceability of this Agreement or any of the other Loan
Documents; (iii) has any material adverse effect upon the value of the
whole or any material part of the Collateral, the Liens of Agent with
respect to the Collateral or the priority of any such Liens; (iv)
materially impairs the ability of Borrower to perform its obligations
under this Agreement or any of the other Loan Documents, including
repayment of any of the Obligations when due; or (v) materially
impairs the ability of Agent to enforce or collect the Obligations or
realize upon any of the Collateral in accordance with the Loan
Documents and Applicable Law.
Maximum Rate - the maximum non-usurious rate of interest
permitted by Applicable Law that at any time, or from time to time,
may be contracted for, taken, reserved, charged or received on the
Debt in question or, to the extent that at any time Applicable Law may
thereafter permit a higher maximum non-usurious rate of interest, then
such higher rate. Notwithstanding any other provision hereof, the
Maximum Rate shall be calculated on a daily basis (computed on the
actual number of days elapsed over a year of 365 or 366 days, as the
case may be).
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Money Borrowed - means, as applied to any Person, (i) Debt
arising from the lending of money by any other Person to such Person;
(ii) Debt, whether or not in any such case arising from the lending of
money by another Person to such Person, (A) which is represented by
notes payable or drafts accepted that evidence extensions of credit,
(B) which constitutes obligations evidenced by bonds, debentures,
notes or similar instruments, or (C) upon which interest charges are
customarily paid (other than accounts payable) or that was issued or
assumed as full or partial payment for Property; (iii) Debt that
constitutes a Capitalized Lease Obligation; (iv) reimbursement
obligations with respect to letters of credit or guaranties of letters
of credit and (v) Debt of such Person under any guaranty of
obligations that would constitute Debt for Money Borrowed under
clauses (i) through (iii) hereof, if owed directly by such Person.
Multiemployer Plan - has the meaning set forth in Section
4001(a)(3) of ERISA.
Noteholders - shall mean Sun Life Insurance Company of
America, The Equitable Private Income and Equity Partnership II, L.P.,
The Life Insurance Company of Virginia, and Protective Life Insurance
Company and their successors and assigns.
Note Purchase Agreement - shall mean that certain Note
Purchase Agreement dated as of June 17, 1993, as amended or modified
from time to time, between the Noteholders and Borrower and pursuant
to which the Noteholders purchased the Senior Notes.
Note Purchase Documents - shall mean the Note Purchase
Agreement and all instruments, agreements and other writings executed
by either Noteholders or Borrower in connection therewith or with
reference thereto.
Notes - each Revolver Note and each Term Note.
Notice of Borrowing - as defined in Section 4.1.1(i) of this
Agreement.
Notice of Conversion/Continuation - as defined in Section
3.1.2(ii) of this Agreement.
Obligations - all Loans and all other advances, debts,
liabilities, obligations, covenants and duties (together with all
interest, fees and other charges thereon) that are at any time or
times due or payable under any of the Loan Documents by any or all of
Obligors to Agent or any Lender of any kind or nature, whether direct
or indirect (including those acquired by assignment), absolute or
contingent, primary or secondary, due or to become due, now existing
or hereafter arising and however acquired, and all liabilities and
obligations that Borrower may now or hereafter have to any Lender for
any interest rate swaps, interest collars or other interest rate
protection agreements..
Obligor - Borrower, any Guarantor and any other Person liable
for the payment of the whole or any part of the Obligations.
Other Agreements - the Notes, and any and all agreements,
instruments and documents (other than this Agreement and the Security
Documents), heretofore, now or hereafter executed by Borrower, any
Obligor or any other third party and delivered to Agent or any Lender
in respect of the transactions contemplated by this Agreement.
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Out-of-Formula Condition - at any date of determination
thereof, a condition such that the outstanding principal amount of
Revolver Loans on such date exceeds the Borrowing Base on such date.
Out-of-Formula Loan - a Revolver Loan made when an
Out-of-Formula Condition exists or the amount of any Revolver Loan
which results in an Out-of-Formula Condition.
Participant - as defined in Section 14.2.1.
Participating Lender - as defined in Section 2.3.2(i).
Payment Items - all checks, drafts, or other items of payment
payable to Borrower, including proceeds of any of the Collateral.
Pending Revolver Loans - at any date, the aggregate principal
amount of all Revolver Loans which have been requested in any
Notice(s) of Borrowing received by Agent but which have not
theretofore been advanced by Agent or Lenders.
Permitted Acquisitions - any transaction, or any series of
related transactions, by which Borrower directly or indirectly (a)
acquires any ongoing business, whether through the purchase of assets
or otherwise, (b) acquires (in one transaction or as the most recent
transaction in a series of transactions) control of at least a
majority in ordinary voting power of the Securities of a corporation
that have ordinary voting power for the election of directors, or (c)
acquires control of a 50% or more ownership interest in any
partnership, limited liability company, limited liability partnership
or joint venture, provided that the amount of consideration to be paid
by Borrower (whether in cash, notes or other Property) is less than,
in the case of a single Acquisition, $3,000,000 and further provided
that in no event shall the aggregate amount of all Acquisitions made
in any period of four consecutive quarters exceed $5,000,0000.
Permitted Lien - a Lien of a kind specified in Section 10.2.5
of this Agreement.
Permitted Purchase Money Debt - Purchase Money Debt of
Borrower or any of its Subsidiaries which is incurred after the date
of this Agreement, is secured by a Purchase Money Lien and does not
exceed at any time an aggregate amount of $1,000,000. For the
purposes of this definition, the principal amount of any Purchase
Money Debt consisting of capitalized leases shall be computed as a
Capitalized Lease Obligation.
Person - an individual, partnership, corporation, limited
liability company, joint stock company, land trust, business trust, or
unincorporated organization, or a government or agency or political
subdivision thereof.
Plan - an employee benefit plan now or hereafter maintained
for employees of Borrower that is covered by Title IV of ERISA.
Prime Rate - the interest rate so denominated and set by
Wachovia from time to time as an interest rate basis for borrowings.
The Prime Rate is but one of several interest rate bases used by
Wachovia. Wachovia lends at interest rates above and below the Prime
Rate.
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Prime Rate Loan - a Loan, or portion thereof, during any
period in which it bears interest at a rate based upon the Prime Rate.
Pro Rata - a share of or in all Loans, payments, proceeds,
collections, Collateral and Extraordinary Expenses, which share for
any Lender on any date shall be a percentage arrived at by dividing
the amount of the Commitment of such Lender on such date by the
aggregate amount of the Commitments of all Lenders on such date.
Projections - Borrower's forecasted Consolidated and
consolidating (a) balance sheets, (b) profit and loss statements, (c)
cash flow statements, and (d) capitalization statements, all prepared
on a consistent basis with Borrower's historical financial statements,
together with appropriate supporting details and a statement of
underlying assumptions.
Properly Contested - in the case of any Debt of Borrower
(including any Taxes) that is not paid as and when due or payable by
reason of Borrower's bona fide dispute concerning its liability to pay
same or concerning the amount thereof, that (i) such Debt and any
Liens securing same are being properly contested in good faith by
appropriate proceedings promptly instituted and diligently conducted;
(ii) Borrower has established appropriate reserves as shall be
required in conformity with GAAP, (iii) the non-payment of such Debt
will not have a Material Adverse Effect and will not result in a
forfeiture of any assets of Borrower; (iv) no Lien is imposed upon any
of Borrower's assets with respect to such Debt unless such Lien is at
all times junior and subordinate in priority to the Liens in favor of
Agent (except only with respect to property taxes that have priority
as a matter of applicable state law) and enforcement of such Lien is
stayed during the period prior to the final resolution or disposition
of such dispute; (v) if the Debt results from the entry, rendition or
issuance against Borrower or any of its assets of a judgment, writ,
order or decree, such judgment, writ, order or decree is stayed or
bonded pending a timely appeal or other judicial review; and (vi) if
such contest is abandoned, settled or determined adversely to
Borrower, Borrower forthwith pays such Debt and all penalties and
interest in connection therewith.
Property - any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
Purchase Money Debt - means and includes (i) Debt (other than
the Obligations) for the payment of all or any part of the purchase
price of any fixed assets, (ii) any Debt (other than the Obligations)
incurred at the time of or within 10 days prior to or after the
acquisition of any fixed assets for the purpose of financing all or
any part of the purchase price thereof, and (iii) any renewals,
extensions or refinancings thereof, but not any increases in the
principal amounts thereof outstanding at the time.
Purchase Money Lien - a Lien upon fixed assets which secures
Purchase Money Debt, but only if such Lien shall at all times be
confined solely to the fixed assets the purchase price of which was
financed through the incurrence of the Purchase Money Debt secured by
such Lien.
Regulation D - Regulation D of the Board of Governors.
Register - the register maintained by Agent in accordance with
Section 4.9.2 of this Agreement.
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Reportable Event - any of the events set forth in Section
4043(b) of ERISA.
Required Lenders - at any date of determination thereof,
Lenders having Commitments representing at least 66-2/3% of the
aggregate Commitments at such time; provided, however, that if any
Lender shall have failed to fund its Pro Rata share of any Borrowing
of Revolver Loans in accordance with the terms of this Agreement,
then, for so long as such failure continues, the term "Required
Lenders" shall mean Lenders (excluding such Lender whose failure to
fund its Pro Rata share of any Borrowing of Revolver Loans has not
been cured) having Commitments representing at least 66-2/3% of the
aggregate Commitments at such time; provided further, however, that if
the Commitments have been terminated, the term "Required Lenders"
shall mean Lenders (excluding each Lender whose failure to fund its
Pro Rata share of any Borrowing of Revolver Loans has not been cured)
holding Loans representing at least 66-2/3% of the aggregate principal
amount of Loans outstanding at such time.
Restricted Investment - any acquisition of Property by
Borrower or any of its Subsidiaries in exchange for cash or other
Property, whether in the form of an acquisition of Securities or other
indebtedness or obligations, or the purchase or acquisition by
Borrower or any Subsidiary of any other Property, or a loan, advance,
capital contribution or subscription, but excluding Permitted
Acquisitions and acquisitions of the following: (a) fixed assets to be
used in the business of Borrower or any Subsidiary so long as the
acquisition costs thereof constitute Capital Expenditures permitted
hereunder; (b) goods held for sale or lease or to be used in the
manufacture of goods or the provision of services by Borrower or any
Subsidiary in the ordinary course of business; (c) Current Assets
arising from the sale or lease of goods or the rendition of services
in the ordinary course of business of Borrower or any Subsidiary; (d)
investments in Subsidiaries to the extent existing on the Closing
Date; and (e) Cash Equivalents.
Revolver Commitment - at any date for any Lender, the
obligation of such Lender to make Revolver Loans, which shall not
exceed the principal amount set forth opposite such Lender's name
under the heading "Revolver Commitment" on the signature pages hereof
or the signature page of the Assignment and Acceptance by which it
became a Lender, as modified from time to time pursuant to the terms
of this Agreement or to give effect to any applicable Assignment and
Acceptance, and "Revolver Commitments" means the aggregate principal
amount of the Revolver Commitments of all Lenders, the maximum amount
of which shall be $45,000,000.
Revolver Loan - a Loan made by Lenders as provided in Section
2.1 of this Agreement or a Settlement Loan funded solely by Wachovia.
Revolver Note - a Revolver Note to be executed by Borrower in
favor of each Lender in the form of EXHIBIT A attached hereto, which
shall be in the face amount of such Lender's Revolver Commitment and
which shall evidence all Revolver Loans made by such Lender to
Borrower pursuant to this Agreement.
Security - shall have the same meaning as in Section 2(1) of
the Securities Act of 1933.
Security Documents - all instruments and agreements now or at
any time hereafter securing the whole or any part of the Obligations.
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Senior Notes - shall mean Borrower's 9% Senior Secured Notes
due 1999 and 10% Senior Secured Notes due 2000 purchased by the
Noteholders pursuant to the Note Purchase Agreement.
Senior Officer - any of the chairman of the board of
directors, president, any senior or executive vice president or chief
financial officer of, or in-house legal counsel to, Borrower.
Settlement Date - as defined in Section 4.1.3(ii).
Settlement Loan - as defined in Section 4.1.3(ii) of this
Agreement.
Settlement Report - a report delivered by Agent to Lenders
summarizing the amount of the outstanding Revolver Loans as of the
Settlement Date and the calculation of the Borrowing Base as of such
Settlement Date.
Solvent - as to any Person, such Person (i) owns Property
whose fair saleable value is greater than the amount required to pay
all of such Person's Debt (including contingent debts), (ii) is able
to pay all of its Debt as such Debts mature, (iii) has capital
sufficient to carry on its business and transactions and all business
and transactions in which it is about to engage; and (iv) is not
"insolvent" within the meaning of Section 101(32) of the Bankruptcy
Code.
Statutory Reserves - on any date, the percentage (expressed as
a decimal) established by the Board of Governors which is the then
stated maximum rate for all reserves (including, but not limited to,
any emergency, supplemental or other marginal reserve requirements)
applicable to any member bank of the Federal Reserve System in respect
to Eurocurrency Liabilities (or any successor category of liabilities
under Regulation D). Such reserve percentage shall include, without
limitation, those imposed pursuant to said Regulation D. The
Statutory Reserve shall be adjusted automatically on and as of the
effective date of any change in such percentage.
Subordinated Debt - Debt of Borrower that is fully and
absolutely subordinated in right of payment to the Obligations in a
manner satisfactory to Agent and Lenders.
Subsidiary - any Person a majority of the equity ownership or
Voting Stock of which is at the time owned, directly or indirectly, by
Borrower or by one or more other Subsidiaries or by Borrower and one
or more other Subsidiaries; provided, however, that the term
"Subsidiary" shall not include any corporation, partnership, business
association or other entity which has (and for so long as it has)
assets with a fair market value of $100,000 or which has gross
revenues in any year of less than $100,000.
Taxes - 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 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.
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Term - as defined in Section 6.1 of this Agreement.
Term Loan Advance - an advance made by a Lender as part of the
Term Loan on the Closing Date and thereafter means each Lender's
portion of the Term Loan.
Term Loan Commitment - at any date for any Lender, the
obligation of such Lender to make Term Loan Advances 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 "Term Loan Commitment" on the signature pages hereof or the
signature page of any Assignment and Acceptance by which it became a
Lender, as modified from time to time pursuant to the terms of
Agreement or to give effect to any applicable Assignment and
Acceptance, and the term "Term Loan Commitments" means the aggregate
principal amount of the Term Loan Commitments of all Lenders, the
maximum amount of which shall be $20,000,000.
Term Note - shall have the meaning ascribed to it in Section
2.2.2.
Transferee - as defined in Section 14.3.3 of this Agreement.
Type - the type of a Loan, which shall be either a LIBOR Rate
Loan or a Prime Rate Loan.
UCC - the Uniform Commercial Code as adopted and in force in
the State of Georgia.
Value - with reference to Inventory, the value of such
Inventory, determined at the lower of its cost or market value, with
cost being determined on a first-in, first-out basis.
Voting Stock - Securities of any class or classes of a
corporation the holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the corporate directors
(or Persons performing similar functions).
Wachovia - Wachovia Bank of Georgia, N.A., a national bank.
1.2. ACCOUNTING TERMS. Unless otherwise specified herein, all
terms of an accounting character used in this Agreement shall be interpreted,
all accounting determinations under this Agreement shall be made, and all
financial statements required to be delivered under this Agreement shall be
prepared in accordance with GAAP, applied on a basis consistent with the most
recent audited Consolidated financial statements of Borrower and its
Subsidiaries heretofore delivered to Agent and Lenders and using the same
method for inventory valuation as used in such audited financial statements,
except for any change in which Borrower's independent public accountants concur
or as required by GAAP unless (i) Borrower shall have objected to determining
such compliance on such basis at the time of delivery of such financial
statements or (ii) Agent or any Lender shall so object in writing within 30
days after the delivery of such financial statements, in either of which events
such calculations shall be made on a basis consistent with those used in the
preparation of the latest financial statements as to which such objection shall
not have been made. In the event of any change in GAAP that occurs after the
date of this Agreement and that is material to Borrower, Agent and Lenders
shall the right to require either that conforming adjustments be made to any
financial covenants set forth in this Agreement, or the components thereof,
that are affected by such change or that Borrower report its financial
condition based on GAAP as in effect immediately prior to the occurrence of
such change.
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1.3. OTHER TERMS. All other terms contained in this Agreement
shall have, when the context so indicates, the meanings provided for by the UCC
to the extent the same are used or defined therein.
1.4. CERTAIN MATTERS OF CONSTRUCTION. The terms "herein," "hereof"
and "hereunder" and other words of similar import refer to this Agreement as a
whole and not to any particular section, paragraph or subdivision. Any pronoun
used shall be deemed to cover all genders. In the computation of periods of
time from a specified date to a later specified date, the word "from" means
"from and including" and the words "to" and "until" each means "to but
excluding." The section titles, table of contents and list of exhibits appear
as a matter of convenience only and shall not affect the interpretation of this
Agreement. All references to statutes and related regulations shall include
any amendments of same and any successor statutes and regulations. All
references to any of the Loan Documents shall include any and all
modifications thereto and any and all extensions or renewals thereof. All
references to any Person shall mean and include successors and permitted
assigns of such Person. All references to "including" shall be understood to
mean "including, without limitation." All references to the time of day shall
mean the time of day on the day in question in Atlanta, Georgia, unless
otherwise expressly provided in this Agreement. A Default or an Event of
Default shall be deemed to exist at all times during the period commencing on
the date that such Default or Event of Default occurs to the date on which such
Default or Event of Default is waived in writing pursuant to this Agreement or
is cured within any period of cure expressly provided in this Agreement.
SECTION 2. CREDIT FACILITIES
Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in, this Agreement and the other Loan
Documents, Lenders severally agree to the extent and in the manner hereinafter
set forth to make their respective Pro Rata shares of the Commitments available
to Borrower, in an aggregate amount up to $65,000,000, as follows:
2.1. REVOLVER FACILITY.
2.1.1. Revolver Loans. Each Lender agrees, severally to the
extent of its Revolver Commitment and not jointly with the other Lenders, upon
the terms and subject to the conditions set forth herein, to make Revolver
Loans to Borrower on any 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 Revolver
Commitment at such time, which Revolver Loans may be repaid and reborrowed in
accordance with the provisions of this Agreement; provided, however, that
Lenders shall have no obligation whatsoever to make any Revolver Loan if at the
time of the proposed funding thereof the aggregate principal amount of all of
the Revolver Loans and Pending Revolver Loans then outstanding exceeds, or
would exceed after the funding of such Revolver Loan, the Borrowing Base. Each
Borrowing of Revolver Loans shall be funded by Lenders Pro Rata in accordance
with their respective Revolver Commitments (except for Wachovia with respect to
Settlement Loans). The Revolver Loans shall bear interest as set forth in
Section 3.1. hereof. Each Revolver Loan shall, at the option of Borrower, be
made or continued as, or converted into, part of one or more Borrowings that,
unless specifically provided herein, shall consist entirely of Prime Rate Loans
or LIBOR Rate Loans.
2.1.2. Out-of-Formula Loans. If the unpaid balance of
Revolver Loans outstanding at any time should exceed the Borrowing Base at such
time, such Revolver Loans shall nevertheless constitute Obligations that are
secured by the Collateral and entitled to all of the benefits of the Loan
Documents. In the event that Lenders are willing in their sole and absolute
discretion to make
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Out-of-Formula Loans, such Out-of-Formula Loans shall be payable ON DEMAND,
shall be secured by the Collateral and shall bear interest as provided in this
Agreement for Revolver Loans generally.
2.1.3. Use of Proceeds. The proceeds of the Revolver Loans
shall be used by Borrower solely for one or more of the following purposes:
(i) to satisfy any Debt owing on the Closing Date to Wachovia; (ii) to pay the
fees and transaction expenses associated with the closing of the transactions
described herein; (iii) to pay any of the Obligations; and (iv) to make
expenditures for other lawful corporate purposes of Borrower to the extent such
expenditures are not prohibited by this Agreement or Applicable Law. In no
event may any Revolver Loan proceeds be used by Borrower to make a contribution
to the equity of any Subsidiary, 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.
2.1.4. Revolver Notes. The Revolver Loans made by each
Lender and interest accruing thereon shall be evidenced by the records of Agent
and such Lender and by the Revolver Note payable to such Lender (or the
assignee of such Lender), which shall be completed in conformity with this
Agreement and delivered to such Lender on the Closing Date. All outstanding
principal amounts and accrued interest under the Revolver Loans shall be due
and payable as set forth in Section 5.2 hereof.
2.2. TERM LOAN FACILITY.
2.2.1. Term Loan. Subject to and upon the terms and
conditions herein set forth, each Lender severally agrees to make to Borrower a
Term Loan Advance in an amount not to exceed such Lender's Term Loan
Commitment. The Term Loan shall be comprised of Term Loan Advances in the
aggregate principal amount of $20,000,000 and shall be funded by Lenders on the
Closing Date, concurrently with Lenders' funding of their initial Revolver
Loans. The proceeds of the Term Loan Advances shall be used by Borrower solely
for purposes for which the proceeds of the Revolver Loans are authorized to be
used. The Term Loan Commitment of each Lender shall expire on the funding by
such Lender of its Term Loan Advance. Borrower shall not be entitled to
reborrow any amounts repaid with respect to the Term Loan Advances. All of the
Term Loan Advances shall initially be Prime Rate Loans. Each Lender shall make
its Term Loan Advance available to Agent in immediately available funds, to
such account of Agent as Agent may designate, not later than 12:00 noon on the
Closing Date. After the Agent's receipt of the proceeds of such Term Loan
Advance, and upon satisfaction of the conditions precedent set forth in Section
11 hereof, Agent shall make the proceeds of all such Term Loan Advances
available to Borrower on the Closing Date by transferring same day funds equal
to the proceeds of such Term Loan Advances received by Agent to an account
designated by Borrower in writing.
2.2.2. Term Notes. Borrower shall execute and deliver to
Agent on behalf of each Lender, on the Closing Date, a promissory note
substantially in the form of EXHIBIT B attached hereto and made a part hereof
(such promissory note, together with any new notes issued pursuant to Section
14.3 upon the assignment of any portion of any Lender's Term Loan Advance,
being hereinafter referred to collectively as the "Term Notes" and each of such
promissory notes being hereinafter referred to individually as a "Term Note"),
to evidence such Lender's Term Loan Advance to Borrower, in original principal
amounts equal to the amount of such Lender's Term Loan Commitment. Each Term
Note shall be dated the Closing Date and shall provide for payment of the Term
Loan Advance evidenced thereby as specified in Section 4.3 hereof.
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SECTION 3. INTEREST, FEES AND CHARGES
3.1. INTEREST.
3.1.1. Rates of Interest. 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 the applicable rate indicated below:
(i) for Revolver Loans made or outstanding as
Prime Rate Loans, the Prime Rate in effect from time to time plus the
Applicable Margin; or
(ii) for Revolver Loans made or outstanding as
LIBOR Rate Loans, the relevant Adjusted LIBOR Rate for the applicable
Interest Period selected by Borrower in conformity with this Agreement
plus the Applicable Margin.
Borrower agrees to pay interest in respect of all unpaid
principal amounts outstanding with respect to Term Loan Advances from the
respective dates such principal amounts are advanced until paid (whether it is
stated maturity, on acceleration, or otherwise) at a rate per annum equal to
the applicable rate indicated below:
(i) for Term Loan Advances made or outstanding in
whole or in part as Prime Rate Loans, the Prime Rate in effect from
time to time plus the Applicable Margin; or
(ii) for Term Loan Advances made or outstanding in
whole or in part as LIBOR Rate Loans, the relevant Adjusted LIBOR Rate
for the applicable Interest Period selected by Borrower in conformity
with this Agreement plus the Applicable Margin.
Upon determining the Adjusted LIBOR Rate for any Interest
Period requested by Borrower, Agent shall promptly notify Borrower thereof by
telephone and, if so requested by Borrower, confirmed in writing. Such
determination shall, absent manifest error, be final, conclusive and binding on
all parties and for all purposes. The applicable rate of interest for all
Loans bearing interest based upon the Prime Rate shall be increased or
decreased, as the case may be, by an amount equal to any increase or decrease
in the Prime Rate, with such adjustments to be effective as of the opening of
business on the day that any such change in the Prime Rate becomes effective.
Interest on each Loan shall accrue from and including the date of such Loan to
but excluding the date of any repayment thereof; provided, however, that, if a
Loan is repaid on the same day made, one day's interest shall be paid on such
Loan. The Prime Rate on the date hereof is 8.50% per annum and, therefore, the
rate of interest in effect hereunder on the date hereof, expressed in simple
interest terms, is 8.50% per annum with respect to any portion of the Revolver
Loans bearing interest as a Prime Rate Loan and is 8.50% per annum with respect
to any portion of the Term Loan Advances bearing interest as a Prime Rate Loan.
3.1.2 Conversions and Continuations.
(i) Borrower may on any Business Day, subject to
the giving of a proper Notice of Conversion/Continuation as hereinafter
described, elect (A) to continue all or any part of a LIBOR Rate Loan
by selecting a new Interest Period therefor, to commence on the last
day of the immediately preceding Interest Period, or (B) to convert all
or any part of a Loan of one
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Type into a Loan of another Type; provided, however, that no
outstanding Loans may be converted into or continued as LIBOR Rate
Loans when any Default or Event of Default has occurred and is
continuing. Any conversion of a LIBOR Rate Loan into a Prime Rate
Loan shall be made on the last day of the Interest Period for such
LIBOR Rate Loan. Any conversion or continuation made with respect to
less than the entire outstanding balance of the Revolver Loans or the
Term Loan Advances, must be allocated among Lenders on a Pro Rata
basis, and the Interest Period for Loans converted into or continued
as LIBOR Rate Loans shall be coterminous for each Lender.
(ii) Whenever Borrower desires to convert
or continue Loans under Section 2.1.2(i), Borrower shall give Agent
written notice (or telephonic notice promptly confirmed in writing)
substantially in the form of EXHIBIT C, signed by an authorized
officer of Borrower, at least 1 Business Day before the requested
conversion date, in the case of a conversion into Prime Rate Loans,
and at least 2 Business Days before the requested conversion or
continuation date, in the case of a conversion into or continuation
of LIBOR Rate Loans. Promptly after receipt of a Notice of
Conversion/Continuation, Agent shall notify each Lender in writing of
the proposed conversion or continuation. Each such Notice of
Conversion/Continuation shall be irrevocable and shall specify the
aggregate principal amount of the Revolver Loans to be converted or
continued, the date of such conversion or continuation (which shall be
a Business Day) and whether the Loans are being converted into or
continued as LIBOR Rate Loans (and, if so, the duration of the
Interest Period to be applicable thereto) or Prime Rate Loans. If,
upon the expiration of any Interest Period in respect of any LIBOR
Rate Loans, Borrower shall have failed to deliver the Notice of
Conversion/Continuation, Borrower shall be deemed to have elected to
convert such LIBOR Rate Loans to Prime Rate Loans.
3.1.3. Interest Periods. In connection with the making or
continuation of, or conversion into, each Borrowing of LIBOR Rate Loans,
Borrower shall select an interest period (each an "Interest Period") to be
applicable to such LIBOR Rate Loan, which interest period shall commence on the
date such LIBOR Rate Loan is made and shall end on a numerically corresponding
day in the first, second or third month thereafter; provided, however, that:
(i) the initial Interest Period for a LIBOR Rate
Loan shall commence on the date of such Borrowing (including the date
of any conversion from a Revolver Loan of another Type) and each
Interest Period occurring thereafter in respect of such Revolver Loan
shall commence on the date on which the next preceding Interest Period
expires;
(ii) if any Interest Period would otherwise expire
on a day which is not a Business Day, such Interest Period shall expire
on the next succeeding Business Day, provided that if any Interest
Period in respect of LIBOR Rate Loans would otherwise expire on a day
which is not a Business Day but is a day of the month after which no
further Business Day occurs in such month, such Interest Period shall
expire on the next preceding Business Day;
(iii) any Interest Period which begins on a day for
which there is no numerically corresponding day in the calendar month
at the end of such Interest Period shall expire on the last Business
Day of such calendar month;
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(iv) no Interest Period with respect to any
portion of a Loan shall extend beyond a date on which Borrower is
required to make a scheduled payment of such portion of principal;
(v) no Interest Period shall extend beyond the
last day of the Term; and
(vi) there shall be no more than 5 Interest
Periods in effect at any one time.
3.1.4. Interest Rate Not Ascertainable. If Agent shall
determine (which determination shall, absent manifest error, be final,
conclusive and binding upon all parties) that on any date for determining the
Adjusted LIBOR Rate for any Interest Period, by reason of any changes arising
after the date of this Agreement affecting the London interbank market or any
Lender's or Bank's position in such market, adequate and fair means do not
exist for ascertaining the applicable interest rate on the basis provided for
in the definition of Adjusted LIBOR Rate, then, and in any such event, Agent
shall forthwith give notice (by telephone confirmed in writing) to Borrower of
such determination. Until Agent notifies Borrower that the circumstances
giving rise to the suspension described herein no longer exist, the obligation
of Lenders to make LIBOR Rate Loans shall be suspended, and such affected Loans
then outstanding shall, at the end of the then applicable Interest Period or at
such earlier time as may be required by Applicable Law, bear the same interest
as Prime Rate Loans.
3.1.5. Default Rate of Interest. Upon and after the
occurrence of an Event of Default, and during the continuance thereof, the
principal amount of all Loans (and, to the extent permitted by Applicable Law,
all accrued interest that is past due) shall, at the election of Agent at any
time without notice, bear interest at a variable rate per annum equal to 2%
above the interest rate otherwise applicable from time to time to Prime Rate
Loans (the "Default Rate"). Borrower acknowledges that the cost and expense to
Agent and each Lender attendant upon the occurrence of an Event of Default are
difficult to ascertain or estimate and that the Default Rate is a fair and
reasonable estimate to compensate Agent and Lender for such added cost and
expense.
3.2. FEES.
3.2.1. Closing Fee. Borrower shall pay to Agent, for the
Pro Rata benefit of Lenders, a closing fee of $150,000, which shall be fully
earned and, except to the extent otherwise required by Applicable Law,
non-refundable on the Closing Date and shall be paid on January 2, 1996.
3.2.2. Unused Line Fee. Borrower shall pay to Agent for the
Pro Rata benefit of Lenders a fee equal to .50% per annum of the amount by
which the Average Revolver Loan Balance is less than $45,000,000. The unused
line fee shall be payable monthly, in arrears, on the first day of each
calendar month after the Closing Date.
3.2.3. Audit and Appraisal Fees. Borrower shall reimburse
Lenders for all reasonable costs and expenses incurred by Lenders in connection
with all audits and appraisals of Borrower's books and records and such other
matters pertaining to Borrower or any Collateral as any such Lender shall deem
appropriate.
3.2.4. Agency Fee. In consideration of Wachovia's
syndication of the Commitments and service as Agent hereunder, Borrower shall
pay to Agent an agency fee of $25,000 per year, which fee shall be payable on
the Closing Date and on each anniversary of the Closing Date.
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3.3. COMPUTATION OF INTEREST AND FEES. All interest, fees and
other charges provided for in this Agreement shall be calculated daily and
shall be computed on the actual number of days elapsed over a year of 360 days.
3.4. REIMBURSEMENT OF EXPENSES. If, at any time or times
regardless of whether or not an Event of Default then exists, Agent or any
Lender incurs legal or accounting expenses or any other out-of-pocket costs or
expenses in connection with (i) the negotiation and preparation of this
Agreement or any of the other Loan Documents, any amendment of or modification
of this Agreement or any of the other Loan Documents; (ii) the administration
of this Agreement or any of the other Loan Documents and the transactions
contemplated hereby and thereby; (iii) any litigation, contest, dispute, suit,
proceeding or action (whether instituted by Agent, any Lender, an Obligor or
any other Person) in any way relating to the Collateral, this Agreement or any
of the other Loan Documents or Borrower's affairs; (iv) any attempt to enforce
any rights of Agent or any Lender against Borrower or any other Person which
may be obligated to Agent or a Lender by virtue of this Agreement or any of the
other Loan Documents, including the Account Debtors; or (v) any attempt to
inspect, verify, protect, preserve, restore, collect, sell, liquidate or
otherwise dispose of or realize upon the Collateral; then all such legal and
accounting expenses and other out-of-pocket costs and expenses of Lender shall
be charged to Borrower. If all or any portion of the Obligations are collected
by or through an attorney-at-law, Agent and Lenders shall be entitled to
collect reasonable attorneys' fees and all costs of collection from Borrower.
All amounts chargeable to Borrower under this Section 3.4 shall be Obligations
secured by all of the Collateral, shall be payable ON DEMAND to Agent and
Lenders, as the case may be, and shall bear interest from the date such demand
is made until paid in full at the rate applicable to Revolver Loans
constituting Prime Rate Loans from time to time. Borrower shall also reimburse
Agent for expenses incurred by Agent in its administration of any Collateral to
the extent and in the manner provided in Section 7 hereof or in any of the
other Loan Documents.
3.5. RESERVED.
3.6. ILLEGALITY. Notwithstanding anything to the contrary
contained elsewhere in this Agreement, if (i) any change in any law or
regulation or in the interpretation thereof by any governmental authority
charged with the administration thereof shall make it unlawful for a Lender to
make or maintain a LIBOR Rate Loan or to give effect to its obligations as
contemplated hereby with respect to a LIBOR Rate Loan or (ii) at any time such
Lender determines that the making or continuance of any LIBOR Rate Loan has
become impracticable as a result of a contingency occurring after the date
hereof which adversely affects the London interbank market or the position of
such Lender in such market, then such Lender shall promptly after such
determination give Agent and Borrower notice thereof and may (1) declare that
LIBOR Rate Loans will not thereafter be made by such Lender, whereupon any
request by a Borrower for a LIBOR Rate Loan shall be deemed a request for a
Prime Rate Loan unless such Lender's declaration shall be subsequently
withdrawn (which declaration shall be withdrawn promptly after the cessation of
the circumstances described in clause (i) or (ii) above); and (2) require that
all outstanding LIBOR Rate Loans made by such Lender be converted to Prime Rate
Loans, under the circumstances of clause (i) or (ii) of this Section 3.6
insofar as such Lender determines the continuance of LIBOR Advances to be
impracticable, in which event all such LIBOR Rate Loans shall be automatically
converted to Prime Rate Loans as of the date of Borrower's receipt of the
aforesaid notice from such Lender.
3.7. INCREASED COSTS. If, by reason of (a) after the date hereof,
the introduction of or any change (including any change by way of imposition or
increase of Statutory Reserves or other reserve
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requirements) in or in the interpretation of any law or regulation, or (b) the
compliance with any guideline or request from any central bank or other
governmental authority or quasi-governmental authority exercising control over
banks or financial institutions generally (whether or not having the force of
law):
(i) any Lender shall be subject to any Tax,
duty or other charge with respect to any LIBOR Rate Loan or its
obligation to make LIBOR Rate Loans, or shall change the basis of
taxation of payment to any Lender of the principal of or interest on
its LIBOR Rate Loans or its obligation to make LIBOR Rate Loans (except
for changes in the rate of Tax on the overall net income of such Lender
imposed by the jurisdiction in which such Lender's principal executive
office is located); or
(ii) any reserve (including any imposed by the
Board of Governors of the Federal Reserve System), special deposits or
similar requirement against assets of, deposits with or for the account
of, or credit extended by, any Lender shall be imposed or deemed
applicable or any other condition affecting its LIBOR Rate Loans or its
obligation to make LIBOR Rate Loans shall be imposed on Lender or the
London interbank market;
and as a result thereof there shall be any increase in the cost to such Lender
of agreeing to make or making, funding or maintaining LIBOR Rate Loans (except
to the extent already included in the determination of the applicable Adjusted
LIBOR Rate for LIBOR Rate Loans), or there shall be a reduction in the amount
received or receivable by such Lender, then Lender shall promptly after
determining such increased costs give Borrower notice thereof and Borrower
shall from time to time, upon written notice from and demand by such Lender
(with a copy of such notice and demand to Agent), pay to Agent for the account
of such Lender, within 15 Business Days after the date specified in such notice
and demand, an additional amount sufficient to indemnify such Lender against
such increased cost. A certificate as to the amount of such increased cost,
submitted to Borrower by such Lender, shall be final, conclusive and binding
for all purposes, absent manifest error. If any Lender shall advise Agent at
any time that, because of the circumstances described hereinabove in this
Section 2.7 or any other circumstances arising after the date of this Agreement
affecting such Lender or the London interbank market or such Lender's position
in such market, the Adjusted LIBOR Rate, as determined by Agent, will not
adequately and fairly reflect the cost to such Lender of funding LIBOR Rate
Loans, then, and in any such event:
(i) Agent shall forthwith give 30 days prior
written notice to Borrower and Lenders of such advice;
(ii) Borrower's right to request and such
Lender's obligation to make LIBOR Rate Loans shall be immediately
suspended and Borrower's right to continue a LIBOR Rate Loan as such
beyond the then applicable Interest Period shall also be suspended,
until each condition giving rise to such suspension no longer exists;
and
(iii) such Lender shall make a Revolver Loan
as part of the requested Borrowing of LIBOR Rate Loans as a Prime Rate
Loan, which Prime Rate Loan shall, for all purposes, be considered part
of such Borrowing.
For purposes of this Section 3.7, all references to a Lender shall be
deemed to include any bank holding company or bank parent of such Lender.
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3.8. CAPITAL ADEQUACY. If after the date hereof any Lender
determines that (a) the adoption of any Applicable Law regarding capital
requirements for banks or bank holding companies or the subsidiaries thereof,
(b) any change in the interpretation or administration of any such law, rule or
regulation by any governmental authority, central bank, or comparable agency
charged with the interpretation or administration thereof, or (c) compliance by
such Lender or its holding company with any request or directive of any such
governmental authority, central bank or comparable agency regarding capital
adequacy (whether or not having the force of law), has the effect of reducing
the return on such Lender's capital to a level below that which such Lender
could have achieved (taking into consideration such Lender's and its holding
company's policies with respect to capital adequacy immediately before such
adoption, change or compliance and assuming that such Lender's capital was
fully utilized prior to such adoption, change or compliance) but for such
adoption, change or compliance as a consequence of such Lender's commitment to
make the Loans pursuant hereto by any amount deemed by such Lender to be
material:
(i) Agent shall promptly, after such Lender's
determination of such occurrence, give notice thereof to Borrower and
Lenders; and
(ii) Borrower shall pay to Agent, for the account
of such Lender, as an additional fee from time to time, within 15 days
after demand by Agent, such amount as such Lender certifies to be the
amount reasonably calculated to compensate such Lender for such
reduction.
A certificate of such Lender claiming entitlement to compensation as
set forth above will be conclusive in the absence of manifest error. Such
certificate will set forth the nature of the occurrence giving rise to such
compensation, the additional amount or amounts to be paid to such Lender
(including the basis for such Lender's determination of such amount), and the
method by which such amounts were determined. In determining such amount, such
Lender may use any reasonable averaging and attribution method. For purposes
of this Section 3.8 all references to a Lender shall be deemed to include any
bank holding company or bank parent of such Lender.
3.9. FUNDING LOSSES. If for any reason (other than due to a
default by a Lender or as a result of a Lender's refusal to honor a LIBOR Rate
Loan request due to circumstances described in Section 3.6 or 3.7 hereof) a
Borrowing of, or conversion to or continuation of, LIBOR Rate Loans does not
occur on the date specified therefor in a Notice of Borrowing or Notice of
Conversion/ Continuation (whether or not withdrawn), or if any repayment
(including any conversions pursuant to Section 3.1.2 hereof) of any of its
LIBOR Rate Loans occurs on a date that is not the last day of an Interest
Period applicable thereto, or if for any reason Borrower defaults in its
obligation to pay or repay LIBOR Rate Loans when required by the terms of this
Agreement, then Borrower shall compensate Lenders for any loss, costs or
expenses incurred by Lenders, said compensation to include, without limitation,
an amount equal to the excess, if any, of (i) the amount of interest which
would have accrued on the amount so paid or prepaid or not prepaid or borrowed
for the period from the date of such payment, prepayment or failure to prepay
or borrow to the last day of the then current Interest Period for such LIBOR
Rate Loans (or, in the case of a failure to prepay or borrower, the Interest
Period for such LIBOR Rate Loans which would have commenced on the date of such
failure to prepay or borrow) at the applicable rate of interest for such LIBOR
Rate Loans provided for herein over (ii) the amount of interest (as reasonably
determined by Agent) that Lenders would have paid on deposits in Dollars of
comparable amounts having terms comparable to such period placed with it by
leading banks in the London interbank market. Borrower shall pay such amount
upon presentation by Agent of a statement setting forth the amount and Agent's
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calculation thereof pursuant hereto, which statement shall be deemed true and
correct absent manifest error. For purposes of this Section 3.9, all
references to a Lender shall be deemed to include any bank holding company or
bank parent of such Lender.
3.10. MAXIMUM INTEREST. Regardless of any provision contained in
this Agreement or any of the other Loan Documents, in no contingency or event
whatsoever shall the aggregate of all amounts that are contracted for, charged
or received by Agent and Lenders pursuant to the terms of this Agreement or any
of the other Loan Documents and that are deemed interest under Applicable Law
exceed the highest rate permissible under any Applicable Law. No agreements,
conditions, provisions or stipulations contained in this Agreement or any of
the other Loan Documents or the exercise by Agent of the right to accelerate
the payment or the maturity of all or any portion of the Obligations, or the
exercise of any option whatsoever contained in any of the Loan Documents, or
the prepayment by Borrower of any of the Obligations, or the occurrence of any
contingency whatsoever, shall entitle Agent or any Lender to charge or receive
in any event, interest or any charges, amounts, premiums or fees deemed
interest by Applicable Law (such interest, charges, amounts, premiums and fees
referred to herein collectively as "Interest") in excess of the Maximum Rate
and in no event shall Borrower be obligated to pay Interest exceeding such
Maximum Rate, and all agreements, conditions or stipulations, if any, which may
in any event or contingency whatsoever operate to bind, obligate or compel
Borrower to pay Interest exceeding the Maximum Rate shall be without binding
force or effect, at law or in equity, to the extent only of the excess of
Interest over such Maximum Rate. If any Interest is charged or received in
excess of the Maximum Rate ("Excess"), Borrower acknowledges and stipulates
that any such charge or receipt shall be the result of an accident and bona
fide error, and such Excess, to the extent received, shall be applied first to
reduce the principal 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. The right to accelerate the maturity of any of
the Obligations does not include the right to accelerate any interest that has
not otherwise accrued on the date of such acceleration, and Agent and Lenders
do not intend to collect any unearned interest in the event of any such
acceleration. Borrower recognizes that, with fluctuations in the rates of
interest set forth in Section 3.1.1 of this Agreement, and the Maximum Rate,
such an unintentional result could inadvertently occur. All monies paid to
Agent or any Lender hereunder or under any of the other Loan Documents, whether
at maturity or by prepayment, shall be subject to any rebate of unearned
interest as and to the extent required by Applicable Law. By the execution of
this Agreement, Borrower covenants that (i) the credit or return of any Excess
shall constitute the acceptance by Borrower of such Excess, and (ii) Borrower
shall not seek or pursue any other remedy, legal or equitable, against Agent or
any Lender, based in whole or in part upon contracting for, charging or
receiving any Interest in excess of the Maximum Rate. For the purpose of
determining whether or not any Excess has been contracted for, charged or
received by Agent or any Lender, all interest at any time contracted for,
charged or received from Borrower in connection with any of the Loan Documents
shall, to the extent permitted by Applicable Law, be amortized, prorated,
allocated and spread in equal parts throughout the full term of the
Obligations. Borrower, Agent and Lenders shall, to the maximum extent
permitted under Applicable Law, (i) characterize any non-principal payment as
an expense, fee or premium rather than as Interest and (ii) exclude voluntary
prepayments and the effects thereof. The provisions of this Section 3.10 shall
be deemed to be incorporated into every Loan Document (whether or not any
provision of this Section is referred to therein). All such Loan Documents and
communications relating to any Interest owed by Borrower and all figures set
forth therein shall, for the sole purpose of computing the extent of
Obligations, be automatically recomputed by Borrower, and by any court
considering the same, to give effect to the adjustments or credits required by
this Section 3.10.
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SECTION 4. LOAN ADMINISTRATION
4.1. MANNER OF BORROWING AND FUNDING REVOLVER LOANS. Borrowings
under the Commitments established pursuant to Section 2.1 hereof shall be made
and funded as follows:
4.1.1. Notice of Borrowing.
(i) Whenever Borrower desires to make a Borrowing
under Section 2.1 of this Agreement (other than a Borrowing resulting
from a conversion or continuation pursuant to Section 3.1.2), Borrower
shall give Agent prior written notice (or telephonic notice promptly
confirmed in writing) of such Borrowing request (a "Notice of
Borrowing"), which shall be in the form of EXHIBIT D annexed hereto and
signed by an authorized officer of Borrower. Such Notice of Borrowing
shall be given by Borrower no later than 11:00 a.m. at the office of
Agent designated by Agent from time to time (a) on the Business Day of
the requested funding date of such Borrowing, in the case of Prime Rate
Loans, and (b) at least 2 Business Days prior to the requested funding
date of such Borrowing, in the case of LIBOR Rate Loans. Notices
received after 11:00 a.m. shall be deemed received on the next
Business Day. The Revolver Loans made by each Lender on the Closing
Date shall be in excess of $250,000 and shall be made as Prime Rate
Loans and thereafter may be made or continued as or converted into
Prime Rate Loans or LIBOR Rate Loans. Each Notice of Borrowing (or
telephonic notice thereof) shall be irrevocable and shall specify (a)
the principal amount of the Borrowing, (b) the date of Borrowing (which
shall be a Business Day), (c) whether the Borrowing is to consist of
Prime Rate Loans or LIBOR Rate Loans, (d) in the case of LIBOR Rate
Loans, the duration of the Interest Period to be applicable thereto,
and (e) the account of Borrower to which the proceeds of such Borrowing
are to be disbursed. Borrower may not request any LIBOR Rate Loans if
a Default or Event of Default exists.
(ii) 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 other Loan Documents as principal, accrued
interest, fees or other charges shall be deemed irrevocably to be a
request for Revolver Loans 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 such Revolver Loans may be disbursed by
way of direct payment of the relevant Obligation and shall bear
interest as Prime Rate Loans. Neither Agent nor any Lender shall have
any obligation to Borrower to honor any deemed request for a Revolver
Loan when an Out-of-Formula Condition exists or would result therefrom,
but may do so in their discretion and without regard to the existence
of, and without being deemed to have waived, any Default or Event of
Default.
(iii) As an accommodation to Borrower, Agent and
Lenders may permit telephonic requests for Borrowings and electronic
transmittal of instructions, authorizations, agreements or reports to
Agent by Borrower; provided, however, Borrower shall confirm each such
telephonic request by delivery of the required Notice of Borrowing to
Agent by facsimile transmission promptly, but in no event later than
5:00 p.m. on the same day. Unless Borrower specifically directs Agent
and Lenders in writing not to accept or act upon telephonic or
electronic communications from Borrower, neither Agent nor any Lender
shall have any liability to Borrower for any loss or damage suffered by
such Borrower as a result of Agent's or any Lender'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
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have been sent to Agent or Lenders by Borrower and neither Agent nor
any Lender shall have any duty to verify the origin of any such
communication or the identity or authority of the Person sending it.
4.1.2. Fundings by Lenders. Subject to its receipt of
notice from Agent of a Notice of Borrowing as provided in Section 4.1.1, each
Lender shall timely honor its Revolver Commitment by funding its Pro Rata share
of each Borrowing of Revolver Loans that is properly requested by Borrower and
that Borrower is entitled to receive under the Loan Agreement. Agent shall
notify Lenders of each Notice of Borrowing by 12:00 noon on the proposed
funding date (in the case of Prime Rate Loans) or by 3:00 p.m. at least 2
Business Days before the proposed funding date (in the case of LIBOR Rate
Loans). Each Lender shall deposit with Agent an amount equal to its Pro Rata
share of the Borrowing requested by Borrower at Agent's designated bank in
immediately available funds not later than 2:00 p.m. on the date of funding of
such Borrowing, unless Agent's notice to Lenders is received after 12:00 noon
on the proposed funding date of a Prime Rate Loan, in which event Lenders shall
deposit with Agent their respective Pro Rata shares of the requested Borrowing
on or before 11:00 a.m. of the next Business Day. Subject to its receipt of
such amounts from Lenders and provided each of the applicable conditions set
forth in Section 11 is satisfied, Agent shall make the proceeds of the Revolver
Loans 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 such Lender's Pro Rata share
of the requested Borrowing, 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 Borrowing is not in fact deposited with
Agent, then, if Agent has disbursed to Borrower an amount corresponding to such
share, then such 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, (a) in the case of Borrower, at the interest rate applicable to such
Borrowing and (b) in the case of such Lender, at the Federal Funds Rate. If
such Lender repays to Agent such corresponding amount, such amount so repaid
shall constitute a Revolver Loan, and if both such Lender and Borrower shall
have repaid such corresponding amount, Agent shall promptly return to Borrower
such corresponding amount in same day funds.
4.1.3. Settlement and Settlement Loans.
(i) In order to facilitate the administration of
the Revolver Loans under this Agreement, Lenders agree (which agreement
shall not be for the benefit of or enforceable by Borrower) that
settlement among them with respect to the Revolver Loans may take place
on a periodic basis on dates determined from time to time by Agent
(each a "Settlement Date"), which may occur before or after the
occurrence or during the continuance of a Default or Event of Default
and whether or not all of the conditions set forth in Section 11 of
this Agreement have been met. On each Settlement Date, payment shall
be made by or to each Lender in the manner provided herein and in
accordance with the Settlement Report delivered by Agent to Lenders
with respect to such Settlement Date so that, as of each Settlement
Date and after giving effect to the transaction to take place on such
Settlement Date, each Lender shall hold its Pro Rata share of all
Revolving Loans then outstanding. Agent shall request settlement with
the Lenders on a basis not less frequently than once every 5 Business
Days.
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(ii) Between Settlement Dates, Agent may request
Wachovia to advance, and Wachovia may, but shall in no event be
obligated to, advance to Borrower out of Wachovia's own funds the
entire principal amount of any Borrowing of Revolver Loans that are
Prime Rate Loans requested or deemed requested pursuant to this
Agreement (any such Revolver Loan funded exclusively by Wachovia being
referred to as a "Settlement Loan"). Each Settlement Loan shall
constitute a Revolver Loan hereunder and shall be subject to all of the
terms, conditions and security applicable to other Revolver Loans,
except that all payments thereon shall be payable to Wachovia solely
for its own account. The obligation of Borrower to repay such
Settlement Loans to Wachovia shall be evidenced by the records of
Wachovia and need not be evidenced by any promissory note. Agent shall
not request Wachovia to make any Settlement Loan if (A) Agent shall
have received written notice from any Lender that one or more of the
applicable conditions precedent set forth in Section 11 hereof will not
be satisfied on the requested funding date for the applicable Borrowing
or (B) the requested Borrowing would exceed the amount of Availability
on the funding date or would cause the then outstanding principal
balance of all Settlement Loans to exceed $2,000,000. Wachovia shall
not otherwise be required to determine whether the applicable
conditions precedent set forth in Section 11 hereof have been satisfied
or the requested Borrowing would exceed the amount of Availability on
the funding date applicable thereto prior to making, in its sole
discretion, any Settlement Loan. On each Settlement Date, or, if
earlier, upon demand by Agent for payment thereof, the then outstanding
Settlement Loans shall be immediately due and payable. Borrower shall
be deemed to have requested Revolver Loans to be made on each
Settlement Date in the amount of all outstanding Settlement Loans and
the proceeds of such Revolver Loans shall be applied to the repayment
of such Settlement Loans. Agent shall notify the Lenders of the
outstanding balance of Revolver Loans prior to 11:00 a.m. on the
funding dates for such Revolver Loans and each Lender shall deposit
with Agent an amount equal to its Pro Rata share of the amount of
Revolver Loans deemed requested in immediately available funds not
later than 11:00 a.m. on such funding date. The proceeds of
Settlement Loans may be used solely for purposes for which Revolver
Loans generally may be used in accordance with Section 2.1.3 hereof. If
any amounts received by Wachovia in respect of any Settlement Loans are
later required to be returned or repaid by Wachovia to Borrower or any
other Obligor or their respective representatives or
successors-in-interest, whether by court order, settlement or
otherwise, the other Lender shall, upon demand by Wachovia with notice
to Agent, pay to Agent for the account of Wachovia, an amount equal to
each other Lender's Pro Rata share of all such amounts required to be
returned by Wachovia.
4.1.4. Disbursement Authorization. Borrower hereby
irrevocably authorizes Agent to disburse the proceeds of each Revolver Loan
requested, or deemed to be requested pursuant to this Section 4.1.1, as
follows: (i) the proceeds of each Revolver Loan requested under Section
4.1.1(i) shall be disbursed by Agent in accordance with the terms of the
written disbursement letter from Borrower in the case of the initial Borrowing,
and, and in the case of each subsequent Borrowing, by wire transfer to such
bank account as may be agreed upon by Borrower and Agent from time to time or
elsewhere if pursuant to a written direction from Borrower; and (ii) the
proceeds of each Revolver Loan requested under Section 4.1.1(ii) shall be
disbursed by Agent by way of direct payment of the relevant interest or other
Obligation.
4.2. DEFAULTING LENDER. If any Lender shall, at any time, fail to
make any payment to Agent or Wachovia that is required hereunder, Agent may,
but shall not be required to, retain payments that would otherwise be made to
such defaulting Lender hereunder and apply such payments to such defaulting
Lender's defaulted obligations hereunder, at such time, and in such order, as
Agent may elect in its sole
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discretion. With respect to the payment of any funds from Agent to a Lender or
from a Lender to Agent, the party failing to make the full payment when due
pursuant to the terms hereof shall, upon demand by the other party, pay such
amount together with interest on such amount at the Federal Funds Rate. The
failure of any Lender to fund its portion of any Revolver Loan shall not
relieve any other Lender of its obligation, if any, to fund its portion of the
Revolver Loan on the date of Borrowing, but no Lender shall be responsible for
the failure of any other Lender to make any Revolver Loan to be made by such
Lender on the date of any Borrowing. Solely for purposes of voting or
consenting to matters with respect to any of the Loan Documents, Collateral or
any Obligations and determining a defaulting Lender's Pro Rata share of
payments and proceeds of Collateral, a defaulting Lender shall not be deemed to
be a "Lender" and such Lender's Commitment shall be deemed to be zero (0).
4.3. SPECIAL PROVISIONS GOVERNING LIBOR RATE LOANS.
4.3.1. Number of LIBOR Rate Loans. In no event may the
number of LIBOR Rate Loans outstanding at any time to any Lender exceed 5.
4.3.2 Minimum Amounts. Each election of LIBOR Rate Loans
pursuant to Section 4.1.1(i), and each continuation of or conversion to LIBOR
Rate Loans pursuant to Section 3.1.2 hereof, shall be in a minimum amount of
$2,000,000 and integral multiples of $1,000,000 in excess of that amount.
4.4. ALL LOANS TO CONSTITUTE ONE OBLIGATION. The Loans shall
constitute one general Obligation of Borrower and shall be secured by Agent's
Lien upon all of the Collateral; provided, however, that Agent and each Lender
shall be deemed to be a creditor of Borrower and the holder of a separate claim
against Borrower to the extent of any Obligations owed by Borrower to Agent or
such Lender.
SECTION 5. PAYMENTS
5.1. GENERAL PAYMENT PROVISIONS. All payments (including all
prepayments) of principal of and interest on the Loans and other Obligations
that are payable to Agent or any Lender shall be made to Agent in Dollars
without any offset or counterclaim and free and clear of (and without deduction
for) any present or future Taxes, and, with respect to payments made other than
by application of balances in the Collateral Reserve Account, in immediately
available funds not later than 12:00 noon on the due date (and payment made
after such time on the due date to be deemed to have been made on the next
succeeding Business Day). All payments received by Agent shall be distributed
by Agent to Lenders on a Pro Rata basis, subject to the right of offset that
Agent may have as to amounts otherwise to be remitted to a particular Lender by
reason of amounts due Agent from such Lender under any of the Loan Documents.
5.2. REPAYMENT OF REVOLVER LOANS.
5.2.1. Payment of Principal. The outstanding principal
amounts with respect to the Revolver Loans shall be due and payable as follows:
(i) Any portion of the Revolver Loans consisting
of the principal amount of Prime Rate Loans shall be paid by Borrower
to Agent, for the Pro Rata benefit of Lenders (or, in the case of
Settlement Loans, for the sole benefit of Wachovia) unless converted to
a LIBOR
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Rate Loan in accordance with this Agreement, immediately upon the
earliest of (a) the receipt by Agent of any proceeds or payments of
any of the Collateral, to the extent of such proceeds or payments, (b)
the Commitment Termination Date, or (c) each Settlement Date in the
case of all Settlement Loans outstanding on such date.
(ii) Any portion of the Revolver Loans consisting
of the principal amount of LIBOR Rate Loans shall be paid by Borrower
to Agent, for the Pro Rata benefit of Lenders, unless converted to a
Prime Rate Loan or continued as a LIBOR Rate Loan in accordance with
the terms of this Agreement, upon the earlier of (a) the last day of
the Interest Period applicable thereto or (b) the Commitment
Termination Date. In no event shall Borrower be authorized to pay any
LIBOR Rate Loan prior to the last day of the Interest Period applicable
thereto unless otherwise agreed in writing by Agent or Borrower is
otherwise expressly authorized or required by any other provision of
this Agreement to pay any LIBOR Rate Loan outstanding on a date other
than the last day of the Interest Period applicable thereto, and
Borrower pays to Agent, for the Pro Rata benefit of Lenders,
concurrently with any prepayment of a LIBOR Rate Loan the amount due
Agent and Lenders under Section 3.9 hereof as a result of such
prepayment.
(iii) Notwithstanding anything to the contrary
contained elsewhere in this Agreement, if an Out-of-Formula Condition
shall exist, Borrower shall, ON DEMAND, repay the outstanding Revolver
Loans bearing interest as Prime Rate Loans in an amount sufficient to
reduce the aggregate unpaid principal amount of all Revolver Loans by
an amount equal to such excess; and, if such payment of Prime Rate
Loans is not sufficient to cure the Out-of-Formula Condition, then
Borrower shall immediately either (a) deposit with Agent, for the Pro
Rata benefit of Lenders, for application to any outstanding Revolver
Loans bearing interest as LIBOR Rate Loans as the same become due and
payable at the end of the applicable Interest Periods, cash in an
amount sufficient to cure such Out-of-Formula Condition and any such
cash shall be held by Agent, pending disbursement of same to Lenders,
in the Cash Collateral Account subject to Agent's Lien thereon, or (b)
pay the Revolver Loans outstanding that bear interest as LIBOR Rate
Loans to the extent necessary to cure such Out-of-Formula Condition and
also pay to Agent any and all amounts required by Section 3.9 hereof to
be paid by reason of the prepayment of a LIBOR Rate Loan prior to the
last day of the Interest Period applicable thereto.
5.2.2. Payment of Interest. Interest accrued on the
Revolver Loans shall be due on (i) the first calendar day of each month (for
the immediately preceding month), computed through the last calendar day of the
preceding month, with respect to any Revolver Loan (whether a Prime Rate Loan
or LIBOR Rate Loan) and (ii) the last day of the applicable Interest Period in
the case of a LIBOR Rate Loan. Accrued interest shall also be paid by Borrower
on the Commitment Termination Date. With respect to any Prime Rate Loan
converted into a LIBOR Rate Loan pursuant to Section 3.1.2 on a day when
interest would not otherwise have been payable with respect to such Prime Rate
Loan, accrued interest to the date of such conversion on the amount of such
Prime Rate Loan so converted shall be paid on the conversion date.
5.3. REPAYMENT OF TERM LOAN ADVANCES.
5.3.1. Payment of Principal. Each Term Loan Advance shall
be repaid in accordance with the terms of the Term Note evidencing such Term
Loan Advance. The Term Loan Advances shall mature in consecutive quarterly
installments, commencing March 1, 1996, equal to (a) for the period from the
Closing Date through January 12, 1997, $1,250,000 per quarter, (b) for the
period from January
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13, 1997 through January 12, 1998, $1,750,000 per quarter and (c) for the
period from January 13, 1998 through January 12, 1999, $2,000,000 per quarter.
The final installment of each Term Loan Advance shall be in an amount equal to
such holder's Pro Rata share of the remaining principal balance of the Term
Loan and shall be payable on January 12, 1999. Each installment shall be
payable to Agent for the account and Pro Rata benefit of each Lender. Each
Term Loan Advance, if not sooner paid, shall be due and payable in full on the
Commitment Termination Date.
5.3.2. Payment of Interest. Interest accrued on each Term
Loan Advance shall be due and payable on the earliest of (i) the first calendar
day of each month for the immediately preceding month, computed through the
last calendar day of the preceding month, whether all or any portion of the
Term Loan Advance bears interest as a Prime Rate Loan or a LIBOR Rate Loan,
(ii) the last day of the applicable Interest Period in the case of any portion
of such Term Loan Advance that is a LIBOR Rate Loan, or (iii) the Commitment
Termination Date.
5.3.3. Mandatory Prepayment of Term Loan Advances. Borrower
shall prepay the entire unpaid principal balance of the Term Loan Advances, and
all accrued but unpaid interest thereon, upon the Commitment Termination Date.
Borrower shall also be required to prepay the Term Loan Advances as follows:
(i) If Borrower shall have Excess Cash Flow in
any Fiscal Year, commencing with Borrower's Fiscal Year ending
February 28, 1997, as reflected on Borrower's financial statements
delivered to Agent in accordance with Section 10.1.3 hereof, then
Borrower shall prepay the Term Loan in an aggregate amount equal to
75% of such Excess Cash Flow for such Fiscal Year plus interest
accrued and unpaid on the principal amount prepaid, such prepayment to
be made within 10 days following Agent's receipt of such financial
statements;
(ii) Each mandatory prepayment pursuant to this
Section 5.3.3 shall be applied first to Prime Rate Loans to the full
extent thereof before application to any LIBOR Rate Loans; provided,
however, that, so long as no Default or Event of Default exists, in
lieu of application of such prepayment to LIBOR Rate Loans prior to
the expiration of the respective Interest Periods applicable thereto
and the resulting requirement to pay the charges provided for in
Section 3.9 hereof, Borrower, at its option, may deposit with Agent
cash funds equal to such prepayments to be held by Agent in the Cash
Collateral Account for application to the Term Loan Advances on the
sooner to occur of the expiration the Interest Period applicable
thereto or the Commitment Termination Date. Each such prepayment
shall be distributed by Agent to each Lender on a Pro Rata basis and
shall be applied by Lenders to the installments of principal due under
the Term Notes in the inverse order of their maturities until payment
thereof in full.
5.3.4 Optional Prepayments of Term Loan Advances. Borrower
may, at its option, prepay any portion of the Term Loan Advances consisting of
Prime Rate Loans in whole at any time or in part from time to time, in amounts
aggregating $1,000,000 or any greater integral multiple of $100,000, by paying
the principal amount to be prepaid together with interest accrued or unpaid
thereon to the date of prepayment and any applicable prepayment premium set
forth below. Any portion of the Term Loan Advances consisting of LIBOR Rate
Loans may be prepaid, at Borrower's option, at any time in whole or from time
to time in part, in amounts aggregating $1,000,000 or any greater integral
multiple thereof, by paying the principal amount to be prepaid, interest
accrued and unpaid thereon to the date of prepayment, all charges pursuant to
Section 3.9 hereof if such prepayment is made on a date other than the last day
of an applicable Interest Period, and any applicable prepayment premium as
hereinafter set
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forth in this Section 5.3.4. Each such optional prepayment shall be applied to
prepay the Term Loan Advances on a Pro Rata basis and shall be applied against
scheduled amortization payments in the inverse order of the occurrence thereof.
Borrower shall give written notice (or telephonic notice confirmed in writing)
to the Agent of any intended prepayment (i) not less than 1 Business Day prior
to any prepayment of Prime Rate Loans and not less than 2 Business Days prior
to any prepayment of LIBOR Rate Loans. Such notice, once given, shall be
irrevocable and, upon receipt of any such notice of optional prepayment, Agent
shall promptly notify each Lender of the contents thereof and of such Lender's
share of the prepayment. All prepayments shall include payment of accrued
interest on the principal so prepaid and shall be applied to the payment of
interest before applicable to principal.
5.4. PAYMENT OF OTHER OBLIGATIONS. Borrower shall pay all costs,
fees and charges pursuant to this Agreement as and when provided in Section 3.2
hereof, to Agent, or to any other Person designated by Agent in writing. The
balance of the Obligations requiring the payment of money shall be payable by
Borrower to Agent for the Pro Rata benefit of Lenders, as and when provided in
this Agreement, the Other Agreements or the Security Documents, or, if no date
of payment is otherwise specified in the Loan Documents, ON DEMAND.
5.5. MARSHALLING; PAYMENTS SET ASIDE. None of Agent or any Lender
shall be under any obligation to marshall any assets in favor of Borrower or
any other Obligor or against or in payment of any or all of the Obligations.
To the extent that Borrower makes a payment or payments to Agent or Lenders or
any of such Persons receives payment from the proceeds of any Collateral or
exercises its right of setoff, and such payment or payments or the proceeds of
such enforcement or setoff or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid
to a trustee, receiver or any other party, then to the extent of such recovery,
the obligation or part thereof originally intended to be satisfied, and all
Liens, rights and remedies therefor, shall be revived and continued in full
force and effect as if such payment had not been made or such enforcement or
setoff had not occurred. The provisions of the immediately preceding sentence
of this Section 5.5 shall survive any termination of the Commitments and
payment in full of the Obligations.
5.6. ALLOCATION OF PAYMENTS FROM BORROWER. All monies to be
applied to the Obligations, whether such monies represent voluntary payments by
Borrower or any Guarantor or are received pursuant to demand for payment or
realized from any disposition of Collateral, 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 portion of the
Revolver Loans which Agent may have advanced on behalf of any Lender and for
which Agent has not been reimbursed by such Lender or Borrower; (ii) second, to
Wachovia to pay the principal and accrued interest on any portion of the
Settlement Loans outstanding; (iii) third, to Agent and Wachovia to pay the
amount of Extraordinary Expenses that have not been reimbursed to Agent or
Wachovia by Borrower or Lenders, together with interest accrued thereon; (iv)
fourth, to Agent to pay any Indemnified Amount that has not been paid to Agent
by Borrower or Lenders, together with interest accrued thereon; (v) fifth, to
Agent to pay any fees due and payable to Agent; (vi) sixth, to Lenders for any
Indemnified Amount that they have paid to Agent and for any Extraordinary
Expenses that they have reimbursed to Agent; and (vii) seventh, to Lenders in
payment of the unpaid principal and accrued interest in respect of the Loans
and any other Obligations then outstanding. The allocations set forth in this
Section 5.6 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 of approval of Borrower or any other Person.
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5.7. APPLICATION OF PAYMENTS AND COLLECTIONS. All payments
received by Agent by 12:00 noon in immediately available funds on any Business
Day shall be deemed received on that Business Day. All payments received by
Agent after 12:00 noon in immediately available funds on any Business Day shall
be deemed received on the following Business Day. Borrower irrevocably waives
the right to direct the application of any and all payments and collections at
any time or times hereafter received by Agent or any Lender from or on behalf
of Borrower, and Borrower does hereby irrevocably agree that Agent shall have
the continuing exclusive right to apply and reapply any and all such payments
and collections received at any time or times hereafter by Agent or its agent
against the Obligations, in such manner as Agent may deem advisable,
notwithstanding any entry by Agent upon any of its books and records.
5.8. LOAN ACCOUNTS; THE REGISTER; ACCOUNT STATED.
5.8.1. Loan Accounts. Each Lender shall maintain in
accordance with its usual and customary practices an account or accounts (a
"Loan Account") evidencing the Debt of Borrower to such Lender resulting from
each Loan owing to such Lender from time to time, including the amount of
principal and interest payable to such Lender from time to time hereunder and
under each Note payable to such Lender.
5.8.2. The Register. Agent shall maintain a register (the
"Register") which shall include a master account and a subsidiary account for
each Lender and in which accounts (taken together) shall be recorded (i) the
date and amount of each Borrowing made hereunder, the Type of each Loan
comprising such Borrowing and any Interest Period applicable thereto, (ii) the
effective date and amount of each Assignment and Acceptance delivered to and
accepted by it and the parties thereto, (iii) the amount of any principal or
interest due and payable or to become due and payable from Borrower to each
Lender hereunder or under the Notes, and (iv) the amount of any sum received by
Agent from Borrower or any other Obligor and each Lender's share thereof. The
Register shall be available for inspection by Borrower or any Lender at the
offices of Agent at any reasonable time and from time to time upon reasonable
prior notice.
5.8.3. Entries Binding. The entries made in the Register
and each Loan Account shall constitute rebuttably presumptive evidence of the
information contained therein; provided, however, that if a copy of information
contained in the Register or any Loan Account is provided to any Person, or any
Person inspects the Register or any Loan Account, at any time or from time to
time, then the information contained in the Register or the Loan Account, as
applicable shall be conclusive and binding on such Person for all purposes
absent manifest error, unless such Person notifies Agent in writing within 30
days after such Person's receipt of such copy or such Person's inspection of
the Register or Loan Account of its intention to dispute the information
contained therein.
5.9. GROSS UP FOR TAXES. If Borrower shall be required by
Applicable Law to withhold or deduct any Taxes from or in respect of any sum
payable under this Agreement or any of the other Loan Documents, (a) the sum
payable to Agent or such Lender shall be increased as may be necessary so that,
after making all required withholding or deductions, Agent or such Lender (as
the case may be) receives an amount equal to the sum it would have received had
no such withholding or deductions been made, (b) Borrower shall make such
withholding or deductions, and (c) Borrower shall pay the full amount withheld
or deducted to the relevant taxation authority or other authority in accordance
with Applicable Law.
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SECTION 6. TERM AND TERMINATION OF COMMITMENTS
6.1. TERM OF COMMITMENTS. Subject to each Lender's right to cease
making Loans to Borrower when any Default exists or upon termination of the
Commitments as provided in Section 6.2 hereof, the Commitments shall be in
effect for a period of 3 years from the date hereof, through January 12, 1999
(the "Term").
6.2. TERMINATION.
6.2.1. Termination by Agent. Agent may (and upon the
direction of the Required Lenders, shall) terminate the Commitments without
notice upon or after the occurrence of an Event of Default.
6.2.2. Termination by Borrower. Upon at least 30 days prior
written notice to Agent, Borrower may, at its option, terminate the Commitments;
provided, however, no such termination by Borrower shall be effective until
Borrower has paid all of the Obligations in immediately available funds. Any
notice of termination given by Borrower shall be irrevocable unless Agent
otherwise agrees in writing. Borrower may elect to terminate the Commitments in
their entirety only. No section of this Agreement, type of Loan available
hereunder or Commitment may be terminated singly.
6.2.3. Effect of Termination. On the effective date of
termination by Agent or by Borrower, all of the Obligations shall be immediately
due and payable and Lenders shall have no obligation to make any Loans. All
undertakings, agreements, covenants, warranties and representations of Borrower
contained in the Loan Documents shall survive any such termination and Agent
shall retain its Liens in the Collateral and all of its rights and remedies
under the Loan Documents notwithstanding such termination until Borrower has
satisfied the Obligations to Agent and Lenders, in full, in the manner set forth
in Section 6.2.2. Notwithstanding the payment in full of the Obligations, Agent
shall not be required to terminate its security interests in any of the
Collateral unless, with respect to any loss or damage Agent may incur as a
result of the dishonor or return of any Payment Items applied to the
Obligations, Agent shall have received either (i) a written agreement, executed
by Borrower, each Borrower Subsidiary and any Person whose loans or other
advances to Borrower are used in whole or in part to satisfy the Obligations,
indemnifying Agent and Lenders from any such loss or damage; or (ii) such
monetary reserves and Liens on the Collateral for such period of time as Agent,
in its reasonable discretion, may deem necessary to protect Agent from any such
loss or damage.
SECTION 7. SECURITY INTERESTS
7.1. GRANT OF SECURITY INTEREST. To secure the prompt payment and
performance of all of the Obligations, Borrower hereby grants to Agent, for the
benefit of itself as Agent and for the Pro Rata benefit of Lenders, a
continuing security interest in and Lien upon all of the following Property and
interests in Property of Borrower, whether now owned or existing or hereafter
created, acquired or arising and wheresoever located:
(i) All Inventory;
(ii) All Documents Collateral;
(iii) All Balances Collateral;
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(iv) All Credit Card Receivables;
(v) All Inventory Proceeds; and
(vi) All Books and Records.
7.2. LIEN PERFECTION; FURTHER ASSURANCES. Borrower shall execute
or cause to be executed such UCC-1 financing statements as are required by the
UCC and such other instruments, assignments or documents as are necessary to
perfect Agent's Lien upon any of the Collateral, and shall take such other
action as may be required to perfect or to continue the perfection of Agent's
Lien upon the Collateral. Borrower shall cause any or all of its Subsidiaries
to execute any and all agreements, documents or instruments required by Agent
and Lenders with respect to the Collateral or any collateral owned by such
Subsidiary, including guaranty agreements, security agreements and UCC-1
financing statements. Unless prohibited by Applicable Law, Borrower hereby
authorizes Agent to execute and file any such financing statement on Borrower's
behalf. The parties agree that a carbon, photographic or other reproduction of
this Agreement shall be sufficient as a financing statement and may be filed in
any appropriate office in lieu thereof. At Agent's request, Borrower shall
also promptly execute or cause to be executed and shall deliver to Agent any
and all documents, instruments and agreements deemed necessary by Agent and
Lenders to give effect to or carry out the terms or intent of the Loan
Documents.
SECTION 8. COLLATERAL ADMINISTRATION
8.1. GENERAL PROVISIONS.
8.1.1. Location of Collateral. All tangible items of
Collateral, other than Inventory in transit, shall at all times be kept by
Borrower at one or more of the business locations of Borrower set forth in
SCHEDULE 8.1.1 hereto and shall not be moved therefrom, without the prior
written approval of Agent, except that prior to an Event of Default and
acceleration of the maturity of the Obligations in consequence thereof, Borrower
may (i) make sales of its Inventory in the ordinary course of its business, (ii)
may move Inventory or any records relating to any Collateral to a location shown
on SCHEDULE 8.1.1 or to a location in the United States other than those shown
on SCHEDULE 8.1.1 hereto so long as Borrower has given Agent at least 30
Business Days' prior written notice of such new location and prior to moving any
Inventory to such location Borrower has executed and delivered to Agent UCC-1
financing statements and any other appropriate documentation to perfect or
continue the perfection of Agent's Liens with respect to such Inventory and all
proceeds thereof, and (iii) may warehouse any of the Inventory at any time with
any third party, but only after prior written notice to Agent thereof and only
if the warehouseman who shall receive any such Inventory shall issue
non-negotiable warehouse receipts in Agent's name to evidence any such
warehousing of goods constituting Inventory.
8.1.2. Insurance of Collateral. Borrower shall maintain and
pay for insurance upon all Collateral wherever located and with respect to
Borrower's business, covering casualty, hazard, public liability and such other
risks in such amounts and with such insurance companies as are reasonably
satisfactory to Agent. Borrower shall deliver the originals or certified copies
of such policies to Agent with satisfactory Agent's loss payable endorsements,
naming Agent as loss payee, assignee or additional insured, as appropriate. Each
policy of insurance or endorsement shall contain a clause requiring the insurer
to give not less than 30 days prior written notice to Agent in the event of
cancellation of the policy for any reason whatsoever and a clause specifying
that the interest of Agent shall not be impaired or invalidated by any act or
neglect of Borrower or the owner of the Property or by the occupation of
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the premises for purposes more hazardous than are permitted by said policy. If
Borrower fails to provide and pay for such insurance, Agent may, at its option,
but shall not be required to, procure the same and charge Borrower therefor.
Borrower agrees to deliver to Agent, promptly as rendered, true copies of all
reports made in any reporting forms to insurance companies.
8.1.3. Protection of Collateral. All expenses of protecting,
storing, warehousing, insuring, handling, maintaining and shipping any
Collateral, all Taxes imposed under any Applicable Law on any of the Collateral
or in respect of the sale thereof, and all other payments required to be made by
Agent to any Person to realize upon any Collateral shall be borne and paid by
Borrower. If Borrower fails to pay promptly any portion thereof when due, Agent
may, at its option, but shall not be required to, pay the same and charge
Borrower therefor. Agent shall not be liable or responsible in any way for the
safekeeping of any of the Collateral or for any loss or damage thereto (except
for reasonable care in the custody thereof while any Collateral is in Agent's
actual possession) or for any diminution in the value thereof, or for any act or
default of any warehouseman, carrier, forwarding agency, or other Person
whomsoever, but the same shall be at Borrower's sole risk.
8.1.4. Proceeds of Collateral. Unless and until otherwise
required by Agent, Borrower may collect all proceeds of the Collateral and use
same in the ordinary course of business for purposes for which proceeds of
Revolver Loans may be used. If and when requested by Agent, or in any event
after the occurrence and during the continuance of an Event of Default, Borrower
shall hold all proceeds of the Collateral received by it in trust for the
benefit of Agent and Lenders and shall cause the same to be deposited promptly
to the collateral reserve account for application to the Obligations.
8.2. AGREEMENTS REGARDING INVENTORY. With respect to the
Inventory, Borrower hereby represents, warrants and covenants to and with Agent
and Lenders as follows:
8.2.1. Sale of Inventory. Borrower shall not sell, lease,
exchange or otherwise dispose of any of the Inventory without the prior written
consent of Agent, except in the ordinary course of Borrower's business for cash,
by credit card, on open account or on terms of payment ordinarily extended to
its customers. Upon the sale, exchange or other disposition of Inventory, the
security interest and Lien created and provide for herein, without break in
continuity and without further formality or act, shall continue in and attach to
any Inventory Proceeds and Documents Collateral and in the event of any
unauthorized sale, shall continue in the Inventory itself.
8.2.2. Records and Reports of Inventory. Borrower shall keep
accurate and complete records of its Inventory and shall furnish Agent and
Lenders inventory reports respecting such Inventory in form and detail
satisfactory to Agent and Lenders at such times as Agent and Lenders may
request. Without limiting the generality of the foregoing, Borrower shall, as
soon as practicable, but in any event on or before 20 days after the end of each
month, furnish or cause to be furnished to Agent a status report, certified by a
Senior Officer of the type, dollar Value and location of all Inventory as at the
end of the preceding fiscal month. On the Closing Date, and at the end of each
fiscal week and month of Borrower thereafter, Borrower shall prepare and deliver
to Agent and Lenders a Collateral Report evidencing that there is no
Out-of-Formula Condition as of the date of the report's submission to Agent and
certifying that all rents and other charges currently owing by Borrower with
respect to any leased locations have been paid on a timely basis. Each
Collateral Report shall be in such form as Agent and Required Lenders may
request from time to time and the statements in each such report shall be
certified by a Senior Officer as to truth and accuracy. Borrower shall conduct a
fiscal inventory no less frequently
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than annually and shall provide to Agent and Lenders a report based on each
such fiscal inventory promptly thereafter, together with such supporting
information as Agent shall request.
8.2.3. Returns of Inventory. Borrower shall not return any
of its Inventory to a supplier or vendor thereof, or any other Person, whether
for cash, credit against future purchases or then existing payables, or
otherwise, unless (i) such return is in the ordinary course of business of
Borrower and such Person; (ii) no Default or Event of Default exists or would
result therefrom; (iii) the return of such Inventory will not result in an
Out-of-Formula Condition; and (iv) any payments received by Borrower in
connection with any such return are promptly turned over to Agent for
application to the Obligations.
8.3 AGREEMENTS REGARDING BALANCES COLLATERAL. With respect to the
Balances Collateral, Borrower hereby represents, warrants and covenants to and
with Agent and Lenders as follows:
8.3.1. Ownership. Borrower owns the Balances Collateral
free and clear of any Lien other than Permitted Liens.
8.3.2. Remedies. In addition to such other rights and
remedies with respect to the Balances Collateral as may exist from time to time
hereafter in favor Agent or any Lender, whether by way of setoff, banker's lien,
consensual security interest or otherwise, upon or after the occurrence of any
Event of Default, Agent and Lenders may charge any part or all of the
obligations of Agent or any Lender to Borrower represented by items constituting
the Balances Collateral in the possession and control of Agent or any Lender
against the payment of the Obligations, without prior notice to or demand upon
Borrower.
8.3.3. Liens. Borrower will not incur, create or suffer to
exist any Lien upon any of the Balances Collateral except for Permitted Liens,
or sell, convey, pledge or assign its right, title or interest therein, without
the prior written consent of Agent and Lenders.
SECTION 9. REPRESENTATIONS AND WARRANTIES
9.1. GENERAL REPRESENTATIONS AND WARRANTIES. To induce Agent and
Lenders to enter into this Agreement and to make available the Commitments,
Borrower warrants and represents to Agent and Lenders that:
9.1.1. Organization and Qualification. Each of Borrower and
its Subsidiaries is a corporation duly incorporated, validly existing and in
good standing under the laws of the jurisdiction of its incorporation. Each of
Borrower and its Subsidiaries is duly qualified and is authorized to do business
and is in good standing as a foreign corporation in each state or jurisdiction
listed on SCHEDULE 9.1.1 hereto and in all other states and jurisdictions in
which the failure of Borrower or any of such Subsidiaries to be so qualified
would have a Material Adverse Effect.
9.1.2. Corporate Power and Authority. Each of Borrower and
its Subsidiaries is duly authorized and empowered to enter into, execute,
deliver and perform this Agreement and each of the other Loan Documents to which
it is a party. The execution, delivery and performance of this Agreement and
each of the other Loan Documents have been duly authorized by all necessary
corporate action and do not and will not (i) require any consent or approval of
the shareholders of Borrower or any Subsidiary; (ii) contravene Borrower's or
any Subsidiary's charter, articles or certificate of incorporation or by-laws;
(iii) violate, or cause Borrower or any Subsidiary to be in default under, any
provision of any Applicable
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Law, order, writ, judgment, injunction, decree, determination or award in
effect having applicability to Borrower or any Subsidiary; (iv) result in a
breach of or constitute a default under any indenture or loan or credit
agreement or any other agreement, lease or instrument to which Borrower or any
Subsidiary is a party or by which it or its Properties may be bound or
affected; or (v) result in, or require, the creation or imposition of any Lien
(other than Permitted Liens) upon or with respect to any of the Properties now
owned or hereafter acquired by Borrower or any Subsidiary.
9.1.3. Legally Enforceable Agreement. This Agreement is, and
each of the other Loan Documents when delivered under this Agreement will be, a
legal, valid and binding obligation of each of Borrower and its Subsidiaries
signatories thereto enforceable against them in accordance with the respective
terms of such Loan Documents, except as the enforceability thereof may be
limited by bankruptcy, insolvency or other similar laws of general application
affecting the enforcement of creditors' rights.
9.1.4. Capital Stock; Subsidiaries. All capital stock,
debentures, bonds, notes and all other Securities of Borrower presently issued
and outstanding are validly and properly issued in accordance with all
Applicable Law, including the "Blue Sky" laws of the applicable states and all
federal securities laws. On the date hereof, Borrower has no Subsidiaries.
9.1.5. Corporate Names; Fundamental Changes. During the
5-year period preceding the date of this Agreement, neither Borrower nor any
Subsidiary has been known as or used any corporate, fictitious or tradenames
except under the tradenames "Faller's Furniture Center," "Marks-Fitzgerald,"
"Rhodes Furniture," "Cross Rhodes," "Furniture Warehouse and Showrooms Company,"
"Rhodes," "Cross Rhodes Furniture Warehouse and Showrooms Co.," "Rhodes
Furniture Company (TN - Rhodes, Inc.)," "Weberg Enterprises" and "Glick's
Furniture"; and neither Borrower nor any Subsidiary has been the surviving
corporation of a merger or consolidation or acquired all or substantially all of
the assets of any Person except for purchases from Weberg Enterprises, Inc. and
The Glick Furniture Company.
9.1.6. Business Locations; Agent for Process. As of the date
hereof, the chief executive office and other places of business of Borrower and
each Subsidiary are as listed on SCHEDULE 8.1.1 hereto. During the 5-year
period preceding the date of this Agreement, neither Borrower nor any Subsidiary
has had an office, place of business or agent for service of process other than
as listed on SCHEDULE 8.1.1. Except as shown on SCHEDULE 8.1.1 on the date
hereof, no Inventory of Borrower or any Subsidiary is stored with a bailee,
warehouseman or similar Person, nor is any Inventory consigned to any Person.
9.1.7. Title to Properties; Priority of Liens. Borrower and
each Subsidiary has good and marketable title to and fee simple ownership of, or
valid and subsisting leasehold interests in, all of its real Property, and good
title to all of its personal Property, in each case, free and clear of all Liens
except Permitted Liens. Borrower has paid or discharged, and has caused each
Subsidiary to pay and discharge, all lawful claims which, if unpaid, might
become a Lien against any Properties of Borrower or such Subsidiary that is not
a Permitted Lien. The Liens granted to Agent under Section 5 hereof are first
priority Liens, subject only to those Permitted Liens which are expressly
permitted by the terms of this Agreement to have priority over the Liens of
Agent.
9.1.8. Financial Statements; Fiscal Year. The Consolidated
and consolidating balance sheets of Borrower and such other Persons described
therein (including the accounts of all Subsidiaries
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<PAGE> 44
of Borrower for the respective periods during which a Subsidiary relationship
existed) as of August 31, 1995, and the related statements of income, changes
in stockholder's equity, and changes in financial position for the periods
ended on such dates, have been prepared in accordance with GAAP, and present
fairly the financial positions of Borrower and such Persons at such dates and
the results of Borrower's operations for such periods. Since August 31, 1995,
there has been no material change in the condition, financial or otherwise, of
Borrower and such other Persons as shown on the Consolidated balance sheet as
of such date and no material adverse change in the aggregate value of Equipment
and real Property owned by Borrower or such other Persons.
9.1.9. Full Disclosure. The financial statements referred to
in Section 9.1.8 hereof do not contain any untrue statement of a material fact
and neither this Agreement nor any other written statement provided by Borrower
to Agent or any Lender contains or omits any material fact necessary to make the
statements contained herein or therein not materially misleading. There is no
fact or circumstances in existence on the date hereof which Borrower has failed
to disclose to Agent in writing that may reasonably be expected to have a
Material Adverse Effect.
9.1.10. Solvent Financial Condition. Each of Borrower and its
Subsidiaries is now Solvent and, after giving effect to the Loans to be made
hereunder and the consummation of the other transactions described in the Loan
Documents, Borrower and each of its Subsidiaries will be Solvent.
9.1.11. Taxes. The federal tax identification number of
Borrower is 58-0536190. Borrower and each Subsidiary has filed all federal,
state and local tax returns and other reports it is required by law to file and
has paid, or made provision for the payment of, all Taxes upon it, its income
and Properties as and when such Taxes are due and payable, except to the extent
being Properly Contested. The provision for Taxes on the books of Borrower and
each Subsidiary are adequate for all years not closed by applicable statutes,
and for its current Fiscal Year.
9.1.12. Brokers. There are no claims against any Obligor for
brokerage commissions, finder's fees or investment banking fees in connection
with the transactions contemplated by this Agreement or any of the other Loan
Documents.
9.1.13. Governmental Approvals. Each of Borrower and its
Subsidiaries has, and is in good standing with respect to, all Governmental
Approvals necessary to continue to conduct its business as heretofore or
proposed to be conducted by it and to own or lease and operate its Properties as
now owned or leased by it.
9.1.14. Compliance with Laws. Each of Borrower and its
Subsidiaries has duly complied with, and its Properties, business operations and
leaseholds are in compliance in all material respects with, the provisions of
all Applicable Law (except to the extent that any such noncompliance with
Applicable Law would not reasonably be expected to have a Material Adverse
Effect) and there have been no citations, notices or orders of noncompliance
issued to Borrower or any of the Subsidiaries under any such law, rule or
regulation.
9.1.15. Restrictions. Neither Borrower nor any of the
Subsidiaries is a party or subject to any contract, agreement, or charter or
other corporate restriction, which has or could be reasonably expected to have a
Material Adverse Effect. Neither Borrower nor any of the Subsidiaries is a
party or subject to any contract or agreement (other than this Agreement) which
restricts its right or ability to
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<PAGE> 45
incur Debt, none of which prohibit the execution of or compliance with this
Agreement or the other Loan Documents by Borrower or any of the Subsidiaries,
as applicable.
9.1.16. Litigation. Except as set forth on SCHEDULE 9.1.16
hereto, there are no actions, suits, proceedings or investigations pending on
the date hereof, or to the Knowledge of Borrower, threatened on the date hereof,
against or affecting Borrower or any of the Subsidiaries, or the business,
operations, Properties, prospects, profits or condition of Borrower or any of
the Subsidiaries, which, if determined adversely to Borrower or any Subsidiary,
would have a Material Adverse Effect. To the Knowledge of Borrower, neither
Borrower nor any of its Subsidiaries is in default on the date hereof with
respect to any order, writ, injunction, judgment, decree or rule of any court,
governmental authority or arbitration board or tribunal.
9.1.17. No Defaults. No event has occurred and no condition
exists which would, upon or after the execution and delivery of this Agreement
or Borrower's performance hereunder, constitute a Default or an Event of
Default. Neither Borrower nor any of the Subsidiaries is in default, and no
event has occurred and no condition exists which constitutes, or which with the
passage of time or the giving of notice or both would constitute, a default in
the payment of any Debt of Borrower or a Subsidiary to any Person for Money
Borrowed.
9.1.18. Pension Plans. Except as disclosed on SCHEDULE 9.1.18
hereto, neither Borrower nor any of the Subsidiaries has any Plan on the date
hereof. Borrower and each of its Subsidiaries is in full substantial compliance
with the requirements of ERISA and the regulations promulgated thereunder with
respect to each Plan. No fact or situation that is reasonably likely to result
in a material adverse change in the financial condition of Borrower or any of
the Subsidiaries exists in connection with any Plan. Neither Borrower nor any
of its Subsidiaries has any withdrawal liability in connection with a
Multiemployer Plan.
9.1.19. Trade Relations. There exists no actual or threatened
termination, cancellation or limitation of, or any materially adverse
modification or change in, the business relationship between any Borrower and
any customer or any group of customers whose purchases individually or in the
aggregate are material to the business of such Borrower, or with any material
supplier or group of suppliers, and there exists no condition or state of facts
or circumstances which is reasonably likely to have a Material Adverse Effect or
prevent any Borrower from conducting such business after the consummation of the
transaction contemplated by this Agreement in substantially the same manner in
which it has heretofore been conducted.
9.1.20. Rental Payments. Borrower is not in default in the
payment of any rent or any other sums owing by Borrower with respect to any
leased premises of Borrower, and Borrower does not have any Knowledge of any
other default in its performance under any such lease.
9.1.21. Labor Relations. Except as described on SCHEDULE
9.1.21 hereto, neither Borrower nor any of the Subsidiaries is a party to any
collective bargaining agreement on the date hereof. On the date hereof, there
are no material grievances, disputes or controversies with any union or any
other organization of Borrower's or any Subsidiary's employees, or, to
Borrower's Knowledge, any threats of strikes, work stoppages or any asserted
pending demands for collective bargaining by any union or organization.
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<PAGE> 46
9.1.22. Restricted Investment Company Act; Public Utility
Holding Company Act. No Obligor is an "investment company" or a "person
directly or indirectly controlled by or acting on behalf of an investment
company" within the meaning of the Restricted Investment Company Act of 1940,
or a "holding company," or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company," within the meaning of the Public Utility Holding Company Act of 1935.
9.1.23. Margin Stock. Neither Borrower nor any of the
Subsidiaries is engaged, principally or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying any
Margin Stock.
9.2. CONTINUOUS NATURE OF REPRESENTATIONS AND WARRANTIES. Each
representation and warranty contained in this Agreement and the other Loan
Documents shall be continuous in nature and shall remain accurate, complete and
not misleading at all times during the term of this Agreement, except for
changes in the nature of Borrower's or any Subsidiary's business or operations
that may occur after the date hereof in the ordinary course of business so long
as Required Lenders have consented to such changes and such changes are not
violative of any provision of this Agreement. Notwithstanding the foregoing,
representations and warranties which by their terms are applicable only to a
specific date shall be deemed made only at and as of such date.
9.3. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties of Borrower contained in this Agreement or any
of the other Loan Documents shall survive the execution, delivery and
acceptance thereof by Agent, Lenders and the parties thereto and the closing of
the transactions described therein or related thereto.
SECTION 10. COVENANTS AND CONTINUING AGREEMENTS
10.1. AFFIRMATIVE COVENANTS. For so long as there are any
Commitments outstanding and thereafter until payment in full of the
Obligations, Borrower covenants that, unless otherwise consented to by Agent in
writing, and shall cause each Subsidiary to:
10.1.1. Visits and Inspections. Permit representatives of
Agent, from time to time, as often as may be reasonably requested, but only
during normal business hours and (except when a Default or Event of Default
exists) upon reasonable prior notice to Borrower, to visit and inspect the
Properties of Borrower and each Subsidiary, inspect, audit and make extracts
from its books and records, and discuss with its officers, its employees and its
independent accountants, Borrower's and each Subsidiary's business, assets,
liabilities, financial condition, business prospects and results of operations.
Representatives of each Lender shall be authorized to accompany Agent on each
such visit and inspection and to participate with Agent therein.
10.1.2. Notices. Notify Agent and Lenders in writing,
promptly after Borrower's obtaining Knowledge thereof, (i) of the commencement
of any litigation affecting Borrower or any of its Properties, whether or not
the claims asserted in such litigation are considered by Borrower to be covered
by insurance, and of the institution of any administrative proceeding, to the
extent that such litigation or proceeding, if determined adversely to Borrower,
would reasonably be expected to have a Material Adverse Effect; (ii) of any
material labor dispute to which Borrower may become a party, any strikes or
walkouts relating to any of its plants or other facilities, and the expiration
of any labor contract to which it is a party or by which it is bound; (iii) of
any material default by Borrower under any note, indenture,
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<PAGE> 47
loan agreement, mortgage, lease, deed, guaranty or other similar agreement
relating to any Debt of Borrower exceeding $500,000; (iv) of any Default or
Event of Default; (v) of any default by any Person under any note or other
evidence of Debt payable to Borrower in an amount exceeding $500,000; (vi) of
any lawsuit or contested proceeding in which the amount in controversy exceeds
$500,000, and of the entry of any judgment or order in any such lawsuit or
proceeding; (vii) of any violation or asserted violation of ERISA or any
Environmental Law, the adverse resolution of which would reasonably be expected
to have a Material Adverse Effect; (viii) of any termination of the Beneficial
Agreement or the execution by Borrower of any agreement for a private label
credit card program for Borrower's customers; and (ix) the assertion by any
Noteholders that Borrower has defaulted in the performance of its obligations
under any of the Note Purchase Documents. In addition, Borrower shall give
Agent at least 30 Business Days' prior written notice of any Obligor's opening
of any new office or place of business.
10.1.3. Financial Statements. Keep, and cause each Subsidiary
to keep, adequate records and books of account with respect to its business
activities in which proper entries are made in accordance with GAAP reflecting
all its financial transactions; and cause to be prepared and to be furnished to
Agent and Lenders the following (all to be prepared in accordance with GAAP
applied on a consistent basis, unless Borrower's certified public accountants
concur in any change therein, such change is disclosed to Agent and is
consistent with GAAP and, if required by the Required Lenders, the financial
covenants set forth in Section 10.3 are amended in a manner requested by the
Required Lenders to take into account the effects of such change):
(i) as soon as available, and in any event within
95 days after the close of each Fiscal Year, unqualified audited
financial statements of Borrower and its Subsidiaries as of the end of
such Fiscal Year, on a Consolidated and consolidating basis, certified
without material qualification by a firm of independent certified
public accountants of recognized national standing selected by
Borrower but reasonably acceptable to Agent (except for a
qualification for a change in accounting principles with which the
accountant concurs), and setting forth in each case in comparative
form the corresponding Consolidated and consolidating figures for the
preceding Fiscal Year;
(ii) as soon as available, and in any event within
40 days after the end of each month hereafter, including the last
month of Borrower's Fiscal Year, unaudited interim financial
statements of Borrower and its Subsidiaries as of the end of such
month and of the portion of Borrower's financial year then elapsed, on
a Consolidated and consolidating basis, certified by the principal
financial officer of Borrower as prepared in accordance with GAAP and
fairly presenting the Consolidated financial position and results of
operations of Borrower and its Subsidiaries for such month and period
subject only to changes from audit and year-end adjustments and except
that such statements need not contain notes;
(iii) promptly after the sending or filing thereof,
as the case may be, copies of any proxy statements, financial
statements or reports which Borrower has made generally available to
its shareholders and copies of any regular, periodic and special
reports or registration statements which Borrower files with the
Securities and Exchange Commission or any governmental authority which
may be substituted therefor, or any national securities exchange;
(iv) promptly after the filing thereof, copies of
any annual report to be filed in accordance with ERISA in connection
with each Plan; and
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<PAGE> 48
(v) such other data and information (financial
and otherwise) as Agent, from time to time, may reasonably request,
bearing upon or related to the Collateral or Borrower's and each of
its Subsidiaries' financial condition or results of operations.
Concurrently with the delivery of the financial statements
described in clause (i) of this Section 10.1.3, Borrower shall deliver to Agent
and Lenders a copy of the accountants' letter to Borrower's management that is
prepared in connection with such financial statements. Concurrently with the
delivery of the financial statements described in clauses (i) and (ii) of this
Section 10.1.3, or more frequently if requested by any Lender during any period
that a Default or Event of Default, Borrower shall cause to be prepared and
furnished to Agent and Lenders a Compliance Certificate in the form of EXHIBIT
E hereto executed by the chief financial officer of Borrower.
10.1.4. Certain Reporting. Agent may, at any time in its
sole discretion, require Borrower to permit Agent to verify under the letterhead
of a certified public accountant the individual account balances of the
individual Account Debtors immediately upon Agent's request therefor, and, upon
Agent's request made at any time hereafter, Borrower shall furnish Agent with a
then current address list for all Account Debtors. Upon Agent's request,
Borrower shall furnish to Agent and each Lender a status report, certified by a
Senior Officer, of the aggregate Dollar amount of the items comprising the
accounts payable of Borrower and the age of each individual item thereof as of
the last day of the preceding month (segregating such items in such manner and
to such degree as Agent may request).
10.1.5. Projections. No later than 30 days prior to the end
of each Fiscal Year of Borrower, deliver to Agent and Lenders the Projections of
Borrower for the forthcoming 3 years, year by year, and for the forthcoming
Fiscal Year, month by month.
10.1.6. Taxes. Pay and discharge all Taxes prior to the date
on which such Taxes become delinquent or penalties attach thereto, except and to
the extent only that such Taxes are being Properly Contested.
10.1.7. Compliance with Laws. Comply with all Applicable Law,
including ERISA, all Environmental Laws and all laws, statutes, regulations and
ordinances regarding the collection, payment and deposit of Taxes, and obtain
and keep in force any and all Governmental Approvals necessary to the ownership
of its Properties or to the conduct of its business, to the extent that any such
failure to comply, obtain or keep in force would be reasonably likely to have a
Material Adverse Effect. Without limiting the generality of the foregoing, if
any Environmental Release shall occur at or on any of the Properties of Borrower
or any Subsidiary, Borrower shall, or shall cause the applicable Subsidiary to,
act immediately to investigate the extent of, and to make appropriate remedial
action to eliminate, such Environmental Release, whether or not ordered or
otherwise directed to do so by any governmental authority or agency.
10.1.8. Insurance. In addition to the insurance required
herein with respect to the Collateral, maintain with financially sound and
reputable insurers, insurance with respect to its Properties and business
against such casualties and contingencies of such type (including product
liability, business interruption, larceny, embezzlement, or other criminal
misappropriation insurance) and in such amounts as is customary in the business
of Borrower or such Subsidiary.
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<PAGE> 49
10.2. NEGATIVE COVENANTS. For so long as there are any Commitments
outstanding and thereafter until payment in full of the Obligations, Borrower
covenants that, unless Agent has first consented thereto in writing, it shall
not and shall not permit any Subsidiary to:
10.2.1. Fundamental Changes. Enter into any transaction to
merge, reorganize, consolidate or amalgamate with any Person, or liquidate, wind
up or dissolve itself, except for mergers or consolidations of any Subsidiary
with another Subsidiary.
10.2.2. Loans. Make any loans or other advances of money
other than for salary, travel advances, advances against commissions and other
similar advances in the ordinary course of business) to any Person (including
Borrower, a Subsidiary or an Affiliate), except loans to Green Capital not to
exceed $5,000,000 in principal amount outstanding at any time, but only if (a)
Agent is given at least 5 days' prior written notice thereof, (b) the terms of
the loan (including the terms of repayment) are evidenced in writing, and (c)
Green Capital in writing agrees with Borrower and Agent that Green Capital will
repay all such loans prior to making any Distributions to any of its partners
and will maintain partnership capital of at least $100,000,000 at all times that
any loans that any loans to it from Borrower are outstanding.
10.2.3. Debt for Money Borrowed. Create, incur, assume or
suffer to exist any Debt for Money Borrowed except for: (i) Debt for Money
Borrowed existing on the date of this Agreement; (ii) Debt for Money Borrowed
incurred pursuant to financial contractual agreements made and entered into, and
disclosed in writing to Agent and Lenders, prior to the date of this Agreement,
including Debt to the Noteholders under the Note Purchase Documents; (iii) Debt
for Money Borrowed from Agent or any Lender under any of the Loan Documents;
(iv) Subordinated Debt; (v) Permitted Purchase Money Debt; and (vi) Debt arising
under interest rate protection agreements between Borrower and any Lender that
have been approved in writing by Agent. In no event shall Borrower be permitted
to prepay any Debt for Money Borrowed, including any Debt owing under the Senior
Notes.
10.2.4. Affiliate Transactions. Except as set forth in
Schedule 10.2.4, enter into, or be a party to any transaction with any Affiliate
or stockholder, except (i) the transactions contemplated by the Loan Documents;
(ii) payment of customary directors' fees and indemnities; (iii) transactions
with Affiliates that were consummated prior to the date hereof and that have
been disclosed to Lenders; and (iv) in the ordinary course of and pursuant to
the reasonable requirements of Borrower's or such Subsidiary's business and upon
fair and reasonable terms which are fully disclosed to Agent and are no less
favorable to Borrower or such Subsidiary than would obtain in a comparable arm's
length transaction with a Person not an Affiliate or stockholder of Borrower or
such Subsidiary.
10.2.5. Limitation on Liens. Create or suffer to exist any
Lien upon any of its Property, income or profits, whether now owned or hereafter
acquired, except:
(i) Liens at any time granted in favor of Agent;
(ii) Liens for Taxes (excluding any Lien imposed
pursuant to any of the provisions of ERISA) not yet due or being
Properly Contested;
(iii) A statutory Lien arising in the ordinary
course of Borrower's or a Subsidiary's business by operation of law,
but only if payment in respect of any such Lien is not at the time
required or the Debt secured by such Lien is being Properly Contested
and such Lien
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<PAGE> 50
does not materially detract from the value of the Property of Borrower
or such Subsidiary and does not materially impair the use thereof in
the operation of Borrower's or such Subsidiary's business;
(iv) Purchase Money Liens securing Permitted
Purchase Money Debt;
(v) A Lien arising by virtue of the rendition,
entry or issuance against Borrower or any Subsidiary, or any Property
of Borrower or any Subsidiary, of any judgment, writ, order, or decree
for so long as such Lien is in existence for less than 30 consecutive
days after it first arises, is at all times junior in priority to any
Liens in favor of Agent and is being Properly Contested;
(vi) Liens incurred or deposits made in the
ordinary course of business to secure the performance of tenders, bids,
leases, contracts (other than for the repayment of Money Borrowed),
statutory obligations and other similar obligations or arising as a
result of progress payments under government contracts, provided that,
to the extent any such Liens attach to any of the Collateral, such
Liens are at all times subordinate and junior to the Liens upon the
Collateral in favor of Agent;
(vii) easements, rights-of-way, restrictions,
covenants or other agreements of record and other similar charges or
encumbrances on real Property of Borrower or a Subsidiary that do not
interfere with the ordinary conduct of the business of Borrower or such
Subsidiary;
(viii) Liens in existence immediately prior to the
Closing Date that are satisfied in full and released on the Closing
Date as a result of the application of Borrower's cash on hand at the
Closing Date and the proceeds of the Loans to be made on the Closing
Date;
(ix) such other Liens as appear on SCHEDULE
10.2.5 hereto, to the extent provided therein; and
(x) such other Liens as Required Lenders in their
sole discretion may hereafter approve in writing.
10.2.6. Subordinated Debt. Make any payment of any part or
all of any Subordinated Debt or take any other action or omit to take any other
action in respect of any Subordinated Debt, except in accordance with the
subordination agreement relative thereto.
10.2.7. Distributions. Declare or make any Distributions;
provided, however, that so long as no Default or Event of Default exists,
Borrower may repurchase its capital stock in an aggregate amount of up to
$3,000,000.
10.2.8. Capital Expenditures. Make Capital Expenditures
including, by way of capitalized leases) which in the aggregate, as to Borrower
and its Subsidiaries, exceed $20,000,000 during Fiscal Year 1996, $18,000,000
during either of Fiscal Years 1997 and 1998 or $15,000,000 during Fiscal Year
1999 or during any Fiscal Year thereafter; provided, however, Capital
Expenditures made by Borrower in connection with the Acquisitions of Weberg
Enterprises, Inc. and The Glick Furniture Company shall not be included in the
foregoing calculations.
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<PAGE> 51
10.2.9. Disposition of Assets. Except as set forth in
Schedule 10.2.9, sell, assign, lease, consign or otherwise dispose of any of its
Properties or any interest therein, including any disposition of Property as
part of a sale and leaseback transaction, to or in favor of any Person, except
(i) sales of Inventory in the ordinary course of business for so long as no
Event of Default exists hereunder, (ii) dispositions of Property (other than
Inventory) in the ordinary course of business, (iii) a transfer of Property to
Borrower by a Subsidiary; and (iv) dispositions expressly authorized by other
provisions of this Agreement.
10.2.10. Stock of Subsidiaries. Permit any of the Subsidiaries
to issue any additional shares of its capital stock except director's qualifying
shares.
10.2.11. Restricted Investments. Make or have, or permit any
Subsidiary to make or have, any Restricted Investment, except for Permitted
Acquisitions.
10.2.12. Tax Consolidation. File or consent to the filing of
any consolidated income tax return with any Person other than a Subsidiary.
10.2.13. Fiscal Year. Establish a fiscal year different from
the Fiscal Year.
10.2.14. Corporate Documents. Amend, modify or otherwise
change any of the terms or provisions in any of its corporate charter, articles
of incorporation, bylaws or other governing documents as in effect on the
Closing Date, except for changes that do not affect in any way Borrower's or
such Subsidiary's rights and obligations to enter into and perform the Loan
Documents to which it is a party to pay all of the Obligations and that do not
have a Material Adverse Effect.
10.3. SPECIFIC FINANCIAL COVENANTS. For so long as there are any
Commitments outstanding and thereafter until payment in full of the
Obligations, Borrower covenants that, unless otherwise consented to by Agent in
writing, it shall:
10.3.1. Minimum EBITDA. Borrower shall at all times maintain
Consolidated EBITDA of at least the amount shown below for the period
corresponding thereto:
<TABLE>
<CAPTION>
Period Amount
------ ------
<S> <C>
March 1, 1996 through $7,000,000
May 31, 1996
March 1, 1996 through $16,000,000
August 30, 1996
March 1, 1996 through $35,000,000
November 30, 1996
March 1, 1996 through $45,000,000
February 28, 1997
March 1, 1997 through
February 28, 1998 $47,000,000, calculated quarterly based upon the
immediately preceding four (4) fiscal quarters of
Borrower
</TABLE>
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<PAGE> 52
<TABLE>
<S> <C>
March 1, 1998 and thereafter $48,000,000, calculated quarterly based upon the
immediately preceding four (4) fiscal quarters of
Borrower
</TABLE>
10.3.2 Consolidated Fixed Charge Coverage Ratio. Borrower
shall at all times maintain a Consolidated Fixed Charge Coverage Ratio of at
least the ratios shown below for the period corresponding thereto, calculated
quarterly based upon the immediately preceding 4 fiscal quarters:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Closing Date through 1.50 to 1
February 28, 1997
March 1, 1997 through 1.75 to 1
February 28, 1998
March 1, 1998 and 2.0 to 1
thereafter
</TABLE>
10.3.3 Minimum Consolidated Net Worth. Borrower shall at
all times maintain a Consolidated Net Worth of at least an amount equal to the
sum of (i) $65,000,000, plus (ii) beginning with the fiscal quarter ending
November 30, 1995, 75% of Consolidated Net Income for each quarter thereafter
on a cumulative basis, without giving effect to any losses.
10.3.4 Consolidated Leverage Ratio. Borrower shall at all
times maintain a Consolidated Leverage Ratio that does not exceed the ratios
shown below for the periods corresponding thereto:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Closing Date through 2.75 to 1
February 27, 1997
February 28, 1997 through 2.50 to 1
February 27, 1998
February 28, 1998 and 2.25 to 1
thereafter
</TABLE>
SECTION 11. CONDITIONS PRECEDENT
11.1. CONDITIONS PRECEDENT TO INITIAL CREDIT EXTENSIONS.
Notwithstanding any other provision of this Agreement or any of the other Loan
Documents, and without affecting in any manner the rights of Agent and Lenders
under the other sections of this Agreement, Lenders shall not be required to
make the initial Revolver Loans requested by Borrower or, to fund any of the
Term Loan Advances unless, on or before January 16, 1996, each of the following
conditions has been and continues to be satisfied:
11.1.1. Loan Documents. Each of the Loan Documents to be
executed on or about the Closing Date shall be in form and substance
satisfactory to Agent and Lenders, shall have been duly executed and delivered
to Agent by each of the signatories thereto and shall be accepted by Agent and
Lenders.
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11.1.2. Availability. Agent shall have determined, and
Lenders shall be satisfied that, immediately after Lenders have made the initial
Loans on the Closing Date, and Borrower has paid (or made provision for payment
of) all closing costs incurred in connection with the Commitments, Availability
is not less than $5,000,000.
11.1.3. Evidence of Perfection and Priority of Liens. Agent
shall have received copies of all filing receipts or acknowledgments issued by
any governmental authority to evidence any filing or recordation necessary to
perfect the Liens of Agent in the Collateral and evidence in form satisfactory
to Agent and Lenders that such Liens constitute valid and perfected security
interests and Liens, and that there are no other Liens upon any Collateral
except for Permitted Liens.
11.1.4. Articles of Incorporation. Agent shall have received
a copy of the Articles or Certificate of Incorporation of Borrower and each
Obligor, and all amendments thereto, certified by the Secretary of State or
other appropriate officials of the jurisdiction of Borrower's and each Obligor's
states of incorporation.
11.1.5. Good Standing Certificates. Agent shall have received
good standing certificates for Borrower, issued by the Secretary of State or
other appropriate official of Borrower's jurisdiction of incorporation and each
jurisdiction where the conduct of Borrower's business activities or ownerships
of its Property necessitates qualification.
11.1.6. Opinion Letters. Agent shall have received a
favorable, written opinion of King & Spalding covering the matters set forth on
EXHIBIT F attached hereto.
11.1.7. Insurance. Agent shall have received copies of the
casualty insurance policies of Borrower with respect to the Collateral, together
with loss payable endorsements on Agent's standard form of loss payee
endorsement naming Agent as loss payee with respect to each such policy and
copies of Borrower's liability insurance policies, together with endorsements
naming Agent as a co-insured, all as required by the Loan Documents.
11.1.8. Landlord Agreements. Agent shall have received all
landlord or warehouseman agreements with respect to all premises leased by
Borrower and which are disclosed on SCHEDULE 8.1.1 hereto.
11.1.9. No Labor Disputes. Agent shall have received
assurances satisfactory to it that there are no threats of strikes or work
stoppages by any employees, or organization of employees, of any Obligor which
Agent reasonably determines may have a Material Adverse Effect.
11.1.10. Compliance with Laws and Other Agreements. Agent
shall have determined or received assurances satisfactory to it that none of the
Loan Documents or any of the transactions contemplated thereby violate any
applicable law, court order or agreement binding upon any Obligor.
11.1.11. No Material Adverse Change. No material adverse
change in the financial condition of any Obligor or the quality, quantity or
value of any Collateral shall have occurred since August 31, 1995.
11.2. CONDITIONS PRECEDENT TO ALL CREDIT EXTENSIONS.
Notwithstanding any other provision of this Agreement or any of the other Loan
Documents, and without affecting in any manner the rights of Agent and Lenders
under the other sections of this Agreement, Lenders shall not be required to
make
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any Loans or otherwise extend any credit to or for the benefit of Borrower,
unless and until each of the following conditions has been and continues to be
satisfied:
11.2.1. No Defaults. No Default or Event of Default shall
exist;
11.2.2. Satisfaction of Conditions in Other Loan Documents.
Each of the conditions precedent set forth in any other Loan Document shall have
been and shall remain satisfied; and
11.2.3. No Litigation. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or proposed
before any court, governmental agency or legislative body to enjoin, restrain or
prohibit, or to obtain damages in respect of, or which is related to or arises
out of, this Agreement or the consummation of the transactions contemplated
hereby.
11.2.4. No Material Adverse Effect. No event shall have
occurred and no condition shall exist which has or may be reasonably likely to
have a Material Adverse Effect.
11.3. LIMITED WAIVER OF CONDITIONS PRECEDENT. If Lenders shall make
any Loans under this Agreement at a time when any of the foregoing conditions
precedent are not satisfied (regardless of whether the failure of satisfaction
of any such conditions precedent was known or unknown to Agent or Lenders), the
funding of such Loans shall not operate as a waiver of the right of Agent and
Lenders to insist upon the satisfaction of all conditions precedent with
respect to each subsequent Borrowing requested by Borrower or a waiver of any
Default or Event of Default as a consequence of the failure of any such
conditions to be satisfied, unless Agent, with the prior consent of the
Required Lenders, in writing waives the satisfaction of any condition precedent
in which event such waiver shall only be applicable for the specific instance
given and only to the extent and for the period of time expressly stated in
such written waiver.
SECTION 12. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
12.1. EVENTS OF DEFAULT. The occurrence or existence 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 13.9 hereof):
12.1.1. Payment of Obligations. Borrower shall fail to pay
any of the Obligations on the due date thereof (whether due at stated maturity,
on demand, upon acceleration or otherwise).
12.1.2. Misrepresentations. Any representation, warranty or
other written statement to Agent or any Lender by or on behalf of Borrower or
any other Obligor, whether made in or furnished in compliance with or in
reference to any of the Loan Documents, proves to have been false or misleading
in any material respect when made or furnished or when reaffirmed pursuant to
Section 9.2 hereof.
12.1.3. Breach of Specific Covenants. Borrower shall fail or
neglect to perform, keep or observe any covenant contained in Sections 7.2,
8.1.1, 10.1.1, 10.1.3, 10.2 or 10.3 hereof on the date that Borrower is
required to perform, keep or observe such covenant.
12.1.4. Breach of Other Covenants. Borrower shall fail or
neglect to perform, keep or observe any covenant contained in this Agreement
(other than a covenant which is dealt with specifically elsewhere in Section
12.1 hereof) and the breach of such other covenant is not cured to Agent's and
the
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Required Lender's satisfaction within 15 days after the sooner to occur of any
Senior Officer's receipt of notice of such breach from Agent or the date on
which such failure or neglect first becomes known to any Senior Officer;
provided, however, that such notice and opportunity to cure shall not apply in
the case of any failure to perform, keep or observe any covenant which is not
capable of being cured at all or within such 15-day period or which is a
willful and knowing breach by Borrower.
12.1.5. Default Under Security Documents/Other Agreements.
An event of default under any of the Security Documents or Other Agreements
shall occur.
12.1.6. Other Defaults. There shall occur any default or
event of default on the part of Borrower or any Subsidiary under the Note
Purchase Documents or any other agreement, document or instrument to which
Borrower or any Subsidiary is a party or by which Borrower or any Subsidiary or
any of their respective Properties is bound, creating or relating to any Debt
in excess of $1,000,000 if the payment or maturity of such Debt may be
accelerated in consequence of such event of default or demand for payment of
such Debt may be made.
12.1.7. Uninsured Losses. Any material loss, theft, damage
or destruction of any of the Collateral not fully covered (subject to such
deductibles as Agent shall have permitted) by insurance if the amount not
covered by insurance exceeds $500,000.
12.1.8. Material Adverse Change. There shall occur any event
or condition that has a Material Adverse Effect, or there shall occur any
material adverse change in the financial condition or business prospects of
Borrower or any Guarantor.
12.1.9. Insolvency Proceedings. Borrower or any Guarantor
shall commence, or shall consent to the commencement against it of, any
Insolvency Proceeding; or any Insolvency Proceeding shall be commenced against
Borrower or any Guarantor and the same shall not have been dismissed within 60
days after the commencement thereof; or any motion, complaint or other
pleadings filed in any bankruptcy case of any Person other than Borrower and
such motion, complaint or pleading seeks the consolidation of Borrower's assets
and liabilities with the assets and liabilities of such Person.
12.1.10. Business Disruption; Condemnation. There shall
occur a cessation of a substantial part of the business of Borrower for a
period which may be reasonably expected to have a Material Adverse Effect; or
Borrower shall suffer the loss or revocation of any license or permit now held
or hereafter acquired by Borrower which is necessary to the continued or lawful
operation of its business; or Borrower shall be enjoined, restrained or in any
way prevented by court, governmental or administrative order from conducting
all or any material part of its business affairs; or any material lease or
agreement pursuant to which Borrower leases or occupies any premises on which
any Collateral is located shall be canceled or terminated prior to the
expiration of its stated term and such cancellation or termination has a
Material Adverse Effect or results in an Out-of-Formula Condition; or any
material part of the Collateral shall be taken through condemnation or the
value of such Property shall be materially impaired through condemnation.
12.1.11. Change of Control. Any Person (other than Green
Capital) or an affiliated group of Person shall acquire more than 50% of the
issued and outstanding Voting Stock of Borrower.
12.1.12. ERISA. A Reportable Event shall occur which Agent,
in its sole discretion, shall determine in good faith constitutes grounds for
the termination by the Pension Benefit Guaranty Corporation of any Plan or for
the appointment by the appropriate United States district court of a trustee
for any Plan, or if any Plan shall be terminated or any such trustee shall be
requested or appointed, or
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if Borrower, any Subsidiary or any Obligor is in "default" (as defined in
Section 4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan
resulting from Borrower's, such Subsidiary's or such Obligor's complete or
partial withdrawal from such Plan.
12.1.13. Challenge to Agreement. Any Obligor, or any of
their respective Affiliates, shall challenge or contest in any action, suit or
proceeding the validity or enforceability of any of the Loan Documents, the
legality or enforceability of any of the Obligations or the perfection or
priority of any Lien granted to Agent.
12.1.14. Repudiation of or Default Under Guaranty. Any
Guarantor shall revoke or attempt to revoke the Guaranty signed by such
Guarantor, or shall repudiate such Guarantor's liability thereunder or shall be
in default under the terms thereof.
12.1.15. Prepayment of Senior Notes. Borrower shall prepay
any principal, interest or other amounts owing under any of the Senior Notes.
12.2. ACCELERATION OF THE OBLIGATIONS. Without in any way limiting
the right of Agent to demand payment of any portion of the Obligations payable
on demand in accordance with Section 5.4 hereof, 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 the Required Lenders, shall)
declare the principal of and any accrued interest on the Loans and all other
Obligations owing under any of the Loan Documents to be, 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 the entire principal of and accrued and unpaid interest
on the Loans and other 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 the occurrence of an Event of Default
specified in Section 12.1.9 hereof, all of the Obligations shall become
automatically due and payable without declaration, notice or demand by Agent
and the Commitments shall automatically terminate.
12.3. OTHER REMEDIES. Upon and after the occurrence of an Event of
Default, Agent may in its discretion (and, upon receipt of written direction of
the Required Lenders, shall) exercise from time to time the following rights
and remedies:
12.3.1. All of the rights and remedies of a secured party
under the UCC or under other Applicable Law, and all other legal and equitable
rights to which Agent may be entitled, all of which rights and remedies shall be
cumulative and shall be in addition to any other rights or remedies contained in
this Agreement or any of the other Loan Documents, and none of which shall be
exclusive.
12.3.2. The right to take immediate possession of any of the
Collateral, and to (i) require Borrower to assemble the Collateral, at
Borrower's expense, and make it available to Agent at a place designated by
Agent which is reasonably convenient to both parties, and (ii) enter any
premises where any of the Collateral shall be located and to keep and store the
Collateral on said premises until sold (and if said premises be the Property of
Borrower, then Borrower agrees not to charge Agent for storage thereof).
12.3.3. The right to sell or otherwise dispose of all or any
Collateral in its then condition, or after any further manufacturing or
processing thereof, at public or private sale or sales, with such notice as may
be required by law, in lots or in bulk, for cash or on credit, all as Agent, in
its sole discretion, may deem advisable. Borrower agrees that any requirement
of notice to Borrower or any other Obligor of any proposed public or private
sale or other disposition of Collateral by Agent shall be
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deemed reasonable notice thereof if given at least 5 days prior thereto, and
such sale may be at such locations as Agent may designate in said notice.
Agent shall have the right to conduct such sales on Borrower's or any other
Obligor's premises, without charge therefor, and such sales may be adjourned
from time to time in accordance with Applicable Law. Agent shall have the
right to sell, lease or otherwise dispose of the Collateral, or any part
thereof, for cash, credit or any combination thereof, and Agent may purchase
all or any part of the Collateral at public or, if permitted by law, private
sale and, in lieu of actual payment of such purchase price, may set off the
amount of such price against the Obligations. The proceeds realized from the
sale of any Collateral may be applied, after allowing 2 Business Days for
collection, first to the costs, expenses and attorneys' fees incurred by Agent
in collecting the Obligations, in enforcing the rights of Agent under the Loan
Documents and in collecting, retaking, completing, protecting, removing,
storing, advertising for sale, selling and delivering any Collateral, second to
the interest due upon any of the Obligations; and third, to the principal of
the Obligations. If any deficiency shall arise, Borrower and each Guarantor
shall remain jointly and severally liable to Agent therefor.
12.3.4. Agent is hereby granted a license or other right to
use, without charge, Borrower's labels, patents, copyrights, rights of use of
any name, trade secrets, tradenames, trademarks and advertising matter, or any
Property of a similar nature, as it pertains to the Collateral, in advertising
for sale and selling any Collateral and Borrower's rights under all licenses and
all franchise agreements shall inure to Agent's benefit.
12.4. SETOFF. In addition to any Liens granted under any of the
Loan Documents and any rights now or hereafter available under Applicable Law,
Agent and each Lender (and each of their respective Affiliates) is hereby
authorized by Borrower at any time that an Event of Default exists, without
notice to Borrower or any other Person (any such notice being hereby expressly
waived) to set off and to appropriate and to apply any and all deposits,
general or special (including Debt evidenced by certificates of deposit whether
matured or unmatured (but not including trust accounts)) and any other Debt at
any time held or owing by Agent, such Lender or any of their Affiliates to or
for the credit or the account of Borrower against and on account of the
Obligations of Borrower arising under the Loan Documents to Agent, such Lender
or any of their Affiliates, including all Loans and all claims of any nature or
description arising out of or in connection with this Agreement, irrespective
of whether or not (i) Agent or such Lender shall have made any demand hereunder
or (ii) Agent, at the request or with the consent of the Required Lenders shall
have declared the principal of and interest on the Loans and other amounts due
hereunder to be due and payable as permitted by this Agreement and even though
such Obligations may be contingent or unmatured. Notwithstanding the
foregoing, each of Agent and Lenders agree with each other that it shall not,
without the express consent of the Required Lenders, and that it shall (to the
extent that it is lawfully entitled to do so) upon the request of the Required
Lenders, exercise its setoff rights hereunder against any accounts of Borrower
now or hereafter maintained with Agent, such Lender or any Affiliate of any of
them. If any party (or its Affiliate) exercises the right of setoff provided
for hereunder, such party shall be obligated to share any such setoff in the
manner and to the extent required by Section 13.5.
12.5. REMEDIES CUMULATIVE; NO WAIVER. All covenants, conditions,
provisions, warranties, guaranties, indemnities, and other undertakings of
Borrower contained in this Agreement and the other Loan Documents, or in any
document referred to herein or contained in any agreement supplementary hereto
or in any schedule or in any Subsidiary Guaranty given to Agent or contained in
any other agreement between Agent and Borrower, heretofore, concurrently, or
hereafter entered into, shall be deemed cumulative to and not in derogation or
substitution of any of the terms, covenants, conditions, or agreements of
Borrower herein contained. The failure or delay of Agent to require strict
performance by Borrower of any provision of this Agreement or to exercise or
enforce any rights, Liens, powers, or
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remedies hereunder or under any of the aforesaid agreements or other documents
or security or Collateral shall not operate as a waiver of such performance,
Liens, rights, powers and remedies, but all such requirements, Liens, rights,
powers, and remedies shall continue in full force and effect until all Loans
and all other Obligations owing or to become owing from Borrower to Agent shall
have been fully satisfied. None of the undertakings, agreements, warranties,
covenants and representations of Borrower contained in this Agreement or any of
the other Loan Documents and no Event of Default by Borrower under this
Agreement or any other Loan Documents shall be deemed to have been suspended or
waived by Agent, unless such suspension or waiver is by an instrument in
writing specifying such suspension or waiver and is signed by a duly authorized
representative of Agent and directed to Borrower.
SECTION 13. AGENT
13.1. APPOINTMENT, AUTHORITY AND DUTIES OF AGENT.
13.1.1. Each Lender hereby irrevocably appoints and
designates Wachovia as Agent to act as herein specified. Agent may, and each
Lender by its acceptance of a Note shall be deemed irrevocably to have
authorized Agent to, enter into all Loan Documents relating to any Collateral,
for its benefit and the Pro Rata benefit of Lenders and, except as otherwise
provided in this Section 12, to exercise such rights and powers under this
Agreement and the other Loan Documents 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 taken by
Agent or the Required Lenders in accordance with the provisions of this
Agreement or the other Loan Documents, and the exercise by Agent or the
Required Lenders of any of the powers set forth herein or therein, together
with such other powers as are reasonably incidental thereto, shall be
authorized and binding upon all Lenders. Without limiting the generality of
the foregoing, Agent shall have the sole and exclusive right and authority to
(a) act as the disbursing and collecting agent for Lenders with respect to all
payments and collections arising in connection with this Agreement and the
other Loan Documents; (b) execute and deliver as Agent each Loan Document and
accept delivery of each such agreement delivered by Borrower or any other
Obligor; (c) act as collateral agent for Lenders for purposes of the perfection
of all security interest and Liens created by such agreements and, subject to
the direction of the Required Lenders, for all other purposes stated therein;
(d) subject to the direction of the Required Lenders, manage, supervise or
otherwise deal with the Collateral; (e) take such action as is necessary or
desirable to maintain the perfection and priority of the security interest and
Liens created or to be created by the Loan Documents; and (f) except as may be
otherwise specifically restricted by the terms of this Agreement and subject to
the direction of the Required Lenders, exercise all remedies given to Agent or
Lenders with respect to any of the Collateral under the Loan Documents relating
thereto, Applicable Law or otherwise. The duties of Agent shall be ministerial
and administrative in nature, and Agent shall not have by reason of this
Agreement or any other Loan Document a fiduciary relationship with any Lender
(or any Lender's participants).
13.1.2. Agent (which term, as used in this sentence, shall
include reference to Agent's Affiliates and to the officers, directors,
employees and agents of Agent's Affiliates) shall not: (a) have any duties or
responsibilities except those expressly set forth in this Agreement and the
other Loan Documents; (b) be responsible to any Lender (or any Lender's
participants) for any recitals, statements, representations or warranties
contained in any of the Loan Documents or in any certificate or other document
referred to or provided for in, or received by any Lender under, any of the
other Loan Documents, or for the existence, value or sufficiency of the
Collateral or the perfection or priority of a Lien therein or the validity or
enforceability this Agreement or any of the other Loan Documents or any other
document referred to or provided for herein or therein, or for any failure by
Borrower, any Guarantor or any other Person (other than Agent) who is at any
time a signatory to any of the Loan
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Documents to perform any of its obligations hereunder or thereunder; (c) be
required to initiate or conduct any litigation, foreclosure or collection
proceedings hereunder or under any of the other Loan Documents except to the
extent directed to do so by the Required Lenders during the continuance of any
Event of Default; or (d) be responsible for any action taken or omitted to be
taken hereunder or under any of the other Loan Documents or under any other
document or instrument referred to or provided for herein or therein or in
connection herewith or therewith, except for its own willful misconduct or
gross negligence.
13.1.3. Agent may perform any of its duties by or through its
agents and employees and may employ agents and attorneys-in-fact and shall not
be responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. Borrower shall promptly
(and in any event, ON DEMAND) reimburse Agent for all reasonable expenses
(including all Extraordinary Expenses) incurred by Agent pursuant to any of the
provisions hereof or of any of the other Loan Documents or in the execution of
any of Agent's duties hereby or thereby created or in the exercise of any right
or power herein or therein imposed or conferred upon it or Lenders (excluding,
however, general overhead expenses), and each Lender agrees promptly to pay to
Agent, ON DEMAND, such Lender's Pro Rata share of any such reimbursement for
expenses (including Extraordinary Expenses) that is not timely made by Borrower
to Agent.
13.1.4. The rights, remedies, powers and privileges conferred
upon Agent hereunder and under the other Loan Documents may be exercised by
Agent without the necessity of the joinder of any other parties unless
otherwise required by Applicable Law. If Agent shall request instructions from
the Required Lenders with respect to any act or action (including the failure
to act) in connection with this Agreement or any of the other Loan Documents,
Agent shall be entitled to refrain from such act or taking such action unless
and until Agent shall have received instructions from the Required Lenders; and
Agent shall not incur liability to any Person by reason of so refraining.
Without limiting the foregoing, no Lender shall have any right of action
whatsoever against Agent as a result of Agent acting or refraining from acting
hereunder or under any of the Loan Documents in accordance with the
instructions of the Required Lenders.
13.1.5. Agent shall promptly, upon receipt thereof, forward
to each Lender copies of any written notices, reports, certificates and other
information received by Agent from any Obligor (to the extent such Obligor is
not required by the terms of the Loan Documents to supply such information
directly to Lenders) and copies of the results of any field audits by Agent
with respect to Borrower.
13.2. AGREEMENTS REGARDING COLLATERAL. Each Lender shall have a Pro
Rata interest in the security interests and Liens in and to the Collateral and
any other Property granted and assigned to Agent under the Loan Documents. The
Lenders hereby irrevocably authorize Agent, at its option and in its
discretion, to release any Lien upon any Collateral upon the termination of the
Commitments and payment or satisfaction of all of the Obligations. Agent
shall, if directed to do so by the Required Lenders, release any Lien upon any
Collateral having a value of less than $20,000 in the aggregate during any
12-month period. Except as expressly provided herein, Agent shall not release
any of the Liens without the prior written authorization of all Lenders. Agent
shall have no obligation whatsoever to any of the Lenders to assure that any of
the Collateral exists or is owned by Borrower or is cared for, protected or
insured or has been encumbered, or that Agent's Liens have been properly or
sufficiently or lawfully created, perfected, protected or enforced or entitled
to any particular priority or to exercise at all or in any manner or under any
duty of care, disclosure or fidelity, or to continue exercising, any of the
rights or powers granted or available to Agent pursuant to this Agreement or
any of the other Loan Documents, it being understood and agreed that in respect
of the Collateral, or any act, omission or event related thereto,
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Agent may act in any manner it may deem appropriate, in its discretion, given
Agent's own interests in the Collateral in its capacity as one of the Lenders.
13.3. RELIANCE BY AGENT. 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 or Persons, 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 other Loan Documents, Agent shall in all cases be
fully protected in acting or refraining from acting hereunder and thereunder in
accordance with the instructions of the Required Lenders, and such instructions
of the Required Lenders and any action taken or failure to act pursuant thereto
shall be binding upon Lenders.
13.4. ACTION UPON DEFAULT. Agent shall not be deemed to have
knowledge of the occurrence of a Default or an Event of Default unless it has
received notice from a Lender or Borrower specifying the occurrence of such
Default or Event of Default. If Agent shall receive such a notice of the
occurrence of a Default or an Event of Default or shall otherwise acquire
actual knowledge of any Default or Event of Default, Agent shall promptly
notify Lenders in writing and Agent shall take such action and assert such
rights under this Agreement and the other Loan Documents, or shall refrain from
taking such action and asserting such rights, as the Required Lenders shall
direct from time to time. If any Lender shall receive a notice of the
occurrence of a Default or an Event of Default or shall otherwise acquire
actual knowledge of any Default or Event of Default, such Lender shall promptly
notify Agent and the other Lenders in writing. As provided in Section 13.3
hereof, Agent shall not be subject to any liability by reason of acting or
refraining to act pursuant to any request of the Required Lenders except for
its own willful misconduct or gross negligence. Before directing Agent to take
or refrain from taking any action or asserting any rights under this Agreement
and the other Loan Documents, the Required Lenders shall consult with and seek
the advice of (but without having to obtain the consent of) each other Lender,
and promptly after directing Agent to take or refrain from taking any such
action or asserting any such rights, the Required Lenders will so advise each
other Lender of the action taken or refrained from being taken and, upon
request of any Lender, will supply information concerning actions taken or not
taken. In no event shall the Required Lenders, without the prior written
consent of each Lender, direct Agent to accelerate and demand payment of the
Loans held by one Lender without accelerating and demanding payment of all
other Loans. Each Lender agrees that it will not take any legal action, nor
will it institute any action or proceeding, against Borrower or any other
Obligor with respect to any of the Loans or with respect to any Collateral,
without the prior written consent of the Required Lenders and, without limiting
the generality of the foregoing, no Lender may accelerate or otherwise enforce
its portion of the Obligations.
13.5. RATABLE SHARING. If any Lender shall obtain any payment or
reduction (including any amounts received as adequate protection of a bank
account deposit treated as cash collateral under the Bankruptcy Code) of any
Obligation of Borrower hereunder (whether voluntary, involuntary, through the
exercise of any right of set-off or otherwise) in excess of its Pro Rata share
of payments or reductions on account of such Obligations obtained by all of the
Lenders, such Lender shall forthwith (i) notify the other Lenders and Agent of
such receipt and (ii) purchase from the other Lenders such participations in
the affected Obligations as shall be necessary to cause such purchasing Lender
to share the excess payment or reduction, net of 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. Borrower agrees that any Lender so purchasing a
participation from another Lender pursuant to this Section 13.5 may, to the
fullest
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extent permitted by Applicable Law, exercise all of its rights of payment
(including the right of set-off) with respect to such participation as fully as
if such Lender were the direct creditor of Borrower in the amount of such
participation.
13.6. INDEMNIFICATION OF AGENT.
13.6.1. Each Lender severally agrees to indemnify and defend
the Agent Indemnitees (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, and to hold each of the Agent
Indemnitees harmless from and against, any and all Claims which may be imposed
on, incurred by or asserted against any of the Agent Indemnitees in any way
related to or arising out of this Agreement or any of the other Loan Documents
or any other document contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby (including the costs and expenses
which Borrower is obligated to pay under Section 15.2 hereof) or the
enforcement of any of the terms hereof or thereof or of any such other
documents, provided that no Lender shall be liable to any Agent Indemnitee for
any of the foregoing to the extent that they result solely from the willful
misconduct or gross negligence of such Agent Indemnitee.
13.6.2. Without limiting the generality of the foregoing
provisions of this Section 13.6, if Agent should be sued by any receiver,
trustee in bankruptcy, debtor-in-possession or other Person on account of any
alleged preference or fraudulent transfer received or alleged to have been
received from Borrower or any Guarantor as the result of any transaction under
the Loan Documents, then in such event any monies paid by Agent in settlement
or satisfaction of such suit, together with all Extraordinary Expenses incurred
by Agent in the defense of same, shall be promptly reimbursed to Agent by
Lenders to the extent of each Lender's Pro Rata share.
13.6.3. Without limiting the generality of the foregoing
provisions of this Section 13.6, if at any time (whether prior to or after the
Commitment Termination Date) any action or proceeding shall be brought against
any of the Agent Indemnitees by an Obligor or by any other Person claiming by,
through or under an Obligor, to recover damages for any act taken or omitted by
Agent under any of the Loan Documents or in the performance of any rights,
powers or remedies of Agent against Obligor, any Account Debtor, the Collateral
or with respect to any Revolver Loans, or to obtain any other relief of any
kind on account of any transaction between Agent and the Agent Indemnitees
under or in relation to any of the Loan Documents, Lenders agree to indemnify,
defend and hold the Agent Indemnitees harmless with respect thereto and to pay
to the Agent Indemnitees their respective Pro Rata shares of such amount as the
Agent Indemnitees shall be required to pay by reason of a judgment, decree, or
other order entered in such action or proceeding or by reason of any compromise
or settlement agreed to by the Agent Indemnitees, including all interest and
costs assessed against the Agent Indemnitees in defending or compromising such
action, together with attorneys' fees and other legal expenses paid or incurred
by the Agent Indemnitees in connection therewith; provided, however, that no
Lender shall be liable to any Agent Indemnitee for any of the foregoing to the
extent that they arise solely from the willful misconduct or gross negligence
of such Agent Indemnitee. In Agent's discretion, Agent may also reserve for or
satisfy any such judgment, decree or order from proceeds of Collateral prior to
any distributions therefrom to or for the account of Lenders.
13.7. LIMITATION ON RESPONSIBILITIES OF AGENT. Except for action
expressly required of Agent hereunder, 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 13.6 hereof against any and all Claims which may be
incurred by Agent by reason of taking or continuing to take any such action.
Agent shall not be liable to Lenders (or any Lender's participants)
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for any action lawfully taken or omitted to be taken under or in connection
with this Agreement or the other Loan Documents except as a result of actual
gross negligence or willful misconduct on the part of Agent. Agent does not
assume any responsibility for any failure or delay in performance or breach by
any Obligor or any Lender of its obligations under this Agreement or any of the
other Loan Documents. Agent does not make to Lenders, and no Lender makes to
Agent or the other Lenders, any express or implied warranty, representation or
guarantee with respect to the Revolver Loans, the Collateral, the Loan
Documents or any Obligor. Agent shall not be responsible to Lenders, and no
Lender shall be responsible to Agent or the other Lenders, for: (i) any
recitals, statements, information, representations or warranties contained in,
or for the execution, validity, genuineness, effectiveness or enforceability
of, any of the Loan Documents; (ii) the validity, genuineness, enforceability,
collectibility, value or sufficiency of the Collateral, or the perfection or
priority of any Lien therein; or (iii) the assets, liabilities, financial
condition, results of operations, business, creditworthiness or legal status of
any Obligor or any Account Debtor. Agent shall be entitled to act, and shall
be fully protected in acting upon, any certification, notice or other
communication in whatever form believed by Agent, in good faith, to be genuine
and correct and to have been signed or sent or made by a proper Person. Agent
shall have no obligation to any Lender to ascertain or inquire as to the
observance or performance by Borrower of any of the duties or agreements of
Borrower under any of the Loan Documents or the satisfaction of any conditions
precedent contained in any of the Loan Documents. Agent may consult with and
employ legal counsel, accountants and other experts and shall be entitled to
act upon, and shall be fully protected in any action taken in good faith
reliance upon, any advice given by such experts.
13.8. SUCCESSOR AGENT AND CO-AGENTS.
13.8.1. Subject to the appointment and acceptance of a
successor Agent as provided below, Agent may resign at any time by giving
written notice thereof to each Lender and Borrower. Upon any such resignation,
the Required Lenders, after prior consultation with (but without having to
obtain consent of) each Lender, shall have the right to appoint a successor
Agent which shall be a financial institution organized under the laws of the
United States or of any State thereof, shall have a combined capital surplus of
at least $50,000,000 and shall be reasonably acceptable to Borrower (and for
purposes hereof, any successor to Wachovia or any of the other existing Lenders
shall be acceptable to Borrower). Upon the acceptance of any appointment as an
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent, and the retiring Agent shall be discharged from its
duties and obligations hereunder. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Section 13 shall continue in effect
for its benefit in respect of any actions taken or omitted to be taken by it
while it was acting as Agent. Notwithstanding anything to the contrary
contained in this Agreement, any successor by merger or acquisition of the
stock or assets of Wachovia shall continue to be Agent hereunder unless such
successor shall resign in accordance with the provisions hereof.
13.8.2. It is the purpose of this Agreement that there shall
be no violation of any Applicable Law denying or restricting the right of
financial institutions to transact business as agent in any jurisdiction. It
is recognized that, in case of litigation under any of the Loan Documents, or
in case Agent deems that by reason of present or future laws of any
jurisdiction Agent might be prohibited from exercising any of the powers,
rights or remedies granted to Agent or Lenders hereunder or under any of the
Loan Documents or from holding title to or a Lien upon any Collateral or from
taking any other action which may be necessary hereunder or under any of the
Loan Documents, Agent may appoint an additional Person as a separate collateral
agent or co-collateral agent which is not so prohibited from taking any of such
actions or exercising any of such powers, rights or remedies. If Agent shall
appoint an additional Person as a separate collateral agent or co-collateral
agent as provided above, each and every remedy, power, right, claim, demand or
cause of action intended by any of the Loan Documents
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to be exercised by or vested in or conveyed to Agent with respect thereto shall
be exercisable by and vested in such separate collateral agent or co-collateral
agent, but only to the extent necessary to enable such separate collateral
agent or co-collateral agent to exercise such powers, rights and remedies, and
every covenant and obligation necessary to the exercise thereof by such
separate collateral agent or co-collateral agent shall run to and be
enforceable by either of them. Should any instrument from Lenders be required
by the separate collateral agent or co-collateral agent so appointed by Agent
in order more fully and certainly to vest in and confirm to him or it such
rights, powers, duties and obligations, any and all of such instruments shall,
on request, be executed, acknowledged and delivered by Lenders whether or not a
Default or Event of Default then exists. In case any separate collateral agent
or co-collateral agent, or a successor to either, shall die, become incapable
of acting, resign or be removed, all the estates, properties, rights, powers,
duties and obligations of such separate collateral agent or co-collateral
agent, so far as permitted by Applicable Law, shall vest in and be exercised by
the Agent until the appointment of a new collateral agent or successor to such
separate collateral agent or co-collateral agent.
13.9. CONSENTS, AMENDMENTS AND WAIVERS.
13.9.1. No amendment or modification of any provision of this
Agreement shall be effective without the prior written agreement of the
Required Lenders and Borrower, and no termination or waiver of any provision of
this Agreement, nor any consent to any departure from the terms hereof by
Borrower, shall be effective without the prior written concurrence of the
Required Lenders, which concurrence the Required Lenders shall have the right
to grant or withhold in their sole discretion. Notwithstanding the immediately
preceding sentence, the written agreement of all Lenders shall be required to
effectuate any amendment, modification or waiver that would (a) alter the
provisions of Sections 3.6, 3.7, 3.8, 3.9, 5.6, 5.7, 6.1, 12, 13, 15.2 or 15.3,
the definitions of "Availability Reserve," "Borrowing Base," "Pro Rata,"
"Required Lenders" or any provision of this Agreement obligating Agent to take
certain actions at the direction of the Required Lenders, or any provision of
this Agreement regarding the Pro Rata treatment or obligations of Lenders, (b)
increase or otherwise modify any of the Commitments (other than to reduce
proportionately each Lender's Commitment in connection with any overall
reduction in the amount of the Commitments), (c) alter or amend the rate of
interest payable in respect of the Loans (except as may be expressly authorized
by the Loan Documents or as may be necessary, in Agent's judgement, to comply
with Applicable Law), (d) waive or agree to defer collection of any fee,
termination charge or other charge provided for under any of the Loan Documents
or the unused line fee in Section 3.2.3 hereof, (e) subordinate the payment of
any of the Obligations to any other Debt or the priority of any Liens granted
to Agent under any of the Loan Documents to Liens granted to any other Person,
except as currently provided in or contemplated by the Loan Documents, in
connection with Borrower's incurrence of Permitted Purchase Money Debt, and
except for Liens granted by an Obligor to financial institutions with respect
to amounts on deposit with such financial institutions to cover returned items,
processing and analysis charges and other charges in the ordinary course of
business that relate to deposit accounts with such financial institutions, (f)
alter the time or amount of repayment of any of the Loans or waive any Event of
Default resulting from nonpayment of the Loans on the due date thereof (or
within any applicable period of grace), or (g) forgive any of the Obligations,
except any portion of the Obligations held by a Lender who consents in writing
to such forgiveness. In no event shall any amendment to the provisions of
Section 4.1.3 be effective without the prior written consent of Wachovia.
Notwithstanding the foregoing or any other provision in this Agreement, Agent
shall have the exclusive right to determine whether any Accounts or Inventory
constitute Eligible Accounts or Eligible Inventory (basing such determination
in each case upon the meanings given to such terms in Section 1), or whether to
impose or release any reserve, and to exercise its own credit judgment in
connection therewith, which judgment, if exercised in good faith, shall
exonerate Agent from any liability to Lenders or any other Person for any
errors in judgment. No Lender shall be authorized to
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amend or modify any Note held by it, or to give or withhold waivers with
respect thereto (including any waiver of an Event of Default thereunder),
unless such amendment, modification or waiver is consented to by writing by all
Lenders. The making of any Loans hereunder by any Lender during the existence
of a Default or Event of Default shall not be deemed to constitute a waiver of
such Default or Event of Default. Any waiver or consent granted by Lenders
hereunder shall be effective only if in writing and then only in the specific
instance and for the specific purpose for which it was given.
13.9.2. In connection with any proposed amendment to any of
the Loan Documents or waiver of any of the terms thereof or any Default or
Event of Default thereunder, Borrower shall not solicit, request or negotiate
for or with respect to any such proposed amendment or waiver of any of the
provisions of this Agreement or any of the other Loan Documents unless each
Lender shall be informed thereof by Borrower or Agent (to the extent known by
Agent) and shall be afforded an opportunity of considering the same and
supplied by Borrower with sufficient information to enable it to make an
informed decision with respect thereto. Borrower will not, directly or
indirectly, pay or cause to be paid any remuneration or other thing of value,
whether by way of supplemental or additional interest, fee or otherwise, to any
Lender (in its capacity as a Lender hereunder) as consideration for or as an
inducement to the consent to or agreement by such Lender with any waiver or
amendment of any of the terms and provisions of this Agreement or any of the
other Loan Documents unless such remuneration or thing of value is concurrently
paid, on the same terms, on a Pro Rata basis to all Lenders.
13.10. DUE DILIGENCE AND NON-RELIANCE. Each Lender hereby
acknowledges and represents that it has, independently and without reliance
upon Agent or the other Lenders, and based upon such documents, information and
analyses as it has deemed appropriate, made its own credit analysis of each
Obligor and its own decision to enter into this Agreement, to fund the Loans to
be made by it hereunder and each Lender has made such inquiries concerning the
Loan Documents, the Collateral and each Obligor as such Lender feels necessary
and appropriate, and has taken such care on its own behalf as would have been
the case had it entered into the other Loan Documents without the intervention
or participation of the other Lenders or Agent. Each Lender hereby further
acknowledges and represents that the other Lenders and Agent have not made any
representations or warranties to it concerning any Obligor, any of the
Collateral or with respect to the legality, validity, sufficiency or
enforceability of any of the Loan Documents. Each Lender also hereby
acknowledges that it will, independently and without reliance upon the other
Lenders or Agent, and based upon such financial statements, documents and
information as it deems appropriate at the time, continue to make and rely upon
its own credit decisions in making Loans and in taking or refraining to take
any other action under this Agreement or any of the other Loan Documents.
Except for notices, reports and other information expressly required to be
furnished to Lenders by Agent hereunder, Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the affairs, financial condition, business or Properties of Borrower
(or any of its Affiliates) which may come into possession of Agent or any of
Agent's Affiliates.
13.11. REPRESENTATIONS AND WARRANTIES OF LENDERS. By its execution
of this Agreement, each Lender hereby represents and warrants to Borrower and
the other Lenders that it has the power to enter into and perform its
obligations under this Agreement and the other Loan Documents, and that it has
taken all necessary and appropriate action to authorize its execution and
performance of this Agreement and the other Loan Documents will be binding upon
it and the obligations imposed upon it herein or therein will be enforceable
against it in accordance with the respective terms of such documents.
13.12. THE REQUIRED LENDERS. As to any provisions of this Agreement
or the other Loan Documents under which action may or is required to be taken
upon direction or approval of the Required
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Lenders, the direction or approval of the Required Lenders shall be binding
upon each Lender to the same extent and with the same effect as if each Lender
had joined therein.
13.13. SEVERAL OBLIGATIONS. The obligations and commitments of each
Lender under this Agreement and the other Loan Documents are several and
neither Agent nor any Lender shall be responsible for the performance by the
other Lenders of its obligations or commitments hereunder or thereunder.
Notwithstanding any liability of Lenders stated to be joint and several to
third Persons under any of the Loan Documents, such liability shall be shared,
as among Lenders, Pro Rata according to the respective Commitments of Lenders.
13.14. AGENT IN ITS INDIVIDUAL CAPACITY. With respect to its
obligation to lend under this Agreement, the Loans made by it and the Notes
issued to it, Agent shall have the same rights and powers hereunder and under
the other Loan Documents as any other Lender or holder of a Note and may
exercise the same as though it were not performing the duties specified herein;
and the terms "Lenders," "Required Lenders," or any similar term shall, unless
the context clearly otherwise indicates, include Agent in its capacity as a
Lender. Agent and its Affiliates may each accept deposits, maintain deposits
or credit balances for, invest in, lend money to, act as trustee under
indentures of, serve as financial advisor to, and generally engage in any kind
of business with Borrower or any other Obligor, or any affiliate of Borrower or
any other Obligor, as if it were any other bank and without any duty to account
therefore to the other Lenders.
13.15. THIRD PARTY BENEFICIARIES. 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 any right to enforce any of the provisions of this Section 13 except
as expressly provided in Section 13.17 hereof. 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.
13.16. NOTICE OF TRANSFER. Agent may deem and treat a Lender party
to this Agreement as the owner of such Lender's portion of the Revolver Loans
for all purposes, unless and until a written notice of the assignment or
transfer thereof executed by such Lender has been received by Agent.
13.17. REPLACEMENT OF CERTAIN LENDERS. If a Lender ("Affected
Lender") shall have (i) failed to fund its Pro Rata share of any Revolver Loan
requested by Borrower which such Lender is obligated to fund under the terms of
this Agreement and which such failure has not been cured, (ii) requested
compensation from Borrower under Section 3.7 to recover increased costs
incurred by such Lender (or its parent or holding company) which are not being
incurred generally by the other Lenders (or their respective parents or holding
companies), or (iii) delivered a notice pursuant to Section 3.6 hereof claiming
that such Lender is unable to extend LIBOR Rate Loans to Borrower for reasons
not generally applicable to the other Lenders, then, in any such case and in
addition to any other rights and remedies that Agent, any other Lender or
Borrower may have against such Affected Lender, Borrower or Agent may make
written demand on such Affected Lender (with a copy to Agent in the case of a
demand by Borrower and a copy to Borrower in the case of a demand by Agent) for
the Affected Lender to assign, and such Affected Lender shall assign pursuant
to one or more duly executed Assignment and Acceptances within 5 Business Days
after the date of such demand, to one or more Lenders willing to accept such
assignment or assignments, or to one or more Eligible Assignees designated by
Agent, all of such Affected Lender's rights and obligations under this
Agreement (including its Commitments and all Loans owing to it) in accordance
with Section 14 hereof. Agent is hereby irrevocably authorized to execute one
or more Assignment and Acceptances as attorney-in-fact for any Affected Lender
which fails or refuses to execute and deliver the same within 5 Business Days
after the date of such demand. The
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Affected Lender shall be entitled to receive, in cash and concurrently with
execution and delivery of each such Assignment and Acceptance, all amounts owed
to the Affected Lender hereunder or under any other Loan Document, including
the aggregate outstanding principal amount of the Revolver Loans owed to such
Lender, together with accrued interest thereon through the date of such
assignment. Upon the replacement of any Affected Lender pursuant to this
Section 13.17, such Affected Lender shall cease to have any participation in,
entitlement to, or other right to share in the Liens of Agent in any Collateral
and such Affected Lender shall have no further liability to Agent, any Lender
or any other Person under any of the Loan Documents (except as provided in
Section 13.6 hereof as to events or transactions which occur prior to the
replacement of such Affected Lender), including any commitment to make loans.
13.18. REMITTANCE OF PAYMENTS AND COLLECTIONS.
13.18.1. All payments by any Lender to Agent shall be made
not later than the time set forth elsewhere in this Agreement on the Business
Day such payment is due; provided, however, that if such payment is due on
demand by Agent and such demand is made on the paying Lender after 11:00 a.m.
on such Business Day, then payment shall be made by 1:00 p.m. on the next
Business Day. Payment by Agent to any 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, however, that if Agent
receives such funds at or prior to 1:00 p.m., Agent shall pay such funds to
such Lender by 2:00 p.m. on such Business Day, but if Agent receives such funds
after 1:00 p.m., Agent shall pay such funds to such Lender by 2:00 p.m. on the
next Business Day.
13.18.2. With respect to the payment of any funds from Agent
to a Lender or from a Lender to Agent, the party failing to make full payment
when due pursuant to the terms hereof shall, on demand by the other party, pay
such amount together with interest thereon at the Federal Funds Rate. In no
event shall Borrower be entitled to receive any credit for any interest paid by
Agent to any Lender, or by any Lender to Agent, at the Federal Funds Rate as
provided herein.
SECTION 14. BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS
14.1. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of Borrower, Agent and Lenders and their respective
successors and assigns (which, in the case of Agent, shall include any
successor Agent appointed pursuant to Section 13.8 hereof), except that (i)
Borrower shall not have the right to assign its rights or delegate performance
of any of its obligations under any of the Loan Documents and (ii) any
assignment by any Lender must be made in compliance with Section 14.3 hereof.
Notwithstanding clause (ii) of this Section 14.1, any Lender may at any time,
without the consent of Borrower or Agent, assign all or any portion of its
rights under this Agreement and its Notes to a Federal Reserve Bank; provided,
however, that no such assignment shall release the transferor Lender from its
obligations hereunder. Agent may treat the payee of any Note as the owner
thereof for all purposes hereof unless and until such payee complies with
Section 14.3 in the case of an assignment thereof or, in the case of any other
transfer, a written notice of the transfer is filed with Agent. Any assignee
or transferee of a Note agrees by acceptance thereof to be bound by all the
terms and provisions of the Loan Documents. Any request, authority or consent
of any Person, who at the time of making such request or giving such authority
or consent is the holder of a Note, shall be conclusive and binding on any
subsequent holder, transferee or assignee of such Note or of any Note or Notes
issued in exchange therefor.
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14.2. PARTICIPATIONS.
14.2.1. Permitted Participants; Effect. Any Lender may, in
the ordinary course of its business and in accordance with Applicable Law, at
any time sell to one or more banks or other financial institutions (each a
"Participant") participating interest in any of the Obligations owing to such
Lender, any Commitment of such Lender or any other interest of such Lender
under any of the Loan Documents. In the event of any such sale by a Lender of
participating interests to a Participant, such Lender's obligations under the
Loan Documents shall remain unchanged, such Lender shall remain solely
responsible to the other parties hereto for the performance of such
obligations, such Lender shall remain the holder of any Note for all purposes
under the Loan Documents, all amounts payable by Borrower under this Agreement
and any of the Notes shall be determined as if such Lender had not sold such
participating interests, and Borrower and Agent shall continue to deal solely
and directly with such Lender in connection with such Lender's rights and
obligations under the Loan Documents. If a Lender sells a participation to a
Person other than an Affiliate of such Lender, then such Lender shall give
prompt written notice thereof to Borrower and the other Lenders.
14.2.2. Voting Rights. Each Lender shall retain the sole
right to approve, without the consent of any Participant, any amendment,
modification or waiver of any provision of the Loan Documents other than an
amendment, modification or waiver with respect to any Loans or Commitment in
which such Participant has an interest which forgives principal, interest or
fees or reduces the stated interest rate or the stated rates at which fees are
payable with respect to any such Loan or Commitment, postpones the Commitment
Termination Date, or any date fixed for any regularly scheduled payment of
interest or fees on such Revolver Loan or Commitment, or releases from
liability Borrower or any Guarantor or releases any substantial portion of any
of the Collateral.
14.2.3. Benefit of Set-Off. Borrower agrees that each
Participant shall be deemed to have the right of set-off provided in Section
12.4 hereof in respect of its participating interest in amounts owing under the
Loan Documents to the same extent and subject to the same requirements under
this Agreement (including Section 13.5) as if the amount of its participating
interest were owing directly to it as a Lender under the Loan Documents,
provided that each Lender shall retain the right of set-off provided in Section
12.4 hereof with respect to the amount of participating interests sold to each
Participant. Lenders agree to share with each Participant, and each
Participant by exercising the right of set-off provided in Section 12.4 agrees
to share with each Lender, any amount received pursuant to the exercise of its
right of set-off, such amounts to be shared in accordance with Section 13.5
hereof as if each Participant were a Lender.
14.3. ASSIGNMENTS.
14.3.1. Permitted Assignments. Any Lender may, in the
ordinary course of its business and in accordance with Applicable Law, at any
time assign to any Eligible Assignee all or any part of its rights and
obligations under the Loan Documents, so long as (i) each assignment is of a
constant, and not a varying, ratable percentage of all of the transferor
Lender's rights and obligations under the Loan Documents with respect to the
Loans and, in the case of a partial assignment, is in a minimum principal
amount of $5,000,000 and integral multiples of $1,000,000 in excess of that
amount; and (ii) the parties to each such assignment shall execute and deliver
to Agent, for its acceptance and recording, an Assignment and Acceptance. The
consent of Agent shall be required prior to an assignment becoming effective
with respect to an Eligible Assignee which is not a Lender or an Affiliate of a
Lender, and such assignment shall not become effective until such time as
notice thereof is given to Borrower and Agent in substantially the form of
EXHIBIT H attached hereto, but nothing contained herein shall limit in any way
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the right of Lenders to assign to any Eligible Assignee all of their rights and
obligations under the Loan Documents.
14.3.2. Effect; Effective Date. Upon (i) delivery to Agent
of a notice of assignment substantially in the form attached as EXHIBIT H
hereto, together with any consents required by Section 14.3.1, and (ii) payment
of a $3,000 fee to the Agent for processing any assignment to an Eligible
Assignee that is not an Affiliate of the transferor Lender, such assignment
shall become effective on the effective date specified in such notice of
assignment. On and after the effective date of such assignment, such Eligible
Assignee shall for all purposes be a Lender party to this Agreement and any
other Loan Document executed by the Lenders and shall have all the rights and
obligations of the Lender under the Loan Documents to the same extent as if it
were an original party thereto, and no further consent or action by Borrower,
Lenders or Agent shall be required to release the transferor Lender with
respect to the Commitment (or portion thereof) of such Lender and Obligations
assigned to such Eligible Assignee. Upon the consummation of any assignment to
an Eligible Assignee pursuant to this Section 14.3.2, the transferor Lender,
Agent and Borrower shall make appropriate arrangements so that replacement
Notes are issued to such transferor Lender and new Notes or, as appropriate,
replacement Notes, are issued to such Eligible Assignee, in each case in
principal amounts reflecting their respective Commitments, as adjusted pursuant
to such assignment.
14.3.3. Dissemination of Information. Borrower authorizes
each Lender and Agent to disclose to any Participant, any Eligible Assignee or
any other Person acquiring an interest in the Loan Documents by operation of
law (each a "Transferee"), and any prospective Transferee, any and all
information in Agent's or such Lender's possession concerning Borrower, the
Subsidiaries or the Collateral, subject to appropriate confidentiality
undertakings on the part of such Transferee.
14.4. TAX TREATMENT. If any interest in any Loan Document is
transferred to any Transferee that is organized under the laws of any
jurisdiction other than the United States or any State thereof, the transferor
Lender shall cause such Transferee, concurrently with the effectiveness of such
transfer, to comply with the provisions of Section 4.8 hereof.
SECTION 15. MISCELLANEOUS
15.1. POWER OF ATTORNEY. Borrower hereby irrevocably designates,
makes, constitutes and appoints Agent (and all Persons designated by Agent) as
Borrower's true and lawful attorney (and agent-in-fact) and Agent, or Agent's
designee, may, without notice to Borrower and in either Borrower's or Agent's
name, but at the cost and expense of Borrower:
15.1.1. At such time or times as Agent or said designee, in
its sole discretion, may determine, endorse Borrower's name on any Payment Item
or proceeds of the Collateral which come into the possession of Agent or under
Agent's control.
15.1.2. At such time or times upon or after the occurrence of
an Event of Default as Agent or Agent's designee in its sole discretion may
determine: (i) demand payment of the Accounts from the Account Debtors, enforce
payment of the Accounts by legal proceedings or otherwise, and generally
exercise all of Borrower's rights and remedies with respect to the collection of
the Accounts; (ii) settle, adjust, compromise, discharge or release any of the
Accounts or other Collateral or any legal proceedings brought to collect any of
the Accounts or other Collateral; (iii) sell or assign any of the Accounts and
other Collateral upon such terms, for such amounts and at such time or times as
Agent deems advisable; (iv) take control, in any manner, of any item of payment
or proceeds relating to any Collateral; (v) prepare, file and sign Borrower's
name to a proof of claim in bankruptcy or similar document against
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<PAGE> 69
any Account Debtor or to any notice of lien, assignment or satisfaction of Lien
or similar document in connection with any of the Collateral; (vi) receive,
open and dispose of all mail addressed to Borrower and to notify postal
authorities to change the address for delivery thereof to such address as Agent
may designate; (vii) endorse the name of Borrower upon any of the items of
payment or proceeds relating to any Collateral and deposit the same to the
account of Agent on account of the Obligations; (viii) endorse the name of
Borrower upon any chattel paper, document, instrument, invoice, freight bill,
bill of lading or similar document or agreement relating to any Accounts or
Inventory of any Obligor and any other Collateral; (ix) use Borrower's
stationery and sign the name of Borrower to verifications of the Accounts and
notices thereof to Account Debtors; (x) use the information recorded on or
contained in any data processing equipment and computer hardware and software
relating to the Accounts, Inventory, Equipment and any other Collateral; (xi)
make and adjust claims under policies of insurance; and (xii) do all other acts
and things necessary, in Agent's determination, to fulfill Borrower's
obligations under this Agreement.
15.2. GENERAL INDEMNITY. Borrower hereby agrees to indemnify and
defend the Agent Indemnitees and the Lender Indemnitees and to hold the Agent
Indemnitees and the Lender Indemnitees harmless from and against any Claim ever
suffered or incurred by any of the Agent Indemnitees or Lender Indemnitees
(including reasonable attorneys' fees and legal expenses) arising out of or
related to this Agreement or any of the other Loan Documents, the performance
by Agent or Lenders of their duties or the exercise of any of their rights or
remedies hereunder, or the result of Borrower's failure to observe, perform or
discharge Borrower's duties hereunder. In addition, Borrower shall indemnify
and defend the Agent Indemnitees and the Lender Indemnitees against and save
the Agent Indemnitees and the Lender Indemnitees harmless from all Claims of
any Person with respect to the Collateral. Without limiting the generality of
the foregoing, these indemnities shall extend to any Claims asserted against
any of the Agent Indemnitees and the Lender Indemnitees by any Person under any
Environmental Laws or similar laws by reason of Borrower's or any other
Person's failure to comply with laws applicable to solid or hazardous waste
materials or other toxic substances. Additionally, if any Taxes (excluding
Taxes imposed upon or measured solely by the net income of Agent and Lenders,
but including, any intangibles tax, stamp tax, recording tax or franchise tax)
shall be payable by Agent, any Lender, Borrower or any Guarantor on account of
the execution or delivery of this Agreement, or the execution, delivery,
issuance or recording of any of the other Loan Documents, or the creation or
repayment of any of the Obligations hereunder, by reason of any Applicable Law
now or hereafter in effect, Borrower will pay (or will promptly reimburse Agent
and Lenders for the payment of) all such Taxes, including any interest and
penalties thereon, and will indemnify and hold Agent Indemnitees and Lender
Indemnitees harmless from and against liability in connection therewith.
15.3. SURVIVAL OF ALL INDEMNITIES. Notwithstanding anything to the
contrary in this Agreement or any of the other Loan Documents, the obligation
of Borrower and each Lender with respect to each indemnity given by it in this
Agreement, whether given by Borrower to Agent Indemnitees or Lender Indemnitees
or by any Lender to any Agent Indemnitees, shall survive the payment in full of
the Obligations and the termination of the Commitments.
15.4. MODIFICATION OF AGREEMENT. This Agreement may not be
modified, altered or amended, except by an agreement in writing signed by
Borrower, Agent and Lenders (or, where otherwise allowed by Section 13 hereof,
the Required Lenders); provided, however, that no consent, written or
otherwise, of Borrower shall be necessary or required in connection with any
amendment of any of the provisions of Section 13 or any other provision of this
Agreement that affects only the rights, duties and responsibilities of Lenders
and Agent as among themselves so long as no such amendment imposes any
additional obligations on Borrower.
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<PAGE> 70
15.5. SEVERABILITY. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under Applicable Law, but if any provision of this Agreement shall be
prohibited by or invalid under Applicable Law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.
15.6. CUMULATIVE EFFECT; CONFLICT OF TERMS. The provisions of the
Other Agreements and the Security Documents are hereby made cumulative with the
provisions of this Agreement. Except as otherwise provided in any of the other
Loan Documents by specific reference to the applicable provision of this
Agreement, if any provision contained in this Agreement is in direct conflict
with, or inconsistent with, any provision in any of the other Loan Documents,
the provision contained in this Agreement shall govern and control.
15.7. EXECUTION IN COUNTERPARTS. This Agreement 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 instrument.
15.8. AGENT'S OR REQUIRED LENDERS' CONSENT. Whenever Agent's,
Lenders' or Required Lenders' consent is required to be obtained under this
Agreement or any of the other Loan Documents as a condition to any action,
inaction, condition or event, Agent and each Lender shall be authorized to give
or withhold its consent in its sole and absolute discretion and to condition
its consent upon the giving of additional collateral security for the
Obligations, the payment of money or any other matter.
15.9. NOTICE. All notices, requests and demands to or upon a party
hereto shall be in writing and shall be sent by certified or registered mail,
return receipt requested, personal delivery against receipt or by telecopier or
other facsimile transmission and shall be deemed to have been validly served,
given or delivered when delivered against receipt or 3 Business Days after
deposit in the U.S. mail, postage prepaid, or, in the case of facsimile
transmission, when received (if on a Business Day and, if not received on a
Business Day, then on the next Business Day after receipt) at the office where
the noticed party's telecopier is located, addressed to the noticed party at
the address shown for such party on the signature page hereof or, in the case
of a Person who becomes a Lender after the date hereof, at the address shown on
the Assignment and Acceptance by which such Person became a Lender. Any
written notice or demand that is not sent in conformity with the provisions
hereof shall nevertheless be effective on the date that such notice is actually
received by the noticed party.
15.10. CREDIT INQUIRIES. Borrower hereby authorizes and permits
Agent and Lenders (but Agent and Lenders shall have no obligation) to respond
to usual and customary credit inquiries from third parties concerning Borrower
or any Subsidiaries.
15.11. TIME OF ESSENCE. Time is of the essence of this Agreement,
the Other Agreements and the Security Documents.
15.12. ENTIRE AGREEMENT; EXHIBITS AND SCHEDULES. This Agreement and
the other Loan Documents, together with all other instruments, agreements and
certificates executed by the parties in connection therewith or with reference
thereto, embody the entire understanding and agreement between the parties
hereto and thereto with respect to the subject matter hereof and thereof and
supersede all prior agreements, understandings and inducements, whether express
or implied, oral or written. Each of the Exhibits and each of the Schedules
attached hereto are incorporated into this Agreement and by this reference made
a part hereof.
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<PAGE> 71
15.13. INTERPRETATION. No provision of this Agreement or any of the
other Loan Documents shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other governmental or judicial
authority by reason of such party having or being deemed to have structured or
dictated such provision.
15.14. OBLIGATIONS SEVERAL. The obligations of each Lender hereunder
are several, and no Lender shall be responsible for the obligations or
Commitment of any other Lender. Nothing contained in this Agreement and no
action taken by Lenders pursuant hereto shall be deemed to constitute the
Lenders to be a partnership, association, joint venture or any other kind of
entity. The amounts payable at any time hereunder to each Lender shall be a
separate and independent debt, and each Lender shall be entitled, to the extent
not otherwise restricted hereunder, to protect and enforce its rights arising
out of this Agreement and any of the other Loan Documents and it shall not be
necessary for Agent or any other Lender to be joined as an additional party in
any proceeding for such purpose.
15.15. GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS BEEN
NEGOTIATED, EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE IN
ATLANTA, GEORGIA. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF GEORGIA; PROVIDED, HOWEVER, THAT IF
ANY OF THE COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN GEORGIA,
THE LAWS OF SUCH JURISDICTION SHALL GOVERN THE METHOD, MANNER AND PROCEDURE FOR
FORECLOSURE OF AGENT'S LIEN UPON SUCH COLLATERAL AND THE ENFORCEMENT OF AGENT'S
OTHER REMEDIES IN RESPECT OF SUCH COLLATERAL TO THE EXTENT THAT THE LAWS OF
SUCH JURISDICTION ARE DIFFERENT FROM OR INCONSISTENT WITH THE LAWS OF THE STATE
OF GEORGIA. AS PART OF THE CONSIDERATION FOR NEW VALUE RECEIVED, AND
REGARDLESS OF ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF
BORROWER, ANY LENDER OR AGENT, BORROWER HEREBY CONSENTS AND AGREES THAT THE
SUPERIOR COURT OF FULTON COUNTY, GEORGIA, OR, AT AGENT'S OPTION, THE UNITED
STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA, ATLANTA DIVISION,
SHALL HAVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES AMONG
BORROWER, AGENT AND LENDERS PERTAINING TO THIS AGREEMENT OR TO ANY MATTER
ARISING OUT OF OR RELATED TO THIS AGREEMENT. BORROWER EXPRESSLY SUBMITS AND
CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY
SUCH COURT, AND BORROWER HEREBY WAIVES ANY OBJECTION WHICH BORROWER MAY HAVE
BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON
CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE
RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. BORROWER HEREBY WAIVES PERSONAL
SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION
OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS
MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER AT THE
ADDRESS SET FORTH IN THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED
COMPLETED UPON THE EARLIER OF BORROWER'S ACTUAL RECEIPT THEREOF OR 3 DAYS AFTER
DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID. NOTHING IN THIS AGREEMENT
SHALL BE DEEMED OR OPERATE TO AFFECT THE RIGHT OF AGENT TO SERVE LEGAL PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY AGENT
OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION
UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR
JURISDICTION.
15.16. WAIVERS BY BORROWER. BORROWER WAIVES (I) THE RIGHT TO TRIAL
BY JURY (WHICH AGENT AND EACH LENDER HEREBY ALSO WAIVES) IN ANY ACTION, SUIT,
PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE
LOAN DOCUMENTS, THE OBLIGATIONS OR THE COLLATERAL; (II) PRESENTMENT, DEMAND AND
PROTEST AND NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON PAYMENT, MATURITY,
RELEASE, COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL COMMERCIAL
PAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS, CHATTEL PAPER AND
GUARANTIES AT ANY TIME HELD BY AGENT ON WHICH BORROWER MAY IN ANY WAY BE LIABLE
AND HEREBY RATIFIES AND CONFIRMS WHATEVER AGENT MAY DO IN THIS REGARD; (III)
NOTICE PRIOR TO TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR ANY BOND OR
SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING AGENT TO
EXERCISE ANY
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<PAGE> 72
OF AGENT'S REMEDIES; (IV) THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND
EXEMPTION LAWS; AND (V) NOTICE OF ACCEPTANCE HEREOF. BORROWER ACKNOWLEDGES
THAT THE FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO AGENT'S AND LENDER'S
ENTERING INTO THIS AGREEMENT AND THAT AGENT AND LENDERS ARE RELYING UPON THE
FOREGOING WAIVERS IN ITS FUTURE DEALINGS WITH BORROWER. BORROWER WARRANTS AND
REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL
AND HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT
MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
IN WITNESS WHEREOF, this Agreement has been duly executed in
Atlanta, Georgia, on the day and year specified at the beginning of this
Agreement.
ATTEST: BORROWER:
--------
RHODES, INC.
By:
- -------------------------------- -------------------------------------
BARBARA W. SNOW, Joel H. Dugan, Senior Vice President,
Assistant Secretary Finance and Administration
[CORPORATE SEAL]
Address:
4370 Peachtree Road, N.E.
Atlanta, Georgia 30319
Attention: Joel H. Dugan,
Senior Vice President
Telecopier No.: (404) 264-4701
--------------
LENDERS:
-------
WACHOVIA BANK OF GEORGIA, N.A.
Revolver Commitment: $22,500,000 By:
Term Loan Commitment: $10,000,000 -------------------------------------
Title:
-------------------------------
Address:
-------
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Attention: Kevin B. Harrison
Telecopier No.: (404) 332-6920
--------------
[Signatures continued on following page]
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<PAGE> 73
FLEET CAPITAL CORPORATION
Revolver Commitment: $22,500,000 By:
Term Loan Commitment: $10,000,000 -------------------------------------
Title:
-------------------------------
Address:
-------
300 Galleria Parkway
Suite 800
Atlanta, Georgia 30339
Attention: Office Head
Telecopier No.: (770) 859-2483
--------------
AGENT:
-----
WACHOVIA BANK OF GEORGIA, N.A.,
as Agent
By:
-------------------------------------
Title:
------------------------------
Address:
-------
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Attention: Kevin B. Harrison
Telecopier No.: (404) 332-6920
--------------
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<PAGE> 74
EXHIBIT A
FORM OF REVOLVER NOTE
January 12, 1996
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 Loan Agreement referred to below on the date on which such
outstanding principal amounts become due and payable pursuant to Section 5.2 of
the Loan 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 Section 3.1 of the Loan 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 Loan and Security Agreement dated the date
hereof (as the same may be amended from time to time, the "Loan 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 Loan Documents executed and delivered in connection
therewith. The provisions of the Loan 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 Loan Agreement.
The repayment of the principal balance of this Note is subject to the
provisions of Section 5.2 of the Loan 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 6.2
of the Loan Agreement.
All payments of principal and interest shall be made in Dollars in
immediately available funds as specified in the Loan Agreement.
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 Loan 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 Loan Agreement or any of the other Loan Documents.
All principal amounts of Revolver Loans made by Lender to Borrower
pursuant to the Loan 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 Loan 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
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<PAGE> 75
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 non-payment, 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 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, surrender,
substitute or exchange any Collateral securing this Note and 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 JOEL H. DUGAN, Senior Vice President,
[CORPORATE SEAL] Finance and Administration
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<PAGE> 76
EXHIBIT B
FORM OF TERM NOTE
U.S. $______________
January 12, 1996
Atlanta, Georgia
FOR VALUE RECEIVED, the undersigned Rhodes, Inc., a Georgia
corporation (herein called the "Borrower"), hereby promises to pay to the order
of _______________________________ (herein, together with any subsequent holder
hereof, called the "Lender"), the principal sum of $_________, or so much
thereof as represents Lender's Pro Rata share of the outstanding principal
amount of all Term Loans pursuant to the terms of the Loan Agreement referred
to below, on the dates on which such outstanding principal amounts become due
and payable pursuant to Section 5.3 of the Loan Agreement, in strict accordance
with the terms thereof. Borrower likewise unconditionally promises to pay to
Lender interest from and after the date hereof on the unpaid balance hereof at
such interest rates, payable at such times and computed in such manner as are
specified in Section 3.1 of the Loan Agreement, in strict accordance with the
terms thereof.
This Term Note ("Note") is issued pursuant to, and is one of the "Term
Notes" referred to in, the Loan and Security Agreement, dated the date hereof
(as at any time amended, the "Loan Agreement"), among Borrower, Wachovia Bank
of Georgia, N.A. ("Agent"), as agent for itself and the other financial
institutions from time to time parties thereto ("Lenders"), and such Lenders,
and Lender is and shall be entitled to all benefits thereof and of all Loan
Documents executed and delivered in connection therewith. The provisions of
the Loan 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 Loan Agreement.
This Note is subject to mandatory prepayment in accordance with the
provisions of Section 5.3.3 of the Loan Agreement. Notwithstanding anything to
the contrary contained herein, the entire unpaid principal balance of and
accrued interest on this Note shall be due and payable immediately upon the
termination of the Commitments as set forth in Section 6.2 of the Loan
Agreement.
All payments of principal and interest shall be made in lawful money
of the United States of America in immediately available funds to Agent for
Lender's benefit at the Payment Office specified in the Loan Agreement.
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 Loan Agreement. If this Note
is collected by or through an attorney at law, then Borrower shall be obligated
to pay, in addition the principal balance and accrued interest hereof,
reasonable attorneys' fees, expenses and court costs. From and after the
occurrence of an Event of Default, the outstanding principal amount hereof
shall bear interest at the Default Rate.
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
B-1
<PAGE> 77
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 non-payment, 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 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, surrender,
substitute or exchange any collateral securing this Note and 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 and
delivered by its duly authorized officers, on the date first above written.
ATTEST: RHODES, INC.
By:
- --------------------------------- ------------------------------------
Assistant Secretary JOEL H. DUGAN, Senior Vice President,
[CORPORATE SEAL] Finance and Administration
B-2
<PAGE> 78
EXHIBIT C
FORM OF NOTICE OF CONVERSION/CONTINUATION
Date ______________,______
Wachovia Bank of Georgia, N.A., as Agent
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Attention: Kevin B. Harrison
Re: Loan and Security Agreement dated January 12, 1996, by and
among Rhodes, Inc., Wachovia Bank of Georgia, N.A., as agent
for certain Lenders from time to time parties thereto, and
such Lenders (as at any time amended, the "Loan Agreement")
Gentlemen:
This Notice of Conversion/Continuation is delivered to you pursuant to
Section 3.1.2 of the Loan Agreement. Unless otherwise defined herein,
capitalized terms used herein shall have the meanings attributable thereto in
the Loan Agreement. Borrower hereby gives notice of its request as follows:
Check as applicable:
[ ] A conversion of Loans from one Type to another, as follows:
(i) The requested date of the proposed conversion
is ______________, 19__ (the "Conversion
Date");
(ii) The Type of Loans to be converted pursuant
hereto are presently __________________
[select either LIBOR Rate Loans or Prime Rate
Loans] in the principal amount of
$_____________ outstanding as of the
Conversion Date;
(iii) The portion of the aforesaid Loans to be
converted on the Conversion Date is
$_____________ (the "Conversion Amount");
(iv) The Conversion Amount is to be converted into
a ____________ [select either a LIBOR Rate
Loan or a Prime Rate Loan] (the "Converted
Loan") on the Conversion Date.
(v) [In the event Borrower selects a LIBOR Rate
Loan:] Borrower hereby requests that the
Interest Period for such Converted Loan be
for a duration of _____ [insert length of
Interest Period].
[ ] A continuation of LIBOR Rate Loans for new Interest Period, as
follows:
(i) The requested date of the proposed
continuation is _______________, 19__ (the
"Continuation Date");
C-3
<PAGE> 79
(ii) The aggregate amount of the LIBOR Rate Loans
subject to such continuation is
$__________________;
(iii) The duration of the selected Interest Period
for the LIBOR Rate Loans which are the
subject of such continuation is:
_____________ [select duration of applicable
Interest Period];
Borrower hereby ratifies and reaffirms all of its liabilities and
obligations under the Loan Documents and certifies that no Default or Event of
Default exists on the date hereof.
Borrower has caused this Notice of Conversion/Continuation to be
executed and delivered by its duly authorized officer, this _______ day of
______________, 19__.
RHODES, INC.
By:
--------------------------------
Title:
-------------------------
C-4
<PAGE> 80
EXHIBIT D
FORM OF NOTICE OF BORROWING
Date __________, ____
Wachovia Bank of Georgia, N.A., as Agent
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Attention: Kevin B. Harrison
Re: Loan and Security Agreement dated January 12, 1996, by and
among Rhodes, Inc., Wachovia Bank of Georgia, N.A., as agent
for certain Lenders from time to time parties thereto, and
such Lenders (as at any time amended, the "Loan Agreement")
Gentlemen:
This Notice of Borrowing is delivered to you pursuant to Section 4.1.1
of the Loan Agreement. Unless otherwise defined herein, capitalized terms used
herein shall have the meanings attributable thereto in the Loan Agreement.
Borrower hereby requests a Revolver Loan in the aggregate principal amount of
$______________ to be made on _____________, _____, and to consist of:
Check as applicable: [ ] Prime Rate Loans in the aggregate
principal amount of $_____________
[ ] LIBOR Rate Loans in the aggregate
principal amount of $___________,
with Interest Periods as follows:
(i) As to $_____________, an Interest Period of ______ month(s);
(ii) As to $_____________, an Interest Period of ______ months;
(iii) As to $_____________, an Interest Period of ______ months.
Borrower hereby ratifies and reaffirms all of its liabilities and
obligations under the Loan Documents and Borrower hereby certifies that no
Default or Event of Default exists on the date hereof.
Borrower has caused this Notice of Borrowing to be executed and
delivered by its duly authorized officer, this ______ day of _____________,
_____.
__________________________________
By:
-------------------------------
Title:
-------------------------
D-1
<PAGE> 81
EXHIBIT E
COMPLIANCE CERTIFICATE
[Letterhead of Borrower]
__________________, 19__
Wachovia Bank of Georgia, N.A., as Agent
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Attention: Kevin B. Harrison
The undersigned, the chief financial officer of Rhodes, Inc.,
a Georgia corporation ("Borrower"), gives this certificate to Wachovia Bank of
Georgia, N.A. ("Agent") in accordance with the requirements of Section 10.1.3
of that certain Loan and Security Agreement dated January 12, 1996, among
Borrower, Agent and the Lenders referenced therein ("Loan Agreement").
Capitalized terms used in this Certificate, unless otherwise defined herein,
shall have the meanings ascribed to them in the Loan Agreement.
1. Based upon my review of the balance sheets
and statements of income of Borrower and its Subsidiaries for the [Fiscal Year]
[quarterly period] ending __________________, 19__, copies of which are
attached hereto, I hereby certify that:
(a) Consolidated EBITDA for such period is
$___________;
(b) Consolidated Fixed Charge Coverage Ratio is
____ to ____;
(c) Consolidated Net Worth is $_______________;
(d) Consolidated Leverage Ratio is ____ to ____;
(e) Capital Expenditures during the period and for
the Fiscal Year to date total $_________ for
Borrower.
2. No Default exists on the date hereof, other
than: __________________ _____________________
___________________________ [if none, so state]; and
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<PAGE> 82
3. No Event of Default exists on the date
hereof, other than ____________________________________________________________
__ [if none, so state].
4. As of the date hereof, Borrower is current in
its payment of all accrued rent and other charges to Persons who own or lease
any premises where any of the Collateral is located, and there are no pending
disputes or claims regarding Borrower's failure to pay or delay in payment of
any such rent or other charges.
Very truly yours,
------------------------------
Chief Financial Officer
E-2
<PAGE> 83
EXHIBIT F
OPINION LETTER REQUIREMENTS
Borrower's counsel's opinion letter should address the following in a
manner satisfactory to Agent:
1. Borrower's due incorporation, valid existence, good standing and
qualification as a foreign corporation.
2. Corporate name of Borrower.
3. Borrower's corporate power to execute, deliver and perform the Loan
Documents.
4. Borrower's due authorization to execute, deliver and perform the Loan
Documents.
5. Borrower's execution, delivery and performance of the Loan Documents
do not (a) violate the articles or bylaws, (b) cause a breach or default under
any agreement, (c) violate any law, regulation, judgment or order, or (d)
result in or require a Lien or other encumbrance other than in favor of Agent.
6. The number of issued and outstanding shares of stock of Borrower.
7. The Loan Documents as legal, valid and binding obligations,
enforceable against all Obligors in accordance with their respective terms,
subject to standard bankruptcy and other creditor's rights and equity
exceptions.
8. Counsel's lack of knowledge of litigation or other proceedings, except
as disclosed in Loan Agreement.
9. Absence of any registration, filing, consent or approval requirement
of governmental authority in connection with the execution, delivery and
performance of the Loan Documents.
10. Non-violation by the Loan Documents of any Applicable Laws relating to
interest or usury.
11. Due payment of all applicable taxes and fees required to be paid in
connection with the Loans, the Loan Documents, UCC-1 financing statements and
other Security Documents.
12. Creation in favor of Agent of a duly perfected security interest in
the Collateral described in the Security Documents.
13. Absence of violation of Section 7 of the Securities Exchange Act of
1934, as amended, any regulations issued pursuant thereto, or regulations G, T,
U and X of the Board of Governors of the Federal Reserve System, by the
transactions contemplated by the Loan Documents.
14. Absence of requirement under the laws of applicable states for Agent
or Lenders to qualify in such states to enter into or enforce the provisions of
the Loan Documents.
F-1
<PAGE> 84
EXHIBIT G
FORM OF ASSIGNMENT AND ACCEPTANCE
Dated as of ______, 19__
Reference is made to the Loan and Security Agreement dated January 12,
1996 (at any time amended, the "Loan Agreement"), among RHODES, INC.
("Borrower"), WACHOVIA BANK OF GEORGIA, N.A., in its capacity as agent
("Agent") for the financial institutions from time to time party to the Loan
Agreement ("Lenders"), and Lenders. Capitalized terms used herein and not
otherwise defined shall have the meanings assigned to such terms in the Loan
Agreement.
______________________________________ (the "Assignor") and __________
____________________________ (the "Assignee") agree as follows:
1. (A) Assignor hereby assigns to Assignee and Assignee hereby
purchases and assumes from Assignor (i) a principal amount of $________ of the
outstanding Revolver Loans held by Assignor (which amounts, according to the
records of Agent, represents (_______%) of the total principal amount of
outstanding Revolver Loans) and (ii) a principal amount of $__________ of
Assignor's Revolver Commitment (which amount includes Assignor's outstanding
Revolver Loans being assigned to Assignee pursuant to clause (i) above and
which, according to the records of Agent, represents (____%) of the total
Revolver Commitments of Lenders under the Loan Agreement); (B) Assignor hereby
assigns to Assignee and Assignee hereby purchases and assumes from Assignor (i)
a principal amount of $________ of the outstanding Term Loan and (ii) a
principal amount of $_________ of Assignor's Term Loan Commitment (which amount
includes Assignor's outstanding Term Loan Advance being assigned to Assignee
pursuant to clause (i) above and which, according to the records of Agent,
represents ________% of the total Term Loan Commitments of the Lenders under
the Loan Agreement) (the items described in (A) and (B) above being herein
collectively referred to as the "Assigned Interests"), together with an
interest in the Loan Documents corresponding to the Assigned Interest. This
Agreement shall be effective from the date (the "Assignment Effective Date") on
which Assignor receives both (x) the principal amount of the Assigned Interest
in the Loans on the Assignment Effective Date, if any, and (y) a copy of this
Agreement duly executed by Assignee. From and after the Assignment Effective
Date, Assignee hereby expressly assumes, and undertakes to perform, all of
Assignor's obligations in respect of Assignor's Commitments to the extent, and
only to the extent, of Assignee's Assigned Interest, and all principal,
interest, fees and other amounts which would otherwise be payable to or for
Assignor's account in respect of the Assigned Interest shall be payable to or
for Assignee's account, to the extent such amounts have accrued subsequent to
the Assignment Effective Date.
2. Assignor (i) represents that as of the date hereof, the
aggregate of its Commitments under the Loan Agreement (without giving effect to
assignments thereof, which have not yet become effective) is $__________, and
the outstanding balance of its Loans (unreduced by any assignments thereof,
which have not yet become effective) is $__________; (ii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Loan Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or
G-1
<PAGE> 85
value of the Loan Agreement or any other instrument or document furnished
pursuant thereto, other than that Assignor is the legal and beneficial owner of
the interest being assigned by it hereunder and that such interest is free and
clear of any adverse claim; (iii) makes no representation or warranty and
assumes no responsibility with respect to the financial condition of Borrower,
the performance or observance by Borrower of any of its obligations under the
Loan Agreement or any of the Loan Documents[; and (iv) attaches the Notes held
by it and requests that Agent exchange such Notes for new Notes payable to
Assignee and the Assignor in the principal amounts set forth on Schedule A
hereto].
3. Assignee (i) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (ii) confirms that it
has received a copy of the Loan Agreement, together with copies of the most
recent financial statements delivered pursuant to Section _____ thereof, and
copies of such other Loan Documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance; (iii) agrees that it shall, independently and
without reliance upon the Assignor and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Loan Agreement; (iv)
confirms that it is eligible to become an Assignee; (v) appoints and
authorizes Agent to take such action as agent on its behalf and to exercise
such powers under the Loan Agreement as are delegated to Agent by the terms
thereof, together with such powers as are incidental thereto; (vi) agrees that
it will strictly observe and perform all the obligations that are required to
be performed by it as a "Lender" under the terms of the Loan Agreement and the
other Loan Documents; and (vii) agrees that it will keep confidential all
information with respect to Borrower furnished to it by Borrower or the
Assignor to the extent provided in the Loan Agreement.
4. Assignor acknowledges and agrees that it will not sell or
otherwise dispose of the Assigned Interest or any portion thereof, or grant any
participation therein, in a manner which, or take any action in connection
therewith which, would violate the terms of any of the Loan Documents.
5. This Agreement and all rights and obligations shall be
interpreted in accordance with and governed by the laws of the State of
Georgia. If any provision hereof would be invalid under Applicable Law, then
such provision shall be deemed to be modified to the extent necessary to render
it valid while most nearly preserving its original intent; no provision hereof
shall be affected by another provision's being held invalid.
6. Each notice or other communication hereunder shall be in
writing, shall be sent by messenger, by telecopy or facsimile transmission or
by first-class mail, shall be deemed given when sent and shall be sent as
follows:
If to Assignee, to the following address (or to such other address as
Assignee may designate from time to time):
----------------------
----------------------
----------------------
G-2
<PAGE> 86
If to Assignor, to the following address (or to such other address as
Assignor may designate from time to time):
----------------------
----------------------
----------------------
----------------------
Payments hereunder shall be made by wire transfer of immediately
available Dollars as follows:
If to Assignee, to the following account (or to such other account as
Assignee may designate from time to time):
----------------------
ABA No.
--------------
----------------------
Account No.
----------
Reference: ----------
If to Assignor, to the following account (or to such other account as
Assignor may designate from time to time):
----------------------
----------------------
----------------------
ABA No.
--------------
For Account of:
------
Reference:
-----------
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed and delivered by their respective duly authorized
officers, as of the date first above written.
--------------------------------
("Assignor")
By:
----------------------------
Title:
-----------------------
--------------------------------
("Assignee")
By:
----------------------------
Title:
-----------------------
G-3
<PAGE> 87
SCHEDULE A TO ASSIGNMENT AND ACCEPTANCE
G-4
<PAGE> 88
EXHIBIT H
FORM OF NOTICE
Reference is made to (i) the Loan and Security Agreement dated January
12, 1996 (as at any time amended, the "Loan Agreement") among RHODES, INC.
("Borrower"), WACHOVIA BANK OF GEORGIA, N.A. in its capacity as agent ("Agent")
for the financial institutions from time to time party to the Loan Agreement
("Lenders"), and Lenders, and (ii) the Assignment and Acceptance dated as of
____________, 19__ (the "Assignment Agreement") between __________________ (the
"Assignor") and ____________________ (the "Assignee"). Except as otherwise
defined herein, capitalized terms used herein which are defined in the Loan
Agreement are used herein with the respective meanings specified therein.
The Assignor hereby notifies Borrower and Agent of Assignor's intent
to assign to Assignee pursuant to the Assignment Agreement a principal amount
of (i) $________ of the outstanding Revolver Loans held by Assignor, (ii)
$___________ of Assignor's Revolver Commitment (which amount includes the
Assignor's outstanding Revolver Loans being assigned to Assignee pursuant to
clause (i) above), (iii) $_______________ of the outstanding Term Loan Advance
held by Assignor, and (iv) $_____________ of Assignor's Term Loan Commitment
(which amount includes Assignor's outstanding portion of the Term Loan Advance
being assigned to Assignee pursuant to clause (iii) above), together with an
interest in the Loan Documents corresponding to the interest in the Loans and
Commitments so assigned. Pursuant to the Assignment Agreement, Assignee has
expressly assumed all of Assignor's obligations under the Loan Agreement to the
extent of the Assigned Interest (as defined in the Assignment Agreement).
For purposes of the Loan Agreement, Agent shall deem Assignor's share
of the Revolver Commitment and Term Loan Commitment to be reduced by $_________
and $__________, respectively, and Assignee's share of the Revolver Commitment
and Term Loan Commitment to be increased by $_________ and $___________,
respectively.
The address of the Assignee to which notices, information and payments
are to be sent under the terms of the Loan Agreement is:
------------------
------------------
------------------
------------------
Assignee's LIBOR Lending Office address is as follows:
------------------
------------------
------------------
------------------
H-1
<PAGE> 89
This Notice is being delivered to the Borrower and Agent pursuant to
Section 13.3 of the Loan Agreement. Please acknowledge your receipt of this
Notice by executing and returning to Assignee and Assignor a copy of this
Notice.
IN WITNESS WHEREOF, the undersigned have caused the execution of this
Notice, as of _________________, 19__.
-----------------------------
("Assignor")
By:
--------------------------
Title:
-------------------
-----------------------------
("Assignee")
By:
-------------------------
Title:
------------------
ACKNOWLEDGED AND AGREED TO
AS OF THE DATE SET FORTH ABOVE:
RHODES, INC.
By:
--------------------------
Title:
--------------------
WACHOVIA BANK OF GEORGIA, N.A.,
as Agent
By:
--------------------------
Title:
--------------------
H-2
<PAGE> 90
SCHEDULE 8.1.1
BUSINESS LOCATIONS
<TABLE>
<S> <C>
2507 Dawson Road 4836 14th Street West
Albany, Georgia 31707 Bradenton, Florida 34207
1071 Patton Avenue 1290 Highway 7
Asheville, North Carolina 28806 Charleston, South Carolina 29407
P.O. Box 6468 8570 Rivers Avenue
Athens, Georgia 30604 North Charleston, South Carolina 29418
3655 Memorial Drive 6191 E. Independence Boulevard
Decatur, Georgia 30032 Charlotte, North Carolina 28212
3380 Florence Road 5533 Westpark Drive
Powder Springs, Georgia 30073 Charlotte, North Carolina 28217
4363 N.E. Exp. Access Road 4430 Tamiami Trail
Doraville, Georgia 30341 Charlotte Harbor, Florida 33950
5955 Stewart Parkway 6933 Lee Highway
Douglasville, Georgia 30135 Chattanooga, Tennessee 37421
2338 Henry Clower Boulevard 7500 Two Notch Road
Snellville, Georgia 30278 Columbia, South Carolina 29204
1680-J Highway 138 3166 Macon Road
Conyers, Georgia 30208 Columbus, Georgia 31907
3360 Wrightsboro Road 2700 Ross Clark Circle
Augusta, Georgia 30909 Dothan, Alabama 36301
2700 19th Street North 4521 Chapel Hill Boulevard
Birmingham, Alabama 35207 Durham, North Carolina 27707
1686 Montgomery Highway P.O. Box 35168
Hoover, Alabama 35216 Fayetteville, North Carolina 28303
1970 Bessemer Road 5370 Cleveland Avenue
Birmingham, Alabama 35208 Ft. Myers, Florida 33907
1632 Center Point Road
Center Point, Alabama 35215 328 Racetrack Road
Ft. Walton, Florida 32548
1847 Crestwood Boulevard
Birmingham, Alabama 35210 2305 N.W. 13th Street
Gainesville, Florida 32601
</TABLE>
-1-
<PAGE> 91
<TABLE>
<S> <C>
3407 Highpoint Road 15115 Old Hickory Boulevard
Greensboro, North Carolina 27417 Nashville, Tennessee 37211
2686 Laurens Road 1028 Gallatin Road, S.
Greenville, South Carolina 29607 Madison, Tennessee 37115
429 Pass Road 2235 Gallatin Road, N.
Gulfport, Mississippi 39507 Madison, Tennessee 37115
2501 University Drive, N.W. 344 White Bridge Road
Huntsville, Alabama 35816 Nashville, Tennessee 37209
4290 Lakeland Drive, E. 2418 E. Colonial Drive
Jackson, Mississippi 39208 Orlando, Florida 32803
4700 Walgreen Road 5510 W. Colonial Drive
Jacksonville, Florida 32209 Orlando, Florida 32803
5960 Beach Boulevard 420 W. State Road, #436
Jacksonville, Florida 32207 Altamonte Springs, Florida 32714
266-25 Blanding Boulevard 901 Landstreet Road
Orange Park, Florida 32073 Orlando, Florida 32824
4700 Walgreen Road 9421 Orange Blossom Trail
Jacksonville, Florida 32209 Orlando, Florida 32837
410 North Peters Road 298 S. Yonge Street
Knoxville, Tennessee 37922 Ormond Beach, Florida 32174
2601 Nicholasville Road 1318 W. Fifteenth Street
Lexington, Kentucky 40503 Panama City, Florida 32401
P.O. Box 36126 5316 N. Davis Highway
Louisville, Kentucky 40233 Pensacola, Florida 32503
2086 Eisenhower Parkway 527 E. Fontaine Street
Macon, Georgia 31206 Pensacola, Florida 32503
3712 Airport Boulevard 5920 Glenwood Avenue
Mobile, Alabama 36608 Raleigh, North Carolina 27612
2525 Eastern Bypass 3501 Spring Forest Road
Montgomery, Alabama 36117 Raleigh, North Carolina 27604
5295 N. Tamiami Trail 105 Tibet Avenue
Naples, Florida 33940 Savannah, Georgia 31406
</TABLE>
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<PAGE> 92
<TABLE>
<S> <C>
300 W. Blackstock Road 11600 East 56th Avenue
Spartanburg, South Carolina 29301 Denver, Colorado 80239
5690 Campus Parkway 422 South Chambers Road, Building "B"
Hazelwood, Missouri 63042 Aurora, Colorado 80017
3900 Union Road 2550 East County Line Road
St. Louis, Missouri 63125 Littleton, Colorado 80126
105 Commerce Lane 8996 West Bowles
Fairview Heights, Illinois 62208 Littleton, Colorado 80123
411 Midrivers Mall Drive 9979 Wadsworth Parkway
St. Peters, Missouri 63376 Westminster, Colorado 80021
1122 Thomasville Road 5333 North Bannock Street
Tallahassee, Florida 32303 Denver, Colorado 80216
460 S. College Road 1815 North Academy Boulevard
Wilmington, North Carolina 28403 Colorado Springs, Colorado 80909
1590 Peters Creek Parkway 5001 South College
Winston-Salem, North Carolina 27103 Fort Collins, Colorado 80525
1800 East Fifth Avenue 1028 8th Avenue
Columbus, Ohio 43219 Greeley, Colorado 80631
2233 S. Hamilton Road 655 North 1st Street
Columbus, Ohio 43232 Grand Junction, Colorado 81501
1333 Morse Road 9803 Broadway
Columbus, Ohio 43229 San Antonio, Texas 78217
6569 Sawmill Road 4714 Industry Park Boulevard
Dublin, Ohio 43017 San Antonio, Texas 78218
50 N. Wilson Road 2627 Southwest Military Drive
Columbus, Ohio 43204 San Antonio, Texas 78224
110 Consumer Square 6709 Northwest Loop 410
Shawnee Center San Antonio, Texas 78238
Chillicothe, Ohio 45601
1950 Bandera Road
888 Hebron Road San Antonio, Texas 78228
Heath, Ohio 43056
510 East IH 10
Seguin, Texas 78155
</TABLE>
-3-
<PAGE> 93
5639 Airport Boulevard
Austin, Texas 78751
4501 South General Bruce Drive, #10
Temple, Texas 76502
5400 Franklin
Waco, Texas 76710
605 South 11th Street
Beaumont, Texas 77701
7122 Gateway East
El Paso, Texas 79915
912 Anthony Drive
Champaign, Illinois 61821
The following bailees, warehouseman, similar parties and consignees
hold inventory of Borrower or one of its Subsidiaries:
<TABLE>
<CAPTION>
Name and Address of Party Nature of Relationship Amount of Inventory Owner of Inventory
<S> <C> <C> <C>
NONE
</TABLE>
-4-
<PAGE> 94
SCHEDULE 8.1.1-A
SPECIFIC COLLATERAL LOCATIONS
(a) 275-003 Harbison Boulevard
Columbia, South Carolina 29212
(b) 2233 South Hamilton Road
Columbus, Ohio 43232
(c) 50 North Wilson Road
Columbus, Ohio 43204
(d) 8996 West Bowles
Littleton, Colorado 80123
(e) 422 S. Chambers Road
Building "B"
Aurora, Colorado 80017
(f) 1028 - 8th Avenue
Greeley, Colorado 80631
(g) 9803 Broadway
San Antonio, Texas 78217
(h) 1950 Bandera Road
San Antonio, Texas 78228
(i) 2627 S.W. Military Drive
San Antonio, Texas 78224
(j) 410 North Peters Road
Knoxville, Tennessee 37922
(k) 2235 Gallatin Road North
Madison, Tennessee 37115
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<PAGE> 95
SCHEDULE 9.1.1
JURISDICTIONS IN WHICH BORROWER
AND EACH SUBSIDIARY
IS AUTHORIZED TO DO BUSINESS
<TABLE>
<CAPTION>
Name of Entity Jurisdictions
<S> <C> <C>
Marks Fitzgerald & Rhodes Furniture Alabama
Weberg Furniture Colorado
Rhodes Furniture Florida
Rhodes Furniture Georgia
Crossroads & Weberg Furniture Illinois
Crossroads Indiana
(1) Rhodes Furniture Kansas
Crossroads Kentucky
Rhodes Furniture Mississippi
Crossroads and Rhodes Furniture Missouri
Rhodes Furniture North Carolina
Rhodes Furniture & Glick Furniture Co. Ohio
Rhodes South Carolina
Rhodes & Fowler's Furniture Company Tennessee
Weberg Furniture Texas
(1) A subsidiary consisting of one store. This is Rhodes' only subsidiary, Rhodes Furniture Co.
</TABLE>
-1-
<PAGE> 96
SCHEDULE 9.1.16
LITIGATION
On April 17, 1995, several individuals, as members of a purported
plaintiff class of customers, filed suit in the Circuit Court of Jefferson
County, Alabama against the Company and certain other defendants, including
Sears, Roebuck & Company, Inc., Service Merchandise Company, Inc., Friedman's
Inc., Alabama Power Company, Lowe's Home Centers, Inc., and Rex Radio and
Television, Inc., alleging violations of the Code of Alabama and fraud and
conspiracy arising from the sale of "extended service contracts" in connection
with the credit purchase of consumer goods. In their prayer for relief, the
plaintiffs seek damages equal to all principal and finance charges under the
credit agreements in question, a judgment voiding the credit agreements,
injunctive relief, the reimbursement of all costs associated with the action,
other compensatory damages and unspecified punitive damages. The Company
believes that its practices with respect to extended service contracts comply
with Alabama law and it intends to vigorously defend this action.
Due to the nature of the Company's business, it is from time to time a
party to other legal proceedings arising in the ordinary course of its
business, none of which, in the judgment of management, would have a material
adverse effect on its operations or financial condition if adversely
determined.
-1-
<PAGE> 97
SCHEDULE 9.1.18
PENSION PLANS
Plans:
1. Rhodes, Inc. Employees' Pension Plan
2. Rhodes, Inc. Supplemental Employees' Pension Plan
-1-
<PAGE> 98
SCHEDULE 9.1.21
COLLECTIVE BARGAINING AGREEMENTS; LABOR CONTROVERSIES
1. Borrower and its Subsidiaries are parties to the following collective
bargaining agreements: None
<TABLE>
<CAPTION>
Type of Agreement Parties Term of Agreement
<S> <C> <C>
</TABLE>
2. Material grievances, disputes of controversies with employees are as
follows: None
<TABLE>
<CAPTION>
Parties Involved Nature of Grievance, Dispute or Controversy
<S> <C>
</TABLE>
3. Threatened strikes, work stoppages and asserted pending demands for
collective bargaining are as follows: None
<TABLE>
<CAPTION>
Parties Involved Nature of Matter
<S> <C>
</TABLE>
-1-
<PAGE> 99
SCHEDULE 10.2.4
AFFILIATE TRANSACTIONS
-1-
<PAGE> 100
SCHEDULE 10.2.5
PERMITTED LIENS
Liens existing on the date hereof in favor of the Noteholders, but
only if and for so long as such Liens are covered by and subject to the
Intercreditor Agreement between the Noteholders and Wachovia, the rights under
which have been assigned by Wachovia to Agent.
-1-
<PAGE> 101
SCHEDULE 10.2.9
DISPOSITION OF ASSETS
-1-
<PAGE> 1
EXHIBIT 13.1
RHODES, INC.
PART II
OTHER INFORMATION
Item 2. Changes in Securities
On January 12, 1996, the Company entered into a loan and security
agreement with Wachovia Bank of Georgia, N.A. ("Wachovia") and the Fleet Capital
Corporation, which provides a term loan of $20 million and a revolving credit
facility of the lesser of $45 million or 50% of eligible inventory. The loan
and security agreement replaces the Company's prior banking borrowing facility,
expires January 12, 1999 and is secured by substantially all of the inventory of
the Company. In accordance with the loan and security agreement, the Company
may not declare or pay any dividends without the consent of Wachovia, and the
Company must maintain certain minimum cash flow levels, fixed charge coverage
and leverage ratios and consolidated net worth levels.
13
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
33-61613 of Rhodes, Inc. on Form S-8 of our report dated January 5, 1996 on the
financial statements of the Weberg Division (a division of Weberg Enterprises,
Inc.) for the year ended December 31, 1994, appearing in Amendment No. 1 to the
Form 8-K of Rhodes, Inc.
DELOITTE & TOUCHE LLP
Denver, Colorado
January 16, 1996
<PAGE> 1
WEBERG DIVISION
(A Division of Weberg Enterprises, Inc.)
Financial Statements for the Year Ended December 31, 1994
and Independent Auditors' Report
<PAGE> 2
EXHIBIT 99.1
INDEPENDENT AUDITORS' REPORT
Weberg Enterprises, Inc.:
We have audited the accompanying balance sheet of the Weberg Division
(Division) (a division of Weberg Enterprises, Inc. (Company)) as of December
31, 1994, and the related statements of income and cash flows for the year then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Division as of December 31, 1994, and
the results of its operations and its cash flows for the year then ended in
conformity with generally accepted accounting principles.
As discussed in Note 2 to the financial statements, the Division changed its
method of accounting for inventory costs effective January 1, 1994.
The accompanying financial statements have been prepared from the separate
records maintained by the Division and may not necessarily be indicative of the
conditions that would have existed or the results of operations if the Division
had been operated as an unaffiliated company. Portions of certain income and
expenses represent allocations made from items applicable to the Company as a
whole.
Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Denver, Colorado
January 5, 1996
<PAGE> 3
WEBERG DIVISION
BALANCE SHEET
DECEMBER 31, 1994
(Amounts in Thousands)
<TABLE>
<S> <C>
CURRENT ASSETS:
Cash $ 176
Trade receivables, net of allowance of $2 1,026
Other receivables 25
Inventories (Notes 2, 3 and 4) 23,651
Prepaid expenses 323
Deferred income taxes (Note 7) 341
-----------
Total current assets 25,542
-----------
PROPERTY AND EQUIPMENT - at cost (Notes 5 and 6):
Land 443
Buildings 3,321
Fixtures, equipment and leasehold improvements 12,554
-----------
Total 16,318
Less accumulated depreciation and amortization 8,572
-----------
Net property and equipment 7,746
-----------
DEFERRED INCOME TAXES (Note 7) 659
-----------
TOTAL ASSETS $ 33,947
===========
</TABLE>
-2-
<PAGE> 4
<TABLE>
<S> <C>
LIABILITIES AND INVESTMENT BY AND ADVANCES FROM
WEBERG ENTERPRISES
CURRENT LIABILITIES:
Long-term debt - current portion (Note 5) $ 244
Accounts payable 2,443
Accrued property and sales taxes 1,424
Advances from customers 1,236
Accrued payroll and benefits 1,229
Accrued advertising 955
Other accrued expenses 548
----------
Total current liabilities 8,079
----------
LONG-TERM DEBT (Note 5) 1,873
----------
DEFERRED GAIN (Note 6) 281
----------
Total liabilities 10,233
----------
INVESTMENT BY AND ADVANCES FROM WEBERG ENTERPRISES (Note 3) 23,714
----------
TOTAL LIABILITIES AND INVESTMENT BY AND ADVANCES FROM
WEBERG ENTERPRISES $ 33,947
==========
</TABLE>
-3-
<PAGE> 5
WEBERG DIVISION
STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1994
(Amounts in Thousands)
<TABLE>
<S> <C>
SALES $ 112,921
COST OF SALES 67,400
-----------
GROSS PROFIT 45,521
-----------
OPERATING EXPENSES (Notes 6, 8 and 9):
Personnel 18,731
Non-Personnel 14,210
Advertising 9,202
Credit promotion fees 664
-----------
Total operating expenses 42,807
-----------
OPERATING INCOME 2,714
INTEREST EXPENSE (803)
-----------
INCOME BEFORE INCOME TAXES AND CUMULATIVE
EFFECT OF CHANGE IN ACCOUNTING FOR INVENTORIES 1,911
-----------
INCOME TAXES (Note 7):
Current provision (799)
Deferred benefit 26
-----------
(773)
-----------
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING FOR INVENTORIES 1,138
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING FOR
INVENTORIES, NET OF TAXES OF $228 (Note 2) 380
-----------
NET INCOME 1,518
INVESTMENT BY AND ADVANCES FROM WEBERG ENTERPRISES,
BEGINNING OF YEAR 19,653
ADVANCES 6,251
REPAYMENTS (3,708)
-----------
INVESTMENTS BY AND ADVANCES FROM WEBERG ENTERPRISES,
END OF YEAR $ 23,714
============
</TABLE>
-4-
<PAGE> 6
WEBERG DIVISION
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1994
(Amounts in Thousands)
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,518
Adjustments to reconcile net income to net cash
used in operating activities:
Deferred gain recognized (56)
Depreciation and amortization 815
Deferred income taxes (26)
Change in accounting for inventories (380)
Net change in operating assets and liabilities:
Trade receivables (311)
Other receivables (25)
Inventories (1,169)
Prepaid expenses (118)
Accounts payable (287)
Accrued expenses 275
Advances from customers (252)
------------
Net cash used in operating activities (16)
------------
CASH FLOWS FROM INVESTING ACTIVITIES -
Payments for property and equipment (3,762)
------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt 1,523
Principal payments of long-term debt (206)
Investments by and Advances from Weberg Enterprises 6,251
Repayments of Investments by and Advances from Weberg Enterprises (3,708)
------------
Net cash provided by financing activities 3,860
------------
NET INCREASE IN CASH 82
CASH, BEGINNING OF YEAR 94
------------
CASH, END OF YEAR $ 176
============
</TABLE>
-5-
<PAGE> 7
WEBERG DIVISION
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1994
(Amounts in Thousands)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION - Weberg Enterprises, Inc. (Company) operates 21
retail furniture stores and 2 distribution centers (collectively, the
Division) in the states of Colorado, Texas and Illinois. The
accompanying financial statements of the Division include the
transactions and account balances related to the operations of the
Division including an allocation from the Company of certain operating
expenses and interest expense directly related to the operations of the
Division. Allocations of such operating expenses from the Company are
generally based upon the Division's sales and inventory levels relative
to the Company's total sales and inventory levels. Management believes
that allocated expenses are representative of actual expenses that would
have been incurred by the Division. However, the accompanying financial
statements may not necessarily be indicative of the conditions that would
have existed or the results of operations if the Division had been
operated as a separate unaffiliated company. The Division's financial
statements do not include transactions and account balances related to or
resulting from other activities of the Company.
INVENTORIES - Inventories, consisting of finished goods, are stated at
the lower of cost or market value. Cost is determined principally by the
last-in, first-out (LIFO) method; however, cost for certain inventories
is determined by the first-in, first-out (FIFO) method (Note 4).
DEPRECIATION AND AMORTIZATION - Depreciation of property and equipment is
provided using the straight-line and accelerated methods over the
estimated useful lives ranging from three to forty years. Amortization
of leasehold improvements is provided on the straight-line method over
the lesser of the lease term or the estimated useful lives of the assets.
STORE AND WAREHOUSE OPENING COSTS - The costs of opening new stores and
warehouses are expensed as incurred. The Division opened one
distribution center in 1994.
2. CHANGE IN ACCOUNTING METHOD
Effective January 1, 1994, the Company changed its method of accounting
for inventory costs, including those of the Division, to include certain
purchasing, warehousing and transportation costs in inventory. Such
costs had previously been charged to expense in the period incurred. The
Company believes this new inventory valuation method is preferable
because it provides a better matching of costs with related revenues.
The effect of this change was to increase the Division's 1994 income
before the cumulative effect of the accounting change by approximately
$57.
3. INVESTMENT BY AND ADVANCES FROM WEBERG ENTERPRISES
The Company has an investment in the Division in addition to having
advanced funds to the Division for purposes of its operations. Funding
for the operation of the Division is provided principally by the Company.
As described in Note 1, the Company has allocated interest expense to the
Division and has
-6-
<PAGE> 8
done so in an amount considered commensurate with the financing costs
associated with its advances to the Division.
There are no sales or purchases of product between the Division and the
Company and thus no related unrealized intercompany profit on any
inventories or property and equipment.
The Company has pledged all of the Division's inventories as collateral
under a bank line of credit, which has an outstanding balance at December
31, 1994 of $8,500.
4. INVENTORIES
Inventories are comprised of the following as of December 31, 1994:
<TABLE>
<S> <C>
LIFO inventory at cost $ 22,959
FIFO inventory at cost 2,922
----------
Total inventory at cost 25,881
LIFO reserve (2,230)
----------
Total $ 23,651
==========
</TABLE>
If all of the Division's inventories had been valued at FIFO, 1994 net
income would have been $1,604.
5. LONG-TERM DEBT
Long-term debt at December 31, 1994 consists of the following:
<TABLE>
<S> <C>
Mortgage note payable in monthly installments of
$11 including interest at 8%, collateralized by
building in El Paso, Texas, matures April 1995 $ 29
Mortgage note payable in monthly installments of $9
including interest at 9.75%, collateralized by building
in Champaign, Illinois, matures April 2003 602
Mortgage note payable in monthly installments of
$24 including interest at prime plus .5%,
collateralized by inventory racks in the Denver
Distribution Center, matures November 2001 1,486
---------
Total 2,117
Less current maturities 244
---------
Long-term debt $ 1,873
=========
</TABLE>
-7-
<PAGE> 9
Scheduled maturities of long-term debt for the years ending December
31 are as follows:
<TABLE>
<S> <C>
1995 $ 244
1996 236
1997 258
1998 283
1999 310
Thereafter 786
---------
Total $ 2,117
=========
</TABLE>
6. LEASE OBLIGATIONS
In September 1992, the Company's stockholder purchased a building which
had been leased by the Division under a capital lease and, as a result,
the Division's obligations under the capital lease were terminated as of
such date. The Division, however, has continued to lease the building
from the Company's stockholder under a month-to-month lease. The
Division deferred the $407 gain on this transaction and is recognizing
the gain ratably over the estimated remaining useful life of the
building.
The Division operates in certain facilities under operating leases with
various renewal options and escalation clauses. The leases require that
utilities, maintenance, taxes, insurance, and leasehold improvements be
paid by the tenant. The Division leases several facilities from the
stockholder of the Company under month-to-month leases.
Future minimum lease payments under operating leases are as follows for
the years ending December 31:
<TABLE>
<S> <C>
1995 $ 1,840
1996 1,702
1997 1,572
1998 1,460
1999 1,035
Thereafter 3,211
----------
Total $ 10,820
==========
</TABLE>
Rent expense for facilities under operating leases in 1994 was $3,420.
Included in 1994 rent expense was $2,151 under operating leases with the
Company's stockholder.
7. INCOME TAXES
The taxable income of the Division is included in the income tax return
of the Company. The Company filed an election to revoke its
S-Corporation status effective December 17, 1993 and became a
C-Corporation effective January 1, 1994. This election was deemed
effective upon filing and, as a result, income taxes are now provided for
in the Company's financial statements in accordance with Statement of
Financial Accounting Standards No. 109 (SFAS No. 109). The Company
allocates current and deferred income taxes to the Division by applying
SFAS No. 109 as if the Division were a separate taxpayer. As of December
31, 1994, $799 of income taxes payable is included in the Investment By
and Advances From Weberg Enterprises account.
-7-
<PAGE> 10
Deferred income tax assets and liabilities are allocated annually for
differences between the financial reporting basis and the income tax
basis of assets and liabilities that will result in taxable or deductible
amounts in the future. Such deferred tax assets and liability
computations are based on enacted tax laws and rates applicable to years
in which the differences are expected to affect taxable income.
Income tax expense for the year ended December 31, 1994 is comprised of
the following components:
<TABLE>
<CAPTION>
FEDERAL STATE TOTAL
<S> <C> <C> <C>
Current $ (724) $ (75) $ (799)
Deferred 24 2 26
------- ------ -------
$ (700) $ (73) $ (773)
======= ====== =======
</TABLE>
As of December 31, 1994, the temporary differences which resulted in
deferred tax assets are as follows:
<TABLE>
<S> <C>
Current:
Accrual of expenses for financial
reporting purposes but not for
income tax purposes $ 341
---------
Noncurrent:
Difference between book and tax
basis of property and equipment 554
Deferred gain 105
---------
659
---------
Total deferred tax asset $ 1,000
=========
</TABLE>
The following reconciles the 1994 income tax provision to the Federal
statutory rate:
<TABLE>
<S> <C>
Income tax expense, computed at
Federal statutory rate $ 650
Tax effect of:
State income taxes, net of
Federal income tax benefit 45
Expenses not deductible for income
tax purposes 47
Other 31
-------
Total provision $ 773
=======
</TABLE>
8. EMPLOYEE BENEFIT PLANS
The Division's employees are eligible for participation in the Weberg
Enterprises, Inc. 401(k) Profit Sharing Plan and Trust (the 401(k)
Plan). The 401(k) Plan is available for all employees age 21 and over
who have been employed by the Company for a period of one year. An
employee may contribute up to 15% of gross salary to the 401(k) Plan.
The Company's Board of Directors determines annually what
contribution, if any, the Company shall make to the 401(k) Plan.
Employee contributions vest
-9-
<PAGE> 11
immediately while Company contributions vest over a seven-year period.
The Company did not make any contributions to the 401(k) Plan on
behalf of the Division's participants for the year ended December 31,
1994.
The Weberg Enterprises, Inc. Supplemental Retirement Plan (the Plan)
was created in December 1992 and is available to certain key employees
of the Division specified within the Plan. The Plan does not specify
minimum or maximum participant contributions. The Company's Board of
Directors determines annually what contribution, if any, the Company
shall make to the Plan. Employee and Company contributions vest
immediately. The Company incurred $12 in expenses in connection with
the Plan on behalf of the Division's participants during the year
ended December 31, 1994. The Plan was terminated effective December
31, 1995.
9. SUBSEQUENT EVENT
On October 31, 1995, the Company sold certain of its assets related to
the Division, net of certain lease obligations and certain liabilities
related to employee benefits, (the Sale) to Rhodes, Inc. (Rhodes) for
approximately $31.4 million. The assets, comprised principally of
inventories, leasehold improvements, office equipment and
miscellaneous assets, were utilized by the Company in the operation of
21 retail furniture stores and 2 distribution centers in the states of
Colorado, Texas and Illinois. In connection with the Sale, Rhodes
assumed the Division's obligations under 11 of the store locations and
entered into leases or subleases with affiliates of the Company for 10
store and 2 distribution center locations.
* * * * *
-10-
<PAGE> 12
WEBERG DIVISION
BALANCE SHEET
SEPTEMBER 30, 1995
Amounts in Thousands
(Unaudited)
<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS:
Cash $ 71
Trade receivables 585
Other receivables 84
Inventories 22,384
Prepaid expenses 315
Deferred income taxes 698
-------------
Total current assets 24,137
-------------
PROPERTY AND EQUIPMENT - at cost
Land 443
Buildings 3,321
Fixtures, equipment and leasehold improvements 12,449
-------------
Total 16,213
-------------
Less accumulated depreciation and amortization 8,870
Net property and equipment 7,343
-------------
DEFERRED INCOME TAXES 577
-------------
TOTAL ASSETS $ 32,057
=============
</TABLE>
<PAGE> 13
WEBERG DIVISION
LIABILITIES AND INVESTMENT BY AND ADVANCES FROM
WEBERG ENTERPRISES
<TABLE>
<S> <C>
CURRENT LIABILITIES:
Long-term debt - current portion $ 244
Accounts payable 3,139
Accrued property and sales taxes 1,600
Advances from customers 1,274
Accrued payroll and benefits 773
Accrued advertising 535
Other accrued expenses 1,523
-------------
Total current liabilities 9,088
-------------
LONG-TERM DEBT 1,690
-------------
DEFERRED GAIN 239
-------------
Total Liabilities 11,017
-------------
INVESTMENT BY AND ADVANCES FROM WEBERG ENTERPRISES 21,040
-------------
TOTAL LIABILITIES AND INVESTMENT BY AND ADVANCES FROM
WEBERG ENTERPRISES $ 32,057
=============
</TABLE>
<PAGE> 14
WEBERG DIVISION
STATEMENT OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1995
Amounts in Thousands
(Unaudited)
<TABLE>
<S> <C>
SALES $ 77,216
COST OF SALES 46,161
-------------
GROSS PROFIT 31,055
-------------
OPERATING EXPENSES
Personnel 13,077
Non-Personnel 10,763
Advertising 5,595
Credit promotion fees 1,404
-------------
Total operating expenses 30,839
-------------
OPERATING INCOME 216
-------------
INTEREST EXPENSE 1,041
-------------
INCOME (LOSS) BEFORE INCOME TAXES (825)
-------------
INCOME TAXES
Current benefit 6
Deferred benefit 273
-------------
NET INCOME (LOSS) $ (546)
=============
</TABLE>
<PAGE> 1
EXHIBIT 99.2
RHODES, INC. AND SUBSIDIARIES
PRO FORMA COMBINED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)
FOR THE YEAR ENDED FEBRUARY 28, 1995
<TABLE>
<CAPTION>
ACTUAL
---------------------------
RHODES WEBERG PRO FORMA PRO FORMA
INC. DIVISION ADJUSTMENTS COMBINED
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET SALES $361,238 $112,921 ($1,523) (2) $472,636
COST OF GOODS SOLD 185,995 67,400 253,395
--------------------------------------------------------
GROSS PROFIT 175,243 45,521 (1,523) 219,241
--------------------------------------------------------
FINANCE CHARGES AND INSURANCE
COMMISSIONS 4,935 - 4,935
--------------------------------------------------------
OPERATING EXPENSES:
Selling 57,720 6,554 (2) 74,381
241 (2)
9,202 (2)
664 (2)
General and administrative 93,391 (1,523) (2) 117,981
12,177 (2)
13,936 (2)
Provision for credit losses 164 193 (2) 357
60 (3)
Amortization of intangibles 3,074 75 (4) 3,209
Other expense (income), net 197 (160) (2) 37
Personnel 18,731 (18,731) (2)
Non-personnel 14,210 (14,210) (2)
Advertising 9,202 (9,202) (2)
Credit promotion fees 664 (664) (2)
--------------------------------------------------------
154,546 42,807 (1,388) 195,965
--------------------------------------------------------
OPERATING INCOME 25,632 2,714 (135) 28,211
Interest expense, net 6,109 803 2,512 (5) 8,621
(803) (6)
--------------------------------------------------------
NET INCOME BEFORE INCOME TAXES 19,523 1,911 (1,844) 19,590
PROVISION FOR INCOME TAXES 8,004 773 (745) (7) 8,032
--------------------------------------------------------
NET INCOME $11,519 $1,138 ($1,099) $11,558
========================================================
NET INCOME PER SHARE $1.18 $1.18
========================================================
WEIGHTED AVERAGE NUMBER OF SHARES
OF COMMON STOCK OUTSTANDING 9,760 9,760
========================================================
</TABLE>
<PAGE> 2
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
1. The attached Pro Forma Combined Income Statements for the year ended
February 28, 1995, give effect to the acquisition of 21 store operations
and two distribution centers, collectively The Weberg Division (Weberg
Division) from Weberg Enterprises, Inc. which was completed on November 1,
1995. The adjustments related to the Pro Forma Combined Income Statements
assume the Transaction was consummated at March 1, 1994. No Pro Forma
Combined Balance Sheet is presented as Rhodes Form 10-Q for the period
ended November 30, 1995 shows the actual consolidated balance sheet as of
that date.
Rhodes, Inc. (Rhodes) purchased the net assets of Weberg Division in a
transaction accounted for as a purchase. Accordingly, pro forma
adjustments include such adjustments as are necessary to allocate the
purchase price based on the estimated fair market value of the assets
acquired and the liabilities assumed. Any purchase price allocation
adjustments will be made within one year from the acquisition date and are
not expected to be material to the pro forma financial statements taken as
a whole.
Weberg Division has a fiscal year end on December 31, and accordingly for
pro forma purposes, Weberg Division's December 31, 1994 Income Statement
has been combined with Rhodes February 28, 1995 statements.
The pro forma financial information is not necessarily indicative of the
results of operations or the financial position which would have been
attained had the acquisition been consummated on the dates indicated or
which may be attained in the future. The pro forma financial information
should be read in conjunction with the historical consolidated financial
statements of Rhodes and Weberg Division.
2. Reflects reclassifications made to the Weberg Division financial
statement presentation to conform to the Rhodes financial statement
presentation.
3. Amortization of Goodwill associated with the acquisition.
$2,400,000/40 years = $60,000.
4. Amortization of loan origination costs for acquisition debt.
$225,000/3 years = $75,000.
5. Interest expense associated with the debt incurred to acquire the assets of
Weberg Division. $31,400,000 * 8.0% = $2,512,000.
6. Elimination of Weberg Division interest expense assumed to be included
in note 5.
7. Reflects adjustment to income tax provision (benefit) for combined pro
forma income to Rhodes 41% effective rate.
<PAGE> 3
RHODES, INC. AND SUBSIDIARIES
PRO FORMA COMBINED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)
FOR THE NINE MONTHS ENDED NOVEMBER 30,1995
<TABLE>
<CAPTION>
ACTUAL
-----------------
RHODES WEBERG PRO FORMA PRO FORMA
INC. DIVISION ADJUSTMENTS COMBINED
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET SALES $296,543 $77,216 ($1,201) (2) $372,558
COST OF GOODS SOLD 153,727 46,161 199,888
---------------------------------------------
GROSS PROFIT 142,816 31,055 (1,201) 172,670
---------------------------------------------
FINANCE CHARGES AND INSURANCE
COMMISSIONS 4,281 - 4,281
---------------------------------------------
OPERATING EXPENSES:
Selling 49,767 4,571 (2) 61,541
204 (2)
5,595 (2)
1,404 (2)
General and administrative 78,457 (1,201) (2) 96,347
8,506 (2)
10,585 (2)
Provision for credit losses 71 16 (2) 87
45 (3)
Amortization of intangibles 2,179 56 (4) 2,280
Other expense (income), net (139) (42) (2) (181)
Non-Recurring One-time Charge 2,400 2,400
Personnel 13,077 (13,077) (2)
Non-personnel 10,763 (10,763) (2)
Advertising 5,595 (5,595) (2)
Credit promotion fees 1,404 (1,404) (2)
---------------------------------------------
132,735 30,839 (1,100) 162,474
---------------------------------------------
OPERATING INCOME 14,362 216 (101) 14,477
Interest expense, net 4,817 1,041 1,884 (5) 6,701
(1,041) (6)
---------------------------------------------
NET INCOME BEFORE INCOME TAXES 9,545 (825) (944) 7,776
PROVISION FOR INCOME TAXES 3,914 (279) (447) (7) 3,188
---------------------------------------------
NET INCOME $5,631 ($546) ($497) $4,588
=============================================
NET INCOME PER SHARE $0.60 $0.49
=============================================
WEIGHTED AVERAGE NUMBER OF SHARES
OF COMMON STOCK OUTSTANDING 9,328 9,328
=============================================
</TABLE>
<PAGE> 4
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
1. The attached Pro Forma Combined Income Statements for the nine month
period ended November 30, 1995, give effect to the acquisition of 21 store
operations and two distribution centers, collectively The Weberg Division
(Weberg Division), from Weberg Enterprises, Inc. which was completed on
November 1, 1995. The adjustments related to the Pro Forma Combined Income
Statements assume the Transaction was consummated at March 1, 1995. No Pro
Forma Combined Balance Sheet is presented as Rhodes Form 10-Q for the
period ended November 30, 1995 shows the actual consolidated balance sheet
as of that date.
Rhodes, Inc. (Rhodes) purchased the net assets of Weberg Division in a
transaction accounted for as a purchase. Accordingly, pro forma
adjustments include such adjustments as are necessary to allocate the
purchase price based on the estimated fair market value of the assets
acquired and the liabilities assumed. Any purchase price allocation
adjustments will be made within one year from the acquisition date and are
not expected to be material to the pro forma financial statements taken as
a whole.
Weberg Division has a fiscal year end on December 31, and accordingly for
pro forma purposes, Weberg Division's September 30, 1995 Income Statement
has been combined with Rhodes nine months ended November 30, 1995
statements.
The pro forma financial information is not necessarily indicative of the
results of operations or the financial position which would have been
attained had the acquisition been consummated on the dates indicated or
which may be attained in the future. The pro forma financial information
should be read in conjunction with the historical consolidated financial
statements of Rhodes and Weberg Division.
2. Reflects reclassifications made to the Weberg Division financial
statement presentation to conform to the Rhodes financial statement
presentation.
3. Amortization of Goodwill associated with the acquisition.
$2,400,000/40 years = $60,000/12*9 = $45,000
4. Amortization of loan origination costs for acquisition debt.
$225,000/3 years = $75,000/12*9=$56,000
5. Interest expense associated with the debt incurred to acquire the
assets of Weberg Division. $31,400,000 * 8.0%/12*9 = $1,884,000
6. Elimination of Weberg Division interest expense assumed to be included
in note 5.
7. Adjust income tax provision (benefit) for combined pro forma income to
Rhodes 41% effective rate.
