SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED SEPTEMBER 30, 1996
COMMISSION FILE NUMBER 1-9875
[GRAPHIC OMITTED]
STANDARD COMMERCIAL CORPORATION
Incorporated under the laws of I.R.S. Employer
North Carolina Identification No. 13-1337610
2201 MILLER ROAD, WILSON, NORTH CAROLINA 27893
Telephone Number (919) 291-5507
Former name, former address and former fiscal year, if changed since last report
Not applicable
On November 1, 1996 the registrant had outstanding 9,328,052 shares of Common
Stock ($.20 par value).
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) had been subject to such filing requirements for
the past 90 days.
YES X NO
--------- ---------
STANDARD COMMERCIAL CORPORATION
CONSOLIDATED BALANCE SHEET
(In thousands; unaudited)
<TABLE>
<CAPTION>
September 30 March 31
1996 1995 1996
---- ---- ----
ASSETS
<S> <C> <C> <C>
Cash..................................................... $48,241 $ 60,219 $ 78,688
Receivables.............................................. 198,303 172,352 252,117
Inventories.............................................. 346,020 396,016 259,781
Prepaid expenses......................................... 7,288 5,939 3,690
Marketable securities.................................... 1,510 1,033 5,325
-------------------------------------
Current assets....................................... 601,362 635,559 599,601
Property, plant and equipment............................ 133,734 133,272 134,498
Investment in affiliates................................. 11,791 13,472 11,442
Other assets............................................. 34,887 49,013 37,283
-------------------------------------
Total assets......................................... $781,774 $831,316 $782,824
=====================================
LIABILITIES
Short-term borrowings.................................... $385,025 $424,207 $373,625
Current portion of long-term debt........................ 8,469 10,395 11,665
Accounts payable......................................... 120,432 126,309 133,737
Taxes accrued............................................ 26,217 27,178 24,776
-------------------------------------
Current liabilities.................................. 540,143 588,089 543,803
Long-term debt........................................... 28,923 33,368 31,818
Convertible subordinated debentures...................... 69,000 69,000 69,000
Retirement and other benefits............................ 19,173 17,973 18,498
Deferred taxes........................................... 8,808 11,482 9,632
Commitments and contingencies............................ - - -
-------------------------------------
Total liabilities.................................... 666,047 719,912 672,751
-------------------------------------
MINORITY INTERESTS....................................... 29,605 32,195 27,473
-------------------------------------
ESOP redeemable preferred stock.......................... 8,748 9,132 8,748
Unearned ESOP compensation............................... (6,320) (6,165) (6,320)
-------------------------------------
SHAREHOLDERS' EQUITY
Preferred stock, $1.65 par value; authorized 1,000,000
shares
Issued 87,477 to ESOP; (Sept 95 - 91,319; March 96 - 87,477) Common stock,
$0.20 par value; authorized shares 20,000,000
Issued 11,867,465; (Sept 95 - 11,389,072; March 96 - 2,373 2,278 2,325
11,624,275)..............................................
Additional paid-in capital............................... 46,157 41,209 43,660
Unearned restricted stock plan compensation.............. (385) (460) (435)
Treasury stock at cost 2,540,722 shares
(Sept 1995 - 2,441,586; March 1996 - 2,490,661)........ (2,997) (1,890) (2,384)
Retained earnings........................................ 48,787 37,828 46,450
Cumulative translations adjustments...................... (10,241) (2,723) (9,444)
-------------------------------------
Total shareholders' equity........................... 83,694 76,242 80,172
-------------------------------------
Total liabilities and equity......................... $781,774 $831,316 $782,824
=====================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
STANDARD COMMERCIAL CORPORATION
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
(In thousands, except share information; unaudited)
<TABLE>
<CAPTION>
Second quarter ended Six months ended
September 30
September 30
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Sales - tobacco................................... $169,629 $186,528 $384,892 $370,273
- nontobacco................................ 79,376 95,668 174,504 208,887
--------------------------------------------
Total sales................................... 249,005 282,196 559,396 579,160
Cost of sales..................................... 227,033 267,434 515,538 549,925
Selling, general and administrative expenses...... 18,272 18,342 36,268 37,148
Other income (expense) - net...................... 279 (22) 727 (60)
--------------------------------------------
Income (loss) before taxes.................... 3,979 (3,602) 8,317 (7,973)
Income taxes...................................... (944) 148 (2,056) (846)
--------------------------------------------
Income (loss) after taxes..................... 3,035 (3,454) 6,261 (8,819)
Minority interests................................ (268) 9 (2,204) (1,151)
Equity in earnings of affiliates.................. 144 270 362 540
--------------------------------------------
Income (loss) from continuing operations...... 2,911 (3,175) 4,419 (9,430)
Income (loss) from discontinued operations........ - 3,751 - (749)
--------------------------------------------
Net income (loss)............................. 2,911 576 4,419 (10,179)
ESOP preferred stock dividends net of tax......... (116) (120) (231) (241)
--------------------------------------------
Net income (loss) applicable to common stock.. 2,795 456 4,188 (10,420)
Retained earnings at beginning of period.......... 47,051 38,392 46,450 50,530
Dividends declared................................ (1,059) (1,020) (1,851) (2,282)
--------------------------------------------
Retained earnings at end of period............ $48,787 $37,828 $48,787 $37,828
============================================
Earnings (loss) per common share
Primary- from continuing operations........... $0.30 $(0.37) $0.45 $(1.09)
- from discontinued operations......... - 0.42 - (0.09)
--------------------------------------------
- net.................................. $0.30 $0.05 $0.45 $(1.18)
- average shares outstanding........... 9,264,010 8,887,613 9,215,826 8,842,626
Fully diluted from continuing operations.......... * * * *
</TABLE>
*Not applicable because fully diluted calculations include adjustments
which are antidilutive.
The accompanying notes are an integral part of these financial statements.
<PAGE>
STANDARD COMMERCIAL CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands; unaudited)
<TABLE>
<CAPTION>
Six months ended
September 30
------------
1996 1995
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net income (loss)....................................................... $4,419 $(10,179)
Depreciation and amortization........................................... 9,130 11,700
Minority interests...................................................... 2,204 1,151
Undistributed earnings of affiliates.................................... (362) (540)
Gain on disposition of property, plant and equipment.................... (184) (607)
Loss on disposal of discontinued operations............................. - 749
Other................................................................... 913 (6,826)
---------------------------
16,120 (4,552)
Net changes in working capital
Receivables......................................................... 50,950 38,478
Inventories......................................................... (87,701) (50,602)
Current payables.................................................... (10,441) (16,493)
---------------------------
CASH USED FOR OPERATING ACTIVITIES...................................... (31,072) (33,169)
---------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Property, plant and (7,673) (8,618)
equipment...........................................- additions
- dispositions................................ 334 1,230
Business (acquisitions) dispositions.................................... 2,993 279
---------------------------
CASH USED FOR INVESTING ACTIVITIES...................................... (4,346) (7,109)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term borrowings...................................... 10,012 9,687
Repayment of long-term borrowings....................................... (16,210) (10,461)
Net change in short-term borrowings..................................... 11,400 45,252
Dividends paid.......................................................... (231) (241)
Other................................................................... - 46
---------------------------
CASH PROVIDED BY FINANCING ACTIVITIES................................... 4,971 44,283
---------------------------
Increase in cash for period............................................. (30,447) 4,005
Cash at beginning of period............................................. 78,688 56,214
---------------------------
CASH AT END OF PERIOD................................................... $48,241 $60,219
===========================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
STANDARD COMMERCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
o The interim statements presented herein should be read in conjunction with the
financial statements and notes thereto included in the Company's latest Annual
Report on Form 10-K.
o The interim period financial statements have been prepared by the Company
without audit and contain all of the adjustments which are, in the opinion of
management, necessary for a fair statement of the results of operations. All
such adjustments are of a normal, recurring nature. Because of the seasonality
of the Company's businesses, fluctuations in results for interim periods are not
necessarily indicative of business trends or results to be expected for a full
year.
o Financial statements for the prior year have been restated to include wool
operating results as continuing operations because the planned sale of the wool
business was terminated in December 1995.
o Inventories for the periods shown were as follows:
September 30 March 31
(In thousands) 1996 1995 1996
---- ---- ----
Tobacco $274,997 $288,517 $160,721
Nontobacco 71,023 107,499 99,060
-------- ------- ---------
Total $346,020 $396,016 $259,781
======= ======= =======
o During fiscal year ended March 31, 1996 the Company initiated a reorganization
plan for its nontobacco businesses and determined that a pretax restructuring
charge of $12.5 million ($11.0 million after-tax) was appropriate. The costs
include $3.6 million for the impairment of goodwill, $2.1 million for the
closure of a processing plant in Argentina, $2.8 million for the settlement of
export incentive programs and $2.5 million for expenses of reorganizing and
consolidating the wool division management structure and various other costs
incurred in the aborted sale of the wool division. With the exception of the
export incentive issue which is expected to be resolved in 1998, it is
anticipated that substantially all other accrued but unpaid amounts related to
the reorganization ($0.6 million at September 30, 1996) will be expended by the
end of fiscal 1997.
o There were no changes in accounting policies during the period ended September
30, 1996.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
Results of Operations
Sales of $249.0 million for the September 1996 quarter decreased by 11.8%
from the prior-year quarter. Sales for the six months to date of $559.4 are 3.4%
lower than the same period last year. Despite the reduction in sales, net income
was substantially higher versus the same periods last year (up $2.3 million and
$14.6 million, respectively). Results for 1995 have been restated to treat the
wool business as a continuing operation.
First half tobacco sales totaled $384.9 million, up 3.9% from a year
earlier. Tobacco volumes were down by 2.9% as the prior year included sales of
past year inventories while the 1996 sales are mainly current crop tobacco. The
improved sales mix, combined with higher prices due to improving industry
conditions and lower interest expense, led to substantially improved operating
margins. Volume increases in Turkey and the U.S. partially offset small declines
in other areas. Administrative expenses were up slightly primarily because of
expanding operations in Africa. Minority interest was higher due to increased
volumes in our 51%-owned oriental tobacco business. First half tobacco income
from continuing operations of $5.2 million was $6.1 million better than the
prior year which showed a loss of $909,000.
Despite a 4.2% increase in wool volumes, nontobacco sales for the 1996 six
months were down 16.5% as continued soft wool market conditions and a change in
mix resulted in lower prices. Volumes were up in Argentina and the United
Kingdom. Operating margins recovered as the worldwide surplus of wool
<PAGE>
STANDARD COMMERCIAL CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION (continued)
is gradually being reduced and market conditions continue to stabilize.
Operating efficiencies and overhead reductions contributed to a significant
reduction in the loss from continuing nontobacco operations to $769,000 in 1996
from $8.5 million in the same prior-year period. The building supply business
produced a modest profit for the period.
Overall the Company posted pretax income of $8.3 million compared to a loss
of $8.0 million in the 1995 first half. Interest included in cost of sales and
other expenses totaled $20.6 million in the current six months compared with
$22.2 million in the prior year primarily reflecting lower inventory financing
costs.
Prior-year income tax provisions were required for certain jurisdictions
where profits were earned despite overall pretax losses. Tax charges or credits
vary as a percentage of pretax income or loss due to differences in tax rates
and relief available in areas where profits are earned or losses incurred.
Discontinued operations in the June 1995 quarter included a provision of
$4.5 million towards the anticipated loss on sale of the wool business under a
fixed-price agreement. Due to inclusion of wool operating losses for the
September 1995 quarter in continuing operations, $3.8 million of the provision
recorded in the June quarter was reversed.
As disclosed hereinbefore, the Company made an after-tax provision of $11.0
million in fiscal 1996 for restructuring its nontobacco operations. Major
components of the restructuring include closure of our wool processing facility
in Argentina, write-off of goodwill, reorganization of wool division management
and other miscellaneous expenses related to the aborted sale of our wool
business. Thus far in Argentina, the factory has been closed, 181 employees have
been terminated and certain impaired assets have been written down.
Additionally, the factory building has been leased to a third party. In
Australia we have consolidated operations under one management team to better
and more efficiently serve this market. The wool tops departments in the German
and French companies have been reorganized under a single manager to streamline
marketing efforts. A feasibility study is underway to improve operational
efficiencies in our French topmaking factory. For the current six months, the
charges referred to above have resulted in lower depreciation and amortization
expenses of approximately $250,000 and lower personnel costs of approximately
$125,000.
Because of the seasonal nature of the Company's businesses, results for
interim periods are not necessarily indicative of results for a full year.
Financial Condition
Working capital at September 30, 1996 was $61.2 million, up from $47.5
million at September 30, 1995. This was primarily due to contributions from
operating activities resulting in reduced borrowings. Compared to March 31,
1996, working capital improved by $5.4 million due to reductions in the current
portion of long-term debt and seasonal business factors. Capital expenditures of
$7.7 million, relate mostly to expansion of warehouse facilities in Greece and
routine expenditures in the US tobacco division.
The Company continued its efforts to deleverage its balance sheet by
reducing uncommitted inventory levels and its borrowings to finance such
inventories. Tobacco inventories have declined by $13.5 million and wool
inventories have declined by $36.5 million since September 1995.
The Company's credit facilities for tobacco include $100 million for US
operations and $200 million for European operations expiring in June 1998, and
local lines of approximately $245 million. There are separate credit facilities
for the wool business totaling $145 million. These facilities are believed by
management to be adequate for its projected level of business in fiscal 1997.
<PAGE>
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS - Not applicable
Item 2. CHANGES IN SECURITIES - Under amended loan and guaranty agreements
entered into in July 1996 (Exhibits 4(ii) and 4(iii) annexed hereto),
the Company must maintain (1) a leverage ratio (ratio of (a) total
liabilities minus subordinated indebtedness to (b) tangible net worth
plus subordinated indebtedness) of no more than 4.25 to 1.00 and (2)
tangible net worth of at least $82,500,000 for the balance of 1996 and
$85,000,000 thereafter. These provisions could restrict the ability of
the Company to pay cash dividends.
Item 3. DEFAULTS UPON SENIOR SECURITIES - Not applicable
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
a. An annual meeting of shareholders was held on August 13, 1996.
b. Not required.
c. 1. Four persons nominated by management were elected as
directors, without opposition, for terms expiring in 1999
as follows:
Nominee Votes For Votes Withheld Broker Nonvotes
Marvin W Coghill 8,138,860 13,202 -0-
Thomas M Evins Jr 8,138,566 13,496 -0-
Robert E Harrison 8,138,549 13,512 -0-
William A Ziegler 8,132,915 19,147 -0-
2. The appointment of Deloitte & Touche LLP as the Company's
independent auditors for fiscal 1997 was approved by a vote of
8,137,629 shares in favor, 6,125 shares against and 8,307 shares
abstaining. There were no broker nonvotes.
d. Not applicable.
Item 5. OTHER INFORMATION - Not applicable
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
a. The following exhibits are filed as a part of this report:
4(i) Amendment No 3, dated as of July 15, 1996, amending Loan and
Security Agreement dated May 5, 1995 between Standard
Commercial Tobacco Co., Inc., a subsidiary of the Company and
NationsBank, N.A. (South), formerly known as NationsBank of
Georgia, N.A., filed as Exhibit 4 (iii) to the Company's
report on Form 10-K for the year ended March 31, 1995.
4(ii) Second Amended and Restated Parent Guaranty Agreement dated as
of July 15, 1996 between the Company and NationsBank, N.A.
(South), formerly known as NationsBank of Georgia, N.A.,
whereby the Company guarantees the indebtedness under Exhibit
4 (i) above.
4(iii) Second Supplemental Agreement dated July 16, 1996 between the
Company and certain subsidiaries and Deutsche Bank A.G. et al
which amends Master Facilities Agreement dated May 5, 1995
filed as Exhibit 4 (ii) to the Company's report on Form 10-K
for the year ended March 31, 1995.
Upon request the Company will file with the Commission any
instruments defining the rights of holders of long-term debt of the
Company and its subsidiaries representing a total indebtedness of
less than ten percent of the total assets of the Company on a
consolidated basis.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K (continued)
11 Computation of Earnings per Common Share.
27 Financial Data Schedule.
b. The Company did not file any reports on Form 8-K during the quarter.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: November 5, 1996 STANDARD COMMERCIAL CORPORATION
(Registrant)
By /s/ Robert E Harrison
-------------------------------
Robert E Harrison
President, Chief Executive
Officer and Chief Financial
Officer
By /s/ Guy M Ross
-------------------------------
Guy M Ross
Vice President and Chief
Accounting Officer
Exhibit 4(i)
AMENDMENT NO 3 TO
LOAN AND SECURITY AGREEMENT
(Term Loan)
Dated as of July 15, 1996
STANDARD COMMERCIAL TOBACCO CO., INC., a North Carolina corporation, the
financial institutions party to this Agreement from time to time, NATIONSBANK,
N.A. (SOUTH), a national banking association, as agent for the Lenders (as
hereinafter defined), and FIRST UNION COMMERCIAL CORPORATION, as co-agent for
such Lenders, agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1. Definitions. For the purpose of this Agreement:
"Account Debtor" means a Person who is obligated on a
Receivable.
"Acquire" or "Acquisition", as applied to any Business Unit or
Investment, means the acquiring or acquisition of such Business Unit or
Investment by purchase, exchange, issuance of stock or other securities, or by
merger, reorganization or any other method.
"Affiliate" means, with respect to a Person, (a) any partner,
officer, shareholder (if holding more than ten percent (10%) of the outstanding
shares of capital stock of such Person), director, employee or managing agent of
such Person, (b) any other Person (other than a Subsidiary) that, (i) directly
or indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, such given Person, (ii) directly or indirectly
beneficially owns or holds ten percent (10%) or more of any class of voting
stock or partnership or other voting interest of such Person or any Subsidiary
of such Person, or (iii) ten percent (10%) or more of the voting stock or
partnership or other voting interest of which is directly or indirectly
beneficially owned or held by such Person or a Subsidiary of such Person. The
term "control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through ownership of voting securities or partnership or other voting
interest, by contract or otherwise.
"Agency Account" means an account of the Borrower maintained by
it with a Clearing Bank pursuant to an Agency Account Agreement.
"Agency Account Agreement" means an agreement among the Borrower,
the Agent and a Clearing Bank, in form and substance satisfactory to the Agent,
concerning the collection of payments which represent the proceeds of
Receivables or of any other Collateral.
"Agent" means NationsBank, N.A. (South), a national banking
association, and any successor agent appointed pursuant to Section 15.9 hereof.
"Agents" means the Agent and the Co-Agent.
"Agent's Office" means the office of the Agent specified in or
determined in accordance with the provisions of Section 16.1.
"Agreement" means and includes this Agreement, including all
Schedules, Exhibits and other attachments hereto, and all amendments,
modifications and supplements hereto and thereto.
"Agreement Date" means the date as of which this Agreement is
dated.
"Applicable Law" means all applicable provisions of
constitutions, statutes, rules, regulations and orders of all governmental
bodies and of all orders and decrees of all courts and arbitrators, including,
without limitation, Environmental Laws.
"Assignment and Acceptance" means an assignment and acceptance in
the form attached hereto as Exhibit A assigning all or a portion of a Lender's
interests, rights and obligations under this Agreement pursuant to Section 14.1.
"Benefit Plan" means an "employee pension benefit plan" as
defined in Section 3(2) of ERISA (other than a Multiemployer Plan) in respect of
which the Borrower or any Related Company is, or within the immediately
preceding six (6) years was, an "employer" as defined in Section 3(5) of ERISA,
including such plans as may be established after the Agreement Date.
"Borrower" means Standard Commercial Tobacco Co., Inc., a North
Carolina corporation, and its successors and assigns.
"Borrowing Base Certificate" means a certificate in the form
attached as Exhibit B to the Revolving Credit Agreement which has been delivered
by the Borrower pursuant to the terms of the Revolving Credit Agreement.
"Business Day" means (i) for all purposes other than as set forth
in clause (ii) below, any day other than a Saturday, Sunday or legal holiday on
which banks in Atlanta, Georgia are not open for the conduct of a substantial
part of their commercial banking business, and (ii) with respect to all notices
and determinations in connection with, and payments of principal and interest
on, Eurodollar Rate Loans, any day that is a Business Day described in clause
(i) above and is also a day of trading by and between banks dealing in Dollar
deposits in the applicable interbank market.
"Business Unit" means the assets constituting the business or a
division or operating unit thereof of any Person.
"Capital Expenditures" means, with respect to any Person, all
expenditures made and liabilities incurred for the acquisition of assets (other
than assets which constitute a Business Unit) which are not, in accordance with
GAAP, treated as expense items for such Person in the year made or incurred as a
prepaid expense applicable to a future year or years.
"Capitalized Lease" means a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP.
"Capitalized Lease Obligation" means Indebtedness represented by
obligations under a Capitalized Lease, and the amount of such Indebtedness shall
be the capitalized amount of such obligations determined in accordance with
GAAP.
"Cash Equivalents" means
(a) marketable direct obligations issued or
unconditionally guaranteed by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof;
(b) commercial paper maturing no more than one year
from the date issued and, at the time of acquisition thereof, having a rating of
at least A-1 from Standard & Poor's Corporation or at least P-1 from Moody's
Investors Service, Inc.;
(c) certificates of deposit or bankers' acceptances
issued in Dollar denominations and maturing within one year from the date of
issuance thereof issued by any commercial bank organized under the laws of the
United States of America or any state thereof or the District of Columbia having
a combined capital and surplus of not less than $100,000,000 and, unless issued
by the Agent or a Lender, not subject to set-off or offset rights in favor of
such bank arising from any banking relationship with such bank; and
(d) repurchase agreements in form and substance and
for amounts satisfactory to the Agent.
"Clearing Bank" means any banking institution with which an
Agency Account has been established pursuant to an Agency Account Agreement.
"Co-Agent" means First Union Commercial Corporation.
"Collateral" means and includes all of the Borrower's right,
title and interest in and to each of the following, wherever located and whether
now or hereafter existing or now owned or hereafter acquired or arising:
(a) all Receivables,
(b) all Inventory,
(c) all Equipment,
(d) all Real Estate,
(e) all Contract Rights,
(f) all General Intangibles,
(g) all goods and other property, whether or not
delivered,
(i) the sale or lease of which gives or purports
to give rise to any Receivable, including,
but not limited to, all merchandise returned
or rejected by or repossessed from
customers, or
(ii) securing any Receivable,
including, without limitation, all rights as an unpaid vendor or lienor
(including, without limitation, stoppage in transit, replevin and reclamation)
with respect to such goods and other property,
(h) all mortgages, deeds to secure debt and deeds of
trust on real or personal property, guaranties,
leases, security agreements, and other agreements
and property which secure or relate to any
Receivable or other Collateral, or are acquired for
the purpose of securing and enforcing any item
thereof,
(i) all documents of title, policies and certificates
of insurance, securities, chattel paper and other
documents and instruments evidencing or pertaining
to any and all items of Collateral,
(j) all files, correspondence, computer programs,
tapes, discs and related data processing
software which contain information
identifying or pertaining to any of the
Receivables or any Account Debtor, or
showing the amounts thereof or payments
thereon or otherwise necessary or
helpful in the realization thereon or the
collection thereof,
(k) all cash deposited with the Agent or any
Lender or any Affiliate of the Agent or any
Lender or which the Agent, for the benefit of
the Lenders, or any Lender or such Affiliate
is entitled to retain or otherwise possess as
collateral pursuant to the provisions of this
Agreement or any of the Security Documents or
any agreement relating to any Letters of
Credit,
(l) any and all products and proceeds of the
foregoing (including, but not limited to, any
claim to any item referred to in this
definition, and any claim against any third
party for loss of, damage to or
destruction of any or all of, the Collateral
or for proceeds payable under, or
unearned premiums with respect to, policies
of insurance) in whatever form,
including, but not limited to, cash,
negotiable instruments and other
instruments for the payment of money, chattel
paper, security agreements and other
documents.
"Commitment" means, as to each Lender, the amount set forth
opposite such Lender's name on the signature pages hereof, representing such
Lender's obligation, upon and subject to the terms and conditions of this
Agreement (including the applicable provisions of Section 14.1), to make a Term
Loan.
"Commitment Percentage" means, as to any Lender, the percentage
of the Total Commitment obtained by dividing such Lender's Commitment by the
Total Commitment.
"Consolidated", when used with reference to Current Assets,
Current Liabilities, EBITDA, Interest Expense, Indebtedness, Long-Term
Liabilities, Liabilities, Net Income, Net Loss or Tangible Net Worth, shall mean
the sum of Current Assets, Current Liabilities, EBITDA, Interest Expenses,
Indebtedness, Long-Term Liabilities, Liabilities, Net Incomes, Net Losses or
Tangible Net Worths, as the case may be, of the Borrower and its Consolidated
Subsidiaries, as consolidated after the elimination of intercompany items and,
in the case of Net Income and Tangible Net Worth, after appropriate deductions
for any minority interests in any Subsidiaries, and, when used with reference to
such accounts of any other Person, shall mean the sum of such accounts of such
Person and its Consolidated Subsidiaries as so modified.
"Consolidated Subsidiaries" means, as to the Borrower, the
Subsidiaries of the Borrower whose accounts are at the time in question, in
accordance with GAAP and pursuant to the written consent of the Required
Lenders, which consent may be withheld in their absolute discretion conditioned
upon, inter alia, the execution and delivery of guaranties, security agreements,
mortgages and other documents required by the Required Lenders in their absolute
discretion, consolidated with those of the Borrower; provided, however, CRES
shall not be classified as a "Consolidated Subsidiary" of Borrower for purposes
of this Agreement.
"Contaminant" means any waste, pollutant, hazardous substance,
toxic substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, or any constituent of any such substance or waste.
"Contract Rights" means any rights under contracts not yet earned
by performance and not evidenced by an instrument or chattel paper.
"Controlled Disbursement Account" means one or more accounts
maintained by and in the name of the Borrower with a Disbursing Bank for the
purposes of disbursing Revolving Credit Loan proceeds and amounts deposited
thereto.
"Copyrights" means and includes, in each case whether now
existing or hereafter arising, all of the Borrower's right, title and interest
in and to
(a) all copyrights, rights and interests in
copyrights, works protectable by copyright,
copyright registrations and copyright
applications;
(b) all renewals of any of the foregoing;
(c) all income, royalties, damages and payments now or
hereafter due and/or payable under any of the
foregoing, including, without limitation, damages
or payments for past or future infringements of any
of the foregoing;
(d) the right to sue for past, present and future
infringements of any of the foregoing; and
(e) all rights corresponding to any of the
foregoing throughout the world.
"CRES" means CRES Tobacco Company, Inc.
"Current Assets" means, with respect to any Person, the aggregate
amount of assets of such Person which should properly be classified as current
assets in accordance with GAAP, after deducting adequate reserves in each case
where a reserve is appropriate in accordance with GAAP.
"Current Liabilities" means, with respect to any Person, the
aggregate amount of all Liabilities of such Person which should properly be
classified as current liabilities in accordance with GAAP.
"Current Maturities" means, when used in connection with
Long-Term Liabilities, as of any date of determination, the principal amount of
such Liabilities coming due on such date or during the twelve-month period
following such date in accordance with the terms of any instrument or agreement
evidencing such Liabilities or relating thereto; provided that for the purpose
of this definition, Long-Term Liabilities shall not include any Liability that
is by the terms of the instrument evidencing such Liability or by the terms of
an agreement among the Borrower, the holder of such Long-Term Liability and the
Agent expressly subordinate to the Secured Obligations on terms satisfactory to
the Agent.
"Deeds of Trust" means the deeds of trust executed by the
Borrower, WAA and GPI for the benefit of the Agent granting the Agent a lien on
certain real property owned by the Borrower, WAA and GPI.
"Default" means any of the events specified in Section 13.1 which
with the passage of time or giving of notice or both would constitute an Event
of Default.
"Default Margin" means 3.0%.
"Disbursing Bank" means any commercial bank with which a
Controlled Disbursement Account is maintained after the Effective Date.
"Dollar" and "$" means freely transferable United States
dollars.
"EBITDA" means for the period in question, Net Income plus
Required Interest Expense, income taxes, depreciation and amortization.
"ERISA" means the Employee Retirement Income Security Act of
1974, as in effect from time to time.
"Effective Date" means the Agreement Date.
"Effective Interest Rate" means each rate of interest per annum
on the Term Loans in effect from time to time pursuant to the provisions of
Sections 5.1(a), (b) and (c).
"Eligible Assignee" means (i) a commercial bank organized under
the laws of the United States, or any State thereof, having total assets in
excess of $1,000,000,000 or any commercial finance or asset based lending
affiliate of any such commercial bank; (ii) a savings and loan association or
savings bank organized under the laws of the United States, or any State
thereof, having a net worth of at least $250,000,000 calculated in accordance
with GAAP; (iii) any Affiliate of Fleet Capital Corporation, Fleet Financial
Group, Inc. or any Lender, and any successor or assign of any of them and (iv)
any Lender listed on the signature page of this Agreement; provided in each case
that the representation contained in Section 14.1(c)(i) hereof shall be
applicable with respect to such institution or Lender.
"Environmental Laws" means all federal, state, local and foreign
laws now or hereafter in effect relating to pollution or protection of the
environment, including laws relating to emissions, discharges, Releases or
threatened Releases of pollutants, Contaminants, chemicals, or industrial, toxic
or hazardous substances or wastes into the environment (including, without
limitation, ambient air, surface water, ground water, or land), or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, removal, transport, or handling of pollutants, Contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes, and any and
all regulations, notices or demand letters issued, entered, promulgated or
approved thereunder; such laws and regulations include but are not limited to
the Resource Conservation and Recovery Act, 42 U.S.C. Sub Section 6901 et seq.,
as amended; the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. Sub Section 6901 et seq., as amended; the Toxic Substances
Control Act, 15 U.S.C. Sub Section 2601 et seq., as amended; the Clean Air Act,
46 U.S.C. Sub Section 7401 et seq., as amended; and state and federal lien and
environmental cleanup programs.
"Environmental Lien" means a Lien in favor of any governmental
entity for (a) any liability under Environmental Laws or (b) damages arising
from, or costs incurred by such governmental entity in response to, a Release or
threatened Release of Contaminant into the environment.
"Equipment" means and includes, all machinery, apparatus,
equipment, motor vehicles, tractors, trailers, rolling stock, fittings, fixtures
and other tangible personal property (other than Inventory) of every kind and
description used in the Borrower's business operations or owned by the Borrower
or in which the Borrower has an interest, and all parts, accessories and special
tools and all increases and accessions thereto and substitutions and
replacements therefor.
"Eurodollar Rate" means, with respect to any Interest Period for
any Eurodollar Rate Loan, a per annum interest rate determined pursuant to the
following formula:
Eurodollar Rate = Interbank Offered Rate
---------------------------------
1 - Eurodollar Reserve Percentage
The Eurodollar Rate shall be adjusted automatically as of the
effective date of any change in the Eurodollar Reserve Percentage.
"Eurodollar Rate Loan" means a Loan or a portion of a Loan that
bears interest based upon the Eurodollar Rate.
"Eurodollar Reserve Percentage", means, for any day, that
percentage (expressed as a decimal) which is in effect from time to time under
Regulation D of the Board of Governors of the Federal Reserve System, as such
regulation may be amended from time to time or any successor regulation, as the
maximum reserve requirement (including, without limitation, any basic,
supplemental, emergency, special, or marginal reserves) applicable with respect
to "Eurocurrency liabilities" as that term is defined in Regulation D (or
against any other category of liabilities that includes deposits by reference to
which the interest rate of Eurodollar Rate Loans is determined), whether or not
a Lender has any Eurocurrency liabilities subject to such reserve requirement at
that time. Eurodollar Loans shall be deemed to constitute Eurocurrency
liabilities and as such shall be deemed subject to reserve requirements without
benefits of credits for proration, exceptions or offsets.
"European Debt" means the Indebtedness described on Schedule 1.1A
- - European Indebtedness.
"Event of Default" means any of the events specified in Section
13.1, provided that any requirement for notice or lapse of time or any other
condition has been satisfied.
"Federal Funds Effective Rate" means, for any period, a
fluctuating interest rate per annum equal for each day during such period to the
weighted average of the rates on overnight federal funds transactions with
members of the Federal Reserve system arranged by federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of Atlanta, or, if such rate
is not so published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by NationsBank from three
federal funds brokers of recognized standing selected by NationsBank.
"Financial Officer" means the chief financial officer, vice
president - finance, treasurer, assistant treasurer or controller of the
Borrower.
"Financing Statements" means any and all Uniform Commercial Code
financing statements, in form and substance satisfactory to the Agent, executed
and delivered by the Borrower, WAA and GPI to the Agent, naming the Agent, for
the benefit of the Lenders, as secured party and the Borrower or WAA (as the
case may be) as debtor, in connection with this Agreement.
"GAAP" means generally accepted accounting principles
consistently applied and maintained throughout the period indicated and, when
used with reference to the Borrower or any Subsidiary, consistent with the prior
financial practice of the Borrower, as reflected on the financial statements
referred to in Section 7.1(o); provided, however, that, in the event that
changes shall be mandated by the Financial Accounting Standards Board or any
similar accounting authority of comparable standing, or shall be recommended by
the Borrower's independent public accountants, such changes shall be included in
GAAP as applicable to the Borrower only from and after such date as the
Borrower, the Required Lenders and the Agent shall have amended this Agreement
to the extent necessary to reflect any such changes in the financial covenants
set forth in Article 12.
"General Intangibles" means all of the Borrower's now owned or
hereafter acquired general intangibles, choses in action and causes of action
and all other intangible personal property of the Borrower of every kind and
nature (other than Accounts), including, without limitation, all Proprietary
Rights, corporate or other business records, inventions, designs, blueprints,
plans, specifications, goodwill, computer software, customer lists,
registrations, licenses, franchises, tax refund claims, reversions or any rights
thereto and any other amounts payable to the Borrower from any Plan or other
employee benefit plan, rights and claims against carriers and shippers, rights
to indemnification, business interruption insurance and proceeds thereof,
property, casualty or any similar type of insurance and any proceeds thereof,
proceeds of insurance covering the lives of key employees on which the Borrower
is beneficiary and any letter of credit, guarantee, claims, security interest or
other security held by or granted to the Borrower to secure payment by an
Account Debtor of any of the Accounts.
"Governmental Approvals" means all authorizations, consents,
approvals, licenses and exemptions of, registrations and filings with, and
reports to, all governmental bodies, whether federal, state, local or foreign
national or provincial and all agencies thereof.
"GPI" means General Processors, Inc.
"GPI Security Agreement" means the Security Agreement to be
executed and delivered by GPI in favor of the Agent, as the same may be amended,
supplemented or otherwise modified from time to time.
"Guarantors" means a collective reference to the Parent
Guarantor, WAA and the Subsidiary Guarantors, and their respective successors
and assigns.
"Guaranty", "Guaranteed" or to "Guarantee" as applied to any
obligation of another Person shall mean and include
(a) a guaranty (other than by endorsement of negotiable
instruments for collection in the ordinary course
of business), directly or indirectly, in any
manner, of any part or all of such obligation of
such other Person, and
(b) an agreement, direct or indirect, contingent
or otherwise, and whether or not constituting
a guaranty, the practical effect of
which is to assure the payment or performance
(or payment of damages in the
event of nonperformance) of any part or all
of such obligation of such other
Person whether by
(i) the purchase of securities or
obligations,
(ii) the purchase, sale or lease (as
lessee or lessor) of property or
the purchase or sale of services
primarily for the purpose of
enabling the obligor with
respect to such obligation to
make any payment or performance
(or payment of damages in the
event of nonperformance) of or
on account of any part or all of
such obligation, or to assure
the owner of such obligation
against loss,
(iii) the supplying of funds to or in
any other manner investing in
the obligor with respect to such
obligation,
(iv) repayment of amounts drawn down
by beneficiaries of letters of
credit, or
(v) the supplying of funds to or
investing in a Person on account
of all or any part of such
Person's obligation under a
Guaranty of any obligation or
indemnifying or holding
harmless, in any way, such
Person against any part or all
of such obligation.
"Guaranty Agreements" means the guaranty agreements given by the
Guarantors in favor of the Agent and the Lenders in connection herewith to
secure the obligations of the Borrower hereunder.
"Indebtedness" of any Person means, without duplication, all
Liabilities of such Person, and to the extent not otherwise included in
Liabilities, the following:
(a) all obligations for Money Borrowed or for the
deferred purchase price of property or
services,
(b) all obligations (including, during the
noncancellable term of any lease in the
nature of a title retention agreement, all
future payment obligations under such lease
discounted to their present value in
accordance with GAAP) secured by any Lien to
which any property or asset owned or held by
such Person is subject, whether or not the
obligation secured thereby shall have been
assumed by such Person,
(c) all obligations of other Persons which such Person
has Guaranteed, including, but not limited to, all
obligations of such Person consisting of recourse
liability with respect to accounts receivable sold
or otherwise disposed of by such Person,
(d) all obligations of such Person in respect of
Interest Rate Protection Agreements, and
(e) in the case of the Borrower (without duplication)
all obligations under the Revolving Credit Loans
and the Term Loans.
"Interbank Offered Rate" means, with respect to any Eurodollar
Rate Loan for the Interest Period applicable thereto, the average (rounded
upward to the nearest one-sixteenth (1/16) of one percent) per annum rate of
interest determined by the Agent (each such determination to be conclusive and
binding) as of two Business Days prior to the first day of such Interest Period
from Telerate Page 3750 as the effective rate at which deposits in immediately
available funds in Dollars are being offered or quoted to major banks in the
applicable interbank market for Eurodollar deposits for a term comparable to
such Interest Period and in the amount of the Loan of which such Eurodollar Rate
Loan is a part. If such rate is unavailable on such service, then such rate may
be determined by the Agent from any other interest rate reporting service of
recognized standing that the Agent shall select.
"Intercreditor Agreements" means (i) that certain Intercreditor
and Subordination Agreement, dated as of July 15, 1996 (as amended, supplemented
or otherwise modified from time to time), by and among the Borrower, WAA, GPI,
the senior lenders party thereto and the subordinated lenders parties thereto
having MeesPierson, N.V. as their agent and (ii) that certain Intercreditor
Agreement, dated as of July 15, 1996 (as amended, supplemented or otherwise
modified from time to time), by and among the Borrower, WAA, GPI, the Lenders,
the Agents and the lenders parties to the Revolving Credit Agreement.
"Interest Period" means with respect to each Eurodollar Rate
Loan, the period commencing on the date of the making or continuation of or
conversion to such Eurodollar Rate Loan and ending one, two or three months
thereafter, as the Borrower may elect in the applicable notice of borrowing
given to pursuant to Section 2.1 or Notice of Conversion or Continuation;
provided, that:
(i) any Interest Period that would
otherwise end on a day that is not a
Business Day shall, subject to the
provisions of clause (iii) below, be
extended to the next succeeding
Business Day unless such Business Day
falls in the next calendar month, in
which case such Interest Period shall
end on the immediately preceding
Business Day;
(ii) any Interest Period that begins on the
last Business Day of a calendar month
(or on a day for which there is no
numerically corresponding day in the
calendar month at the end of such
Interest Period) shall, subject to
clause (iii) below, end on the last
Business Day of a calendar month;
(iii) any Interest Period that would
otherwise end after the Maturity Date
shall end on the Maturity Date; and
(iv) notwithstanding clause (iii) above, no
Interest Period shall have a duration of
less than one month and if any applicable
Interest Period would be for a shorter
period, such Interest Period shall not be
available.
"Interest Rate Protection Agreement" shall mean an interest rate
swap, cap or collar agreement or similar arrangement between any Person and a
financial institution providing for the transfer or mitigation of interest risks
either generally or under specific contingencies.
"Internal Revenue Code" means the Internal Revenue Code of 1986,
as amended from time to time.
"Inventory" means all inventory as such term is defined in the
Uniform Commercial Code and shall include, without limitation,
(a) all goods intended for sale or lease by the
Borrower, or for display or demonstration, including, without limitation,
tobacco and other tobacco related products intended for sale by the Borrower to
its customers,
(b) all work in process,
(c) all raw materials and other materials and supplies
of every nature and description used or which might
be used in connection with the manufacture,
packing, shipping, advertising, selling, leasing or
furnishing of such goods or otherwise used or
consumed in the Borrower's business, and
(d) all documents evidencing and general
intangibles relating to any of the foregoing.
"Investment" means, with respect to any Person:
(a) the acquisition or ownership by such Person of any
share of capital stock, evidence of Indebtedness or
other security issued by any other Person,
(b) any loan, advance or extension of credit to, or
contribution to the capital of, any other Person,
excluding advances to employees in the ordinary
course of business for business expenses,
(c) any Guaranty of the obligations of any other
Person,
(d) any other investment (other than the
Acquisition of a Business Unit) in any other
Person, and
(e) any commitment or option to make any of the
investments listed in clauses (a) through (d) above
if, in the case of an option, the consideration
therefor exceeds $25,000.
"IRS" means the Internal Revenue Service.
"JTI Letter of Credit Facility" shall have the meaning given to
such term in the Revolving Credit Agreement.
"Lender" means at any time any financial institution party to
this agreement at such time, including any such Person becoming a party hereto
pursuant to the provisions of Article 14, and its successors and assigns, and
"Lenders" means at any time all of the financial institutions party to this
Agreement at such time, including any such Persons becoming parties hereto
pursuant to the provisions of Article 14, and their successors and assigns.
"Liabilities" of any Person means all items (except for items of
capital stock, additional paid-in capital or retained earnings, or of general
contingency or deferred tax reserves) which in accordance with GAAP would be
included in determining total liabilities as shown on the liability side of a
balance sheet of such Person as at the date as of which Liabilities are to be
determined.
"Lien" as applied to the property of any Person means:
(a) any mortgage, deed to secure debt, deed of
trust, lien, pledge, charge, lease
constituting a Capitalized Lease Obligation,
conditional sale or other title retention
agreement, or other security interest,
security title or encumbrance of any kind in
respect of any property of such Person, or
upon the income or profits therefrom,
(b) any arrangement, express or implied, under
which any property of such Person is
transferred, sequestered or otherwise
identified for the purpose of subjecting the
same to the payment of Indebtedness or
performance of any other obligation in
priority to the payment of the general,
unsecured creditors of such Person,
(c) any Indebtedness which is unpaid more than 30
days after the same shall have become due and
payable and which if unpaid might by law
(including, but not limited to, bankruptcy
and insolvency laws), or otherwise, be given
any priority whatsoever over the claims of
general unsecured creditors of such Person,
and
(d) the filing of, or any agreement to give, any
financing statement under the Uniform Commercial
Code or its equivalent in any jurisdiction,
excluding informational financing statements
relating to property leased by the Borrower.
"Loan" means any Term Loan, as well as all such loans
collectively, as the context requires.
"Loan Account" and "Loan Accounts" shall have the meanings
ascribed thereto in Section 5.5.
"Loan Documents" means collectively this Agreement, the Notes,
the Security Documents and each other instrument, agreement or document executed
by the Borrower, any Guarantor or any Affiliate or Subsidiary of the Borrower or
any Guarantor in connection with this Agreement whether prior to, on or after
the Effective Date and each other instrument, agreement or document referred to
herein or contemplated hereby.
"Loan Year" means each period of twelve (12) consecutive months
commencing on the Effective Date and on each anniversary thereof.
"Lockbox" means each U.S. Post Office Box specified in a
Lockbox Agreement.
"Lockbox Agreement" means each agreement between the Borrower and
a Clearing Bank concerning the establishment of a Lockbox for the collection of
Receivables.
"Long-Term Liabilities" means, with respect to any Person, the
aggregate amount of all Liabilities of such Person other than Current
Liabilities.
"Margin Stock" means margin stock as defined in Section 221.1(h)
of Regulation U, as the same may be amended or supplemented from time to time.
"Materially Adverse Effect" means, with respect to any Person, a
materially adverse effect upon such Person's business, assets, liabilities,
condition (financial or otherwise), results of operations or business prospects,
and in addition (i) with respect to the Borrower, means a materially adverse
effect upon the Borrower's ability to perform its obligations hereunder or under
any other Loan Document to which it is a party or upon the enforceability of
such obligations against the Borrower and (ii) with respect to any Guarantor,
means a materially adverse effect upon the Guarantor's ability to perform its
obligations under any Loan Document to which it is a party or upon the
enforceability of such obligations against such Guarantor.
"Maturity Date" means May 2, 1998.
"Money Borrowed" means, as applied to Indebtedness,
(a) Indebtedness for money borrowed,
(b) Indebtedness, whether or not in any such case
the same was for money borrowed,
(i) represented by notes payable, and
drafts accepted, that represent
extensions of credit,
(ii) constituting obligations
evidenced by bonds, debentures, notes
or similar instruments, or
(iii) upon which interest charges are customarily
paid or that was issued or assumed as full
or partial payment for property (other than
trade credit that is incurred in the
ordinary course of business),
(c) Indebtedness that constitutes a Capitalized
Lease Obligation, and
(d) Indebtedness that is such by virtue of clause (c)
of the definition thereof, but only to the extent
that the obligations Guaranteed are obligations
that would constitute Indebtedness for Money
Borrowed.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which the Borrower or a Related Company is
required to contribute or has contributed within the immediately preceding six
(6) years.
"NationsBank" means NationsBank, N.A. (South), and its
successors and assigns.
"Net Amount" means, with respect to any Investments made by any
Person, the gross amount of all such Investments minus the aggregate amount of
all cash received and the fair value, at the time of receipt by such Person, of
all property received as payments of principal or premiums, returns of capital,
liquidating dividends or distributions, proceeds of sale or other dispositions
with respect to such Investments.
"Net Income" or "Net Loss" means, as applied to any Person, the
net income (or net loss) of such Person for the period in question after giving
effect to deduction of or provision for all operating expenses including
management fees, all taxes and reserves (including reserves for deferred taxes)
and all other proper deductions, all determined in accordance with GAAP,
provided that there shall be excluded:
(a) the net income (or net loss) of any Person accrued
prior to the date it becomes a Subsidiary of, or is
merged into or consolidated with, the Person whose
Net Income is being determined or a Subsidiary of
such Person,
(b) the net income (or net loss) of any Person in
which the Person whose Net Income is being
determined or any Subsidiary of such Person
has an ownership interest, except, in the
case of net income, to the extent that any
such income has actually been received by
such Person or such Subsidiary in the form of
cash dividends or similar distributions,
(c) any restoration of any contingency reserve, except
to the extent that provision for such reserve was
made out of income during such period,
(d) any net gains or losses on the sale or other
disposition, not in the ordinary course of
business, of Investments, Business Units and other
capital assets, provided that there shall also be
excluded any related charges for taxes thereon,
(e) any net gain arising from the collection of
the proceeds of any insurance policy,
(f) any write-up of any asset, and
(g) any other extraordinary item.
"Net Worth" means, with respect to any Person, such Person's
total shareholder's equity (including capital stock, additional paid-in capital
and retained earnings, after deducting treasury stock) which would appear as
such on a balance sheet of such Person prepared in accordance with GAAP.
"Note" means any of the term notes referred in Section 2.3 hereof
and "Notes" means more than one such note.
"Notice of Conversion or Continuation" has the meaning
specified in Section 5.7.
"Operating Lease" means any lease (other than a lease
constituting a Capitalized Lease Obligation) of real or personal property.
"PBGC" means the Pension Benefit Guaranty Corporation and any
successor agency.
"Parent Guarantor" means Standard Commercial Corporation, a
North Carolina corporation.
"Patents" means and includes, in each case whether now existing
or hereafter arising, all of the Borrower's right, title and interest in and to
(a) any and all patents and patent applications,
(b) inventions and improvements described and claimed
therein,
(c) reissues, divisions, continuations, renewals,
extensions and continuations-in-part thereof,
(d) income, royalties, damages, claims and payments now or
hereafter due and/or payable under and with respect
thereto, including, without limitation, damages and
payments for past and future infringements thereof,
(e) rights to sue for past, present and future
infringements thereof, and
(f) all rights corresponding to any of the foregoing
throughout the world.
"Payment Date" means the first day of each calendar month
commencing on August 1, 1996 and continuing thereafter until the Secured
Obligations have been irrevocably paid in full.
"Permitted Investments" means Investments of the Borrower in:
(a) negotiable certificates of deposit and time deposits
issued by NationsBank or by any United States bank or
trust company having capital, surplus and undivided
profits in excess of $100,000,000,
(b) any direct obligation of the United States of America or
any Agency or instrumentality thereof which has a
remaining maturity at the time of purchase of not more
than one year and repurchase agreements relating to the
same,
(c) sales of inventory on credit in the ordinary course
of business,
(d) shares of capital stock, evidence of Indebtedness or other
security acquired by the Borrower in consideration for or
as evidence of past-due or restructured Receivables in an
aggregate face amount of such Receivables at any time not
to exceed $1,000,000,
(e) Guaranties permitted pursuant to Section 12.3,
(f) those items described on Schedule 1.1B - Permitted
Investments, and
(g) other Investments not in excess of $10,000 individually or
$50,000 in the aggregate in any fiscal year of the
Borrower.
"Permitted Liens" means:
(a) Liens securing taxes, assessments and other
governmental charges or levies (excluding any Lien
imposed pursuant to any of the provisions of ERISA)
or the claims of materialmen, mechanics, carriers,
warehousemen or landlords for labor, materials,
supplies or rentals incurred in the ordinary course
of business, but (i) in all cases only if payment
shall not at the time be required to be made in
accordance with Section 10.6, and (ii) in the case
of warehousemen or landlords, only if such liens are
junior to the Security Interest in any of the
Collateral,
(b) Liens consisting of deposits or pledges made in the
ordinary course of business in connection with, or to
secure payment of, obligations under workers'
compensation, unemployment insurance or similar
legislation or under payment or performance bonds,
(c) Liens constituting encumbrances in the nature of zoning
restrictions, easements, and rights or restrictions of
record on the use of real property, which do not
materially detract from the value of such property or
impair the use thereof in the business of the Borrower,
(d) Purchase Money Liens,
(e) Liens shown on Schedule 1.1C - Permitted Liens,
(f) Liens shown on Schedule 1.1D - Permitted Liens
(European Debt), and
(g) Liens of the Agent, for the benefit of the Lenders,
arising under this Agreement and the other Loan Documents.
"Permitted Purchase Money Indebtedness" means Purchase Money
Indebtedness of the Borrower incurred after the Agreement Date
(a) which is secured by a Purchase Money Lien,
(b) the aggregate principal amount of which does not
exceed an amount equal to 100% of the lesser of
(i) the cost (including the principal amount of such
Indebtedness, whether or not assumed) of the
property (other than Inventory) subject to such
Lien, and
(ii) the fair value of such property (other
than Inventory) at the time of its
acquisition, and
(c) which, when aggregated with the principal amount of all
other such Indebtedness and Capitalized Lease Obligations
of the Borrower at the time outstanding, does not exceed
$250,000.
For the purposes of this definition, the principal amount of any
Purchase Money Indebtedness consisting of Capitalized Leases shall be computed
as a Capitalized Lease Obligation.
"Person" means an individual, corporation, partnership,
association, trust or unincorporated organization, or a government or any agency
or political subdivision thereof.
"Plan" means any employee benefit plan as defined in Section 3(3)
of ERISA in respect of which the Borrower or any Related Company is, or within
the immediately preceding six (6) years was, an "employer" as defined in Section
3(5) of ERISA.
"Prime Rate" means on any day the interest rate per annum equal
to the rate of interest publicly announced by the Agent at its head office in
Atlanta, Georgia as its "prime" rate, as in effect on the last Business Day of
the calendar month immediately preceding the month in which such day falls. The
Agent lends at rates above and below the Prime Rate.
"Prime Rate Loan" means a Loan or a portion of a Loan bearing
interest at a rate determined with reference to the Prime Rate.
"Proprietary Rights" means all of the Borrower's now owned and
hereafter arising or acquired: Patents, Copyrights, Trademarks, including,
without limitation, those Proprietary Rights set forth on Schedule 7.1(cc)
hereto, and all other rights under any of the foregoing, all extensions,
renewals, reissues, divisions, continuations, and continuations-in-part of any
of the foregoing, and all rights to sue for past, present and future
infringement of any of the foregoing.
"Purchase Money Indebtedness" means
(a) Indebtedness created to secure the payment of all or
any part of the purchase price of any property
(other than Inventory),
(b) any Indebtedness incurred at the time of or within 30 days
prior to or after the acquisition of any property (other
than Inventory) for the purpose of financing all or any
part of the purchase price thereof, and
(c) any renewals, extensions or refinancings thereof, but not
any increases in the principal amounts thereof outstanding
at the time of any such renewal, extension or refinancing.
"Purchase Money Lien" means any Lien securing Purchase Money
Indebtedness, but only if such Lien shall at all times be confined solely to the
property (other than Inventory) the purchase price of which was financed through
the incurrence of the Purchase Money Indebtedness secured by such Lien.
"Real Estate" means all of the Borrower's now or hereafter owned
or leased estates in real property, including, without limitation, all fees,
leaseholds and future interests, together with all of the Borrower's now or
hereafter owned or leased interests in the improvements and emblements thereon,
the fixtures attached thereto and the easements appurtenant thereto, including,
without limitation the real property described on Schedule 7.1(x).
"Receivables" means and includes
(a) any and all rights to the payment of money or other
forms of consideration of any kind (whether
classified under the Uniform Commercial Code as
accounts, contract rights, chattel paper, general
intangibles, or otherwise) including, but not
limited to, accounts receivable, letters of credit
and the right to receive payment thereunder, chattel
paper, tax refunds, insurance proceeds, Contract
Rights, notes, drafts, instruments, documents,
acceptances, and all other debts, obligations and
liabilities in whatever form from any Person,
(b) all guarantees, security and Liens for payment
thereof,
(c) all goods, whether now owned or hereafter acquired, and
whether sold, delivered, undelivered, in transit or
returned, which may be represented by, or the sale or
lease of which may have given rise to, any such right to
payment or other debt, obligation or liability, and
(d) all proceeds of any of the foregoing.
"Regulation U" means Regulation U of the Board of Governors of
the Federal Reserve System (or any successor), as the same may be amended or
supplemented from time to time.
"Related Company" means any (i) corporation which is a member of
the same controlled group of corporations (within the meaning of Section 414(b)
of the Internal Revenue Code) as any Borrower; (ii) partnership or other trade
or business (whether or not incorporated) under common control (within the
meaning of Section 414(c) of the Internal Revenue Code) with any Borrower; or
(iii) member of the same affiliated service group (within the meaning of Section
414(m) of the Internal Revenue Code) as any Borrower, any corporation described
in clause (i) above or any partnership, trade or business described in clause
(ii) above.
"Release" means release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment or into or out of any property, including the
movement of Contaminants through or in the air, soil, surface water or
groundwater.
"Remedial Action" means actions required to (i) clean up, remove,
treat or in any other way address Contaminants in the indoor or outdoor
environment; (ii) prevent the Release or threat of Release or minimize the
further Release of Contaminants so they do not migrate or endanger or threaten
to endanger public health or welfare or the indoor or outdoor environment; or
(iii) perform pre-remedial studies and investigations and post-remedial
monitoring and care.
"Reportable Event" has the meaning set forth in Section 4043(b)
of ERISA, but shall not include a Reportable Event as to which the provision for
30 days' notice to the PBGC is waived under applicable regulations.
"Required Interest Expense" means the amount of interest paid or
accrued according to GAAP by the Borrower (on a Consolidated basis) on all of
its Indebtedness during the period in question.
"Required Lenders" at any date of determination thereof, Lenders
holding Term Loans representing at least 51% of the aggregate amount of Term
Loans outstanding at such time.
"Restricted Dividend Payment" means any dividend, distribution or
payment on or with respect to (a) any shares of a Person's capital stock (other
than dividends payable solely in shares of its capital stock) or (b) any
partnership interest in a Person, excluding, however, any such dividend,
distribution or payment to the Borrower by any Subsidiary of the Borrower.
"Restricted Payment" means (a) any redemption or prepayment or
other retirement, prior to the stated maturity thereof or prior to the due date
of any regularly scheduled installment or amortization payment with respect
thereto, of any Indebtedness for Borrowed Money or of any Indebtedness that is
junior and subordinate to the Secured Obligations, (b) the payment by any Person
of the principal amount of or interest on any Indebtedness (other than trade
debt) owing to a shareholder, partner or equity holder of such Person or to any
Affiliate of any such shareholder, partner or equity holder and (c) the payment
of any management, consulting or similar fee by any Person to any Affiliate of
such Person.
"Restricted Purchase" means any payment on account of the
purchase, redemption or other acquisition or retirement by a Person of any (a)
shares of such Person's capital stock (except shares acquired on the conversion
thereof into other shares of capital stock of such Person) or (b) a partnership
interest in such Person, if such Person is a partnership.
"Revolving Credit Agreement" means the Loan and Security
Agreement, dated as of May 2, 1995 (as amended, supplemented or otherwise
modified from time to time), by and among the Borrower, the lenders parties
thereto and NationsBank, N.A. (South) and First Union Commercial Corporation, as
agent for such lenders, together with all amendments and modifications thereto
and all replacements therefor.
"Revolving Credit Facility" shall have the meaning given to such
term in the Revolving Credit Agreement.
"Revolving Credit Loans" means loans made to the Borrower
pursuant to Section 2.1 of the Revolving Credit Agreement.
"Schedule of Inventory" means a schedule delivered by the
Borrower to the Agent pursuant to the provisions of Section 9.12(b).
"Schedule of Receivables" means a schedule delivered by the
Borrower to the Agent pursuant to the provisions of Section 9.12(a).
"Secured Obligations" means, in each case whether now in
existence or hereafter arising,
(a) the principal of, and interest and premium, if any, on,
the Loans and any other loans now or hereafter made by the
Agent to the Borrower in its capacity as Agent for the
Lenders,
(b) all indebtedness, liabilities, obligations,
covenants and duties of the Borrower to the Agent or
to the Lenders of every kind, nature and description
arising under or in respect of this Agreement,
the Notes or any of the other Loan Documents,
whether direct or indirect, absolute or contingent,
due or not due, contractual or tortious, liquidated
or unliquidated, and whether or not evidenced by any
note, and whether or not for the payment of money,
including without limitation, fees required to be
paid pursuant to Article 5 and expenses required to
be paid or reimbursed pursuant to Section 16.2.
"Security Documents" means each of the following:
(a) the WAA Security Agreement,
(b) the GPI Security Agreement,
(c) the Financing Statements,
(d) the Guaranty Agreements,
(e) the Deeds of Trust, and
(f) each other writing executed and delivered by the
Borrower or any other Person securing the Secured
Obligations.
"Security Interest" means the Liens of the Agent, for the benefit
of the Lenders, on and in the Collateral effected hereby or by any of the
Security Documents or pursuant to the terms hereof or thereof.
"Special Receivable" means the $10,000,000 receivable from the
Parent Guarantor to the Borrower generated by the disbursement by the Borrower
to the Parent Guarantor of the proceeds of the Term Loans.
"Subordinated Indebtedness" means Indebtedness of the Borrower,
the repayment of which has been subordinated to the repayment of the Secured
Obligations pursuant to subordination agreements in form and substance
satisfactory to the Lenders.
"Subordination Agreement" means the subordination agreement
executed by the Parent Guarantor in favor of the Agent and the Lenders whereby
the Parent Guarantor (i) subordinates the repayment of $15,000,000 of the
obligations of the Borrower to the Parent Guarantor to the repayment of the
Secured Obligations on a permanent basis and (ii) subordinates the repayment of
the remaining obligations of the Borrower to the Parent Guarantor to the
repayment of the Secured Obligations upon the occurrence of a Default hereunder.
"Subsidiary"
(a) when used to determine the relationship of a Person
to another Person, means a Person of which an
aggregate of 50% or more of the stock of any class
or classes or 50% or more of other ownership
interests is owned of record or beneficially by such
other Person, or by one or more Subsidiaries of such
other Person, or by such other Person and one or
more Subsidiaries of such Person,
(i) if the holders of such stock, or other
ownership interests, (A) are ordinarily, in
the absence of contingencies, entitled to
vote for the election of a majority of the
directors (or other individuals performing
similar functions) of such Person, even
though the right so to vote has been
suspended by the happening of such a
contingency, or (B) are entitled, as such
holders, to vote for the election of a
majority of the directors (or individuals
performing similar functions) of such Person,
whether or not the right so to vote exists by
reason of the happening of a contingency, or
(ii) in the case of such other ownership
interests, if such ownership interests
constitute a majority voting interest, and
(b) when used with respect to a Plan, ERISA or a
provision of the Internal Revenue Code
pertaining to employee benefit plans, also
means any corporation, trade or business
(whether or not incorporated) which is under common
control with the Borrower and is treated as a single
employer with the Borrower under Section 414(b) or
(c) of the Internal Revenue Code and the regulations
thereunder.
"Tangible Net Worth" means, as applied to the Borrower, the Net
Worth of the Borrower and its Consolidated Subsidiaries at the time in question,
after excluding therefrom (i) the amount of all intangible items reflected
therein, including, without limitation, all unamortized debt discount and
expense, unamortized research and development expense, unamortized deferred
charges, goodwill, patents, trademarks, service marks, trade names, copyrights,
unamortized excess cost of investment in non-Consolidated Subsidiaries over
equity at dates of acquisition and all similar items which should properly be
treated as intangibles in accordance with GAAP and (ii) the Special Receivable.
"Termination Event" means
(a) a Reportable Event, or
(b) the filing of a notice of intent to terminate a Plan
or the treatment of a Plan amendment as a
termination under Section 4041 of ERISA, or
(c) the institution of proceedings to terminate a Plan by the
PBGC under Section 4042 of ERISA, or the appointment of a
trustee to administer any Plan.
"Total Commitment" means the sum of the Commitments.
"Trademarks" means and includes in each case whether now
existing or hereafter arising, all of the Borrower's right, title and interest
in and to
(a) trademarks (including service marks), trade names and
trade styles and the registrations and applications for
registration thereof and the goodwill of the business
symbolized by the trademarks,
(b) licenses of the foregoing, whether as licensee or
licensor,
(c) renewals thereof,
(d) income, royalties, damages and payments now or hereafter
due and/or payable with respect thereto, including,
without limitation, damages, claims and payments for past
and future infringements thereof,
(e) rights to sue for past, present and future infringements
thereof, including the right to settle suits involving
claims and demands for royalties owing, and
(f) all rights corresponding to any of the foregoing
throughout the world.
"Type" means with respect to any Loan, a Prime Rate Loan or a
Eurodollar Rate Loan.
"Unfunded Vested Accrued Benefits" means with respect to any
Plan at any time, the amount (if any) by which
(a) the present value of all vested nonforfeitable
benefits under such Plan exceeds
(b) the fair market value of all Plan assets allocable
to such benefits,
all determined as of the then most recent valuation date for such Plan.
"Uniform Commercial Code" means the Uniform Commercial Code as in
effect from time to time in the State of North Carolina.
"WAA" means W.A. Adams Company.
"WAA Security Agreement" means the Security Agreement to be
executed and delivered by WAA in favor of the Agent, as the same may be amended,
supplemented or otherwise modified from time to time.
"Wholly-Owned Subsidiary" when used to determine the relationship
of a Subsidiary to a Person means a Subsidiary all of the issued and outstanding
shares (other than directors' qualifying shares) of the capital stock of which
shall at the time be owned by such Person or one or more of such Person's
Wholly-Owned Subsidiaries or by such Person and one or more of such Person's
Wholly-Owned Subsidiaries.
SECTION 1.2. General. All terms of an accounting nature not
specifically defined herein shall have the meaning ascribed thereto by GAAP. The
terms accounts, chattel paper, contract rights, documents, equipment,
instruments, general intangibles and inventory, as and when used in this
Agreement or the Security Documents, shall have the meanings given those terms
in the Uniform Commercial Code. Unless otherwise specified, a reference in this
Agreement to a particular section or subsection is a reference to that section
or subsection of this Agreement, and the words "hereof," "herein," "hereunder"
and words of similar import, when used in this Agreement, refer to this
Agreement as a whole and not to any particular provision, section or subsection
of this Agreement. Wherever from the context it appears appropriate, each term
stated in either the singular or plural shall include the singular and plural,
and pronouns stated in the masculine, feminine or neuter gender shall include
the masculine, the feminine and the neuter. Words denoting individuals include
corporations and vice versa. References to any legislation or statute or code,
or to any provisions of any legislation or statute or code, shall include any
modification or reenactment of, or any legislative, statutory or code provision
substituted for, such legislation, statute or code or provision thereof.
References to any document or agreement (including this Agreement) shall include
references to such document or agreement as amended, novated, supplemented,
modified or replaced from time to time, so long as and to the extent that such
amendment, novation, supplement, modification or replacement is either not
prohibited by the terms of this Agreement or is consented to by the Required
Lenders and the Agent. References to any Person include its successor or
permitted substitutes and assigns.
ARTICLE 2
TERM LOAN FACILITY
SECTION 2.1. Term Loans. Upon the terms and subject to the
conditions of, and in reliance upon the representations and warranties made
under, this Agreement, each Lender agrees, severally, but not jointly, to make a
Term Loan to the Borrower on the Effective Date in an amount equal to such
Lender's Commitment. If the Term Loans are to consist of Eurodollar Rate Loans,
the Borrower shall notify the Agent before 11:00 a.m. on the date that is two
Business Days prior to the Effective Date, specifying the proposed amount of the
Eurodollar Rate Loans (which shall be at least $1,000,000 or an integral
multiple of $500,000 in excess thereof) and the duration of the Interest Period
to be applicable to such Eurodollar Rate Loans. The principal amount of any Term
Loan which is repaid pursuant to Section 2.2 may not be reborrowed by the
Borrower. The Agent's and each Lender's books and records reflecting the date
and the amount of each Term Loan and each repayment of principal thereof shall
constitute prima facie evidence of the accuracy of the information contained
therein, subject to the provisions of Section 5.6.
SECTION 2.2. Repayment of Term Loans. Each Term Loan is due and
payable, and shall be repaid in full by the Borrower in 23 consecutive
installments. The first 22 of such installments shall each be in the amount of
1/60th of the original principal amount of such Term Loan and shall be due and
payable on consecutive Payment Dates commencing on August 1, 1996 through and
including the Payment Date on April 1, 1998. The final installment payable on
May 2, 1998 shall be in the amount of the then unpaid balance of such Term Loan.
SECTION 2.3. Term Notes. Each Lender's Term Loan and the
obligation of the Borrower to repay such Term Loan shall also be evidenced by a
term note payable to the order of such Lender. Each such term note shall be
dated the Effective Date and be duly and validly executed and delivered by the
Borrower.
SECTION 2.4. Prepayment of Term Loans.
(a) Voluntary Prepayment. The Borrower shall have the right at
any time and from time to time, upon at least 60 days' prior written notice to
the Agent in the case of a prepayment in full and upon at least five days' prior
written notice to the Agent in the case of a partial prepayment, to prepay the
Term Loans on a pro rata basis (based upon the then outstanding principal
balances of the Term Loans) in whole or in part on any Business Day. Each
partial prepayment of the Term Loans shall be applied to the principal
installments of the Term Loans in the inverse order of their maturities. On the
prepayment date, the Borrower shall pay interest on the amount prepaid, accrued
to the prepayment date, together with any amounts payable under Section 2.4(a)
or Section 5.11 on account of such prepayment. Any notice of prepayment given by
the Borrower hereunder shall be irrevocable, and the amount to be prepaid
(including accrued interest and any prepayment fees) shall be due and payable on
the date designated in the notice.
(b) Mandatory Prepayment. Any and all amounts received by the Borrower
as proceeds from the sale of any Equipment or Real Estate to the extent such
proceeds exceed (i) $25,000 in the case of any single item of Equipment or
parcel of Real Estate, or (ii) $100,000 in the aggregate for all such Equipment
and Real Estate sold during any twelve-month period shall be paid, immediately
upon receipt by the Borrower to the Lender and shall be applied to the principal
installments of the Term Loans in the inverse order of their maturities. The
Borrower shall also be obligated to prepay the Term Loans in full together with
accrued and unpaid interest thereon upon any acceleration of the Term Loans
pursuant to Article 13.
ARTICLE 3
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ARTICLE 4
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ARTICLE 5
GENERAL LOAN PROVISIONS
SECTION 5.1. Interest.
(a) Term Loans.
(i) Prime Rate Loans. The Borrower will pay
interest on the unpaid principal amount of
each Prime Rate Loan for each day
from the day such Loan was made until such
Loan is due (whether at maturity, by reason
of acceleration or otherwise) at a rate per
annum equal to the Prime Rate, payable
monthly in arrears on each Payment Date.
(ii) Eurodollar Rate Loans. The Borrower will pay
interest on the unpaid principal amount of
each Eurodollar Rate Loan for each Interest
Period applicable thereto at a rate per annum
equal to the sum of (A) 2 1/4% and (B) the
Eurodollar Rate, payable in arrears on the
last day of such Interest Period and when
such Eurodollar Rate Loan is due (whether at
maturity, by reason of acceleration or
otherwise).
(b) Other Secured Obligations. The Borrower will pay interest on
the unpaid principal amount of each Secured Obligation other than a Loan for
each day from the day such Secured Obligation becomes due and payable until such
Secured Obligation is paid, at the rate per annum applicable to Prime Rate
Loans,
payable on demand.
(c) Default Rate. If the Borrower shall fail to pay when due (at
maturity, by reason of acceleration or otherwise) all or any portion of the
principal amount of any Loan or interest thereon or all or any portion of the
Secured Obligations, or if there shall occur and be continuing any other Event
of Default, the unpaid principal amount of each Loan or other Secured Obligation
shall no longer bear interest in accordance with the terms of Section 5.1(a) and
(b), as the case may be, but shall bear interest for each day from the date it
was so due or the date on which such other Event of Default occurred until paid
in full (or, if earlier, until such Event of Default is cured or waived in
writing by the Required Lenders) at a rate per annum equal to the Default Margin
plus the rate otherwise in effect under Section 5.1(a) or (b), payable on
demand. The interest rate provided for in this Section 5.1(c) shall to the
extent permitted by Applicable Law apply to and accrue on the amount of any
judgment entered with respect to any Secured Obligation and shall continue to
accrue at such rate during any proceeding described in Section 13.1(g)
or (h).
(d) The interest rates provided for in Sections 5.1(a), (b) and
(c) shall be computed on the basis of a year of 360 days and the actual number
of days elapsed. Interest rates determined with reference to the Prime Rate
shall be adjusted automatically as of the opening of business on the effective
date of each change in the Prime Rate.
(e) It is not intended by the Lenders, and nothing contained in
this Agreement or the Notes shall be deemed, to establish or require the payment
of a rate of interest in excess of the maximum rate permitted by Applicable Law
(the "Maximum Rate"). If, in any month, the Effective Interest Rate, absent such
limitation, would have exceeded the Maximum Rate, then the Effective Interest
Rate for that month shall be the Maximum Rate, and, if in future months, the
Effective Interest Rate would otherwise be less than the Maximum Rate, then the
Effective Interest Rate shall remain at the Maximum Rate until such time as the
amount of interest paid hereunder equals the amount of interest which would have
been paid if the same had not been limited by the Maximum Rate. In the event,
upon payment in full of the Secured Obligations, the total amount of interest
paid or accrued under the terms of this Agreement is less than the total amount
of interest which would have been paid or accrued if the Effective Interest Rate
had at all times been in effect, then the Borrower shall, to the extent
permitted by Applicable Law, pay to the Lenders an amount equal to the excess,
if any, of (i) the lesser of (A) the amount of interest which would have been
charged if the Maximum Rate had, at all times, been in effect and (B) the amount
of interest which would have accrued had the Effective Interest Rate, at all
times, been in effect and (ii) the amount of interest actually paid or accrued
under this Agreement. In the event the Lenders receive, collect or apply as
interest any sum in excess of the Maximum Rate, such excess amount shall be
applied to the reduction of the principal balance of the Secured Obligations,
and if no such principal is then outstanding, such excess or part thereof
remaining, shall be paid to the Borrower.
SECTION 5.2. Fees. The Borrower will pay a of $100,000 fee on
the Effective Date for the ratable benefit of the Lenders (ratable in
proportion to each Lender's Commitment).
SECTION 5.3. Manner of Payment.
(a) Except as otherwise expressly provided in Section 9.1(b),
each payment (including prepayments) by the Borrower on account of the principal
of or interest on the Loans or of any other amounts payable to the Lenders under
this Agreement or any Note shall be made not later than 12:00 noon (Atlanta
time) on the date specified for payment under this Agreement to the Agent, for
the account of the Lenders, at the Agent's Office, in Dollars, in immediately
available funds and shall be made without any setoff, counterclaim or deduction
whatsoever. Any payment received after such time but before 1:00 p.m. (Atlanta
time) on such day shall be deemed a payment on such date for the purposes of
Section 13.1, but for all other purposes shall be deemed to have been made on
the next succeeding Business Day.
(b) The Borrower hereby irrevocably authorizes each Lender and
each Affiliate of such Lender and each participant herein to charge any account
of the Borrower maintained with such Lender or such Affiliate or participant
with such amounts as may be necessary from time to time to pay any Secured
Obligations (whether or not owed to such Lender, Affiliate or participant) which
are not paid when due.
SECTION 5.4. General. If any payment under this Agreement or any
Note shall be specified to be made upon a day which is not a Business Day, it
shall be made on the next succeeding day which is a Business Day and such
extension of time shall in such case be included in computing interest, if any,
in accordance with such payment.
SECTION 5.5. Loan Accounts; Statements of Account.
(a) Each Lender shall open and maintain on its books a loan
account in the Borrower's name (each, a "Loan Account" and collectively, the
"Loan Accounts"). Each such Loan Account shall show as debits thereto each Loan
made under this Agreement by such Lender to the Borrower and as credits thereto
all payments received by such Lender and applied to principal of such Loan, so
that the balance of the loan account at all times reflects the principal amount
due such Lender from the Borrower.
(b) The Agent shall maintain on its books a control account for
the Borrower in which shall be recorded (i) the amount of each disbursement made
hereunder, (ii) the amount of any principal or interest due or to become due
from the Borrower hereunder, and (iii) the amount of any sum received by the
Agent hereunder from the Borrower and each Lender's ratable share therein.
(c) The entries made in the accounts pursuant to subsections (a)
and (b) shall be prima facie evidence, in the absence of manifest error, of the
existence and amounts of the obligations of the Borrower therein recorded and in
case of discrepancy between such accounts, in the absence of manifest error, the
accounts maintained pursuant to subsection (b) shall be controlling.
(d) The Agent will account separately to the Borrower monthly
with a statement of Loans, charges and payments made to and by the Borrower
pursuant to this Agreement, and such accounts rendered by the Agent shall be
deemed final, binding and conclusive, save for manifest error, unless the Agent
is notified by the Borrower in writing to the contrary within 30 days of the
date the account to the Borrower was so rendered. Such notice by the Borrower
shall be deemed an objection to only those items specifically objected to
therein. Failure of the Agent to render such account shall in no way affect the
rights of the Agent or of the Lenders hereunder.
SECTION 5.6. Settlement Among Lenders.
(a) Return of Payments. If any amounts received by NationsBank in
respect of the Secured Obligations are later required to be returned or repaid
by NationsBank to the Borrower or any other obligor or their respective
representatives or successors in interest, whether by court order, settlement or
otherwise, in excess of the NationsBank's Commitment Percentage of all such
amounts required to be returned by all Lenders, each other Lender shall, upon
demand by NationsBank with notice to the Agent, pay to the Agent for the account
of NationsBank, an amount equal to the excess of such Lender's Commitment
Percentage of all such amounts required to be returned by all Lenders over the
amount, if any, returned directly by such Lender.
(b) Payments to Agent, Lenders. (i) Payment by any Lender to the
Agent shall be made not later than 1:00 p.m. (Atlanta time) on the Business Day
such payment is due, provided that if such payment is due on demand by another
Lender, such demand is made on the paying Lender not later than 10:00 a.m.
(Atlanta time) on such Business Day. Payment by the Agent to any Lender shall be
made by wire transfer, promptly following the Agent's receipt of funds for the
account of such Lender and in the type of funds received by the Agent, provided
that if the Agent receives such funds at or prior to 1:00 p.m. (Atlanta time),
the Agent shall pay such funds to such Lender by 2:00 p.m. (Atlanta time) on
such Business Day. If a demand for payment is made after the applicable time set
forth above, the payment due shall be made by 2:00 p.m. (Atlanta time) on the
first Business Day following the date of such demand.
(ii) If a Lender shall, at any time, fail to make any
payment to the Agent required hereunder, the Agent may, but shall
not be required to, retain payments that would otherwise be made
to such Lender hereunder and apply such payments to such Lender's
defaulted obligations hereunder, at such time, and in such order,
as the Agent may elect in its sole discretion.
(iii) With respect to the payment of any funds under this
Section 5.6(b), whether from the Agent to a Lender or from a
Lender to the Agent, the party failing to make full payment when
due pursuant to the terms hereof shall, upon demand by the other
party, pay such amount together with interest on such amount at
the Federal Funds Effective Rate.
(c) Settlement of Other Secured Obligations. All other amounts
received by the Agent on account of, or applied by the Agent to the payment of,
any Secured Obligation owed to the Lenders (including, without limitation, fees
payable to the Lenders pursuant to Section 5.2 and proceeds from the sale of, or
other realization upon, all or any part of the Collateral following an Event of
Default) that are received by the Agent on or prior to 1:00 p.m. (Atlanta time)
on a Business Day will be paid by the Agent to each Lender on the same Business
Day, and any such amounts that are received by the Agent after 1:00 p.m.
(Atlanta time) will be paid by the Agent to each Lender on the following
Business Day. Unless otherwise stated herein, the Agent shall distribute fees
payable to the Lenders pursuant to Section 5.2 ratably to the Lenders based on
each Lender's Commitment Percentage and shall distribute proceeds from the sale
of, or other realization upon, all or any part of the Collateral following an
Event of Default ratably to the Lenders based on the amount of the Secured
Obligations then owing to each Lender.
SECTION 5.7. Notice of Conversion or Continuation of Loans.
Whenever the Borrower desires, subject to the provisions of Sections 5.8 and
5.9, to convert an outstanding Term Loan consisting of Loans of one Type into a
Term Loan consisting of Loans of a different Type provided for in this Agreement
or to continue an outstanding Term Loan consisting of Eurodollar Rate Loans for
a subsequent Interest Period, the Borrower shall notify the Agent in writing
(which notice shall be irrevocable) by telecopy not later than 11:00 a.m. on the
date one Business Day before the day on which a proposed conversion of a Loan
consisting of Eurodollar Rate Loans into a Loan consisting of Prime Rate Loans
is to be effective and two Business Days before the day on which a proposed
conversion of a Term Loan consisting of Prime Rate Loans into, or continuation
of a Term Loan consisting of Eurodollar Rate Loans as, a Loan consisting of
Eurodollar Rate Loans is to be effective (and if the Loan to be continued is a
Loan consisting of Eurodollar Rate Loans, such effective date shall be the last
day of the Interest Period for the Loans comprising such Loan). Each such notice
(a "Notice of Conversion or Continuation") shall (i) identify the Loan to be
converted or continued, including the Type of Loans comprising such Loan, the
aggregate outstanding principal balance thereof and, in the case of a Loan
consisting of Eurodollar Rate Loans, the last day of the Interest Period
therefor, (ii) specify the effective date of such conversion or continuation,
(iii) specify the aggregate principal amount of the Loans comprising such Loan
to be converted or continued and, if converted, the Type or Types of Loan into
which conversion of such principal amount or specified portions thereof is to be
made, and (iv) in the case of any conversion into or continuation as a Loan
consisting of Eurodollar Rate Loans, the Interest Period to be applicable
thereto, and shall be immediately followed by a written confirmation thereof by
the Borrower in substantially the form of Exhibit B (as such form is modified
from time to time by the Agent), properly completed or otherwise in a form
acceptable to the Agent, provided that if such written confirmation differs in
any respect from the action taken by the Agent, the records of the Agent shall
control absent manifest error.
SECTION 5.8. Conversion or Continuation. Provided that no Default
or Event of Default shall have occurred and be continuing (but subject to the
provisions of Sections 5.7 and 5.9, the Borrower may request that all or any
part of any outstanding Loans of one Type comprising a single Loan (a) be
converted into Loans of any other Type provided for in this Agreement, or (b) be
continued as Loans of the same Type, in the same aggregate principal amount, on
any Business Day (which, in the case of a conversion or continuation of a Loan
comprised of Eurodollar Rate Loans, shall be the last day of the Interest Period
applicable to such Loans), upon notice (which notice shall be irrevocable) given
in accordance with Section 5.7.
SECTION 5.9. Duration of Interest Periods; Maximum Number of
Eurodollar Rate Loans; Minimum Increments. Subject to the provisions of the
definition of Interest Period, the duration of each Interest Period applicable
to a Term Loan comprised of Eurodollar Rate Loans shall be as specified in the
applicable notice of borrowing provided pursuant to Section 2.1 or Notice of
Conversion or Continuation. The Borrower may elect a subsequent Interest Period
to be applicable to the Eurodollar Rate Loans comprising a Loan by giving a
Notice of Conversion or Continuation with respect to such Loans in accordance
with Sections 5.7 and 5.8. If the Agent does not receive a notice of election in
accordance with Section 5.7 with respect to the continuation of the Eurodollar
Rate Loans comprising a Loan within the applicable time limits specified in said
Section 5.7, or if, when such notice must be given, a Default or Event of
Default exists or Eurodollar Rate Loans are not available, the Borrower shall be
deemed to have elected to convert such Eurodollar Rate Loans in whole into a
Prime Rate Loans on the last day of the then-current Interest Period therefor.
Notwithstanding the foregoing, the Borrower may not select an Interest Period
that would end, but for the provisions of the definition "Interest Period,"
after the Maturity Date. In no event shall the total number of Loans consisting
of Eurodollar Rate Loans outstanding hereunder at any one time exceed two. Each
Term Loan consisting of Eurodollar Rate Loans shall be in an amount of
$1,000,000 or an integral multiple of $500,000 in excess thereof.
SECTION 5.10. Changed Circumstances.
(a) Illegality. If the introduction of or any change in or in the
interpretation of (in each case, after the date hereof) any law or regulation
makes it unlawful, or any Governmental Authority asserts, after the date hereof,
that it is unlawful, for any Lender to perform its obligations hereunder to
make, fund or maintain Eurodollar Rate Loans hereunder, the Agent (upon the
request of such Lender) shall so notify the Borrower of such event and the right
of the Borrower to select Eurodollar Rate Loans for any subsequent Loan or in
connection with any subsequent conversion or continuation of Advances comprising
any Loan shall be suspended until the Agent shall notify the Borrower that the
circumstances causing such suspension no longer exist, and the Borrower shall
forthwith prepay in full all Eurodollar Rate Loans then outstanding, with
interest accrued thereon, unless the Borrower, within three Business Days of
such notice from the Agent, requests the conversion of all Eurodollar Rate Loans
then outstanding into Prime Rate Loans in accordance with Sections 5.7 and 5.9;
provided, that if the date of such repayment or proposed conversion is not the
last day of the Interest Period applicable to such Eurodollar Rate Loans, the
Borrower shall also pay any amount due pursuant to Section 5.11.
(b) Disruption in Market. If the Agent shall, at least one
Business Day before the date of any requested borrowing or the date of any
conversion or continuation of any existing Loans (each such requested borrowing
or Loans to be converted or continued, a "Pending Loan"), notify the Borrower
that the Eurodollar Rate for Eurodollar Rate Loans comprising such Pending Loan
will not adequately reflect the cost to the Required Lenders of making or
funding their Eurodollar Rate Loans for such Pending Loan, the right of the
Borrower to select Eurodollar Rate Loans for such Pending Loan, any subsequent
Loan or in connection with any subsequent conversion or continuation of Loans
shall be suspended until the Agent shall notify the Borrower that the
circumstances causing such suspension no longer exist, and each Loans comprising
each Pending Loan and each such subsequent Loan requested to be made, continued
or converted shall be made or continued as or converted into a Prime Rate Loans
or a Loan consisting of Prime Rate Loans.
(c) Increased Costs; Capital Adequacy. The Borrower agrees that
if any Applicable Law now or hereafter in effect and whether or not presently
applicable to any Lender or any request, guideline or directive of any
Governmental Authority (whether or not having the force of law and whether or
not failure to comply therewith would be lawful) or the interpretation or
administration thereof by any Governmental Authority charged with administration
thereof, shall (i)(A) impose, affect, modify or deem applicable any reserve,
special deposit, capital maintenance or similar requirement against anyLoan, (B)
impose on any Lender any other condition regarding any Loan, this Agreement, any
Note or the facilities provided hereunder or (C) impose or increase a
requirement by such Lender (or such Lender's parent) to allocate capital
resources to such Lender's Commitment to make Loans hereunder which has or would
have the effect of reducing the return on such Lender's capital to a level below
that which such Lender could have achieved (taking into consideration such
Lender's then existing policies with respect to capital adequacy and assuming
full utilization of such Lender's capital) or (ii) subject such Lender to any
taxes or similar charges (other than taxes on or measured by income of such
Lender) on the recording, registration, notarization or other formalization of
the Loans or the Notes, and the result of any circumstance referred to in clause
(i) or (ii) above shall be to increase the cost to such Lender of making,
funding or maintaining any Loan or to reduce the amount of any sum receivable by
such Lender or such Lender's rate of return on capital with respect to any Loan
to a level below that which such Lender could have achieved but for such
imposition, modification or deemed applicability by an amount deemed by such
Lender (in the exercise of its reasonable judgment) to be material, then, upon
demand by such Lender, the Borrower shall immediately pay to such Lender
additional amounts which shall be sufficient to compensate such Lender for such
increased cost, tax or reduced rate of return. The Borrower shall not be
responsible to any Lender for any such costs incurred by such Lender as a result
of any of the aforementioned events occurring more than 90 days prior to the
Borrower's receipt of notice of such claim from such Lender.
(d) Bank Certificate Conclusive. A certificate of a Lender
claiming compensation under Section 5.10(c) shall be conclusive in the absence
of manifest error. Such certificate shall set forth the nature of the occurrence
giving rise to such claim for compensation, the additional amount or amounts to
be paid to it hereunder and the method by which such amounts were determined. In
determining such amount, a Lender may use any reasonable averaging and
attribution methods, applied on a non-discriminatory basis.
SECTION 5.11. Payments Not at End of Interest Period; Failure to
Borrow. If for any reason any payment of principal with respect to any
Eurodollar Rate Loan is made on any day other than the last day of the Interest
Period applicable to such Eurodollar Rate Advance or, after having given a
Notice of Conversion or Continuation pursuant to Section 5.7 with respect to any
Loan to consist of Eurodollar Rate Loans, such Loan is not converted or
continued as a Loan consisting of Eurodollar Loans due to the Borrower's failure
to borrow or to fulfill the applicable conditions set forth in Article 6, the
Borrower shall pay to the Agent, for the account of each Lender an amount
computed pursuant to the following formula:
L = (R - T) x P x D
---------------
360
L = amount payable to the Agent
R = interest rate on Eurodollar Rate Loan
T = effective interest rate per annum at which any readily marketable bond or
other obligation of the United States, selected at the Agent's sole discretion,
maturing on or near the last day of the Interest Period applicable to such Loans
and in approximately the same amount as such Loan can be purchased by a Lender
on the day of such payment of principal or failure to borrow or convert or
continue P = the amount of principal prepaid or the amount of the requested Loan
D = the number of days remaining in the applicable Interest Period as of the
date of such payment or the number of days of the requested Interest Period
The Borrower shall pay such amounts upon presentation by the Agent of a
statement setting forth the amount and the Agent's calculation thereof pursuant
hereto, which statement shall be deemed true and correct absent manifest error.
SECTION 5.12. Prepayment Penalty. In addition to the amounts, if
any, payable pursuant to Section 5.11, if the Borrower prepays the Loans in full
prior to May 2, 1998 for any reason with funds generated or received from
sources other than the internal generation of cash flow, the Borrower shall pay
to the Agent for the ratable benefit of the Lenders on such date of prepayment
(in proportion to each Lender's Commitment Percentage), as liquidated damages
and compensation for the costs of making funds available to the Borrower under
this Agreement, and not as a penalty, an amount equal to $100,000.
ARTICLE 6
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ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF BORROWER
SECTION 7.1. Representations and Warranties. The Borrower
represents and warrants to the Agent and to the Lenders as follows:
(a) Organization; Power; Qualification. The Borrower and each of
its Subsidiaries is a corporation, duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, having the power
and authority to own its properties and to carry on its business as now being
and hereafter proposed to be conducted and is duly qualified and authorized to
do business in each jurisdiction in which the character of its properties or the
nature of its business requires such qualification or authorization. The
jurisdictions in which each of the Borrower and each of its Subsidiaries is
qualified to do business as a foreign corporation are listed on Schedule 7.1(a).
(b) Capitalization. The outstanding capital stock of the Borrower
has been duly and validly issued and is fully paid and nonassessable, and the
number and owners of such shares of capital stock of the Borrower are set forth
on Schedule 7.1(b). The issuance and sale of the Borrower's capital stock have
been registered or qualified under applicable federal and state securities laws
or are exempt therefrom.
(c) Subordinated Indebtedness. The Borrower has delivered to the
Agent a complete and correct copy of all documents evidencing or relating to the
Subordinated Indebtedness, and each of the representations and warranties given
by the Borrower therein is true and correct in all material respects. The
subordination provisions of the Subordination Agreement will be enforceable
against each party thereto. All of the Secured Obligations constitute Senior
Obligations (as defined in the Subordination Agreement) entitled to the benefits
of subordination created under the Subordination Agreement.
(d) Subsidiaries. Schedule 7.1(d) correctly sets forth the name
of each Subsidiary of the Borrower, its jurisdiction of incorporation, the name
of its immediate parent or parents, and the percentage of its issued and
outstanding securities owned by the Borrower or any other Subsidiary of the
Borrower and indicating whether such Subsidiary is a Consolidated Subsidiary.
Except as set forth on Schedule 7.1(d),
(i) no Subsidiary of the Borrower has issued any securities
convertible into shares of such Subsidiary's capital stock
or any options, warrants or other rights to acquire any
shares or securities convertible into such shares, and
(ii) the outstanding stock and securities of each Subsidiary of
the Borrower are owned by the Borrower or a Wholly-Owned
Subsidiary of the Borrower, or by the Borrower and one or
more of its Wholly-Owned Subsidiaries, free and clear of
all Liens, warrants, options and rights of others of any
kind whatsoever.
The outstanding capital stock of each Subsidiary of the Borrower has
been duly and validly issued and is fully paid and nonassessable by the issuer,
and the number and owners of the shares of such capital stock are set forth on
Schedule 7.1(d).
(e) Authorization of Agreement, Notes, Loan Documents and
Borrowing. The Borrower has the right and power, and has taken all necessary
action to authorize it, to execute, deliver and perform this Agreement and each
of the Loan Documents in accordance with their respective terms. This Agreement
and each of the Loan Documents have been duly executed and delivered by the duly
authorized officers of the Borrower and each is, or each when executed and
delivered in accordance with this Agreement will be, a legal, valid and binding
obligation of the Borrower, enforceable in accordance with its terms.
(f) Compliance of Agreement, Notes, Loan Documents and Borrowing
with Laws, Etc. Except as set forth on Schedule 7.1(f), the execution, delivery
and performance of this Agreement and each of the Loan Documents in accordance
with their respective terms and the borrowings hereunder do not and will not, by
the passage of time, the giving of notice or otherwise,
(i) require any Governmental Approval or violate
any Applicable Law relating to the Borrower
or any of its Subsidiaries,
(ii) conflict with, result in a breach of or constitute
a default under the articles or certificate of
incorporation or by-laws of the Borrower or any of
its Subsidiaries,
(iii) conflict with, result in a breach of or
constitute a default under any material
provisions of any indenture, agreement or
other instrument to which the Borrower or any
of its Subsidiaries is a party or by which
the Borrower, any of its Subsidiaries or any
of the Borrower's or such Subsidiaries'
property may be bound or any Governmental
Approval relating to the Borrower or any of
its Subsidiaries, or
(iv) result in or require the creation or imposition of
any Lien upon or with respect to any property now
owned or hereafter acquired by the Borrower other
than the Security Interest.
(g) Business. The Borrower is engaged principally in the
business of the sale of tobacco and tobacco related products.
(h) Compliance with Law; Governmental Approvals.
(i) Except as set forth in Schedule 7.1(h), the
Borrower and each of its Subsidiaries
(A) has all Governmental Approvals, including
permits relating to federal, state and local Environmental Laws, ordinances and
regulations, required by any Applicable Law for it to conduct its business, each
of which is in full force and effect, is final and not subject to review on
appeal and is not the subject of any pending or, to the knowledge of the
Borrower, threatened attack by direct or collateral proceeding, and
(B) is in compliance with each Governmental
Approval applicable to it and in compliance with all other Applicable Laws
relating to it, including, without being limited to, all Environmental Laws and
all occupational health and safety laws applicable to the Borrower, any of its
Subsidiaries or their respective properties,
except for instances of noncompliance which would not, singly or
in the aggregate, cause a Default or Event of Default or have a Materially
Adverse Effect on the Borrower or any of its Subsidiaries and in respect of
which reserves in respect of the Borrower's or such Subsidiary's reasonably
anticipated liability therefor have been established on the books of the
Borrower or such Subsidiary, as applicable.
(ii) Without limiting the generality of the above,
except with respect to matters which could not
reasonably be expected to have, singly or in the
aggregate, a Materially Adverse Effect on the
Borrower or any of its Subsidiaries:
(A) the operations of the Borrower and each of
its Subsidiaries comply in all material respects with all applicable
environmental, health and safety requirements of Applicable Law;
(B) the Borrower and each of its Subsidiaries
has obtained all environmental, health and safety permits necessary for its
operation, and all such permits are in good standing and the Borrower and each
of its Subsidiaries is in compliance in all material respects with all terms and
conditions of such permits;
(C) neither the Borrower nor any of its
Subsidiaries nor any of their respective present or past property or operations
are subject to any order from or agreement with any public authority or private
party respecting (x) any environmental, health or safety requirements of
Applicable Law, (y) any Remedial Action, or (z) any liabilities and costs
arising from the Release or threatened Release of a Contaminant into the
environment;
(D) none of the operations of the Borrower or
of any of its Subsidiaries is subject to any judicial or administrative
proceeding alleging a violation of any environmental, health or safety
requirement of Applicable Law;
(E) none of the present or past operations of
the Borrower or any of its Subsidiaries is the subject of any investigation by
any public authority evaluating whether any Remedial Action is needed to respond
to a Release or threatened Release of a Contaminant into the environment;
(F) neither the Borrower nor any of its
Subsidiaries has filed any notice under any requirement of Applicable Law
indicating past or present treatment, storage or disposal of a hazardous waste,
as that term is defined under 40 CFR Part 261 or any state equivalent;
(G) neither the Borrower nor any of its
Subsidiaries has filed any notice under any requirement of Applicable Law
reporting a Release of a Contaminant into the environment;
(H) are in compliance in all material respects
with applicable Environmental Laws, during the course of the Borrower's or any
of its Subsidiaries' ownership of or operations on the Real Estate, there have
been no (1) generation, treatment, recycling, storage or disposal of hazardous
waste, as that term is defined under 40 CFR Part 261 or any state equivalent,
(2) use of underground storage tanks or surface impoundments, (3) use of
asbestos-containing materials, or (4) use of polychlorinated biphenyls (PCB)
used in hydraulic oils, electrical transformers or other equipment;
(I) neither the Borrower nor any of its
Subsidiaries has entered into any negotiations or agreements with any Person
(including, without limitation, any prior owner of any of the Real Estate or
other property of the Borrower or any of its Subsidiaries) relating to any
Remedial Action or environmental related claim;
(J) neither the Borrower nor any of its
Subsidiaries has received any notice or claim to the effect that it is or may be
liable to any Person as a result of the Release or threatened Release of a
Contaminant into the environment;
(K) neither the Borrower nor any of its
Subsidiaries has any material contingent liability in connection with any
Release or threatened Release of any Contaminant into the environment;
(L) no Environmental Lien has attached to any
of the Real Estate or other property of the Borrower or of any of its
Subsidiaries;
(M) the presence and condition of all
asbestos-containing material which is on or part of the Real Estate do not
violate in any material respect any currently applicable requirement of
Applicable Law; and
(N) neither the Borrower nor any of its
Subsidiaries manufactures, distributes or sells, and has never manufactured,
distributed or sold, products which contain asbestos-containing material.
(iii) the Borrower has notified the Lenders of the
receipt by it or by any of its Subsidiaries of any notice of a material
violation of any Environmental Laws and occupational health and safety laws
applicable to the Borrower, any of its Subsidiaries or any of their respective
properties.
(i) Title to Properties. Except as set forth in Schedule 7.1(i),
the Borrower and each of its Subsidiaries has valid and legal title to or
leasehold interest in all personal property, Real Estate owned and other assets
used in its business.
(j) Liens. Except as set forth in Schedule 7.1(j), none of the
properties and assets of the Borrower or any Subsidiary of the Borrower is
subject to any Lien, except Permitted Liens. Other than the Financing
Statements, no financing statement under the Uniform Commercial Code of any
State or other instrument evidencing a Lien which names the Borrower or any
Subsidiary of the Borrower as debtor has been filed (and has not been
terminated) in any State or other jurisdiction, and neither the Borrower nor any
Subsidiary of the Borrower has signed any such financing statement or other
instrument or any security agreement authorizing any secured party thereunder to
file any such financing statement or instrument, except to perfect those Liens
listed on Schedule 7.1(j).
(k) Indebtedness and Guaranties. Schedule 7.1(k) is a complete
and correct listing of all (i) Indebtedness for Money Borrowed, and (ii)
Guaranties of each of the Borrower and each of its Subsidiaries. Each of the
Borrower and its Subsidiaries has performed and is in compliance with all of the
terms of such Indebtedness and Guaranties and all instruments and agreements
relating thereto, and no default or event of default, or event or condition
which with notice or lapse of time or both would constitute such a default or
event of default, exists with respect to any such Indebtedness or Guaranty.
(l) Litigation. Except as set forth on Schedule 7.1(l), there are
no actions, suits or proceedings pending (nor, to the knowledge of the Borrower,
are there any actions, suits or proceedings threatened, or any reasonable basis
therefor) against or in any other way relating to or affecting the Borrower or
such Subsidiaries or any of the Borrower's or any of its Subsidiaries, other
properties in any court or before any arbitrator of any kind or before or by any
governmental body, except actions, suits or proceedings of the character
normally incident to the kind of business conducted by the Borrower or any of
its Subsidiaries which, if adversely determined, would not singly or in the
aggregate have a Materially Adverse Effect on the Borrower or such Subsidiary,
and there are no strikes or walkouts in progress, pending or contemplated
relating to any labor contracts to which the Borrower or any of its Subsidiaries
is a party, relating to any labor contracts being negotiated, or otherwise.
(m) Tax Returns and Payments. Except as set forth on Schedule
7.1(m), all United States federal, state and local as well as foreign national,
provincial and local and other tax returns of the Borrower and each of its
Subsidiaries required by Applicable Law to be filed have been duly filed, and
all United States federal, state and local and foreign national, provincial and
local and other taxes, assessments and other governmental charges or levies upon
the Borrower and each of its Subsidiaries and the Borrower's and any of its
Subsidiaries' property, income, profits and assets which are due and payable
have been paid, except any such nonpayment which is at the time permitted under
Section 10.6. The charges, accruals and reserves on the books of the Borrower
and each of its Subsidiaries in respect of United States federal, state and
local and foreign national, provincial and local taxes for all fiscal years and
portions thereof since the organization of the Borrower are in the judgment of
the Borrower adequate, and the Borrower knows of no reason to anticipate any
additional assessments for any of such years which, singly or in the aggregate,
might have a Materially Adverse Effect on the Borrower.
(n) Burdensome Provisions. Neither the Borrower nor any of its
Subsidiaries is a party to any indenture, agreement, lease or other instrument,
or subject to any charter or corporate restriction, Governmental Approval or
Applicable Law compliance with the terms of which might have a Materially
Adverse Effect on the Borrower or any of its Subsidiaries.
(o) Financial Condition. The financial statements and financial
information provided to the Lenders, consisting of, among other things, (i) an
audited consolidated balance sheet of the Borrower dated as of March 31, 1995,
together with related consolidated statements of income, retained earnings and
cash flows, certified by Deloitte & Touche, certified public accountants, as
true and correct, fairly represent the financial condition of the Borrower as of
such date; such financial statements were prepared in accordance with GAAP
applied on a consistent basis; and since the date of such financial statements
there have occurred no changes or circumstances which have had or are likely to
have a Material Adverse Effect on the Borrower and the financial statements
referenced above; and (ii) an internally prepared consolidated balance sheet of
the Borrower and WAA dated as of December 31, 1995, together with related
consolidated statements of income, retained earnings and cash flows, fairly
represent the financial condition of the Borrower and WAA as of such date; such
financial statements were prepared in accordance with GAAP applied on a
consistent basis; and since the dates of such financial statements there have
occurred no changes or circumstances which have had or are likely to have a
Material Adverse Effect on the Borrower or WAA and the financial statements
referenced above.
(p) Adverse Change. Since the date of the last financial
statements of the Borrower delivered to the Agent pursuant to Section
7.1(o)(i),
(i) no material adverse change has occurred in the
business, assets, liabilities, financial condition, results of operations or
business prospects of the Borrower, and
(ii) no event has occurred or failed to occur which
has had, or may have, singly or in the aggregate, a Materially Adverse Effect
on the Borrower.
(q) ERISA.
(i) Neither the Borrower nor any Related Company
maintains or contributes to any Benefit Plan other than those listed on Schedule
7.1(q).
(ii) No Benefit Plan has been terminated or partially
terminated, and no Multiemployer Plan is insolvent or in reorganization, nor
have any proceedings been instituted to terminate any Benefit Plan or to
reorganize any Multiemployer Plan.
(iii) Neither the Borrower nor any Related Company has
withdrawn from any Benefit Plan or Multiemployer Plan, nor has a condition
occurred which if continued would result in a withdrawal.
(iv) Neither the Borrower nor any Related Company has
incurred any withdrawal liability, including contingent withdrawal liability, to
any Multiemployer Plan pursuant to Title IV of ERISA.
(v) Neither the Borrower nor any Related Company has
incurred any liability to the PBGC other than for required insurance premiums
which have been paid when due.
(vi) No Reportable Event has occurred with respect to
a Plan.
(vii) No Benefit Plan has an "accumulated funding
deficiency" (whether or not waived) as defined in Section 302 of ERISA or in
Section 412 of the Internal Revenue Code.
(viii) Each Plan is in substantial compliance with ERISA, and
neither the Borrower nor any Related Company has received any communication from
a governmental agency asserting that a Plan is not in compliance with ERISA.
(ix) Each Plan which is intended to be a qualified
Plan has been determined by the IRS to be qualified under Section 401(a) of the
Internal Revenue Code as currently in effect or will be submitted to the IRS for
such determination prior to the end of the remedial amendment period under
Section 401(b) of the Internal Revenue Code and the regulations promulgated
thereunder and neither the Borrower nor any Related Company knows or has reason
to know why each such Plan should not continue to be so qualified, and each
trust related to such Plan that has been submitted to the IRS for determination
of exempt status has been determined to be exempt from federal income tax under
Section 501(a) of the Internal Revenue Code or will be submitted to the IRS for
a determination of exempt status.
(x) Except as provided on Schedule 7.1(q), neither
the Borrower nor any Related Company maintains or contributes to any employer
welfare benefit plan within the meaning of Section 3(1) of ERISA which provides
benefits to employees after termination of employment other than as required by
Section 601 of ERISA.
(xi) Schedule B to the most recent annual report filed
with the IRS with respect to each Benefit Plan and furnished to the Lender is
complete and accurate. Since the date of each such Schedule B, there has been no
adverse change in funding status or financial condition of the Benefit Plan
relating to such Schedule B.
(xii) Neither the Borrower nor any Related Company has
failed to make a required installment under Subsection (m) of Section 412 of the
Internal Revenue Code or any other payment required under Section 412 of the
Internal Revenue Code on or before the due date for such installment or other
payment.
(xiii) Neither the Borrower nor any Related Company is
required to provide security to a Benefit Plan under Section 401(a)(29) of the
Internal Revenue Code due to a Benefit Plan amendment that results in an
increase in current liability for the plan year.
(xiv) Neither the Borrower, nor any Related Company,
nor any other "party-in-interest" or "disqualified person" has engaged in a
nonexempt "prohibited transaction," as such terms are defined in Section 4975 of
the Internal Revenue Code and Section 406 of ERISA, in connection with any Plan
or has taken or failed to take any action which would constitute or result in a
Termination Event.
(xv) Neither the Borrower nor any Related Company has
failed to comply with the health care continuation coverage requirements of
Section 4980B of the Internal Revenue Code in respect of employees and former
employees of such Borrower or such Related Company and their dependents and
beneficiaries which alone or in the aggregate would subject such Borrower or
such Related Company to any material liability.
(xvi) Neither the Borrower nor any Related Company has
(i) failed to make a required contribution or payment to a Multiemployer Plan or
(ii) made a complete or partial withdrawal under Sections 4203 or 4205 of ERISA
from a Multiemployer Plan. Except as provided on Schedule 7.1(q), to the best
knowledge of the Borrower after due inquiry, neither the Borrower nor any
Related Company shall have any obligation to (A) make contributions to any
Multiemployer Plan on or after the Effective Date, or (B) pay withdrawal
liability to any Multiemployer Plan in an amount in excess of a "de minimis
amount" as such term is defined in Section 4209 of ERISA.
(r) Absence of Defaults. Neither the Borrower nor any of
its Subsidiaries is in default under its articles or certificate of
incorporation or by-laws and no event has occurred, which has not been
remedied, cured or waived,
(i) which constitutes a Default or an Event of
Default, or
(ii) which constitutes, or which with the passage of
time or giving of notice or both would constitute, a default or event of default
by the Borrower or any of its Subsidiaries under any material agreement (other
than this Agreement) or judgment, decree or order to which the Borrower or any
of its Subsidiaries is a party or by which the Borrower, any of its Subsidiaries
or any of the Borrower's or any of its Subsidiaries' properties may be bound or
which would require the Borrower or any of its Subsidiaries to make any payment
under any thereof prior to the scheduled maturity date therefor, except, in the
case only of any such agreement, for alleged defaults which are being contested
in good faith by appropriate proceedings and with respect to which reserves in
respect of the Borrower's or such Subsidiary's reasonably anticipated liability
have been established on the books of the Borrower or such Subsidiary.
(s) Accuracy and Completeness of Information.
(i) All written information, reports and other papers
and data produced by or on behalf of the Borrower and furnished to the Agent or
any Lender were, at the time the same were so furnished, complete and correct in
all material respects, to the extent necessary to give the recipient a true and
accurate knowledge of the subject matter. No fact is known to the Borrower which
has had, or may in the future have (so far as the Borrower can foresee), a
Materially Adverse Effect upon the Borrower or any of its Subsidiaries which has
not been set forth in the financial statements or disclosure delivered prior to
the Effective Date, in each case referred to in Section 7.1(o), or in such
written information, reports or other papers or data or otherwise disclosed in
writing to the Agent and the Lenders prior to the Agreement Date. No document
furnished or written statement made to the Agent or any Lender by the Borrower
in connection with the negotiation, preparation or execution of this Agreement
or any of the Loan Documents contains or will contain any untrue statement of a
fact material to the creditworthiness of the Borrower or omits or will omit to
state a material fact necessary in order to make the statements contained
therein not misleading.
(ii) The Borrower has no reason to believe that any
document furnished or written statement made to the Agent or any Lender by any
Person other than the Borrower in connection with the negotiation, preparation
or execution of this Agreement or any of the Loan Documents contained any
incorrect statement of a material fact or omitted to state a material fact
necessary in order to make the statements made, in light of the circumstances
under which they were made, not misleading.
(t) Solvency. In each case after giving effect to the
Indebtedness represented by the Loans outstanding and to be incurred, the
transactions contemplated by this Agreement, the Borrower and each of its
Subsidiaries is solvent, having assets of a fair salable value which exceeds the
amount required to pay its debts as they become absolute and matured (including
contingent, subordinated, unmatured and unliquidated liabilities), and the
Borrower and each of its Subsidiaries is able to and anticipates that it will be
able to meet its debts as they mature and has adequate capital to conduct the
business in which it is or proposes to be engaged.
(u) Receivables.
(i) Status.
(A) Each Receivable reflected in the
computations included in any Borrowing Base Certificate meets the criteria
enumerated in the definition of Eligible Receivables set forth in the Revolving
Credit Agreement, except as disclosed in such Borrowing Base Certificate or as
disclosed in a timely manner in a subsequent Borrowing Base Certificate or
otherwise in writing to the Agent.
(B) The Borrower has no knowledge of any fact
or circumstance not disclosed to the Lender in a Borrowing Base Certificate or
otherwise in writing which would impair the validity or collectibility of any
Receivable of $5,000 or more or of Receivables which (regardless of the
individual amount thereof) aggregate $50,000 or more.
(ii) Chief Executive Office. The chief executive
office of the Borrower and the books and records relating to the Receivables are
located at the address or addresses set forth on Schedule 7.1(u); the Borrower
has not maintained its chief executive office or books and records relating to
any Receivables at any other address at any time during the five years
immediately preceding the Agreement Date except as disclosed on Schedule 7.1(u).
(v) Inventory.
(i) Schedule of Inventory. All Inventory included in
any Schedule of Inventory or Borrowing Base Certificate delivered to the Lender
pursuant to Section 9.12 meets the criteria enumerated in the definitions of
Eligible Committed Leaf Inventory, Eligible Cut Rag Inventory and Eligible
Uncommitted Leaf Inventory of the Revolving Credit Agreement, except as
disclosed in such Schedule of Inventory or Borrowing Base Certificate or in a
subsequent Schedule of Inventory or Borrowing Base Certificate, or as otherwise
specifically disclosed in writing to the Agent.
(ii) Condition. All Inventory is in good condition,
meets all standards imposed by any governmental agency, or department or
division thereof, having regulatory authority over such goods, their use or
sale, and is currently either usable or salable in the normal course of the
Borrower's business, except to the extent reserved against in the financial
statements referred to in Section 7.1(o) or delivered pursuant to Article 11 or
as disclosed on a Schedule of Inventory delivered to the Agent pursuant to
Section 9.12(b).
(iii) Location. All Inventory is located on the
premises set forth on Schedule 7.1(v) or is Inventory in transit to one of such
locations, except as otherwise disclosed in writing to the Agent; the Borrower
has not, in the last year, located such Inventory at premises other than those
set forth on Schedule 7.1(v).
(w) Equipment. All Equipment is in good order and repair in
all material respects and is located on the premises set forth on Schedule
7.1(w).
(x) Real Property. The Borrower owns no Real Estate and leases no
Real Estate other than that described on Schedule 7.1(x) and other than Real
Estate acquired or leased after the Effective Date for which the Borrower has
complied with the requirements of Section 9.14.
(y) Corporate and Fictitious Names. Except as otherwise disclosed
on Schedule 7.1(y), during the five-year period preceding the Agreement Date,
neither the Borrower nor any predecessor thereof has been known as or used any
corporate or fictitious name other than the corporate name of the Borrower on
the Effective Date.
(z) Federal Reserve Regulations. Neither the Borrower nor any of
its Subsidiaries is engaged and none will engage, principally or as one of its
important activities, in the business of extending credit for the purpose of
"purchasing" or "carrying" any "margin stock" (as each of the quoted terms is
defined or used in Regulations G and U of the Board of Governors of the Federal
Reserve System). No part of the proceeds of any of the Loans will be used for so
purchasing or carrying margin stock or, in any event, for any purpose which
violates, or which would be inconsistent with, the provisions of Regulation G,
T, U or X of such Board of Governors. If requested by the Agent or any Lender,
the Borrower will furnish to the Agent and the Lenders a statement or statements
in conformity with the requirements of said Regulation G, T, U or X to the
foregoing effect.
(aa) Investment Company Act. The Borrower is not an "investment
company" or a company "controlled" by an "investment company" (as each of the
quoted terms is defined or used in the Investment Company Act of 1940, as
amended).
(bb) Employee Relations. The Borrower and each of its
Subsidiaries has a stable work force in place and is not, except as set forth on
Schedule 7.1(bb), party to any collective bargaining agreement nor has any labor
union been recognized as the representative of the Borrower's or any of its
Subsidiaries' employees, and the Borrower knows of no pending, threatened or
contemplated strikes, work stoppage or other labor disputes involving the
Borrower's or any of its Subsidiaries' employees.
(cc) Proprietary Rights. Schedule 7.1(cc) sets forth a correct
and complete list of all of the Proprietary Rights. None of the Proprietary
Rights is subject to any licensing agreement or similar arrangement except as
set forth on Schedule 7.1(cc) or as entered into in the sale or distribution of
the Borrower's Inventory in the ordinary course of business. To the best of the
Borrower's knowledge, none of the Proprietary Rights infringes on or conflicts
with any other Person's property, and no other Person's property infringes on or
conflicts with the Proprietary Rights. The Proprietary Rights described on
Schedule 7.1(cc) constitute all of the property of such type necessary to the
current and anticipated future conduct of the Borrower's business.
(dd) Trade Names. All trade names or styles under which the
Borrower sells Inventory or Equipment or creates Receivables, or to which
instruments in payment of Receivables are made payable, are listed on Schedule
7.1(dd).
SECTION 7.2. Survival of Representations and Warran-ties, Etc.
All representations and warranties set forth in this Article 7 and all
statements contained in any certificate, financial statement, or other
instrument, delivered by or on behalf of the Borrower pursuant to or in
connection with this Agreement or any of the Loan Documents (including, but not
limited to, any such representation, warranty or statement made in or in
connection with any amendment thereto) shall constitute representations and
warranties made under this Agreement. All representations and warranties made
under this Agreement shall be made or deemed to be made at and as of the
Agreement Date, at and as of the Effective Date and at and as of the date of
each Loan, except that representations' and warranties which, by their terms are
applicable only to one such date shall be deemed to be made only at and as of
such date. All representations and warranties made or deemed to be made under
this Agreement shall survive and not be waived by the execution and delivery of
this Agreement, any investigation made by or on behalf of the Lender or any
borrowing hereunder.
ARTICLE 8
SECURITY INTEREST
SECTION 8.1. Security Interest.
(a) To secure the payment, observance and performance of the
Secured Obligations, the Borrower hereby mortgages, pledges and assigns all of
the Collateral to the Agent, for the benefit of itself as Agent and for the pro
rata benefit of the Lenders (in proportion to each Lender's ownership of all
Secured Obligations from time to time), and grants to the Agent, for the benefit
of itself as Agent and for the pro rata benefit of the Lenders (also in such
proportion), a continuing security interest in, and a continuing Lien upon, all
of the Collateral.
(b) As additional security for all of the Secured Obligations,
the Borrower grants to the Agent, for the benefit of itself as Agent and the
Lenders, a security interest in, and assigns to the Agent, for the benefit of
itself as Agent and the Lenders, all of the Borrower's right, title and interest
in and to, any deposits or other sums, at any time credited by or due from each
Lender and each Affiliate of a Lender to the Borrower, or credited by or due
from any participant of any Lender to the Borrower, with the same rights therein
as if the deposits or other sums were credited by or due from such Lender. The
Borrower hereby authorizes each Lender and each Affiliate of such Lender and
each participant to pay or deliver to the Agent, for the account of the Lenders,
without any necessity on the Agent's or any Lender's part to resort to other
security or sources of reimbursement for the Secured Obligations, at any time
during the continuation of any Event of Default or in the event that the Agent,
on behalf of the Lenders, should make demand for payment hereunder and without
further notice to the Borrower (such notice being expressly waived), any of the
aforesaid deposits (general or special, time or demand, provisional or final) or
other sums for application to any Secured Obligation, irrespective of whether
any demand has been made or whether such Secured Obligation is mature, and the
rights given the Agent, the Lenders, their Affiliates and participants hereunder
are cumulative with such Person's other rights and remedies, including other
rights of setoff. The Agent will promptly notify the Borrower of its receipt of
any such funds for application to the Secured Obligations, but failure to do so
will not affect the validity or enforceability thereof. The Agent may give
notice of the above grant of a security interest in and assignment of the
aforesaid deposits and other sums, and authorization, to, and make any suitable
arrangements with, any Lender, any such Affiliate of any Lender or participant
for effectuation thereof, and the Borrower hereby irrevocably appoints Agent as
its attorney to collect any and all such deposits or other sums to the extent
any such payment is not made to the Agent or any Lender by such Lender,
Affiliate or participant.
(c) As additional security for all of the Secured Obligations,
the Borrower hereby assigns to the Agent for the ratable benefit of the Lenders
(in proportion to each Lender's ownership of all Secured Obligations from time
to time) its rights to proceeds arising under any Foreign Receivable Support
Letter of Credit now existing or hereafter arising. The Borrower shall deliver
to the Agent all original Foreign Receivable Support Letters of Credit.
Immediately upon its receipt of any Foreign Receivable Support Letter of Credit,
and prior to the presentation of any draw thereunder, the Borrower shall provide
to the issuer of each such Foreign Receivable Support Letter of Credit (i)
written notification, with a conformed copy to the Agent, that the Borrower has
assigned such Foreign Receivable Support Letter of Credit to the Agent,
providing such issuer sufficient information to identify reasonably the credit
so assigned, and (ii) requesting and directing the issuer to pay the Agent as
assignee upon any draw under such Foreign Receivable Support Letter of Credit.
For the purposes of this Agreement, the term "Foreign Receivable Support Letter
of Credit" shall mean any letter of credit issued in favor of the Borrower as
beneficiary to support the payment of any receivable due from a foreign entity
or person.
SECTION 8.2. Continued Priority of Security Interest.
(a) The Security Interest granted by the Borrower shall at all
times be valid, perfected and enforceable against the Borrower and all third
parties in accordance with the terms of this Agreement, as security for the
Secured Obligations, and the Collateral shall not at any time be subject to any
Liens that are prior to, on a parity with or junior to the Security Interest,
other than Permitted Liens.
(b) The Borrower shall, at its sole cost and expense, take all
action that may be necessary or desirable, or that the Agent may reasonably
request, so as at all times to maintain the validity, perfection, enforceability
and rank of the Security Interest in the Collateral in conformity with the
requirements of Section 8.2(a), or to enable the Agent and the Lenders to
exercise or enforce their rights hereunder, including, but not limited to:
(i) paying all taxes, assessments and other claims
lawfully levied or assessed on any of the Collateral, except to the extent that
such taxes, assessments and other claims constitute Permitted Liens,
(ii) obtaining, after the Agreement Date, landlords'
and mortgagees, releases, subordinations or waivers, and using all reasonable
efforts to obtain mechanics' releases, subordinations or waivers,
(iii) delivering to the Agent, for the benefit of the
Lenders, endorsed or accompanied by such instruments of assignment as the Agent
may specify, and stamping or marking, in such manner as the Agent may specify,
any and all chattel paper, instruments, letters and advices of guaranty and
documents evidencing or forming a part of the Collateral, and
(iv) executing and delivering financing statements,
pledges, designations, hypothecations, notices and assignments in each case in
form and substance satisfactory to the Agent relating to the creation, validity,
perfection, maintenance or continuation of the Security Interest under the
Uniform Commercial Code or other Applicable Law.
(c) The Agent is hereby authorized to file one or more financing
or continuation statements or amendments thereto without the signature of or in
the name of the Borrower for any purpose described in Section 8.2(b). The Agent
will give the Borrower notice of the filing of any such statements or
amendments, which notice shall specify the locations where such statements or
amendments were filed. A carbon, photographic, xerographic or other reproduction
of this Agreement or of any of the Security Documents or of any financing
statement filed in connection with this Agreement is insufficient as a financing
statement.
(d) The Borrower shall mark its books and records as directed by
the Agent and as may be necessary or appropriate to evidence, protect and
perfect the Security Interest and shall cause its financial statements to
reflect the Security Interest.
ARTICLE 9
COLLATERAL COVENANTS
Until all the Secured Obligations have been paid in full, unless
the Required Lenders shall otherwise consent in the manner provided in Section
16.11:
SECTION 9.1. Collection of Receivables.
(a) At the request of the Agent, the Borrower will cause all
monies, checks, notes, drafts and other payments relating to or constituting
proceeds of trade accounts receivable to be forwarded to a Lockbox for deposit
in an Agency Account in accordance with the procedures set out in the
corresponding Agency Account Agreement. The Borrower will promptly cause all
monies, checks, notes, drafts and other payments relating to or constituting
proceeds of other Receivables, of any other Collateral and of any trade accounts
receivable that are not forwarded to a Lockbox, to be transferred to or
deposited in an Agency Account. In particular, the Borrower will:
(i) advise each Account Debtor on trade accounts
receivable to address all remittances with respect to amounts payable on
account thereof to a specified Lockbox,
(ii) advise each other Account Debtor that makes
payment to the Borrower by wire transfer, automated clearinghouse transfer or
similar means to make payment directly to an Agency Account, and
(iii) stamp all invoices relating to trade accounts
receivable with a legend satisfactory to the Agent indicating that payment is to
be made to the Borrower via a specified Lockbox.
(b) The Borrower and the Agent shall cause all collected balances
in each Agency Account to be transmitted daily by wire transfer, depository
transfer check or other means in accordance with the procedures set forth in the
corresponding Agency Account Agreement, to the Agent at the Agent's Office:
(i) for application, on account of the Secured
Obligations, as provided in Sections 2.3(c), 13.2, and 13.3, such credits to be
entered as of the Business Day they are received if they are received prior to
1:30 p.m. (Atlanta time) and to be conditioned upon final payment in cash or
solvent credits of the items giving rise to them, and
(ii) with respect to the balance, so long as no
Default or Event of Default has occurred and is continuing, for transfer by wire
transfer or depository transfer check to a Controlled Disbursement Account.
(c) Any monies, checks, notes, drafts or other payments referred
to in subsection (a) of this Section 9.1 which, notwithstanding the terms of
such subsection, are received by or on behalf of the Borrower will be held in
trust for the Agent and will be delivered to the Agent or a Clearing Bank, as
promptly as possible, in the exact form received, together with any necessary
endorsements for application by the Agent directly to the Secured Obligations
or, if applicable, for deposit in the Agency Account maintained with a Clearing
Bank and processing in accordance with the terms of the corresponding Agency
Account Agreement.
SECTION 9.2. Verification and Notification. The Agent shall
have the right at any time and from time to time,
(a) in the name of the Agent, the Lenders or in the name of the
Borrower, to verify the validity, amount or any other matter relating to any
Receivables by mail, telephone, telegraph or otherwise,
(b) to review, audit and make extracts from all records and
files related to any of the Receivables, and
(c) to notify the Account Debtors or obligors under any
Receivables of the assignment of such Receivables to the Agent, for the benefit
of the Lenders, and to direct such Account Debtor or obligors to make payment of
all amounts due or to become due thereunder directly to the Agent, for the
account of the Lenders, and, upon such notification and at the expense of the
Borrower, to enforce collection of any such Receivables and to adjust, settle or
compromise the amount or payment thereof, in the same manner and to the same
extent as the Borrower might have done.
SECTION 9.3. Disputes, Returns and Adjustments.
(a) In the event any amounts due and owing under any Receivable
for an amount in excess of $1,000,000 are in dispute between the Account Debtor
and the Borrower, the Borrower shall provide the Agent with prompt written
notice thereof.
(b) The Borrower shall notify the Agent promptly of all returns
and credits in excess of $50,000 in respect of any Receivable, which notice
shall specify the Receivable affected.
(c) The Borrower may, in the ordinary course of business unless a
Default or an Event of Default has occurred and is continuing, grant any
extension of time for payment of any Receivable or compromise, compound or
settle the same for less than the full amount thereof, or release wholly or
partly any Person liable for the payment thereof, or allow any credit or
discount whatsoever therein; provided that (i) no such action results in the
reduction of more than $50,000 in the amount payable with respect to any
Receivable or of more than $250,000 with respect to all Receivables in any
fiscal year of the Borrower (in each case, excluding the allowance of credits or
discounts generally available to Account Debtors in the ordinary course of the
Borrower's business and appropriate adjustments to the accounts of Account
Debtors in the ordinary course of business), and (ii) the Agent is promptly
notified of the amount of such adjustments and the Receivable(s) affected
thereby.
SECTION 9.4. Invoices.
(a) The Borrower will not use any invoices other than invoices in
the form delivered to the Agent prior to the Agreement Date without giving the
Agent 30 days, prior notice of the intended use of a different form of invoice
together with a copy of such different form.
(b) Upon the request of the Agent, the Borrower shall deliver to
the Agent, at the Borrower's expense, copies of customers, invoices or the
equivalent, original shipping and delivery receipts or other proof of delivery,
customers' statements, customer address lists, the original copy of all
documents, including, without limitation, repayment histories and present status
reports, relating to Receivables and such other documents and information
relating to the Receivables as the Agent shall specify.
SECTION 9.5. Delivery of Instruments. In the event any Receivable
is at any time evidenced by a promissory note, trade acceptance or any other
instrument for the payment of money, the Borrower will immediately thereafter
deliver such instrument to the Agent, appropriately endorsed to the Agent, for
the benefit of the Lenders.
SECTION 9.6. Sales of Inventory. All sales of Inventory will
be made in compliance with all requirements of Applicable Law.
SECTION 9.7. Ownership and Defense of Title.
(a) Except for Permitted Liens, the Borrower shall at all times
be the sole owner or lessee of each and every item of Collateral and shall not
create any lien on, or sell, lease, exchange, assign, transfer, pledge,
hypothecate, grant a security interest or security title in or otherwise dispose
of, any of the Collateral or any interest therein, except for sales of Inventory
in the ordinary course of business, for cash or on open account or on terms of
payment ordinarily extended to its customers, and except for dispositions that
are otherwise expressly permitted under this Agreement. The inclusion of
"proceeds" of the Collateral under the Security Interest shall not be deemed a
consent by the Agent or the Lenders to any other sale or other disposition of
any part or all of the Collateral.
(b) The Borrower shall defend its title or leasehold interest in
and to, and the Security Interest in, the Collateral against the claims and
demands of all Persons.
SECTION 9.8. Insurance.
(a) The Borrower shall at all times maintain insurance on the
Inventory against loss or damage by fire, theft (excluding theft by employees),
burglary, pilferage, loss in transit and such other hazards as the Agent shall
reasonably specify, in amounts not to exceed those obtainable at commercially
reasonable rates and under policies issued by insurers acceptable to the Agent
in the exercise of its reasonable judgment. All premiums on such insurance shall
be paid by the Borrower and copies of the policies delivered to the Agent. The
Borrower will not use or permit the Inventory to be used in violation of
Applicable Law or in any manner which might render inapplicable any insurance
coverage.
(b) All insurance policies required under Section 9.8(a) shall
name the Agent, for the benefit of the Lenders, as an additional insured and
shall contain loss payable clauses in the form submitted to the Borrower by the
Agent, or otherwise in form and substance satisfactory to the Required Lenders,
naming the Agent, for the benefit of the Lenders, as loss payee, as its
interests may appear, and providing that
(i) all proceeds thereunder shall be payable to the
Agent, for the benefit of the Lenders,
(ii) no such insurance shall be affected by any act or
neglect of the insurer or owner of the property described in such policy, and
(iii) such policy and loss payable clauses may be
canceled, amended or terminated only upon at least ten days, prior written
notice given to the Agent.
(c) Any proceeds of insurance referred to in this Section 9.8
which are paid to the Agent, for the account of the Lenders, shall be, at the
option of the Required Lenders in their sole discretion, either (i) applied to
replace the damaged or destroyed property, or (ii) applied to the payment or
prepayment of the Secured Obligations.
SECTION 9.9. Location of Offices and Collateral.
(a) The Borrower will not change the location of its chief
executive office or the place where it keeps its books and records relating to
the Collateral or change its name, its identity or corporate structure without
giving the Agent 60 days' prior written notice thereof.
(b) All Inventory, other than Inventory in transit to any such
location, will at all times be kept by the Borrower at the locations set forth
in Schedule 7.1(v), and shall not, without the prior written consent of the
Agent, be removed therefrom except pursuant to sales of Inventory permitted
under Section 9.7(a).
(c) If any Inventory is in the possession or control of any of
the Borrower's agents or processors, the Borrower shall notify such agents or
processors of the Security Interest (and shall promptly provide copies of any
such notice to the Agent and the Lenders) and, upon the occurrence of an Event
of Default, shall instruct them (and cause them to acknowledge such instruction)
to hold all such Inventory for the account of the account of the Lenders,
subject to the instructions of the Agent.
SECTION 9.10. Records Relating to Collateral.
(a) The Borrower will at all times
(i) keep complete and accurate records of Inventory
on a basis consistent with past practices of the Borrower so as to permit
comparison of Inventory records relating to different time periods, itemizing
and describing the kind, type and quantity of Inventory and the Borrower's cost
therefor and a current price list for such Inventory, and
(ii) keep complete and accurate records of all other
Collateral.
(b) The Borrower will prepare a physical listing of all
Inventory, wherever located, at least annually.
SECTION 9.11. Inspection. The Agent and each Lender (by any of
their officers, employees or agents) shall have the right, to the extent that
the exercise of such right shall be within the control of the Borrower, at any
time or times to
(a) visit the properties of the Borrower and its Subsidiaries,
inspect the Collateral and the other assets of the Borrower and its Subsidiaries
and inspect and make extracts from the books and records of the Borrower and its
Subsidiaries, including but not limited to management letters prepared by
independent accounts, all during customary business hours at such premises;
(b) discuss the Borrower's and its Subsidiaries' business,
assets, liabilities, financial condition, results of operations and business
prospects, insofar as the same are reasonably related to the rights of the Agent
or the Lenders hereunder or under any of the Loan Documents, with the Borrower's
and its Subsidiaries, (i) principal officers, (ii) independent accountants, and
(iii) any other Person (except that any such discussion with any third parties
shall be conducted only in accordance with the Agent's or such Lender's standard
operating procedures relating to the maintenance of the confidentiality of
confidential information of borrowers);
(c) verify the amount, quantity, value and condition of, or any
other matter relating to, any of the Collateral (other than Receivables) and in
this connection to review, audit and make extracts from all records and files
related to any of the Collateral.
The Borrower will deliver to the Agent, for the benefit of the Lenders, any
instrument necessary for it to obtain records from any service bureau
maintaining records on behalf of the Borrower.
SECTION 9.12. Information and Reports.
(a) Schedule of Receivables. The Borrower shall deliver to the
Agent on or before the Effective Date and not later than the 15th Business Day
of each calendar month thereafter a Schedule of Receivables which
(i) shall be as of the last Business Day of the
immediately preceding month,
(ii) shall be reconciled to the Borrowing Base
Certificate as of such last Business Day, and
(iii) shall set forth a detailed aged trial balance of all
its then existing Receivables, specifying the names, countries and balance due
for each Account Debtor obligated on a Receivable so listed.
(b) Schedule of Inventory. The Borrower shall deliver to the
Agent on or before the Effective Date and not later than the 20th day of each
calendar month thereafter a Schedule of Inventory as of the last Business Day of
the immediately preceding month of the Borrower, itemizing and describing the
kind, type and quantity of Inventory, the Borrower's cost thereof and the
location thereof.
(c) Borrowing Base Certificate. The Borrower shall deliver
to the Agent a Borrowing Base Certificate at least weekly or less frequently
at the discretion of the Agent.
(d) Notice of Diminution of Value. The Borrower shall give prompt
notice to the Agent of any matter or event which has resulted in, or may result
in, the diminution in excess of $200,000 in the value of any of its Collateral,
except for any such diminution in the value of any Receivables or Inventory in
the ordinary course of business which has been appropriately reserved against,
as reflected in financial statements previously delivered to the Agent and the
Lenders pursuant to Article 11.
(e) Additional Information. The Agent may in its discretion from
time to time request that the Borrower deliver the schedules, certificates
described in Sections 9.12(a), (b) and (c) more or less often and on different
schedules than specified in such Sections and the Borrower will comply with such
requests. The Borrower will also furnish to the Agent and each Lender such other
information with respect to the Collateral as the Agent or such Lender may from
time to time reasonably request.
SECTION 9.13. Power of Attorney. The Borrower hereby
appoints the Agent as its attorney, with power
(a) to endorse the name of the Borrower on any checks, notes,
acceptances, money orders, drafts or other forms of payment or security that may
come into the Agent's or any Lender's possession, and
(b) to sign the name of the Borrower on any invoice or bill of
lading relating to any Receivable, Inventory or other Collateral, on any drafts
against customers related to letters of credit, on schedules and assignments of
Receivables furnished to the Agent or any Lender by the Borrower, on notices of
assignment, financing statements and other public records relating to the
perfection or priority of the Security Interest, verifications of account and
notices to or from customers.
SECTION 9.14. Additional Real Estate Leases. Promptly upon the
Borrower's entry into any lease of Real Estate (other than a lease conveying an
interest in Real Estate, which shall be subject to the provisions of clause (a)
above), the Borrower shall collaterally assign to the Agent, for the benefit of
itself and the Lenders, the Borrower's interest in such lease, in form and
substance satisfactory to the Agent. The Borrower shall also deliver to the
Agent an executed landlord's waiver and consent with respect to such lease in
form and substance satisfactory to the Agent.
SECTION 9.15. Assignment of Claims Act. Upon the request of the
Agent, the Borrower shall execute any documents or instruments and shall take
such steps or actions reasonably required by the Agent so that all monies due or
to become due under any contract with the United States of America, the District
of Columbia or any state, county, municipality or other domestic or foreign
governmental entity, or any department, agency or instrumentality thereof, will
be assigned to the Agent, for the benefit of itself and the Lenders, and notice
given thereof in accordance with the requirements of the Assignment of Claims
Act of 1940, as amended, or any other laws, rules or regulations relating to the
assignment of any such contract and monies due to or to become due.
ARTICLE 10
AFFIRMATIVE COVENANTS
Until all the Secured Obligations have been paid in full, unless
the Required Lenders shall otherwise consent in the manner provided for in
Section 16.11, the Borrower will, and will cause each of its Subsidiaries to:
SECTION 10.1. Preservation of Corporate Existence and Similar
Matters. Preserve and maintain its corporate existence, rights, franchises,
licenses and privileges in the jurisdiction of its incorporation and qualify and
remain qualified as a foreign corporation and authorized to do business in each
jurisdiction in which the character of its properties or the nature of its
business requires such qualification or authorization.
SECTION 10.2. Compliance with Applicable Law. Comply with all
Applicable Law relating to the Borrower or such Subsidiary except to the extent
being contested in good faith by appropriate proceedings and for which reserves
in respect of the Borrower's or such Subsidiary's reasonably anticipated
liability therefor have been appropriately established.
SECTION 10.3. Maintenance of Property. In addition to, and not
in derogation of, the requirements of Section 9.7 and of the Security
Documents,
(a) protect and preserve all properties material to its business,
including copyrights, patents, trade names and trademarks, and maintain in good
repair, working order and condition in all material respects, with reasonable
allowance for wear and tear, all tangible properties, and
(b) from time to time make or cause to be made all needed and
appropriate repairs, renewals, replacements and additions to such properties
necessary for the conduct of its business, so that the business carried on in
connection therewith may be properly and advantageously conducted at all times.
SECTION 10.4. Conduct of Business. At all times carry on its
business in an efficient manner and engage in only the business described in
Section 7.1(g).
SECTION 10.5. Insurance. Maintain, in addition to the coverage
required by Section 9.8 and the Security Documents, insurance with responsible
insurance companies against such risks and in such amounts as is customarily
maintained by similar businesses or as may be required by Applicable Law, and
from time to time deliver to the Agent or any Lender upon its request a detailed
list of the insurance then in effect, stating the names of the insurance
companies, the amounts and rates of the insurance, the dates of the expiration
thereof and the properties and risks covered thereby.
SECTION 10.6. Payment of Taxes and Claims. Pay or
discharge when due
(a) all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits or upon any properties belonging
to it, except that real property ad valorem taxes shall be deemed to have been
so paid or discharged if the same are paid before they become delinquent, and
(b) all lawful claims of materialmen, mechanics, carriers,
warehousemen and landlords for labor, materials, supplies and rentals which, if
unpaid, might become a Lien on any properties of the Borrower;
except that this Section 10.6 shall not require the payment or discharge of any
such tax, assessment, charge, levy or claim which is being contested in good
faith by appropriate proceedings and for which reserves in respect of the
reasonably anticipated liability therefor have been appropriately established.
SECTION 10.7. Accounting Methods and Financial Records. Maintain
a system of accounting, and keep such books, records and accounts (which shall
be true and complete), as may be required or as may be necessary to permit the
preparation of financial statements in accordance with GAAP.
SECTION 10.8. Use of Proceeds.
(a) Use the proceeds of the Term Loans to pay amounts
indicated on Schedule 10.8 to the Persons indicated thereon, and
(b) not use any part of such proceeds to purchase or, to carry or
reduce or retire or refinance any credit incurred to purchase or carry, any
margin stock (within the meaning of Regulation G or U of the Board of Governors
of the Federal Reserve System) or, in any event, for any purpose which would
involve a violation of such Regulation G or U or of Regulation T or X of such
Board of Governors, or for any purpose prohibited by law or by the terms and
conditions of this Agreement.
SECTION 10.9. Hazardous Waste and Substances; Environmental
Requirements.
(a) In addition to, and not in derogation of, the requirements of
Section 10.2 and of the Security Documents, comply with all Environmental Laws
and all Applicable Laws relating to occupational health and safety (except for
instances of noncompliance that are being contested in good faith by appropriate
proceedings if reserves in respect of the Borrower's or such Subsidiary's
reasonably anticipated liability therefor have been appropriately established),
promptly notify the Agent of its receipt of any notice of a violation of any
such Environmental Laws or other such Applicable Laws and indemnify and hold the
Agent and the Lenders harmless from all loss, cost, damage, liability, claim and
expense incurred by or imposed upon the Agent or any Lender on account of the
Borrower's failure to perform its obligations under this Section 10.9.
(b) Whenever the Borrower gives notice to the Agent pursuant to
this Section 10.9 with respect to a matter that reasonably could be expected to
result in liability to the Borrower in excess of $50,000.00 in the aggregate,
the Borrower shall, at the Agent's request and the Borrower's expense (i) cause
an independent environmental engineer acceptable to the Agent to conduct an
assessment, including tests where necessary, of the site where the noncompliance
or alleged noncompliance with Environmental Laws has occurred and prepare and
deliver to the Agent a report setting forth the results of such assessment, a
proposed plan to bring the Borrower into compliance with such Environmental Laws
(if such assessment indicates noncompliance) and an estimate of the costs
thereof, and (ii) provide to the Agent a supplemental report of such engineer
whenever the scope of the noncompliance, or the response thereto or the
estimated costs thereof, shall materially adversely change.
SECTION 10.10. CRES Management Fees. Cause CRES to distribute to
the Borrower, within forty-five (45) days after the end of each calendar month,
management fees equal to 90% of CRES's net income for such month (calculated
before the payment or accrual of taxes and management fees).
ARTICLE 11
INFORMATION
Until all the Secured Obligations have been paid in full, unless
the Required Lenders shall otherwise consent in the manner set forth in Section
16.11, the Borrower will furnish to the Agent and to each Lender at the offices
then designated for such notices pursuant to Section 16.1:
SECTION 11.1. Financial Statements.
(a) Audited Year-End Statements. As soon as available, but in any
event within 90 days after the end of each fiscal year of the Borrower, copies
of the consolidating and Consolidated balance sheets of the Borrower and its
Consolidated Subsidiaries as at the end of such fiscal year and the related
statements of earnings, shareholders' equity and statement of cash flows for
such fiscal year, in each case setting forth in comparative form the figures for
the previous fiscal year of the Borrower, reported on, as to such Consolidated
statements, without qualification as to the scope of the audit or the status of
the Borrower as a "going concern", by independent certified public accountants
of nationally recognized standing; and
(b) Monthly Financial Statements. As soon as available after the
end of each month, but in any event within 45 days after the end of each month,
copies of the unaudited consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as at the end of such month and the related unaudited
consolidated statements of earnings and cash flows for the Borrower and its
Consolidated Subsidiaries for such month and for the portion of the fiscal year
of the Borrower through such month, certified by a Financial Officer of the
Borrower as presenting fairly the financial condition and results of operations
of the Borrower (subject to normal year-end audit adjustments);all such
financial statements to be complete and correct in all material respects and
prepared in accordance with GAAP (except, with respect to interim financial
statements, for the omission of footnotes and for the effect of normal year-end
audit adjustments) applied consistently throughout the periods reflected
therein.
SECTION 11.2. Accountants' Certificate. Together with the
financial statements referred to in Section 11.1(a), the Borrower shall
deliver a certificate of such accountants addressed to the Agent
(a) stating that in making the examination necessary for the
certification of such financial statements, nothing has come to their attention
to lead them to believe that any Default or Event of Default exists and, in
particular, they have no knowledge of any Default or Event of Default or, if
such is not the case, specifying such Default or Event of Default and its
nature, and
(b) having attached the calculations, prepared by the Borrower
and reviewed by such accountants, required to establish whether or not the
Borrower is in compliance with the covenants contained in Sections 12.1, 12.2,
12.5, 12.10 and 12.11, as at the date of such financial statements.
SECTION 11.3. Officer's Certificate. At the time that the
Borrower furnishes the financial statements pursuant to Section 11.1(b) for
any month that is the last month of a fiscal quarter of the Borrower, the
Borrower shall also furnish a certificate of its President or a Financial
Officer
(a) setting forth as at the end of such fiscal quarter or fiscal
year, as the case may be, the calculations required to establish whether or not
the Borrower was in compliance with the requirements of Sections 12.1, 12.2,
12.5, 12.10 and 12.11, as at the end of each respective period,
(b) stating that the information on the schedules to this
Agreement are complete and accurate as of the date of such certificate or, if
such is not the case, attaching to such certificate updated schedules, and
(c) stating that, based on a reasonably diligent examination, no
Default or Event of Default exists, or, if such is not the case, specifying such
Default or Event of Default and its nature, when it occurred, whether it is
continuing and the steps being taken by the Borrower with respect to such
Default or Event of Default.
SECTION 11.4. Copies of Other Reports.
(a) As soon as available, but no later than June 30 of any fiscal
year, projections on a monthly basis of (i) anticipated financial performance of
the Parent Guarantor and the Borrower for such fiscal year and (ii) projected
Availability for such fiscal year.
(b) Promptly upon receipt thereof, copies of all reports, if any,
submitted to the Borrower or its Board of Directors by its independent public
accountants, including, without limitation, any management report.
(c) As soon as practicable, copies of all financial statements
and reports that the Borrower shall send to its shareholders generally and of
all registration statements and all regular or periodic reports which the
Borrower shall file with the Securities and Exchange Commission or any successor
commission.
(d) From time to time and as soon as reasonably practicable
following each request, such forecasts, data, certificates, reports, statements,
opinions of counsel, documents or further information regarding the business,
assets, liabilities, financial condition, results of operations or business
prospects of the Borrower or any of its Subsidiaries as the Agent or any Lender
may reasonably request and that the Borrower has or (except in the case of legal
opinions relating to the perfection or priority of the Security Interest)
without unreasonable expense can obtain; provided, however, that the Lenders
shall, to the extent reasonably practicable, coordinate examinations of the
Borrower's records by their respective internal auditors. The rights of the
Agent and the Lenders under this Section 11.4 are in addition to and not in
derogation of their rights under any other provision of this Agreement or of any
other Loan Document.
(e) If requested by the Agent or any Lender, the Borrower will
furnish to the Agent and the Lenders statements in conformity with the
requirements of Federal Reserve Form G-3 or U-1 referred to in Regulation G and
U, respectively, of the Board of Governors of the Federal Reserve System.
SECTION 11.5. Notice of Litigation and Other Matters.
Prompt notice of:
(a) the commencement, to the extent the Borrower is aware of the
same, of all proceedings and investigations by or before any governmental or
nongovernmental body and all actions and proceedings in any court or before any
arbitrator against or in any other way relating to or affecting the Borrower,
any of its Subsidiaries or any of the Borrower's or any of its Subsidiaries,
properties, assets or businesses, which might, singly or in the aggregate,
result in the occurrence of a Default or an Event of Default, or have a
Materially Adverse Effect on the Borrower or any of its Subsidiaries,
(b) any amendment of the articles of incorporation or
by-laws of the Borrower or any of its Subsidiaries,
(c) any change in the business, assets, liabilities, financial
condition, results of operations or business prospects of the Borrower or any of
its Subsidiaries which has had or may have, singly or in the aggregate, a
Materially Adverse Effect on the Borrower or any of its Subsidiaries and any
change in the executive officers of the Borrower, and
(d) any Default or Event of Default or any event which
constitutes or which with the passage of time or giving of notice or both would
constitute a default or event of default by the Borrower or any of its
Subsidiaries under any material agreement (other than this Agreement) to which
the Borrower or any of its Subsidiaries is a party or by which the Borrower, any
of its Subsidiaries or any of the Borrower's or any of its Subsidiaries'
properties may be bound.
SECTION 11.6. ERISA. As soon as possible and in any event
within 30 days after the Borrower knows, or has reason to know, that:
(a) any Termination Event with respect to a Plan has
occurred or will occur, or
(b) the aggregate present value of the Unfunded Vested
Accrued Benefits under all Plans is equal to an amount in excess of $0, or
(c) the Borrower or any of its Subsidiaries is in "default" (as
defined in Section 4219(c)(5) of ERISA) with respect to payments to a
Multiemployer Plan required by reason of the Borrower's or such Subsidiary's
complete or partial withdrawal (as described in Section 4203 or 4205 of ERISA)
from such Multiemployer Plan, a certificate of the President or a Financial
Officer of the Borrower setting forth the details of such event and the action
which is proposed to be taken with respect thereto, together with any notice or
filing which may be required by the PBGC or other agency of the United States
government with respect to such event.
SECTION 11.7. Accuracy of Information. All written information,
reports, statements and other papers and data furnished to the Agent or any
Lender, whether pursuant to this Article 11 or any other provision of this
Agreement or of any other Loan Document, shall be, at the time the same is so
furnished, complete and correct in all material respects to the extent necessary
to give the Agent and the Lenders true and accurate knowledge of the subject
matter.
SECTION 11.8. Revisions or Updates to Schedules. Should any of
the information or disclosures provided on any of the Schedules originally
attached hereto become outdated or incorrect in any material respect, the
Borrower shall deliver to the Agent and the Lenders as part of the officer's
certificate required pursuant to Section 11.3(b) such revisions or updates to
such Schedule(s) as may be necessary or appropriate to update or correct such
Schedule(s), provided that no such revisions or updates to any Schedule(s) shall
be deemed to have amended, modified or superseded such Schedule(s) as originally
attached hereto, or to have cured any breach of warranty or representation
resulting from the inaccuracy or incompleteness of any such Schedule(s), unless
and until the Required Lenders in their sole and absolute discretion, shall have
accepted in writing such revisions or updates to such Schedule(s).
SECTION 11.9. Subordinated Indebtedness Certificate. Not less
than five Business Days prior to any scheduled payment of any principal of, or
interest or other amounts on, the Subordinated Indebtedness, and as a condition
precedent to making such payment, the Borrower shall furnish a certificate of
its President or a Financial Officer stating:
(a) that no Default or Event of Default is in existence as of the
date of the certificate or will be in existence as of the date of such payment,
both with and without giving effect to the making of such payment, and
(b) the amount of principal and interest to be paid.
ARTICLE 12
NEGATIVE COVENANTS
Until all the Secured Obligations have been paid in full, unless
the Required Lenders shall otherwise consent in the manner set forth in Section
16.11, the Borrower will not directly or indirectly and, in the case of Sections
12.2 through 12.16, will not permit its Subsidiaries to:
SECTION 12.1. Financial Ratios. Permit:
(a) Minimum Tangible Net Worth. Tangible Net Worth as of the last
day of any fiscal year (commencing with the fiscal year ending March 31, 1996)
to be less than an amount equal to the sum of (i) Tangible Net Worth as of the
first day of such fiscal year plus (ii) an amount equal to the greater of (A)
95% of Net Income of the Borrower and its Subsidiaries for such fiscal year or
(B) $2,000,000.00. Notwithstanding the above, for fiscal year 1996, the amount
in (ii)(A) above shall be reduced by the amount of intangible loan costs to
obtain the Revolving Credit Facility and the JTI Letter of Credit Facility.
(b) Ratio of Consolidated Total Liabilities to Tangible Net
Worth. The ratio of (x) total Consolidated Liabilities of the Borrower and its
Consolidated Subsidiaries minus Subordinated Indebtedness to (y) Tangible Net
Worth of the Borrower and its Consolidated Subsidiaries plus Subordinated
Indebtedness at any time to be equal to or greater than (i) 2.0 to 1.0 as of
June 30, 1996 or June 30, 1997, (ii) 4.0 to 1.0 as of September 30, 1996 or
September 30, 1997, (iii) 3.25 to 1.0 as of December 31, 1996 or December 31,
1997, (iv) 2.0 to 1.0 as of March 31, 1997 or March 31, 1998 or (v) 4.0 to 1.0
at any time.
(c) Coverage Ratio. As of the end of any fiscal quarter
(commencing with the fiscal quarter ending June 30, 1996), the ratio of (x)
Consolidated EBITDA of the Borrower and its Consolidated Subsidiaries for the
four fiscal quarterly periods ending on such fiscal quarter end minus Capital
Expenditures of the Borrower and its Consolidated Subsidiaries for such four
fiscal quarterly periods to (y) the sum of the Current Maturities of the
Consolidated Long-Term Liabilities of the Borrower and its Consolidated
Subsidiaries plus Required Interest Expense of the Borrower and its Consolidated
Subsidiaries for the four fiscal quarterly periods ending on such fiscal quarter
end to be less than 1.35 to 1, in each case determined in accordance with GAAP.
(d) Losses. Cumulative year-to-date Net Losses in any
fiscal year to exceed $1,750,000.
SECTION 12.2. Indebtedness for Money Borrowed. Create, assume, or
otherwise become or remain obligated in respect of, or permit or suffer to exist
or to be created, assumed or incurred or to be outstanding any Indebtedness for
Money Borrowed, except that this Section 12.2 shall not apply to:
(a) Indebtedness of the Borrower for Money Borrowed
represented by the Loans and the Notes,
(b) Indebtedness for Money Borrowed reflected on Schedule 7.1(k),
excluding any such Indebtedness that is to be paid in full on the Effective
Date,
(c) Permitted Purchase Money Indebtedness, and
(d) inter-company Indebtedness among the Borrower and its
Subsidiaries.
SECTION 12.3. Guaranties. Become or remain liable with respect to
any Guaranty of any obligation of any other Person (excluding specifically
therefrom (i) endorsements in the ordinary course of business of negotiable
instruments for deposit or collection, or (ii) guarantees by the Borrower of the
European Debt provided the obligations of the Borrower under such guarantees are
subordinated to the Secured Obligations pursuant to subordination agreements in
form and substance satisfactory to the Lenders).
SECTION 12.4. Investments. Acquire, after the Agreement Date, any
Business Unit or Investment or, after such date, maintain any Investment other
than Permitted Investments and any of the inter-company transactions permitted
by Section 12.18.
SECTION 12.5. Capital Expenditures. Make or incur any Capital
Expenditures in the aggregate in excess of $2,500,000.00 during any fiscal
year (computed on a non-cumulative basis).
SECTION 12.6. Restricted Dividend Payments and Purchases, Etc.
Declare or make any Restricted Dividend Payment, Restricted Payment or
Restricted Purchase.
SECTION 12.7. Consolidation, Merger, Sale or Purchase of Assets,
etc.. Dissolve, liquidate, or wind up its or any Subsidiary's affairs, or enter
into any transaction of merger or consolidation, or enter into any receivables
sale program, or sell, transfer, lease or otherwise dispose of all or any part
of its or any Subsidiary's property or assets (other than in the ordinary course
of business for fair consideration).
SECTION 12.8. Transactions with Affiliates. Effect any
transaction with any Affiliate on a basis less favorable to the Borrower or any
of its Subsidiaries than would be the case if such transaction had been effected
with a Person not an Affiliate.
SECTION 12.9. Liens. Create, assume or permit or suffer to
exist or to be created or assumed any Lien on any of the Collateral or its
other assets, other than Permitted Liens.
SECTION 12.10.Capitalized Lease Obligations. Incur or permit to
exist any Capitalized Lease Obligations if such Capitalized Lease Obligation
when added to existing Capitalized Lease Obligations and Permitted Purchase
Money Indebtedness of the Borrower would exceed $250,000 in the aggregate.
SECTION 12.11.Operating Leases. Enter into any operating Lease if
the aggregate annual rental payable under all Operating Leases of the Borrower
and its Subsidiaries would exceed $1,000,000 in the aggregate at any time after
the Effective Date.
SECTION 12.12.Real Estate Leases. Enter into any real property
lease, including a lease relating to the Real Estate occupied by the Borrower or
any of its Subsidiaries on the Effective Date, without the prior written consent
of the Agent.
SECTION 12.13.Plans. Permit any condition to exist in connection
with any Plan which might constitute grounds for the PBGC to institute
proceedings to have such Plan terminated or a trustee appointed to administer
such Plan, and any other condition, event or transaction with respect to any
Plan which could result in the incurrence by the Borrower of any material
liability, fine or penalty.
SECTION 12.14.Sales and Leasebacks. Enter into any arrangement
with any Person providing for the Borrower's or any Subsidiary's leasing from
such Person any real or personal property which has been or is to be sold or
transferred, directly or indirectly, by the Borrower or such Subsidiary to such
Person.
SECTION 12.15.Subordinated Indebtedness. (i) Amend or modify (or
permit the amendment or modification of) any of the terms of any Subordinated
Indebtedness to the extent any such amendment or modification would be adverse
to the issuer thereof or to the interests of the Lenders, (ii) make (or give any
notice with respect thereto) any voluntary or optional payment or prepayment or
redemption or acquisition for value of (including without limitation, by way of
depositing money or securities with the trustee with respect thereto before due
for the purpose of paying when due) or exchange of any Subordinated Indebtedness
or (iii) make any payment, prepayment, redemption, acquisition for value of
(including without limitation, by way of depositing money or securities with the
trustee with respect thereto before due for the purpose of paying when due),
refund, refinance or exchange of any Subordinated Indebtedness other than in
accordance with the terms of the Subordination Agreement.
SECTION 12.16.Management Fees. Pay management fees to the Parent
Guarantor in violation of any of the following terms:
(i) until such time as the Borrower has delivered to the Agent
its draft unqualified audited financial statements for a fiscal year as prepared
by independent certified public accountants selected by the Borrower and
satisfactory to the Lenders and certified by the Borrower (the "Draft Audited
Financial Statements"):
(A) aggregate management fees paid by the Borrower for the first
eleven fiscal months of such fiscal year shall not exceed 55% of the Borrower's
Net Income before taxes and before deductions for management fees for such
eleven months as reflected on the Borrower's internally prepared financial
statements for such months; plus
(B) management fees paid by the Borrower for the last fiscal
month of such fiscal year shall not exceed 55% of the Borrower's projected Net
Income before taxes and before deductions for management fees for such last
fiscal month as reflected on the Borrower's projections for such month, with
such projected Net Income for such last fiscal month to be based upon:
(1) actual sales for such last fiscal month
booked through the 25th of such last fiscal month;
(2) sales/shipments reasonably projected to be
made through the last day of such last fiscal month;
(3) all gross margin projections are to be
based on current customer margins experienced by the Borrower;
(4) any other expenses, including operating
expenses, are to be based on current margins experienced by the
Borrower;
(ii) on and after the date the Borrower has delivered to the
Agent the Draft Audited Financial Statements for any fiscal year, aggregate
management fees paid by the Borrower to the Parent Guarantor for such fiscal
year shall not exceed 70% of the Borrower's Net Income before taxes and before
deductions for management fees as reflected on such Draft Unqualified Audited
Financial Statements for such fiscal year;
(iii) the Borrower shall not make any of the foregoing management
fee payments unless prior to the making of any such payment, the Borrower
delivers to the Agent a certificate (in form satisfactory to the Agent) from its
President or Financial Officer certifying that the Borrower is in compliance
with all of the terms and provisions of this Agreement (including, without
limitation, the foregoing provisions) as of the date of the making of such
payment; and
(iv) Notwithstanding anything to the contrary contained in the
foregoing subsections (i) and (ii), aggregate management fees paid by the
Borrower to the Parent Guarantor for any fiscal year shall not exceed 70% of the
Borrower's Net Income before taxes and before deductions for management fees for
such fiscal year as reflected on the Borrower's unqualified audited financial
statements for such fiscal year (A) prepared by independent certified public
accountants selected by the Borrower and satisfactory to the Lenders and (B)
certified by the Borrower.
SECTION 12.17.Uncommitted Leaf Inventory. Permit Uncommitted Leaf
Inventory to exceed $10,000,000 at any time.
SECTION 12.18.Intercompany Transactions. (i) Permit Subordinated
Indebtedness to the Parent Guarantor to be less than $15,000,000 at any time
outstanding, (ii) make any payments after the occurrence of a Default or Event
of Default to any Affiliate on account of any trade payables to such Affiliate
and (iii) permit receivables from Affiliates (excluding the Special Receivable)
less payables to Affiliates to be greater than $11,000,000 at any time;
provided, however, so long as no Default or Event of Default then exists, the
Agents may in their sole discretion approve an increase in such $11,000,000
amount to an amount up to $18,000,000 on account of prepayments of tobacco
purchased from its Affiliates and on account of other short term arms-length
transactions with its Affiliates.
SECTION 12.19. Loans and Advances to CRES. Permit the outstanding
principal balance of all loans and advances to CRES to exceed $1,250,000.00 at
any time.
ARTICLE 13
DEFAULT
SECTION 13.1. Events of Default. Each of the following shall
constitute an Event of Default, whatever the reason for such event and whether
it shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment or order of any court or any order, rule or regulation
of any governmental or nongovernmental body:
(a) Default in Payment. The Borrower shall default in any payment
of principal of or interest on any Loan or any Note when and as due (whether at
maturity, by reason of acceleration or otherwise).
(b) Other Payment Default. The Borrower shall default in
the payment, as and when due, of principal of or interest on, any other
Secured Obligation.
(c) Misrepresentation. Any representation or warranty made or
deemed to be made by the Borrower under this Agreement or any Loan Document, or
any amendment hereto or thereto, shall at any time prove to have been incorrect
or misleading in any material respect when made.
(d) Default in Performance. The Borrower shall default in the
performance or observance of any term, covenant, condition or agreement to be
performed by the Borrower, contained in this Agreement (other than as
specifically provided for otherwise in this Section 13.1).
(e) Indebtedness Cross-Default.
(i) The Borrower or any Subsidiary of the
Borrower shall fail to pay when due and payable the principal of or interest on
any Indebtedness for Money Borrowed (other than the Loans and the Revolving
Credit Loans) in an amount in excess of $250,000.00, or
(ii) the maturity of any such Indebtedness
shall have (A) been accelerated in accordance with the provisions of any
indenture, contract or instrument providing for the creation of or concerning
such Indebtedness, or (B) been required to be prepaid prior to the stated
maturity thereof, or
(iii) any event shall have occurred and be continuing which
would permit any holder or holders of such Indebtedness, any trustee or agent
acting on behalf of such holder or holders or any other Person so to accelerate
such maturity, and the Borrower shall have failed to cure such default prior to
the expiration of any applicable cure or grace period.
(f) Other Cross-Defaults. The Borrower or any of its Subsidiaries
shall default in the payment when due, or in the performance or observance, of
any obligation or condition of any agreement, contract or lease (other than this
Agreement, the Security Documents or any such agreement, contract or lease
relating to Indebtedness for Money Borrowed) if the existence of any such
defaults, singly or in the aggregate, could in the sole judgment of the Agent
(to be exercised in good faith) have a Materially Adverse Effect on the Borrower
or any of its Subsidiaries; provided, however, that for the purposes of this
provision where such a default could result only in a monetary loss, a Material
Adverse Effect shall not be deemed to have occurred unless the aggregate of such
losses would exceed $250,000.00.
(g) Voluntary Bankruptcy Proceeding. The Borrower, the
Parent Guarantor or any of their respective Subsidiaries shall
(i) commence a voluntary case under the
federal bankruptcy laws (as now or hereafter in effect),
(ii) file a petition seeking to take advantage
of any other laws, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, winding up or composition for adjustment of debts,
(iii) consent to or fail to contest in a timely
and appropriate manner any petition filed against it in an involuntary case
under such bankruptcy laws or other laws,
(iv) apply for or consent to, or fail to
contest in a timely and appropriate manner, the appointment of, or the taking of
possession by, a receiver, custodian, trustee, or liquidator of itself or of a
substantial part of its property, domestic or foreign,
(v) admit in writing its inability to pay its
debts as they become due,
(vi) make a general assignment for the benefit
of creditors, or
(vii) take any corporate action for the purpose
of authorizing any of the foregoing.
(h) Involuntary Bankruptcy Proceeding. A case or other
proceeding shall be commenced against the Borrower, the Parent Guarantor or
any of their respective Subsidiaries in any court of competent jurisdiction
seeking
(i) relief under the federal bankruptcy laws
(as now or hereafter in effect) or under any other laws, domestic or foreign,
relating to bankruptcy, insolvency, reorganization, winding up or adjustment of
debts,
(ii) the appointment of a trustee, receiver,
custodian, liquidator or the like of the Borrower, the Parent Guarantor or any
of their respective Subsidiaries or of all or any substantial part of the
assets, domestic or foreign, of the Borrower, the Parent Guarantor or any of
their respective Subsidiaries, and such case or proceeding shall continue
undismissed or unstayed for a period of 60 consecutive calendar days, or an
order granting the relief requested in such case or proceeding against the
Borrower, the Parent Guarantor or any of their respective Subsidiaries
(including, but not limited to, an order for relief under such federal
bankruptcy laws) shall be entered.
(i) Failure of Agreements. The Borrower or any Guarantor shall
challenge the validity and binding effect of any provision of any Loan Document
after delivery thereof hereunder or shall state its intention to make such a
challenge in writing, or any Loan Document, after delivery thereof hereunder,
shall for any reason (except to the extent permitted by the terms thereof) cease
to create a valid and perfected first priority Lien (except for Permitted Liens)
on, or security interest in, any of the Collateral purported to be covered
thereby.
(j) Judgment. A final, unappealable judgment or order for the
payment of money in an amount that exceeds the uncontested insurance available
therefor by $250,000.00 or more shall be entered against the Borrower or any
Guarantor by any court and such judgment or order shall continue undischarged or
unstayed for 10 days.
(k) Attachment. A warrant or writ of attachment or execution or
similar process which exceeds $250,000.00 in value shall be issued against any
property of the Borrower or any Guarantor and such warrant or process shall
continue undischarged or unstayed for 10 days.
(l) Loan Documents. Any event of default under any Loan Document
shall occur or the Borrower or any Guarantor shall default in the performance or
observance of any term, covenant, condition or agreement contained in, or the
payment of any other sum covenanted to be paid by the Borrower or any Guarantor
under, any Loan Document; provided, however that no event of default under any
Loan Document shall be deemed to have occurred until any notice required under
such Loan Document has been given and any grace period granted under such Loan
Document has expired.
(m) ERISA.
(i) Any Termination Event with respect to a
Plan shall occur that, after taking into account the excess, if any, of (A) the
fair market value of the assets of any other Plan with respect to which a
Termination Event occurs on the same day (but only to the extent that such
excess if the property of the Borrower) over (B) the present value on such day
of all vested nonforfeitable benefits under such other Plan, results in an
Unfunded Vested Accrued Benefit in excess of $0, or
(ii) any Plan shall incur an "accumulated
funding deficiency" (as defined in Section 412 of the Internal Revenue Code or
Section 302 of ERISA) for which a waiver has not been obtained in accordance
with the applicable provisions of the Internal Revenue Code and ERISA, or
(iii) the Borrower is in "default" (as defined
in Section 4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan
resulting from the Borrower's complete or partial withdrawal (as described in
Section 4203 or 4205 of ERISA) from such Multiemployer Plan.
(n) Change in Ownership/Control/Key Management. (i) There shall
occur a change of ownership of the Borrower or any Subsidiary Guarantor or (ii)
any Person other than Ery W. Kehaya (or his estate or heirs) shall possess,
directly or indirectly, the power to (A) vote 25% or more of the securities
having ordinary voting power for the election of directors of the Parent
Guarantor or (B) direct or cause direction of the management and policies of the
Parent Guarantor, whether through the ownership of voting securities, by
contract or otherwise.
(o) General Insecurity. The occurrence of any event or condition
which, in the discretion of the Required Lenders, constitutes a material adverse
change in the business, condition (financial or otherwise) or results of
operation of the Borrower which materially and adversely affects the ability of
the Borrower to perform its obligations to the Lender under this Agreement or
the Loan Documents.
(p) Non-U.S. Credit Facilities. The failure of the Parent
Guarantor and its Subsidiaries to have credit facilities in place to
adequately finance the non-U.S. tobacco business of the Parent Guarantor and
its Subsidiaries or the wool business of the Parent Guarantor and its
Subsidiaries, in either case as determined by the Agents in their sole
discretion exercised in good faith.
(q) Termination of Revolving Credit Facility. The
termination of the Revolving Credit Facility.
(r) Cross-Default to Revolving Credit Agreement. The
occurrence of a Default or an Event of Default under the Revolving Credit
Agreement.
SECTION 13.2. Remedies.
(a) Automatic Acceleration of Facilities. Upon the occurrence of
an Event of Default specified in Section 13.1(g) or (h), the principal of and
the interest on the Loans and any Note at the time outstanding, and all other
amounts owed to the Agent or the Lenders under this Agreement or any of the Loan
Documents and all other Secured Obligations, shall thereupon become due and
payable without presentment, demand, protest, or other notice of any kind, all
of which are expressly waived, anything in this Agreement or any of the Loan
Documents to the contrary notwithstanding.
(b) Other Remedies. If any Event of Default shall have occurred,
and during the continuance of any such Event of Default, the Agent may, and at
the direction of the Required Lenders in their sole and absolute discretion
shall, do any of the following:
(i) declare the principal of and interest on
the Loans and any Note at the time outstanding, and all other amounts owed to
the Agent or the Lenders under this Agreement or any of the Loan Documents and
all other Secured Obligations, to be forthwith due and payable, whereupon the
same shall immediately become due and payable without presentment, demand,
protest or other notice of any kind, all of which are expressly waived, anything
in this Agreement or the Loan Documents to the contrary notwithstanding;
(ii) notify, or request the Borrower to notify,
in writing or otherwise, any Account Debtor or obligor with respect to any one
or more of the Receivables to make payment to the Agent, for the benefit of the
Lenders, or any agent or designee of the Agent, at such address as may be
specified by the Agent and if, notwithstanding the giving of any notice, any
Account Debtor or other such obligor shall make payments to the Borrower, the
Borrower shall hold all such payments it receives in trust for the Agent, for
the account of the Lenders, without commingling the same with other funds or
property of, or held by, the Borrower, and shall deliver the same to the Agent
or any such agent or designee of the Agent immediately upon receipt by the
Borrower in the identical form received, together with any necessary
endorsements;
(iii) settle or adjust disputes and claims directly with
Account Debtors and other obligors on Receivables for amounts and on terms which
the Agent considers advisable and in all such cases only the net amounts
received by the Agent, for the account of the Lenders, in payment of such
amounts, after deductions of costs and attorneys, fees, shall constitute
Collateral and the Borrower shall have no further right to make any such
settlements or adjustments or to accept any returns of merchandise;
(iv) enter upon any premises in which Inventory
may be located and, without resistance or interference by the Borrower, take
physical possession of any or all thereof and maintain such possession on such
premises or move the same or any part thereof to such other place or places as
the Agent shall choose, without being liable to the Borrower on account of any
loss, damage or depreciation that may occur as a result thereof, so long as the
Agent shall act reasonably and in good faith;
(v) require the Borrower to and the Borrower
shall, without charge to the Agent or any Lender, assemble the Inventory and
maintain or deliver it into the possession of the Agent or any agent or
representative of the Agent at such place or places as the Agent may designate
and as are reasonably convenient to both the Agent and the Borrower;
(vi) at the expense of the Borrower, cause any
of the Inventory to be placed in a public or field warehouse, and the Agent
shall not be liable to the Borrower on account of any loss, damage or
depreciation that may occur as a result thereof, so long as the Agent shall act
reasonably and in good faith;
(vii) without notice, demand or other process,
and without payment of any rent or any other charge, enter any of the Borrower's
premises and, without breach of the peace, until the Agent, on behalf of the
Lenders, completes the enforcement of its rights in the Collateral, take
possession of such premises or place custodians in exclusive control thereof,
remain on such premises and use the same and any of the Borrower's Equipment,
for the purpose of (A) completing any work in process, preparing any Inventory
for disposition and disposing thereof, and (B) collecting any Receivable, and
the Agent for the benefit of the Lenders is hereby granted a license or
sublicense and all other rights as may be necessary, appropriate or desirable to
use the Proprietary Rights in connection with the foregoing, and the rights of
the Borrower under all licenses, sublicenses and franchise agreements shall
inure to the Agent for the benefit of the Lenders (provided, however, that any
use of any federally registered trademarks as to any goods shall be subject to
the control as to the quality of such goods of the owner of such trademarks and
the goodwill of the business symbolized thereby);
(viii) exercise any and all of its rights under
any and all of the Security Documents;
(ix) apply any Collateral consisting of cash to
the payment of the Secured Obligations in any order in which the Agent, on
behalf of the Lenders, may elect or use such cash in connection with the
exercise of any of its other rights hereunder or under any of the Security
Documents;
(x) establish or cause to be established one
or more Lockboxes or other arrangement for the deposit of proceeds of
Receivables, and, in such case, the Borrower shall cause to be forwarded to the
Agent at the Agent's Office, on a daily basis, copies of all checks and other
items of payment and deposit slips related thereto deposited in such Lockboxes,
together with collection reports in form and substance satisfactory to the
Agent; and
(xi) exercise all of the rights and remedies of
a secured party under the Uniform Commercial Code and under any other Applicable
Law, including, without limitation, the right, without notice except as
specified below and with or without taking the possession thereof, to sell the
Collateral or any part thereof in one or more parcels at public or private sale,
at any location chosen by the Agent, for cash, on credit or for future delivery,
and at such price or prices and upon such other terms as the Agent may deem
commercially reasonable. The Borrower agrees that, to the extent notice of sale
shall be required by law, at least ten days' notice to the Borrower of the time
and place of any public sale or the time after which any private sale is to be
made shall constitute reasonable notification, but notice given in any other
reasonable manner or at any other reasonable time shall constitute reasonable
notification. The Agent shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. The Agent may adjourn any public
or private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time and
place to which it was so adjourned.
SECTION 13.3. Application of Proceeds. Subject to the terms of
the Intercreditor Agreements, all proceeds from each sale of, or other
realization upon, all or any part of the Collateral following an Event of
Default shall be applied or paid over as follows:
(a) First: to the payment of all costs and expenses
incurred in connection with such sale or other realization, including
reasonable attorneys' fees,
(b) Second: to the payment of the Secured Obligations (with
the Borrower remaining liable for any deficiency) as the Agent may elect,
(c) Third: the balance (if any) of such proceeds shall be
paid to the Borrower, subject to any duty imposed by law, or otherwise to
whomsoever shall be entitled thereto.
The Borrower shall remain liable and will pay, on demand, any deficiency
remaining in respect of the Secured Obligations, together with interest thereon
at a rate per annum equal to the highest rate then payable hereunder on such
Secured Obligations, which interest shall constitute part of the Secured
Obligations.
SECTION 13.4. Power of Attorney. In addition to the
authorizations granted to the Agent under Section 9.13 or under any other
provision of this Agreement or of any other Loan Document, during the
continuance of an Event of Default, the Borrower hereby irrevocably designates,
makes, constitutes and appoints the Agent (and all Persons designated by the
Agent from time to time) as the Borrower's true and lawful attorney, and agent
in fact, and the Agent, or any agent of the Agent, may, without notice to the
Borrower, and at such time or times as the Agent or any such agent in its sole
discretion may determine, in the name of the Borrower, the Agent or the Lenders,
(i) demand payment of the Receivables,
(ii) enforce payment of the Receivables by
legal proceedings or otherwise,
(iii) exercise all of the Borrower's rights and
remedies with respect to the collection of Receivables,
(iv) settle, adjust, compromise, extend or
renew any or all of the Receivables,
(v) settle, adjust or compromise any legal
proceedings brought to collect the Receivables,
(vi) discharge and release the Receivables or
any of them,
(vii) prepare, file and sign the name of the
Borrower on any proof of claim in bankruptcy or any similar document
against any Account Debtor,
(viii) prepare, file and sign the name of the
Borrower on any notice of Lien, assignment or satisfaction of Lien, or similar
document in connection with any of the Collateral,
(ix) endorse the name of the Borrower upon any
chattel paper, document, instrument, notice, freight bill, bill of lading or
similar document or agreement relating to the Receivables, the Inventory or any
other Collateral,
(x) use the stationery of the Borrower and
sign the name of the Borrower to verifications of the Receivables and on any
notice to the Account Debtors,
(xi) open the Borrower's mail,
(xii) notify the post office authorities to
change the address for delivery of the Borrower's mail to an address
designated by the Agent, and
(xiii) use the information recorded on or contained in any
data processing equipment and computer hardware and software relating to the
Receivables, Inventory or other Collateral to which the Borrower has access.
SECTION 13.5. Miscellaneous Provisions Concerning Remedies.
(a) Rights Cumulative. The rights and remedies of the Agent and
the Lenders under this Agreement, the Notes and each of the Loan Documents shall
be cumulative and not exclusive of any rights or remedies which it or they would
otherwise have. In exercising such rights and remedies the Agent and the Lenders
may be selective and no failure or delay by the Agent or any Lender in
exercising any right shall operate as a waiver of it, nor shall any single or
partial exercise of any power or right preclude its other or further exercise or
the exercise of any other power or right.
(b) Waiver of Marshalling. The Borrower hereby waives any
right to require any marshalling of assets and any similar right.
(c) Limitation of Liability. Nothing contained in this Article 13
or elsewhere in this Agreement or in any of the Loan Documents shall be
construed as requiring or obligating the Agent, any Lender or any agent or
designee of the Agent or any Lender to make any demand, or to make any inquiry
as to the nature or sufficiency of any payment received by it, or to present or
file any claim or notice or take any action, with respect to any Receivable or
any other Collateral or the monies due or to become due thereunder or in
connection therewith, or to take any steps necessary to preserve any rights
against prior parties, and the Agent, the Lenders and their agents or designees
shall have no liability to the Borrower for actions taken pursuant to this
Article 13, any other provision of this Agreement or any of the Loan Documents
so long as the Agent or such Lender shall act reasonably and in good faith.
(d) Appointment of Receiver. In any action under this Article 13,
the Agent shall be entitled during the continuance of an Event of Default to the
appointment of a receiver, without notice of any kind whatsoever, to take
possession of all or any portion of the Collateral and to exercise such power as
the court shall confer upon such receiver.
ARTICLE 14
ASSIGNMENTS
SECTION 14.1. Successors and Assigns; Participations.
(a) This Agreement shall be binding upon and inure to the benefit
of the Borrower, the Lenders, the Agent, all future holders of the Notes, and
their respective successors and assigns, except that the Borrower may not assign
or transfer any of its rights or obligations under this Agreement without the
prior written consent of each Lender.
(b) Each Lender may assign to one or more Eligible Assignees all
or a portion of its interests, rights and obligations under this Agreement
(including, without limitation, all or a portion of the Loans at the time owing
to it and the Notes held by it); provided, however, that (i) the Agents consent
to each such assignment (such consent not to be unreasonably withheld), (ii)
each such assignment shall be of a constant, and not a varying, percentage of
all the assigning Lender's rights and obligations under this Agreement, (iii)
the parties to each such assignment shall execute and deliver to the Agent, for
its acceptance and recording in the Register (as hereinafter defined) an
Assignment and Acceptance, together with any Note or Notes subject to such
assignment and such assignee's pro rata share of the Agent's syndication
expenses (pro rata in proportion to the share purchased by such assignee
relative to all assigned shares), (iv) such assignment shall not, without the
consent of the Borrower, require the Borrower to file a registration statement
with the Securities and Exchange Commission or apply to or qualify the Loans or
the Notes under the blue sky laws of any state, and (v) the representation
contained in Section 14.2 hereof shall be true with respect to any such proposed
assignee. Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in each Assignment and Acceptance, (x) the
assignee thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender
hereunder, and (y) the Lender assignor thereunder shall, to the extent provided
in such assignment, be released from its obligations under this Agreement.
(c) By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than the
representation and warranty that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse claim, such Lender
assignor makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with this Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any other
instrument or document furnished pursuant hereto; (ii) such Lender assignor
makes no representation or warranty and assumes no responsibility with respect
to the financial condition of the Borrower or the performance or observance by
the Borrower of any of its obligations under this Agreement or any other
instrument or document furnished pursuant hereto; (iii) such assignee confirms
that it has received a copy of this Agreement, together with copies of the
financial statements referred to in Section 7.1(o) and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon the Agent, such Lender assignor or any
other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (v) such assignee confirms that it is an
Eligible Assignee; (vi) such assignee appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers under this
Agreement and the other Loan Documents as are delegated to the Agent by the
terms hereof and thereof, together with such powers as are reasonably incidental
thereto; and (vii) such assignee agrees that it will perform in accordance with
their terms all of the obligations which by the terms of this Agreement are
required to be performed by it as a Lender.
(d) The Agent shall maintain a copy of each Assignment and
Acceptance delivered to it and a register for the recordation of the names and
addresses of the Lenders and the Commitment Percentage of, and principal amount
of the Loans owing to, each Lender from time to time (the "Register"). The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Borrower, the Agent and the Lenders may treat each person whose name is
recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrower or any
Lender at any reasonable time and from time to time upon reasonable prior
notice.
(e) Upon its receipt of an Assignment and Acceptance executed by
an assigning Lender and an Eligible Assignee together with any Note or Notes
subject to such assignment and the written consent to such assignment, the Agent
shall, if such Assignment and Acceptance has been completed and is in the form
of Exhibit A, (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register, (iii) give prompt notice thereof
to the Lenders and the Borrower, and (iv) promptly deliver a copy of such
Acceptance and Assignment to the Borrower. Within five Business Days after
receipt of notice, the Borrower shall execute and deliver to the Agent in
exchange for the surrendered Note or Notes a new Note or Notes to the order of
such Eligible Assignee in amounts equal to the Commitment Percentage assumed by
such Eligible Assignee pursuant to such Assignment and Acceptance and a new Note
or Notes to the order of the assigning Lender in an amount equal to the
Commitment retained by it hereunder. Such new Note or Notes shall be in an
aggregate principal amount equal to the aggregate principal amount of such
surrendered Note or Notes, shall be dated the effective date of such Assignment
and Acceptance and shall otherwise be in substantially the form of the assigned
Notes delivered to the assignor Lender. Each surrendered Note or Notes shall be
cancelled and returned to the Borrower.
(f) The Lenders may not sell participations to one or more banks
or other entities in all or a portion of its rights and obligations under this
Agreement.
(g) Any Lender may, in connection with any assignment or proposed
assignment pursuant to this Section 14.1, disclose to the assignee or proposed
assignee any information relating to the Borrower furnished to such Lender by or
on behalf of the Borrower; provided that, prior to any such disclosure, each
such assignee or proposed assignee shall agree with the Borrower or such Lender
(which in the case of an agreement with only such Lender, the Borrower shall be
recognized as a third party beneficiary thereof) to preserve the confidentiality
of any confidential information relating to the Borrower received from such
Lender.
SECTION 14.2. Representation of Lenders. Each Lender hereby
represents that it will make each Loan hereunder as a commercial loan for its
own account in the ordinary course of its business; provided, however, that
subject to Section 13.1 hereof, the disposition of the Notes or other evidence
of the Secured Obligations held by any Lender shall at all times be within its
exclusive control.
ARTICLE 15
AGENT
SECTION 15.1. Appointment of Agent. Each of the Lenders hereby
irrevocably designates and appoints NationsBank, N.A. (South) as the Agent of
such Lender under this Agreement and the other Loan Documents, and each such
Lender irrevocably authorizes Agent, as the Agent for such Lender to take such
action on its behalf under the provisions of this Agreement and the other Loan
Documents and to exercise such powers and perform such duties as are expressly
delegated to the Agent by the terms of this Agreement and such other Loan
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement or
such other Loan Documents, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein and therein, or any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or the other Loan Documents or otherwise exist against the Agent.
SECTION 15.2. Delegation of Duties. The Agent may execute any of
its duties under this Agreement and the other Loan Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care.
SECTION 15.3. Exculpatory Provisions. Neither the Agent nor any
of its trustees, officers, directors, employees, agents, attorneys-in-fact or
Affiliates shall be (i) liable to any Lender (or any Lender's participants) for
any action lawfully taken or omitted to be taken by it or such Person under or
in connection with this Agreement or the other Loan Documents (except for its or
such Person's own gross negligence or willful misconduct), or (ii) responsible
in any manner to any Lender (or any Lender's participants) for any recitals,
statements, representations or warranties made by the Borrower or any officer
thereof contained in this Agreement or the other Loan Documents or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in connection with, this Agreement or the
other Loan Documents or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or the other Loan Documents or
for any failure of the Borrower to perform its obligations hereunder or
thereunder. The Agent shall not be under an obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement, or to inspect the
properties, books or records of the Borrower.
SECTION 15.4. Reliance by Agent. The Agent shall be entitled to
rely, and shall be fully protected in relying, upon any Note, writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document or conversation believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including, without limitation, counsel to the
Borrower), independent accountants and other experts selected by the Agent. The
Agent may deem and treat the payee of any Note as the owner thereof for all
purposes unless such Note shall have been transferred in accordance with Section
14.1. The Agent shall be fully justified in failing or refusing to take any
action under this Agreement and the other Loan Documents unless it shall first
receive such advice or concurrence of the Required Lenders as it deems
appropriate or it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement
and the Notes in accordance with a request of the Required Lenders, and such
request and any action taken or failure to act pursuant thereto shall be binding
upon all the Lenders and all future holders of the Notes.
SECTION 15.5. Notice of Default. The Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent has received notice from a Lender or the Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event that the Agent
receives such a notice, the Agent shall promptly give notice thereof to the
Lenders. The Agent shall take such action with respect to such Default or Event
of Default as shall be reasonably directed by the Required Lenders; provided
that unless and until the Agent shall have received such directions, the Agent
may (but shall not be obligated to) take such action, or refrain from taking
such action, with respect to such Default or Event of Default as it shall deem
advisable in the best interests of the Lenders.
SECTION 15.6. Non-Reliance on Agent and Other Lenders. Each
Lender expressly acknowledges that neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates has made any
representations or warranties to it and that no act by the Agent hereinafter
taken, including any review of the affairs of the Borrower, shall be deemed to
constitute any representation or warranty by the Agent to any Lender. Each
Lender represents to the Agent that it has, independently and without reliance
upon the Agent or any other Lender, and based on such documents and information
as it has deemed appropriate, made its own appraisal of and investigation into
the business, operations, property, financial and other condition and
creditworthiness of the Borrower and made its own decision to make its Loans
hereunder and enter into this Agreement. Each Lender also represents that it
will, independently and without reliance upon the Agent or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
creditworthiness of the Borrower. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the Agent
hereunder or by the other Loan Documents, the Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, financial and other condition or
creditworthiness of the Borrower which may come into the possession of the Agent
or any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates.
SECTION 15.7. Indemnification. The Lenders agree to indemnify the
Agent in its capacity as such (to the extent not reimbursed by the Borrower and
without limiting the obligation of the Borrower to do so), ratably according to
their respective Commitment Percentages, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the Notes)
be imposed on, reasonably incurred by or asserted against the Agent in any way
relating to or arising out of this Agreement or the other Loan Documents, or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Agent under
or in connection with any of the foregoing; provided that no Lender shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
(i) resulting solely from the Agent's gross negligence or willful misconduct or
resulting solely from transactions or occurrences that occur at a time after
such Lender has assigned all of its interests, rights and obligations under this
Agreement pursuant to Section 14.1 or, in the case of a Lender to which an
assignment is made hereunder pursuant to Section 14.1, at a time before such
assignment; or (ii) constituting ordinary overhead costs and expenses incurred
by the Agent in the administration of the Loans under the Loan Documents, all of
which shall be borne by the Agent; but this shall not include any costs,
expenses, fees or disbursements (A) which are incurred by outside agencies or
attorneys retained by the Agent to effect collection of the Secured Obligations
or any Collateral, (B) which are incurred by the Agent on account of the Agent's
employees reasonably assigned to conduct field examinations or to effect
collection of the Secured Obligations or any Collateral or (C) which the Agent
may reasonably incur in enforcing any right or remedy under the Loan Documents,
in collecting any of the Secured Obligations, or in maintaining, preserving,
protecting or realizing upon any Collateral, all of which shall be shared by the
Agent and each Lender pro rata in accordance with their respective Commitments
at the date such costs, expenses, fees or disbursements are incurred. The
agreements in this subsection shall survive the payment of the Notes, the
Secured Obligations and all other amounts payable hereunder and the termination
of this Agreement.
SECTION 15.8. Agent in Its Individual Capacity. The Agent and its
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Borrower and any Guarantor and their respective
Subsidiaries as if the Agent were not the Agent hereunder. With respect to its
Commitment, the Loans made or renewed by it and any Note issued to it and any
Letter of Credit issued by it, the Agent shall have and may exercise the same
rights and powers under this Agreement and the other Loan Documents and is
subject to the same obligations and liabilities as and to the extent set forth
herein and in the other Loan Documents for any other Lender. The terms "Lenders"
or "Required Lenders" or any other term shall, unless the context clearly
otherwise indicates, include the Agent in its individual capacity as a Lender or
one of the Required Lenders.
SECTION 15.9. Successor Agent. The Agent may resign as Agent upon
thirty days' notice to the Lenders. If the Agent shall resign as Agent under
this Agreement, then the Required Lenders shall appoint from among the Lenders a
successor agent for the Lenders which successor agent shall be approved by the
Borrower (which approval shall not be unreasonably withheld), whereupon such
successor agent shall succeed to the rights, powers and duties of the Agent, and
the term "Agent" shall mean such successor agent effective upon its appointment,
and the former Agent's rights, powers and duties as Agent shall be terminated,
without any other or further act or deed on the part of such former Agent or any
of the parties to this Agreement or any holders of the Notes. The effective date
of the Agent's resignation shall in all cases be postponed until a successor
agent has been appointed. After any retiring Agent's resignation hereunder as
Agent, the provisions of Section 15.7 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement.
SECTION 15.10.Notices from Agent to Lenders. The Agent shall
promptly, upon receipt thereof, forward to each Lender copies of any written
notices, reports or other information supplied to it by the Borrower (but which
the Borrower is not required to supply directly to the Lenders).
ARTICLE 15-A
Co-Agent
SECTION 15-A.1. Appointment of Co-Agent. Each of the Lenders
hereby irrevocably designates and appoints First Union Commercial Corporation as
the Co-Agent of such Lender under this Agreement and the other Loan Documents,
and each such Lender irrevocably authorizes Co-Agent, as the Co-Agent for such
Lender to take such action on its behalf under the provisions of this Agreement
and the other Loan Documents and to exercise such powers and perform such duties
as are expressly delegated to the Co-Agent by the terms of this Agreement and
such other Loan Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary elsewhere in
this Agreement or such other Loan Documents, the Co-Agent shall not have any
duties or responsibilities, except those expressly set forth herein and therein,
or any fiduciary relationship with any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or the other Loan Documents or otherwise exist against the
Co-Agent.
SECTION 15-A.2. Delegation of Duties. The Co-Agent may execute
any of its duties under this Agreement and the other Loan Documents by or
through agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Co-Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care.
SECTION 15-A.3. Exculpatory Provisions. Neither the Co-Agent nor
any of its trustees, officers, directors, employees, agents, attorneys-in-fact
or Affiliates shall be (i) liable to any Lender (or any Lender's participants)
for any action lawfully taken or omitted to be taken by it or such Person under
or in connection with this Agreement or the other Loan Documents (except for its
or such Person's own gross negligence or willful misconduct), or (ii)
responsible in any manner to any Lender (or any Lender's participants) for any
recitals, statements, representations or warranties made by the Borrower or any
officer thereof contained in this Agreement or the other Loan Documents or in
any certificate, report, statement or other document referred to or provided for
in, or received by the Co-Agent under or in connection with, this Agreement or
the other Loan Documents or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or the other Loan Documents or
for any failure of the Borrower to perform its obligations hereunder or
thereunder. The Co-Agent shall not be under an obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement, or to inspect the
properties, books or records of the Borrower.
SECTION 15-A.4. Reliance by Co-Agent. The Co-Agent shall be
entitled to rely, and shall be fully protected in relying, upon any Note,
writing, resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document or conversation believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including, without limitation, counsel to the
Borrower), independent accountants and other experts selected by the Co-Agent.
The Co-Agent may deem and treat the payee of any Note as the owner thereof for
all purposes unless such Note shall have been transferred in accordance with
Section 14.1. The Co-Agent shall be fully justified in failing or refusing to
take any action under this Agreement and the other Loan Documents unless it
shall first receive such advice or concurrence of the Required Lenders as it
deems appropriate or it shall first be indemnified to its satisfaction by the
Lenders against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The Co-Agent shall in
all cases be fully protected in acting, or in refraining from acting, under this
Agreement and the Notes in accordance with a request of the Required Lenders,
and such request and any action taken or failure to act pursuant thereto shall
be binding upon all the Lenders and all future holders of the Notes.
SECTION 15-A.5. Non-Reliance on Co-Agent and Other Lenders. Each
Lender expressly acknowledges that neither the Co-Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates has made any
representations or warranties to it and that no act by the Co-Agent hereinafter
taken, including any review of the affairs of the Borrower, shall be deemed to
constitute any representation or warranty by the Co-Agent to any Lender. Each
Lender represents to the Co-Agent that it has, independently and without
reliance upon the Co-Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Borrower and made its own decision to make
its Loans hereunder and enter into this Agreement. Each Lender also represents
that it will, independently and without reliance upon the Co-Agent or any other
Lender, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit analysis, appraisals and decisions
in taking or not taking action under this Agreement and the other Loan
Documents, and to make such investigation as it deems necessary to inform itself
as to the business, operations, property, financial and other condition and
creditworthiness of the Borrower. The Co-Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, financial and other condition or
creditworthiness of the Borrower which may come into the possession of the
Co-Agent or any of its officers, directors, employees, agents, attorneys-in-fact
or Affiliates.
SECTION 15-A.6. Indemnification. The Lenders agree to indemnify
the Co-Agent in its capacity as such (to the extent not reimbursed by the
Borrower and without limiting the obligation of the Borrower to do so), ratably
according to their respective Commitment Percentages, from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind whatsoever which may at any
time (including, without limitation, at any time following the payment of the
Notes) be imposed on, reasonably incurred by or asserted against the Co-Agent in
any way relating to or arising out of this Agreement or the other Loan
Documents, or any documents contemplated by or referred to herein or therein or
the transactions contemplated hereby or thereby or any action taken or omitted
by the Co-Agent under or in connection with any of the foregoing; provided that
no Lender shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements (i) resulting solely from the Co-Agent's gross
negligence or willful misconduct or resulting solely from transactions or
occurrences that occur at a time after such Lender has assigned all of its
interests, rights and obligations under this Agreement pursuant to Section 14.1
or, in the case of a Lender to which an assignment is made hereunder pursuant to
Section 14.1, at a time before such assignment; or (ii) constituting ordinary
overhead costs and expenses incurred by the Agent in the administration of the
Loans under the Loan Documents, all of which shall be borne by the Co-Agent; but
this shall not include any costs, expenses, fees or disbursements (A) which are
incurred by outside agencies or attorneys retained by the Co-Agent to effect
collection of the Secured Obligations or any Collateral, (B) which are incurred
by the Co-Agent on account of the Agent's employees reasonably assigned to
conduct field examinations or to effect collection of the Secured Obligations or
any Collateral or (C) which the Co-Agent may reasonably incur in enforcing any
right or remedy under the Loan Documents, in collecting any of the Secured
Obligations, or in maintaining, preserving, protecting or realizing upon any
Collateral, all of which shall be shared by the Co-Agent and each Lender pro
rata in accordance with their respective Commitments at the date such costs,
expenses, fees or disbursements are incurred. The agreements in this subsection
shall survive the payment of the Notes, the Secured Obligations and all other
amounts payable hereunder and the termination of this Agreement.
SECTION 15-A.7. Co-Agent in Its Individual Capacity. The Co-Agent
and its Affiliates may make loans to, accept deposits from and generally engage
in any kind of business with the Borrower and any Guarantor and their respective
Subsidiaries as if the Co-Agent were not the Co-Agent hereunder. With respect to
its Commitment, the Loans made or renewed by it and any Note issued to it and
any Letter of Credit issued by it, the Co-Agent shall have and may exercise the
same rights and powers under this Agreement and the other Loan Documents and is
subject to the same obligations and liabilities as and to the extent set forth
herein and in the other Loan Documents for any other Lender. The terms "Lenders"
or "Required Lenders" or any other term shall, unless the context clearly
otherwise indicates, include the Co-Agent in its individual capacity as a Lender
or one of the Required Lenders.
SECTION 15-A.8. Successor Co-Agent. The Co-Agent may resign as
Co-Agent upon thirty days' notice to the Lenders. If the Co-Agent shall resign
as Co-Agent under this Agreement, then the Required Lenders shall appoint from
among the Lenders a successor co-agent for the Lenders which successor co-agent
shall be approved by the Borrower (which approval shall not be unreasonably
withheld), whereupon such successor co-agent shall succeed to the rights, powers
and duties of the Co-Agent, and the term "Co-Agent" shall mean such successor
agent effective upon its appointment, and the former Co-Agent's rights, powers
and duties as Co-Agent shall be terminated, without any other or further act or
deed on the part of such former Co-Agent or any of the parties to this Agreement
or any holders of the Notes. The effective date of the Co-Agent's resignation
shall in all cases be postponed until a successor co-agent has been appointed.
After any retiring Co-Agent's resignation hereunder as Co-Agent, the provisions
of Section 15-A.6 shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Co-Agent under this Agreement.
ARTICLE 16
MISCELLANEOUS
SECTION 16.1. Notices.
(a) Method of Communication. Except as specifically provided in
this Agreement or in any of the Loan Documents, all notices and the
communications hereunder and thereunder shall be in writing or by telephone,
subsequently confirmed in writing. Notices in writing shall be delivered
personally or sent by certified or registered mail, postage pre-paid, or by
overnight courier, telex or facsimile transmission and shall be deemed received
in the case of personal delivery, when delivered, in the case of mailing, when
receipted for, in the case of overnight delivery, on the next Business Day after
delivery to the courier, and in the case of telex and facsimile transmission,
upon transmittal, provided that in the case of notices to the Agent, notice
shall be deemed to have been given only when such notice is actually received by
the Agent. A telephonic notice to the Agent, as understood by the Agent, will be
deemed to be the controlling and proper notice in the event of a discrepancy
with or failure to receive a confirming written notice.
(b) Addresses for Notices. Notices to any party shall be
sent to it at the following addresses, or any other address of which all the
other parties are notified in writing
If to the Borrower: Standard Commercial Tobacco Co., Inc.
2201 Miller Road
Wilson, North Carolina 27893
Attn: Rick Hardy
Facsimile No.: 919-291-7660
If to the Agent: NationsBank, N.A. (South)
Business Credit Division
600 Peachtree Street
13 Plaza
Atlanta, Georgia 30308
Attn: Brian O'Fallon
Facsimile No.: 404-607-6439
If to a Lender: At the address of such Lender set forth on
the signature page hereof.
(c) Agent's Office. The Agent hereby designates its office
located at 600 Peachtree Street, Atlanta, Georgia 30308, or any subsequent
office which shall have been specified for such purpose by written notice to the
Borrower, as the office to which payments due are to be made and at which Loans
will be disbursed.
SECTION 16.2. Expenses. The Borrower agrees to pay or
reimburse on demand all costs and expenses incurred by the Agent or any
Lender, including, without limitation, the reasonable fees and disbursements
of counsel, in connection with
(a) the negotiation, preparation, execution, delivery,
administration, enforcement and termination of this Agreement and each of the
other Loan Documents, whenever the same shall be executed and delivered,
including, without limitation
(i) the out-of-pocket costs and expenses
incurred in connection with the administration and interpretation of this
Agreement and the other Loan Documents;
(ii) the costs and expenses of appraisals of
the Collateral;
(iii) the costs and expenses of lien and title
searches and title insurance;
(iv) the costs and expenses of environmental
reports with respect to the Real Estate;
(v) taxes, fees and other charges for filing
the Financing Statements and continuations and the costs and expenses of
taking other actions to perfect, protect, and continue the Security Interests;
provided, however, that the Borrower shall not be required to pay the
expenses of any Person which becomes a Lender more than ninety (90) days after
the Effective Date incurred in connection with such Person's so becoming a
Lender;
(b) the preparation, execution and delivery of any waiver,
amendment, supplement or consent by the Agent and the Lenders relating to this
Agreement or any of the Loan Documents;
(c) sums paid or incurred to pay any amount or take any action
required of the Borrower under the Loan Documents that the Borrower fails to pay
or take;
(d) costs of inspections and verifications of the Collateral, the
Borrower's operations and the books and records of the Borrower by the Agent
and/or the Lenders or their respective agents, such costs to include, without
limitation, standard per diem fees charged by the Agent or the Lenders and costs
for travel, lodging, and meals;
(e) costs and expenses of forwarding loan proceeds, collecting
checks and other items of payment, and establishing and maintaining each
Controlled Disbursement Account, Agency Account and Lockbox;
(f) costs and expenses of preserving and protecting the
Collateral;
(g) consulting, after the occurrence of a Default, with one or
more Persons, including appraisers, accountants and lawyers, concerning the
value of any Collateral for the Secured Obligations or related to the nature,
scope or value of any right or remedy of the Agent or any Lender hereunder or
under any of the Loan Documents, including any review of factual matters in
connection therewith, which expenses shall include the fees and disbursements of
such Persons;
(h) reasonable costs and expenses paid or incurred to obtain
payment of the Secured Obligations, enforce the Security Interests, sell or
otherwise realize upon the Collateral, and otherwise enforce the provisions of
the Loan Documents, or to prosecute or defend any claim in any way arising out
of, related to or connected with, this Agreement or any of the Loan Documents,
which expenses shall include the reasonable fees and disbursements of counsel
and of experts and other consultants retained by the Agent or any Lender.
The foregoing shall not be construed to limit any other provisions of the Loan
Documents regarding costs and expenses to be paid by the Borrower. The Borrower
hereby authorizes the Agent and the Lenders to debit the Borrower's Loan
Accounts (by increasing the principal amount of the Term Loans) in the amount of
any such costs and expenses owed by the Borrower when due.
SECTION 16.3. Stamp and Other Taxes. The Borrower will pay any
and all stamp, registration, recordation and similar taxes, fees or charges and
shall indemnify the Agent and the Lenders against any and all liabilities with
respect to or resulting from any delay in the payment or omission to pay any
such taxes, fees or charges, which may be payable or determined to be payable in
connection with the execution, delivery, performance or enforcement of this
Agreement and any of the Loan Documents or the perfection of any rights or
security interest thereunder, including, without limitation, the Security
Interest.
SECTION 16.4. Setoff. In addition to any rights now or hereafter
granted under Applicable Law and not by way of limitation of any such rights,
during the continuance of any Event of Default, each Lender, any participant
with such Lender in the Loans and each Affiliate of each Lender are hereby
authorized by the Borrower at any time or from time to time, without notice to
the Borrower or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and to apply any and all deposits (general
or special, including, but not limited to, indebtedness evidenced by
certificates of deposit, whether matured or unmatured) and any other
indebtedness at any time held or owing by any Lender or any Affiliate of any
Lender or any participant to or for the credit or the account of the Borrower
against and on account of the Secured Obligations irrespective or whether or not
(a) Agent or such Lender shall have made any demand under
this Agreement or any of the Loan Documents, or
(b) the Agent or such Lender shall have declared any or all of
the Secured Obligations to be due and payable as permitted by Section 13.2 and
although such Secured Obligations shall be contingent or unmatured.
Notwithstanding the foregoing, (i) each Lender (other than NationsBank)
agrees that it shall not, without the express consent of the Required Lenders,
exercise its setoff rights hereunder against any accounts of Borrower now or
hereafter maintained with such Lender or any Affiliate of such Lender and (ii)
the Agent and the Lenders agree that the Agent or any Lender shall (to the
extent that it is lawfully entitled to do so) upon the request of the Required
Lenders, exercise its respective setoff rights hereunder against any accounts of
Borrower now or hereafter maintained with the 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 16.24.
SECTION 16.5. Litigation. THE BORROWER, THE AGENT AND THE LENDERS
HEREBY AGREE THAT THE FEDERAL COURT OF THE WESTERN DISTRICT OF NORTH CAROLINA
OR, AT THE OPTION OF THE AGENT OR ANY LENDER, ANY COURT IN WHICH THE AGENT OR
SUCH LENDER SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT
MATTER JURISDICTION OVER THE MATTER IN CONTROVERSY, SHALL HAVE NONEXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE BORROWER
AND THE AGENT OR SUCH LENDER, PERTAINING DIRECTLY OR INDIRECTLY TO THIS
AGREEMENT OR THE LOAN DOCUMENTS OR TO ANY MATTER ARISING THEREFROM. THE BORROWER
EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR
PROCEEDING COMMENCED IN SUCH COURTS, HEREBY WAIVING PERSONAL SERVICE OF THE
SUMMONS AND COMPLAINT, OR OTHER PROCESS OR PAPERS ISSUED THEREIN AND AGREEING
THAT SERVICE OF SUCH SUMMONS AND COMPLAINT OR OTHER PROCESS OR PAPERS MAY BE
MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO THE BORROWER AT THE ADDRESS OF
THE BORROWER SET FORTH IN SECTION 16.1. SHOULD THE BORROWER FAIL TO APPEAR OR
ANSWER ANY SUMMONS, COMPLAINT, PROCESS OR PAPERS SO SERVED WITHIN THIRTY (30)
DAYS AFTER THE MAILING THEREOF, IT SHALL BE DEEMED IN DEFAULT AND AN ORDER
AND/OR JUDGMENT MAY BE ENTERED AGAINST IT AS DEMANDED OR PRAYED FOR IN SUCH
SUMMONS, COMPLAINT, PROCESS OR PAPERS. THE NONEXCLUSIVE CHOICE OF FORUM SET
FORTH IN THIS SECTION SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT OF ANY
JUDGMENT OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT
TO ENFORCE SAME IN ANY APPROPRIATE JURISDICTION.
SECTION 16.6. Waiver of Rights. THE BORROWER HEREBY KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY WAIVES ALL RIGHTS WHICH BORROWER HAS UNDER CHAPTER
14 OF TITLE 44 OF THE OFFICIAL CODE OF GEORGIA OR UNDER ANY SIMILAR PROVISION OF
APPLICABLE LAW TO NOTICE AND TO A JUDICIAL HEARING PRIOR TO THE ISSUANCE OF A
WRIT OF POSSESSION ENTITLING THE AGENT OR ANY LENDER, OR THE SUCCESSORS AND
ASSIGNS OF THE AGENT OR SUCH LENDER TO POSSESSION OF THE COLLATERAL UPON EVENT
OF DEFAULT. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING AND WITHOUT
LIMITING ANY OTHER RIGHT WHICH THE AGENT OR THE LENDERS MAY HAVE, THE BORROWER
CONSENTS THAT IF LENDER FILES A PETITION FOR AN IMMEDIATE WRIT OF POSSESSION IN
COMPLIANCE WITH SECTIONS 44-14-261 AND 44-14-262 OF THE OFFICIAL CODE OF GEORGIA
OR UNDER ANY SIMILAR PROVISION OF APPLICABLE LAW, AND THIS WAIVER OR A COPY
HEREOF IS ALLEGED IN SUCH PETITION AND ATTACHED THERETO, THE COURT BEFORE WHICH
SUCH PETITION IS FILED MAY DISPENSE WITH ALL RIGHTS AND PROCEDURES HEREIN WAIVED
AND MAY ISSUE FORTHWITH AN IMMEDIATE WRIT OF POSSESSION IN ACCORDANCE WITH
CHAPTER 14 OF TITLE 44 OF THE OFFICIAL CODE OF GEORGIA OR IN ACCORDANCE WITH ANY
SIMILAR PROVISION OF APPLICABLE LAW, WITHOUT THE NECESSITY OF AN ACCOMPANYING
BOND AS OTHERWISE REQUIRED BY SECTION 44-14-263 OF THE OFFICIAL CODE OF GEORGIA
OR BY ANY SIMILAR PROVISION UNDER APPLICABLE LAW. THE BORROWER HEREBY
ACKNOWLEDGES THAT IT HAS READ AND FULLY UNDERSTANDS THE TERMS OF THIS WAIVER AND
THE EFFECT HEREOF.
SECTION 16.7. Consent to Advertising and Publicity. With the
prior written consent of the Borrower, which consent shall not be unreasonably
withheld, the Agent, on behalf of the Lenders, may issue and disseminate to the
public information describing the credit accommodation entered into pursuant to
this Agreement, including the name and address of the Borrower, the amount,
interest rate, maturity, collateral and a general description of the Borrower's
business.
SECTION 16.8. Reversal of Payments. The Agent and each Lender
shall have the continuing and exclusive right to apply, reverse and re-apply any
and all payments to any portion of the Secured Obligations in a manner
consistent with the terms of this Agreement. To the extent the Borrower makes a
payment or payments to the Agent, for the account of the Lenders, or any Lender
receives any payment or proceeds of the Collateral for the Borrower's benefit,
which payment(s) or proceeds or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any bankruptcy law, state
or federal law, common law or equitable cause, then, to the extent of such
payment or proceeds received, the Secured Obligations or part thereof intended
to be satisfied shall be revived and continued in full force and effect, as if
such payment or proceeds had not been received by the Agent or such Lender.
SECTION 16.9. Injunctive Relief. The Borrower recognizes that, in
the event the Borrower fails to perform, observe or discharge any of its
obligations or liabilities under this Agreement, any remedy at law may prove to
be inadequate relief to the Agent and the Lenders; therefore, the Borrower
agrees that if any Event of Default shall have occurred and be continuing, the
Agent and the Lenders, if the Agent or any Lender so requests, shall be entitled
to temporary and permanent injunctive relief without the necessity of proving
actual damages.
SECTION 16.10.Accounting Matters. All financial and accounting
calculations, measurements and computations made for any purpose relating to
this Agreement, including, without limitation, all computations utilized by the
Borrower to determine whether it is in compliance with any covenant contained
herein, shall, unless this Agreement otherwise provides or unless Required
Lenders shall otherwise consent in writing, be performed in accordance with
GAAP.
SECTION 16.11.Amendments.
(a) Except as set forth in subsection (b) below, any term,
covenant, agreement or condition of this Agreement or any of the Loan Documents
may be amended or waived, and any departure therefrom may be consented to by the
Required Lenders, if, but only if, such amendment, waiver or consent is in
writing signed by the Required Lenders and, in the case of an amendment (other
than an amendment described in Section 16.11(d)), by the Borrower, and in any
such event, the failure to observe, perform or discharge any such term,
covenant, agreement or condition (whether such amendment is executed or such
waiver or consent is given before or after such, failure) shall not be construed
as a breach of such term, covenant, agreement or condition or as a Default or an
Event of Default. Unless otherwise specified in such waiver or consent, a waiver
or consent given hereunder shall be effective only in the specific instance and
for the specific purpose for which given. In the event that any such waiver or
amendment is requested by the Borrower, the Agent and the Lenders may require
and charge a fee in connection therewith and consideration thereof in such
amount as shall be determined by the Agent and the Required Lenders in their
discretion.
(b) Except as otherwise set forth in this Agreement, without
the prior unanimous written consent of the Lenders,
(i) no amendment, consent or waiver shall affect the
amount or extend the time of the obligation of the Lenders to make Loans or
extend the originally scheduled time or times of payment of the principal of any
Loan or alter the time or times of payment of interest on any Loan or the amount
of the principal thereof or the rate of interest thereon or the amount of any
commitment or termination fee payable hereunder or permit any subordination of
the principal or interest on such Loan, permit the subordination of the Security
Interests in any material Collateral, amend any provision requiring the Agent to
act at the request of the Required Lenders, amend the definitions of "Commitment
Percentage," "Eligible Assignee," "Required Lenders" or "Secured Obligations,"
amend the definitions used in Section 5.1 relating to interest rates, amend any
provision relating to the ratable rights or obligations of the Lenders or amend
the provisions of Section 5.12, Article 13, Section 14.1(b), Article 15, Section
16.11(b), Section 16.23 or Section 16.24,
(ii) no material collateral under this Agreement or
any Security Document shall be released by the Agent other than as specifically
permitted in this Agreement and no Guarantor shall be released from its
obligations under any Guaranty Agreement,
(iii) neither the Agent nor any Lender shall consent to
any amendment to or waiver of the provisions of the Subordinated Agreements or
any other instrument or agreement evidencing or relating to obligations of the
Borrower that are expressly subordinate to any of the Secured Obligations if
such amendment or waiver would be adverse to the Lenders in their capacities as
Lenders hereunder, and
(iv) neither the Agent nor any Lender shall consent to
any amendment to or waiver of the provisions to either Intercreditor Agreement
if such amendment or waiver would be adverse to the Lenders in their capacities
as Lenders hereunder;
provided, however, that anything herein to the contrary notwithstanding,
Required Lenders shall have the right to waive any Default or Event of Default
and the consequences hereunder of such Default or Event of Default and shall
have the right to enter into an agreement with the Borrower or any Guarantor
providing for the forbearance from the exercise of any remedies provided
hereunder or under the other Loan Documents without waiving any Default or Event
of Default.
(c) The making of Loans hereunder by the Lenders during the
existence of a Default or Event of Default shall not be deemed to constitute a
waiver of such Default or Event of Default.
(d) Notwithstanding any provision of this Agreement or the other
loan documents to the contrary, no consent, written or otherwise, of the
Borrower shall be necessary or required in connection with any amendment to
Article 15 or Section 5.7, and any amendment to such provisions shall be
effected solely by and among the Agent and the Lenders, provided that no such
amendment shall impose any obligation on the Borrower.
SECTION 16.12.Assignment. All the provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Borrower may not assign or
transfer any of its rights under this Agreement.
SECTION 16.13.Performance of Borrower's Duties.
(a) The Borrower's obligations under this Agreement and each of
the Loan Documents shall be performed by the Borrower at its sole cost and
expense.
(b) If the Borrower shall fail to do any act or thing which it
has covenanted to do under this Agreement or any of the Loan Documents, the
Agent, on behalf of the Lenders, may (but shall not be obligated to) do the same
or cause it to be done either in the name of the Agent or the Lenders or in the
name and on behalf of the Borrower, and the Borrower hereby irrevocably
authorizes the Agent so to act.
SECTION 16.14.Indemnification. The Borrower agrees to reimburse
the Agent and the Lenders for all costs and expenses, including, reasonable
counsel fees and disbursements, incurred, and to indemnify and hold the Agent
and the Lenders harmless from and against all losses suffered by, the Agent or
any Lender in connection with
(i) the exercise by the Agent or any Lender of any
right or remedy granted to it under this Agreement or any of the Loan
Documents,
(ii) any claim, and the prosecution or defense
thereof, arising out of or in any way connected with this Agreement or any of
the Loan Documents, and
(iii) the collection or enforcement of the Secured
Obligations or any of them, other than such costs, expenses and liabilities
arising out of the Agent's or any Lender's gross negligence or willful
misconduct.
SECTION 16.15.All Powers Coupled with Interest. All powers of
attorney and other authorizations granted to the Agent and the Lenders and any
Persons designated by the Agent or the Lenders pursuant to any provisions of
this Agreement or any of the Loan Documents shall be deemed coupled with an
interest and shall be irrevocable so long as any of the Secured Obligations
remain unpaid or unsatisfied.
SECTION 16.16.Survival. Notwithstanding any termination of
this Agreement,
(a) until all Secured Obligations have been irrevocably paid in
full or otherwise satisfied, the Agent, for the benefit of the Lenders, shall
retain its Security Interest and shall retain all rights under this Agreement
and each of the Security Documents with respect to such Collateral as fully as
though this Agreement had not been terminated,
(b) the indemnities to which the Agent and the Lenders are
entitled under the provisions of this Article 16 and any other provision of this
Agreement and the Loan Documents shall continue in full force and effect and
shall protect the Agent and the Lenders against events arising after such
termination as well as before, and
(c) in connection with the termination of this Agreement and the
release and termination of the Security Interests, the Agent, on behalf of
itself as agent and the Lenders, may require such assurances and indemnities as
it shall reasonably deem necessary or appropriate to protect the Agent and the
Lenders against loss on account of such release and termination, including,
without limitation, with respect to credits previously applied to the Secured
Obligations that may subsequently be reversed or revoked.
SECTION 16.17.Titles and Captions. Titles and captions of
Articles, Sections and subsections in this Agreement are for convenience only,
and neither limit nor amplify the provisions of this Agreement.
SECTION 16.18.Severability of Provisions. Any provision of this
Agreement or any Loan Document which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only to the extent
of such prohibition or unenforceability without invalidating the remainder of
such provision or the remaining provisions hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.
SECTION 16.19.Governing Law. This Agreement and the Notes shall
be construed in accordance with and governed by the law of the State of North
Carolina.
SECTION 16.20.Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and shall be
binding upon all parties, their successors and assigns, and all of which taken
together shall constitute one and the same agreement.
SECTION 16.21.Reproduction of Documents. This Agreement, each of
the Loan Documents and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by the Agent or any Lender, and (c) financial
statements, certificates and other information previously or hereafter furnished
to the Agent or any Lender, may be reproduced by the Agent or such Lender by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and such Person may destroy any original document so produced.
Each party hereto stipulates that, to the extent permitted by Applicable Law,
any such reproduction shall be as admissible in evidence as the original itself
in any judicial or administrative proceeding (whether or not the original shall
be in existence and whether or not such reproduction was made by the Agent or
such Lender in the regular course of business), and any enlargement, facsimile
or further reproduction of such reproduction shall likewise be admissible in
evidence.
SECTION 16.22.Term of Agreement. This Agreement shall remain in
effect from the Agreement Date and thereafter until all Secured Obligations
shall have been irrevocably paid and satisfied in full. No termination of this
Agreement shall affect the rights and obligations of the parties hereto arising
prior to such termination.
SECTION 16.23.Increased Capital. If any Lender shall have
determined that the adoption of any applicable law, rule, regulation, guideline,
directive or request (whether or not having force of law) regarding capital
requirements for banks or bank holding companies, or any change therein or in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by such Lender with any of the foregoing
imposes or increases a requirement by such Lender to allocate capital resources
to such Lender's Commitment to make Loans hereunder which has or would have the
effect of reducing the return on such Lender's capital to a level below that
which such Lender could have achieved (taking into consideration such Lender's
then existing policies with respect to capital adequacy and assuming full
utilization of such Lender's capital) but for such adoption, change or
compliance by any amount deemed by such Lender to be material: (i) such Lender
shall promptly after its determination of such occurrence give notice thereof to
the Borrower; and (ii) the Borrower shall pay to such Lender as an additional
fee from time to time on demand such amount as such Lender certifies to be the
amount that will compensate it for such reduction. A certificate of such Lender
claiming compensation under this Section 16.23 shall be conclusive in the
absence of manifest error. Such certificate shall set forth the nature of the
occurrence giving rise to such compensation, the additional amount or amounts to
be paid to it hereunder and the method by which such amounts were determined. In
determining such amount, such Lender may use any reasonable averaging and
attribution methods.
SECTION 16.24. Pro-Rata Participation.
(a) If any Lender shall obtain any payment or reduction
(including any amounts received as adequate protection of a deposit treated as
cash collateral under any federal bankruptcy laws or any other laws, domestic or
foreign, relating to bankruptcy, insolvency, reorganization, winding up or
composition for adjustment of debts) of any Secured 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 (in proportion to all
Secured Obligations) of payments or reductions on account of such Secured
Obligations obtained by all of the Lenders, such Lender shall forthwith (i)
notify the other Lenders and the Agent of such receipt, and (ii) purchase from
the other Lenders such participations in the affected Secured 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
(in proportion to all Secured Obligations); 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. The Borrower agrees that any Lender so purchasing a
participation from another Lender pursuant to this Section 16.24 may, to the
fullest 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 the Borrower in the amount
of such participation.
(b) Each Lender which receives a secured claim under any
applicable bankruptcy, insolvency or other similar law the security for which is
a debt owed by it to the Borrower, such Lender shall exercise its rights in
respect of such secured claim in a manner consistent with the rights of the
Lenders entitled under this Section 16.24 to share in the benefits of any
recovery on such secured claim.
(c) The Borrower expressly consents to the foregoing
arrangements.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their duly authorized officers in several counterparts all as
of the day and year first written above.
BORROWER:
[Corporate Seal] STANDARD COMMERCIAL TOBACCO CO.,
INC.
Attest: By:
---------------------------
Name:
----------------------
By: Title:
----------------------- ---------------------
Name:
-------------------
Title:
------------------
LENDERS:
Commitment: NATIONSBANK, N.A. (SOUTH)
$2,272,720.00
By:
---------------------------
Name:
----------------------
Title:
---------------------
Address: 600 Peachtree Street
13 Plaza
Atlanta, Georgia 30308
Attn: Business Credit
Facsimile No.: 404-607-
6437
Commitment: FIRST UNION COMMERCIAL CORPORATION
$2,272,720.00
By:
----------------------------
Name:
-----------------------
Title:
-----------------------
Address: One First Union Center
Charlotte, North Carolina
28288-0737
Attn: Bernard Banks
Facsimile No.: 704-374-2703
Commitment: MELLON BANK, N.A.
$1,454,550.00
By
------------------------------
Title
--------------------------
Address: Mellon Business Credit
Mellon Bank Center
1735 Market Street, 6th Floor
Philadelphia, PA 19103
Attn: Roger D. Attix
Facsimile No.: 215-553-0201
Commitment: BANK OF BOSTON
$1,454,550.00
By
------------------------------
Title
---------------------------
Address: Bank of Boston
100 Federal Street
01-09-06
Boston, MA 02110
Attn: William Purinton
Facsimile No.: 617-434-2309
Commitment: FLEET CAPITAL CORPORATION
$1,454,550.00
By
-----------------------------
Title
---------------------------
Address: Fleet Capital Corporation
6060 JA Jones Drive
Suite 200
Charlotte, NC 28287
Attn: Rodney G. McSwain
Facsimile No.: 704-553-6738
Commitment: THE CIT GROUP/BUSINESS CREDIT
$1,090,920.00
By
------------------------------
Title
---------------------------
Address: The CIT Group/Business Credit
900 Ashwood Parkway
Suite 600
Atlanta, GA 30338
Attn: Robert Bernier
Facsimile No.: 770-551-7899
AGENT:
NATIONSBANK, N.A. (SOUTH)
By:
----------------------------
Name:
-----------------------
Title:
----------------------
Address: 600 Peachtree Street
13 Plaza
Atlanta, Georgia 30308
Attn: Business Credit
Facsimile No.: 404-607-6437
CO-AGENT:
FIRST UNION COMMERCIAL CORPORATION
By:
----------------------------
Name:
-----------------------
Title:
----------------------
Address: One First Union Center
Charlotte, North Carolina
28288-0737
Attn: Bernard Banks
Facsimile No.: 704-374-2703
Exhibit 4(ii)
SECOND AMENDED AND RESTATED PARENT GUARANTY AGREEMENT
THIS SECOND AMENDED AND RESTATED PARENT GUARANTY AGREEMENT, dated as of
July 15, 1996 (the "Guaranty"), is made by STANDARD COMMERCIAL CORPORATION, a
North Carolina corporation ("SCC"), in favor of the Banks (the "Banks") parties
to the Loan Agreements (as defined below), and NATIONSBANK, N.A. (SOUTH),
formerly known as NationsBank of Georgia, N.A., as agent for the Banks (the
"Agent"), for the benefit of STANDARD COMMERCIAL TOBACCO CO., INC. ("SCTC"), a
wholly owned subsidiary of SCC.
PRELIMINARY STATEMENT. SCTC has entered into (i) that certain Loan and
Security Agreement, dated as of May 2, 1995, as amended by that certain
Amendment No. 1 to Loan and Security Agreement dated as of November 17, 1995, as
further amended by that certain Amendment No. 2 to Loan and Security Agreement
dated as of December 31, 1995, and as further amended by that certain Amendment
No. 3 to Loan and Security Agreement, of even date herewith, and (ii) that
certain Loan and Security Agreement (Term Loan) of even date herewith
(collectively the "Loan Agreements") with NationsBank, N.A. (South), First Union
Commercial Corporation, the other lenders signatory thereto from time to time
(collectively and including their successors and assigns, the "Banks"), and the
Agent, pursuant to which Loan Agreements the Lenders have agreed to provide SCTC
credit facilities aggregating up to $110,000,000. In order to induce the Agent
and each Bank to accept the terms of the Loan Agreements and because of the
direct benefit to SCC of loans made from time to time hereafter by the Banks to
SCTC and letters of credit issued by the Banks, SCC has agreed to guarantee the
payment and performance of the Guaranteed Indebtedness (hereinafter as defined).
This Second Amended and Restated Parent Guaranty Agreement amends and restates
the terms and conditions of that certain Amended and Restated Parent Guaranty
Agreement, dated as of November 17, 1995, made by the undersigned in favor of
the Agent and the Banks for the benefit of SCTC.
NOW, THEREFORE, for value received and to induce the Agent and each Bank
to accept the terms of the Loan Agreements and because of the direct benefit to
SCC of loans made from time to time hereafter by the Banks to SCTC and letters
of credit issued and SCC agrees as follows:
ARTICLE I. DEFINITIONS
-----------------------
Section 1.01 DEFINITIONS. (a) The following capitalized terms that are
used herein have the following meanings, respectively:
"AFFILIATE" means, with respect to any Person, any other Person directly
or indirectly controlling (including but not limited to all directors and
officers of such Person), controlled by or under direct or indirect common
control with such Person. A Person shall be deemed to control a corporation if
such Person possesses, directly or indirectly, the power (i) to vote 10% or more
of the securities having ordinary voting power for the election of directors of
such corporation or (ii) to direct or cause direction of the management and
policies of such corporation, whether through the ownership of voting
securities, by contract or otherwise.
"ASSIGNEE" means any assignee acquiring all or a portion of a Bank's
interest in either of the Loan Agreements and such Bank's Notes in accordance
with the terms and provisions of such Loan Agreement.
"BUSINESS DAY" means any day other than a Saturday, a Sunday, a legal
holiday in Charlotte, North Carolina, and New York, New York, or a day on which
banking institutions in Charlotte, North Carolina, or New York, New York, are
authorized by law or other governmental action to close.
"CASH EQUIVALENTS" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than six months from the date of acquisition, (ii) U.S. dollar denominated (or
foreign currency fully hedged by U.S. Dollars) time deposits, certificates of
deposit, Eurodollar time deposits, Eurodollar certificates of deposit of (x) any
domestic commercial bank organized or licensed under the laws of the United
States or any State thereof including the District of Columbia of recognized
standing having capital and surplus in excess of $400,000,000 or (y) any bank
whose short-term commercial paper rating from S&P is at least A-1 or the
equivalent thereof or from Moody's is at least P-1 or the equivalent thereof
(any such bank being an "APPROVED BANK"), in each case with maturities of not
more than six months from the date of acquisition, (iii) commercial paper and
variable or fixed rate notes issued by any Approved Bank (or by the parent
company thereof) or any variable rate notes issued by, or guaranteed by any
domestic corporation rated A-1 (or the equivalent thereof) or better by S&P or
P-1 (or the equivalent thereof) or better by Moody's and maturing within six
months of the date of acquisition and (iv) repurchase agreements with a bank or
trust company (including any Bank) or recognized securities dealer having
capital and surplus in excess of $400,000,000 for direct obligations issued by
or fully guaranteed by the United States of America in which SCTC shall have a
perfected first priority security interest (subject to no other liens or
encumbrances) and having, on the date of purchase thereof, a fair market value
of at least 100% of the amount of the repurchase obligations.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
"CONSISTENT BASIS" or "consistent basis" means, with regard to the
application of United States accounting principles, United States accounting
principles consistent in all material respects with the United States accounting
principles used and applied in preparation of the financial statements
previously delivered to the Banks and referred to in Section 3.06 hereof.
"CONTROLLED GROUP" means (i) the controlled group of corporations as
defined in Section 414(b) of the Code and the applicable regulations thereunder,
or (ii) the group of trades or businesses under common control as defined in
Section 414(c) of the Code and the applicable regulations thereunder, of which
SCTC is a part or may become a part.
"DEFAULT" means any event, act or condition which with notice or lapse
of time, or both, would constitute an Event of Default.
"DOCUMENTS" shall mean the Loan Agreements, the Notes and any agreement,
instrument, certificate or document now or hereafter executed by SCTC, SCC, or
any of their Affiliates or Subsidiaries in connection with the obligations under
the Loan Agreements and delivered to any Holder including, without limitation,
any letter of credit applications executed in connection with the Letters of
Credit.
"ENVIRONMENTAL LAWS" means any and all federal, state, local and foreign
statutes, laws, regulations, ordinances, rules, regulations, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions or policies including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act, the
Superfund Amendments and Reauthorization Act, the Resource Conservation and
Recovery Act, the Toxic Substances Control Act, the Clean Air Act and the Clean
Water Act relating to the environment or to emissions, discharges or releases of
pollutants, contaminants, petroleum or petroleum products, chemicals or
industrial, toxic or hazardous substances or wastes into the environment
(including, without limitation, ambient air, surface water, ground water or
land) or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants, contaminants,
petroleum or petroleum products, chemicals or industrial, toxic or hazardous
substances or wastes or the clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and the rulings
issued thereunder.
"ERISA AFFILIATE" means each person (as defined in Section 3(9) of
ERISA) which together with SCTC, the undersigned or any of their respective
Affiliates would be deemed to be a member of the same "controlled group" within
the meaning of Section 414(b), (c), (m) and (o) of the Code.
"EUROPEAN CREDIT FACILITIES" means the revolving credit facilities
extended by various European financial institutions to SCC and/or its
Subsidiaries on a committed basis through and including May 2, 1998 under the
Master Facilities Agreement.
"EVENT OF DEFAULT" has the meaning specified in Article VI.
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" or "generally accepted
accounting principles" means generally accepted accounting principles in the
United States in effect as of the date of the Loan Agreements.
"GUARANTEED INDEBTEDNESS" shall mean without duplication all of the
indebtedness, obligations and liabilities (in each case, whether or not existing
on the date hereof or arising from time to time thereafter, direct or indirect,
joint or several, actual, absolute or contingent, matured or unmatured,
liquidated or unliquidated, secured or unsecured, arising by contract, operation
of law or otherwise) of SCTC to the Holders under or in respect of any one or
more of the Documents, including, without limitation, the principal of, and
interest on, the Notes.
"GUARANTY OBLIGATIONS" means any obligations (other than endorsements in
the ordinary course of business of negotiable instruments for deposit or
collection) guaranteeing or intended to guarantee any Indebtedness, leases,
dividends or other obligations of any other Person in any manner, whether direct
or indirect, and including without limitation any obligation, whether or not
contingent, (i) to purchase any such Indebtedness or other obligation or any
property constituting security therefor, (ii) to advance or provide funds or
other support for the payment or purchase of such indebtedness or obligation or
to maintain working capital, solvency or other balance sheet condition of such
other Person (including without limitation keep well agreements, maintenance
agreements, comfort letters or similar agreement or arrangement), (iii) to lease
or purchase property, securities or services primarily for the purpose of
assuring the owner of such Indebtedness or obligation, or (iv) otherwise assure
or hold harmless the owner of such Indebtedness or obligation against loss in
respect thereof. The amount of Guaranty Obligations hereunder shall be deemed to
be an amount equal to the stated or determinable amount of the Indebtedness or
obligation in respect of which such Guaranty Obligation is made or, if not
stated or determinable, the maximum reasonably anticipated amount in respect
thereof (assuming such other Person is required to perform thereunder) as
determined in good faith.
"HOLDER" shall mean each Bank and any other Assignee.
"INDEBTEDNESS" means without duplication, (i) all indebtedness for
borrowed money, (ii) the deferred purchase price of assets or services which in
accordance with generally accepted accounting principles would be shown to be a
liability (or on the liability side of a balance sheet), (iii) all Guaranty
Obligations, (iv) the maximum amount of all letters of credit issued or
acceptance facilities established for the account of such Person and, without
duplication, all drafts drawn thereunder (other than letters of credit (x)
supporting other Indebtedness of the undersigned and its Subsidiaries or (y)
offset by a like amount of cash or government securities held in escrow to
secure such letter of credit and draws thereunder), (v) all capitalized lease
obligations, (vi) all Indebtedness of another Person secured by any lien or any
property of the undersigned or any of its Subsidiaries, whether or not such
indebtedness has been assumed, (vii) all obligations under take-or-pay or
similar arrangements or under interest rate, currency, or commodities
agreements, (viii) indebtedness created or arising under any conditional sale or
title retention agreement, and (ix) withdrawal liability or insufficiency under
ERISA or under any qualified plan or related trust; but specifically excluding
from the foregoing trade payables and accrued expenses arising or incurred in
the ordinary course of business.
"INTANGIBLE ASSETS" shall mean, as of the date of any determination
thereof, the total amount of all assets of the undersigned and its Subsidiaries
consisting of goodwill, patents, tradenames, trademarks, copyrights, franchises,
experimental expense, organization expense, unamortized debt discount and
expense, deferred assets other than prepaid insurance and prepaid taxes, the
excess of cost of shares acquired over book value of related assets and such
other assets as are properly classified as "intangible assets" in accordance
with Generally Accepted Accounting Principles.
"INTEREST EXPENSE" means the aggregate amount of interest accruing on
Indebtedness and all amortization of debt discount and expense on Indebtedness
(including, without limitation, any obligation to pay rent in respect of leases
required to be capitalized in accordance with Generally Accepted Accounting
Principles) of the undersigned or any of its Subsidiaries in the twelve-month
period ending on the date such discount or expense is calculated.
"LETTER OF CREDIT OBLIGATIONS" means the sum of all Regular Letter of
Credit Obligations and all JTI Letter of Credit Obligations, as such terms are
defined in the Loan Agreements.
"LEVERAGE RATIO" means the ratio of (a) Total Liabilities minus
Subordinated Indebtedness to (b) Tangible Net Worth plus Subordinated
Indebtedness.
"LIEN" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, security interest, encumbrance, lien (statutory or otherwise),
preference, priority or charge of any kind (including any agreement to give any
of the foregoing, any conditional sale or other title retention agreement, any
financing or similar statement or notice filed under the Uniform Commercial Code
as adopted and in effect in the relevant jurisdiction or other similar recording
or notice statute, and any lease in the nature thereof).
"MAJORITY HOLDERS" means, at a particular time, the holders of at least
51% of the aggregate unpaid principal amount of the Notes and the Letter of
Credit Obligations, or if no amounts are outstanding under the Notes and there
are no Letter of Credit Obligations or, then such determination shall be made on
the basis of Holders having an aggregate Commitment Percentage of at least 51%.
"MASTER FACILITIES AGREEMENT" means that certain loan document,
including all exhibits and schedules thereto, executed by SCC and certain of its
European subsidiaries with various financial institutions, providing for the
renewal and extension of the European Credit Facilities, as such agreement is
amended as of the date of this Agreement or as may be hereafter amended,
modified, or supplemented.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the
operations or financial condition of the undersigned and its Subsidiaries, taken
as a whole, (ii) the ability of the undersigned to perform its obligations under
this Guaranty, or (iii) the validity or enforceability of this Guaranty, or the
rights and remedies of the Holders hereunder.
"MOODY'S" means Moody's Investors Service, Inc., and any
successor thereof.
"MULTIEMPLOYER PLAN" means at any time an employee pension benefit plan
within the meaning of Section 4001(a)(3) of ERISA to which any member of the
Controlled Group is then making or accruing an obligation to make contributions
or has within the preceding five plan years made contributions, including for
these purposes any Person which ceased to be a member of the Controlled Group
during such five year period.
"PBGC" means the Pension Benefit Guaranty Corporation established under
ERISA, and any successor thereto.
"PERMITTED INVESTMENTS" means (i) cash and Cash Equivalents, (ii)
receivables owing to the undersigned from any of its customers and/or suppliers,
in each case if created, acquired or made in the ordinary course of business and
payable or dischargeable in accordance with customary trade terms, (iii)
Indebtedness to the undersigned incurred in the ordinary course of business,
(iv) loans and advances to employees for business-related travel expenses,
moving expenses and other similar expenses, in each case incurred in the
ordinary course of business) in an aggregate amount not to exceed $500,000 at
any time outstanding, (v) investments (including debt obligations) received in
connection with the bankruptcy or reorganization of suppliers and customers and
in settlement of delinquent obligations of, and other disputes with, customers
and suppliers arising in the ordinary course of business, (vi) equity securities
listed on the New York Stock Exchange ("NYSE"), PROVIDED that the long-term
credit rating of the corporation issuing such securities shall be at least AA
from S&P or AA2 from Moody's, or (vii) investments owned by the undersigned on
the date hereof and set forth in EXHIBIT A (but without additional acquisitions
thereof except as otherwise permitted hereby or with prior written consent of
the Holders).
"PERMITTED LIENS" means (i) Liens described on EXHIBIT B attached
hereto; (ii) Liens for taxes not yet due or Liens for taxes being contested in
good faith by appropriate proceedings for which adequate reserves determined in
accordance with generally accepted accounting principles have been established
(and as to which the property subject to such lien is not yet subject to
foreclosure, sale or loss on account thereof); (iii) Liens in respect of
property imposed by law arising in the ordinary course of business such as
materialmen's, mechanics', warehousemen's and other like Liens provided that
such Liens secure only amounts not yet due and payable; (iv) pledges or deposits
made to secure payment of worker's compensation insurance, unemployment
insurance, pensions or social security programs; (v) Liens arising from good
faith deposits in connection with or to secure performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government contracts,
performance and return-of-money bonds and other similar obligations incurred in
the ordinary course of business (other than obligations in respect of the
payment of borrowed money); (vi) easements, rights-of-way, restrictions
(including zoning restrictions), minor defects or irregularities in title and
other similar charges or encumbrances not, in any material respect, impairing
the use of such property for its intended purposes or interfering with the
ordinary conduct of business of the undersigned or any of its Subsidiaries;
(vii) purchase money Liens on assets other than inventory securing purchase
money indebtedness of up to $5,000,000 at any time outstanding; (viii) Liens on
the capital stock of each of the Subsidiaries identified on EXHIBIT B to secure
repayment of the European Credit Facilities; (ix) Liens permitted pursuant to
Section 5.07 hereof; and (x) Liens in favor of the Agent for the ratable benefit
of the Banks.
"PERSON" means any individual, partnership, joint venture, firm,
corporation, association, trust or other enterprise (whether or not
incorporated), or any government or political subdivision or any agency,
department or instrumentality thereof.
"PLAN" means any multiemployer or single-employer plan as defined in
Section 4001 of ERISA, which is maintained, or at any time during the five
calendar years preceding the date of this Guaranty was maintained, for employees
of the undersigned, any of its Subsidiaries or an ERISA Affiliate.
"REGULATION D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof establishing reserve requirements.
"REGULATION G" means Regulation G of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof establishing margin requirements.
"REGULATION U" means Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof establishing margin requirements.
"REGULATION X" means Regulation X of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion of establishing margin requirements.
"SCTC NOTE" means that certain promissory note executed by SCTC in favor
of SCC in the original principal amount of $15,000,000.
"S&P" means Standard & Poors Corporation, and any successor
thereof.
"SALE OF WOOL GROUP" means the sale or sales of the capital stock or
substantially all assets or business of a Wool Group Company at arms-length
terms for cash consideration.
"SUBORDINATED INDEBTEDNESS" means indebtedness of SCC the repayment of
which has been subordinated to the repayment of the obligations of SCC hereunder
pursuant to subordination agreements in form and substance satisfactory to the
Banks.
"SUBORDINATION AGREEMENT" means the subordination agreement executed by
SCC in favor of the Agent and the Banks whereby SCC (i) subordinates the
repayment of the SCTC Note to the repayment of the Guaranteed Obligations on a
permanent basis, and (ii) subordinates the repayment of the remaining
obligations of SCTC to SCC to the repayment of the Guaranteed Obligations upon
the occurrence of a Default under the Loan Agreements as amended, modified or
supplemented from time to time.
"SUBSIDIARY" means (i) any corporation more than 50% of whose stock of
any class or classes having by the terms thereof ordinary voting power to elect
a majority of the directors of such corporation (irrespective of whether or not
at the time, any class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency) is at the time owned
by such Person directly or indirectly through Subsidiaries, and (ii) any
partnership, association, joint venture or other entity in which such person
directly or indirectly through Subsidiaries has more than 50% equity interest at
any time.
"TANGIBLE NET WORTH" means, at any time, consolidated net shareholders'
equity of the undersigned and its Subsidiaries, determined in accordance with
Generally Accepted Accounting Principles applied on a Consistent Basis, with no
upward adjustments due to a revaluation of assets, minus all Intangible Assets
of the undersigned and its Subsidiaries and excluding cumulative translation
adjustments.
"TOTAL LIABILITIES" means all items which, in accordance with Generally
Accepted Accounting Principles, would be classified as liabilities on a
consolidated balance sheet of the undersigned and its Subsidiaries.
"WOOL GROUP COMPANY" means each of the companies identified on SCHEDULE
1 attached hereto.
(b) Capitalized terms that are used herein and are not defined herein
shall have the meanings ascribed to them in the Loan Agreements.
ARTICLE II. THE GUARANTY
-------------------------
Section 2.01 GUARANTY OF PAYMENT AND PERFORMANCE OF OBLIGATIONS. SCC
unconditionally guarantees to each Holder the full and prompt payment when due,
whether at maturity, at any stated prepayment date or earlier by reason of
acceleration or otherwise, and at all times thereafter, of all of the Guaranteed
Indebtedness; and the undersigned further agrees to pay all costs and expenses,
including, without limitation, all court costs and reasonable attorneys' fees
and expenses, paid or incurred in endeavoring to collect all or any part of the
Guaranteed Indebtedness from, or in prosecuting any action against, SCTC or the
undersigned of all or any part of the Guaranteed Indebtedness. This is a
continuing guaranty of payment and not of collection.
The undersigned covenants that it will not be discharged except by
complete performance of the obligations contained herein. Upon an Event of
Default under the Loan Agreements, any Holder may, at its sole election and
without notice, proceed directly and at once against the undersigned to collect
and recover the full amount of any portion of the liability of the undersigned
hereunder, without first proceeding against SCTC, any other Person, or any
security or collateral for the Guaranteed Indebtedness or for the liability of
the undersigned under this Guaranty. Each Holder shall have the exclusive right
to determine the application of payments and credits, if any, from the
undersigned, SCTC or from any other Person on account of the Guaranteed
Indebtedness owed to such Holder.
Section 2.02 OBLIGATIONS UNCONDITIONAL. The undersigned hereby agrees
that the obligations of the undersigned under this Guaranty shall be continuing,
absolute and unconditional, irrespective of (i) the invalidity or
unenforceability of any part or all of the Guaranteed Indebtedness or any
Document; (ii) the absence of any attempt to collect the Guaranteed Indebtedness
from SCTC or from any other guarantor of the Guaranteed Indebtedness or any
other action to enforce the same or to realize upon any security for any
thereof; (iii) the waiver or consent by the Agent or any Holder with respect to
any provision of any Document or applicable law; (iv) any failure by the Agent
or any Holder to acquire, perfect or maintain a security interest in, or take
any steps to preserve its rights to, any security or collateral for the
Guaranteed Indebtedness, this Guaranty or any other guaranty of the Guaranteed
Indebtedness; (v) any defense arising by reason of any disability or other
defense (other than a defense of payment, unless the payment on which such
defense is based was or is subsequently invalidated, declared to be fraudulent
or preferential, otherwise, avoided and/or required to be repaid to or for the
benefit of SCTC, in which case there shall be no defense of payment with respect
to such payment) of SCTC or any endorser, guarantor, comaker or any other
Person; (vi) the Agent's or a Holder's election, in any proceeding instituted
under Chapter 11 of Title 11 of the Bankruptcy Code (11 U.S.C. Section 101 et
seq.), of the application of Section 1111(b)(2) of the Bankruptcy Code; (vii)
any borrowing or grant of a security interest by SCTC, as a
debtor-in-possession, under Section 364 of the Bankruptcy Code; (viii) the
disallowance or avoidance of all or any portion of a Holder's claim(s) for
repayment of the Guaranteed Indebtedness under the Bankruptcy Code or the
avoidance of any security for the Guaranteed Indebtedness; (ix) any errors or
omissions by a Holder with respect to the administration of the Guaranteed
Indebtedness or any security therefor or which might change the scope of the
undersigned's rights hereunder; (x) the acceptance of additional parties
primarily or secondarily liable on the Guaranteed Indebtedness; or (xi) any
other circumstance which might otherwise constitute a legal or equitable
discharge or defense of a guarantor.
Section 2.03 FREEDOM TO ACT. The Agent or any Holder is hereby
authorized, without notice and without affecting the liability of the
undersigned hereunder to the Agent or such Holder or any other Holder, from time
to time to (i) renew, extend, accelerate or otherwise change the time for
payment of, or other terms relating to, the Guaranteed Indebtedness, or
otherwise modify, amend or change the terms of any of the Documents; (ii) accept
partial payments on the Guaranteed Indebtedness; (iii) take and hold security or
collateral for the Guaranteed Indebtedness or any other liabilities of SCTC, the
obligations of the undersigned under this Guaranty and the obligations under any
other guaranties of the Guaranteed Indebtedness, and exchange, enforce, waive,
release, sell, transfer, assign or otherwise deal with any such security or
collateral; (iv) apply such security or collateral and direct the order or
manner of sale thereof as each Holder may determine in its discretion; (v)
settle, release, compromise, collect or otherwise liquidate the Guaranteed
Indebtedness or any portion thereof and any security or collateral therefor in
any manner; (vi) extend additional loans, credit and financial accommodations
and otherwise create additional Guaranteed Indebtedness; (vii) waive strict
compliance with the terms of the Documents and otherwise forbear from asserting
the Agent's or such Holder's rights and remedies thereunder; (viii) enforce or
forbear from enforcing the guaranty of any other guarantor of all or any part of
the Guaranteed Indebtedness or release any such guarantor; (ix) assign this
Guaranty in part or in whole in connection with any assignment of any part or
all of the Guaranteed Indebtedness; or (x) release any obligor with respect to
the Guaranteed Indebtedness.
No delay on the part of the Agent or any Holder in the exercise of any
right or remedy shall operate as a waiver thereof, and no single or partial
exercise by the Agent or any Holder of any right or remedy shall preclude any
further exercise thereof by the Agent or such Holder or any other Holder nor
shall any modification or waiver of any of the provisions of this Guaranty be
binding upon the Agent or any Holder except as expressly set forth in a writing
duly signed and delivered on the Agent's or such Holder's behalf by any
authorized officer of the Agent or such Holder. The Agent's or such Holder's
failure at any time or times hereafter to require strict performance by the
undersigned of any of the covenants, provisions, warranties, terms and
conditions contained in this Guaranty or any other promissory note, loan
agreement, lease, security agreement, mortgage, agreement, instrument or other
document now or at any time or times hereafter executed by the undersigned and
delivered to the Agent or such Holder shall not waive, affect or diminish any
right of the Agent or such Holder at any time or times hereafter to demand
strict performance therewith and no waiver of any such right shall be deemed to
occur by any act or knowledge of the Agent or such Holder, its agents, officers
or employees or be binding against the Agent or such Holder, except as expressly
set forth in a writing duly signed and delivered on the Agent's or such Holder's
behalf by an officer of the Agent or such Holder, respectively. No waiver by the
Agent or such Holder of any default shall operate as a waiver of any other
default or the same default on a future occasion, and no action by the Agent or
such Holder permitted hereunder shall in any way affect or impair the Agent's or
such Holder's rights or the obligations of the undersigned under this Guaranty.
No modification or waiver of any of the provisions of this Guaranty by the Agent
or any Holder nor any action by the Agent or any Holder permitted hereunder
shall affect or impair any other Holder's rights or the obligations of the
undersigned under this Guaranty unless such modification, waiver or action is
consented to in a writing duly signed and delivered on such Holder's behalf by
an officer of such Holder.
The undersigned hereby transfers and conveys to the Agent, for the
ratable benefit of the Holders, any and all balances, credits, deposits,
accounts, items and monies of the undersigned now or hereafter in the possession
or control of the Agent or any Holder, and the Agent and each Holder is hereby
given a lien upon, security title to, and a security interest in all property of
the undersigned of every kind and description now or hereafter in the possession
or control of the Agent and each Holder for any reason, including without
limitation all dividends and distributions on or other rights in connection
therewith. The Agent and each Holder may, without demand or notice of any kind,
at any time and from time to time when any amount shall be due and payable
hereunder, appropriate and apply toward the payment of such amount, and in such
order of application as the Agent may from to time to time determine, any
property, balances, credits, deposits, accounts, items or monies of SCC in the
possession or control of the Agent or any Holder for any purpose.
Section 2.04 WAIVERS OF UNDERSIGNED. The undersigned shall have no right
of subrogation, reimbursement or indemnity whatsoever and no right of recourse
to or with respect to any assets or property of SCTC or to any collateral for
said debts and obligations of SCTC to the Holders. The undersigned further
waives any right to demand security from SCTC and any benefit of, and any right
to participate in, any security or collateral given to any Holder, including,
without limitation, security given to any Holder to secure payment of the
Guaranteed Indebtedness or any other liability of SCTC to any Holder. The
undersigned also waives all set-offs and counterclaims and all presentments,
demands for performance, notices of nonperformance, protests, notices of
protest, notices of dishonor, and diligence with respect to the Guaranteed
Indebtedness and the obligations of the undersigned hereunder, the filing of any
claims with a court in the event of receivership or bankruptcy of SCTC, and
notices of acceptance of this Guaranty. The undersigned further waives all
notices that the principal amount, any payment or any portion thereof, any
interest and/or premium on all or any part of the Guaranteed Indebtedness is
due, notices of the creation or existence of the Guaranteed Indebtedness,
notices of any and all proceedings to collect from SCTC, any endorser or any
other guarantor of all or any part of the Guaranteed Indebtedness, or from
anyone else, and, to the extent permitted by law, notices of exchange, sale,
surrender or other handling of any security or collateral given to any Holder to
secure payment of the Guaranteed Indebtedness. The undersigned consents and
agrees that no Holder shall be under any obligation to marshall any assets in
favor of the undersigned or against or in payment of any or all of the
Guaranteed Indebtedness. The undersigned waives any and all requirements of
diligence in collection or protection of realization upon the Guaranteed
Indebtedness or any collateral granted to the Agent or any Holder pursuant to
the Loan Documents or in enforcing any remedy available to the Agent or any
Holder under any of the Loan Documents. The undersigned waives the benefit of
N.C. Gen. Stat. Sections 26-7 through 26-9, inclusive. The undersigned also
waives any provisions under the applicable law of any jurisdiction, relating to
the undersigned's right to discharge upon the undersigned's giving notice to the
Agent or any Holder to proceed against SCTC for collection after the Guaranteed
Indebtedness is due and payable, and the failure or refusal of the Agent or any
Holder to commence an action or foreclose any collateral within any specific
time period or at any time.
Section 2.05 REVIVAL. The undersigned further agrees that to the extent
that SCTC or the undersigned make a payment or a transfer of an interest in any
property to any Holder, which payment or transfer or any part thereof is
subsequently invalidated, declared to be fraudulent or preferential, or
otherwise is avoided, and/or required to be repaid to SCTC or the undersigned,
the estate of SCTC or the undersigned, a trustee, receiver or any other party
under any bankruptcy law, state or federal law, common law or equitable cause,
then to the extent of such avoidance or repayment, the obligation or part
thereof intended to be satisfied shall be revived and continued in full force
and effect as if said payment had not been made.
Section 2.06 SUBORDINATION; BANKRUPTCY. The undersigned further agrees
that any and all present and future debts and obligations of SCTC to the
undersigned and any and all claims of the undersigned against SCTC, or any of
its properties, howsoever arising, shall be subordinate and subject in right of
payment to the prior payment, in full, of the Guaranteed Indebtedness and as
security for this Guaranty, the undersigned hereby assigns to each Holder all
claims of any nature which the undersigned may now or hereafter have against
SCTC. If SCTC or the undersigned should at any time become insolvent or make a
general assignment for the benefit of creditors, or if a proceeding in
bankruptcy or any insolvency or reorganization proceedings shall be filed or
commenced by, against or in respect of SCTC or the undersigned, any and all
obligations of the undersigned shall, at the option of any Holder, become due
and payable, and the undersigned shall forthwith pay to the Holders the full
amount which would be payable hereunder by the undersigned if all Guaranteed
Indebtedness was then due and payable.
Section 2.07 OBLIGATION TO KEEP INFORMED. The undersigned hereby assumes
responsibility for keeping itself informed of the financial condition of SCTC
and any and all endorsers and/or other guarantor of all or any part of the
Guaranteed Indebtedness and of all other circumstances bearing upon the risk of
nonpayment of the Guaranteed Indebtedness or any part thereof, and the
undersigned hereby agrees that no Holder shall have a duty to advise the
undersigned of information known to any Holder regarding such condition or any
such circumstance. In the event that any Holder, in its sole discretion,
undertakes at any time or from time to time to provide any such information to
the undersigned, that Holder or other Holders shall not be under any obligation
(i) to undertake any investigation, whether or not a part of their regular
business routine, (ii) to disclose any information which any Holder wishes to
maintain confidential, or (iii) to make any other or future disclosures of such
information or any other information to the undersigned.
ARTICLE III. REPRESENTATIONS AND WARRANTIES
--------------------------------------------
The undersigned hereby represents and warrants to the Agent and the
Holders that:
Section 3.01 ORGANIZATION AND GOOD STANDING. The undersigned and each of
its Subsidiaries are corporations duly incorporated, validly existing and in
good standing under the laws of the respective states of their incorporation,
are duly qualified and in good standing as foreign corporations authorized to do
business in every jurisdiction where the failure to so qualify would have a
Material Adverse Effect on the undersigned or any of such Subsidiaries and have
the requisite corporate power and authority to own their respective properties
and to carry on their respective businesses as now conducted and as proposed to
be conducted.
Section 3.02 DUE AUTHORIZATION. The undersigned (i) has the corporate
power and requisite authority to execute, deliver and perform this Guaranty and
the Subordination Agreement and (ii) is duly authorized to, and has been
authorized by all necessary corporate action, to execute, deliver and perform
this Guaranty and the Subordination Agreement.
Section 3.03 NO CONFLICTS OR CONSENTS. Neither the execution and
delivery of this Guaranty or the Subordination Agreement, nor the consummation
of the transactions contemplated therein, nor performance of and compliance with
the terms and provisions thereof will (i) violate or conflict with any provision
of its articles of incorporation or bylaws, (ii) violate, contravene or
materially conflict with any law, regulation (including without limitation
Regulation U or Regulation X), order, writ, judgment, injunction, decree or
permit applicable to it, (iii) violate, contravene or materially conflict with
contractual provisions of, or cause an event of default under, any indenture,
loan agreement, mortgage, deed of trust, contract or other agreement or
instrument to which it is a party or by which it may be bound or (iv) result in
or require the creation of any lien, security interest or other charge or
encumbrance (other than those contemplated in or in connection with this
Guaranty) upon or with respect its properties.
Section 3.04 CONSENTS. No consent, approval, authorization or order of,
or filing, registration or qualification with, any court or governmental
authority or third party is required in connection with the execution, delivery
or performance of this Guaranty or the Subordination Agreement.
Section 3.05 ENFORCEABLE OBLIGATIONS. This Guaranty and the
Subordination Agreement have been duly executed and delivered by the undersigned
and constitute the legal, valid and binding obligations of the undersigned
enforceable in accordance with their respective terms, except as may be limited
by bankruptcy or insolvency laws or similar laws affecting creditors' rights
generally.
Section 3.06 FINANCIAL CONDITION. The financial statements and financial
information provided to the Holders, consisting of, among other things, the most
recent audited consolidated balance sheet of the undersigned and its
Subsidiaries together with related consolidated statements of income, retained
earnings and cash flows certified by Deloitte & Touche, certified public
accountants, as true and correct, fairly represent the financial condition of
the undersigned and its Subsidiaries as of such date. Such financial statements
were prepared in accordance with generally accepted accounting principles
applied on a consistent basis. The undersigned has also furnished to the Holders
internally prepared and unaudited financial projections. Such financial
projections were prepared based on the best information available to the
undersigned and, where applicable, were prepared in accordance with Generally
Accepted Accounting Principles applied on a Consistent Basis. Such financial
projections are accurate, to the best knowledge of the undersigned, in all
material respects, and since the date of such financial projections there have
occurred no changes or circumstances which have had or are likely to have a
Material Adverse Effect on the undersigned or its Subsidiaries
Section 3.07 NO DEFAULT. No Default or Event of Default presently
exists.
Section 3.08 LIENS. Except for Permitted Liens, the undersigned and its
Subsidiaries have good and marketable title to all of their respective
properties and assets free and clear of all liens, encumbrances, mortgages,
pledges, security interests and other adverse claims of any nature.
Section 3.09 INDEBTEDNESS. The undersigned and its Subsidiaries have no
Indebtedness (including without limitation reimbursement or other contingent
obligations) except as disclosed in the financial statements referenced in
Section 3.06 and as set forth in EXHIBIT C.
Section 3.10 LITIGATION. Except as disclosed in EXHIBIT D, there are no
actions, suits or legal, equitable, arbitration or administrative proceedings,
pending or, to the knowledge of the undersigned threatened, against the
undersigned or any of its Subsidiaries which, if adversely determined, could
have a Material Adverse Effect on the enforceability of this Guaranty.
Section 3.11 MATERIAL AGREEMENTS. Neither the undersigned nor any of its
Subsidiaries, is in default in any material respect under any contract, lease,
loan agreement, indenture, mortgage, security agreement or other material
agreement or obligation to which it is a party or by which any of its properties
is bound.
Section 3.12 BURDENSOME CONTRACTS. Neither the undersigned nor any of
its Subsidiaries is a party to, or bound by, any contract, lease, indenture,
loan agreement or other agreement or arrangement the performance of which would
have a Material Adverse Effect on the business, condition (financial or
otherwise), operations or properties of the undersigned or any such Subsidiary
or on the ability of the undersigned to perform its obligations under this
Guaranty or the Subordination Agreement.
Section 3.13 TAXES. The undersigned and its Subsidiaries have filed, or
caused to be filed, all material tax returns (federal, state, local and foreign)
required to be filed and paid all amounts of taxes shown thereon to be due
(including interest and penalties) and have paid all other taxes, fees,
assessments and other governmental charges (including mortgage recording taxes,
documentary stamp taxes and intangibles taxes) owing by it and its Subsidiaries,
except for such taxes (i) which are not yet delinquent or (ii) as are being
contested in good faith and by proper proceedings, and against which adequate
reserves are being maintained in accordance with generally accepted accounting
principles. The undersigned is not aware of any proposed material tax
assessments against it or any of its Subsidiaries. No extension of time for
assessment or payment by the undersigned of any federal, state or local tax in
effect other than extensions granted in the ordinary course of business which do
not have a Material Adverse Effect.
Section 3.14 COMPLIANCE WITH LAW. The undersigned and its Subsidiaries
are in compliance with all laws, rules, regulations, orders and decrees
(including without limitation environmental laws) applicable to it and its
Subsidiaries, or to its and its Subsidiaries' properties.
Section 3.15 ERISA. (i) No Reportable Event (as defined in ERISA) has
occurred and is continuing with respect to any Plan; (ii) no Plan has an
unfunded current liability (determined under Section 412 of the Code) or an
accumulated funding deficiency, (iii) no proceedings have been instituted, or,
to the knowledge of the undersigned, planned, to terminate any Plan, (iv)
neither the undersigned, any member of a Controlled Group, nor any
duly-appointed administrator of a Plan (A) has instituted or intends to
institute proceedings to withdraw from any Multi-Employer Pension Plan (as
defined in Section 3(37) or ERISA); and (v) each Plan has been maintained and
funded in all material respects with its terms and with the provisions of ERISA
applicable thereto.
Section 3.16 SUBSIDIARIES. The undersigned has no Subsidiaries except as
set forth in EXHIBIT E.
Section 3.17 GOVERNMENT REGULATION. Neither the undersigned nor any of
its Subsidiaries is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Investment Company Act of 1940
or the Interstate Commerce Act, each as amended. In addition, neither the
undersigned nor any of its Subsidiaries is (i) an "investment company"
registered or required to be registered under the Investment Company Act of
1940, as amended, and is not controlled by such a company, or (ii) a "holding
company," or a "Subsidiary company" of a "holding company," or an "affiliate" of
a "holding company" or of a "Subsidiary" or a "holding company," within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
Section 3.18 HAZARDOUS SUBSTANCES. The real property owned or leased by
the undersigned or any of its Subsidiaries or on which the undersigned or any of
its Subsidiaries operates (the "Subject Property") is free from "hazardous
substances" as defined in the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, 42 U.S.C. Sub Section 9601 et seq., as amended, and
the regulations promulgated thereunder; no portion of the Subject Property is
subject to federal, state or local regulation or liability because of the
presence of stored, leaked or spilled petroleum products, waste materials or
debris, "PCB's" or PCB items (as defined in 40 C.F.R. Section 763.3),
underground storage tanks, "asbestos" (as defined in 40 C.F.R. Section 763.63)
or the past or present accumulation, spillage or leakage of any such substance;
and the undersigned and each of its Subsidiaries is in substantial compliance
with all Environmental Laws and the undersigned knows of no complaint or
investigation regarding real property which it or any of its Subsidiaries' owns
or leases or on which it or any of its Subsidiaries' operates.
Section 3.19 PATENTS, ETC. The undersigned and its Subsidiaries possess
all material patents, trademarks, service marks, trade names, copyrights,
licenses and other rights, free from burdensome restrictions, that are necessary
for the operation of its and its Subsidiaries' businesses as presently conducted
and as proposed to be conducted.
Section 3.20 SOLVENCY. The undersigned is, and after consummation of
this Guaranty and after giving effect to all Indebtedness incurred hereunder,
will be solvent.
ARTICLE IV. AFFIRMATIVE COVENANTS
----------------------------------
The undersigned hereby covenants and agrees that so long as the Loan
Agreements are in effect and until the Loans, all obligations in respect of
Letters of Credit, and other obligations arising under the Documents, together
with interest, fees and other charges thereunder, have been paid in full and the
Commitments thereunder shall have terminated:
Section 4.01 INFORMATION COVENANTS. The undersigned will furnish, or
cause to be furnished, to the Agent and each Holder:
(a) ANNUAL FINANCIAL STATEMENTS. As soon as available and in any event
within 90 days after the close of each fiscal year of the undersigned, a
consolidated and consolidating balance sheet of the undersigned and its
Subsidiaries as at the end of such fiscal year together with related statements
of income and retained earnings and of cash flows for such fiscal year, setting
forth in comparative form figures for the preceding fiscal year, all in
reasonable detail and examined independent certified public accountants of
recognized national standing acceptable to the Agent and whose opinion shall be
to the effect that such financial statements have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis and
shall not be qualified as to the scope of the audit or as to the status of the
undersigned as a going concern, and which shall be accompanied by a certificate
of such accountants stating that in the course of its regular audit of the
business of the undersigned which audit was conducted in accordance with
generally accepted auditing standards (including tests of the accounting records
and such other auditing procedures as were considered necessary in the
circumstances) they have obtained no knowledge of any Default or Event of
Default which has occurred and is continuing or, if in the opinion of such
accounting firm such a Default or Event of Default has occurred and is
continuing, a statement as to the nature thereof, all of the foregoing to be in
reasonable detail and in form and substance satisfactory to the Agent and the
Majority Holders. It is specifically understood and agreed that failure of the
annual financial statements to be accompanied by an opinion and certificate of
such accountants in form and substance as provided herein shall constitute a
Default hereunder.
(b) QUARTERLY FINANCIAL STATEMENTS. As soon as available and in any
event within 45 days after the end of each fiscal quarter, a consolidated and
consolidating balance sheet of the undersigned and its Subsidiaries as at the
end of such quarter together with related statements of income and retained
earnings and of cash flows for such quarter and for the portion of the fiscal
year ending with such quarter, in each case setting forth in comparative form
figures for the corresponding period of the preceding fiscal year, all in
reasonable form and detail acceptable to the Agent and the Majority Holders,
subject to changes resulting from audit and normal year-end adjustments.
(c) OFFICER'S CERTIFICATE. At the time of delivery of the financial
statements provided for in Sections 4.01(a) and (b) hereof, a certificate of an
authorized financial officer of the undersigned, substantially in the form of
EXHIBIT G to the effect that such financial statements have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis and that the undersigned is in compliance with the terms of this Guaranty
and no Default or Event of Default exists, or if any Default or Event of Default
does exist specifying the nature and extent thereof and what action the
undersigned proposes to take with respect thereto. In addition, such officer's
certificate shall demonstrate compliance of the financial covenants contained in
Sections 4.10, 4.11, 4.12 and 5.06 by calculation thereof as of the end of each
such fiscal period.
(d) ACCOUNTANT'S CERTIFICATE. Within the period for delivery of the
annual financial statements provided in Section 4.01(a), a certificate of the
accountants conducting the annual audit stating that they have reviewed this
Guaranty and stating further whether, in the course of their audit, they have
become aware of any Default or Event of Default (insofar as any such terms or
provisions pertain to accounting matters) and, if any such Default or Event of
Default exists, specifying the nature and extent thereof.
(e) AUDITOR'S REPORTS. Promptly upon receipt thereof, a copy of any
other report submitted by independent accountants to the undersigned in
connection with any annual, interim or special audit of the books of the
undersigned including any management letter.
(f) SEC AND OTHER REPORTS. Promptly upon transmission thereof, copies of
any filings and registrations with, and reports to, (i) the Securities and
Exchange Commission, or any successor agency, by the undersigned, and copies of
all financial statements, proxy statements, notices and reports as the
undersigned shall send to its shareholders or to the holders of any other
Indebtedness (including specifically without limitation, any Subordinated
Indebtedness or the indebtedness under the Senior Notes) in their capacity as
such holders and (ii) the United States Environmental Protection Agency, or any
state or local agency responsible for environmental matters, the United States
Occupational Health and Safety Administration, or any state or local agency
responsible for health and safety matters, or any successor agencies or
authorities concerning environmental, health or safety matters.
(g) OTHER INFORMATION. With reasonable promptness upon any
such request, such other information regarding the business, properties
or financial condition of the undersigned as the Agent or the Majority
Holders may reasonably request.
(h) NOTICE OF DEFAULT OR LITIGATION. Upon the undersigned obtaining
knowledge thereof, it will give written notice to the Agent and the Holders (i)
immediately, of the occurrence of an event or condition consisting of a Default
or Event of Default, specifying the nature and existence thereof and what action
the undersigned proposes to take with respect thereto, and (ii) promptly, but in
any event within 5 Business Days, of the occurrence of any of the following with
respect to the undersigned or any of its Subsidiaries: (A) the pendency or
commencement of any litigation, arbitral or governmental proceeding against the
undersigned or any of its Subsidiaries which is likely to have, or could have, a
Material Adverse Effect on the business, properties, assets, condition
(financial or otherwise) or prospects of the undersigned or any of its
Subsidiaries or of the undersigned to perform its obligations hereunder, (B) any
levy of an attachment, execution or other process against its or any of its
Subsidiaries' assets having a value of $250,000 or more, (C) the occurrence of
an event or condition which shall constitute a default or event of default under
any other agreement for borrowed money, including without limitation any default
in respect of the European Credit Facilities, (D) any development in its or any
Subsidiary's business or affairs which has resulted in, or which the undersigned
reasonably believes may result in, a Material Adverse Effect or (E) the
institution of any proceedings against, or the receipt of notice of potential
liability or responsibility for violation, or alleged violation of any federal,
state or local law, rule or regulation, including but not limited to,
regulations promulgated under the Resource Conservation and Recovery Act of
1976, 42 U.S.C. 6901 et seq., regulating the generation, handling or disposal of
any toxic or hazardous waste or substance or the release into the environment or
storage of any toxic or hazardous waste or substance, the violation of which
could give rise to a material liability on the business, assets, properties
condition (financial or otherwise) or prospects of the undersigned, (F) any
notice or determination concerning the imposition of any withdrawal liability by
a multiemployer Plan on the undersigned or any of its ERISA Affiliates, the
determination that a multiemployer Plan is, or is expected to be, in
reorganization within the meaning of Title IV or ERISA, the termination of any
Plan, and the amount of liability incurred or which may be incurred in
connection with any such event.
Section 4.02 PRESERVATION OF EXISTENCE AND FRANCHISES. The undersigned
will do or cause to be done, all things necessary to preserve and keep in full
force and effect its existence, rights, franchises and authority and the
existence, rights, franchises and authority of each of its Subsidiaries.
Section 4.03 BOOKS, RECORDS AND INSPECTIONS. The undersigned will keep,
and will cause each of its Subsidiaries to keep, complete and accurate books and
records of its and each Subsidiary's transactions in accordance with good
accounting practices on the basis of generally accepted accounting principles
applied on a consistent basis (including the establishment and maintenance of
appropriate reserves). The undersigned will permit, and will cause each of its
Subsidiaries to permit, on reasonable notice officers or designated
representatives of any Holder to visit and inspect its and any of its
Subsidiary's books of account and records and any of its and any Subsidiary's
properties or assets (in whomever's possession) and to discuss the affairs,
finances and accounts of the undersigned or any of its Subsidiaries with, and be
advised as to the same by its or any Subsidiary's officers, directors and
independent accountants.
Section 4.04 COMPLIANCE WITH LAW. The undersigned will comply, and will
cause each of its Subsidiaries to comply, with all applicable laws, rules,
regulations and orders of, and all applicable restrictions imposed by all
applicable governmental bodies, foreign or domestic, or authorities and agencies
thereof (including quasi-governmental authorities and agencies), in respect of
the conduct of its or any Subsidiary's business and the ownership of its or any
Subsidiary's property (including all Environmental Laws and controls), except
where any such noncompliance would not have a Material Adverse Effect on the
business, assets, properties or condition (financial or otherwise) of the
undersigned or any of its Subsidiaries or on the ability of the undersigned or
any of its Subsidiaries to perform its obligations hereunder.
Section 4.05 PAYMENT OF TAXES AND OTHER INDEBTEDNESS. The undersigned
will pay and discharge, and will cause its Subsidiaries to pay and discharge,
(i) all taxes, assessments and governmental charges or levies imposed upon it or
its Subsidiaries, or upon its or its Subsidiaries' income or profits, or upon
any of its properties, before they shall become delinquent, (ii) all lawful
claims (including claims for labor, materials and supplies) which, if unpaid,
might give rise to a Lien or charge upon any of its or any of its Subsidiaries'
properties, and (iii) except as prohibited hereunder, all of its or its
Subsidiaries' other Indebtedness as they shall become due; PROVIDED, however,
that neither the undersigned nor any of its Subsidiaries shall be required to
pay any such tax, assessment, charge, levy, claim or Indebtedness which is being
contested in good faith by appropriate proceedings and as to which adequate
reserves therefor have been established in accordance with generally accepted
accounting principles, UNLESS the failure to make any such payment shall give
rise to an immediate right to foreclosure on a lien securing such amounts, in
which case the undersigned or any such Subsidiary shall make immediate payment
of or shall otherwise satisfy such tax, assessment, charge, levy, claim or
Indebtedness upon commencement of proceedings to foreclose on any such lien.
Section 4.06 INSURANCE. The undersigned will at all times maintain, and
will cause its Subsidiaries to maintain in full force and effect insurance
(including worker's compensation insurance, liability insurance, casualty
insurance and business interruption insurance) in such amounts, covering such
risks and liabilities and with such deductibles or self-insurance retentions as
are in accordance with normal industry practice. The undersigned will promptly
provide evidence of the foregoing insurance upon the request of any Bank. If the
undersigned fails to maintain any of the foregoing insurance, the Agent shall
have the right to obtain such insurance at the undersigned's expense.
Section 4.07 MAINTENANCE OF PROPERTY. The undersigned will maintain and
preserve, and will cause its Subsidiaries to maintain and preserve, its and its
Subsidiaries' properties and equipment used or useful in its or its
Subsidiaries' business (in whomsoever's possession as they may be) in good
repair, working order and condition, normal wear and tear excepted, and will
make, or cause to be made, in such properties and equipment from time to time
all repairs, renewals, replacements, extensions, additions, betterments and
improvements thereto as may be needed or proper, to the extent and in the manner
customary for companies in similar businesses.
Section 4.08 PERFORMANCE OF OBLIGATIONS. The undersigned will perform in
all material respects, and will cause its Subsidiaries to perform in all
material respects, all of its and its Subsidiaries' obligations (including,
except as may be otherwise prohibited or contemplated hereunder, payment of
Indebtedness in accordance with its terms) under the terms of all material
agreements, indentures, mortgages, security agreements or other debt instruments
to which it or any Subsidiary is a party or by which it or any Subsidiary is
bound.
Section 4.09 ERISA. The undersigned will (a) at all times, make prompt
payment of all contributions required under all employee pension benefit plans
("Plans") and required to meet the minimum funding standard set forth in ERISA
with respect to its Plans; (b) promptly upon request, furnish the Agent and the
Holders copies of each annual report/return (Form 5500 Series), as well as all
schedules and attachments required to be filed with the Department of Labor
and/or the Internal Revenue Service pursuant to ERISA, and the regulations
promulgated thereunder, in connection with each of its Plans for each Plan Year;
(c) notify the Agent immediately of any fact, including, but not limited to, any
Reportable Event (as defined in ERISA) arising in connection with any of its
Plans, which might constitute grounds for termination thereof by the PBGC or for
the appointment by the appropriate United States District Court of a trustee to
administer such Plan, together with a statement, if requested by the Agent, as
to the reason therefor and the action, if any, proposed to be taken with respect
thereof; and (d) furnish to the Agent, upon its request, such additional
information concerning any of its Plans as may be reasonably requested. The
undersigned will not, nor will it permit any of its ERISA Affiliates to (I)
terminate a Plan if any such termination would give rise to or result in any
material liability, or (II) cause or permit to exist any Termination Event under
ERISA or other event or condition which presents a material risk of termination
at the request of the PBGC.
Section 4.10 TANGIBLE NET WORTH. The undersigned shall maintain Tangible
Net Worth of at least (i) $80,000,000 from April 1, 1996 through and including
September 30, 1996, (ii) $82,500,000 from October 1, 1996 through and including
December 31, 1996, and (iii) $85,000,000 on and at all times after January 1,
1997.
ARTICLE V. NEGATIVE COVENANTS
------------------------------
The undersigned hereby covenants and agrees that so long as the Loan
Agreements are in effect and until the Loans, all obligations in respect of the
Letters of Credit, and all other obligations arising under the Documents,
together with interest, fees and other charges thereunder, have been paid in
full and the Commitments thereunder shall have terminated:
Section 5.01 NATURE OF BUSINESS. The undersigned will not, nor will it
permit any of its Subsidiaries to, substantively alter the character or conduct
of its or any Subsidiary's business from that conducted as of the Closing Date.
Section 5.02 CONSOLIDATION, MERGER, SALE OF ASSETS, ETC. The undersigned
will not, nor will it permit any of its Subsidiaries to, dissolve, liquidate, or
wind up its or any Subsidiary's affairs, or enter into any transaction of merger
or consolidation, sell, transfer, lease or otherwise dispose of all or any
substantial part of its or any Subsidiary's property or assets (other than in
the ordinary course of business for fair consideration); provided, however,
notwithstanding the foregoing, SCC may permit its applicable Subsidiaries to
conclude the Sale of the Wool Group so long as the net proceeds of such sale are
used and applied in accordance with the terms of the Master Facilities
Agreement; and provided, further, that SCC may, or permit its applicable
Subsidiaries to, sell, transfer or otherwise dispose of the capital stock or
assets of Bela Duty Free Import-Export GmbH and Stancom Building Supplies, Inc.
in arms'-length transactions for fair consideration.
Section 5.03 FISCAL YEAR. The undersigned will not, nor will it permit
any Subsidiary to, change, or permit a change, in its or any Subsidiary's fiscal
year.
Section 5.04 ARTICLES AND BYLAWS. The undersigned will not, nor will it
permit any Subsidiary to, amend, modify or change in any respect its or any
Subsidiary's articles of incorporation (corporate charter or other similar
organizational document) or bylaws if such amendment, modification or change
would have a Material Adverse Effect.
Section 5.05 NO DIVIDEND RESTRICTION. The undersigned will not, nor will
it permit any Subsidiary to, enter into, assume or become subject to any
agreement prohibiting or otherwise restricting or limiting the ability of any
Subsidiary of the undersigned to pay dividends to the undersigned except for (i)
the limitation on the payment of dividends set forth in the Loan Agreements,
(ii) the limitation on the payment of dividends set forth in the Master
Facilities Agreement, and (iii) the limitation on the payment of dividends in
those certain "ringed fence" wool group credit facilities, extended to certain
of the Subsidiaries, existing as of the date hereof.Section 5.06 LEVERAGE RATIO.
The undersigned will not permit its Leverage Ratio (i) to exceed 4.75 to 1.0 at
any time prior to the Sale of the Wool Group, and (ii) to exceed 3.5 to 1.0 at
any time after the Sale of the Wool Group.
Section 5.07 LIENS. The undersigned will not permit any of its
Subsidiaries located outside of the United States to pledge their respective
assets to secure their respective credit facilities, except (i) pursuant to the
terms and conditions of, or as disclosed in, the Master Facilities Agreement,
(ii) pursuant to or in connection with the Wool Group Facility (as defined in
the Master Facilities Agreement), or (iii) in connection with securing lines of
credit in individual countries where the assets of a particular subsidiary are
pledged to secure local facilities used by such subsidiary for general working
capital purposes.
Section 5.08 NEGATIVE PLEDGE OF CAPITAL STOCK. Except with respect to
any Permitted Liens, the undersigned shall not pledge or otherwise grant a Lien
upon any of the capital stock of any of its Subsidiaries.
ARTICLE VI. EVENTS OF DEFAULT
------------------------------
Section 6.01 EVENTS OF DEFAULT. The occurrence of any of the following
events shall constitute an "Event of Default" hereunder:
(a) PAYMENT. The undersigned shall default in the payment
when due of any of any of its obligations hereunder; or
(b) REPRESENTATIONS. Any representation, warranty or statement made or
deemed to be made by the undersigned herein, in any statement or certificate
delivered or required to be delivered pursuant hereto or thereto shall prove
untrue in any material respect on the date as of which it was deemed to have
been made; or
(c) COVENANTS. The undersigned shall (i) default in the due
performance or observance of any term, covenant or agreement contained in
Section 4.10 or 5.06 hereof,(ii) default in the due performance or observance of
any term, covenant or agreement contained in Section 5.01, 5.02, 5.03, 5.04 or
5.05 hereof or (iii) default in the due performance or observance by it of any
term, covenant or agreement (other than those referred to in subsection (a),
(b), (c)(i) or (c)(ii) of this Section 6.01) contained in this Guaranty and such
default shall continue unremedied for a period of at least 30 days after notice
thereof by the Agent or any Bank to the undersigned; or
(d) GUARANTY. This Guaranty or any provision thereof shall cease to be
in full force and effect, or the undersigned or any Person acting by or on
behalf of the undersigned shall deny or disaffirm the undersigned's obligations
under this Guaranty, or the undersigned shall default in the due performance or
observance of any term, covenant or agreement on its part to be performed or
observed pursuant to this Guaranty; or
(e) BANKRUPTCY, ETC. The undersigned or any of its Subsidiaries shall
commence a voluntary case concerning itself under the Bankruptcy Code in Title
11 of the United States Code (as amended, modified, succeeded or replaced, from
time to time, the "BANKRUPTCY CODE"); or an involuntary case is commenced
against the undersigned or any of its Subsidiaries under the Bankruptcy Code and
the petition is not dismissed within 60 days, after commencement of the case; or
a custodian (as defined in the Bankruptcy Code) is appointed for, or takes
charge of all or substantially all of the property of the undersigned or any of
its Subsidiaries; or the undersigned or any of its Subsidiaries commences any
other proceeding under any reorganization, arrangement, adjustment of the debt,
relief of creditors, dissolution, insolvency or similar law of any jurisdiction
whether now or hereafter in effect relating to the undersigned or any of its
Subsidiaries; or there is commenced against the undersigned or any of its
Subsidiaries any such proceeding which remains undismissed for a period of 30
days; or the undersigned or any of its Subsidiaries is adjudicated insolvent or
bankrupt; or any order of relief or other order approving any such case or
proceeding is entered; or the undersigned or any of its Subsidiaries suffers
appointment of any custodian or the like for it or for any substantial part of
its property to continue undischarged or unstayed for a period of 30 days; or
the undersigned or any of its Subsidiaries makes a general assignment for the
benefit of creditors; or any corporate action is taken by the undersigned or any
of its Subsidiaries for the purpose of effecting any of the foregoing; or
(f) DEFAULTS UNDER OTHER AGREEMENTS. (i) The undersigned shall (x)
default in any payment (beyond the applicable grace period with respect thereto,
if any) with respect to any Indebtedness in excess of $100,000 or (y) default in
the observance or performance of any agreement or condition relating to any such
Indebtedness or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event or condition shall occur or condition
exist, the effect of which default or other event or condition is to cause, or
permit, the holder or holders of such Indebtedness (or trustee or agent on
behalf of such holders) to cause (determined without regard to whether any
notice or lapse of time is required), any such Indebtedness to become due prior
to its stated maturity; or (ii) any such Indebtedness of the undersigned shall
be declared due and payable, or required to be prepaid other than by a regularly
scheduled required prepayment, prior to the stated maturity thereof; or
(g) JUDGMENTS. One or more judgments or decrees shall be entered against
the undersigned involving a liability of $500,000 or more in any instance, or
$1,000,000 or more in the aggregate for all such judgments and decrees for the
undersigned (not paid or fully covered by insurance provided by a carrier who
has acknowledged coverage) and any such judgments or decrees shall not have been
vacated, discharged or stayed or bonded pending appeal within 60 days from the
entry thereof; or
(h) OWNERSHIP. Any Person other than Ery W. Kehaya or his immediate
family members shall possess, directly or indirectly, the power to (A) vote 25%
or more of the securities having ordinary voting power for the election of
directors of the undersigned or (B) direct or cause direction of the management
and policies of the undersigned, whether through the ownership of voting
securities, by contract or otherwise.
(i) ERISA. (i) The undersigned or any member of the Controlled
Group shall fail to pay when due an amount or amounts aggregating in excess of
$100,000 which it shall have become liable to pay under Title IV of ERISA; or
notice of intent to terminate a Plan or Plans which in the aggregate have
unfunded liabilities in excess of $1,000,000 (individually and collectively, a
"MATERIAL PLAN") shall be filed under Title IV of ERISA by the undersigned or
any member of the Controlled Group, any plan administrator or any combination of
the foregoing; or the PBGC shall institute proceedings under Title IV of ERISA
to terminate, to impose liability (other than for premiums under Section 4007 of
ERISA) in respect of, or to cause a trustee to be appointed to administer any
Material Plan; or a condition shall exist by reason of which the PBGC would be
entitled to obtain a decree adjudicating that any Material Plan must be
terminated; or there shall occur a complete or partial withdrawal from, or a
default, within the meaning of Section 4219(c)(5) of ERISA, with respect to, one
or more Multiemployer Plans which could cause one or more members of the
Controlled Group to incur a current payment obligation in excess of $500,000.
(j) EUROPEAN FACILITY. Without limiting the generality of the foregoing,
any default or event of default shall occur (and continues beyond any applicable
grace period) under or with respect to the European Credit Facilities or the
Master Facilities Agreement, or any loan or security documents executed in
connection therewith or governed or affected thereby; or the outstanding
commitments of the European lenders parties to the Master Facilities Agreement
shall be less than $100,000,000.00 at any time.
ARTICLE VII. MISCELLANEOUS
---------------------------
Section 7.01 SUCCESSORS AND ASSIGNS. This Guaranty shall be binding upon
the undersigned and upon the trustees, successors and assigns of the
undersigned, and shall inure to the benefit of each Holder's successors and
assigns; all references herein to SCTC and to the undersigned shall be deemed to
include their respective trustees, successors and assigns.
Section 7.02 NOTICES. All written communications provided for hereunder
shall be sent by first class mail or nationwide overnight delivery service (with
charges prepaid) and (i) if to a Holder, addressed to such Holder at the address
specified for such communications as the signature pages of the Loan Agreements,
or at such other address as such Holder shall have specified to the undersigned
in writing, (ii) if to any other Holder, addressed to such other Holder at such
address as such other Holder shall have specified to the undersigned in writing,
(iii) if to the undersigned, addressed to it at 2201 Miller Road, Wilson, North
Carolina 27893, Attention: Rick Hardy, or at such other address as the
undersigned shall have specified to each Holder in writing; provided, however,
that any such communication to the undersigned may also, at the option of any
Holder, be delivered by any other means either to the undersigned at its address
specified above or to any of its officers.
Section 7.03 AMENDMENT. Subject to the terms of the Loan Agreements,
this Guaranty may be amended, and the undersigned may take any action herein
prohibited, or omit to perform any act herein required to be performed by it, if
the undersigned shall obtain the written consent to such amendment, action or
omission to act, of each of the Holders. No course of dealing between the
undersigned and any Holder nor any delay in exercising any rights hereunder or
under any Note shall operate as a waiver of any rights of any Holder. As used
herein, the term "this Guaranty" and references thereto shall mean this Guaranty
as it may from time to time be amended or supplemented.
Section 7.04 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE
AGREEMENT. All representations and warranties contained herein or made in
writing by or on behalf of the undersigned in connection herewith shall survive
the execution and delivery of this Guaranty, the transfer by any Holder of any
Note or portion thereof or interest therein and the payment of any Note, and may
be relied upon by any Assignee, regardless of any investigation made at any time
by or on behalf of any Bank or any transferee. Subject to the preceding
sentence, this Guaranty embodies the entire agreement and understanding between
the Banks and the undersigned and supersedes all prior agreements and
understandings relating to the subject matter hereof.
Section 7.05 SATISFACTION REQUIREMENT. If any agreement, certificate or
other writing, or any action taken or to be taken, is by the terms of this
Guaranty required to be satisfactory to any Holder, the determination of such
satisfaction shall be made by such Holder, in the sole and exclusive judgment
(exercised in good faith) of the Holder making such determination.
Section 7.06 GOVERNING LAW. This Guaranty shall be construed and
enforced in accordance with, and the rights of the parties shall be governed by,
the laws of the State of North Carolina. The undersigned hereby submits to the
nonexclusive jurisdiction of the United States District Courts located in the
State of North Carolina and of any North Carolina State court sitting in
Charlotte for purposes of all legal proceedings arising out of or relating to
this Guaranty or the transactions contemplated hereby. The undersigned
irrevocably waives, to the fullest extent permitted by law, any objection which
it may now or hereafter have to the laying of the venue of any such proceeding
brought in such a court and any claim that any such proceeding brought in such a
court has been brought in an inconvenient forum.
Section 7.07 WAIVER OF JURY TRIAL. THE UNDERSIGNED, HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS GUARANTY, ANY OTHER FINANCING DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
Section 7.08 MISCELLANEOUS. Wherever possible each provision of this
Guaranty shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Guaranty shall be prohibited by or
invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity without invalidating the remainder of such
provision or the remaining provisions of this Guaranty. The descriptive headings
of the sections of this Guaranty are inserted for convenience only and do not
constitute a part of this Guaranty.
Section 7.09 CONSENT AND ACCEPTANCE. The undersigned hereby expressly
consents to and accepts the amendments effected by Amendment No. 3 to Loan and
Security Agreement, and the undersigned hereby fully restates and reaffirms its
guaranty of payment to each Holder of all of the Guaranteed Indebtedness upon
the terms and conditions set forth herein.
IN WITNESS WHEREOF, this Guaranty has been duly executed by the
undersigned as of the date first above written.
ATTEST: STANDARD COMMERCIAL CORPORATION
By: By:
--------------------------- ---------------------------
Title: Title:
------------------------ ------------------------
(Corporate Seal)
Conformed Copy Exhibit 4(iii)
DATED 16 July 1996
------------------
Standard Commercial Corporation
acting for itself and on behalf of
Trans-Continental Leaf Tobacco Corporation Limited, (1)
Standard Commercial Tobacco Company (UK) Limited,
Spierer Freres & Cie S.A.
Werkhof GmbH
- and -
Standard Commercial Tobacco Company, Inc. (2)
W.A. Adams Company
General Processors, Inc.
- and -
Commerzbank A.G., (3)
Deutsche Bank A.G. in Hamburg,
Westdeutsche Landesbank Girozentrale,
MeesPierson N.V.,
Norddeutsche Landesbank Girozentrale,
The Royal Bank of Scotland plc
- and -
Deutsche Bank A.G. in Hamburg (4)
- and -
MeesPierson N.V. (5)
- and -
The Banks (6)
-----------------------------------
SECOND SUPPLEMENTAL AGREEMENT
TO THE MASTER FACILITIES AGREEMENT
-----------------------------------
LOVELL WHITE DURRANT
65 Holborn Viaduct
London EC1A 2DY
THIS AGREEMENT is made the 16th day of July 1996
BETWEEN:
(1) STANDARD COMMERCIAL CORPORATION (Federal Tax Identification Number
13/1337610) whose registered office is at 2201 Miller Road, P.O. Box
450, Wilson NC 27894-0450, USA ("SCC") on behalf of itself and the other
Group Companies referred to in Recital C below;
(2) STANDARD COMMERCIAL TOBACCO COMPANY, INC. whose registered office
is at P O Box 450, Wilson, North Carolina 27894, USA, W.A. ADAMS
COMPANY whose registered office is at P O Box 1848, Wilson, North
Carolina, 27894, USA, and GENERAL PROCESSORS INC. whose registered
office is at P O Box 246, Oxford, North Carolina, 27565, USA. (the
"US Obligors")
(3) COMMERZBANK A.G, DEUTSCHE BANK A.G. in Hamburg, MEESPIERSON N.V.,
WESTDEUTSCHE LANDESBANK GIROZENTRALE, NORDDEUTSCHE LANDESBANK
GIROZENTRALE and THE ROYAL BANK OF SCOTLAND PLC (the "Steering
Committee");
(4) DEUTSCHE BANK A.G. in Hamburg (the "Lead Bank");
(5) MEESPIERSON N.V. (the "Security Agent");
(6) THE BANKS LISTED IN SCHEDULE I ("the Banks").
WHEREAS:
(A) On 5 May, 1995, the parties (except the US Obligors) entered into the
MFA (as defined below).
(B) The US Obligors now wish to become parties to the MFA and they and the
original parties also wish to amend and supplement the MFA as set out in
this Agreement.
(C) This Agreement is entered into by SCC (pursuant to Clause 37 of the MFA)
on behalf of itself and each Group Company which is a party to the MFA.
IT IS AGREED:
1. DEFINITIONS
1.1 Save as expressly provided in this Agreement, expressions defined in the
MFA shall bear the same meanings in this Agreement and principles of
interpretation applicable to the MFA shall also apply to this Agreement.
1.2 In this Agreement and the MFA (as amended by this Agreement) the
following expressions shall bear the following respective meanings and
shall (save for the definition of MFA) be deemed to be incorporated in
the MFA:-
"Aggregate Bank
Indebtedness" shall have the meaning given to that
expression in Clause 26.1 (Notification);"
"Bank Loss" shall have the meaning given to that
expression in Clause 26.9(a) (Final
Equalisation);
"Committed Banks" all Banks (to the extent and in respect
only of their respective Overall
Commitments);
"Default Date" the first date on which the
Original US Lenders declare an event of
default (however expressed) under the US
Facility Agreement;
"Default Event" an event of default (however expressed)
under the US Facility Agreement;
"Intercreditor Agreement" the intercreditor and subordination
agreement entered into or to be entered into between (1) the US
Obligors, (2) the Senior Lenders named therein with NationsBank
of Georgia, N.A., as their collateral and administration agent
and (3) the Junior Lenders named therein with the Security Agent
as their collateral and administration agent;
"Intercreditor Obligations" all obligations and liabilities incurred
by the Security Agent, the Lead Bank and/or any of the Banks in
connection with or arising out of the US Security and/or the
Intercreditor Agreement including, without limitation, any such
obligations and liabilities incurred by the Security Agent, the
Lead Bank and/or any of the Banks pursuant to a breach by any of
the Security Agent, the Lead Bank and/or any of the Banks of any
of the terms of the Intercreditor Agreement or by any of the US
Obligors of any of the terms of the US Facility Agreement and/or
the Intercreditor Agreement;
"Letter of Credit" the standby letter of credit issued or to be issued
by the Security Agent in favour of the US Collateral Agent in an
amount of up to $2 million;
"MFA"the Master Facilities Agreement dated 5th May, 1995 made between
Trans-Continental Leaf Tobacco Corporation Limited and Standard
Commercial Tobacco Company (UK) Limited (1) Spierer Freres & Cie
S.A. and Werkhof GmbH (2) Standard Commercial Corporation (3)
Commerzbank A.G., Deutsche Bank A.G. in Hamburg, Westdeutsche
Landesbank Girozentrale, MeesPierson N.V., Norddeutsche
Landesbank Girozentrale and The Royal Bank of Scotland plc (4)
Deutsche Bank A.G. in Hamburg (5) MeesPierson N.V. (6) and the
financial institutions identified therein as Banks (7) as amended
by a first supplemental agreement dated 1st February 1996 and
includes references to such agreement as extended, varied,
supplemented, restated and or replaced in any manner from time to
time (even if changes are made to the composition of the Finance
Parties and/or the other parties to such agreement) and
references to such agreement shall also include any document
which extends, supplements, varies, restates or replaces such
agreement;
"NationsBank" NationsBank N.A. (formerly NationsBank N.A. (Carolinas);
"Original US Lenders" the financial institutions party to the US
Facility Agreement at the Default Date;
"Proportion of Bank Loss" in relation to any Bank, means the
proportion which its Bank Loss bears to the aggregate of all the
Bank Loss of the Banks on the date on which the relevant notice
is delivered pursuant to Clause 26.9(a);
"Pro Rata Share" in relation to any Bank at any time, means a
percentage equal to that proportion which such Bank's Overall
Commitment at such time bears to the aggregate of all the Overall
Commitments of the Banks at such time;
"Reducing Portion" in relation to any Reducing Bank, means the amount
of its Reducing Outstandings and, in relation to any NonCommitted
Bank, means the amount set out next to its name in Schedule XII;
"SCC US Guarantee" the guarantee dated as of April 1995 given by SCC
to the financial institutions party to the US Facility Agreement;
"US Collateral Agent" NationsBank, N.A. (South), or any successor
appointed by the financial institutions party to the US Facility
Agreement from time to time;
"US Facility" the loan facilities made available to SCT(US) pursuant
to the US Facility Agreement;
"US Facility Agreement" (i) the loan and security agreement dated as
of May 2, 1995 made between SCT(US), the financial institutions
party to the agreement from time to time, NationsBank N.A.
(South) as agent for the Lenders (as defined therein) and First
Union Commercial Corporation as co-agent for the Lenders, as
further amended by Amendment No. 1 dated as of November 17 1995,
Amendment No. 2 dated as of December 31, 1995 and Amendment No. 3
dated as of 15 July 1996 and
(ii) the loan and security agreement dated 15 July 1996,
each as amended, supplemented or modified from time to time;
"US Obligations" means all the obligations and liabilities incurred by the
Security Agent in connection with or arising out of the US Security
and/or the Intercreditor Agreement and/or the Letter of Credit;
"US Obligors" each of SCT(US), W. A. Adams Company and General Processors
Inc;
"US Security" means:-
(a) the guarantee issued or to be issued by the US Obligors in favour
of the Security Agent;
(b) the security agreement granted or to be granted by the US
Obligors in favour of the Security Agent;
(c) any new or additional guarantees and/or security subsequently
given to the Security Agent by any US Obligor;
"WAFSSystem" the record keeping system used by the Tobacco Group (as varied
from time to time with the prior written consent of the Security
Agent) to record and monitor the uncommitted tobacco owned by the
Borrowers and other Tobacco Group Companies. WAFS is an acronym for
World Available for Sale;
1.3 Unless the context otherwise requires, any reference in this
Agreement to a Clause is to a Clause of the MFA.
1.4 The MFA shall be amended as set out below.
2. PARTIES, DEFINITIONS AND INTERPRETATION
2.1 The US Obligors shall become parties to the MFA and accordingly on page
one of the MFA the following shall be inserted as a new paragraph after
the paragraph numbered "(3)":
"(4) STANDARD COMMERCIAL TOBACCO COMPANY, INC. whose registered
office is at P O Box 450, Wilson, North Carolina 27894, USA,
W.A. ADAMS COMPANY whose registered office is at P O Box
1848, Wilson, North Carolina, 27894, USA, and GENERAL
PROCESSORS, INC. whose registered office is at P O Box 246,
Oxford, North Carolina, 27565, USA (the "US Obligors");" and
the existing paragraphs ( 4), (5), (6), and (7) shall be
renumbered accordingly.
2.2 The definition of "Disposal" shall be amended by adding as a new line
below paragraph (b) the new words "excluding in each case any sale or
disposition of shares, goodwill and/or assets by one Group Company to
another Group Company as part of an intra-Group reorganisation".
2.3 The definition of "Final Repayment Date" shall be deleted and
replaced with the following:-
""Final Repayment Date" 2 May, 1998 or, if that day is not a
Business Day, the immediately preceding
Business Day;"
2.4 The definition of "Group" shall be amended by adding after the
words "may agree from time to time" the new words "but excluding
Tobacco Processors (Lilongwe) Limited, Tobacco Processors
(Zimbabwe) (Pvt) Limited, Transhellenic Tobacco S.A. and The Siam
Tobacco Export Corporation Limited".
2.5 The definition of "Margin" shall be deleted and replaced by the
following:-
""Margin" for the purposes of Clause 7.1 (Interest Rate) means:
(a) for so long as the aggregate Overall Commitments are equal to or
exceed $189,000,000, 2.5 per cent. per annum;
(b) for so long as the aggregate Overall Commitments are equal to or
greater than $175,000,000 but are less than $189,000,000, 2.25
per cent. per annum;
(c) for so long as the aggregate Overall Commitments exceed
$150,000,000 but are less than $175,000,000, 1.75 per cent. per
annum; and
(d) for so long as the aggregate Overall Commitments are equal to or
less than $150,000,000, 1.25 per cent. per annum;"
2.6 The definition of "NationsBank Facility Agreement" shall be
amended by deleting the words "N.A. (Carolinas)" in line 2 and by
deleting the figure of $10,000,000 and replacing it with
"$6,241,231.50";
2.7 The definition of "NationsBank Holding Company Loans" shall be
deleted.
2.8 The definition of "Permitted Borrowings" shall be amended by
inserting a new Clause (m) in that definition as follows:
"(m) Borrowings by any Subsidiary of either of the Borrowers or by
any Wool Group Company by way of term loans on arms length terms
from any bank or financial institution."
2.9 The definition of "Permitted Encumbrances" shall be amended by
inserting a new Clause (n) as follows:
"(n) any Encumbrance granted by a Subsidiary of either of the
Borrowers or a Wool Group Company to a bank or financial
institution to secure Borrowings permitted under paragraph (m)
of the definition of Permitted Borrowings; and"
and by renumbering the existing paragraph (n) as (o);
2.10 The definition of "Proportion of Aggregate Outstandings" shall be
amended by inserting at the end of that definition the words "except in
relation to Clause 26.2 (Calculation) when it shall mean, in relation to
any Bank, the proportion which its Aggregate Bank Indebtedness bears to
the aggregate of all the Aggregate Bank Indebtedness of the Banks on the
Enforcement Date;"
2.11 The definition of "Security Documents" shall be amended by adding the
words "the US Security" in the first line of that definition after the
words "detailed in Schedule VI" and by adding the words "or guarantees"
after "substituted or additional security" in line
2.
2.12 The definition of "Surplus Cash" shall be amended by adding to the end
of paragraph (a) of that definition the words "including, without
limitation, amounts standing to the credit of the Reorganisation Account
(as defined in Clause 40 (Wool Group Reorganisation))" and by adding the
words "which amount shall, unless otherwise agreed between the Borrowers
and the Steering Committee (in consultation with Coopers & Lybrand) be
no less than $20,000,000" to the end of paragraph (ii) of that
definition.
2.13 The existing definition of "US Facility Agreement" shall be deleted.
2.14 A new Clause 1.3 shall be added as follows:
"1.3 Intercreditor Agreement: The Lead Bank (acting with Majority
Bank approval) and SCC hereby designate the Intercreditor
Agreement as a Finance Document."
3. SURVIVAL OF PROVISIONS OF MASTER FACILITIES AGREEMENT
Clause 2.6 (Survival of Provisions of the Master Facilities Agreement)
shall be amended by inserting after the words "Termination Date)" in
line 5 the words "6.3 (Counter Indemnity)," and by inserting after "8.4
(Waiver)" the words 21.15 (Security Agent and Letter of Credit).
4. REVIEW
Clause 4 (Review) shall be deleted and replaced by the words
"Deliberately Deleted".
5. FACILITIES
5.1 Clause 6.2 (Existing Facilities, Other Borrowers) shall be amended by
renumbering existing Clause 6.2 as 6.2(a) and adding the following new
provision as paragraph (b):-
"(b) (Save in respect of the Facility made available by The Royal
Bank of Scotland plc to SCTC identified in Schedule II to
this Agreement) where a Facility is available only to one
Borrower, such Facility shall henceforth be available to
both Borrowers (or either of them), subject to the other
Borrower signing such mandate or other documentation as the
relevant Bank may require to enable such Borrower to utilise
the relevant Facility on the same basis as the Borrower to
which it was originally made available."
5.2 Clause 6.3 (Counter Indemnity) shall be amended by:
(a) inserting "(A)" immediately after the heading "Counter
Indemnity:", and adding after the word "Bank" where it first
appears in line 1 of that Clause the words ", the Lead Bank
and/or the Security Agent";
(b) adding the words "including, without limitation, the Letter of
Credit" in the third line of that Clause (A) after the words
"guarantees or other obligations";
(c) deleting the word "such" in the fourth line of that Clause
(A) and replacing it with "a";
(d) adding the words "or otherwise contemplated by this Agreement"
before the words "each of the Borrowers" in the fourth line of
that Clause (A) and adding the words "and the US Obligors" after
the words "each of the Borrowers" in the fourth line of that
Clause (A);
(e) adding the words "or any of them" after "Obligations" in line 3
of Clause 6.3(A)(a) and deleting "hereof" in line 6 of that
Clause and inserting "thereof" in its place;
(f) inserting the words "and/or any US Obligor" after the word
"Borrower" in the first line of Sub-clause 6.3(A)(b) and adding
the words "or any US Obligor" after "Borrower" where it occurs
in lines 4, 5 and 7 of that clause;
(g) adding the words "or US Obligor" after "Borrower" in line 5 of
Clause 6.3(A)(c), and adding the words "and each US Obligor"
after "each of the Borrowers" in line 8 of Clause 6.3(c) and
after "accepted by the Borrowers" in line 9 of Clause 6.3(A)(c);
(h) adding the words "and the US Obligors" after "Borrowers" in
lines 1 and 4 of Clause 6.3(A)(d);
(i) adding a new sub-clause (B) as follows:
"SCTC hereby irrevocably requests the Security Agent to issue
the Letter of Credit and each of the Borrowers and each of the
US Obligors expressly confirms that the provisions of this
clause 6.3 shall apply to the Letter of Credit. SCTC hereby
undertakes that, prior to the issue by the Security Agent of the
Letter of Credit it will deposit with the Lead Bank cash
collateral of not less than US$2,000,000 to secure its
obligations under this Clause 6.3 and will grant to the Security
Agent a charge over such deposit in the form notified by the
Security Agent to the Borrower prior to 16 July 1996."
(j) adding a new sub-clause (C) as follows:
"(C) In consideration of the Finance Parties entering into
the Intercreditor Agreement each of the Borrowers and
the US Obligors jointly and severally:
(a) agrees to keep each of the Security Agent, the
Lead Bank and each of the Banks indemnified from
and against all actions, proceedings,
liabilities, claims, demands, damages, costs and
expenses in relation to or arising out of or
appearing to the Security Agent, the Lead Bank
and/or any of the Banks to arise out of the
Intercreditor Obligations or any indemnity given
by any of them in relation thereto and to pay to
the Security Agent, the Lead Bank and each of
the Banks on demand all payments, losses, costs,
charges, damages and expenses suffered or
incurred by each of them in consequence thereof
or arising in connection therewith, whether
directly or indirectly;
(b) irrevocably authorises the Finance Parties to
debit to any account of a Borrower or US Obligor
with any of the Finance Parties all such
payments, losses, costs, charges, damages and
expenses and agrees that the Finance Parties
shall be entitled at any time without notice to
or consent from a Borrower or US Obligor to
apply or transfer any money at any time standing
to the credit of any account of such Borrower or
US Obligor in part payment or payment of such
sums of money as may now or hereafter from time
to time be or become due or arising from such
Borrower or US Obligor pursuant to paragraph (a)
above;
(c) irrevocably authorises and directs the Finance
Parties to make any payments and comply with any
demands which may be claimed or appear to any of
the Finance Parties to be claimed or made under
or pursuant to any of the Intercreditor
Obligations or any indemnity given by any
Finance Party in relation thereto without any
reference to or further authority from any
Borrower or US Obligor and agrees that any
payment made by the Security Agent, the Lead
Bank and/or any Bank in accordance with or
appearing to such person to be in accordance
with any of the Intercreditor Obligations and/or
any indemnities of any Finance Party in respect
thereof shall be binding upon each of the
Borrowers and each US Obligor and shall be
accepted by the Borrowers and US Obligors as
conclusive evidence that such person was liable
to make such payment or comply with such demand
and the Security Agent, the Lead Bank and each
of the Banks may at any time determine or
procure the determination of any of the
Intercreditor Obligations and/or any of the
indemnities of any of them in respect thereof;
(d) agrees that the liability of the Borrowers and
the US Obligors under this Clause 6.3(C) shall
apply also to any extension or renewal of the
Intercreditor Obligations (whether in the same
terms or otherwise and whether arising by
agreement, operation of law or otherwise
howsoever) and the liabilities and obligations
of the Borrowers and the US Obligors under this
Clause 6.3(C) shall continue in respect of the
Intercreditor Obligations as so extended or
renewed;
(e) agrees to provide to the Security Agent, the
Lead Bank and/or any Bank on demand made at any
time following the declaration by the Lead Bank
of an Event of Default in accordance with Clause
17.1, cash cover for all liabilities of each of
the Security Agent, the Lead Bank and each Bank
under or pursuant to the Intercreditor
Obligations (actual or contingent) at the time
of such demand; and
(f) agrees that the indemnity contained in this
Clause 6.3(C) shall be in addition to and not in
substitution for any other indemnity or
reimbursement right which the Security Agent,
the Lead Bank and/or any Bank may hold as at the
date of this Agreement."
6. REPAYMENT
6.1 Clause 8.5 (Extension) shall be deleted and replaced by the words
"Deliberately Deleted".
6.2 Clause 8.6 (Reductions) shall be amended to read as follows:-
"(a) Each Reducing Bank shall be entitled to receive reductions in
its Outstandings to the level of its Overall Commitment as set
out below and the Borrowers shall procure that payments are made
to each Reducing Bank in reduction of its Outstandings in
accordance with the terms of this Agreement. No amount so paid
may be redrawn and the limit for the relevant Facility shall be
reduced accordingly.
(b) Each Committed Bank shall be entitled (at its option) to
receive permanent reductions in its Outstandings in
accordance with sub-clause (f) below and Clause 15.2(d)
(Cash Flow Forecast) and the Borrowers shall procure that
payments are made to each Committed Bank which elects to
receive them in accordance with the terms of this Agreement.
On receipt by a Committed Bank of a payment in accordance
with sub-clause (f) below, the Overall Commitment of such
Committed Bank shall be permanently reduced accordingly.
(c) Each Reducing Bank and each Non-Committed Bank shall be
entitled to receive on 16 July 1996, a payment of an amount
equal to 20 per cent. of its Reducing Portion.
(d) Each Reducing Bank and each Non-Committed Bank shall, subject to
Clause 15.3(c) (Cash Flow Forecast) and to there being
sufficient Surplus Cash (having regard to the provisions of
Clause 15.3) to satisfy those payments together with any
payments contemplated under Clause 8.6(h) and 15.3(c), be
entitled to receive the following payments:-
(i) no later than 30 days after 30 September, 1996, a
payment equal to 30 per cent. of its Reducing Portion;
(ii) no later than 30 days after 31 December, 1996, a
payment equal to 25 per cent. of its Reducing Portion;
and
(iii) no later than 30 days after 31 March, 1997, a payment
equal to 25 per cent. of its Reducing Portion.
All payments so received shall be applied in permanent reduction
of (aa) the Outstandings of each such Reducing Bank and (bb) the
facility and commitment made available by each such
Non-Committed Bank. If, at any date on which a payment falls to
be made under this Clause 8.6(d), there is insufficient Surplus
Cash (having regard to the provisions of Clause 15.3) to satisfy
the full amount payable to a Reducing Bank or a Non-Committed
Bank on such date, the amount payable on such date shall be
reduced accordingly, but any shortfall shall be carried forward
into the next Trading Period and shall be payable 30 days after
the next following Quarter Date, provided that, at such next
Quarter Date, there is sufficient Surplus Cash (having regard to
the provisions of Clause 15.3) to satisfy such payment. If there
is insufficient Surplus Cash (having regard to the provisions of
Clause 15.3) to pay any shortfall at the next Quarter Date, such
shortfall shall be carried forward into each successive Trading
Period until, as at any Quarter Date, there is sufficient
Surplus Cash (having regard to Clause 15.3) to satisfy such
shortfall.
(e) The Lead Bank shall, as soon as reasonably practicable after
each Quarter Date (commencing with 31 December 1996), notify
each Committed Bank in writing of the amount of the
permanent reduction to which it is entitled under Clause
8.6(f) and ask whether it wishes to accept such reduction.
If a Committed Bank notifies the Lead Bank that it elects to
forego its reduction or if it fails to reply to the Lead
Bank in writing within 14 days of the date of the notice
given by the Lead Bank, then no distribution shall be made
to such Committed Bank with respect to such Quarter Date
under Clause 8.6(f) and the amount which would otherwise
have been distributable to it shall be shared amongst the
Committed Banks which elect to receive such reductions pro
rata to their Overall Commitments at such Quarter Date and
if, after doing so, there is any surplus left, such surplus
shall be applied rateably in reduction of Outstandings (but
not Commitments) under the Facilities at such time. If a
Committed Bank elects to forego its reduction, its
Commitment and Pro Rata Share shall not be reduced.
Notwithstanding the foregoing provisions of this sub-clause (e),
the Borrowers may by notice in writing to the Lead Bank at any
time, require that all distributions hereunder shall be made to
all Committed Banks and shall be applied in permanent reduction
of the Commitments of all Committed Banks pro rata to their
respective Overall Commitments on the date on which such
distributions fall to be made.
(f) Payments to each Committed Bank in accordance with and
subject to Clause 8.6(b) above and Clause 15.3(d) (Cash Flow
Forecast), shall be made 45 days after each Quarter Date
(commencing with 31 December 1996) or if any such day is not
a Business Day, on the next following Business Day. If, at
any Quarter Date, there is insufficient Surplus Cash (having
regard to the provisions of Clause 15.3) to satisfy the full
amount payable to a Committed Bank pursuant to Clause 8.6(b)
on such date, the payment to be made 45 days after such
Quarter Date shall be reduced accordingly, but any shortfall
shall be carried forward into the next Trading Period and
shall be payable 45 days after the next Quarter Date,
provided that, at such next following Quarter Date, there is
sufficient Surplus Cash (having regard to the provisions of
Clause 15.3) to satisfy such payment. If there is
insufficient Surplus Cash (having regard to the provisions
of Clause 15.3) to pay any shortfall at the next Quarter
Date, such shortfall shall be carried forward into each
successive Trading Period until, as at any Quarter Date,
there is sufficient Surplus Cash (having regard to Clause
15.3) to satisfy such shortfall.
(g) The amounts payable out of Surplus Cash to Reducing Banks
and Non-Committed Banks under Clause 8.6(d) shall be paid to
them pro rata to their respective Reducing Portions as at
the close of business on 16 July 1996. The amounts payable
out of Surplus Cash to Committed Banks under Clause 8.6(f)
shall be paid to them pro rata to their respective Overall
Commitments on the date at which such payments are initially
to be made, provided that no payments shall be made to
Committed Banks under Clause 8.6(f) in respect of any
Trading Period until the Reducing Banks and the
Non-Committed Banks have received the full amount to which
they are then entitled under Clauses 8.6(c) and (d) in
respect of such period. Nothing in this Agreement shall
entitle any Reducing Bank or Non-Committed Bank to receive
aggregate payments in excess of its Reducing Portion or any
Committed Bank to receive payments in excess of its Overall
Commitment (as reduced from time to time).
(h) NationsBank shall be entitled to receive the proceeds of the
sale of the shares in Dubek Limited (the "Dubek Sale Proceeds")
and to be treated as a Reducing Bank as follows:
(i) if and to the extent that NationsBank shall have
received the Dubek Sale Proceeds before the date of
this Agreement, such Dubek Sale Proceeds shall be
applied in permanent reduction of the Overall
Commitment of NationsBank and NationsBank shall be
treated as a Reducing Bank with an Overall Commitment
equal to the amount of its Commitment as so reduced
(the "NationsBank Reduced Commitment") and NationsBank
shall be entitled to receive payments under clauses
8.6(c) and (d) as a Reducing Bank under this Clause
8.6 with a Reducing Portion equal to the amount of the
NationsBank Reduced Commitment.
(ii) if and to the extent that NationsBank shall not have
received the Dubek Sale Proceeds before the date of
this Agreement, it shall be entitled to receive
payments under Clauses 8.6(c) and (d) as a Reducing
Bank under this Clause 8.6 with a Reducing Portion
equal to the full amount of its Overall Commitment
specified in Schedule II (less any amounts actually
received by it in respect of the Dubek Sale Proceeds).
provided that nothing in this Clause shall entitle NationsBank
to receive an aggregate amount (whether by way of payments under
Clause 8.6 or Clause 14.5 (a)(iii) or otherwise) in excess of
the sum referred to in Clause 14.5(a)(iii)."
7. REPRESENTATIONS AND WARRANTIES
Clause 13 (Representations and Warranties) shall be amended by adding a
new Clause 13.2 as follows:
"13.2 US Obligors: Each of the US Obligors (in respect of itself)
represents and warrants to each of the Finance Parties in the
terms of Clauses 13.1(a), (b), (c) and (d) as if references in
those Clauses to an "Obligor" and a "Group Company" were
references to such US Obligor".
by renumbering the remaining sub-clauses of that Clause accordingly and
by inserting in new sub-clause 13.3 (Repetition) the words "and 13.2"
after the words "Clause 13.1(y))".
8. GENERAL COVENANTS
8.1 Clause 14.4 (Restriction on Disposals) shall be amended by adding
a new sub-clause (v) as follows:
"a sale or disposition of shares, goodwill and/or assets by one Group
Company to another Group Company as part of an intra-Group
Reorganisation or the sale of all the shares held by a Group Company in
a company which is dormant (as defined in Section 250 of the Act)".
8.2 Clause 14.5 (Distribution of Net Disposal Proceeds) shall be
amended by:
(a) adding in clause 14.5(a) after the words "All Net Disposal
Proceeds shall" in the first line the words "(save as provided
in Clauses 14.5(c), (g) and (h)";
(b) inserting the word "permanent" in Clause 14.5(a)(iii) before
the words "reduction or discharge" in line one and by
deleting the figure of $10,000,000 and replacing it by the
words "its Outstandings from time to time (which shall at no
time exceed the lesser of: (i) $6,241,231.50 and (ii) its
Overall Commitment hereunder as reduced in accordance with
the terms of this Agreement from time to time) and amounts
so received by NationsBank shall be applied in permanent
reduction of its Overall Commitment accordingly.";
(c) deleting Clause 14.5(a) (iv) and renumbering the existing
sub-clause (v) as (iv) and by replacing the word "Fifth" in
that sub-clause with "Fourth".
(d) deleting Clause 14.5(c) and replacing it by the following:
"Notwithstanding Clauses 14.5(a), (b), (d), (e) and (f)
of this Clause 14.5, but subject to Clause 14.5(h), all
Net Disposal Proceeds shall be applied as follows: all
such Net Disposal Proceeds shall be credited to an
account with the Lead Bank designated "Sales Proceeds
Account" and shall be held in such account until such
time or times as the credit balance on such account
exceeds $1,000,000 whereupon the entire credit balance
on such account shall be applied in accordance with this
Clause 14.5."
(f) adding new sub-clauses 14.5(g) and (h) as follows:-
"(g) Notwithstanding any other provision of this Agreement,
no Reducing or Non-Committed Bank shall be entitled to
receive Net Disposal Proceeds arising from assets
financed in whole by the Committed Banks.
(h) In this Clause 14.5 and Clause 14.6, Net Disposal
Proceeds shall not include proceeds from Disposals
during the term of the Facilities provided that the
proceeds from all such Disposals in aggregate amount
are less than or equal to $3,000,000, and further
provided that each such Disposal is (i) made by a Wool
Group Company or a Subsidiary of the Borrowers or the
Covenantors (a "Third Tier Subsidiary") and (ii) the
proceeds from such Disposal are only retained by, and
made available for the working capital purposes of,
such Wool Group Company or Third Tier Subsidiary (as
the case may be)".
8.3 In sub-clause 14.8(b)(i) (Factoring and Loans) the words "provided that
the aggregate amount of all loans and advances by the Borrowers shall
not at any time exceed $75,000,000 (or, if the Lead Bank specifically
agrees in writing with Steering Committee approval, $85,000,000) and the
aggregate amount of any loans or advances made by the Borrowers to any
individual Subsidiary of a Tobacco Group Company which is itself a
Tobacco Group Company (excluding long term assets as calculated for the
purposes of the audited consolidated financial statements of the
Borrower for the financial year ended 31 March 1995) shall not exceed
$30,000,000" shall be added to the end of that sub-clause.
8.4 In sub-clause 14.8(b)(ii) (Factoring and Loans) the figure of
$30,000,000 shall be substituted for the figure of $25,000,000 in the
final line.
8.5 A new Clause 14.8(c) shall be inserted as follows:
"No further loans, gifts or credit may be made available by any Tobacco
Group Company to any Wool Group Company after 16 July 1996."
8.6 Clause 14.11 (Capital Assets) shall be amended by adding the words "(and
in any event, the value of all capital assets acquired and capital
expenditure incurred in any Accounting Reference Period shall not exceed
$1,000,000 without the prior written approval of the Steering
Committee)" after the words "and accepted by the Steering Committee" in
line 8 of that clause.
8.7 Clause 14.13(b) (Restrictions on Issue and Disposals of Shares) shall be
amended by adding the words "or the sale of the entire shareholding of a
Group Company in a company detailed on the list attached as Appendix C
to this Agreement" after the words "Sale of a Wool Company" in line one.
8.8 Clause 14.17 (New Subsidiaries and Joint Ventures) shall be amended by
deleting the closing bracket in the final line and adding the new words
"or except where the aggregate investment made by the Group in all such
Subsidiaries and/or joint ventures during the Availability Period does
not exceed $1,000,000) and to notify the Lead Bank as soon as reasonably
practicable of any proposal to establish a Subsidiary or joint venture
and to provide such information about it as the Lead Bank may require
from time to time".
8.9 Clause 14.44 (Dormant Companies) shall be amended by adding the words
"provided that a company detailed in Appendix C to this Agreement may be
put into liquidation without requirement for consent hereunder provided
the Lead Bank has been notified in writing on the commencement of
liquidation proceedings." to the end of that Clause.
8.10 Clause 14.45 (US Facility) shall be amended by adding the words "giving
details of such amendment or variation" to the end of that Clause.
8.11 Clause 14.48 (Security) shall be amended by adding at the end a comma
and the new words "provided that:
(a) no steps are required to be taken to perfect the
charges proposed to be created over the shares in
Transcatab SpA, Tobacco Processors (Malawi) Limited
(for so long only as the existing pre-emption rights
remain in the articles of association of such company
and exchange control consent to such charge has not
been received from the Central Bank of Malawi),
Tobacco Processors (Zimbabwe) (Pvt.) Limited and
Tobacco Processors (Lilongwe) Limited;
(b) no steps are required to be taken to document the
intercompany loans made by Group Companies to Stancom
Tobacco (Malawi) Limited or to obtain security
therefor for so long as the litigation referred to in
Clause 13.1(u) is continuing and documenting such
loans or obtaining such security would prejudice the
position of Stancom Tobacco (Malawi) Limited in such
litigation;
(c) registration in Kenya of the debentures granted by SCTC
and TCLC to the Security Agent is not required for so
long as neither of the Borrowers is registered in Kenya
as having a place of business in Kenya.
The Security Agent reserves the right, by notice in writing to
SCC at any time, to require SCC and the Borrowers to use
reasonable endeavours to procure the release of the preemption
rights and to obtain the consent of the Central Bank of Malawi
referred to above."
8.12 A new Clause 14.55 shall be added as follows:-
"14.55 Inventory: The aggregate uncommitted inventory of the
Borrowers (as shown on the WAFS System operated by the
Borrowers) shall not exceed $35,000,000 at any time."
8.13 A new Clause 14.56 shall be added as follows:
"14.56 Intercreditor Agreement: comply in all respects with
the terms of the Intercreditor Agreement and in particular
shall not pay or require the payment to it of any sums in
breach of the US Facility Agreement."
8.14 A new clause 14.57 shall be added as follows:
"14.57 US Facility Agreement: Each of the US Obligors shall procure that
wherever any indebtedness under the US Facility Agreement is permanently
reduced, the commitments thereunder shall be reduced accordingly."
9. INFORMATION COVENANTS
9.1 Clause 15.3 (Cash Flow Forecast) shall be amended as follows:-
(a) by deleting in sub-clause (a) the words "ten days following each
Quarter Date" and inserting in their place "the twentieth day in
each month with respect to the preceding month" and by deleting
the words "Quarter Date" in subclauses 15.3(a)(i) and
15.3(a)(ii) and inserting in their place "such date".
(b) by adding in sub-clause (b) the words "on a quarterly basis"
after the words "Forecast and Calculation" in line one.
(c) by adding in sub-clause (c) the words "and in particular to no
Event of Default having occurred and being continuing" after the
words "terms of this Agreement" in line 8 of that Clause and by
inserting the figure "(c)" after the words "In this Clause 15.3"
in line 10 of that sub-clause; and
(d) by deleting the existing sub-clauses (d) and (e) and
substituting new sub-clauses 15.3(d) and (e) as follows:-
"(d) If a Cash Flow Forecast and Calculation or a recast
Cash Flow Forecast and Calculation are determined by
the Steering Committee (acting on the instructions of
the Majority Banks) to be satisfactory, then, provided
the Calculation shows that there is sufficient Surplus
Cash (taking into account the Cash Flow Forecast and
any payments made or to be made in respect of such
period pursuant to sub-clause (c) above), payments may
be made to the Committed Banks in permanent reduction
of their Outstandings subject to the other terms of
this Agreement, and in particular to no Event of
Default having occurred and being continuing, and to
the requirements of the Act and/or any equivalent
legislation applicable in Liechtenstein.
Notwithstanding any other provision of this Agreement,
the aggregate Overall Commitments of the Committed
Banks shall not be reduced below $170,000,000 unless
(i) the removal of this requirement is specifically
requested by SCC by notice in writing to the Lead
Bank, or (ii) a Sale of the Wool Group is effected, or
(iii) the reduction arises by reason of Net Disposal
Proceeds paid to the Committed Banks pursuant to
Clause 14.5(c). All payments to the Committed Banks
under this sub-clause 15.3(d) shall be made pro rata
pari passu. In this Clause 15.3(d) pro rata means the
proportion which an amount to be paid to a Committed
Bank during any Trading Period bears to the aggregate
of all of the amounts to be paid to the Committed
Banks in that Trading Period, where in each case the
relevant Committed Bank has elected to accept such
payment.
(e) The sum of approximately $10,000,000 held in a blocked
account with Deutsche Bank AG in Hamburg as at 16 July
1996 shall be applied as follows:
(i) First: in making the payments to the Reducing
Banks and the Non-Committed Banks contemplated
in Clause 8.6(c) (Reductions);
(ii) Second: in providing the cash cover referred to
in Clause 6.3(B) (Counter Indemnity);
(iii) Third: in reducing Outstandings (but not
Commitments or Overall Commitments)".
9.2 Clause 15.4 (Security Details) shall be deleted and replaced by
the following:
"Security Details: Deliver to the Security Agent in sufficient
numbers for distribution to the Banks:
(a) not later than 30 days following each Quarter Date, details of
all Borrowings of each of the Borrowers during the Trading
Period ending on such Quarter Date;
(b) not later than 30 days following each Quarter Date details of
all Borrowings of each other Group Company during the Trading
Period ending on such Quarter Date,
and in each case together with details of all Encumbrances
created in respect thereof and the value of all pledged assets
in such detail as the Lead Bank, (acting on the instructions of
the Majority Banks) may require".
9.3 Clause 15.6 (Monthly Updates) shall be amended by deleting the heading
"Monthly Updates" and replacing it with "Quarterly Updates" and by
deleting in sub-clauses (a) and (b) the words "by the twentieth day in
each month with respect to the preceding month" and inserting in their
place "no later than 30 days after each Quarter Date with respect to the
Trading Period ending on such Quarter Date" and by adding to the end of
that Clause the words "with respect to: (a) each of the Borrowers
individually; and (b) each of the Borrowers and their respective
Subsidiaries in such detail as the Lead Bank (acting on the instructions
of the Majority Banks) may require."
9.4 Clause 15.7(a) (Audited Accounts) shall be amended by inserting the
words "and each of the US Obligors" in line 6 after the words "and each
of the Group Companies".
9.5 Clause 15.9 (Inventory Programme) shall be amended by deleting the words
"the twentieth Business Day of each month with respect to the preceding
month" and inserting in their place "30 days after each Quarter Date
with respect to the Trading Period ending on such Quarter Date for the
Borrowers and their respective Subsidiaries".
9.6 Clause 15.17 (Receivables) shall be deleted and replaced by the
following:
"Receivables: Deliver to the Security Agent in sufficient numbers for
distribution to the Banks not later than 30 days after each Quarter Date
a report on receivables of each of the Borrowers arising during the
Trading Period preceding such Quarter Date including details of all
debts owed by debtors which were due for payment in the preceding
Trading Period and are not yet paid, in a form notified to SCC by the
Security Agent."
9.7 Clause 15.18 (Pre-Financing) shall be deleted and replaced by:
"Pre-Financing: Deliver to the Security Agent, in sufficient numbers for
distribution to the Banks, no later than 30 days after each Quarter
Date, for SCTC and TCLC and each other Tobacco Group Company, details of
all pre-financing provided or agreed to be provided to such Tobacco
Group Company during the preceding Trading Period, in each case in a
form notified by the Security Agent to SCC."
9.8 Clause 15.19 (Additional Information) shall be amended by deleting the
words "twentieth day in each month" in line 2 of that clause and
inserting in their place "30 days after each Quarter Date" and by
deleting the word "month" wherever it occurs in sub-clauses (i), (ii),
(iii) and (iv) and inserting "Trading Period" in its place.
9.9 A new Clause 15.20 shall be inserted as follows:
"15.20 US Obligors: Deliver to the Security Agent in sufficient numbers
for distribution to the Banks, no later than the twentieth day in each
month for each of the US Obligors:
(i) details of all Borrowings of each of the US Obligors
for the preceding month as at the last day of that
preceding month; and
(ii) a calculation of the Borrowing Base under the US
Facility Agreement with respect to the preceding month
calculated as at the last day of that preceding month."
9.10 A new clause 15.21 shall be inserted as follows:
"15.21 Revision of Time Limits at Year End: notwithstanding the
provisions of Clauses 15.3, 15.5, 15.20 and 15.22, where
information to be provided under those clauses with respect to
any month relates to the month immediately preceding the
financial year end of the Borrowers, the period of 20 days
referred to in those Clauses shall be deemed to be changed to 60
days."
9.11 A new Clause 15.22 shall be inserted as follows:
"15.22 Financial Covenant Calculations: by the twentieth day
in each month a spread sheet showing calculations for the
financial covenants set out in Clause 16.1 with respect to
the preceding month."
10. FINANCIAL COVENANTS
10.1 The existing Clauses 16.1 and 16.2 shall be deleted and the
following new clauses shall be inserted:-
"16.1 For so long as any liability remains outstanding or capable of
becoming outstanding under any of the Finance Documents, the
Borrowers shall procure that:
(a) Minimum Net Worth: Net Worth at any time during each
of the periods set out below shall not fall below the
amounts set out below:
Quarter Beginning $
31 March 1996 7,500,000
30 June 1996 7,500,000
30 September 1996 8,500,000
31 December 1996 10,000,000
31 March 1997 13,000,000
(b) Borrower Net Worth: Borrower Net Worth shall not fall
below $25,000,000.
(c) Net Borrowings: Net Borrowings shall not exceed A +
(0.8 X B) where A is calculated as $75,500,000 for the
purposes of all calculations relating to periods up to
30 September 1996 and as $68,500,000 thereafter and B
is calculated as the sum of:
(i) all inventory and stock in trade of the
Borrowers;
(ii) trade receivables of the Borrowers not more than
90 days overdue;
(iii) all loans and advances provided by the Borrowers
to members of the Group less all loans and
advances by members of the Group to the
Borrowers as determined on a basis consistent
with the 1995/96 audited financial statements of
the Group; and
(iv) all loans and advances made available by the
Borrowers to suppliers of the Group.
LESS
All amounts due to trade creditors of each of the
Borrowers.
16.2 Not later than 31 March 1997, the Steering Committee, in
consultation with Coopers & Lybrand, shall determine the
levels for Net Worth, Borrower Net Worth and Net
Borrowings which shall apply for the purposes of Clause
16.1 for the financial year ended 31 March 1998 and upon
written notice by the Lead Bank to SCC such levels shall
be deemed to have been inserted in Clause 16.1 with
immediate effect and shall apply in place of the figures
currently set out therein.
16.3 SCC: For so long as any liability remains outstanding or
capable of being outstanding under any of the Finance
Documents SCC undertakes as follows:
(a) SCC will not permit its Leverage Ratio (i) to
exceed 4.25 to 1.0 at any time prior to the Sale
of the Wool Group and (ii) to exceed 3.5 to 1.0
at any time after the Sale of the Wool Group;
(b) SCC Tangible Net Worth during each of the
periods set out below shall not fall below the
amounts set out below:
Period $
13.6.96 - 29.9.96 80,000,000
30.9.96-30.12.96 82,500,000
31.12.96-02.5.98 85,000,000
.
16.4 In this Clause 16, the following expressions shall
have the following meanings:-
"Borrower Net Worth" means the aggregate of the amounts
paid up or credited as paid up on the issued share
capital of the Borrowers and the aggregate amount of
capital and revenue reserves of the Borrowers,
including:-
(a) any amount credited to share premium account of
the Borrowers;
(b) any capital redemption reserves of the
Borrowers;
(c) any balance standing to the credit of the
combined profit and loss account of the
Borrowers;
but deducting
(d) any debit balance on the combined profit and
loss account of the Borrowers;
(e) any amounts shown in respect of goodwill
(including goodwill arising on consolidation) or
other intangible assets of the Borrowers and
interests of non-Group members in members of the
Borrowers;
(f) any reserves set aside for taxation, deferred
taxation or bad debts;
(g) any amounts arising from upward revaluations of
any assets since 5 May 1995; and
(h) the nominal amount of any shares in a company
which are beneficially owned (if it be the case)
by that company itself;
and so that no amount shall be included or excluded
more than once.
For the purposes of this Clause, the combined profit and
loss account of the Borrowers shall exclude any equity
pick-up and/or stock dividends received or receivable by
the Borrowers from their investments in Subsidiary
and/or affiliate companies after 31 March 1995. "Equity
pick-up" means, as at the date of determination thereof,
the Borrowers' share of any increase or decrease in the
net asset value of its Subsidiaries or affiliates
whether through trading, revaluation of assets or other
means; the Borrowers' share of net asset value being
determined as a function of their investment in such
Subsidiaries or affiliate companies.
"Intangible Assets" means, as at the date of any
determination thereof, the total amount of all assets of
SCC and its Subsidiaries consisting of goodwill,
patents, tradenames, trademarks, copyrights, franchises,
experimental expense, organisation expense, unamortised
debt, discount and expense, deferred assets other than
prepaid insurance and prepaid taxes, the excess of cost
of shares acquired over book value of related assets and
such other assets as are properly classified as
"intangible assets" in accordance with generally
accepted accounting principles in the United States of
America;
"Leverage Ratio" means the ratio of (a) Total Liabilities
minus Subordinated Indebtedness to (b) SCC Tangible Net
Worth plus Subordinated Indebtedness;
"Net Borrowings" means all Borrowings less (i) any
Borrowings incurred to invest in new Subsidiaries and
joint ventures provided such investment is permitted
under Clause 14.17, (ii) contingent liabilities
(including those referable to bonds, guarantees,
indemnities and letters of credit given by Banks under
the Facilities) and (iii) amounts of cash for the time
being deposited by a Borrower with a Bank which are at
all times capable of being set off by such Bank against
such Borrower's liabilities to it. All JTI contingent
liabilities and deposits financed from sources other
than the Facilities shall be excluded from the
calculation of Net Borrowings."
"Net Worth" means the aggregate of the amounts paid up
or credited as paid up on the issued share capital of
the Borrowers and the aggregate amount of capital and
revenue reserves of the Borrowers, including:-
(a) any amount credited to share premium account of
the Borrowers;
(b) any capital redemption reserves of the
Borrowers;
(c) any balance standing to the credit of the
consolidated profit and loss account of the
Borrowers;
but deducting
(d) any debit balance on the consolidated profit and
loss account of the Borrowers;
(e) any amounts shown in respect of goodwill
(including goodwill arising on consolidation) or
other intangible assets of the Borrowers and
interests of non-Group members in the Borrowers;
(f) any reserves set aside for taxation, deferred
taxation or bad debts;
(g) any amounts arising from upward revaluations of
any assets since 5 May 1995; and
(h) the nominal amount of any shares in a company
which are beneficially owned (if it be the case)
by that company itself;
and so that no amount shall be included or excluded
more than once;
For the purposes of this Clause, the consolidated profit
and loss account of the Borrowers shall be prepared on a
consistent basis under generally accepted accounting
principles in the United States of America, but
excluding any equity pick-up and stock dividend received
or receivable by the Borrowers from their investments in
Subsidiary and/or affiliate companies after 31 March
1996.
"Subordinated Indebtedness" means indebtedness of SCC
the repayment of which has been subordinated to the
repayment of the obligations of SCC under the SCC US
Guarantee in accordance with the terms of the SCC US
Guarantee;
"SCC Tangible Net Worth" means at any time, consolidated
net shareholders' equity of SCC and its Subsidiaries
determined in accordance with generally accepted
accounting principles in the United States of America
applied on a consistent basis, with no upward
adjustments due to a revaluation of assets, minus all
Intangible Assets of SCC and its Subsidiaries and
excluding cumulative transaction adjustments.
"Total Liabilities" means all items which, in accordance
with generally accepted accounting principles in the
United States of America, would be classified as
liabilities on a consolidated balance sheet of SCC and
its Subsidiaries".
16.5 Testing of Covenants
(a) The covenant contained in Clause 16.1(c) (Net
Borrowings) shall be tested as of the end of each month,
by reference to the most recent details provided
pursuant to Clause 15.
(b) The covenant contained in Clause 16.1(a) (Minimum Net
Worth) shall apply on a continuing basis and be tested
monthly by reference to any losses or profits
demonstrated, first, by the management accounts and
secondly, where applicable, by the relevant audited
accounts of the Borrowers.
(c) The covenant contained in Clause 16.1(b) (Borrower Net
Worth) shall apply on a continuing basis and shall be
tested monthly by reference to any losses or profits
demonstrated, first by reference to monthly management
accounts and second by reference to the annual audited
accounts of each of the Borrowers.
(d) The covenants contained in Clauses 16.3 (a) and (b)
shall be tested on each Quarter Date first by
reference to the most recent Officers Certificate
provided to the agent under the US Facility Agreement
relating to that Trading Period (a copy of which
shall be delivered to the Security Agent at the same
time it is delivered under the US Facility Agreement),
second by reference to the quarterly consolidated
management accounts of SCC and its Subsidiaries and
third by reference to the annual consolidated audited
accounts of SCC and its Subsidiaries.
(e) The Lead Bank may require any calculation based on the
management figures to be restated and certified as
accurate by the Auditors if in the bona fide opinion of
the Lead Bank the subsequent publication of audited
figures or any other information becoming available to
the Lead Bank casts doubt on any relevant management
figures."
The existing Clause 16.3 shall be renumbered accordingly.
11. TERMINATION IN CASE OF DEFAULT
11.1 Clause 17.1(a) shall be amended by inserting the words "or any US
Obligor" after the words "failure by any Obligor".
11.2 Clause 17.1(b) shall be amended by inserting the words "or any US
Obligor" after the words "in relation to any Group Company".
11.3 Clause 17.1(c) shall be amended by inserting the words "or any US
Obligor" after the words "failure by any Obligor".
11.4 Clause 17.1(d) shall be amended by inserting the words "or any US
Obligor" after the words "Group Company" wherever they occur.
11.5 Clause 17.1(e) shall be amended by inserting the words "US Obligor's or"
after the words "substantial part of any" in subclauses (i) and (ii).
11.6 Clauses 17.1(f), (g), (h), (i), (j), (k), (n) and (o) shall be amended
by inserting the words "or any US Obligor" after the words "Group
Company" wherever they occur and Clause 17.1 (k) shall additionally be
amended by deleting the words "following the receipt by the Steering
Committee of the Report of Coopers & Lybrand referred to in Clause 4.1
(Review)" in sub-clause 17.1(k)(iii).
11.7 Clause 17.1(p) shall be amended by inserting the words "or US Obligors"
after the words "Obligors".
11.8 Clause 17.1(r) shall be amended by deleting sub-clause (vi) and the word
"and" immediately preceding it and inserting "or" at the end of Clause
17.1(b)(v).
11.9 Clause 17.1(s) shall be amended by deleting sub-clause (vi) and the word
"and" immediately preceding it and replacing "and" with "or".
12. FEES
12.1 Clause 18.2 (Commitment Fee) shall be deleted and replaced by the
following:-
"During the term of this Agreement, the Borrowers shall pay to the Lead
Bank for the account of the Banks on 16 July 1996 and thereafter on each
subsequent Quarter Date, a commitment fee calculated at the rate of 0.25
per cent. per annum on the aggregate Overall Commitments. Such fee shall
accrue from day to day and on the basis of a 360 day year and shall be
distributed between the Banks in their Pro Rata Shares". For the
purposes of this Clause Overall Commitments shall be determined as
follows:
(a) In relation to the payment due on 16 July 1996, "Overall
Commitments" shall be the Overall Commitments of the Banks
immediately prior to the execution of this Agreement;
(b) In relation to a payment due after 16 July 1996, Overall
Commitments shall be calculated by reference to the Overall
Commitments of the Banks on the day on which such payment falls
to be made."
12.2 The following shall be inserted as Clauses 18.3 and 18.4 of the
MFA:-
"18.3 Back End Fee: SCC and the Borrowers shall be jointly and
severally liable to pay to the Security Agent for the
account of the Banks a fee of an amount calculated and
payable in accordance with Schedule XXI.
18.4 VAT: Where the costs and fees specified in this Clause attract
value added tax or any similar tax, the relevant Borrower and/or
SCC shall pay the relevant amount of such tax in addition to the
cost or fee concerned."
12.3 The following shall be inserted as Schedule XXI to the MFA:-
"SCHEDULE XXI
CALCULATION OF BACK-END FEE
1. Definitions and Interpretations
1.1 In this Schedule, the following words and expressions shall
have the meanings set opposite them:-
"Accountants" means the leading firm of chartered accountants
appointed by the Security Agent from time to time for the
purpose of this Schedule;
"Exercise Date" means the date determined in accordance with
paragraph 3 below;
"the Exercise Price" means the price for the Shares
determined in accordance with paragraph 2.2(b) below;
"Fee" means the back-end fee payable by SCC to the Security
Agent as agent and trustee for the Banks in accordance with this
Schedule;
"Shares" means ordinary shares in the capital of SCC such shares
at the date of this Agreement being ordinary shares of $0.20
each;
"Strike Price" means the price for the Shares determined in
accordance with paragraph 2.2(a) below.
2. Calculation of Fee
2.1 Amount of Fee: The amount of the Fee to be paid by SCC and
the Borrowers to the Banks shall be equal to:
$1,000,000 X Exercise Price
--------------
Strike Price
2.2 Calculation of Strike Price and Exercise Price: For the
purposes of this Schedule:-
(a) subject to any adjustment made under this Schedule, the
Strike Price shall be the greater of (i) $4.25 per Share
and (ii) the average of the middle market quotations of
the Shares, as derived from the Wall Street Journal with
respect to all the dealing days on the New York Stock
Exchange in May 1996; and
(b) subject to any adjustment made under this Schedule, the
Exercise Price for the Shares shall be lesser of (i)
$17.25 per Share and (ii) the average of the middle
market quotations of the Shares, as derived from the
Wall Street Journal with respect to the thirty dealing
days on the New York Stock Exchange immediately
preceding the relevant Exercise Date.
2.3 Collar on amount of Fee: Notwithstanding paragraphs 2.1 and
2.2 above, the amount of the Fee shall be (a) a minimum of
$500,000 and (b) a maximum of $2,000,000.
3. Exercise Date
Determination of Exercise Date: Subject as provided below,
the Exercise Date shall be the earlier of the date on
which:-
(a) the Facilities or any material part of them are
refinanced; or
(b) the Facilities are repaid in full (with unmatured
liabilities under the Facilities being fully cash
collateralised); or
(c) the Enforcement Date; or
(d) the Final Repayment Date;
Provided that if the Fee is not paid in full to the Security
Agent within 10 Business Days of such date ("the original date")
then the Majority Banks may, at any time by written notice to
SCC given before the Fee is paid, elect that the Exercise Date
shall be such later date falling after the original date and
prior to the date on which the Fee (as recalculated by reference
to such later date (if any)) is paid in full as the Majority
Banks may select.
4. Payments
4.1 The Fee shall be paid by SCC and/or the Borrowers to the
Security Agent not later than 5 Business Days after the Exercise
Date.
4.2 The fee shall be distributed amongst the Banks pro rata to
their Overall Commitments on the Exercise Date.
5. Variations in Capital
5.1 Variations in Capital: Subject to paragraph 5.2, in the event of
any increase or variation of the share capital of SCC (whenever
effected) by way of capitalisation or rights issue or otherwise,
the Security Agent, in consultation with SCC, may make such
consequential adjustments as it considers appropriate, in order
to reflect such increase or variation of the share capital of
SCC, to the Strike Price and Exercise Price.
5.2 Review by Accountants: Except in the case of a capitalisation
issue, no adjustment under paragraph 5.1 shall be made without
the prior confirmation in writing from the Accountants that it
is in their opinion fair and reasonable.
5.3 Notification of Adjustment: As soon as reasonably practical
after making any adjustment under paragraph 5.1, the Security
Agent shall give notice in writing of such adjustment to SCC and
each Bank.
5.4 Role of Accountants: In respect of any matter where they are
required to act under this schedule in relation to the Fee, the
Accountants shall be deemed to be acting as experts and not as
arbitrators and the Arbitration Acts 1950 to 1979 shall not
apply hereto.
13. US FACILITY
13.1 The heading to Clause 21 shall be amended to read "Assignments,
Transfers and US Security".
13.2 Clause 21.2 (Banks) shall be amended to read as follows:-
"Any Finance Party may, after prior consultation with the Lead Bank and
with the prior written consent of SCC (which shall not be unreasonably
withheld or delayed) and subject to Clause 21.3:-
(a) assign its rights and benefits under its Facilities and this
Agreement and each other Finance Document to which it is a
party; or
(b) transfer in accordance with Clause 21.4 its obligations
under this Agreement and each other Finance Document
to another Finance Party or to an institution (whether incorporated in
the United Kingdom or elsewhere) which is for the time being authorised
or entitled (pursuant to the Banking Act 1987 and the Banking
Co-ordination (Second Council Directive) Regulations 1992) to accept
deposits in the United Kingdom, where in each case (i) such assignee or
transferee is acting as principal only and (ii) the rights and/or
obligations being assigned or transferred to it represent all or a
minimum of $10 million of the Overall Commitment of the assignor or
transferor.
Any Finance Party wishing to assign or transfer any of its rights and/or
obligations under this Agreement (the "Proposed Transferor") shall first
notify the Lead Bank of its intention so to do and the proposed terms of
such assignment or transfer (the "Transfer Notice") and shall not be
entitled to make such assignment or transfer until a period of thirty
days (the "30 Day Period") shall have elapsed from the date of receipt
by the Lead Bank of the Transfer Notice. If, within the 30 Day Period,
any Finance Party has notified the Proposed Transferor that it is
willing to accept an assignment or transfer on the same terms as those
detailed in the Transfer Notice and otherwise on the terms of this
Agreement (which notification shall be binding on such Finance Party)
(an "Acceptance Notice") then the Proposed Transferor shall be obliged
to make such assignment or transfer to such Finance Party and not to any
third party. If more than one Finance Party shall have given an
Acceptance Notice to the Proposed Transferor within the 30 Day Period,
the obligation of the Proposed Transferor hereunder shall be to transfer
to the first Finance Party to give an Acceptance Notice to the Proposed
Transferor. If no Acceptance Notice is received from any Finance Party
during the 30 Day Period with respect to a Transfer Notice, the Proposed
Transferor may assign or transfer its rights and obligations specified
in the Transfer Notice on the terms specified in such Transfer Notice
and otherwise in accordance with the terms of this Agreement. No
assignment or transfer of any rights and/or obligations of a Finance
Party hereunder may be made on terms which have not previously been
notified in full to the Lead Bank in a Transfer Notice in accordance
with the terms of this Clause."
13.3 Clause 21.3 (Assignment and Transfer) shall be amended by inserting the
words "and agreeing that it shall be bound in all respects by the terms
of the Intercreditor Agreement as if it had been an original party
thereto as a Junior Lender (as defined therein) and executing such
documentation in relation thereto as the Lead Bank may require" after
the words "Finance Document as a Finance Party" in line 7 of that
Clause.
13.4 Clause 21.13 shall be amended by inserting in paragraph (a) before "to
any prospective assignee", the words "with the prior consent of SCC".
13.5 The following shall be inserted as Clause 21.14 of the MFA:
"21.14 Investigation: Each Transferee shall be deemed to irrevocably
agree, upon becoming a party to this Agreement, that the Lead Bank may
at any time, at the cost of the Transferee, appoint Coopers & Lybrand or
another reputable firm of accountants to investigate the compliance by
such Transferee with its obligations under this Agreement and in
particular Clause 21."
13.6 The following shall be inserted as Clause 21.15 of the MFA:-
"21.15 (a) Security Agent and Letter of Credit: The Banks
hereby appoint the Security Agent to execute the
Intercreditor Agreement on behalf of the Banks and to
issue the Letter of Credit and hereby authorise the
Security Agent to exercise such rights, powers and
discretions as are specifically delegated to it by the
terms of this Agreement together with such rights,
powers and discretions as are reasonably incidental to
them.
(b) The Security Agent agrees that, as soon as reasonably
practicable after receipt by it of written notification
from the US Agent of a Default Event, it shall notify
each Bank by facsimile of the occurrence of such Default
Event.
(c) Each Bank shall notify the Security Agent by facsimile
no later than 10.00 a.m. (London time) on the fifteenth
Business Day after the date of such notice, whether it
wishes the Security Agent to enforce the US Security
held by it upon the Security Agent becoming entitled to
do so hereunder, under the US Security and under the
Intercreditor Agreement.
(d) If all Banks agree to its taking such enforcement
action, the Security Agent shall enforce the US
Security, provided that nothing in this Agreement shall
require the Security Agent, the Lead Bank or any of the
Banks to breach any provision of the Intercreditor
Agreement.
(e) In consideration of the Security Agent issuing the
Letter of Credit, each Bank hereby jointly and
severally:-
(i) agrees to keep the Security Agent indemnified
from and against all actions, proceedings,
liabilities, claims, demands, damages, costs and
expenses in relation to or arising out of or
appearing to the Security Agent to arise out of
the Letter of Credit and/or the US Security or
any indemnity or undertaking given by the
Security Agent in relation to them and to pay to
the Security Agent on demand all payments,
losses, costs, charges, damages and expenses
suffered or incurred by the Security Agent in
consequence of the Letter of Credit and/or the
US Security or arising in connection with them,
whether directly or indirectly;
(ii) irrevocably authorises and directs the Security
Agent to make any payments and comply with any
demands which may be claimed or appear to the
Security Agent to be claimed or made under or
pursuant to any of the Letter of Credit and/or
the US Security or any indemnity or undertaking
given by the Security Agent in relation to them
without any reference to or further authority
from any Bank and agrees that any payment made
by the Security Agent in accordance with or
appearing to the Security Agent to be in
accordance with any of the Letter of Credit
and/or the US Security and/or any indemnities or
undertakings of the Security Agent in respect of
them shall be binding upon each of the Banks and
shall be accepted by the Banks as conclusive
evidence that the Security Agent was liable to
make such payment or comply with such demand and
the Security Agent may at any time determine or
procure the determination of any of the Letter
of Credit and/or the US Security and/or any of
the indemnities or undertakings of the Security
Agent in respect of them;
(iii) agrees that the indemnity contained in this
Clause shall be in addition to and not in
substitution for any other indemnity or
reimbursement right which the Security Agent may
hold as at the date of this Agreement.
(iv) agrees to provide to the Security Agent,
forthwith on demand at any time by the Security
Agent if at any time the Security Agent in its
discretion considers that it may not be able to
have full recourse to the cash collateral
referred to in Clause 6.3(h), full cash cover
for its obligations under this Clause 21.14(e),
together with such documentation relating to it,
including charges or deposit agreements, as the
Security Agent may require."
(f) Each of the Finance Parties hereby undertakes to the
others of them that it will comply strictly with the
terms of the Intercreditor Agreement.
14. LEAD BANK, SECURITY AGENT AND STEERING COMMITTEE
14.1 Clause 22.1(a)(i) (Appointment) shall be amended by inserting the words"
"and the Intercreditor Agreement" after the words "this Agreement" in
the first and third lines of that clause.
14.2 Clause 22.1(a) (Appointment) shall be amended by inserting a new
sub-clause (iv) as follows:-
"(iv) the Security Agent to act as its agent and (in relation only
to the US Security) trustee in connection with the US
Security and the Intercreditor Agreement and authorises the
Security Agent to exercise such rights, powers and
discretions as are specifically delegated to it by the
terms of this Agreement, the Intercreditor Agreement and the
US Security together with all such rights, powers and
discretions as are reasonably incidental to them."
14.3 Clause 22.2(a) (Powers) shall be amended by deleting the existing
sub-clauses (i), (ii) and (iii) and inserting the following in their
place:
"(i) any representation made by the Obligors and/or the US
Obligors in or in connection with the Finance Documents is
true;
(ii) no Event of Default or Potential Event of Default has
occurred; and
(iii) no Obligor or US Obligor is in breach of or in default under its
obligations under any Finance Document or the US Facility
Agreement;"
14.4 Clause 22.2(d) (Powers) shall be amended by inserting the words "or US
Obligor" after "Obligor" wherever it occurs.
14.5 Clauses 22.2 (i) and (j) (Powers) shall be amended by replacing the
words "this Agreement" with "any Finance Document".
14.6 Clause 22.3(b) (Duties) shall be amended by adding after the words
"under the Security Documents from any Obligor" in the last line the
words "or from any other person under the US Security or the
Intercreditor Agreement".
14.7 Clause 22.3(c) (Duties) shall be amended by deleting the words "this
Agreement or any Security Document" in line 4 of that clause and
inserting the words "any Finance Document" in their place and also by
deleting the words "this Agreement" at the end of that clause and
inserting in their place the words "such Finance Document" and by
inserting after "Obligor" the words "or US Obligor" and by inserting the
words "or the US Facility Agreement" after the words "Finance Document"
wherever they occur.
14.8 Clause 22.6 (Exoneration) shall be amended by adding the words "or US
Obligor" after "any Obligor" wherever it appears and by adding "or the
US Facility Agreement" after each reference to "any Finance Document"
and by adding "or US Obligor " after "Group Company" in sub-sections (c)
and (f).
14.9 Clause 22.13 (Credit Appraisals) shall be amended by adding the words
"or US Obligor" in line 4 after the words "nature of any Group Company"
and in sub-clauses (a) and (b) thereof after the words "Group Company"
wherever they occur.
15. PROVISIONS RELATING TO SUCCESSOR
Clause 24.3 (Provisions relating to Successor) shall be amended by
adding in sub-clause (a) after "and the Obligors" the words "and US
Obligors".
16. ENFORCEMENT
Clause 25.1 (Enforcement) shall be amended by adding to the end of
sub-clause (c) the words "(with respect only to the security granted by
such Charging Company) and by adding a proviso to the end of that Clause
as follows:-
"provided that the Security Agent may only be required to enforce the US
Security in accordance with the terms of the Intercreditor Agreement".
17. EQUALISATION
17.1 Clause 26.1 (Notification) shall be deleted and replaced by the
following:
"26.1 Notification: Within five Business Days after the Enforcement
Date, each Bank shall notify the Lead Bank and the Security Agent of:
(a) the aggregate amount of Indebtedness incurred by each
Group Company and each US Obligor to such Bank (actually
or contingently) under its Facilities and each Finance
Document as at the Enforcement Date; and
(b) the aggregate amount (if any) paid by such Bank under
or pursuant to the Intercreditor Agreement by reason
of a breach or an alleged breach by any of the Finance
Parties of the terms of the Intercreditor Agreement
(including payments made under or in respect of the
Letter of Credit or pursuant to Clause 21.15
(Security Agent and Letter of Credit)) which has not
already been reported under (a) above and which has
not been repaid or reimbursed to such Bank,
(its "Aggregate Bank Indebtedness")."
17.2 A new Clause 26.9 shall be added as follows:
"26.9 Final Equalisation: The provisions of this Clause 26.9 shall be
applied at such time or times after the Enforcement Date as the
Security Agent shall consider appropriate, (provided that such
provisions will, unless otherwise agreed by all the Banks, be
applied at least once by no later than the first anniversary of
the Enforcement Date), as follows:
(a) before each occasion on which it intends to implement
the provisions of this Clause 26.9, the Security Agent
shall send a notice to each Bank requiring it to
notify the Security Agent of (i) the aggregate amount
of Indebtedness incurred by each Group Company and
each US Obligor to such Bank (actually or
contingently) under its Facilities and each Finance
Document as at the date of such notice and which has
not been paid or cash cover or other security provided
therefor as at the date of such notice; and (ii) the
aggregate amount (if any) paid by such Bank under or
pursuant to the Intercreditor Agreement by reason of a
breach or an alleged breach by any of the Finance
Parties of the terms of the Intercreditor Agreement
(including payments made under or in respect of the
Letter of Credit or pursuant to Clause 21.15
(Security Agent and Letter of Credit)) which has not
already been reported under (i) above and which has
not been repaid or reimbursed to such Bank as at the
date of such notice (its "Bank Loss").
(b) Each Bank shall deliver the information requested by the
Security Agent no later than 10 Business Days after
receipt by it of a notice pursuant to sub-clause (a)
above.
(c) Based on the information given to it under Clause
26.9(b) (subject to any adjustments it regards as
appropriate) the Security Agent shall calculate the
balancing credit or balancing payment (if any) due to
or from each Bank, being the amount required to be
paid or received in order to equalise such Bank's
Proportion of Bank Loss with its Proportion of
Aggregate Commitments, and shall notify each Bank of
the amount (if any) payable or receivable by each Bank
accordingly.
(d) Forthwith upon receipt of a written request by the
Security Agent, each relevant Bank shall pay to the
Security Agent the amount of the balancing payment
notified as payable by it under Clause 26.9(c) and the
Security Agent shall, as soon as practicable, pay to
each Bank to which a balancing credit is due, the
amount of such credit, provided that where an amount
is claimed by a Bank for an unmatured liability, then
the amount of the relevant Reserve shall be paid into
an interest-bearing deposit account in accordance with
Clause 27.6 (Account).
(e) If a Bank fails to make a payment due from it under
this Clause 26.9, the Security Agent shall be entitled
to take action on behalf of the banks to whom such
payment was to be redistributed (subject to being
indemnified to its satisfaction by such Banks) but
shall have no obligation or liability to those Banks
or any other person as regards such default and any
loss suffered as a result of such default shall lie
where it falls.
Any equalisation under this Clause 26.9 shall be in addition to
any equalisation conducted pursuant to Clause 26.1 and will take
account of previous adjustments under Clauses 26.1 and 26.9 as
appropriate.
18. NOTICES
Clause 32.3 shall be amended by adding the words "or US Obligor" after
"Obligor" wherever it occurs.
19. AUTHORITY OF SCC
Clause 37.1 (Amendment) shall be amended by adding in line 1 after the
words "(other than SCC)" the words "including the US Obligors".
20. GOVERNING LAW AND JURISDICTION
Clause 39.2 (b) shall be amended by adding after "Covenantors" in line 1
the words "and each of the US Obligors".
21. CONSENT TO WOOL GROUP REORGANISATION
A new Clause 40 shall be added as follows:
"40. WOOL GROUP REORGANISATION
40.1 The Finance Parties hereby consent to the proposed
reorganisation of the Wool Group on the terms set out in
Appendix D (the "Wool Group Reorganisation") provided that such
reorganisation shall not adversely affect the security held by
the Security Agent or the MFA Banks over the shares in Standard
Wool France S.A. This clause shall not restrict a Wool Group
Company entering into any Permitted Borrowings or Permitted
Encumbrances.
40.2 TCLC hereby undertakes that, forthwith upon receipt by it of the
sum of approximately $13,000,000 which will be received by it
following the Wool Group Reorganisation (the "Reorganisation
Proceeds"), it will pay the Reorganisation Proceeds into a
designated account of TCLC with Deutsche Bank AG in Hamburg (the
"Reorganisation Account"). TCLC further agrees that, in
consideration of the Banks consenting to the Wool Group
Reorganisation, it shall not be entitled to withdraw any amount
from time to time standing to the credit of the Reorganisation
Account except as provided in Clause 40.3 below.
40.3 Any balance from time to time standing to the credit of the
Reorganisation Account may be withdrawn only in the following
circumstances:
(a) If at any time when a payment falls to be made to a
Reducing Bank or a Non-Committed Bank pursuant to
Clauses 8.6 (a), (c) and (d) and subject always to
Clause 15.3(c), TCLC shall be entitled to debit the
Reorganisation Account with the amount of such payment
and to apply the amount withdrawn from the
Reorganisation Account in reduction or satisfaction of
such payment.
(b) If at any time, TCLC has insufficient freely available
cash for the purposes of operating its business the
Group Treasurer may, by notice in writing to the Lead
Bank and each other member of the Steering Committee,
request a withdrawal from the Reorganisation Account
by certifying (i) that TCLC has insufficient freely
available cash for the purposes of operating its
business, (ii) the reasons for such insufficiency,
(iii) the amount required to satisfy such
insufficiency, (iv) the amount requested to be
withdrawn from the Reorganisation Account (which shall
be an amount equal to or less than such insufficiency)
and (v) the period for which additional funds are
required (the "Stated Period"). TCLC shall be
permitted to withdraw such amount two Business Days
after receipt by all of the members of the Steering
Committee of such notice unless the Steering Committee
has notified TCLC in writing that it objects to the
proposed withdrawal. TCLC undertakes that it shall
repay the amount so withdrawn to the credit of the
Reorganisation Account within the Stated Period.
(c) If and to the extent that the balance standing to the
credit of the Reorganisation Account at any time exceeds
the amount of the payments which will become due to the
Committed and Reducing Banks pursuant to Clause 8.6(a),
(c) and (d).
40.4 For the avoidance of doubt, the Reorganisation Account and the
balance standing to the credit of the Reorganisation Account
shall continue at all times to be subject to the security
granted by the Borrower Debentures and nothing in this Clause 40
shall create a trust of any kind.
40.5 The amount, if any, standing to the credit of the Reorganisation
Account on 1 May 1997, shall be applied in reduction of the
Outstandings of the Banks or, if there are no such Outstandings,
shall be paid to such account of TCLC as TCLC may specify by
notice in writing to the Lead Bank. Nothing in this letter shall
oblige Deutsche Bank AG in Hamburg to permit any overdraft or
debit balance on the Reorganisation Account."
and Schedule II to this Agreement shall be added as a new Appendix
D to the MFA.
22. THE BANKS
22.1 Schedule II shall be amended:
(a) by deleting the figure of $10,000,000 under the headings
"Commitment" and Overall Commitment" against the name of
NationsBank and replacing them with "$6,241,231.50"; and
(b) by adding after the reference to "BfG Bank Aktiengesellschaft"
the words "transferred to Bank of America NT&SA" and by
aggregating the details for Borrower, Type of Facility,
Commitment and Overall Commitment so as to produce a new entry
in Schedule II for Bank of America giving Bank of America a
Commitment of $21,000,000 and an Overall Commitment of
$21,000,000.
22.2 Schedule IV shall be amended by adding after the words "BfG Bank A.G."
in Parts I and II of that Schedule the words "(now transferred to Bank
of America NT&SA)"
22.3 Schedule XI Part II shall be amended by adding after the words "BfG Bank
A.G." the words "(now transferred to Bank of America NT&SA)".
22.4 Schedule XIII shall be amended by adding after the words "BfG Bank AG"
the words "(now transferred to Bank of America NT&SA)".
22.5 The execution provisions of the MFA shall be amended by adding after the
signatures for BfG Bank the words "(transferred its Commitment to Bank
of America NT&SA)".
23. EXISTING SECURITY
Schedule XI (Existing Security) shall be amended by adding to the end of
that Schedule the following details:
"BHF Bank The Bank's general terms and conditions provides
for a pledge on goods and documents of title
which are in the possession of the Bank."
24. DISTRIBUTION OF RECOVERIES
Schedule XVIII shall be amended by inserting the words "or the US
Obligors" after the word "Obligors" in paragraphs 2(d), and (e)and on
paragraph 2(f)(ii) and (iii).
25. COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of
which when taken together shall constitute a single instrument.
26. NOTICES
The provisions of Clause 32 (Notices) of the MFA shall be deemed to be
incorporated, mutatis mutandis, in this Agreement.
27. GOVERNING LAW AND JURISDICTION
The provisions of Clause 39 (Governing Law and Jurisdiction) of the MFA
shall be deemed to be incorporated, mutatis mutandis, in this Agreement.
28. EFFECTIVE DATE
This Agreement shall become effective on the date on which the Lead Bank
confirms to SCC and the Banks that all of the following have been
received by the Lead Bank in form and substance satisfactory to it (or
have been waived by the Lead Bank (acting on the instructions of the
Majority Banks):-
(c) Agreement: a copy of this Agreement duly executed by SCC on
behalf of itself and each Borrower and Covenantor and by all the
other parties hereto, together with a letter addressed to the
Lead Bank by each Borrower and Covenantor confirming that it has
received a copy of this Agreement and has instructed SCC to sign
this Agreement on its behalf;
(d) Intercreditor Agreement: a copy of the Intercreditor
Agreement duly executed by all the parties to it;
(e) US Facility Agreement: a copy of the US Facility Agreement
duly executed by all the parties to it;
(f) Company Documents:
(i) Constitutional Documents: certified copies of the
certificate of incorporation, certificate of
incorporation on change of name (if any) and current
memorandum and articles of association of each US
Obligor, SCC and SCTC;
(ii) Members' Resolutions: in relation to each of the US
Obligors, a certified copy of the minutes of the
meeting of its members or a written consent of the
beneficial owners of all shares of such company
approving the terms of this Agreement and the
Intercreditor Agreement and the US Security to which
it is a party, together with a certificate of one of
its directors confirming that (where a meeting of
members has been held) the resolutions set out in the
relevant minutes were duly and properly passed and
confirming that such resolutions are still in effect
and have not been varied or rescinded unless local
legal counsel to the Lead Bank and the Security Agent
advises that this is not necessary.
(iii) Certificate of Authorisation: in relation to each of
SCC and the US Obligors, a certificate of one of its
directors to the effect that the requisite resolution
of its board of directors, in the Agreed Terms, has
been duly and properly passed:-
(aa) authorising its execution, delivery and
performance of this Agreement the Intercreditor
Agreement and, in the case of the US Obligors,
the US Security to which they are parties; and
(bb) authorising a named person or persons specified
in such documents and whose specimen signatures
appear there to sign (where appropriate as a
Deed) such documents and any amendments and
renewals of them and to give any notices or
certificates required in connection with such
documents, and confirming that such resolutions
are still in effect and have not been varied or
rescinded or a certificate in such other form as
local legal counsel to the Lead Bank and the
Security Agent considers to be satisfactory;
(iv) Authorising Board Resolutions: a certified copy of the
resolutions of the board of directors of each of SCC
and the US Obligors unless local legal counsel to the
Lead Bank and the Security Agent advises that this is
not necessary;
(v) Obligor Confirmations: in relation to each of the
Obligors except the Covenantors, a confirmation that its
obligations under or pursuant to the Finance Documents
remain in full force and effect and that the guarantees
and/or security granted by it remain in full force and
effect to secure all the obligations of the Borrowers
under the MFA as amended hereby;
(vi) SCTC Members' Resolutions: in relation to SCTC, a
certified copy of the minutes of the meeting of its
members or a written consent of the beneficial owners
of all shares of such company approving the charge
referred to in Clause 6.1(h) (the "Cash Charge"),
together with a certificate of two of its directors
confirming that (where a meeting of members has been
held) the resolutions set out in the relevant minutes
were duly and properly passed and confirming that such
resolutions are still in effect and have not been
varied or rescinded unless local legal counsel to the
Lead Bank and the Security Agent advises that this is
not necessary.
(vii) SCTC Certificate of Authorisation: in relation to
SCTC, a certificate of two of its directors to the
effect that the requisite resolution of its board of
directors, in the Agreed Terms, has been duly and
properly passed:-
(aa) authorising its execution, delivery and performance of
the Cash Charge; and
(bb) authorising a named person or persons specified in such
documents and whose specimen signatures appear there to
sign (where appropriate as a Deed) the Cash Charge and
any amendments and renewals of it and to give any
notices or certificates required in connection with it,
and confirming that such resolutions are still in
effect and have not been varied or rescinded or a
certificate in such other form as local legal counsel
to the Lead Bank and the Security Agent considers to be
satisfactory;
(viii) SCTC Authorising Board Resolutions: a certified
copy of the resolutions of the board of directors of
SCTC unless local legal counsel to the Lead Bank and
the Security Agent advises that this is not necessary;
(g) Security Documents: (a)a guarantee and a security agreement
duly executed by the US Obligors; and (b) the Cash Charge
duly executed by SCTC.
(h) Legal Opinions: legal opinions of each of:-
Robinson, Bradshaw & Hinson, (North Carolina)
Dr Dr Batliner & Partner, (Liechtenstein)
Secretan Troyanov & Partners, (Switzerland)
Clifford Chance (England)
(i) US Facility: receipt by the Lead Bank of a facsimile
addressed to the Lead Bank from NationsBank, N.A. (South) as
agent to the providers of the US Facility stating either
that all the conditions precedent set out in (aa) the Third
Amendment to the US Facility Agreement and (bb) the term
loan and security agreement referred to at (ii) in the
definition of "US Facility Agreement" have been satisfied
and the facilities referred to therein are unconditionally
available to SCT(US) or that such conditions precedent will
be so satisfied and such facilities will become so available
upon satisfaction (either by delivery or by waiver by the
Lead Bank (acting on the instructions of the Majority
Banks)) of the conditions precedent set out in this
Agreement;
(j) Repayment Schedules: evidence that new repayment schedules
have been accepted by the Non-Committed Banks (in terms
consistent with this Agreement) as replacing or overriding
any rights of repayment they may have under their respective
facility documents;
(k) Payment of Fees: all fees payable to the Lead Bank, the Security
Agent and their respective legal advisers or any Consultant
(together with any disbursements and any applicable taxes) shall
have been paid in full no later than 5 days following the date
of execution of this Agreement;
(l) Other Documentation: such other documentation as the Lead
Bank may specify in writing.
29. CONDITIONS SUBSEQUENT
29.1 SCC and the Borrowers shall procure that all of the following shall be
received by the Lead Bank in form and substance satisfactory to it no
later than 31 July 1996:
(a) title insurance in favour of the Security Agent as agent and
trustee for the Finance Parties, with respect to each of the
properties owned by the US Obligors; and
(b) a legal opinion of Narron, Holdford, Babb, Harrison & Rhodes
P.A.
29.2 A failure by SCC and the Borrowers to procure the satisfaction of the
conditions in Clause 29.1 shall not invalidate this Agreement or the
incorporation of its terms in the MFA or any provision of the MFA but
such failure shall constitute an Event of Default under the MFA. For the
avoidance of doubt, save as expressly provided in Clause 17.1
(Termination in Case of Default) all the terms and conditions of this
Agreement and the MFA (including, without limitation, Clauses 6.3
(Counter Indemnity), 21.15 (Security Agent and Letter of Credit) and 26
(Equalisation) shall remain in full force and effect for so long as any
amount is owing or capable of becoming owing, actually or contingently,
under or pursuant to this Agreement, the MFA, the Letter of Credit or
any of the other Finance Documents (including, without limitation, the
Intercreditor Agreement).
30. DORMANT COMPANIES
The attached Schedule III shall be attached as Appendix C to the MFA.
31. MFA TO CONTINUE IN FULL FORCE
31.1 The MFA shall continue in full force and effect, save as otherwise
expressly amended by this Agreement.
31.2 The amendments contained in this Agreement shall be without prejudice to
any rights and liabilities arising under the MFA by reference to any
acts, omissions and events occurring before such amendments come into
effect.
AS WITNESS the hands of the parties the day and year first above written.
US OBLIGORS
STANDARD COMMERCIAL TOBACCO COMPANY, INC.
P O Box 450
Wilson, North Carolina 27894
Facsimile No: (919) 237 1109
Attention: D L Williams
By: Mr Merrick
W.A. ADAMS COMPANY
P O Box 1848
Wilson, North Carolina 27894
Facsimile No: (919) 237 1109
Attention: D L Williams
By: Mr Merrick
GENERAL PROCESSORS, INC.
P O Box 246
Oxford, North Carolina 27565
Facsimile No: (919) 693 1818
Attention: D L Williams
By: Mr Merrick
SCC
STANDARD COMMERCIAL CORPORATION
(acting for itself and on behalf of Trans-Continental Leaf
Tobacco Corporation Limited, Standard Commercial
Tobacco Company (UK) Limited, Werkhof GmbH and
Spierer Freres & Cie SA) 2201 Miller Road, P O Box 450, Wilson NC 27894-0450,
USA
Facsimile No: 001 919 237 1109
Attention: The Finance Director
By: Mr Merrick
THE LEAD BANK
DEUTSCHE BANK A.G. IN HAMBURG
F/Kreditbearbeitung 3
Alter Wall 37
20457 Hamburg, Germany
Facsimile No: 00 49 40 3701 4784
Attention: Mrs Monika Nickel
By: Mr Wilken Mrs Nickel
THE SECURITY AGENT
MEESPIERSON N.V.
Camomile Court
23 Camomile Street
London EC3A 7PP
Facsimile No: 0171 444 8810
Attention: Walter Gibson Esq
By: Mr Gibson Mr Lappin-Smith
THE STEERING COMMITTEE
COMMERZBANK A.G.
Ness 7-9
20457 Hamburg, Germany
Facsimile No: 00 49 40 368 33305
Attention: Mr Weidner
By: Mr Loeck Mr Weidner
NORDDEUTSCHE LANDESBANK GIROZENTRALE
Brodschrangen 4
20457 Hamburg, Germany
Facsimile No: 00 49 40 3765 5304
Attention: Mrs Barbara Grammel
By: Mrs Glindmeyer Mr Heckmann
WESTDEUTSCHE LANDESBANK GIROZENTRALE
Domstrasse 10, 20095 Hamburg,
Germany
Facsimile No: 00 49 40 339 68265
Attention: Mr T Richter
By: Mr Richter Mr Jungnitsch
DEUTSCHE BANK A.G. IN HAMBURG
F/Kreditbearbeitung 3
Alter Wall 37
20457 Hamburg, Germany
Facsimile No: 00 49 40 3701 4784
Attention: Mrs Monika Nickel
By: Mr Wilken Mrs Nickel
MEESPIERSON N.V.
Coolsingel 93, P O Box 749
3000 AS Rotterdam
Netherlands
Facsimile No: 00 31 10 401 5885
Attention: Jaap van Beveren
By: Mr Gibson Mr Lappin-Smith
THE ROYAL BANK OF SCOTLAND PLC
5-10 Great Tower Street
London EC3P 3HX
Facsimile No: 0171 626 5407
Attention: T J Smith Esq
Julia H Peasley
By: Mr Smith
THE BANKS
DEUTSCHE BANK A.G. IN HAMBURG
F/Kreditbearbeitung 3
Alter Wall 37
20457 Hamburg, Germany
Facsimile No: 00 49 40 3701 4784
Attention: Mrs Monika Nickel
By: Mr Wilken Mrs Nickel
MEESPIERSON N.V.
Coolsingel 93, P O Box 749
3000 AS Rotterdam
Netherlands
Facsimile No: 00 31 10 401 5885
Attention: Jaap van Beveren
By: Mr Gibson Mr Lappin-Smith
JOH. BERENBERG, GOSSLER & CO.
Neuer Jungfernstieg 20
20354 Hamburg,
Germany
Facsimile No: 00 49 40 354 248
Attention: Mr Schroder
By: Mr Dolitz Mr Bock
BERLINER HANDELS-UND FRANKFURTER BANK
Paulstrasse 5
20095 Hamburg, Germany
Facsimile No: 00 49 40 320 09203
Attention: Dr Saft
By: Dr Saft Mr Budde
BERLINER BANK AKTIENGESELLSCHAFT
Niederlassung Hamburg
Domstrasse 21
20095 Hamburg, Germany
Facsimile No: 00 49 40 3020 5319
Attention: Mr v. Lobbecke
By: Mr Nullmeier Mr v. Lobbecke
COMMERZBANK A.G.
Ness 7-9
20457 Hamburg, Germany
Facsimile No: 00 49 40 368 33305
Attention: Mr Weidner
By: Mr Loeck Mr Weidner
NORDDEUTSCHE LANDESBANK GIROZENTRALE
Brodschrangen 4
20457 Hamburg, Germany
Facsimile No: 00 49 40 376 55304
Attention: Mrs Barbara Grammel
By: Mrs Glindmeyer Mr Heckmann
SCHRODER MUNCHMEYER HENGST & CO.
Ballindamm 33
20095 Hamburg, Germany
Facsimile No: 00 49 40 329 5275
Attention: Mr Stockmann
By: Mr Hahlbrock Mr Stockmann
THE THAI FARMERS BANK PUBLIC COMPANY LIMITED
Gansemarkt 24
20354 Hamburg, Germany
Facsimile No: 00 49 40 346 206
Attention: Mr Heidebrecht
By: Mr Heidebrecht XXXXXXXXXXXXXXXXX
WESTDEUTSCHE LANDESBANK GIROZENTRALE
Domstrasse 10, 20095 Hamburg,
Germany
Facsimile No: 00 49 40 339 68265
Attention: Mr T Richter
By: Mr Richter Mr Jungnitsch
BANK JULIUS BAER & CO. LIMITED
Bahnhofstrasse 36
8001 Zurich
Switzerland
Facsimile No: 00 411 202 1016
Attention: Dr Zollinger
By: Dr Zollinger Mr Geissbuhler
NATIONSBANK, N.A.
Facsimile No: 00 1 704 386 1270
Attention: Mr Greg Powell
By: Mr Parkhurst
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
Bank of America House
1 Alie Street
London E1 8DE
Facsimile No: 0171 313 2236
Attention: Robert Kasbolt
By: Mr Casbolt
THE ROYAL BANK OF SCOTLAND PLC
5-10 Great Tower Street
London EC3P 3HX
Facsimile No: 0171 626 5407
Attention: T J Smith Esq
Julia H Peasley
By: Mr Smith
SCHEDULE I
THE BANKS
Bank
Bank Julius Baer & Co. Ltd
Bank of America NT & SA
BfG Bank Aktiengesellschaft
Berliner Handels-und
Frankfurter Bank
Commerzbank
Aktiengesellschaft
MeesPierson N.V.
NationsBank, N.A.
Norddeutsche Landesbank
Girozentrale
Schroder Munchmeyer Hengst
& Co.
Westdeutsche Landesbank
Girozentrale
The Thai Farmers Bank
Public Company Limited
Joh. Berenberg, Gossler & Co.
Berliner Bank
Aktiengesellschaft
Deutsche Bank
Aktiengesellschaft
The Royal Bank of Scotland plc
STANDARD COMMERCIAL CORPORATION EXHIBIT 11
COMPUTATION OF EARNINGS PER COMMON SHARE
(In thousands, except share information; unaudited)
<TABLE>
<CAPTION>
Second quarter ended Six months ended
September 30 September 30
1996 1995 1996 1995
---- ---- ---- ----
PRIMARY EARNINGS PER SHARE
<S> <C> <C> <C> <C>
Income (loss) from continuing operations..................... $2,911 $(3,175) $4,419 $(9,430)
Less - ESOP preferred stock dividends net of tax............. (116) (120) (231) (241)
--------------------------------------------------
Income (loss) from continuing operations
applicable to common stock.............................. 2,795 (3,295) 4,188 (9,671)
Income (loss) from discontinued operations................... - 3,751 - (749)
--------------------------------------------------
Net income (loss) applicable to common stock................. $2,795 $ 456 $4,188 $(10,420)
==================================================
Primary average shares outstanding........................... 9,264,010 8,887,613 9,215,826 8,842,626
==================================================
Earnings (loss) per common share
- from continuing operations............................ $0.30 $(0.37) $0.45 $(1.09)
- from discontinued operations.......................... - 0.42 - (0.09)
--------------------------------------------------
- net................................................... $0.30 $0.05 $0.45 $(1.18)
==================================================
FULLY DILUTED EARNINGS PER SHARE
Income (loss) from continuing operations
applicable to common stock.............................. $2,795 $(3,295) $4,188 $(9,671)
Add - after-tax interest expense on 7 1/4%
convertible subordinated debentures................. 825 825 1,650 1,650
- dividends payable to ESOP assuming
conversion to common stock.......................... - - - -
--------------------------------------------------
Adjusted income (loss) from continuing operations............ 3,620 (2,479) 5,838 (8,021)
Income (loss) from discontinued operations................... - 3,751 - (749)
--------------------------------------------------
Net income (loss) applicable to common stock................. $3,620 $1,281 $5,838 $(8,770)
==================================================
Primary average shares outstanding........................... 9,264,010 8,887,613 9,215,826 8,842,626
Increase in shares outstanding assuming
- conversion of 7 1/4% convertible subordinated
debentures at November 13, 1991...................... 2,257,115 2,169,129 2,257,115 2,169,129
- conversion of ESOP convertible
preferred stock at July 1, 1993...................... 268,334 269,219 263,113 265,065
--------------------------------------------------
Fully diluted average shares outstanding..................... 11,789,459 11,325,961 11,736,054 11,276,820
==================================================
Earnings (loss) per common share
- from continuing operations............................ $0.31 $(0.22) $0.50 $(0.71)
- from discontinued operations.......................... - 0.33 - (0.07)
--------------------------------------------------
- net................................................... $0.31 $0.11 $0.50 $(0.78)
==================================================
</TABLE>
*Calculation of fully diluted earnings per share includes adjustments which are
antidilutive. Therefore, no fully diluted earnings per share are shown on the
face of the income statement.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET, CONSOLIDATED STATEMENT OF INCOME AND RETAINED
EARNINGS, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 48,241
<SECURITIES> 1,510
<RECEIVABLES> 198,303<F1>
<ALLOWANCES> 0<F2>
<INVENTORY> 346,020
<CURRENT-ASSETS> 601,362
<PP&E> 133,734<F1>
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 781,774
<CURRENT-LIABILITIES> 540,143
<BONDS> 97,923
<COMMON> 2,373
8,748
0
<OTHER-SE> 81,321
<TOTAL-LIABILITY-AND-EQUITY> 781,774
<SALES> 559,396
<TOTAL-REVENUES> 559,396
<CGS> 515,538
<TOTAL-COSTS> 515,538
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0<F2>
<INTEREST-EXPENSE> 0<F2>
<INCOME-PRETAX> 8,317
<INCOME-TAX> 2,056
<INCOME-CONTINUING> 4,419
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,419
<EPS-PRIMARY> 0.45
<EPS-DILUTED> 0.45
<FN>
<F1>SHOWN NET IN FINANCIAL STATEMENTS.
<F2>NOT SHOWN SEPARATELY UNDER MATERIALITY GUIDELINES.
</FN>
</TABLE>
