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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Sections 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) March 15, 1996
TEXFI INDUSTRIES, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 1-6797 56-0795032
(State or other Jurisdiction (Commission File (IRS Employer
of Incorporation) Number) Identification No.)
5400 GLENWOOD AVENUE, SUITE 215, RALEIGH, NC 27612
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (919) 783-4736
N/A
(Former Name or Former Address, If Changed Since Last Report)
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Item 2. Acquisition or Disposition of Assets
On March 15, 1996, the Registrant closed a $74 million credit facility,
pursuant to a Credit Agreement (the "1996 Credit Facility") with various
participating lenders, as enumerated in Schedule A below, (collectively referred
to herein as the "Lenders"), including NationsBank N.A. as agent. The 1996
Credit Facility consists of a $19 million "Term Loan" and a "Revolving Credit
Facility" not to exceed $55 million. The respective share of both the Term Loan
and Revolving Credit Facility for each participating lender is identified in
Schedule A below. The 1996 Credit Facility refinanced the Registrant's existing
bank credit facility and factor advance arrangement and provided funds to
support its ongoing working capital and capital expenditure needs. Under the
terms of certain Deeds of Trust, Assignments of Factoring Proceeds, and a
Security Agreement, the Registrant granted to the Lenders security interests in
substantially all of its tangible and intangible assets.
The 1996 Credit Facility requires the Registrant to maintain certain
covenants including, but not limited to, a stated net worth, a stated leverage
ratio as described below, a stated coverage ratio (as defined), and a stated
ratio of current assets to current liabilities (excluding the current maturities
of all debt). Additionally, the 1996 Credit Facility restricts, among other
things, the creation of certain additional indebtedness and liens, the
disposition of specific assets, and the payment of dividends and other specific
distributions by the Registrant.
The Term Loan and advances under the Revolving Credit Facility bear
interest at a rate equal to the Registrant's choice between a Base, CD or LIBOR
rate option (all as defined) plus a margin based upon the leverage ratio
applicable to its most recent fiscal quarter. The leverage ratio is computed as
the percentage of Consolidated Debt (as defined) to Consolidated EBITDA (as
defined). At closing, $19 million of Term Loan borrowings bore interest at an
average rate of 8.13% per annum based upon the available CD rates for differing
maturities. Of the total of approximately $35.7 million of borrowings under the
Revolving Credit Facility, $33 million bore interest at 8.08% per annum based
upon the available CD rate, while the remaining $2.7 million bore interest at
approximately 10% per annum based upon the Base rate option. Interest is payable
in arrears at the conclusion of each individual interest period , which varies
depending upon the rate and period chosen, not to exceed 90 days if the
applicable interest period is greater than 90 days.
The Registrant will repay the Term Loan principal in monthly
installments of $500,000 commencing on April 30, 1996 with a final balloon
payment due on September 15, 1998 of $4.5 million or such other amount as then
remains unpaid under the Term Loan. The Registrant is required to prepay the
Term Loan on or before April 30 of each year that the Term Loan is outstanding
to the extent of 50% of the Excess Cash Flow (as defined) for its immediately
preceding fiscal year. In addition, the Registrant is required to prepay the
Term Loan in amounts equal to the net proceeds of specific asset sales or
offerings of other debt or equity by the Registrant. Such mandatory prepayments
will be applied on a pro rata basis to the remaining Term Loan installments due.
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The proceeds of amounts due to the Registrant from its factors, which
have been assigned to the Lenders, are applied as repayment of advances
outstanding under the Revolving Credit Facility. The Registrant is required to
repay all amounts outstanding under the Revolving Credit Facility on September
15, 1998. The Registrant's "Borrowing Base" under the Revolving Credit Facility
is calculated as the sum of (a) 90% of factored Eligible Accounts (as defined),
plus (b) 85% of House Accounts (as defined), subject to certain aggregate dollar
limitations, plus (c) an amount equal to the lesser of (i) 50% of Eligible
Inventory (as defined), calculated on the basis of lower of cost or market, with
cost computed on a first-in, first-out basis, or (ii) $10,000,000. In the event
that the sum of the outstanding amount of Revolving Credit Facility advances
exceeds the Borrowing Base, the Registrant is required to repay the excess of
such advances.
Schedule A
COMMITMENT AND
LENDER COMMITMENT PERCENTAGE
NationsBank, N.A $17,000,000
22.972973%
Mellon Bank, N.A $16,000,000
21.621622%
The First Nations Bank of Boston $13,000,000
17.567567%
CoreStates Bank, N.A. Corporation $13,000,000
17.567567%
NatWest Bank, N.A $10,000,000
13.513514%
National Bank of Canada $ 5,000,000
6.756757%
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Item 5. Other Information
The provisions of the Indenture between the Registrant and First Union
National Bank of North Carolina, as Trustee, dated September 8, 1993 (the
"Indenture") which restrict the incurrence of additional indebtedness by the
Registrant were waived in accordance with the Indenture's requirement with
respect to the closing of the 1996 Credit Facility. The Indenture governs the
Registrant's outstanding 8.75% Senior Subordinated Debentures due August 1, 1999
(the "Debenture"). As a condition to the waiver by the Debenture holders, the
Registrant executed a Second Supplemental Indenture dated March 15, 1996 with
the Trustee.
The Second Supplemental Indenture provides that beginning on the last
business day of September 1998, and continuing on the last business day of each
month thereafter to and including June, 1999 (each such day being referred to as
a "Payment Date"), the Registrant will deposit $600,000 with the Trustee (a
"Deposit"), provided, that the amount of any Deposit may be reduced at the
Registrant's option by an amount equal to all "Repurchased Debentures"
surrendered to the Trustee on or prior to the applicable Payment Date.
Repurchased Debentures means (i) the principal amount of all Debentures
repurchased by the Registrant as of the applicable Payment Date less (ii) the
principal amount of all such Debentures that have been credited against previous
Deposits on prior Payment Dates. The Trustee is to hold the Deposit in trust for
the benefit of the holders of the Debentures and invest such amounts in U.S.
Government obligations or interest-bearing accounts or certificates of deposit
with federal or state chartered banks. All Deposits, including interest earned
thereon, are to be paid by the Trustee on the principal and interest of the
Debentures when due.
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Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits
(a) Financial Statements of Business Acquired. Not Applicable
(b) Pro Forma Financial Information. Not Applicable.
(c) The Exhibits furnished in connection with this report are as
follows:
2(a)(1) Credit Agreement dated as of March 15, 1996.
2(a)(2) Security Agreement dated as of March 15, 1996.
2(a)(3) Form of Deed of Trust and Security Agreement
(North Carolina property) dated as of March 15,
1996.
2(a)(4) Form of Mortgage and Security Agreement (South
Carolina property) dated as of March 15, 1996.
2(a)(5) Deed to Secure Debt and Security Agreement
(Georgia property) dated as of March 15, 1996.
2(a)(6) Form of Assignment of Factoring Proceeds dated as
of March 15, 1996.
4(a)(1) First Supplemental Indenture dated as of March 10,
1995.
4(a)(2) Second Supplemental Indenture dated as of March
15, 1996.
The following exhibits and schedules to the Credit Agreement, filed as
Exhibit 2(a)(1) hereto, have been omitted. The Registrant hereby undertakes to
furnish supplementally a copy of any such omitted exhibit or schedule to the
Commission upon request.
Exhibit A-1 Form of Revolving Credit Note
Exhibit A-2 Form of Term Note
Exhibit B-1 Form of Notice of Revolving Credit Loan Borrowing
Exhibit B-2 Form of Notice of Term Loan Borrowing
Exhibit C Form of Notice of Conversion/Continuation
Exhibit D Form of Officer's Compliance Certificate
Exhibit E Form of Assignment and Acceptance
Exhibit F Form of Borrowing Base Certificate
Schedule 1.1(a) Commitments
Schedule 1.1(b) Encumbered Property
Schedule 6.1(a) Jurisdictions of Organization and Qualification to Do
Business as Foreign Corporation
Schedule 6.1(f) Environmental Matters
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Schedule 6.1(g) ERISA Plans
Schedule 6.1(j) Intellectual Property Matters
Schedule 6.1(k) Material Contracts
Schedule 6.1(l) Employment, Non-Compete, Investment and Shareholder Agreements
Schedule 6.1(p) Material Contingent Liabilities
Schedule 6.1(u) Debt and Guarantees
Schedule 10.1 Permitted Debt
Schedule 10.3 Liens
Schedule 10.4 Loans, Advances and Investments
The following schedule to the Security Agreement, filed as Exhibit
2(a)(2) hereto, have been omitted. The Registrant hereby undertakes to furnish
supplementally a copy of such omitted schedule to the Commission upon request.
Schedule 1 Excluded Property
The following exhibits to the Form of Deed Trust and Security Agreement
(North Carolina property), filed as Exhibit 2(a)(4) hereto, have been omitted.
The Registrant hereby undertakes to furnish supplementally a copy of such
omitted exhibits to the Commission upon request.
Exhibit A Description of Land
Exhibit B Permitted Exceptions
Exhibit C Excluded Equipment
The following exhibits to the Form of Mortgage and Security Agreement
(South Carolina property), filed as Exhibit 2(a)(4) hereto, have been omitted.
The Registrant hereby undertakes to furnish supplementally a copy of such
omitted exhibits to the Commission upon request.
Exhibit A Description of Land
Exhibit B Permitted Exceptions
Exhibit C Excluded Equipment
The following exhibits to the Deed to Secure Debt and Security
Agreement (Georgia property), filed as Exhibit 2(a)(3) hereto, have been
omitted. The Registrant hereby undertakes to furnish supplementally a copy of
such omitted exhibits to the Commission upon request.
Exhibit A Description of Land
Exhibit B Permitted Exceptions
Exhibit C Excluded Equipment
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TEXFI INDUSTRIES, INC.
By: s/ Dane L. Vincent
Dane L. Vincent
Chief Financial Officer and Treasurer
Date: March 29, 1996
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INDEX TO EXHIBITS
Exhibit No. Exhibit
2(a)(1) Credit agreement dated as of March 15, 1996 among Registrant,
as Borrower, certain Lenders referred to therein, NationsBank,
N.A., as Agent, and NationsBanc Commercial Corporation, as
Disbursing Agent.
2(a)(2) Security Agreement dated as of March 15, 1996 between
Registrant, as Grantor, and NationsBank, N.A., as Agent for
certain Lenders referred to therein, and NationsBanc
Commercial Corporation, as Disbursing Agent.
2(a)(3) Form of Deed of Trust and Security Agreement (North Carolina
property) dated as of March 15, 1996 between Registrant, as
Grantor, TIM, Inc., as Trustee, and NationsBank, N.A., as
Beneficiary and Agent for certain Lenders referred to therein,
and NationsBanc Commercial Corporation, as Disbursing Agent.
2(a)(4) Form of Mortgage and Security Agreement (South Carolina
property) dated as of March 15, 1996 between Registrant, as
Grantor, and NationsBank, N.A., as Beneficiary and Agent for
certain Lenders referred to therein, and NationsBanc
Commercial Corporation, as Disbursing Agent.
2(a)(5) Deed to Secure Debt and Security Agreement (Georgia property)
dated as of March 15, 1996 between Registrant, as Grantor, and
NationsBank, N.A., as Beneficiary and Agent for certain
Lenders referred to therein, and NationsBanc Commercial
Corporation, as Disbursing Agent.
2(a)(6) Form of Assignment of Factoring Proceeds dated as of March
15, 1996.
4(a)(1) First Supplemental Indenture dated as of March 10, 1995,
between Registrant and First Union National Bank of North
Carolina, as Trustee.
4(a)(2) Second Supplemental Indenture dated as of March 15, 1996,
between Registrant and First Union National Bank of North
Carolina, as Trustee.
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Exhibit 2(a)(1)
CREDIT AGREEMENT
Dated As of March 15, 1996
by and among
TEXFI INDUSTRIES, INC.,
as Borrower,
the Lenders Referred to Herein,
NATIONSBANK, N.A.,
as Agent
and
NATIONSBANC COMMERCIAL CORPORATION,
as Disbursing Agent
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TABLE OF CONTENTS
ARTICLE I - DEFINITIONS...................................... 1
SECTION 1.1 Definitions...................................... 1
SECTION 1.2 General.......................................... 19
SECTION 1.3 Accounting Matters............................... 19
SECTION 1.4 Other Definitions and Provisions................. 20
ARTICLE II - REVOLVING CREDIT FACILITY................................. 20
SECTION 2.1 Commitment....................................... 20
SECTION 2.2 Procedure for Advances........................... 21
SECTION 2.3 Repayment of Revolving Credit.................... 24
SECTION 2.4 Revolving Credit Notes........................... 24
SECTION 2.5 Voluntary Permanent Reduction of the Aggregate
Revolving Credit Commitment............. 25
SECTION 2.6 Termination of the Revolving Credit Facility..... 25
ARTICLE IIA - LETTER OF CREDIT FACILITY................................. 26
SECTION 2A.1 Commitment....................................... 26
SECTION 2A.2 Procedure for Issuance of Letters of Credit...... 26
SECTION 2A.3 Commissions and Other Charges.................... 27
SECTION 2A.4 L/C Participations............................... 27
SECTION 2A.5 Reimbursement Obligation of the Borrower......... 28
SECTION 2A.6 Obligations Absolute............................. 28
SECTION 2A.7 Effect of Application............................ 29
SECTION 2A.8 Outstanding Letter of Credit..................... 29
ARTICLE III - TERM LOAN FACILITY........................................ 29
SECTION 3.1 Term Loan........................................ 29
SECTION 3.2 Procedure for Advance of Term Loan............... 29
SECTION 3.3 Repayment of Term Loan........................... 30
SECTION 3.4 Optional Repayments of Term Loan................. 30
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SECTION 3.5 Mandatory Prepayments of Term Loan.................30
SECTION 3.6 Term Notes.........................................31
ARTICLE IV - GENERAL LOAN PROVISIONS.................................... 31
SECTION 4.1 Interest.......................................... 31
SECTION 4.2 Notice and Manner of Conversion or Continuation of
Loans.................................... 34
SECTION 4.3 Commitment and Other Fees......................... 35
SECTION 4.4 Manner of Payment................................. 35
SECTION 4.5 Crediting of Payments and Proceeds................ 36
SECTION 4.6 Nature of Obligations of Lenders Regarding
Extensions of Credit; Assumption by
Disbursing Agent......................... 36
SECTION 4.7 Changed Circumstances............................. 37
SECTION 4.8 Indemnity......................................... 38
SECTION 4.9 Capital Requirements.............................. 39
SECTION 4.10 Taxes............................................. 39
SECTION 4.11 Change in Lending Office.......................... 41
SECTION 4.12 Use of Proceeds................................... 41
ARTICLE V - CLOSING; CONDITIONS OF CLOSING AND BORROWING.41
SECTION 5.1 Closing............................................41
SECTION 5.2 Conditions to Closing and Initial Extensions of
Credit....................................41
SECTION 5.3 Conditions to All Extensions of Credit.............47
ARTICLE VI - REPRESENTATIONS AND WARRANTIES OF
BORROWER...........................................48
SECTION 6.1 Representations and Warranties.....................48
SECTION 6.2 Survival of Representations and Warranties, Etc....54
ARTICLE VII - FINANCIAL INFORMATION AND NOTICES...........................54
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SECTION 7.1 Financial Statements and Projections..............55
SECTION 7.2 Officer's Compliance Certificate..................56
SECTION 7.3 Other Reports.....................................56
SECTION 7.4 Notice of Litigation and Other Matters............57
SECTION 7.5 Accuracy of Information...........................58
ARTICLE VIII - AFFIRMATIVE COVENANTS............................. 59
SECTION 8.1 Preservation of Corporate Existence and Related
Matters.................................. 59
SECTION 8.2 Maintenance of Property........................... 59
SECTION 8.3 Insurance......................................... 59
SECTION 8.4 Accounting Methods and Financial Records.......... 59
SECTION 8.5 Payment and Performance of Obligations............ 60
SECTION 8.6 Compliance With Laws and Approvals................ 60
SECTION 8.7 Environmental Management.......................... 60
SECTION 8.8 Compliance with ERISA............................. 60
SECTION 8.9 Compliance With Agreements........................ 60
SECTION 8.10 Conduct of Business............................... 61
SECTION 8.11 Visits and Inspections............................ 61
SECTION 8.12 Audits............................................ 61
SECTION 8.13 Further Assurances................................ 61
ARTICLE IX - FINANCIAL COVENANTS........................................ 61
SECTION 9.1 Current Ratio..................................... 61
SECTION 9.2 Coverage Ratio. ................................. 62
SECTION 9.3 Leverage Ratio.................................... 62
SECTION 9.4 Minimum Net Worth................................. 62
ARTICLE X - NEGATIVE COVENANTS......................................... 63
SECTION 10.1 Limitations on Debt............................... 63
SECTION 10.2 Limitations on Guarantees......................... 63
SECTION 10.3 Limitations on Liens.............................. 64
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SECTION 10.4 Limitations on Loans, Advances, Investments and
Acquisitions..............................65
SECTION 10.5 Limitations on Mergers and Liquidation.............66
SECTION 10.6 Limitations on Sale of Assets......................66
SECTION 10.7 Transactions with Affiliates.......................67
SECTION 10.8 Certain Accounting Changes.........................67
SECTION 10.9 Compliance with ERISA..............................67
SECTION 10.10 Modification of Factor Agreements and Credit
Insurance.................................68
SECTION 10.11 Restricted Payments................................68
ARTICLE XI - DEFAULT AND REMEDIES........................................68
SECTION 11.1 Events of Default..................................68
SECTION 11.2 Remedies...........................................71
SECTION 11.3 Rights and Remedies Cumulative; Non-Waiver; etc....72
ARTICLE XII - THE AGENT...................................................72
SECTION 12.1 Appointment........................................72
SECTION 12.2 Delegation of Duties...............................73
SECTION 12.3 Exculpatory Provisions.............................73
SECTION 12.4 Reliance by Agents.................................73
SECTION 12.5 Notice of Default..................................74
SECTION 12.6 Non-Reliance on the Agents and Other Lenders.......74
SECTION 12.7 Indemnification....................................75
SECTION 12.8 The Agent and Disbursing Agent in Their Individual
Capacities................................75
SECTION 12.9 Resignation of Agent; Successor Agents.............75
SECTION 12.10 Participation in Audits............................76
ARTICLE XIII - MISCELLANEOUS...............................................76
SECTION 13.1 Notices............................................76
SECTION 13.2 Expenses...........................................78
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SECTION 13.3 Set-off............................................78
SECTION 13.4 Governing Law......................................79
SECTION 13.5 Consent to Jurisdiction............................79
SECTION 13.6 Waiver of Jury Trial...............................79
SECTION 13.7 Reversal of Payments...............................79
SECTION 13.8 Injunctive Relief..................................80
SECTION 13.9 Successors and Assigns; Participations.............80
SECTION 13.10 Amendments, Waivers and Consents...................83
SECTION 13.11 Performance of Borrower's Duties...................83
SECTION 13.12 Indemnification....................................83
SECTION 13.13 All Powers Coupled with Interest. ................84
SECTION 13.14 Survival of Indemnities............................84
SECTION 13.15 Titles and Captions................................84
SECTION 13.16 Severability of Provisions.........................84
SECTION 13.17 Counterparts.......................................84
SECTION 13.18 Term of Agreement..................................84
SECTION 13.19 Adjustments........................................84
SECTION 13.20 Independent Effect of Covenants....................85
SECTION 13.21 Legal Fees.........................................85
Exhibits and Schedules
EXHIBITS
Exhibit A-1 - Form of Revolving Credit Note
Exhibit A-2 - Form of Term Note
Exhibit B-1 - Form of Notice of Revolving Credit Loan Borrowing
Exhibit B-2 - Form of Notice of Term Loan Borrowing
Exhibit C - Form of Notice of Conversion/Continuation
Exhibit D - Form of Officer's Compliance Certificate
Exhibit E - Form of Assignment and Acceptance
Exhibit F - Form of Borrowing Base Certificate
SCHEDULES
Schedule 1.1(a) - Commitments
Schedule 1.1(b) - Encumbered Property
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Schedule 6.1(a) - Jurisdictions of Organization and Qualification to Do
Business as Foreign Corporation
Schedule 6.1(f) - Environmental Matters
Schedule 6.1(g) - ERISA Plans
Schedule 6.1(j) - Intellectual Property Matters
Schedule 6.1(k) - Material Contracts
Schedule 6.1(l) - Employment, Non-Compete, Investment and
Shareholder Agreements
Schedule 6.1(p) - Material Contingent Liabilities
Schedule 6.1(u) - Debt and Guarantees
Schedule 10.1 - Permitted Debt
Schedule 10.3 - Liens
Schedule 10.4 - Loans, Advances and Investments
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CREDIT AGREEMENT
CREDIT AGREEMENT, dated as of the 15th day of March, 1996, by and among
Texfi Industries, Inc., a corporation organized under the laws of Delaware (the
"Borrower"), the Lenders who are or may become a party to this Agreement
(collectively, the "Lenders"), NationsBank, N.A., a national banking
association, as Agent for the Lenders, and NationsBanc Commercial Corporation,
as Disbursing Agent for the Lenders.
STATEMENT OF PURPOSE
The Borrower has requested and the Lenders have agreed to extend a
revolving credit facility and a term loan facility to the Borrower on the terms
and conditions of this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. The following terms when used in this
Agreement shall have the meanings assigned to them below:
"Accounts" means, collectively, all rights to payment for goods sold or
leased or for services rendered or to be rendered, whether or not earned by
performance, and all sums of money or other proceeds due or becoming due
thereon, howsoever evidenced, including without limitation "accounts" as defined
in the Uniform Commercial Code of North Carolina, instruments, documents,
chattel paper and general intangibles, whether secured or unsecured, now
existing or hereafter created, all notes receivable and all proceeds thereof and
all rights, title, security interests and guarantees with respect to each of the
foregoing.
"Adjustment Date" shall have the meaning assigned thereto in Section
4.1(c).
"Affiliate" means, with respect to a Person, any other Person (other
than a Subsidiary) which directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with
such Person. The term "control" means (a) the power to vote twenty percent (20%)
or more of the securities or other equity interests of a Person
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having ordinary voting power, or (b) the possession, directly or indirectly, of
any other power to direct or cause the direction of the management and policies
of a Person, whether through ownership of voting securities, by contract or
otherwise.
"Agent" means NationsBank, N.A. in its capacity as agent hereunder, and any
successor thereto appointed pursuant to Section 12.9.
"Agent's Office" means the office of the Agent specified in or
determined in accordance with the provisions of Section 13.1(c).
"Aggregate Revolving Credit Commitment" means the aggregate amount of
the Lenders' Revolving Credit Commitments hereunder, as such amount may be
reduced at any time or from time to time pursuant to Section 2.5. On the Closing
Date, the Aggregate Revolving Credit Commitment shall be Fifty-Five Million
Dollars ($55,000,000).
"Agreement" means this Credit Agreement, as amended or supplemented
from time to time.
"Applicable Law" means all applicable provisions of constitutions,
statutes, rules, regulations and orders of all Governmental Authorities and all
orders and decrees of all courts and arbitrators.
"Applicable Margin" shall have the meaning assigned thereto in Section
4.1(c).
"Application" means an application, in the form specified by the
Issuing Lender from time to time, requesting the Issuing Lender to issue a
Letter of Credit.
"Asset Sale" means any sale, sale-leaseback (other than sale-leasebacks
of Equipment to be purchased under the Borrower's 1996, 1997 and 1998 capital
expenditure plans as set forth in projections provided by the Borrower to the
Lenders which will be financed under operating leases to be entered into by the
Borrower with respect to such Equipment), mortgage of real property or any other
disposition (including the grant of any option, warrant or other right) by any
Person of any of its property or assets, other than (a) sales of Inventory in
the ordinary course of business, (b) the sale of Accounts to Factors and (c) the
sale of Equipment, the proceeds of which are applied either to the purchase of
replacement Equipment with like function or to the prepayment of any purchase
money Debt secured by a Lien on such Equipment, with the balance applied in
accordance with Section 3.5(a).
"Assignment and Acceptance" shall have the meaning assigned thereto in
Section 13.9(b)(iii).
"Assignment of Factoring Proceeds" means, collectively, the Assignment
of Factoring Proceeds between each Factor, the Borrower and the Agent pursuant
to which the Borrower
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assigns the Factoring Credit Balances to the Agent for the benefit of itself,
the Lenders and the Disbursing Agent.
"Base Rate" means, at any time, the higher of (a) the Prime Rate or (b)
the Federal Funds Rate plus 1/2 of 1%. Each change in the Base Rate shall take
effect simultaneously with the corresponding change or changes in the Prime Rate
or the Federal Funds Rate. Each determination of the Base Rate by the Agent or
the Disbursing Agent shall, in the absence of manifest error, be conclusive and
binding.
"Base Rate Loan" means any Loan bearing interest at a rate determined
with reference to the Base Rate as provided in Section 4.1(a) hereof.
"Borrowing Base" means the sum of (a) 90% of Eligible Accounts, plus
(b) 85% of House Accounts (subject to the applicable House Accounts Limit), plus
(c) an amount equal to the lesser of (i) 50% of Eligible Inventory, calculated
on the basis of the lower of cost or market, with cost calculated on a first-in,
first-out basis, or (ii) $10,000,000 less (d) the contingent liability of the
Lenders to CIT pursuant to the Indemnity Agreement of even date between the
Agent on behalf of the Lenders and CIT (the "CIT Indemnity"). No Accounts or
Inventory of any Person acquired by the Borrower after the Closing Date shall be
included in the Borrowing Base until the Agent shall have completed a field
examination of the Accounts and Inventory of such acquired Person, at the
Borrower's expense, and the Agent shall have received a report of such
examination in form reasonably satisfactory to the Majority Lenders.
"Borrowing Base Certificate" means the certificate of the Borrower
substantially in the form of Exhibit F attached hereto.
"Business Day" means (a) for all purposes other than as set forth in
clause (b) below, any day other than a Saturday, Sunday or legal holiday on
which banks in Charlotte, North Carolina and New York City are authorized or
required to close their commercial banking business, and (b) with respect to all
notices and determinations in connection with, and payments of principal and
interest on, any LIBOR Rate Loan, any day that is a Business Day described in
clause (a) and that is also a day for trading by and between banks in U.S.
Dollar deposits in the London interbank market.
"Capital Asset" means, with respect to the Borrower and its
Subsidiaries, any asset which should be classified and accounted for as a
capital asset on a Consolidated balance sheet of the Borrower and its
Subsidiaries.
"Capital Expenditures" means, with respect to the Borrower and its
Subsidiaries for any period, the aggregate cost of all Capital Assets acquired
by the Borrower and its Subsidiaries during such period, as determined in
accordance with GAAP.
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"Capital Lease" means, with respect to the Borrower and its
Subsidiaries, any lease of any property which should be classified and accounted
for as a capital lease on a Consolidated balance sheet of the Borrower and its
Subsidiaries.
"CD Assessment Rate" means, with respect to any Interest Period for any
CD Rate Loan, the then maximum net annual assessment rate for such Interest
Period for determining the annual assessment payable by NationsBank to the
Federal Deposit Insurance Corporation (or any successor) for insuring Dollar
deposits made at offices of NationsBank in the United States. The CD Base Rate
applicable to any CD Rate Loan for any Interest Period shall be adjusted
automatically on and as of the effective date of each change in the relevant CD
Assessment Rate during such Interest Period.
"CD Base Rate" means the secondary market rate of interest for
certificates of deposit for a maturity equal to the Interest Period selected as
determined by the Federal Reserve System and published in the Federal Reserve
Statistical release H.15(519) (or any successor publication) one Business Day
prior to the commencement of the applicable Interest Period. The CD Base Rate
used in determining the CD-Based Rate for Saturday and Sunday of each week shall
be the CD Base Rate for the immediately preceding Thursday. Whenever the day to
be used in determining the CD-Based Rate is a day for which the Federal Reserve
System does not publish the CD Base Rate, the CD Base Rate for the next
preceding day for which the CD Base Rate was published shall be used instead.
"CD-Based Rate" means a rate per annum (rounded upwards, if necessary,
to the next higher 1/100th of 1%) determined by NationsBank pursuant to the
following formula:
CD-Based Rate = CD Base Rate
__________________________ + CD Assessment Rate
1.00 - CD Reserve Percentage
"CD Rate Loan" means any Loan bearing interest at a rate based upon the
CD-Based Rate as provided in Section 4.1(a).
"CD Reserve Percentage" means, for any day, the percentage (expressed
as a decimal rounded upwards, if necessary, to the next higher 1/100th of 1%)
which is in effect for such day as prescribed by the Federal Reserve Board (or
any successor) for determining the maximum reserve requirement (including
without limitation any basic, supplemental or emergency reserves) for a member
bank of the Federal Reserve System in Charlotte in respect of new non-personal
time deposits in Charlotte having a maturity comparable to the Interest Period
selected and in an amount comparable to the CD Rate Loan which shall be
outstanding during such Interest Period.
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<PAGE>
"Closing Date" means the date of this Agreement or such later Business
Day upon which each condition described in Section 5.2 shall be satisfied or
waived in all respects in a manner acceptable to the Agent, in its sole
discretion.
"Code" means the Internal Revenue Code of 1986, and the rules and
regulations thereunder, each as amended or supplemented.
"Collateral" means all the assets, property and interests in property
of the Borrower and its Subsidiaries, whether now owned or hereafter acquired,
that shall, from time to time, secure the Obligations including without
limitation the Collateral described in the Security Documents and any property
or interest provided in addition to or in substitution for any of the foregoing.
"Commitment Percentage" means, with respect to a particular Lender, the
percentage obtained by dividing (a) the amount of the Total Commitment of such
Lender by (b) the amount of the Total Commitments of all Lenders.
"Committed Amount" means an amount equal to the lesser of (i) the
Aggregate Revolving Credit Commitment or (ii) the Borrowing Base.
"Consolidated" means, with reference to financial statements or
financial statement items of the Borrower and its Subsidiaries, such statements
or items on a consolidated basis in accordance with applicable principles of
consolidation under GAAP.
"Coverage Ratio" means, as of any quarter end, the ratio of (x) EBITDAR
less Capital Expenditures both for the period of four (4) consecutive fiscal
quarters ending on such fiscal quarter end, to (y) the sum of (i) Interest
Expense plus (ii) Restricted Payments by the Borrower during such period (other
than mandatory payments under the Borrower's Subordinated Extendible Debentures
due April 1, 2000, Series C and mandatory payments under the Borrower's 11-1/4%
Convertible Senior Subordinated Debentures due October 1, 1997) to the extent
Restricted Payments are permitted hereunder, plus (iii) current maturities of
Debt during such period plus (iv) all rental and operating lease expenses
deducted in the determination of EBITDAR, all determined on the basis of a
Consolidated balance sheet of the Borrower and its Subsidiaries.
"Credit Risk" means the risk of loss resulting solely and exclusively
from an account debtor's failure to pay at maturity because of its financial
inability.
"Current Assets" means, at any date, all amounts which should be
included under current assets on a Consolidated balance sheet of the Borrower
and its Subsidiaries on such date in accordance with GAAP.
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<PAGE>
"Current Liabilities" means, at any date, all amounts which should be
included under current liabilities on a Consolidated balance sheet of the
Borrower and its Subsidiaries on such date in accordance with GAAP; provided,
that the current portion of all Debt shall be excluded from the computation of
Current Liabilities.
"Debt" means, with respect to any Person at any date, the sum of the
following calculated in accordance with GAAP: (a) all liabilities, obligations
and indebtedness for borrowed money including but not limited to obligations
evidenced by bonds, debentures, notes or other similar instruments, (b) all
obligations to pay the deferred purchase price of property or services
including, without limitation, all conditional sale obligations and seller notes
and earn-out obligations issued or incurred in connection with the acquisition
of any other Person, (c) all obligations as lessee under Capital Leases, (d) all
Debt of any other Person secured by a Lien on any asset of such Person, (e) all
obligations, contingent or otherwise, relative to the face amount of letters of
credit, whether or not drawn, including, without limitation, any Reimbursement
Obligation, and banker's acceptances in each case issued for the account of any
such Person, (f) all Guarantees by such Person, (g) all obligations to redeem,
repurchase, exchange, defease or otherwise make payments in respect of capital
stock or other securities of such Person and (h) all payments which would be due
and payable by any such Person upon termination of any Hedging Agreement.
"Deeds of Trust" means each of the Deeds of Trust, Mortgages and Deed
to Secure Debt executed by the Borrower or any of its Subsidiaries in favor of
the Agent, for the benefit of the Lenders and the Disbursing Agent, as amended
or supplemented from time to time. On the Closing Date, such Deeds of Trust,
Mortgages and Deed to Secure Debt shall encumber the properties listed on
Schedule 1.1(b).
"Default" means any of the events specified in Section 11.1 which with
the passage of time, the giving of notice or any other condition, would
constitute an Event of Default.
"Disbursing Agent" means NationsBanc Commercial Corporation in its
capacity as disbursing agent hereunder, and any successor thereto appointed
pursuant to Section 12.9.
"Dollars" or "$" means, unless otherwise qualified, dollars in lawful
currency of the United States.
"EBITDA" means, for any period of determination, (a) Net Income for
such period, plus (b) the sum of the following to the extent deducted in the
determination of Net Income: (i) income taxes, (ii) Interest Expense and (iii)
amortization, depreciation, charges incurred for discontinued operations during
fiscal year 1995 and other non-cash charges (including amortization of goodwill,
transaction expenses, covenants not to compete and other intangible assets).
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<PAGE>
"EBITDAR" means, for any period of determination, (a) EBITDA for such
period plus (b) all rental and operating lease expenses which accrue under
Material Leases and which are deducted in the determination of Net Income for
such period.
"Eligible Accounts" means the aggregate amount of all Accounts created
by the Borrower for which the Factors retain the Credit Risk under their
respective Factoring Agreements with the Borrower and all Accounts sold and
assigned to the Factors under their respective Factoring Agreements with
recourse to the Borrower but with respect to which the Credit Risk is fully
insured in form and substance reasonably satisfactory to the Agent and which
policy has been endorsed or assigned to the Agent, less all discounts, returns,
credits or allowances at any time issued, owing or outstanding, less the amount
by which the aggregate amount of all such Accounts sixty (60) days or more past
due exceeds 10% of all such Accounts, less all such Accounts which, to the best
knowledge of the Borrower, have remained unpaid for a period exceeding one
hundred eighty (180) days from the date of the invoice therefor, less all
reserves, less any commissions due the Factors under their respective Factoring
Agreements and less any commissions due any credit insurer under any policy of
credit insurance (including the policy of American Credit Indemnity Company).
"Eligible Assignee" means, with respect to any assignment of the
rights, interest and obligations of a Lender hereunder, a Person that is at the
time of such assignment (a) a commercial bank organized under the laws of the
United States or any state thereof, having total capital and surplus in excess
of $500,000,000, (b) a finance company, insurance company or other financial
institution which in the ordinary course of business extends credit of the type
extended hereunder and that has total capital and surplus in excess of
$500,000,000, (c) already a Lender hereunder (whether as an original party to
this Agreement or as the assignee of another Lender), (d) the successor (whether
by transfer of assets, merger or otherwise) to all or substantially all of the
commercial lending business of a Lender, (e) any Affiliate of the assigning
Lender or (f) any other Person that has been approved in writing as an Eligible
Assignee by the Borrower and the Agent.
"Eligible Inventory" means the gross dollar value of the raw materials,
greige goods and finished goods held for sale in the ordinary course of the
business of the Borrower and its Subsidiaries in which the Agent on behalf of
the Lenders and the Disbursing Agent has a first priority, perfected security
interest pursuant to the Security Agreement and which at all times continues to
be acceptable to the Agent in its sole, reasonable discretion, less (to the
extent otherwise included in Eligible Inventory) any supplies, spare parts,
work-in-process, goods rejected by any customer of the Borrower or its
Subsidiaries or returned by any customer unless suitable for sale to other
customers, goods to be returned to suppliers of the Borrower or its
Subsidiaries, goods in transit to third parties, Inventory subject to a Lien
other than a Lien in favor of the Agent or a Factor, Inventory on consignment to
or from the Borrower, obsolete Inventory, Inventory held by the Borrower for
more than twelve months, Inventory deemed ineligible in the sole reasonable
discretion of the Agent and less any
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<PAGE>
irregular inventory and reserves required by GAAP for obsolete inventory and
market value declines, all as set forth and more particularly described in the
Borrowing Base Certificate.
"Employee Benefit Plan" means any employee benefit plan within the
meaning of Section 3(3) of ERISA which (a) is maintained for employees of the
Borrower or any ERISA Affiliate or (b) has at any time within the preceding six
years been maintained for the employees of the Borrower or any current or former
ERISA Affiliate.
"Environmental Laws" means any and all federal, state and local laws,
statutes, ordinances, rules, regulations, permits, licenses, approvals,
interpretations and orders of courts or Governmental Authorities, relating to
the protection of human health or the environment, including, but not limited
to, requirements pertaining to the manufacture, processing, distribution, use,
treatment, storage, disposal, transportation, handling, reporting, licensing,
permitting, investigation or remediation of Hazardous Materials. Environmental
Laws include, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. ss. 9601 et. seq.), the Hazardous
Material Transportation Act (49 U.S.C. ss. 331 et. seq.), the Resource
Conservation and Recovery Act (42 U.S.C. ss. 6901 et. seq.), the Federal Water
Pollution Control Act (33 U.S.C. ss. 1251 et. seq.), the Clean Air Act (42
U.S.C. ss. 7401 et. seq.), the Toxic Substances Control Act (15 U.S.C. ss. 2601
et. seq.), the Safe Drinking Water Act (42 U.S.C. ss. 300, et. seq.), the
Environmental Protection Agency's regulations relating to underground storage
tanks (40 C.F.R. Parts 280 and 281), and the rules and regulations promulgated
under each of these statutes, each as amended or supplemented.
"Equipment" means all equipment, including, without limitation, all
manufacturing, distribution, selling, data processing and office equipment, all
machinery, all furniture, furnishings, appliances, fixtures and trade fixtures,
tools, tooling, molds, dies, vehicles, vessels, aircraft and all other goods of
every type and description other than Inventory (collectively, "Equipment").
"ERISA" means the Employee Retirement Income Security Act of 1974, and
the rules and regulations thereunder, each as amended or supplemented.
"ERISA Affiliate" means any Person who together with the Borrower is
treated as a single employer within the meaning of Section 414(b), (c), (m) or
(o) of the Code or Section 4001(b) of ERISA.
"Event of Default" means any of the events specified in Section 11.1,
provided that any requirement for passage of time, giving of notice, or any
other condition, has been satisfied.
"Excess Cash Flow" means, for any period of determination, the sum of
(a) EBITDAR for such period, minus (b) income taxes (to the extent such taxes
are paid) and Interest
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<PAGE>
Expense paid and deducted in the determination of Net Income for such period,
minus (c) all principal payments made in respect of Consolidated Debt during
such period (excluding Excess Cash Flow Payments pursuant to Section 3.5) minus
(d) all Capital Expenditures made during such period (excluding Capital
Expenditures made with the proceeds of Consolidated Debt), minus (e) all rental
and operating lease payments during such period, plus or minus (f) the net
change in the working capital of the Borrower and its Subsidiaries during such
period and deferred financing costs associated with this transaction.
"Extensions of Credit" means, as to any Lender at any time, an amount
equal to the sum of (a) the aggregate principal amount of all Loans made by such
Lender then outstanding and (b) such Lender's Commitment Percentage of the
Letter of Credit Obligations then outstanding.
"Factor" means NCC, RFC, First Factors Corporation, The CIT
Group/Commercial Services, Inc. ("CIT") in its role as a factor under its
Factoring Agreement with the Borrower and any other factor approved by the Agent
(which approval will not be unreasonably withheld) which has executed and
delivered to the Agent documents sufficient to waive such factor's right of
off-set with respect to ledger debt and to assign the proceeds of all factored
Accounts to the Agent for the benefit of the Lenders and which contain
provisions substantially similar to those executed by the Factors at the closing
(collectively, "Factors").
"Factoring Agreement" means any agreement between the Borrower and a
Factor for the purchase by or assignment or transfer to such Factor of the
Accounts of the Borrower (collectively, the "Factoring Agreements").
"Factoring Credit Balances" means amounts due from a Factor to the
Borrower which have been assigned to the Agent for the benefit of the Lenders
and the Disbursing Agent.
"Federal Funds Rate" means, for any day, a fluctuating interest rate
per annum equal 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 at 11:00 a.m. (Charlotte time) for such day (or, if
such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
"Financing Statements" means financing statements approved for filing
in accordance with the applicable Uniform Commercial Code and all other titles,
documents and certificates that the Agent, the Disbursing Agent or the Lenders
may require from the Borrower to describe and perfect the security interests
created herein or in the other Loan Documents.
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<PAGE>
"Fiscal Year" means the fifty-two, fifty-three week fiscal year of the
Borrower ending on the Friday closest to October 31.
"Fixed Rate Loan" means either a CD Rate Loan or a LIBOR Rate Loan.
"GAAP" means generally accepted accounting principles, as recognized by
the American Institute of Certified Public Accountants and the Financial
Accounting Standards Board, applied and maintained on a consistent basis for the
Borrower and its Subsidiaries throughout the period indicated and consistent
with the prior financial practice of the Borrower.
"Governmental Approvals" means all authorizations, consents, approvals,
licenses and exemptions of, registrations and filings with, and reports to, all
Governmental Authorities.
"Governmental Authority" means any nation, province, state or political
subdivision thereof, and any government or any Person exercising executive,
legislative, regulatory or administrative functions of or pertaining to
government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"Guarantee" means, with respect to any Person on any date, any direct
or indirect liability, contingent or otherwise, of such Person with respect to
any indebtedness or other obligation of another Person if the primary purpose or
intent in incurring such liability, or the primary effect thereof, is to provide
assurance to the obligee of such indebtedness or other obligation that such
indebtedness or other obligation will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders of such
indebtedness or other obligation will be protected (in whole or in part) against
loss with respect thereto.
"Hazardous Materials" means any substances or materials (a) which are
or become defined as hazardous wastes, hazardous substances, pollutants,
contaminants or toxic substances under any Environmental Law, (b) which are
toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic or otherwise harmful to human health or the environment and are or
become regulated by any Governmental Authority, (c) the presence of which
require investigation or remediation under any Environmental Law, (d) the
discharge or emission or release of which requires a permit or license under any
Environmental Law or other Governmental Approval, (e) which are deemed to pose a
health or safety hazard to persons or neighboring properties, (f) which are
materials consisting of underground or aboveground storage tanks, whether empty,
filled or partially filled with any substance, or (g) which contain, without
limitation, friable or damaged asbestos, polychlo rinated biphenyls, urea
formaldehyde foam insulation, petroleum hydrocarbons, petroleum derived
substances or waste, crude oil, nuclear fuel, natural gas or synthetic gas.
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<PAGE>
"Hedging Agreement" means any agreement approved by the Agent and
Majority Lenders with respect to an interest rate swap, collar, cap, floor or a
forward rate agreement or other agreement regarding the hedging of interest rate
risk exposure executed by the Borrower or any of its Subsidiaries with any
financial institution that is or was a Lender at the time such agreement was
entered into, and any confirming letter executed pursuant to such agreement, all
as amended or supplemented.
"House Accounts" means all Accounts created by the Borrower in the
ordinary course of its business which satisfy and continue to satisfy the
following requirements:
(a) The Account is a bona fide existing obligation of the
named account debtor arising from the sale and delivery of merchandise
or the rendering of services to such account Debtor in the ordinary
course of the Borrower's business and is actually and absolutely owing
to the Borrower and is not contingent for any reason, and the Borrower
has lawful and absolute title to such Account and the unqualified right
to assign and grant a security interest therein to the Agent;
(b) The subject merchandise has been shipped or delivered on
open account to the named account debtor on an absolute sale basis and
not on consignment, on approval or on a return basis or subject to any
other repurchase or return agreement and no material part of the
subject merchandise has been returned;
(c) The Account is not evidenced by chattel paper or an
instrument of any kind, unless such chattel paper or instrument is
duly endorsed to and is in the possession of the Agent;
(d) The Account is a valid, legally enforceable obligation of
the account debtor and no offset (including without limitation
discounts, counterclaims or contra accounts) or other defense on the
part of such account debtor or any claim on the part of such account
debtor denying liability thereunder has been asserted;
(e) The Account is not subject to any lien or security
interest whatsoever, except for the Agent's security interest and other
security interests permitted herein, and a currently effective UCC
financing statement filed by the Agent against the Borrower covering
such Account is on file in all appropriate filing locations for all of
the Borrower's places of business and records concerning such Account;
(f) The Credit Risk with respect to the Account is fully
insured in form and substance reasonably satisfactory to the Agent or
confirmed letters of credit supporting payment of such Account have
been issued and transferred to the Agent under documents reasonably
satisfactory to the Agent; provided, that the value of such
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Account shall be determined net of any commissions due in respect of
such insurance or letters of credit;
(g) The Account has not been specifically assigned to a Factor
and the account debtor on the Account is not the account debtor on any
Account which has been specifically assigned to a Factor;
(h) The Account is not due from an account debtor more than
fifty percent (50%) of whose Accounts have remained unpaid for a period
exceeding ninety (90) days from the respective dates of such invoices;
(i) The Account has not remained unpaid for a period exceeding
one hundred twenty (120) days from the date of such invoice;
(j) The Account at all times continues to be acceptable to
the Agent in its sole, reasonable discretion;
(k) The Account does not arise out of a contract with the
United States of America, or any department, agency, subdivision or
instrumentality thereof, or any State or municipality, or any agency
or unit thereof; and
(l) The Borrower shall have directed payment of such
Account to the Lockbox.
"House Accounts Limit" means $6,000,000 during the period from the
Closing Date through the fifth Business Day following receipt by the Agent of
the annual financial statements for the Borrower for Fiscal Year 1996,
$10,000,000 thereafter until the fifth Business Day following receipt by the
Agent of the financial statements of the Borrower for the second quarter of
Fiscal Year 1997, $15,000,000 thereafter until the fifth Business Day following
receipt by the Agent of the annual financial statements for the Borrower for
Fiscal Year 1997, and $18,000,000 thereafter; provided, that in no event shall
the House Accounts Limit increase after the occurrence and during the
continuance of an Event of Default.
"Interest Expense" means, for any period, the gross interest expense
(including without limitation, interest expense attributable to Capital Leases
and all net obligations pursuant to Hedging Agreements) of the Borrower and its
Subsidiaries for such period, all determined for such period on a Consolidated
basis in accordance with GAAP.
"Interest Period" shall have the meaning assigned thereto in Section
4.1(b).
"Inventory" means all inventory of the Borrower and its Subsidiaries
wherever located, including without limitation, all goods manufactured or
acquired for sale or lease and all raw materials, work in process and finished
merchandise, and all supplies and goods, used
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or consumed in the operation of the business of the Borrower and its
Subsidiaries, whether or not the same is in transit or in the constructive,
actual or exclusive possession of the Borrower or its Subsidiaries or is held by
the Borrower, its Subsidiaries or by others for the account of the Borrower or
its Subsidiaries and the cash and non-cash proceeds thereof, including but not
limited to proceeds realized from the sale of such items and insurance proceeds.
"Issuing Lender" means NationsBank, in its capacity as issuer of any
Letter of Credit, or any successor thereto.
"L/C Commitment" means One Million Dollars ($1,000,000).
"L/C Facility" means the letter of credit facility established pursuant
to Article IIA hereof.
"L/C Participants" means the collective reference to all the Lenders
other than the Issuing Lender.
"Lender" means each Person executing this Agreement as a Lender set
forth on the signature pages hereto and each Person that hereafter becomes a
party to this Agreement as a Lender pursuant to Section 13.9.
"Lending Office" means, with respect to any Lender, the office of such
Lender maintaining such Lender's Loans.
"Letter of Credit Obligations" means at any time, an amount equal to
the sum of (a) the aggregate undrawn and unexpired amount of the then
outstanding Letters of Credit and (b) the aggregate amount of drawings under
Letters of Credit which have not then been reimbursed pursuant to Section 2A.5.
"Letters of Credit" shall have the meaning assigned thereto in Section
2A.1(a).
"Leverage Ratio" means as of any fiscal quarter end the ratio of (a)
Consolidated Debt of the Borrower and its Subsidiaries as of such fiscal quarter
end to (b) Consolidated EBITDA of the Borrower and its Subsidiaries for the
period of four consecutive fiscal quarters ending on such fiscal quarter end.
"LIBOR" means the rate of interest determined on the basis of the rate
for deposits in Dollars for a period equal to the Interest Period selected which
appears on the Telerate Page 3750 at approximately 11:00 a.m. London time, two
(2) Business Days prior to the commencement of the applicable Interest Period.
If, for any reason, such rate is not available, the "LIBOR" shall mean the rate
per annum at which, as determined by the Agent, Dollars in the amount of the
subject Loan are being offered to leading banks at approximately
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11:00 a.m. London time, two (2) Business Days prior to the commencement of the
applicable Interest Period for settlement in immediately available funds by
leading banks in the London interbank market for a period equal to the Interest
Period selected.
"LIBOR Rate" means a rate per annum (rounded upwards, if necessary, to
the next higher 1/100th of 1%) determined by the Agent pursuant to the following
formula:
LIBOR Rate = LIBOR
--------------------------------------
1.00 - Reserve Requirement
"LIBOR Rate Loan" means any Loan bearing interest at a rate determined
with reference to the LIBOR Rate as provided in Section 4.1(a) hereof.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
For the purposes of this Agreement, a Person shall be deemed to own subject to a
Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, Capital Lease or other
title retention agreement relating to such asset.
"Loan" means any Revolving Credit Loan or any Term Loan made to the
Borrower pursuant to Articles II and III and all such Loans collectively as the
context requires.
"Loan Documents" means, collectively, this Agreement, the Notes, the
Security Documents, any Hedging Agreement, any Application, any lockbox or cash
management agreement with the Disbursing Agent or a Lender and each other
document, instrument and agreement executed and delivered by any Loan Party in
connection with this Agreement, all as amended or supplemented.
"Loan Party" means the Borrower and each other Person (other than the
Agent, the Disbursing Agent, the Factors and the Lenders) which is now or
hereafter party to any of the Loan Documents.
"Lockbox" means a post office box maintained by the Disbursing Agent to
which the proceeds of the House Accounts are to be remitted by the account
debtor on such House Account. The proceeds of House Accounts remitted to the
Lockbox shall be deposited into an account in the name and sole control of the
Disbursing Agent pending the application of such proceeds by the Disbursing
Agent as provided in this Agreement.
"Majority Lenders" means, at any date, any combination of Lenders
holding at least fifty-one percent (51%) of all Loans or, if no Loans are at the
time outstanding, Lenders whose Commitment Percentages aggregate at least
fifty-one percent (51%).
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"Material Adverse Effect" means a material adverse effect on (a)
Collateral with an aggregate value of $1,000,000 or more, (b) the properties,
business, operations or financial condition of the Borrower and its
Subsidiaries, taken as a whole, or (c) the ability of the Borrower and its
Subsidiaries, taken as a whole, to perform their payment obligations or other
material obligations under the Loan Documents.
"Material Contract" means any written contract, agreement or other
instrument to which the Borrower or any of its Subsidiaries is a party (or by
which the Borrower or any of its Subsidiaries is bound), the cancellation,
non-performance or non-renewal of which by any party thereto would have a
Material Adverse Effect.
"Material Lease" means any lease, license or other similar agreement
which creates a possessory interest in personal property, the aggregate rentals
or payments under which exceed $50,000 during the term of such agreement or
whose term exceeds a period of one year.
"Maximum Rate" shall have the meaning assigned thereto in Section
4.1(f).
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is making, or
is accruing an obligation to make, contributions within the preceding six years.
"NationsBank" means NationsBank, N.A., a national banking association, and
its successors.
"NCC" means NationsBanc Commercial Corporation, and its successors.
"Net Income" means, with respect to the Borrower and its Subsidiaries
for any period, the Consolidated net income (or loss) of the Borrower and its
Subsidiaries for such period determined in accordance with GAAP; provided, that
there shall be excluded from Consolidated net income (or loss): (a) the income
(or loss) of any Person (other than a Subsidiary of the Borrower) in which the
Borrower has an ownership interest unless received by the Borrower in a cash
distribution, (b) the income (or loss) of any Person accrued prior to the date
it became a Subsidiary of the Borrower or is merged into or consolidated with
the Borrower and (c) extraordinary items.
"Net Proceeds" means, with respect to any sale, lease, transfer or
other disposition of assets by the Borrower or any of its Subsidiaries, or any
issuance by the Borrower or any of its Subsidiaries of any capital stock or
other debt or equity securities permitted hereunder, the aggregate amount of
cash received for such assets or securities (including, without limitation, any
payments received for non-competition covenants, consulting or management fees,
and any portion of the amount received evidenced by a seller promissory note or
other evidence of Debt), net of (i) amounts reserved, if any, for taxes payable
with respect to any
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<PAGE>
such sale (after application of any available losses, credits or other offsets),
(ii) reasonable and customary transaction costs properly attributable to such
transaction and payable by the Borrower or any of its Subsidiaries (other than
to an Affiliate) in connection with such sale, lease, transfer or other
disposition of assets or issuance of any capital stock or other securities,
including, without limitation, commissions and underwriting discounts, and (iii)
until actually received by the Borrower or any of its Subsidiaries, any portion
of the amount received held in escrow or evidenced by a seller promissory note
or non-compete agreement or covenant for which compensation is paid over time.
Upon receipt by the Borrower or any of its Subsidiaries of amounts referred to
in item (iii) of the preceding sentence, such amounts shall then be deemed to be
"Net Proceeds."
"Net Worth" means, at any date, the combined stockholders' equity
(including capital stock, additional paid-in capital and retained earnings,
after deducting treasury stock) of the Borrower and its Subsidiaries at such
time (excluding all Subordinated Debt) determined in accordance with GAAP.
"Notes" means the Revolving Credit Notes or the Term Notes, or any
combination thereof; "Note" means any of such Notes.
"Notice of Conversion/Continuation" shall have the meaning assigned thereto
in Section 4.2.
"Notice of Revolving Credit Loan Borrowing" shall have the meaning
assigned thereto in Section 2.2(a).
"Obligations" means, in each case, whether now in existence or
hereafter arising: (a) the principal of and interest on (including interest
accruing after the filing of any bankruptcy or similar petition) all Loans, (b)
the Letter of Credit Obligations, (c) all payment and other obligations owing by
the Borrower under any Hedging Agreement and (d) all other fees and commissions
(including reasonable attorney's fees), charges, indebtedness, loans,
liabilities, financial accommodations, obligations, covenants and duties owing
by the Borrower to the Lenders, the Agent or the Disbursing Agent arising under
this Agreement or any other Loan Document, of every kind, nature and
description, direct or indirect, absolute or contingent, due or to become due,
contractual or tortious, liquidated or unliquidated, and whether or not
evidenced by any note, and whether or not for the payment of money.
"Officer's Compliance Certificate" shall have the meaning assigned
thereto in Section 7.2.
"Other Taxes" shall have the meaning assigned thereto in Section 4.10(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
agency.
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"Pension Plan" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to the provisions of Title IV of ERISA or
Section 412 of the Code and which (a) is maintained for employees of the
Borrower or any ERISA Affiliates or (b) has at any time within the preceding six
years been maintained for the employees of the Borrower or any of its current or
former ERISA Affiliates.
"Permitted Lien" means any of the Liens permitted under Section 10.3.
"Person" means an individual, corporation, partnership, association,
trust, business trust, joint venture, limited liability company, joint stock
company, pool, syndicate, sole proprietorship, unincorporated organization,
Governmental Authority or any other form of entity not specifically listed
herein.
"Preferred Stock" means any of the Borrower's Stock which gives the
holder thereof a preference over the holders of the Borrower's common stock with
respect to the payment of dividends or liquidation proceeds, or otherwise
designated by the Borrower as "preferred stock," including without limitation
the Borrower's Series A Junior Participating Preferred Stock.
"Prime Rate" means, at any time, the rate of interest per annum
publicly announced from time to time by the Agent as its prime rate. Each change
in the Prime Rate shall be effective as of the opening of business on the day
such change in the Prime Rate occurs. The parties hereto acknowledge that the
rate announced publicly by the Agent as its Prime Rate is an index or base rate
and shall not necessarily be its lowest rate charged to its customers or other
banks.
"Realty" means all of those certain tracts or parcels of land owned or
leased by the Borrower, some of which are more particularly described in the
Deeds of Trust, together with all easements, rights and appurtenances thereto,
and all buildings and improvements now or hereafter located thereon, and all
fixtures and all additions thereto and substitutions therefor, whether now or
hereafter existing, and all realty and interests in realty hereafter acquired or
leased by the Borrower in the United States.
"Register" shall have the meaning assigned thereto in Section 13.9(c).
"Reimbursement Obligation" means the obligation of the Borrower to
reimburse the Issuing Lender pursuant to Section 2A.5 for amounts drawn under
Letters of Credit.
"Required Lenders" means, at any date, any combination of Lenders
holding at least 66 2/3% of all Loans or, if no Loans are at the time
outstanding, Lenders whose Commitment Percentages aggregate at least 66 2/3%.
"Reserve Requirement" means, on any day, that percentage (expressed as
a decimal fraction) which is in effect on such day, as provided by the Board of
Governors of the Federal Reserve System (or any successor governmental body),
for determining the maximum reserve requirements (including, without limitation,
basic, supplemental, marginal and emergency
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reserves) with respect to "Eurocurrency liabilities" as currently defined in
Regulation D of the Board of Governors of the Federal Reserve System, or under
any similar or successor regulation of the Board of Governors with respect to
Eurocurrency liabilities or Eurocurrency funding. Each determination by a Lender
of the Reserve Requirement shall, in the absence of manifest error, be
conclusive and binding.
"Restricted Payments" shall have the meaning assigned thereto in Section
10.11.
"Revolving Credit Commitment" means as to any Lender, the commitment of
such Lender to make Revolving Credit Loans as set forth on Schedule 1.1(a) of
this Agreement or in the most recent Assignment and Acceptance, if any, executed
by such Lender, as such amount may be reduced at any time or from time to time
pursuant to Section 2.5.
"Revolving Credit Facility" means the revolving credit facility
established pursuant to Article II hereof.
"Revolving Credit Loan" means any Revolving Credit Loan made to the
Borrower pursuant to Article II and all such Loans collectively as the context
requires.
"Revolving Credit Notes" means the separate Revolving Credit Notes made
by the Borrower payable to the order of each of the Lenders, substantially in
the form of Exhibit A-1 hereto, evidencing the Revolving Credit Facility, and
any amendments, modifications and supplements thereto, any substitutes therefor,
and any replacements, restatements, renewals or extension thereof, in whole or
in part.
"Revolving Credit Termination Date" means the earliest of the dates
referred to in Section 2.6.
"RFC" means Republic Factoring Corporation.
"Security Agreement" means the Security Agreement of even date between
the Borrower, as grantor, in favor of the Agent for the benefit of the Agent,
the Disbursing Agent and the Lenders, as amended or supplemented from time to
time.
"Security Documents" means the collective reference to the Security
Agreement, the Deeds of Trust, the Assignment of Factoring Proceeds, and each
other agreement or writing pursuant to which any Loan Party pledges or grants a
security interest in the Collateral or other collateral securing the Obligations
or such Person guarantees the payment and/or performance of the Obligations.
"Solvent" means, with respect to the Borrower and its Subsidiaries on a
Consolidated basis at any date, that the Borrower and its Subsidiaries (a) have
capital sufficient to carry on their businesses and transactions in which they
engage and are able to pay their debts as they mature, (b) own property having a
present fair saleable value on a going concern basis greater than the amount
required to pay their probable liabilities (including contingencies), and (c) do
not believe that they will incur debts or liabilities beyond their ability to
pay such debts
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or liabilities as they mature. In determining the amount of contingent or
unliquidated liabilities at any date, such liabilities will be computed at the
amount which, in light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.
"Stock" means all shares, options, interests or other equivalents
(howsoever designated) of or in a corporation, whether voting or nonvoting,
including, without limitation, common stock, warrants, preferred stock,
convertible debentures and all agreements, instruments and documents
convertible, in whole or in part, into any one or more or all of the foregoing.
"Subordinated Debt" means any Debt which expressly contains in the
instruments evidencing such Debt, or in the indenture or other similar
instrument pursuant to which such Indebtedness is issued, subordination
provisions, in form and substance reasonably satisfactory to the Required
Lenders, to the effect that the holder agrees that the Indebtedness evidenced by
such instrument, and any renewals or extensions thereof, shall at all times and
in all respects be subordinate and junior in right of payment to the Obligations
hereunder and shall include, without limitation, the Borrower's 11-1/4%
Convertible Senior Subordinated Debentures due October 1, 1997, 8-3/4% Senior
Subordinated Debentures due August 1, 1999, and Subordinated Extendible
Debentures due April 1, 2000, Series C.
"Subsidiary" means, as to any Person, any other Person of which more
than fifty percent (50%) of the outstanding capital stock or other ownership
interests having ordinary voting power to elect a majority of the board of
directors or other managers of such Person is at the time, directly or
indirectly, owned by or the management is otherwise controlled by such Person
(irrespective of whether, at the time, capital stock or other ownership
interests shall have or might have voting power by reason of the happening of
any contingency). Unless otherwise qualified, references to "Subsidiary" or
"Subsidiaries" herein shall refer to those of the Borrower.
"Taxes" shall have the meaning assigned thereto in Section 4.10(a).
"Term Loan" means the Term Loan made to the Borrower pursuant to
Article III.
"Term Loan Commitment" means as to any Lender, the commitment of such
Lender to make the Term Loans as set forth on Schedule 1.1(a) of this Agreement.
"Term Loan Facility" means the term loan facility established pursuant
to Article III hereof.
"Term Loan Maturity Date" means September 15, 1998.
"Term Notes" means the Term Notes made by the Borrower payable to the
order of each of the Lenders, substantially in the form of Exhibit A-2 hereto,
evidencing the Term Loan Facility, and any amendments, modifications and
supplements thereto, any substitutes
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therefor, and any replacements, restatements, renewals or extensions thereof, in
whole or in part.
"Termination Event" means, a "Reportable Event" described in Section
4043 of ERISA (other than a reportable event not subject to the provision for
30-day notice to the PBGC under regulations promulgated under such Section), (b)
the withdrawal of the Borrower or any ERISA Affiliate from a Pension Plan during
a plan year in which it was a "substantial employer" as defined in Section
4001(a)(2) of ERISA, (c) the termination of a Pension Plan, the filing of a
notice of intent to terminate a Pension Plan or the treatment of a Pension Plan
amendment as a termination under Section 4041 of ERISA, (d) the institution of
proceedings to terminate, or the appointment of a trustee with respect to, any
Pension Plan by the PBGC, (e) any other event or condition which would
constitute grounds under Section 4042(a) of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan, (f) the partial or
complete withdrawal of the Borrower or any ERISA Affiliate from a Multiemployer
Plan, (g) the imposition of a Lien pursuant to Section 412 of the Code or
Section 302 of ERISA, (h) any event or condition which results in the
reorganization or insolvency of a Multiemployer Plan under Sections 4241 or 4245
of ERISA, or (i) any event or condition which results in the termination of a
Multiemployer Plan under Section 4041A of ERISA or the institution by PBGC of
proceedings to terminate a Multiemployer Plan under Section 4042 of ERISA.
"Total Commitment" means, as to any Lender, the collective reference to
the total amount of (a) the Revolving Credit Commitment of such Lender and (b)
the Term Loan Commitment of such Lender.
SECTION 1.2 General. All terms of an accounting nature not specifically
defined herein shall have the meaning assigned thereto by GAAP. Unless otherwise
specified, a reference in this Agreement to a particular section, subsection,
Schedule or Exhibit is a reference to that section, subsection, Schedule or
Exhibit 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. Any reference herein to
"Charlotte time" or "Atlanta time" shall refer to the applicable time of day in
Charlotte, North Carolina, or Atlanta,Georgia, as the case may be.
SECTION 1.3 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 or any Subsidiary thereof to determine compliance with any covenant
contained herein, shall, except as otherwise expressly contemplated hereby or
unless there is an express written direction by the Agent with the consent of
the Required Lenders to the contrary agreed to by the Borrower, be performed in
accordance with GAAP as in effect on the Closing Date. In the event that changes
in GAAP (as in effect on the Closing Date) shall be mandated by the Financial
Accounting Standards Board, or any similar accounting body of comparable
standing, or shall be recommended by the Borrower's certified public
accountants, to the extent that such changes would modify such accounting terms
or the interpretation or computation thereof,
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such changes shall be followed in defining such accounting terms only from and
after the date the Borrower and the Lenders shall have amended this Agreement to
the extent necessary to reflect any such changes in the financial covenants and
other terms and conditions of this Agreement.
SECTION 1.4 Other Definitions and Provisions.
(a) Use of Capitalized Terms. Unless otherwise defined therein, all
capitalized terms defined in this Agreement shall have the defined meanings when
used in this Agreement, the Notes and the other Loan Documents or any
certificate, report or other document made or delivered pursuant to this
Agreement.
(b) Miscellaneous. The words "hereof", "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
ARTICLE II
REVOLVING CREDIT FACILITY
SECTION 2.1 Commitment.
(a) Revolving Credit Loans. Subject to the terms and conditions of this
Agreement, each Lender severally agrees to make Revolving Credit Loans to the
Borrower from time to time from the Closing Date through but not including the
Revolving Credit Termination Date as requested by the Borrower in accordance
with Section 2.2; provided, that (a) the aggregate principal amount of all
outstanding Revolving Credit Loans (after giving effect to any amount requested)
shall not exceed an amount equal to the lesser of (i) the Aggregate Revolving
Credit Commitment less the Letter of Credit Obligations and the Borrowing Base
and (b) the sum of the principal amount of outstanding Revolving Credit Loans
from any Lender to the Borrower plus such Lender's Commitment Percentage of the
Letter of Credit Obligations then outstanding shall not at any time exceed an
amount equal to such Lender's Revolving Credit Commitment. Immediately after
giving effect to the initial Loans to be made and Letters of Credit to be issued
on the Closing Date, the Committed Amount shall exceed the aggregate outstanding
principal amount of all Revolving Credit Loans and Letter of Credit Obligations
by at least $2,500,000, and after giving effect to any voluntary prepayment by
the Borrower of any Debt for borrowed money, including Subordinated Debt but
excluding the Loans, and as a condition precedent to the Borrower's right to
make any investment permitted by Section 10.4(e), the Committed Amount shall
exceed the aggregate outstanding principal amount of all Revolving Credit Loans
and Letter of Credit Obligations by at least $5,000,000. Each Revolving Credit
Loan by a Lender shall be in a principal amount equal to such Lender's
Commitment Percentage of the aggregate principal amount of Revolving Credit
Loans requested on each occasion. Subject to the terms
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and conditions hereof, the Borrower may borrow, repay and reborrow Revolving
Credit Loans hereunder until the Revolving Credit Termination Date.
SECTION 2.2 Procedure for Advances.
(a) Initial Loan. On or prior to the Closing Date, the Borrower shall
give the Disbursing Agent irrevocable written notice in the form attached hereto
as Exhibit B-1 (a "Notice of Revolving Credit Loan Borrowing") of the Revolving
Credit Loan to be made on the Closing Date, which Loan shall be either a Base
Rate Loan or a CD Rate Loan, as elected by the Borrower.
(b) Subsequent Loans. With respect to all Revolving Credit Loans requested
by the Borrower subsequent to the Closing Date:
(i) The Borrower shall, not later than 11:00 a.m. (Atlanta
time) (1) at least one Business Day before each Base Rate Loan and (2)
at least three Business Days before each Fixed Rate Loan, give the
Disbursing Agent irrevocable written notice in the form of a Notice of
Revolving Credit Loan Borrowing (or telephonic notice of such requested
borrowing promptly confirmed by such written notice) specifying (A) the
date of such borrowing, which shall be a Business Day, (B) the amount
of such borrowing, which shall be with respect to Fixed Rate Loans in
the aggregate principal amount of $3,000,000 or a whole multiple of
$1,000,000 in excess thereof, (C) whether the Revolving Credit Loans
are to be Fixed Rate Loans or Base Rate Loans and (D) in the case of a
Fixed Rate Loan, the duration of the Interest Period applicable
thereto. Notices received after 11:00 a.m. (Atlanta time) shall be
deemed received on the next Business Day.
(ii) Upon receipt of each Notice of Revolving Credit Loan
Borrowing, the Disbursing Agent shall calculate the Borrowing Base as
of the date of such proposed borrowing, based on the information set
forth in the then most current Borrowing Base Certificate furnished to
the Disbursing Agent by the Borrower pursuant to Section 2.2 (c) and
the Disbursing Agent's determination of the amount of Eligible Accounts
and the Disbursing Agent shall determine the maximum amount of the
Revolving Credit Loans to be made. If the requested Loan is to be a
Base Rate Loan, the Disbursing Agent shall, subject to Section 4.6,
make the requested Loan on behalf of the Lenders, and each such advance
shall be deemed an advance under and shall be evidenced by, the
Revolving Credit Notes. Each Lender hereby assigns to the Disbursing
Agent a ratable portion of its respective Revolving Credit Note to the
extent of the Disbursing Agent's unpaid funding obligations and
interest accruing with respect thereto as set forth in this Section
2.2(b) hereof outstanding from time to time. Such assignment shall be
effective only to the extent of unpaid funding obligations and accrued
interest thereon due and payable at any time to the Disbursing Agent
and shall in no event affect any commitment or other fees due the
Lenders hereunder.
If the requested Loan is a Fixed Rate Loan, the Disbursing
Agent shall, on the date of receipt of the Notice of Revolving Credit
Loan Borrowing, notify the Lenders
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of such request for a Fixed Rate Loan, and not later than 2:00 p.m.
(Atlanta time) on the proposed borrowing date, each Lender will make
available to the Disbursing Agent, for the account of the Borrower, at
the office of the Disbursing Agent, such Lender's Commitment Percentage
of the Fixed Rate Loans to be made on such borrowing date. Promptly
after the Disbursing Agent's receipt of such funds and upon fulfillment
of the applicable conditions set forth in Article V, the Disbursing
Agent will (and each Lender hereby irrevocably authorizes the
Disbursing Agent to) make such funds available to the Borrower. Subject
to Section 4.6 hereof, the Disbursing Agent shall not be obligated to
disburse the proceeds of any Fixed Rate Loan requested pursuant to this
Section 2.2 until each Lender shall have made available to the
Disbursing Agent its Commitment Percentage of such Fixed Rate Loan.
The Disbursing Agent will settle with the Lenders by
accounting for all sums advanced to the Borrower by the Disbursing
Agent (and not reimbursed by the Lenders) and the proceeds of all
Factoring Credit Balances and other sums applied to the payment of such
advances, including all other sums held by the Disbursing Agent on (A)
Tuesday of each week (or if any such Tuesday is not a Business Day, on
the next succeeding Business Day) and (B) on such date as the sum of
all available Factor Credit Balances, all other sums held by the
Disbursing Agent, the amount of any requested Base Rate Loan and all
advances made by the Disbursing Agent on behalf of the Lenders and not
reimbursed by the Lenders exceeds $5,000,000. The date of each such
settlement and accounting is referred to herein as the "Settlement
Date."
Not later than 2:00 p.m. (Atlanta time) on the Settlement
Date, each Lender shall fund its Commitment Percentage of the net
amount of all advances by the Disbursing Agent outstanding after giving
effect to the requested borrowing, which amount shall thereafter be
reflected on the books and records of the Agent and Disbursing Agent as
Revolving Credit Loans of the Lenders bearing interest at the Base Rate
plus the Applicable Margin until repaid, the occurrence of a Default or
such Base Rate Loans are converted to Fixed Rate Loans in accordance
with Section 4.2.
(iii) On each Business Day, the Disbursing Agent shall apply
the proceeds of all available Factoring Credit Balances, together with
all other sums held by the Disbursing Agent, to the payment of first,
all outstanding advances by the Disbursing Agent to the Borrower on
behalf of the Lenders, and then to the payment of all other Base Rate
Loans then outstanding, with the balance to be retained by the
Disbursing Agent pending application as provided in this Agreement.
(iv) Each Lender acknowledges and agrees that its obligation
to fund interim advances made by the Disbursing Agent in accordance
with the terms of this Section 2.2(b) is absolute and that the
obligations of all the Lenders to fund is unconditional and shall not
be affected by any circumstance whatsoever.
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(c) Borrowing Base Certificate. On Tuesday of each week, the Borrower
shall furnish to the Agent and Disbursing Agent a certificate substantially in
the form of Exhibit F attached hereto setting forth, as of the previous Friday,
the amount of House Accounts, Eligible Inventory and Letter of Credit
Obligations, together with any supporting data related thereto that the
Disbursing Agent or the Agent may reasonably request. The Agent shall confirm to
the Disbursing Agent the amount of Letter of Credit Obligations set forth in the
certificate and the Agent's acceptance of the computation of House Accounts.
Based on the information set forth in such certificate and the Disbursing
Agent's determination of the amount of Eligible Accounts (which may be based on
information supplied by the Borrower to the Disbursing Agent certified by the
Borrower to be based on its on-line review of Factor books and records), the
Disbursing Agent shall compute the Borrowing Base as of the date of each
borrowing under Section 2.2 of this Agreement, or as of the date of receipt by
the Issuing Lender of an Application for the issuance of a Letter of Credit
under Section 2A.2 to determine the maximum amount of the Revolving Credit Loans
which may be advanced or Letters of Credit which may be issued as of such date.
Each determination of the Borrowing Base by the Disbursing Agent shall, in the
absence of manifest error, be conclusive and binding. A copy of each Borrowing
Base Certificate shall be furnished to the Lenders by the Disbursing Agent.
(d) CIT Indemnity. Pursuant to a separate indemnity agreement dated as
of March 15, 1996 (the "CIT Indemnity"), the Agent on behalf of the Lenders has
agreed to indemnify The CIT Group/Commercial Services, Inc. in an aggregate
amount not to exceed $3,500,000 (plus cost and expenses, including attorneys
fees, as provided in the CIT Indemnity) in respect of certain Ledger Debt
Obligations referred to therein. The Borrower agrees to reimburse the Lenders
for the amount of any such indemnity obligation paid by the Lenders immediately
upon notice from the Agent and to pay interest on any unreimbursed amounts at
the rate which would be payable on any outstanding Base Rate Loans which were
then overdue. If the Borrower fails to timely reimburse the Lenders for any such
indemnity obligation, the Borrower shall be deemed to have timely given a Notice
of Revolving Credit Loan Borrowing hereunder to the Disbursing Agent requesting
the Lenders to make a Base Rate Loan on such date in an amount equal to such
indemnity obligation and, subject to satisfaction or waiver of the conditions
precedent specified in Article V, the Lenders shall make Base Rate Loans in such
amount, the proceeds of which shall be applied to reimburse the Lenders for such
amount. The Borrower's obligations under this Section 2.2(d) shall be absolute
and unconditional under any and all circumstances and irrespective of any
set-off, counterclaim or defense to payment which the Borrower may have or have
had against the Agent or any Lender. By its execution hereof, each Lender hereby
authorizes the Agent to enter into the CIT Indemnity on its behalf and hereby
severally agrees to pay the indemnity obligations thereunder in an aggregate
amount not to exceed its Commitment Percentage of each such obligation. Each
Lender's obligation of indemnity hereunder shall be treated as a letter of
credit obligation of such Lender.
SECTION 2.3 Repayment of Revolving Credit.
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(a) Repayment on Revolving Credit Termination Date. The Borrower shall
repay the outstanding principal amount of all Revolving Credit Loans in full,
together with all accrued but unpaid interest thereon, on the Revolving Credit
Termination Date.
(b) Overadvances. If at any time the sum of the outstanding principal
amount of all Revolving Credit Loans exceeds the lesser of (i) the Aggregate
Revolving Credit Commitment less the Letter of Credit Obligations or (ii) the
Borrowing Base (an "Overadvance"), the Borrower shall immediately repay the
Revolving Credit Loans in an amount equal to the Overadvance. Each repayment
referred to in this Section 2.3(b) shall be shall be accompanied by accrued
interest and any amount required to be paid pursuant to Section 4.8 hereof.
(c) Optional Prepayments of Revolving Credit Loans. The Borrower may at
any time and from time to time prepay the Revolving Credit Loans, in whole or in
part, without prior notice with respect to Base Rate Loans and upon at least
three (3) Business Days irrevocable notice to the Agent with respect to Fixed
Rate Loans, specifying the Business Day and amount of prepayment and whether the
prepayment is of Fixed Rate Loans or Base Rate Loans or a combination thereof,
and, if of a combination thereof, the amount allocable to each. Upon receipt of
such notice, the Agent shall promptly notify each Lender. If any such notice is
given, the amount specified therein shall be due and payable on the date
specified therein. Partial prepayments shall be in an aggregate amount of
$3,000,000 or a whole multiple of $1,000,000 in excess thereof with respect to
Fixed Rate Loans except as to prepayments required by the provisions of Section
2.3(b). Each repayment referred to in this Section 2.3(c) shall be shall be
accompanied by accrued interest and any amount required to be paid pursuant to
Section 4.8 hereof.
(d) Limitation on Prepayment of Fixed Rate Loans. The Borrower may not
prepay any Fixed Rate Loan on any day other than on the last day of the Interest
Period applicable thereto unless such repayment is accompanied by any amount
required to be paid pursuant to Section 4.8 hereof.
SECTION 2.4 Revolving Credit Notes. Each Lender's Revolving Credit
Loans and the obligation of the Borrower to repay such Revolving Credit Loans
shall be evidenced by a Revolving Credit Note executed by the Borrower payable
to the order of such Lender representing the Borrower's obligation to pay such
Lender's Revolving Credit Commitment or, if less, the aggregate unpaid principal
amount of all Revolving Credit Loans made by such Lender to the Borrower
hereunder, plus interest on such principal amounts. Each Revolving Credit Note
shall be dated the date hereof and shall bear interest on the unpaid principal
amount thereof at the applicable interest rate per annum specified in Section
4.1.
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SECTION 2.5 Voluntary Permanent Reduction of the Aggregate Revolving Credit
Commitment.
(a) The Borrower shall have the right at any time and from time to time
prior to the Revolving Credit Termination Date, upon at least five (5) Business
Days prior written notice to the Agent and the Disbursing Agent, to permanently
reduce, from time to time, without premium or penalty, the Aggregate Revolving
Credit Commitment, each reduction to be in an aggregate principal amount of not
less than $1,000,000 or any integral multiple thereof. In no event shall the
Aggregate Revolving Credit Commitment be reduced below $10,000,000 until the
Term Loan is paid in full.
(b) Each permanent reduction permitted pursuant to this Section 2.5
shall be accompanied by a payment of principal sufficient to reduce the
aggregate outstanding Extensions of Credit of the Lenders (other than Term
Loans) after such reduction to the Aggregate Revolving Credit Commitment as so
reduced and by payment of accrued interest on the amount of such repaid
principal. Any reduction of the Aggregate Revolving Credit Commitment to zero
shall be accompanied by payment of all outstanding Obligations respecting the
Revolving Credit Facility and termination of the Aggregate Revolving Credit
Commitment and Revolving Credit Facility. If the reduction of the Aggregate
Revolving Credit Commitment requires the repayment of any Fixed Rate Loan, such
reduction may be made only on the last day of the then current Interest Period
applicable thereto unless such repayment is accompanied by any amount required
to be paid pursuant to Section 4.8 hereof.
SECTION 2.6 Termination of the Revolving Credit Facility. The Revolving
Credit Facility shall terminate on the earliest of (i) September 15, 1998, (ii)
the date of permanent reduction of the Aggregate Revolving Credit Commitment in
whole pursuant to Section 2.5 and (iii) the date of termination by the Agent on
behalf of the Lenders pursuant to Section 11.2(a); provided, that not earlier
than the 30th day prior to and not later than the 30th day after each of the
first and second anniversaries of the Closing Date, the Borrower may, by written
notice (an "Extension Request") given to the Agent, request that the Revolving
Credit Termination Date be extended in each instance to a date that is 364 days
after the Revolving Credit Termination Date then in effect; provided, however,
that the Revolving Credit Termination Date shall not thereby be extended beyond
September 15, 2000. The Agent shall promptly advise the Disbursing Agent and
each Lender of its receipt of any Extension Request. The Lenders shall provide
the Agent with a written acceptance or rejection of each Extension Request no
later than sixty (60) days after the date thereof; provided that the failure of
any Lender to provide such written acceptance or rejection shall be deemed to be
a rejection of the request. If each of the Lenders provides the Agent with a
written acceptance of the Borrower's request within such sixty (60) day period,
the Agent shall so notify the Borrower in writing, with a copy to the Disbursing
Agent.
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ARTICLE IIA
LETTER OF CREDIT FACILITY
SECTION 2A.1 Commitment. Subject to the terms and conditions hereof,
the Issuing Lender, in reliance on the agreements of the other Lenders set forth
in Section 2A.4(a), agrees to issue documentary or standby letters of credit
("Letters of Credit") for the account of the Borrower on any Business Day from
the Closing Date through but not including the date which is sixty (60) days
prior to the Revolving Credit Termination Date in such form as may be approved
from time to time by the Issuing Lender; provided, that the Issuing Lender shall
have no obligation to issue any Letter of Credit if, after giving effect to such
issuance, (a) the Letter of Credit Obligations would exceed the L/C Commitment
or (b) the sum of the aggregate principal amount of all outstanding Revolving
Credit Loans and Letter of Credit Obligations would exceed the Committed Amount.
Each Letter of Credit shall (i) be denominated in Dollars, (ii) be a documentary
or standby letter of credit issued to support obligations of the Borrower,
contingent or otherwise, incurred in the ordinary course of business, (iii)
expire on a date not more than one hundred eighty (180) days later in the case
of a documentary letter of credit and not more than one year later in the case
of a standby letter of credit but in no event later than the Revolving Credit
Termination Date and (iv) be subject to the Uniform Customs and Practice for
Documentary Credits and, to the extent not inconsistent therewith, the laws of
the State of North Carolina. The Issuing Lender shall not issue any Letter of
Credit hereunder if such issuance would conflict with, or cause the Issuing
Lender or any L/C Participant to exceed any limits imposed by any Applicable
Law. References herein to "issue" and derivations thereof with respect to
Letters of Credit shall also include extensions, modifications or confirmations
of any existing Letters of Credit, unless the context otherwise requires.
SECTION 2A.2 Procedure for Issuance of Letters of Credit. The Borrower
may from time to time request that the Issuing Lender issue a Letter of Credit
by delivering to the Issuing Lender at the Agent's Office an Application
therefor, completed to the reasonable satisfaction of the Issuing Lender, and
such other certificates, documents and other papers and information as the
Issuing Lender may reasonably request. Upon receipt of any Application, the
Issuing Lender shall process such Application and the certificates, documents
and other papers and information delivered to it in connection therewith in
accordance with its customary procedures and shall, subject to Section 2A.1 and
Article V hereof, promptly issue the Letter of Credit requested thereby (but in
no event shall the Issuing Lender be required to issue any Letter of Credit
earlier than three Business Days after its receipt of the Application therefor
and all such other certificates, documents and other papers and information
relating thereto) by issuing the original of such Letter of Credit to the
beneficiary thereof or as otherwise may be agreed by the Issuing Lender and the
Borrower. The Issuing Lender shall furnish to the Borrower a copy of such Letter
of Credit and furnish to each Lender a copy of such Letter of Credit and the
amount of each Lender's L/C Participation therein, all promptly following the
issuance of such Letter of Credit.
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SECTION 2A.3 Commissions and Other Charges.
(a) The Borrower shall pay to the Agent, for the account of the Issuing
Lender and the L/C Participants, a letter of credit commission on the face
amount of each Letter of Credit in an amount equal to the Applicable Margin for
LIBOR Loans as in effect from time to time. Such commission shall be payable
quarterly in arrears on the last Business Day of each fiscal quarter of the
Borrower and on the Revolving Credit Termination Date.
(b) In addition to the foregoing commission, the Borrower shall pay the
Issuing Lender an issuance fee of one-quarter percent (1/4%) per annum on the
face amount of each Letter of Credit, which fees shall be fully earned and be
payable upon the issuance of each Letter of Credit.
(c) The Agent shall, promptly following its receipt thereof, distribute
to the Issuing Lender and the L/C Participants all commissions received by the
Agent in accordance with their respective Commitment Percentages.
SECTION 2A.4 L/C Participations.
(a) The Issuing Lender irrevocably agrees to grant and hereby grants to
each L/C Participant, and, to induce the Issuing Lender to issue Letters of
Credit hereunder, each L/C Participant irrevocably agrees to accept and purchase
and hereby accepts and purchases from the Issuing Lender, on the terms and
conditions hereinafter stated, for such L/C Participant's own account and risk
an undivided interest equal to such L/C Participant's Commitment Percentage in
the Issuing Lender's obligations and rights under each Letter of Credit issued
hereunder and the amount of each draft paid by the Issuing Lender thereunder.
Each L/C Participant unconditionally and irrevocably agrees with the Issuing
Lender that, if a draft is paid under any Letter of Credit for which the Issuing
Lender is not reimbursed in full by the Borrower in accordance with the terms of
this Agreement, such L/C Participant shall pay to the Issuing Lender upon demand
at the Issuing Lender's address for notices specified herein an amount equal to
such L/C Participant's Commitment Percentage of the amount of such draft, or any
part thereof, which is not so reimbursed.
(b) Upon becoming aware of any amount required to be paid by any L/C
Participant to the Issuing Lender pursuant to Section 2A.4(a) in respect of any
unreimbursed portion of any payment made by the Issuing Lender under any Letter
of Credit, the Issuing Lender shall notify each L/C Participant of the amount
and due date of such required payment and such L/C Participant shall pay to the
Issuing Lender the amount specified on the applicable due date. If any such
amount is paid to the Issuing Lender after the date such payment is due, such
L/C Participant shall pay to the Issuing Lender on demand, in addition to such
amount, the product of (i) such amount, times (ii) the daily average Federal
Funds Rate as determined by the Agent during the period from and including the
date such payment is due to the date on which such payment is immediately
available to the Issuing Lender, times (iii) a fraction the numerator of which
is the number of days that elapse during such period and the denominator of
which is 360. A certificate of the Issuing Lender with respect to any amounts
owing under this Section shall be conclusive in the absence of manifest error.
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With respect to payment to the Issuing Lender of the unreimbursed amounts
described in this Section 2A.4(b), if the L/C Participants receive notice that
any such payment is due (A) prior to 1:00 p.m. (Charlotte time) on any Business
Day, such payment shall be due that Business Day, and (B) after 1:00 p.m.
(Charlotte time) on any Business Day, such payment shall be due on the following
Business Day.
(c) Whenever, at any time after the Issuing Lender has made payment
under any Letter of Credit and has received from any L/C Participant its
Commitment Percentage of such payment in accordance with this Section 2A.4, the
Issuing Lender receives any payment related to such Letter of Credit (whether
directly from the Borrower or otherwise, or any payment of interest on account
thereof, the Issuing Lender will promptly distribute to such L/C Participant its
pro rata share thereof; provided, that in the event that any such payment
received by the Issuing Lender shall be required to be returned by the Issuing
Lender, such L/C Participant shall return to the Issuing Lender the portion
thereof previously distributed by the Issuing Lender to it.
SECTION 2A.5 Reimbursement Obligation of the Borrower. The Borrower
agrees to reimburse the Issuing Lender on each date on which the Issuing Lender
notifies the Borrower of the date and amount of a draft paid under any Letter of
Credit for the amount of (a) such draft so paid and (b) any taxes, fees, charges
or other costs or expenses incurred by the Issuing Lender in connection with
such payment. Each such payment shall be made to the Issuing Lender at its
address for notices specified herein in lawful money of the United States and in
immediately available funds. Interest shall be payable on any and all amounts
remaining unpaid by the Borrower under this Article IIA from the date such
amounts become payable (whether at stated maturity, by acceleration or
otherwise) until payment in full at the rate which would be payable on any
outstanding Base Rate Loans which were then overdue. If the Borrower fails to
timely reimburse the Issuing Lender on the date the Borrower receives the notice
referred to in this Section 2A.5, the Borrower shall be deemed to have timely
given a Notice of Revolving Credit Loan Borrowing hereunder to the Disbursing
Agent requesting the Lenders to make a Base Rate Loan on such date in an amount
equal to the amount of such drawing and, subject to the satisfaction or waiver
of the conditions precedent specified in Article V, the Lenders shall make Base
Rate Loans in such amount, the proceeds of which shall be applied to reimburse
the Issuing Lender for the amount of the related drawing and costs and expenses.
SECTION 2A.6 Obligations Absolute. The Borrower's obligations under
this Article IIA (including without limitation the Reimbursement Obligation)
shall be absolute and unconditional under any and all circumstances and
irrespective of any set-off, counterclaim or defense to payment which the
Borrower may have or have had against the Issuing Lender or any beneficiary of a
Letter of Credit. The Borrower also agrees with the Issuing Lender that the
Issuing Lender shall not be responsible for, and the Borrower's Reimbursement
Obligation under Section 2A.5 shall not be affected by, among other things, the
validity or genuineness of documents or of any endorsements thereon, even though
such documents shall in fact prove to be invalid, fraudulent or forged, or any
dispute between or among the Borrower and any beneficiary of any Letter of
Credit or any other party to which such Letter of Credit may be transferred or
any claims whatsoever of a Borrower against any beneficiary
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of such Letter of Credit or any such transferee. The Issuing Lender shall not be
liable for any error, omission, interruption or delay in transmission, dispatch
or delivery of any message or advice, however transmitted, in connection with
any Letter of Credit, except for errors or omissions caused by the Issuing
Lender's gross negligence or willful misconduct. The Borrower agrees that any
action taken or omitted by the Issuing Lender under or in connection with any
Letter of Credit or the related drafts or documents, if done in the absence of
gross negligence or willful misconduct and in accordance with the standards of
care specified in the Uniform Customs and, to the extent not inconsistent
therewith, the UCC shall be binding on the Borrower and shall not result in any
liability of the Issuing Lender to the Borrower. The responsibility of the
Issuing Lender to the Borrower in connection with any draft presented for
payment under any Letter of Credit shall, in addition to any payment obligation
expressly provided for in such Letter of Credit, be limited to determining that
the documents (including each draft) delivered under such Letter of Credit in
connection with such presentment are in conformity with such Letter of Credit.
SECTION 2A.7 Effect of Application. To the extent that any provision of
any Application related to any Letter of Credit is inconsistent with the
provisions of this Article IIA, the provisions of this Article IIA shall apply.
SECTION 2A.8 Outstanding Letter of Credit. The Borrower, the Issuing
Lender, the Lenders and the Agent acknowledge that NationsBank, N.A. has
heretofore issued a letter of credit in the face amount of $125,000 which letter
of credit, as of the Closing Date, shall be deemed to be a Letter of Credit
issued by the Issuing Lender hereunder and subject to all of the terms and
conditions hereof.
ARTICLE III
TERM LOAN FACILITY
SECTION 3.1 Term Loan. Subject to the terms and conditions of this
Agreement, each Lender severally agrees to make a Term Loan to the Borrower on
the Closing Date in a principal amount equal to such Lender's Term Loan
Commitment.
SECTION 3.2 Procedure for Advance of Term Loan. Not later than 11:00
a.m. (Atlanta time) on the Closing Date, the Borrower shall give the Disbursing
Agent a Notice of Borrowing in the form attached hereto as Exhibit B-2 ("Notice
of Term Loan Borrowing"), requesting that the Lenders make the Term Loan. Upon
receipt of such Notice of Term Loan Borrowing from the Borrower, the Disbursing
Agent shall promptly notify each Lender thereof. Not later than 2:00 p.m.
(Atlanta time) on the Closing Date, each Lender will make available to the
Disbursing Agent for the account of the Borrower, at the office of the
Disbursing Agent in funds immediately available to the Disbursing Agent, an
amount equal to such Lender's Term Loan Commitment. The Borrower hereby
irrevocably authorizes the Disbursing Agent to disburse the proceeds of the Term
Loan in immediately
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available funds by wire transfer to such Person or Persons as may be designated
by the Borrower.
SECTION 3.3 Repayment of Term Loan. The Borrower shall repay the
principal amount of the Term Loan in thirty (30) consecutive monthly
installments on the last day of each month commencing April 30, 1996, the first
twenty-nine (29) of which shall be in the amount of $500,000 and the last of
which shall be in the amount of $4,500,000 or such other principal amount as
shall then remain unpaid under the Term Loan. If not sooner paid, the Term Loan
shall be paid in full, together with accrued interest thereon, on the Term Loan
Maturity Date.
SECTION 3.4 Optional Repayments of Term Loan.
(a) Optional Repayments. The Borrower shall have the right at any time
and from time to time, upon at least five (5) Business Days prior written notice
to the Disbursing Agent, to repay the Term Loan in whole or in part without
premium or penalty except as provided below. Each optional repayment of the Term
Loan hereunder shall be in an aggre gate principal amount of at least $1,000,000
or any whole multiple of $250,000 in excess thereof with respect to Base Rate
Loans and in an aggregate principal amount of at least $3,000,000 or any whole
multiple of $1,000,000 in excess thereof with respect to Fixed Rate Loans. Each
such repayment shall be applied to the principal installments of the Term Loan
in inverse order of maturity and shall be accompanied by accrued interest on the
amount repaid through the date of repayment and by any payment required under
Section 4.8 hereof.
(b) Limitation on Prepayment of Fixed Rate Loans. The Borrower may not
prepay any Fixed Rate Loan on any day other than on the last day of the Interest
Period applicable thereto unless such repayment is accompanied by any amount
required to be paid pursuant to Section 4.8 hereof.
SECTION 3.5 Mandatory Prepayments of Term Loan.
(a) Asset Sale; Issuance of Debt/Equity. Within ten (10) Business Days
after (i) the consummation by the Borrower or any Subsidiary of any Asset Sale,
or (ii) the public or private offering of any Debt and/or equity by the Borrower
or any Subsidiary (other than a conversion of Subordinated Debt into common
stock of the Borrower in accordance with the provisions of the Borrower's
11-1/4% Convertible Senior Subordinated Debentures due October 1, 1997 or the
sale of stock pursuant to employee stock options in an aggregate amount not to
exceed the lesser of (i) 850,000 shares of common stock or (ii) ten percent
(10%) of the outstanding common stock of the Borrower), the Borrower shall apply
an amount equal to the Net Proceeds realized from such Asset Sale or offering of
Debt and/or equity, to the extent that such Net Proceeds exceed an aggregate of
$50,000 in any fiscal quarter, to the prepayment of the Term Loan and then to
permanently reduce the Aggregate Revolving Credit Commitment.
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(b) Excess Cash Flow Payments. The Borrower shall repay the Term Loan
on or before April 30 of each year that the Term Loan is outstanding in an
amount equal to 50% of the Excess Cash Flow for the immediately preceding fiscal
year.
(c) Manner of Application. Each mandatory repayment under this Section
3.5 shall be applied to the principal installments due on the Term Loan on a pro
rata basis. Each such repayment shall be accompanied by accrued interest on the
amount prepaid and by any payment required under Section 4.8 hereof.
SECTION 3.6 Term Notes. Each Lender's Term Loan and the obligation of
the Borrower to repay such Term Loan shall be evidenced by a Term Note in the
form attached hereto as Exhibit A-2, payable to the order of such Lender
representing the Borrower's obligation to pay such Lender's Term Loan
Commitment. Each Term Note shall be dated the Closing Date and shall bear
interest on the unpaid principal amount thereof at the applicable interest rate
per annum specified in Section 4.1.
ARTICLE IV
GENERAL LOAN PROVISIONS
SECTION 4.1 Interest.
(a) Interest Rate Options. Subject to the provisions of this Section
4.1, at the election of the Borrower, the principal balance of any Loan shall
bear interest at the Base Rate, the CD Rate or at the LIBOR Rate plus, in each
case, the Applicable Margin as set forth below. The Borrower shall select the
rate of interest and Interest Period, if any, applicable to any Loan at the time
a Notice of Revolving Credit Loan Borrowing is given pursuant to Section 2.2, or
prior to 12:00 noon (Atlanta time) on the Closing Date with respect to the Term
Loan or at the time a Notice of Conversion/Continuation is given pursuant to
Section 4.2. Each Loan bearing interest based on the Base Rate shall be a "Base
Rate Loan," each Loan bearing interest at the CD Rate shall be a "CD Rate Loan"
and each Loan bearing interest based on the LIBOR Rate shall be a "LIBOR Rate
Loan". Any Loan as to which the Borrower has not duly specified an interest rate
as provided herein shall be deemed a Base Rate Loan.
(b) Interest Periods. In connection with each Fixed Rate Loan, the
Borrower, by giving notice at the times described in Section 4.1(a), shall elect
an interest period (each, an "Interest Period") to be applicable to such Loan,
which Interest Period shall be a period of 30, 90 or 180 days in the case of CD
Rate Loans and 1, 2, 3 or 6 months in the case of LIBOR Loans; provided that:
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(i) each Interest Period shall commence on the date of advance
of or conversion to any Fixed Rate Loan and, in the case of immediately
successive Interest Periods, each successive Interest Period shall
commence on the date on which the next preceding Interest Period
expires;
(ii) if any Interest Period would otherwise expire on a day
that is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day; provided, that if any Interest Period
would otherwise expire on a day that is not a Business Day but is a day
of the month after which no further Business Day occurs in such month,
such Interest Period shall expire on the next preceding Business Day;
(iii) any Interest Period 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 end on the last Business Day of the calendar month at the
end of such Interest Period;
(iv) no Interest Period for a Revolving Credit Loan shall
extend beyond the Revolving Credit Maturity Date, no Interest Period
for the Term Loan shall extend beyond the Term Loan Maturity Date and
no Interest Period shall be selected by the Borrower which would result
in the repayment of any Fixed Rate Loan prior to the end of an Interest
Period; and
(v) there shall be no more than ten (10) LIBOR Rate Loans in
effect at any time.
(c) Applicable Margin. The Applicable Margin provided for in Section
4.1(a) with respect to the Loans (the "Applicable Margin") shall, for the period
commencing on the Closing Date and ending on the day immediately preceding the
initial Adjustment Date, be 2.75% in the case of LIBOR Rate Loans, 2.75% in the
case of CD Rate Loans and 1.75% in the case of Base Rate Loans. Commencing on
such Adjustment Date and on each Adjustment Date thereafter, the Applicable
Margin shall be determined by reference to the Leverage Ratio in accordance with
the following pricing matrix:
Applicable Margin Per Annum
Leverage Ratio Base Rate + Fixed Rate +
greater than or equal
to 4.75 to 1.0 2.00% 3.00%
4.75 to 1.0 or less
but equal to or
greater than
4.0 to 1.0 1.75% 2.75%
4.0 to 1.0 or
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less but equal to
or greater than
3.25 to 1.0 1.50% 2.50%
3.25 to 1.0 or
less 1.25% 2.25%
Adjustments, if any, in the Applicable Margin shall be made by the Agent on the
fifth (5th) day (or, if not a Business Day, on the next succeeding Business Day)
following receipt by the Agent of the annual financial statements for the
Borrower for Fiscal Year 1996 and the accompanying Officer's Compliance
Certificate and thereafter on the 5th day (or, if not a Business Day, on the
next succeeding Business Day) following each receipt by the Agent of quarterly
financial statements for the Borrower and its Subsidiaries pursuant to Section
7.1(b) and the accompanying Officer's Compliance Certificate (each such date, an
"Adjustment Date"), setting forth the Leverage Ratio as of the most recent year
end or fiscal quarter end as applicable. In the event the Borrower fails to
deliver such financial statements and Certificate within the time required by
Sections 7.1 and 7.2 hereof, the Applicable Margin shall, subject to Section
4.1(d), be the highest Applicable Margin set forth above until the Adjustment
Date following the delivery of such financial statements and Certificate.
(d) Default Rate. Upon the occurrence and during the continuance of a
Default or Event of Default, the Borrower shall no longer have the option to
request Fixed Rate Loans, and upon the occurrence and during the continuance of
an Event of Default all amounts due and payable with respect to Fixed Rate Loans
shall bear interest at a rate per annum two percent (2%) in excess of the rate
then applicable to Fixed Rate Loans until the end of the applicable Interest
Period and thereafter at a rate equal to two percent (2%) in excess of the rate
then applicable to Base Rate Loans and (iii) all amounts due and payable with
respect to Base Rate Loans shall bear interest at a rate per annum equal to two
percent (2%) in excess of the rate then applicable to Base Rate Loans. Interest
shall continue to accrue on the Notes at the foregoing rate after the filing by
or against the Borrower of any petition seeking any relief in bankruptcy or
under any act or law pertaining to insolvency or debtor relief, whether state,
federal or foreign.
(e) Interest Payment and Computation. Interest on each Base Rate Loan
shall be paid to the Disbursing Agent (for the ratable benefit of the Disbursing
Agent and the Lenders) in arrears on the first Business Day of each calendar
month commencing April 1, 1996, and interest on each Fixed Rate Loan shall be
paid to the Disbursing Agent (for the ratable benefit of the Lenders) on the
last day of each Interest Period applicable thereto, and if such Interest Period
extends beyond 90 days, on the 90th day of the Interest Period. All interest
rates provided for hereunder, all fees provided for in Section 4.3 and all fees
and commissions provided for in Section 2A shall be computed on the basis of a
360-day year and assessed for the actual number of days elapsed.
(f) Maximum Rate. In no contingency or event whatsoever shall the aggregate
of all amounts deemed interest hereunder or under any of the Notes exceed the
highest rate permissible under any Applicable Law which a court of competent
jurisdiction shall, in a final
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determination, deem applicable hereto. In the event that such a court determines
that the Lenders have contracted for, charged or received interest hereunder in
excess of the highest applicable rate, the rate in effect hereunder shall
automatically be reduced to the maximum rate permitted by Applicable Law and the
Lenders shall at the Agent's option promptly refund to the Borrower any interest
received by Lenders in excess of the maximum lawful rate or shall apply such
excess to the principal balance of the Obligations. It is the intent hereof that
the Borrower not pay or contract to pay, and that neither the Disbursing Agent
nor any Lender charge, receive or contract to receive, directly or indirectly in
any manner whatsoever, interest in excess of the maximum non-usurious rate that
may be paid by the Borrower under Applicable Law.
SECTION 4.2 Notice and Manner of Conversion or Continuation of Loans.
Provided that no Default or Event of Default has occurred and is then
continuing, (a) the Borrower shall have the option to convert at any time all or
any portion of its outstanding Base Rate Loans in a principal amount equal to
$3,000,000 or any whole multiple of $1,000,000 in excess thereof into one or
more Fixed Rate Loans and (b) upon the expiration of any Interest Period, the
Borrower may, or pursuant to Section 4.1(d) shall, convert all or any portion of
its outstanding Fixed Rate Loans into Base Rate Loans in a principal amount
equal to $1,000,000 or a whole multiple of $250,000 in excess thereof or
continue such Fixed Rate Loans as Fixed Rate Loans. Whenever the Borrower
desires to convert or continue Loans as provided above, the Borrower shall give
the Disbursing Agent irrevocable prior written notice in the form attached as
Exhibit C (a "Notice of Conversion/Continuation") not later than 11:00 a.m.
(Atlanta time) three (3) Business Days, in the event of a conversion to or
continuation as Fixed Rate Loans, and one (1) Business Day, in the event of a
conversion to Base Rate Loans, before the day on which a proposed conversion or
continuation of such Loan is to be effective specifying (i) the Loans to be
converted or continued, and, in the case of a Fixed Rate Loan to be converted or
continued, the last day of the Interest Period therefor, (ii) the effective date
of such conversion or continuation (which shall be a Business Day), (iii) the
principal amount of such Loans to be converted or continued and (iv) the
Interest Period to be applicable to such converted or continued Fixed Rate Loan.
The Disbursing Agent shall promptly notify the Lenders of such Notice of
Conversion/Continuation. If, within the time period required under the terms of
this Section 4.2, the Disbursing Agent does not receive a Notice of
Conversion/Continuation from the Borrower containing an election to continue
Fixed Rate Loans for an additional Interest Period or to convert such Fixed Rate
Loans, then, upon the expiration of the Interest Period therefor, such Loans
will be automatically converted to Base Rate Loans.
SECTION 4.3 Commitment and Other Fees.
(a) Commitment Fee. The Borrower shall pay to the Agent, for the
account of the Lenders, a non-refundable commitment fee at a rate per annum
equal to three-eighths of one percent (3/8 of 1%) on the average daily unused
portion of the Aggregate Revolving Credit Commitment. The commitment fee shall
be payable in arrears on the last Business Day of each calendar quarter,
commencing March 31, 1996 and continuing on the last Business Day of each
calendar quarter thereafter until and including the Revolving Credit Termination
Date.
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Such commitment fee shall be distributed by the Agent to the Lenders pro rata in
accordance with the Lenders' respective Commitment Percentages.
(b) Other Fees and Compensation. The Borrower shall pay to the Agent,
for the account of the Agent and not for the account of the Lenders, certain
fees and other compensation established in a separate letter agreement dated
January 16, 1996 between the Agent and the Borrower.
SECTION 4.4 Manner of Payment. Each payment (including repayments or
prepayments described in Articles II and III) by the Borrower on account of the
principal of or interest on the Loans or of any fee or other amounts (including
the Reimbursement Obligation) payable to the Lenders or the Disbursing Agent
under this Agreement or any Note shall be made not later than 2:00 p.m. (Atlanta
time) on the date specified for payment under this Agreement to the Disbursing
Agent for the account of the Lenders pro rata (other than as set forth in the
last sentence of this Section) in accordance with their respective Commitment
Percentages at the Disbursing Agent's Office, in Dollars, in immediately
available funds and shall be made without any set-off, counterclaim or deduction
whatsoever. Any payment received after such time but before 5:00 p.m. (Atlanta
time) on such day shall be deemed a payment on such date for the purposes of
Section 11.1, but for all other purposes shall be deemed to have been made on
the next succeeding Business Day. Any payment received after 5:00 p.m. (Atlanta
time) shall be deemed to have been made on the next succeeding Business Day for
all purposes. Upon receipt by the Disbursing Agent of each such payment, the
Disbursing Agent shall credit each Lender's account with its pro rata share
(other than as set forth in the last sentence of this Section) of such payment
in accordance with such Lender's Commitment Percentage and shall wire advice of
the amount of such credit to each Lender. Each payment to the Disbursing Agent
of fees, expenses or other compensation of the Agent, the Disbursing Agent or
the Issuing Lender shall be made in like manner, but for the account of the
Agent, Disbursing Agent or Issuing Lender, as the case may be. Each payment to
the Agent of the Issuing Lender's fees or L/C Participants' commissions shall be
made in like manner, but for the account of the Issuing Lender or the L/C
Participants, as the case may be. 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 any interest due
hereunder; provided, that if such extension would cause payment of interest on
or principal of any LIBOR Rate Loan to be made in the next calendar month, such
payment shall be made on the next preceding Business Day. All amounts payable to
any Lender under Sections 4.7(c), 4.8, 4.9 and 4.10 shall be payable to such
Lender in accordance with the terms of such Sections.
SECTION 4.5 Crediting of Payments and Proceeds. In the event that the
Borrower shall fail to pay any of the Obligations when due and the Obligations
have been accelerated pursuant to Section 11.2, all payments received by the
Lenders upon the Notes and the other Obligations and all net proceeds from the
enforcement of the Obligations shall be applied first to all expenses then due
and payable by the Borrower hereunder, then to all indemnity obligations then
due and payable by the Borrower hereunder, then to all fees of the Agent,
Disbursing Agent or Issuing Lender then due and payable, then to all commitment
and
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other fees then due and payable, then to accrued and unpaid interest on the
Notes and the Reimbursement Obligation and then to the principal amount of the
Notes and the Reimbursement Obligation, in that order.
SECTION 4.6 Nature of Obligations of Lenders Regarding Extensions of
Credit; Assumption by Disbursing Agent. The obligations of the Lenders under
this Agreement to make the Loans and issue or participate in Letters of Credit
are several and are not joint or joint and several. Unless the Disbursing Agent
shall have received notice from a Lender prior to a proposed borrowing date of
any Loan (including advances by the Disbursing Agent in accordance with Section
2.2(b)) that such Lender will not make available to the Disbursing Agent such
Lender's ratable portion of the amount to be borrowed on such date (which notice
shall not release such Lender of its obligations hereunder), the Disbursing
Agent may assume that such Lender has made such portion available to the
Disbursing Agent on the proposed borrowing date or will make such portion
available on the Settlement Date in accordance with Article II. The Disbursing
Agent may, in reliance upon such assumption, disburse the proceeds of the Term
Loan to the Borrower on the Closing Date and may disburse the proceeds of the
Revolving Credit Loans in accordance with Section 2.2 hereof. If such amount is
made available to the Disbursing Agent on a date after such borrowing date, such
Lender shall pay to the Disbursing Agent on demand an amount, until paid, equal
to the product of (a) the amount of such Lender's Commitment Percentage of such
borrowing, times (b) the daily average Federal Funds Rate during such period as
determined by the Agent, times (c) a fraction the numerator of which is the
number of days that elapse from and including such borrowing date to the date on
which such Lender's Commitment Percentage of such borrowing shall have become
immediately available to the Disbursing Agent and the denominator of which is
360. A certificate of the Disbursing Agent with respect to any amounts owing
under this Section shall be conclusive, absent manifest error. If such Lender's
Commitment Percentage of such borrowing is not made available to the Disbursing
Agent by such Lender within three (3) Business Days of such borrowing date, the
Disbursing Agent shall be entitled to recover such amount made available by the
Disbursing Agent with interest thereon at the rate per annum applicable to such
Loan, on demand, from the Borrower. The failure of any Lender to make its
Commitment Percentage of any Loan available shall not relieve it or any other
Lender of its obligation, if any, hereunder to make its Commitment Percentage of
such Loan available on such borrowing date, but no Lender shall be responsible
for the failure of any other Lender to make its Commitment Percentage of such
Loan available on the borrowing date.
SECTION 4.7 Changed Circumstances.
(a) Circumstances Affecting LIBOR Rate Availability. If, with respect
to any Interest Period, the Disbursing Agent or the Required Lenders (after
consultation with Disbursing Agent) shall determine that, by reason of
circumstances affecting the foreign exchange and interbank markets generally,
deposits in eurodollars in the applicable amounts are not being offered (or
quoted via Telerate Page 3750) to the Disbursing Agent or the Required Lenders
for such Interest Period, then the Disbursing Agent shall forthwith give notice
thereof to the Borrower (such determination to be made by the Disbursing Agent
or such Required Lenders in good faith and in a manner consistent with similar
determinations
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made with respect to LIBOR Rate Loans to other borrowers under similar
circumstances). Thereafter, until the Disbursing Agent notifies the Borrower
that such circumstances no longer exist, the obligation of the Lenders to make
LIBOR Rate Loans, and the right of the Borrower to convert any Loan to or
continue any Loan as a LIBOR Rate Loan, shall be suspended, and the Borrower
shall repay in full (or cause to be repaid in full) the then outstanding
principal amount of each such LIBOR Rate Loan, together with accrued interest
thereon, on the last day of the then current Interest Period applicable to such
LIBOR Rate Loan or convert the then outstanding principal amount of each such
LIBOR Rate Loan to a Base Rate Loan or CD Rate Loan as of the last day of such
Interest Period.
(b) Laws Affecting LIBOR Rate Availability. If, after the date hereof,
the introduction of, or any change in, any Applicable Law or any change 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 any Lender (or any of their respective Lending
Offices) with any request or directive (whether or not having the force of law)
of any such Governmental Authority, central bank or comparable agency, shall
make it unlawful or impossible for any of the Lenders (or any of their
respective Lending Offices) to honor its obligations hereunder to make or
maintain any LIBOR Rate Loan, such Lender shall promptly give notice thereof to
the Disbursing Agent and the Disbursing Agent shall promptly give notice to the
Borrower and the other Lenders (such determination to be made by the Disbursing
Agent or such Lender in good faith and in a manner consistent with similar
determinations made with respect to LIBOR Rate Loans to other borrowers under
similar circumstances). Thereafter, until the Agent notifies the Borrower that
such circumstances no longer exist, (i) the obligations of the Lenders to make
LIBOR Rate Loans and the right of the Borrower to convert any Loan or continue
any Loan as a LIBOR Rate Loan shall be suspended and thereafter the Borrower may
select only Base Rate Loans or CD Rate Loans hereunder and (ii) if any of the
Lenders may not lawfully continue to maintain a LIBOR Rate Loan to the end of
the then current Interest Period applicable thereto, the applicable LIBOR Rate
Loan shall immediately be converted to a Base Rate Loan for the remainder of
such Interest Period.
(c) Increased Costs. If, after the date hereof, the introduction of, or
any change in, any Applicable Law, 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 any of the
Lenders (or any of their respective Lending Offices) with any request or
directive (whether or not having the force of law) of such Governmental
Authority, central bank or comparable agency:
(i) shall subject any of the Lenders (or any of their
respective Lending Offices) to any tax, duty or other charge with
respect to any LIBOR Rate Loan, Letter of Credit or Application or
shall change the basis of taxation of payments to any of the Lenders
(or any of their respective Lending Offices) of the principal of or
interest on any LIBOR Rate Loan, Letter of Credit or any other amounts
due under this Agreement in respect thereof (except for the imposition
of, or any change in the rate of tax on the net income of any of the
Lenders or any of their respective Lending
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Offices imposed by the jurisdiction in which such Lender is organized
or is or should be qualified to do business or such Lending Office is
located); or
(ii) shall impose, modify or deem applicable any reserve
(including, without limitation, any reserve imposed by the Board of
Governors of the Federal Reserve System, other than any reserve
included in the Reserve Requirements), special deposit, insurance or
similar requirement against assets of, deposits with or for the account
of, or credit extended by any of the Lenders (or any of their
respective Lending Offices) with respect to LIBOR Rate Loans or shall
impose on any of the Lenders (or any of their respective Lending
Offices) or the foreign exchange and interbank markets any other
condition affecting any LIBOR Rate Loan;
and the result of any of the foregoing is to increase the costs to any
of the Lenders of maintaining any Fixed Rate Loan or to reduce the
yield or amount of any sum received or receivable by any of the Lenders
under this Agreement or under the Notes in respect of a Fixed Rate Loan
or Letter of Credit or Application, then such Lender shall promptly
notify the Disbursing Agent, and the Disbursing Agent shall promptly
notify the Borrower of such fact and demand compensation therefor and,
within fifteen (15) days after such notice by Disbursing Agent, the
Borrower shall pay to such Lender such additional amount or amounts as
(after good faith and reasonable computation) will compensate such
Lender or Lenders for such increased cost or reduction; provided,
however, that in demanding any such payment from the Borrower, such
Lender shall treat the Borrower in a manner consistent with its
treatment of other similarly situated debtors of such Lender. The
Disbursing Agent will promptly notify the Borrower of any event of
which it has knowledge which will entitle such Lender to compensation
pursuant to this Section 4.7(c); provided, that the Disbursing Agent
shall incur no liability whatsoever to the Lenders or the Borrower in
the event it fails to do so. A certificate of the Disbursing Agent or
applicable Lender setting forth the basis for determining such
additional amount or amounts necessary to compensate such Lender or
Lenders shall be conclusively presumed to be correct absent manifest
error.
SECTION 4.8 Indemnity. The Borrower hereby indemnifies each of the
Lenders against any loss or expense actually incurred by such Lender which
arises from or is attributable to such Lender's obtaining, liquidating or
employing deposits or other funds acquired to effect, fund or maintain the Loans
(a) as a consequence of any failure by the Borrower to make any payment when due
of any amount due hereunder in connection with a Fixed Rate Loan, (b) due to any
failure of the Borrower to borrow on a date specified therefor in a Notice of
Revolving Credit Loan Borrowing or Notice of Conversion/Continua tion or (c) due
to any payment, prepayment or conversion of any Fixed Rate Loan on a date other
than the last day of the Interest Period therefor. The amount of such loss or
expense shall be determined, based upon the assumption that such Lender funded
its Commitment Percentage of the LIBOR Rate Loans in the London interbank market
and using any reasonable attribution or averaging methods which such Lender
deems appropriate and practical. A certificate of such Lender setting forth the
basis for determining such amount or amounts necessary to compensate such Lender
shall be forwarded to the Borrowers through
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the Agent and shall be conclusively presumed to be correct, absent manifest
error. The Borrower shall have the right to consult with the Agent prior to
making any indemnity payments provided for herein.
SECTION 4.9 Capital Requirements. If, after the date of this Agreement,
the introduction of, or any change in, or in the interpretation of, any
Applicable Law or compliance with any guideline or request from any central bank
or comparable agency or other Governmental Authority (whether or not having the
force of law), has the effect of reducing the rate of return on the capital of,
or has affected the amount of capital required to be maintained by, any Lender
or any corporation controlling such Lender as a consequence of, or with
reference to its Total Commitment and other commitments of this type, below the
rate which the Lender or such other corporation could have achieved but for such
introduc tion, change or compliance, then within fifteen (15) days after written
demand by any such Lender, the Borrower shall pay to such Lender from time to
time as specified by such Lender additional amounts sufficient (after good faith
and reasonable computation) to compensate such Lender or other corporation for
such reduction; provided, however, that in demanding any such payment from the
Borrower, such Lender shall treat the Borrower in a manner consistent with its
treatment of other similarly situated debtors of such Lender. A certificate as
to such amounts submitted to the Borrower and the Agent by such Lender, shall be
conclusively presumed to be correct, absent manifest error.
SECTION 4.10 Taxes.
(a) Payments Free and Clear. Any and all payments by the Borrower
hereunder or under the Notes or the Letters of Credit shall be made free and
clear of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholding, and all liabilities with respect
thereto excluding, (i) in the case of each Lender, the Agent and the Disbursing
Agent, income and franchise taxes imposed by the jurisdiction under the laws of
which such Lender, Agent or Disbursing Agent (as the case may be) is organized
or is or should be qualified to do business or any political subdivision thereof
and (ii) in the case of each Lender, income and franchise taxes imposed by the
jurisdiction of such Lender's Lending Office or any political subdivision
thereof (all such non-excluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as "Taxes"). If the
Borrower shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder or under any Note to any Lender or the Agent, (A) the sum
payable shall be increased as may be necessary so that after making all required
deductions (including, without limitation, deductions applicable to additional
sums payable under this Section 4.10) such Lender, Agent or Disbursing Agent (as
the case may be) receives an amount equal to the amount such party would have
received had no such deductions been made, (B) the Borrower shall make such
deductions, (C) the Borrower shall pay the full amount deducted to the relevant
taxing authority or other authority in accordance with applicable law, and (D)
the Borrower shall deliver to the Agent evidence of such payment to the relevant
taxing authority or other authority in the manner provided in Section 4.10(d).
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(b) Stamp and Other Taxes. In addition, the Borrower shall pay any
present or future stamp, registration, recordation or documentary taxes or any
other similar fees or charges or excise or property taxes (other than excise and
property taxes to which the Agent, Disbursing Agent or any Lender would have
been subject in the absence of this Agreement and the provision for security in
connection with the execution of this Agreement), levies of the United States or
any state or political subdivision thereof or any applicable foreign
jurisdiction which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement, the
Loans, the Letters of Credit, the other Loan Documents, or the perfection of any
rights or security interest in respect thereto (hereinafter referred to as
"Other Taxes").
(c) Indemnity. The Borrower shall indemnify each Lender, the Agent and
the Disbursing Agent for the full amount of Taxes and Other Taxes (including,
without limitation, any Taxes and Other Taxes imposed by any jurisdiction on
amounts payable under this Section 4.10) paid by such Lender or the Agent (as
the case may be) and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto, whether or not such Taxes or Other
Taxes were correctly or legally asserted. Such indemnification shall be made
within thirty (30) days from the date such Lender, the Agent or the Disbursing
Agent (as the case may be) makes written demand therefor.
(d) Evidence of Payment. Within thirty (30) days after the date of any
payment of Taxes or Other Taxes, the Borrower shall furnish to the Agent, at its
address referred to in Section 13.1, the original or a certified copy of a
receipt evidencing payment thereof or other evidence of payment satisfactory to
the Agent.
(e) Delivery of Tax Forms. Each Lender organized under the laws of a
jurisdiction other than the United States or any state thereof shall deliver to
the Borrower, with a copy to the Agent, or concurrently with the delivery of the
relevant Assignment and Acceptance, as applicable, (i) two United States
Internal Revenue Service Forms 4224 or Forms 1001, as applicable (or successor
forms) properly completed and certifying in each case that such Lender is
entitled to a complete exemption from withholding or deduction for or on account
of any United States federal income taxes, and (ii) an Internal Revenue Service
Form W-8 or W-9 or successor applicable form, as the case may be, to establish
an exemption from United States backup withholding taxes. Each such Lender
further agrees to deliver to the Borrower, with a copy to the Agent, a Form 1001
or 4224 and Form W-8 or W-9, or successor applicable forms or manner of
certification, as the case may be, on or before the date that any such form
expires or becomes obsolete or after the occurrence of any event requiring a
change in the most recent form previously delivered by it to the Borrower,
certifying in the case of a Form 1001 or 4224 that such Lender is entitled to
receive payments under this Agreement without deduction or withholding of any
United States federal income taxes (unless in any such case a change in treaty,
law or regulation has occurred prior to the date on which any such delivery
would otherwise be required which renders such forms inapplicable or the
exemption to which such forms relate unavailable and such Lender notifies the
Borrower and the Agent that it is not entitled to receive payments without
deduction or withholding of United States federal income taxes) and, in the case
of a Form W-8 or W-9, establishing an exemption from United States backup
withholding tax.
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(f) Survival. Without prejudice to the survival of any other agreement
of the Borrower hereunder, the agreements and obligations of the Borrower
contained in this Section 4.10 shall survive the payment in full of the
Obligations and the termination of the Total Commitments.
SECTION 4.11 Change in Lending Office. Each Lender agrees that, upon
the occurrence of any event giving rise to the operation of Sections 4.7, 4.8,
4.9 or 4.10 with respect to such Lender, it will use its best efforts to
designate another lending office as its Lending Office for any Loans affected by
such event with the intent of avoiding the consequence of the event giving rise
to the operation of any such Section; provided, that such designation is made on
such terms that such Lender and its Lending Office suffer no economic, legal or
regulatory disadvantage as a consequence thereof.
SECTION 4.12 Use of Proceeds. The Borrower shall use the proceeds of
the Loans (i) to refinance certain existing Debt of the Borrower and its
Subsidiaries, (ii) to pay certain fees and expenses related to the transactions
contemplated hereby and (iii) to provide for the ongoing working capital and
capital expenditure requirements of the Borrower and its Subsidiaries.
ARTICLE V
CLOSING; CONDITIONS OF CLOSING AND BORROWING
SECTION 5.1 Closing. The closing shall take place at the offices of
Kennedy Covington Lobdell & Hickman, L.L.P., 100 North Tryon Street, Suite 4200,
Charlotte, North Carolina 28202 on March 15, 1996 or on such other date as the
parties hereto shall mutually agree.
SECTION 5.2 Conditions to Closing and Initial Extensions of Credit. The
obligation of the Lenders to close this Agreement and to make the initial Loans
or issue the initial Letter of Credit is subject to the satisfaction of each of
the following conditions:
(a) Executed Loan Documents. The following Loan Documents, in form and
substance satisfactory to the Agent and each Lender:
(i) this Agreement;
(ii) the Notes;
(iii) the Security Documents; and
(iv) the Financing Statements
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shall have been duly authorized, executed and delivered by the Borrower
and each other Loan Party, as applicable, shall be in full force and
effect and no Default or Event of Default shall exist thereunder, and
the Borrower and each other Loan Party, as applicable, shall have
delivered original counterparts thereof to the Agent.
(b) Collateral.
(i) Filings and Recordings. All filings necessary to
perfect the Liens of the Lenders in the Collateral described
in the Security Documents shall have been made in all
appropriate locations and the Agent shall have received
evidence satisfactory to the Agent that such Liens constitute
valid and perfected first priority Liens therein.
(ii) Lien Search. The Borrower shall have delivered
the results of a Lien search of all filings made against the
Borrower and each other Loan Party under the Uniform
Commercial Code as in effect in any state in which any of
their respective assets are located, indicating among other
things that their respective assets are free and clear of any
Lien except for the Liens permitted by Section 10.3.
(c) Insurance. The Agent shall have received certificates of
insurance and, if requested, certified copies of insurance policies in
the form required under Section 8.3 and the Security Documents and
otherwise in form and substance reasonably satisfactory to the Agent.
(d) Title Insurance. The Agent shall have received marked up
unconditional binders for ALTA title policies from a title insurance
company reasonably acceptable to the Agent, dated the Closing Date (or
an earlier date acceptable to the Agent in its sole discretion). The
binders shall (a) be in an amount not less than $18,000,000 in the
aggregate, (b) be issued at ordinary premium rates, (c) insure that the
Security Documents create a valid, first priority perfected Lien on the
Realty, free and clear of all defects and encumbrances except such
standard printed exceptions contained in the policy form referred to
below and such as the Agent may, in its sole discretion, permit, (d)
naming the Agent as the insured thereunder, (e) be in form of ALTA
standard coverage Lenders' policy--1992 and (f) contain such
endorsements and affirmative coverages as the Agent may reasonably
request, including, without limitation, endorsements for future
advances under this Agreement.
(e) Surveys. The Agent shall have received as-built surveys of
the Realty, satisfactory in form and substance to the Agent, certified
by independent surveyors licensed in the State in which the Realty is
situated, which surveys shall indicate the following: (a) an accurate
metes and bounds description of the Realty; (b) the correct location of
all buildings, structures and other improvements on the Realty,
including, without limitation, all streets, easements, rights-of-way
and utility lines; (c) the location of ingress and egress from the
Realty and the location of any set-back or other building lines
affecting the Realty; (d) a certification in form and substance
acceptable
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to the Agent that no portion of the Realty is located in a flood hazard
area; and (e) a certification in form and substance acceptable to the
Agent to the accuracy and completeness of the survey and to such other
matters relating to the Realty and survey as the Agent shall reasonably
require.
(f) Environmental Assessment of Realty. The Borrower shall
have delivered to the Agent an environmental assessment report
addressed to the Agent by a qualified environmental consultant,
acceptable to the Lenders, in form and substance satisfactory to the
Lenders, indicating appropriate inquiry into the previous ownership and
use of the Realty being encumbered by the lien of the Deeds of Trust,
consistent with good commercial or customary practices and indicating
that except as set forth in such reports there are no present or
potential environmental problems or hazards on, under or about such
premises and confirming material compliance by the Borrower and its
Subsidiaries with all environmental laws; such assessment to include at
least the following: historical research into previous ownership and
uses, comprehensive governmental records review at federal, state and
local levels, review of available aerial photographs and topographical
maps, on-site visual investigation, review of surrounding land uses,
and review of manufacturing, processing, operating and housekeeping
practices of the Borrower (or its Subsidiary) at such facility.
(g) Closing Certificates and Opinions; etc.
(i) Certificate of the Borrower. The Agent shall have
received a certificate from the chief executive or chief
financial officer (or other officer acceptable to the Agent)
of the Borrower, in form and substance satisfactory to the
Agent, to the effect that, to the best of such officer's
knowledge, all representations and warranties of the Borrower
contained in this Agreement and the other Loan Documents are
true and correct in all material respects; that the Borrower
is not in violation of any of the covenants contained in this
Agreement and the other Loan Documents; that, after giving
effect to the transactions contemplated by this Agreement, no
Default or Event of Default has occurred and is continuing;
and that the Borrower has satisfied each of the closing
conditions.
(ii) Certificate of Secretary of the Borrower. The
Agent shall have received a certificate of the secretary or
assistant secretary of the Borrower, certifying that attached
thereto is a true and complete copy of the certificate of
incorporation of the Borrower and all amendments thereto,
certified as of a recent date by the appropriate Governmental
Authority in its jurisdiction of organization; that attached
thereto is a true and complete copy of the bylaws of the
Borrower as in effect on the date of such certification; that
attached thereto is a true and complete copy of resolutions
duly adopted by the Board of Directors of the Borrower
authorizing the borrowings contemplated hereunder and the
execution, delivery and performance of this Agreement and the
other Loan Documents to which the Borrower is a party; and as
to the
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incumbency and genuineness of the signature of each officer of
the Borrower executing Loan Documents to which the Borrower is
a party.
(iii) Certificates of Good Standing. The Agent shall
have received long-form certificates as of a recent date of
the good standing of the Borrower under the laws of its
jurisdiction of organization and foreign qualification in each
jurisdiction where the Borrower is required to be qualified to
do business and a certificate of the relevant taxing authority
of the State of Delaware certifying that the Borrower has
filed required tax returns and owes no delinquent taxes.
(iv) Opinions of Counsel. The Agent shall have
received favorable opinions of counsel to the Borrower and
each of the other Loan Parties addressed to the Agent and
Lenders with respect to the Borrower, each of the other Loan
Parties, the Loan Documents and such other matters as the
Lenders shall reasonably request.
(v) Tax Forms. The Agent and the Borrower shall
have received originals of the United States Internal Revenue
Service forms required by Section 4.10(e) hereof.
(vi) Borrowing Base Certificate. The Agent shall have
received a Borrowing Base Certificate properly completed and
executed by the Borrower and the Borrowing Base, as computed
by the Disbursing Agent, shall evidence borrowing availability
in an amount equal to or greater than the amount of the
Revolving Credit Loan to be advanced plus any Letters of
Credit to be issued on the Closing Date plus $2,500,000.
(h) Consents; No Adverse Change.
(i) Governmental and Third Party Approvals. All
necessary approvals, authorizations and consents of any Person
and of all Governmental Authorities and courts having
jurisdiction with respect to the transactions contemplated by
this Agreement and the Loan Documents shall have been obtained
and remain in full force and effect.
(ii) Permits and Licenses. All permits and licenses,
including permits and licenses required under Applicable Laws,
necessary to the conduct of business by the Borrower shall
have been obtained and remain in full force and effect.
(iii) No Injunction, Etc. No action, proceeding,
investigation, regulation or legislation shall have been
instituted, or, to the best of the Borrower's knowledge,
threatened or proposed before any Governmental Authority to
enjoin, restrain, or prohibit, or to obtain substantial
damages in respect of, or which is related to or arises out of
this Agreement or the other
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Loan Documents or the consummation of the transactions
contemplated hereby or thereby.
(iv) No Material Adverse Change. Since November 3,
1995, there shall not have occurred any event, condition or
state of facts that is reasonably likely to have a Material
Adverse Effect.
(v) No Event of Default. No Default or Event of
Default shall have occurred and be continuing.
(i) Financial Matters.
(i) Financial Statements. The Agent and each Lender
shall have received audited annual financial statements for
the Borrower and its Subsidiaries for Fiscal Year ending 1995.
(ii) Financial Condition Certificate. The chief
executive officer or chief financial officer of the Borrower
shall have delivered to the Agent a certificate stating that:
(A) the Borrower is Solvent, (B) the liquidity position of the
Borrower as of the Closing Date is not materially different
from the projections and other financial information
previously furnished to the Lenders, and (C) attached thereto
is a pro forma balance sheet of the Borrower as of the Closing
Date setting forth on a pro forma basis the financial
condition of the Borrower as of that date and reflecting on a
pro forma basis the effect of the transactions contemplated
herein, including all material fees and expenses in connection
herewith.
(iii) Projections. The Agent shall have received
projected financial statements of the Borrower and its
Subsidiaries for the Fiscal Years ending 1996, 1997 and 1998,
including Consolidated balance sheets, statements of income
and cash flow statements of the Borrower and its Subsidiaries
giving effect to the transactions contemplated by this
Agreement, together with appropriate supporting details and
such other facts as relate to the ongoing business of the
Borrower and its Subsidiaries (collectively, the
"Projections"). Such Projections shall be accompanied by a
certificate of the chief executive officer or chief financial
officer of the Borrower to the effect that the Projections are
based on reasonable estimates and assumptions, all of which
are fair in light of the conditions which existed at the time
the Projections were made, have been prepared on the basis of
the assumptions stated therein, and reflect, as of the time so
furnished and the Closing Date, the reasonable estimate of the
Borrower and its Subsidiaries of the results of the operations
and other information projected therein; provided, however,
that said representation is not an assurance that actual
results will not be different from those projected as a result
of changing circumstances now unforeseen or circumstances
outside of the Borrower's control.
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(iv) Payment at Closing. There shall have been paid
by the Borrower to the Agent and the Lenders the fees set
forth or referenced in Section 4.3 and any other accrued and
unpaid fees or expenses due hereunder (including, without
limitation, reasonable legal fees and expenses), and to any
other Person such amount as may be due thereto in connection
with the transactions contemplated hereby, including all
taxes, fees and other charges in connection with the
execution, delivery, recording, filing and registration of any
of the Loan Documents. The Agent shall have received written
instructions from the Borrower directing the application of
the proceeds of Loans to be made under this Agreement on the
Closing Date.
(j) Factor Documents.
(i) Factoring agreement between the Borrower and NCC.
(ii) Factoring agreement between the Borrower and RFC.
(iii) Factoring agreement between the Borrower and First Factors
Corporation.
(iv) Factoring agreement between the Borrower and CIT.
(v) Assignment of Factoring Proceeds -- NCC.
(vi) Assignment of Factoring Proceeds -- RFC.
(vii) Assignment of Factoring Proceeds -- First Factors Corporation.
(viii) Assignment of Factoring Proceeds -- CIT.
(ix) Interfactor Agreement.
(k) Miscellaneous.
(i) Proceedings and Documents. All opinions,
certificates and other instruments and all proceedings in
connection with the transactions contemplated by this
Agreement shall be reasonably satisfactory in form to the
Lenders and shall comply as to substance with the requirements
of this Agreement. The Lenders shall have received copies of
all other instruments and other evidence as the Lenders may
reasonably request, in form and substance satisfactory to the
Lenders, with respect to the transactions contemplated by this
Agreement and the taking of all actions in connection
therewith.
(ii) Appraisals. The Agent and the Lenders shall have
received satisfactory appraisals of all of the tangible
personal property included within
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the Collateral conducted by independent appraisal firms
satisfactory to each Lender.
(iii) Audits. The Agent shall have completed a field
examination of the Accounts and Inventory of the Borrower and
its Subsidiaries, at the Borrower's expense, and the Agent
shall have received an audit report in form reasonably
satisfactory to the Agent and each Lender.
(iv) Indebtedness to CIT. The outstanding Debt of the
Borrower and its Subsidiaries to CIT shall have been paid and
CIT shall have released its Liens on the assets of the
Borrower and its Subsidiaries.
(v) Due Diligence and Other Documents. The Borrower
shall have delivered to the Agent such other documents,
certificates and opinions as the Agent reasonably requests,
including a copy of the Borrower's standard form of Bill and
Hold Agreement.
(vi) Merrill Amendment. The Second Supplemental
Indenture between the Company and First Union National Bank of
North Carolina, as Trustee, shall be in form and substance
reasonably satisfactory to the Agent.
SECTION 5.3 Conditions to All Extensions of Credit. The obligation of
the Lenders to make any Loan or of the Issuing Lender to issue any Letter of
Credit is subject to the satisfaction of the following conditions precedent on
the relevant borrowing date:
(a) Continuation of Representations and Warranties. The
representations and warranties made by the Borrower contained in
Article VI shall be true and correct in all respects as of the date
made; provided, however, that the Borrower shall notify the Agent (and
the Agent shall notify each Lender and the Disbursing Agent) of any
material subsequent change in the representations and warranties made
in this Agreement at the time of or prior to any future Loan, such
notice to be given immediately following such change. Absent any such
notice from the Borrower, each Notice of Revolving Credit Loan
Borrowing shall be deemed a certification of the foregoing
representations and warranties, after giving effect to any notices of
material subsequent changes, both before and after giving effect to the
requested Extension of Credit.
(b) No Existing Default. No Default or Event of Default shall
have occurred and be continuing hereunder (i) on the borrowing date
with respect to such Loan or after giving effect to the Loans to be
made on such date or (ii) on the issue date with respect to such Letter
of Credit or after giving effect to such Letters of Credit on such
date.
ARTICLE VI
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REPRESENTATIONS AND WARRANTIES OF BORROWER
SECTION 6.1 Representations and Warranties. To induce the Agent, the
Disbursing Agent and each Lender to enter into this Agreement and to make any
Loan or issue or participate in the Letters of Credit, the Borrower hereby
represents and warrants to the Agent, the Disbursing Agent and the Lenders that:
(a) Organization; Power; Qualification. The Borrower and each
of its Subsidiaries are duly organized, validly existing and in good
standing under the laws of the jurisdiction of their incorporation or
formation, have the power and authority to own their respective
properties and to carry on their respective businesses as now being and
hereafter proposed to be conducted and are duly qualified and
authorized to do business in each jurisdiction in which the character
of their respective properties or the nature of their respective
businesses requires such qualification and autho rization, except where
the failure to be so qualified and authorized could not reasonably be
expected to have a Material Adverse Effect. The jurisdictions in which
the Borrower and its Subsidiaries are organized and qualified to do
business as of the Closing Date are described on Schedule 6.1(a).
(b) Authorization of Agreement, Notes, Loan Documents and
Borrowing. The Borrower has the right, power and authority and has
taken all necessary corporate and other action to authorize the
execution, delivery and performance of this Agreement, the Notes and
each of the other Loan Documents to which each is a respective party in
accordance with their respective terms. As of the Closing Date and the
dates described in Article V hereof, this Agreement, the Notes and each
of the other Loan Documents to which the Borrower is a party have been
duly executed and delivered by the duly authorized officers of the
Borrower and, on and after such date, each such document constitutes
the legal, valid and binding obligation of the Borrower, enforceable in
accordance with its terms.
(c) Compliance of Agreement, Notes, Loan Documents and
Borrowing with Laws, Etc. The execution, delivery and performance by
the Borrower of the Loan Documents to which the Borrower is a party,
the borrowings hereunder and the transactions contemplated hereby and
thereby 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 except those approvals
which have been obtained, (ii) conflict with, result in a breach of or
constitute a default under (A) the articles of incorporation, bylaws or
other organizational documents of the Borrower or any Material Contract
to which the Borrower is a party or by which any of its properties may
be bound or (B) any Governmental Approval relating to the Borrower or
(iii) 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 Liens arising under the Loan Documents.
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(d) Compliance with Law; Governmental Approvals. Except with
respect to Environmental Laws (which are covered by Section 6.1(f), the
Borrower and its Subsidiaries (i) have all material Governmental
Approvals required by any Applicable Law for them to conduct their
respective businesses, 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 best of the Borrower's knowledge, threatened
proceeding and (ii) are in compliance with each Governmental Approval
applicable to them and in compliance with all other Applicable Laws
relating to them or any of their respective properties, except in each
case where the failure to so comply could not reasonably be expected to
have a Material Adverse Effect.
(e) Tax Returns and Payments. The Borrower and its
Subsidiaries have duly filed or caused to be filed all federal, state,
local and other tax returns required by Applicable Law to be filed, and
have paid, or made adequate provision for the payment of, all federal,
state, local and other taxes, assessments and governmental charges or
levies upon them and their respective property, income, profits and
assets which are due and payable, except for any such taxes for the
current year not yet due and payable or where the payment of such tax
is being disputed in good faith and adequate reserves have been
established by the Borrower in accordance with GAAP. No Governmental
Authority has filed any Lien or asserted any claim against the Borrower
or its Subsidiaries with respect to material unpaid taxes which has not
been discharged or resolved or is not being contested in good faith.
The charges, accruals and reserves on the books of the Borrower and its
Subsidiaries in respect of federal, state, local and other taxes for
all Fiscal Years and portions thereof since the organization of the
Borrower and its Subsidiaries are in the judgment of the Borrower
adequate, and the Borrower does not anticipate any additional material
taxes or assessments for any of such years.
(f) Environmental Matters. Except as set forth on Schedule
6.1(f), (i) the properties of the Borrower and its Subsidiaries are in
compliance with all applicable Environmental Laws, and there is no
release or threatened release of Hazardous Materials at, under or about
such properties or such operations which could interfere in any
material respect with the continued operation of such properties or
impair in any way the fair saleable value thereof and (ii) neither the
Borrower nor any of its Subsidiaries has received any written notice of
any violation, alleged violation, non-compliance, liability or
potential liability regarding environmental matters or compliance with
Environmental Laws with regard to any of its properties or the
operations conducted in connection therewith which has not been fully
corrected or complied with, nor does the Borrower nor any of its
Subsidiaries have knowledge or reason to believe that any such notice
will be received or is being threatened.
(g) ERISA.
(i) As of the Closing Date, neither the Borrower nor
any ERISA Affiliate maintains or contributes to, or has any
obligation under, any Employee Benefit Plans other than those
identified on Schedule 6.1(g).
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(ii) The Borrower and each ERISA Affiliate are in
compliance with all applicable provisions of ERISA and the
regulations and published interpretations thereunder with
respect to all Employee Benefit Plans except where the failure
to so comply could not reasonably be expected to have a
Material Adverse Effect and except for any required amendments
for which the remedial amendment period as defined in Section
401(b) of the Code has not yet expired. Each Employee Benefit
Plan that is intended to be qualified under Section 401(a) of
the Code has been determined by the Internal Revenue Service
to be so qualified, and each trust related to such plan has
been determined to be exempt under Section 501(a) of the Code.
No material liability has been incurred by the Borrower or any
ERISA Affiliate which remains unsatisfied for any taxes or
penalties with respect to any Employee Benefit Plan or any
Multiemployer Plan.
(iii) No Pension Plan has been terminated, nor has
any accumulated funding deficiency (as defined in Section 412
of the Code) been incurred (without regard to any waiver
granted under Section 412 of the Code), nor has any funding
waiver from the Internal Revenue Service been received or
requested with respect to any Pension Plan, nor has the
Borrower nor any ERISA Affiliate failed to make any
contributions or to pay any amounts due and owing as required
by Section 412 of the Code, Section 302 of ERISA or the terms
of any Pension Plan prior to the due dates of such
contributions under Section 412 of the Code or Section 302 of
ERISA, nor has there been any event requiring any disclosure
under Section 4041(c)(3)(C) or 4063(a) of ERISA with respect
to any Pension Plan.
(iv) Neither the Borrower nor any ERISA Affiliate
has: (A) engaged in a nonexempt prohibited transaction
described in Section 406 of the ERISA or Section 4975 of the
Code; (B) incurred any liability to the PBGC which remains
outstanding other than the payment of premiums and there are
no premium payments which are due and unpaid or (C) failed to
make a required contribution or payment to a Multiemployer
Plan.
(v) No Termination Event has occurred or is
reasonably expected to occur which in either case could
reasonably be expected to have a Material Adverse Effect.
(vi) No proceeding, claim (excluding routine
participant claims for benefits), lawsuit and/or investigation
is existing or, to the best knowledge of the Borrower after
due inquiry, threatened concerning or involving any (A)
employee welfare benefit plan (as defined in Section 3(1) of
ERISA) currently maintained or contributed to by the Borrower
or any ERISA Affiliate, (B) Pension Plan or (C) Multiemployer
Plan that in each case is reasonably likely to have a Material
Adverse Effect.
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(h) Margin Stock. Neither the Borrower nor any of its
Subsidiaries is engaged principally or as one of its activities in the
business of extending credit for the purpose of "purchasing" or
"carrying" any "margin stock" (as each such term 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 or Letters of
Credit will be used for purchasing or carrying margin stock or for any
purpose which vio lates, or which would be inconsistent with, the
provisions of Regulation G, T, U or X of such Board of Governors.
(i) Government Regulation. Neither the Borrower nor any of its
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company" (as each such term is defined or used in the
Investment Company Act of 1940, as amended) and neither the Borrower
nor any of its Subsidiaries is, or will be, subject to regulation under
the Public Utility Holding Company Act of 1935, each as amended, or any
other Applicable Law which materially limits its ability to incur or
consummate the transactions contemplated hereby.
(j) Intellectual Property. To the best of the Borrower's
knowledge and after due inquiry, Schedule 6.1(j) hereto sets forth a
complete and accurate list of all patents, patent rights or licenses,
patent applications, trademarks, trademark rights, trade names, trade
name rights and copyrights (collectively, "Intellectual Property")
owned, licensed or otherwise lawfully used by the Borrower or its
Subsidiaries. Except as set forth on Schedule 6.1(j), as of the Closing
Date the Borrower and its Subsidiaries own, license or otherwise
possess the lawful right to use the Intellectual Property and all other
similar intangible assets which are necessary or required to conduct
their respective businesses as now and presently planned to be
conducted without conflict with the rights of others except where the
failure to so own or possess such may not reasonably be expected to
have a Material Adverse Effect. No event has occurred which permits, or
after notice or lapse of time or both would permit, the revocation or
termination of any such rights to the Intellectual Property or other
material intangible assets.
(k) Material Contracts. Schedule 6.1(k) sets forth a complete
and accurate list of all Material Contracts of the Borrower and its
Subsidiaries in effect as of the Closing Date not listed on any other
Schedule hereto. Except as set forth on Schedule 6.1(k), on the Closing
Date each such Material Contract is, and after giving effect to the
consummation of the transactions contemplated by the Loan Documents
will be, in full force and effect in accordance with the terms thereof
and there are no material defaults by the Borrower or any of its
Subsidiaries or, to the best of its knowledge, by any other party under
any such Material Contract.
(l) Employment, Non-Compete, Investment and Shareholder
Agreements. Schedule 6.1(l) sets forth a complete and accurate list of
(i) all employment agreements and executive compensation arrangements
to which the Borrower or a Subsidiary is a party which provide for
aggregate compensation (assuming compliance with or satisfaction of all
contingencies or conditions) to any Person of more than
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$250,000 per year, (ii) all material agreements to which the Borrower
or a Subsidiary is a party under which any party thereto enters into
any covenant not to compete with, or solicit customers of, the other
party or any covenant to maintain the confidentiality of any customer
or employee lists or similar intangible assets, and (iii) all
agreements relating to the investment in, or the voting or disposition
of, any outstanding shares of capital stock of the Borrower or its
Subsidiaries. Each such agreement listed on Schedule 6.1(l) is, and
after giving effect to the transactions contemplated by the Loan
Documents will be, in full force and effect in accordance with the
terms thereof and there are no material defaults by the Borrower or any
of its Subsidiaries or, to the best of its knowledge, by any other
party under any such agreement.
(m) Employee Matters. The Borrower and its Subsidiaries are in
compliance in all material respects with all Applicable Laws with
respect to their employees including, without limitation, fair labor
standards laws, wage and hour laws, workers compensation laws, federal
and state withholding, social security and payroll laws and similar
laws. The Borrower and its Subsidiaries have paid all material federal,
state and local withholding, social security, payroll and other
employment related taxes which are due and payable.
(n) Trade Relations. To the Borrower's knowledge, there exists
no actual or threatened termination, cancellations or limitation of, or
any modification or change in, the business relationship of the
Borrower or any of its Subsidiaries with any customer or any group of
customers whose purchases individually or in the aggregate are material
to the business of the Borrower or its Subsidiary, or with any material
supplier. To the Borrower's knowledge, there exists no present
condition or state of facts or circumstance affecting any customer of
the Borrower or any of its Subsidiaries that could be reasonably
expected to have a Material Adverse Effect or prevent the Borrower or
any of its Subsidiaries from conducting its business after the
consummation of the transactions contemplated by this Agreement in
substantially the same manner in which it has heretofore been
conducted.
(o) Burdensome Provisions. To the best knowledge of the
Borrower after due inquiry, neither the Borrower nor any of its
Subsidiaries is a party to any Material Contract, or subject to any
corporate or partnership restriction, Governmental Approval or
Applicable Law which is so unusual or burdensome as in the foreseeable
future could reasonably be expected to have a Material Adverse Effect.
(p) Financial Statements. All quarterly and annual balance
sheets, statements of income, retained earnings, stockholders' equity
and cash flows, and all other financial statements of the Borrower and
its Subsidiaries which have been furnished by the Borrower to the Agent
and the Lenders for the purposes of or in connection with this
Agreement have been prepared in accordance with GAAP consis tently
applied throughout the periods involved and present fairly in all
material respects the matters reflected therein subject, in the case of
unaudited statements, to changes resulting from normal year-end audit
adjustments and information to be included in footnotes to the audited
statements. As of the Closing Date, except as set
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forth on Schedule 6.1(p), neither the Borrower nor any of its
Subsidiaries has any material contingent liability or material
liability for taxes, long-term leases or unusual forward or long-term
commitments which are not reflected in the financial statements
described above or in the notes thereto.
(q) No Material Adverse Change. No event which has had or
could reasonably be expected to have a Material Adverse Effect has
occurred since November 3, 1995.
(r) Solvency. As of the Closing Date and after giving effect
to each Loan made hereunder, the Borrower will be Solvent.
(s) Titles to Properties. Subject to Permitted Liens, the
Borrower has good and marketable title to, or valid and subsisting
leasehold interests in, the Realty and valid and legal title to all of
its personal property, including, but not limited to, the real and
personal property reflected on the financial statements delivered
pursuant to Section 6.1(p), except property which has been disposed of
subsequent to such date, which dispositions have been in the ordinary
course of business or otherwise expressly permitted hereunder.
(t) Liens. None of the properties and assets of the Borrower
or its Subsidiaries is subject to any Lien other than Permitted Liens.
Except for financing statements evidencing leases permitted hereunder,
Debt no longer outstanding or that are filed in counties where the
Borrower no longer has a facility, no financing statement under the
Uniform Commercial Code of any state which names the Borrower or any of
its Subsidiaries or any of their respective trade names or divisions as
debtor and which has not been terminated, has been filed in any state
or other jurisdiction and neither the Borrower nor any of its
Subsidiaries has signed any such financing statement or any security
agreement authorizing any secured party thereunder to file any such
financing statement, except to perfect Permitted Liens.
(u) Debt and Guarantees. Schedule 6.1(u) sets forth a complete
and accurate listing of all Debt and Guarantees of the Borrower and its
Subsidiaries in excess of $250,000. The Borrower and its Subsidiaries
have performed and are in compliance in all material respects with all
of the material terms of such Debt and Guarantees, and no default or
event of default on the part of the Borrower or its Subsidiaries exists
with respect to any such Debt or Guarantee.
(v) Litigation. Except as set forth in Schedule 6.1(v), there
are no actions, suits or proceedings pending nor, to the knowledge of
the Borrower, threatened against or in any other way relating adversely
to or affecting the Borrower or any of its Subsidiaries or any of their
respective properties in any court or before any arbitrator of any kind
or before or by any Governmental Authority which, if adversely
determined, could reasonably be expected to have a Material Adverse
Effect.
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(w) Absence of Defaults. No event has occurred or is
continuing which constitutes a Default or an Event of Default, and no
event has occurred which constitutes a default or event of default by
the Borrower or its Subsidiaries under any Material Contract or
judgment, decree or order to which the Borrower or its Subsidiaries is
a party or by which the Borrower or its Subsidiaries or any of their
respective properties may be bound or which would require the Borrower
or its Subsidiaries to make any payment thereunder prior to the
scheduled maturity date therefor.
(x) Accuracy and Completeness of Information. No document
furnished or written statement made to the Agent or the Lenders by the
Borrower or its Subsidiaries 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 its Subsidiaries or omits or will
omit to state a material fact necessary in order to make the statements
contained therein not misleading. The Borrower is not aware of any
facts which it has not disclosed in writing to the Agent having a
Material Adverse Effect, or insofar as the Borrower can now foresee,
could reasonably be expected to have a Material Adverse Effect.
SECTION 6.2 Survival of Representations and Warranties, Etc. All repre
sentations and warranties made under this Agreement shall survive the Closing
Date and shall not be waived by the execution and delivery of this Agreement,
any investigation made by or on behalf of the Lenders or any borrowing
hereunder.
ARTICLE VII
FINANCIAL INFORMATION AND NOTICES
Until all the Obligations have been indefeasibly paid and satisfied in
full and the Total Commitments terminated, unless consent has been obtained in
the manner set forth in Section 13.10 hereof, the Borrower will furnish or cause
to be furnished to the Agent at the Agent's Office (with copies for each
Lender), or such other office as may be designated by the Agent from time to
time:
SECTION 7.1 Financial Statements and Projections.
(a) Monthly Financial Statements. As soon as practicable and in any
event within thirty (30) days after the end of each accounting month of the
Borrower, an unaudited Consolidated and consolidating balance sheet of the
Borrower and its Subsidiaries as of the end of such month and related statements
of income, changes in stockholders' equity and cash flows for such month, all in
reasonable detail and prepared by the Borrower in accordance with GAAP, and
certified by the Chief Executive Officer or Chief Financial Officer of the
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Borrower to be true and correct. (The Lenders acknowledge that the Borrower has
no active Subsidiaries and accordingly does not presently prepare consolidating
statements.)
(b) Quarterly Financial Statements. As soon as practicable and in any
event within sixty (60) days after the end of each fiscal quarter of the
Borrower (except the fourth quarter in each fiscal year), an unaudited
Consolidated and consolidating balance sheet of the Borrower and its
Subsidiaries as of the close of such fiscal quarter and unaudited Consolidated
and consolidating statements of income, retained earnings and cash flows for the
fiscal quarter then ended and that portion of the Fiscal Year then ended, all in
reasonable detail setting forth in comparative form the corresponding figures
for the preceding Fiscal Year and prepared by the Borrower in accordance with
GAAP, subject to year end adjustments and, if applicable, containing disclosure
of the effect on the financial position or results of operations of any change
in the application of accounting principles and practices during the period, and
certified by the chief executive officer or chief financial officer of the
Borrower to present fairly in all material respects the financial condition of
the Borrower and its Subsidiaries as of their respective dates and the results
of operations of the Borrower and its Subsidiaries for the respective periods
then ended, subject to normal year end adjustments. (The Lenders acknowledge
that the Borrower has no active Subsidiaries and accordingly does not presently
prepare consolidating statements.)
(c) Annual Financial Statements. As soon as practicable and in any
event within one hundred twenty (120) days after the end of each Fiscal Year, an
audited Consolidated and an unaudited consolidating balance sheet of the
Borrower and its Subsidiaries as of the close of such Fiscal Year and audited
Consolidated and unaudited consolidating statements of income, retained earnings
and cash flows for the Fiscal Year then ended, including the notes thereto, all
in reasonable detail setting forth in comparative form the corresponding figures
for the preceding Fiscal Year and prepared by an independent certified public
accounting firm in accordance with GAAP and, if applicable, containing
disclosure of the effect on the financial position or results of operation of
any change in the application of accounting principles and practices during the
year, and accompanied by a report thereon by such certified public accountants
that is not qualified with respect to scope limitations imposed by the Borrower
or any of its Subsidiaries or with respect to accounting principles followed by
the Borrower or any of its Subsidiaries not in accordance with GAAP. (The
Lenders acknowledge that the Borrower has no active Subsidiaries and accordingly
does not presently prepare consolidating statements.)
(d) Annual Financial Projections. As soon as practicable and in any
event no later than sixty (60) days after the end of each Fiscal Year, financial
projections of the Borrower and its Subsidiaries on a consolidated basis for the
ensuing twelve (12) months, such projections to include, on a monthly basis, the
following: projected statements of income and cash flows and balance sheets and
a report containing management's discussion and analysis of such projections,
accompanied by a certificate from the chief financial officer of the Borrower to
the effect that, to the best of such officer's knowledge, such projections are
good faith estimates of the financial condition and operations of the Borrower
and its Subsidiaries for such twelve (12) month period.
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SECTION 7.2 Officer's Compliance Certificate. At each time financial
statements are delivered pursuant to Sections 7.1(b) and 7.1(c), a certificate
of the chief executive officer or chief financial officer of the Borrower in the
form of Exhibit D attached hereto (an "Officer's Compliance Certificate"):
(a) stating that such officer has reviewed the financial
statements of the Borrower and its Subsidiaries as of the end of such
fiscal quarter and such statements fairly present in all material
respects the financial condition of the Borrower and its Subsidiaries
as of the dates indicated and the results of their operations and cash
flows for the periods indicated, subject to normal year end adjustments
and information to be included in footnotes to the audited statements;
(b) stating that to such officer's knowledge, based on a
reasonable examination sufficient to enable him to make an informed
statement, 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; and
(c) setting forth as at the end of such fiscal quarter the
calculations required to establish (i) whether or not the Borrower and
its Subsidiaries were in compliance with the financial covenants set
forth in Article IX hereof and (ii) the calculation of the Applicable
Margin pursuant to Section 4.1(c) as at the end of such period.
SECTION 7.3 Other Reports.
(a) All reports and forms filed with respect to all Plans under ERISA
except as filed in the ordinary course of business and that would not result in
any adverse effect or action under ERISA;
(b) Promptly upon receipt thereof, copies of all material reports, if
any, submitted to the Borrower or its Board of Directors by its independent
public accountants in connection with their auditing function, including,
without limitation, any management report and any management responses thereto;
(c) If reasonably requested by the Agent, statements in conformity with
the requirements of Federal Reserve Form G-1 or U-1 referred to in Regulations G
and U, respectively, of the Board of Governors of the Federal Reserve System;
(d) Promptly but in any event within ten (10) Business Days after the
filing thereof, a copy of (i) each report or other filing made by the Borrower
or its Subsidiaries with the Securities and Exchange Commission ("SEC") and
required by the SEC to be delivered to the shareholders of the Borrower or any
of its Subsidiaries, and (ii) each report made by the Borrower or any of its
Subsidiaries to the SEC on Form 8-K and each final registration statement of the
Borrower or any of its Subsidiaries filed with the SEC other than those filed on
Form S-8;
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(e) On Tuesday of each week, a Borrowing Base Certificate as described
in Section 2.2(c) and a "Cash Position" report in form reasonably satisfactory
to the Agent, on or prior to the fifteenth (15th) day of each month, a Factored
Accounts Receivable Aging Report and on or prior to thirty (30) days after each
accounting month of the Borrower, an Inventory Report, House Account Aging
Report and financial statements, all covering such periods and financial items
and in such form as shall be reasonably satisfactory to the Agent; and
(f) Such other information regarding the operations, business affairs
and financial condition of the Borrower and its Subsidiaries as the Agent may
reasonably request.
SECTION 7.4 Notice of Litigation and Other Matters. Prompt (but in no
event later than ten (10) days after the Chairman, Chief Executive Officer,
President or Chief Financial Officer of the Borrower obtains actual knowledge
thereof) telephonic and written notice of:
(a) the commencement of all material proceedings and
investigations by or before any Governmental Authority and all material
actions and proceedings in any court or before any arbitrator against
or involving the Borrower or any Subsidiary thereof or any of their
respective material properties, assets or businesses including any
material notice received from the Internal Revenue Service or other
taxing authority regarding employment related taxes which individually
or in the aggregate, if adversely determined could reasonably be
expected to have a Material Adverse Effect;
(b) any notice of any material violation received by the
Borrower or any Subsidiary thereof from any Governmental Authority
including, without limitation, any notice of material violation of
Environmental Laws which in any such case could reasonably be expected
to have a Material Adverse Effect;
(c) any labor controversy that has resulted in, or threatens
to result in, a strike or other work action against the Borrower or any
Subsidiary thereof that could reasonably be expected to have a Material
Adverse Effect;
(d) any Default or Event of Default or any other event which
could reasonably be expected to have a Material Adverse Effect; and
(e) to the extent it could reasonably be expected to have a
Material Adverse Effect (i) the establishment of any new Employee
Benefit Plan, the commencement of contributions to any plan to which
the Borrower or any ERISA Affiliate was not previously contributing or
any increase in the benefits of any existing Employee Benefit Plan,
(ii) each funding waiver request filed with respect to any Employee
Benefit Plan and all communications received or sent by the Borrower or
any ERISA Affiliate with respect to such request, (iii) the failure of
the Borrower or any ERISA Affiliate to make a required installment or
payment under Section 302 of ERISA or Section 412 of the Code by the
due date, (iv) any Termination Event or "prohibited transaction", as
such term is defined in Section 406 of ERISA or Section 4975 of the
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Code, in connection with any Employee Benefit Plan or any trust created
thereunder, along with a description of the nature thereof, what action
the Borrower has taken, is taking or proposes to take with respect
thereto and, when known, any action taken or threatened by the Internal
Revenue Service, the Department of Labor or the PBGC with respect
thereto, (v) any favorable or unfavorable determination letter from the
Internal Revenue Service regarding the qualification of an Employee
Benefit Plan under Section 401(a) of the Code (along with a copy
thereof), (vi) all notices received by the Borrower or any ERISA
Affiliate of the PBGC's intent to terminate any Pension Plan or to have
a trustee appointed to administer any Pension Plan, (vii) each Schedule
B (Actuarial Information) to the annual report (Form 5500 Series) filed
by the Borrower or any ERISA Affiliate with the Internal Revenue
Service with respect to each Pension Plan, (viii) all notices received
by the Borrower or any ERISA Affiliate from a Multiemployer Plan
sponsor concerning the imposition or amount of withdrawal liability
pursuant to Section 4202 of ERISA and (ix) the Borrower obtaining
knowledge or reason to know that the Borrower or any ERISA Affiliate
has filed or intends to file a notice of intent to terminate any
Pension Plan under a distress termination within the meaning of Section
4041(c) of ERISA.
SECTION 7.5 Accuracy of Information. All written information, reports
and statements furnished by or on behalf of the Borrower to the Agent, the
Disbursing Agent or any Lender (other than financial forecasts) whether pursuant
to this Article VII or any other provision of this Agreement or any of the
Security Documents, 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, the
Disbursing Agent or such Lender fair and reasonable knowledge of the subject
matter based on the Borrower's knowledge thereof.
ARTICLE VIII
AFFIRMATIVE COVENANTS
Until all of the Obligations have been indefeasibly paid and satisfied
in full and the Total Commitments terminated, unless consent has been obtained
in the manner provided for in Section 13.10, the Borrower will, and will cause
each of its Subsidiaries to:
SECTION 8.1 Preservation of Corporate Existence and Related Matters.
Except as permitted by Section 10.5, preserve and maintain its separate
corporate existence and all rights, franchises, licenses and privileges
necessary to the conduct of its business; and qualify and remain qualified as a
foreign corporation and authorized to do business in each
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jurisdiction in which the failure to so qualify could reasonably be expected to
have a Material Adverse Effect.
SECTION 8.2 Maintenance of Property. In addition to the requirements of
any of the Security Documents, protect and preserve all properties necessary to
its business, including copyrights, patents, trade names and trademarks;
maintain in good working order and condition all buildings, equipment and other
tangible real and personal property in a manner which is customary in the
industry in which the Borrower or such Subsidiary is engaged; and from time to
time make or cause to be made all renewals, replacements and additions to such
property 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 8.3 Insurance.
(a) In addition to the requirements of any of the Security Documents,
maintain insurance with responsible insurance companies against such risks and
in such amounts as are customarily maintained in the industry in which the
Borrower is engaged and as may be required by Applicable Law.
(b) On the Closing Date and upon the reasonable request of the Agent
thereafter, deliver to the Agent (i) a detailed list of the insurance then in
effect, stating the names of the insurance companies, the amounts of the
insurance, the dates of the expiration thereof and the risks covered thereby and
(ii) a certified copy of the policies of insurance.
SECTION 8.4 Accounting Methods and Financial Records. Maintain a system
of accounting, and keep such books, records and accounts (which shall be true
and complete in all material respects) as may be required or as may be necessary
to permit the preparation of financial statements in accordance with GAAP and in
compliance with the regulations of any Governmental Authority having
jurisdiction over it or any of its properties.
SECTION 8.5 Payment and Performance of Obligations. Pay and perform all
Obligations under this Agreement and the other Loan Documents and pay or perform
(a) all taxes, assessments and other governmental charges that may be levied or
assessed upon it or any of its property (including, without limitation,
withholding, social security, payroll and similar employment related taxes on
the dates such taxes are due), and (b) all other indebtedness, obligations and
liabilities in accordance with customary trade practices; provided, that the
Borrower may contest any item described in clauses (a) and (b) hereof in good
faith so long as adequate reserves are maintained with respect thereto in
accordance with GAAP.
SECTION 8.6 Compliance With Laws and Approvals. Observe and remain in
compliance with all Applicable Laws and maintain in full force and effect all
Governmental Approvals, in each case applicable or necessary to the conduct of
its business, except to the
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extent the failure to do so could not reasonably be expected to have a Material
Adverse Effect.
SECTION 8.7 Environmental Management. In addition to and without
limiting the generality of Section 8.6, maintain the Realty (whether leased or
owned in fee) free of any Hazardous Materials required to be removed in order to
be in compliance with Environmental Laws (provided that as to violations or
other matters disclosed in the environmental assessment reports delivered to the
Agent under Section 5.2(b)(vii) hereof, the Borrower shall not be in default
hereunder so long as proper procedures are promptly undertaken to remove or
remediate such violation, damage or noncompliance with all due diligence and are
continued until such violation, damage or noncompliance has been corrected or
cured to the reasonable satisfaction of the Agent), and adopt and maintain
Hazardous Materials management practices including generation, storage, disposal
and remediation as may be required to be in compliance in all material respects
with all Environmental Laws with respect to all other Hazardous Materials
located on its business premises.
SECTION 8.8 Compliance with ERISA. In addition to and without limiting
the generality of Section 8.6, make timely payment of contributions required to
meet the minimum funding standards set forth in ERISA with respect to any
Employee Benefit Plan; not take any action or fail to take action the result of
which could be a liability to the PBGC or to a Multiemployer Plan; not
participate in any prohibited transaction that could result in any material
civil penalty under ERISA or material tax under the Code; operate each Employee
Benefit Plan in such a manner that will not incur any tax liability under
Section 4980B of the Code or any liability to any qualified beneficiary as
defined in Section 4980B of the Code except where failure to do so could or
would not be expected to have a Material Adverse Effect; and furnish to the
Agent and each Lender upon the Agent's request such additional information about
any Employee Benefit Plan as may be reasonably requested by the Agent.
SECTION 8.9 Compliance With Agreements. Comply in all material respects
with each Material Contract entered into in the conduct of its business except
where the failure to do so could or would not be expected to have a Material
Adverse Effect; provided, that the Borrower or such Subsidiary may contest in
good faith any such Material Contract so long as adequate reserves are
maintained with respect thereto in accordance with GAAP.
SECTION 8.10 Conduct of Business. Engage only in the lines of business
conducted on the Closing Date and lines of business reasonably related thereto.
SECTION 8.11 Visits and Inspections. Permit representatives of the
Agent or any of the Lenders, from time to time, as often as may be reasonably
requested, but only during normal business hours (except upon, and during the
continuance of an Event of Default), to visit and inspect its properties;
inspect, audit and make extracts from its books, records and files, including,
but not limited to, management letters prepared by independent accountants; and
discuss with its principal officers, and its independent accountants, its
business, assets, liabilities, financial condition, results of operations and
business prospects.
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SECTION 8.12 Audits. Permit the Agent and a representative of up to two
other Lenders, at the Borrower's expense, to conduct, or cause to be conducted,
on a semi-annual basis, a field examination of the Accounts and Inventory of the
Borrower and its Subsidiaries; provided, that the Agent shall have the right to
conduct such audits on a more frequent basis if reasonably required by the Agent
in its sole discretion but shall in all events conduct such audits at least
semi-annually; and provided further, that a written copy of the results of such
field examination, if any, shall be provided to the Disbursing Agent and each
Lender by the Agent.
SECTION 8.13 Further Assurances. Make, execute and deliver all such
additional and further acts, things, deeds and instruments as the Agent or the
Required Lenders may reasonably require to document and consummate the
transactions contemplated hereby and to vest completely in and insure the Agent
and the Lenders their respective rights under this Agreement, the Notes, the
Letters of Credit and the other Loan Documents.
ARTICLE IX
FINANCIAL COVENANTS
Until all of the Obligations have been indefeasibly paid and satisfied
in full and the Total Commitments terminated, unless consent has been obtained
in the manner set forth in Section 13.10 hereof, the Borrower will not:
SECTION 9.1 Current Ratio. Permit the ratio of (a) Consolidated Current
Assets of the Borrower and its Subsidiaries to (b) Consolidated Current
Liabilities of the Borrower and its Subsidiaries to be less than 2.0 to 1.0, at
any time.
SECTION 9.2 Coverage Ratio. Permit the Coverage Ratio to be less than
the following ratios as of the date indicated:
Ratio Applicable Date
.9 to 1.0 At the end of the second quarter of Borrower's 1996 fiscal year.
1.0 to 1.0 At the end of the third quarter of Borrower's 1996 fiscal year.
1.0 to 1.0 At the end of the fourth quarter of Borrower's 1996 fiscal year.
1.1 to 1.0 At the end of each quarter of Borrower's 1997 fiscal year.
1.25 to 1.0 At the end of the first quarter of Borrower's 1998 fiscal year
and at the end of each fiscal quarter thereafter.
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SECTION 9.3 Leverage Ratio. Permit the Leverage Ratio to exceed the
following ratios as of the date indicated:
Ratio Applicable Date
5.0 to 1.0 At the end of the second quarter of Borrower's 1996 fiscal year.
5.0 to 1.0 At the end of the third quarter of Borrower's 1996 fiscal year.
4.5 to 1.0 At the end of the fourth quarter of Borrower's 1996 fiscal year.
4.5 to 1.0 At the end of the first quarter of Borrower's 1997 fiscal year.
4.0 to 1.0 At the end of the second quarter of Borrower's 1997 fiscal year.
4.0 to 1.0 At the end of the third quarter of Borrower's 1997 fiscal year.
3.5 to 1.0 At the end of the fourth quarter of Borrower's 1997 fiscal year
and at the end of each fiscal quarter thereafter.
SECTION 9.4 Minimum Net Worth. Permit Consolidated Net Worth, as of any
date, to be less than (a) $4,000,000 plus (b) fifty percent (50%) of
Consolidated Net Income (if positive) of the Borrower and its Subsidiaries for
each fiscal quarter occurring after the Closing Date plus (c) one hundred
percent (100%) of the aggregate Net Proceeds of any issuance or offering of
capital stock received by the Borrower or any of its Subsidiaries after the
Closing Date.
ARTICLE X
NEGATIVE COVENANTS
Until all of the Obligations have been indefeasibly paid and satisfied
in full and the Total Commitments terminated, unless consent has been obtained
in the manner set forth in Section 13.10 hereof, the Borrower will not and will
not permit any of its Subsidiaries to:
SECTION 10.1 Limitations on Debt. Create, incur or suffer to exist any
Debt, other than:
(a) the Obligations;
(b) Debt set forth on Schedule 10.1 hereto, including the
extension of maturity, modification or refinancing (but not in any such
case an increase in the principal amount nor a shortening of the
maturity thereof) thereof;
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(c) Subordinated Debt owing to the Borrower or any Subsidiary
by any other Subsidiary;
(d) trade accounts payable arising in the ordinary course of
business and not more than ninety (90) days past due unless being
contested in good faith and by appropriate proceedings;
(e) Debt consisting of Guarantees permitted by Section 10.2
hereof;
(f) Obligations of the Borrower pursuant to any Hedging
Agreement to the extent such obligations constitute Debt;
(g) Surety bonds and appeal bonds acquired in the ordinary
course of business or in connection with the enforcement of rights or
claims of the Borrower or of any Subsidiary or in connection with
judgments that do not result in an Event of Default; and
(h) Debt of the Borrower and its Subsidiaries incurred in
connection with Capital Leases, purchase money Debt of the Borrower and
its Subsidiaries and additional Debt of the Borrower and its
Subsidiaries not otherwise permitted herein provided that the aggregate
amount of such Debt shall not exceed $2,000,000 on any date of
determination.
SECTION 10.2 Limitations on Guarantees. Create, incur, assume, or
suffer to exist any Guarantees except (a) Guarantees in favor of the Agent for
the benefit of the Lenders, (b) Guarantees existing on the Closing Date and set
forth on Schedule 6.1(u) hereto, and any renewal or modification (but not any
increase in the principal amount) thereof, (c) Guarantees representing the
endorsement of negotiable instruments for deposit or collection in the ordinary
course of business, (d) Guarantees of payments under any trade payable incurred
or operating lease entered into by the Borrower or any Subsidiary and any other
obligation (not constituting Debt) of the Borrower or any Subsidiary, all of
which Guarantees and obligations are incurred in the ordinary course of
business, and (e) Guarantees of any Debt in each case permitted by Section 10.1.
SECTION 10.3 Limitations on Liens. Create, incur, assume or suffer to
exist any Lien on or with respect to any of its assets or properties (including
shares of capital stock), real or personal, whether now owned or hereafter
acquired, except:
(a) Liens of the Agent for the benefit of the Lenders or the
Disbursing Agent;
(b) Liens existing on the Closing Date and set forth on
Schedule 10.3 hereto;
(c) Liens evidencing the interest of lessors under operating
leases in the property subject to such lease;
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(d) Liens incurred in connection with the Debt referred to in
Section 10.1(b);
(e) Liens for taxes, assessments and other governmental
charges or levies (excluding any Lien imposed pursuant to any of the
provisions of ERISA or Environmental Laws) not yet due or as to which
the period of grace, if any, related thereto has not expired or which
are being contested in good faith and by appropriate proceedings if
adequate reserves are maintained to the extent required by GAAP;
(f) the claims of materialmen, mechanics, carriers,
warehousemen, processors or landlords for labor, materials, supplies or
rentals incurred in the ordinary course of business, (i) which are not
overdue for a period of more than sixty (60) days or (ii) which are
being contested in good faith and by appropriate proceedings;
(g) 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 and utility deposits;
(h) Liens securing the performance of bids, tenders, statutory
obligations, surety and appeal bonds and other obligations of like
nature, incurred as an incident to and in the ordinary course of
business;
(i) Liens constituting encumbrances in the nature of zoning
restrictions, easements and rights or restrictions of record on the use
of real property, which in the aggregate do not, in any case,
materially detract from the value of such property or impair the use
thereof in the ordinary conduct of business;
(j) Leases and subleases not materially interfering with the
ordinary course of conduct of the businesses of the Borrower and its
Subsidiaries, taken as a whole;
(k) Judgement Liens which do not create an Event of Default
under Section 11.1(l);
(l) Liens noted on the title insurance policies delivered to
the Agent under Section 5.2(b)(v) hereof;
(m) Liens securing Capital Leases and purchase money Debt to
the extent permitted under Section 10.1(h) but only if such Liens are
at all times confined solely to the property which is the subject of
the Capital Lease or the purchase price of which was financed through
the incurrence of the purchase money Debt secured by such Lien; and
(n) Liens of Factors under the terms and conditions of the
Factoring Agreements.
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SECTION 10.4 Limitations on Loans, Advances, Investments and
Acquisitions. Purchase, own, invest in or otherwise acquire, directly or
indirectly, any capital stock, interests in any partnership or joint venture,
evidence of Debt or other obligation or security of any other Person,
substantially all or a material portion of the business or assets of any other
Person or any other investment or interest whatsoever in any other Person; or
make or permit to exist, directly or indirectly, any loans, advances or
extensions of credit to, or any investment in cash or by delivery of property
in, any Person; or enter into, directly or indirectly, any commitment or option
in respect of the foregoing except:
(a) investments in (i) marketable direct obligations issued or
unconditionally guaranteed by the United States 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, (ii) commercial paper maturing no more than one year from the
date issued and, at the time of acquisition, having a rating of at
least A-1 from Standard & Poor's Corporation or at least P-1 from
Moody's Investors Service, Inc. and (iii) certificates of deposit or
bankers' acceptances maturing within one year from the date of issuance
thereof issued by, or overnight reverse repurchase agreements from, or
any time deposit or account with, or investment issued by, any
commercial bank organized under the laws of the United States of
America or any state thereof or the District of Columbia having
combined capital and surplus of not less than $500,000,000;
(b) loans and advances to employees for reasonable travel and
business expenses in the ordinary course of business;
(c) deposits for utilities, security deposits, leases and
similar prepaid expenses incurred in the ordinary course of business;
(d) trade accounts created in the ordinary course of business;
and
(e) investments by the Borrower in the form of joint ventures
or acquisitions of all or substantially all of the business or a line
of business (whether by the acquisition of capital stock, assets or any
combination thereof) of any other Person if each such investment or
acquisition meets all of the following requirements: (i) the businesses
of the joint venture or the Person to be acquired or the joint ventures
to be entered into shall be in the same lines of business as engaged in
by the Borrower on the Closing Date, (ii) no Default or Event of
Default shall have occurred and be continuing both before and after
giving effect to the acquisition or joint venture, (iii) the Borrower
has delivered to the Agent and the Lenders a certificate of the chief
financial officer of the Borrower demonstrating pro forma compliance
with the covenants contained in Article IX after giving effect to such
acquisition or joint venture, (iv) the fair market value of all
consideration paid in connection with such joint ventures or
acquisitions during any fiscal year of the Borrower shall not exceed
$1,000,000, of which cash consideration paid shall not exceed $500,000,
(v) in the case of the acquisition of the capital stock of any Person,
the Borrower or one of its
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Subsidiaries shall own the controlling interest in such Person after
giving effect to such an acquisition and (vi) the Obligations shall be
secured by a Lien on all assets acquired by the Borrower in connection
with such acquisition.
SECTION 10.5 Limitations on Mergers and Liquidation. Merge, consolidate
or enter into any similar combination with any other Person or liquidate,
wind-up or dissolve itself (or suffer any liquidation or dissolution) except any
Subsidiary of the Borrower may merge with the Borrower (so long as the Borrower
is the surviving corporation) or another Subsidiary of the Borrower.
SECTION 10.6 Limitations on Sale of Assets. Convey, sell, lease,
assign, transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, the sale of any receivables (other than to
Factors under the Factoring Agreements) and leasehold interests and any
sale-leaseback (other than sale-leasebacks of Equipment to be purchased under
the Borrower's 1996, 1997 and 1998 capital expenditure plans included in the
projections furnished by the Borrower to the Lenders which will be financed
under operating leases to be entered into by the Borrower with respect to such
Equipment) or similar transaction), whether now owned or hereafter acquired
except:
(a) the sale of assets no longer necessary or usable in the
business of the Borrower or such Subsidiary;
(b) the sale of inventory in the ordinary course of business;
(c) the sale by any Subsidiary of its business or assets to
the Borrower or another Subsidiary, provided that both before and after
giving effect to such sale no Default or Event of Default shall have
occurred and be continuing;
(d) any other sale or disposition of assets in any Fiscal Year
which, in the aggregate, based on the dispositions of proceeds
received, do not exceed an aggregate amount of $2,500,000; and
(e) the sale or discount without recourse of accounts
receivable arising in the ordinary course of business in connection
with the compromise or collection thereof to the extent permitted under
the Factoring Agreements.
SECTION 10.7 Transactions with Affiliates. Directly or indirectly, (a)
except as permitted pursuant to Section 10.4, make any loan or advance to, or
purchase or assume any note or other obligation to or from, any of its officers,
directors, shareholders or Affiliates, or to or from any member of the immediate
family of any of its officers, directors, shareholders or Affiliates, or
subcontract any operations to any of its Affiliates, or (b) enter into, or be a
party to, any transaction with any of its Affiliates, except pursuant to the
reasonable requirements of its business and upon fair and reasonable terms that
are fully disclosed to and approved in writing by the Required Lenders and are
no less favorable to it than would obtain in a comparable arm's length
transaction with a Person not its Affiliate.
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SECTION 10.8 Certain Accounting Changes. Change its Fiscal Year end, or
make any material change in its accounting treatment and reporting practices
except as required by GAAP.
SECTION 10.9 Compliance with ERISA. (a) Permit the occurrence of any
Termination Event which would result in a liability to the Borrower or any ERISA
Affiliate; (b) permit the present value of all benefit liabilities under all
Pension Plans (determined under the actuarial assumptions used for Code and
ERISA funding purposes) to exceed the current value of the assets of such
Pension Plans allocable to such benefit liabilities; (c) permit any accumulated
funding deficiency (as defined in Section 302 of ERISA and Section 412 of the
Code) with respect to any Pension Plan, whether or not waived; (d) fail to make
any contribu tion or payment to any Multiemployer Plan which the Borrower or any
ERISA Affiliate may be required to make under any agreement relating to such
Multiemployer Plan, or any law pertaining thereto; (e) engage, or permit any
ERISA Affiliate to engage, in any prohibited transaction under Section 406 of
ERISA or Section 4975 of the Code for which a civil penalty pursuant to Section
502(i) of ERISA or a tax pursuant to Section 4975 of the Code; (f) permit the
establishment of any Employee Benefit Plan providing post-retirement welfare
benefits (other than required pursuant to Section 4980B of the Code) or
establish or amend any Employee Benefit Plan which establishment or amendment
could result in liability to the Borrower or any ERISA Affiliate or increase the
obligation of the Borrower or any ERISA Affiliate to a Multiemployer Plan which
liability or increase, individually or together with all similar liabilities and
increases, is reasonably likely to have a Material Adverse Effect; or (g) fail,
or permit any ERISA Affiliate to fail, to establish, maintain and operate each
Employee Benefit Plan in compliance with the provisions of ERISA, the Code and
all other applicable laws and the regulations and interpretations thereof, which
failure is reasonably likely to have a Material Adverse Effect.
SECTION 10.10 Modification of Factor Agreements and Credit Insurance.
Amend or modify the Factoring Agreements or any policy of credit insurance
(including the Borrower's existing policy with American Credit Indemnity
Company), in any material respect, without the prior written consent of the
Required Lenders.
SECTION 10.11 Restricted Payments. Declare or pay any dividends on any
shares of stock of any class of the Borrower now or hereafter outstanding, or
purchase, redeem or otherwise retire any such shares, or apply or set apart any
of the assets therefor or make any other distribution (by reduction of capital
or otherwise) in respect of any such shares, or invest in (by capital
contribution or otherwise) or purchase or repurchase the stock or indebtedness
or all or a substantial part of the assets or properties of any Affiliate, or
make any payment of principal or interest with respect to any Subordinated Debt
or agree to do any of the foregoing (herein, "Restricted Payments"); provided
that if no Default or Event of Default shall have occurred and be continuing or
would result therefrom, the Borrower may (a) make payments of principal and
interest necessary to comply with its binding obligations under the instruments
evidencing the Subordinated Debt outstanding on the Closing Date and (b) subject
to compliance with Section 2.1, voluntarily prepay the Subordinated Extendible
Debentures due April 1, 2000, Series C.
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ARTICLE XI
DEFAULT AND REMEDIES
SECTION 11.1 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 Authority or otherwise:
(a) Default in Payment of Principal of Loans. The Borrower
shall default in any payment of principal of any Loan or Note or
Reimbursement Obligation when and as due (whether at maturity, by
reason of acceleration or otherwise).
(b) Other Payment Default. The Borrower shall default in the
payment when and as due (whether at maturity, by reason of acceleration
or otherwise) of interest on any Loan or Note or the payment of any
other Obligation, and such default shall continue unremedied for three
(3) Business Days.
(c) Misrepresentation. Any representation or warranty made or
deemed to be made by the Borrower or any other Loan Party under this
Agreement, 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 or deemed made.
(d) Default in Performance of Certain Covenants. The Borrower
shall default in the performance or observance of any covenant or
agreement contained in Section 7.4(d), Section 8.12, Section 8.13,
Article IX or Article X of this Agreement.
(e) Default in Performance of Certain Other Covenants. The
Borrower shall default in the performance or observance of any covenant
or agreement contained in Article VII of this Agreement (other than
Section 7.4(d)) and such default shall continue for a period of ten
(10) Business Days after the earlier of (i) written notice thereof from
the Agent to the Borrower, or (ii) any executive officer of the
Borrower knows or should have known of such default.
(f) Default in Performance of Other Covenants and Conditions.
The Borrower shall default in the performance or observance of any
term, covenant, condition or agreement contained in this Agreement
(other than as specifically provided for otherwise in this Section
11.1) or any other Loan Document and such default shall continue for a
period of thirty (30) Business Days after the earlier of (ii) written
notice thereof from the Agent to the Borrower, or (ii) any executive
officer of the Borrower knows or should have known of such default.
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(g) Cross-Default. The Borrower or any of its Subsidiaries
shall (i) default in the payment of any Debt (other than the Notes or
any Reimbursement Obligation) the outstanding aggregate balance of
which exceeds $250,000 beyond the period of grace, if any, provided in
the instrument or agreement under which such Debt or obligation was
created and such default is not cured or waived; or (ii) default in the
observance or performance of any other agreement or condition relating
to such Debt (other than the Notes or any Reimbursement Obligation)
contained in any instrument or agreement evidencing, securing or
relating thereto or any other event shall occur or condition exist, the
effect of which default or other event or condition is to permit the
holder or holders of such Debt (or a trustee or agent on behalf of such
holder or holders or beneficiary or beneficiaries), upon the giving of
notice if required, to cause any such Debt to become due prior to its
stated maturity (any applicable grace period having expired) and such
default is not cured or waived.
(h) Voluntary Bankruptcy Proceeding. The Borrower or any of
its 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.
(i) Involuntary Bankruptcy Proceeding. A case or other
proceeding shall be commenced against the Borrower or any of its
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; or (ii)
the appointment of a trustee, receiver, custodian, liquidator or the
like for the Borrower or its Subsidiary or for all or any substantial
part of its assets, domestic or foreign, and such case or proceeding
shall continue undismissed or unstayed for a period of sixty (60)
consecutive calendar days, or an order granting the relief requested in
such case or proceeding (including, but not limited to, an order for
relief under such federal bankruptcy laws) shall be entered.
(j) Failure of Agreements. Any material provision of this
Agreement or of any other Loan Document shall for any reason be
declared by a court of competent jurisdiction to be null and void, or a
proceeding shall be commenced by the Borrower or any of its
Subsidiaries, or by any Governmental Authority having jurisdiction over
the Borrower or any of its Subsidiaries, seeking to establish the
invalidity or unenforceability thereof (exclusive of questions of
interpretation of any provision thereof), or the Borrower or any of its
Subsidiaries shall deny that it has any liability
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or obligation for the payment of any principal or interest purported to
be created under any Loan Document other than on account of the prior
payment thereof, or shall contest the viability of the Liens created
under the Security Documents.
(k) Termination Event. The occurrence of any of the following
events: (i) the Borrower or any ERISA Affiliate fails to make full
payment when due (or promptly after the Borrower obtains knowledge of
any such amounts) of all amounts which, under the provisions of any
Pension Plan or Section 412 of the Code, the Borrower or any ERISA
Affiliate is required to pay as contributions thereto, which failure is
reasonably likely to have a Material Adverse Effect; (ii) an
accumulated funding deficiency in excess of $250,000 occurs or exists,
whether or not waived, with respect to any Pension Plan; (iii) a
Termination Event resulting in liability to the Borrower or any ERISA
Affiliate in excess of $250,000; or (iv) the Borrower or any ERISA
Affiliate as employers under one or more Multiemployer Plan makes a
complete or partial withdrawal from any such Multiemployer Plan and the
plan sponsor of such Multiemployer Plans notifies such withdrawing
employer that such employer has incurred a withdrawal liability
requiring payments in an amount exceeding $250,000.
(l) Judgment. A judgment or order for the payment of money
which exceeds an amount equal to $250,000 in excess of any applicable
insurance coverage shall be entered against the Borrower by any court
and such judgment or order shall continue undischarged, unstayed or
unbonded for a period of thirty (30) days.
(m) Attachment. A warrant or writ of attachment or execution
or similar process shall be issued against any property of the Borrower
or any of its Subsidiaries and such warrant or process shall continue
undischarged, unstayed or unbonded for a period of thirty (30) days.
(n) Factoring Agreements. The Borrower shall default in the
performance or observance of any term, covenant, condition or agreement
contained in any of the Factoring Agreements and shall have received
notice of such default and such default shall continue beyond the
period of grace, if any, provided for therein.
(o) Termination of Material Contracts. Any Material Contract
(other than a purchase order) shall be terminated if the result of such
termination, together with the termination of any other Material
Contracts in the aggregate, shall or could reasonably be expected to
have a Material Adverse Effect.
(p) Change in Control. There shall have occurred under any
indenture or other instrument evidencing any Debt in excess of
$1,000,000 any "change in control" (as defined in such indenture or
other evidence of Debt) obligating the Borrower to repurchase, redeem
or repay all or any part of the Debt or capital stock provided for
therein.
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SECTION 11.2 Remedies. Upon the occurrence and during the continuance
of an Event of Default, with the consent of the Required Lenders, the Agent may,
or upon the request of the Required Lenders, the Agent shall, by written notice
to the Borrower, with a copy to the Disbursing Agent:
(a) Acceleration; Termination of Facility. Declare the
principal of and interest on the Loans, the Notes and the Reimbursement
Obligations at the time outstanding, and all other amounts owed to the
Lenders and to the Agent or Disbursing Agent under this Agreement or
any of the other Loan Documents (including, without limitation, all
Letter of Credit Obligations, whether or not the beneficiaries of the
then outstanding Letters of Credit shall have presented the documents
required thereunder) and all other Obligations, to be forthwith due and
payable, whereupon the same shall immediately become due and payable
without presentment, demand, protest or any additional notice of any
kind, all of which are expressly waived, anything in this Agreement or
the other Loan Documents to the contrary notwithstanding, and terminate
the Revolving Credit Commitment and the right of the Borrower to
request Letters of Credit hereunder; provided, that upon the occurrence
of an Event of Default specified in Section 10.1(g) or (h), the
Revolving Credit Commitment and the L/C Commitment shall be
automatically terminated and all Obligations shall automatically become
due and payable. Nothing herein shall be construed to permit the Agent,
the Disbursing Agent or any Lender to charge or collect any unmatured
or unearned interest.
(b) Letters of Credit. With respect to all Letters of Credit
with respect to which presentment for honor shall not have occurred at
the time of an acceleration pursuant to the preceding paragraph,
require the Borrower at such time to deposit in a cash collateral
account opened by the Disbursing Agent an amount equal to the aggregate
then undrawn and unexpired amount of such Letters of Credit. Amounts
held in such cash collateral account shall be applied by the Disbursing
Agent to the payment of drafts drawn under such Letters of Credit, and
the unused portion thereof after all such Letters of Credit shall have
expired or been fully drawn upon, if any, shall be applied to repay the
other Obligations. After all such Letters of Credit shall have expired
or been fully drawn upon, the Reimbursement Obligation shall have been
satisfied and all other Obligations shall have been paid in full, the
balance, if any, in such cash collateral account shall be returned to
the Borrower.
(c) Rights of Collection. Exercise on behalf of the Lenders
all of its other rights and remedies under this Agreement, the other
Loan Documents and Applicable Law, in order to satisfy all of the
Borrower's Obligations.
SECTION 11.3 Rights and Remedies Cumulative; Non-Waiver; etc. The
enumeration of the rights and remedies of the Agent, the Disbursing Agent and
the Lenders set forth in this Agreement is not intended to be exhaustive and the
exercise by the Agent, the Disbursing Agent and the Lenders of any right or
remedy shall not preclude the exercise of any other rights or remedies, all of
which shall be cumulative, and shall be in addition to any other right or remedy
given hereunder or under the Loan Documents or that may now or
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hereafter exist in law or in equity or by suit or otherwise. No delay or failure
to take action on the part of the Agent, the Disbursing Agent or Lender in
exercising any right, power or privilege shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right, power or privilege
preclude other or further exercise thereof or the exercise of any other right,
power or privilege or shall be construed to be a waiver of any Event of Default.
No course of dealing between the Borrower, the Agent, the Disbursing Agent and
the Lenders or their respective agents or employees shall be effective to
change, modify or discharge any provision of this Agreement or any of the other
Loan Documents or to constitute a waiver of any Event of Default.
ARTICLE XII
THE AGENT
SECTION 12.1 Appointment. Each of the Lenders hereby irrevocably
designates and appoints NationsBank as the Agent and NCC as the Disbursing Agent
of such Lender under this Agreement and the other Loan Documents and each such
Lender irrevocably authorizes NationsBank as Agent and NCC as the Disbursing
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 and the Disbursing
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, neither the Agent nor the Disbursing Agent shall have any duties or
responsibilities, except those expressly set forth herein and therein, or any
fiduciary rela tionship 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 or
the Disbursing Agent. To the extent any provision of this Agreement permits
action by the Agent, the Agent shall, subject to the provisions of Section 13.10
hereof and of this Article XII, take such action if directed in writing to do so
by the Required Lenders.
SECTION 12.2 Delegation of Duties. The Agent and the Disbursing Agent
may execute any of their respective 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. Neither
the Agent nor the Disbursing Agent shall be responsible for the negligence or
misconduct of any agents or attorneys-in-fact selected by it with reasonable
care.
SECTION 12.3 Exculpatory Provisions. Neither the Agent, the Disbursing
Agent nor any of their officers, directors, employees, agents,
attorneys-in-fact, Subsidiaries or Affiliates shall be (a) liable 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 (b) responsible in
any
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manner to any of the Lenders 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 or
Disbursing Agent under or in connection with, this Agreement or the other Loan
Documents or for the value, validity, effectiveness, genuine ness,
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. Neither the Agent nor the Disbursing Agent shall be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement, or to inspect the properties, books or records of the Borrower.
SECTION 12.4 Reliance by Agents. The Agent and the Disbursing 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 or
Disbursing Agent. The Agent and the Disbursing 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 13.10 hereof. The Agent and the
Disbursing 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 (or, when expressly
required hereby or by the relevant other Loan Document, all the 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 except for its own gross
negligence or willful misconduct. The Agent and the Disbursing 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
(or, when expressly required hereby, all the 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 12.5 Notice of Default. Neither the Agent nor the Disbursing
Agent shall be deemed to have knowledge or notice of the occurrence of any
Default or Event of Default hereunder unless it 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 or the Disbursing Agent receives such a notice or otherwise
becomes aware of the occurrence of any Default or Event of Default, it 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.
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SECTION 12.6 Non-Reliance on the Agents and Other Lenders. Each Lender
expressly acknowledges that neither the Agent, the Disbursing Agent nor any of
their respective officers, directors, employees, agents, attorneys-in-fact,
Subsidiaries or Affiliates has made any representations or warranties to it and
that no act by the Agent or the Disbursing Agent hereinafter taken, including
any review of the affairs of the Borrower, shall be deemed to constitute any
representation or warranty by the Agent or Disbursing Agent to any Lender. Each
Lender represents to the Agent or Disbursing Agent that it has, independently
and without reliance upon the Agent, the Disbursing 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 and issue or participate in Letters of Credit
hereunder and enter into this Agreement. Each Lender also represents that it
will, independently and without reliance upon the Agent, the Disbursing 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 or the
Disbursing Agent hereunder or by the other Loan Documents, neither the Agent nor
the Disbursing Agent shall have any duty or responsibility to provide any Lender
with any credit or other information concerning the business, operations,
property, financial and other condition or creditworthiness of the Borrower
which may come into the possession of the Agent or the Disbursing Agent or any
of their respective officers, directors, employees, agents, attorneys-in-fact,
Subsidiaries or Affiliates.
SECTION 12.7 Indemnification. The Lenders agree to indemnify the Agent
and Disbursing Agent in their capacity as such and (to the extent not reimbursed
by the Borrower and without limiting the obligation of the Borrower to do so),
ratably according to the respective amounts of their Commitment Percentages,
from and against any and all liabili ties, 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 or any Reimbursement Obligation) be
imposed on, incurred by or asserted against the Agent or Disbursing 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 or Disbursing Agent under or in connection with any of the foregoing;
provided that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting solely from the Agent's or the
Disbursing Agent's bad faith, gross negligence or willful misconduct.
Notwithstanding the foregoing, the Agent agrees to indemnify the Disbursing
Agent from and against any and all losses which the Disbursing Agent may sustain
caused by the failure of any Lender to reimburse such Lender's funding
obligations under Section 2.2(b) or the failure of any Lender to indemnify the
Disbursing Agent as provided herein (which indemnity by the Agent shall not be
subject to the indemnification provisions set forth above). The agreements in
this Section 12.7 shall survive
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the payment of the Notes, any Reimbursement Obligation and all other amounts
payable hereunder and the termination of this Agreement.
SECTION 12.8 The Agent and Disbursing Agent in Their Individual
Capacities. The Agent and the Disbursing Agent and their respective Subsidiaries
and Affiliates may make loans to, accept deposits from and generally engage in
any kind of business with the Borrower as though the Agent or the Disbursing
Agent, as the case may be, were not an agent hereunder. With respect to any
Loans made or renewed by it and any Note issued to it, and with respect to any
Letter of Credit issued by it or participated in by it, the Agent shall have the
same rights and powers under this Agreement and the other Loan Documents as any
Lender and may exercise the same as though it were not an agent, and the terms
"Lender" and "Lenders" shall include the Agent in its individual capacity.
SECTION 12.9 Resignation and Removal of Agent; Successor Agents.
Subject to the appointment and acceptance of a successor as provided below, the
Agent may resign at any time by giving thirty (30) days prior notice thereof to
the Lenders and the Borrower. In addition, after eighteen (18) months have
expired since the Closing Date and at such time as the Agent's Total Commitment
is less than or equal to $10,000,000, the Agent may be removed at any time with
the written consent of the Borrower and the Required Lenders. Upon any such
resignation by the Agent, the Required Lenders shall have the right to appoint a
successor Agent from among the Lenders, and if no successor Agent shall have
been so appointed by the Required Lenders and shall have accepted such
appointment within fifteen (15) days after the retiring Agent's giving of notice
of resignation, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent from among the Lenders. Upon any such removal of the Agent, the
Required Lenders shall appoint a successor Agent. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, as the case may be, such
successor Agent shall thereupon succeed to and become vested with all rights,
powers, privileges and duties of the preceding Agent, and the preceding Agent
shall be discharged from its duties and obligations hereunder. After any
preceding Agent's resignation or removal hereunder as Agent, as the case may be,
the provisions of this Section 12.9 shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
the Agent.
The Disbursing Agent may resign at any time by giving thirty (30) days
prior notice thereof to the Lenders and the Borrower. Upon such resignation, the
Agent shall succeed to and become vested with all rights, powers, privileges and
duties of the retiring Disbursing Agent, and the retiring Disbursing Agent shall
be discharged from its duties and obligations hereunder. After any retiring
Disbursing Agent's resignation hereunder as Disbursing Agent, as the case may
be, the provisions of this Section 12.9 shall continue in effect for its benefit
in respect of any actions taken or omitted to be taken by it while it was acting
as the Disbursing Agent.
SECTION 12.10 Participation in Audits. The Lenders shall have the right
to participate in the field audits provided for in Section 8.12 on a rotating
basis.
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ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 Notices.
(a) Method of Communication. Except as otherwise provided in this
Agreement, all notices and communications hereunder shall be in writing, or by
telephone subsequently confirmed in writing if otherwise permitted by this
Agreement. Any notice shall be effective if delivered by hand delivery or sent
via telecopy, recognized overnight courier service or certified mail, return
receipt requested, and shall be presumed to be received by a party hereto (i) on
the date of delivery if delivered by hand or sent by telecopy, (ii) on the next
Business Day if sent by recognized overnight courier service and (iii) on the
fifth Business Day following the date sent by certified mail, return receipt
requested. 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 as to which all the other parties
are notified in writing.
If to the Borrower: Texfi Industries, Inc.
5400 Glenwood Avenue, Suite 318
Raleigh, North Carolina 27612
Attention: Chief Financial Officer
Telephone No.: (919) 783-4736
Telecopy No.: (919) 783-4739
with copies to: Schell Bray Aycock Abel & Livingston
1500 Renaissance Plaza
230 North Elm Street
Post Office Box 21847
Greensboro, North Carolina 27420
Attention: Mark T. Cain
Telephone No.: (910) 370-8800
Telecopy No.: (910) 370-8830
If to NationsBank, N.A., NationsBank, N.A.
as Agent or Lender: 100 North Tryon Street, NC1-007-08-11
Charlotte, North Carolina 28255
Attention: J. Timothy Martin
Telephone No.: (704) 386-8385
Telecopy No.: (704) 386-1270
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with copies to: Kennedy Covington Lobdell & Hickman, L.L.P.
NationsBank Corporate Center
Suite 4200
100 North Tryon Street
Charlotte, North Carolina 28202-4006
Attention: J. Donnell Lassiter
Telephone No.: (704) 331-7444
Telecopy No.: (704) 331-7598
If to NationsBanc Commercial NationsBanc Commercial Corporation
Corporation, as Disbursing Post Office Box 4095
Agent: Atlanta, Georgia 30302-4095
Attention: Kenneth D. Frasier
Telephone No.: (770) 491-4290
Telecopy No. (770) 491-4007
(c) Agent's Office. The Agent hereby designates its office located at
the address set forth above, or any subsequent office which shall have been
specified for such purpose by written notice to the Borrower and Lenders, as the
Agent's Office referred to herein, to which payments due are to be made and at
which Loans will be disbursed and Letters of Credit issued.
(d) Disbursing Agent's Office. The Disbursing Agent hereby designates
its office located at the address set forth above, or any subsequent office
which shall have been specified for such purpose by written notice to the
Borrower and Lenders, as the Disbursing Agent's office referred to herein, at
which Revolving Credit Loans will be disbursed.
SECTION 13.2 Expenses. The Borrower will pay all reasonable
out-of-pocket expenses of the Agent and the Disbursing Agent in connection with:
(a) the preparation, execution and delivery of this Agreement and each of the
other Loan Documents, whenever the same shall be executed and delivered,
including all reasonable syndication and due diligence expenses, reasonable
appraiser's fees, reasonable search fees, title insurance premiums, recording
fees, taxes and reasonable fees and disbursements of counsel for the Agent or
the Disbursing Agent; (b) the preparation, execution and delivery of any waiver,
amendment or consent by the Agent, the Disbursing Agent or the Lenders relating
to this Agreement or any of the other Loan Documents including reasonable fees
and disbursements of counsel for the Agent or the Disbursing Agent, reasonable
search fees, reasonable appraise r's fees, recording fees and taxes imposed in
connection therewith; and (c) consulting with one or more Persons, including
appraisers, accountants, engineers and attorneys, concerning or related to the
nature, scope or value of any right or remedy of the Agent, the Disbursing Agent
or any of the Lenders hereunder or under any of the other Loan Documents,
including any review of factual matters in connection therewith, which expenses
shall include the reasonable fees and disbursements of such Persons. In
addition, the Borrower will pay all reasonable out-of-pocket expenses of the
Agent and the Disbursing Agent and each Lender in connection with prosecuting or
defending any claim in any way arising out of, related to,
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connected with, or enforcing any provision of, this Agreement or any of the
other Loan Docu ments, which expenses shall include the reasonable fees and
disbursements of counsel and of experts and other consultants retained by the
Agent, the Disbursing Agent or any of the Lend ers.
SECTION 13.3 Set-off. In addition to any rights now or hereafter
granted under Applicable Law and not by way of limitation of any such rights,
upon and after the occurrence of any Event of Default and during the continuance
thereof, the Disbursing Agent, the Lenders and any assignee or participant of a
Lender in accordance with Section 13.9 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, time or
demand, 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 the Lenders, or any such assignee or participant to or for the
credit or the account of the Borrower against and on account of the Obligations
irrespective of whether or not (a) the Lenders shall have made any demand under
this Agreement or any of the other Loan Documents or (b) the Agent shall have
declared any or all of the Obligations to be due and payable as permitted by
Section 11.2.
SECTION 13.4 Governing Law. THIS AGREEMENT, THE NOTES AND THE OTHER
LOAN DOCUMENTS, UNLESS OTHERWISE EXPRESSLY SET FORTH THEREIN, SHALL BE GOVERNED
BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH
CAROLINA, WITHOUT REFERENCE TO THE CONFLICTS OR CHOICE OF LAW PRINCIPLES
THEREOF.
SECTION 13.5 Consent to Jurisdiction. The Borrower hereby irrevocably
consents to the personal jurisdiction of the state and federal courts located in
Mecklenburg County, North Carolina, in any action, claim or other proceeding
arising out of any dispute in connection with this Agreement, the Notes and the
other Loan Documents, any rights or obligations hereunder or thereunder, or the
performance of such rights and obligations. The Borrower hereby irrevocably
consents to the service of a summons and complaint and other process in any
action, claim or proceeding brought by the Agent or Lender in connection with
this Agreement, the Notes or the other Loan Documents, any rights or obligations
hereunder or thereunder, or the performance of such rights and obligations, on
behalf of itself or its property, by the mailing of copies thereof by registered
or certified mail, postage prepaid, to the Borrower at its address for notices
contained in Section 13.1. Nothing in this Section 13.5 shall affect the right
of the Agent or any Lender to serve legal process in any other manner permitted
by Applicable Law or affect the right of the Agent or any Lender to bring any
action or proceeding against the Borrower or its properties in the courts of any
other jurisdictions.
SECTION 13.6 Waiver of Jury Trial. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THE AGENT, THE DISBURSING AGENT, EACH LENDER
AND THE BORROWER HEREBY IRREVOCABLY WAIVE THEIR RESPECTIVE
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RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM OR OTHER PROCEEDING
ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR THE
OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE
PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.
SECTION 13.7 Reversal of Payments. To the extent the Borrower makes a
payment or payments to the Agent or the Disbursing Agent for the ratable benefit
of the Lenders or the Agent receives any payment or proceeds of the Collateral
which payments 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 repaid, the 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 the Disbursing Agent.
SECTION 13.8 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 of law may prove to be
inadequate relief to the Lenders. Therefore, the Borrower agrees that the
Lenders, at the Lenders' option, shall be entitled to temporary and permanent
injunctive relief in any such case without the necessity of proving actual
damages.
SECTION 13.9 Successors and Assigns; Participations.
(a) Benefit of Agreement. This Agreement shall be binding upon and
inure to the benefit of the Borrower, the Agent, the Disbursing Agent and the
Lenders, 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) Assignment by Lenders. Each Lender may, with the consent of the
Agent and, so long as no Default or Event of Default shall have occurred and be
continuing, the Borrower, which consents shall not be unreasonably withheld,
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 Obligations at the time owing to it and the Notes held by
it); provided, that:
(i) each such assignment shall be of a constant, and not a
varying, percentage of all the assigning Lender's rights and
obligations under this Agreement;
(ii) the Commitment of the assigning Lender after any such
assignment (determined as of the date the Assignment and Acceptance
with respect to such assignment is delivered to the Agent) shall in no
event be less than $5,000,000 and the Commitment so assigned shall not
be less than $5,000,000 (other than assignments of the entire
Commitment of a Lender);
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(iii) the parties to each such assignment shall execute and
deliver to the Agent, for its acceptance and recording in the Register,
an Assignment and Acceptance in the form of Exhibit E attached hereto
(an "Assignment and Acceptance"), together with any Note or Notes
subject to such assignment, and shall furnish the Disbursing Agent with
a copy of each such Assignment;
(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 assigning Lender shall pay to the Agent an assignment
fee of $3,000 upon the execution by such Lender of the Assignment and
Acceptance.
Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in each Assignment and Acceptance, which effective date
shall be at least five (5) Business Days after the execution thereof, (A) the
assignee thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender hereby
and (B) the Lender thereunder shall, to the extent provided in such assignment,
be released from its obligations under this Agreement.
(c) Register. 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 amount of the Obligations with respect 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, the
Disbursing 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 Lenders at any
reasonable time and from time to time upon reasonable prior notice.
(d) Issuance of New Notes. 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 substantially in the form of Exhibit E:
(i) accept such Assignment and Acceptance;
(ii) record the information contained therein in the Register;
(iii) give prompt notice thereof to the Lenders and the
Borrower; and
(iv) promptly deliver a copy of such Assignment and Acceptance
to the Borrower.
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Within five (5) 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 assumed by the Lender 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 assigning Lender. Each surrendered Note or Notes shall be
canceled and returned to the Borrower.
(e) Participations. Each Lender may sell participations to one or more
banks or other entities in all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its
Commitment and the Notes held by it); provided that:
(i) each such participation shall be in an amount not less
than $3,000,000;
(ii) such Lender's obligations under this Agreement
(including, without limitation, its Commitment) shall remain unchanged;
(iii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations;
(iv) such Lender shall remain the holder of the Notes held by
it for all purposes of this Agreement;
(v) the Borrower, the Agent and the other Lenders shall
continue to deal solely and directly with such Lender in connection
with such Lender's rights and obligations under this Agreement;
(vi) such Lender shall not permit such participant the right
to approve any waivers, amendments or other modifications to this
Agreement or any other Loan Document other than waivers, amendments or
modifications which would reduce the principal of or the interest rate
on any Loan or Reimbursement Obligation, extend the term or increase
the amount of the Lender's Commitment in which such participant
participates, reduce the amount of any fees to which such participant
is entitled, extend any scheduled payment date for principal or, except
as expressly contemplated hereby or permitted in this Agreement or the
Security Documents, release any Guarantors or any Collateral; and
(vii) any such disposition shall not, without the consent of
the Borrower, require the Borrower to file a registration statement
with the Securities and Exchange Commission to apply to qualify the
Loans or the Notes under the blue sky law of any state.
The Agent and the Lenders shall hold all non-public information with
respect to the Borrower or its Subsidiaries obtained pursuant to the Loan
Documents confidential in
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accordance with their customary procedures of handling their own confidential
information. Any information disclosed by or on behalf of the Borrower or any
acquired Person to the Agent or any of the Lenders and any information obtained
by the Agent or any of the Lenders pursuant to the provisions of, or in
connection with, this Agreement shall be used solely for purposes of this
Agreement and not in any other manner, and, if such information is not otherwise
in the public domain, shall not be disclosed by the Agent or such Lender to any
other Person except (i) to its independent accountants and legal counsel (it
being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such information and instructed to keep
such information confidential), (ii) pursuant to statutory and regulatory
requirements, (iii) pursuant to any mandatory court order, subpoena or other
legal process or (iv) subject to a written agreement containing provisions
substantially the same as those of this Section, to any participant in or
assignee of, or prospective participant in or assignee of, any Loan.
(f) Certain Pledges or Assignments. Nothing herein shall prohibit any
Lender from pledging or assigning any Note to any Federal Reserve Bank in
accordance with Applicable Law.
SECTION 13.10 Amendments, Waivers and Consents. Except as set forth
below, any term, covenant, agreement or condition of this Agreement or any of
the other Loan Documents may be amended or waived by the Lenders, and any
consent given by the Lenders, if, but only if, such amendment, waiver or consent
is in writing signed by the Required Lenders (or by the Agent with the consent
of the Required Lenders) and delivered to the Agent and, in the case of an
amendment, signed by the Borrower; provided, that no amendment, waiver or
consent shall (a) increase the amount or extend the time of the obligation of
the Lenders to make Loans or issue or participate in Letters of Credit, (b)
extend the originally scheduled time or times of payment of the principal of any
Loan or Reimbursement Obligation or the time or times of payment of interest or
fees on any Loan or Reimbursement Obligation, (c) reduce the rate of interest or
fees payable on any Loan or Reimbursement Obligation, (d) permit any
subordination of the principal or interest on any Loan or Reimbursement
Obligation, (e) release any Collateral for any Obligation (other than as
specifically permitted in this Agreement or the Security Documents), (f) release
any of the Guarantors from the Guaranty Agreement, (g) amend the provisions of
this Section 13.10 or the definition of Majority Lenders or Required Lenders or
(h) the advance rates in the Borrowing Base definition, without the prior
written consent of each Lender. In addition, no amendment, waiver or consent to
the provisions of (a) Article XII shall be made without the written consent of
the Agent and (b) Article IIA without the written consent of the Issuing Lender.
SECTION 13.11 Performance of Borrower's Duties. 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.
SECTION 13.12 Indemnification. The Borrower agrees to reimburse the
Agent, the Disbursing Agent, the Lenders and their Affiliates and their
respective officers, directors, employees and agent for all reasonable costs and
expenses, including all reasonable counsel,
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appraisal, or other expert or consultant fees and disbursements incurred, and to
indemnify and hold the Agent, the Disbursing Agent and the Lenders and their
Affiliates and their respective officers, directors, employees and agents
harmless from and against all losses suffered by the Agent, the Disbursing Agent
and the Lenders in connection with (a) the exercise by the Agent, the Disbursing
Agent or the Lenders of any right or remedy granted to them under this Agreement
or any of the other Loan Documents, (b) except for claims by the Lenders and the
Disbursing Agent against one another, any claim, and the prosecution or defense
thereof, arising out of or attributable to this Agreement or any of the other
Loan Documents, and (c) the collection or enforcement of the Obligations or any
of them; provided, that the Borrower shall not be obligated to reimburse the
Agent, the Disbursing Agent or any Lender for costs and expenses, or indemnify
the Agent, the Disbursing Agent or any Lender for any loss, resulting from the
gross negligence or willful misconduct of the Agent, the Disbursing Agent or
Lender.
SECTION 13.13 All Powers Coupled with Interest. All powers of attorney
and other authorizations granted to the Lenders, the Agent, the Disbursing Agent
and any Persons designated by the Agent, the Disbursing Agent or Lenders
pursuant to any provisions of this Agreement or any of the other Loan Documents
shall be deemed coupled with an interest and shall be irrevocable so long as any
of the Obligations remain unpaid or unsatisfied or the Commitments have not been
terminated.
SECTION 13.14 Survival of Indemnities. Notwithstanding any termination
of this Agreement, the indemnities to which the Agent, the Disbursing Agent and
the Lenders are entitled under the provisions of this Article XIII and any other
provision of this Agreement and the Loan Documents shall continue in full force
and effect and shall protect the Agent, the Disbursing Agent and the Lenders
against events arising after such termination as well as before.
SECTION 13.15 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 13.16 Severability of Provisions. Any provision of this
Agreement or any other 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 13.17 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 13.18 Term of Agreement. This Agreement shall remain in effect
from the Closing Date through and including the date upon which all Obligations
shall have
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been indefeasibly and 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 13.19 Adjustments. If any Lender (a "Benefitted Lender") shall
at any time receive any payment of all or part of the Obligations, or if any
Lender shall at any time receive any Collateral in respect to the Obligations
(whether voluntarily or involuntarily, by set-off or otherwise) in a greater
proportion than any such payment to and Collateral received by any other Lender,
such Benefitted Lender shall purchase for cash from the other Lenders
participations in such portion of each such other Lender's Loans, or shall
provide such other Lenders with the benefits of any such Collateral, or the
proceeds thereof, as shall be necessary to cause such Benefitted Lender to share
the excess payment or benefits of such Collateral or proceeds ratably with each
of the Lenders; provided, that if all or any portion of such excess payment or
benefits is thereafter recovered from such Benefitted Lender, such purchase
shall be rescinded, and the purchase price and benefits returned to the extent
of such recovery, but without interest. The Borrower agrees that each Lender so
purchasing a portion of another Lender's Loans may exercise all rights of
payment (including, without limitation, rights of set-off) with respect to such
portion as fully as if such Lender were the direct holder of such portion.
SECTION 13.20 Independent Effect of Covenants. The Borrower expressly
acknowledges and agrees that each covenant contained in Articles VIII, IX and X
hereof shall be given independent effect. Accordingly, the Borrower shall not
engage in any transaction or other act otherwise permitted under any covenant
contained in Articles VIII, IX and X if, before or after giving effect to such
transaction or act, the Borrower shall or would be in breach of any other
covenant contained in Articles VIII, IX or X.
SECTION 13.21 Legal Fees. Any references herein to fees of counsel
shall mean fees based upon such counsel's normal hourly rates.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed under seal by their duly authorized officers, all as of the day and
year first written above.
BORROWER:
TEXFI INDUSTRIES, INC.
By: /s/ William L. Remley
Name: William L. Remley
Title: Chief Executive Officer
AGENT:
NATIONSBANK, N.A.,
As Agent and Lender
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By: /s/ Joseph R. Netzel
Name: Joseph R. Netzel
Title: Vice President
[SIGNATURES CONTINUED ON THE FOLLOWING PAGE]
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DISBURSING AGENT
NATIONSBANC COMMERCIAL
CORPORATION
By: /s/ Kenneth D. Frasier
Name: Kenneth D. Frasier
Title: Vice President
LENDERS:
NATIONSBANK, N.A.
By:/s/ Joseph R. Netzel
Name: Joseph R. Netzel
Title: Vice President
MELLON BANK, N.A.
By: /s/ Jeffrey G. Sapherstein
Name: Jeffrey G. Sapherstein
Title: Assistant Vice President
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ William C. Purinton
Name: William C. Purinton
Title: Vice President
CORESTATES BANK, N.A.
By: /s/ Marcus F. Brown
Name: Marcus F. Brown
Title: Vice President
NATWEST BANK N.A.
By: /s/ Jody L. Gorin
Name: Jody L. Gorin
Title: Vice President
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NATIONAL BANK OF CANADA
By: /s/ Charles Collie
Name: Charles Collie
Title: Vice President
By: /s/ Alex M. Council IV
Name: Alex M. Council IV
Title: Vice President
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<PAGE>
Exhibit 2(a)(2)
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement"), dated as of March 15, 1996
by and between TEXFI INDUSTRIES, INC., a corporation organized under the laws of
Delaware (the "Grantor") and NATIONSBANK, N.A., a national banking association
organized under the laws of the United States, as Agent (the "Agent") for the
benefit of itself and the financial institutions (the "Lenders") as are, or may
from time to time become, parties to the Credit Agreement (as defined below),
and NationsBanc Commercial Corporation, as Disbursing Agent (the "Disbursing
Agent").
STATEMENT OF PURPOSE
Pursuant to a Credit Agreement dated as of even date herewith (together
with all amendments and other modifications, if any, from time to time hereafter
made thereto, the "Credit Agreement"), by and among the Grantor as Borrower
thereunder (the "Borrower"), the Lenders, the Agent and the Disbursing Agent,
the Lenders will extend Loans to and cause Letters of Credit to be issued on
behalf of the Borrower as more specifically described in the Credit Agreement.
In order to induce the Lenders, the Agent and the Disbursing Agent to enter into
the Credit Agreement, and as a condition to the making of the Loans and the
issuance of any Letter of Credit thereunder, the Lenders require that the
Grantor grant a continuing security interest in and to the "Collateral" (as
hereinafter defined) to secure the "Secured Obligations" (as hereinafter
defined).
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. Definitions. Terms defined in the Credit Agreement and not
otherwise defined herein, when used in this Agreement including its preamble and
recitals, shall have the respective meanings provided for in the Credit
Agreement. The following additional terms, when used in this Agreement, shall
have the following meanings:
"Account Debtor" means any Person who is or may become obligated to the
Grantor under, with respect to, or on account of, an Account.
"Accounts" means all "accounts" (as defined in the UCC) now or
hereafter owned or acquired by the Grantor or in which the Grantor now or
hereafter has or acquires any right or interest, and, in any event, shall also
include, without limitation, all accounts receivable, contract rights, book
debts, notes, drafts and other obligations or indebtedness owing to the Grantor
arising
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from the sale, lease or exchange of goods or other property by it or property to
be sold, leased or exchanged, or the performance of services by it, or to be
performed (including, without limitation, any such obligation which might be
characterized as an account, contract right or general intangible under the
Uniform Commercial Code in effect in any jurisdiction) and all of the Grantor's
rights in, to and under all purchase orders for goods, services or other
property, and all of the Grantor's rights to any goods, services or other
property represented by any of the foregoing (including returned or repossessed
goods and unpaid sellers' rights of rescission, replevin, reclamation and rights
to stoppage in transit) and all monies due to or to become due to the Grantor
under all contracts for the sale, lease or exchange of goods or other property
or the performance of services by it (whether or not yet earned by performance
on the part of the Grantor), in each case whether now in existence or hereafter
arising or acquired, including, without limitation, the right to receive the
proceeds of said purchase orders and contracts and all collateral security and
guarantees of any kind given by any Person with respect to any of the foregoing.
"Collateral" means the collective reference to:
(i) Accounts;
(ii) Inventory;
(iii) Documents;
(iv) Equipment;
(v) Fixtures;
(vi) Instruments;
(vii) General Intangibles;
(viii) All books and records (including, without limitation,
customer lists, credit files, computer programs, printouts and other
computer materials and records) of the Grantor pertaining to any of the
Collateral;
(ix) All other goods and personal property of the Grantor,
whether tangible or intangible; and
(x) All products and Proceeds of all or any of the Collateral
described in clauses (i) through (ix) hereof.
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"Collateral Account" means a cash collateral account or any other
lockbox or cash management account established by the Grantor with the Agent, in
the name and under the exclusive dominion and control of the Agent, pursuant to
Section 6(b).
"Copyright License" means any written agreement now or hereafter in
existence granting to the Grantor any right to use any Copyright.
"Copyrights" means, collectively, all of the following now owned or
hereafter created or acquired by the Grantor: (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 or with respect to 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.
"Documents" means all "documents" (as defined in the UCC) or other
receipts covering, evidencing or representing goods or services, now or
hereafter owned or acquired by the Grantor or in which the Grantor now or
hereafter has or acquires any right or interest.
"Equipment" means all "equipment" (as defined in the UCC) of the
Grantor, wherever located, all other machinery, equipment and goods (other than
Inventory) of the Grantor used or bought for use primarily in the business of
the Grantor, including all accessions, additions, attachments, improvements,
substitutions and replacements thereto and therefor, in all such cases whether
now owned or hereafter acquired by the Grantor or in which the Grantor now has
or hereafter acquires any right or interest; provided that, the term "equipment"
shall not include the property set forth on Schedule 1 hereto.
"Financing Statements" means the Uniform Commercial Code Form UCC-1
Financing Statements executed by the Grantor with respect to the Collateral and
to be filed in the jurisdictions set forth in the Perfection Certificate.
"Fixtures" means all "fixtures" (as defined in the UCC) of the Grantor,
whether now owned or hereafter acquired, or in which the Grantor now has or
hereafter acquires any right or interest; provided that the term "fixtures"
shall not include the property set forth on Schedule 1 hereto; provided that,
the term "fixtures" shall not include the property set forth on Schedule 1
hereto.
"General Intangibles" means all "general intangibles" (as defined in
the UCC) now or hereafter owned or acquired by the Grantor or in which the
Grantor now or hereafter has or acquires any right or interest, and, in any
event, shall mean and include, without limitation, all rights to
indemnification, and all rights, title and interest which the Grantor may now or
hereafter have in or under all contracts (other than contracts described in the
definition of Accounts),
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agreements, permits, licenses (which contracts, agreements, permits and licenses
may be pledged pursuant to the terms thereof) causes of action, franchises, tax
refund claims, customer lists, Intellectual Property, license royalties,
goodwill, trade secrets, data bases, business records, Factoring Credit Balances
and all other amounts due from any Factor and all other intangible property of
every kind and nature.
"Instruments" means all "instruments", "chattel paper" or "letters of
credit" (each as defined in the UCC), including, without limitation,
instruments, chattel paper and letters of credit evidencing, representing,
arising from or existing in respect of, relating to, securing or otherwise
supporting the payment of, any of the Accounts, including (but not limited to)
promissory notes, drafts, bills of exchange and trade acceptances, now or
hereafter owned or acquired by the Grantor or in which the Grantor now or
hereafter has or acquires any right or interest.
"Intellectual Property" means, collectively, (a) all systems software
and applications software, including, but not limited to, screen displays and
formats, program structures, sequence and organization, all documentation for
such software, including, but not limited to, user manuals, flowcharts,
programmer's notes, functional specifications, and operations manuals, all
formulas, processes, ideas and know-how embodied in any of the foregoing, and
all program materials, flowcharts, notes and outlines created in connection with
any of the foregoing, whether or not patentable or copyrightable, (b) concepts,
discoveries, improvements and ideas, (c) any useful information relating to the
items described in clause (a) or (b), including know-how, technology,
engineering drawings, reports, design information, trade secrets, practices,
laboratory notebooks, specifications, test procedures, maintenance manuals,
research, development, manufacturing, marketing, merchandising, selling,
purchasing and accounting, (d) Patents, Patent rights and Patent applications,
Copyrights and Copyright applications, Trademarks, Trademark rights, trade
names, trade name rights, service marks, service mark rights, applications for
registration of Trademarks, trade names and service marks, and Trademark, trade
name and service mark registrations and Patent Licenses, Trademark Licenses and
Copyright Licenses, and (e) other licenses to use any of the items described in
the foregoing clauses (a), (b), (c) and (d) or any other similar items of the
Grantor necessary for the conduct of its business.
"Inventory" means all "inventory" (as defined in the UCC) now or
hereafter owned or acquired by the Grantor or in which the Grantor now or
hereafter has or acquires any right or interest, wherever located and, in any
event, shall mean and include, without limitation, all raw materials, inventory
and other materials and supplies, work-in-process, finished goods, all
accessions thereto, documents therefor and any products made or processed
therefrom and all substances, if any, commingled therewith or added thereto.
"Patent License" means any written agreement now or hereafter in
existence granting to the Grantor any right to use any invention on which a
Patent is in existence.
"Patents" means, collectively, all of the following now owned or
hereafter created or acquired by the Grantor: (a) all patents and patent
applications including all patentable inventions;
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(b) all reissues, divisions, continuations, renewals, extensions and
continuations-in-part of any of the foregoing; (c) all income, royalties,
damages or payments now or hereafter due and/or payable under any of the
foregoing or with respect to 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.
"Perfection Certificate" means a certificate dated as of even date
herewith, setting forth the corporate names, chief executive office or principal
place of business in each state and other current locations of Collateral of the
Grantor and such other information as the Agent deems pertinent to the
perfection of security interests, completed and supplemented with the schedules
and attachments contemplated thereby to the satisfaction of the Agent, and duly
certified by the chief executive or chief financial officer of the Grantor so
authorized to act.
"Permitted Liens" means all Liens permitted pursuant to Section 10.3 of
the Credit Agree ment.
"Proceeds" means all proceeds of, and all other profits, rentals or
receipts, in whatever form, arising from the collection, sale, lease, exchange,
assignment, licensing or other disposition of, or realization upon, Collateral,
including, without limitation, all claims of the Grantor against third parties
for loss of, damage to or destruction of, or for proceeds payable under, or
unearned premiums with respect to, policies of insurance in respect of, any
Collateral, and any condemnation or requisition payments with respect to any
Collateral and the following types of property acquired with cash proceeds:
Accounts, Inventory, Documents, Fixtures, Instruments, General Intangibles and
Equipment.
"Secured Obligations" means the Obligations as defined in the Credit
Agreement and any renewals or extensions of any of the Obligations.
"Security Interests" means the security interests granted pursuant to
Section 2, as well as all other security interests created or assigned as
additional security for the Secured Obligations pursuant to the provisions of
this Agreement.
"Trademark License" means any written agreement now or hereafter in
existence granting to the Grantor any right to use any Trademark.
"Trademarks" means, collectively, all of the following now owned or
hereafter created or acquired by the Grantor: (a) all Trademarks, trade names,
corporate names, company names, business names, fictitious business names, trade
styles, service marks, logos, other business identifiers, prints and labels on
which any of the foregoing have appeared or appear, all registrations and
recordings thereof, and all applications in connection therewith, including
registrations, recordings and applications in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
state thereof or any other country or any
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political subdivision of any thereof; (b) all reissues, extensions and 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 or with respect to 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.
"UCC" means the Uniform Commercial Code as in effect on the date hereof
in the State of North Carolina; provided that if by reason of mandatory
provisions of law, the perfection or the effect of perfection or non-perfection
of the Security Interests in any Collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than North Carolina, "UCC"
means the Uniform Commercial Code as in effect in such other jurisdiction for
purposes of the provisions hereof relating to such perfection or effect of
perfection or non-perfection.
SECTION 2. The Security Interests.
(a) In order to secure the payment and performance of all of the
Secured Obligations, the Grantor hereby grants to the Agent, for the ratable
benefit of itself, the Lenders and the Disbursing Agent, a continuing security
interest in and to all of the Grantor's estate, right, title and interest in and
to all Collateral whether now or hereafter owned or acquired by the Grantor or
in which the Grantor now has or hereafter has or acquires any rights, and
wherever located.
(b) The Security Interests are granted as security only and shall not
subject the Agent, the Disbursing Agent or any Lender to, or transfer to the
Agent, the Disbursing Agent or any Lender, or in any way affect or modify, any
obligation or liability of the Grantor with respect to any of the Collateral or
any transaction in connection therewith.
SECTION 3. Representations and Warranties. The Grantor
represents and warrants as follows:
(a) The Grantor has the corporate power and authority and the legal
right to execute and deliver, to perform its obligations under, and to grant the
Security Interests in the Collateral pursuant to, this Agreement and has taken
all necessary corporate action to authorize its execution, delivery and
performance of, and grant of the Security Interests in the Collateral pursuant
to, this Agreement.
(b) This Agreement constitutes a legal, valid and binding obligation of
the Grantor enforceable in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors' rights generally.
(c) The execution, delivery and performance of this Agreement will not
violate any provision of any Applicable Law or contractual obligation of the
Grantor and will not result in
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the creation or imposition of any Lien on any of the properties or revenues of
the Grantor pursuant to any Applicable Law or contractual obligation of the
Grantor, except as contemplated hereby.
(d) No consent or authorization of, filing with, or other act by or in
respect of, any arbitrator or Governmental Authority and no consent of any other
Person (including, without limitation, any stockholder or creditor of the
Grantor), is required in connection with the execution, delivery, performance,
validity or enforceability of this Agreement except (i) those which have been
obtained, (ii) UCC filings, (iii) required notices under the Federal Assignment
of Claims Act or any corresponding state law and (iv) filings with the United
States Patent and Trademark Office and the United States Copyright Office.
(e) Except as set forth on Schedule 6.1(v) of the Credit Agreement, no
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of the Grantor after due
inquiry, threatened by or against the Grantor or against any of its properties
or revenues with respect to this Agreement or any of the transactions contem
plated hereby.
(f) The Grantor has good and marketable title to all of its respective
Collateral, free and clear of any Liens other than the Permitted Liens.
(g) The Grantor has not performed or failed to perform any acts that
would prevent or hinder the Agent from enforcing any of the terms of this
Agreement. Other than financing statements or other similar or equivalent
documents or instruments with respect to Permitted Liens, those evidencing
leases permitted under the Credit Agreement, Debt no longer outstanding or that
are filed in counties where the Grantor no longer has a facility, no financing
statement, mortgage, security agreement or similar or equivalent document or
instrument covering all or any part of the Collateral of the Grantor is on file
or of record in any jurisdiction. No Collateral of the Grantor is in the
possession of any Person (other than the Grantor) asserting any claim thereto or
security interest therein, except that the Agent or its designee may have
possession of the Collateral as contemplated hereby.
(h) All of the information set forth in the Perfection Certificate with
respect to the Grantor is true and correct in all material respects as of the
date hereof.
(i) The Grantor has, contemporaneously herewith, delivered to the Agent
possession of all originals of all negotiable Instruments, documents and chattel
paper constituting Collateral currently owned or held by the Grantor, if any
(duly endorsed in blank, if requested by the Agent).
(j) With respect to any Intellectual Property of the Grantor the loss,
impairment or infringement of which might have a Material Adverse Effect:
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(i) such Intellectual Property is subsisting and has not been
adjudged invalid or unenforceable, in whole or in part;
(ii) such Intellectual Property is valid and enforceable;
(iii) the Grantor has made all necessary filings and
recordations to protect its interest in such Intellectual Property,
including, without limitation, recordations of all of its interests in
the Patents and Trademarks included in such Intellectual Property in
the United States Patent and Trademark Office and its claims to the
Copyrights included in such Intellectual Property in the United States
Copyright Office;
(iv) the Grantor is the exclusive owner of the entire and
unencumbered right, title and interest in and to such Intellectual
Property and no claim has been made that the use of such Intellectual
Property does or may violate the asserted rights of any third party;
and
(v) the Grantor has performed and will continue to perform all
acts and has paid and will continue to pay all required fees and taxes
to maintain each and every such item of Intellectual Property in full
force and effect.
(k) The Financing Statements executed by the Grantor are in appropriate
form and when filed in the offices specified in the Perfection Certificate, the
Security Interests will constitute valid and perfected security interests in the
Collateral of the Grantor, prior to all other Liens and rights of others therein
except for the Permitted Liens (to the extent that a security interest therein
may be perfected by filing pursuant to the UCC) and all filings and other
actions necessary or desirable to perfect and protect such Security Interests
have been duly taken.
(l) The Inventory, Fixtures and Equipment of the Grantor are insured in
accordance with the requirements hereof and of the Credit Agreement.
SECTION 4. Further Assurances; Covenants.
(a) General.
(i) The Grantor agrees not to change the location of its chief
executive office or principal place of business in any state unless it
shall have given the Agent thirty (30) days prior written notice
thereof, executed and delivered to the Agent all financing statements
and financing statement amendments which the Agent may request in
connection therewith and, if requested by the Agent, delivered an
opinion of counsel with respect thereto in accordance with Section
4(a)(vii) hereof. The Grantor agrees not to change the locations where
it keeps or holds any Collateral or any records relating thereto from
the applicable location described in the Perfection Certificate unless
the Grantor shall have given the Agent thirty (30) days prior written
notice of such change of location,
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executed and delivered to the Agent all financing statements and
financing statement amendments which the Agent may request in
connection therewith and, if requested by the Agent, delivered an
opinion of counsel with respect thereto in accordance with Section
4(a)(vii) hereof; provided, that the Grantor may keep Inventory at, or
in transit to, any location described in the Perfection Certificate.
The Grantor agrees not to, in any event, change the location of any
Collateral if such change would cause the Security Interests in such
Collateral to lapse or cease to be perfected.
(ii) The Grantor agrees not to change its name, identity or
corporate structure in any manner unless it shall have given the Agent
thirty (30) days prior written notice thereof, executed and delivered
to the Agent all financing statements and financing statement
amendments which the Agent may request in connection therewith, and, if
requested by Agent, delivered an opinion of counsel with respect
thereto in accordance with Section 4 (a)(vii) hereof.
(iii) The Grantor will, from time to time, at its expense,
execute, deliver, file and record any statement, assignment,
instrument, document, agreement or other paper and take any other
action (including without limitation any filings of financing or
continuation statements under the UCC and any filings with the United
States Patent and Trademark Office and United States Copyright Office)
that from time to time may be necessary, or that the Agent may
reasonably request, in order to create, preserve, upgrade in rank (to
the extent required hereby), perfect, confirm or validate the Security
Interests or to enable the Agent and the Lenders to obtain the full
benefits of this Agreement, or to enable the Agent to exercise and
enforce any of its rights, powers and remedies hereunder with respect
to any of the Collateral. Prior to the irrevocable payment in full of
the Secured Obligations, the Grantor hereby authorizes the Agent, upon
the failure of the Grantor to so do within three Business Days after
receipt of notice from the Agent, to execute and file financing
statements, financing statement amendments or continuation statements
without the Grantor's signature appearing thereon. The Grantor agrees
that a carbon, photographic, photostatic or other reproduction of this
Agreement or of a financing statement is sufficient as a financing
statement. The Grantor shall pay the costs of, or incidental to, any
recording or filing of the Financing Statements and any other financing
statements, financing statement amendments or continuation statements
concerning the Collateral.
(iv) If any Collateral exceeding in value $50,000 in the
aggregate is at any time in the possession or control of any
warehouseman, bailee (other than a carrier transporting Inventory to a
purchaser in the ordinary course of business), or the Grantor's agents
or processors, the Grantor shall notify in writing such warehouseman,
bailee, agent or processor of the Security Interests created hereby,
shall use reasonable efforts to obtain such warehouseman's, bailee's,
agent's or processor's agreement in writing to hold all such Collateral
for the Agent's account subject to the Agent's instructions, and shall
cause such warehouseman, bailee, agent or processor to issue and
deliver to the Agent
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warehouse receipts, bills of lading or any similar documents relating
to such Collateral in the Agent's name and in form and substance
reasonably acceptable to the Agent.
(v) The Grantor will cause the Agent, for the ratable benefit
of itself and the Lenders, to be named as loss payee on each insurance
policy covering risks relating to any of its Inventory, Fixtures and
Equipment, as reasonably requested by the Agent. The Grantor will
deliver to the Agent, upon request of the Agent, the insurance policies
for such insurance. Each such insurance policy shall include effective
waivers by the insurer of subrogation, provide that all insurance
proceeds shall be adjusted with and payable to the Agent and provide
that no cancellation or termination thereof shall be effective until at
least thirty (30) days have elapsed after receipt by the Agent of
written notice thereof. The Grantor shall arrange for appropriate
certifications that the requirements of this Section 4(a)(v) have been
satisfied, to be made to the Agent and each insured party, as soon as
practicable, by each insurer or its authorized representative with
respect thereto.
(vi) The Grantor will, promptly upon request, provide to the
Agent all information and evidence the Agent may reasonably request
concerning the Collateral, and in particular the Accounts, to enable
the Agent to enforce the provisions of this Agreement.
(vii) If requested by the Agent or the Required Lenders, prior
to each date on which the Grantor proposes to take any action
contemplated by Section 4(a)(i) or Section 4 (a)(ii) hereof, the
Grantor shall, at its cost and expense, cause to be delivered to the
Agent and the Lenders an opinion of counsel, in form and content
reasonably satisfactory to the Agent and the Required Lenders.
(viii) From time to time upon request by the Agent, the
Grantor shall, at its cost and expense, cause to be delivered to the
Agent and the Lenders an opinion or opinions of counsel, satisfactory
to the Agent, as to the enforceability of the Loan Documents and the
Lien of the Agent and Lenders on the Collateral and other property of
the Grantor and such other matters relating to the transactions
contemplated hereby as the Agent or the Required Lenders may reasonably
request.
(ix) The Grantor will comply in all material respects with all
Applicable Laws applicable to the Collateral or any part thereof or to
the operation of the Grantor's business.
(x) The Grantor will pay promptly when due all taxes,
assessments and governmental charges or levies imposed upon the
Collateral or in respect of its income or profits therefrom, as well as
all claims of any kind (including, without limitation, claims for
labor, materials and supplies) against or with respect to the
Collateral, except that no such charge need be paid if (A) the validity
thereof is being contested in good faith by
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appropriate proceedings, and (B) such charge is adequately reserved
against on the Grantor's books in accordance with GAAP.
(xi) No Grantor shall
(A) sell, assign (by operation of law or otherwise)
or otherwise dispose of any of the Collateral, except as
permitted by the Credit Agreement; or
(B) create or suffer to exist any Lien or other
charge or encumbrance upon or with respect to any of the
Collateral to secure indebtedness of any Person or entity,
except as permitted by the Credit Agreement.
(b) Accounts, Etc.
(i) The Grantor shall use all reasonable efforts to cause to
be collected from its Account Debtors, as and when due, any and all
amounts owing under or on account of each Account not sold and
transferred to a Factor (including, without limitation, Accounts which
are delinquent, such Accounts to be collected in accordance with lawful
collection procedures) and to apply forthwith upon receipt thereof all
such amounts as are so collected to the outstanding balance of such
Account. The reasonable costs and expenses (including, without
limitation, attorney's fees), of collection of Accounts incurred by the
Grantor or the Agent shall be borne by the Grantor.
(ii) Upon the occurrence and during the continuance of any
Event of Default, upon request of the Agent or the Required Lenders,
the Grantor will promptly notify (and the Grantor hereby authorizes the
Agent so to notify) each Account Debtor in respect of any Account not
sold and transferred to a Factor that such Account has been assigned to
the Agent hereunder and that any payments due or to become due in
respect of such Account are to be made directly to the Agent or its
designee.
(iii) The Grantor will perform and comply in all material
respects with all of its obligations in respect of Accounts and General
Intangibles and the exercise by the Agent of any of its rights
hereunder shall not release the Grantor from any of its duties or
obliga tions.
(iv) No Grantor will (A) amend, modify, terminate or waive any
material provi sion of any agreement giving rise to an Account in any
manner which could reasonably be expected to materially adversely
affect the value of such Account as Collateral or (B) fail to exercise
promptly and diligently each and every material right which it may have
under each agreement giving rise to an Account (other than any right of
termination).
(c) Inventory, Etc. The Grantor hereby represents, warrants, covenants
and agrees as follows: (i) all Inventory is, and at shall be at all times,
located at places of business listed in
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the Perfection Certificate or as to which the Grantor has complied with the
provisions of Section 4(a)(i) hereof, except Inventory in transit from one such
location to another such location; (ii) no Inventory is, nor shall at any time
or times be, subject to any Lien whatsoever, except for Permitted Liens; and
(iii) no Inventory in aggregate value exceeding $50,000 at any time is, nor
shall at any time or times be, kept, stored or maintained with a bailee,
warehouseman, carrier or similar party (other than a carrier delivering
Inventory to a purchaser in the ordinary course of the Grantor's business)
unless the Required Lenders have given their prior written consent and Grantor
has complied with the provisions of Section 4(a)(iv) hereof.
(d) Equipment, Etc. The Grantor will maintain each item of Equipment in
the same condition, repair and working order as when acquired, ordinary wear and
tear and immaterial impairments of value and damage by the elements excepted,
and in accordance with any manufacturer's manual, and will as quickly as
practicable provide all maintenance, service and repairs necessary for such
purpose and will promptly furnish to the Agent a statement respecting any
material loss or damage to any of the Equipment.
(e) Intellectual Property.
(i) The Grantor shall notify the Agent promptly (A) of its
acquisition after the Closing Date of any Patent, Patent License,
Trademark or Trademark License and (B) if it knows, or has reason to
know of any adverse determination or development (including, without
limitation, the institution of, or any such determination or
development in, any proceeding in the United States Patent and
Trademark Office or any court) regarding the Grantor's ownership of any
Patent or Trademark, its right to register the same, or to keep and
maintain the same. In the event that any Patent, Patent License,
Trademark or Trademark License is infringed, misappropriated or diluted
by a third party, the Grantor shall notify the Agent promptly after it
learns thereof and shall, unless the Grantor and the Agent shall
jointly determine that any such action would be of immaterial economic
value, promptly sue for infringement, misappropriation or dilution and
to recover any and all damages for such infringement, misappropriation
or dilution, and take such other actions as may be appropriate under
the circumstances to protect such Patent, Patent License, Trademark or
Trademark License. In no event shall the Grantor, either itself or
through any agent, employee or licensee, file an application for the
registration of any Patent or Trademark with the United States Patent
and Trademark Office or any similar office or agency in any other
country or any political subdivision thereof, unless simultaneously
therewith it informs the Agent, and, upon issuance of such Patent or
Trademark, executes and delivers any and all agreements, instruments,
documents and papers the Agent may reasonably request to evidence the
Security Interests in such Patent or Trademark and the goodwill and
general intangibles of the Grantor relating thereto or represented
thereby. The Grantor hereby constitutes the Agent its attorney-in-fact
to execute and file all such writings for the foregoing purposes, all
acts of such attorney being hereby ratified and confirmed, and such
power, being coupled with an interest, shall be irrevocable until the
Commitments have terminated and the Secured Obligations are paid in
full.
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(ii) The Grantor shall: (A) preserve and maintain in all
material respects its rights in the Intellectual Property; and (B) upon
and after the occurrence of an Event of Default, use its best efforts
to obtain any consents, waivers or agreements necessary to enable the
Agent to exercise its remedies with respect to the Intellectual
Property. No Grantor shall abandon any right to file a Copyright,
Patent or Trademark application that is material to the business of the
Grantor nor shall the Grantor abandon any such pending Copyright,
Patent or Trademark application, or Copyright, Copyright License,
Patent, Patent License, Trademark or Trademark License without the
prior written consent of Agent.
(iii) The Grantor hereby assigns, transfers and conveys to
Agent, effective upon the occurrence and during the continuance of any
Event of Default, the nonexclusive right and license to use all
Intellectual Property owned or used by the Grantor, together with any
goodwill associated therewith, all to the extent necessary to enable
the Agent to realize on the Collateral (including, without limitation,
completing production of, advertising for sale and selling the
Collateral) and any successor or assign to enjoy the benefits of the
Collateral. This right and license shall inure to the benefit of all
successors, assigns and transferees of Agent and its successors,
assigns and transferees, whether by voluntary conveyance, operation of
law, assignment, transfer, foreclosure, deed in lieu of foreclosure or
otherwise. Such right and license is granted free of charge, without
requirement that any monetary payment whatsoever be made to the Grantor
by Agent.
(f) Indemnification. The Grantor agrees to pay, and to save the Agent
and the Lenders harmless from, any and all liabilities, costs and expenses
(including, without limitation, reasonable legal fees and expenses) (i) with
respect to, or resulting from, any and all excise, sales or other taxes which
may be payable or determined to be payable with respect to any of the
Collateral, (ii) with respect to, or resulting from, complying with any
Applicable Law applicable to any of the Collateral or (iii) in connection with
any of the transactions contemplated by this Agreement (except to the extent any
such liabilities, costs and expenses result from the gross negligence or willful
misconduct of the Agent or Lenders). In any suit, proceeding or action brought
by the Agent under any Account for any sum owing thereunder, or to enforce any
provisions of any Account, the Grantor will save, indemnify and keep the Agent
and the Lenders harmless from and against all expense, loss or damage suffered
by reason of any defense, setoff, counterclaim, recoupment or reduction or
liability whatsoever of the Account Debtor or any other obligor thereunder,
arising out of a breach by the Grantor of any obligation thereunder or arising
out of any other agreement, indebtedness or liability at any time owing to or in
favor of such Account Debtor or obligor or its successors from the Grantor
(except to the extent any such expense, loss or damage results from the gross
negligence or willful misconduct of the Agent or Lenders). The obligations of
the Grantor under this Section 4(f) shall survive the termination of the other
provisions of this Agreement.
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SECTION 5. Reporting and Recordkeeping. The Grantor respectively
covenants and agrees with the Agent and the Lenders that from and after the date
of this Agreement and until the Commitments have terminated and all Secured
Obligations have been fully satisfied:
(a) Maintenance of Records Generally. The Grantor will keep and
maintain at its own cost and expense complete and accurate records of the
Collateral, including, without limitation, a record of all payments received and
all credits granted with respect to the Collateral and all other dealings with
the Collateral. All chattel paper given to the Grantor with respect to any
Accounts will be marked with the following legend: "This writing and the
obligations evidenced or secured hereby are subject to the security interest of
NationsBank, N.A., as Agent". For the Agent's and the Lenders' further security,
the Grantor agrees that upon the occurrence and during the continuation of any
Event of Default, the Grantor shall deliver and turn over any such books and
records directly to the Agent or its designee. The Grantor shall permit any
representative of the Agent to inspect such books and records in accordance with
Section 7.11 of the Credit Agreement and will provide photocopies thereof to the
Agent upon its reasonable request.
(b) Further Identification of Collateral. The Grantor will, if so
requested by the Agent, furnish to the Agent statements and schedules further
identifying and describing the Collateral and such other reports in connection
with the Collateral as the Agent may reasonably request, all in reasonable
detail.
(c) Notices. In addition to the notices required by Section 5(b)
hereof, the Grantor will advise the Agent promptly, in reasonable detail, (i) of
any material Lien or claim made or asserted against any of the Collateral, (ii)
of any material adverse change in the composition of the Collateral, and (iii)
of the occurrence of any other event which could have a material adverse effect
on the Collateral or on the validity, perfection or priority of the Security
Interests.
SECTION 6. Proceeds of Accounts and Collateral Account.
(a) Subject to Section 6(b) hereof, the proceeds of all Accounts shall
be remitted to a lockbox maintained by the Disbursing Agent (or directly to the
account of the Disbursing Agent hereinafter referred to) and deposited into an
account of the Disbursing Agent in the name and exclusive control of the
Disbursing Agent.
(b) Upon the written request of the Agent, the Grantor shall establish
with the Agent a Collateral Account in the name and under the exclusive dominion
and control of the Agent (which Collateral Account may be a blocked account).
There shall be deposited from time to time into such account the cash proceeds
of the Collateral required to be delivered to the Agent pursuant to Section 6(c)
or any other provision of this Agreement. Any income received by the Agent with
respect to the balance from time to time standing to the credit of the
Collateral Account, including any interest or capital gains on investments of
amounts on deposit in the Collateral Account, shall remain, or be deposited, in
the Collateral Account, shall vest in the Agent, shall constitute part of the
Collateral hereunder and shall not constitute payment of the
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Secured Obligations until applied thereto as hereinafter provided. The Agent
shall give written notice of any request to establish a Collateral Account to
the Disbursing Agent.
(c) Upon the occurrence and during the continuance of an Event of
Default, if requested by the Agent, the Grantor shall instruct all Account
Debtors and other Persons obligated in respect of all Accounts to make all
payments in respect of the Accounts either (i) directly to the Agent (by
instructing that such payments be remitted to a post office box which shall be
in the name and under the exclusive dominion and control of the Agent) or (ii)
to one or more other banks in any state in the United States (by instructing
that such payments be remitted to a post office box which shall be in the name
and under the exclusive dominion and control of such bank) under arrangements,
in form and substance satisfactory to the Agent, pursuant to which the Grantor
shall have irrevocably instructed such other bank (and such other bank shall
have agreed) to remit all proceeds of such payments directly to the Agent for
deposit into the Collateral Account or as the Agent may otherwise instruct such
bank, and thereafter if the proceeds of any Collateral shall be received by the
Grantor, the Grantor will promptly deposit such proceeds into the Collateral
Account and until so deposited, all such proceeds shall be held in trust by the
Grantor for and as the property of the Agent, for the benefit of itself and the
Lenders and shall not be commingled with any other funds or property of the
Grantor. At any time after the occur rence and during the continuance of an
Event of Default, the Agent may itself so instruct the Grantor's Account Debtors
and the Grantor hereby constitutes and appoints the Agent (and the president,
any vice president or any assistant vice president of the Agent from time to
time) as its attorney-in-fact with full power and authority to so instruct the
Grantor's Account Debtors. All such payments made to the Agent shall be
deposited in the Collateral Account.
(d) Upon the occurrence of any Event of Default, the Agent is
authorized at any time and from time to time, and during the continuance
thereof, without notice to the Grantor, to set off, appropriate and apply any
and all amounts on deposit in the Collateral Account, and the proceeds thereof,
against all Secured Obligations.
SECTION 7. General Authority.
(a) The Grantor hereby irrevocably appoints the Agent its true and
lawful attorney, with full power of substitution, in the name of the Grantor,
the Agent, the Lenders or otherwise, for the sole use and benefit of the Agent
and the Lenders, but at the Grantor's expense, to exercise, at any time from
time to time all or any of the following powers:
(i) to file the Financing Statements and any financing
statements, financing statement amendments and continuation statements
referred to in Sections 4(a)(i), 4(a)(ii), and 4(a)(iii) hereof,
(ii) to demand, sue for, collect, receive and give acquittance
for any and all monies due or to become due with respect to any
Collateral or by virtue thereof,
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(iii) to settle, compromise, compound, prosecute or defend any
action or proceeding with respect to any Collateral,
(iv) to sell, transfer, assign or otherwise deal in or with
the Collateral and the Proceeds thereof, as fully and effectually as if
the Agent were the absolute owner thereof, and
(v) to extend the time of payment and to make any allowance
and other adjustments with reference to the Collateral;
provided that the Agent shall not take any of the actions described in this
Section 7 except those described in clause (i) above unless an Event of Default
shall have occurred and be continuing and the Agent shall give the Grantor not
less than ten (10) days' prior written notice of the time and place of any sale
or other intended disposition of any of the Collateral, except any Collateral
which is perishable or threatens to decline speedily in value or is of a type
customarily sold on a recognized market. The Grantor agrees that any such notice
constitutes "reasonable notification" within the meaning of Section 9-504(3) of
the UCC (to the extent such Section is applicable).
(b) The Grantor hereby ratifies all that said attorney shall lawfully
do or cause to be done by virtue hereof. This power of attorney is a power
coupled with an interest and shall be irrevocable.
(c) The Grantor also authorizes the Agent at any time and from time to
time, to execute, in connection with the sale provided for in Section 8 hereof,
any endorsements, assign ments or other instruments of conveyance or transfer
with respect to the Collateral.
SECTION 8. Remedies Upon Event of Default.
(a) If any Event of Default has occurred and is continuing, the Agent
may exercise on behalf of itself and the Lenders all rights of a secured party
under the UCC (whether or not in effect in the jurisdiction where such rights
are exercised) and, in addition, the Agent may (i) withdraw all cash, if any, in
the Collateral Account and investments made with amounts on deposit in the
Collateral Account, and apply such monies, investments and other cash, if any,
then held by it as Collateral as specified in Section 10 hereof and (ii) if
there shall be no such monies, investments or cash or if such monies,
investments or cash shall be insufficient to pay all the Secured Obligations in
full, sell the Collateral or any part thereof at public or private sale, for
cash, upon credit or for future delivery, and at such price or prices as the
Agent may deem satisfactory. The Agent or any Lender may be the purchaser of any
or all of the Collateral so sold at any public sale (or, if the Collateral is of
a type customarily sold in a recognized market or is of a type which is the
subject of widely distributed standard price quotations or if otherwise
permitted under applicable law, at any private sale) and thereafter hold the
same, absolutely, free from any right or claim of the Grantor of whatsoever
kind. The Grantor will execute and deliver
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such documents and take such other action as the Agent deems reasonably
necessary or advisable in order that any such sale may be made in compliance
with law. Upon any such sale the Agent shall have the right to deliver, assign
and transfer to the purchaser thereof the Collateral so sold (without warranty).
Each purchaser at any such sale shall hold the Collateral so sold to it
absolutely, free from any claim or right of the Grantor of whatsoever kind,
including any equity or right of redemption of the Grantor. To the extent
permitted by law, the Grantor hereby specifi cally waives all rights of
redemption, stay or appraisal which it has or may have under any law now
existing or hereafter adopted. The notice of such sale shall be given to the
applicable Grantor ten (10) days prior to such sale and (A) in case of a public
sale, state the time and place fixed for such sale, and (B) in the case of a
private sale, state the day after which sale may be consummat ed. Any such
public sale shall be held at such time or times within ordinary business hours
and at such place or places as the Agent may fix in the notice of such sale. At
any such sale the Collateral may be sold in one lot as an entirety or in
separate parcels, as the Agent may determine. The Agent shall not be obligated
to make any such sale pursuant to any such notice. The Agent may, without notice
or publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for the
sale, and such sale may be made at any time or place to which the same may be so
adjourned. In case of any sale of all or any part of the Collateral on credit or
for future delivery, the Collateral so sold may be retained by the Agent until
the selling price is paid by the purchaser thereof, but the Agent shall not
incur any liability in case of the failure of such purchaser to take up and pay
for the Collateral so sold and, in case of any such failure, such Collateral may
again be sold upon like notice. The Agent, instead of exercising the power of
sale herein conferred upon it, may proceed by a suit or suits at law or in
equity to foreclose the Security Interests and sell the Collateral, or any
portion thereof, under a judgment or decree of a court or courts of competent
jurisdiction. The Grantor shall remain liable for any deficiency.
(b) For the purpose of enforcing any and all rights and remedies under
this Agreement, the Agent may if an Event of Default has occurred and is
continuing (i) require each Grantor to, and the Grantor agrees that it will, at
its expense and upon the request of the Agent, forthwith assemble all or any
part of the Collateral as directed by the Agent and make it available at a place
designated by the Agent which is, in the Agent's opinion, reasonably convenient
to the Agent and the Grantor, whether at the premises of the Grantor or
otherwise, (ii) to the extent permitted by applicable law, enter, with or
without process of law and without breach of the peace, any premise where any of
the Collateral is or may be located and, without charge or liability to the
Agent, seize and remove such Collateral from such premises, (iii) have access to
and use the Grantor's books and records relating to the Collateral and (iv)
prior to the disposition of the Collateral, store or transfer such Collateral
without charge in or by means of any storage or transportation facility owned or
leased by the Grantor, process, repair or recondition such Collateral or
otherwise prepare it for disposition in any manner and to the extent the Agent
deems appropriate and, in connection with such preparation and disposition, use
without charge any Trademark, trade name, Copyright, Patent or technical process
used by the Grantor.
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<PAGE>
(c) Without limiting the generality of the foregoing, if any Event of
Default has occurred and is continuing,
(i) the Agent may license, or sublicense, whether general,
special or otherwise, and whether on an exclusive or non-exclusive
basis, any Patents or Trademarks included in the Collateral throughout
the world for such term or terms, on such conditions and in such manner
as the Agent shall in its sole discretion determine;
(ii) the Agent may (without assuming any obligations or
liability thereunder), at any time and from time to time, enforce (and
shall have the exclusive right to enforce) against any licensee or
sublicensee all rights and remedies of the Grantor in, to and under any
Patent Licenses or Trademark Licenses and take or refrain from taking
any action under any thereof, provided, that no such actions shall
result in the failure of such Patent Licenses or Trademark Licenses to
remain in compliance with all Applicable Law, and the Grantor hereby
releases the Agent and each of the Lenders from and against any claims
arising out of, any lawful action so taken or omitted to be taken with
respect thereto except with respect to the gross negligence or willful
misconduct of the Agent or the Lenders; and
(iii) upon request by the Agent, the Grantor will execute and
deliver to the Agent a power of attorney, in form and substance
satisfactory to the Agent, for the imple mentation of any lease,
assignment, license, sublicense, grant or option, sale or other
disposition of a Patent or Trademark. In the event of any such
disposition pursuant to this Section, the Grantor shall supply its
know-how and expertise relating to the manufacture and sale of the
products bearing Trademarks or the products or services made or
rendered in connection with Patents, and its customer lists and other
records relating to such Patents or Trademarks and to the distribution
of said products, to the Agent.
SECTION 9. Limitation on Duty of Agent in Respect of Collateral. Beyond
reasonable care in the custody thereof, the Agent shall have no duty as to any
Collateral in its possession or control or in the possession or control of any
agent or bailee or any income thereon or as to the preservation of rights
against prior parties or any other rights pertaining thereto. The Agent shall be
deemed to have exercised reasonable care in the custody of the Collateral in its
possession if the Collateral is accorded treatment substantially equal to that
which it accords its own property, and the Agent shall not be liable or
responsible for any loss or damage to any of the Collateral, or for any
diminution in the value thereof, by reason of the act or omission of any
warehouseman, carrier, forwarding agency, consignee or other agent or bailee
selected by the Agent in good faith.
SECTION 10. Application of Proceeds. Upon the occurrence and during the
continuance of an Event of Default, the proceeds of any sale of, or other
realization upon, all or any part of the Collateral shall be applied by the
Agent as follows:
first, to payment of the out-of-pocket expenses of such sale
or other realization, including all reasonable out-of-pocket expenses,
liabilities and advances incurred or made
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<PAGE>
by the Agent in connection therewith, and any other unreimbursed
expenses for which the Agent, the Disbursing Agent or any Lender is to
be reimbursed pursuant to Section 13.2 of the Credit Agreement, or
Section 4(f) or 13 hereof or any corresponding provision of any of the
other Loan Documents;
second, to payment of any fees and commissions owing to the
Agent, the Disbursing Agent or any Lender under the Credit Agreement in
accordance with the provisions of the Credit Agreement;
third, to the payment of all accrued and unpaid interest and
principal, if any, due to the Disbursing Agent for advances made to the
Grantor and not reimbursed by the Lenders or the Grantor;
fourth, to ratable payment of accrued but unpaid interest
(including post-petition interest) on the Secured Obligations and any
termination payments due in respect of any Hedging Agreement with any
Lender (pro rata in accordance with all such amounts due);
fifth, to the ratable payment of unpaid principal of the
Secured Obligations;
sixth, to the ratable payment of all other Secured
Obligations, until all Secured Obligations shall have been paid in
full; and
finally, to payment to the applicable Grantor or their
respective successor or assigns, or as a court of competent
jurisdiction may direct, of any surplus then remaining from such
proceeds.
The Agent may make distribution hereunder in cash or in kind or, on a ratable
basis, in any combination thereof.
SECTION 11. Concerning the Agent. The provisions of Article XII of the
Credit Agreement shall inure to the benefit of the Agent in respect of this
Agreement and shall be binding upon the parties to the Credit Agreement in such
respect. In furtherance and not in derogation of the rights, privileges and
immunities of the Agent therein set forth:
(a) The Agent is authorized to take all such action as is
provided to be taken by it as Agent hereunder and all other action
incidental thereto. As to any matters not expressly provided for
herein, the Agent may request instructions from the Lenders and shall
act or refrain from acting in accordance with written instructions from
the Required Lenders (or, when expressly required by this Agreement or
the Credit Agreement, all the Lenders) or, in the absence of such
instructions, in accordance with its discretion.
(b) The Agent shall not be responsible for the existence,
genuineness or value of any of the Collateral or for the validity,
perfection, priority or enforceability of the
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<PAGE>
Security Interests, whether impaired by operation of law or by reason
of any action or omission to act on its part (other than any such
action or inaction constituting gross negligence or willful
misconduct). The Agent shall have no duty to ascertain or inquire as to
the performance or observance of any of the terms of this Agreement by
the Grantor.
SECTION 12. Appointment of Collateral Agents. At any time or times, in
order to comply with any legal requirement in any jurisdiction or in order to
effectuate any provision of the Loan Documents, the Agent may appoint another
bank or trust company or one or more other Persons, either to act as collateral
agent or agents, jointly with the Agent or separately, on behalf of the Agent
and the Lenders with such power and authority as may be necessary for the
effectual operation of the provisions hereof and specified in the instrument of
appointment (which may, in the discretion of the Agent, include provisions for
the protection of such collateral agent similar to the provisions of Section 11
hereof).
SECTION 13. Expenses. In the event that the Grantor fails to comply
with the provisions of the Credit Agreement, this Agreement or any other Loan
Document, such that the value of any Collateral or the validity, perfection,
rank or value of the Security Interests are thereby diminished or potentially
diminished or put at risk, the Agent if requested by the Required Lenders may,
but shall not be required to, effect such compliance on behalf of the Grantor,
and the Grantor shall reimburse the Agent for the reasonable costs thereof on
demand. All insurance expenses and all reasonable expenses of protecting,
storing, warehousing, insuring, handling, maintaining and shipping the
Collateral, any and all excise, stamp, intangibles, transfer, property, sales,
and use taxes imposed by any state, federal, or local authority or any other
Governmental Authority on any of the Collateral, or in respect of the sale or
other disposition thereof, shall be borne and paid by the Grantor; and if the
Grantor fails promptly to pay any portion thereof when due, the Agent or any
Lender may, at its option, but shall not be required to, pay the same and charge
the Grantor's account therefor, and the Grantor agrees to reimburse the Agent or
such Lender therefor on demand. All sums so paid or incurred by the Agent or any
Lender for any of the foregoing and any and all other sums for which the Grantor
may become liable hereunder and all costs and expenses (including reasonable
attorneys' fees, legal expenses and court costs) incurred by the Agent or any
Lender in enforcing or protecting the Security Interests or any of their rights
or remedies thereon shall be payable by the Grantor on demand and shall bear
interest (after as well as before judgment) until paid at the rate then
applicable to Base Rate Loans under the Credit Agreement and shall be additional
Secured Obligations hereunder.
SECTION 14. Notices. All notices, communications and distributions
hereunder shall be given or made in accordance with Section 13.1 of the Credit
Agreement.
SECTION 15. Waivers, Non-Exclusive Remedies. No failure on the part of
the Agent or any Lender to exercise, and no delay in exercising and no course of
dealing with respect to, any right under the Credit Agreement, this Agreement or
any other Loan Document shall operate as a waiver thereof or hereof; nor shall
any single or partial exercise by the Agent or any
- 20 -
<PAGE>
Lender of any right under the Credit Agreement, this Agreement or any other Loan
Document preclude any other or further exercise thereof, and the exercise of any
rights in this Agreement, the Credit Agreement and the other Loan Documents are
cumulative and are not exclusive of any other remedies provided by law. This
Agreement is a Loan Document executed pursuant to the Credit Agreement.
SECTION 16. Successors and Assigns. This Agreement is for the benefit
of the Agent and the Lenders and their successors and assigns (as permitted by
the Credit Agreement), and in the event of an assignment of all or any of the
Secured Obligations, the rights hereunder, to the extent applicable to the
indebtedness so assigned, may be transferred with such indebted ness. This
Agreement shall be binding on the Grantor and its successor and assigns;
provided, that the Grantor may not assign any of its rights or obligations
hereunder without the prior written consent of the Agent and the Lenders.
SECTION 17. Changes in Writing. Neither this Agreement nor any
provision hereof may be changed, waived, discharged or terminated orally, but
only in writing signed by the Grantor and the Agent with the consent of the
Required Lenders (or, when expressly required by this Agreement or the Credit
Agreement, all of the Lenders).
SECTION 18. Powers Coupled with an Interest. All authorizations and
agencies herein contained with respect to the Collateral are irrevocable and
powers coupled with an interest.
SECTION 19. GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NORTH CAROLINA, WITHOUT REFERENCE TO THE CONFLICTS OR CHOICE OF LAW PRINCIPLES
THEREOF.
SECTION 20. Consent to Jurisdiction. The Grantor hereby irrevocably
consents to the personal jurisdiction of the state and federal courts located in
Mecklenburg County, North Carolina, in any action, claim or other proceeding
arising out of or any dispute in connection with this Agreement, any rights or
obligations hereunder, or the performance of such rights and obligations. The
Grantor hereby irrevocably consents to the service of a summons and complaint
and other process in any action, claim or proceeding brought by the Agent or any
Lender in connection with this Agreement, any rights or obligations hereunder,
or the performance of such rights and obligations, on behalf of itself or its
property, in the manner provided in Section 13.1 of the Credit Agreement.
Nothing in this Section 20 shall affect the right of the Agent or any Lender to
serve legal process in any other manner permitted by Applicable Law or affect
the right of the Agent or any Lender to bring any action or proceeding against
the Grantor or its properties in the courts of any other jurisdictions.
SECTION 21. Waiver of Jury Trial. NOTWITHSTANDING ANY OTHER
PROVISION CONTAINED HEREIN, IN THE EVENT ANY JUDICIAL PROCEEDING IS
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<PAGE>
INSTITUTED IN CONNECTION WITH THIS AGREEMENT, TO THE EXTENT PERMITTED BY LAW,
THE AGENT AND EACH LENDER BY THEIR ACCEPTANCE OF THIS AGREEMENT OR THE BENEFITS
HEREOF AND THE GRANTOR HEREBY IRREVOCABLY WAIVES ITS RESPECTIVE RIGHTS TO A JURY
TRIAL WITH RESPECT TO ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF OR
ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS
HEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.
SECTION 22. Severability. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(a) the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Agent and the
Lenders in order to carry out the intentions of the parties hereto as nearly as
may be possible; and (b) the invalidity or unenforceability of any provisions
hereof in any jurisdiction shall not affect the validity or enforceability of
such provision in any other jurisdic tion.
SECTION 23. Headings. The various headings of this Agreement are
inserted for convenience only and shall not affect the meaning or interpretation
of this Agreement or any provisions hereof.
SECTION 24. Counterparts. This Agreement may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
and all of which shall constitute together but one and the same agreement.
SECTION 25. Legal Fees. Any reference herein to fees of counsel shall
mean fees based upon such counsel's normal hourly rates.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed under seal by their duly authorized officers, all as of the day and
year first written above.
TEXFI INDUSTRIES, INC.
By: /s/ William L. Remley
Name: William L. Remley
Title: Chief Executive Officer
[CORPORATE SEAL]
Agent:
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<PAGE>
NATIONSBANK, N.A., as Agent
By: /s/ Joseph R. Netzel
Name: Joseph R. Netzel
Title: Vice President
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<PAGE>
<PAGE>
Exhibit 2(a)(3)
FORM OF DEED OF TRUST AND SECURITY AGREEMENT
STATE OF NORTH CAROLINA
COUNTY OF
DEED OF TRUST AND SECURITY AGREEMENT
Between
Texfi Industries, Inc.
TIM, Inc., Trustee
and
NationsBank, N.A., as Agent
and
NationsBanc Commercial Corporation, as Disbursing Agent
Dated as of March 15, 1996
This instrument was drawn by and mail to:
J. Donnell Lassiter, Esq.
Kennedy Covington Lobdell & Hickman, L.L.P.
NationsBank Corporate Center, Suite 4200
101 North Tryon Street
Charlotte, North Carolina 28202-4006
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE I - REPRESENTATIONS, WARRANTIES, COVENANTS
AND AGREEMENTS OF GRANTOR................................................................ 4
Section 1.01 Payment of Secured Obligations.................................................. 4
Section 1.02 Title of Grantor................................................................ 4
Section 1.03 Maintenance, Repair, Alterations................................................ 4
Section 1.04 Required Insurance.............................................................. 5
Section 1.05 Delivery of Insurance Policies, etc............................................. 5
Section 1.06 Insurance Proceeds.............................................................. 6
Section 1.07 Assignment of Policies Upon Foreclosure......................................... 6
Section 1.08 Indemnification; Subrogation; Waiver of Offset.................................. 7
Section 1.09 Taxes and Impositions........................................................... 7
Section 1.10 Impound for Taxes............................................................... 8
Section 1.11 Utilities....................................................................... 9
Section 1.12 Actions Affecting Mortgaged Estate.............................................. 9
Section 1.13 Actions by Beneficiary As To Mortgaged Estate................................... 9
Section 1.14 Survival of Warranties.......................................................... 10
Section 1.15 Eminent Domain.................................................................. 10
Section 1.16 Additional Encumbrances......................................................... 10
Section 1.17 Inspection, Audits and Information Regarding Collateral......................... 11
Section 1.18 Liens........................................................................... 11
Section 1.19 Beneficiary's Powers............................................................ 11
Section 1.20 Restrictions Affecting Title.................................................... 12
Section 1.21 After-Acquired Property......................................................... 12
Section 1.22 Easements and Restrictions...................................................... 12
Section 1.23 Estoppel Certificate............................................................ 12
ARTICLE II - SECURITY AGREEMENT....................................................................... 13
Section 2.01 Creation of Security Interest................................................... 13
Section 2.02 Representations, Warranties and Covenants of Grantor............................ 14
ARTICLE III - EVENTS OF DEFAULT AND REMEDIES OF BENEFICIARY............................................ 15
Section 3.01 Events of Default............................................................... 15
Section 3.02 Receiver........................................................................ 18
<PAGE>
Section 3.03 Waiver of Rights................................................................ 18
Section 3.04 Retention of Possession......................................................... 19
Section 3.05 Remedies not Exclusive.......................................................... 19
ARTICLE IV - MISCELLANEOUS............................................................................ 19
Section 4.01 Governing Law................................................................... 19
Section 4.02 Waiver of Rights................................................................ 19
Section 4.03 Notices......................................................................... 20
Section 4.04 Captions........................................................................ 20
Section 4.05 Invalidity of Certain Provisions................................................ 20
Section 4.06 Subrogation..................................................................... 20
Section 4.07 Trustee......................................................................... 20
</TABLE>
Exhibits
A - Description of Land
B - Permitted Exceptions
C - Excluded Equipment
<PAGE>
COLLATERAL IS OR INCLUDES FIXTURES
DEED OF TRUST AND SECURITY AGREEMENT
THIS DEED OF TRUST AND SECURITY AGREEMENT (this "Deed of Trust") dated
as of March 15, 1996 by and between TEXFI INDUSTRIES, INC., a Delaware
corporation, whose mailing address is 5400 Glenwood Avenue, Raleigh, North
Carolina 27612 ("Grantor"), TIM, INC., whose address is Interstate Tower,
NC1005171, 121 West Trade Street, Charlotte, North Carolina 28255 ("Trustee"),
and NATIONSBANK, N.A., a national banking association organized under the laws
of the United States, as Agent (the "Beneficiary") for the benefit of itself and
the financial institutions (the "Lenders") as are, or may from time to time,
become parties to the Credit Agreement (as defined below) and NATIONSBANC
COMMERCIAL CORPORATION, as Disbursing Agent (the "Disbursing Agent").
STATEMENT OF PURPOSE
Pursuant to a Credit Agreement dated as of even date herewith (together
with all amendments and other modifications, if any, from time to time hereafter
made thereto, the "Credit Agreement") by and among the Grantor as Borrower
thereunder (the "Borrower"), the Lenders and the Beneficiary as Agent thereunder
and NationsBanc Commercial Corporation as Disbursing Agent thereunder, the
Lenders will extend Loans to and cause Letters of Credit to be issued on behalf
of the Borrower, as more particularly described in the Credit Agreement. To
induce the Lenders, the Agent and the Disbursing Agent to enter into the Credit
Agreement, and as a condition to the making of the Loans and the issuance of
Letters of Credit thereunder, the Lenders require that the Grantor execute and
deliver this Deed of Trust.
FOR GOOD AND VALUABLE CONSIDERATION, including the indebtedness herein
recited, the receipt of which is hereby acknowledged, Grantor hereby irrevocably
grants, bargains, sells, transfers, conveys and assigns to Trustee for the
benefit and security of Beneficiary, under and subject to the terms and
conditions hereinafter set forth, all right, title, interest and estate of
Grantor in and to the real property more particularly described in Exhibit A
attached hereto and by this reference incorporated herein (the "Land");
TOGETHER WITH all of the right, title, interest and estate of Grantor,
either at law or in equity, in and to:
<PAGE>
Any and all buildings, improvements and structures now or hereafter
erected on the Land (the "Improvements") (the Land and the Improvements are
collectively referred to as the "Property");
All rights, privileges, tenements, hereditaments, rights-of-way,
easements, appendages, streets, alleys, passages, waters, watercourses,
covenants, rights and appurtenances of the Property belonging or in any way
appertaining thereto, or which hereafter shall in any way belong, relate or be
appurtenant thereto, whether now owned or hereafter acquired by Grantor, and all
right, title, and interest of Grantor in and to any streets, ways, watercourses,
alleys, easements, covenants and strips or gores of land now existing or
hereafter created for the benefit of Grantor, the Property or any subsequent
owner or tenant of the Property on or over land adjoining the Property or any
portion thereof and all rights to enforce the maintenance thereof;
All minerals, soil, flowers, crops, trees, timber and other emblements
now or hereafter on, under or above the Property;
All water, sanitary and storm sewer systems now or hereafter located
by, over and/or upon the Property or any part and parcel thereof, and which
water system includes all water mains, service laterals, hydrants, valves and
appurtenances, including, without limitation, all sanitary sewer lines,
including mains, laterals, manholes and appurtenances;
All paving for streets, roads, walkways or entranceways now or
hereafter located on the Property or any part or parcel thereof;
All fixtures located upon or within the Property or now or at any time
hereafter attached to or installed in, or used in connection with, any of the
Property, including, but not limited to, any and all partitions, dynamos,
screens, awnings, motors, engines, boilers, furnaces, pipes, plumbing,
escalators, elevators, sprinkler systems, fire prevention and extinguishing
apparatus and equipment, water tanks, heating, ventilating, air conditioning and
air-cooling equipment, heaters, condensers, compressors, ducts, machinery,
walks, fences, shrubbery, driveways, fittings and other fixtures of every kind
and character whatsoever (collectively, the "Fixtures");
Any award or awards heretofore made or hereafter to be made by any
municipal, state or Federal authorities to the present or any subsequent owners
of the Property or the Fixtures, including any award or awards or settlements
hereafter made resulting from condemnation proceedings or the taking of the
Property or the Fixtures, or any part thereof, under the power of eminent
domain;
All proceeds from the conversion, voluntary or involuntary, of any of
the Property or the Fixtures into cash or liquidated claims including, without
limitation, the proceeds of insurance, subject to certain restoration rights of
Grantor as provided in Section 1.06 hereof;
2
<PAGE>
All existing and future leases, subleases, licenses and other
agreements for the use and occupancy of all or any portion of the Property or
the Fixtures, and any and all extensions, renewals and modifications thereof,
whether written or oral and whether for a definite term or month to month,
including without limitation (i) any and all cash or securities deposited
thereunder to secure performance by the lessees of their obligations thereunder,
(ii) the right to receive and collect all rents thereunder and (iii) any and all
guarantees of any lessee's obligations thereunder (collectively, the "Leases");
All earnings, revenues, rents, issues, profits, avails, general
intangibles, choses in action and other income of and from the Property or the
Fixtures including, without limitation, all rents and receipts from the Leases
(collectively, the "Rents and Profits");
All architectural, engineering and similar plans, specifications,
drawings, renderings, profiles, studies, shop drawings, reports, plats, permits,
surveys and similar documents relating to the Property; all sewer taps, permits
and allocations; and all agreements for utilities, bonds, sureties and the like,
relating to the Property or appurtenant facilities erected or to be erected upon
or about the Property;
All warranties and guarantees of contractors or subcontractors or of
suppliers or manufacturers of equipment or other property incorporated into the
Improvements or used with or otherwise constituting part of the Fixtures; and
All equipment (other than the equipment described on Exhibit C hereto)
and other personal property located on, and used or useable in connection with,
the Property, including without limitation any and all air conditioners,
antennae, appliances, apparatus, awnings, basins, bathtubs, beds, boilers,
bookcases, cabinets, carpets, coolers, curtains, dehumidifiers, disposals,
doors, drapes, dryers, ducts, dynamos, elevators, engines, equipment,
escalators, fans, fittings, floor coverings, furnaces, furnishings, furniture,
hardware, heaters, humidifiers, incinerators, lighting, machinery, motors,
ovens, pictures, pipes, plants and containers, plumbing, pumps, radiators,
ranges, recreational facilities, refrigerators, screens, security systems,
shades, shelving, sinks, sprinklers, stokers, stoves, telephone systems,
toilets, ventilators, wall coverings, washers, windows, window coverings, and
wiring, as the same are now and will hereafter be constituted, whether now owned
by Grantor or hereafter acquired, together with all appliances, instruments,
improvements, accessories, equipment, parts and appurtenances appertaining or
attached thereto, or from time to time incorporated therein or installed as part
thereof, and all substitutions, renewals and replacements of and additions,
improvements, accessions and accumulations to any and all thereof which are now
owned or hereafter acquired by Grantor, together with all the rents, issues,
incomes, profits, accounts, proceeds and avails thereof.
All of the above-described right, title, interest, estate, claim and
demand of Grantor together with all cash and noncash proceeds thereof, and all
substitutions, accessions and replacements thereto and therefor, are referred to
herein as the "Mortgaged Estate".
3
<PAGE>
TO HAVE AND TO HOLD the Mortgaged Estate hereby granted or mortgaged
unto the Trustee and the Trustee's successors and assigns, in fee simple
forever.
PROVIDED, HOWEVER, that these presents are upon the condition that, if
the Secured Obligations (as defined below) shall be paid when due, and if
Grantor shall keep, perform and observe all and singular the covenants,
agreements and provisions in this Deed of Trust expressed to be kept, performed
and observed by or on the part of Grantor, then this Deed of Trust and the
estate and rights hereby granted shall cease, determine and be void, but
otherwise shall be and remain in full force and effect.
THIS DEED OF TRUST SHALL SECURE THE FOLLOWING OBLIGATIONS
(collectively, the "Secured Obligations"):
(a) Payment of the Obligations (as defined in the Credit Agreement) and
any renewals or extensions of any of the Obligations;
(b) Payment of all sums advanced by or on behalf of Beneficiary to
protect the Mortgaged Estate, with interest thereon at the rate of interest
provided in Section 4.1(d) of the Credit Agreement (the "Default Rate") from the
date of advance by Beneficiary to the date of payment by Grantor; and
(c) Payment of all other sums from time to time owing to the
Beneficiary, the Lenders or the Disbursing Agent under the Loan Documents (as
defined in the Credit Agreement).
Capitalized terms used herein shall have the meanings set forth in this
Deed of Trust or, if not defined herein, shall have the meaning ascribed to such
term in the Credit Agreement.
ARTICLE I
REPRESENTATIONS, WARRANTIES, COVENANTS
AND AGREEMENTS OF GRANTOR
Grantor hereby represents, warrants, covenants and agrees as follows:
SECTION 1.01 PAYMENT OF SECURED OBLIGATIONS. Grantor shall pay when due
all of the Obligations, and shall pay all other sums secured hereby at the time
and place and in the manner specified in the Loan Documents.
SECTION 1.02 TITLE OF GRANTOR. Grantor has, subject to the Permitted
Exceptions (as set forth on Exhibit B attached hereto and by this reference
incorporated herein (herein the "Permitted Exceptions")), in its own right, good
and indefeasible title in fee simple to the
4
<PAGE>
Mortgaged Estate which is free from all liens and encumbrances, except the
Permitted Exceptions, and has full right to make this conveyance and that it
will warrant and defend the title to such property, except for the Permitted
Exceptions, against the lawful claims of all Persons.
SECTION 1.03 MAINTENANCE, REPAIR, ALTERATIONS. Grantor shall: (i) keep
the Mortgaged Estate in good condition and repair, subject to reasonable wear
and tear and damage due to casualty which is subject to repair as hereinafter
required, (ii) except as permitted by the Credit Agreement or otherwise
permitted in writing by Beneficiary, not remove, demolish or alter any of the
Mortgaged Estate or the Fixtures, other than in the ordinary course of business,
(iii) complete promptly and in good and workmanlike manner any alteration
permitted hereunder and promptly restore in like manner any Improvement which
may be damaged or destroyed thereon or therein subject to the provisions of
Section 1.06 hereof and pay when due all claims for labor performed and
materials furnished therefor, and (iv) comply, and cause the Mortgaged Estate to
comply, with all laws, ordinances, regulations, covenants, conditions and
restrictions now or hereafter affecting the Mortgaged Estate or any part
thereof.
SECTION 1.04 REQUIRED INSURANCE. Grantor shall at all times keep, or
cause to be kept, the Improvements which now are or hereafter become a part of
the Mortgaged Estate insured under an "all risk" extended coverage form of
insurance policy containing both a replacement cost and an agreed amount
endorsement (and against all other hazards as reasonably may be required by
Beneficiary, which may include, without limitation, insurance against loss or
damage by flood and earthquake). All insurance shall be in form, content and
amounts approved by Beneficiary and written by an insurance company or companies
approved by Beneficiary. The policies for such insurance shall have attached
thereto standard mortgagee clauses in favor of and permitting Beneficiary to
collect any and all proceeds payable under all such insurance. All such policies
or certified copies thereof shall be delivered to and held by Beneficiary as
further security for the Secured Obligations, with evidence of renewal coverage
delivered to Beneficiary annually at least 10 days before the expiration date of
any policy. Grantor shall also carry public liability insurance protecting
Trustee and Beneficiary against liability for injuries to persons and property
occurring in, on or adjacent to the Mortgaged Estate, in forms, companies and
amounts satisfactory to Beneficiary with the policy or policies evidencing such
insurance to contain a 30 day notice of cancellation or of change in coverage
clause in favor of Beneficiary. Grantor shall not carry separate insurance,
concurrent in kind or form and contributing in the event of loss, with any
insurance required herein.
SECTION 1.05 DELIVERY OF INSURANCE POLICIES, ETC. All policies of
insurance shall be issued by companies with a financial rating of at least A-X
as rated in the most recent edition of Best's Insurance Reports and in amounts
in each company as may be reasonably satisfactory to Beneficiary. All policies
of insurance shall have attached thereto a lender's loss payable and additional
insured endorsement for the benefit of Beneficiary in form reasonably
satisfactory to Beneficiary, shall contain a standard waiver of subrogation
clause and shall contain such other endorsements, terms and provisions as shall
be reasonably satis-
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factory to Beneficiary. If requested, Grantor shall furnish Beneficiary with a
certified copy of all policies of required insurance. At least ten (10) days
prior to the expiration of each such policy, Grantor shall furnish Beneficiary
with evidence satisfactory to Beneficiary of the reissuance of a policy
continuing insurance in force as required by this Deed of Trust. All such
policies shall contain a provision that such policies will not be canceled,
modified or amended (including any reduction in the scope or limits of
coverage), without thirty (30) days' prior written notice to Beneficiary.
Beneficiary shall not be responsible for the solvency of any company issuing any
policy of insurance pursuant hereto whether or not approved by it, or for the
collection of any amounts due under any such policy, and shall be responsible
and accountable only for such money as may be actually received by it, and then
only in accordance with the terms hereof. Nothing contained herein shall be
construed as making Beneficiary liable in any way for any loss, damage or injury
resulting from the failure to insure the Mortgaged Estate.
SECTION 1.06 INSURANCE PROCEEDS. After the occurrence of any casualty
to the Mortgaged Estate or any part thereof, Grantor shall give prompt written
notice thereof to Beneficiary and each insurer and submit a claim to insurer for
payment of insurance proceeds with a copy of such claim sent by Grantor to
Beneficiary. Such casualty shall not affect the lien of this Deed of Trust or
the obligations of Grantor hereunder, and Beneficiary is authorized at
Beneficiary's option to compromise and settle all loss claims if not adjusted
promptly by Grantor. All proceeds of insurance paid or payable under any
insurance policy (the "Insurance Proceeds") shall be paid to Beneficiary for the
benefit of Grantor and each insurer of all or any portion of the Mortgaged
Estate is hereby authorized and directed to make payment for any such loss
directly to Beneficiary for the benefit of Grantor; provided that so long as no
Event of Default shall have occurred and be continuing, Insurance Proceeds of
$100,000 or less shall be paid to Grantor. Any Insurance Proceeds shall be
applied first to the payment of all costs and expenses incurred by Beneficiary
in obtaining such proceeds. The balance of the proceeds, if any, shall be
applied (a) if Beneficiary determines in its reasonable judgment that (i) the
proceeds together with such other sums as Grantor shall deposit with Beneficiary
to pay the costs of alteration, restoration or rebuilding the Mortgaged Estate
or such portion thereof which may have been altered, damaged or destroyed, are
sufficient to pay such costs in full, (ii) no Event of Default shall have
occurred and be continuing hereunder, (iii) following completion of such
alteration, restoration or rebuilding, the Property will be substantially equal
in value and economic viability to its status prior to such casualty, (iv) such
alteration, restoration or rebuilding can be completed on or prior to the
Revolving Credit Termination Date under the Credit Agreement and (v) Grantor
will have sufficient income pending the completion of such, alteration,
restoration or rebuilding to pay all debt service due Beneficiary with respect
to the Loans, toward altering, restoring or rebuilding the Mortgaged Estate or
such portion thereof which may have been altered, damaged or destroyed, on the
same or similar conditions and requirements as are customarily required for
construction loans made by Beneficiary, or (b) otherwise, to the pro rata
payment of principal and interest due on the Loans based on the principal
balances then outstanding and to the payment of any other obligations due under
the other Loan Documents. Notwith standing the application of Insurance Proceeds
to the payment of a portion of the secured indebtedness, the unpaid portion of
the secured indebtedness shall remain in full force and
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effect, and Grantor shall not be excused in the payment thereof. Nothing
contained in this Deed of Trust shall be deemed to excuse Grantor from repairing
or maintaining the Mortgaged Estate as provided herein and in Section 1.03
hereof. The application or release by Beneficiary of any Insurance Proceeds
shall not cure or waive any Event of Default or notice of default under this
Deed of Trust or invalidate any act done pursuant to such notice.
SECTION 1.07 ASSIGNMENT OF POLICIES UPON FORECLOSURE. In the event of
foreclosure of this Deed of Trust or other transfer of title or assignment of
the Mortgaged Estate in extinguishment, in whole or in part, of the Secured
Obligations, all right, title and interest of Grantor in and to all policies of
insurance including any refundable premiums required by this Deed of Trust shall
inure to the benefit of and pass to the successor in interest of Grantor or the
purchaser or grantee of the Mortgaged Estate.
SECTION 1.08 INDEMNIFICATION; SUBROGATION; WAIVER OF OFFSET.
(a) Grantor shall indemnify, defend and hold Trustee and Beneficiary
harmless from any and all loss, costs, damages, expenses and liability incurred
by Beneficiary or Trustee in connection with this Deed of Trust, including all
attorneys' fees and expenses incurred by Trustee or Beneficiary, except to the
extent any such loss, cost, damage, expense or liability results from the gross
negligence or willful misconduct of the Trustee and/or Beneficiary. If
Beneficiary or Trustee commences an action against Grantor to enforce any of the
terms hereof or for the recovery of any sum secured hereby, Grantor shall pay
all attorneys' fees and expenses incurred by Beneficiary or Trustee in
connection therewith, and the right to such attorney's fees and expenses shall
be deemed to have accrued on the commencement of such action, and shall be
enforceable whether or not such action is prosecuted to judgment. Upon an Event
of Default, Beneficiary may employ an attorney or attorneys to protect its
rights hereunder, and in the event of such employment following an Event of
Default, Grantor shall pay all reasonable attorneys' fees and expenses incurred
by Beneficiary, whether or not an action is actually commenced against Grantor
by reason of an Event of Default.
(b) All sums payable by Grantor hereunder, under the Credit Agreement
and under the other Loan Documents shall be paid without notice, demand,
counterclaim, set-off, deduction or defense and without abatement, suspension,
deferment, diminution or reduction, and the obligations and liabilities of
Grantor hereunder shall in no way be released, discharged or otherwise affected
by reason of: (i) any damage to or destruction of or any condemnation or similar
taking of the Mortgaged Estate or any part thereof, (ii) any restriction or
prevention of or interference with any use of the Mortgaged Estate or any part
thereof unless caused unlawfully by Beneficiary, (iii) any title defect or
encumbrance or any eviction from the Mortgaged Estate or any part thereof by
title paramount or otherwise, (iv) any bankruptcy, insolvency, reorganization,
composition, adjustment, dissolution, liquidation or other like proceeding
relating to Grantor, or any action taken with respect to this Deed of Trust by
any trustee or receiver of Grantor, or by any court, in any such proceeding, or
(v) any other occurrence whatsoever, whether similar or dissimilar to the
foregoing whether or not Grantor shall have notice or knowledge of any of the
foregoing. To the extent permitted
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by law, Grantor waives all rights now or hereafter conferred by statute or
otherwise to any abatement, suspension, deferment, diminution or reduction of
any sum secured hereby.
SECTION 1.09 TAXES AND IMPOSITIONS.
(a) Subject to the provisions of subsection (c) of this Section 1.09
and to the provisions of Section 1.10 hereof, Grantor shall pay or cause to be
paid and shall furnish evidence of payment thereof to Beneficiary, at least ten
(10) days prior to delinquency, all real property taxes and assessments, general
and special, and all other taxes and assessments of any kind or nature
whatsoever, including without limitation nongovernmental levies or assessments
such as maintenance charges, levies or charges resulting from covenants,
conditions and restrictions affecting the Mortgaged Estate, which are assessed
or imposed upon the Mortgaged Estate, or become due and payable, and which
create, may create or appear to create a lien upon the Mortgaged Estate, or any
part thereof (all of which taxes, assessments and other governmental and
nongovernmental charges of like nature are hereinafter referred to as
"Impositions"); provided that if, by law, any such Imposition is payable, or may
at the option of the taxpayer be paid, in installments, Grantor may pay the same
together with any accrued interest on the unpaid balance of such Imposition in
installments as the same become due and before any fine, penalty, interest or
cost may be added thereto for the nonpayment of any such installment and
interest.
(b) If at any time after the date hereof there shall be assessed or
imposed (i) a tax or assessment on the Mortgaged Estate in lieu of or in
addition to the Impositions payable by Grantor pursuant to subsection (a) above,
or (ii) a license fee, tax or assessment imposed on Beneficiary and measured by
or based in whole or in part upon the amount of the outstanding obligations
secured hereby (excluding income, franchise or capital taxes imposed on the
income of Beneficiary), then all such taxes, assessments or fees shall be deemed
to be included within the term Impositions, and Grantor shall pay and discharge
the same as herein provided with respect to the payment of Impositions. At the
option of Beneficiary, all obligations secured hereby together with all accrued
interest thereon, shall become due and payable in the event that Grantor shall
not be permitted to pay such fees, taxes or assessments on behalf of
Beneficiary.
(c) Grantor shall have the right before any delinquency occurs to
contest or object to the amount or validity of any Imposition by appropriate
legal proceedings, but such right shall not be deemed or construed in any way as
relieving, modifying, or extending Grantor's covenant to pay any such Imposition
at the time and in the manner provided in this Section 1.09, unless Grantor has
given prior written notice to Beneficiary of Grantor's intent to so contest or
object to an Imposition, and unless, at Beneficiary's sole option, (i) Grantor
shall demonstrate to Beneficiary's reasonable satisfaction that the legal
proceedings shall conclu sively operate to prevent the sale of the Mortgaged
Estate, or any part thereof, to satisfy such Imposition prior to final
determination of such proceedings, (ii) Grantor shall furnish a good and
sufficient bond or surety as requested by and reasonably satisfactory to
Beneficiary or (iii) Grantor shall have provided a good and sufficient
undertaking as may be required or permitted by law to accomplish a stay of such
proceedings.
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SECTION 1.10 IMPOUND FOR TAXES. Upon demand by Beneficiary after an
Event of Default (as defined in Section 3.01 hereof) has occurred and during the
continuance thereof, Grantor shall pay to Beneficiary, on the first day of each
and every calendar month, until the Secured Obligations are paid in full, an
amount equal to one-twelfth of the annual Impositions reasonably estimated by
Beneficiary necessary to pay the installments of Impositions next due on the
Mortgaged Estate. All such amounts paid under the terms of this Section 1.10
shall be held by Beneficiary in a non-interest bearing account. Grantor shall
cause all bills, statements or other documents relating to Impositions to be
sent or mailed directly to Beneficiary. Upon receipt of such bills, statements
or other documents, and provided Grantor has deposited sufficient funds pursuant
to this Section 1.10, Beneficiary shall pay such amounts as may be due
thereunder out of the funds so deposited. If at any time and for any reason the
funds so deposited are or will be insufficient to pay such amounts as may then
or subsequently be due, Beneficiary shall notify Grantor, and Grantor shall
promptly deposit an amount equal to such deficiency with Beneficiary.
Notwithstanding the foregoing, nothing contained herein shall cause Beneficiary
to be deemed a trustee of such funds or to be obligated to pay any amounts in
excess of the amount of funds so deposited pursuant to this Section 1.10.
Beneficiary may impound or reserve for future payment of Impositions such
portion of such payments as Beneficiary may in its reasonable discretion deem
proper, applying the balance to the principal of or interest on the indebtedness
secured hereby which may then be due and payable. If Grantor fails to deposit
sums sufficient to fully pay such Impositions at least thirty (30) days before
delinquency thereof, Beneficiary may, at Beneficiary's election and with prior
notice to Grantor, but without any obligation so to do, advance any amounts
required to make up the deficiency. All amounts so advanced, if any, shall bear
interest at the Default Rate from the date of such payment to the date of
repayment thereof in full to Beneficiary, shall be secured hereby and shall be
part of the Secured Obligations and shall be repayable to Beneficiary upon
demand.
SECTION 1.11 UTILITIES. Grantor shall pay or cause to be paid when due
all utility charges which are incurred by or on behalf of Grantor for the
benefit of the Mortgaged Estate or which may become a charge or lien against the
Mortgaged Estate for gas, electricity, water or sewer services or solid waste
removal services furnished to the Mortgaged Estate and all other assessments or
charges of a similar nature, whether public or private, affecting the Mortgaged
Estate or any portion thereof, whether or not such taxes, assessments or charges
are liens thereon and shall, upon request of Beneficiary, provide evidence of
the payment thereof in accordance with this Section 1.11.
SECTION 1.12 ACTIONS AFFECTING MORTGAGED ESTATE. Grantor shall appear
in and contest any action or proceeding purporting to affect the security hereof
or the rights or powers of Beneficiary and shall pay all costs and expenses,
including cost of evidence of title and reasonable attorneys' fees, in any such
action or proceeding in which Beneficiary may appear. Grantor shall give written
notice of any claim asserted or legal action filed against Grantor or the
Mortgaged Estate within five (5) Business Days after Grantor's first knowledge
thereof. Nothing in this Section 1.12 shall be deemed to prevent Beneficiary
from appearing in and contesting such actions and Grantor shall reimburse
Beneficiary for any costs and expenses in accordance with Section 1.08 above.
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SECTION 1.13 ACTIONS BY BENEFICIARY AS TO MORTGAGED ESTATE. Upon the
occurrence and during the continuance of an Event of Default, Beneficiary, in
its sole discretion, without obligation so to do and without notice to or demand
upon Grantor and without releasing Grantor from any obligation, may take any
action in respect of the Mortgaged Estate in such manner and to such extent as
Beneficiary may deem necessary to protect the security hereof. In connection
therewith (without limiting its general powers), Beneficiary shall have and is
hereby given the right, but not the obligation to: (a) enter upon and take
possession of the Mortgaged Estate, (b) direct Grantor to terminate any
management agent employed by Grantor with the prior written consent of
Beneficiary and to employ such management agent as Beneficiary may determine in
its sole and absolute discretion, (c) make additions, alterations, repairs and
improvements to the Mortgaged Estate which it may consider to be necessary or
proper to keep the Mortgaged Estate in good condition and repair, subject to
normal wear and tear, (d) appear and participate in any action or proceeding
affecting or which may affect the security hereof or the rights or powers of
Beneficiary, (e) pay, purchase, contest or compromise any encumbrance, claim,
charge, lien or debt which in the reasonable judgment of Beneficiary may affect
or appears to affect the security of this Deed of Trust or be prior or superior
hereto, (f) take or perform all actions or pay all amounts from time to time,
which this Deed of Trust permits or requires Grantor to take or perform, and (g)
in exercising such powers, pay necessary expenses, including employment of
counsel or other necessary or desirable consultants. Grantor shall immediately
upon demand therefor by Beneficiary pay all costs and expenses incurred by
Beneficiary in connection with the exercise by Beneficiary of the foregoing
rights, including without limitation costs of evidence of title, court costs,
appraisals, surveys and reasonable attorneys' fees, and any such costs and
expenses from the date so paid until the date repaid in full, shall bear
interest at the Default Rate, and shall be secured hereby as part of the Secured
Obligations.
SECTION 1.14 SURVIVAL OF WARRANTIES. Grantor shall fully and faithfully
satisfy and perform the obligations of Grantor contained in the Credit
Agreement. All representations, warranties and covenants of Grantor contained
therein shall remain continuing representations, warranties and covenants of
Grantor during any time when any portion of the Secured Obligations remains
outstanding.
SECTION 1.15 EMINENT DOMAIN. Should the Mortgaged Estate, or any part
thereof or interest therein, be taken or damaged by reason of any public
improvement, condemnation or eminent domain proceeding or in any other manner
(collectively, "Condemnation"), or should Grantor receive any notice or other
information regarding such proceeding, Grantor shall give prompt written notice
thereof to Beneficiary. Beneficiary may participate in any such Condemnation
proceedings, and Grantor shall from time to time deliver to Beneficiary all
instruments requested by Beneficiary to permit such participation. Grantor
shall, at its expense, diligently prosecute in a reasonable manner any such
proceedings and shall consult with Beneficiary and its attorneys and experts,
and cooperate in a reasonable manner with them in the carrying on or defense of
any such proceedings. All proceeds of Condemnation awards or proceeds of sale in
lieu of Condemnation with respect to the Mortgaged Estate and all judgments,
decrees and awards for injury or damage to the Mortgaged Estate shall be paid to
Beneficiary for the benefit of Grantor and shall be applied in the manner in
which
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Insurance Proceeds are to be applied pursuant to Section 1.06 hereof. Grantor
hereby assigns and transfers all such proceeds, judgments, decrees and awards to
the Beneficiary and agrees to execute such further assignments of all such
proceeds, judgments, decrees and awards, as Beneficiary may request. Beneficiary
is hereby authorized, in the name of Grantor, to execute and deliver valid
acquittances for, and to appeal from, any such judgment, decree or award.
Beneficiary shall not be, in any event or circumstance, liable or responsible
for failure to collect or exercise diligence in the collection of any proceeds,
judgments, decrees or awards.
SECTION 1.16 ADDITIONAL ENCUMBRANCES. Grantor shall not further
encumber the Mortgaged Estate or any portion thereof.
SECTION 1.17 INSPECTION, AUDITS AND INFORMATION REGARDING
COLLATERAL.
(a) Grantor shall permit Beneficiary, its representatives and agents,
to enter upon the Mortgaged Estate at all reasonable times and during normal
business hours and to inspect the Mortgaged Estate, and shall cooperate with
Beneficiary, its representatives and agents, during such inspections, including
making available to Beneficiary working copies of all plans and specifications
together with all related supplementary materials.
(b) Grantor shall also permit Beneficiary, its representatives and
agents, to examine, copy and make extracts of the books, records, accounting
data and other documents of Grantor that relate in any way to the Mortgaged
Estate, including, without limitation, all permits, licenses, consents and
approvals of all governmental authorities having jurisdiction over Grantor and
the Mortgaged Estate. All such books, records and documents shall be made
available to Beneficiary promptly upon written demand therefor and, at the
request of Beneficiary, Grantor shall furnish Beneficiary with convenient
facilities for the foregoing purposes.
SECTION 1.18 LIENS. Grantor shall, within thirty (30) days after
Grantor receives notice thereof, pay and discharge, at Grantor's cost and
expense, all liens, encumbrances and charges upon the Mortgaged Estate, or any
part thereof or interest therein, except for Permitted Exceptions. Grantor shall
have the right to contest in good faith the validity of any such lien,
encumbrance or charge; provided that (a) Grantor shall first deposit with
Beneficiary or Beneficiary's title company a bond or other security satisfactory
to Beneficiary in such amounts as Beneficiary and the title company shall
require, and (b) Grantor shall thereafter diligently proceed to cause such lien,
encumbrance or charge to be removed and discharged. If Grantor shall fail to
discharge any such lien, encumbrance or charge, then, in addition to any other
right or remedy of Beneficiary, Beneficiary may, but shall not be obligated to,
discharge the same, either by paying the amount claimed to be due, or by
procuring the discharge of such lien by depositing in court a bond or the amount
claimed or otherwise giving security for such claim, or in such manner as is or
may be prescribed by law and such amount paid or expended by Beneficiary shall
bear interest at the Default Rate, shall be part of the Secured Obligations and
secured hereby and shall be repaid to Beneficiary on demand.
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SECTION 1.19 BENEFICIARY'S POWERS. At any time, or from time to time,
without notice and without liability therefor, and without affecting the
personal liability, if any, of any Person for payment of the Secured Obligations
or the effect of this Deed of Trust upon the remainder of the Mortgaged Estate,
Beneficiary with the consent of the Required Lenders (as defined in the Credit
Agreement) may, without notice, (a) release any part of the Mortgaged Estate,
(b) consent in writing to the making of any map or plat thereof, (c) join in
granting any easement thereon, (d) join in any extension agreement or any
agreement subordinating the lien or charge hereof, (e) release any person liable
for payment of the indebtedness secured hereby, (f) extend the maturity or alter
any of the terms of any such obligations, (g) grant other indulgences, (h) take
or release any other or additional security for any obligation herein mentioned,
(i) make compositions or other arrangements with debtors in relation thereto, or
(j) advance additional funds to protect the security hereof and pay or discharge
the obligations of Grantor hereunder or under the Loan Documents, and all
amounts so advanced, with interest thereon at the Default Rate, shall be part of
the Secured Obligations and secured hereby and such amount paid or expended by
Beneficiary shall bear interest at the Default Rate, and shall be repaid to
Beneficiary on demand.
SECTION 1.20 RESTRICTIONS AFFECTING TITLE. Grantor shall perform when
due all obligations required to be performed by Grantor by the provisions of any
agreement affecting title to the Mortgaged Estate.
SECTION 1.21 AFTER-ACQUIRED PROPERTY. All right, title and interest of
Grantor in and to all extensions, improvements, betterments, renewals,
substitutes and replacements of, and all additions and appurtenances to, the
Mortgaged Estate, hereafter acquired by, or released to, Grantor or constructed,
assembled or placed by Grantor on the Land, and all conversions of the security
constituted thereby, immediately upon such acquisition, release, construction,
assembling, placement or conversion, as the case may be, and in each such case,
without any further mortgage, conveyance, assignment, or other act by Grantor,
shall become subject to the lien of this Deed of Trust as fully and completely,
and with the same effect, as though now owned by Grantor and specifically
described in the granting clauses hereof, but at any and all times Grantor will
execute and deliver to Beneficiary any and all such further assurances,
mortgages, conveyances, or assignments thereof as Beneficiary may reasonably
require for the purpose of expressly and specifically subjecting the same to the
lien of this Deed of Trust.
SECTION 1.22 EASEMENTS AND RESTRICTIONS. All proposed easements,
permits, licenses, plans, tract maps and other instruments which would or might
affect the title to the Mortgaged Estate shall be submitted to Beneficiary for
Beneficiary's approval (and execution solely as lienholder if Beneficiary so
desires) prior to the execution thereof by Grantor, accompanied by a survey
showing the exact proposed location thereof and such other information as
Beneficiary shall reasonably require. Grantor shall not subject the Mortgaged
Estate or any part thereof to any easements, permits, licenses, plans, tract
maps or other instruments which would or might affect the title to the Mortgaged
Estate (other than a Permitted Exception) without the prior written consent of
Beneficiary.
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SECTION 1.23 ESTOPPEL CERTIFICATE. Grantor shall, at any time and from
time to time upon not less than ten (10) days' prior written notice from
Beneficiary execute, acknowledge and deliver to Beneficiary a statement (i)
certifying that this Deed of Trust and the Secured Obligations are unmodified
and in full force and effect or, if modified, stating the nature thereof and
certifying that this Deed of Trust and the Secured Obligations, as so modified,
are in full force and effect and the date to which principal, interest and other
sums secured hereby have been paid and (ii) acknowledging that there are no
uncured defaults or circumstances which, with the passage of time, or the giving
of notice, or both, would constitute an Event of Default under this Deed of
Trust or under the Secured Obligations or specifying such defaults if any are
claimed. Any such certificate may be conclusively relied upon by Beneficiary and
any prospective purchaser or assignee of the Secured Obligations. Grantor's
failure to deliver such certificate within such time shall be conclusive upon
Grantor that (A) the Secured Obligations are in full force and effect, without
modification, except as may be represented by Beneficiary, and (B) there are no
uncured defaults hereunder or circumstances which, with the passage of time, or
the giving of notice, or both, would constitute an Event of Default.
SECTION 1.24 FUTURE ADVANCES. It is the intention of the parties hereto
that this Deed of Trust is made and executed to comply with the provisions of
N.C.G.S. Section 45-67 et seq. and shall secure any and all present and future
Obligations (but in no event incurred more than fifteen (15) years after the
date hereof), including, without limitation, all future loans, advances and
readvances on a revolving basis which may be made from time to time by the
Lenders to the Grantor pursuant to the Credit Agreement, and any and all
amendments or modifications to the Credit Agreement, or any other instrument,
document or agreement referred to or contemplated thereby, which may hereafter
be entered into from time to time between the parties thereto. Although the
amount, including present and future Obligations, may decrease or increase from
time to time, it is understood and agreed by the parties hereto that all such
future loans, advances and readvances shall be secured to the same extent as the
original obligations hereunder, up to a maximum aggregate amount of principal
indebtedness outstanding at any one time of Seventy-four Million and 00/100
Dollars ($74,000,000), plus interest, costs and advances made by Beneficiary to
protect or preserve the Property or for taxes or insurance premiums as provided
in this Deed of Trust. The principal amount of present Obligations secured
hereby is Fifty Four Million Seven Hundred Eighty Two Thousand and 00/100
Dollars ($54,782,000.00) as of the date hereof. Pursuant to N.C.G.S. Section
45-68(2), the Grantor and Beneficiary agree that at the time each obligation is
incurred it shall not be necessary for each obligation to be evidenced by any
written instrument or notation signed by the Grantor and stipulate that such
obligation is secured by this Deed of Trust.
ARTICLE II
SECURITY AGREEMENT
SECTION 2.01 CREATION OF SECURITY INTEREST. This Deed of Trust shall
constitute a security agreement between Grantor as the Debtor and Beneficiary as
the Secured Party, and
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Grantor hereby grants to Beneficiary a security interest in such of the
Mortgaged Estate as may, in accordance with the Uniform Commercial Code of the
State of North Carolina (the "UCC"), be subject to a security interest
thereunder (herein, the "UCC Property"). Cumulative of all other rights of
Beneficiary hereunder, Beneficiary shall have all of the rights conferred upon
secured parties by the UCC. Grantor will execute and deliver to Beneficiary all
financing statements that may from time to time be reasonably required by
Beneficiary to establish and maintain the validity and priority of the security
interest of Beneficiary and pay all costs and expenses of any searches
reasonably required by Beneficiary. Beneficiary may exercise any or all of the
remedies of a secured party available to it under the UCC with respect to the
UCC Property, and it is expressly agreed that if upon an Event of Default
Beneficiary should proceed to dispose of the UCC Property in accordance with the
provisions of the UCC, five (5) days' notice by Beneficiary to Grantor shall be
deemed to be reasonable notice under any provision of the UCC requiring such
notice; provided, that, to the extent permitted by applicable law, Beneficiary
may at its option dispose of the UCC Property in accordance with Beneficiary's
rights and remedies with respect to the Mortgaged Estate pursuant to the
provisions of this Deed of Trust in lieu of proceeding under the UCC.
Grantor shall give advance notice in writing to Beneficiary of any
proposed change in Grantor's name, identity, or business form or structure and
will execute and deliver to Beneficiary, prior to or concurrently with the
occurrence of any such change, all additional financing statements that
Beneficiary may require to establish and maintain the validity and priority of
Beneficiary's security interest with respect to any of the UCC Property. Grantor
hereby appoints Beneficiary as its attorney-in-fact to execute and file on its
behalf any financing statements, continuation statements or other statements in
connection therewith which Beneficiary deems necessary or reasonably advised, to
preserve and maintain the priority of the lien hereof, or to extend the
effectiveness hereof, under the UCC or any other laws that may hereafter become
applicable. This power, being coupled with an interest, shall be irrevocable so
long as any of the Secured Obligations remains unpaid.
This Deed of Trust shall be effective as a financing statement filed as
a fixture filing from the date of its filing for record in the real estate
records of the county in which the UCC Property is situated. Information
concerning the security interest created by this Deed of Trust may be obtained
from Beneficiary, as secured party, at the address of Beneficiary stated above.
The mailing address of Grantor, as debtor, is as stated in the introductory
paragraph of this Deed of Trust.
SECTION 2.02 REPRESENTATIONS, WARRANTIES AND COVENANTS OF GRANTOR.
Grantor hereby represents, warrants and covenants, with respect to the UCC
Property as follows:
(a) except for the security interest granted hereby, Grantor
is, and as to portions of the UCC Property to be acquired by Grantor
after the date hereof will be, the sole owner of the UCC Property, free
from any adverse lien, security interest, encumbrance or adverse claims
thereon of any kind whatsoever except for Permitted Exceptions. Grantor
will notify Beneficiary of, and will defend such property against,
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all claims and demands of all persons at any time claiming the same or
any interest therein;
(b) except as otherwise provided herein or in the other Loan
Documents, Grantor will not lease, sell, convey, remove, alter or in
any manner transfer the UCC Property without the prior written consent
of Beneficiary, other than in the ordinary course of business and
except as permitted by the Credit Agreement; and
(c) the UCC Property will be kept on or at the Property and
Grantor will not remove the UCC Property from the Property unless it is
replaced with replacement property satisfactory to Beneficiary, without
the prior written consent of Beneficiary, except as otherwise provided
herein or in the Credit Agreement.
ARTICLE III
EVENTS OF DEFAULT AND REMEDIES OF BENEFICIARY
SECTION 3.01 EVENTS OF DEFAULT. If
(a) An Event of Default shall occur and be continuing under the
Credit Agreement;
or
(b) Grantor shall fail to perform or observe any of its covenants or
agreements set forth herein and such failure shall continue for more than three
(3) Business Days from the date due if the event or condition is a failure to
pay money to or on behalf of the Beneficiary as and when due or for more than
thirty (30) days after written notice from Beneficiary to Grantor of such
failure if the event or condition is other than a failure to pay money; or
(c) Grantor shall, without the prior written consent of Beneficiary,
sell, transfer, assign or further encumber the Mortgaged Estate or any part
thereof or any interest therein, or shall be divested of its title or any
interest therein, in any manner, whether voluntarily or involuntarily;
then and in each and every such case ("Event of Default" or "Default"), and at
any time thereafter while such Event of Default is continuing, Beneficiary shall
have, in addition to any rights at law or in equity, each and all of the
following rights and remedies, which may be exercised individually, collectively
or cumulatively:
(i) Beneficiary may, at its option, by written notice to
Grantor, declare immediately due and payable the Secured Obligations
(any notice of intent to accelerate such Secured Obligations prior to
the notice of acceleration being expressly waived by Grantor), and upon
any such declaration, the principal of accrued and unpaid interest and
all other Secured Obligations shall
15
<PAGE>
become and be immediately due and payable. Anything to the contrary
contained in this Deed of Trust notwithstanding, the principal debt
and, to the extent permitted by applicable law, accrued and unpaid
interest to that date shall thereafter bear interest at the Default
Rate until paid.
(ii) To the extent permitted by applicable law, Beneficiary
personally, or by the agents or attorneys of Beneficiary, may take
immediate possession of the Mortgaged Estate hereby conveyed and
operate or lease the same and collect all income and rents arising
therefrom then due or that may thereafter become due, and pay the
proceeds so collected therefrom to Beneficiary for application in
accordance with the Credit Agreement.
(iii) In the event of the noncompliance with any duty or
duties required of Grantor under the terms of this Deed of Trust,
Beneficiary reserves the right, at its own election, to advance
sufficient funds to perform or maintain such duty or duties. Such
funds, on notice from Beneficiary, shall be immediately paid by Grantor
to Beneficiary, and if not so paid shall bear interest at the Default
Rate from the date of demand for payment to the date of their payment
in full to Beneficiary and shall be secured by this Deed of Trust.
(iv) Upon request of Beneficiary at any time when an Event of
Default shall have occurred, it shall be lawful for and the duty of
Trustee, and Trustee is hereby authorized and empowered to sell and
dispose of the Mortgaged Estate, or any portion thereof requested by
Beneficiary in accor dance with N. C. Gen. Stat. Sec. 45-21.1 et seq.,
or any subsequently enacted statute governing foreclosure and sale
under power of sale, at the place that Trustee so designates; and
Trustee may thereupon execute and deliver to the purchaser at said sale
a sufficient conveyance of the Mortgaged Estate in fee simple, which
conveyance may contain recitals as to the happening of the Default upon
which the execution of the power of sale, herein granted, depends, and
said recitals shall be presumptive evidence that all preliminary acts
prerequisite to said sale and deed were in all things duly complied
with; and Beneficiary, its agents, representatives, successors or
assigns, may bid and purchase at such sale. Grantor hereby constitutes
and appoints Trustee or any Substitute Trustee, agent and
attorney-in-fact to make such sale, recitals, and conveyance, and all
of the acts of such attorney-in-fact are hereby ratified. Such recitals
shall be binding and conclusive (except as to existence of an Event of
Default on Grantor's part) upon Grantor, and the conveyance to be made
by Trustee or Substitute Trustee (and in the event of a deed in lieu of
foreclosure, then as to such conveyance) shall be effectual to bar all
right, title and interest, equity of redemption (including all
statutory redemption), homestead, dower, curtesy and all other
exemptions that Grantor possesses, in and to the Mortgaged Estate.
Grantor does hereby authorize and empower the herein named Trustee, and
each and all of such Trustee's successors in this
16
<PAGE>
Deed of Trust, to sell said Mortgaged Estate together or in lots or
parcels, as such Trustee shall deem expedient, and to execute and
deliver to the purchaser or purchasers of such Mortgaged Estate good
and sufficient deeds of conveyance thereof by fee simple title and to
receive and pay over the proceeds of such sale or sales to the
following payments and in the following order: (A) all expenses
incurred in making such sale or sales; (B) one percent (1%) of the
amount collected (or such other reasonable amount not to exceed $20,000
as may be agreed upon by Trustee and Beneficiary) to Trustee as
compensation for executing this Deed of Trust; and (C) to the
Beneficiary for application in accordance with the Credit Agreement.
(v) The purchaser under any trustee's or foreclosure sale
hereunder may disaffirm any easement granted or lease contract made
without the approval of Beneficiary subsequent to the execution of this
Deed of Trust, and may take immediate possession of the Mortgaged
Estate free from, and despite the terms of, such grant of easement or
lease contract. In the event of a foreclosure of the lien of this Deed
of Trust, any owner in possession of the Mortgaged Estate shall
thereupon become the tenant at will of the purchaser at such
foreclosure sale and should such tenant or any person claiming
possession under or through him refuse to surrender possession of the
Mortgaged Estate upon demand, the purchaser shall thereupon be entitled
to institute and maintain the statutory action for forcible detainer
and procure a writ of possession thereunder. Beneficiary, or any other
holder of the Secured Obligations being the highest bidder for cash,
may purchase at any foreclosure sale or sales made by the Trustee
hereunder.
(vi) The provisions hereinabove set forth relating to
foreclosure of the lien of this Deed of Trust by public sale to be
conducted by Trustee, or any Substitute Trustee (as hereinafter
provided), are not intended as an exclusive method of foreclosure
hereunder or to deprive Beneficiary of any other legal or equitable
remedies available to it. Accordingly, it is specifically agreed that
the remedy of foreclosure by trustee's sale hereinabove provided for
shall be cumulative and shall not in any way be construed as an
exclusive remedy, and Beneficiary shall be fully entitled to a court
foreclosure and to avail itself of any and all other legal or equitable
remedies at any time available under the laws of the State of North
Carolina.
(vii) It is agreed that the power of sale above conferred upon
the Trustee is conferred upon the above named Trustee and upon any
Substitute Trustee, as herein provided, and in the event Trustee
advertises the Mortgaged Estate or any portion thereof for sale under
this Deed of Trust, Trustee, or any Substitute Trustee thereafter
appointed, may complete the sale whether advertised by Trustee or any
Substitute Trustee, and deeds may be executed accordingly by Trustee or
any Substitute Trustee actually making the sale.
17
<PAGE>
(viii) It is agreed that Beneficiary may, at any time or times
and at the pleasure of Beneficiary, appoint a successor or Substitute
Trustee in the place of said Trustee or any Substitute Trustee
theretofore appointed, by an instrument in writing, and any person so
appointed shall have all powers conferred herein upon the Trustee above
named, and it is agreed that said power of substitution may be
exercised as frequently and at such times as Beneficiary or then holder
of the Secured Obligations may desire.
(ix) Grantor does hereby ratify all acts which Trustee, or his
successors or substitute, may undertake respecting the Mortgaged Estate
by virtue hereof and agrees that all recitals contained in any deed
executed by Trustee or Substitute Trustee under this Deed of Trust
shall conclusively be presumed to be true in all courts of law and
equity and shall be conclusive proof that all prerequisites to any such
sale or sales have been regularly performed, and conclusive proof of
the regularity of the appointment of said Trustee or Substitute
Trustee, and of the authority of said Trustee or Substitute Trustee to
make said sale, and such sale or sales shall forever bar Grantor and
all persons claiming under it from all rights, title and interests to
the Mortgaged Estate sold, whether in law or in equity.
(x) Beneficiary may exercise any or all of the remedies of a
secured party available to it under the UCC with respect to the
Mortgaged Estate as set forth in Article II hereof; provided, however,
that Beneficiary may, at its option, dispose of the collateral in
accordance with Beneficiary's rights and remedies in respect of the
Mortgaged Estate pursuant to the provisions of this Deed of Trust, in
lieu of proceeding under the UCC.
(xi) To the extent permitted in the Credit Agreement,
Beneficiary may offset and apply, to any or all of the Secured
Obligations, all monies, credits and other property of any nature
whatsoever, and the proceeds thereof, of Grantor now or at any time
hereafter in the possession of, in transit to or from, under the
custody or control of, or on deposit with, Beneficiary.
SECTION 3.02 RECEIVER. In addition to any other rights and powers
conferred herein, Beneficiary shall have the right after the happening of any
Event of Default as hereinabove defined to apply for the appointment of a
receiver of rents and profits of any part or the whole of the Mortgaged Estate
without notice, and Beneficiary shall be entitled, as a matter of right, without
regard to the value of the Mortgaged Estate as security for the amount due or to
the solvency of Grantor or any other party or parties liable for the payment of
such amount, to the appointment of such a receiver of rents and profits with
power to lease the Mortgaged Estate, or such part thereof as may not then be
under lease, and with such other powers as may be deemed necessary, who, after
deducting all proper charges and expenses attending the execution of his trust
as receiver shall apply the residue of the Rents and Profits to the payment and
satisfaction of the Secured Obligations, or to any deficiency which may exist
after applying the proceeds of the sale of the Mortgaged Estate to the payment
of the Secured
18
<PAGE>
Obligations, including interest and the costs of any reasonable attorneys' fees
for the foreclosure and sale in such order of priority as Beneficiary shall
elect.
SECTION 3.03 WAIVER OF RIGHTS. Neither Grantor nor its successors or
assigns, ever shall have or assert any right, under any statute or rule of law
pertaining to the marshaling of assets, the exemption of homestead, the
administration of estates of decedents, or in any manner whatever, to defeat,
reduce or affect the right of the holder of the Secured Obligations, under the
terms of this Deed of Trust, to a sale of the Mortgaged Estate for the
collection of the Secured Obligations (without any prior or different resort for
collection), or the right of the holder, under the terms of this Deed of Trust,
to the payment of the Secured Obligations out of the proceeds of sale of the
conveyed Mortgaged Estate in preference to every other person and claimant
whatever (only reasonable expenses as aforesaid being first deducted); and
Grantor, to the extent that it lawfully may, expressly waives any right now or
hereafter existing to redeem the Mortgaged Estate or any portion thereof so
sold.
SECTION 3.04 RETENTION OF POSSESSION. Notwithstanding the appointment
of any receiver, liquidator or trustee of Grantor, or the then owner of the
Mortgaged Estate, or of any of Grantor's or then owners' other property,
Beneficiary and Trustee, or either of them, shall be entitled to retain
possession and control of the Mortgaged Estate now or hereafter granted to or
held by Beneficiary or Trustee hereunder.
SECTION 3.05 REMEDIES NOT EXCLUSIVE. The cumulative rights of
Beneficiary arising under the clauses and covenants contained in this Deed of
Trust shall be separate, distinct and cumulative and none of them shall be
construed to be exclusive or an election to proceed under any one provision
herein to the exclusion of any other provision, anything herein or otherwise to
the contrary notwithstanding. In addition to any remedies provided herein for an
Event of Default hereunder, Beneficiary shall have all other remedies allowed
under the laws of the State of North Carolina, and the laws of the United
States. No failure on the part of Beneficiary to exercise any of its rights
hereunder arising upon any Default shall be construed to prejudice its rights in
the event of any other or subsequent Default. No delay on the part of
Beneficiary in exercising any of such rights shall be construed to preclude it
from the exercise thereof at any time during the continuance of such Default.
Beneficiary may enforce any one or more remedies or rights hereunder in such
order and manner as it may determine, successively or concurrently at its
option. By accepting payment or partial payment of any sums secured hereby after
its due date, Beneficiary shall not make an accommodation or thereby waive the
agreement herein contained that time is of the essence, nor shall Beneficiary
waive either any of its remedies or options or its right to require prompt
payment when due of all Secured Obligations or to consider failure so to pay a
Default hereunder. Neither the acceptance of this Deed of Trust nor its
enforcement, whether by court action or pursuant to other powers herein
contained, shall prejudice or in any manner affect Beneficiary's right to
realize upon or enforce any other security now or hereafter held by Beneficiary.
19
<PAGE>
ARTICLE IV
MISCELLANEOUS
SECTION 4.01 GOVERNING LAW. This Deed of Trust shall be governed by and
construed and enforced in accordance with the law of the State of North Carolina
applicable to contracts made and to be performed in the State of North Carolina
without reference to conflicts of laws principles.
SECTION 4.02 WAIVER OF RIGHTS. To the extent permitted by law, Grantor
waives the benefit of all laws now existing or that hereafter may be enacted (a)
providing for any appraisement before sale of any portion of the Mortgaged
Estate, and (b) in any way extending the time for the enforcement of the
collection of the Secured Obligations or creating or extending a period of
redemption from any sale made in collecting the Secured Obligations. To the full
extent Grantor may do so, Grantor agrees that Grantor will not at any time
insist upon, plea, claim or take the benefit or advantage of any law now or
hereafter in force providing for any appraisement, valuation, stay, extension or
redemption, and Grantor, for itself and its successors and assigns, and for any
and all persons ever claiming any interest in the Mortgaged Estate by, through
or under Grantor, to the extent permitted by law, hereby waives and releases all
rights of redemption, valuation, appraisement, stay of execution, notice of
election to mature or declare due the whole of the Secured Obligations and
marshal ling in the event of foreclosure of the liens hereby created. If any law
referred to in this Section and now in force, of which Grantor, Grantor's
successors and assigns or other person might take advantage despite this
Section, shall hereafter be repealed or cease to be in force, such law shall not
thereafter be deemed to preclude the application of this Section. To the extent
permitted by law, Grantor expressly waives and relinquishes any and all rights
and remedies which Grantor may have or be able to assert by reason of the laws
of the State of North Carolina pertaining to the rights and remedies of
sureties.
SECTION 4.03 NOTICES. Whenever Beneficiary or Grantor shall desire to
give or serve any notice, demand, request or other communication with respect to
this Deed of Trust, each such notice, demand, request or other communication
shall be in writing and shall be effective only if the same is delivered in the
manner set forth in the Credit Agreement, addressed to the addresses therein set
forth. Any party may at any time change its address for such notices by
delivering or mailing to the other parties hereto, as aforesaid, a notice of
such change.
SECTION 4.04 CAPTIONS. The captions or headings at the beginning of
each Section hereof are for the convenience of the parties and are not a part of
this Deed of Trust.
SECTION 4.05 INVALIDITY OF CERTAIN PROVISIONS. If the lien of this Deed
of Trust is invalid or unenforceable as to any part of the Secured Obligations,
or if the lien is invalid or unenforceable as to any part of the Mortgaged
Estate, the unsecured or partially secured portion of the debt shall be
completely paid prior to the payment of the remaining and secured portion of the
Secured Obligations, and all payments made on the debt, whether voluntary or
20
<PAGE>
under foreclosure or other enforcement action or procedure, shall be considered
to have been first paid on and applied to the full payment of that portion of
the Secured Obligations which is not secured or fully secured by the lien of
this Deed of Trust.
SECTION 4.06 SUBROGATION. To the extent that proceeds of the Secured
Obligations are used to pay any outstanding lien, charge or prior encumbrance
against the Mortgaged Estate and such proceeds or advances have been or will be
advanced by Beneficiary, Beneficiary shall be subrogated to any and all rights
and liens held by any owner or holder of such outstanding liens, charges and
prior encumbrances, irrespective of whether said liens, charges or encumbrances
are released of record.
SECTION 4.07 TRUSTEE. Trustee shall be under no duty to take any action
hereunder except as expressly required, or to perform any act which would
involve Trustee in expense or liability or to institute or defend any suit in
respect hereof, unless properly indemnified to its satisfaction.
IN WITNESS WHEREOF, Grantor has caused this Deed of Trust to be
executed under seal on its behalf by its duly authorized officers as of the day
and year first above written.
TEXFI INDUSTRIES, INC.
By:
Name:
Title:
[CORPORATE SEAL]
ATTEST:
Secretary
21
<PAGE>
STATE OF NORTH CAROLINA
COUNTY OF MECKLENBURG
This ____ day of March, 1996, personally came before me, a Notary
Public in and for said County and State, __________________________________ who,
being by me duly sworn, says that he is _________ President of TEXFI INDUSTRIES,
INC., that the seal affixed to the foregoing instrument in writing is the
corporate seal of said Corporation and that said instrument was signed and
sealed by him on behalf of said Corporation by its authority duly given, and the
said ______________________________ acknowledged said instrument in writing to
be the act and deed of said Corporation.
Notary Public
My Commission Expires:
22
<PAGE>
Exhibit 2(a)(4)
Form of Mortgage and Security Agreement
STATE OF SOUTH CAROLINA
COUNTY OF
MORTGAGE AND SECURITY AGREEMENT
Between
Texfi Industries, Inc.
and
NationsBank, N.A., as Agent
and
NationsBanc Commercial Corporation, as Disbursing Agent
Dated as of March 15, 1996
This instrument was drawn by and mail to:
J. Donnell Lassiter, Esq.
Kennedy Covington Lobdell & Hickman, L.L.P.
NationsBank Corporate Center, Suite 4200
101 North Tryon Street
Charlotte, North Carolina 28202-4006
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
ARTICLE I - REPRESENTATIONS, WARRANTIES, COVENANTS
AND AGREEMENTS OF GRANTOR................................................................ 4
Section 1.01 Payment of Secured Obligations.................................................. 4
Section 1.02 Title of Grantor................................................................ 4
Section 1.03 Maintenance, Repair, Alterations................................................ 5
Section 1.04 Required Insurance.............................................................. 5
Section 1.05 Delivery of Insurance Policies, etc............................................. 5
Section 1.06 Insurance Proceeds.............................................................. 6
Section 1.07 Assignment of Policies Upon Foreclosure......................................... 7
Section 1.08 Indemnification; Subrogation; Waiver of Offset.................................. 7
Section 1.09 Taxes and Impositions........................................................... 8
Section 1.10 Impound for Taxes............................................................... 9
Section 1.11 Utilities....................................................................... 9
Section 1.12 Actions Affecting Mortgaged Estate.............................................. 9
Section 1.13 Actions by Beneficiary As To Mortgaged Estate................................... 10
Section 1.14 Survival of Warranties.......................................................... 10
Section 1.15 Eminent Domain.................................................................. 10
Section 1.16 Additional Encumbrances......................................................... 11
Section 1.17 Inspection, Audits and Information Regarding Collateral......................... 11
Section 1.18 Liens........................................................................... 11
Section 1.19 Beneficiary's Powers............................................................ 12
Section 1.20 Restrictions Affecting Title.................................................... 12
Section 1.21 After-Acquired Property......................................................... 12
Section 1.22 Easements and Restrictions...................................................... 12
Section 1.23 Estoppel Certificate............................................................ 13
ARTICLE II - SECURITY AGREEMENT....................................................................... 13
Section 2.01 Creation of Security Interest................................................... 13
Section 2.02 Representations, Warranties and Covenants of Grantor............................ 14
ARTICLE III - EVENTS OF DEFAULT AND REMEDIES OF BENEFICIARY............................................ 15
Section 3.01 Events of Default............................................................... 15
Section 3.02 Receiver........................................................................ 17
<PAGE>
Section 3.03 Waiver of Rights................................................................ 17
Section 3.04 Retention of Possession......................................................... 18
Section 3.05 Remedies not Exclusive.......................................................... 18
ARTICLE IV - MISCELLANEOUS............................................................................ 18
Section 4.01 Governing Law................................................................... 18
Section 4.02 Waiver of Rights................................................................ 18
Section 4.03 Notices......................................................................... 19
Section 4.04 Captions........................................................................ 19
Section 4.05 Invalidity of Certain Provisions................................................ 19
Section 4.06 Subrogation..................................................................... 19
</TABLE>
Exhibits
A - Description of Land
B - Permitted Exceptions
C - Excluded Equipment
<PAGE>
COLLATERAL IS OR INCLUDES FIXTURES
MORTGAGE AND SECURITY AGREEMENT
THIS MORTGAGE AND SECURITY AGREEMENT (this "Mortgage") dated as of
March 15, 1996 by and between Texfi Industries, Inc., a Delaware corporation,
whose mailing address is 5400 Glenwood Avenue, Raleigh, North Carolina 27612
("Grantor"), and NationsBank, N.A., a national banking association organized
under the laws of the United States, as Agent (the "Beneficiary") for the
benefit of itself and the financial institutions (the "Lenders") as are, or may
from time to time, become parties to the Credit Agreement (as defined below) and
NationsBanc Commercial Corporation, as Disbursing Agent (the "Disbursing
Agent").
STATEMENT OF PURPOSE
Pursuant to a Credit Agreement dated as of even date herewith (together
with all amendments and other modifications, if any, from time to time hereafter
made thereto, the "Credit Agreement") by and among the Grantor as Borrower
thereunder (the "Borrower"), the Lenders, Beneficiary as Agent thereunder and
NationsBanc Commercial Corporation as Disbursing Agent thereunder, the Lenders
will extend Loans to and cause Letters of Credit to be issued on behalf of the
Borrower, as more particularly described in the Credit Agreement. To induce the
Lenders to enter into the Credit Agreement, and as a condition to the making of
the Loans and the issuance of Letters of Credit thereunder, the Lenders require
that the Grantor execute and deliver this Mortgage.
FOR GOOD AND VALUABLE CONSIDERATION, including the indebtedness herein
recited, the receipt of which is hereby acknowledged, Grantor hereby irrevocably
grants, bargains, sells, transfers, conveys and assigns to Beneficiary, for
itself and as Agent for the Lenders under and subject to the terms and
conditions hereinafter set forth, all right, title, interest and estate of
Grantor in and to the real property more particularly described in Exhibit A
attached hereto and by this reference incorporated herein (the "Land");
TOGETHER WITH all of the right, title, interest and estate of Grantor,
either at law or in equity, in and to:
Any and all buildings, improvements and structures now or hereafter
erected on the Land (the "Improvements") (the Land and the Improvements are
collectively referred to as the "Property");
All rights, privileges, tenements, hereditaments, rights-of-way,
easements, appendages, streets, alleys, passages, waters, watercourses,
covenants, rights and
<PAGE>
appurtenances of the Property belonging or in any way appertaining thereto, or
which hereafter shall in any way belong, relate or be appurtenant thereto,
whether now owned or hereafter acquired by Grantor, and all right, title, and
interest of Grantor in and to any streets, ways, watercourses, alleys,
easements, covenants and strips or gores of land now existing or hereafter
created for the benefit of Grantor, the Property or any subsequent owner or
tenant of the Property on or over land adjoining the Property or any portion
thereof and all rights to enforce the maintenance thereof;
All minerals, soil, flowers, crops, trees, timber and other emblements
now or hereafter on, under or above the Property;
All water, sanitary and storm sewer systems now or hereafter located
by, over and/or upon the Property or any part and parcel thereof, and which
water system includes all water mains, service laterals, hydrants, valves and
appurtenances, including, without limitation, all sanitary sewer lines,
including mains, laterals, manholes and appurtenances;
All paving for streets, roads, walkways or entranceways now or
hereafter located on the Property or any part or parcel thereof;
All fixtures (other than fixtures described on Exhibit C hereto)
located upon or within the Property or now or at any time hereafter attached to
or installed in, or used in connection with, any of the Property, including, but
not limited to, any and all partitions, dynamos, screens, awnings, motors,
engines, boilers, furnaces, pipes, plumbing, escalators, elevators, sprinkler
systems, fire prevention and extinguishing apparatus and equipment, water tanks,
heating, ventilating, air conditioning and air-cooling equipment, heaters,
condensers, compressors, ducts, machinery, walks, fences, shrubbery, driveways,
fittings and other fixtures of every kind and character whatsoever
(collectively, the "Fixtures");
Any award or awards heretofore made or hereafter to be made by any
municipal, state or Federal authorities to the present or any subsequent owners
of the Property or the Fixtures, including any award or awards or settlements
hereafter made resulting from condemnation proceedings or the taking of the
Property or the Fixtures, or any part thereof, under the power of eminent
domain;
All proceeds from the conversion, voluntary or involuntary, of any of
the Property or the Fixtures into cash or liquidated claims including, without
limitation, the proceeds of insurance, subject to certain restoration rights of
Grantor as provided in Section 1.06 hereof;
All existing and future leases, subleases, licenses and other
agreements for the use and occupancy of all or any portion of the Property or
the Fixtures, and any and all extensions, renewals and modifications thereof,
whether written or oral and whether for a definite term or month to month,
including without limitation (i) any and all cash or securities deposited
thereunder to secure performance by the lessees of their obligations thereunder,
(ii) the right to receive and collect all rents thereunder and (iii) any and all
guarantees of any lessee's obligations thereunder (collectively, the "Leases");
2
<PAGE>
All earnings, revenues, rents, issues, profits, avails, general
intangibles, choses in action and other income of and from the Property or the
Fixtures including, without limitation, all rents and receipts from the Leases
(collectively, the "Rents and Profits");
All architectural, engineering and similar plans, specifications,
drawings, renderings, profiles, studies, shop drawings, reports, plats, permits,
surveys and similar documents relating to the Property; all sewer taps, permits
and allocations; and all agreements for utilities, bonds, sureties and the like,
relating to the Property or appurtenant facilities erected or to be erected upon
or about the Property;
All warranties and guarantees of contractors or subcontractors or of
suppliers or manufacturers of equipment or other property incorporated into the
Improvements or used with or otherwise constituting part of the Fixtures; and
All equipment (other than the equipment described on Exhibit C hereto)
and other personal property located on, and used or useable in connection with,
the Property, including without limitation any and all air conditioners,
antennae, appliances, apparatus, awnings, basins, bathtubs, beds, bidets,
boilers, bookcases, cabinets, carpets, coolers, curtains, dehumidifiers,
disposals, doors, drapes, dryers, ducts, dynamos, elevators, engines, equipment,
escalators, fans, fittings, floor coverings, furnaces, furnishings, furniture,
hardware, heaters, humidifiers, incinerators, lighting, machinery, motors,
ovens, pictures, pipes, plants and containers, plumbing, pumps, radiators,
ranges, recreational facilities, refrigerators, screens, security systems,
shades, shelving, sinks, sprinklers, stokers, stoves, telephone systems,
toilets, ventilators, wall coverings, washers, windows, window coverings, and
wiring, as the same are now and will hereafter be constituted, whether now owned
by Grantor or hereafter acquired, together with all appliances, instruments,
improvements, accessories, equipment, parts and appurtenances appertaining or
attached thereto, or from time to time incorporated therein or installed as part
thereof, and all substitutions, renewals and replacements of and additions,
improvements, accessions and accumulations to any and all thereof which are now
owned or hereafter acquired by Grantor, together with all the rents, issues,
incomes, profits, accounts, proceeds and avails thereof.
All of the above-described right, title, interest, estate, claim and
demand of Grantor together with all cash and noncash proceeds thereof, and all
substitutions, accessions and replacements thereto and therefor, are referred to
herein as the "Mortgaged Estate".
TO HAVE AND TO HOLD the Mortgaged Estate hereby granted or mortgaged
unto Beneficiary and Beneficiary's successors and assigns, in fee simple
forever.
PROVIDED, HOWEVER, that these presents are upon the condition that, if
the Secured Obligations (as defined below) shall be paid when due, and if
Grantor shall keep, perform and observe all and singular the covenants,
agreements and provisions in this Mortgage expressed to be kept, performed and
observed by or on the part of Grantor, then this Mortgage and the estate and
rights hereby granted shall cease, determine and be void, but otherwise shall be
and remain in full force and effect.
3
<PAGE>
THIS MORTGAGE SHALL SECURE THE FOLLOWING OBLIGATIONS
(collectively, the "Secured Obligations"):
(a) Payment of the Obligations (as defined in the Credit Agreement) and
any renewals or extensions of any of the Obligations;
(b) Payment of all sums advanced by or on behalf of Beneficiary to
protect the Mortgaged Estate, with interest thereon at the rate of interest
provided in Section 4.1(d) of the Credit Agreement (the "Default Rate") from the
date of advance by Beneficiary or the Lenders to the date of payment by Grantor;
and
(c) Payment of all other sums from time to time owing to Beneficiary
under the Loan Documents (as defined in the Credit Agreement).
(d) In accordance with Section 29-3-50, S.C. Code of Laws (1976, as
amended), payment of all future advances, and readvances that may subsequently
be made to Grantor by the Lenders or NCC pursuant to the terms of the Credit
Agreement, and all renewals or extensions thereof; provided, however, that
nothing contained herein shall create an obligation on the part of the Lenders
or NCC to make future advances or readvances to Grantor, the maximum amount of
all indebtedness outstanding at any one time not to exceed $74,000,000, plus
interest thereon, all charges, and expenses of collection incurred by Grantor,
including court costs, and reasonable attorneys' fees.
Capitalized terms used herein shall have the meanings set forth in this
Mortgage or, if not defined herein, shall have the meaning ascribed to such term
in the Credit Agreement.
ARTICLE I
REPRESENTATIONS, WARRANTIES, COVENANTS
AND AGREEMENTS OF GRANTOR
Grantor hereby represents, warrants, covenants and agrees as follows:
Section 1.01 Payment of Secured Obligations. Grantor shall pay when due
all of the Obligations, and shall pay all other sums secured hereby at the time
and place and in the manner specified in the Loan Documents.
Section 1.02 Title of Grantor. Grantor has, subject to the Permitted
Exceptions (as set forth on Exhibit B attached hereto and by this reference
incorporated herein (herein the "Permitted Exceptions")), in its own right, good
and indefeasible title in fee simple to the Mortgaged Estate which is free from
all liens and encumbrances, except the Permitted Exceptions, and has full right
to make this conveyance and that it will warrant and defend the
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title to such property, except for the Permitted Exceptions, against the lawful
claims of all Persons.
Section 1.03 Maintenance, Repair, Alterations. Grantor shall: (i) keep
the Mortgaged Estate in good condition and repair, subject to reasonable wear
and tear and damage due to casualty which is subject to repair as hereinafter
required, (ii) except as permitted by the Credit Agreement or otherwise
permitted in writing by Beneficiary, not remove, demolish or alter any of the
Mortgaged Estate or the Fixtures, other than in the ordinary course of business,
(iii) complete promptly and in good and workmanlike manner any alteration
permitted hereunder and promptly restore in like manner any Improvement which
may be damaged or destroyed thereon or therein subject to the provisions of
Section 1.06 hereof and pay when due all claims for labor performed and
materials furnished therefor, and (iv) comply, and cause the Mortgaged Estate to
comply, with all laws, ordinances, regulations, covenants, conditions and
restrictions now or hereafter affecting the Mortgaged Estate or any part
thereof.
Section 1.04 Required Insurance. Grantor shall at all times keep, or
cause to be kept, the Improvements which now are or hereafter become a part of
the Mortgaged Estate insured under an "all risk" extended coverage form of
insurance policy containing both a replacement cost and an agreed amount
endorsement (and against all other hazards as reasonably may be required by
Beneficiary, which may include, without limitation, insurance against loss or
damage by flood and earthquake). All insurance shall be in form, content and
amounts approved by Beneficiary and written by an insurance company or companies
approved by Beneficiary. The policies for such insurance shall have attached
thereto standard mortgagee clauses in favor of and permitting Beneficiary to
collect any and all proceeds payable under all such insurance. All such policies
or certified copies thereof shall be delivered to and held by Beneficiary as
further security for the Secured Obligations, with evidence of renewal coverage
delivered to Beneficiary annually at least 10 days before the expiration date of
any policy. Grantor shall also carry public liability insurance protecting
Beneficiary against liability for injuries to persons and property occurring in,
on or adjacent to the Mortgaged Estate, in forms, companies and amounts
satisfactory to Beneficiary with the policy or policies evidencing such
insurance to contain a 30 day notice of cancellation or of change in coverage
clause in favor of Beneficiary. Grantor shall not carry separate insurance,
concurrent in kind or form and contributing in the event of loss, with any
insurance required herein.
Section 1.05 Delivery of Insurance Policies, etc. All policies of
insurance shall be issued by companies with a financial rating of at least A-X
as rated in the most recent edition of Best's Insurance Reports and in amounts
in each company as may be reasonably satisfactory to Beneficiary. All policies
of insurance shall have attached thereto a lender's loss payable and additional
insured endorsement for the benefit of Beneficiary in form reasonably
satisfactory to Beneficiary, shall contain a standard waiver of subrogation
clause and shall contain such other endorsements, terms and provisions as shall
be reasonably satis factory to Beneficiary. If requested, Grantor shall furnish
Beneficiary with a certified copy of all policies of required insurance. At
least ten (10) days prior to the expiration of each
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such policy, Grantor shall furnish Beneficiary with evidence satisfactory to
Beneficiary of the reissuance of a policy continuing insurance in force as
required by this Mortgage. All such policies shall contain a provision that such
policies will not be canceled, modified or amended (including any reduction in
the scope or limits of coverage), without thirty (30) days' prior written notice
to Beneficiary. Beneficiary shall not be responsible for the solvency of any
company issuing any policy of insurance pursuant hereto whether or not approved
by it, or for the collection of any amounts due under any such policy, and shall
be responsible and accountable only for such money as may be actually received
by it, and then only in accordance with the terms hereof. Nothing contained
herein shall be construed as making Beneficiary liable in any way for any loss,
damage or injury resulting from the failure to insure the Mortgaged Estate.
Section 1.06 Insurance Proceeds. After the occurrence of any casualty
to the Mortgaged Estate or any part thereof, Grantor shall give prompt written
notice thereof to Beneficiary and each insurer and submit a claim to insurer for
payment of insurance proceeds with a copy of such claim sent by Grantor to
Beneficiary. Such casualty shall not affect the lien of this Mortgage or the
obligations of Grantor hereunder, and Beneficiary is authorized at Beneficiary's
option to compromise and settle all loss claims if not adjusted promptly by
Grantor. All proceeds of insurance paid or payable under any insurance policy
(the "Insurance Proceeds") shall be paid to Beneficiary for the benefit of
Grantor and each insurer of all or any portion of the Mortgaged Estate is hereby
authorized and directed to make payment for any such loss directly to
Beneficiary for the benefit of Grantor; provided that so long as no Event of
Default shall have occurred and be continuing, Insurance Proceeds of $100,000 or
less shall be paid to Grantor. Any Insurance Proceeds shall be applied first to
the payment of all costs and expenses incurred by Beneficiary in obtaining such
proceeds. The balance of the proceeds, if any, shall be applied (a) if
Beneficiary determines in its reasonable judgment that (i) the proceeds together
with such other sums as Grantor shall deposit with Beneficiary to pay the costs
of alteration, restoration or rebuilding the Mortgaged Estate or such portion
thereof which may have been altered, damaged or destroyed, are sufficient to pay
such costs in full, (ii) no Event of Default shall have occurred and be
continuing hereunder, (iii) following completion of such alteration, restoration
or rebuilding, the Property will be equal in value and economic viability to its
status prior to such casualty, (iv) such alteration, restoration or rebuilding
can be completed on or prior to the Revolving Credit Termination Date under the
Credit Agreement and (v) Grantor will have sufficient income pending the
completion of such, alteration, restoration or rebuilding to pay all debt
service due Beneficiary with respect to the Loans, toward altering, restoring or
rebuilding the Mortgaged Estate or such portion thereof which may have been
altered, damaged or destroyed, on the same or similar conditions and
requirements as are customarily required for construction loans made by
Beneficiary, or (b) otherwise, to the pro rata payment of principal and interest
due on the Loans based on the principal balances then outstanding and to the
payment of any other obligations due under the other Loan Documents.
Notwithstanding the application of Insurance Proceeds to the payment of a
portion of the secured indebtedness, the unpaid portion of the secured
indebtedness shall remain in full force and effect, and Grantor shall not be
excused in the payment thereof. Nothing contained in this Mortgage shall be
deemed to excuse Grantor from repairing or maintaining the Mortgaged Estate as
provided
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herein and in Section 1.03 hereof. The application or release by Beneficiary of
any Insurance Proceeds shall not cure or waive any Event of Default or notice of
default under this Mortgage or invalidate any act done pursuant to such notice.
Section 1.07 Assignment of Policies Upon Foreclosure. In the event of
foreclosure of this Mortgage or other transfer of title or assignment of the
Mortgaged Estate in extinguishment, in whole or in part, of the Secured
Obligations, all right, title and interest of Grantor in and to all policies of
insurance including any refundable premiums required by this Mortgage shall
inure to the benefit of and pass to the successor in interest of Grantor or the
purchaser or grantee of the Mortgaged Estate.
Section 1.08 Indemnification; Subrogation; Waiver of Offset.
(a) Grantor shall indemnify, defend and hold Beneficiary harmless from
any and all loss, costs, damages, expenses and liability incurred by Beneficiary
in connection with this Mortgage, including all attorneys' fees and expenses
incurred by Beneficiary, except to the extent any such loss, cost, damage,
expense or liability results from the gross negligence or willful misconduct of
Beneficiary. If Beneficiary commences an action against Grantor to enforce any
of the terms hereof or for the recovery of any sum secured hereby, Grantor shall
pay all attorneys' fees and expenses incurred by Beneficiary in connection
therewith, and the right to such attorney's fees and expenses shall be deemed to
have accrued on the commence ment of such action, and shall be enforceable
whether or not such action is prosecuted to judgment. Upon an Event of Default,
Beneficiary may employ an attorney or attorneys to protect its rights hereunder,
and in the event of such employment following an Event of Default, Grantor shall
pay all attorneys' fees and expenses incurred by Beneficiary, whether or not an
action is actually commenced against Grantor by reason of an Event of Default.
(b) All sums payable by Grantor hereunder, under the Credit Agreement
and under the other Loan Documents shall be paid without notice, demand,
counterclaim, set-off, deduction or defense and without abatement, suspension,
deferment, diminution or reduction, and the obligations and liabilities of
Grantor hereunder shall in no way be released, discharged or otherwise affected
by reason of: (i) any damage to or destruction of or any condemnation or similar
taking of the Mortgaged Estate or any part thereof, (ii) any restriction or
prevention of or interference with any use of the Mortgaged Estate or any part
thereof unless caused unlawfully by Beneficiary, (iii) any title defect or
encumbrance or any eviction from the Mortgaged Estate or any part thereof by
title paramount or otherwise, (iv) any bankruptcy, insolvency, reorganization,
composition, adjustment, dissolution, liquidation or other like proceeding
relating to Grantor, or any action taken with respect to this Mortgage by any
trustee or receiver of Grantor, or by any court, in any such proceeding, or (v)
any other occurrence whatsoever, whether similar or dissimilar to the foregoing
whether or not Grantor shall have notice or knowledge of any of the foregoing.
To the extent permitted by law, Grantor waives all rights now or hereafter
conferred by statute or otherwise to any abatement, suspension, deferment,
diminution or reduction of any sum secured hereby.
Section 1.09 Taxes and Impositions.
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(a) Subject to the provisions of subsection (c) of this Section 1.09
and to the provisions of Section 1.10 hereof, Grantor shall pay or cause to be
paid and shall furnish evidence of payment thereof to Beneficiary, at least ten
(10) days prior to delinquency, all real property taxes and assessments, general
and special, and all other taxes and assessments of any kind or nature
whatsoever, including without limitation nongovernmental levies or assessments
such as maintenance charges, levies or charges resulting from covenants,
conditions and restrictions affecting the Mortgaged Estate, which are assessed
or imposed upon the Mortgaged Estate, or become due and payable, and which
create, may create or appear to create a lien upon the Mortgaged Estate, or any
part thereof (all of which taxes, assessments and other governmental and
nongovernmental charges of like nature are hereinafter referred to as
"Impositions"); provided that if, by law, any such Imposition is payable, or may
at the option of the taxpayer be paid, in installments, Grantor may pay the same
together with any accrued interest on the unpaid balance of such Imposition in
installments as the same become due and before any fine, penalty, interest or
cost may be added thereto for the nonpayment of any such installment and
interest.
(b) If at any time after the date hereof there shall be assessed or
imposed (i) a tax or assessment on the Mortgaged Estate in lieu of or in
addition to the Impositions payable by Grantor pursuant to subsection (a) above,
or (ii) a license fee, tax or assessment imposed on Beneficiary and measured by
or based in whole or in part upon the amount of the outstanding obligations
secured hereby, then all such taxes, assessments or fees shall be deemed to be
included within the term Impositions, and Grantor shall pay and discharge the
same as herein provided with respect to the payment of Impositions. At the
option of Beneficiary, all obligations secured hereby together with all accrued
interest thereon, shall become due and payable in the event that Grantor shall
not be permitted to pay such fees, taxes or assessments on behalf of
Beneficiary.
(c) Grantor shall have the right before any delinquency occurs to
contest or object to the amount or validity of any Imposition by appropriate
legal proceedings, but such right shall not be deemed or construed in any way as
relieving, modifying, or extending Grantor's covenant to pay any such Imposition
at the time and in the manner provided in this Section 1.09, unless Grantor has
given prior written notice to Beneficiary of Grantor's intent to so contest or
object to an Imposition, and unless, at Beneficiary's sole option, (i) Grantor
shall demonstrate to Beneficiary's reasonable satisfaction that the legal
proceedings shall conclu sively operate to prevent the sale of the Mortgaged
Estate, or any part thereof, to satisfy such Imposition prior to final
determination of such proceedings, (ii) Grantor shall furnish a good and
sufficient bond or surety as requested by and reasonably satisfactory to
Beneficiary or (iii) Grantor shall have provided a good and sufficient
undertaking as may be required or permitted by law to accomplish a stay of such
proceedings.
Section 1.10 Impound for Taxes. Upon demand by Beneficiary after an
Event of Default (as defined in Section 3.01 hereof) has occurred and during the
continuance thereof, Grantor shall pay to Beneficiary, on the first day of each
and every calendar month, until the Secured Obligations are paid in full, an
amount equal to one-twelfth of the annual Impositions reasonably estimated by
Beneficiary necessary to pay the installments of Impositions next due
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on the Mortgaged Estate. All such amounts paid under the terms of this Section
1.10 shall be held by Beneficiary in a non-interest bearing account. Grantor
shall cause all bills, statements or other documents relating to Impositions to
be sent or mailed directly to Beneficiary. Upon receipt of such bills,
statements or other documents, and provided Grantor has deposited sufficient
funds pursuant to this Section 1.10, Beneficiary shall pay such amounts as may
be due thereunder out of the funds so deposited. If at any time and for any
reason the funds so deposited are or will be insufficient to pay such amounts as
may then or subsequently be due, Beneficiary shall notify Grantor, and Grantor
shall promptly deposit an amount equal to such deficiency with Beneficiary.
Notwithstanding the foregoing, nothing contained herein shall cause Beneficiary
to be deemed a trustee of such funds or to be obligated to pay any amounts in
excess of the amount of funds so deposited pursuant to this Section 1.10.
Beneficiary may impound or reserve for future payment of Impositions such
portion of such payments as Beneficiary may in its reasonable discretion deem
proper, applying the balance to the principal of or interest on the indebtedness
secured hereby which may then be due and payable. If Grantor fails to deposit
sums sufficient to fully pay such Impositions at least thirty (30) days before
delinquency thereof, Beneficiary may, at Beneficiary's election and with prior
notice to Grantor, but without any obligation so to do, advance any amounts
required to make up the deficiency. All amounts so advanced, if any, shall bear
interest at the Default Rate from the date of such payment to the date of
repayment thereof in full to Beneficiary, shall be secured hereby and shall be
part of the Secured Obligations and shall be repayable to Beneficiary upon
demand.
Section 1.11 Utilities. Grantor shall pay or cause to be paid when due
all utility charges which are incurred by or on behalf of Grantor for the
benefit of the Mortgaged Estate or which may become a charge or lien against the
Mortgaged Estate for gas, electricity, water or sewer services or solid waste
removal services furnished to the Mortgaged Estate and all other assessments or
charges of a similar nature, whether public or private, affecting the Mortgaged
Estate or any portion thereof, whether or not such taxes, assessments or charges
are liens thereon and shall, upon request of Beneficiary, provide evidence of
the payment thereof in accordance with this Section 1.11.
Section 1.12 Actions Affecting Mortgaged Estate. Grantor shall appear
in and contest any action or proceeding purporting to affect the security hereof
or the rights or powers of Beneficiary and shall pay all costs and expenses,
including cost of evidence of title and reasonable attorneys' fees, in any such
action or proceeding in which Beneficiary may appear. Grantor shall give written
notice of any claim asserted or legal action filed against Grantor or the
Mortgaged Estate within five (5) Business Days after Grantor's first knowledge
thereof. Nothing in this Section 1.12 shall be deemed to prevent Beneficiary
from appearing in and contesting such actions and Grantor shall reimburse
Beneficiary for any costs and expenses in accordance with Section 1.08 above.
Section 1.13 Actions by Beneficiary As To Mortgaged Estate. Upon the
occurrence and during the continuance of an Event of Default, Beneficiary, in
its sole discretion, without obligation so to do and without notice to or demand
upon Grantor and without releasing Grantor from any obligation, may take any
action in respect of the
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Mortgaged Estate in such manner and to such extent as Beneficiary may deem
necessary to protect the security hereof. In connection therewith (without
limiting its general powers), Beneficiary shall have and is hereby given the
right, but not the obligation to: (a) enter upon and take possession of the
Mortgaged Estate, (b) direct Grantor to terminate any management agent employed
by Grantor with the prior written consent of Beneficiary and to employ such
management agent as Beneficiary may determine in its sole and absolute
discretion, (c) make additions, alterations, repairs and improvements to the
Mortgaged Estate which it may consider to be necessary or proper to keep the
Mortgaged Estate in good condition and repair, subject to normal wear and tear,
(d) appear and participate in any action or proceeding affecting or which may
affect the security hereof or the rights or powers of Beneficiary, (e) pay,
purchase, contest or compromise any encumbrance, claim, charge, lien or debt
which in the reasonable judgment of Beneficiary may affect or appears to affect
the security of this Mortgage or be prior or superior hereto, (f) take or
perform all actions or pay all amounts from time to time, which this Mortgage
permits or requires Grantor to take or perform, and (g) in exercising such
powers, pay necessary expenses, including employment of counsel or other
necessary or desirable consultants. Grantor shall immediately upon demand
therefor by Beneficiary pay all costs and expenses incurred by Beneficiary in
connection with the exercise by Beneficiary of the foregoing rights, including
without limitation costs of evidence of title, court costs, appraisals, surveys
and reasonable attorneys' fees, and any such costs and expenses from the date so
paid until the date repaid in full, shall bear interest at the Default Rate, and
shall be secured hereby as part of the Secured Obligations.
Section 1.14 Survival of Warranties. Grantor shall fully and faithfully
satisfy and perform the obligations of Grantor contained in the Credit
Agreement. All representations, warranties and covenants of Grantor contained
therein shall remain continuing representations, warranties and covenants of
Grantor during any time when any portion of the Secured Obligations remains
outstanding.
Section 1.15 Eminent Domain. Should the Mortgaged Estate, or any part
thereof or interest therein, be taken or damaged by reason of any public
improvement, condemnation or eminent domain proceeding or in any other manner
(collectively, "Condemnation"), or should Grantor receive any notice or other
information regarding such proceeding, Grantor shall give prompt written notice
thereof to Beneficiary. Beneficiary may participate in any such Condemnation
proceedings, and Grantor shall from time to time deliver to Beneficiary all
instruments requested by Beneficiary to permit such participation. Grantor
shall, at its expense, diligently prosecute in a reasonable manner any such
proceedings and shall consult with Beneficiary and its attorneys and experts,
and cooperate in a reasonable manner with them in the carrying on or defense of
any such proceedings. All proceeds of Condemnation awards or proceeds of sale in
lieu of Condemnation with respect to the Mortgaged Estate and all judgments,
decrees and awards for injury or damage to the Mortgaged Estate shall be paid to
Beneficiary for the benefit of Grantor and shall be applied in the manner in
which Insurance Proceeds are to be applied pursuant to Section 1.06 hereof.
Grantor hereby assigns and transfers all such proceeds, judgments, decrees and
awards to Beneficiary and agrees to execute such further assignments of all such
proceeds, judgments, decrees and awards, as Beneficiary may request. Beneficiary
is hereby authorized, in the name of Grantor, to execute
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and deliver valid acquittances for, and to appeal from, any such judgment,
decree or award. Beneficiary shall not be, in any event or circumstance, liable
or responsible for failure to collect or exercise diligence in the collection of
any proceeds, judgments, decrees or awards.
Section 1.16 Additional Encumbrances. Grantor shall not further
encumber the Mortgaged Estate or any portion thereof.
Section 1.17 Inspection, Audits and Information Regarding
Collateral.
(a) Grantor shall permit Beneficiary, its representatives and agents,
to enter upon the Mortgaged Estate at all reasonable times and during normal
business hours and to inspect the Mortgaged Estate, and shall cooperate with
Beneficiary, its representatives and agents, during such inspections, including
making available to Beneficiary working copies of all plans and specifications
together with all related supplementary materials.
(b) Grantor shall also permit Beneficiary, its representatives and
agents, to examine, copy and make extracts of the books, records, accounting
data and other documents of Grantor that relate in any way to the Mortgaged
Estate, including, without limitation, all permits, licenses, consents and
approvals of all governmental authorities having jurisdiction over Grantor and
the Mortgaged Estate. All such books, records and documents shall be made
available to Beneficiary promptly upon written demand therefor and, at the
request of Beneficiary, Grantor shall furnish Beneficiary with convenient
facilities for the foregoing purposes.
Section 1.18 Liens. Grantor shall, within thirty (30) days after
Grantor receives notice thereof, pay and discharge, at Grantor's cost and
expense, all liens, encumbrances and charges upon the Mortgaged Estate, or any
part thereof or interest therein, except for Permitted Exceptions. Grantor shall
have the right to contest in good faith the validity of any such lien,
encumbrance or charge; provided that (a) Grantor shall first deposit with
Beneficiary or Beneficiary's title company a bond or other security satisfactory
to Beneficiary in such amounts as Beneficiary and the title company shall
require, and (b) Grantor shall thereafter diligently proceed to cause such lien,
encumbrance or charge to be removed and discharged. If Grantor shall fail to
discharge any such lien, encumbrance or charge, then, in addition to any other
right or remedy of Beneficiary, Beneficiary may, but shall not be obligated to,
discharge the same, either by paying the amount claimed to be due, or by
procuring the discharge of such lien by depositing in court a bond or the amount
claimed or otherwise giving security for such claim, or in such manner as is or
may be prescribed by law and such amount paid or expended by Beneficiary shall
bear interest at the Default Rate, shall be part of the Secured Obligations and
secured hereby and shall be repaid to Beneficiary on demand.
Section 1.19 Beneficiary's Powers. At any time, or from time to time,
without notice and without liability therefor, and without affecting the
personal liability, if any, of any Person for payment of the Secured Obligations
or the effect of this Mortgage upon the remainder of the Mortgaged Estate,
Beneficiary with the consent of the Required Lenders (as
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defined in the Credit Agreement) may, without notice, (a) release any part of
the Mortgaged Estate, (b) consent in writing to the making of any map or plat
thereof, (c) join in granting any easement thereon, (d) join in any extension
agreement or any agreement subordinating the lien or charge hereof, (e) release
any person liable for payment of the indebtedness secured hereby, (f) extend the
maturity or alter any of the terms of any such obligations, (g) grant other
indulgences, (h) take or release any other or additional security for any
obligation herein mentioned, (i) make compositions or other arrangements with
debtors in relation thereto, or (j) advance additional funds to protect the
security hereof and pay or discharge the obligations of Grantor hereunder or
under the Loan Documents, and all amounts so advanced, with interest thereon at
the Default Rate, shall be part of the Secured Obligations and secured hereby
and such amount paid or expended by Beneficiary shall bear interest at the
Default Rate, and shall be repaid to Beneficiary on demand.
Section 1.20 Restrictions Affecting Title. Grantor shall perform when
due all obligations required to be performed by Grantor by the provisions of any
agreement affecting title to the Mortgaged Estate.
Section 1.21 After-Acquired Property. All right, title and interest of
Grantor in and to all extensions, improvements, betterments, renewals,
substitutes and replacements of, and all additions and appurtenances to, the
Mortgaged Estate, hereafter acquired by, or released to, Grantor or constructed,
assembled or placed by Grantor on the Land, and all conversions of the security
constituted thereby, immediately upon such acquisition, release, construction,
assembling, placement or conversion, as the case may be, and in each such case,
without any further mortgage, conveyance, assignment, or other act by Grantor,
shall become subject to the lien of this Mortgage as fully and completely, and
with the same effect, as though now owned by Grantor and specifically described
in the granting clauses hereof, but at any and all times Grantor will execute
and deliver to Beneficiary any and all such further assurances, mortgages,
conveyances, or assignments thereof as Beneficiary may reasonably require for
the purpose of expressly and specifically subjecting the same to the lien of
this Mortgage.
Section 1.22 Easements and Restrictions. All proposed easements,
permits, licenses, plans, tract maps and other instruments which would or might
affect the title to the Mortgaged Estate shall be submitted to Beneficiary for
Beneficiary's approval (and execution solely as lienholder if Beneficiary so
desires) prior to the execution thereof by Grantor, accompanied by a survey
showing the exact proposed location thereof and such other information as
Beneficiary shall reasonably require. Grantor shall not subject the Mortgaged
Estate or any part thereof to any easements, permits, licenses, plans, tract
maps or other instruments which would or might affect the title to the Mortgaged
Estate (other than a Permitted Exception) without the prior written consent of
Beneficiary.
Section 1.23 Estoppel Certificate. Grantor shall, at any time and from
time to time upon not less than ten (10) days' prior written notice from
Beneficiary execute, acknowledge and deliver to Beneficiary a statement (i)
certifying that this Mortgage and the Secured Obligations are unmodified and in
full force and effect or, if modified, stating the nature
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thereof and certifying that this Mortgage and the Secured Obligations, as so
modified, are in full force and effect and the date to which principal, interest
and other sums secured hereby have been paid and (ii) acknowledging that there
are no uncured defaults or circumstances which, with the passage of time, or the
giving of notice, or both, would constitute an Event of Default under this
Mortgage or under the Secured Obligations or specifying such defaults if any are
claimed. Any such certificate may be conclusively relied upon by Beneficiary and
any prospective purchaser or assignee of the Secured Obligations. Grantor's
failure to deliver such certificate within such time shall be conclusive upon
Grantor that (A) the Secured Obligations are in full force and effect, without
modification, except as may be represented by Beneficiary, and (B) there are no
uncured defaults hereunder or circumstances which, with the passage of time, or
the giving of notice, or both, would constitute an Event of Default.
ARTICLE II
SECURITY AGREEMENT
Section 2.01 Creation of Security Interest. This Mortgage shall
constitute a security agreement between Grantor as the Debtor and Beneficiary as
the Secured Party, and Grantor hereby grants to Beneficiary a security interest
in such of the Mortgaged Estate as may, in accordance with the Uniform
Commercial Code of the State of North Carolina (the "UCC"), be subject to a
security interest thereunder (herein, the "UCC Property"). Cumulative of all
other rights of Beneficiary hereunder, Beneficiary shall have all of the rights
conferred upon secured parties by the UCC. Grantor will execute and deliver to
Beneficiary all financing statements that may from time to time be reasonably
required by Beneficiary to establish and maintain the validity and priority of
the security interest of Beneficiary and pay all costs and expenses of any
searches reasonably required by Beneficiary. Beneficiary may exercise any or all
of the remedies of a secured party available to it under the UCC with respect to
the UCC Property, and it is expressly agreed that if upon an Event of Default
Beneficiary should proceed to dispose of the UCC Property in accordance with the
provisions of the UCC, five (5) days' notice by Beneficiary to Grantor shall be
deemed to be reasonable notice under any provision of the UCC requiring such
notice; provided, that, to the extent permitted by applicable law, Beneficiary
may at its option dispose of the UCC Property in accordance with Beneficiary's
rights and remedies with respect to the Mortgaged Estate pursuant to the
provisions of this Mortgage in lieu of proceeding under the UCC.
Grantor shall give advance notice in writing to Beneficiary of any
proposed change in Grantor's name, identity, or business form or structure and
will execute and deliver to Beneficiary, prior to or concurrently with the
occurrence of any such change, all additional financing statements that
Beneficiary may require to establish and maintain the validity and priority of
Beneficiary's security interest with respect to any of the UCC Property. Grantor
hereby appoints Beneficiary as its attorney-in-fact to execute and file on its
behalf any financing statements, continuation statements or other statements in
connection therewith which Beneficiary deems necessary or reasonably advised, to
preserve and maintain the
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priority of the lien hereof, or to extend the effectiveness hereof, under the
UCC or any other laws that may hereafter become applicable. This power, being
coupled with an interest, shall be irrevocable so long as any of the Secured
Obligations remains unpaid.
This Mortgage shall be effective as a financing statement filed as a
fixture filing from the date of its filing for record in the real estate records
of the county in which the UCC Property is situated. Information concerning the
security interest created by this Mortgage may be obtained from Beneficiary, as
secured party, at the address of Beneficiary stated above. The mailing address
of Grantor, as debtor, is as stated in the introductory paragraph of this
Mortgage.
Section 2.02 Representations, Warranties and Covenants of Grantor.
Grantor hereby represents, warrants and covenants, with respect to the UCC
Property as follows:
(a) except for the security interest granted hereby, Grantor
is, and as to portions of the UCC Property to be acquired by Grantor
after the date hereof will be, the sole owner of the UCC Property, free
from any adverse lien, security interest, encumbrance or adverse claims
thereon of any kind whatsoever except for Permitted Exceptions. Grantor
will notify Beneficiary of, and will defend such property against, all
claims and demands of all persons at any time claiming the same or any
interest therein;
(b) except as otherwise provided herein or in the other Loan
Documents, Grantor will not lease, sell, convey, remove, alter or in
any manner transfer the UCC Property without the prior written consent
of Beneficiary, other than in the ordinary course of business and
except as permitted by the Credit Agreement; and
(c) the UCC Property will be kept on or at the Property and
Grantor will not remove the UCC Property from the Property unless it is
replaced with replacement property satisfactory to Beneficiary, without
the prior written consent of Beneficiary, except as otherwise provided
herein or in the Credit Agreement.
ARTICLE III
EVENTS OF DEFAULT AND REMEDIES OF BENEFICIARY
Section 3.01 Events of Default. If
(a) An Event of Default shall occur and be continuing under the Credit
Agreement; or
(b) Grantor shall fail to perform or observe any of its covenants or
agreements set forth herein and such failure shall continue for more than three
(3) Business Days from the
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<PAGE>
date due if the event or condition is a failure to pay money to or on behalf of
Beneficiary as and when due or for more than thirty (30) days after written
notice from Beneficiary to Grantor of such failure if the event or condition is
other than a failure to pay money; or
(c) Grantor shall, without the prior written consent of Beneficiary,
sell, transfer, assign or further encumber the Mortgaged Estate or any part
thereof or any interest therein, or shall be divested of its title or any
interest therein, in any manner, whether voluntarily or involuntarily;
then and in each and every such case ("Event of Default" or "Default"), and at
any time thereafter while such Event of Default is continuing, Beneficiary shall
have, in addition to any rights at law or in equity, each and all of the
following rights and remedies, which may be exercised individually, collectively
or cumulatively:
(i) Beneficiary may, at its option, by written notice to
Grantor, declare immediately due and payable the Secured Obligations
(any notice of intent to accelerate such Secured Obligations prior to
the notice of acceleration being expressly waived by Grantor), and upon
any such declaration, the principal of accrued and unpaid interest and
all other Secured Obligations shall become and be immediately due and
payable. Anything to the contrary contained in this Mortgage
notwithstanding, the principal debt and, to the extent permitted by
applicable law, accrued and unpaid interest to that date shall
thereafter bear interest at the Default Rate until paid.
(ii) To the extent permitted by applicable law, Beneficiary
personally, or by the agents or attorneys of Beneficiary, may take
immediate possession of the Mortgaged Estate hereby conveyed and
operate or lease the same and collect all income and rents arising
therefrom then due or that may thereafter become due, and pay the
proceeds so collected therefrom to Beneficiary for application in
accordance with the Credit Agreement.
(iii) In the event of the noncompliance with any duty or
duties required of Grantor under the terms of this Mortgage,
Beneficiary reserves the right, at its own election, to advance
sufficient funds to perform or maintain such duty or duties. Such
funds, on notice from Beneficiary, shall be immediately paid by Grantor
to Beneficiary, and if not so paid shall bear interest at the Default
Rate from the date of demand for payment to the date of their payment
in full to Beneficiary and shall be secured by this Mortgage.
(iv) Beneficiary may and is hereby authorized and empowered to
foreclose this Mortgage and sell and dispose of the Mortgaged Estate in
accor dance with applicable law, at the place that Beneficiary so
designates; and Beneficiary may thereupon execute and deliver to the
purchaser at said sale a sufficient conveyance of the Mortgaged Estate
in fee simple, which conveyance may contain recitals as to the
happening of the Default upon which the right
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<PAGE>
of foreclosure depends, and said recitals shall be presumptive evidence
that all preliminary acts prerequisite to said sale and deed were in
all things duly complied with; and Beneficiary, its agents,
representatives, successors or assigns, may bid and purchase at such
sale. Grantor hereby constitutes and appoints Beneficiary agent and
attorney-in-fact to make such sale, recitals, and conveyance, and all
of the acts of such attorney-in-fact are hereby ratified. Such recitals
shall be binding and conclusive (except as to existence of an Event of
Default on Grantor's part) upon Grantor, and the conveyance to be made
by Beneficiary (and in the event of a deed in lieu of foreclosure, then
as to such conveyance) shall be effectual to bar all right, title and
interest, equity of redemption (including all statutory redemption),
homestead, dower, curtesy and all other exemptions that Grantor
possesses, in and to the Mortgaged Estate. Grantor does hereby
authorize and empower Beneficiary and each and all of Beneficiary's
successors in this Mortgage, to sell said Mortgaged Estate together or
in lots or parcels, as such Beneficiary shall deem expedient, and to
execute and deliver to the purchaser or purchasers of such Mortgaged
Estate good and sufficient deeds of conveyance thereof by fee simple
title and to re ceive and pay over the proceeds of such sale or sales
to the following payments and in the following order: (A) all expenses
incurred in making such sale or sales; (B) all sums due Beneficiary
hereunder; and (C) to Beneficiary for application in accordance with
the Credit Agreement.
(v) The purchaser under any foreclosure sale hereunder may
disaffirm any easement granted or lease contract made without the
approval of Beneficiary subsequent to the execution of this Mortgage,
and may take immediate possession of the Mortgaged Estate free from,
and despite the terms of, such grant of easement or lease contract. In
the event of a foreclosure of the lien of this Mortgage, any owner in
possession of the Mortgaged Estate shall thereupon become the tenant at
will of the purchaser at such foreclosure sale and should such tenant
or any person claiming possession under or through him refuse to
surrender possession of the Mortgaged Estate upon demand, the purchaser
shall thereupon be entitled to institute and maintain the statutory
action for forcible detainer and procure a writ of possession thereun
der. Beneficiary, or any other holder of the Secured Obligations being
the highest bidder for cash, may purchase at any foreclosure sale or
sales made hereunder.
(vi) Beneficiary may exercise any or all of the remedies of a
secured party available to it under the UCC with respect to the
Mortgaged Estate as set forth in Article II hereof; provided, however,
that Beneficiary may, at its option, dispose of the collateral in
accordance with Beneficiary's rights and remedies in respect of the
Mortgaged Estate pursuant to the provisions of this Mortgage, in lieu
of proceeding under the UCC.
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<PAGE>
(vii) To the extent permitted in the Credit Agreement,
Beneficiary may offset and apply, to any or all of the Secured
Obligations, all monies, credits and other property of any nature
whatsoever, and the proceeds thereof, of Grantor now or at any time
hereafter in the possession of, in transit to or from, under the
custody or control of, or on deposit with, Beneficiary.
Section 3.02 Receiver. In addition to any other rights and powers
conferred herein, Beneficiary shall have the right after the happening of any
Event of Default as hereinabove defined to apply for the appointment of a
receiver of rents and profits of any part or the whole of the Mortgaged Estate
without notice, and Beneficiary shall be entitled, as a matter of right, without
regard to the value of the Mortgaged Estate as security for the amount due or to
the solvency of Grantor or any other party or parties liable for the payment of
such amount, to the appointment of such a receiver of rents and profits with
power to lease the Mortgaged Estate, or such part thereof as may not then be
under lease, and with such other powers as may be deemed necessary, who, after
deducting all proper charges and expenses attending the execution of his trust
as receiver shall apply the residue of the Rents and Profits to the payment and
satisfaction of the Secured Obligations, or to any deficiency which may exist
after applying the proceeds of the sale of the Mortgaged Estate to the payment
of the Secured Obligations, including interest and the costs of any reasonable
attorneys' fees for the foreclosure and sale in such order of priority as
Beneficiary shall elect.
Section 3.03 Waiver of Rights. Neither Grantor nor its successors or
assigns, ever shall have or assert any right, under any statute or rule of law
pertaining to the marshaling of assets, the exemption of homestead, the
administration of estates of decedents, or in any manner whatever, to defeat,
reduce or affect the right of the holder of the Secured Obligations, under the
terms of this Mortgage, to a sale of the Mortgaged Estate for the collection of
the Secured Obligations (without any prior or different resort for collection),
or the right of the holder, under the terms of this Mortgage, to the payment of
the Secured Obligations out of the proceeds of sale of the conveyed Mortgaged
Estate in preference to every other person and claimant whatever (only
reasonable expenses as aforesaid being first deducted); and Grantor, to the
extent that it lawfully may, expressly waives any right now or hereafter
existing to redeem the Mortgaged Estate or any portion thereof so sold.
Section 3.04 Retention of Possession. Notwithstanding the appointment
of any receiver, liquidator or trustee of Grantor, or the then owner of the
Mortgaged Estate, or of any of Grantor's or then owners' other property,
Beneficiary shall be entitled to retain possession and control of the Mortgaged
Estate now or hereafter granted to or held by Beneficiary hereunder.
Section 3.05 Remedies not Exclusive. The cumulative rights of
Beneficiary arising under the clauses and covenants contained in this Mortgage
shall be separate, distinct and cumulative and none of them shall be construed
to be exclusive or an election to proceed under any one provision herein to the
exclusion of any other provision, anything herein or otherwise to the contrary
notwithstanding. In addition to any remedies provided herein for an Event of
Default hereunder, Beneficiary shall have all other remedies allowed under the
17
<PAGE>
laws of the State of South Carolina, and the laws of the United States. No
failure on the part of Beneficiary to exercise any of its rights hereunder
arising upon any Default shall be construed to prejudice its rights in the event
of any other or subsequent Default. No delay on the part of Beneficiary in
exercising any of such rights shall be construed to preclude it from the
exercise thereof at any time during the continuance of such Default. Beneficiary
may enforce any one or more remedies or rights hereunder in such order and
manner as it may determine, successively or concurrently at its option. By
accepting payment or partial payment of any sums secured hereby after its due
date, Beneficiary shall not make an accommodation or thereby waive the agreement
herein contained that time is of the essence, nor shall Beneficiary waive either
any of its remedies or options or its right to require prompt payment when due
of all Secured Obligations or to consider failure so to pay a Default hereunder.
Neither the acceptance of this Mortgage nor its enforcement, whether by court
action or pursuant to other powers herein contained, shall prejudice or in any
manner affect Beneficiary's right to realize upon or enforce any other security
now or hereafter held by Beneficiary.
ARTICLE IV
MISCELLANEOUS
Section 4.01 Governing Law. This Mortgage shall be governed by and
construed and enforced in accordance with the law of the State of South Carolina
applicable to contracts made and to be performed in the State of South Carolina
without reference to conflicts of laws principles.
Section 4.02 Waiver of Rights. To the extent permitted by law, Grantor
waives the benefit of all laws now existing or that hereafter may be enacted (a)
providing for any appraisement before sale of any portion of the Mortgaged
Estate, and (b) in any way extending the time for the enforcement of the
collection of the Secured Obligations or creating or extending a period of
redemption from any sale made in collecting the Secured Obligations. To the full
extent Grantor may do so, Grantor agrees that Grantor will not at any time
insist upon, plea, claim or take the benefit or advantage of any law now or
hereafter in force providing for any appraisement, valuation, stay, extension or
redemption, and Grantor, for itself and its successors and assigns, and for any
and all persons ever claiming any interest in the Mortgaged Estate by, through
or under Grantor, to the extent permitted by law, hereby waives and releases all
rights of redemption, valuation, appraisement, stay of execution, notice of
election to mature or declare due the whole of the Secured Obligations and
marshal ling in the event of foreclosure of the liens hereby created. If any law
referred to in this Section and now in force, of which Grantor, Grantor's
successors and assigns or other person might take advantage despite this
Section, shall hereafter be repealed or cease to be in force, such law shall not
thereafter be deemed to preclude the application of this Section. To the extent
permitted by law, Grantor expressly waives and relinquishes any and all rights
and
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<PAGE>
remedies which Grantor may have or be able to assert by reason of the laws of
the State of North Carolina pertaining to the rights and remedies of sureties.
Section 4.03 Notices. Whenever Beneficiary or Grantor shall desire to
give or serve any notice, demand, request or other communication with respect to
this Mortgage, each such notice, demand, request or other communication shall be
in writing and shall be effective only if the same is delivered in the manner
set forth in the Credit Agreement, addressed to the addresses therein set forth.
Any party may at any time change its address for such notices by delivering or
mailing to the other parties hereto, as aforesaid, a notice of such change.
Section 4.04 Captions. The captions or headings at the beginning of
each Section hereof are for the convenience of the parties and are not a part of
this Mortgage.
Section 4.05 Invalidity of Certain Provisions. If the lien of this
Mortgage is invalid or unenforceable as to any part of the Secured Obligations,
or if the lien is invalid or unenforceable as to any part of the Mortgaged
Estate, the unsecured or partially secured portion of the debt shall be
completely paid prior to the payment of the remaining and secured portion of the
Secured Obligations, and all payments made on the debt, whether voluntary or
under foreclosure or other enforcement action or procedure, shall be considered
to have been first paid on and applied to the full payment of that portion of
the Secured Obligations which is not secured or fully secured by the lien of
this Mortgage.
Section 4.06 Subrogation. To the extent that proceeds of the Secured
Obligations are used to pay any outstanding lien, charge or prior encumbrance
against the Mortgaged Estate and such proceeds or advances have been or will be
advanced by Beneficiary, Beneficiary shall be subrogated to any and all rights
and liens held by any owner or holder of such outstanding liens, charges and
prior encumbrances, irrespective of whether said liens, charges or encumbrances
are released of record.
IN WITNESS WHEREOF, Grantor has caused this Mortgage to be executed
under seal on its behalf by its duly authorized officers as of the day and year
first above written.
Texfi Industries, Inc.
By:
Witness Name:
Title:
Witness
[CORPORATE SEAL]
ATTEST:
Secretary
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<PAGE>
STATE OF NORTH CAROLINA
COUNTY OF MECKLENBURG
PERSONALLY appeared before me the undersigned witness, who upon oath
states that (s)he saw the within named Texfi Industries, Inc., by and through
its above signed officer, sign, seal and as its act and deed deliver the within
written Mortgage and Security Agreement, for the uses and purposes therein
mentioned, and that (s)he with the other witness whose signature appears above
witnessed the due execution thereof.
SWORN TO before me this 14th )
day of March, 1996. )
)
)
) Witness
Notary Public )
My Commission Expires:
October 4, 2000
<PAGE>
<PAGE>
Exhibit 2(a)(5)
STATE OF GEORGIA
COUNTY OF JACKSON
DEED TO SECURE DEBT AND SECURITY AGREEMENT
Between
Texfi Industries, Inc.
and
NationsBank, N.A., as Agent
and
NationsBanc Commercial Corporation, as Disbursing Agent
Dated as of March 15, 1996
This instrument was drawn by and mail to:
J. Donnell Lassiter, Esq.
Kennedy Covington Lobdell & Hickman, L.L.P.
NationsBank Corporate Center, Suite 4200
101 North Tryon Street
Charlotte, North Carolina 28202-4006
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE I - REPRESENTATIONS, WARRANTIES, COVENANTS
AND AGREEMENTS OF GRANTOR..................................................................... 4
Section 1.01 Payment of Secured Obligations....................................................... 4
Section 1.02 Title of Grantor..................................................................... 4
Section 1.03 Maintenance, Repair, Alterations..................................................... 5
Section 1.04 Required Insurance................................................................... 5
Section 1.05 Delivery of Insurance Policies, etc.................................................. 5
Section 1.06 Insurance Proceeds................................................................... 6
Section 1.07 Assignment of Policies Upon Foreclosure.............................................. 7
Section 1.08 Indemnification; Subrogation; Waiver of Offset....................................... 7
Section 1.09 Taxes and Impositions................................................................ 8
Section 1.10 Impound for Taxes.................................................................... 9
Section 1.11 Utilities............................................................................ 9
Section 1.12 Actions Affecting Mortgaged Estate................................................... 9
Section 1.13 Actions by Beneficiary As To Mortgaged Estate........................................ 10
Section 1.14 Survival of Warranties............................................................... 10
Section 1.15 Eminent Domain....................................................................... 10
Section 1.16 Additional Encumbrances.............................................................. 11
Section 1.17 Inspection, Audits and Information Regarding Collateral.............................. 11
Section 1.18 Liens................................................................................ 11
Section 1.19 Beneficiary's Powers................................................................. 12
Section 1.20 Restrictions Affecting Title......................................................... 12
Section 1.21 After-Acquired Property.............................................................. 12
Section 1.22 Easements and Restrictions........................................................... 13
Section 1.23 Estoppel Certificate................................................................. 13
Section 1.24 Non-Residential Status of Property................................................... 13
ARTICLE II - SECURITY AGREEMENT............................................................................ 13
Section 2.01 Creation of Security Interest........................................................ 13
Section 2.02 Representations, Warranties and Covenants of Grantor................................. 14
ARTICLE III - EVENTS OF DEFAULT AND REMEDIES OF BENEFICIARY................................................. 15
Section 3.01 Events of Default.................................................................... 15
<PAGE>
Section 3.02 Receiver............................................................................. 18
Section 3.03 Waiver of Rights..................................................................... 18
Section 3.04 Retention of Possession.............................................................. 18
Section 3.05 Remedies not Exclusive............................................................... 19
Section 3.06 Waiver of Appraisement; Valuation, Stay, Extension,
Homestead Exemption and Redemption Laws.............................................. 19
Section 3.07 Discontinuance of Proceedings and Restoration of the
Parties.............................................................................. 19
ARTICLE IV - MISCELLANEOUS................................................................................. 20
Section 4.01 Governing Law........................................................................ 20
Section 4.02 Waiver of Rights..................................................................... 20
Section 4.03 Notices.............................................................................. 20
Section 4.04 Captions............................................................................. 20
Section 4.05 Invalidity of Certain Provisions..................................................... 20
Section 4.06 Subrogation.......................................................................... 21
Section 4.07 Waiver of Rights For Commercial Transaction.......................................... 21
Section 4.08 Waiver of Grantor's Rights........................................................... 21
Section 4.09 Final Maturity....................................................................... 21
</TABLE>
Exhibits
A - Description of Land
B - Permitted Exceptions
C - Excluded Equipment
<PAGE>
DEED TO SECURE DEBT AND SECURITY AGREEMENT
THIS DEED TO SECURE DEBT AND SECURITY AGREEMENT (this "Security Deed")
dated as of March 15, 1996 by and between TEXFI INDUSTRIES, INC., a Delaware
corporation, whose mailing address is 5400 Glenwood Avenue, Raleigh, North
Carolina 27612 ("Grantor"), and NATIONSBANK, N.A., a national banking
association organized under the laws of the United States, as Agent (the
"Beneficiary") for the benefit of itself and the financial institutions (the
"Lenders") as are, or may from time to time, become parties to the Credit
Agreement (as defined below) and NATIONSBANC COMMERCIAL CORPORATION, as
Disbursing Agent (the "Disbursing Agent").
STATEMENT OF PURPOSE
Pursuant to a Credit Agreement dated as of even date herewith (together
with all amendments and other modifications, if any, from time to time hereafter
made thereto, the "Credit Agreement") by and among the Grantor as Borrower
thereunder (the "Borrower"), the Lenders, the Beneficiary as Agent thereunder
and the Disbursing Agent, the Lenders will extend Loans to and cause Letters of
Credit to be issued on behalf of the Borrower, as more particularly described in
the Credit Agreement. To induce the Lenders, the Agent and the Disbursing Agent
to enter into the Credit Agreement, and as a condition to the making of the
Loans and the issuance of Letters of Credit thereunder, the Lenders require that
the Grantor execute and deliver this Security Deed.
FOR GOOD AND VALUABLE CONSIDERATION, including the indebtedness herein
recited, the receipt of which is hereby acknowledged, Grantor hereby irrevocably
grants, bargains, sells, transfers, conveys and assigns to Beneficiary, under
and subject to the terms and conditions hereinafter set forth, all right, title,
interest and estate of Grantor in and to the real property more particularly
described in Exhibit A attached hereto and by this reference incorporated herein
(the "Land");
TOGETHER WITH all of the right, title, interest and estate of Grantor,
either at law or in equity, in and to:
Any and all buildings, improvements and structures now or hereafter
erected on the Land (the "Improvements") (the Land and the Improvements are
collectively referred to as the "Property");
All rights, privileges, tenements, hereditaments, rights-of-way,
easements, appendages, streets, alleys, passages, waters, watercourses,
covenants, rights and appurtenances of the Property belonging or in any way
appertaining thereto, or which hereafter shall in any way
<PAGE>
belong, relate or be appurtenant thereto, whether now owned or hereafter
acquired by Grantor, and all right, title, and interest of Grantor in and to any
streets, ways, watercourses, alleys, easements, covenants and strips or gores of
land now existing or hereafter created for the benefit of Grantor, the Property
or any subsequent owner or tenant of the Property on or over land adjoining the
Property or any portion thereof and all rights to enforce the maintenance
thereof;
All minerals, soil, flowers, crops, trees, timber and other emblements
now or hereafter on, under or above the Property;
All water, sanitary and storm sewer systems now or hereafter located
by, over and/or upon the Property or any part and parcel thereof, and which
water system includes all water mains, service laterals, hydrants, valves and
appurtenances, including, without limitation, all sanitary sewer lines,
including mains, laterals, manholes and appurtenances;
All paving for streets, roads, walkways or entranceways now or
hereafter located on the Property or any part or parcel thereof;
All fixtures (other than fixtures described on Exhibit C hereto)
located upon or within the Property or now or at any time hereafter attached to
or installed in, or used in connection with, any of the Property, including, but
not limited to, any and all partitions, dynamos, screens, awnings, motors,
engines, boilers, furnaces, pipes, plumbing, escalators, elevators, sprinkler
systems, fire prevention and extinguishing apparatus and equipment, water tanks,
heating, ventilating, air conditioning and air-cooling equipment, heaters,
condensers, compressors, ducts, machinery, walks, fences, shrubbery, driveways,
fittings and other fixtures of every kind and character whatsoever
(collectively, the "Fixtures");
Any award or awards heretofore made or hereafter to be made by any
municipal, state or Federal authorities to the present or any subsequent owners
of the Property or the Fixtures, including any award or awards or settlements
hereafter made resulting from condemnation proceedings or the taking of the
Property or the Fixtures, or any part thereof, under the power of eminent
domain;
All proceeds from the conversion, voluntary or involuntary, of any of
the Property or the Fixtures into cash or liquidated claims including, without
limitation, the proceeds of insurance, subject to certain restoration rights of
Grantor as provided in Section 1.06 hereof;
All existing and future leases, subleases, licenses and other
agreements for the use and occupancy of all or any portion of the Property or
the Fixtures, and any and all extensions, renewals and modifications thereof,
whether written or oral and whether for a definite term or month to month,
including without limitation (i) any and all cash or securities deposited
thereunder to secure performance by the lessees of their obligations thereunder,
(ii) the right to receive and collect all rents thereunder and (iii) any and all
guarantees of any lessee's obligations thereunder (collectively, the "Leases");
2
<PAGE>
All earnings, revenues, rents, issues, profits, avails, general
intangibles, choses in action and other income of and from the Property or the
Fixtures including, without limitation, all rents and receipts from the Leases
(collectively, the "Rents and Profits");
All architectural, engineering and similar plans, specifications,
drawings, renderings, profiles, studies, shop drawings, reports, plats, permits,
surveys and similar documents relating to the Property; all sewer taps, permits
and allocations; and all agreements for utilities, bonds, sureties and the like,
relating to the Property or appurtenant facilities erected or to be erected upon
or about the Property;
All warranties and guarantees of contractors or subcontractors or of
suppliers or manufacturers of equipment or other property incorporated into the
Improvements or used with or otherwise constituting part of the Fixtures; and
All equipment (other than the equipment described on Exhibit C hereto)
and other personal property located on, and used or useable in connection with,
the Property, including without limitation any and all air conditioners,
antennae, appliances, apparatus, awnings, basins, bathtubs, beds, bidets,
boilers, bookcases, cabinets, carpets, coolers, curtains, dehumidifiers,
disposals, doors, drapes, dryers, ducts, dynamos, elevators, engines, equipment,
escalators, fans, fittings, floor coverings, furnaces, furnishings, furniture,
hardware, heaters, humidifiers, incinerators, lighting, machinery, motors,
ovens, pictures, pipes, plants and containers, plumbing, pumps, radiators,
ranges, recreational facilities, refrigerators, screens, security systems,
shades, shelving, sinks, sprinklers, stokers, stoves, telephone systems,
toilets, ventilators, wall coverings, washers, windows, window coverings, and
wiring, as the same are now and will hereafter be constituted, whether now owned
by Grantor or hereafter acquired, together with all appliances, instruments,
improvements, accessories, equipment, parts and appurtenances appertaining or
attached thereto, or from time to time incorporated therein or installed as part
thereof, and all substitutions, renewals and replacements of and additions,
improvements, accessions and accumulations to any and all thereof which are now
owned or hereafter acquired by Grantor, together with all the rents, issues,
incomes, profits, accounts, proceeds and avails thereof.
All of the above-described right, title, interest, estate, claim and
demand of Grantor together with all cash and noncash proceeds thereof, and all
substitutions, accessions and replace ments thereto and therefor, are referred
to herein as the "Mortgaged Estate".
TO HAVE AND TO HOLD the Mortgaged Estate hereby granted or mortgaged
unto Beneficiary and Beneficiary's successors and assigns, in fee simple
forever.
THIS SECURITY DEED IS A DEED passing legal title pursuant to the laws
of the State of Georgia governing Deeds to Secure Debt, and is also a Security
Agreement granting a present and continuing security interest and security title
in that portion of the Mortgaged Estate constituting personal property or
fixtures, pursuant to the Uniform Commercial Code as adopted by the State of
Georgia, and is not a mortgage as "mortgage" is defined for the purposes of the
real property law of the State of Georgia.
3
<PAGE>
THIS SECURITY DEED SHALL SECURE THE FOLLOWING OBLIGATIONS
(collectively, the "Secured Obligations"):
(a) Payment of the Obligations (as defined in the Credit Agreement) and
any renewals or extensions of any of the Obligations;
(b) Payment of all sums advanced by or on behalf of Beneficiary to
protect the Mortgaged Estate, with interest thereon at the rate of interest
provided in Section 4.1(d) of the Credit Agreement (the "Default Rate") from the
date of advance by Beneficiary to the date of payment by Grantor; and
(c) Payment of all other sums from time to time owing to Beneficiary,
the Lenders or the Disbursing Agent under the Loan Documents (as defined in the
Credit Agreement).
SHOULD THE SECURED OBLIGATIONS BE PAID according to the tenor and
effect thereof when the same shall become due and payable and should Grantor
perform all covenants herein contained in a timely manner, then this Security
Deed shall be cancelled and surrendered.
Capitalized terms used herein shall have the meanings set forth in this
Security Deed or, if not defined herein, shall have the meaning ascribed to such
term in the Credit Agreement.
ARTICLE I
REPRESENTATIONS, WARRANTIES, COVENANTS
AND AGREEMENTS OF GRANTOR
Grantor hereby represents, warrants, covenants and agrees as follows:
SECTION 1.01 PAYMENT OF SECURED OBLIGATIONS. Grantor shall pay when due
all of the Obligations, and shall pay all other sums secured hereby at the time
and place and in the manner specified in the Loan Documents.
SECTION 1.02 TITLE OF GRANTOR. Grantor has, subject to the Permitted
Exceptions (as set forth on Exhibit B attached hereto and by this reference
incorporated herein (herein the "Permitted Exceptions")), in its own right, good
and indefeasible title in fee simple to the Mortgaged Estate which is free from
all liens and encumbrances, except the Permitted Exceptions, and has full right
to make this conveyance and that it will warrant and defend the title to such
property, except for the Permitted Exceptions, against the lawful claims of all
Persons.
SECTION 1.03 MAINTENANCE, REPAIR, ALTERATIONS. Grantor shall: (i) keep
the Mortgaged Estate in good condition and repair, subject to reasonable wear
and tear and damage due to casualty which is subject to repair as hereinafter
required, (ii) except as permitted by the Credit Agreement or otherwise
permitted in writing by Beneficiary, not remove, demolish or alter any
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of the Mortgaged Estate or the Fixtures, other than in the ordinary course of
business, (iii) complete promptly and in good and workmanlike manner any
alteration permitted hereunder and promptly restore in like manner any
Improvement which may be damaged or destroyed thereon or therein subject to the
provisions of Section 1.06 hereof and pay when due all claims for labor
performed and materials furnished therefor, and (iv) comply, and cause the
Mortgaged Estate to comply, with all laws, ordinances, regulations, covenants,
conditions and restrictions now or hereafter affecting the Mortgaged Estate or
any part thereof.
SECTION 1.04 REQUIRED INSURANCE. Grantor shall at all times keep, or
cause to be kept, the Improvements which now are or hereafter become a part of
the Mortgaged Estate insured under an "all risk" extended coverage form of
insurance policy containing both a replacement cost and an agreed amount
endorsement (and against all other hazards as reasonably may be required by
Beneficiary, which may include, without limitation, insurance against loss or
damage by flood and earthquake). All insurance shall be in form, content and
amounts approved by Beneficiary and written by an insurance company or companies
approved by Beneficiary. The policies for such insurance shall have attached
thereto standard mortgagee clauses in favor of and permitting Beneficiary to
collect any and all proceeds payable under all such insurance. All such policies
or certified copies thereof shall be delivered to and held by Beneficiary as
further security for the Secured Obligations, with evidence of renewal coverage
delivered to Beneficiary annually at least 10 days before the expiration date of
any policy. Grantor shall also carry public liability insurance protecting
Beneficiary against liability for injuries to persons and property occurring in,
on or adjacent to the Mortgaged Estate, in forms, companies and amounts
satisfactory to Beneficiary with the policy or policies evidencing such
insurance to contain a 30 day notice of cancellation or of change in coverage
clause in favor of Beneficiary. Grantor shall not carry separate insurance,
concurrent in kind or form and contributing in the event of loss, with any
insurance required herein.
SECTION 1.05 DELIVERY OF INSURANCE POLICIES, ETC. All policies of
insurance shall be issued by companies with a financial rating of at least A-X
as rated in the most recent edition of Best's Insurance Reports and in amounts
in each company as may be reasonably satisfactory to Beneficiary. All policies
of insurance shall have attached thereto a lender's loss payable and additional
insured endorsement for the benefit of Beneficiary in form reasonably
satisfactory to Beneficiary, shall contain a standard waiver of subrogation
clause and shall contain such other endorsements, terms and provisions as shall
be reasonably satisfactory to Beneficiary. If requested, Grantor shall furnish
Beneficiary with a certified copy of all policies of required insurance. At
least ten (10) days prior to the expiration of each such policy, Grantor shall
furnish Beneficiary with evidence satisfactory to Beneficiary of the reissuance
of a policy continuing insurance in force as required by this Security Deed. All
such policies shall contain a provision that such policies will not be canceled,
modified or amended (including any reduction in the scope or limits of
coverage), without thirty (30) days' prior written notice to Beneficiary.
Beneficiary shall not be responsible for the solvency of any company issuing any
policy of insurance pursuant hereto whether or not approved by it, or for the
collection of any amounts due under any such policy, and shall be responsible
and accountable only for such money as may be actually received by it, and then
only in accordance with the terms hereof. Nothing contained herein shall be
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construed as making Beneficiary liable in any way for any loss, damage or injury
resulting from the failure to insure the Mortgaged Estate.
SECTION 1.06 INSURANCE PROCEEDS. After the occurrence of any casualty
to the Mortgaged Estate or any part thereof, Grantor shall give prompt written
notice thereof to Beneficiary and each insurer and submit a claim to insurer for
payment of insurance proceeds with a copy of such claim sent by Grantor to
Beneficiary. Such casualty shall not affect the lien of this Security Deed or
the obligations of Grantor hereunder, and Beneficiary is authorized at
Beneficiary's option to compromise and settle all loss claims if not adjusted
promptly by Grantor. All proceeds of insurance paid or payable under any
insurance policy (the "Insurance Proceeds") shall be paid to Beneficiary for the
benefit of Grantor and each insurer of all or any portion of the Mortgaged
Estate is hereby authorized and directed to make payment for any such loss
directly to Beneficiary for the benefit of Grantor; provided that so long as no
Event of Default shall have occurred and be continuing, Insurance Proceeds of
$100,000 or less shall be paid to Grantor. Any Insurance Proceeds shall be
applied first to the payment of all costs and expenses incurred by Beneficiary
in obtaining such proceeds. The balance of the proceeds, if any, shall be
applied (a) if Beneficiary determines in its reasonable judgment that (i) the
proceeds together with such other sums as Grantor shall deposit with Beneficiary
to pay the costs of alteration, restoration or rebuilding the Mortgaged Estate
or such portion thereof which may have been altered, damaged or destroyed, are
sufficient to pay such costs in full, (ii) no Event of Default shall have
occurred and be continuing hereunder, (iii) following completion of such
alteration, restoration or rebuilding, the Property will be equal in value and
economic viability to its status prior to such casualty, (iv) such alteration,
restoration or rebuilding can be completed on or prior to the Revolving Credit
Termination Date under the Credit Agreement and (v) Grantor will have sufficient
income pending the completion of such, alteration, restoration or rebuilding to
pay all debt service due Beneficiary with respect to the Loans, toward altering,
restoring or rebuilding the Mortgaged Estate or such portion thereof which may
have been altered, damaged or destroyed, on the same or similar conditions and
requirements as are customarily required for construction loans made by
Beneficia ry, or (b) otherwise, to the pro rata payment of principal and
interest due on the Loans based on the principal balances then outstanding and
to the payment of any other obligations due under the other Loan Documents.
Notwithstanding the application of Insurance Proceeds to the payment of a
portion of the secured indebtedness, the unpaid portion of the secured
indebtedness shall remain in full force and effect, and Grantor shall not be
excused in the payment thereof. Nothing contained in this Security Deed shall be
deemed to excuse Grantor from repairing or maintaining the Mortgaged Estate as
provided herein and in Section 1.03 hereof. The application or release by
Beneficiary of any Insurance Proceeds shall not cure or waive any Event of
Default or notice of default under this Security Deed or invalidate any act done
pursuant to such notice.
SECTION 1.07 ASSIGNMENT OF POLICIES UPON FORECLOSURE. In the event of
foreclosure of this Security Deed or other transfer of title or assignment of
the Mortgaged Estate in extinguishment, in whole or in part, of the Secured
Obligations, all right, title and interest of Grantor in and to all policies of
insurance including any refundable premiums required by this Security Deed shall
inure to the benefit of and pass to the successor in interest of Grantor or the
purchaser or grantee of the Mortgaged Estate.
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SECTION 1.08 INDEMNIFICATION; SUBROGATION; WAIVER OF OFFSET.
(a) Grantor shall indemnify, defend and hold Beneficiary harmless from
any and all loss, costs, damages, expenses and liability incurred by Beneficiary
in connection with this Security Deed, including all attorneys' fees and
expenses incurred by Beneficiary, except to the extent any such loss, cost,
damage, expense or liability results from the gross negligence or willful
misconduct of Beneficiary. If Beneficiary commences an action against Grantor to
enforce any of the terms hereof or for the recovery of any sum secured hereby,
Grantor shall pay all attorneys' fees and expenses incurred by Beneficiary in
connection therewith, and the right to such attorney's fees and expenses shall
be deemed to have accrued on the commencement of such action, and shall be
enforceable whether or not such action is prosecuted to judgment. Upon an Event
of Default, Beneficiary may employ an attorney or attorneys to protect its
rights hereunder, and in the event of such employment following an Event of
Default, Grantor shall pay all attorneys' fees and expenses incurred by
Beneficiary, whether or not an action is actually commenced against Grantor by
reason of an Event of Default.
(b) All sums payable by Grantor hereunder, under the Credit Agreement
and under the other Loan Documents shall be paid without notice, demand,
counterclaim, set-off, deduction or defense and without abatement, suspension,
deferment, diminution or reduction, and the obligations and liabilities of
Grantor hereunder shall in no way be released, discharged or otherwise affected
by reason of: (i) any damage to or destruction of or any condemnation or similar
taking of the Mortgaged Estate or any part thereof, (ii) any restriction or
prevention of or interference with any use of the Mortgaged Estate or any part
thereof unless caused unlawfully by Beneficiary, (iii) any title defect or
encumbrance or any eviction from the Mortgaged Estate or any part thereof by
title paramount or otherwise, (iv) any bankruptcy, insolvency, reorganization,
composition, adjustment, dissolution, liquidation or other like proceeding
relating to Grantor, or any action taken with respect to this Security Deed by
any trustee or receiver of Grantor, or by any court, in any such proceeding, or
(v) any other occurrence whatsoever, whether similar or dissimilar to the
foregoing whether or not Grantor shall have notice or knowledge of any of the
foregoing. To the extent permitted by law, Grantor waives all rights now or
hereafter conferred by statute or otherwise to any abatement, suspension,
deferment, diminution or reduction of any sum secured hereby.
SECTION 1.09 TAXES AND IMPOSITIONS.
(a) Subject to the provisions of subsection (c) of this Section 1.09
and to the provisions of Section 1.10 hereof, Grantor shall pay or cause to be
paid and shall furnish evidence of payment thereof to Beneficiary, at least ten
(10) days prior to delinquency, all real property taxes and assessments, general
and special, and all other taxes and assessments of any kind or nature
whatsoever, including without limitation nongovernmental levies or assessments
such as maintenance charges, levies or charges resulting from covenants,
conditions and restrictions affecting the Mortgaged Estate, which are assessed
or imposed upon the Mortgaged Estate, or become due and payable, and which
create, may create or appear to create a lien upon the Mortgaged Estate, or any
part thereof (all of which taxes, assessments and other governmental and
nongovernmental charges of like nature are hereinafter referred to as
"Impositions"); provided
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that if, by law, any such Imposition is payable, or may at the option of the
taxpayer be paid, in installments, Grantor may pay the same together with any
accrued interest on the unpaid balance of such Imposition in installments as the
same become due and before any fine, penalty, interest or cost may be added
thereto for the nonpayment of any such installment and interest.
(b) If at any time after the date hereof there shall be assessed or
imposed (i) a tax or assessment on the Mortgaged Estate in lieu of or in
addition to the Impositions payable by Grantor pursuant to subsection (a) above,
or (ii) a license fee, tax or assessment imposed on Beneficiary and measured by
or based in whole or in part upon the amount of the outstanding obligations
secured hereby, then all such taxes, assessments or fees shall be deemed to be
included within the term Impositions, and Grantor shall pay and discharge the
same as herein provided with respect to the payment of Impositions. At the
option of Beneficiary, all obligations secured hereby together with all accrued
interest thereon, shall become due and payable in the event that Grantor shall
not be permitted to pay such fees, taxes or assessments on behalf of
Beneficiary.
(c) Grantor shall have the right before any delinquency occurs to
contest or object to the amount or validity of any Imposition by appropriate
legal proceedings, but such right shall not be deemed or construed in any way as
relieving, modifying, or extending Grantor's covenant to pay any such Imposition
at the time and in the manner provided in this Section 1.09, unless Grantor has
given prior written notice to Beneficiary of Grantor's intent to so contest or
object to an Imposition, and unless, at Beneficiary's sole option, (i) Grantor
shall demonstrate to Beneficiary's reasonable satisfaction that the legal
proceedings shall conclusively operate to prevent the sale of the Mortgaged
Estate, or any part thereof, to satisfy such Imposition prior to final
determination of such proceedings, (ii) Grantor shall furnish a good and
sufficient bond or surety as requested by and reasonably satisfactory to
Beneficiary or (iii) Grantor shall have provided a good and sufficient
undertaking as may be required or permitted by law to accomplish a stay of such
proceedings.
SECTION 1.10 IMPOUND FOR TAXES. Upon demand by Beneficiary after an
Event of Default (as defined in Section 3.01 hereof) has occurred and during the
continuance thereof, Grantor shall pay to Beneficiary, on the first day of each
and every calendar month, until the Secured Obligations are paid in full, an
amount equal to one-twelfth of the annual Impositions reasonably estimated by
Beneficiary necessary to pay the installments of Impositions next due on the
Mortgaged Estate. All such amounts paid under the terms of this Section 1.10
shall be held by Beneficiary in a non-interest bearing account. Grantor shall
cause all bills, statements or other documents relating to Impositions to be
sent or mailed directly to Beneficiary. Upon receipt of such bills, statements
or other documents, and provided Grantor has deposited sufficient funds pursuant
to this Section 1.10, Beneficiary shall pay such amounts as may be due
thereunder out of the funds so deposited. If at any time and for any reason the
funds so deposited are or will be insufficient to pay such amounts as may then
or subsequently be due, Beneficiary shall notify Grantor, and Grantor shall
promptly deposit an amount equal to such deficiency with Beneficiary.
Notwithstanding the foregoing, nothing contained herein shall cause Beneficiary
to be deemed a trustee of such funds or to be obligated to pay any amounts in
excess of the amount of funds so deposited pursuant to this Section 1.10.
Beneficiary may impound or reserve for future payment of Impositions such
portion of such payments as Beneficiary may in its reasonable discretion deem
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proper, applying the balance to the principal of or interest on the indebtedness
secured hereby which may then be due and payable. If Grantor fails to deposit
sums sufficient to fully pay such Impositions at least thirty (30) days before
delinquency thereof, Beneficiary may, at Beneficiary's election and with prior
notice to Grantor, but without any obligation so to do, advance any amounts
required to make up the deficiency. All amounts so advanced, if any, shall bear
interest at the Default Rate from the date of such payment to the date of
repayment thereof in full to Beneficiary, shall be secured hereby and shall be
part of the Secured Obligations and shall be repayable to Beneficiary upon
demand.
SECTION 1.11 UTILITIES. Grantor shall pay or cause to be paid when due
all utility charges which are incurred by or on behalf of Grantor for the
benefit of the Mortgaged Estate or which may become a charge or lien against the
Mortgaged Estate for gas, electricity, water or sewer services or solid waste
removal services furnished to the Mortgaged Estate and all other assessments or
charges of a similar nature, whether public or private, affecting the Mortgaged
Estate or any portion thereof, whether or not such taxes, assessments or charges
are liens thereon and shall, upon request of Beneficiary, provide evidence of
the payment thereof in accordance with this Section 1.11.
SECTION 1.12 ACTIONS AFFECTING MORTGAGED ESTATE. Grantor shall appear
in and contest any action or proceeding purporting to affect the security hereof
or the rights or powers of Beneficiary and shall pay all costs and expenses,
including cost of evidence of title and reasonable attorneys' fees, in any such
action or proceeding in which Beneficiary may appear. Grantor shall give written
notice of any claim asserted or legal action filed against Grantor or the
Mortgaged Estate within five (5) Business Days after Grantor's first knowledge
thereof. Nothing in this Section 1.12 shall be deemed to prevent Beneficiary
from appearing in and contesting such actions and Grantor shall reimburse
Beneficiary for any costs and expenses in accordance with Section 1.08 above.
SECTION 1.13 ACTIONS BY BENEFICIARY AS TO MORTGAGED ESTATE. Upon the
occurrence and during the continuance of an Event of Default, Beneficiary, in
its sole discretion, without obligation so to do and without notice to or demand
upon Grantor and without releasing Grantor from any obligation, may take any
action in respect of the Mortgaged Estate in such manner and to such extent as
Beneficiary may deem necessary to protect the security hereof. In connection
therewith (without limiting its general powers), Beneficiary shall have and is
hereby given the right, but not the obligation to: (a) enter upon and take
possession of the Mortgaged Estate, (b) direct Grantor to terminate any
management agent employed by Grantor with the prior written consent of
Beneficiary and to employ such management agent as Beneficiary may determine in
its sole and absolute discretion, (c) make additions, alterations, repairs and
improvements to the Mortgaged Estate which it may consider to be necessary or
proper to keep the Mortgaged Estate in good condition and repair, subject to
normal wear and tear, (d) appear and participate in any action or proceeding
affecting or which may affect the security hereof or the rights or powers of
Beneficiary, (e) pay, purchase, contest or compromise any encumbrance, claim,
charge, lien or debt which in the reasonable judgment of Beneficiary may affect
or appears to affect the security of this Security Deed or be prior or superior
hereto, (f) take or perform all actions or pay all amounts from time to time,
which this Security Deed permits or requires Grantor to take or
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perform, and (g) in exercising such powers, pay necessary expenses, including
employment of counsel or other necessary or desirable consultants. Grantor shall
immediately upon demand therefor by Beneficiary pay all costs and expenses
incurred by Beneficiary in connection with the exercise by Beneficiary of the
foregoing rights, including without limitation costs of evidence of title, court
costs, appraisals, surveys and reasonable attorneys' fees, and any such costs
and expenses from the date so paid until the date repaid in full, shall bear
interest at the Default Rate, and shall be secured hereby as part of the Secured
Obligations.
SECTION 1.14 SURVIVAL OF WARRANTIES. Grantor shall fully and faithfully
satisfy and perform the obligations of Grantor contained in the Credit
Agreement. All representations, warranties and covenants of Grantor contained
therein shall remain continuing representations, warranties and covenants of
Grantor during any time when any portion of the Secured Obligations remains
outstanding.
SECTION 1.15 EMINENT DOMAIN. Should the Mortgaged Estate, or any part
thereof or interest therein, be taken or damaged by reason of any public
improvement, condemnation or eminent domain proceeding or in any other manner
(collectively, "Condemnation"), or should Grantor receive any notice or other
information regarding such proceeding, Grantor shall give prompt written notice
thereof to Beneficiary. Beneficiary may participate in any such Condemnation
proceedings, and Grantor shall from time to time deliver to Beneficiary all
instruments requested by Beneficiary to permit such participation. Grantor
shall, at its expense, diligently prosecute in a reasonable manner any such
proceedings and shall consult with Beneficiary and its attorneys and experts,
and cooperate in a reasonable manner with them in the carrying on or defense of
any such proceedings. All proceeds of Condemnation awards or proceeds of sale in
lieu of Condemnation with respect to the Mortgaged Estate and all judgments,
decrees and awards for injury or damage to the Mortgaged Estate shall be paid to
Beneficiary for the benefit of Grantor and shall be applied in the manner in
which Insurance Proceeds are to be applied pursuant to Section 1.06 hereof.
Grantor hereby assigns and transfers all such proceeds, judgments, decrees and
awards to Beneficiary and agrees to execute such further assignments of all such
proceeds, judgments, decrees and awards, as Beneficiary may request. Beneficiary
is hereby authorized, in the name of Grantor, to execute and deliver valid
acquittances for, and to appeal from, any such judgment, decree or award.
Beneficiary shall not be, in any event or circumstance, liable or responsible
for failure to collect or exercise diligence in the collection of any proceeds,
judgments, decrees or awards.
SECTION 1.16 ADDITIONAL ENCUMBRANCES. Grantor shall not further
encumber the Mortgaged Estate or any portion thereof.
SECTION 1.17 INSPECTION, AUDITS AND INFORMATION REGARDING COLLATERAL.
(a) Grantor shall permit Beneficiary, its representatives and agents,
to enter upon the Mortgaged Estate at all reasonable times and during normal
business hours and to inspect the Mortgaged Estate, and shall cooperate with
Beneficiary, its representatives and agents, during such inspections, including
making available to Beneficiary working copies of all plans and specifications
together with all related supplementary materials.
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(b) Grantor shall also permit Beneficiary, its representatives and
agents, to examine, copy and make extracts of the books, records, accounting
data and other documents of Grantor that relate in any way to the Mortgaged
Estate, including, without limitation, all permits, licenses, consents and
approvals of all governmental authorities having jurisdiction over Grantor and
the Mortgaged Estate. All such books, records and documents shall be made
available to Beneficiary promptly upon written demand therefor and, at the
request of Beneficiary, Grantor shall furnish Beneficiary with convenient
facilities for the foregoing purposes.
SECTION 1.18 LIENS. Grantor shall, within thirty (30) days after
Grantor receives notice thereof, pay and discharge, at Grantor's cost and
expense, all liens, encumbrances and charges upon the Mortgaged Estate, or any
part thereof or interest therein, except for Permitted Exceptions. Grantor shall
have the right to contest in good faith the validity of any such lien,
encumbrance or charge; provided that (a) Grantor shall first deposit with
Beneficiary or Beneficiary's title company a bond or other security satisfactory
to Beneficiary in such amounts as Beneficiary and the title company shall
require, and (b) Grantor shall thereafter diligently proceed to cause such lien,
encumbrance or charge to be removed and discharged. If Grantor shall fail to
discharge any such lien, encumbrance or charge, then, in addition to any other
right or remedy of Beneficiary, Beneficiary may, but shall not be obligated to,
discharge the same, either by paying the amount claimed to be due, or by
procuring the discharge of such lien by depositing in court a bond or the amount
claimed or otherwise giving security for such claim, or in such manner as is or
may be prescribed by law and such amount paid or expended by Beneficiary shall
bear interest at the Default Rate, shall be part of the Secured Obligations and
secured hereby and shall be repaid to Beneficiary on demand.
SECTION 1.19 BENEFICIARY'S POWERS. At any time, or from time to time,
without notice and without liability therefor, and without affecting the
personal liability, if any, of any Person for payment of the Secured Obligations
or the effect of this Security Deed upon the remainder of the Mortgaged Estate,
Beneficiary with the consent of the Required Lenders (as defined in the Credit
Agreement) may, without notice, (a) release any part of the Mortgaged Estate,
(b) consent in writing to the making of any map or plat thereof, (c) join in
granting any easement thereon, (d) join in any extension agreement or any
agreement subordinating the lien or charge hereof, (e) release any person liable
for payment of the indebtedness secured hereby, (f) extend the maturity or alter
any of the terms of any such obligations, (g) grant other indulgences, (h) take
or release any other or additional security for any obligation herein mentioned,
(i) make compositions or other arrangements with debtors in relation thereto, or
(j) advance additional funds to protect the security hereof and pay or discharge
the obligations of Grantor hereunder or under the Loan Documents, and all
amounts so advanced, with interest thereon at the Default Rate, shall be part of
the Secured Obligations and secured hereby and such amount paid or expended by
Beneficiary shall bear interest at the Default Rate, and shall be repaid to
Beneficiary on demand.
SECTION 1.20 RESTRICTIONS AFFECTING TITLE. Grantor shall perform when
due all obligations required to be performed by Grantor by the provisions of any
agreement affecting title to the Mortgaged Estate.
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SECTION 1.21 AFTER-ACQUIRED PROPERTY. All right, title and interest of
Grantor in and to all extensions, improvements, betterments, renewals,
substitutes and replacements of, and all additions and appurtenances to, the
Mortgaged Estate, hereafter acquired by, or released to, Grantor or constructed,
assembled or placed by Grantor on the Land, and all conversions of the security
constituted thereby, immediately upon such acquisition, release, construction,
assembling, placement or conversion, as the case may be, and in each such case,
without any further mortgage, conveyance, assignment, or other act by Grantor,
shall become subject to the lien of this Security Deed as fully and completely,
and with the same effect, as though now owned by Grantor and specifically
described in the granting clauses hereof, but at any and all times Grantor will
execute and deliver to Beneficiary any and all such further assurances,
mortgages, conveyances, or assignments thereof as Beneficiary may reasonably
require for the purpose of expressly and specifically subjecting the same to the
lien of this Security Deed.
SECTION 1.22 EASEMENTS AND RESTRICTIONS. All proposed easements,
permits, licenses, plans, tract maps and other instruments which would or might
affect the title to the Mortgaged Estate shall be submitted to Beneficiary for
Beneficiary's approval (and execution solely as lienholder if Beneficiary so
desires) prior to the execution thereof by Grantor, accompanied by a survey
showing the exact proposed location thereof and such other information as
Beneficiary shall reasonably require. Grantor shall not subject the Mortgaged
Estate or any part thereof to any easements, permits, licenses, plans, tract
maps or other instruments which would or might affect the title to the Mortgaged
Estate (other than a Permitted Exception) without the prior written consent of
Beneficiary.
SECTION 1.23 ESTOPPEL CERTIFICATE. Grantor shall, at any time and from
time to time upon not less than ten (10) days' prior written notice from
Beneficiary execute, acknowledge and deliver to Beneficiary a statement (i)
certifying that this Security Deed and the Secured Obligations are unmodified
and in full force and effect or, if modified, stating the nature thereof and
certifying that this Security Deed and the Secured Obligations, as so modified,
are in full force and effect and the date to which principal, interest and other
sums secured hereby have been paid and (ii) acknowledging that there are no
uncured defaults or circumstances which, with the passage of time, or the giving
of notice, or both, would constitute an Event of Default under this Security
Deed or under the Secured Obligations or specifying such defaults if any are
claimed. Any such certificate may be conclusively relied upon by Beneficiary and
any prospective purchaser or assignee of the Secured Obligations. Grantor's
failure to deliver such certificate within such time shall be conclusive upon
Grantor that (A) the Secured Obligations are in full force and effect, without
modification, except as may be represented by Beneficiary, and (B) there are no
uncured defaults hereunder or circumstances which, with the passage of time, or
the giving of notice, or both, would constitute an Event of Default.
SECTION 1.24 NON-RESIDENTIAL STATUS OF PROPERTY. Grantor represents and
warrants to Beneficiary that neither all of the Property nor any part thereof is
to be used as a dwelling place by Grantor or any other person at the time this
Security Deed is entered into and, accordingly, the notice requirements of
O.C.G.A., Sections 44-14-162.2 and 44-14-162.3, shall not be applicable to any
exercise of the power of sale contained in this Security Deed.
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ARTICLE II
SECURITY AGREEMENT
SECTION 2.01 CREATION OF SECURITY INTEREST. This Security Deed shall
constitute a security agreement between Grantor as the Debtor and Beneficiary as
the Secured Party, and Grantor hereby grants to Beneficiary a security interest
in such of the Mortgaged Estate as may, in accordance with the Uniform
Commercial Code of the State of Georgia (the "UCC"), be subject to a security
interest thereunder (herein, the "UCC Property"). Cumulative of all other rights
of Beneficiary hereunder, Beneficiary shall have all of the rights conferred
upon secured parties by the UCC. Grantor will execute and deliver to Beneficiary
all financing statements that may from time to time be reasonably required by
Beneficiary to establish and maintain the validity and priority of the security
interest of Beneficiary and pay all costs and expenses of any searches
reasonably required by Beneficiary. Beneficiary may exercise any or all of the
remedies of a secured party available to it under the UCC with respect to the
UCC Property, and it is expressly agreed that if upon an Event of Default
Beneficiary should proceed to dispose of the UCC Property in accordance with the
provisions of the UCC, five (5) days' notice by Beneficiary to Grantor shall be
deemed to be reasonable notice under any provision of the UCC requiring such
notice; provided, that, to the extent permitted by applicable law, Beneficiary
may at its option dispose of the UCC Property in accordance with Beneficiary's
rights and remedies with respect to the Mortgaged Estate pursuant to the
provisions of this Security Deed in lieu of proceeding under the UCC.
Grantor shall give advance notice in writing to Beneficiary of any
proposed change in Grantor's name, identity, or business form or structure and
will execute and deliver to Beneficiary, prior to or concurrently with the
occurrence of any such change, all additional financing statements that
Beneficiary may require to establish and maintain the validity and priority of
Beneficiary's security interest with respect to any of the UCC Property. Grantor
hereby appoints Beneficiary as its attorney-in-fact to execute and file on its
behalf any financing statements, continuation statements or other statements in
connection therewith which Beneficiary deems necessary or reasonably advised, to
preserve and maintain the priority of the lien hereof, or to extend the
effectiveness hereof, under the UCC or any other laws that may hereafter become
applicable. This power, being coupled with an interest, shall be irrevocable so
long as any of the Secured Obligations remains unpaid.
This Security Deed shall be effective as a financing statement filed as
a fixture filing from the date of its filing for record in the real estate
records of the county in which the UCC Property is situated. Information
concerning the security interest created by this Security Deed may be obtained
from Beneficiary, as secured party, at the address of Beneficiary stated above.
The mailing address of Grantor, as debtor, is as stated in the introductory
paragraph of this Security Deed.
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SECTION 2.02 REPRESENTATIONS, WARRANTIES AND COVENANTS OF GRANTOR.
Grantor hereby represents, warrants and covenants, with respect to the UCC
Property as follows:
(a) except for the security interest granted hereby, Grantor
is, and as to portions of the UCC Property to be acquired by Grantor
after the date hereof will be, the sole owner of the UCC Property, free
from any adverse lien, security interest, encum brance or adverse
claims thereon of any kind whatsoever except for Permitted Exceptions.
Grantor will notify Beneficiary of, and will defend such property
against, all claims and demands of all persons at any time claiming the
same or any interest therein;
(b) except as otherwise provided herein or in the other Loan
Documents, Grantor will not lease, sell, convey, remove, alter or in
any manner transfer the UCC Property without the prior written consent
of Beneficiary, other than in the ordinary course of business and
except as permitted by the Credit Agreement; and
(c) the UCC Property will be kept on or at the Property and
Grantor will not remove the UCC Property from the Property unless it is
replaced with replacement property satisfactory to Beneficiary, without
the prior written consent of Beneficiary, except as otherwise provided
herein or in the Credit Agreement.
ARTICLE III
EVENTS OF DEFAULT AND REMEDIES OF BENEFICIARY
SECTION 3.01 EVENTS OF DEFAULT. If
(a) An Event of Default shall occur and be continuing under the Credit
Agreement; or
(b) Grantor shall fail to perform or observe any of its covenants or
agreements set forth herein and such failure shall continue for more than three
(3) Business Days from the date due if the event or condition is a failure to
pay money to or on behalf of Beneficiary as and when due or for more than thirty
(30) days after written notice from Beneficiary to Grantor of such failure if
the event or condition is other than a failure to pay money; or
(c) Grantor shall, without the prior written consent of Beneficiary,
sell, transfer, assign or further encumber the Mortgaged Estate or any part
thereof or any interest therein, or shall be divested of its title or any
interest therein, in any manner, whether voluntarily or involuntarily;
then and in each and every such case ("Event of Default" or "Default"), and at
any time thereafter while such Event of Default is continuing, Beneficiary shall
have, in addition to any rights at law or in equity, each and all of the
following rights and remedies, which may be exercised individually, collectively
or cumulatively:
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(i) Beneficiary may, at its option, by written notice to
Grantor, declare immediately due and payable the Secured Obligations
(any notice of intent to accelerate such Secured Obligations prior to
the notice of acceleration being expressly waived by Grantor), and upon
any such declaration, the principal of accrued and unpaid interest and
all other Secured Obligations shall become and be immediately due and
payable. Anything to the contrary contained in this Security Deed
notwithstanding, the principal debt and, to the extent permitted by
applicable law, accrued and unpaid interest to that date shall
thereafter bear interest at the Default Rate until paid.
(ii) To the extent permitted by applicable law, Beneficiary
personally, or by the agents or attorneys of Beneficiary, may take
immediate possession of the Mortgaged Estate hereby conveyed and
operate or lease the same and collect all income and rents arising
therefrom then due or that may thereafter become due, and pay the
proceeds so collected therefrom to Beneficiary for application in
accordance with the Credit Agreement.
(iii) In the event of the noncompliance with any duty or
duties required of Grantor under the terms of this Security Deed,
Beneficiary reserves the right, at its own election, to advance
sufficient funds to perform or maintain such duty or duties. Such
funds, on notice from Beneficiary, shall be immediately paid by Grantor
to Beneficiary, and if not so paid shall bear interest at the Default
Rate from the date of demand for payment to the date of their payment
in full to Beneficiary and shall be secured by this Security Deed.
(iv) Beneficiary may make application to a court of competent
jurisdiction for, and be entitled to, as a matter of strict right
without notice and without regard to the occupancy or value of any
security for the Secured Obligations or the solvency of any party bound
for the payment thereof, the appointment of a receiver to take
possession of and operate the Property and to collect and apply the
rents, issues, profits and revenues thereof; the receiver shall have
all of the rights and powers permitted under the laws of the State of
Georgia, and Grantor shall pay to Beneficiary, upon demand, all
expenses, including receiver's fees, reasonable attorney's fees, costs
and agents' compensation, incurred by it pursuant to the provisions of
this paragraph, and all such expenses shall be secured by this Security
Deed.
(v) Beneficiary may sell the Property, or any part thereof or
any interest therein separately, at Beneficiary's discretion, with or
without taking possession thereof, at public sale before the courthouse
door of the county in which the Property, or a part thereof, is
located, to the highest bidder for cash, after first giving notice of
the time, place and terms of such sale by advertisement published once
a week for four weeks (without regard for the number of days) in a
newspaper in which advertisements of sheriffs' sales are published in
such county. The advertisement so published shall be notice to Grantor,
and Grantor hereby
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waives all other notices. Beneficiary may bid and purchase at any such
sale, and Beneficiary may execute and deliver to purchaser or
purchasers at any such sale a sufficient conveyance of the Property or
the part thereof or interest therein sold. Beneficiary's conveyance may
contain recitals as to the occurrence of an Event of Default under this
Security Deed, which recitals shall be presumptive evidence that all
preliminary acts prerequisite to such sale and conveyance were duly
complied with in all respects. The recitals made by Beneficiary shall
be binding and conclusive upon Grantor, and the sale and conveyance
made by Beneficiary shall divest Grantor of all right, title, interest
or equity Grantor may have had in, to and under the Property, or the
part thereof or interest therein sold, and shall vest the same in the
purchaser or purchasers at such sale. Beneficiary may hold one or more
sales hereunder until the Secured Obligations have been satisfied in
full. Grantor hereby constitutes and appoints Beneficiary as Grantor's
agent and attorney-in-fact to make such sale, to execute and deliver
such conveyance and to make such recitals, and Grantor hereby ratifies
and confirms all of the acts and doings of Beneficiary as Grantor's
agent and attorney-in-fact hereunder. Beneficiary's agency and power as
attorney-in-fact hereunder are coupled with an interest, cannot be
revoked by death, incompetence, reorganization, insolvency or
otherwise, and shall not be exhausted until the Secured Obligations
have been satisfied in full. The proceeds of each sale by Beneficiary
hereunder shall be applied first to the costs and expenses of the sale
and of all proceedings in connection therewith (including but not
limited to the fees and expenses of Beneficiary's attorneys in
connection therewith), and the balance shall be applied to the
remainder of the Secured Obligations. In the event of any sale pursuant
to the agency and power herein granted, Grantor shall be and become a
tenant holding over and shall deliver possession of the Property, or
the part thereof or interest therein sold, to the purchaser or
purchasers at the sale or be summarily dispossessed in accordance with
the provisions of law applicable to tenants holding over.
(vi) Beneficiary may, in addition to and not in abrogation of
the rights granted under paragraph (v) above, either with or without
entry or taking possession as herein provided or otherwise, proceed by
a suit or suits in law or in equity or by any other appropriate
proceeding or remedy (a) to enforce payment of Note or the performance
of any term, covenant, condition or agreement of this Security Deed or
any other right and (b) to pursue any other remedy available to it as
Beneficiary shall determine most effectual for such purposes.
(vii) Beneficiary may exercise any or all of the remedies of a
secured party available to it under the UCC with respect to the
Mortgaged Estate as set forth in Article II hereof; provided, however,
that Beneficiary may, at its option, dispose of the collateral in
accordance with Beneficiary's rights and remedies in respect of the
Mortgaged Estate pursuant to the provisions of this Security Deed, in
lieu of proceeding under the UCC.
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(viii) To the extent permitted in the Credit Agreement,
Beneficiary may offset and apply, to any or all of the Secured
Obligations, all monies, credits and other property of any nature
whatsoever, and the proceeds thereof, of Grantor now or at any time
hereafter in the possession of, in transit to or from, under the
custody or control of, or on deposit with, Beneficiary.
SECTION 3.02 RECEIVER. In addition to any other rights and powers
conferred herein, Beneficiary shall have the right after the happening of any
Event of Default as hereinabove defined to apply for the appointment of a
receiver of rents and profits of any part or the whole of the Mortgaged Estate
without notice, and Beneficiary shall be entitled, as a matter of right, without
regard to the value of the Mortgaged Estate as security for the amount due or to
the solvency of Grantor or any other party or parties liable for the payment of
such amount, to the appointment of such a receiver of rents and profits with
power to lease the Mortgaged Estate, or such part thereof as may not then be
under lease, and with such other powers as may be deemed necessary, who, after
deducting all proper charges and expenses attending the execution of his trust
as receiver shall apply the residue of the Rents and Profits to the payment and
satisfaction of the Secured Obligations, or to any deficiency which may exist
after applying the proceeds of the sale of the Mortgaged Estate to the payment
of the Secured Obligations, including interest and the costs of any reasonable
attorneys' fees for the foreclosure and sale in such order of priority as
Beneficiary shall elect.
SECTION 3.03 WAIVER OF RIGHTS. Neither Grantor nor its successors or
assigns, ever shall have or assert any right, under any statute or rule of law
pertaining to the marshaling of assets, the exemption of homestead, the
administration of estates of decedents, or in any manner whatev er, to defeat,
reduce or affect the right of the holder of the Secured Obligations, under the
terms of this Security Deed, to a sale of the Mortgaged Estate for the
collection of the Secured Obligations (without any prior or different resort for
collection), or the right of the holder, under the terms of this Security Deed,
to the payment of the Secured Obligations out of the proceeds of sale of the
conveyed Mortgaged Estate in preference to every other person and claimant
whatever (only reasonable expenses as aforesaid being first deducted); and
Grantor, to the extent that it lawfully may, expressly waives any right now or
hereafter existing to redeem the Mortgaged Estate or any portion thereof so
sold.
SECTION 3.04 RETENTION OF POSSESSION. Notwithstanding the appointment
of any receiver, liquidator or trustee of Grantor, or the then owner of the
Mortgaged Estate, or of any of Grantor's or then owners' other property,
Beneficiary shall be entitled to retain possession and control of the Mortgaged
Estate now or hereafter granted to or held by Beneficiary hereunder.
SECTION 3.05 REMEDIES NOT EXCLUSIVE. The cumulative rights of
Beneficiary arising under the clauses and covenants contained in this Security
Deed shall be separate, distinct and cumulative and none of them shall be
construed to be exclusive or an election to proceed under any one provision
herein to the exclusion of any other provision, anything herein or otherwise to
the contrary notwithstanding. In addition to any remedies provided herein for an
Event of Default hereunder, Beneficiary shall have all other remedies allowed
under the laws of the State of North
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Carolina, and the laws of the United States. No failure on the part of
Beneficiary to exercise any of its rights hereunder arising upon any Default
shall be construed to prejudice its rights in the event of any other or
subsequent Default. No delay on the part of Beneficiary in exercising any of
such rights shall be construed to preclude it from the exercise thereof at any
time during the continuance of such Default. Beneficiary may enforce any one or
more remedies or rights hereunder in such order and manner as it may determine,
successively or concurrently at its option. By accepting payment or partial
payment of any sums secured hereby after its due date, Beneficiary shall not
make an accommodation or thereby waive the agreement herein contained that time
is of the essence, nor shall Beneficiary waive either any of its remedies or
options or its right to require prompt payment when due of all Secured
Obligations or to consider failure so to pay a Default hereunder. Neither the
acceptance of this Security Deed nor its enforcement, whether by court action or
pursuant to other powers herein contained, shall prejudice or in any manner
affect Beneficiary's right to realize upon or enforce any other security now or
hereafter held by Beneficiary.
SECTION 3.06 WAIVER OF APPRAISEMENT; VALUATION, STAY, EXTENSION,
HOMESTEAD EXEMPTION AND REDEMPTION LAWS. Grantor agrees, to the full extent
permitted by law, that in case of a default on the part of Grantor hereunder,
neither Grantor nor anyone claiming through or under it shall or will set up,
claim or seek to take advantage of any appraisement, valuation, stay, extension,
homestead exemption or redemption laws now or hereafter in force, in order to
prevent or hinder the enforcement of foreclosure of this Security Deed, or the
absolute sale of the Property, or the final and absolute putting into possession
of the purchasers immediately after such sale. Grantor, for itself and all who
may at any time claim through or under it, hereby waives to the full extent that
it may lawfully do so the benefit of all such laws and any and all right to have
the assets comprised in the security intended to be created hereby marshalled
upon any foreclosure of the lien hereof.
SECTION 3.07 DISCONTINUANCE OF PROCEEDINGS AND RESTORATION OF THE
PARTIES. In case Beneficiary shall have proceeded to enforce any right, power or
remedy under this Security Deed by foreclosure, entry or otherwise, any such
proceedings shall have been discontinued or abandoned for any reason, or shall
have been determined adversely to Beneficiary, then and in every such case
Grantor and Beneficiary shall be restored to their former positions and rights
hereunder, and all rights, powers and remedies of Beneficiary shall continue as
if no such proceeding had been taken.
ARTICLE IV
MISCELLANEOUS
SECTION 4.01 GOVERNING LAW. This Security Deed shall be governed by and
construed and enforced in accordance with the law of the State of Georgia
applicable to contracts made and to be performed in the State of Georgia without
reference to conflicts of laws principles.
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SECTION 4.02 WAIVER OF RIGHTS. To the extent permitted by law, Grantor
waives the benefit of all laws now existing or that hereafter may be enacted (a)
providing for any appraisement before sale of any portion of the Mortgaged
Estate, and (b) in any way extending the time for the enforcement of the
collection of the Secured Obligations or creating or extending a period of
redemption from any sale made in collecting the Secured Obligations. To the full
extent Grantor may do so, Grantor agrees that Grantor will not at any time
insist upon, plea, claim or take the benefit or advantage of any law now or
hereafter in force providing for any appraisement, valuation, stay, extension or
redemption, and Grantor, for itself and its successors and assigns, and for any
and all persons ever claiming any interest in the Mortgaged Estate by, through
or under Grantor, to the extent permitted by law, hereby waives and releases all
rights of redemption, valuation, appraisement, stay of execution, notice of
election to mature or declare due the whole of the Secured Obligations and
marshalling in the event of foreclosure of the liens hereby created. If any law
referred to in this Section and now in force, of which Grantor, Grantor's
successors and assigns or other person might take advantage despite this
Section, shall hereafter be repealed or cease to be in force, such law shall not
thereafter be deemed to preclude the application of this Section. To the extent
permitted by law, Grantor expressly waives and relinquishes any and all rights
and remedies which Grantor may have or be able to assert by reason of the laws
of the State of North Carolina pertaining to the rights and remedies of
sureties.
SECTION 4.03 NOTICES. Whenever Beneficiary or Grantor shall desire to
give or serve any notice, demand, request or other communication with respect to
this Security Deed, each such notice, demand, request or other communication
shall be in writing and shall be effective only if the same is delivered in the
manner set forth in the Credit Agreement, addressed to the addresses therein set
forth. Any party may at any time change its address for such notices by
delivering or mailing to the other parties hereto, as aforesaid, a notice of
such change.
SECTION 4.04 CAPTIONS. The captions or headings at the beginning of
each Section hereof are for the convenience of the parties and are not a part of
this Security Deed.
SECTION 4.05 INVALIDITY OF CERTAIN PROVISIONS. If the lien of this
Security Deed is invalid or unenforceable as to any part of the Secured
Obligations, or if the lien is invalid or unenforceable as to any part of the
Mortgaged Estate, the unsecured or partially secured portion of the debt shall
be completely paid prior to the payment of the remaining and secured portion of
the Secured Obligations, and all payments made on the debt, whether voluntary or
under foreclosure or other enforcement action or procedure, shall be considered
to have been first paid on and applied to the full payment of that portion of
the Secured Obligations which is not secured or fully secured by the lien of
this Security Deed.
SECTION 4.06 SUBROGATION. To the extent that proceeds of the Secured
Obligations are used to pay any outstanding lien, charge or prior encumbrance
against the Mortgaged Estate and such proceeds or advances have been or will be
advanced by Beneficiary, Beneficiary shall be subrogated to any and all rights
and liens held by any owner or holder of such outstanding liens, charges and
prior encumbrances, irrespective of whether said liens, charges or encumbrances
are released of record.
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SECTION 4.07 WAIVER OF RIGHTS FOR COMMERCIAL TRANSACTION. The interest
of Beneficiary hereunder and the obligations of Grantor for the Secured
Obligations arise from a commercial transaction within the meaning of O.C.G.A.
Section 44-14-260(1). Accordingly, pursuant to O.C.G.A. Section 44-14-263,
Grantor waives any and all rights which Grantor may have to notice prior to
seizure by Beneficiary of any interest in personal property of Grantor which
constitutes part of the Property, whether such seizure is by writ of possession
or otherwise.
SECTION 4.08 WAIVER OF GRANTOR'S RIGHTS. GRANTOR HEREBY WAIVES ANY
RIGHT GRANTOR MAY HAVE UNDER THE CONSTITUTION OF THE STATE OF GEORGIA OR THE
CONSTITUTION OF THE UNITED STATES OF AMERICA TO NOTICE OR TO A JUDICIAL HEARING
PRIOR TO THE EXERCISE OF ANY RIGHT OR REMEDY PROVIDED TO BENEFICIARY BY THIS
SECURITY DEED, AND GRANTOR WAIVES GRANTOR'S RIGHTS, IF ANY, TO SET ASIDE OR
INVALIDATE ANY SALE UNDER POWER DULY CONSUMMATED IN ACCORDANCE WITH THE
PROVISIONS OF THIS SECURITY DEED ON THE GROUND (IF SUCH BE THE CASE) THAT THE
SALE WAS CONSUMMATED WITHOUT PRIOR NOTICE OR JUDICIAL HEARING. THE WAIVERS MADE
BY GRANTOR IN THIS SECTION AND ELSEWHERE IN THIS SECURITY DEED HAVE BEEN MADE
VOLUNTARILY, INTELLIGENTLY AND KNOWINGLY ON BEHALF OF GRANTOR BY ITS DULY
AUTHORIZED REPRESENTATIVES AFTER THEY HAVE READ AND UNDERSTOOD THIS SECURITY
DEED AND HAVE BEEN AFFORDED AN OPPORTUNITY TO BE INFORMED BY COUNSEL OF
GRANTOR'S POSSIBLE ALTERNATIVE RIGHTS, AND BY EXECUTING THIS SECURITY DEED THE
DULY AUTHORIZED REPRESENTATIVES OF GRANTOR ACKNOWLEDGE SO MAKING SUCH WAIVERS ON
BEHALF OF GRANTOR.
SECTION 4.09 FINAL MATURITY. The final maturity of the Secured
Obligations secured hereby is September 15, 1998.
IN WITNESS WHEREOF, Grantor has caused this Security Deed to be
executed under seal on its behalf by its duly authorized officers as of the day
and year first above written.
TEXFI INDUSTRIES, INC.,
a Delaware corporation
By: /s/ William L. Remley
Name: William L. Remley
Title: Chief Executive Officer
ATTEST: /s/ Paige Clarke Dickerson
Name: Paige Clarke Dickerson
Title: Assistant Secretary
[CORPORATE SEAL]
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Signed, sealed and delivered in the presence of:
/s/ Ross J. Smyth
Witness
/s/ Rosemary A. Koontz
Notary Public
Commission Expiration: October 4, 2000
[NOTARY SEAL]
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Exhibit 2(a)(6)
ASSIGNMENT OF FACTORING PROCEEDS
(No Advances or Ledger Debt)
Texfi Industries, Inc., a Delaware corporation (the "Debtor") assigns
to NationsBank, N.A., a national banking association, as Agent (the "Agent") for
the ratable benefit of itself, NationsBanc Commercial Corporation, as Disbursing
Agent (the "Disbursing Agent"), and the financial institutions (the "Lenders")
as are, or may from time to time become, parties to the Credit Agreement dated
of even date herewith between the Agent, the Disbursing Agent and the Lenders
(together with any modifications, substitutions, supplements, amendments,
renewals or restatements thereof, the "Credit Agreement") and grants to the
Agent a security interest in all funds now or hereafter payable to the Debtor by
________________________ (the "Factor") pursuant to the Factoring Agreement
dated ______________, 19___ between the Debtor and the Factor or any
modifications, substitutions, supplements, amendments, renewals or restatements
thereof (the "Factoring Agreement").
The Agent understands that the amount of funds, if any, that may be
payable at any time to the Debtor pursuant to the Factoring Agreement is
uncertain. Further, this Assignment is subject to and shall not affect any
rights of the Factor under the terms and conditions of the Factoring Agreement
or any other agreement between the Factor and the Debtor, or applicable law,
with respect to any matter whatsoever including the right to "charge back" to
the Debtor's account any disputed invoices and other items and sums. Any credit
balance shown on any statement of account is provisional only and is subject to
such charges.
The Debtor hereby authorizes the Factor, and the Factor agrees, to
provide (i) to the Disbursing Agent, copies of the monthly factoring statement
plus interim reports and such other information as the Disbursing Agent may
request from time to time and (ii) to the Agent, a copy of the monthly detailed
ageing and such other information as the Agent may request from time to time.
The Debtor hereby directs the Factor to pay to the Disbursing Agent for
the benefit of the Agent, and the Factor agrees to pay to the Disbursing Agent,
such sums as the Factor in its discretion determines to be payable to the Debtor
from time to time pursuant to the Factoring Agreement. Such payment shall be for
the account of the Debtor. The Factor is hereby authorized to recognize the
Agent's claim to rights hereunder without investigating the reason for any
action taken by the Agent or the validity or the amount of obligations of the
Debtor to the Agent, the Lenders or the Disbursing Agent.
This Agreement cannot be terminated by the Debtor or the Factor but
only upon the Factor's receipt of a written termination notice from the Agent.
Such notice shall be sent by certified mail, return receipt requested, to:
<PAGE>
Until this Agreement is terminated pursuant to the preceding paragraph,
the Debtor agrees that it will not (i) borrow from or obtain any loan, secured
or unsecured, from the Factor, nor take any advance or anticipated payment
against any monies due under the Factoring Agreement, (ii) have the Factor
guarantee any amount due or to become due from the Debtor to any third party, or
(iii) have the Factor open any letters of credit on behalf of the Debtor. The
Factor agrees that it will not extend any such accommodations to the Debtor and
further agrees that it will not deduct or set off against amounts payable to the
Debtor under the Factoring Agreement sums owing the Factor and arising from the
Debtor's purchases from other of the Factor's clients.
The Factor agrees to notify the Agent in writing of the sending by the
Factor to the Debtor of any notice of termination of the Factoring Agreement.
The terms of this Agreement may not be altered except by a written agreement
signed by the Debtor, the Factor and the Agent.
The Agent warrants and represents to the Factor that it holds a first
priority perfected security interest in the funds assigned hereunder for the
ratable benefit of itself, the Lenders and the Disbursing Agent and that the
Disbursing Agent for the benefit of the Agent is entitled to receive all amounts
otherwise available to the Debtor pursuant to the Factoring Agreement. The Agent
hereby agrees to indemnify and to hold the Factor harmless from any and all
liability or expense which may be incurred by reason of the Factor's recognition
of the assignment and security interest herein contained and its remittances to
the Disbursing Agent as herein provided. This indemnity shall survive
termination of this Assignment.
The Agent agrees that any interest that it may have in the Debtor's now
existing and hereafter created accounts, instruments, contract rights, chattel
paper, documents, general intangibles and the proceeds thereof, which are
specifically assigned to the Factor and all returned, reclaimed and repossessed
goods relating thereto (the "Factor Collateral"), shall be and hereby is made
subordinate to the interest of the Factor therein. The Agent agrees that its
subordination hereunder shall survive termination of this Agreement and shall
remain in full force and effect until all obligations of the Debtor to the
Factor have been satisfied in full. The Agent further agrees that until all of
the obligations of the Debtor to the Factor have been satisfied in full, it will
not enforce its security interest in the Factor Collateral, nor will it attach,
levy upon, execute against, exercise any rights, assert any claim or interest,
take any action, or institute any proceedings with respect thereto.
The Factor agrees that any interest it may have in the Debtor's now
existing and hereinafter created accounts, instruments, contract rights, chattel
paper, documents, general intangibles and the proceeds thereof, which are not
Factor Collateral and which do not arise from the sale of goods or rendition of
services to customers who are account debtors on the Factor Collateral, and all
returned, reclaimed and repossessed goods relating thereto (the "Agent
Collateral"), shall be and herein is made subordinate to the interest of the
Agent therein. The Factor agrees that its subordination hereunder shall survive
termination of this Agreement and shall remain in full force and effect until
all obligations of the Debtor to the Agent, the Lenders and the Disbursing Agent
under the Credit Agreement have been satisfied in full. The Factor further
agrees that until all of the obligations of the Debtor to the Agent, the Lenders
and the Disbursing Agent under the Credit Agreement have been satisfied in full,
it will not enforce its
-2-
<PAGE>
security interest in the Agent Collateral, nor will it attach, levy upon,
execute against, exercise any rights, assert any claim or interest, take any
action, or institute any proceedings with respect thereto.
The subordination and relative priority agreements set forth herein are
expressly conditioned upon the non-avoidability and perfection of the interest
to which another interest is subordinated and if the interest to which another
interest is subordinated is not perfected or is voidable for any reason, then
the subordination provided for herein shall not be effective as to that
particular property.
The validity, interpretation and enforcement of this Agreement shall be
governed by the laws of Georgia. This Agreement shall bind and benefit the
parties and their respective successors and assigns. There are no third party
beneficiaries to this Agreement other than the Lenders and the Disbursing Agent.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the 15th day of March, 1996.
Texfi Industries, Inc.
By:
(Title)
[SEAL]
ACCEPTED AND AGREED:
NationsBank, N.A., as Agent
By:
(Title)
By:
(Title)
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<PAGE>
Exhibit 4(a)(1)
FIRST SUPPLEMENTAL INDENTURE, dated as of March 10, 1995, between Texfi
Industries, Inc., a Delaware corporation (the "Company") and First Union
National Bank of North Carolina, a national banking association (the "Trustee").
Capitalized terms used herein without definition shall have the same meanings
herein as in the Indenture.
W I T N E S S E T H
WHEREAS, the Company and the Trustee are parties to an Indenture dated
as of September 8, 1993 ("Indenture"), pursuant to which the Company may issue
up to $34,500,000 in principal amount of 8 3/4% Series Subordinated Debentures
due August 1, 1999; and
WHEREAS, Section 11.2 of the Indenture provides that the Company, when
authorized by a resolution of its Board of Directors, and the Trustee may make
certain amendments to the Indenture with the consent of the holders of at least
a majority in principal amount of the outstanding Securities;
WHEREAS, the Company desires to amend the Indenture as set forth herein
and such amendments may be made with the consent of the holders of at least a
majority in principal amount of the outstanding Securities rather than of each
Securityholder;
NOW, THEREFORE, in consideration of the premises and of other good and
valuable considerations, receipt whereof is hereby acknowledged, the parties
hereto agree as follows:
1. The Indenture is hereby amended by adding the following definition
to Section 1.01 of the Indenture:
"New Debt" means (i) any liability of any person (a) for
borrowed money, (b) evidenced by a note, debenture or similar
instrument (including a purchase money obligation given in connection
with the acquisition of any property or assets other than inventory or
similar property acquired in the ordinary court of business), including
securities, or (c) for the payment of money relating to a Capitalized
Lease Obligation; and (ii) any liability of others described in the
preceding clause (i) which the person has guaranteed or which is
otherwise its legal liability. Notwithstanding anything to the contrary
in the foregoing, New Debt shall not include advances to the Company
under any of its factoring agreements.
2. The Indenture is hereby amended by deleting Section 4.11 of the
Indenture in its entirety and inserting therefor the following:
<PAGE>
"SECTION 4.11. Senior Indebtedness.
The Company shall not (i), directly or indirectly, create,
incur, assume or become liable for, contingently or otherwise, any New
Debt (unless, in the case of any particular New Debt, the instrument
creating or evidencing the same or the assumption or guarantee thereof
expressly provides that such New Debt shall not be senior in right of
payment to the Securities), or (ii) permit any Subsidiary to, directly
or indirectly, create, incur, assume or become liable for, contingently
or otherwise, any New Debt ((i) and (ii) are collectively referred to
in this Section 4.11 as an "incurrence") if, upon given effect to such
incurrence on a pro forma basis, the aggregate amount of the sum of (x)
Senior Indebtedness of the Company and (y) the aggregate Indebtedness
of all of the Subsidiaries shall exceed sixty percent (60%) of Total
Capitalization, all calculated as of the date of such incurrence."
3. The Indenture is hereby amended by deleting Section 4.12 of the
Indenture in its entirety and inserting therefor the following:
"SECTION 4.12. Total Indebtedness.
The Company shall not, and shall not permit any Subsidiary to,
directly or indirectly, create, incur, assume or become liable for,
contingently or otherwise (collectively referred to in this Section
4.12 as an "incurrence") any New Debt if, upon giving effect to such
incurrence on a pro forma basis, the aggregate amount of the
Indebtedness of the Company and the Subsidiaries on a consolidated
basis shall exceed (i) seventy-five (75%) of Total Capitalization or
(ii) the product of (x) 4.25 multiplied by (y) Four Quarter EBITDA
(excluding write-downs for discontinued operations), all as calculated
as of the date of such incurrence."
4. Except as specifically modified herein, the Indenture shall remain
in full force and effect in accordance with its terms.
5. The parties may sign any number of copies of this First Supplemental
Indenture. Each signed copy shall be an original, but all of them together
represent the same agreement. This First Supplemental Indenture may be executed
in any number of counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same instrument.
6. The recitals contained in this First Supplemental Indenture shall be
taken as statements of the Company and the Trustee assumes no responsibility for
their correctness. The Trustee makes no representations as to the validity or
sufficiency of this First Supplemental Indenture.
-2-
<PAGE>
7. This First Supplemental Indenture shall be governed by and construed
in accordance with the laws of the State of North Carolina.
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed, and their respective corporate seals
to be hereunto affixed, all as of the date first written above.
TEXFI INDUSTRIES, INC.
By: /s/ Dane L. Vincent
Title: Vice President Finance, Treasurer
(SEAL)
ATTEST:
/s/ Doris R. Bray
Assistant Secretary
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA, as Trustee
By: /s/ Ted Weir
Title: Trust Officer
(SEAL)
-3-
<PAGE>
Exhibit 4(a)(2)
SECOND SUPPLEMENTAL INDENTURE, dated as of March 15, 1996, between
Texfi Industries, Inc., a Delaware corporation (the "Company"), and First Union
National Bank of North Carolina, a national banking association (the "Trustee").
Capitalized terms used herein without definition shall have the same meanings
herein as in the Indenture.
W I T N E S S E T H:
WHEREAS, the Company and the Trustee are parties to an Indenture dated
as of September 8, 1993 ("Indenture"), pursuant to which the Company may issue
up to $34,500,000 in principal amount of 8 3/4% Senior Subordinated Debentures
due August 1, 1999; and
WHEREAS, the Company and the Trustee entered into the First
Supplemental Indenture dated March 10, 1995; and
WHEREAS, Section 11.01 of the Indenture provides that the Company, when
authorized by a resolution of its Board of Directors, and the Trustee may make
certain amendments to the Indenture without the consent of any Securityholders;
WHEREAS, the Company desires to amend the Indenture as set forth herein
and such amendments may be made without the consent of any Securityholders;
NOW, THEREFORE, in consideration of the premises and of other good and
valuable consideration, receipt whereof is hereby acknowledged, the parties
hereto agree as follows:
1. The Indenture is hereby amended by adding a new Section 4.13
as follows:
Section 4.13. Deposits Prior to Maturity
Beginning on the last business day of the month of
September, 1998, and continuing on the last business day of
each month thereafter to and including June, 1999 (each such
day being referred to as a "Payment Date"), the Company will
deposit with the Trustee an amount equal to Six Hundred
Thousand Dollars ($600,000.00) (a "Deposit"), provided, that
the amount of any Deposit may be reduced by an amount equal to
all Repurchased Debentures surrendered to the Trustee on or
prior to the applicable Payment Date. For purposes of the
foregoing sentence, "Repurchased Debentures" means (i) the
principal amount of all Debentures repurchased by the Company
as of the applicable Payment Date less (ii) the principal
amount of all such Debentures that have been credited against
previous Deposits on prior Payment Dates. The Company shall
provide to the Trustee within five business days following
each Payment Date a statement reflecting the amount of the
Deposit made with the Trustee on such Payment Date and the
amount of all Debenture
<PAGE>
Repurchases by the Company as of such Payment Date. The
Trustee is authorized to place the Deposits in a special
reserve account where it shall be held in trust for the
benefit of the Securityholders. The Trustee shall invest and
apply the Deposits pursuant to Section 8.02. The Company
acknowledges and agrees that upon deposit with the Trustee of
such amounts, such Deposits shall become the property of the
Holders and that the Company has no ownership or other
interest in such Deposits.
2. The Indenture is hereby amended by deleting Section 8.02 in its
entirety and inserting therefor the following:
Section 8.02. Application of Trust Money.
The Trustee or Paying Agent shall hold in trust money
or U. S. Government Obligations deposited with it pursuant to
Section 8.01 and shall apply the deposited money and the money
from U.S. Government Obligations in accordance with this
Indenture to the payment of principal and interest on the
Securities.
The Trustee shall receive and hold in trust for the
benefit of the Securityholders such amounts as shall be paid
to it by the Company pursuant to Section 4.13 and shall invest
such amounts in U.S. Government Obligations or in
interest-bearing accounts or certificates of deposit with
federal or state charted banks located in the State of North
Carolina that have assets in excess of $500,000,000 and that
have their deposits of $100,000 or less insured by the Federal
Deposit Insurance Corporation or its successor corporation.
All such amounts, including interest earned thereon, shall be
held in trust for the benefit of the Securityholders and shall
be paid by the Trustee (i) first on the principal of the
Debentures when it comes due, ratably, without preference or
priority of any kind, (ii) then on interest, ratably, without
preference or priority of any kind, and (iii) then to the
Trustee for amounts due under Section 7.07.
3. Section 3.07 of the Indenture is hereby amended by inserting the
words "or Section 4.13" in the second line following the words "Section 8.01"
and preceding the word "shall".
4. Except as specifically modified herein, the Indenture shall remain
in full force and effect in accordance with its terms.
5. The parties may sign any number of copies of this Second
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement. This Second Supplemental Indenture may be
executed in any number of counterparts, each of
2
<PAGE>
which shall be an original; but such counterparts shall together constitute but
one and the same instrument.
6. The recitals contained in this Second Supplemental Indenture shall
be taken as statements of the Company, and the Trustee assumes no responsibility
for their correctness. The Trustee makes no representations as to the validity
or sufficiency of this Second Supplemental Indenture.
7. The Second Supplemental Indenture shall be governed by and construed
in accordance with the laws of the State of North Carolina.
IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be duly executed, and their respective corporate seals
to be hereunto affixed, all as of the date first written above.
TEXFI INDUSTRIES, INC.
By: /s/ William L. Remley
Title: Chief Executive Officer
[SEAL]
ATTEST:
/s/ Paige Clarke Dickerson
Assistant Secretary
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA, as Trustee
By: /s/ Shannon Stahel
Title: Trust Officer
[SEAL]
ATTEST:
/s/ Karen E. Atkins
Assistant Secretary
3
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